Fitch Downgrades 11 Classes of GMAC 2004-1; Assigns RR & LS Ratings

NEW YORK--(BUSINESS WIRE)--Fitch Ratings downgrades and assigns or revises Loss Severity (LS) ratings, Recovery Ratings and Rating Outlooks to the following classes of GMAC Commercial Mortgage Securities, Inc., Series 2004-1 (GMAC 2004-1) commercial mortgage pass-through certificates:

--$15.3 million class D to 'AAsf/LS5' from 'AA+sf/LS4'; Outlook to Negative from Stable;

--$8.1 million class E to 'BBBsf/LS5' from 'AAsf/LS5'; Outlook to Negative from Stable;

--$12.6 million class F to 'BBsf/LS5' from 'Asf/LS4';

Outlook Negative;

--$8.1 million class G to 'B-sf/LS5' from 'BBBsf/L5'; Outlook Negative;

--$10.8 million class H to 'CCCsf/RR2' from 'BBsf/LS5';

--$4.5 million class J to 'CCCsf/RR2' from 'BBsf/LS5';

--$4.5 million class K to 'CCCsf/RR2' from 'Bsf/LS5';

--$4.5 million class L to 'CCsf/RR4' from 'B-sf/LS5';

--$2.7 million class M to 'Csf/RR6' from 'B-sf/LS5';

--$2.7 million class N to 'Csf/RR6' from 'B-sf/LS5';

--$2.7 million class O to 'Csf/RR6' from 'CCCsf/RR1'.

In addition, Fitch affirms the ratings and revises Outlooks as indicated:

--$73.3 million class A-1A at 'AAAsf/LS1'; Outlook Stable;

--$7.1 million class A-2 at 'AAAsf/LS1'; Outlook Stable;

--$50 million class A-3 at 'AAAsf/LS1'; Outlook Stable;

--$343.8 million class A-4 at 'AAAsf/LS1'; Outlook Stable;

--$20.7 million class B at 'AAAsf/LS4'; Outlook Stable;

--$8.1 million class C at 'AAAsf/LS5'; Outlook to Negative from Stable.

Fitch withdraws the ratings of the interest-only classes X-1 and X-2. (For additional information, see 'Fitch Revises Practice for Rating IO & Pre-Payment Related Structured Finance Securities', dated June 23, 2010.)

The downgrades are the result of Fitch's revised loss estimates for the transaction following its prospective analysis, which is similar to its recent vintage fixed-rate commercial mortgage backed security (CMBS) analysis. Fitch expects potential losses of 5.8%, approximately $34 million, of the remaining pool balance, or 4.7% of the original pool balance, from the loans in special servicing and the loans that are not expected to refinance at maturity based on Fitch's refinance test. As of the August 2010 distribution date, actual losses to the pool were 0.23%, or $1.3 million. The Rating Outlooks reflect the likely direction of any rating changes over the next one to two years.

As of the August 2010 distribution date, the pool has paid down 18.1% to $591 million from $721.4 million at issuance. Nine loans (23.5%) are currently defeased. Fitch has identified 13 Loans of Concern (20.6%), including six loans in special servicing (10.8%).

The largest specially serviced asset (7.5% in total) is comprised of two cross collateralized office properties located in Fort Washington, PA. The borrower was unable to meet debt service obligations after the loss of a major tenant. Foreclosure is being pursued.

The next largest specially serviced asset (1.2%) is a retail property located in Mount Clemens, MI. The property went into monetary default after an anchor tenant stopped paying rent. Foreclosure is being pursued.

Fitch stressed the cash flow of the remaining non-defeased loans by, generally, applying a 10% reduction to 2008 fiscal year-end net operating income, and applying an adjusted market cap rate between 7.25% and 11% 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 of 1.25 times or higher were considered to pay off at maturity. Under this scenario, 26 loans are not expected to pay off at maturity with seven loans incurring a loss when compared to Fitch's stressed value.

Information used to conduct this review included data received from Trepp; Berkadia Commercial Mortgage, LLC, as Master Servicer; CWCapital Asset Management LLC, as Special Servicer; and third party information received from the World Wide Web.

Additional information is available at 'www.fitchratings.com'.

Related Research:

--'Global Structured Finance Rating Criteria' (Aug. 13, 2010);

--'Special-Purpose Vehicles in Structured Finance Transactions' (Sept. 17, 2009);

--'Surveillance Methodology for Recent Vintage U.S. CMBS' (Jul 7, 2009);

--'U.S. CMBS Surveillance Criteria' (Oct. 7, 2008);

--'Rating Criteria for Fitch's U.S. CMBS Multiborrower Rating Model' (Jan 4, 2008);

--'GMAC Commercial Mortgage Securities, Inc., Series 2004-C1' (March 31, 2004).

Related Research:

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=547326

Special-Purpose Vehicles in Structured Finance Transactions

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=466618

Surveillance Methodology for Recent Vintage U.S. CMBS

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=457782

U.S. CMBS Surveillance Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=408326

Rating Criteria for Fitch's U.S. CMBS Multiborrower Rating Model

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=367170

GMAC Commercial Mortgage Securities, Inc., Series 2004-C1

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=201986

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