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Announcement:

Moody's Affirms 23 CMBS Classes of GSMS 2007-GG10

07 Jul 2011

Approximately $7.30 Billion of Structured Securities Affected

New York, July 07, 2011 -- Moody's Investors Service (Moody's) affirmed the ratings of 23 classes of GS Mortgage Securities Corporation II, Commercial Mortgage Pass-Through Certificates, Series 2007-GG10 as follows:

Cl. A-2, Affirmed at Aaa (sf); previously on Oct 26, 2007 Definitive Rating Assigned Aaa (sf)

Cl. A-3, Affirmed at Aaa (sf); previously on Oct 26, 2007 Definitive Rating Assigned Aaa (sf)

Cl. A-AB, Affirmed at Aaa (sf); previously on Oct 26, 2007 Definitive Rating Assigned Aaa (sf)

Cl. A-4, Affirmed at A1 (sf); previously on Oct 5, 2010 Downgraded to A1 (sf)

Cl. A-1A, Affirmed at A1 (sf); previously on Oct 5, 2010 Downgraded to A1 (sf)

Cl. A-M, Affirmed at Baa1 (sf); previously on Oct 5, 2010 Downgraded to Baa1 (sf)

Cl. A-J, Affirmed at B2 (sf); previously on Oct 5, 2010 Downgraded to B2 (sf)

Cl. B, Affirmed at B3 (sf); previously on Oct 5, 2010 Downgraded to B3 (sf)

Cl. C, Affirmed at Caa2 (sf); previously on Oct 5, 2010 Downgraded to Caa2 (sf)

Cl. D, Affirmed at Caa3 (sf); previously on Oct 5, 2010 Downgraded to Caa3 (sf)

Cl. E, Affirmed at C (sf); previously on Oct 5, 2010 Downgraded to C (sf)

Cl. F, Affirmed at C (sf); previously on Oct 5, 2010 Downgraded to C (sf)

Cl. G, Affirmed at C (sf); previously on Oct 5, 2010 Downgraded to C (sf)

Cl. H, Affirmed at C (sf); previously on Oct 5, 2010 Downgraded to C (sf)

Cl. J, Affirmed at C (sf); previously on Nov 19, 2009 Downgraded to C (sf)

Cl. K, Affirmed at C (sf); previously on Nov 19, 2009 Downgraded to C (sf)

Cl. L, Affirmed at C (sf); previously on Nov 19, 2009 Downgraded to C (sf)

Cl. M, Affirmed at C (sf); previously on Nov 19, 2009 Downgraded to C (sf)

Cl. N, Affirmed at C (sf); previously on Nov 19, 2009 Downgraded to C (sf)

Cl. O, Affirmed at C (sf); previously on Nov 19, 2009 Downgraded to C (sf)

Cl. P, Affirmed at C (sf); previously on Nov 19, 2009 Downgraded to C (sf)

Cl. Q, Affirmed at C (sf); previously on Nov 19, 2009 Downgraded to C (sf)

Cl. X, Affirmed at Aaa (sf); previously on Oct 26, 2007 Definitive Rating Assigned Aaa (sf)

RATINGS RATIONALE

The affirmations are due to key parameters, including Moody's loan to value (LTV) ratio, Moody's stressed debt service coverage ratio (DSCR) and the Herfindahl Index (Herf), remaining within acceptable ranges. Based on our current base expected loss, the credit enhancement levels for the affirmed classes are sufficient to maintain the current ratings.

Moody's rating action reflects a cumulative base expected loss of 12.1% of the current balance. At last review, Moody's cumulative base expected loss was 15.7%. The decline in base expected loss is due to recent loan modifications, stabilizing loan performance and the liquidation of several specially serviced loans since last review. Moody's stressed scenario loss is 22.2% of the current balance compared to 29.8% at last review. Moody's provides a current list of base and stress scenario losses for conduit and fusion CMBS transactions on moodys.com at http://v3.moodys.com/viewresearchdoc.aspx?docid=PBS_SF215255. Depending on the timing of loan payoffs and the severity and timing of losses from specially serviced loans, the credit enhancement level for investment grade classes could decline below the current levels. If future performance materially declines, the expected level of credit enhancement and the priority in the cash flow waterfall may be insufficient for the current ratings of these classes.

