Fitch Upgrades Bear Stearns 2003-PWR2

NEW YORK--()--Fitch Ratings has upgraded four and affirmed seven classes of Bear Stearns Commercial Mortgage Securities Trust commercial mortgage pass-through certificates series 2003-PWR2. A detailed list of rating actions follows at the end of this release.

KEY RATING DRIVERS

The upgrades to classes E through H are due to increased credit enhancement from significant paydowns and the relatively stable performance of the pool. Fitch modeled losses of 15% of the remaining pool; expected losses on the original pool balance total 2%, including losses already incurred. The pool has experienced $6.5 million (0.6% of the original pool balance) in realized losses to date. Fitch has designated four (30.8%) of the remaining 10 loans as Fitch Loans of Concern, which includes one specially serviced asset (17.3%). One loan (0.8%) is currently defeased.

As of the March 2013 distribution date, the pool's aggregate principal balance has been reduced by 90.9% to $97.5 million from $1.1 billion at issuance. Interest shortfalls are currently affecting classes M through P.

The largest contributor to Fitch's modeled losses is a 128,829 square foot (sf) office building (17.3%) located in Farmington Hills, MI. At origination the property was occupied by a single tenant. The sole tenant vacated in December 2011 and a new tenant took occupancy in April 2012. The loan transferred to the special servicer in June 2012 due to imminent monetary default. The property is 76% occupied by one tenant as of first quarter 2014 while the special servicer continues to actively marketing the vacant space.

RATING SENSITIVITIES

The ratings on the class C through H notes are expected to be stable as the credit enhancement remains high. The class J and K notes are expected to be upgraded as the transaction continues to delever. Classes L through N may be subject to further downgrades as losses are realized.

Fitch upgrades the following classes:

-- $12.0 million class E notes to 'AAAsf' from 'AAsf'; Outlook Stable;

-- $10.7 million class F notes to 'AAsf' from 'A-sf'; Outlook Stable;

-- $9.3 million class G notes at to 'Asf' from 'BBB+sf'; Outlook Stable;

-- $13.3 million class H notes to 'BBBsf' from 'BBB-sf'; Outlook to Stable from Negative.

Fitch has affirmed the following classes:

-- $14.7 million class C notes at 'AAAsf'; Outlook Stable;

-- $9.3 million class D notes at 'AAAsf'; Outlook Stable;

-- $5.3 million class J notes at 'BBsf'; Outlook to Positive from Negative;

-- $5.3 million class K notes at 'Bsf'; Outlook to Positive from Negative;

-- $4.0 million class L notes at 'CCCsf'; RE 70%;

-- $5.3 million class M notes at 'CCsf'; RE 0%;

-- $2.7 million class N notes at 'CCsf'; RE 0%.

Class A-1, A-2, A-3, A-4, and B have paid in full. Fitch does not rate the $5.4 million class P. Fitch has previously withdrawn the rating on the interest-only classes X-1 and X-2.

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=826025

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, Inc.
Primary Surveillance Analyst
Matthew McGowan, +1-212-908-0733
Associate Director
One State Street Plaza
New York, NY 10004
or
Committee Chairperson
Mary MacNeill, +1-212-908-0785
Managing Director
or
Media Relations, New York
Sandro Scenga, +1-212-908-0278
sandro.scenga@fitchratings.com

Sharing

Contacts

Fitch Ratings, Inc.
Primary Surveillance Analyst
Matthew McGowan, +1-212-908-0733
Associate Director
One State Street Plaza
New York, NY 10004
or
Committee Chairperson
Mary MacNeill, +1-212-908-0785
Managing Director
or
Media Relations, New York
Sandro Scenga, +1-212-908-0278
sandro.scenga@fitchratings.com