Fitch Upgrades 1 Class on GS Mortgage Securities Corporation II, Series 2007-EOP; Assigns Outlooks

2008-11-21 00:49:05 -

Fitch Ratings upgrades and assigns Ratings Outlooks to GS Mortgage Securities Corporation II pass-through certificates, series 2007-EOP as follows:
--$370.3 million class B to 'AAA' from 'AA+'; Outlook Stable.
In addition, Fitch affirms and assigns Rating Outlooks to the following classes:
--$875 million class A-1 at 'AAA'; Outlook Stable;
--$584.8 million class A-2 at 'AAA'; Outlook Stable;
--$606.5 million class A-3 at 'AAA'; Outlook Stable;
--Interest only class X at 'AAA'; Outlook Stable;
--$432.3 million class C at 'AA'; Outlook Stable;
--$220 million class D at 'AA-'; Outlook Stable;
--$237.9 million class E at 'A+'; Outlook Stable;
--$214.7 million class F at 'A'; Outlook Stable;
--$142.4 million class G at 'A-'; Outlook Stable;
--$142.4 million class H at 'BBB+'; Outlook Stable;
--$395 million class J at 'BBB'; Outlook Stable;
--$213.6 million class K at 'BBB-; Outlook Stable;
--$534 million class L at 'BB+'; Outlook Negative.
The upgrade to class B reflects the pay down of approximately 27.6% since issuance. Fitch has completed its review of year-end 2007 and June 30, 2008 servicer reported information. As of the Nov. 15, 2008 distribution date, the total collateral balance has been reduced to approximately $4.97 billion from $6.87 billion at issuance. The pay down included the release of two of the top ten mortgaged assets, 10 & 30 South Wacker in Chicago, IL and Three Stamford Plaza in Stamford, CT.
The Negative Outlook for Class L reflects the exposure to the office sector given the economic outlook, in addition to the increased allocated debt attributed to markets in California, Boston and New York. The Rating Outlooks reflect the likely direction of rating changes over the next one to two years.
The certificates are collateralized by a single $4.9 billion nonrecourse floating-rate loan secured by approximately 103 office properties, down from approximately 135 properties at issuance. The collateral consists of mortgages, equity pledges in joint ventures and cash flow pledges. In addition, there is approximately $2.3 billion of mezzanine debt held outside the trust.
The largest property in the pool (11%) is the Verizon Building located across from Bryant Park in mid-town Manhattan. The property was undergoing major interior and exterior renovations at issuance. With building renovations completed, occupancy continues to improve as tenants complete their build outs. As of the Aug. 31, 2008 rent roll, the Verizon Building was approximately 88.2% leased and 78.3% occupied, with many tenants in free rent periods. Due to lag in actual rent collections, there was not a June 30, 2008 servicer report for this property.
The pool remains diverse, with 103 office properties located in nine different states. Excluding the Verizon Building, the top ten properties account for approximately 29% of the collateral balance, with no single property comprising more than 4% of the collateral. In addition, the average occupancy at the properties as of Aug. 31, 2008 was approximately 88% compared to 91% at issuance.
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