Fitch Affirms BSCMS 2005-PWR8
OREANDA-NEWS. Fitch Affirms BSCMS 2005-PWR8 New York Fitch Ratings has affirmed 10 classes of Bear Stearns Commercial Mortgage Securities Trust commercial mortgage pass-through certificates series 2005-PWR8 (BSCMS 2005-PWR8). A full list of rating actions follows at the end of this release.
KEY RATING DRIVERS
Credit enhancement for the classes has increased; however, the affirmations are the result of pool concentration and adverse selection of the remaining collateral. The pool is concentrated with only 14 loans remaining.
Fitch modeled losses of 60.9% of the remaining pool; expected losses on the original pool balance total 5.7%, including $72.8 million (4.1% of the original pool balance) in realized losses to date. Fitch has designated eight loans (77.5% of pool) as Loans of Concern, which includes seven specially serviced loans (75.5%). The specially serviced loans consist of three assets (38.7%) that are REO and four loans (36.8%) that are classified as in foreclosure.
As of the June 2016 distribution date, the pool's aggregate principal balance has been reduced by 97.4% to $46.7 million from $1.77 billion at issuance. Per servicing reporting, one loan (1.2%), which has an April 2020 maturity date, has been defeased. The six remaining non-specially serviced loans have final maturities in 2017 (one loan; 4.3% of pool), 2020 (four; 17.1%) and 2024 (one; 2%).
The largest contributors to modeled losses have remained the same since the last rating action.
The largest contributor to modeled losses is the La Borgata at Serrano asset (25.2% of pool), which is a 62,183 square foot (sf) mixed-use property located in El Dorado Hills, CA (approximately 30 miles east of Sacramento, CA). The loan was transferred to special servicing in March 2012 for imminent default and the asset became REO in August 2013. The asset has been affected by declining occupancy coupled with increasing operating expenses since issuance. As of the March 2016 rent roll, the asset was 63% occupied, an improvement from 49% at Fitch's last rating action, due to three new leases commencing in 2015. The asset is expected to be included in an upcoming auction.
The next largest contributor to modeled losses is the specially-serviced One Corporate Drive loan (12.6%), which is secured by a 54,948 sf office building located in Holtsville, NY. The loan was transferred to special servicing in May 2015 for imminent default and the loan subsequently defaulted in June 2015. The property has been vacant since April 2015 and the special servicer has indicated there are currently no leasing prospects. A receiver was appointed in February 2016 and negotiations with the borrower, which has several tenant-in-common entities, are being dual-tracked with foreclosure.
The third largest contributor to modeled losses is the 310 Technology Parkway Office Building asset (9.4%), which is a 61,244 sf office building located in Norcross, GA. The loan was transferred to special servicing in September 2013 for payment default and the asset became REO in April 2014. The asset has been vacant since the single tenant, Pediatric Services of America, vacated at its January 2013 lease expiration. The special servicer has indicated there are currently no leasing prospects. The asset is expected to be included in an upcoming auction.
RATING SENSITIVITIES
Upgrades to classes E and F are not likely due to adverse selection of the remaining collateral and high percentage of specially serviced loans. Downgrades are possible if additional loans transfer to special servicing and/or expected losses increase significantly.
DUE DILIGENCE USAGE
No third-party due diligence was provided or reviewed in relation to this rating action.
Fitch has affirmed the following classes:
--$15.8 million class E at 'CCCsf'; RE 100%;
--$19.9 million class F at 'Csf'; RE 15%;
--$11.1 million class G at 'Dsf'; RE 0%;
--$0 class H at 'Dsf'; RE 0%;
--$0 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 P at 'Dsf'; RE 0%.
The class A-1, A-2, A-3, A-AB, A-4, A-4FL, A-J, B, C and D certificates have paid in full. Fitch does not rate the fully depleted class Q certificates. Fitch previously withdrew the ratings on the interest-only class X-1 and X-2 certificates.
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