NEW YORK--(BUSINESS WIRE)--Fitch Ratings has downgraded five classes and affirmed 14 classes of Bear Stearns Commercial Mortgage Securities Trust, series 2007-TOP28 (BSCMSI 2007-TOP28). A detailed list of rating actions follows at the end of this press release.
KEY RATING DRIVERS
The downgrades are due to an increase in expected losses. Fitch modeled losses of 5.3% of the remaining pool; expected losses on the original pool balance total 6.2%, including $28.5 million (1.6% of the original pool balance) in realized losses to date. Fitch has designated 58 loans (33.7%) as Fitch Loans of Concern, which includes four specially serviced assets (1.7%).
Over 50% of the pool consists of retail properties, including eight the Top 15 loans, the largest of which is the largest loan in the pool, representing 11.1% of the collateral. While updated rent rolls were provided by the servicer; recent sales information was not. Fitch made conservative assumptions in its modeling on these loans.
As of the August 2013 distribution date, the pool's aggregate principal balance has been reduced by 13% to $1.53 billion from $1.76 billion at issuance. Per the servicer reporting, two loans (3.5% of the pool) are defeased. Interest shortfalls are currently affecting classes L through P.
The largest contributor to expected losses is the RiverCenter I & II loan (3.6% of the pool), which is secured by a leasehold interest in two adjacent office buildings totaling 550,000 sf. The properties, which are located outside Cincinnati in Covington, KY, have seen an overall decline in performance over the last few years. As of May 2013, occupancy was reported at 68%, down from 73.5% in July 2012. Further, the second largest tenant (10% of NRA) recently renewed its lease at 15% lower than its current rent.
The next largest contributor to expected losses is the Pavilions at Hartman Heritage loan (1.5%), which is secured by a 220,000 sf retail property located in Independence, MO. As of July 31, 2013, occupancy was 75.7%. While the property saw an over 60% improvement in property cash flow between year-end 2012 and 2011, the property is still performing significantly below expectations at issuance when occupancy was 92%.
The ratings on the senior classes A-3 through B are expected to remain stable. Classes C and D are subject to downgrade should expected losses increase in the future. The distressed classes are subject to further downgrade as losses are realized.
Fitch downgrades the following classes as indicated:
--$17.6 million class F to 'CCsf' from 'CCCsf', RE 0%;
--$19.8 million class G to 'CCsf' from 'CCCsf', RE 0%;
--$15.4 million class H to 'Csf' from 'CCsf', RE 0%;
--$2.2 million class J to 'Csf' from 'CCsf', RE 0%;
--$2.2 million class K to 'Csf' from 'CCsf', RE 0%.
Fitch affirms the following classes as indicated:
--$60.1 million class A-3 at 'AAAsf', Outlook Stable;
--$64.9 million class A-AB at 'AAAsf', Outlook Stable;
--$841.7 million class A-4 at 'AAAsf', Outlook Stable;
--$117.9 million class A-1A at 'AAAsf', Outlook Stable;
--$176.1 million class A-M at 'AAAsf', Outlook Stable;
--$114.5 million class A-J at 'BBBsf', Outlook Stable;
--$30.8 million class B at 'BBsf', Outlook Stable;
--$15.4 million class C at 'BBsf', Outlook Negative;
--$28.6 million class D at 'Bsf', Outlook Negative;
--$22 million class E at 'CCCsf', RE 35%;
--$2.2 million class L at 'Csf', RE 0%;
--$154,558 class M at 'Dsf', RE 0%;
--$0 class N at 'Dsf', RE 0%;
--$0 class O at 'Dsf', RE 0%.
The class A-1 and A-2 certificates have paid in full. Fitch does not rate the class P certificates. Fitch previously withdrew the ratings on the interest-only class X-1 and X-2 certificates.
Additional information on Fitch's criteria for analyzing U.S. CMBS transactions is available in the Dec. 18, 2012 report, 'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria', which is available at www.fitchratings.com under the following headers:
Structured Finance >> CMBS >> Criteria Reports
Additional information is available at www.fitchratings.com.
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' (May 24, 2013);
--'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria' (Dec. 18, 2012).
Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria
U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria