Approximately $54 million of structured securities affected
New York, October 26, 2018 -- Moody's Investors Service, ("Moody's") has
affirmed the ratings on six classes, upgraded the ratings on two
classes and downgraded the ratings on one class in Bear Stearns Commercial
Mortgage Securities Trust 2004-PWR5, Commercial Mortgage
Pass-Through Certificates, Series 2004-PWR5 as follows:
Cl. F, Affirmed Aaa (sf); previously on Oct 27,
2017 Affirmed Aaa (sf)
Cl. G, Affirmed Aaa (sf); previously on Oct 27,
2017 Affirmed Aaa (sf)
Cl. H, Affirmed Aaa (sf); previously on Oct 27,
2017 Affirmed Aaa (sf)
Cl. J, Affirmed Aaa (sf); previously on Oct 27,
2017 Affirmed Aaa (sf)
Cl. K, Affirmed Aaa (sf); previously on Oct 27,
2017 Upgraded to Aaa (sf)
Cl. L, Upgraded to Aa2 (sf); previously on Oct 27,
2017 Upgraded to Baa1 (sf)
Cl. M, Upgraded to A3 (sf); previously on Oct 27,
2017 Upgraded to Ba2 (sf)
Cl. N, Affirmed Caa3 (sf); previously on Oct 27,
2017 Affirmed Caa3 (sf)
Cl. X-1, Downgraded to Caa2 (sf); previously
on Oct 27, 2017 Affirmed Caa1 (sf)
RATINGS RATIONALE
The ratings on five P&I classes, Cl. F, Cl.
G, Cl. H, Cl. J, and Cl. K,
were affirmed because 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 rating on
Cl. N was affirmed because the rating is consistent with Moody's
expected loss plus realized losses. Cl. N has already experienced
a 16% realized loss as result of previously liquidated loans.
The ratings on two P&I classes, Cl. L and Cl.
M, were upgraded 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 10%
since Moody's last review. In addition, loans constituting
86% of the pool have either defeased or have amortized 90%
or more from their securitization balance and are scheduled to mature
within the next 12 months.
The rating on the IO Class, Cl. X-1, was downgraded
due to the decline in the credit quality of its reference classes resulting
from principal paydowns of higher quality reference classes.
Moody's does not anticipate losses from the remaining collateral
in the current environment. However, over the remaining life
of the transaction, losses may emerge from macro stresses to the
environment and changes in collateral performance. Our ratings
reflect the potential for future losses under varying levels of stress.
Moody's base expected loss plus realized losses is now 1.4%
of the original pooled balance, the same as the last review.
Moody's provides a current list of base expected losses for conduit
and fusion CMBS transactions on moodys.com at http://www.moodys.com/viewresearchdoc.aspx?docid=PBS_SF215255.
FACTORS THAT WOULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS:
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 principal methodology used in rating Bear Stearns Commercial Mortgage
Securities Trust 2004-PWR5, Cl. F, Cl.
G, Cl. H, Cl. J, Cl. K, Cl.
L, Cl. N, and Cl. M was "Moody's
Approach to Rating Large Loan and Single Asset/Single Borrower CMBS"
published in July 2017. The methodologies used in rating Bear Stearns
Commercial Mortgage Securities Trust 2004-PWR5, Cl.
X-1 were "Moody's Approach to Rating Large Loan and Single
Asset/Single Borrower CMBS" published in July 2017 and "Moody's
Approach to Rating Structured Finance Interest-Only (IO) Securities"
published in June 2017. Please see the Rating Methodologies page
on www.moodys.com for a copy of these methodologies.
DEAL PERFORMANCE
As of the October 11, 2018 distribution date, the transaction's
aggregate certificate balance has decreased by 96% to $54
million from $1.23 billion at securitization. The
certificates are collateralized by nine mortgage loans ranging in size
from less than 1% to 69% of the pool. One loan,
constituting 3% of the pool, has an investment-grade
structured credit assessment and two loans, constituting 83%
of the pool, have defeased and are secured by US government securities.
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 4,
the same as at Moody's last review.
One loan, constituting less than 1% of the pool, is
on the master servicer's watchlist. The watchlist includes
loans that meet certain portfolio review guidelines established as part
of the CRE Finance Council (CREFC) monthly reporting package. As
part of Moody's ongoing monitoring of a transaction, the agency
reviews the watchlist to assess which loans have material issues that
could affect performance.
Eight loans have been liquidated from the pool, resulting in an
aggregate realized loss of $17.7 million (for an average
loss severity of 46%). No loans are currently in special
servicing.
Moody's received full year 2017 operating results for 100% of the
pool, and partial year 2018 operating results for 57% of
the pool (excluding specially serviced and defeased loans).
The loan with a structured credit assessment is the New Castle Marketplace
Loan ($1.4 million -- 3% of the pool),
which is secured by a retail property located in New Castle, Delaware.
As of March 2018, the property was 100% leased. The
loan is fully amortizing and has amortized by 91% since securitization.
Moody's structured credit assessment and stressed DSCR are aaa (sca.pd)
and greater than 4.00X, respectively.
The top three non-defeased loans represent 13.8%
of the pool balance. The largest loan is the Arcade Garage Loan
($3.5 million -- 6.5% of the
pool), which is secured by a 617-space, nine level
parking garage located in Providence, Rhode Island. The loan
is fully amortizing and has already amortized by 55% since securitization.
Moody's LTV and stressed DSCR are 32.5% and greater than
3.00X, respectively.
The second largest loan is the 877 Post Road East Loan ($2.4
million -- 4.4% of the pool), which
is secured by a 29,000 square foot (SF) mixed use property in Westport,
Connecticut. The property was 100% leased as of March 2018,
the same as at prior reviews. The loan is fully amortizing and
has amortized by 57% since securitization. Moody's LTV and
stressed DSCR are 36.1% and 2.70X, respectively.
The third largest loan is the Herriman Crossroads Loan ($1.6
million -- 2.9% of the pool), which
is secured by a 31,000 SF retail property located in Herriman,
Utah. As of June 2018 the property was 96% leased,
unchanged from December 2017. The loan is fully amortizing and
has amortized by 57% since securitization. Moody's LTV and
stressed DSCR are 30.0% and greater than 3.00X,
respectively.
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.
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 credit rating action on the support provider and in relation to
each particular credit 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 credit rating action,
and whose ratings may change as a result of this credit 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.
Kevin Li
Analyst
Structured Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Matthew Halpern
Vice President - Senior Analyst
Structured Finance Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
