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Rating Action:

Moody's Affirms Ten and Upgrades Six Classes of BSCMS 2004-PWR6

Global Credit Research - 13 Jun 2014

Approximately $572.9 Million of Structured Securities Affected

New York, June 13, 2014 -- Moody's Investors Service (Moody's) affirmed the ratings of ten classes and upgraded the ratings of six classes of Bear Stearns Commercial Mortgage Securities Trust, Commercial Mortgage Pass-Through Certificates, Series 2004-PWR6 as follows:

Cl. A-6, Affirmed Aaa (sf); previously on Jul 12, 2013 Affirmed Aaa (sf)

Cl. A-J, Affirmed Aaa (sf); previously on Jul 12, 2013 Affirmed Aaa (sf)

Cl. B, Upgraded to Aaa (sf); previously on Jul 12, 2013 Upgraded to Aa1 (sf)

Cl. C, Upgraded to Aaa (sf); previously on Jul 12, 2013 Upgraded to Aa2 (sf)

Cl. D, Upgraded to Aa2 (sf); previously on Jul 12, 2013 Upgraded to A1 (sf)

Cl. E, Upgraded to Aa3 (sf); previously on Jul 12, 2013 Upgraded to A2 (sf)

Cl. F, Upgraded to A2 (sf); previously on Jul 12, 2013 Affirmed Baa1 (sf)

Cl. G, Upgraded to Baa1 (sf); previously on Jul 12, 2013 Affirmed Baa3 (sf)

Cl. H, Affirmed Ba2 (sf); previously on Jul 12, 2013 Affirmed Ba2 (sf)

Cl. J, Affirmed Ba3 (sf); previously on Jul 12, 2013 Affirmed Ba3 (sf)

Cl. K, Affirmed B2 (sf); previously on Jul 12, 2013 Affirmed B2 (sf)

Cl. L, Affirmed B3 (sf); previously on Jul 12, 2013 Affirmed B3 (sf)

Cl. M, Affirmed Caa1 (sf); previously on Jul 12, 2013 Affirmed Caa1 (sf)

Cl. N, Affirmed Caa3 (sf); previously on Jul 12, 2013 Affirmed Caa3 (sf)

Cl. P, Affirmed C (sf); previously on Jul 12, 2013 Downgraded to C (sf)

Cl. X-1, Affirmed Ba3 (sf); previously on Jul 12, 2013 Affirmed Ba3 (sf)

RATINGS RATIONALE

The upgrades to classes B through G were primarily due to an increase in credit support since Moody's last review, resulting from paydowns and amortization, as well as Moody's expectation of additional increases in credit support resulting from the payoff of loans approaching maturity that are well positioned for refinance. The pool has paid down by 22% since Moody's last review. Approximately 60% of the pool's loans with debt yields exceeding 10.0%, are scheduled to mature within the next six months.

The affirmations to the P&I classes A-6, A-J, H through L were based on the transaction's key metrics, including Moody's loan-to-value (LTV) ratio, Moody's stressed debt service coverage ratio (DSCR) and the transaction's Herfindahl Index (Herf), are within acceptable ranges.

The affirmation to the ratings on P&I classes M through P are due to the ratings being consistent with Moody's expected loss.

The affirmation to the rating on the IO class X-1 was based on the credit performance of it's referenced classes.

Moody's rating action reflects a base expected loss of 2.9% of the current balance, compared to 2.1% at Moody's last review. Moody's base expected loss plus realized losses is now 2.6% of the original pooled balance, compared to 2.5% at the last review. Moody's provides a current list of base expected losses for conduit and fusion CMBS transactions on moodys.com at http://v3.moodys.com/viewresearchdoc.aspx?docid=PBS_SF215255.

FACTORS THAT WOULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING:

The performance expectations for a given variable indicate Moody's forward-looking view of the likely range of performance over the medium term. Performance that falls outside the given range can indicate that the collateral's credit quality is stronger or weaker than Moody's had previously expected.

Factors that could lead to an upgrade of the ratings include a significant amount of loan paydowns or amortization, an increase in the pool's share of defeasance or an improvement in pool performance.

Factors that could lead to a downgrade of the ratings include a decline in the performance of the pool, loan concentration, an increase in realized and expected losses from specially serviced and troubled loans or interest shortfalls.

METHODOLOGY UNDERLYING THE RATING ACTION

The methodologies used in this rating were "Moody's Approach to Rating Fusion U.S. CMBS Transactions" published in April 2005, and "Moody's Approach to Rating CMBS Large Loan/Single Borrower Transactions" published in July 2000. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.

DESCRIPTION OF MODELS USED

Moody's review used the excel-based CMBS Conduit Model v 2.64, which it uses for both conduit and fusion transactions. Conduit model results at the Aa2 (sf) level are driven by property type, Moody's actual and stressed DSCR, and Moody's property quality grade (which reflects the capitalization rate Moody's uses to estimate Moody's value). Conduit model results at the B2 (sf) level are based on a paydown analysis using the individual loan-level Moody's LTV ratio. Moody's may consider other concentrations and correlations in its analysis. Based on the model pooled credit enhancement levels of Aa2 (sf) and B2 (sf), the required credit enhancement on the remaining conduit classes are either interpolated between these two data points or determined based on a multiple or ratio of either of these two data points. For fusion deals, Moody's merges the credit enhancement for loans with investment-grade structured credit assessments with the conduit model credit enhancement for an overall model result. Moody's incorporates negative pooling (adding credit enhancement at the structured credit assessment level) for loans with similar structured credit assessments in the same transaction.

