DBRS Confirms Ratings of GS Mortgage Securities Trust 2013-GCJ14

DBRS Limited (DBRS) has today confirmed all classes of Commercial Mortgage Pass-Through Certificates, Series 2013-GCJ14 (the Certificates) issued by GS Mortgage Securities Trust 2013-GCJ14 as follows:

-- Class A-1 at AAA (sf)
-- Class A-2 at AAA (sf)
-- Class A-3 at AAA (sf)
-- Class A-4 at AAA (sf)
-- Class A-5 at AAA (sf)
-- Class A-AB at AAA (sf)
-- Class A-S at AAA (sf)
-- Class B at AA (sf)
-- Class C at A (high) (sf)
-- Class PEZ at A (high) (sf)
-- Class D at BBB (sf)
-- Class E at BBB (low) (sf)
-- Class F at BB (sf)
-- Class G at B (sf)
-- Class X-A at AAA (sf)
-- Class X-C at AAA (sf)

All trends are Stable. DBRS does not rate the first loss piece, Class H. The Class A-S, Class B and Class C certificates may be exchanged for the Class PEZ certificates (and vice versa).

The rating confirmations reflect the overall stability of the pool, which has experienced a collateral reduction of 2.7% since issuance as a result of scheduled loan amortization and the liquidation of one loan. At issuance, the pool consisted of 84 fixed-rate loans secured by 132 commercial properties. As of the June 2015 remittance, 83 loans remain in the pool with an aggregate outstanding principal balance of $1,208.5 million. The top 15 loans continue to exhibit stable performance with a weighted-average (WA) debt service coverage ratio (DSCR) of 1.82 times (x), based on the most recent year-end reporting available for the individual loans. As of the June 2015 remittance, there are no loans in special servicing and 11 loans on the servicer’s watchlist, representing 11.8% of the current pool balance. Two of the most pivotal loans on the watchlist are highlighted below.

The Mendoza Multifamily Portfolio (Prospectus ID#5, representing 4.1% of the current pool balance) loan is secured by nine multifamily properties located in Northern California. The loan was added to the watchlist as a result of major deferred maintenance reported for two of the nine properties. According to the March 2015 site inspection, a unit at the Woodcreek Townhomes property was severely damaged as a result of a fire in February 2015. The servicer has issued letters of deferred maintenance in regards to the borrower’s plan for remediation and DBRS has followed-up with the servicer for the status of the repairs. According to the May 2015 service commentary, the repairs have not commenced due to the ongoing investigation surrounding the damaged unit. However, the loan benefits from an outstanding reserve balance totaling $361,789, allocated for capital improvement and deferred maintenance, as of June 2015. According to the June 2015 rent roll, the total portfolio occupancy was 94.2%, which has remained in line with occupancy at December 2013. Despite the ongoing deferred maintenance issues at the subject, the loan continues to exhibit strong performance with a Q1 2015 DSCR of 2.12x, an improvement compared with the YE2014 DSCR of 1.92x.

The Southpark Center I & II (Prospectus ID#8, representing 2.1% of the current pool balance) loan is secured by two multi-tenant office buildings located in Charlotte, North Carolina. The loan was added to the watchlist due to a decline in performance, as the YE2014 DSCR was reported to be 1.33x compared with the YE2013 DSCR of 1.68x. The servicer has attributed the decline in DSCR to an increase in vacancy loss, particularly rent concessions, and a decrease in expense reimbursements. However, the property occupancy remains stable at 86.3%, according to the March 2015 rent roll, with the largest tenant, Flour Enterprises, representing 30.5% of the net rentable area (NRA) on a lease scheduled to expire in June 2019. According to Q1 2015 Reis data, the Charlotte metropolitan and uptown submarket achieved a higher average asking rental rate of $26.72 per square foot (psf) compared with the subject’s average rental rate of approximately $22.00 psf; however, the subject’s occupancy remained in line with the submarket. Despite the decline in YE2014 performance, the loan shows potential for improvement with a Q1 2015 DSCR of 1.77x and benefits from a tenant reserve balance totaling $735,968 as of June 2015.

DBRS continues to monitor this transaction in its Monthly CMBS Surveillance Report, with additional information on the DBRS viewpoint for this transaction. The June 2015 Monthly CMBS Surveillance Report for this transaction will be published shortly. If you are interested in receiving this report, contact us at info@dbrs.com.

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

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link to the right under Related Research or by contacting us at info@dbrs.com.

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

The applicable methodologies are North American CMBS Rating Methodology (June 2015) and CMBS North American Surveillance (January 2015), which can be found on our website under Methodologies.