Fitch Affirms GSMS 1998-C1

NEW YORK--()--Fitch Ratings has affirmed three classes of Goldman Sachs Mortgage Securities Corporation II 1998-C1 commercial mortgage pass-through certificates series. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The affirmation of class G is due to stable performance of the underlying collateral and sufficient credit enhancement. There are 34 loans remaining, eleven of which are defeased (16.5%) and one is in special servicing (20.1%). The remaining performing loans (63.4%) are low leveraged and fully amortizing. Despite high credit enhancement, a further upgrade is limited given the increasing concentration and adverse selection of the pool.

Fitch modeled losses of 21.6% of the remaining pool; expected losses on the original pool balance total 5.1%, including $80 million (4.3% of the original pool balance) in realized losses to date. As of the April 2014 distribution date, the pool's aggregate principal balance has been reduced by 96.5% to $65.8 million from $1.86 billion at issuance. Fitch has designated seven loans (36.9%) as Fitch Loans of Concern, which includes the one specially serviced asset.

The largest contributor to expected losses is the specially-serviced Home Mortgage Plaza asset (20.1% of the pool), which is secured by a 211,089 square foot (SF) office building located in San Juan, PR. The loan transferred to special servicing in February 2011 for imminent default and became real estate owned in October 2013. The special servicer reports that it is pursuing foreclosure and the current occupancy is 64%.

The next largest contributor to expected losses is the Days Inn and Suites Galleria/Westchase loan (1.3%), which is secured by an 89 room limited-service hotel located in Houston, TX. The property's has been suffering from poor performance over the last several years, but has remained current since issuance. The servicer reports the poor performance is a result low occupancy, which was at 19% as of year-end 2012.

A Fitch Loan of Concern is the Willow Run Business Center (10.5%), which is secured by a 1,751,430 SF industrial building in Ypsilanti, MI. The largest tenant, General Motors Corp., which occupies 91% of the net rentable area has a lease expiration of August 2015. The servicer-reported DSCR was 1.92x as of second-quarter 2013 and occupancy was 99% as of year-end 2013.

Another Fitch Loan of Concern is the Dexter Ridge Shopping Center (1.4%), a 45,351 SF unanchored retail center located in Cordova, TN. The property has suffered from poor performance due to high concessions and delinquent tenants. As of the year-end 2013 rent roll, 5 tenants (41.5% of the NRA) were delinquent 30 days or more on rent payments. As of year-end 2013, the servicer-reported occupancy and DSCR was 85.7% and 1.09x, respectively.

RATING SENSITIVITY

The Rating Outlook on class G has been revised to Stable from Negative due to increasing credit enhancement and continued paydown. Fitch does not expect further rating changes unless losses increase due to deterioration of cash flows from the underlying collateral.

Fitch affirms the following classes, revises Rating Outlooks and assigns REs as indicated:

--$23.3 million class G at 'BBBsf'; Outlook to Stable from Negative;

--$36.4 million class H at 'Dsf'; RE 65%;

--$0 class J at 'Dsf'; RE 0%.

The class A-1, A-2, A-3, B, C, D and E certificates have paid in full. Fitch does not rate the class F and K certificates. Fitch previously withdrew the rating on the interest-only class X certificates.

Additional information on Fitch's criteria for analyzing U.S. CMBS transactions is available in the Dec. 11, 2013 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' (May 24, 2013);

--'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=708661

U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=724961

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=827654

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Contacts

Fitch Ratings
Primary Analyst
Sean Gibbs, +1 212-908-0311
Associate Director
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Committee Chairperson
Mary MacNeill, +1 212-908-0785
Managing Director
or
Media Relations:
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com

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Contacts

Fitch Ratings
Primary Analyst
Sean Gibbs, +1 212-908-0311
Associate Director
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Committee Chairperson
Mary MacNeill, +1 212-908-0785
Managing Director
or
Media Relations:
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com