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Rating Action:

Moody's Upgrades Two and Affirms Two CMBS Classes of GMAC 1999-C3

18 Jul 2013

Approximately $21.8 Million of Structured Securities Affected

New York, July 18, 2013 -- Moody's Investors Service (Moody's) upgraded the ratings of two classes and affirmed the ratings of two classes of GMAC Commercial Mortgage Securities, Inc. Mortgage Pass-Through Certificates, Series 1999-C3 as follows:

Cl. H, Upgraded to Aaa (sf); previously on Nov 8, 2012 Upgraded to Ba1 (sf)

Cl. J, Upgraded to Aaa (sf); previously on Nov 8, 2012 Upgraded to Ba2 (sf)

Cl. K, Affirmed C (sf); previously on Oct 28, 2010 Downgraded to C (sf)

Cl. X, Affirmed Caa3 (sf); previously on Feb 22, 2012 Downgraded to Caa3 (sf)

RATINGS RATIONALE

The upgrades are due to upcoming defeasance maturities and increased credit subordination due to loan payoffs and amortization. The pool has paid down by 22% since Moody's last full review.

The rating of the one remaining below investment grade P&I class is consistent with Moody's expected loss and thus is affirmed.

The rating of the IO class is consistent with the credit performance of its referenced classes and thus is affirmed.

Moody's rating action reflects a cumulative base expected loss of 0.3% of the current balance compared to 6.7% at last review. Base expected losses and realized losses have decreased to 2.9% of the original balance from 3.0% at last review. Moody's provides a current list of base 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.

Primary sources of assumption uncertainty are the extent of growth in the current macroeconomic environment given the weak pace of recovery in the commercial real estate property markets. Commercial real estate property values are continuing to move in a modestly positive direction along with a rise in investment activity and stabilization in core property type performance. Limited new construction and moderate job growth have aided this improvement. However, a consistent upward trend will not be evident until the volume of investment activity steadily increases for a significant period, non-performing properties are cleared from the pipeline, and fears of a Euro area recession are abated.

The methodologies used in this rating were "Moody's Approach to Rating U.S. CMBS Conduit Transactions" published on September 2000 and "Moody's Approach to Rating CMBS Large Loan/Single Borrower Transactions" published in July 2000. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.

Moody's review incorporated the use of the excel-based CMBS Conduit Model v 2.62 which is used for both conduit and fusion transactions. Conduit model results at the Aa2 (sf) 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 (sf) level are driven by a paydown 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 (sf) and B2 (sf), 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 credit assessments is melded with the conduit model credit enhancement into an overall model result. Fusion loan credit enhancement is based on the credit assessment 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 credit assessment level, is incorporated for loans with similar credit assessments in the same transaction.

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 two compared to three at last review.

In cases where the Herf falls below 20, Moody's also employs the large loan/single borrower methodology. This methodology uses the excel-based Large Loan Model v 8.5 and then reconciles and weights the results from Conduit and Large Loan models in formulating a rating recommendation. The large loan model derives credit enhancement levels based on an aggregation of adjusted loan level proceeds derived from Moody's loan level LTV ratios. Major adjustments to determining proceeds include leverage, loan structure, property type and sponsorship. These aggregated proceeds are then further adjusted for any pooling benefits associated with loan level diversity, other concentrations and correlations.

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 a review utilizing MOST® (Moody's Surveillance Trends) Reports and a proprietary program that highlights significant credit changes that have occurred in the last month as well as cumulative changes since the last full transaction review. On a periodic basis, Moody's also performs a full transaction review that involves a rating committee and a press release. Moody's prior transaction review is summarized in a press release dated November 8, 2012. 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 17, 2013 distribution date, the transaction's aggregate certificate balance has decreased by 98% to $21.8 billion from $1.15 billion at securitization. The Certificates are collateralized by five mortgage loans ranging in size from less than 2% to 35% of the pool, with the remaining three loans, excluding defeasance, representing 37% of the pool. There are two defeased loans representing 63% of the pool.

Twenty-eight loans have been liquidated from the pool, resulting in a realized loss of $33 million (15.1% loss severity). There are currently no loans in special servicing or on the watchlist.

Moody's was provided with full year 2011 and 2012 operating results for 100% of the pool. Excluding defeased loans, Moody's weighted average conduit LTV is 76% compared to 66% at last full review. Moody's net cash flow reflects a weighted average haircut of 26% to the most recently available net operating income. Moody's value reflects a weighted average capitalization rate of 9.8%.

Excluding defeased loans, Moody's actual and stressed conduit DSCRs are 1.10X and 1.47X, respectively, compared to 1.27X and 1.64X, respectively, at last full 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.

The remaining three conduit loans represent 37% of the pool balance. The largest loan is the Burleson Towne Center Loan ($5.6 million -- 25.5% of the pool), which is secured by an outdoor shopping center located thirteen miles south of Fort Worth, in Burleson, Texas. The property was 95% leased as of May 2013, compared to 98% leased at last review. JC Penny is the only anchor tenant leasing 68% of the net rentable area (NRA) through October 2019. Moody's LTV and stressed DSCR are 78% and 1.38X, respectively, compared to 70% and 1.54X at last review.

The second largest loan is the Rivercrest Apartments Loan ($2.2 million -- 10.0% of the pool), which is secured by a 120 unit apartment building located in Albany, Georgia. The property was 92% leased as of May 2013 compared to 93% leased at last review. The property's performance declined from 2011 to 2012 due to reduced rental revenue and higher operating costs. The property continues to perform. Moody's LTV and stressed DSCR are 77% and 1.34X, respectively, compared to 64% and 1.62X at last review.

The third-largest loan is the CVS Pharmacy Baltimore Loan ($387 thousand -- 1.8% of the pool). The loan is secured by a 12,600 SF store located in Baltimore, Maryland. The property is 100% leased to CVS Pharmacy through the loan maturity in March 2016. CVS sublet the space to Family Dollar for the remainder of the lease. Performance remains stable. Moody's current LTV and stressed DSCR are 29% and 3.58X respectively, compared to 37% and 2.86X at last review.

REGULATORY DISCLOSURES

Moody's did not receive or take into account a third-party assessment on the due diligence performed regarding the underlying assets or financial instruments related to the monitoring of this transaction in the past six months.

In conducting surveillance of this credit, Moody's considered performance data contained in servicer and remittance reports. Moody's obtains servicer reports on this transaction on a periodic basis, at least annually.

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 rating action on the support provider and in relation to each particular 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 rating action, and whose ratings may change as a result of this 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.

Benjamin Abrams
Associate Analyst
Structured Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Michael Gerdes
MD - Structured Finance
Structured Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
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 Upgrades Two and Affirms Two CMBS Classes of GMAC 1999-C3
No Related Data.
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