Fitch announces downgrades on three commercial-mortgage pass-through deals

Fitch announces downgrades on three commercial-mortgage pass-through deals
Written by Publishing Team

Fitch Ratings has announced rating downgrades for eight classes of commercial mortgage pass-through certificates. Rating action moves by performance on loans to two regional malls, an office building in Chicago, retail property in the Chelsea neighborhood of Manhattan, and retail property in Port Chester, New York

Six categories of GS Mortgage Securities Trust’s rating downgraded, 2013-GC13, reflecting increased loss expectations on the pool of specialist loans in two regional malls.

Fitch said the pool has a large concentration of loans of interest, about 34.5%, as well as four privately-served loans, representing 27.6% of the pool.

Two retail property loans, both sponsored by Brookfield Properties, represent the largest contributors to Fitch’s underlying losses in the collateral group. Fitch said the loan on the 670,376-square-foot portion of a million-square-foot shopping mall in St. Matthews, which represents 11.7% of the complex, is the largest contributor to the loss forecast.

While the property was 92% leased as of September 2021 rental listings, it was converted to private service in June 2020, having failed to pay after its due date. According to Fitch, Brookfield Properties sponsored the deal.

The second largest contributor to expected losses is the special-serviced center Crossroads, accounting for 7.9% of the collateral pool. According to Fitch, the borrower does not want to put additional money into the loan, but is willing to manage the property.

Fitch also downgraded the COMM 2013-CCRE13 Mortgage Trust by one category. The 22-story 1.45 million-square-foot office building at 175 West Jackson Boulevard in downtown Chicago, accounting for 10.4% of the complex, is the largest contributor to total losses.

The occupancy level of less than 70% since 2018 remains a challenge for the property. The occupancy level for the office building was 65% as of September 2021, up slightly from 63% at the end of 2020, 67% in 2019 and 61% at the end of 2018.

The second largest contributor to the losses is a loan on a 16,225-square-foot retail property at 525 West 22nd Street, in the Chelsea neighborhood of Manhattan. It recently lost a tenant, Danese Gallery, which brought the occupancy level down to 41.5%. Fitch said the current tenant, Ameringer Yohe, has expanded the vacant lot, restoring occupancy to some extent, to 68% as of June 2021.

Fitch also announced it had downgraded the Morgan Stanley Bank of America Merrill Lynch Trust (MSBAM) 2015-C22 rating to F, citing larger losses on the privately serviced Hilton Houston West Chase loan, which defaulted in March 2020.

The Westchase loan represents 4.3% of all collateral, and is secured by a 297-key full-service hotel located in Houston’s Energy Corridor. Westchase’s loan defaulted after being hit by low oil and gas prices and oversupply in the Houston housing market. Fitch said the economic impact of the coronavirus pandemic has only made matters worse. The borrower was granted patience from April to July 2020, but was unable to reach the terms of a long-term adjustment after that.

Cutbacks weren’t the only deal-breakers. Fitch confirmed the classification of seven denominations of notes on the GS Mortgage Securities Trust transaction; 10 chapters in COMM 2013-CCRE13; and 12 class on MSBAM treatment.


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