Fitch Upgrades BSCMST 2005-PWR10

CHICAGO--()--Fitch Ratings has upgraded one class and affirmed 16 classes of Bear Stearns Commercial Mortgage Securities Trust (BSCMST), series 2005-PWR10 commercial mortgage pass-through certificates. A detailed list of rating actions follows at the end of this release.

KEY RATING DRIVERS

The upgrade reflects the high credit enhancement of the senior class as a result of principal pay down and stable loss expectations from Fitch's previous rating action. As of the October 2015 distribution date, the pool's aggregate principal balance has been reduced by 80.9% (including 10.4% of realized losses) to $503.7 million from $2.634 billion at issuance. Cumulative interest shortfalls in the amount of $21.9 million are currently affecting class C and classes H through S.

Of the original 214 loans, 59 remain, of which three (40.2%) are in special servicing. The non-specially serviced loans have maturity dates in 2015 (63.3%), 2016 (6.1%), 2020 (21.5%) and 2025 (1.2%), with 35.7% being ARD loans. Seven loans (12.1%) are defeased, one of which matures in 2015 (1.5%), and the others in 2020 (10.6%). Fitch modeled losses of 12.6% of the remaining pool; expected losses of the original pool are 12.8% including losses already incurred to date (10.4%).

The largest contributor to Fitch modeled losses, Crocker Park (17.5% of the pool), is the largest loan in the pool. The mixed-use lifestyle center is located in Westlake, OH, approximately 15 miles west of Cleveland's central business district. The collateral includes approximately 398,000 sf of retail space, 84,000 sf of office space, and 158 multifamily units. The collateral continues to be well-occupied with year-end 2014 occupancy at 94%. Overall asset performance is hindered by decreasing base rent and expense reimbursements; as well as high expenses attributable to interest payments on special assessment bonds, which are paid prior to debt service on the securitized loan. The servicer-reported debt service coverage ratio (DSCR) has declined to .63 times (x) at year-end (YE) 2014 from .8x at YE 2013. The loan is scheduled to mature in December 2015. The sponsor reportedly intends to complete a refinancing prior to the maturity date; however, Fitch continues to model losses based on a value calculated using the reported cash flow and a stressed cap rate.

The second largest contributor to modeled losses is the specially serviced 1001 Ross Avenue (5.4%), which is secured by a 204 unit multifamily property located in the Dallas central business district. The property has struggled since issuance as the Dallas market experienced a large supply increase of multifamily units in the submarket. As of YE 2014, the property was 92% occupied with a .84x DSCR. The loan transferred to the special servicer in May 2015 due to imminent monetary default. The sponsor indicated that they would be unable to refinance the loan prior to the scheduled maturity date of November 2015. The special servicer has begun workout conversations but the sponsor recently communicated that an asset sale was planned in late October to pay-off the outstanding balance.

The third-largest contributor to modeled losses is a specially serviced 102,129-sf retail center (1.7%) located in Monroeville, PA approximately 18 miles west of the Pittsburgh's central business district. The property was transferred to the special servicer in May 2015 due to imminent monetary default. The loan is schedule to mature in December 2020 and according to servicer commentary, the loan was current as of the September remittance. The property has struggled to cover debt service since 2008 with a sub 1.0x DSCR. As of YE 2014, the center was 91% occupied with a DSCR of .96x. The special servicer continues to monitor the property and review its rights under the loan documents.

RATING SENSITIVITIES

Fitch's loss assumptions assumed a stressed value on the specially serviced loans. The Stable Outlook to the class A-M reflects the expectation that the class will pay in full. The rating on classes A-J and B may be impacted by the disposition of the specially serviced loans. Additional upgrades are possible as principal paydown increases the classes credit enhancement and losses are less than anticipated. Downgrades could occur if losses are greater than expected from the specially serviced loans, pool performance deteriorates, or loans default at maturity.

DUE DILIGENCE USAGE

No third-party due diligence was provided or reviewed in relation to this rating action.

Fitch has upgraded following class as indicated:

--$249.6 million class A-M to 'AAAsf' from 'AAsf'; Outlook Stable.

Fitch has affirmed the following classes:

--$210.7 million class A-J at 'CCCsf'; RE 85% from 90%;

--$19.8 million class B at 'CCsf'; RE0%;

--$23.6 million class C at 'Dsf'; RE 0%.

Classes D, E, F, G, H, J, K, L, M, N, O, P, and Q are affirmed at 'Dsf'; RE0%; due to realized losses. Classes A-1, A-2, A-3, A-AB, A-4, and A-1A have repaid in full. The ratings on the interest-only classes X-1 and X-2 were withdrawn. Fitch does not rate $0.0 million class S.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Global Structured Finance Rating Criteria (pub. 06 Jul 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952

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

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

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=992648

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=992648

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

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Contacts

Fitch Ratings
Primary Analyst
Jay Bullie, +1-312-368-2079
Associate Director
Fitch Ratings, Inc.
70 W. Madison Street
Chicago, IL 60602
or
Committee Chairperson
Britt Johnson, +1-312-606-2341
Senior Director
or
Media Relations
Sandro Scenga, New York, +1-212-908-0278
sandro.scenga@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Jay Bullie, +1-312-368-2079
Associate Director
Fitch Ratings, Inc.
70 W. Madison Street
Chicago, IL 60602
or
Committee Chairperson
Britt Johnson, +1-312-606-2341
Senior Director
or
Media Relations
Sandro Scenga, New York, +1-212-908-0278
sandro.scenga@fitchratings.com