DBRS Finalizes Ratings on GSMS 2012-ALOHA

DBRS has today finalized its ratings on the following classes of GS Mortgage Securities Corporation Trust 2012-ALOHA, Commercial Mortgage Pass-Through Certificates, Series 2012-ALOHA (GSMS 2012-ALOHA). The trends are Stable.

-- Class A at AAA (sf)
-- Class X-A at AAA (sf)
-- Class X-B at AAA (sf)
-- Class B at AA (low) sf)
-- Class C at A (low) (sf)
-- Class D at BBB (low) (sf)

The collateral for the transaction consists of the fee interest in a super-regional mall, an office building and a small unanchored retail center as well as the partial fee, partial leasehold interest in another office building. Ala Moana Center, the mall portion of the collateral, was originally built in 1959 and has been expanded and renovated multiple times over the years, with the most recent renovation including the addition of Nordstrom’s first store located in Hawaii. By virtue of its location near Waikiki Beach, approximately 40% of the subject’s visitors are tourists, with a large number of foreign tourists coming from Japan, China and Korea. Ala Moana Center is considered one of the top malls in the U.S. by virtue of its large size and extremely high sales levels achieved by its tenants. Sales performance at the property has been historically very good and continues to improve. Sales for comparable tenants occupying less 10,000 sf have increased from $969 psf in 2002 to $1,329 sf as of the T-12 ending January 31, 2012, period. In addition, anchor tenant sales are also high, with all four department store anchors reporting sales volumes higher than their respective national averages.

Sears is one of the four department store anchors at the property, and is included in the collateral for the loan. However, the borrowers can release the Sears parcel without any paydown of the loan. The parcel will be transferred to an affiliate of GGP and the store will be torn down to be replaced with shop space. Tenant relocations will only be allowed if a tenant has less than six months remaining on its lease or the execution, by the loan sponsor, of a master lease for a three-year minimum term that will cover 110% of the relocated tenant (s) total income. DBRS does not consider the release of the Sears parcel and subsequent building of new improvements to have a materially negative impact on the loan. The two offices at the property, Ala Moana Building and Ala Moana Pacific Center, are performing somewhat poorly in comparison to the mall, with occupancy rates of 87.2% and 82.3%, respectively. These two properties only account for 5.9% of DBRS UW NCF, mitigating the impact of any underperformance.

The loan has minimal default risk during the ten-year loan term, as the DBRS Term DSCR is quite high at 2.21x and no individual tenant contributes more than 3.1% of base rent. DBRS LTV is considered modest at 75.9%.

Notes:
All figures are in U.S. dollars unless otherwise noted.

This rating is endorsed by DBRS Ratings Limited for use in the European Union.

All classes are privately placed pursuant to Rule 144a. The Class X-A and Class X-B balances are notional. DBRS ratings on interest-only certificates address the likelihood of receiving interest based on the notional amount outstanding. DBRS considers the interest-only certificate’s position within the transaction payment waterfall when determining the appropriate rating.

The applicable methodology is CMBS Rating Methodology, which can be found on our website under Methodologies.