Fitch Affirms BSCMSI 2007-PWR16
KEY RATING DRIVERS
The affirmations reflect stable performance since Fitch's last rating action including relatively stable loss expectations from the specially serviced assets. The pool received roughly $305 million in pay down from the 32 Sixth Avenue loan, which was the largest loan at Fitch's last rating action. There are eleven specially serviced assets (6.2%), of which eight are REO (real estate owned). The special servicer continues efforts to improve occupancy at most of the REO properties before determining a disposition strategy.
Fitch modeled losses of 13.5% of the remaining pool; expected losses on the original pool balance total 13.7%, including $200.3 million (6.0% of the original pool balance) in realized losses to date. Fitch has designated 42 loans (31.9%) as Fitch Loans of Concern, which includes the eleven specially serviced assets.
As of the October 2015 distribution date, the pool's aggregate principal balance has been reduced by 43.1% to $1.88 billion from $3.31 billion at issuance. Per the servicer reporting, seven loans (2.7% of the pool) are defeased. Interest shortfalls are currently affecting classes C through S.
The Beacon Seattle & DC Portfolio remains the largest contributor to modeled losses. 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.
Eight properties remain as one property was sold since Fitch's prior rating action, which resulted in no principal pay down to the pari passu piece in the transaction. As of June 2015, the portfolio occupancy of the remaining eight properties increased to 85% from 82% at year-end 2014.
The second largest contributor to expected losses is the specially serviced North Grand Mall (1.6%), a 297,008 sf regional mall located in Ames, IA. The loan was transferred to the special servicer in June 2014 for imminent default. Anchor tenants at the mall include JCPenney (31.6% NRA), which extended their lease for an additional seven years through March 2020 and Younkers (16.8% NRA), which expires in 2022. The third largest tenant, a movie theatre, closed since in 2014. 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 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. The asset became REO as of July 2015.The servicer-reported occupancy at the property as of October 2015 is 85.0%, a decline from the 92.7% reported at year-end 2013. Fitch's analysis of the property's tenant sales report indicates reported sales at the property are below the industry average and calculated in-line tenant sales at approximately $157/sf for the trailing twelve months ending June 2015 and total mall sales of $38.6 million. The servicer reports that a final disposition strategy is still being determined. Fitch expects significant losses on the asset.
The third largest contributor to expected losses is the Perimeter Expo loan (2.1%), which is secured by a 175,835-sf two story retail property located in the Perimeter Center neighborhood of Atlanta, approximately 15 miles north of the CBD. Tenants at the property include Marshalls, Nordstrom Rack Old Navy. Occupancy dropped to 59% as of year-end 2014, down from 92% at year-end 2013. Thomasville Home Furnishings and Saks's Off Broadway (together occupying 53,851sf) vacated at their lease expirations in 2013 and 2014, respectively. The loan has remained current as the sponsor continues to seek replacement tenants for the vacancies. The servicer reported debt service coverage ratio was reported to be 1.01x at year-end 2014.
RATING SENSITIVITIES
The Stable Outlooks on A-4, A-1A and A-M classes reflect their seniority and sufficient credit enhancement. Downgrades to the senior classes are not expected unless there is a material decline in loan performance or if losses on the specially serviced loans exceed current expectations. Upgrades to classes A-J and below are possible if specially serviced assets are resolved with better than anticipated recoveries. Downgrades to the distressed classes will occur as losses are realized.
DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in relation to this rating action.
Fitch affirms the following classes as indicated:
--$775.2 million class A-4 at 'AAAsf'; Outlook Stable;
--$314.9 million class A-1A at 'AAAsf'; Outlook Stable;
--$331.4 million class A-M at 'Asf'; Outlook Stable;
--$273.4 million class A-J at 'CCCsf'; RE 80%;
--$33.1 million class B at 'CCCsf'; RE 0%;
--$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%;
--$15.1 million 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 O at 'Dsf'; RE 0%;
--$0 class P at 'Dsf'; RE 0%;
--$0 class Q at 'Dsf'; RE 0%.
The class A-1, A-2, A-3 and A-AB certificates have paid in full. Fitch does not rate the class S certificates. Fitch previously withdrew the rating on the interest-only class X certificates.
Комментарии