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Announcement:

Moody's affirms 22 CMBS classes of CD 2005-CD1

07 Dec 2012

Approximately $3.21 billion of structured securities affected

New York, December 07, 2012 -- Moody's Investors Service (Moody's) affirmed the ratings of 22 CMBS classes of CD 2005-CD1 Commercial Mortgage Trust, Commercial Mortgage Pass-Through Certificates, Series 2005-CD1 as follows:

Cl. A-2FL, Affirmed at Aaa (sf); previously on Jan 13, 2006 Definitive Rating Assigned Aaa (sf)

Cl. A-2FX, Affirmed at Aaa (sf); previously on Jan 13, 2006 Definitive Rating Assigned Aaa (sf)

Cl. A-3, Affirmed at Aaa (sf); previously on Jan 13, 2006 Definitive Rating Assigned Aaa (sf)

Cl. A-SB, Affirmed at Aaa (sf); previously on Jan 13, 2006 Definitive Rating Assigned Aaa (sf)

Cl. A-4, Affirmed at Aaa (sf); previously on Jan 13, 2006 Definitive Rating Assigned Aaa (sf)

Cl. A-1A, Affirmed at Aaa (sf); previously on Jan 13, 2006 Definitive Rating Assigned Aaa (sf)

Cl. A-M, Affirmed at Aaa (sf); previously on Jan 13, 2006 Definitive Rating Assigned Aaa (sf)

Cl. A-J, Affirmed at A3 (sf); previously on Dec 17, 2010 Downgraded to A3 (sf)

Cl. B, Affirmed at Baa1 (sf); previously on Dec 17, 2010 Downgraded to Baa1 (sf)

Cl. C, Affirmed at Baa3 (sf); previously on Dec 17, 2010 Downgraded to Baa3 (sf)

Cl. D, Affirmed at Ba1 (sf); previously on Dec 17, 2010 Downgraded to Ba1 (sf)

Cl. E, Affirmed at Ba3 (sf); previously on Dec 17, 2010 Downgraded to Ba3 (sf)

Cl. F, Affirmed at B3 (sf); previously on Dec 17, 2010 Downgraded to B3 (sf)

Cl. G, Affirmed at Caa2 (sf); previously on Dec 17, 2010 Downgraded to Caa2 (sf)

Cl. H, Affirmed at Ca (sf); previously on Dec 17, 2010 Downgraded to Ca (sf)

Cl. J, Affirmed at C (sf); previously on Dec 17, 2010 Downgraded to C (sf)

Cl. K, Affirmed at C (sf); previously on Dec 17, 2010 Downgraded to C (sf)

Cl. L, Affirmed at C (sf); previously on Dec 17, 2010 Downgraded to C (sf)

Cl. M, Affirmed at C (sf); previously on Dec 17, 2010 Downgraded to C (sf)

Cl. N, Affirmed at C (sf); previously on Jan 6, 2010 Downgraded to C (sf)

Cl. X, Affirmed at Ba3 (sf); previously on Feb 22, 2012 Downgraded to Ba3 (sf)

Cl. OCS, Affirmed at Baa3 (sf); previously on Jan 13, 2006 Definitive Rating Assigned Baa3 (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 their current ratings.

The rating of Class OCS is tied to the One Court Square loan and is affirmed due to the stable performance of this loan.

The rating of the IO Class, Class X, is consistent with the credit performance of the referenced classes and thus is affirmed.

Moody's rating action reflects a base expected loss of approximately 6% of the current deal balance, essentially unchanged since Moody's 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.

The performance expectations for a given variable indicate Moody's forward-looking view of the likely range of performance over the medium term. From time to time, Moody's may, if warranted, change these expectations. Performance that falls outside the given range may indicate that the collateral's credit quality is stronger or weaker than Moody's had anticipated when the related securities ratings were issued. Even so, a deviation from the expected range will not necessarily result in a rating action nor does performance within expectations preclude such actions. The decision to take (or not take) a rating action is dependent on an assessment of a range of factors including, but not exclusively, the performance metrics.

Primary sources of assumption uncertainty are the extent of growth in the current macroeconomic environment given the weak pace of recovery and 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 hotel sector is performing strongly with nine straight quarters of growth and the multifamily sector continues to show increases in demand with a growing renter base and declining home ownership. Recovery in the office sector continues at a measured pace with minimal additions to supply. However, office demand is closely tied to employment, where growth remains slow and employers are considering decreases in the leased space per employee. Also, primary urban markets are outperforming secondary suburban markets. Performance in the retail sector continues to be mixed with retail rents declining for the past four years, weak demand for new space and lackluster sales driven by internet sales growth. Across all property sectors, the availability of debt capital continues to improve with robust securitization activity of commercial real estate loans supported by a monetary policy of low interest rates.

