March 12 (The following statement was released by the rating agency)
Fitch Ratings has affirmed all classes of Bear Stearns
Commercial Mortgage Securities Trust (BSCMSI) commercial mortgage pass-through
certificates series 2007-PWR16. A detailed list of rating actions follows at the
end of this press release.
KEY RATING DRIVERS
Fitch modeled losses of 11.4% of the remaining pool; expected losses on the
original pool balance total 13.2%, including $171.7 million (5.2% of the
original pool balance) in realized losses to date. Fitch has designated 45 loans
(24.9%) as Fitch Loans of Concern, which includes nine specially serviced assets
As of the March 2014 distribution date, the pool's aggregate principal balance
has been reduced by 29.7% to $2.33 billion from $3.31 billion at issuance. Per
the servicer reporting, one loan (0.2% of the pool) is defeased. Interest
shortfalls are currently affecting classes L through S.
While expected losses are lower than at Fitch's last rating action, the largest
contributor to expected losses remains the Beacon Seattle & DC portfolio (8.8%
of the pool). The loan was initially secured by a portfolio consisting of 16
office properties, the pledge of the mortgage and the borrower's ownership
interest in one office property, and the pledge of cash flows from three office
properties. In aggregate, the initial portfolio of 20 properties comprised
approximately 9.8 million square feet (sf) of office space. The loan was
transferred to special servicing in April 2010 for imminent default and was
modified in December 2010. Key modification terms included a five-year extension
of the loan to May 2017, a deleveraging structure that provided for the release
of properties over time, and an interest rate reduction. The loan was returned
to the master servicer in May 2012 and is performing under the modified terms.
Under the modification, 11 properties have been released to date, two of which
occurred after Fitch's last rating action. These properties included Market
Square (Washington, D.C.); Key Center (Bellevue, WA); City Center Bellevue
(Bellevue, WA); 1616 North Fort Myer Drive (Arlington, VA); Liberty Place
(Washington, D.C.); Army and Navy Building (Washington, D.C.); 1300 North
Seventeenth Street (Arlington, VA); Reston Town Center (Reston, VA); Washington
Mutual Tower (Seattle, WA); Wells Fargo Center (Seattle, WA); and Plaza Center
As reported by the servicer and as of February 2014, the loan has paid down by
$1.58 billion (58% of the original overall loan balance). As of year-end (YE)
2013, the portfolio occupancy of the remaining nine properties has fallen below
80%, down significantly from the 97% occupancy reported at issuance for the same
properties. The portfolio continues to be subject to tenant lease rollover risk.
As of YE 2012, the net operating income was $72.2 million for the remaining nine
properties, representing a 2.5% increase from YE 2011, a 1.6% decline from YE
2010, and a 4.9% decline from NOI reported at issuance for the same properties.
The next largest contributor to expected losses is the The Mall at Prince
Georges loan (6.4%), which is secured by a 920,801 sf regional mall located in
Hyattsville, MD. The mall was built in 1959 and renovated in 2004. As of third
quarter 2013, the servicer-reported occupancy is 95.9%, down from 97.9% at
year-end 2012. Anchor tenants at the mall are Macy's occupying 21.25% of the net
rentable area (NRA), which expires in October 2018; JCPenney (16.16% NRA), which
expires July 2016, and Target (15.40% NRA), which expires January 2019. Box
tenants include Marshalls (3.80% NRA), expiring September 2016, Ross (3.26%
NRA), expiring January 2018, and Old Navy, which recently extended its lease to
Fitch's analysis of the property's third quarter 2013 tenant sales report
indicates in-line sales of $350/sf, a decline from the non-anchor reported sales
of $427/sf reported at issuance. Fitch's review of the third quarter 2013 rent
roll also indicates significant tenant roll is possible in 2017 at loan
maturity, presenting refinance risk given the potential tenant roll as well as
the low tenant sales. The interest only loan has a servicer-reported DSCR of
1.39x as of third quarter 2013.
The third largest contributor to expected losses is the North Grand Mall loan
(1.3%), which is secured by a 297,008 sf regional mall located in Ames, IA.
Anchor tenants at the mall include JCPenney (31.6% NRA), which extended their
lease for an additional 7 years through March 2020 and Younkers (16.8% NRA),
which expires in 2022. Sears closed its location at the mall in 2008, after
which its store was demolished and replaced with Kohl's, TJ Maxx, and Shoe
Carnival. The servicer-reported occupancy at the property as of year end 2013 is
92.7%. Fitch's analysis of the property's tenant sales report indicates reported
sales at the property are below the industry average. The loan commenced
principal payments in July 2012, which caused the DSCR to drop to 0.92x at year
end 2012, and a further decline to 0.80x was reported as of year end 2013.
Fitch's analysis indicates the property may face refinance risk at maturity
given the low DSCR and tenant sales.
The Stable Outlooks on the super senior 'AAA' classes reflect the seniority of
these classes and sufficient credit enhancement.
Rating Outlooks on classes A-2 through A-1A remain Stable due to increasing
credit enhancement and continued paydown. The Rating Outlook on class A-M is
revised from Negative to Stable given the stabilized performance of the top 15
loans in the pool as well as losses lower than expected on liquidated loans.
Fitch affirms the following classes:
--$86.2 million class A-2 at 'AAAsf', Outlook Stable;
--$58.2 million class A-3 at 'AAAsf', Outlook Stable;
--$88.6 million class A-AB at 'AAAsf', Outlook Stable;
--$954.4 million class A-4 at 'AAAsf', Outlook Stable;
--$319 million class A-1A at 'AAAsf', Outlook Stable;
--$331.4 million class A-M at 'Asf', Outlook to Stable from Negative;
--$273.4 million class A-J at 'CCCsf', RE 85%;
--$33.1 million class B at 'CCCsf', RE 85%;
--$33.1 million class C at 'CCCsf', RE 0%;
--$33.1 million class D at 'CCsf', RE 0%;
--$20.7 million class E at 'CCsf', RE 0%;
--$24.9 million class F at 'Csf', RE 0%;
--$29 million class G at 'Csf', RE 0%;
--$41.4 million class H at 'Csf', RE 0%;
--$2.4 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 Q at 'Dsf', RE 0%.
The A-1 class is paid in full. Fitch does not rate the class S 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