OREANDA-NEWS. S&P: Greenwich Capital Commercial Funding Corp. Series 2006-GG7 Ratings Lowered On Two Classes; Two Ratings Affirmed Centennial S&P Global Ratings today loweredits ratings on two classes of commercial mortgage pass-through certificates from Greenwich Capital Commercial Funding Corp.'s series 2006-GG7, a U. S. commercial mortgage-backed securities (CMBS) transaction. In addition, we affirmed our ratings on two other classes from the same transaction (see list).

Our rating actions follow our analysis of the transaction, primarily using ourcriteria for rating U. S. and Canadian CMBS transactions, which included a review of the credit characteristics and performance of the remaining assets in the pool, the transaction's structure, and the liquidity available to the trust.

We lowered our rating on class B to reflect our view of the class' susceptibility to reduced liquidity support from the 13 specially serviced assets ($525.2 million, 79.4%), as well as credit support erosion that we anticipate will occur upon the eventual resolution of 12 ($361.7 million, 54.7%) of the 13 assets with the special servicers (discussed below). In addition, we lowered our rating on class C to 'D (sf)' because of accumulated interest shortfalls that we expect to remain outstanding for the foreseeable future. Class C has experienced three consecutive months of interest shortfalls.

According to the July 12, 2016, trustee remittance report, the current monthlyinterest shortfalls totaled $661,643 and resulted primarily from:

Appraisal subordinate entitlement reduction amounts totaling $322,786;

Modified interest rate reduction totaling $203,074;

Special servicing fees totaling $67,417;

Interest not advanced totaling $40,388; and

Workout fees totaling $5,754.

The current interest shortfalls affected classes subordinate to and including class C.

The affirmations on classes A-M and A-J reflect our expectation that the available credit enhancement for these classes will be within our estimate of the necessary credit enhancement required for the current ratings, as well as current and future performance of the transaction's collateral, the transaction structure, and liquidity support available to the classes.

While available credit enhancement levels suggest positive rating movements onclasses A-M and A-J, our analysis also considered the classes' susceptibility to reduced liquidity support from the 13 specially serviced assets. Specifically, we also considered the JP Morgan International Plaza I & II loan($163.5 million, 24.7%) and the uncertainty about what the sole tenant will dowhen its lease expires in 2018, which is coterminous with the loan's maturity.

TRANSACTION SUMMARY

As of the July 12, 2016, trustee remittance report, the collateral pool balance was $661.5 million, which is 18.3% of the pool balance at issuance. The pool currently includes 13 loans (reflecting cross-collateralized loans) and two real estate-owned (REO) assets, down from 134 loans at issuance. Thereare 13 assets with the special servicers, one loan ($18.2 million, 2.8%) is onthe master servicer's watchlist, and no loans are defeased. The master servicer, Midland Loan Services, reported financial information for 94.7% of the loans in the pool, of which 92.0% was partial-year or year-end 2015 data and the remaining was year-end 2014 data.

We calculated a 1.11x S&P Global Ratings' weighted average debt service coverage (DSC) and 103.3% S&P Global Ratings' weighted average loan-to-value (LTV) ratio using a 7.61% S&P Global Ratings' weighted average capitalization rate. The DSC, LTV, and capitalization rate calculations exclude 12 of the 13 specially serviced assets and one subordinate B hope note ($30.0 million, 4.5%). The top 10 loans have an aggregate outstanding pool trust balance of $605.2 million (91.5%). Excluding the seven nonperforming specially serviced assets, using servicer-reported numbers, we calculated an S&P Global Ratings' weighted average DSC and LTV of 1.15x and 101.5%, respectively, for the three remaining top 10 loans.

To date, the transaction has experienced $251.8 million in principal losses, or 7.0% of the original pool trust balance. We expect losses to reach approximately 10.3% of the original pool trust balance in the near term, basedon losses incurred to date and additional losses we expect upon the eventual resolution of 12 of the 13 specially serviced assets.

CREDIT CONSIDERATIONS

As of the July 12, 2016 trustee remittance report, 13 assets in the pool were with the special servicers, LNR Partners LLC (LNR) or Talmage LLC (Talmage). Details of the two largest specially serviced assets, both of which are top 10assets, are as follows:

The JP Morgan International Plaza I & II loan ($163.5 million, 24.7%) is the largest loan in the pool and has a total reported exposure of $164.5 million. There is also a $30.8 million subordinate B note and a $10.0 million mezzanineloan. The whole loan is secured by a 756,851-sq.-ft. office property in Farmers Branch, Texas. The loan had a payment not received but still in grace period payment status. According to Talmage, the loan's payment status is current. It was transferred to Talmage on Oct. 21, 2015, because the borrower advised that it is not able to pay off the loan at maturity. Talmage said thatthe loan was modified on March 8, 2016. The modification terms included extending the maturity from June 2016 to February 2018. It is our understanding from Talmage that the loan was transferred back to master servicing subsequent to the July 2016 remittance report. The reported DSC and occupancy for year-end Dec. 31, 2015 were over 1.30x and 100.0%, respectively.