New York, November 06, 2012 -- Moody's has affirmed the ratings of all classes of Notes issued by Gramercy Real Estate CDO 2005-1, Ltd. The affirmations are due to key transaction parameters performing within levels commensurate with the existing ratings levels. The rating action is the result of Moody's on-going surveillance of commercial real estate collateralized debt obligation and collateralized loan obligation (CRE CDO CLO) transactions.

Moody's rating action is as follows:

Cl. A-1, Affirmed at Aaa (sf); previously on Apr 7, 2009 Confirmed at Aaa (sf)

Cl. A-2, Affirmed at Aaa (sf); previously on Apr 7, 2009 Confirmed at Aaa (sf)

Cl. B, Affirmed at Aa2 (sf); previously on Nov 15, 2011 Upgraded to Aa2 (sf)

Cl. C, Affirmed at Baa1 (sf); previously on Nov 15, 2011 Upgraded to Baa1 (sf)

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

Cl. E, Affirmed at Ba2 (sf); previously on Nov 17, 2010 Downgraded to Ba2 (sf)

Cl. F, Affirmed at B1 (sf); previously on Nov 17, 2010 Downgraded to B1 (sf)

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

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

Cl. J, Affirmed at Caa3 (sf); previously on Nov 17, 2010 Downgraded to Caa3 (sf)

Cl. K, Affirmed at Caa3 (sf); previously on Apr 7, 2009 Downgraded to Caa3 (sf)

RATINGS RATIONALE

Gramercy Real Estate CDO 2005-1, Ltd. is a static (the reinvestment period ended in July 2010) cash transaction backed by a portfolio of whole loans (53.1% of the pool balance), commercial mortgage backed securities (CMBS) including rake bonds (29.8%), mezzanine loans (9.7%), and B-Notes (7.4%). As of the September 28, 2012 trustee report, the aggregate Note balance of the transaction, including Preference Shares, has decreased to $760.7 million from $1.0 billion at issuance, as a result of the combination of the junior notes cancellation to Class E, Class F, Class G, and Class H Notes and of the paydown directed to the Class A-1 Notes from regular amortization of collateral, resolution and sales of defaulted collateral, and interest proceeds paid as principal proceeds as a result of failing the par value tests. In general, holding all key parameters static, the junior note cancellations results in slightly higher expected losses and longer weighted average lives on the senior Notes, while producing slightly lower expected losses on the mezzanine and junior Notes. However, this does not cause, in and of itself, a downgrade or upgrade of any outstanding classes of Notes. The transaction is failing its two par value tests while passing all of its interest coverage tests. Currently, the transaction is over-collateralized by $39.2 million (including cash principal available for regular distribution).

There are nine assets with par balance of $243.1 million (30.9% of the current pool balance) that are considered defaulted securities as of the September 28, 2012 trustee report, compared to three defaulted securities totaling $151.9 million par amount (16.8%) at last review. Moody's does expect moderate to significant losses to occur from these defaulted securities once they are realized.

Moody's has identified the following parameters as key indicators of the expected loss within CRE CDO transactions: weighted average rating factor (WARF), weighted average life (WAL), weighted average recovery rate (WARR), and Moody's asset correlation (MAC). These parameters are typically modeled as actual parameters for static deals and as covenants for managed deals.

WARF is a primary measure of the credit quality of a CRE CDO pool. We have completed updated assessments for the non-Moody's rated collateral. The bottom-dollar WARF is a measure of the default probability within a collateral pool. Moody's modeled a bottom-dollar WARF of 5,572 compared to 5,007 at last review. The current distribution of Moody's rated collateral and assessments for non-Moody's rated collateral is as follows: Aaa-Aa3 (10.4% compared to 11.2%), A1-A3 (4.0% compared to 6.7%),Baa1-Baa3 (5.4% compared to 2.1% at last review), Ba1-Ba3 (9.6% compared to 14.3% at last review), B1-B3 (6.6% compared to 10.1% at last review), and Caa1-Ca/C (64.0% compared to 55.6% at last review).

Moody's modeled to a WAL of 3.0 years, the same as that at last review. The current WAL is based on the assumption about extensions.

Moody's modeled a fixed 37.6% WARR, compared to 39.7% at last review.

Moody's modeled a MAC of 8.4%, compared to 7.3% at last review.

Moody's review incorporated CDOROM® v2.8, one of Moody's CDO rating models, which was released on March 22, 2012.

The cash flow model, CDOEdge® v3.2.1.2, was used to analyze the cash flow waterfall and its effect on the capital structure of the deal.

Changes in any one or combination of the key parameters may have rating implications on certain classes of rated notes. However, in many instances, a change in key parameter assumptions in certain stress scenarios may be offset by a change in one or more of the other key parameters. In general, the rated notes are particularly sensitive to changes in recovery rate assumptions. Holding all other key parameters static, changing the recovery rate assumption down from 37.6% to 27.6% or up to 47.6% would result in modeled rating movement on the rated Notes of 0 to 6 notches downward and 0 to 7 notches upward, respectively.

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 and commercial real estate property markets. Commercial real estate property values are continuing to move in a 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 eight straight quarters of growth and the multifamily sector continues to show increases in demand with a growing renter base and declining home ownership. Slow recovery in the office sector continues 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 discounting and promotions. However, rising wages and reduced unemployment, along with increased consumer confidence, is helping to spur consumer spending resulting in increased sales. 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 maintains its forecast of relatively robust growth in the US and an expectation of a mild recession in the euro area for 2012. Downside risks remain significant, and elevated downside risks and their materialization could pose a serious threat to the outlook. Major downside risks include: a deeper than expected recession in the euro area; the potential for a hard landing in major emerging markets; an oil supply shock; and material fiscal tightening in the US given recent political gridlock. Healthy but below-trend growth in GDP is expected through the rest of this year and next with risks trending to the downside.

The methodologies used in this rating were "Moody's Approach to Rating SF CDOs" published in May 2012, and "Moody's Approach to Rating Commercial Real Estate CDOs" published in July 2011. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.

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.

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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.

Biao He Analyst Structured Finance Group Moody'sInvestors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653Michael Gerdes MD - Structured Finance Structured Finance Group JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 Releasing Office: Moody's Investors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653(C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

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