NEW YORK--(BUSINESS WIRE)--Fitch Ratings has downgraded three classes, upgraded one class, and affirmed 15 classes of Greenwich Capital Commercial Funding Corporation commercial mortgage pass-through certificates series 2007-GG11.
A detailed list of rating actions follows at the end of this press release.
KEY RATING DRIVERS
The upgrade is due to better than expected recoveries on dispositions of specially serviced assets and further clarity about ultimate losses on the distressed classes. Fitch modeled losses of 8.1% of the remaining pool; expected losses on the original pool balance total 10.5%, including $136 million (5.1% of the original pool balance) in realized losses to date. Fitch has designated 20 Fitch Loans of Concern (41%), which includes two specially serviced assets (1%).
As of the November 2015 distribution date, the pool's aggregate principal balance has been reduced by 32.7% to $1.81 billion from $2.69 billion at issuance. Per the servicer reporting, six loans (9.1% of the pool) are defeased. Interest shortfalls are currently affecting classes D through S.
The largest contributor to expected losses is the Bush Terminal loan (13.5% of the pool), which is secured by a portfolio of 16 buildings totaling six million square feet (sf) of industrial/flex/office space located in Brooklyn, NY. At origination the loan was underwritten by the lender on pro forma basis as the property was slated for redevelopment. Occupancy at the property has been gradually declining and was approximately 62% as of June 2015 compared to 87.2% at issuance, which partly reflects space being kept vacant for redevelopment.
The loan transferred to the special servicer in January 2011 due to payment default. The loan was subsequently modified in April 2012 and split into an A-Note of $190 million and a B-Note of $110 million. The collateral sustained significant damage from Superstorm Sandy and was transferred back to the special servicer where it was again modified and the reduced interest rate of 4.68% extended through September 2015. A new equity partner was brought in and is finally executing on the conversion plans. The servicer reports that the loan is scheduled to refinance prior to year-end. Recovery on the B-note, if any, is likely to be minimal.
The second largest contributor to expected losses is the One Liberty Plaza loan (18.3%) which is secured by a 53-story, Class A office building located in lower Manhattan. Built for U.S. Steel in 1972, the glass and steel tower contains approximately 2.3 million sf. Occupancy had fallen to 79% as of June 2015 from 99% at YE 2013 due to the departure of two large tenants. While a few small portions of the space have been leased the majority of it remains vacant. Brookfield Office Properties is the sponsor.
The third largest contributor to expected losses is the specially-serviced Eola Park Center loan (1.5%), which is secured by a 166,497-sf 14-story office building located in Orlando, FL. Occupancy and rental rates have gradually declined since issuance due to a soft Orlando office market. The special servicer approved a loan modification in June 2015 splitting the loan into a $17.5 million A-note and a $10.2 million B-note.
The Rating Outlooks on the senior classes remain Stable due to increasing credit enhancement from continued paydown and defeasance. Upgrades to class A-J are possible if the B-note on the Bush Terminal loan has better than expected recoveries. The subordinate classes will continue to see downgrades as losses are realized.
DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in relation to this rating action.
Fitch downgrades the following classes:
--$20.2 million class D to 'Csf' from 'CCsf'; RE 0%;
--$33.6 million class E to 'Csf' from 'CCsf'; RE 0%.
--$17.9 million class H to 'Dsf' from 'Csf'; RE 0%.
Fitch upgrades the following classes and revises Rating Outlooks as indicated:
--$268.7 million class A-M to 'Asf' from 'BBBsf'; Outlook to Stable from Positive.
Fitch affirms the following classes and revises REs as indicated:
--$211.6 million class A-J at 'CCCsf'; RE 100%;
--$20.2 million class B at 'CCCsf'; RE 50%.
Fitch affirms the following classes:
--$962.9 million class A-4 at 'AAAsf'; Outlook Stable;
--$199.7 million class A-1-A at 'AAAsf'; Outlook Stable;
--$26.9 million class C at 'CCsf'; RE 0%;
--$13.4 million class F at 'Csf'; RE 0%;
--$33.6 million class G at 'Csf'; 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%;
--$0 class P at 'Dsf'; RE 0%;
--$0 class Q at 'Dsf'; RE 0%.
The class A-1, A-2, A-3 and A-AB certificates have paid in full. Fitch does not rate class S. Fitch previously withdrew the rating on the interest-only class XC and XP certificates.
Structured Finance >> CMBS >> Criteria Reports
Additional information is available at www.fitchratings.com.
Global Structured Finance Rating Criteria (pub. 06 Jul 2015)
U.S. and Canadian Fixed-Rate Multiborrower CMBS Surveillance and U.S. Re-REMIC Criteria (pub. 13 Nov 2015)
Dodd-Frank Rating Information Disclosure Form