Fitch Upgrades Four Classes of BSCMS 2003-TOP10

CHICAGO--(BUSINESS WIRE)--

Fitch Ratings has upgraded four classes and affirmed the remaining classes of Bear Stearns Commercial Mortgage Securities Trust, Series 2003-TOP 10. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The upgrades are the result of increased credit enhancement as a result of principal pay down, stable loss expectations from Fitch's previous rating action, as well as the low leverage of the remaining non-specially serviced loans.

As of the October 2014 distribution date, the pool's aggregate principal balance has been reduced by 97.0% (including 0.3% of realized losses) to $40.1 million from $1.212 billion at issuance. Cumulative interest shortfalls in the amount of $125,755 are currently affecting class O.

Of the original 171 loans, 16 remain, two of which (48.6%) are in special servicing. The non-specially serviced loans have maturity dates in 2015 (12.5%), 2017 (18.9%), 2018 (7.7%), 2022 (7.0%) and 2023 (19.3%). Two loans (20.4%) are defeased, one of which matures in 2015 (9.0%), and the other in 2017 (11.4%).

Fitch modeled losses of 27.3% of the remaining pool; expected losses of the original pool are 1.3% including losses already incurred to date (0.4%). Both loans with Fitch expected losses are in special servicing. The non-specially serviced, non-defeased loans have a weighted average LTV of 59%.

The largest contributor to Fitch's modeled losses is the specially serviced loan, Power Plaza Shopping Center (23.8% of the pool). The loan is collateralized by a 112,155 sf retail center located in Vacaville, CA. The property is shadow anchored by a Sam's Club and Wal-Mart. The center's occupancy was 78% from June 2010 until the end of 2012, when Old Navy vacated upon its lease expiration. Subsequently, Michael's relocated to a center across the freeway from the subject which reduced the occupancy to 51%. The sponsor is concentrating on renewing a major tenant lease which expires in Jan. 2015 and releasing the existing vacant spaces. The loan was scheduled to mature in September 2014 but the sponsor approached the special servicer about extending the loan for a second time.

The second largest contributor to Fitch's modeled losses is the real estate owned (REO) 105,833 sf retail center located in Altamonte Springs, FL (9.6%). As of August 2014, the property reported occupancy was 47%, which is down from 99% at issuance. The loan transferred to the special servicer in May 2010 for imminent payment default. The special servicer addressed a number of deferred maintenance issues and re-tenanted a vacant suite which is currently being built out for a daycare center. The special servicer reports that the center was auctioned during the end of the September and the sale is expected to close in the fourth quarter of 2014.

One loan on the master servicer's watchlist, Sandstone Apartments (3.59%), is a 76 unit multifamily community located in Edwardsville, KS. The loan is scheduled to mature in January 2018. The property was 99% occupied with a debt service coverage ratio of 1.2x at year-end 2013; however, occupancy was reported to fall to 97% during the third quarter of 2014. The borrower indicated during the third quarter of 2014 that the reported expenses had increased due to plumbing work that was performed throughout the multifamily complex during the past year. While performance has declined, the loan per unit is low at $18,932.

RATINGS SENSITIVITIES

The ratings of classes G through K are expected to remain stable. The rating on classes L and M could be subject to further downgrades should realized losses be greater than expected from specially serviced loans, pool performance deteriorates, or maturing loans default at maturity.

Fitch has upgraded the following classes:

--$0.8 million class G to 'AAAsf' from 'BBB-sf'; Outlook Stable;

--$10.6 million class H to 'AAAsf' from 'BBsf'; Outlook Stable;

--$4.5 million class J to 'BBBsf' from 'Bsf'; Outlook Stable;

--$6.1 million class K to 'BBsf' from 'Bsf'; Outlook Stable.

Fitch has affirmed the following classes and revised recovery estimates as indicated:

--$4.5 million class L at 'CCCsf'; RE 100%;

--$3.0 million class M at 'CCCsf'; RE 100%;

--$3.0 million class N at 'CCsf'; RE 0% from RE 90%.

Fitch does not rate class O. The ratings on class X-1 and X-2 were previously withdrawn. Class A-1, A-2, B, C, D, E, and F have paid in full.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' (Aug. 4, 2014);

--'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria' (Dec. 11, 2013).

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=754389

U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=724961

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=904514

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.