Fitch Affirms GE Capital Commercial Mortgage Corp. 2002-3; Assigns Outlooks & LS Ratings

NEW YORK--(BUSINESS WIRE)--Fitch Ratings has affirmed, assigned Rating Outlooks and Loss Severity (LS) ratings to GE Capital Commercial Mortgage Corp.'s (GECCM) commercial mortgage pass-through certificates, series 2002-3. A detailed list of rating actions follows the end of the press release.

The affirmations are due to stable performance and defeasance, along with limited Fitch expected losses upon disposition of specially serviced assets along with expected losses from Fitch's prospective review of potential stresses. Fitch expects losses of approximately 1.6%, or $14.3 million from loans in special servicing and loans that cannot refinance at maturity based on Fitch's refinance. These losses will be absorbed by the class not rated by Fitch. The majority of Fitch's expected losses are associated with loans currently in special servicing.

As of the April 2010 distribution date, the pool's certificate balance has paid down 25.1% to $876.4 million from $1.2 billion at issuance. Of the remaining 109 loans, 24 (23.1%) have defeased.

There are three specially serviced loans in the pool (5.1%). Two of the loans have foreclosed and one is real estate owned (REO).

The two largest specially serviced assets (4.7%) are cross-collateralized and cross-defaulted loans owned by the same borrower secured by two multifamily buildings located in downtown Denver, CO. The loans transferred in July 2009 for imminent default. There was a holdback reserve and that money was used to pay down principal.

The third largest specially serviced asset (0.4%) is a 72,357 square foot (sf) retail building located in Jackson, TN. The loan transferred to special servicing in January 2009 for monetary default. The building became REO in October 2009.

Fitch stressed the cash flow of the remaining non defeased loans by applying a 10% reduction to 2008 fiscal year end net operating income and applying an adjusted market cap rate between 7.5% and 10% to determine value.

Similar to Fitch's prospective analysis of recent vintage CMBS, each loan also underwent a refinance test by applying an 8% interest rate and 30-year amortization schedule based on the stressed cash flow. Loans that could refinance to a debt service coverage ratio (DSCR) of 1.25 times (x) or higher were considered to payoff at maturity. Of the non-defeased or non-specially serviced loans, eight loans (6.9% of the pool) incurred a loss when compared to Fitch's stressed value.

Fitch has affirmed, assigned Outlooks and LS ratings to the following classes:

--$90.1 million class A-1 at 'AAA/LS1'; Outlook Stable;

--$553.8 million class A-2 at 'AAA/LS1'; Outlook Stable;

--Interest-only class X-1 at 'AAA'; Outlook Stable;

--Interest-only class X-2 at 'AAA'; Outlook Stable;

--$46.8 million class B at 'AAA/LS3'; Outlook Stable;

--$16.1 million class C at 'AAA/LS4'; Outlook Stable;

--$26.3 million class D at 'AAA/LS3'; Outlook Stable;

--$14.6 million class E at 'AAA/LS4'; Outlook Stable;

--$10.2 million class F at 'AAA/LS4'; Outlook Stable;

--$17.6 million class G at 'AA+/LS4'; Outlook Stable;

--$11.7 million class H at 'AA-/LS4'; Outlook Stable;

--$27.8 million class J at 'A-/LS3'; Outlook Stable;

--$10.2 million class K at 'BBB/LS4'; Outlook Negative;

--$8.8 million class L at 'BBB-/LS5'; Outlook Negative;

--$10.2 million class M at 'BB/LS4'; Outlook Negative;

--$8.8 million class N at 'B+/LS5'; Outlook Negative;

--$5.9 million class O at 'B-/LS5'; Outlook Negative.

Fitch does not rate the $17.6 million class P certificates.

Additional information on Fitch's amended criteria for analyzing recent vintage U.S. CMBS is available in the July 7, 2009 report, 'Surveillance Methodology for Recent Vintage U.S. CMBS,' which is available at 'www.fitchratings.com' under the following headers:

Structured Finance >> CMBS >> Criteria Reports

Additional information is available at www.fitchratings.com.

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