Fitch Downgrades Bear Stearns Series 1999-WF2; Assigns Outlooks, LS and Recovery Ratings

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings downgrades and assigns Loss Severity Ratings (LS), Recovery Ratings (RR) and Rating Outlooks to the following Bear Stearns Commercial Mortgage Securities Trust, series 1999-WF2 commercial mortgage pass-through certificates:

--$9.5 million class J to 'B-/LS3' from 'B+', Outlook Negative;

--$10.8 million class K to 'C/RR2' from 'B-', Outlook Negative.

Fitch also upgrades and assigns LS Ratings and Outlooks to the following class:

--$10.8 million class F to 'AAA/LS3' from 'AA+', Outlook Stable.

In addition, Fitch affirms and assigns LS Ratings and Outlooks to the following classes:

--$18.6 million class C at 'AAA/LS3', Outlook Stable;

--$10.8 million class D at 'AAA/LS3', Outlook Stable;

--$27.0 million class E at 'AAA/LS3', Outlook Stable;

--$21.6 million class G at 'A/LS3', Outlook Stable;

--$16.2 million class H at 'BBB/LS3', Outlook Stable;

--$8.1 million class I at 'BB/LS3', Outlook Stable.

Fitch revises the recovery rating on class L to 'D/RR6'. Classes A1, A2 and B, have paid in full. Fitch withdraws the rating of the interest only class X. (For additional information, see 'Fitch Revises Practice for Rating IO & Pre-Payment Related Structured Finance Securities', dated June 23, 2010.)

The rating affirmations reflect the stable performance of the pool and sufficient credit enhancement to offset Fitch expected losses following Fitch's analysis which is similar to its recent vintage fixed-rate CMBS analysis. Fitch expects potential losses of 5.31% of the remaining pool balance, approximately $7.2 million, from loans in special servicing and loans that are not expected to refinance at maturity based on Fitch's refinance test. Rating Outlooks reflect the likely direction of any rating changes over the next one or two years.

As of the July 2010 distribution date, the pool has paid down 87.5% to $134.7 million from $1.1 billion at issuance. Of the original 294 loans, 74 remain in the transaction. Fitch has identified 10 Loans of Concern (19.1%), including eight loans in special servicing (18.4%), as well as other loans with deteriorating performance.

The largest specially serviced loan (3.35%) is collateralized by a single-tenant retail property in Salt Lake City, UT. The loan was transferred to the Special Servicer in August 2009 due to maturity default. The borrower has been unable to refinance the loan due to the near term lease expiration of the single tenant. The special servicer is evaluating the borrower's request for a loan modification while the borrower is working to reconfigure space to meet the tenant's needs.

Fitch stressed the cash flow of the remaining non-defeased loans by applying a 5% reduction to 2009 fiscal year end net operating income and applying an adjusted market cap rate between 7.25% and 10.5% to determine value.

Similar to Fitch's prospective analysis of recent vintage CMBS, each loan also underwent a refinance test by applying an 8% interest rate and 30-year amortization schedule based on the stressed cash flow. Loans that could refinance to a debt service coverage ratio of 1.25 times or higher were considered to pay off at maturity. Under this scenario, all performing loans passed the refinance test.

Additional information on Fitch's amended criteria for analyzing recent vintage U.S. CMBS is available in the July 7, 2009 report, 'Surveillance Methodology for Recent Vintage U.S. CMBS,' which is available at 'www.fitchratings.com' under the following headers:

Structured Finance then CMBS then Criteria Reports

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

Related Research:

Surveillance Methodology for Recent Vintage U.S. CMBS

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=457782

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.

CONTACT:

Fitch Ratings, New York
Jonathan Teichmann, 212-908-0862
Adam Fox, 212-908-0869
or
Media Relations:
Sandro Scenga, 212-908-0278
Email: sandro.scenga@fitchratings.com

KEYWORDS:   United States  North America  New York

INDUSTRY KEYWORDS:   Professional Services  Banking

MEDIA: