DBRS Morningstar Confirms Ratings of Bear Stearns Commercial Mortgage Securities Trust, Series 2007-TOP28

DBRS Limited (DBRS Morningstar) confirmed the ratings of all classes of the Commercial Mortgage Pass-Through Certificates, Series 2007-TOP28 issued by Bear Stearns Commercial Mortgage Securities Trust, Series 2007-TOP28 as follows:

-- Class C at C (sf)
-- Class D at C (sf)
-- Class E at C (sf)
-- Class F at C (sf)

These classes have ratings that do not carry trends. As of February 2020, these classes continue to maintain an Interest in Arrears designation.

The rating confirmations reflect the DBRS Morningstar outlook for the remaining loan in the transaction, which had a balance of $91.6 million as of the February 2020 remittance. The loan is secured by a regional mall in Charleston, West Virginia, and has been in special servicing for several years as the loan sponsor, Forest City, was unable to sell the property or repay the loan at the September 2017 maturity date.

Based on the servicer’s October 2018 valuation for the property, as well as the foreclosure sale price of $35.0 million when the trust took title of the property as of January 2019, DBRS Morningstar anticipates losses for this loan could flow into Class D, supporting the rating confirmations at C (sf) for the outstanding Certificates.

The collateral property has struggled since the loss of both non-collateral anchors, Sears and Macy’s, in 2017 and 2019, respectively, leaving only one anchor in JCPenney and mall occupancy at approximately 50%.

Given the loss of a second anchor since the servicer’s October 2018 appraisal, DBRS Morningstar expects the as-is value will further decline when a new valuation is obtained. In the analysis for this review, DBRS Morningstar assumed a loss in excess of 70% at liquidation. That scenario suggests losses will be contained to the Class D and below Certificates; however, given the potential for further value decline, particularly given the low investor demand for de-stabilized mall properties in secondary markets, DBRS Morningstar believes the ultimate resolution could result in losses that creep into Class C, supporting the C (sf) rating for that class.

For additional commentary and analysis on the remaining loan in the pool, please see the DBRS Viewpoint platform, for which information is provided below.

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

For complimentary access to the loan commentary and other transaction-specific content, please register for the DBRS Viewpoint platform at www.viewpoint.dbrs.com. The platform includes issuer and servicer data for most outstanding CMBS transactions (including non-DBRS Morningstar-rated), as well as loan-level and transaction-level commentary for most DBRS Morningstar-rated and -monitored transactions.

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

The principal methodology is North American CMBS Surveillance Methodology, which can be found on www.dbrs.com under Methodologies & Criteria. For a list of the structured-finance-related methodologies that may be used during the rating process, please see the DBRS Morningstar Global Structured Finance Related Methodologies document, which can be found on www.dbrs.com in the Commentary tab under Regulatory Affairs. 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.

For more information regarding rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: <a href="https://www.dbrsmorningstar.com/research/357883/" target="_blank">DBRS Morningstar Provides Update on Rating Methodologies in Light of Measures to Contain Coronavirus Disease (COVID-19)</a>.

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 [email protected].

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

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the rating process. Please note a sensitivity analysis is not performed for CMBS bonds rated CCC or lower. The DBRS Morningstar long-term rating scale definition indicates that ratings of CCC or lower are assigned when the bond is highly likely to default or default is imminent, thereby prevailing over a sensitivity analysis.

For more information on this credit or on this industry, visit www.dbrs.com or contact us at [email protected].

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