Fitch Affirms 2 Classes of GE 2004-C2

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

KEY RATING DRIVERS

The affirmations reflect sufficient credit enhancement relative to expected losses. In addition, class L and part of class M are covered by defeasance. Six loans remain in the pool, including two specially serviced loans (22.4% of the pool); however, sale of the largest specially serviced asset (13.2% of the pool) is expected imminently. The largest loan represents 72.5% of the pool and two loans are defeased (5.1% of the pool). All of the remaining performing loans mature in 2019.

Fitch modeled losses of 28.7% of the remaining pool; expected losses on the original pool balance total 0.8%, including $1.7 million (0.1% of the original pool balance) in realized losses to date. As of the September 2016 distribution date, the pool's aggregate principal balance has been reduced by 97.7% to $31.9 million from $1.4 billion at issuance. Interest shortfalls are currently affecting class P.

Continental Centre is the largest loan in the pool (72.5% - 54.8% A-note, 17.7% B-note) and is secured by a 477,259 square foot (sf) office building located in downtown Columbus, OH. The loan had previously transferred to special servicing in December 2012, for imminent default. Leading up to the transfer, the largest tenant SBC/AT&T (currently 33.6% net rentable area [NRA], expiration December 2017) had reduced their space which affected the overall performance of the property. Since then a loan modification closed in March 2014 and the loan returned to the master servicer in September 2014. The terms of the loan modification included an A/B note split: $17.5 million A-note and $5.6 million B-note, a maturity extension to March 2019 and a temporary rate reduction. Occupancy was 78% as of YE 2015 and 79% as of the June 2016 rent roll. Due in part to the loan modification, the DSCR has increased substantially to 4.33x and 2.77x as of YE 2015 and YE 2014, respectively, compared to 0.94x as of YE 2013. There are two major-tenant lease expirations (66% of rent roll) in 2017.

RATING SENSITIVITIES

The ratings of classes L and M are expected to remain stable. An upgrade to class M is not warranted at this time due to pool concentration and quality of the remaining collateral. Although payoff to class M is likely, there is a possibility that the Continental Centre loan will not payoff at maturity. Class M may be subject to downgrades should losses increase above expectations.

USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G-10

No third-party due diligence was provided or reviewed in relation to this rating action.

Fitch has affirmed the following classes as indicated:

--$985.7 thousand class L at 'AAAsf', Outlook Stable;

--$5.2 million class M at 'BBsf', Outlook Stable.

The class A-1, A-2, A-3, A-4, A-1A, B, C, D, E, F, G, H, J, K, PPL-1, PPL-2, PPL-3, PPL-4, PPL-5 and PPL-6 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 is available at www.fitchratings.com.

Applicable Criteria

Counterparty Criteria for Structured Finance and Covered Bonds (pub. 01 Sep 2016)

https://www.fitchratings.com/site/re/886006

Criteria for Rating Caps and Limitations in Global Structured Finance Transactions (pub. 16 Jun 2016)

https://www.fitchratings.com/site/re/882401

Global Structured Finance Rating Criteria (pub. 27 Jun 2016)

https://www.fitchratings.com/site/re/883130

U.S. and Canadian Fixed-Rate Multiborrower CMBS Surveillance and U.S. Re-REMIC Criteria (pub. 13 Nov 2015)

https://www.fitchratings.com/site/re/873395

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1012782

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1012782

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

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Contacts

Fitch Ratings
Primary Analyst
Martin Nunnally
Associate Director
+1-212-908-0871
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Mary MacNeill
Managing Director
+1-212-908-0785
or
Media Relations
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Martin Nunnally
Associate Director
+1-212-908-0871
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Mary MacNeill
Managing Director
+1-212-908-0785
or
Media Relations
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com