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Rating Action:

Moody's Affirms 11 and Downgrades 13 CMBS Classes of GCCF 2006-GG7

15 Apr 2010

Approximately $3.4 Billion of Structured Securities Affected

New York, April 15, 2010 -- Moody's Investors Service (Moody's) affirmed the ratings of 11 classes and downgraded 13 classes of Greenwich Capital Commercial Funding Corp. Commercial Mortgage Trust, Series 2006-GG7. The downgrades are due to higher expected losses for the pool resulting from realized and anticipated losses from specially serviced loans and concerns about refinancing risk for loans approaching maturity in an adverse environment. Eleven loans, representing 7% of the pool, mature within the next 24 months. Nine of these loans, representing 5% of the pool, have a Moody's stressed debt service coverage ratio (DSCR) less than 1.00X.

The affirmations are due to key rating parameters, including Moody's loan to value (LTV) ratio, Moody's stressed DSCR and the Herfindahl Index (Herf), remaining within acceptable ranges.

On February 3, 2010 Moody's placed 13 classes of this transaction on review for possible downgrade due to potential losses from specially serviced and other poorly performing loans. This action concludes our review of this transaction. The rating action is the result of Moody's on-going surveillance of commercial mortgage backed securities (CMBS) transactions.

As of the April 12, 2010 distribution date, the transaction's aggregate certificate balance has decreased by 5% to $3.45 billion from $3.61 billion at securitization. The Certificates are collateralized by 132 mortgage loans ranging in size from less than 1% to 7% of the pool, with the top ten loans representing 46% of the pool. At last review the pool included one loan, representing 6% of the pool, with an investment grade underlying rating. However, because of a decline in performance and increased leverage this loan is now analyzed as part of the conduit pool.

Thirty-three loans, representing 23% of the pool, are on the master servicer's watchlist. The watchlist includes loans which meet certain portfolio review guidelines established as part of the Commercial Mortgage Securities Association's (CMSA) monthly reporting package. As part of our ongoing monitoring of a transaction, Moody's reviews the watchlist to assess which loans have material issues that could impact performance.

Two loans have been liquidated from the pool, resulting in an aggregate $82.0 million realized loss (95% loss severity on average). Sixteen loans, representing 9% of the pool, are currently in special servicing. The largest specially serviced loan is the Pacific Center Loan ($121.2 million -- 3.5% of the pool), which is secured by a 439,000 square foot office property located in San Diego, California. The borrower is an affiliate of Maguire Properties. The loan was transferred to special servicing in October 2009 for imminent default. The property was 79% leased as of September 2009 and the property's net operating income (NOI) has declined 24% since securitization. Of the remaining specially serviced loans, 11 loans are either 90+days delinquent, real estate owned (REO) or in the process of foreclosure. The servicer has recognized an aggregate $49.2 million appraisal reduction for nine of the specially serviced loans. Moody's estimates an aggregate $135.2 million loss for all specially serviced loans (46% loss severity on average).

In addition to recognizing losses from specially serviced loans, Moody's has assumed a high default probability on four poorly performing loans, representing 3% of the pool, due to refinancing risk. Moody's estimates a $27.6 million aggregate loss for these troubled loans (30% loss severity on average based on 75% probability of default). Moody's rating action recognizes potential uncertainty around the timing and magnitude of loss from these troubled loans.

Moody's was provided with full-year 2008 and partial year 2009 operating results for 95% and 53% of the pool, respectively. Excluding specially serviced and troubled loans, Moody's weighted average LTV ratio is 110% compared to 153% at Moody's prior review in February 2009. Moody's prior review was part of the first quarter 2009 ratings sweep of 2006-2009 vintage conduit and fusion CMBS transactions.

Excluding specially serviced and troubled loans, Moody's actual and stressed DSCR are 1.28X and 0.93X, respectively, compared to 1.02X and 0.84X at last review. Moody's actual DSCR is based on Moody's net cash flow (NCF) and the loan's actual debt service. Moody's stressed DSCR is based on Moody's NCF and a 9.25% stressed rate applied to the loan balance.

Moody's uses a variation of Herf to measure diversity of loan size, where a higher number represents greater diversity. Loan concentration has an important bearing on potential rating volatility, including the risk of multiple-notch downgrades under adverse circumstances. The credit neutral Herf score is 40. The pool has a Herf of 36, compared to 37 at last review.

The loan that previously had an underlying rating is the One New York Plaza Loan ($196.0 million - 5.7% of the pool), which is secured by a 2,417,000 square foot Class A office building located in downtown Manhattan. The property was 100% leased as of December 2009, essentially the same as at last review. Major tenants include Wachovia Securities (54% of the net rentable area (NRA); lease expiration December 2014), The Goldman Sachs Group (23% of the NRA; lease expiration December 2010) and Fried Frank Harris (16% of the NRA; lease expiration February 2024). Although performance has been stable since last review, Moody's is concerned about the property's high rollover exposure at the end of 2010. Moody's current LTV and stressed DSCR are 81% and 1.13X, respectively, compared to 80% and 1.21X at last full review.

