CHICAGO--(BUSINESS WIRE)--Fitch Ratings has upgraded three classes, affirmed two classes, and downgraded one distressed class of Bear Stearns Commercial Mortgage Securities Trust series 2003-TOP 10. A detailed list of rating actions follows at the end of this press release.
KEY RATING DRIVERS
The upgrades reflect the high credit enhancement of the senior classes as a result of principal pay down, stable loss expectations from Fitch's previous rating action, and the low leverage of the remaining non-specially serviced loans.
The downgrade to class N reflects the expectation of inevitable losses associated with the transaction's specially serviced loan, Power Plaza Shopping Center (34.2%).
As of the September 2015 distribution date, the pool's aggregate principal balance has been reduced by 97.8% (including 0.7% of realized losses) to $27.1 million from $1.212 billion at issuance. Cumulative interest shortfalls in the amount of $13,989 are currently affecting class O.
Of the original 171 loans, 13 remain; the largest is in special servicing. The non-specially serviced loans have maturity dates in 2017 (20.7%), 2018 (9.4%), 2022 (9.4%) and 2023 (26.2%). Of the remaining pool 60.7% fully amortizes. Two loans (15.4%) are defeased. One will mature in 2017 (12.4%) and the other in 2018 (3.0%).
Fitch modeled losses of 23.6% of the remaining pool; expected losses of the original pool are 1.3% including losses already incurred to date (0.7%). The non-specially serviced, non-defeased loans have a weighted average LTV of 59% and DSCR of 1.89x.
The specially serviced loan, Power Plaza Shopping Center is collateralized by an 112,155 sf retail center located in Vacaville, CA. The property is shadow anchored by a Sam's Club and Wal-Mart. The loan was previously modified in late 2013 after the property experienced a drop in occupancy after a new center opened in close proximity to the subject. The sponsor reported the center's occupancy at 73% as of December 2014 and continues to work on the renewal of several current tenants. The loan was scheduled to mature in September 2014 but the sponsor approached the special servicer about extending the loan for a second time. The special servicer is currently evaluating the property and has begun the foreclosure process. Fitch will continue monitor the loan as more information becomes available on the special servicer's workout strategy.
Fitch's loss assumptions assumed a stressed value on the specially serviced loan. The ratings of classes H through K are expected to remain stable. The rating on classes L and M may be impacted by the disposition of the specially serviced asset. 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 loan, 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 the following classes:
--$4.5 million class J to 'AAAsf' from 'BBBsf'; Outlook Stable;
--$6.1 million class K to 'BBBsf' from 'BBsf'; Outlook Stable;
--$4.5 million class L to 'Bsf' from 'CCCsf'; Outlook Stable assigned.
Fitch has affirmed the following classes:
--$2.6 million class H at 'AAAsf'; Outlook Stable;
--$3.0 million class M at 'CCCsf'; RE 100%.
Fitch has downgraded the following class and revised the recovery estimate as indicated:
--$3.0 million class N to 'Csf' from 'CCsf'; RE 15% from RE 0%.
Fitch does not rate class O. The ratings on class X-1 and X-2 were previously withdrawn. Class A-1, A-2, B, C, D, E, F, and G have paid in full.
Additional information is available at www.fitchratings.com.
Global Structured Finance Rating Criteria (pub. 06 Jul 2015)
U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria (pub. 10 Dec 2014)
Dodd-Frank Rating Information Disclosure Form