Moody's uses a variation of Herf to measure the diversity of loan sizes, where a higher number represents greater diversity. Loan concentration has an important bearing on potential rating volatility, including the risk of multiple notch downgrades under adverse circumstances. The credit neutral Herf score is 40. The pool has a Herf of 16, compared to 24 at Moody's last review.

When the Herf falls below 20, Moody's uses the excel-based Large Loan Model v 8.7 and then reconciles and weights the results from the conduit and large loan models in formulating a rating recommendation. The large loan model derives credit enhancement levels based on an aggregation of adjusted loan-level proceeds derived from Moody's loan-level LTV ratios. Major adjustments to determining proceeds include leverage, loan structure, property type and sponsorship. Moody's also further adjusts these aggregated proceeds for any pooling benefits associated with loan level diversity and other concentrations and correlations.

DEAL PERFORMANCE

As of the June 11, 2014 distribution date, the transaction's aggregate certificate balance has decreased by 46% to $573.7 million from $1.1 billion at securitization. The Certificates are collateralized by 68 mortgage loans ranging in size from less than 1% to 13% of the pool, with the top ten loans representing 47% of the pool. Thirteen loans, representing 24% of the pool, have defeased and are secured by U.S. Government securities. Defeasance at last review represented 16% of the pool. The pool contains one loan with a structured credit assessment, representing 2% of the pool.

Twenty loans, representing 22% of the pool, are on the master servicer's watchlist. The watchlist includes loans which meet certain portfolio review guidelines established as part of the CRE Finance Council (CREFC) monthly reporting package. As part of our ongoing monitoring of a transaction, Moody's reviews the watchlist to assess which loans have material issues that could impact performance.

Five loans have been liquidated from the pool since securitization resulting in an aggregate $11.2 million loss (52% loss severity on average). Three loans, representing 1.4% of the pool, are in special servicing. These loans are secured by office, industrial and retail properties. Moody's estimates an $800,000 loss for two of the specially serviced loans (27% loss severity).

Moody's has assumed a high default probability for three poorly-performing loans representing 2.5% of the pool and has estimated an aggregate $2.1 million loss (30% expected loss based on a 50% probability of default) from these troubled loans.

Moody's was provided with full year 2012 and partial year 2013 operating results for 100% and 91%, respectively, of the performing pool. Excluding specially serviced and troubled loans, Moody's weighted average LTV is 76%, the same as at last review. Moody's net cash flow reflects a weighted average haircut of 14% to the most recently available net operating income. Moody's value reflects a weighted average capitalization rate of 9.3%.

Excluding specially serviced and troubled loans, Moody's actual and stressed DSCRs are 1.54X and 1.54X, respectively, compared to 1.55X and 1.46X, respectively, at last review. Moody's actual DSCR is based on Moody's net cash flow (NCF) and the loan's actual debt service. Moody's stressed DSCR is based on Moody's NCF and a 9.25% stressed rate applied to the loan balance.

The loan with a structured credit assessment is the Berry Plastics Portfolio Loan ($14.1 million -- 2.4% of the pool), which is secured by a portfolio of four industrial buildings containing a total of 862,860 square feet (SF). The properties are located in New York (3) and Arizona. The properties are 100% net leased to Berry Plastics through November 2023. The loan is fully amortizing. Moody's structured credit assessment and stressed DSCR are aa3 (sca.pd) and 1.98X, respectively, compared to a2 (sca.pd) and 1.85X at last review.

The top three performing conduit loans represent 26% of the pool balance. The largest conduit loan is the Highland Village Loan ($75.4 million -- 13.1% of the pool), which is secured by a 331,400 SF retail center located in Houston, Texas. The property was 94% leased as of January 2014 compared to 100% at last review. Moody's LTV and stressed DSCR are 55% and 1.78X, respectively, compared to 65% and 1.50X at last review.

The second largest loan is Eton Collection Loan ($47.9 million -- 8.4% of the pool), which is secured by a 286,600 SF retail center located in Woodmere, Ohio. The property was 92% leased as of December 2013, compared to 94% at last review. Moody's LTV and stressed DSCR are 115% and 0.85X, respectively, compared to 100% and 0.98X at last review.

The third largest loan is BAMC Building Loan ($25.8 million -- 4.5% of the pool), which is secured by a 199,230 SF office building located in San Antonio, Texas. The property is 100% leased to GSA tenants through 2021. Performance is stable and the loan is benefiting from amortization. Moody's LTV and stressed DSCR are 74% and 1.39X, respectively, compared to 78% and 1.32X at last review.

REGULATORY DISCLOSURES

For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions of the disclosure form.

Moody's did not receive or take into account a third-party assessment on the due diligence performed regarding the underlying assets or financial instruments related to the monitoring of this transaction in the past six months.

The analysis includes an assessment of collateral characteristics and performance to determine the expected collateral loss or a range of expected collateral losses or cash flows to the rated instruments. As a second step, Moody's estimates expected collateral losses or cash flows using a quantitative tool that takes into account credit enhancement, loss allocation and other structural features, to derive the expected loss for each rated instrument.

Moody's did not use any stress scenario simulations in its analysis.

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this rating action, and whose ratings may change as a result of this rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Lacey M Morgan
Associate Analyst
Structured Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Sandra Ruffin
VP - Senior Credit Officer
Structured Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's Affirms Ten and Upgrades Six Classes of BSCMS 2004-PWR6
No Related Data.
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