DBRS Correction: GS Mortgage Securities Trust, Series 2012-GCJ7

DBRS Inc. (DBRS) corrected a February 22, 2017, press release that did not include language identifying the material deviation for the rating actions taken on GS Mortgage Securites Trust, Series 2012-GCJ7. The press release has been amended with the correct material deviations identified and is available on the DBRS website.

On February 22, 2017, DBRS, Inc. (DBRS) upgraded the ratings on the following classes of Commercial Mortgage Pass-Through Certificates, Series 2012-GCJ7 (the Certificates) issued by GS Mortgage Securities Trust, Series 2012-GCJ7:

-- Class B to AA (high) (sf) from AA (sf)
-- Class C to A (sf) from A (low) (sf)

DBRS has also confirmed the remaining Certificates:

-- Class A-2 at AAA (sf)
-- Class A-3 at AAA (sf)
-- Class A-4 at AAA (sf)
-- Class A-AB at AAA (sf)
-- Class A-S at AAA (sf)
-- Class D at BBB (low) (sf)
-- Class E at BB (sf)
-- Class F at B (sf)
-- Class X-A at AAA (sf)
-- Class X-B at AAA (sf)

DBRS does not rate the first loss piece, Class G. All trends are Stable.

The rating upgrades reflect the healthy performance of the pool overall since issuance, with 69 loans remaining of the original 79 loans and a collateral reduction of 17.1% of the pool since issuance. Additionally, six loans, representing 7.2% of the pool, have fully defeased. Performance metrics are healthy, with a weighted-average (WA) in-place debt service coverage ratio (DSCR) of 1.69 times (x) and a WA debt yield of 12.6%, as based on the most recent year-end figures reported for the remaining loans in the pool. Those figures compare with the DBRS WA Term DSCR and DBRS WA Debt Yield for the remaining loans at issuance of 1.39x and 9.9%, respectively, indicating healthy cash flow growth overall since issuance.

As of the February 2017 remittance, there are 15 loans on the servicer’s watchlist, representing 20.7% of the pool balance, and one loan in special servicing, representing 1.7% of the pool. The majority of the loans on the watchlist are being monitored for relatively minor deferred maintenance items, with some monitored for cash flow declines. The loan in special servicing was transferred in October 2014 and is now real estate owned. Given the sharp performance and value declines for the collateral property since issuance, DBRS anticipates a loss will be incurred at resolution, currently projected to be contained to the unrated Class G Certificates.

There are four loans scheduled to mature in the next 12 months, representing 4.0% of the pool. One of those loans is defeased, representing 0.9% of the pool. For the three non-defeased loans, the weighted-average DBRS refinance (Refi) DSCR is healthy at 1.53x; however, the largest maturing loan, Fifth Third Center (Prospectus ID#24, 1.2% of the pool), has a low DBRS Refi DSCR of 1.05x and a low occupancy rate for the collateral property, indicating a near-term refinance could be difficult. DBRS has applied that loan with an increased probability of default and will monitor for developments through the scheduled April 2017 maturity.

The ratings assigned to Classes D, E and F materially deviate from the higher ratings implied by the quantitative results. The deviations are warranted because sustainability of loan trends has not yet been demonstrated.

DBRS has provided updated loan-level commentary and analysis for larger and/or pivotal watchlisted loans, the specially serviced loan and for the largest 15 loans in the pool in the DBRS CMBS IReports platform. To view these and future loan-level updates provided as part of DBRS’s ongoing surveillance for this transaction, please log into DBRS CMBS IReports at www.ireports.dbrs.com.

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.

The principal methodologies are North American CMBS Rating Methodology (January 2017) and CMBS North American Surveillance (December 2016), which can be found on dbrs.com under Methodologies.

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