DBRS Morningstar Confirms All Classes of GS Mortgage Securities Trust 2013-GC10

DBRS Limited (DBRS Morningstar) confirmed the ratings on all classes of Commercial Mortgage Pass-Through Certificates, Series 2013-GC10 issued by GS Mortgage Securities Trust 2013-GC10 as follows:

-- 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 X-A at AAA (sf)
-- Class B at AA (high) (sf)
-- Class X-B at AA (low) (sf)
-- Class C at A (high) (sf)
-- Class D at BBB (sf)
-- Class E at BB (sf)
-- Class F at B (sf)

All trends are Stable, with the exception of Class F, which maintains a Negative trend to reflect the concerns about several underperforming loans, particularly the largest loan in the pool, Empire Hotel & Retail (Prospectus ID #1; representing 15.7% of pool), which is detailed below.

Although some loans exhibit higher risk profiles related to performance declines from issuance, there are no delinquent or specially serviced loans in the pool. In general, the pool has performed as expected, with 53 of the original 61 loans remaining as of the February 2020 remittance and a collateral reduction of 21.2% since issuance. In addition, 16 loans, representing 19.4% of the pool and including four loans in the top 15, are fully defeased.

Loans representing 80.1% of the current pool balance are reporting YE2019 or YE2018 figures with a weighted-average (WA) debt service coverage ratio (DSCR) and WA debt yield of 1.87 times (x) and 12.2%, respectively. Eleven loans in the top 15, which represent 61.2% of the pool, are reporting partial-year or YE2019 financials. These loans reported a WA DSCR and debt yield of 1.68x and 10.4%, respectively, representing a WA net cash flow growth of 5.6% over the DBRS Morningstar issuance figures.

As of the February 2020 remittance, eight loans, representing 24.6% of the current pool balance, are on the servicer’s watchlist. The largest loan in the pool, Empire Hotel & Retail, is secured by a 423-key full-service hotel with ground level retail located in New York City (NYC), across the street from Lincoln Center and within close proximity to Central Park. The loan is being monitored for its low DSCR, which has remained depressed since YE2016 and was reported at 0.84x for the trailing 12 months ended September 2019. According to the servicer, the borrower attributes the revenue declines to renovation work that occurred between 2014 and 2016, as well as the softening of the NYC hotel market in recent years. For additional information on this loan, please see the loan commentary in the DBRS Viewpoint platform.

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 Morningstar.

DBRS Morningstar provides updated analysis and in-depth commentary in the DBRS Viewpoint platform for the following loans in the transaction:

-- Prospectus ID#1 – Empire Hotel & Retail (15.7% of the pool)
-- Prospectus ID#15 – 701 Technology Drive (2.02% of the pool)

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

Notes:
The principal methodology is North American CMBS Surveillance 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 Morningstar 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.

For more information regarding rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/357883.

For more information regarding structured finance rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/358308.

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 Morningstar 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 Morningstar 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.

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