NEW YORK - (Business Wire) Fitch Ratings has placed two classes of Bear Stearns Commercial Mortgage Securities, Inc. (BSCMSI) Series 2006-BBA7 on Rating Watch Negative. The Negative Watch is due to interest shortfalls as a result of special servicing fees associated with the Citigroup Property Investors Hilton Portfolio (6.7%). The loan transferred to the special servicer in July 2009 for imminent default. The servicer continues to negotiate with the borrower regarding workout options, including the borrower's request to exercise the loan's final, one-year extension option. The loan remains current. The classes will remain on Rating Watch Negative while Fitch determines the probable duration and potential recovery of the shortfalls.
Two loans remain in the transaction: The Columbia Sussex Portfolio (93.1%), and The Hilton Portfolio (6.7%). As of June 2009, the Columbia Sussex Portfolio reported a debt service coverage ratio (DSCR) of 3.38 times (x), and the Hilton Garden Inn reported a DSCR of 2.60x.
Fitch expects hotel performance will continue to be affected by the weak economy. The loans remaining in the pool are hotel assets, which have been among one of the most affected property types. Fitch expects performance may continue to decline through year-end 2009, or until business and leisure travel demands increase.
Fitch has placed the following classes on Rating Watch Negative:
--$8.8 million class J 'BBB';
--$9.6 million class K 'BBB-'.
Additional information is available at 'www.fitchratings.com'.
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