DBRS Downgrades One Class of GE Commercial Mortgage Corporation, Series 2005-C1

DBRS Limited (DBRS) downgraded the rating of one class of Commercial Mortgage Pass-Through Certificates, Series 2005-C1 issued by GE Commercial Mortgage Corporation, Series 2005-C1, as follows:

--Class D to C (sf) from CCC (sf)

In addition, DBRS confirmed the ratings on the following classes:

-- Class E at C (sf)
-- Class F at C (sf)
-- Class G at C (sf)

None of the ratings carry trends. Classes E, F and G also have the Interest in Arrears designation.

The rating downgrade of Class D reflects the increase in expected loss to the trust for the Lakeside Mall loan (Prospectus ID#1, 89.0% of the current pool balance), which is currently in special servicing. The loan transferred to special servicing in May 2016 for imminent maturity default and became real estate owned (REO) in August 2017 after a deed in lieu of foreclosure was obtained from the sponsor, General Growth Properties Inc. The property’s performance has worsened since becoming REO following the recent departure of the non-collateral Sears in September 2018, which was the largest of the five anchor stores at the property. Although long-term redevelopment discussions are ongoing, cash flows have been sustained well below issuance levels since 2010, while the property continues to experience downward-trending tenant sales with elevated competition in the market, which have already contributed to a significant decline in property value since issuance without consideration given to the departure of Sears. While DBRS acknowledges that the proceeds from a sale of the property could potentially repay Class D in full, the liquidation approach assumed by DBRS projects a significant loss to the trust, partially eroding the remaining balance of Class D. Per the August 2017 appraisal, the property’s value was estimated at $43.9 million, well below the July 2016 value of $107.5 million and the current whole loan exposure for this loan of approximately $145.0 as at the December 2018 remittance. The trust piece represents approximately 49.7% of the whole loan balance, with the other A-note piece held in the COMM 2005-LP5 trust, not rated by DBRS.

As at the January 2018 remittance, the transaction experienced a collateral reduction of 95.9% since issuance, with two of the original 127 loans outstanding and a current trust balance of approximately $68.0 million. The Versatile Warehouse loan (Prospectus ID#53, 11.0% of the current pool balance) is scheduled to mature in February 2020. This loan has exhibited stable performance year over year, reporting year-end 2017 and 2016 debt-service coverage ratios of 2.16 times (x) and 2.02x, respectively.

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

DBRS provides updated analysis and in-depth commentary in the DBRS Viewpoint platform for the following loans in the transaction:

-- Prospectus ID#1 – Lakeside Mall (89.0% of the pool)
-- Prospectus ID#53 – Versatile Warehouse (11.0% 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 most outstanding CMBS transactions (including non-DBRS rated), as well as loan level and transaction level commentary for most DBRS rated and monitored transactions.

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 & Criteria. 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.

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the rating process.

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

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