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Rating Action:

Moody's Affirms 11 and Downgrades 15 CMBS Classes of CD 2005-CD1

06 Jan 2010

Approximately $3.74 Billion of Structured Securities Affected

New York, January 06, 2010 -- Moody's Investors Service (Moody's) affirmed the ratings of 11 classes and downgraded 15 classes of CD 2005-CD1 Commercial Mortgage Trust, Commercial Mortgage Pass-Through Certificates, Series 2005-CD1. The downgrades are due to higher expected losses for the pool resulting from anticipated losses from specially serviced loans, increased credit quality dispersion, and concerns about refinancing risk for loans approaching maturity in an adverse environment. Eight loans, representing 6% of the pool, mature within the next 24 months and 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, DSCR and the Herfindahl Index (Herf), remaining within acceptable ranges.

On December 16, 2009, Moody's placed 15 classes on review for possible downgrade due to higher expected losses for the pool resulting from anticipated losses from loans in special servicing and increased credit quality dispersion for the remainder of the pool. This action concludes that review. The rating action is the result of Moody's on-going surveillance of commercial mortgage backed securities (CMBS) transactions.

As of the December 17, 2009 distribution date, the transaction's aggregate certificate balance has decreased by 4% to $3.78 billion from $3.90 billion at securitization. The Certificates are collateralized by 223 mortgage loans ranging in size from less than 1% to 8% of the pool, with the top ten loans representing 33% of the pool. The pool includes three loans with investment-grade underlying ratings, representing 12% of the pool. At securitization, four additional loans, representing 13% of the pool, also had underlying ratings. However, due to declines in performance and the resulting increase in leverage, these loans are now analyzed as part of the conduit pool. Two loans, representing less than 1% of the pool, have defeased and are collateralized by U.S. Government securities.

Forty-six loans, representing 17% 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.

One loan has been liquidated from the pool, resulting in a $1.7 million realized loss (75% loss severity). Currently, 13 loans, representing 8% of the pool, are in special servicing. Two of the specially serviced loans, representing 5% of the pool, are secured by malls owned by affiliates of General Growth Properties (GGP) which were included in GGP's bankruptcy filing. In December, the Bankruptcy Court confirmed the reorganization plans for approximately $10.25 billion of secured debt, including two loans in this transaction.

The largest GGP loan is the Main Mall Loan ($139.9 million - 3.7% of the pool), which is secured by the borrower's interest in a 1.0 million square foot regional mall located in Portland, Maine. The bankruptcy plan provided for a restructuring of this loan that includes extending the maturity date from June 2010 to December 2016. It is expected that the loan will be returned to the master servicer after the restructure is completed. Moody's analyzed this loan as part of the conduit model pool. Moody's LTV and stressed DSCR for the A Note are 89% and 1.06X, respectively, compared to 78% and 1.11X at last review.

The second GGP loan is the Chico Mall Loan ($39.1 million -- 1.0% of the pool), which is secured by a 398,000 square foot mall located in Chico, California. This property was included in a list of "special consideration properties" identified in the GGP bankruptcy reorganization plan. Either the lender or the borrower may compel the other party to enter into a deed in lieu of foreclosure agreement, providing for conveyance of the property to the lender. Moody's has recognized a loss on this loan and the remaining 11 specially serviced loans Of the remaining specially serviced loans, seven loans are either 90+days delinquent, real estate owned (REO) or in the process of foreclosure. The servicer has recognized an aggregate $50.8 million appraisal reduction for nine of the specially serviced loans. Moody's estimates an aggregate $59.6 million loss for all specially serviced loans (36% loss severity on average).

In addition to recognizing losses from specially serviced loans, Moody's has assumed a high default probability on six poorly performing loans (4% of the pool) that mature within the next 24 months. Moody's estimates a $39.2 million aggregate loss for these troubled loans (25% loss severity on average). 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 operating results for 91% of the pool. Excluding specially serviced and troubled loans, Moody's weighted average LTV ratio is 103%, the same as at Moody's previous full review. Although the overall LTV has remained stable, credit quality dispersion has increased. Based on Moody's analysis, 21% of the pool has an LTV in excess of 120% compared to 8% at last review.

Excluding specially serviced and troubled loans, Moody's actual and stressed DSCR are 1.41X and 1.00X, respectively, compared to 1.36X and 0.98X 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 53 compared to 54 at last review.

The largest loan with an underlying rating is the One Court Square Loan ($290.0 million - 7.7% of the pool), which is secured by a 1.4 million square foot Class A office building located in Long Island City (Queens), New York. The property is also encumbered by a $25 million B Note which secures non-pooled Class OCS. The property is 100% leased to Citibank through May 2020 (Citibank, N.A -- Moody's senior unsecured rating A1, stable outlook). Moody's current underlying rating and stressed DSCR of the pooled note are Baa2 and 1.03X, respectively, the same as at last review. Moody's current underlying rating of the B Note is Baa3, the same as at last review.

The second largest loan with an underlying rating is the 100 East Pratt Loan ($105.0 million - 2.8% of the pool), which is secured by a 656,000 square foot office building located in Baltimore, Maryland. The largest tenant is T. Rowe Price Associates, which leases 58% of the premises through June 2017. Moody's current underlying rating and stressed DSCR are Baa3 and 1.34X, respectively, compared to Baa3 and 1.43X at last review.

The third largest loan with an underlying rating is the 220 East 67th Street Loan ($2.5 million - 0.1% of the pool), which is secured by a 114-unit residential cooperative located in Manhattan, New York. Moody's current underlying rating is Aaa, the same as at last review.

