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Rating Action:

Moody's Confirms Two, Affirms Three and Downgrades Eight CMBS Classes of GE 2001-1

29 Jul 2010

Approximately $907.1 Million of Structured Securities Affected

New York, July 29, 2010 -- Moody's Investors Service (Moody's) confirmed the rating of two classes, affirmed three classes and downgraded eight classes of GE Capital Commercial Mortgage Corp., Commercial Mortgage Pass-Through Certificates, 2001-1. The downgrades are due to higher expected losses for the pool resulting from realized and anticipated losses from specially serviced and watchlisted loans and concerns about loans approaching maturity in an adverse environment. Twenty-four loans, representing 20% of the pool, mature within the next 12 months and have a Moody's stressed debt service coverage ratio (DSCR) less than 1.0X.

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

On July 14, 2010, Moody's placed ten classes on review for possible downgrade. This action concludes the review of the transaction. The rating action is the result of Moody's on-going surveillance of commercial mortgage backed securities (CMBS) transactions.

As of the July 15, 2010 distribution date, the transaction's aggregate certificate balance has decreased by 20% to $907.1 million from $1.1 billion at securitization. The Certificates are collateralized by 135 mortgage loans ranging in size from less than 1% to 5% of the pool, with the top ten loans representing 25% of the pool. Currently, there is one loan, representing 5% of the pool, with an investment grade underlying rating. Forty-eight loans, representing 40% of the pool, have defeased and are secured by U.S. Government securities.

Twenty seven loans, representing 19% 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.

Eight loans have been liquidated from the pool, resulting in an aggregate realized loss of $21.5 million (42% loss severity on average). There are 15 loans, representing 11% of the pool, currently in special servicing. The largest specially serviced loan is the Hawthorn Suites Loan ($15.3 million -- 1.7% of the pool), which is secured by a 280-room extended stay hotel located in Atlanta, Georgia. The loan was transferred to special servicing in April 2009 due to delinquency and is currently 90+ days delinquent. The master servicer has recognized a $6.7 million appraisal reduction for this loan. The remaining 14 specially serviced loans are secured by a mix of property types. The servicer has recognized a cumulative $25.3 million appraisal reduction for the ten of the 15 specially serviced loans. Moody's estimates an aggregate $40.8 million loss (43% loss severity on average) for 12 of the specially serviced loans.

In addition to recognizing losses from specially serviced loans, Moody's has assumed a high default probability on 13 poorly performing loans, representing 11% of the pool, due to refinancing risk. Moody's estimates a $27.1 million aggregate loss for these troubled loans (27% expected loss on average based on an overall 42% loss given default and an overall 64% 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 full-year 2009 operating results for 89% and 74%, respectively, of the pool. Moody's weighted average LTV ratio, excluding the specially serviced and troubled loans, is 72% compared to 85% at last review.

Excluding specially serviced and troubled loans, Moody's actual and stressed DSCR are 1.40X and 1.55X, respectively, compared to 1.29X and 1.33X 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 67 at last review.

The loan with an underlying rating is the 59 Maiden Lane Loan ($44.3 million - 5% of the pool), which is secured by a 1.1 million square foot Class B office building located in the financial district of New York City. As of October 2009, the building was 98% leased, essentially the same since last review. The major tenant is NY Citywide Department of Administrative Services, which occupies 66% of the net rentable area (NRA) through August 2021. Performance remains stable and in-line with last review. The loan matures in April 2011 and has amortized 5% since last review. Moody's underlying rating and stressed DSCR are Aaa and 3.91X, respectively, compared to Aaa and 3.73X at last review.

The top three conduit loans represent 9% of the outstanding pool balance. The largest conduit loan is the Long Wharf Maritime Center I Loan ($33.3 million - 4% of the pool), which is secured by a 416,000 square foot office building located in the harbor area immediately south of downtown New Haven, Connecticut. As of March 2009, the property was 60% leased compared to 97.0% at last review. The property's largest tenant is AT&T Corp. (AT&T; Moody's senior unsecured rating A2 - negative outlook). AT&T downsized to 20% of the NRA from 49% NRA when it renewed its lease in October 2008. The loan is on the watch-list for low DSCR and it matures March 2011. Moody's LTV and stressed DSCR are 152% and 0.68X, compared to 88% and 1.16X, respectively, at last review.

The second largest conduit loan is the Pescadero Apartments Loan ($26 million - 3% of the pool), which is secured by a 170-unit Class A apartment complex located 26 miles southeast of San Francisco in Redwood City, California. As of June 2010, the property was 89% leased compared to 95% at last review. Financial performance has suffered due to soft market conditions, increased competition and increased operating expenses. The loan is on the master servicer's watchlist due to low debt service coverage. The loan matures in March 2011. Moody's LTV and stressed DSCR are 125% and 0.78X, respectively, compared to 116% and 0.84X, respectively, at last review.

The third largest conduit loan is the Information Resources Loan ($21.5 million - 2% of the pool), which is secured by two Class B office buildings with a total of 252,000 square feet located in the West Loop submarket of Chicago, Illinois. The properties were constructed in 1908 and are 100% leased to Information Resources Inc. through October 2013. The loan is on the watchlist for a technical default related to the tenant improvement and leasing commission reserve. Moody's LTV and stressed DSCR are 63% and 1.72X, respectively, compared to 60% and 1.71X, respectively, at last review.

Moody's rating action is as follows:

-Class A-2, $674,543,993, affirmed at Aaa; previously assigned Aaa on 7/17/2001

-Class X-1, Notional, affirmed at Aaa; previously assigned Aaa on 7/17/2001

-Class B, $45,157,000, affirmed at Aaa; previously upgraded to Aaa from Aa2 on 4/7/2005

-Class C, $49,390,000, confirmed at Aaa; previously placed on review for possible downgrade on 7/14/2010

-Class D, $15,523,000, confirmed at Aa1; previously placed on review for possible downgrade on 7/14/2010

-Class E, $15,522,000, downgraded to A1 from Aa3; previously placed on review for possible downgrade on 7/14/2010

-Class F, $15,523,000, downgraded to Baa1 from A2; previously placed on review for on 7/14/2010

-Class G, $14,112,000, downgraded to Ba3 from Baa2; previously placed on review for possible downgrade on 7/14/2010

-Class H, $25,400,000, downgraded to Caa2 from Ba1; previously placed on review for possible downgrade on 7/14/2010

-Class I, $18,345,000, downgraded to Caa3 from Ba2; previously placed on review for possible downgrade on 7/14/2010

-Class J, $9,878,000, downgraded to Ca from Ba3; previously placed on review for possible downgrade on 7/14/2010

-Class K, $9,878,000, downgraded to C from B3; previously placed on review for possible downgrade on 7/14/2010

-Class L, $13,823,944, downgraded to C from Caa2; previously placed on review for possible downgrade on 7/14/2010

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 September 20, 2007.

The principal methodology used in rating and monitoring this transaction is "CMBS: Moody's Approach to Rating Fusion Transactions" published on April 19, 2005, which can be found at www.moodys.com in the Ratings 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 Confirms Two, Affirms Three and Downgrades Eight CMBS Classes of GE 2001-1
No Related Data.
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