Fitch Downgrades 13 Classes from BSCMSI 2005-PWR7; Assigns Outlooks & LS Ratings

The downgrades are the result of Fitch's loss expectations and its prospective views regarding cash flow declines and commercial real estate market values. Fitch forecasts potential losses of 5.0% for this transaction, should market conditions not recover. Today's rating actions are based on the full losses of 5.0% as a majority of loans mature in the next five years. The bonds with Negative Outlooks indicate classes that may be downgraded in the future.

To determine potential defaults for each loan, Fitch assumed cash flow would decline by 10% from year-end 2008. That is consistent with the analysis used in its review of recent vintage transactions whereby cash flow was assumed to decline 15% from year-end 2007 projected over a three-year period. If the stressed cash flow would cause the loan to fall below 0.95 times (x) debt service coverage ratio (DSCR), Fitch assumed the loan would default during the term. To determine losses, Fitch used the above stressed cash flow and applied a market cap rate by property type, ranging between 7.5% and 9.5%, to derive a value. If the loan balance at default is less than Fitch's derived value, the loan would realize that amount of loss. These loss estimates were reviewed in more detail for loans representing 55.4% of the pool and, in certain cases, revised based on additional information and/or property characteristics. Loss expectations attributed to loans reviewed in detail represent 100% of the 5.0%.

Approximately 70% of the mortgages mature within the next five years as follows: 0.5% in 2011, 17.5% in 2014, and 51.8% in 2015.

Fitch identified 119 Loans of Concern (25.0%) within the pool, two of which (8.0%) are specially serviced. Six of the Fitch Loans of Concern (18.8%) are within the transaction's top 15 loans, and two (8.0%) is specially serviced.

Losses are expected on five (15.5%) of the loans within the Top 15: four (14.0%) have defaulted, or are expected to default during the term, while losses on one loan (1.5%) are expected at maturity. Loss severities associated with these loans range from 9% to 48%. The largest overall contributors to deal loss are as follows: Shops at Boca Park (5.4%), Marquis Apartments (4.3%), and Garden State Pavilion (2.6%).

The Shops at Boca Park loan is secured by a 277,472 square foot (sf) lifestyle center in Summerlin, NV, northwest of Las Vegas. The loan transferred to the special servicer Oct. 20, 2009 for imminent default. As of the August 2009 rent roll, the property was 85% occupied, down from 97.9% at issuance. The largest tenants are The Great Indoors (50.22% of net rentable area [NRA], expires 2022), Recreation Equipment, Inc. (10.6%, expires 2019) and The Cheesecake Factory (3.55%, expires 2015). The property has lost a number of tenants as Las Vegas and the surrounding suburbs have been hit by the current economic downturn. The Las Vegas retail market continues to see the effect of the current economic downturn with PPR forecasting vacancy to peak at 27.5% next year. The servicer reported DSCR as of July 31, 2009 was 0.96x.

The Marquis Apartments loan is collateralized by a 641-unit multifamily property in King Prussia, PA. Property amenities include: 24-hour security, a fitness center, outdoor and indoor heated pool, parking, a clubhouse and large outdoor recreation areas. Occupancy at the property declined to 78% during the second quarter of 2009, down from 93% at issuance. The servicer reported DSCR as of June 30, 2009 was 0.78x, reflecting the drop in occupancy. The loan remains current as of November 2009; however, Fitch expects the loan may default during the term due to the declining occupancy.

The Garden State Pavilion loan is secured by a 389,384 sf anchored retail center in Cherry Hill, NJ. The largest tenants at the property are Shop Rite (27.9% of NRA, expires 2024), Ross Stores (11.7%, expires 2015), Staples (9.2%, expires 2013), Petco (7.3%, expires 2016), Racetrack Supermarket (3.9%, expires 2024), and Old Country Buffet (3.9%, expires 2013). The loan transferred to the special servicer Jan. 5, 2009 and is currently 90+ days delinquent. Occupancy has dropped to 72% from 82% at issuance. The decline in occupancy was manly driven by the loss of Old Navy and Rack Room Shoes. As of Sept. 20, 2009, servicer reported DSCR was 0.54x. The special servicer is pursuing foreclosure of the property.

Fitch has taken the following rating actions as highlighted below. The rating actions include downgrades, removal of classes from Rating Watch Negative, the assignment and revision of Recovery Ratings (RRs), Loss Severity (LS) ratings and Rating Outlooks:

--$85.7 million class A-J to 'AA/LS3' from 'AAA'; Outlook Stable;

--$33.7 million class B to 'A/LS4' from 'AA'; Outlook Stable;

--$8.4 million class C to 'BBB/LS5' from 'AA-'; Outlook Stable;

--$15.5 million class D to 'BB/LS5' from 'A'; Outlook Stable;

--$11.2 million class E to 'BB/LS5' from 'BBB+'; Outlook Negative;

--$11.2 million class F to 'BB/LS5'from 'BBB'; Outlook Negative;

--$9.8 million class G to 'B/LS5' from 'BBB-'; Outlook Negative;

--$12.7 million class H to 'B-/LS5' from 'BB-'; Outlook Negative;

--$4.2 million class J to 'B-/LS5' from 'B+'; Outlook Negative;

--$4.2 million class K at 'CCC/RR6' from 'B';

--$5.6 million class L at 'CCC'/RR6 from 'B-';

--$4.2 million class M at 'C/RR6' from 'CCC/RR1';

--$1.4 million class N at 'C/RR6' from 'CC/RR1'.

Fitch also affirms the following classes and assigns LS ratings, Rating Outlooks and revises Recovery Ratings as indicated:

--$170.2 million class A-2 at 'AAA/LS1'; Outlook Stable;

--$106 million class A-AB at 'AAA/LS1'; Outlook Stable;

--$527.7 million class A-3 at 'AAA/LS1'; Outlook Stable;

--Interest-only class X-1 at 'AAA'; Outlook Stable;

--Interest-only class X-2 at 'AAA'; Outlook Stable;

--$2.8 million class P at 'C/RR6'.

Class A-1 has paid in full. Fitch does not rate the $14 million class Q.

Additional information on Fitch's amended criteria for analyzing recent vintage U.S. CMBS is available in the July 8, 2009 report, 'Surveillance Methodology for Recent Vintage U.S. CMBS' is available at 'www.fitchratings.com' under the following headers:

Structured Finance then CMBS then Criteria Reports

Structured Finance then CMBS then Special Reports

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

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE.

Fitch Ratings
Jonathan Teichmann, 212-908-0862, New York
Britt Johnson, 312-606-2341, Chicago
or
Media Relations:
Sandro Scenga, 212-908-0278, New York
Email: sandro.scenga@fitchratings.com