Moody's central global macroeconomic scenario is for continued below-trend growth in US GDP over the near term, with consumer spending remaining soft in the US. Hurricane Sandy may skew near-term economic data but is unlikely to have any long-term macroeconomic effects. Primary downside risks include: a deeper than expected recession in the euro area accompanied by deeper credit contraction; the potential for a hard landing in major emerging markets, including China, India and Brazil; an oil supply shock; albeit abated in recent months; and given recent political gridlock, excessive fiscal tightening in the US in 2013 leading the US into recession. However, the Federal Reserve has shown signs of support for activity by continuing with quantitative easing.

The methodologies used in this rating were "Moody's Approach to Rating Fusion U.S. CMBS Transactions" published in April 2005 and "Moody's Approach to Rating Structured Finance Interest-Only Securities" published in February 2012. 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 2.61 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 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 (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 underlying ratings 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 underlying rating level, is incorporated for loans with similar credit assessments in the same transaction.

Moody's review also incorporated the CMBS IO calculator ver1.1 which uses the following inputs to calculate the proposed IO rating based on the published methodology: original and current bond ratings and credit estimates; original and current bond balances grossed up for losses for all bonds the IO(s) reference(s) within the transaction; and IO type corresponding to an IO type as defined in the published methodology. The calculator then returns a calculated IO rating based on both a target and mid-point . For example, a target rating basis for a Baa3 (sf) rating is a 610 rating factor. The midpoint rating basis for a Baa3 (sf) rating is 775 (i.e. the simple average of a Baa3 (sf) rating factor of 610 and a Ba1 (sf) rating factor of 940). If the calculated IO rating factor is 700, the CMBS IO calculator ver1.1 would provide both a Baa3 (sf) and Ba1 (sf) IO indication for consideration by the rating committee.

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 42 compared to a Herf of 46 at Moody's prior review.

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 December 9, 2011. 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 November 19, 2012 distribution date, the transaction's aggregate certificate balance has decreased by 17% to $3.21 billion from $3.89 billion at securitization. The Certificates are collateralized by 202 mortgage loans ranging in size from less than 1% to 9% of the pool, with the top ten loans representing 37% of the pool. The pool includes three loans with investment-grade credit assessments, representing 12% of the pool. Nine loans, representing approximately 2% of the pool, are defeased and are collateralized by U.S. Government securities.

Fourty-two 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) 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.

Seventeen loans have liquidated from the pool, resulting in an aggregate realized loss of $62 million (27% average loan loss severity). Currently, 19 loans, representing 6% of the pool, are in special servicing. The largest specially serviced loan is the Goodwin Square Loan ($33 million -- 1% of the pool), which is secured by a 331,000 square foot, 30-story, office property with an attached 124-room hotel building located in downtown Hartford, Connecticut. The office portion of the property, built in 1989, was 48% leased as of October 2012. The hotel, housed in a five-story, late-19th Century structure, is currently closed. Following default by the borrower, the servicer foreclosed and took title to the property in July 2012. Cushman and Wakefield has been appointed property manager and leasing agent, and is engaged in a "value add" lease-up strategy for the property on behalf of the servicer. Leasing interest in the property is reportedly strong.

The remaining 18 specially serviced loans are secured by a mix of commercial, retail, hotel, and manufactured housing property types. Moody's estimates an aggregate $100 million loss (50% expected loss severity overall) for all specially serviced loans.

Moody's has assumed a high default probability for 18 poorly-performing loans representing 8% of the pool. Moody's analysis attributes to these troubled loans an aggregate $47 million loss (19% expected loss severity based on a 51% probability default).

Moody's was provided with full-year 2011 and partial year 2012 operating results for 99% and 41% of the performing pool, respectively. Excluding specially serviced and troubled loans, Moody's weighted average LTV is 94% compared to 100% at last full review. Moody's net cash flow reflects a weighted average haircut of 11.3% 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 1.49X and 1.09X, respectively, compared to 1.41X and 1.02X 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.

