Fitch Downgrades 3 Distressed Classes of BSCMSI 2004-TOP16

NEW YORK--()--Fitch Ratings has downgraded three classes and affirmed 11 classes of Bear Stearns Commercial Mortgage Securities Trust 2004-TOP16 commercial mortgage pass-through certificates series. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The downgrades reflect a decrease in credit enhancement from incurred losses since the last rating action. The affirmations are the result of stable performance of the underlying collateral and sufficient credit enhancement relative to the ratings.

Fitch modeled losses of 2.8% of the remaining pool; expected losses on the original pool balance total 2.8%, including $11.8 million (1% of the original pool balance) in realized losses to date. Fitch has designated nine loans (13.5%) as Fitch Loans of Concern, which includes two specially serviced assets (0.7%).

As of the January 2014 distribution date, the pool's aggregate principal balance has been reduced by 36.1% to $738.2 million from $1.16 billion at issuance. Per the servicer reporting, 17 loans (31% of the pool) are defeased. Interest shortfalls are currently affecting classes L through P.

The largest contributor to expected losses is the Congress Center Office Development loan (9.7% of the pool), which is secured by a 524,784 square foot (sf) office building located in Chicago, IL. The loan is performing under its modification from November 2012. Terms of the modification included an extended maturity until October 2017 with interest-only (IO) payments through the term. The loan was also assumed by a new borrower and paid down by $15.6 million. The property's occupancy has remained unchanged since the loan modification at 73.9% as of year-end 2013. The servicer reported NOI debt service coverage ratio (DSCR) has increased due to reduced principal balance and IO to 1.29 times (x) as of the second-quarter 2013 from 0.91x as of year-end 2012.

The next largest contributor to expected losses is the specially-serviced asset (0.6%), Wal-Mart- Carlyle Plaza, which is secured by a 126,846 single retail center located in Belleville, IL, approximately 20 miles southwest of St. Louis. The loan transferred to special-servicing in August 2013 for maturity default. The sole tenant, Wal-Mart, vacated the property in 2010 and continued to pay rent until their lease expiration, which was coterminous with the loan maturity. In addition, the special servicer reports there may be environmental issues associated with an adjacent property and has ordered third-party reports.

The third largest contributor to expected losses is the Western New York Medical Park loan (1.6%), which is secured by 81,204 sf medical office park located in West Seneca, NY, south of Buffalo. The property has been suffering from poor performance over the last several years due to increased expenses. The servicer reports that the increase in expenses are primarily a result of higher real estate taxes, property insurance, utilities and repairs and maintenance. The property's occupancy and DSCR were 84% and 0.86x, respectively, as of the third-quarter 2013.

RATING SENSITIVITY

Rating Outlooks on classes A-6 through F remain Stable due to increasing credit enhancement and continued paydown. Rating Outlooks on class G is Negative due to the relatively thin class size of the majority of the subordinate classes.

Fitch downgrades the following classes and assigns Recovery Estimates (REs) as follows:

--$2.9 million class J to 'CCsf' from 'CCCsf', RE 40%;

--$4.3 million class K to 'Csf' from 'CCsf', RE 0%;

--$5.8 million class L to 'Csf' from 'CCsf', RE 0%.

Fitch affirms the following classes, maintains Outlooks and assigns REs as indicated:

--$630 million class A-6 at 'AAAsf', Outlook Stable;

--$20.2 million class B at 'AA+sf', Outlook Stable;

--$13 million class C at 'AAsf', Outlook Stable;

--$13 million class D at 'Asf', Outlook Stable;

--$15.9 million class E at 'BBBsf', Outlook Stable;

--$10.1 million class F at 'BBsf', Outlook to Stable;

--$11.6 million class G at 'Bsf', Outlook Negative;

--$10.1 million class H at 'CCCsf', RE 100%;

--$1.3 million class M at 'Dsf', RE 0%;

--$0 class N at 'Dsf', RE 0%;

--$0 class O at 'Dsf', RE 0%.

Fitch does not rate the class P certificates. Fitch previously withdrew the rating on the interest-only class X-1 certificates.

Classes A-1, A-2, A-3, A-4, A-5 and X-2 have all paid in full.

Additional information on Fitch's criteria for analyzing U.S. CMBS transactions is available in the Dec. 11, 2013 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. 11, 2013).

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=708661

U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=724961

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=816870

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.

Contacts

Fitch Ratings
Primary Analyst
Sean Gibbs
Associate Director
+1-212-908-0311
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Committee Chairperson
Mary MacNeill
Managing Director
+1-212-908-0785
or
Sandro Scenga, New York
+1-212-908-0278
sandro.scenga@fitchratings.com

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Contacts

Fitch Ratings
Primary Analyst
Sean Gibbs
Associate Director
+1-212-908-0311
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Committee Chairperson
Mary MacNeill
Managing Director
+1-212-908-0785
or
Sandro Scenga, New York
+1-212-908-0278
sandro.scenga@fitchratings.com