NEW YORK--()--Fitch Ratings has downgraded four classes and removed seven classes from Rating Watch Negative of GE Commercial Mortgage Corporation (GECMC) commercial mortgage pass-through certificates series 2005-C1. A detailed list of rating actions follows at the end of this press release.
Classes AJ through G were placed on Rating Watch Negative due to interest shortfalls on the August 2012 payment date. The shortfalls were the result of the liquidation of the Washington Mutual Buildings loan, which also resulted in an approximately $46 million loss to the trust. While the interest shortfalls to Classes AJ, and B were cured as of the November 2012 payment date, Fitch believes that there is a possibility that interest shortfalls could again affect these classes again prior to class repayment. According to Fitch's global criteria for rating caps, Fitch will not assign or maintain 'AAAsf' or 'AAsf' ratings for notes that it believes have a high level of vulnerability to interest shortfalls or deferrals, even if permitted under the terms of the documents (for more information please see the full report titled 'Criteria for Rating Caps in Global Structured Finance Transactions', dated Aug. 2, 2012, at www.fitchratings.com). Interest shortfalls are currently impacting classes D through P.
The downgrades to classes F and G reflect an increase in both actual and expected losses since Fitch's last review primarily due to the August 2012 liquidation of the Washington Mutual Buildings loan, as well as newly transferred assets and updated valuations of properties currently in special servicing. Fitch modeled losses of 2.8% of the remaining pool; expected losses on the original pool balance total 5.8%, including losses already incurred. The pool has experienced $69.8 million (4.2% of the original pool balance) in realized losses to date. Fitch has designated 21 loans (23.7%) as Fitch Loans of Concern, which includes four specially serviced assets (5.6%).
As of the November 2012 distribution date, the pool's aggregate principal balance has been reduced by 42.1% to $969 million from $1.67 billion at issuance. Per the servicer reporting, nine loans (9.2% of the pool) have defeased since issuance.
The largest contributor to Fitch-expected losses is the specially-serviced Skytop Pavilion loan (1.4% of the pool), which is secured by a 133,631 square foot (sf) grocery anchored retail center in Cincinnati, OH. The property is anchored by Bigg's (51.3% net rentable area [NRA]), a subsidiary of Supervalue Inc. (rated 'CCC' by Fitch). The property has experienced cash flow issues since second quarter 2011, primarily due to the vacancy of Gold's Gym (previously 33.9% NRA). The July 2012 rent roll reported occupancy at 65%. The year end (YE) December 2011 net operating income (NOI) debt service coverage ratio (DSCR) reported at 1.05 times (x). The loan transferred to special servicing in May 2012 for payment default. The servicer is in discussions with the borrower for potential workout scenarios.
The next largest contributor to Fitch-expected losses is a 62,177sf office building in Bay Shore, NY (0.6%). The property has experienced cash flow issues from occupancy declines. The loan transferred to special servicing in June 2011 for payment default. The servicer-reported occupancy was 29% as of June 2012. The borrower has recently been unresponsive to contact attempts by the servicer. The servicer is currently pursuing foreclosure.
The third largest contributor to Fitch-expected losses is the Lakeside Mall loan (8.6%), which is secured by the in-line space and one of five anchors (Macy's Men's & Home) of a two-level 1.5 million SF regional mall located in Sterling Heights, MI within the Detroit metropolitan statistical area (MSA). Additional non-collateral anchors include Lord & Taylor and Sears. The servicer reported the collateral occupancy at 75% as of December 2011. The NOI DSCR reported at 1.25x YE December 2011, compared to 1.36x at YE December 2010. The loan is sponsored by General Growth Properties, and is current as of the November 2012 payment date.
Fitch downgrades and assigns Outlooks and Recovery Estimates (REs) to the following classes as indicated:
--$110.9 million class A-J to 'Asf' from 'AAAsf'; Outlook Stable;
--$41.9 million class B to 'Asf' from 'AAsf'; Outlook Stable;
--$23 million class F to 'CCCsf' from 'BBsf'; RE 100%;
--$14.6 million class G to 'CCsf' from 'B-sf'; RE 85%.
Fitch affirms d assigns or revises Rating Outlooks and REs as indicated for the following classes:
--$120.6 million class A-3 at 'AAAsf'; Outlook Stable;
--$36.8 million class A-4 at 'AAAsf'; Outlook Stable;
--$20.6 million class A-AB at 'AAAsf'; Outlook Stable;
--$457.9 million class A-5 at 'AAAsf'; Outlook Stable;
--$68.2 million class A-1A at 'AAAsf'; Outlook Stable
--$16.7 million class C at 'Asf'; Outlook Stable;
--$27.2 million class D at 'BBBsf'; Outlook Negative;
--$14.6 million class E at 'BBB-sf'; Outlook Negative;
--$16 million class H at 'Dsf'; RE 0%;
--Class J at 'Dsf'; RE 0%;
--Class K at 'Dsf'; RE 0%;
--Class L at 'Dsf'; RE 0%;
--Class M at 'Dsf'; RE 0%;
--Class N at 'Dsf'; RE 0%;
--Class O at 'Dsf'; RE 0%.
Classes A-J, B, C, D, E, F, and G have been removed from Rating Watch Negative.
Classes J, K, L, M, N, and O have been reduced to zero due to realized losses. The class A-1 and A-2 certificates have paid in full. Fitch does not rate the class P certificates. Fitch previously withdrew the ratings on the interest-only class X-P and X-C certificates.
Additional information on Fitch's criteria for analyzing U.S. CMBS transactions is available in the Dec. 21, 2011 report, 'Surveillance Methodology for U.S. Fixed-Rate CMBS Transactions', which is available at 'www.fitchratings.com' under the following headers:
Structured Finance >> CMBS >> Criteria Reports
Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' (June 6, 2012);
--'Surveillance Methodology for U.S. Fixed-Rate CMBS Transactions' (Dec. 21, 2011);
--'Criteria for Rating Caps in Global Structured Finance Transactions' (Aug. 2, 2012).
Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria
Surveillance Methodology for U.S. Fixed-Rate CMBS Transactions
Criteria for Rating Caps in Global Structured Finance Transactions