DBRS Discontinues One Class and Confirms Two Classes of GE Commercial Mortgage Corporation, Series 2004-C2

DBRS Limited (DBRS) confirmed two classes of Commercial Mortgage Pass-Through Certificates, Series 2004-C2 (the Certificates) issued by GE Commercial Mortgage Corporation, Series 2004-C2, as listed below.

-- Class N at BB (high) (sf)
-- Class O at B (sf)

DBRS also withdrew the rating on the following class:

-- Class X-1

All trends are Stable.
The rating on Class X-1 was withdrawn as the largest loan in the transaction, which represents 98.4% of the pool, was originally extended past its initial maturity date in 2014 but is now in special servicing. While the payments are still being advanced, DBRS deemed it appropriate to withdraw the rating of Class X-1 as the transaction is winding down with limited term risk and expected payments to Class X-1 are coming to an end. The two fully amortizing defeased loans that remain are expected to repay by the end of the year and have a minimal contribution to Class X-1.

The rating confirmations reflect the current performance of the transaction, which has experienced a collateral reduction of 98.3% since issuance. As of the September 2018 remittance, only three of the original 119 loans are outstanding with a cumulative trust balance of $23.5 million. The remaining two loans, representing 1.6% of the pool, are secured by defeasance collateral and mature in December 2018.

The largest loan, Continental Centre (Prospectus ID#8, 98.4% of the pool), is secured by a Class B office property in downtown Columbus, Ohio. The loan initially transferred to special servicing in December 2012 for imminent default due to cash flow issues at the property and returned to the master servicer in September 2014 after the loan was modified with a bifurcated A/B note. After successfully performing under the modified terms for year, the loan transferred back to special servicing in May 2017 for imminent default due to tenancy issues. The property’s former largest tenant, AT&T, elected to downsize its space from 33.5% of net rentable area (NRA) to 3.9% of NRA at lease expiration in December 2017. Additionally, Miami Jacobs Career College (9.1% of NRA) will vacate at its lease expiration at the end of September 2018. Following Miami Jacobs Career College departure, occupancy will fall to approximately 40.8%. Since the loan was modified, loan performance has improved as the loan reported an A-note year-end (YE) 2017 debt-service coverage ratio (DSCR) of 2.94 times (x) and a YE2016 DSCR of 2.84x. When adjusting for the loss of revenue from AT&T and Miami Jacobs Career College, however, the implied A-note DSCR is approximately 1.08x.

All ratings will be subject to ongoing surveillance, which could result in ratings being upgraded, downgraded, placed under review, confirmed or discontinued by DBRS.

As part of this review, DBRS has provided updated analysis and in-depth commentary in the DBRS Viewpoint platform for the following loans in the transaction:

-- Continental Centre (Prospectus ID#8, 98.4% of the pool)

For complimentary access to this content, please register for the DBRS Viewpoint platform at www.viewpoint.dbrs.com. The platform includes issuer and servicer data for the entire CMBS universe, as well as deal and loan-level commentary for all DBRS rated transactions.

The rating assigned to Class N is different than that implied by the analysis within the DBRS North American Direct Sizing Hurdles because of the loan level event risk posed by the value volatility associated with the Continental Centre loan.

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

The principal methodology is North American CMBS Surveillance, which can be found on dbrs.com under Methodologies. For a list of the Structured Finance related methodologies that may be used during the rating process, please see the DBRS Global Structured Finance Related Methodologies document on www.dbrs.com. Please note that not every related methodology listed under a principal Structured Finance asset class methodology may be used to rate or monitor an individual structured finance or debt obligation.

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link under Related Documents or by contacting us at info@dbrs.com.

The rated entity or its related entities did participate in the rating process for this rating action. DBRS had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

For more information on this credit or on this industry, visit www.dbrs.com or contact us at info@dbrs.com.