NEW YORK--(BUSINESS WIRE)--Fitch Ratings has affirmed sixteen classes of Bear Stearns Commercial Mortgage Securities Trust (BSCMS) commercial mortgage pass-through certificates series 2005-PWR7. A detailed list of rating actions follows at the end of this press release.
KEY RATING DRIVERS
The affirmations are based on generally stable loss expectations from Fitch's previous rating action. Although credit enhancement is increasing with continued loan amortization, payoffs and defeasance, expected losses on certain loans are increasing.
Fitch modeled losses of 8.8% of the remaining pool; expected losses on the original pool balance total 8.2%, including $28.7 million (2.6% of the original pool balance) in realized losses to date. Fitch has designated 17 loans (22%) as Fitch Loans of Concern including the two specially serviced loans (4.5%). Loan maturities are concentrated in 2014, 2015, and 2016 comprising of 23.3%, 65.5%, and 7.6% of the pool balance, respectively. Of the loans maturing in 2015, all mature in the first quarter: 42.2% in January, 38.7% in February, and 19.1% in March.
As of the July 2014 remittance, the pool's aggregate principal balance has been paid down by 35.3% to $727.3 million from $1.1 billion at issuance. Interest shortfalls totaling $3.5 million are currently affecting classes F through Q. Per the servicer reporting, twenty one loans (28.7% of the pool) are defeased, including 4 loans (16.7%) in the top 15.
The largest contributor to expected losses is the Shops at Boca Park loan (6.9%), which is secured by 140,415 square feet (sf) of retail space and a 139,000 sf ground lease anchor pad within a lifestyle center located northwest of Las Vegas. The property is shadow anchored by Target and Vons. The loan which had previously been in special servicing and was modified in November 2012 (modification included extending the term 48 periods and reduced the interest rate from 5.25% to 4.75%) transferred back to the master servicer in June 2013. The collateral is part of a larger lifestyle center that features a diverse set of upscale and mid-tier retailers in the suburban submarket of Summerlin. The center reported occupancy of 97% and a debt service coverage ratio (DSCR) of 1.23x as of year-end 2013.
The second largest contributor to expected losses is the specially-serviced Quintard Mall loan (4.3%), which is secured by 375,486 sf of a 621,752 sf regional mall located in Oxford, AL, approximately 60 miles east of Birmingham. The loan transferred to special servicing in May 2013 based on a monetary default after the loan became 60 days delinquent. The sponsor initially requested a modification which was rejected, but continues to negotiate with the special servicer in order to resolve the current default and avoid foreclosure proceedings. The property is anchored by JC Penney, Dillards, and Sears and is the only regional mall in the market with the closest competitor located more than 30 miles to the east. Servicer reported occupancy as of June 2013 was 88%. In-line occupancy was reported at 78%; however, this includes 19% temporary tenants. Excluding the temporary tenants, in-line occupancy is 63%. The loan is categorized as 90+ days delinquent.
The third largest contributor to expected losses is the 1550 Magnolia Avenue Industrial loan (1.1%), which is secured by a 198,800 sf complex located in Corona, CA. The largest tenant, MonkeySports, which occupies 81.5% of the NRA, has a lease expiration during the first quarter of 2015. Although the subject is fully occupied and performance has been consistent, Fitch is concerned with the future performance due to weak market fundamentals and uncertainty with the status of the lease renewal. The loan remains current and with the master servicer.
The remaining specially serviced loan in the pool (0.2%), is secured by a 38,836 sf industrial building located in Harlingen, TX. The loan was transferred to the special servicer in March 2014 for payment default. The property foreclosure process was completed on July 1, 2014 and a third party manager was appointed. The special servicer continues to evaluate potential workout strategies.
The Rating Outlook on class A-J was changed to Positive to reflect Fitch's expectation of continued increases in credit enhancement due to the potential payoff of loans in early 2015 at maturity. An additional sensitivity analysis was performed assuming higher losses on the Quintard Mall. An upgrade to A-J is possible if expected losses on the Quintard Mall remain stable and the maturing loans' payoff is imminent. The a Negative Rating Outlook on class C reflects the potential for downgrades if pool performance deteriorates, maturing loans default at maturity and/or the Quintard Mall's value declines.
Fitch affirms the following classes and revises Ratings Outlooks as indicated:
--$3.5 million class A-AB at 'AAAsf'; Outlook Stable;
--$527.7 million class A-3 at 'AAAsf'; Outlook Stable;
--$85.7 million class A-J at 'Asf'; Outlook to Positive from Negative;
--$33.7 million class B at 'Bsf'; Outlook to Stable from Negative;
--$8.4 million class C at 'B-sf'; Outlook Negative;
--$15.5 million class D at 'CCCsf'; RE 30%;
--$11.2 million class E at 'CCsf'; RE 0%;
--$11.2 million class F at 'CCsf'; RE 0%;
--$9.8 million class G at 'Csf'; RE 0%;
--$12.7 million class H at 'Csf'; RE 0%.
--$4.2 million class J at 'Csf'; RE 0%;
--$3.6 million 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 P at 'Dsf'; RE 0%.
The classes A-1 and A-2 certificates have paid in full. Fitch does not rate the class Q certificates. Fitch previously withdrew the ratings on the interest-only class X-1 and X-2 certificates.
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