NEW YORK--(BUSINESS WIRE)--Link to Fitch Ratings' Report: Goldman Sachs Commercial Mortgage Trust 2014-GC18 (US CMBS)
Fitch Ratings has issued a presale report on GS Mortgage Securities Trust 2014-GC18 Commercial Mortgage Pass-Through Certificates.
Fitch expects to rate the transaction and assign Rating Outlooks as follows:
--$56,812,000 class A-1 'AAAsf'; Outlook Stable;
--$116,213,000 class A-2 'AAAsf'; Outlook Stable;
--$216,747,000 class A-3 'AAAsf'; Outlook Stable;
--$301,979,000 class A-4 'AAAsf'; Outlook Stable;
--$87,793,000 class A-AB 'AAAsf'; Outlook Stable;
--$847,754,000a class X-A 'AAAsf'; Outlook Stable;
--$68,210,000 class A-S 'AAAsf'; Outlook Stable;
--$76,563,000 class B 'AA-sf'; Outlook Stable;
--$189,318,000c class PEZ 'A-sf'; Outlook Stable;
--$44,545,000 class C 'A-sf'; Outlook Stable;
--$22,273,000a,b class X-B 'BBsf'; Outlook Stable;
--$55,682,000b class D 'BBB-sf'; Outlook Stable;
--$22,273,000b class E 'BBsf'; Outlook Stable;
--$12,528,000b class F 'Bsf'; Outlook Stable.
a Notional amount and interest-only.
b Privately placed pursuant to Rule 144A.
c Class A-S, B, and C certificates may be exchanged for class PEZ certificates, and class PEZ certificates may be exchanged for up to the full certificate principal amount of the class A-S, B and C certificates.
The expected ratings are based on information provided by the issuer as of Jan. 15, 2014. Fitch does not expect to rate the $54,290,128 class G or the $66,818,128 interest-only class X-C.
The certificates represent the beneficial ownership in the trust, primary assets of which are 74 loans secured by 141 commercial properties having an aggregate principal balance of approximately $1.113 billion as of the cutoff date. The loans were contributed to the trust by Goldman Sachs Mortgage Company, Citigroup Global Markets Realty Corp., Starwood Mortgage Funding I LLC, and Cantor Commercial Real Estate Lending, L.P.
Fitch reviewed a comprehensive sample of the transaction's collateral, including site inspections on 72.2% of the properties by balance and cash flow analysis and asset summary reviews on 81.2% of the pool.
KEY RATING DRIVERS
High Fitch Leverage: The pool's Fitch DSCR and LTV of 1.15x and 106.2%, respectively, are worse than the 2013 and 2012 averages of 1.29x and 101.6% and 1.24x and 97.2%, respectively.
Limited Lodging Exposure: The pool's hotel concentration of 8.1% is lower than the 2013 average hotel concentration of 14.7%. Two of the 15 largest loans in the pool are collateralized by hotel properties. Hotels have a higher probability of default in Fitch's multiborrower model.
Malls Located in Secondary Markets and High Retail Concentration: Two of the five largest loans, The Crossroads (9% of the pool) and Wyoming Valley Mall (7%), are collateralized by regional malls located in secondary markets. Retail properties represent the largest property type concentration at 40.5% of the pool, including five of the top 10 loans. This is higher than the 2013 average retail concentration of 33.2%.
Secondary Markets: Six of the 10 largest loans are collateralized by properties located in secondary markets, including Portage, MI, Wilkes-Barre, PA, Toledo, OH, Anchorage, AK, and Bangor, ME. The largest state concentrations are Pennsylvania (16.7%), Michigan (12.9%), and Louisiana (11.7%).
For this transaction, Fitch's NCF was 9.9% below the full-year 2012 NOI (for properties that 2012 NOI was provided, excluding properties that were stabilizing during this 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 GSMS 2014-GC18 certificates and found that the transaction displays 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 'A-sf' 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 in the Rating Sensitivity and Rating Stresses sections of the presale.
The master servicer will be Wells Fargo Bank, N.A., rated 'CMS1-' by Fitch. The special servicer will be LNR Partners LLC, rated 'CSS1-' 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 (August 2013)
--Global Structured Finance Rating Criteria (May 2013)
--Criteria for Special-Purpose Vehicles in Structured Finance Transactions (May 2012)
--U.S. Commercial Mortgage Servicer Rating Criteria (February 2011)
--U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria (December 2013)
--Counterparty Criteria for Structured Finance and Covered Bonds (May 2013)