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Rating Action:

Moody's Affirms Seven and Downgrades 14 CMBS Classes of WBCMT 2005-C17

21 Jul 2010

Approximately $2.4 Billion of Structured Securities Affected

New York, July 21, 2010 -- Moody's Investors Service (Moody's) affirmed the ratings of seven classes and downgraded 14 classes of Wachovia Bank Commercial Mortgage Securities, Inc., Commercial Mortgage Pass-Through Certificates, Series 2005-C17. The downgrades are due to higher expected losses for the pool resulting from actual and anticipated losses from specially serviced and highly leveraged watchlisted loans.

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 July 14, 2010 Moody's placed 14 classes of this transaction on review for possible downgrade. 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 July 16, 2010 distribution date, the transaction's aggregate certificate balance has decreased by approximately 12% to $2.4 billion from $2.7 billion at securitization. The Certificates are collateralized by 209 mortgage loans ranging in size from less than 1% to 9% of the pool, with the top 10 non-defeased loans representing 32% of the pool. The pool includes three loans with investment grade underlying ratings, representing 7% of the pool. At last review two additional loans, representing 10% of the pool, had underlying ratings. Their performance has declined since securitization and they are now analyzed as part of the conduit pool because of increased leverage. Twenty-four loans, representing 11% of the pool, have defeased and are collateralized by U.S. Government securities.

Forty-two loans, representing 20% 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; formerly Commercial Mortgage Securities Association) 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 since securitization, resulting in a $4.5 million loss for one of the loans (66% loss severity). The second loan was liquidated with no loss. Currently 14 loans, representing 9% of the pool, are in special servicing. The largest specially serviced loan is the Falchi Building Loan ($43.6 million -- 1.8% of the pool), which is secured by a 638,712 square foot (SF) industrial/office building located in Long Island City, New York. The loan was transferred to special servicing in December 2009 due to imminent maturity default and has passed its March 11, 2010 anticipated repayment date (ARD). The property was 89% leased as of March 2010 and performance has been stable since securitization. The borrower is negotiating a loan modification with the special servicer and Moody's does not expect a loss from this loan. Moody's current LTV and stressed DSCR are 104% and 0.99X, respectively, compared to 119% and 0.86X at last review. Of the remaining 13 specially serviced loans, six loans are either 90+ days delinquent, real estate owned (REO) or in the process of foreclosure. The servicer has recognized an aggregate $34.1 million appraisal reduction for four of the specially serviced loans. Moody's estimates an aggregate $49.6 million loss for 10 of the specially serviced loans (39% expected loss on average).

In addition to recognizing losses from specially serviced loans, Moody's has assumed a high default probability on 12 loans, representing 7% of the pool, due to refinancing risk or performance issues. Moody's estimates a $38.3 million aggregate expected loss for these troubled loans (22% expected loss on average based on overall 35% loss severity and 63% overall default probability). 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 or full-year 2009 operating results for 99% and 91% of the pool, respectively. Excluding specially serviced and troubled loans, Moody's weighted average LTV ratio is 94% compared to 100% at Moody's prior review. Although the overall LTV has declined, the pool has experienced increased credit quality dispersion. Based on Moody's analysis, 13% of the conduit pool has an LTV greater than 120% compared to 1% at last review.

Excluding specially serviced and troubled loans, Moody's actual and stressed DSCR are 1.49X and 1.15X, respectively, compared to 1.39 X and 1.01X 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 41 compared to 50 at last review.

The largest loan with an underlying rating is the Tharaldson Pool 1-B Loan ($66.0 million -- 2.8% of the pool), which is secured by the borrower's leasehold interest in 13 limited service hotels located in Nevada, Texas, California, Oklahoma, New York and Pennsylvania. Occupancy and revenue per available room (RevPAR) for the trailing twelve month period ending December 2009 were 71% and $75, respectively, compared to 79% and $94 in 2008. The loan sponsor is Gary Tharaldson. The loan benefits from a 20 year amortization schedule and has amoritized 12% since last review. Moody's underlying rating and stressed DSCR are A2 and 1.99X, respectively, compared to A1 and 2.16X at last review.

