Fitch Ratings downgrades five classes of GE Commercial Mortgage
Corporation's 2003-C2 commercial mortgage pass-through certificates. A
detailed list of rating actions follows at the end of this release.
The downgrades reflect an increase in expected losses associated with
the specially serviced loans. Fitch modeled losses of 4.4% of the
remaining pool; expected losses of the original pool are at 3.6%. Fitch
has designated 20 loans (15.6%) as Fitch loans of concern, which
includes seven specially serviced loans (5.9%).
As of the July 2012 distribution date, the pool's collateral balance has
paid down 37% to $754.4 million from $1.2 billion at issuance. 27 loans
(32.5%) have been defeased (32.5%) including six (16%) of the top 15
loans in the transaction.
The largest contributor to loss (2.2%) is secured by a 1,124,432 square
foot (sf) industrial/warehouse distribution center located in Memphis,
TN. The loan transferred to special servicing in May 2010 due to the
largest tenant vacating at lease expiration and the bankruptcy of the
second largest tenant. Title was acquired via foreclosure at a trustee
sale in May 2011. The special servicer plans to market the property once
the property occupancy has been stabilized. The property is 35% occupied
as of May 2012.
The second largest contributor to loss (0.9%) is secured by a 91,222 sf
retail shopping center located in Baltimore, MD. The loan transferred to
special servicing in February 2012 due to imminent default. The anchor
tenant vacated as a result of its parent company filing for bankruptcy.
The special servicer is dual tracking foreclosure and note sale. The
property is 34.6% occupied as of September 2011.
The third largest contributor to loss (0.7%) is secured by an office
property located in Golden, CO. The loan was transferred to special
servicing in May 2010 due to payment default. The decline in performance
was due to two tenants vacating in 2007 and 2010; respectively. The
property was recently sold on July 16, 2012 and losses are expected.
Fitch downgrades, revises Outlooks and assigns Recovery Estimates (REs)
to the following classes as indicated:
--$19.2 million class J to 'BBsf' from 'BBBsf'; Outlook revised to
Negative from Stable;
--$7.4 million class K to 'Bsf' from 'BB+sf'; Outlook revised to
Negative from Stable;
--$8.9 million class L to 'CCCsf', RE 100%' from 'Bsf';
--$4.4 million class M to 'CCsf' from 'CCCsf'; RE 30% from 100%;
--$7.4 million class N to 'Csf' from 'CCsf', RE 0% from 100%.
Fitch also affirms, revises Outlooks and REs as indicated:
--$382.8 million class A-4 at 'AAAsf'; Outlook Stable;
--$155.9 million class A-1A at 'AAAsf'; Outlook Stable;
--$35.5 million class B at 'AAAsf'; Outlook Stable;
--$14.8 million class C at 'AAAsf'; Outlook Stable;
--$26.6 million class D at 'AAAsf'; Outlook Stable;
--$14.8 million class E at 'AAAsf'; Outlook Stable;
--$14.8 million class F at 'AAAsf'; Outlook Stable;
--$14.8 million class G at 'AAsf'; Outlook Stable;
--$14.8 million class H at 'Asf'; Outlook revised to Negative from
Stable;
--$3.0 million class O at 'Csf', RE 0% from 75%;
--$111,521 class BLVD-1 at 'A'; Outlook Stable;
--$2.5 million class BLVD-2 at 'A-'; Outlook Stable;
--$4.5 million class BLVD-3 at 'BBB+'; Outlook Stable;
--$3.5 million class BLVD-4 at 'BBB'; Outlook Stable;
--$8.0 million class BLVD-5 at 'BB+'; Outlook Stable.
Classes A-1, A-2, and A-3 are paid in full. Classes BLVD-1 through 5
represent the subordinate note rake classes for the Boulevard Mall.
Fitch has previously withdrawn the rating 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, June
23, 2010).
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);
--'Surveillance Methodology for U.S. Fixed-Rate CMBS Transactions' (Dec.
21, 2011).
Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=679923
Surveillance Methodology for U.S. Fixed-Rate CMBS Transactions
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=662869
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