OREANDA-NEWS. Fitch Ratings has upgraded two classes and affirmed 10 classes of Merrill Lynch Mortgage Trust commercial mortgage pass-through certificates, series 2004-BPC1. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The upgrades and affirmations are warranted due to increased credit enhancement as the pool's collateral balance decreased by 24% since Fitch's last rating action.

There are five assets remaining in the pool; two are specially serviced (69.1%). Of the three remaining non-specially serviced loans, two (17%) mature in September or October 2019 and one (14%) matures in October 2022. Fitch modelled losses of 53.3% of the remaining pool, all from the specially serviced assets. Expected losses on the original pool balance total 7.1%, including $57.1 million (4.6% of the original pool balance) in realized losses to date. As of the December 2015 distribution date, the pool's aggregate principal balance has been reduced by 95.3% to $58.7 million from $1.24 billion at issuance. Interest shortfalls are currently affecting classes F through Q.

The largest contributor to expected losses is the Washington Square Mall (46% of the pool), a 448,762 square foot (sf) portion of a regional mall totalling 922,614 sf located in Indianapolis, IN. The loan transferred to the special servicer in December 2013 for imminent default and became REO through a deed in-lieu of foreclosure in August 2014. The loan was previously modified in February 2011 and the modification terms included the following: a split into a $15 million A-Note and $12.5 million B-Note, an equity contribution from the borrower to fund additional reserves, paydown of $1 million of the outstanding balance, and a maturity extension to July 1, 2016. In December 2014 Sears vacated the mall causing total mall occupancy to drop to 57%, as of October 2015 the total mall occupancy is at 64% while the collateral occupancy is approximately 51%. The property is expected to be marketed for sale in first quarter 2016. Fitch expects significant losses.

The next largest contributor to expected losses is a specially-serviced loan (23.5%), which is secured by two suburban office buildings with a total of 200,758 sf located in Duluth and Jonesboro, GA. The borrower was unable to pay off the loan by the September 2014 maturity which caused the loan to be transferred to the special servicer. The borrower's refinancing fell through when the largest tenant gave notice of plans to vacate the building in November 2014. The borrower recently exercised a one year loan extension and the loan will be monitored before being transferred back to the master servicer. The extended maturity date is in October 2016.

The largest non-specially serviced loan (15.8%) is secured by a 157 room Courtyard Marriott located in Dulles, VA. The subject was 72% occupied as of September 2015 with a third quarter 2015 net operating income debt service coverage ratio (NOI DSCR) of 1.29x and a year-end 2014 NOI DSCR of 1.21x. Total operating expenses have increased each year since 2011 causing the year-end NOI DSCR to be below 1.36x since 2011. The loan matures in September 2019.

RATING SENSITIVITIES

Due to the higher percentage of specially serviced assets, Fitch performed additional stresses to valuations when considering the upgrades. The Stable Rating Outlooks on classes C and D reflect the ability to withstand additional stress as well as the expectation of continued paydown. Although credit enhancement remains high relative to the rating category, the upgrades were limited given the concentrated nature of the pool. Additional downgrades to the distressed classes (those rated below 'B') are expected as losses are realized on specially serviced loans.

DUE DILIGENCE USAGE

No third party due diligence was provided or reviewed in relation to this rating action.

Fitch upgrades the following classes:

Merrill Lynch 2004-BPC1
--$918,162 class C to 'Asf' from 'BBsf'; Outlook Stable;
--$18.6 million class D to 'Bsf' from 'CCCsf'; Outlook Stable Assigned.

Fitch affirms the following classes;

--$9.3 million class E at 'CCsf'; RE 90%;
--$15.5 million class F at 'Csf'; RE 0%;
--$10.9 million class G at 'Csf'; RE 0%;
--$3.4 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 P at 'Dsf'; RE 0%.

The class A1 through AJ and Class B certificates have paid in full. Fitch does not rate the class Q certificates. Fitch previously withdrew the ratings on the interest-only class XC and XP certificates.