Fitch Affirms BSCMS 2007-PWR18

NEW YORK--()--Fitch Ratings has affirmed all classes of Bear Stearns Commercial Mortgage Securities Trust series 2007-PWR18. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The affirmations are due to the overall stable performance of the collateral pool since Fitch's last review. Fitch modeled losses of 6.1% of the remaining pool; expected losses on the original pool balance total 16.3%, including losses already incurred to date (8.2%). Fitch has identified 33 loans (34.4%) as Fitch Loans of Concern (LOC), including one specially serviced loan (0.5%).

As of the December 2014 distribution date, the pool's aggregate principal balance has been reduced by 39% to $1.52 billion from $2.5 billion at issuance. Two loans are defeased (1.8%). Interest shortfalls in the amount of $4.5 million are affecting classes C, D, E, H, K, L, N and S.

The largest contributor to modeled losses is the DRA/Colonial Office Portfolio loan (12.2% of the pool). The current collateral for the interest-only loan consists of 16 office and retail buildings totaling 4.2 million square feet (sf), located across five metropolitan statistical areas (MSAs) primarily in the south and southeast. This compares to 19 properties totaling 5.23 million square feet at issuance. Currently, the loan has a total balance of $553.9 million and is split into three equal pari passu notes. Only the A3 note is securitized in this transaction.

The loan transferred to special servicing in August 2012 and was modified in January 2013. The loan modification included an increased interest-only period for 24 months with a new maturity of July 2016. While with the special servicer, two properties were released and sold which paid down this component of the loan by $35.4 million.

In August 2013, there was a sale and partial release of the Research Park Plaza property (357,000-sf) located in Austin, TX. Another property, One Independence Plaza, was sold and released from the loan collateral in April 2014. As of second quarter 2014, the servicer-reported net operating income (NOI) debt service coverage ratio (DSCR) was 1.24x, compared to 1.18x at year-end 2013. Per the November 2014 rent roll, the portfolio was 84% occupied, compared to 80% at YE2012.

The second largest contributor to modeled losses is the Trumbull Marriott Hotel loan (1.8%). The collateral is a 323-key full-service hotel in Trumbull, CT. Property performance has suffered since 2009 when the loan converted from interest only to a principal and interest loan. YE 2013 income was down 19% from UW estimates due to a decrease in room revenue as well as a decrease in food and beverage revenue, both of which are attributed to the decline in occupancy. Expenses meanwhile have stayed relatively in line with underwriting estimates aside from repairs and maintenance, which has increased 27% from UW estimates.

2Q'14 DSCR was 0.72x with 56% occupancy rate, compared to a DSCR of 0.73x with 59% occupancy at YE2013, 0.71x with 60.5% occupancy at YE2012 and a DSCR of 1.3x with 63.5% occupancy at YE2011. The underwritten DSCR was 1.69x with a 65% occupancy rate estimate. Per the October 2014 STR report, the trailing twelve month occupancy rate was 61.4% with an ADR of $123.56 and RevPar of $75.87. The RevPar at issuance was at $92.48.

RATING SENSITIVITIES

The ratings on all investment grade classes are expected to remain stable due to sufficient credit enhancement and continued paydown. Three of the top 15 loans (6.4%) are performing poorly with DSCRs below 1.0x. The distressed classes (rated below 'B') may be subject to further rating actions as losses are realized.

Fitch affirms the following classes as indicated:

--$19.4 million class A-3 at 'AAAsf'; Outlook Stable;

--$94.6 million class A-AB at 'AAAsf'; Outlook Stable;

--$710 million class A-4 at 'AAAsf'; Outlook Stable;

--$150.7 million class A-1A at 'AAAsf'; Outlook Stable;

--$211.6 million class A-M at 'AAsf'; Outlook Stable;

--$38.9 million class A-MA at 'AAsf'; Outlook Stable;

--$182.5 million class A-J at 'CCCsf'; RE65%;

--$33.6 million class A-JA at 'CCCsf'; RE65%;

--$25 million class B at' CCsf'; RE 0%;

--$25 million class C at' CCsf'; RE 0%;

--$18.9 million class D at 'CCsf'; RE0%;

--$12.1 million class E at 'Dsf'; RE0%.

Classes F through Q have been depleted due to realized losses and are affirmed at 'Dsf' RE 0%. Classes A-1 and A-2 have paid in full. Fitch does not rate class S. Fitch has withdrawn the ratings assigned to the interest only classes X-1 and X-2 at the previous review.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' (May 20, 2014);

--'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria' (Dec. 10, 2014).

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria - Effective from 20 May 2014 to 4 August 2014

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748821

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

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=812608

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=961496

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Contacts

Fitch Ratings
Primary Analyst
Amy Gan
Director
+1 212-908-9143
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Mary MacNeill
Managing Director
+1 212-908-0785
or
Media Relations, New York
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Amy Gan
Director
+1 212-908-9143
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Mary MacNeill
Managing Director
+1 212-908-0785
or
Media Relations, New York
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com