DBRS Upgrades One Class of Bear Stearns Commercial Mortgage Securities Trust 2004-PWR5

DBRS Limited (DBRS) upgraded the rating on the following class of Commercial Mortgage Pass-Through Certificates, Series 2004-PWR5 issued by Bear Stearns Commercial Mortgage Securities Trust 2004-PWR5 (the Trust):

-- Class M to A (high) (sf) from BBB (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)
-- Class L at AAA (sf)

All trends are Stable.

The upgrade of Class M and confirmations on the remaining classes reflect the overall credit support to the bonds as the transaction is secured by significant defeasance collateral (82.2% of the pool balance) and the non-defeased loans continue to report strong credit metrics. Since issuance, the pool has experienced a collateral reduction of 95.5%, with only nine of the original 130 loans remaining as of the September 2018 remittance. All of the remaining loans are either secured by defeasance collateral or benefit from full amortization schedules. Six loans, representing 86.2% of the current pool balance, mature between April 2019 and September 2019, with the remaining three loans maturing in 2024. Excluding defeasance collateral, the pool is reporting a weighted-average, year-end 2017 debt-service coverage ratio and debt yield of 1.88 times and 84.6%, respectively.

There is currently one loan, representing only 0.2% of the current pool balance, on the servicer’s watchlist as the single tenant, Cineplex Odeon, had a lease expiration in November 2017; however, according to the servicer, the tenant renewed its lease to November 2022 at a rental rate of $16.71 per square foot. The loan is expected to be removed from the watchlist once the servicer receives an updated rent roll.

One loan, representing 2.8% 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.

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

As part of this review, DBRS has provided updated analysis and in-depth commentary in the DBRS Viewpoint platform for the following loan in the transaction:

-- New Castle Marketplace (Prospectus ID#19, 2.8% of pool)

For complimentary access to this content, please register for the DBRS Viewpoint platform at www.viewpoint.dbrs.com. The platform includes issuer and servicer data for the entire CMBS universe, as well as deal and loan-level commentary for all DBRS-rated transactions.

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 uncertain loan level 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.

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link under Related Documents or by contacting us at info@dbrs.com.

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

For more information on this credit or on this industry, visit www.dbrs.com or contact us at info@dbrs.com.