Losses stemming from a major industrial property and multifamily complex encouraged Fitch Ratings to downgrade 10 classes of securities within the Bear Stearns Commercial Mortgage Securities Trust (2004-PWR4.A).
The ratings giant modeled losses at 4.03% of the outstanding pool. Overall, losses are expected on 3.63% of the original pool. To date, the pool’s balance has been paid down to $784.2 million from $954.9 million.
Fitch is particularly worried about two specially serviced loans and eight defeased loans.
The loan contributing the most to the losses is a 363,000-square-foot industrial property in Pontiac, Mich. The loan on the property was put into special servicing back in February after a lone tenant vacated the property, creating a threat of imminent default.
The special servicer is now pursuing a foreclosure, which will close in June unless the borrower manages to pay off the loan within the redemption period, according to Fitch.
The second-largest contributor to the expected losses is a loan secured by a multifamily complex with 367 units in Kissimmee, Fla. The property is facing financial troubles on higher operating expenses and falling rents.
Another loan of concern is backed by a 166,386-square-foot office building in Cambridge, Mass., which also is dealing with declining occupancy.
Below is a list of the downgrades by class:
–$9.5 million class E to ‘BBBsf’ from ‘A-sf’; Outlook Stable;
–$9.5 million class F to ‘BBsf’ from ‘BBB+sf’; Outlook Stable;
–$8.3 million class G to ‘Bsf’ from ‘BBB-sf’; Outlook to Negative from Stable;
–$10.7 million class H to ‘CCCsf’ from ‘BBsf’; RE 100%;
–$3.5 million class J to ‘CCCsf’ from ‘B-sf’; RE 100%;
–$4.7 million class K to ‘CCCsf’ from ‘B-sf’; RE 10%;
–$4.7 million class L to ‘CCsf’ from ‘CCCsf’; RE 0%;
–$2.3 million class M to ‘CCsf’ from ‘CCCsf’; RE 0%;
–$2.3 million class N to ‘Csf’ from ‘CCCsf’; RE 0%;
–$2.3 million class P to ‘Csf’ from ‘CCsf’; RE 0%.
Fitch has also affirmed the following classes and rating outlooks as indicated:
–$45.3 million class A-2 at ‘AAAsf’; Outlook Stable;
–$630.9 million class A-3 at ‘AAAsf’; Outlook Stable;
–$19 million class B at ‘AAsf’; Outlook Stable;
–$8.3 million class C at ‘AA-sf’; Outlook Stable;
–$14.3 million class D at ‘Asf’; Outlook Stable.
Fitch does not rate class Q. Class A-1 has paid in full. Fitch has previously withdrawn the rating on the interest-only class X.
