Home

TEXT-S&P cuts 3 Bear Stearns Commercial Mortgage 2005-PWR9 ratings

18.05.12

April 25 - OVERVIEW -- We lowered our ratings on three classes from Bear Stearns Commercial Mortgage Securities Trust 2005-PWR9, a U.S. CMBS transaction. -- In addition, we affirmed our ratings on 11 other classes from the same transaction. -- The downgrades reflect credit deterioration within the collateral pool and credit support erosion that we anticipate will occur upon the eventual resolution of eight of the transaction's 10 loans that are currently with the special servicer. NEW YORK (Standard & Poor's) April 25, 2012--Standard & Poor's Ratings Services today lowered its ratings on three classes of commercial mortgage pass-through certificates from Bear Stearns Commercial Mortgage Securities Trust 2005-PWR9, a U.S. commercial mortgage-backed securities (CMBS) transaction. Concurrently, we affirmed our ratings on 11 other classes from the same transaction (see list). The downgrades reflect deterioration in the credit characteristics of the pool collateral, which under our 'AAA' scenario, yielded debt service coverage (DSC) of 0.92x and a (loan-to-value) ratio of 161.0%. The downgrades further reflect credit support erosion that we anticipate will occur upon the eventual resolution of eight ($93.4 million, 5.2%) of the transaction's 10 ($112.2 million, 6.3%) loans that are currently with the special servicer. The affirmed ratings on the principal and interest certificates reflect subordination and liquidity support levels that are consistent with the outstanding ratings. We affirmed our 'AAA (sf)' ratings on the class X-1 and X-2 interest-only (IO) certificates based on our current criteria. Using servicer-provided financial information, we calculated an adjusted DSC of 1.36x and a LTV ratio of 122.7%. We further stressed the loans' cash flows under our 'AAA' scenario to yield a weighted average DSC of 0.92x and an LTV ratio of 161.0%. The implied defaults and loss severity under the 'AAA' scenario were 76.1% and 37.0%, respectively. These DSC and LTV calculations exclude nine defeased loans ($101.9 million, 5.7%) and eight ($93.4 million, 5.2%) of the transaction's 10 ($112.2 million, 6.3%) loans that are currently with the special servicer. We separately estimated losses for these loans and included them in our 'AAA' scenario implied default and loss severity figures. CREDIT CONSIDERATIONS As of the April 11, 2012, trustee remittance report, eight ($95.2 million, 5.3%) loans in the pool were with the special servicer, Situs Holdings LLC (Situs). According to Situs, two additional loans, the Vista Plaza loan ($2.0 million, 0.1%) and the Baker Waterfront Plaza loan ($15.0 million, 0.9%), were transferred to special servicing subsequent to the April 2012 trustee remittance report. The reported payment status of the specially serviced loans is as follows: one is in foreclosure ($5.2 million, 0.3%), six are 90-plus days delinquent ($62.3 million, 3.5%), one is 60 days delinquent ($2.0 million, 0.1%) and two are current ($42.7 million, 2.4%). Appraisal reduction amounts (ARAs) totaling $34.6 million are in effect for seven of the specially serviced loans. Details on the three largest loans currently with the special servicer are as follows: The 2 & 4 Gannett Drive loan ($27.7 million, 1.5%), the largest specially serviced loan, is secured by two office buildings in Harrison, N.Y., totaling 219,000 sq. ft. The loan, which has a reported current payment status, was transferred to the special servicer on Jan. 28, 2011, due to imminent default. The reported DSC was 0.60x as of year-end 2011. According to Situs, negotiations for a discounted payoff (DPO) with the borrower are ongoing. We expect a moderate loss upon the eventual resolution of this loan. The Storage Bin Portfolio loan ($24.9 million, 1.4%), the second-largest specially serviced loan, is collateralized by a portfolio of five