Fitch Affirms RBSCF 2013-GSP

NEW YORK--()--Fitch Ratings has affirmed the rating for RBS Commercial Funding Inc. 2013-GSP Trust certificates. The detailed rating action follows at the end of this release.

KEY RATING DRIVERS

The affirmation of the rating and Rating Outlook is the result of stable collateral performance since issuance. The trust certificates represent the beneficial interest in a mortgage loan secured by the Garden State Plaza mall in Paramus, NJ. The trust loan is a part of a split loan structure composed of the $375 million trust loan and a pari passu, $150 million related companion loan which is not part of this transaction. The $525 million, 10-year fixed rate (3.86%) interest-only (IO), whole loan matures in February 2024.

Garden State Plaza is a 2.2 million square foot (sf) super-regional mall located in Paramus, NJ. With the exception of JC Penney (which is part of the collateral), the other four anchors - Macy's, Neiman Marcus, Nordstrom and Lord & Taylor, as well as the major tenant AMC Loews theater, own their own spaces and are only subject to ground leases. The in-line tenancy consists of a diverse mix of over 200 retail and entertainment tenants.

The property occupancy has remained above 95% since issuance. As of the March 2016 rent roll, the property was 97.6% occupied, almost unchanged from year-end (YE) 2015. Occupancy as of YE2014 was 98.5%, compared to 98.8% at YE2013 and 96.6% at issuance. The servicer reported first quarter 2016 (1Q16) debt service coverage ratio (DSCR) was 4.97x, compared to 4.85x at YE2015, 4.66x at YE2014, 4.45x at YE2013 and 4.88x at issuance.

Garden State Plaza is located in a densely populated area which provides a strong shopper base for the mall. Although there are four other regional malls located less than 10 miles away, the subject property is the dominant retail center as evidenced by its strong sales. As of trailing 12-months (TTM) March 2016, sales for in-line tenants were $824 per square foot (psf) including the Apple store, and $732 psf excluding Apple, compared to $822 psf and $728 psf, respectively, as of YE 2015 and $787 PSF and 678 psf at issuance.

The property has been successful in retaining existing tenants as well as attracting new ones, particularly nationally recognized tenants. The property faces limited near-term lease rollover risk, as most expiring leases were either extended or replaced by new long-term leases. As of March 2016, leases representing 1.2% expire in 2016, 2.6% in 2017, 5.3% in 2018, and 3.4% in 2019. The majority of in-place leases (87.5%) mature in 2020 and beyond.

Per the 2Q16 Reis report, the Northern NJ retail market had a vacancy rate of 7.4% with average asking rents of $29.12 psf. The South West Bergen submarket had a vacancy rate of 7.9% with average asking rent of $31.71 psf.

As part of its review, Fitch analyzed the performance of the loan and its underlying collateral, using YE2015 and partial year 2016 financials in its analysis. Fitch also reviewed the June 2015 rent roll and stressed the cash flow by excluding revenue from several tenants with lease rollover in 2016.

The Fitch stressed DSCR for the loan is 2.02x, compared to 1.99x modeled at issuance. The Fitch stressed loan-to-value (LTV) ratio is 43.5%, compared to 44.1% modeled at issuance. The Fitch LTV is based on a capitalization of the Fitch-adjusted net cash flow at a rate of 7.25%, which is lower than its published rate due to the high asset quality in a primary market, and strong tenant profile and sales.

RATING SENSITIVITIES

The rating is expected to remain stable. No rating actions are anticipated unless there are material changes in property occupancy or cash flow.

DUE DILIGENCE USAGE

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

Fitch has affirmed the following class as indicated:

--$375 million class A at 'AAAsf'; Outlook Stable.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Counterparty Criteria for Structured Finance and Covered Bonds: Derivative Addendum (pub. 18 Jul 2016)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=884964

Criteria for Analyzing Large Loans in U.S. Commercial Mortgage Transactions (pub. 27 Aug 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=870009

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

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=883130

Related Research

RBS Commercial Funding Inc. 2013-GSP Trust -- Appendix

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=727198

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1009915

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1009915

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

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Contacts

Fitch Ratings
Primary Analyst
Amy Gan
Director
+1-212-908-9143
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Mary MacNeill
Managing Director
+1-212-908-0785
or
Media Relations:
Elizabeth Fogerty, +1 212-908-0526
elizabeth.fogerty@fitchratings.com
Hannah James, +1 646-582-4947
hannah.james@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Amy Gan
Director
+1-212-908-9143
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Mary MacNeill
Managing Director
+1-212-908-0785
or
Media Relations:
Elizabeth Fogerty, +1 212-908-0526
elizabeth.fogerty@fitchratings.com
Hannah James, +1 646-582-4947
hannah.james@fitchratings.com