Fitch Ratings has affirmed 15 classes of GS Mortgage Securities Corporation II Commercial Mortgage Trust 2014-GC18 pass-through certificates. A detailed list of rating actions follows at the end of this press release.
KEY RATING DRIVERS
The affirmations are due to the overall stable performance of the underlying collateral pool since issuance. Fitch reviewed the most recently available financial performance data for the pool, as well as updated rent rolls for the top 15 loans, which represent 60% of the transaction. Of the loans in the pool, 48% reported second quarter 2014 (2Q'14) financials and 39% reported 3Q'14 financials.
As of the January 2015 distribution date, the pool's aggregate principal balance has been reduced by 0.7% to $1,105.9 million from $1,113.6 million at issuance. Currently there are no specially serviced or defeased loans.
The largest servicer watchlist loan is the Haier Building loan (2% of the pool), which is secured by a 63,500-sf, six-story, landmarked building in New York, NY. This 10 year interest-only (IO) loan is sponsored by Jack Dushey and Michael Jemal. At issuance, the property was 100% occupied by two tenants, Gotham Hall Events (47.2% NRA lease ending YE2032) and Haier America Trading (52.8% lease ending YE2021). Haier America, also the borrowing entity, had an option to terminate its lease at any time. As of 3Q'14, the tenant had vacated. In August 2014, a new tenant, W Appliance Company, LLC, another sponsor affiliate, took over 5,000 sf for a lease term of 12 years. Gotham Hall also expanded to 74% of the property. As of the October 2014 rent roll, the property was 82% occupied. Fitch does not consider this loan as a loan of concern as the Haier America's lease termination, Gotham Hall's expansion, and the W Appliance lease were anticipated at issuance. In addition, Haier America has a branding lease, through which it rents the signage on the exterior of the building for $1.25 million annually. The lease expires in May 2021 and will not be affected by Haier America's lease termination. The servicer reported 2Q'14 debt service coverage ratio (DSCR) was 3.19x.
The largest loan in the pool, The Shops at Canal Place (10%), is secured by a high-end retail complex located in downtown New Orleans, LA totaling 216,938 sf of retail space. The property is anchored by Saks Fifth Avenue, The Theaters at Canal Place, and Westin Conference Center (8%). The collateral is part of a 2.15 million-sf mixed-use development Canal Place, which also includes a 438-key Westin Hotel, a 32-story office building and a seven-story parking garage. Sponsored by Darryl Berger and Roger Ogden, the loan is performing in line with issuer underwritten expectations. As of the September 2014 rent roll, the property was 97.8% occupied, which is unchanged since issuance. The servicer reported 2Q'14 DSCR was 1.26x, which is also in line with issuance.
The second largest loan, CityScape - East Office/Retail (9%), is a 10-year partial IO loan (i.e. interest only for the initial 36 months). Collateral consists of a 28-story office tower with a retail component and a five-story subterranean parking garage. The property is part of a larger development that includes the Hotel Paloma, a 250-room Kimpton hotel; CityScape Residences, a 224-unit apartment building; and additional retail and parking space. Sponsored by Red Consolidated Holdings, LLC, the loan is performing in line with issuer underwritten expectations. As of the September 2014 rent roll, the property was 95% occupied, compared to 95.5% at issuance. The servicer reported 2Q14 DSCR was 2.01x, compared to 2.69x at issuance.
RATING SENSITIVITIES
The Rating Outlook for all classes remains Stable. Due to the recent issuance of the transaction and stable performance, Fitch does not foresee positive or negative ratings migration until a material economic or asset-level event changes the transaction's portfolio-level metrics. Additional information on rating sensitivity is available in the report 'Goldman Sachs Commercial Mortgage Trust 2014-GC18 (Jan. 17, 2014) available at www.fitchratings.com.
Fitch affirms the following classes as indicated:
--$49 million class A-1 at 'AAAsf', Outlook Stable;
--$116.2 million class A-2 at 'AAAsf', Outlook Stable;
--$216.7 million class A-3 at 'AAAsf', Outlook Stable;
--$302 million class A-4 at 'AAAsf', Outlook Stable;
--$87.8 million class A-AB at 'AAAsf', Outlook Stable;
--$68.2 million class A-S at 'AAAsf', Outlook Stable;
--$76.6 million class B at 'AA-sf', Outlook Stable;
--Class PEZ Exchangeable Certificates at 'A-sf', Outlook Stable;
--$44.5 million class C at 'A-sf', Outlook Stable;
--$55.7 million class D at 'BBB-sf', Outlook Stable;
--$22.3 million class E at 'BBsf', Outlook Stable;
--$12.5 million class F at 'Bsf', Outlook Stable;
--Interest-Only class X-A at 'AAAsf'; Outlook Stable;
--Interest -Only class X-B at 'AA-sf'; Outlook Stable;
--Interest-Only class X-C at 'BBsf'; Outlook Stable.
Fitch does not rate the class G or class X-D certificates.
A comparison of the transaction's Representations, Warranties, and Enforcement (RW&E) mechanisms to those of typical RW&Es for the asset class is available in the following report:
-- GS Mortgage Securities Trust, Series 2014-GC18-- Appendix' (May 7, 2014).
Additional information on Fitch's criteria for analyzing U.S. CMBS transactions is available in the Dec. 11, 2014 report, 'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria', which is available at 'www.fitchratings.com' under the following headers:
Structured Finance then CMBS then Criteria Reports
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' (Aug. 4, 2014);
--'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria' (Dec. 11, 2013).
Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=754389
U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=812608
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=971876
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