Fitch Takes Various Actions on BSCMS 2003-TOP10
KEY RATING DRIVERS
The upgrades reflect the high credit enhancement of the senior classes as a result of principal pay down, stable loss expectations from Fitch's previous rating action, as well as the low leverage of the remaining non-specially serviced loans. Two loans totalling $2.5 million (11.4%) are defeased, one of which matures in 2017 (9.1%) and the other in 2018 (2.3%).
The downgrade to class M reflects the higher likelihood of losses associated with the transaction's specially serviced loan, Power Plaza Shopping Center (34.2%), which is the transaction's largest asset and currently real estate owned (REO).
As of the August 2016 distribution date, the pool's aggregate principal balance has been reduced by 98.1% (including 0.7% of realized losses) to $23.3 million from $1.212 billion at issuance. Cumulative interest shortfalls in the amount of $37,346 are currently affecting class O.
Of the original 171 loans, 13 remain. The non-specially serviced loans have maturity dates in 2017 (15.2%), 2018 (8.6%), 2022 (9.9%) and 2023 (27.6%), with 55.6% being fully amortizing.
Fitch modeled losses of 42.3% of the remaining pool; expected losses of the original pool are 1.5% including losses already incurred to date (0.7%). The non-specially serviced, non-defeased loans have a weighted average LTV of 58% and DSCR of 1.7x.
The specially serviced asset, Power Plaza Shopping Center is a 112,155 sf retail center located in Vacaville, CA. The property is shadow anchored by a Sam's Club and Wal-Mart. The loan was previously modified in late 2013 after the property experienced a drop in occupancy after a new center opened in close proximity to the subject. The loan was scheduled to mature in September 2014 but was unable to refinance and extension was approved. The special servicer foreclosed on the property during late 2015 after borrower was not able to refinance the loan at the modified maturity date. The foreclosure was completed in April 2016 and the property became REO. The occupancy is reported to be 73%; however, actual occupancy is approximately 35% as a result of the vacancy of the 43,000 sf former anchor space. The special servicer has reported that a letter of intent has been signed for the vacant anchor space.
Fitch's loss assumptions assumed a stressed value on the specially serviced loan as occupancy remains low and ultimate recovery or timing of recovery is unknown. The ratings outlooks are expected to remain stable as additional upgrades may not be warranted due to the deal's concentrations. The ratings on classes M and N may be downgraded when losses are realized. Downgrades could occur if losses are greater than expected from the specially serviced loan, pool performance deteriorates, or maturing loans default at maturity.
USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G-10
No third-party due diligence was provided or reviewed in relation to this rating action.
Fitch has upgraded the following class:
--$6.1 million class K to 'Asf' from 'BBBsf'; Outlook Stable;
Fitch has affirmed the following classes as indicated:
--$3.1 million class J at 'AAAsf'; Outlook Stable;
--$4.5 million class L at 'Bsf'; Outlook Stable;
--$3.0 million class N at 'Csf'; RE 0%;
Fitch has downgraded the following class as indicated:
--$3.0 million class M to 'CCsf' from 'CCCsf'; RE 20%;
Fitch does not rate class O. The ratings on class X-1 and X-2 were previously withdrawn. Class A-1, A-2, B, C, D, E, F, G, and H have paid in full.