DBRS Downgrades Two Classes of GE Commercial Mortgage Corporation, Series 2004-C2

DBRS Limited (DBRS) downgraded the remaining two classes of Commercial Mortgage Pass-Through Certificates, Series 2004-C2 issued by GE Commercial Mortgage Corporation, Series 2004-C2 as follows:

-- Class N to C (sf) from BB (high) (sf)
-- Class O to C (sf) from B (sf)

The rating downgrades reflect DBRS’s loss projection for the one remaining loan in the pool, Continental Centre (Prospectus ID#8), which is currently in special servicing. The loan is secured by a Class B office property in downtown Columbus, Ohio, and was initially transferred to special servicing in December 2012 for imminent default due to cash flow issues at the property. The loan was modified with a bifurcated A/B note and an extended maturity through March 2019 and returned to the master servicer in September 2014. After successfully performing under the modified terms for the next few years, the loan transferred back to special servicing in May 2017 for imminent default due to tenancy issues. According to the latest appraisal obtained by the special servicer, dated June 2018, the property was valued at $8.7 million, below the June 2017 value of $10.9 million and well below the issuance value of $35.0 million. The latest appraised value with the current whole-loan exposure is $23.1 million as at the July 2019 remittance.

For this review, DBRS assumed a loss severity in excess of 90.0%, suggesting losses will take out the remainder of the Class O certificate balance, as well as the majority of the Class N certificate balance, with limited principal recovery. DBRS also notes that the June 2018 appraisal is likely to be updated in the near term and believes another value decline could be possible given the lack of leasing traction at the property over the last year and continued market headwinds.

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 loan in the transaction:

-- Prospectus ID#8 — Continental Centre (100.0% 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 commercial mortgage-backed security 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 the North American CMBS Surveillance Methodology, which can be found on www.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, which can be found on www.dbrs.com in the Commentary tab under Regulatory Affairs. 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 note a sensitivity analysis is not performed for CMBS bonds rated CCC or lower. The DBRS long-term rating scale definition indicates that ratings of CCC or lower are assigned when the bond is highly likely to default or default is imminent, thereby prevailing over a sensitivity analysis.

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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