NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has downgraded 15 classes of Bear Stearns Commercial Mortgage Securities Trust (BSCMST), series 2005-PWR10 commercial mortgage pass-through certificates due to further deterioration of performance relative to the previous full transaction review, most of which involves increased projected losses on the specially serviced loans. A detailed list of rating actions follows at the end of this release.

The downgrades reflect an increase in Fitch expected losses across the pool. Fitch modeled losses of 12.7% for the remaining pool; expected losses as a percentage of the original pool balance are at 11.8%, including losses already incurred to date (0.3%). Fitch has designated 59 loans (36.0%) as Fitch Loans of Concern, which includes the 13 specially serviced loans (12.3%). Fitch expects that classes J through S may be fully depleted from losses associated with the specially serviced assets.

As of the May 2011 distribution date, the pool's aggregate principal balance has been reduced by approximately 9.6% to $2.38 billion from $2.63 billion at issuance, due to a combination of paydown (9.3%) and realized losses (0.3%). Interest shortfalls totaling $3.4 million are affecting classes O through S.

The largest contributor to modeled losses is the specially serviced World Market Center loan (8.8% of the pool), which is secured by a 10-story, approximately 1.1 million-square foot (sf) furniture mart approximately five miles north of the center of the Las Vegas Strip. The loan has been in special servicing since its September 2009 transfer for imminent default. The property suffered during the recession as vacancy increased, tenant payments came in late, and the borrower was forced to offer high concessions to attract new tenants.

According to various media reports, the property was recently acquired by a venture majority-owned by funds managed by Bain Capital and Oaktree Capital Management at an undisclosed price. According to the special servicer, an assumption and modification is in the process of being finalized, with details to be disclosed in the June remittance.

The second-largest contributor to modeled losses (4% of the pool) is a mixed-use lifestyle center in Westlake, OH, approximately 15 miles west of Cleveland's central business district. Collateral includes approximately 398,000 sf of retail space, 84,000 sf of office space, and 158 multifamily units. While the office and multifamily components had not yet stabilized at issuance, occupancy has since risen to 97% as of year-end (YE) 2010 and revenues reported by the servicer were in line with expectation at issuance. However, with expenses 37% higher than underwritten, the property remained unable to service its related debt out of operating cash flows as of YE 2010, with a reported debt service coverage ratio (DSCR) of 0.75 times (x).

Fitch has downgraded the following classes and assigned Recovery Ratings (RRs) as indicated:

--$19.8 million class B to 'Bsf/LS5' from 'BBsf/LS5'; Outlook Negative;

--$29.6 million class C to 'B-sf/LS5' from 'Bsf/LS5'; Outlook Negative;

--$23 million class D to 'CCCsf/RR1' from 'Bsf/LS5';

--$16.5 million class E to 'CCCsf/RR1' from 'Bsf/LS5';

--$26.3 million class F to 'CCCsf/RR1' from 'B-sf/LS5';

--$26.3 million class G to 'CCCsf/RR1' from 'B-sf/LS5';

--$29.6 million class H to 'CCsf/RR4' from 'B-sf/LS5';

--$26.3 million class J to 'Csf/RR6' from 'B-sf/LS5';

--$36.2 million class K to 'Csf/RR6' from 'CCCsf/RR6';

--$3.3 million class L to 'Csf/RR6' from 'CCCsf/RR6';

--$9.9 million class M to 'Csf/RR6' from 'CCCsf/RR6';

--$13.2 million class N to 'Csf/RR6' from 'CCCsf/RR6';

--$6.6 million class O to 'Csf/RR6' from 'CCCsf/RR6';

--$6.6 million class P to 'Csf/RR6' from 'CCCsf/RR6';

--$9.9 million class Q to 'Csf/RR6' from 'CCCsf/RR6';

Additionally, Fitch has affirmed the following classes and revised Rating Outlooks as indicated:

--$49.9 million class A-2 at 'AAAsf/LS2'; Outlook Stable;

--$59.4 million class A-3 at 'AAAsf/LS2'; Outlook Stable;

--$157.1 million class A-AB at 'AAAsf/LS2'; Outlook Stable;

--$1.05 billion class A-4 at 'AAAsf/LS2'; Outlook Stable;

--$282.6 million class A-1A at 'AAAsf/LS2'; Outlook Stable;

--$263.4 million class A-M at 'AAAsf/LS4'; Outlook to Stable from Negative;

--$210.7 million class A-J at 'BBsf/LS4'; Outlook Negative.

Fitch does not rate the $25.5 million class S. Class A-1 has repaid in full.

Additional information on Fitch's amended criteria for analyzing U.S. fixed-rate CMBS transactions is provided in the Nov. 17, 2010 report 'Surveillance Methodology for U.S. Fixed-Rate CMBS Transactions', which is available at 'www.fitchratings.com' under the following headers:

Structured Finance >> CMBS >> Criteria Reports

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

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' (Aug. 13, 2010);

--'Surveillance Methodology for U.S. Fixed-Rate CMBS Transactions' (Nov. 17, 2010).

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=547326

Surveillance Methodology for U.S. Fixed-Rate CMBS Transactions

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=574208

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