Fitch Affirms BSCMS 2001-Top2

CHICAGO--(BUSINESS WIRE)-- Fitch Ratings has affirmed eight classes of Bear Sterns Commercial Mortgage Securities, Inc., (BSCMS) commercial mortgage pass-through certificates series 2001-TOP2. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The affirmation of class E reflects the concentrated nature of the pool and the thin subordinate class. Potential losses from the specially serviced asset could further reduce the subordinate class F and negatively impact the credit enhancement of class E. The pool is concentrated with only four loans remaining, all of which are secured by retail properties. Two of the loans (37.5%) are fully amortizing and mature in January 2021.

As of the April 2016 distribution date, the pool's aggregate principal balance has been reduced by 98.9% to $10.9 million from $1.01 billion at issuance. There has been $59.5 million (5.9% of the original pool balance) in realized losses to date. Fitch has designated two loans (62.5%) as Fitch Loans of Concern, which includes the one specially serviced asset (24.8%). Interest shortfalls are currently affecting classes F through N.

The one specially serviced asset (14.1% of the pool) is secured by a 20,773 square foot (sf) retail center located in Lewisville, TX. A portion of the property is subject to condemnation from the Texas Department of Transportation (TXDOT) as part of an expansion project. After enrollment in an early volunteer acquisition program, the borrower agreed to an offer from TXDOT for the property. Prior to closing the TXDOT transaction, the borrower filed suit challenging the trust's rights to the proceeds in connection with the sale. According to the special servicer, a portion of the proceeds have been distributed to the trust, but the remaining funds are being held in escrow until the conclusion of the litigation. Both the borrower and the trust have filed motions for summary judgement and the parties are currently awaiting a ruling from the court. The February 2016 rent roll indicates the property is 100% vacant.

The largest remaining loan and the other Fitch Loan of Concern (47.7%) is secured by an 88,000-sf unanchored retail center located in Houston, TX. The property has suffered cash flow issues as a result of occupancy declines. For year-end (YE) 2014, the occupancy and debt service coverage ratio (DSCR) were reported to be 76% and 0.63x, respectively. Performance has improved with occupancy at YE 2015 reported to be 82% and a DSCR of 0.76x. Two new leases were signed in 2015, which will improve occupancy and the DSCR. The loan has remained current and matures in August 2018.

RATING SENSITIVITIES

While a further upgrade to class E is possible, it is unlikely given the pool concentration and thin subordinate class. A downgrade may be possible if losses to the specially serviced asset are more than anticipated.

DUE DILIGENCE USAGE

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

Fitch has affirmed the following classes and revises REs as indicated:

--$10 million class E at 'CCCsf'; RE 90%;

--$914,107 class F at 'Dsf'; RE 0%.

Fitch has affirmed the following classes:

--$0 class G at 'Dsf'; RE 0%;

--$0 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%.

The class A-1, A-2, B, C, D and X-2 certificates have paid in full. Fitch does not rate the class N certificates. Fitch previously withdrew the rating on the interest-only class X-1 certificates.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Counterparty Criteria for Structured Finance and Covered Bonds (pub. 14 May 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=744158

Global Structured Finance Rating Criteria (pub. 06 Jul 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952

U.S. and Canadian Fixed-Rate Multiborrower CMBS Surveillance and U.S. Re-REMIC Criteria (pub. 13 Nov 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=873395

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1004365

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1004365

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

View source version on businesswire.com: http://www.businesswire.com/news/home/20160512005774/en/

Fitch Ratings
Primary Analyst
Daniel Anderson
Associate Director
+1-312-606-2305
Fitch Ratings, Inc.
70 West Madison Street
Chicago, IL 60602
or
Committee Chairperson
Mary MacNeill
Managing Director
+1-212-908-0785
or
Media Relations:
Sandro Scenga, New York, +1 212-908-0278
Email: [email protected]

Source: Fitch Ratings

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