DBRS Confirms 22 Classes of GECMC, Series 2005-C1; Designates 13 as Having Interests in Arrears

DBRS has today confirmed the ratings of 22 classes of Commercial Mortgage Pass-Through Certificates, Series 2005-C1, issued by GE Commercial Mortgage Corporation, Series 2005-C1 (the Trust), as follows:

– Class A-2 at AAA (sf)
– Class A-3 at AAA (sf)
– Class A-4 at AAA (sf)
– Class A-AB at AAA (sf)
– Class A-5 at AAA (sf)
– Class A-1A at AAA (sf)
– Class A-J at AAA (sf)
– Class B at AA (low) (sf), Interest in Arrears
– Class C at A (sf), Interest in Arrears
– Class D at BBB (low) (sf), Interest in Arrears
– Class E at B (sf), Interest in Arrears
– Class F at C (sf), Interest in Arrears
– Class G at C (sf), Interest in Arrears
– Class H at C (sf), Interest in Arrears
– Class J at C (sf), Interest in Arrears
– Class K at C (sf), Interest in Arrears
– Class L at C (sf), Interest in Arrears
– Class M at C (sf), Interest in Arrears
– Class N at C (sf), Interest in Arrears
– Class O at C (sf), Interest in Arrears
– Class X-C at AAA (sf)
– Class X-P at AAA (sf)

Class B through Class O have Interest in Arrears. DBRS does not rate the first-loss piece, Class P, which also has interest in arrears. All trends are Stable.

DBRS has today designated three investment-grade classes, Class B through Class D, as having Interest in Arrears. These classes have experienced an interest shortfall as a result of the full payout of the Ward Centers loan (Prospectus ID#4) from the pool. This loan was modified because of the bankruptcy of General Growth Properties Inc. (GGP) and as a result, the special servicer was due a 1% workout fee associated with the payoff of this loan, which totaled more than $500,000. The master servicer paid this fee from the interest due the Trust, which had a negative impact on bondholders, as reflected in the November 2011 remittance report. According to DBRS analysis and information provided to DBRS, all else remaining the same, the interest shortfalls to Class B should be recovered in one month; the interest shortfalls to Class C should be recovered in two months; and the interest shortfalls to Class D should be recovered in four to five months.

DBRS is also paying special attention to the Lakeside Mall loan (Prospectus ID#1), as it is subject to the GGP bankruptcy rulings as well. This loan, like the Ward Centers loan, was modified, which would entitle the special servicer to another 1% workout fee when the loan refinances. Like Ward Centers, the loan is not prohibited from prepayment, and if it did repay earlier than its 2016 modified maturity date, it would cause interest shortfalls up the capital structure within the transaction, much like was experienced in the November 2011 remittance.

The rating confirmations are supported by transaction-level performance that is in line with the metrics at the time of the last DBRS review. As of the November 2011 remittance report, there are 97 loans remaining in the pool, reporting a weighted-average debt service coverage ratio (DSCR) of 1.59 times (x) and a weighted-average debt yield of 10.9%. Approximately 36.5% of the collateral has been reduced since issuance.

DBRS shadow-rates one loan, Buckhead Station (Prospectus ID#12, 2.2% of the current pool balance), as investment grade. DBRS has today confirmed that the performance of this loan remains consistent with investment-grade loan characteristics.

Since the last annual review, four loans previously in special servicing have been liquidated from the Trust. These four loans caused a realized loss of $15.93 million to the Trust.

Five loans remain in special servicing, comprising 8.3% of the current pool balance. The largest of these loans, Washington Mutual Buildings (Prospectus ID#9, 3.5% of the current pool balance), has been in special servicing for more than two years. The loan is unsecured after the two office properties, located in Chatsworth, California, that served as collateral for the loan were sold and the proceeds were applied to the Trust in the November 2010 remittance report. Using the updated information, DBRS has re-modeled this loan, which has a current balance of $39.05 million, at a 100% loss severity. The loan continues to remain in the pool because of ongoing litigation between the lender and guarantor that may result in additional recoveries for the Trust.

The two remaining lender-owned properties in the pool are Oak Park Office Center (Prospectus ID#25, 1.8% of the current pool balance) and Heritage on the River (Prospectus ID#42, 1.2% of the current pool balance). The Oak Park Office Center loan is secured by a 173,000 square foot (sf) office property in Houston and has a current balance of $20.48 million. The Heritage on the River loan is secured by a 301-unit multifamily property in Jacksonville, Florida, and has a current balance of $13.18 million. Using updated appraisals for both properties, the Oak Park Office Center loan was re-modeled with a loss severity of 1% and the Heritage on the River loan was modeled with a loss severity of 48%.

There are 23 loans on the servicer’s watchlist, representing 30.1% of the current pool balance. More information on these loans can be found in the DBRS Monthly CMBS Surveillance Report.

The DBRS analysis included an in-depth look at the top 15 loans in the transaction, in addition to the loans on the servicer’s watchlist, shadow-rated loans and the loans in special servicing. Cumulatively, these loans represent 51% of the current pool balance.

DBRS continues to monitor this transaction on a monthly basis for changes at the bond and loan level. Although DBRS has conservatively projected losses for the specially serviced and most pivotal loans in the transaction, we continue to monitor these loans on a monthly basis for any changes that may affect the losses that those loans may realize.

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

The applicable methodologies are CMBS Rating Methodology and CMBS North America Surveillance Methodology, which can be found on our website under Methodologies.