Fitch Downgrades 4 Classes of GE 2004-C2

NEW YORK--(BUSINESS WIRE)--Fitch Ratings has downgraded four classes and affirmed 16 classes of GE Commercial Mortgage Corporation series 2004-C2 commercial mortgage pass-through certificates series. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

Fitch modeled losses of 4.5% of the remaining pool; expected losses on the original pool balance total 3.1%, including losses already incurred. The pool has experienced $1.4 million (0.1% of the original pool balance) in realized losses to date. Fitch has designated 16 loans (21.4%) as Fitch Loans of Concern, which includes five specially serviced assets (4.6%).

As of the February 2013 distribution date, the pool's aggregate principal balance has been reduced by 31.8% to $957.6 million from $1.4 billion at issuance. Per the servicer reporting, 19 loans (18.6% of the pool) are defeased. Interest shortfalls are currently affecting class P.

The largest contributor to expected losses is a 477,259 sf office building located in Downtown Columbus, OH. The loan is specially-serviced (2.5% of the pool). Occupancy was 79.4% as of November 2012. The largest tenant is in negotiation with the special servicer to downsize their space. In addition, the second largest tenant has a lease that expires June 2013.

The second largest contributor to expected losses is an 181,338 sf retail center located in Frisco, TX, north of Dallas, TX (2.9% of the pool). The property was 78.8% occupied as of December 2012. Toys R Us (27.7% NRA) is the largest tenant and approximately 49% of leases roll through to Year End (YE) 2014, including Toys R Us. The property has not been performing well since 2008 due to drop in occupancy.

The third largest contributor to expected losses is the Princeton Office loan (5.3% of the pool), which is secured by a leasehold interest in six 3-story office buildings located in Princeton, NJ. Occupancy was 87% as of September 2012, which is up from 83% as of YE 2011. However, net operating income (NOI) for Year-to-Date (YTD) June 2012 (annualized) is down 17.6% from YE 2011 NOI. Per the special servicer, concessions are being offered at the property in the form of free rent.

RATING SENSITIVITY

The ratings of investment grade classes A-1 to F are expected to remain stable. The distressed classes (those rated below 'B') are expected to be subject to further downgrades as losses are realized. In addition, classes G, H, and J may be subject to further rating actions should realized losses be greater or less than Fitch's expectations. Fitch remains cautious related to the high concentration of retail assets (41% of the pool).

Fitch downgrades the following classes and assigns or revises Rating Outlooks and Recovery Estimates (REs) as indicated:

--$18.9 million class H to 'BBsf' from 'BBB-sf'; Outlook to Negative from Stable;

--$10.3 million class J to 'Bsf' from 'BBsf'; Outlook to Negative from Stable;

--$8.6 million class K to 'CCCsf' from 'Bsf'; RE 100%;

--$6.9 million class L to 'CCCsf' from 'Bsf'; RE 70%.

Fitch affirms the following classes and revises Outlooks as indicated:

--$8.7 million class A-3 at 'AAAsf'; Outlook Stable;

--$574.5 million class A-4 at 'AAAsf'; Outlook Stable;

--$138.5 million class A-1A at 'AAAsf'; Outlook Stable;

--$41.3 million class B at 'AAAsf'; Outlook Stable;

--$17.2 million class C at 'AAAsf'; Outlook Stable;

--$25.8 million class D at 'AAsf'; Outlook Stable;

--$15.5 million class E at 'AAsf'; Outlook Stable;

--$18.9 million class F at 'Asf'; Outlook Stable;

--$17.2 million class G at 'BBBsf'; Outlook to Negative from Stable;

--$5.2 million class M at 'CCCsf'; RE 0%;

--$2.9 million class PPL-1 at 'BBB-sf'; Outlook Stable;

--$3 million class PPL-2 at 'BBB-sf'; Outlook Stable;

--$4.4 million class PPL-3 at 'BB+sf'; Outlook Stable;

--$5.7 million class PPL-4 at 'BB-sf'; Outlook Stable;

--$3.6 million class PPL-5 at 'B+sf'; Outlook Stable;

--$4.3 million class PPL-6 at 'Bsf'; Outlook Stable.

The class A-1 and A-2 certificates have paid in full. Fitch does not rate the class N, O and P certificates. Fitch previously withdrew the rating on the interest-only class X-1 certificates and the interest-only class X-2 certificates have paid in full.

Additional information on Fitch's criteria for analyzing U.S. CMBS transactions is available in the Dec. 18, 2012 report, 'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria', 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);

--'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria' (Dec. 18, 2012).

Applicable Criteria and Related Research

Global Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=679923

U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=696969

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