Jan 24 (The following statement was released by the rating agency)
Fitch Ratings has downgraded three classes and
affirmed 11 classes of Bear Stearns Commercial Mortgage Securities Trust
2004-TOP16 commercial mortgage pass-through certificates series. A detailed list
of rating actions follows at the end of this press release.
KEY RATING DRIVERS
The downgrades reflect a decrease in credit enhancement from incurred losses
since the last rating action. The affirmations are the result of stable
performance of the underlying collateral and sufficient credit enhancement
relative to the ratings.
Fitch modeled losses of 2.8% of the remaining pool; expected losses on the
original pool balance total 2.8%, including $11.8 million (1% of the original
pool balance) in realized losses to date. Fitch has designated nine loans
(13.5%) as Fitch Loans of Concern, which includes two specially serviced assets
As of the January 2014 distribution date, the pool's aggregate principal balance
has been reduced by 36.1% to $738.2 million from $1.16 billion at issuance. Per
the servicer reporting, 17 loans (31% of the pool) are defeased. Interest
shortfalls are currently affecting classes L through P.
The largest contributor to expected losses is the Congress Center Office
Development loan (9.7% of the pool), which is secured by a 524,784 square foot
(sf) office building located in Chicago, IL. The loan is performing under its
modification from November 2012. Terms of the modification included an extended
maturity until October 2017 with interest-only (IO) payments through the term.
The loan was also assumed by a new borrower and paid down by $15.6 million. The
propertya€™s occupancy has remained unchanged since the loan modification at 73.9%
as of year-end 2013. The servicer reported NOI debt service coverage ratio
(DSCR) has increased due to reduced principal balance and IO to 1.29 times (x)
as of the second-quarter 2013 from 0.91x as of year-end 2012.
The next largest contributor to expected losses is the specially-serviced asset
(0.6%), Wal-Mart- Carlyle Plaza, which is secured by a 126,846 single retail
center located in Belleville, IL, approximately 20 miles southwest of St. Louis.
The loan transferred to special-servicing in August 2013 for maturity default.
The sole tenant, Wal-Mart, vacated the property in 2010 and continued to pay
rent until their lease expiration, which was coterminous with the loan maturity.
In addition, the special servicer reports there may be environmental issues
associated with an adjacent property and has ordered third-party reports.
The third largest contributor to expected losses is the Western New York Medical
Park loan (1.6%), which is secured by 81,204 sf medical office park located in
West Seneca, NY, south of Buffalo. The property has been suffering from poor
performance over the last several years due to increased expenses. The servicer
reports that the increase in expenses are primarily a result of higher real
estate taxes, property insurance, utilities and repairs and maintenance. The
propertya€™s occupancy and DSCR were 84% and 0.86x, respectively, as of the
Rating Outlooks on classes A-6 through F remain Stable due to increasing credit
enhancement and continued paydown. Rating Outlooks on class G is Negative due to
the relatively thin class size of the majority of the subordinate classes.
Fitch downgrades the following classes and assigns Recovery Estimates (REs) as
--$2.9 million class J to 'CCsf' from 'CCCsf', RE 40%;
--$4.3 million class K to 'Csf' from 'CCsf', RE 0%;
--$5.8 million class L to 'Csf' from 'CCsf', RE 0%.
Fitch affirms the following classes, maintains Outlooks and assigns REs as
--$630 million class A-6 at 'AAAsf', Outlook Stable;
--$20.2 million class B at 'AA+sf', Outlook Stable;
--$13 million class C at 'AAsf', Outlook Stable;
--$13 million class D at 'Asf', Outlook Stable;
--$15.9 million class E at 'BBBsf', Outlook Stable;
--$10.1 million class F at 'BBsf', Outlook to Stable;
--$11.6 million class G at 'Bsf', Outlook Negative;
--$10.1 million class H at 'CCCsf', RE 100%;
--$1.3 million class M at 'Dsf', RE 0%;
--$0 class N at 'Dsf', RE 0%;
--$0 class O at 'Dsf', RE 0%.
Fitch does not rate the class P certificates. Fitch previously withdrew the
rating on the interest-only class X-1 certificates.
Classes A-1, A-2, A-3, A-4, A-5 and X-2 have all paid in full.