Fitch Affirms GSMS 2015-GC34

NEW YORK--()--Fitch Ratings has affirmed 15 classes of GS Mortgage Securities Trust (GSMS) commercial mortgage pass-through certificates, series 2015-GC34. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The affirmations are due to overall stable performance. The stable performance reflects no material changes to pool metrics since issuance; therefore, the original rating analysis was considered in affirming the transaction. As of the October 2016 distribution date, the pool's aggregate principal balance has been reduced by 0.5% to $844.6 million from $848.4 million at issuance. Currently, there is one specially serviced loan (8.5% of pool). No loans are defeased and all loans are current. There is currently a $46,908 interest shortfall affecting class G related to a special servicing fee and a small reimbursement for advance interest. The Fitch debt service coverage ratio (DSCR) and loan to value (LTV) at issuance were 1.09x and 112.3%, respectively.

Specially Serviced Loan: The third largest loan in the pool, Hammons Hotel Portfolio (8.5% of the pool), transferred to special servicing in July 2016 due to the borrower and its parent company filing for Chapter 11 bankruptcy in June 2016. The filing was made in connection with litigation, which was ongoing at issuance, related to a complex deal made in 2005 to reprivatize Hammons Hotels. The hotels and loan are performing better than expected with year-end 2015 net operating income (NOI) across the collateral properties 10.6% above bank underwriting. The weighted average RevPAR penetration for the collateral properties was 138.3% as of the June 2016 trailing 12 month (TTM) period. This loan is a non-controlling pari passu loan with the remaining notes securitized in CGCMT 2015-GC33, GSMS 2015-GS1, and CGCMT 2015-GC35.

Stable Performance With No Material Changes: All loans in the pool are current as of the October 2016 distribution with property level performance generally in line with issuance expectations and no material changes to pool metrics.

It should be noted that, at issuance, 750 Lexington Avenue, the second largest loan in the pool (10% of pool), was facing a large imminent lease roll; Locke Lord, which occupied 31% of the net rentable area (NRA; 22% if revenue), subsequently vacated the property at lease expiration in June 2016. The loan includes a $7.75 million upfront leasing reserve related to this space. Fitch will continue to monitor the leasing status of the space.

Above-Average Pool Concentration: The largest 10 loans account for 55.4% of the pool by balance. This is greater than the year-to-date (YTD) October 2015 average of 48.5% and the 2014 average of 50.5%. It was also noted at issuance that the loan concentration index (LCI) was higher than average for this transaction.

High Quality Collateral: At issuance, Fitch performed site inspections for properties that secured loans representing 75.9% of the total original pool balance. Of the properties that Fitch inspected, 39.2% received a property quality grade of 'B+' or better. Three properties (750 Lexington Avenue, Parkside at So7 and LA Fitness Powell), comprising 23.3% of the inspected pool, were assigned property quality grades of 'A-'. Loans representing 10.6% of the inspected pool were assigned property quality grades of 'B-' or 'C+', indicating below-average property quality.

RATING SENSITIVITIES

The Rating Outlooks on all classes remain Stable. Fitch does not foresee positive or negative ratings migration until a material economic or asset-level event changes the transaction's overall portfolio-level metrics.

USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G-10

No third-party due diligence was provided or reviewed in relation to this rating action.

Fitch has affirmed the following classes:

--$30,283,000 class A-1 at 'AAAsf'; Outlook Stable;

--$28,822,000 class A-2 at 'AAAsf'; Outlook Stable;

--$185,000,000 class A-3 at 'AAAsf'; Outlook Stable;

--$284,382,000 class A-4 at 'AAAsf'; Outlook Stable;

--$65,382,000 class A-AB at 'AAAsf'; Outlook Stable;

--$634,167,000* class X-A at 'AAAsf'; Outlook Stable;

--$48,782,000* class X-B at 'AA-sf'; Outlook Stable;

--$40,298,000 class A-S at 'AAAsf'; Outlook Stable;

--$48,782,000 class B at 'AA-sf'; Outlook Stable;

--$131,499,000 class PEZ at 'A-sf'; Outlook Stable;

--$42,419,000 class C at 'A-sf'; Outlook Stable;

--$51,964,000 class D at 'BBB-sf'; Outlook Stable;

--$51,964,000* class X-D at 'BBB-sf'; Outlook Stable;

--$23,331,000 class E at 'BB-sf'; Outlook Stable;

--$8,483,000 class F at 'B-sf'; Outlook Stable.

*Notional amount and interest-only.

Class A-S, B and C certificates may be exchanged for class PEZ certificates, and class PEZ certificates may be exchanged for class A-S, B, and C certificates. Fitch does not rate the $39,238,739 class G.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Counterparty Criteria for Structured Finance and Covered Bonds (pub. 01 Sep 2016)

https://www.fitchratings.com/site/re/886006

Criteria for Rating Caps and Limitations in Global Structured Finance Transactions (pub. 16 Jun 2016)

https://www.fitchratings.com/site/re/882401

Global Structured Finance Rating Criteria (pub. 27 Jun 2016)

https://www.fitchratings.com/site/re/883130

U.S. and Canadian Fixed-Rate Multiborrower CMBS Surveillance and U.S. Re-REMIC Criteria (pub. 13 Nov 2015)

https://www.fitchratings.com/site/re/873395

Related Research

GSMS 2015-GC34 Commercial Mortgage Trust -- Appendix

https://www.fitchratings.com/site/re/872065

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1013353

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1013353

Endorsement Policy

https://www.fitchratings.com/regulatory

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Contacts

Fitch Ratings
Primary Analyst
Stephanie Duski
Analyst
+1-646-582-4820
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Mary MacNeill
Managing Director
+1-212-908-0785
or
Media Relations:
Sandro Scenga, New York, +1 212-908-0278
Email: sandro.scenga@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Stephanie Duski
Analyst
+1-646-582-4820
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Mary MacNeill
Managing Director
+1-212-908-0785
or
Media Relations:
Sandro Scenga, New York, +1 212-908-0278
Email: sandro.scenga@fitchratings.com