DBRS Upgrades Two Classes and Confirms 14 Others of Bear Stearns Commercial Mortgage Securities Trust 2004-PWR5

DBRS has today upgraded the ratings of two classes of Bear Stearns Commercial Mortgage Securities Trust 2004-PWR5 as follows:

-- Class C to AAA (sf) from AA (high) (sf)
-- Class D to AA (sf) from AA (low) (sf)

Additionally, DBRS has confirmed the ratings on the remaining classes in the transaction, with the exception of Class Q, which DBRS does not rate. All trends are Stable.

The ratings upgrades reflect the increased credit enhancement to the bonds from a collateral reduction of approximately 36.94% since issuance. As of the November 2012 remittance report, 107 loans remain in the pool out of the original 130 loans at issuance. Additionally, nine loans, representing 23.12% of the current pool balance, are fully defeased. The weighted-average debt service coverage ratio (DSCR) and weighted-average loan-to-value (LTV) ratio remain stable at 1.48 times (x) and 60.7%, respectively.

As of the November 2012 remittance report, there is one loan in special servicing and 40 loans on the servicer’s watchlist, representing 0.79% and 34.43% of the current pool balance, respectively. The specially serviced loan is highlighted below.

The Bank of America-Texas Portfolio loan (Prospectus ID#55) is secured by a portfolio of five Bank of America Corporation (Bank of America) retail bank branches in five distinct towns in the Dallas-Fort Worth metropolitan statistical area. The loan transferred to special servicing after the borrower informed the servicer it would be unable to make the balloon maturity payment in October 2012. The five properties were all 100% occupied by Bank of America, but the properties in Hillsboro and Paris were vacated when their respective leases expired, which were coterminous with loan maturity. The Bank of America locations in Arlington, Ennis and Stephenville renewed their leases for five years. According to the servicer, the disposition strategy being pursued is to sell the assets individually, as that strategy will likely generate more proceeds for the Trust rather than selling the properties as a portfolio. While the two vacant properties will be a challenge to sell due to the specific build-out and use, the properties were marketed for sale prior to loan maturity to a favorable response, according to the borrower.

At issuance, DBRS shadow-rated one loan, representing 1.15% of the current pool balance, as investment grade. DBRS has today confirmed that the performance of this individual loan remains consistent with investment-grade loan characteristics.

As part of its review, DBRS analyzed the top 15 loans, the one loan in special servicing, loans on the servicer’s watchlist and the one shadow-rated loan, which comprise approximately 71.49% of the current pool balance.

DBRS continues to monitor this transaction in its Monthly CMBS Surveillance Report, with additional information on the DBRS viewpoint for this transaction including details on the largest loans in the pool, the loans in special servicing and the loans on the servicer’s watchlist. The November 2012 Monthly Surveillance Report for this transaction will publish shortly. If you are interested in receiving this report, contact us at info@dbrs.com.

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

This rating is endorsed by DBRS Ratings Limited for use in the European Union.

The applicable methodologies are CMBS Rating Methodology (January 2012) and CMBS North American Surveillance Methodology (November 2012), which can be found on our website under Methodologies.