Distressed commercial loans in special servicing prompted Fitch Ratings to downgrade three classes of Bear Stearns commercial mortgage pass-through certificates.

Another class was upgraded due to an increased credit outlook on pay downs and loan defeasance, Fitch analysts said. The certificates were issued through the BSCMS Commercial Mortgage Trust 2004-TOP16. Most of the ratings were pushed further down the scale of noninvestment grade, while one class moved to BBB from A-. 

Fitch made the downgrades after modeling losses of 2.3% and noting that there are four big loans in special servicing. The loan pool's balance was reduced by 24.3% in February, down to $918 million from $1.2 billion.

The largest contributor to the losses is a retail center located in Altamonte Springs, Fla. Fitch said the loan has been in special servicing since March 2010 because of an imminent payment default. Attempts for a loan modifications continue between the borrower and special servicer.

Another property contributing to the losses is an office property in Citrus Heights, Calif. The loan also was moved into special servicing due to imminent default and the borrower's request to restructure the debt.