The second largest loan with an underlying rating is the Tharaldson Pool 1-A Loan ($47.9 million -- 2.0% of the pool), which is secured by fee interests in 14 limited service hotels and fee interests in the land supporting an additional 13 limited service hotels. Each land parcel is leased to borrowers in the Tharaldson 1-B Pool, which is included in the trust. Occupancy and RevPAR for the trailing twelve month period ending December 2009 were 71% and $67, respectively, compared to 76% and $78 in 2008. The loan sponsor is Gary Tharaldson. The loan benefits from a 20 year amortization schedule and has amortized 12% since last review. Moody's underlying rating and stressed DSCR are Baa1 and 1.87X, respectively, compared to A3 and 1.91X at last review.

The third largest loan with an underlying rating is the 200 Varick Street Loan ($27.0 million -- 1.1% of the pool), which is secured by a 400,061 SF Class B office building located in the Greenwich Village submarket of New York City. The largest tenants include Cardinia Real Estate LLC (28% of the net rentable area (NRA); lease expiration June 2020), Doremus & Company, Inc. (25% of the NRA; lease expiration June 2010) and Nysarc, Inc. (10% of the NRA; lease expiration December 2019). As of March, 2010 the property was 99% leased, the same as at year end 2008. The loan is currently on the master servicer's watchlist due to near term lease rollover. The loan is interest only for its entire 10 year term. Moody's underlying rating and stressed DSCR are Aa2 and 1.91X, respectively, compared to Aa2 and 2.02X at last review.

The first loan that previously had an investment grade underlying rating is the One & Two International Place Loan ($205.1 million -- 8.6% of the pool),which represents a 50% pari passu interest in a $410.2 million first mortgage loan. The loan is secured by two Class A office buildings, totaling 1,852,501 SF, located in Boston, Massachusetts. The largest tenants include Ropes & Gray LLP (19% of the NRA; lease expiration December 2010), Eaton Vance Management (17% of the NRA; lease expiration May 2024) and Choate Hall & Stewart (10% of the NRA; lease expiration September 2015). The property was 90% leased as of February 2010. Performance has declined since securitization due to increased expenses. In addition, market rents for the Financial District submarket have declined 10% since securitization. Moody's LTV and stressed DSCR are 81% and 1.10X, respectively, compared to 70% and 1.27X at last review.

The second loan that previously had an investment grade underlying rating is the Great Wolf Resorts Pool Loan ($44.5 million -- 1.8% of the pool), which is secured by two resorts located in Michigan and Kansas. Performance declined significantly in 2009 as a result of a drop in vacation travel caused by the economic recession. Occupancy and RevPAR for the trailing 12- month period ending December 2009 were 56% and $114, respectively, compared to 61% and $127 for the same period in 2008. The loan is currently on the master servicer's watchlist due low DSCR. Due to the decline in performance, Moody's has assumed a high probability of default for this loan. Moody's LTV and stressed DSCR are 158% and 0.79X, respectively, compared 54% and 1.48X at last review.

The top three conduit loans represent 11% of the pool. The largest conduit loan is the Digital Realty Trust Portfolio Loan ($142.6 million -- 6.0% of the pool), which is secured by six office properties located in five states. The properties were 97% leased as of March 2010. Net operating income (NOI) and occupancy have significantly increased since securitization. The loan sponsor is Digital Realty Trust, a publicly traded REIT. Moody's LTV and stressed DSCR are 58% and 1.85X, respectively, compared to 88% and 1.21X at last review.

