DBRS Downgrades One Class of Bear Stearns Commercial Mortgage Securities Trust 2007-PWR18

DBRS has today downgraded the Commercial Mortgage Pass-Through Certificates, Series 2007-PWR18, Class L issued by Bear Stearns Commercial Mortgage Securities Trust 2007-PWR18 (the Trust) to D (sf) from C (sf).

The downgrade follows realized losses incurred by the Trust following the liquidation of two loans in January 2012.

Van Buren Road Shopping Center (Prospectus ID#83) was secured by a 42,000 square foot (sf) retail property in Avondale, Arizona, approximately 15 miles west of the Phoenix central business district (CBD). The property was built in 2006 and was anchored by Fabric Depot, representing 49% of the net rentable area (NRA). Fabric Depot recently exercised an option to terminate its lease ahead of the scheduled August 2017 expiry. This loan was transferred to special servicing in August 2010 for payment default, partially attributable to declines in occupancy and cash flow in recent years. The asset became real estate owned (REO) in May 2011 and had been included in a portfolio note sale. The realized Trust loss associated with this totals $6.9 million as of the January 2012 remittance.

The second loan that was liquidated, 2695 Mt. Vernon (Prospectus ID#132), was secured by a 25,000 sf retail property in Bakersfield, California, in a high-traffic retail node just off of Hwy. 178. Econo Lube is the subject’s largest tenant, occupying 22% of the NRA. This loan transferred to special servicing in June 2010 for payment default and the asset became REO in August 2011. The asset was included in a November 2011 auction and liquidated with the January 2012 remittance, incurring a realized Trust loss of approximately $3.0 million.

Cumulative realized losses to the Trust now total more than $75 million. The outstanding balance of loans in special servicing exceeded $215 million as of the January 2012 remittance. DBRS expects losses on the loans in special servicing to affect Class H, Class J and Class K, the three classes that it currently rates at C (sf), totaling close to $71 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.