CHICAGO--(BUSINESS WIRE)--Fitch Ratings has affirmed all classes 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.
KEY RATING DRIVERS
The affirmations reflect the static loss projections for loans remaining in the pool. While credit enhancement continues to increase for the senior-most classes, the pool is very concentrated. Fitch modelled losses of 21.5% of the remaining pool; expected losses on the original pool balance total 5.6%, including $71.5 million (4.3% of the original pool balance) in realized losses to date.
As of the August 2015 remittance, the transaction has experienced 93.9% of collateral reduction. There are four loans remaining in the pool, three (91.3% of the pool) of which have been designated as Fitch Loans of Concern.
The largest Fitch Loan of Concern is the largest loan in the pool and the second largest contributor to expected losses. The Lakeside Mall loan (73.1% of the pool) is secured by the inline space and one of five anchors (Macy's Men's & Home) within a two-level 1.5 million square foot (sf) regional mall located in the northern Detroit suburb of Sterling Heights, MI. Additional non-collateral anchors include JC Penney, Sears, Macy's and Lord & Taylor. The subject loan is pari-passu to a $75 million note securitized in COMM 2005-LP5 and is sponsored by GGP. NOI and occupancy have continued to decline year over year and the loan has been on the watchlist since September 2011. According to the March 2015 rent roll, the property was 79.1% occupied, down from 86.1% at YE2013. The NOI DSCR has also declined to 1.12x as of YE2014 from 1.23x at YE2013 and 1.30x at YE2012. The loan was previously in special servicing in relation to GGP's bankruptcy filing, and the original five-year term was extended an additional five years with a scheduled maturity date of June 2016. Fitch will continue to monitor this loan in the coming months.
Skytop Pavilion (13% of the pool) is the largest contributor to expected losses and is one of two assets in special servicing. It is a 133,631 sf grocery-anchored retail property built in 2000 and located in Cincinnati, OH. The loan was transferred to special servicing in May 2012 and has been REO since January 2014. As of July 2015, the property was 60.8% occupied by five tenants, three of which have leases expiring in 2016. A sale of the property following a recent REO auction reportedly fell through for unknown reasons. The special servicer is currently in the process of remarketing the property for sale.
1 East Main Street (5.2% of the pool) is also in special servicing and has been REO since October 2014. The collateral is a 62,177 sf medical office complex located in Bay Shore, NY. As of June 2015, the property was only 18.4% occupied, down from 27% in June 2013. The majority of the tenants are on month-to-month leases, with only one tenant (3.6% of the NRA) operating on a current lease through January 2017. An appraisal conducted in June 2015 noted that the majority of the property was in fair to poor condition and expected that a significant amount of TI work would need to be completed to lease up any of the vacant space.
RATING SENSITIVITIES
The Rating Outlooks on classes C and D are Stable and further upgrades are unlikely. Although credit enhancement to these classes has improved significantly in the last year with the repayment of 61 loans, the pool is highly concentrated, the largest loan is deemed at risk for maturity default and both classes have experienced interest shortfalls. Should the largest loan in the pool transfer to special servicing, it is likely these classes will be impacted by shortfalls again.
The Rating Outlook for class E remains Negative given the concentration in the pool and uncertainty surrounding the likelihood of refinance for the largest loan in the pool. It is possible that this Outlook will be revised should the loan successfully payoff at maturity. The distressed bonds may be subject to further downgrades should they realize losses.
Fitch affirms the following classes and assigns Rating Outlooks and Recovery Estimates (REs) as indicated:
--$8.7 million class C at 'Asf', Outlook Stable;
--$27.2 million class D at 'BBBsf', Outlook Stable;
--$14.6 million class E at 'BBB-sf', Outlook Negative;
--$23 million class F at 'CCCsf', RE 95%;
--$14.6 million class G at 'Csf', RE 0%;
--$14.3 million class H at 'Dsf', RE 0%;
--$0 class J at 'Dsf', RE 0%;
--$0 class K at 'Dsf', RE 0%;
--$0 class L at 'Dsf', RE 0%;
--$0 class M at 'Dsf', RE 0%;
--$0 class N at 'Dsf', RE 0%;
--$0 class O at 'Dsf', RE 0%.
The class A-1, A-2, A-3, A-4, A-5, A-AB, A-1A, A-J and B certificates have been paid in full. Fitch does not rate the class P certificate. Fitch previously withdrew the ratings on the interest-only class X-P and X-C certificates.
DUE DILIGENCE USAGE
No third-party due diligence was provided or reviewed in relation to this rating action.
Additional information is available at www.fitchratings.com.
Applicable Criteria
Global Structured Finance Rating Criteria (pub. 06 Jul 2015)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952
U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria (pub. 10 Dec 2014)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=812608
Additional Disclosures
Dodd-Frank Rating Information Disclosure Form
https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=990336
Solicitation Status
https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=990336
Endorsement Policy
https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31
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