DBRS Downgrades Four Classes of Bear Stearns Commercial Mortgage Securities Trust 2007-PWR18

DBRS has today downgraded the following classes of Bear Stearns Commercial Mortgage Securities Trust 2007-PWR18 as follows:

-Class N to D (sf) from C (sf)
-Class O to D (sf) from C (sf)
-Class P to D (sf) from C (sf)
-Class Q to D (sf) from C (sf)

The downgrade follows realized losses incurred on the trust following the liquidation of the RRI Hotel Portfolio in September 2011.

The RRI Hotel Portfolio loan (Prospectus ID#5) was originally structured as a $78 million pari-passu piece of a $465 million whole loan. It was secured by 79 Red Roof Inn hotels, located across 24 states and totaling 9,423 rooms. Performance decline became apparent in June 2009 when the YTD DSCR was reported to be 0.86x, a decline from 1.17x at YE2008 and 1.38x at issuance. The loan was transferred to special servicing in June 2009 due to delinquent May 2009 and June 2009 payments, as well as the borrower’s indication that they were unwilling and unable to remit future payments.

At the time of liquidation, the loan had a trust loan balance of $74.7 million and a whole loan balance of $445.2 million. The sale of the loan closed on August 25, 2011 at a purchase price of $256,725,000. This represents a 92% recovery of the December 2010 appraised value, which was $278 million, and a purchase price-per-key ratio of $27,244. The total realized loss associated with this loan is $39.6 million, as of the September 2011 remittance. This is in line with the projected loss modeled for the RRI Hotel Portfolio loan in DBRS’ December 2010 surveillance review of this transaction.

The realized loss incurred by the liquidation of the RRI Hotel Portfolio loan has completely eliminated the unrated Class S, and Classes O, P and Q. In addition, the balance of Class N has been reduced by approximately 44%. Cumulative realized losses to the trust now total $57 million.

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.