DBRS Morningstar Downgrades Two Classes of GE Commercial Mortgage Corporation, Series 2007-C1

DBRS Limited (DBRS Morningstar) downgraded the ratings of the following two remaining classes of Commercial Mortgage Pass-Through Certificates, Series 2007-C1 issued by GE Commercial Mortgage Corporation, Series 2007-C1, as follows:

-- Class A-M to D (sf) from C (sf)
-- Class A-MFX to D (sf) from C (sf)

DBRS Morningstar has also removed the Interest in Arrears designation on Classes A-M and A-MFX.

The rating downgrades are the result of the most recent realized losses to the Trust, which occurred after the Wellpoint Office Tower (Prospectus ID#10) and JP Morgan Portfolio (Prospectus ID#7) loans were liquidated from the Trust at a loss of $66.4 million and $127.8 million, respectively, with the December 2020 remittance. The loss eroded the remaining balance on Classes A-M and A-MFX. Since issuance, the transaction has experienced a cumulative loss of $736.9 million with the December 2020 remittance.

The Wellpoint Office Tower loan, which was secured by a 450,000-sf office building in Woodland Hills, California, had been in special servicing since November 2019 for maturity default. In June 2020, an updated appraisal had been provided, with the property’s value reported at $39.1 million ($87 psf), compared with an issuance value of $150 million ($335 psf). This loan ultimately liquidated from the trust with the December 2020 remittance, incurring a realized trust loss of $66.4 million, resulting in a realized loss severity of 59.2%.

The JP Morgan Portfolio loan was originally secured by a 40-story, Class A office tower and accompanying parking garage in the Phoenix, Arizona, CBD, and a 17-story Class B office tower in downtown Houston, Texas. The loan transferred to the special servicer in March 2017 for imminent balloon default and the servicer proceeded with foreclosure. In February 2018 the Phoenix collateral was sold, with a $62.1 million paydown applied in April 2018. The remaining Houston property was most recently valued in March 2019, when an appraised value of $42.0 million was reported, down from $52.0 million in the previous year and $63.2 million at issuance. This remaining loan balance was liquidated from the trust with the December 2020 remittance, incurring a realized trust loss of $127.8 million, resulting in a realized loss severity of 95.0%.

There are no outstanding ratings remaining following the above-referenced rating action. As such, this concludes DBRS Morningstar’s surveillance of this transaction.

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework and its methodologies can be found at: https://www.dbrsmorningstar.com/research/357792.

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

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

The principal methodology is North American CMBS Surveillance Methodology (March 6, 2020), which can be found on dbrsmorningstar.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 dbrsmorningstar.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.

For more information regarding rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/357883.

For more information regarding structured finance rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/358308.

For more information regarding the structured finance rating approach and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/359905.

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@dbrsmorningstar.com.

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

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

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