DBRS Upgrades Two Classes of Bear Stearns Commercial Mortgage Securities Trust 2004-PWR5

DBRS, Inc. (DBRS) upgraded the ratings on the following classes of Commercial Mortgage Pass-Through Certificates, Series 2004-PWR5 issued by Bear Stearns Commercial Mortgage Securities Trust 2004-PWR5 (the Trust):

-- Class L to AAA (sf) from A (low) (sf)
-- Class M to BBB (low) (sf) from B (low) (sf)

DBRS also confirmed the ratings on the following classes:

-- Class F at AAA (sf)
-- Class G at AAA (sf)
-- Class H at AAA (sf)
-- Class J at AAA (sf)
-- Class K at AAA (sf)

All trends are Stable.

The rating upgrades reflect the increased credit support to the bonds as a result of a significant amount of defeasance collateral and the strong credit metrics of the non-defeased collateral remaining within the pool. Since issuance, the pool has experienced a collateral reduction of 95.1%, with only nine of the original 130 loans remaining as at the October 2017 remittance. All of the remaining loans are either secured by defeasance collateral or benefit from full amortization schedules. Six loans, representing 85.9% of the current pool balance, mature in 2019, with the remaining three loans maturing in 2024.

The two largest loans, representing 79.1% of the current pool balance, are fully defeased and an additional loan, representing 4.8% of the current pool balance, is shadow-rated investment grade. DBRS confirmed that the performance of the New Castle Marketplace loan (Prospectus ID#19) remains consistent with investment grade loan characteristics. Excluding defeasance collateral, the pool is reporting a WA YE2016 debt service coverage ratio and debt yield of 2.21x and 24.05%, respectively.

There are currently two loans, representing 1.1% of the current pool balance, on the servicer’s watchlist; however, DBRS has confirmed with the servicer that in-place tenants have signed renewal leases or leases or new tenants have been signed, minimizing any credit risk.

All ratings will be subject to ongoing surveillance, which could result in ratings being upgraded, downgraded, placed under review, confirmed or discontinued by DBRS.

DBRS has provided updated loan-level commentary on all remaining loans in the transaction in the DBRS Viewpoint platform. Registration is free. To view these and future loan-level updates provided as part of DBRS’s ongoing surveillance for this transaction, please register or log into DBRS Viewpoint at viewpoint.dbrs.com.

The rating assigned to Class M materially deviates from the higher rating implied by the quantitative results. DBRS considers a material deviation to be a rating differential of three or more notches between the assigned rating and the rating implied by the quantitative results that is a substantial component of a rating methodology. The deviations are warranted given large loan-level event risk.

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

The principal methodology is CMBS North American Surveillance, which can be found on dbrs.com under Methodologies. For a list of the Structured Finance related methodologies that may be used during the rating process, please see the DBRS Global Structured Finance Related Methodologies document on www.dbrs.com. Please note that not every related methodology listed under a principal Structured Finance asset class methodology may be used to rate or monitor an individual structured finance or debt obligation.

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

The rated entity or its related entities did participate in the rating process. DBRS had access to the accounts and other relevant internal documents of the rated entity or its related entities.