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Rating Action:

Moody's Affirms Four Classes of GCCFC 2005-GG3

29 Jun 2018

Approximately $82.7 Million of Structured Securities Affected

New York, June 29, 2018 -- Moody's Investors Service, ("Moody's") has affirmed the ratings on four classes in Greenwich Capital Commercial Funding Corp., Commercial Mortgage Pass-Through Certificates, Series 2005-GG3 as follows:

Cl. E, Affirmed B1 (sf); previously on Jun 23, 2017 Affirmed B1 (sf)

Cl. F, Affirmed Caa2 (sf); previously on Jun 23, 2017 Affirmed Caa2 (sf)

Cl. G, Affirmed C (sf); previously on Jun 23, 2017 Affirmed C (sf)

Cl. XC, Affirmed C (sf); previously on Jun 23, 2017 Affirmed C (sf)

RATINGS RATIONALE

The rating on P&I Class E was affirmed because the rating is consistent with expected recovery of principal from specially and troubled loans.

The ratings on P&I Classes F & G were affirmed due to Moody's expected loss.

The rating on IO Class XC was affirmed based on the credit performance of the referenced classes.

Moody's rating action reflects a base expected loss of 36.5% of the current balance, compared to 30.4% at Moody's last review. Moody's base expected loss plus realized losses is now 5.5% of the original pooled balance, compared to 5.6% at Moody's last review. Moody's provides a current list of base expected losses for conduit and fusion CMBS transactions on moodys.com at http://www.moodys.com/viewresearchdoc.aspx?docid=PBS_SF215255.

FACTORS THAT WOULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS:

The performance expectations for a given variable indicate Moody's forward-looking view of the likely range of performance over the medium term. Performance that falls outside the given range can indicate that the collateral's credit quality is stronger or weaker than Moody's had previously expected.

Factors that could lead to an upgrade of the ratings include a significant amount of loan paydowns or amortization, an increase in the pool's share of defeasance or an improvement in pool performance.

Factors that could lead to a downgrade of the ratings include a decline in the performance of the pool, loan concentration, an increase in realized and expected losses from specially serviced and troubled loans or interest shortfalls.

METHODOLOGY UNDERLYING THE RATING ACTION

The principal methodology used in rating Greenwich Capital Commercial Funding Corp., 2005-GG3, Cl. E, Cl. F and Cl. G was "Moody's Approach to Rating Large Loan and Single Asset/Single Borrower CMBS" published in July 2017. The methodologies used in rating Greenwich Capital Commercial Funding Corp., 2005-GG3, Cl. XC were "Moody's Approach to Rating Large Loan and Single Asset/Single Borrower CMBS" published in July 2017 and "Moody's Approach to Rating Structured Finance Interest-Only (IO) Securities" published in June 2017. Please see the Rating Methodologies page on www.moodys.com for a copy of these methodologies.

Moody's analysis incorporated a loss and recovery approach in rating the P&I classes in this deal since 13.4% of the pool is in special servicing and Moody's has identified additional troubled loans representing 70.8% of the pool. In this approach, Moody's determines a probability of default for each specially serviced and troubled loan that it expects will generate a loss and estimates a loss given default based on a review of broker's opinions of value (if available), other information from the special servicer, available market data and Moody's internal data. The loss given default for each loan also takes into consideration repayment of servicer advances to date, estimated future advances and closing costs. Translating the probability of default and loss given default into an expected loss estimate, Moody's then applies the aggregate loss from specially serviced and troubled loans to the most junior classes and the recovery as a pay down of principal to the most senior classes.

DEAL PERFORMANCE

As of the June 12, 2018 distribution date, the transaction's aggregate certificate balance has decreased by 97.7% to $82.7 million from $3.6 billion at securitization. The certificates are collateralized by five mortgage loans ranging in size from less than 1% to 70.8% of the pool.

One loan, constituting 70.8% of the pool, is on the master servicer's watchlist. The watchlist includes loans that meet certain portfolio review guidelines established as part of the CRE Finance Council (CREFC) monthly reporting package. As part of Moody's ongoing monitoring of a transaction, the agency reviews the watchlist to assess which loans have material issues that could affect performance.