The second largest conduit loan is the Olympia Portfolio Loan ($57.5 million -- 2.4% of the pool), which consists of 23 loans secured by 22 anchored retail properties and two office properties located in Florida and Georgia. Seven of the loans, representing 26% of the pool, have defeased and are collateralized by U.S. Government securities. Twenty of the properties, representing 88.3% of the allocated loan balance, are anchored by Walgreen Company (senior unsecured rating A2; stable outlook ). Four loans are currently on the master servicer's watchlist due to low DSCR, low occupancy and deferred maintenance. Moody's LTV and stressed DSCR are 93% and 1.02X, respectively, compared to 95% and 1.0X at last review.

The third largest conduit loan is the MetroPlace III & IV Loan ($52.2 million -- 2.2% of the pool), which is secured by two Class A office towers, totaling 325,328 SF, located in Fairfax, Virginia. As of March 2010, the buildings were 99% leased. The largest tenants include GSA-INS (31% of the NRA; lease expiration February 2014), GSA-DEA (22% of the NRA; lease expiration February 2015) and Lockhead Martin (21% of the NRA; lease expiration January 2013). The property was 99% leased as of March 2010. The property's NOI has been steadily increasing since securitization. Moody's LTV and stressed DSCR are 77% and 1.30X, respectively, compared to 93% and 1.07X at last review.

Moody's rating action is as follows:

-Class A-2, $140,908,623, affirmed at Aaa; previously assigned Aaa on 5/10/2005

-Class X-C, Notional, affirmed at Aaa; previously assigned Aaa on 5/10/2005

-Class X-P, Notional, affirmed at Aaa; previously assigned Aaa on 5/10/2005

-Class A-3, $82,046,000, affirmed at Aaa; previously assigned Aaa on 5/10/2005

-Class A-PB, $212,012,566, affirmed at Aaa; previously assigned Aaa on 5/10/2005

-Class A-4, $1,079,352,000, affirmed at Aaa; previously assigned Aaa on 5/10/2005

-Class A-1A, $ 334,620,169, affirmed at Aaa; previously assigned Aaa on 5/10/2005

-Class A-J, $187,242,000, downgraded to Aa2 from Aaa, previously placed on review for possible downgrade on 7/14/2010

-Class B, $74,897,000, downgraded toA2 from Aa2, previously placed on review for possible downgrade on 7/14/2010

-Class C, $23,830,000, downgraded to A3 from Aa3, previously placed on review for possible downgrade on 7/14/2010

-Class D, $47,661,000, downgraded to Baa2 from A2, previously placed on review for possible downgrade on 7/14/2010

-Class E, $27,235,000, downgraded to Ba1 from A3, previously placed on review for possible downgrade on 7/14/2010

-Class F, $27,235,000, downgraded to Ba3 from Baa1, previously placed on review for possible downgrade on 7/14/2010

-Class G, $30,639,000, downgraded to B3 from Baa2, previously placed on review for possible downgrade on 7/14/2010

-Class H, $37,448,000, downgraded to Caa2 from Baa3, previously placed on review for possible downgrade on 7/14/2010

-Class J, $6,808,000, downgraded to Caa3 from Ba1, previously placed on review for possible downgrade on 7/14/2010

-Class K, $10,213,000, downgraded to Ca from Ba2, previously placed on review for possible downgrade on 7/14/2010

-Class L, $13,617,000, downgraded to C from Ba3, previously placed on review for possible downgrade on 7/14/2010

-Class M, $6,808,000, downgraded to C from B1, previously placed on review for possible downgrade on 7/14/2010

-Class N, $6,808,000, downgraded to C from B2, previously placed on review for possible downgrade on 7/14/2010

-Class O, $6,808,000, downgraded to C from B3, previously placed on review for possible downgrade on 7/14/2010

Moody's monitors transactions on both a monthly basis through two sets of quantitative tools -- MOST® (Moody's Surveillance Trends) and CMM on Trepp -- and on a periodic basis through a full review. Moody's prior full review is summarized in a press release dated May 4, 2007.

The principal methodology used in rating and monitoring this transaction is "CMBS: Moody's Approach to Rating Fusion Transactions" dated April 19, 2005, and 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 Seven and Downgrades 14 CMBS Classes of WBCMT 2005-C17
No Related Data.
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