One Bear Stearns Commercial Mortgage Securities Trust 2004-PWR6 Rating Lowered, 10 Affirmed


OVERVIEW
  • We lowered our rating on class M from Bear Stearns Commercial Mortgage Securities Trust 2004-PWR6, a U.S. CMBS transaction.
  • At the same time, we affirmed our ratings on 10 classes from the same transaction.
  • These rating actions reflect our analysis of the transaction, which included a review of the credit characteristics and performance of the remaining loans in the pool, the transaction's structure, and the liquidity available to the trust.
NEW YORK (S&P Global Ratings) Jan. 10, 2019--S&P Global Ratings today lowered 
its rating on the class M commercial mortgage pass-through certificates from 
Bear Stearns Commercial Mortgage Securities Trust 2004-PWR6, a U.S. commercial 
mortgage-backed securities (CMBS) transaction. In addition, we affirmed our 
ratings on 10 classes from the same transaction. (See list.)

The downgrade reflects class M's susceptibility to liquidity interruption from 
the specially serviced and watchlist loans, as well as credit support erosion 
that we anticipate will occur upon the eventual resolution of the specially 
serviced Northway Plaza Shopping Center loan ($2.5 million, representing 2.8% 
of the collateral pool balance as of the Dec. 11, 2018, trustee remittance 
report).

For the affirmations on the principal- and interest-paying certificates, our 
expectation of credit enhancement was in line with the affirmed rating levels.

While available credit enhancement levels suggest positive rating movements on 
classes H, J, K, and L, our analysis also considered the susceptibility to 
reduced liquidity support from the specially serviced Northway Plaza Shopping 
Center loan and refinancing risk on the Plymouth Square Shopping Center loan 
($21.8 million, 24.2%). The Plymouth Square Shopping Center loan matures in 
May 2019 and is on the master servicer's watchlist due to low reported 
occupancy, which was 68.4%, according to the Sept. 26, 2018, rent roll.

We affirmed our 'AAA (sf)' rating on the class X-1 interest-only (IO) 
certificates based on our criteria for rating IO securities.

TRANSACTION SUMMARY
As of the Dec. 11, 2018, trustee remittance report, the collateral pool 
balance was $90.0 million, which is 8.4% of the pool balance at issuance. The 
pool currently includes 12 loans, down from 95 loans at issuance. One loan is 
with the special servicer, two ($30.9 million, 34.3%) are on the master 
servicer's watchlist, and four ($39.6 million, 44.0%) are defeased. 

Excluding the defeased and specially serviced loans, we calculated a 1.67x S&P 
Global Ratings weighted average debt service coverage (DSC) and a 37.2% S&P 
Global Ratings weighted average loan-to-value ratio using a 7.83% S&P Global 
Ratings weighted average capitalization rate for the remaining performing 
loans. 

To date, the transaction has experienced $13.6 million in principal losses, or 
1.3% of the original pool trust balance. We expect losses to reach 
approximately 1.4% of the original pool trust balance in the near term, based 
on losses incurred to date and additional losses we expect upon the eventual 
resolution of the specially serviced loan.

CREDIT CONSIDERATIONS
As of the Dec. 11, 2018, trustee remittance report, the Northway Plaza 
Shopping Center loan was the sole loan with the special servicer, C-III Asset 
Management LLC. The loan, which has a reported foreclosure-in-process payment 
status, is secured by a 79,315-sq.-ft. retail property in Columbia, S.C. The 
loan was transferred to the special servicer on Oct. 6, 2016, due to payment 
default (net cash flow was not sufficient to cover the required waterfall). 
The reported occupancy and net operating income DSC were 53.3% and 0.36x, 
respectively, for the third quarter of 2018. C-III stated that it is working 
on remediating environmental issues at the property. The master servicer has 
deemed the loan nonrecoverable. We expect a significant loss (greater than 
60%) upon its eventual resolution. 
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