DBRS Confirms All Classes of GS Mortgage Securities Corporation Trust 2012-ALOHA

DBRS Limited (DBRS) confirmed its ratings on the following classes of the Commercial Mortgage Pass-Through Certificates, Series 2012-ALOHA issued by GS Mortgage Securities Corporation Trust 2012-ALOHA:

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

All trends are Stable.

The rating confirmations reflect the overall stable performance of the underlying collateral. This loan is secured by a super-regional mall, two office buildings and a strip retail center in Honolulu, Hawaii. The largest portion of the loan (96.4% of the allocated loan balance) is the Ala Moana Center, which is the seventh-largest shopping mall in the United States and the largest open-air mall in the world. The other collateral properties include the Ala Moana Building (196,000 square feet (sf)) and Ala Moana Pacific Center office buildings (167,000 sf) as well as the Ala Moana Plaza strip retail center (14,000 sf), all of which are adjacent to the Ala Moana Center. All four properties are owned by the loan sponsor, Brookfield Properties Retail Group.

The Ala Moana Center is a 2.4 million sf super-regional mall, of which approximately 1.5 million sf serves as collateral. In November 2015, the 660,000 sf Ewa Wing expansion opened at the mall. Ewa Wing is not included in the collateral and is anchored by Hawaii’s first Bloomingdale’s location and Nordstrom. The collateral section of the mall is anchored by Macy’s and Neiman Marcus (non-collateral). Many previously existing collateral tenants relocated after the expansion was complete, including Shirokiya Japan Village Walk (40,978 sf); Forever 21 (29,333 sf); Nordstrom (200,000 sf), which originally operated on a ground lease; and Planet Fitness (15,518 sf). As part of the arrangement that allowed Nordstrom to terminate its ground lease and move to the Ewa Wing, the former Nordstrom space became part of the collateral. That space was divided and is now re-leased to Saks Off Fifth and Target, which both serve as collateral for the loan.

According to the latest rent roll dated September 2018, the mall reported an occupancy rate of 93.3% at an average rental rate of $123 per sf (psf). The largest collateral tenant is Macy’s (through August 2020; 25.1% of collateral net rentable area). Other notable collateral tenants include Old Navy, Barnes & Noble, Target and Saks Off Fifth. Per the trailing 12 months ending September 2018 tenant sales report, in-line tenants occupying less than 10,000 sf reported sales of $1,296 psf, representing a 4.9% increase from the prior year. Key tenants such as Saks Off Fifth, Old Navy, Barnes & Noble and Apple reported sales psf of $198 (-12.0%), $398 (+4.5%), $446 (-3.0%) and $8,754 (+14.4%), respectively.

The Ala Moana Building reported September 2018 occupancy and average rental rate figures of 85.5% and $32.26 psf, respectively, while the Ala Moana Pacific Center reported figures of 88.0% and $30.46 psf, respectively. The Ala Moana Building is undergoing a renovation to the third-floor lobby and the Pacific Center is undergoing a renovation to the seventh-floor lobby. Both renovations began in February 2018; however, no expected completion date was provided by the servicer. The Ala Moana Plaza strip retail property has maintained its 100% occupancy figure based on the September 2018 rent roll at an average rent of $59 psf.

Per the September 2018 financials, the loan reported a trailing nine months debt service coverage ratio (DSCR) of 2.68x, in comparison with the year-end (YE) 2017 DSCR of 2.61x, YE2016 DSCR of 2.55 times (x) and DBRS Term DSCR derived at issuance of 2.21x. DBRS believes this loan will continue to perform above issuance expectations considering its excellent sponsorship, outstanding location near Waikiki Beach and Daniel K. Inouye International Airport, strong tourism growth in the region and stability of tenant sales.

Classes X-A and X-B are interest-only (IO) certificates that reference a single rated tranche or multiple rated tranches. The IO rating mirrors the lowest-rated applicable reference obligation tranche adjusted upward by one notch if senior in the waterfall.

All ratings are subject to surveillance, which could result in ratings being upgraded, downgraded, placed under review, confirmed or discontinued by DBRS.

DBRS provides updated analysis and in-depth commentary in the DBRS Viewpoint platform for this transaction. For complimentary access to this content, please register for the DBRS Viewpoint platform at www.viewpoint.dbrs.com. The platform includes loan-level data for most outstanding CMBS transactions (including non-DBRS rated), as well as loan-level and transaction-level commentary for most DBRS-rated and -monitored transactions.

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

The principal methodology is North American CMBS Multi-borrower Rating Methodology, which can be found on www.dbrs.com under Methodologies & Criteria. For a list of the structured-finance-related methodologies that may be used during the rating process, please see the DBRS Global Structured Finance Related Methodologies document, which can be found on www.dbrs.com in the Commentary tab under Regulatory Affairs. Please note that not every related methodology listed under a principal structured finance asset class methodology may be used to rate or monitor an individual structured finance or debt obligation.

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 under Related Documents or by contacting us at info@dbrs.com.

The rated entity or its related entities did participate in the rating process for this rating action. DBRS had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the rating process. Please note a sensitivity analysis is not performed for CMBS bonds rated CCC or lower. The DBRS long-term rating scale definition indicates that ratings of CCC or lower are assigned when the bond is highly likely to default or default is imminent, thereby prevailing over a sensitivity analysis.

For more information on this credit or on this industry, visit www.dbrs.com or contact us at info@dbrs.com.

DBRS Limited
DBRS Tower, 181 University Avenue, Suite 700
Toronto, ON M5H 3M7 Canada