self-storage properties totaling 311,000 sq. ft. (2,741 units) in Southern New Jersey and Southeast Pennsylvania (two of the properties are first phases of a two-phase project). The loan has a reported 90-plus-days delinquent payment status and has a total reported exposure of $27.1 million. The loan was transferred to the special servicer on Oct. 11, 2010, due to imminent default. An ARA of $16.8 million is in effect against this loan. According to Situs, it has approved a final business plan that permits a DPO, which is being documented, in the amount of $17.0 million ($12.0 million plus an existing $5.0 million letter of credit). The borrower's year-end 2011 operating statements reported an effective gross income of $2.2 million, operating expenses of $1.3 million, net operating income of $916,000, and net cash flow of $870,000. The year-end 2011 reported DSC was 0.46x. We expect a significant loss upon the eventual resolution of this loan. The Baker Waterfront Plaza loan ($15.0 million, 0.9%), the third-largest loan with the special servicer, is secured by a 92,821-sq.-ft. office building in Hoboken, N.J. The loan, which has a reported current payment status, was transferred to special servicing due to imminent default on April 12, 2012.RELATED CRITERIA AND RESEARCH -- Global Structured Finance Scenario And Sensitivity Analysis: The Effects Of The Top Five Macroeconomic Factors, published Nov. 4, 2011. -- U.S. Government Support In Structured Finance And Public Finance Ratings, published Sept. 19, 2011. -- Updated Defeasance Criteria For U.S. CMBS Transactions, published Aug. 16, 2011. -- U.S. CMBS Rating Methodology And Assumptions For Conduit/Fusion Pools, published Nov. 3, 2010. -- Methodology And Assumptions For Analyzing The Major Property Types In U.S. CMBS Transactions, published June 14, 2010. -- Global Methodology For Rating Interest-Only Securities, published April 15, 2010. -- U.S. CMBS 'AAA' Scenario Loss And Recovery Application, published July 21, 2009. -- Standard & Poor's Defeasance Criteria For U.S. CMBS Transactions, published April 4, 2003. RATINGS LOWERED Bear Stearns Commercial Mortgage Securities Trust 2005-PWR9 Commercial mortgage pass-through certificates Rating Class To From Credit enhancement (%) C BB+ (sf) BBB- (sf) 10.89 D BB- (sf) BB (sf) 9.54 E B (sf) B+ (sf) 7.89 RATINGS AFFIRMED Bear Stearns Commercial Mortgage Securities Trust 2005-PWR9 Commercial mortgage pass-through certificates Class Rating Credit enhancement (%) A-2 AAA (sf) 22.90 A-3 AAA (sf) 22.90 A-AB AAA (sf) 22.90 A-4A AAA (sf) 32.53 A-4B AA (sf) 22.90 A-1A AA (sf) 22.90 A-J BBB+ (sf) 13.59 B BBB (sf) 12.84 F CCC- (sf) 6.69 X-1 AAA (sf) N/A X-2 AAA (sf) N/A N/A--Not applicable.

Source: Reuters

Wealth Check: 'Can we prepare for an income fall during teacher training?'

18.05.12

Michael and Jo Tinker are keen to build up both their short and longer-term savings, and also to put aside as much as they can for their two children, Eleanor, three, and Jonathan, 18 months.

Michael, 29, is a music teacher who works part-time at two schools, and part-time as a private guitar and singing tutor. He also does gigs as a solo artist and with a band.

In total, he earns around £1,700 a month; Jo, 30, is a full-time mum.

The Tinkers live in a three-bed mid-terrace house in Sheffield which they part-own with Jo's parents. "We have a mortgage of around £43,000 outstanding," says Jo. "My parents then charge us rent for the other half which costs us £208 per month."

The mortgage is a tracker deal with Barclays/Woolwich at 0.19 per cent above the base rate – so 0.69 per cent. "This is a repayment mortgage and we have made some overpayments," says Jo.

The couple have worked hard to squirrel money away and currently have around £4,000 in a cash individual savings account (ISA) with the Halifax, paying 3 per cent, and £450 in a Barclays ISA which is paying 2.5 per cent.

Source: The Independent