Moody's analysis reflects a forward-looking view of the likely range of collateral performance over the medium term. From time to time, Moody's may, if warranted, change these expectations. Performance that falls outside an acceptable range of the key parameters may indicate that the collateral's credit quality is stronger or weaker than Moody's had anticipated during the current review. Even so, deviation from the expected range will not necessarily result in a rating action. There may be mitigating or offsetting factors to an improvement or decline in collateral performance, such as increased subordination levels due to amortization and loan payoffs or a decline in subordination due to realized losses.

Primary sources of assumption uncertainty are the current sluggish macroeconomic environment and varying performance in the commercial real estate property markets. However, Moody's expects to see increasing or stabilizing property values, higher transaction volumes, a slowing in the pace of loan delinquencies and greater liquidity for commercial real estate in 2011. The hotel and multifamily sectors are continuing to show signs of recovery, while recovery in the office and retail sectors will be tied to recovery of the broader economy. The availability of debt capital continues to improve with terms returning toward market norms. Moody's central global macroeconomic scenario reflects an overall sluggish recovery through 2012, amidst ongoing individual, corporate and governmental deleveraging, persistent unemployment, and government budget considerations.

The principal methodology used in this rating was "Moody's Approach to Rating U.S. CMBS Conduit Transactions" published in September 2000. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

Moody's review incorporated the use of the excel-based CMBS Conduit Model v 2.50 which is used for both conduit and fusion transactions. Conduit model results at the Aa2 level are driven by property type, Moody's actual and stressed DSCR, and Moody's property quality grade (which reflects the capitalization rate used by Moody's to estimate Moody's value). Conduit model results at the B2 level are driven by a pay down analysis based on the individual loan level Moody's LTV ratio. Moody's Herfindahl score (Herf), a measure of loan level diversity, is a primary determinant of pool level diversity and has a greater impact on senior certificates. Other concentrations and correlations may be considered in our analysis. Based on the model pooled credit enhancement levels at Aa2 and B2, the remaining conduit classes are either interpolated between these two data points or determined based on a multiple or ratio of either of these two data points. For fusion deals, the credit enhancement for loans with investment-grade underlying ratings is melded with the conduit model credit enhancement into an overall model result. Fusion loan credit enhancement is based on the underlying rating of the loan which corresponds to a range of credit enhancement levels. Actual fusion credit enhancement levels are selected based on loan level diversity, pool leverage and other concentrations and correlations within the pool. Negative pooling, or adding credit enhancement at the underlying rating level, is incorporated for loans with similar underlying ratings in the same transaction.

Moody's ratings are determined by a committee process that considers both quantitative and qualitative factors. Therefore, the rating outcome may differ from the model output.

The rating action is a result of Moody's on-going surveillance of commercial mortgage backed securities (CMBS) transactions. 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 full review is summarized in a press release dated October 5, 2010. Please see the ratings tab on the issuer / entity page on moodys.com for the last rating action and the ratings history.

DEAL PERFORMANCE

As of the June 10, 2011 distribution date, the transaction's aggregate certificate balance has decreased by 2.7% to $7.36 billion from $7.56 billion at securitization. The Certificates are collateralized by 198 mortgage loans ranging in size from less than 1% to 9.5% of the pool, with the top ten loans representing 31% of the pool. The pool does not contain any defeased loans or loans with credit estimates.

Fifty-four loans, representing 27% 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 CRE Finance Council (CREFC) 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.

Eight loans have been liquidated from the pool since securitization, resulting in an aggregate $79.0 million loss (29% loss severity on average). At last review the pool had experienced an aggregate realized loss of $12.6 million.

Currently, 36 loans, representing 34% of the pool, are in special servicing. Two of the specially serviced loans, representing 14% of the pool, are secured by properties for which Maguire Properties L.P. (Maguire) is the sponsor. The Wells Fargo Tower Loan ($550 million -- 7.5% of the pool), which is the largest specially serviced loan, is secured by a 1.4 million square foot (SF) Class A, 53-story office building located in downtown Los Angeles. The loan was transferred to special servicing in April 2011 due to imminent monetary default. The special servicer has indicated that this loan recently returned to performing status in June 2011. Two California Plaza ($470 million -- 6.4% of the pool) is secured by a 1.3 million SF, 54-story Class A office building located in downtown Los Angeles. This loan was transferred to special servicing in December 2010 due to imminent monetary default. Negotiations are underway between the borrower and the special servicer regarding a potential loan modification.

