NEW YORK--(BUSINESS WIRE)--Fitch Ratings has issued its presale report on Citigroup Commercial Mortgage Trust 2014-GC23 Commercial Mortgage Pass-Through Certificates.
Fitch expects to rate the transaction and assign Rating Outlooks as follows:
--$49,642,000 class A-1 'AAAsf'; Outlook Stable;
--$85,798,000 class A-2 'AAAsf'; Outlook Stable;
--$300,000,000 class A-3 'AAAsf'; Outlook Stable;
--$345,240,000 class A-4 'AAAsf'; Outlook Stable;
--$81,766,000 class A-AB 'AAAsf'; Outlook Stable;
--$957,932,000* class X-A 'AAAsf'; Outlook Stable;
--$80,084,000* class X-B 'AAsf'; Outlook Stable;
--$95,486,000b class A-S 'AAAsf'; Outlook Stable;
--$80,084,000b class B 'AAsf'; Outlook Stable;
--$224,853,000b class PEZ 'A-sf'; Outlook Stable;
--$49,283,000b class C 'A-sf'; Outlook Stable;
--$24,641,000*a class X-C 'BB-sf'; Outlook Stable;
--$64,683,000a class D 'BBB-sf'; Outlook Stable;
--$24,641,000a class E 'BB-sf'; Outlook Stable;
--$9,241,000a class F 'B-sf'; Outlook Stable.
(*) Notional amount and interest-only.
(a) Privately placed pursuant to Rule 144A.
(b) The class A-S, class B and class C certificates may be exchanged for class PEZ certificates, and class PEZ certificates may be exchanged for the class A-S, class B and class C certificates.
The expected ratings are based on information provided by the issuer as of July 8, 2014. Fitch does not expect to rate the $55,443,996*a class X-D, and the $46,202,996a class G certificates.
The certificates represent the beneficial ownership in the trust, primary assets of which are 83 loans secured by 99 commercial properties having an aggregate principal balance of approximately $1.23 billion as of the cutoff date. The loans were contributed to the trust by Citigroup Global Markets Realty Corp.; Goldman Sachs Mortgage Company; GS Commercial Real Estate LP; MC-Five Mile Commercial Mortgage Finance LLC; Redwood Commercial Mortgage Corporation; and Rialto Mortgage Finance, LLC.
Fitch reviewed a comprehensive sample of the transaction's collateral, including site inspections on 79.5% of the properties by balance, cash flow analysis of 87%, and asset summary reviews of 88.8% of the pool.
KEY RATING DRIVERS
Improved Leverage from Recent Transactions: The pool's Fitch debt service coverage ratio (DSCR) and loan to value (LTV) are 1.25x and 99.4%, respectively, are better than the 2013 and 2014 year-to-date (YTD) averages of 1.29x and 101.6% and 1.19x and 105.6%, respectively.
Large High Investment-Grade Credit Opinion Loan: The largest loan in the pool, 28-40 West 23rd (11.4%), has a Fitch credit opinion of 'A-sf' on a stand-alone basis. In the context of the pool, the loan's credit opinion is 'AAAsf'. The loan is collateralized by a 571,205 square foot (sf) mixed-use office and retail building located in Manhattan.
Limited Additional Debt: No loans have subordinate debt in place. The pool has one pari passu loan, Selig Portfolio (7.9%), with the controlling $100 million note securitized in the GSMS 2014-GC21 transaction.
Below-Average Amortization: Three of the top five loans are full-term interest-only. As such, the pool has a significantly above-average proportion of interest-only loans (24.4% of the pool balance versus the 2013 average of 17.1%) and above-average concentration of partial interest loans (43.7% versus the 2013 average of 34%). The pool is scheduled to amortize 11% prior to maturity.
For this transaction, Fitch's net cash flow (NCF) was 10.8% below the most recent net operating income (NOI) (for properties for which historical NOI was provided, excluding properties that were stabilizing during the most recent reporting period). Unanticipated further declines in property-level NCF could result in higher defaults and loss severity on defaulted loans, and could result in potential rating actions on the certificates. Fitch evaluated the sensitivity of the ratings assigned to CGCMT 2014-GC23 certificates and found that the transaction displays slightly above-average sensitivity to further declines in NCF. In a scenario in which NCF declined a further 20% from Fitch's NCF, a downgrade of the junior 'AAAsf' certificates to 'Asf' could result. In a more severe scenario, in which NCF declined a further 30% from Fitch's NCF, a downgrade of the junior 'AAAsf' certificates to 'BBB+sf' could result. The presale report includes a detailed explanation of additional stresses and sensitivities on pages 74 - 75.
The master servicer will be Midland Loan Services, Inc., rated 'CMS1' by Fitch. The special servicer will be Rialto Capital Advisors, LLC, rated 'CSS2-' by Fitch.
The presale report is available at 'www.fitchratings.com'.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Criteria for Analyzing Multiborrower U.S. Commercial Mortgage Transactions (June 2014);
--'Global Structured Finance Rating Criteria' (May 2014);
--Rating Criteria for U.S. Commercial Mortgage Servicers (February 2014);
--U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria (December 2013);
--Counterparty Criteria for Structured Finance and Covered Bonds (May 2014).
Applicable Criteria and Related Research: Citigroup Commercial Mortgage Trust 2014-GC23 (US CMBS)
Criteria for Analyzing Multiborrower U.S. Commercial Mortgage Transactions
Global Structured Finance Rating Criteria
Rating Criteria for U.S. Commercial Mortgage Servicers
U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria
Counterparty Criteria for Structured Finance and Covered Bonds