Fitch Upgrades 4 Classes of BSCMS 2004-PWR4

NEW YORK--()--Fitch Ratings has upgraded four classes and affirmed 10 classes of Bear Stearns Commercial Mortgage Securities Trust (BSCMSI) commercial mortgage pass-through certificates series 2004-PWR4. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The upgrades reflect the expected continued paydown due to amortization as well as defeased collateral supporting the notes. Ten loans liquidated since Fitch's previous rating action, which resulted in higher than expected recoveries.

As of the March 2015 distribution date, the pool's aggregate principal balance has been reduced by 88.5% to $109.6 million from $954.9 million at issuance, with nine loans remaining. Of the nine loans, one is defeased (45.9% of the pool), three are in special servicing (9.6%) and an additional loan has paid off since the March remittance (8.5%). Interest shortfalls are currently affecting classes N through Q.

Fitch modeled losses of 6.1% of the remaining pool; expected losses on the original pool balance total 1.9%, including $11.3 million (1.2% of the original pool balance) in realized losses to date.

The largest contributor to expected losses is a specially-serviced asset (5.4% of the pool), which is secured by three industrial flex buildings totaling 117,798 square feet located in Buffalo Grove, IL. The loan transferred to the special servicer in May 2014 due to imminent default relating to its June 2014 maturity date. Per the November 2014 rent roll, total occupancy was approximately 44.0% while the servicer- reported Debt Service Coverage Ratio (DSCR) was below 1.0x as of year-end (YE ) 2013 and YE 2012. The sole tenant, Siemens, has a lease expiration date of October 2015. Foreclosure proceedings are underway.

The next largest contributor to expected losses is a specially-serviced asset (2.7% of the pool), which is secured by a 116-unit garden apartment and townhome complex located in Jonesboro, GA. The loan transferred to the special servicer in May 2014 and has been real estate owned (REO) since December 2014. As of June 2014, the property was 86.2% occupied with a servicer reported DSCR of 0.90x. Per the special servicer, the property is expected to be marketed for sale this year.

The third largest contributor to expected losses is a specially-serviced asset (1.5% of the pool), which is secured by a 18,216sf retail property located in Honolulu, HI. The loan transferred to the special servicer in March 2014 due to imminent default relating to its April 2014 maturity date. The property was 100% occupied with a servicer reported DSCR of 1.18x as of YE 2014. Per the special servicer, the loan is expected to be auctioned for sale this year.

RATING SENSITIVITIES

Rating Outlooks on classes A-3 through J are Stable due to increasing credit enhancement from continued pay down and the high percentage of defeased collateral. Although current credit enhancement is high, further upgrades were limited due to increasing pool concentration. Downgrades are possible should additional losses be realized.

Fitch upgrades the following classes:

--$8.4 million class C to 'AAAsf' from 'AAsf'; Outlook Stable;

--$14.3 million class D to 'AAAsf' from 'Asf'; Outlook Stable;

--$9.5 million class F to 'BBBsf' from 'BBB-sf'; Outlook Stable;

--$3.6 million class J to 'Bsf' from 'CCCsf'; Outlook Stable Assigned.

Fitch affirms the following classes:

--$10 million class A-3 at 'AAAsf'; Outlook Stable;

--$19.1 million class B at 'AAAsf'; Outlook Stable;

--$9.5 million class E at 'Asf'; Outlook Stable;

--$8.4 million class G at 'BBsf'; Outlook Stable;

--$10.7 million class H at 'Bsf'; Outlook Stable;

--$4.8 million class K at 'CCCsf'; RE 100%;

--$4.8 million class L at 'CCsf'; RE 100%;

--$2.4 million class M at 'CCsf'; RE 60%.

--$2.4 million class N at 'Csf'; RE 0%;

--$1.8 million class P at 'Dsf'; RE 0%.

The class A-1 and A-2 certificates have paid in full. Fitch does not rate the class Q certificates. Fitch previously withdrew the rating on the interest-only class X certificates.

Additional information on Fitch's criteria for analyzing U.S. CMBS transactions is available in the Dec. 10, 2014 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' (Mar. 31, 2015);

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

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=864268

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=982639

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Contacts

Fitch Ratings
Primary Analyst
Tiffany Pierce, +1-212-908-9107
Associate Director
Fitch Ratings, Inc.
33 Whitehall Street
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

Contacts

Fitch Ratings
Primary Analyst
Tiffany Pierce, +1-212-908-9107
Associate Director
Fitch Ratings, Inc.
33 Whitehall Street
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