NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has downgraded one distressed class and upgraded one class of General Electric Capital Assurance Company, series GFCM 2003-1 commercial mortgage pass-through certificates. A detailed list of rating actions follows the end of the press release.

The downgrade is due to the increased likelihood of losses to the already distressed class. The upgrade is due to sufficient credit enhancement and stable performance of the pool.

Fitch modeled losses of 2.61% of the remaining pool; expected losses of the original pool are at 1.3%, including 0.35% in realized losses to date.

As of the July 2012 distribution date, the pool's certificate balance has paid down 63.4% to $298.5 million from $822.6 million. There are no defeased loans within the pool. Fitch identified 27 (21.7%) Loans of Concern, of which one (0.54%) is specially serviced. Current cumulative interest shortfalls totaling $217,747 are affecting classes G through J.

The only specially serviced loan in the pool is collateralized by 26,356 square foot (sf) office building located in Albuquerque, NM. The loan transferred to special servicing in February 2012 for monetary default. The property was vacant from June 2010 until December 2011 when a new lease with the American Red Cross for 11,620 sf was signed. The special servicer reports that negotiations are in progress with the borrower for a forbearance while pursuing all rights and remedies of the trust.

The largest contributor to modeled losses is a loan (0.53%) secured by a 81,900 sf warehouse building located in Rancho Cordova, CA, a submarket of Sacramento. The property remains 29% occupied since Fitch's last rating action with one tenant, CA Home Furnishings, which is on a month-to-month lease. The loan has been current since issuance.

The second largest contributor to modeled losses is a loan (0.95%) secured by a 45,529 sf retail center located in Hoover, AL, a suburb of Birmingham. The property's performance has suffered the last several years due to declining occupancy. The servicer reports that the property's first-quarter occupancy and debt service coverage ratio (DSCR) was 37% and 0.23 times (x), respectively.

Fitch downgrades the following class and assigns a Recovery Estimate (REs) as indicated:

--$7.1 million class G to 'Csf' from 'CCsf'; RE 75%.

Fitch upgrades the following class and revises Outlook as indicated:

--$11.3 million class B to 'AAAsf' from 'AA+'; Outlook to Stable from Positive.

Fitch affirms the following classes as indicated:

--$118.7 million class A-4 at 'AAAsf'; Outlook Stable;

--$112.7 million class A-5 at 'AAAsf'; Outlook Stable;

--$13.3 million class C at 'A+sf'; Outlook Positive;

--$11.3 million class D at 'BBBsf'; Outlook Stable;

--$10.2 million class E at 'BBB-sf'; Outlook Stable;

--$12.3 million class F at 'B-sf'; Outlook Negative;

--$1.2 million class H at 'Dsf'; RE 0%;

--Class J at 'Dsf'; RE 0%.

Classes A-1, A-2 and A-3 have paid in full. Fitch has previously withdrawn the ratings on the interest-only class X.

Additional information on Fitch's criteria is available in the Dec. 21, 2011 report, 'Surveillance Methodology for U.S. Fixed-Rate CMBS Transactions', which is available at 'www.fitchratings.com' under the following headers:

Structured Finance >> CMBS >> Criteria Reports

Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' (June, 6, 2012);

--'Surveillance Methodology for U.S. Fixed-Rate CMBS Transactions', (Dec. 21, 2011).

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=679923

Surveillance Methodology for U.S. Fixed-Rate CMBS Transactions

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=662869

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Fitch Ratings
Primary Analyst
Sean Gibbs, +1-212-908-0311
Associate Director
Fitch, Inc.
One State Street Plaza
New York, NY 10004
or
Committee Chairperson
Mary MacNeill, +1-212-908-0785
Managing Director
or
Media Relations
Sandro Scenga, +1-212-908-0278
sandro.scenga@fitchratings.com

Source: Fitch Ratings

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