The top three conduit loans represent 18% of the pool. The largest conduit loan is the Investcorp Retail Portfolio Loan ($248.4 million - 7.2% of the pool), which represents a pari passu interest in a $260.1 million loan. The loan is secured by 23 shopping centers located in three Texas MSA's (Dallas, Houston and San Antonio). Since securitization, six properties have been released from the loan collateral reducing total net rentable area to 2.2 million square feet from 2.8 million square feet at securitization. As of March 2009, the portfolio was 89% leased compared to 84% at year end 2008 and 93% at securitization. Moody's LTV and stressed DSCR are 139% and 0.74X, respectively, compared to 142% and 0.75X at last review.

The second largest conduit loan is the 55 Corporate Drive Loan ($190.0 million - 5.5% of the pool), which is secured by a three-building, 669,700 square foot office complex located in Bridgewater, New Jersey. The property is 100% leased to Aventis Inc. (Moody's senior unsecured rating of parent, Sanofi-Avenis, is A1, stable outlook) through November 2023. Moody's LTV and stressed DSCR are 133% and 0.71X, respectively, compared to 205% and 0.49X at last review.

The third largest conduit loan is the J.P. Morgan International Plaza I & II Loan ($184.4 million - 5.4% of the pool), which is secured by two office buildings located in Farmers Branch, Texas and totaling 756,900 square feet. The buildings are 100% leased to JPMorgan Chase Bank, NA (Moody's senior unsecured rating is Aa1, negative outlook) through February 2018. Moody's LTV and stressed DSCR are 128% and 0.76X, respectively, compared to 224% and 0.39X at last review.

Moody's rating action is as follows:

- Class A-1, $17,366,562, affirmed at Aaa; previously assigned at Aaa on 8/16/2006

- Class A-2, $ 260,782,000, affirmed at Aaa; previously assigned at Aaa on 8/16/2006

- Class A-3 $101,915,000, affirmed at Aaa; previously assigned at Aaa on 8/16/2006

- Class A-AB, $125,000,000, affirmed at Aaa; previously assigned at Aaa on 8/16/2006

- Class A-4, $1,845,339,000, affirmed at Aaa; previously assigned at Aaa on 8/16/2006

- Class A-1-A, $94,593,517, affirmed at Aaa; previously assigned at Aaa on 8/16/2006

- Class X, Notional, affirmed at Aaa; previously assigned at Aaa on 8/16/2006

- Class A-M, $361,165,000, downgraded to Aa3 from Aaa; previously placed on review for possible downgrade 2/3/2010

- Class A-J, $261,845,000, downgraded to Baa3 from A2; previously placed on review for possible downgrade on 2/3/2010

- Class B, $27,088,000, downgraded to Ba1 from A3; previously placed on review for possible downgrade on 2/3/2010

- Class C, $54,175,000, downgraded to Ba3 from Baa1; previously placed on review for possible downgrade on 2/3/2010

- Class D, $27,087,000, downgraded to B2 from Baa2; previously placed on review for possible downgrade on 2/3/2010

- Class E, $22,573,000, downgraded to B3 from Baa3; previously placed on review for possible downgrade on 2/3/2010

- Class F, $45,146,000, downgraded to Caa1 from Ba1; previously placed on review for possible downgrade on 2/3/2010

- Class G, $31,602,000, downgraded to Caa2 from Ba2; previously placed on review for possible downgrade on 2/3/2010

- Class H, $45,145,000, downgraded to Ca from Ba3; previously placed on review for possible downgrade on 2/3/2010

- Class J, $40,632,000, downgraded to C from B2; previously placed on review for possible downgrade on 2/3/2010

- Class K, $36,116,000, downgraded to C from B3; previously placed on review for possible downgrade on 2/3/2010

- Class L, $13,544,000, downgraded to C from Caa2; previously placed on review for possible downgrade on 2/3/2010

- Class M, $18,058,000, downgraded to C from Caa2; previously placed on review for possible downgrade on 2/3/2010

- Class N, $17,322,250, affirmed at C; previously downgraded to C from Caa3 on 2/3/2010

- Class O, $0, affirmed at C; previously downgraded to C from Ca on 2/3/2010

- Class P, $0, affirmed at C; previously downgraded to C from Ca on 2/3/2010

- Class Q, $0, affirmed at C; previously downgraded to C from Ca on 2/3/2010

Moody's monitors transactions on a monthly basis through two sets of quantitative tools: MOST® (Moody's Surveillance Trends) and CMM (Commercial Mortgage Metrics) on Trepp, and on a periodic basis through a comprehensive review. Moody's prior review is summarized in a press release dated February 9, 2009.

The principal methodology used in rating and monitoring this transaction is "CMBS: Moody's Approach to Rating U.S. Conduit Transactions," published on July 7, 2000, which is available on www.moodys.com in the Rating Methodologies sub-directory under the Research & Ratings tab. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found in the Rating Methodologies sub-directory on Moody's website. In addition, Moody's publishes a weekly summary of structured finance credit, ratings and methodologies, available to all registered users of our website, at www.moodys.com/SFQuickCheck.

New York
Sandra Ruffin
VP - Senior Credit Officer
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Michael M. Gerdes
Senior Vice President
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's Affirms 11 and Downgrades 13 CMBS Classes of GCCF 2006-GG7
No Related Data.
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