Fitch Upgrades Two Classes of Bear Stearns 2006-PWR13

CHICAGO--(BUSINESS WIRE)-- Fitch Ratings has upgraded two classes and affirmed all other rated classes of Bear Stearns Commercial Mortgage Securities Trust, 2006-PWR13, commercial mortgage pass-through certificates. A detailed list of rating actions follows at the end of this release.

KEY RATING DRIVERS

The upgrades are the result of a higher percentage of defeased loans and better than expected recoveries on dispositions of specially serviced assets. Defeased loans represent 11.2% of the remaining balance, including one of the top loans, compared with 5% of the pool as of Fitch's last rating action.

Fitch modeled losses of 7.3% of the remaining pool; expected losses on the original pool balance total 8.9%, including $109.1 million (3.8% of the original pool balance) in realized losses to date. Fitch has designated 94 Fitch Loans of Concern (34.5%), which includes 11 specially serviced assets (7.7%). Of the loans in special servicing, two assets (1%) are real estate owned (REO) as of the November 2015 remittance.

As of the November 2015 distribution date, the pool's aggregate principal balance has been reduced by approximately 29.6% to $2.04 billion from $2.91 billion at issuance. Classes J through P have been depleted due to realized losses associated with loan dispositions, and restructured loans and realized losses have reached class H as of the November 2015 distribution. Excluding the specially serviced loans, approximately 83% of the loans are scheduled to mature or have an anticipated repayment date (ARD) by September 2016.

The largest contributor to modeled loss is secured by an industrial warehouse facility located in Phillipsburg, NJ (1.1% of the pool balance). The loan transferred to special servicing in July 2010 due to monetary default and has a receiver in place. The most recent reported occupancy was 26% with a valuation significantly below the trust debt amount.

The second largest contributor to modeled losses is an REO neighborhood retail center (0.9% of the pool) located in Sparks, NV outside of Reno. The property lost Target in 2010 and is currently less than 50% occupied. A receiver is in place and the former Target space remains vacant.

The eleventh-largest loan, Brandywine Mixed-Use (1.3% of the pool), transferred to special servicing in July 2015 for imminent monetary default. The call center tenant vacated the office portion and overall occupancy as of third-quarter 2015 stands at 39%. The sponsors of the loan, a joint venture of publicly-traded Acadia Realty Trust and Ginsburg Development, also own the four other Brandywine properties in this transaction that make up the larger development known as Brandywine Town Center. The center is located in Wilmington, DE, north of the central business district (CBD) near the Delaware and Pennsylvania border. None of the five loans, which represent 8.1% of the pool balance, are crossed-collateralized and cross-defaulted. A loan workout is still being determined for this asset. The four other Brandywine properties that are not in default are performing.

RATING SENSITIVITIES

The Stable Outlooks for the senior classes reflect their increased credit enhancement and expected continued paydown. Downgrades to the distressed classes will occur as losses are realized.

DUE DILIGENCE USAGE

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

Fitch upgrades the following classes and assigns Rating Outlooks as indicated:

--$232.5 million class A-J to 'BBBsf' from 'BBsf'; Outlook to Stable from Negative;

--$65.4 million class B to 'Bsf' from 'CCCsf'; assigned Outlook Stable.

Fitch has affirmed the following classes:

--$1 billion class A-4 at 'AAAsf'; Outlook Stable;

--$276.3 million class A-1A at 'AAAsf'; Outlook Stable;

--$290.7 million class A-M at 'AAAsf'; Outlook Stable;

--$29.1 million class C at 'CCCsf'; RE 100%;

--$40 million class D at 'CCsf'; RE 70%;

--$29.1 million class E at 'CCsf'; RE 0%;

--$32.7 million class F at 'Csf'; RE 0%;

--$32.7 million class G at 'Csf'; RE 0%;

--$10.8 million class H at 'Dsf'; RE 0%.

Classes J, K, L, M, N and O are affirmed at 'Dsf', RE 0% due to realized losses.

Classes A-1, A-2, A-3 and A-AB have paid in full. Fitch does not rate the fully depleted class P. Fitch previously withdrew the rating on the interest-only classes X-1 and X-2.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Global Structured Finance Rating Criteria (pub. 06 Jul 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952

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=994515

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=994515

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/20151120005924/en/

Fitch Ratings
Primary Analyst
Jeffrey Diliberto
Director
+1-312-368-3268
Fitch Ratings, Inc.
70 West Madison Street
Chicago, IL 60602
or
Committee Chairperson
Mary MacNeill
Managing Director
+1-212-908-0785
or
Media Relations:
Hannah James, +1-646-582-4947
[email protected]

Source: Fitch Ratings

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