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Fitch Upgrades Two Classes of BS 2003-PWR2.

Chicago: Fitch Ratings has upgraded two classes and affirmed five classes of Bear Stearns Commercial Mortgage Securities Trust commercial mortgage pass-through certificates series 2003-PWR2 (BS 2003-PWR2). A detailed list of rating actions follows at the end of this press release.


High Credit Enhancement and Continued Amortization: The senior classes benefit from high and increasing credit enhancement and the upgrades are due to continued amortization since Fitch's last rating action, as well as the stable performance of the remaining seven loans. The largest loan in the transaction (85% of the pool) is collateralized by 3 Times Square, which currently has a loan per square foot of $38. There are no Fitch Loans of Concern.

As of the November 2017 distribution date, the transaction has paid down 98% since issuance, to $20 million from $1.1 billion. One loan, 0.4% of the pool, is defeased.

Concentrated Pool: The pool is highly concentrated with only seven loans remaining. Due to the concentrated nature of the pool, Fitch performed a sensitivity analysis which grouped the remaining loans based on loan structural features, collateral quality and performance and ranked them by their perceived likelihood of repayment. This includes the defeased loan, fully amortizing loans, and balloon loans. The ratings reflect this sensitivity analysis.

Largest Loan is 3 Times Square: The largest loan (85% of the pool) is collateralized by an 883,405 square foot 30-story office property located in Manhattan, also known as The Reuters Building. At issuance the loan was split into two A notes; since Fitch's last rating action the A note securitized in another transaction has paid in full. The property's major tenants include Thomson Reuters (78.0%, lease expiration November 2021), BMO Harris Bank (17.6%, November 2021) (subleasing space from Bain & Co.), and JP Morgan Chase (1.9%, November 2021). The most recent servicer reported debt service coverage ratio (DSCR) and occupancy were as of June 2017 and were 1.69x and 100%, respectively. The loan has an interest rate of 7.4%, is fully amortizing and matures in October 2021, and as of the November 2017 distribution date, the loan per square foot was $38.

Amortization and Maturity Schedule: Five (91%) of the seven loans are fully amortizing; the remaining two are balloon loans. The largest loan (85%) matures in 2021 and the remaining loans mature in 2018.


The Stable Outlooks on classes G through M reflect the expectations that ratings will remain unchanged. Classes G through L are expected to pay in full given the low leverage of the remaining loans. Additional upgrades to class M are unlikely in the near term given the long-dated maturity of the largest loan (2021). Downgrades, while not expected, are possible if several loans default.


No third-party due diligence was provided or reviewed in relation to this rating action.

Fitch has upgraded the following classes:

--$4 million class L to 'AAAsf' from 'BBsf'; Outlook Stable;

--$5.3 million class M to 'BBBsf' from 'BBsf'; Outlook Stable.

Fitch has affirmed the following classes:

--$3.8 million class G at 'AAAsf'; Outlook Stable;

--$13.3 million class H at 'AAAsf'; Outlook Stable;

--$5.3 million class J at 'AAAsf'; Outlook Stable;

--$5.3 million class K at 'AAAsf'; Outlook Stable.

Fitch has affirmed the rating and revised the recovery rating for the following:

--$2.7 million class N at 'Dsf'; RE 90% from RE 0%.

The class A-1, A-2, A-3, A-4, B, C, D, E and F certificates have paid in full. Fitch does not rate the class P certificates. Fitch previously withdrew the ratings on the interest-only class X-1 and X-2 certificates.
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Publication:Daily the Pak Banker (Lahore, Pakistan)
Date:Mar 12, 2018
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