The largest loan with a credit assessment is the One Court Square -- Citibank Loan ($290 million -- 9% of the pool). The loan is secured by a 1.4 million square foot, 50-story office tower located in Long Island City, New York. The signature property is located in the westernmost section of the New York City borough of Queens, across the East River from Midtown Manhattan. The building is fully occupied by Citibank, N.A. (Moody's Long Term Rating A3, negative outlook) under a lease with a scheduled expiration date of May 1, 2020. Citibank has negotiated a lease modification with temporary rent reduction in exchange for waiving its lease termination options. As a result, Citibank now has no lease termination options through the end of its lease in 2020. The property is also encumbered by a $25 million B-note, which is held inside the trust, and which secures the non-pooled, Class OCS certificate. The property changed hands in a July 2012 sale for $481 million in which the new buyer assumed the $315 million of the in-place securitized debt. Moody's value calculation is based on a dark/lit analysis and considers the higher rents that Citibank will pay, effective in 2014. The higher rents plus the waiver of early lease termination options currently offsets the deterioration in credit quality of the tenant (Citibank carried a Aa1 rating at securitization). Moody's credit assessment and stressed DSCR are Baa2 and 1.12X, respectively, compared to Baa2 and 1.03X at last review.

The second-largest loan with a credit assessment is the 100 East Pratt Street Loan ($105 million -- 3% of the pool), which is secured by a 656,000 square foot Class A office property located in downtown Baltimore, Maryland. The property was 98% leased as of December 2011 compared to 96% the prior year. One of the largest tenants, Merrill Lynch, recently signed a lease renewal through February 2018. Moody's current credit assessment and stressed DSCR are Baa3 and 1.32X, respectively, compared to Baa3 and 1.29X at last review.

The third loan with a credit assessment is the 220 East 67th Street Loan ($2.3 million - 0.1% of the pool), which is secured by a 114-unit residential cooperative located in the Upper East Side section of New York City. Moody's current credit assessment is Aaa and >4.00X, the same as at last review.

The top three performing conduit loans represent 15% of the pool. The largest loan is the Yahoo! Center Loan ($250 million -- 8% of the pool), which is secured by a six-building 1.1 million square foot office property located in Santa Monica, California. The property was 90% leased in June 2012 compared to 91% at Moody's last review. The lead tenants are Rubin Postaer (187,000 SF; 17% of property NRA), Yahoo, Inc. (137,000 SF; 13% of property NRA), and Home Box Office (128,000 SF; 12% of property NRA). Moody's current LTV and stressed DSCR are 79% and 1.16X, respectively, compared to 89% and 1.81X at last review.

The second-largest loan is the Maine Mall Loan ($129 million -- 4% of the pool). The loan is secured by a single-story regional mall in Portland, Maine. The mall anchors are Macy's, Sears, and JCPenney. The loan sponsor is General Growth Properties, Inc. Loan maturity was extended to December 2016 as part of a 2010 modification. The property is on the master servicer's watchlist for low DSCR, though performance has recently improved. Mall inline occupancy was 93% at year-end 2011 reporting, up from 90% the prior year. Leasing activity has been positive. New leases include the retailer J.Crew, which recently opened a 5,000 square-foot store at the mall. Moody's current LTV and stressed DSCR are 77% and 1.23X, respectively, compared to 92% and 1.03X at last review.

The third-largest loan is the TPMC Portfolio Loan ($100 million -- 3% of the pool), which is secured by two 18-story office towers totaling 697,000 square feet located in the South Main / Medical Center office submarket of Houston, Texas. Occupancy was 96% as of June 2012, unchanged since Moody's last review. The property is home to the popular Edwards Grand Palace Stadium 24 movie complex. The largest office tenants, General Electric, Net IQ, and UnitedHealth Group Incorporated (f.k.a. United Healthcare), each have leases scheduled to expire between July 2014 and February 2015. Together the top three tenants occupy approximately 39% of property NRA. Moody's analysis considers this medium-term lease rollover risk, which is nearly concurrent with loan maturity in May 2015. Moody's current LTV and stressed DSCR are 88% and 1.17X respectively, compared to 89% and 1.16X at last review.

REGULATORY DISCLOSURES

The Global Scale Credit Ratings on this press release that are issued by one of Moody's affiliates outside the EU are endorsed by Moody's Investors Service Ltd., One Canada Square, Canary Wharf, London E 14 5FA, UK, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that has issued a particular Credit Rating is available on www.moodys.com.

For ratings issued on a program, series or category/class of debt, this announcement provides relevant 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 relevant 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 relevant 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.

Moody's considers the quality of information available on the rated entity, obligation or credit satisfactory for the purposes of issuing a rating.

Moody's adopts all necessary measures so that the information it uses in assigning a rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Please see Moody's Rating Symbols and Definitions on the Rating Process page on www.moodys.com for further information on the meaning of each rating category and the definition of default and recovery.

Please see ratings tab on the issuer/entity page on www.moodys.com for the last rating action and the rating history. The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

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.

Wesley Flamer-Binion
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

Keith Banhazl
Vice President - Senior Analyst
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 affirms 22 CMBS classes of CD 2005-CD1
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.

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Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY550,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

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