Fitch Upgrades Four Classes of BSCMS 2004-PWR5

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has upgraded four and affirmed six classes of Bear Stearns Commercial Mortgage Securities Trust, commercial mortgage pass-through certificates, series 2004-PWR5 (BSCMS 2004-PWR5). A full list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The upgrades reflect an increase in credit enhancement since Fitch's last rating action. The pool has become more concentrated with only 11 loans remaining; however, loan performance remains stable, and modeled losses are in-line with expectations at the last rating action.

Fitch modeled losses of 6.4% of the remaining pool. Expected losses on the original pool balance total 1.7%, including $15.9 million (1.3% of the original pool balance) in realized losses to date.

As of the June 2016 distribution date, the pool's aggregate principal balance has been reduced by 94.2% to $71.9 million from $1.23 billion at issuance. Of the remaining loans, the two largest loans (69.6% of pool), which have maturities in April 2019, have been defeased. Two other loans in the pool are real-estate owned (REO; 7.8%). The seven remaining non-specially serviced loans are fully amortizing with final maturities in 2019 (four loans, 9.2% of pool) and 2024 (three, 13.4%).

The largest contributors to modeled losses have remained the same since the last rating action.

The largest contributor to modeled losses is the Pottsburg Plaza asset (4.8% of pool), which is a 35,905 square foot (sf) neighborhood retail center located in Jacksonville, FL, consisting of two buildings: a 13,905 sf free-standing Walgreens building and a 22,000 sf in-line retail building. The loan was transferred to special servicing in May 2014 due to maturity default and the asset became REO in March 2015. As of the April 2016 rent roll, the asset was 51.7% occupied, with the in-line building being only 21% occupied. Walgreens' lease expires in 2056; however, the tenant has a termination option in 2016 whereby notice must be provided by June 30, 2016 if they want to exercise the option. The special servicer indicated Walgreens has not provided any termination notice and negotiations about extending the lease at a lower rate, due to declining store sales, are in progress.

The next largest contributor to modeled losses is the Campbell Station Shopping Center asset (3%), which is a 28,028 sf unanchored retail strip center located in Spring Hill, TN. The loan was transferred to special servicing in May 2014 due to maturity default and became REO in February 2015. As of the May 2016 rent roll, the asset was 77% occupied, an improvement from 67% at Fitch's last rating action as a new lease with a liquor tenant was executed. A purchase agreement for the asset has been negotiated and is being circulated by the special servicer for final approval.

RATING SENSITIVITIES

The Stable Outlooks on classes E through H reflect that these classes are fully covered by defeased collateral. Despite increasing credit enhancement to classes J through L, upgrades were limited due to the concentrated nature of the pool. Future upgrades are possible should recoveries on the special serviced asset dispositions exceed expectations. Downgrades to the distressed classes are likely should additional losses be realized.

DUE DILIGENCE USAGE

No third-party due diligence was provided or reviewed in relation to this rating action.

Fitch has upgraded the following classes and assigned Rating Outlooks as indicated:

--$18.5 million class H to 'AAAsf' from 'AAsf'; Outlook Stable;

--$4.6 million class J to 'Asf' from 'BBsf'; Outlook Stable;

--$4.6 million class K to 'BBsf' from 'Bsf'; Outlook Stable;

--$6.2 million class L to 'Bsf' from 'CCCsf'; assigned Outlook Stable.

In addition, Fitch has affirmed the following classes:

--$3 million class E at 'AAAsf'; Outlook Stable;

--$15.4 million class F at 'AAAsf'; Outlook Stable;

--$9.3 million class G at 'AAAsf'; Outlook Stable;

--$4.6 million class M at 'CCsf'; RE 100%;

--$4.6 million class N at 'Csf'; RE 40%;

--$1.1 million class P at 'Dsf'; RE 0%.

The class A-1, A-2, A-3, A-4, A-5, B, C and D certificates have paid in full. Fitch does not rate the fully-depleted class Q certificates. Fitch previously withdrew the ratings on the interest-only class X-1 and X-2 certificates.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Counterparty Criteria for Structured Finance and Covered Bonds (pub. 14 May 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=744158

Criteria for Rating Caps and Limitations in Global Structured Finance Transactions (pub. 16 Jun 2016)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=882401

Global Structured Finance Rating Criteria (pub. 27 Jun 2016)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=883130

U.S. and Canadian Fixed-Rate Multiborrower CMBS Surveillance and U.S. Re-REMIC Criteria (pub. 13 Nov 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=873395

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1008590

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1008590

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

View source version on businesswire.com: http://www.businesswire.com/news/home/20160707006350/en/

Fitch Ratings
Primary Analyst
Melissa Che, +1-212-612-7862
Director
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Christopher Bushart, +1-212-908-0606
Senior Director
or
Media Relations, New York
Sandro Scenga, +1-212-908-0278
[email protected]

Source: Fitch Ratings

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