Fitch Upgrades 5 Classes of BSCMS 2002-Top8
OREANDA-NEWS. Fitch Ratings has upgraded five classes and affirmed one class of Bear Stearns Commercial Mortgage Securities Trust (BSCMST) commercial mortgage pass-through certificates series 2002-Top8. A detailed list of rating actions follows at the end of this press release.
KEY RATING DRIVERS
The upgrades reflect increased credit enhancement due to amortization and loan payoffs, a high percentage of defeased loans, and the pool's low leverage. Fitch modeled losses of 2.2% of the remaining pool; expected losses on the original pool balance total 1.2%, including $9.4 million (1.1% of the original pool balance) in realized losses to date. Fitch has designated one loan (5.7%) as a Fitch Loan of Concern.
As of the December 2015 distribution date, eight loans remain and the pool's aggregate principal balance has been reduced by 97.4% to $22 million from $842.2 million at issuance. Per the servicer reporting, three loans (35.6% of the pool) are defeased. Interest shortfalls were previously affecting classes up to class H, but have since been recovered and are unlikely to occur again.
The only Fitch Loan of Concern is secured by a four building industrial complex located in East Boston, MA. The complex, totalling 84,540 square feet (sf), includes two properties with a single-tenant, triple-net (NNN) lease in place and two properties with multiple tenants. The landlord has struggled in the past with vacancy at the multi-tenant buildings; however, occupancy has increased to 96% as of September 2015. Per servicer reporting, the portfolio-wide net operating income (NOI) debt service coverage ratio (DSCR) increased to 0.90x as of year-end (YE) 2014 from 0.87x YE 2013. The NOI DSCR has been below 0.86x since 2010 but the loan has never been delinquent. The loan is fully amortizing and matures in August of 2017.
The largest loan in the pool is secured by a 220,330 sf shopping center located in Citrus Heights, CA. Tenants include Marshalls (15% of GLA), Sprouts Farmers Market (14% of GLA), and PetSmart (10% of GLA). As of the October 2015 rent roll, the center was 98% occupied. Per the servicer, the NOI DSCR was reported as 2.60x as of September 2015.
RATING SENSITIVITIES
The Rating Outlooks on classes H through M are stable due to increasing credit enhancement and overall stable collateral performance. Although the remaining rated classes have high credit enhancement, additional upgrades are not likely in the near term due to significant concentration risk with only eight loans remaining.
DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in relation to this rating action.
Fitch upgrades the following classes as indicated:
--$7.2 million class H to 'AAAsf' from 'Asf'; Outlook Stable;
--$3.2 million class J to 'AAAsf' from 'BBBsf'; Outlook Stable;
--$4.2 million class K to 'AAAsf' from 'BBsf'; Outlook Stable;
--$3.2 million class L to 'BBB-sf' from 'Bsf'; Outlook Stable;
--$3.2 million class M to 'Bsf' from 'CCCsf'; Outlook Stable Assigned.
Fitch affirms the following class as indicated:
--$1.1 million class N at 'Dsf'; RE 100%.
The class A-1, A-2, B, C, D, E, F, G and X-2 certificates have paid in full. Fitch does not rate the class O certificates. Fitch previously withdrew the rating on the interest-only class X-1 certificates.
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