Fitch Ratings has downgraded 10 classes of Bear Stearns Commercial
Mortgage Securities Trust (BSCMST), series 2007-PWR16 commercial
mortgage pass-through certificates. Fitch has also revised the Outlook
for class A-M to Negative from Stable due to increased total expected
pool losses but with consideration given to anticipated upcoming payoff
and disposition proceeds. A detailed list of rating actions follows at
the end of this release.
The downgrades reflect an increase in Fitch expected losses primarily
due to increased loss expectations on the specially serviced loans.
Fitch modeled losses of 12.9% for the remaining pool; expected losses as
a percentage of the original pool balance are at 12.9%, including losses
already incurred to date (1.4%). Fitch has designated 58 loans (39.8%)
as Fitch Loans of Concern, including 16 specially serviced loans (18%).
Fitch expects that classes G through Q may be fully depleted from losses
associated with the specially serviced assets. Class F may also be
As of the April 2011 distribution date, the pool's aggregate principal
balance has been reduced by approximately 10.6% to $2.96 billion from
$3.31 billion at issuance. Interest shortfalls totaling $10.8 million
are affecting classes E through S.
The largest contributor to expected losses is the specially serviced
Beacon Seattle & DC Portfolio (11.4% of the pool), which was initially
secured by 16 properties, the pledge of the mortgage and the borrower's
ownership interest in one property, as well as the pledge of cash flows
from three properties. In aggregate, the 20 properties comprise
approximately 9.8 million square feet (sf) of space. The loan
transferred to special servicing in April 2010 and remained current as
the borrower was negotiating a modification, which closed in December
2010. Key modification terms included a five-year extension of the loan
to May 2017, a deleveraging structure that provides for the release of
properties over time, and an interest rate reduction.
Under the modification plan, six properties have been released as of the
February 2012 remittance, which includes Market Square (Washington,
D.C.), Key Center (Bellevue, WA), 1616 North Fort Myer Drive (Arlington,
VA), Liberty Place (Washington, D.C.), 1300 North Seventeenth Street
(Arlington, VA), and Reston Town Center (Reston, VA). Gross proceeds
from the releases totaled $819 million, which have paid down the trust
loan balance by 30%, repaid prior interest shortfalls, and built up the
Master Reserve Account to $92 million.