Thirty-seven loans have been liquidated from the pool, resulting in an aggregate realized loss of $167.2 million (for an average loss severity of 34.8%). One loan, constituting 13.4% of the pool, is currently in special servicing. The specially serviced loan is the Magnolia Village loan ($11.1 million -- 13.4% of the pool), which is secured by a mixed use project comprised of a three-story, Class A, 54,124 square feet (SF) office building, 9,880 square feet (SF) of retail/garden office space and a 5,896 square foot (SF) restaurant building that includes 2,080 square feet (SF) of finished basement. The collateral is located in Reno, Nevada approximately 3.5 miles from the Reno Tahoe International Airport. The Borrower filed bankruptcy on June 16, 2011 but continues to remit net cash flow on a monthly basis pursuant to a cash collateral order. The property remains in good condition and was 100% leased as of May 2018. The servicer has recognized an $8.4 million appraisal reduction for this loan.

As of the June 12, 2018 remittance statement cumulative interest shortfalls were $25.9 million. Moody's anticipates interest shortfalls will continue because of the exposure to specially serviced loans and/or modified loans. Interest shortfalls are caused by special servicing fees, including workout and liquidation fees, appraisal entitlement reductions (ASERs), loan modifications and extraordinary trust expenses.

The top three conduit loans represent 86.2% of the pool balance. The largest loan is the Doral Arrowwood Hotel Loan ($58.6 million -- 70.8% of the pool), which is secured by a 374-key resort hotel and golf course in Rye Brook, New York, approximately 25 miles north of New York City. The loan returned to the master servicer from special servicing in April 2016 after being modified. The modification included, among other items: (a) loan term increased by 48 months to a February 2019 maturity date, (b) conversion to interest-only payments and (c) an interest rate reduction from 6.0% to 2.0% through September 2016 and then 3.00% for the remaining term. Performance has declined due to decreased ADR as a result of Pfizer decreasing their presence at the hotel. Pfizer had a long-term contract with the property and was contracted at a significantly higher room rate. Moody's has assumed a high default probability and has estimated a moderate loss from this troubled loan.

The second largest loan is the FAA Building Loan ($11.9 million -- 14.4% of the pool), which is secured by a 244,000 square foot (SF) office building located in Des Plaines, Illinois. The property is one of five buildings in the O'Hare Lake Office Park, located five minutes from the Chicago O'Hare International Airport terminals. The property was 92% leased as of December 2017 compared to 91% in December 2016. The General Services Administration leases 85% of the space with the lease expiration in October 2020. Moody's analysis is based on a lit/dark analysis due to concerns about the property's large exposure to a single tenant. The loan is fully amortizing and has amortized 53.4% since securitization. Moody's LTV and stressed DSCR are 61.6% and 1.75X, respectively, compared to 67.4% and 1.56X at the last review.

The third largest loan is the 9480 Warner Ave Loan ($751 thousand -- 0.9% of the pool), which is secured by a 50,722 square foot (SF) grocery store anchored retail property located in Fountain Valley, California approximately 8 miles southwest of Santa Ana. The loan is fully amortizing and has amortized over 85% since securitization. Moody's LTV and stressed DSCR are 14.8% and >4.00X, respectively, compared to 23.8% and >4.00X at the last review.

REGULATORY DISCLOSURES

For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions of the disclosure form.

The analysis includes an assessment of collateral characteristics and performance to determine the expected collateral loss or a range of expected collateral losses or cash flows to the rated instruments. As a second step, Moody's estimates expected collateral losses or cash flows using a quantitative tool that takes into account credit enhancement, loss allocation and other structural features, to derive the expected loss for each rated instrument.

Moody's did not use any stress scenario simulations in its analysis.

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Tulay Sangiray
Analyst
Structured Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Keith Banhazl
MD - Structured Finance
Structured Finance Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

No Related Data.
© 2018 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

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