DBRS Downgrades One Class of Bear Stearns Commercial Mortgage Securities Trust, Series 2007-TOP26

DBRS has today downgraded the following class of the Bear Stearns Commercial Mortgage Securities Trust, Series 2007-Top26 transaction as follows:

Class L from C to D

The downgrade is the consequence of additional realized losses to the trust as a result of the servicer advanceing on Prospectus ID#6, Viad Corporate Center; those advances have now been deemed non-recoverable and are being reimbursed from principal.

Prospectus ID#6, Viad Corporate Center, is secured by a 476,528 sf Class A office property located in the Uptown submarket in Phoenix, just north of McDowell Road on Central Avenue. The loan transferred to the special servicer in March 2009 when the 95% managing member in the borrowing entity cited difficulty making the scheduled interest payments on the loan and refused to contribute further equity into the property given the perceived value loss of approximately $60 million since issuance when the property was valued at $105.6 million. The May 2010 appraisal obtained by the special servicer valued the property at $43 million (a figure which represented an as-is value; the same firm concluded a stabilized value of $57.3 million for the subject property in May 2010).

At YE2009, the property’s occupancy was 82% with the DSCR at 1.19x. Occupancy remained near 80% throughout 2010 and into Q1 2011 when it was reported at 79%. The DSCR for Q1 2011 was reported by the special servicer at 1.12x. In May 2011, the special servicer processed a sale of the property and loan assumption that resulted in a $9 million principal write down of the outstanding $65 million balance on the loan. As a part of the loan assumption and modification, the new borrower is to establish a capital reserve account in the amount of $8 million to fund tenant improvements, leasing commissions, and capital repairs.

The $9 million realized loss was applied to the trust as part of the June 13, 2011 remittance report.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The applicable methodology is CMBS Rating Methodology and CMBS North American Surveillance Methodology, which can be found on our website under Methodologies.