Fitch Affirms GS Mortgage Securities Corp. II 1998-C1

NEW YORK--(BUSINESS WIRE)--Fitch Ratings has affirmed GS Mortgage Securities Corp. II's commercial mortgage pass-through certificates, series 1998-C1. A detailed list of rating actions follows at the end of this release.

The affirmation is based on sufficient credit enhancement for the rating category offsetting Fitch expected losses and increasing loan concentration with only 35 non-defeased loans remaining. Rating Outlooks indicate the likely direction of any changes to the ratings over the next one to two years.

Fitch modeled loss estimates reflect assumed losses on loans in special servicing and on performing loans with declines in performance indicative of a higher probability of default. Fitch modeled losses of 8.3% of the remaining pool balance, the majority of which are from the loans in special servicing.

As of the June 2011 distribution date, the pool's aggregate principal balance has decreased 92.9% to $131.64 million from $1.86 billion at issuance. As of June 2011, there are cumulative interest shortfalls in the amount of $7.1 million, affecting classes H through K. Twelve of the remaining 44 loans (19%) are defeased.

In total, there are five loans (25.8%) in special servicing, one of which is real-estate owned (REO). The largest contributors of Fitch expected losses are all in special servicing.

The largest specially serviced asset (10.9% of the pool) is a 211,089 square foot (sf) office property located in San Juan, Puerto Rico. The asset was transferred to special servicing in February 2011 for imminent default. The last reported occupancy was 66% and the borrower has requested a loan modification.

The second largest specially serviced loan (8.2%) is secured by a 296,735 sf retail property located in Queensbury, NY. The loan transferred to special servicing in May 2008 due to imminent maturity default and a receiver has been appointed to oversee operations at the property.

Fitch affirms the following class as indicated:

--$23.3 million class G at 'BBBsf/LS3'; Outlook Negative.

The $46 million class H remains at 'Dsf/RR4', and class J remains at 'Dsf/RR6' as it has been reduced to zero due to realized losses. Classes A-1, A-2, A-3, B, C, D, and E have paid in full. The unrated class K has been reduced to zero due to realized losses. Fitch does not rate the $62.3 million class F.

Additional information on Fitch's criteria for analyzing U.S. CMBS is available in the Nov. 17, 2010 report, 'Surveillance Methodology for U.S. Fixed-Rate CMBS Transactions', 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:

--'Surveillance Methodology for U.S. Fixed-Rate CMBS Transactions' (Nov. 17, 2010);

--'Global Structured Finance Rating Criteria' (Aug. 13, 2010).

Applicable Criteria and Related Research:

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

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=574208

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=547326

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