DBRS Morningstar Confirms All Classes of GE Commercial Mortgage Corporation, Series 2005-C1

DBRS, Inc. (DBRS Morningstar) confirmed the ratings of all classes of Commercial Mortgage Pass-Through Certificates, Series 2005-C1 issued by GE Commercial Mortgage Corporation, Series 2005-C1, as follows:

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

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

The rating confirmations reflect the anticipated losses to the trust as a result of the liquidation of the Lakeside Mall loan (Prospectus ID#1, 89.5% of the current pool balance). 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 departures of the non-collateral anchors Sears and Lord & Taylor in September 2018 and September 2019, respectively. Various public articles reported the mall had been sold to Out of the Box Ventures for $26.5 million, which is well below the issuance-appraised value of $305.0 million. DBRS Morningstar is uncertain whether the sale also included the non-collateral Sears, Lord & Taylor, Macy’s, and JCPenney anchor spaces; therefore, DBRS Morningstar utilized the most recent appraised collateral value of $17.4 million dated November 2018 in its analysis. The trust piece represents approximately 49.7% of the whole loan balance, with an equal A-note piece held in the COMM 2005-LP5 trust (not rated by DBRS Morningstar) and a small B-note. The DBRS Morningstar analysis projects a loss severity near 100% for the loan inclusive of all anticipated fees, expenses, and accrued interest. The servicer confirmed the sale; however, liquidation proceeds were not finalized as of January 2020. DBRS Morningstar anticipates Classes E, F, and G to have complete principal losses and Class D to have a partial principal loss in the near term.

The remaining loan in the pool, Versatile Warehouse (Prospectus ID#53; 10.5% of the current pool balance), was placed on the servicer’s watchlist in November 2019 due to the upcoming loan maturity date in February 2020. The loan is secured by 28 mixed-use buildings that include warehouse, self-storage, and retail spaces located in Davie, Florida, approximately 24 miles north of the Miami central business district. The loan has exhibited strong and stable operating history with a trailing nine-month ending September 2019 debt service coverage ratio (DSCR) of 2.39 times (x), compared with the year-end (YE) 2018 DSCR of 2.56x, YE2017 DSCR of 2.12x, and YE2016 DSCR of 2.02x. The servicer reported an occupancy rate of 94.0% as of September 2019, slightly down from the December 2018 occupancy rate of 97.0%. The tenant base is granular and there appears to be no large lease rollover risk in the near term. Based on the reported information, DBRS Morningstar anticipates a full loan payoff upon maturity.

As of the December 2019 remittance, the transaction has had a collateral reduction of 96.0% since issuance, with two of the original 127 loans outstanding and a current trust balance of approximately $67.3 million. The recent sale of Lakeside Mall and upcoming loan maturity of Versatile Warehouse suggests the trust will be dissolved in the near term.

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

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

-- Prospectus ID#1 – Lakeside Mall (89.5% of the pool)
-- Prospectus ID#53 – Versatile Warehouse (10.5% 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 Morningstar rated), as well as loan-level and transaction-level commentary for most DBRS Morningstar-rated and -monitored transactions.

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

The principal methodology is 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 Morningstar 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 rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar 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. Please note a sensitivity analysis is not performed for CMBS bonds rated CCC or lower. The DBRS Morningstar 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.

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