There are two other specially serviced loans originally affiliated with McGuire: 550 South Hope and the Maguire Anaheim Portfolio. The 550 South Hope Loan ($118 million -- 2.0% of the pool) is secured by a 566,000 SF Class A office building located in downtown Los Angeles. The property was acquired by Leyton-Belling and Associates earlier this year and the outstanding principal balance was reduced from $165 million to $118 million. Another large specially serviced loan formerly affiliated with Maguire is The Maguire Anaheim Portfolio Loan ($103.5 million -- 1% of the pool), which is secured by two office properties located in Orange County, California which total 333,500 SF. The loan was transferred to special servicing in August 2009 for imminent default and a receiver was appointed February 4, 2011.

The remaining 32 specially serviced loans are secured by a mix of property types and are either 30 to 90+ days delinquent, real estate owned (REO) or in the foreclosure process. The master servicer has recognized an aggregate $562 million appraisal reduction. Moody's has estimated an aggregate $591 million loss (25% expected loss on average) for the specially serviced loans. Moody's has also assumed a high default probability for 43 poorly performing loans representing 24% of the pool. Moody's has estimated a $129.4 million loss (8% expected loss based on a 50% probability default) from the troubled loans. In aggregate, Moody's forecast total losses of $720.4 million (18% expected loss) for specially serviced and troubled loans.

Moody's was provided with full year 2009 and full year 2010 operating results for 91% and 87% of the pool, respectively. Excluding specially serviced and troubled loans, Moody's weighted average LTV is 122% compared to 124% at Moody's prior review. Moody's net cash flow reflects a weighted average haircut of 10.0% to the most recently available net operating income. Moody's value reflects a weighted average capitalization rate of 9.1%.

Excluding specially serviced and troubled loans, Moody's actual and stressed DSCRs are 1.30X and 0.84X, respectively compared to 1.23X and 0.80X 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 risk of multiple notch downgrades under adverse circumstances. The credit neutral Herf score is 40. The pool has a Herf of 35 compared to 36 at Moody's prior review.

The top three performing conduit loans represent 23% of the pool. The largest loan is the Shorenstein Portland Portfolio Loan ($697.2 million -- 9.3% of the pool), which is secured by 16 office properties located in Portland, Oregon. The portfolio totals 3.8 million SF. As of March 2010, the portfolio's was 80% leased, the same as at last review versus 94% at securitization. Performance had been stable through 2008, however, operating income declined in 2009 and again in 2010 due to lower occupancy and increased expenses. Net operating income (NOI) for full year 2009 was approximately 6% lower than in 2008 and reported 2010 total portfolio income was 7% lower than in 2009. The loan is interest-only for the entire term. Moody's LTV and stressed DSCR are 137% and 0.71X compared to 135% and 0.72X, respectively, at last review.

The second largest loan is the TIAA RexCorp New Jersey Portfolio Loan ($270.4 million -- 3.7% of the pool), which is secured by six separate Class A office buildings totaling 1.0 million SF located in Madison, Short Hills and Morristown, New Jersey. As of December 2010, the portfolio was 87% leased compared to 85% at last review. The loan is interest-only for the entire term. Moody's LTV and stressed DSCR 135% and 0.72X compared to 136% and 0.72X, respectively, at last review.

The third largest loan is the 400 Atlantic Street Loan ($265.0 million -- 3.6% of the pool), which is secured by a 527,424 SF class A office building located in Stamford, Connecticut. As of December 2010, the property was 99% leased, the same as last review, compared to 97% at securitization. The loan is interest-only for the entire term. Moody's LTV and stressed DSCR are 128% and 0.76X compared to 136% and 0.72X, respectively, at last review.

New York
Gregory Reed
Vice President - Senior Analyst
Structured Finance Group
Moody's Investors Service, Inc.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

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

Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's Affirms 23 CMBS Classes of GSMS 2007-GG10
No Related Data.
© 2021 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S CREDIT RATINGS AFFILIATES ARE THEIR CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY’S (COLLECTIVELY, “PUBLICATIONS”) MAY INCLUDE SUCH CURRENT OPINIONS. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE APPLICABLE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS (“ASSESSMENTS”), AND OTHER OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

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