Fitch Affirms BSCMS 2007-PWR18

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has affirmed all classes of Bear Stearns Commercial Mortgage Securities Trust series 2007-PWR18. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The affirmations are due to the overall stable performance of the collateral pool since Fitch's last review. Fitch modeled losses of 5.8% of the remaining pool; expected losses on the original pool balance total 11.4%, including losses already incurred to date (8.1%). Fitch has identified 32 loans (30.4%) as Fitch Loans of Concern (LOC), one of which is in special servicing (0.6%).

As of the December 2015 distribution date, the pool's aggregate principal balance has been reduced by 43.1% to $1.42 billion from $2.5 billion at issuance. Five loans are defeased (3%). Interest shortfalls in the amount of $5.3 million are affecting classes C, D, E, H, K, L, N and S.

The largest contributor to modeled losses is the DRA/Colonial Office Portfolio loan (11.3% of the pool). The current collateral for the interest-only loan consists of 12 office and retail buildings totaling 3.5 million square feet (sf), located across five metropolitan statistical area (MSAs) in the states of New Jersey and Alabama. At issuance, the collateral included 19 properties totaling 5.23 million square feet, seven of which were subsequently released and sold, and the proceeds were applied to pay down the loan balance. Currently, the loan has a total balance of $483 million and is split into three equal pari passu notes. Only the A3 note is securitized in this transaction.

The loan transferred to special servicing in August 2012 and a modification was completed in January 2013. The loan modification included an extended interest-only period for 24 months with a new maturity of July 2016. Fitch has recalculated the weighted average occupancy rate and net operating income (NOI) debt service coverage ratio (DSCR) for the remaining properties in the portfolio based on servicer-reported information. As of second quarter 2015, the remaining portfolio DSCR was 1.51x, compared to 1.28x at year-end (YE) 2014. The remaining portfolio was 88.5% occupied as of June 2015, compared to 84.3% at YE2014.

The second largest contributor to modeled losses is the Trumbull Marriott Hotel loan (2%). The collateral is a

323-key full-service hotel in Trumbull, CT. Property performance declined in 2009 at the expiration of the interest-only period, after which the debt service included principal and interest payments. In recent years the property has recovered gradually from its trough performance with an improving occupancy rate, resulting in a higher net operating income. However, performance remains below issuer underwriting expectations.

The 2Q'15 DSCR was 1.01x with an occupancy rate of 75%, compared to a DSCR of 1.0x with an occupancy rate of 65.6% at YE2014. Per the November 2015 STR report, the trailing twelve month (TTM) occupancy rate was 75.4% with an ADR of $118.53 and RevPar of $89.34. The property is performing above its comp set. The RevPar at issuance was at $92.48.

RATING SENSITIVITIES

The ratings on all investment grade classes are expected to remain stable due to sufficient credit enhancement and continued paydown. The distressed classes (rated below 'B') may be subject to further rating actions as losses are realized.

DUE DILIGENCE USAGE

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

Fitch has affirmed the following classes as indicated:--$18 million class A-AB at 'AAAsf'; Outlook Stable;--$710 million class A-4 at 'AAAsf'; Outlook Stable;--$147.9 million class A-1A at 'AAAsf'; Outlook Stable;--$211.6 million class A-M at 'AAsf'; Outlook Stable;--$38.9 million class A-MA at 'AAsf'; Outlook Stable;--$182.5 million class A-J at 'CCCsf'; RE80%;--$33.6 million class A-JA at 'CCCsf'; RE80%;--$25 million class B at' CCsf'; RE 0%;--$25 million class C at' CCsf'; RE 0%;--$18.8 million class D at 'CCsf'; RE0%;--$12.9 million class E at 'Dsf'; RE0%.

Classes F through Q have been depleted due to realized losses and are affirmed at 'Dsf' RE 0%. Classes A-1, A-2 and A-3 have paid in full. Fitch does not rate class S. Fitch has withdrawn the ratings assigned to the interest only classes X-1 and X-2 at the previous review.

Additional information is available at www.fitchratings.com.

Applicable Criteria

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 Formhttps://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=997045

Solicitation Statushttps://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=997045

Endorsement Policyhttps://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/20151218005649/en/

Fitch Ratings
Primary Analyst
Amy Gan
Director
+1-212-908-9143
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Chris Bushart
Senior Director
+1-212-908-0606
or
Media Relations
Sandro Scenga, +1 212-908-0278
[email protected]

Source: Fitch Ratings

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