The other loans that originally had underlying ratings are the Yahoo! Center Loan ($250.0 million -- 6.7% of the pool), the Maine Mall Loan ($139.9 million -- 3.7% of the pool), and the Loews Universal Hotel Portfolio Loan ($55.0 million -- 1.5% of the pool). Due to increased leverage these loans no longer have investment-grade underlying ratings and are now analyzed as part of the conduit pool.

The top three performing conduit loans represent 12% of the pool. The largest conduit loan is the Yahoo! Center Loan ($250.0 million - 6.7% of the pool), which is secured by a 1.1 million square foot Class A office campus located in Santa Monica, California. The property was 87% leased as of June 2009 compared to 83% at last review. The largest tenant is Yahoo! Inc. which leases 49% of the property through August 2015. Although the property's performance has been stable, Moody's valuation incorporates a stressed cash flow due to our concerns about the Santa Monica office market. Asking rents have declined approximately 16% as of the third quarter 2009 compared to the third quarter of 2008. Moody's LTV and stressed DSCR are 77% and 1.20X, respectively, compared to 72% and 1.29X at last review.

The second largest conduit loan is the TPMC Portfolio Loan ($104.2 million - 2.8% of the pool), which is secured by several properties located in suburban Houston, Texas. The properties include a 699,000 square foot office building, a theater/commercial building and a parking garage. The portfolio was 98% occupied as of September 2009 compared to 96% at last review. Moody's LTV and stressed DSCR are 103% and 1.01X, respectively, compared to 105% and 0.98X at last review.

The third largest conduit loan is the Florence Mall Loan ($95.3 million - 2.5% of the pool), which is secured by the borrower's interest in a 929,000 square foot regional mall located in suburban Cincinnati, Ohio. The center is anchored by Sears, Macy's, JCPenney and Macy's Home Store. The property has experienced recent declines as a result of the economic recession. As of June 2009, the property was 80% leased compared to 93% in December 2008. The center is owned by an affiliate of GGP, but was not included in their bankruptcy filing. Moody's LTV and stressed DSCR are 90% and 1.08X, respectively, compared to 87% and 1.09X at last review.

Moody's rating action is as follows:

-Class A-1, $27,384,780, affirmed at Aaa; previously assigned at Aaa on 1/13/2006

-Class A-1D, $30,724,387, affirmed at Aaa; previously assigned at Aaa on 1/13/2006

-Class A-2FL, $200,000,000, affirmed at Aaa; previously assigned at Aaa on 1/13/2006

-Class A-2FX, $70,000,000, affirmed at Aaa; previously assigned at Aaa on 1/13/2006

-Class A-3, $112,000,000, affirmed at Aaa; previously assigned at Aaa on 1/13/2006

-Class A-SB, $198,275,000, affirmed at Aaa; previously assigned at Aaa on 1/13/2006

-Class A-4, $1,563,032,000, affirmed at Aaa; previously assigned at Aaa on 1/13/2006

-Class A-1A, $388,141,280, affirmed at Aaa; previously assigned at Aaa on 1/13/2006

-Class A-M, $387,824,000, affirmed at Aaa; previously assigned at Aaa on 1/13/2006

-Class X, Notional, affirmed at Aaa; previously assigned at Aaa on 1/13/2006

-Class A-J, $305,412,000, downgraded to Aa1 from Aaa; previously placed on review for possible downgrade on 12/16/2009

-Class B, $29,087,000, downgraded to Aa2 from Aa1; previously placed on review for possible downgrade on 12/16/2009

-Class C, $43,630,000, downgraded to A1 from Aa2; previously placed on review for possible downgrade on 12/16/2009

-Class D, $43,630,000, downgraded to A2 from Aa3; previously placed on review for possible downgrade on 12/16/2009

-Class E, $58,174,000, downgraded to Baa1 from A2; previously placed on review for possible downgrade on 12/16/2009

-Class F, $38,783,000, downgraded to Baa3 from A3; previously placed on review for possible downgrade on 12/16/2009

-Class G, $43,630,000, downgraded to Ba2 from Baa1; previously placed on review for possible downgrade on 12/16/2009

-Class H, $43,630,000, downgraded to B2 from Baa2; previously placed on review for possible downgrade on 12/16/2009

-Class J, $48,478,000, downgraded to Caa1from Baa3; previously placed on review for possible downgrade on 12/16/2009

-Class K, $29,087,000, downgraded to Caa3 from Ba1; previously placed on review for possible downgrade on 12/16/2009

-Class L, $9,696,000, downgraded to Ca from Ba2; previously placed on review for possible downgrade on 12/16/2009

-Class M, $14,543,000, downgraded to Ca from Ba3, previously placed on review for possible downgrade on 12/16/2009

-Class N, $9,696,000, downgraded to C from B1; previously placed on review for possible downgraded on 12/16/2009

-Class O, $9,695,000, downgraded to C from B2; previously placed on review for possible downgrade on 12/16/2009

-Class P, $9,696,000, downgraded to C from B3; previously placed on review for possible downgrade on 12/16/2009

-Class OCS, $25,000,000, affirmed at Baa3; previously assigned at Baa3 on 1/13/2006

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 April 25, 2008.

The principal methodology used in rating and monitoring this transaction is "US CMBS: Moody's Approach to Rating Fusion Transactions" published April 19, 2005, 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 transaction 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 15 CMBS Classes of CD 2005-CD1
No Related Data.
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