NEW YORK--(BUSINESS WIRE)--Fitch Ratings has affirmed 20 classes of Bear Stearns Commercial Mortgage Securities Trust (BSCMS) commercial mortgage pass-through certificates series 2005-Top20. A detailed list of rating actions follows at the end of this press release.
KEY RATING DRIVERS
The affirmations reflect stable performance and sufficient credit enhancement to offset Fitch modeled losses for the pool. Fitch modeled losses of 3.3% of the remaining pool; expected losses on the original pool balance total 5%, including $55.9 million (2.7% of the original pool balance) in realized losses to date. Fitch has designated 28 loans (27.5%) as Fitch Loans of Concern. There are no specially serviced loans as of the June 2014 remittance date.
The Rating Outlooks for the 'AAA' rated classes are Stable due to sufficient credit enhancement, stable performance and continued paydown. Fitch revised the Rating Outlooks on class A-J to Positive from Stable as a future upgrade may be warranted if collateral performance continues to remain stable and credit enhancement improves as loans repay at their maturities over the next 24 months. Fitch revised the Outlook on Class D to Stable from Negative due to sufficient credit enhancement. The Rating Outlook on class E remains Negative due to the relatively thin supporting tranches making this class more susceptible to downgrades should actual losses exceed Fitch expectations.
As of the June 2014 distribution date, the pool's aggregate principal balance has been reduced by 30.4% to $1.46 billion from $2.09 billion at issuance. Per the servicer reporting, 12 loans (6.9% of the pool) are defeased. Interest shortfalls are currently affecting classes K through Q.
The largest contributor to expected losses is the Wilton Executive Campus loan (2.5% of the pool), which is secured by an 188,000 square foot (SF) mixed use property in Wilton, CT. The property features ground floor retail, with second story office space. The property's NOI has declined since underwriting due to decreased rents on renewing leases since 2010. The year to date March 2014 net operating income (NOI) debt service coverage ratio (DSCR) reported at 1.25x, compared to 1.31x at year end (YE) 2013, 1.45x at YE 2012, and 2.11x at issuance. Based on the March 2014 rent roll the property is 91% occupied, with leases for approximately 22% of the net rentable area (NRA) rolling over the next 24 months.
The next largest contributor to expected losses is the Lawson Commons loan (3.7%), which is secured by a 436,478 SF, 13-story office tower in St. Paul, MN. Performance had declined at the property due to tenant vacancies in 2011 and 2012. The borrower has since been successful in releasing the vacated space with new tenants in addition to securing new leases with existing tenants. The building is headquarters for Lawson Software (63% NRA), which executed a new lease in June 2013 that extended its maturity date to July 2022 from its original maturity in July 2015. Despite bringing occupancy to 94%, rental revenues continue to lag with effective gross income for YE 2013 declining 6.8% and overall NOI declining 16.6%, since 2011. The YE 2013 NOI DSCR reported at 1.14x, compared to 1.20x at YE 2012, 1.37x at YE 2011, and 1.63x at issuance.
Fitch affirms the following classes and assigns or revises Rating Outlooks and REs as indicated:
--$62.1 million class A-3 at 'AAAsf'; Outlook Stable;
--$12 million class A-AB at 'AAAsf'; Outlook Stable;
--$955 million class A-4A at 'AAAsf'; Outlook Stable;
--$130.8 million class A-4B at 'AAAsf'; Outlook Stable;
--$147.7 million class A-J at 'Asf'; Outlook to Positive from Stable;
--$15.5 million class B at 'Asf'; Outlook Stable;
--$20.7 million class C at 'BBBsf'; Outlook Stable;
--$15.5 million class D at 'BBB-sf'; Outlook to Stable from Negative;
--$28.5 million class E at 'Bsf'; Outlook Negative;
--$18.1 million class F at 'CCCsf'; RE 100%;
--$18.1 million class G at 'CCsf'; RE 50%;
--$23.3 million class H at 'Csf'; RE 0%;
--$9.5 million class J at 'Dsf'; RE 0%;
--$0 class K at 'Dsf'; RE 0%;
--$0 class L at 'Dsf'; RE 0%;
--$0 class M at 'Dsf'; RE 0%;
--$0 class N at 'Dsf'; RE 0%;
--$0 class O at 'Dsf'; RE 0%;
--$0 class P at 'Dsf'; RE 0%;
--$0 class LF at 'Dsf'; RE 0%.
The class A-1 and A-2 certificates have paid in full. The balances for classes K, L, M, N, O, P, Q, and LF have been reduced to zero due to realized losses. 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. 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 20, 2014);
--'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria' (Dec. 11, 2013).
Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria
U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria