DBRS Confirms 13, Downgrades Seven Classes of GE Commercial Mortgage Corporation, Series 2005-C1

DBRS has today confirmed Classes A-2 through AJ, including notional classes X-1 and X-2 at ‘AAA’, Class B at AA (high), Class C at AA (low), Class D at ‘A’, Class E at ‘A’ (low), Class F at BBB (high) and Class G at BBB with Stable trends.

In addition, DBRS has downgraded seven classes of the transaction (classes K through O with Negative trends) based on the projected resolutions of five specially serviced loans (13.9% of the pool) and the number of loans added to the HotList since DBRS’s last review. Uncertainties surrounding the refinance prospects of 24 non-defeased loans (24.7% of the pool) that are scheduled to mature by February 1, 2010 are also of concern to DBRS. While many of these loans have reported stable YE2008 NCFs, 12 loans (13.2% of the pool) have debt yields below 10.0% (whole-loan basis). Three of these loan maturities are in the top ten (12.0% of the pool). Given the current market environment, the high outstanding balances of these loans and the fact that two are sponsored by General Growth Properties, Inc. (GGP), DBRS expects these loans will have challenges obtaining new financing. DBRS has also removed the respective BBB (low) shadow-ratings from the GGP sponsored loans and confirmed the A (low) shadow-rating of Buckhead Station Shopping Center (1.7% of the pool).

After approximately 52 months of seasoning, the transaction has had a collateral reduction of 4.9%, as a result of loan amortization and the prepayment of one loan. The transaction’s WADSCR has improved to 1.65x and a total of 11 loans have fully defeased since issuance (10.9% of the pool), providing the senior classes of the transaction with additional stability.

The pool is well diversified in terms of location, the highest percentage of collateral is located in California (16.7% of the pool) and New York (8.9% of the pool). In regards to property type, retail and office assets represent the highest concentrations with 32.0% and 30.4%, respectively.

Associated losses from the five loans in special servicing are currently projected to reach Class O, driven by the estimated liquidation of the Washington Mutual Buildings (2.7% of the pool). The loan is more than 90 days delinquent and was transferred to special servicing in March 2009 after the sole tenant, JPMorgan Chase (Chase) rejected its lease. Chase had an agreement with the Federal Deposit Insurance Corporation (FDIC) as part of the Washington Mutual (WaMu) takeover that gave Chase the right to reject certain WaMu leases that were not performing or were under performing. The three, Class B office properties that secure the loan are located outside of Los Angeles and were previously 100% occupied by WaMu on long-term leases. The special servicer recently received formal lease rejections and a foreclosure sale is scheduled for September 10, 2009.

In total, there are eight loans (5.2% of the pool) on the DBRS HotList, primarily for DSCRs below 1.0x and upcoming maturities. Four of these loans are multi-family properties, two are retail assets and the remaining two loans are secured by a self storage facility and an office property.

The applicable methodology is CMBS Rating Methodology, which can be found on our website under Methodologies.

This is a Structured Finance rating.

Note:
All figures are in U.S. dollars unless otherwise noted.