NEW YORK--(BUSINESS WIRE)--Fitch Ratings has upgraded three and affirmed 15 classes of GS Mortgage Securities Corporation II, commercial mortgage pass-through certificates, series 2005-GG4 (GSMSC II 2005-GG4). A detailed list of rating actions follows at the end of this press release.
KEY RATING DRIVERS
The upgrades reflect significant paydown, defeasance, and better than expected recoveries on disposed loans since the last rating action. Fitch modeled losses of 18.3% of the remaining pool; expected losses on the original pool balance total 9.1%, including $124.8 million (3.1% of the original pool balance) in realized losses to date. Fitch has designated 38 loans (40% of current pool) as Fitch Loans of Concern, which includes 15 specially serviced assets (19.8%).
As of the January 2015 distribution date, the pool's aggregate principal balance has been reduced by 67.1% to $1.32 billion from $4 billion at issuance. According to the servicing report, 22 loans (28.4%) are defeased. Cumulative interest shortfalls totaling $32 million are currently affecting classes D through P.
The largest contributor to Fitch-modeled losses, which has remained the same as the last rating action, is the One HSBC Center loan (4.8% of the pool). The loan is secured by an 850,476 square foot (sf) office property located in Buffalo, NY. The loan was transferred to special servicing in November 2013 for imminent default. The property's two largest tenants, HSBC Bank USA (77% of the property square footage) and Phillips Lytle (10% of the property square footage), have both vacated the property entirely. As of September 2014, the property's reported occupancy was below 6% with no leasing momentum. According to REIS and as of the third quarter 2014, the overall Buffalo metro office market reported a vacancy of 16% and the submarket reported a vacancy of 20.8%. The servicer indicated foreclosure was filed in December 2014 with a projected foreclosure sale date by the end of June 2015. The servicer-reported annualized year-to-date September 2014 net operating income was negative. A recent appraisal valuation of the asset also indicates significant losses upon liquidation. The master servicer has deemed this loan to be non-recoverable as of January 2015.
The next largest contributor to Fitch-modeled losses is the real estate owned (REO) Temple Mall asset (2.2%). The asset is a 559,309 sf retail property located in Temple, TX. The loan was transferred to special servicing in September 2008 due to imminent default. The asset became REO in September 2011. As of the September 2014 rent roll, the property was 80.4% occupied. The mall is anchored by Macy's, Dillard's, JC Penney, and Premiere Cinema. Dillard's and JC Penney both extended their leases through October 2017 and July 2020, respectively. Premiere Cinema also extended its lease through July 2034 via an amendment providing for an expansion of the IMAX theatre, which was in part funded by a city assistance package. The construction and expansion of the IMAX has been completed and the theatre is now opened. The special servicer expects sales and occupancy at the mall to improve gradually with the expected positive momentum brought about by the new IMAX.
Rating Outlooks on classes A-4, A-4A, A-4B, A-1A, A-J, B, and C are Stable due to increasing credit enhancement, defeasance, and expected continued paydown. Distressed classes (those rated below 'Bsf') may be subject to further downgrades as additional losses are realized.
Fitch has upgraded and assigned or revised Rating Outlooks to the following classes as indicated:
--$300.1 million class A-J to 'Asf' from 'BBsf'; Outlook to Stable from Negative;
--$65 million class B to 'BBsf' from 'Bsf'; Outlook to Stable from Negative;
--$35 million class C to 'Bsf' from 'CCCsf'; Outlook Stable assigned.
In addition, Fitch has affirmed the following classes as indicated:
--$158.9 million class A-4 at 'AAAsf'; Outlook Stable;
--$258.1 million class A-4A at 'AAAsf'; Outlook Stable;
--$167.4 million class A-4B at 'AAAsf'; Outlook Stable;
--$58 million class A-1A at 'AAAsf'; Outlook Stable;
--$75 million class D at 'CCsf'; RE 0%;
--$40 million class E at 'Csf'; RE 0%;
--$55 million class F at 'Csf'; RE 0%;
--$45 million class G at 'Csf'; RE 0%;
--$40 million class H at 'Csf'; RE 0%;
--$19.2 million class J at 'Dsf'; RE 0%;
--$0.2 million class K at 'Dsf'; RE 0%;
--$0 class L at 'Dsf'; RE 0%;
--$0 class M at 'Dsf'; RE 0%;
--$0 class N at 'Dsf'; RE 0%;
--$0 class O at 'Dsf'; RE 0%.
Classes A-1, A-1P, A-DP, A-2, A-3, A-ABA, and A-ABB have paid in full. Class P is not rated by Fitch. The ratings on the interest-only classes X-P and X-C were already previously withdrawn.
Additional information on Fitch's criteria for analyzing U.S. CMBS transactions is available in the Dec. 10, 2014 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 >> CMBS >> Criteria Reports
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' (Aug. 4, 2014);
--'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria' (Dec. 10, 2014).
Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria
U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria