DBRS Morningstar Confirms All Classes with Stable Trends on GS Mortgage Securities Trust 2018-GS10

DBRS Limited (DBRS Morningstar) confirmed the Commercial Mortgage Pass-Through Certificates, Series 2018-GS10 issued by GS Mortgage Securities Trust 2018-GS10 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 X-A at AAA (sf)
-- Class X-B at AA (sf)
-- Class B at AA (low) (sf)
-- Class C at A (low) (sf)
-- Class X-D at BBB (sf)
-- Class D at BBB (sf)
-- Class E at BBB (low) (sf)
-- Class F at BB (low) (sf)
-- Class G-RR at B (low) (sf)

All trends are Stable.

Class G-RR was removed from Under Review with Negative Implications where it was placed on August 6, 2020.

With this review, DBRS Morningstar confirmed that the overall performance of the transaction remains in line with expectations at issuance. At issuance, the trust consisted of 33 fixed-rate loans secured by 57 commercial and multifamily properties. As of the November 2020 remittance, all loans remained in the pool with a collateral reduction of 0.6% caused by scheduled amortization. The transaction is backed by a relatively diverse set of collateral, with loans backed by office, retail, and industrial properties representing 34.4%, 24.1%, and 16.7% of the pool, respectively. There is only a small concentration of loans backed by hospitality properties, which represent less than 3.0% of the pool. Given the unique stresses for hotel properties amid the Coronavirus Disease (COVID-19) pandemic, this is considered a strength for the transaction. In addition, there are three loans, collectively representing 19.3% of the pool, that are shadow-rated investment grade by DBRS Morningstar, including 1000 Wilshire (Prospectus ID#2, 8.1% of the pool), Aliso Creek Apartments (Prospectus ID#3, 7.8% of the pool), and Marina Heights State Farm (Prospectus ID#11, 3.4% of the pool). With this review, DBRS Morningstar confirmed that the loans continue to perform in line with the investment-grade shadow ratings.

As of the November 2020 remittance, there were eight loans on the servicer’s watchlist, representing 17.3% of the pool, and no delinquent or specially serviced loans. The watchlisted loans are being monitored for various reasons, including delinquent taxes, upcoming rollover risk, low debt service coverage ratios (DSCR) or occupancy rates, and/or pandemic-related forbearance requests. Based on the YE2019 financials, the pool reported a weighted-average (WA) DSCR of 2.53 times (x) compared with the YE2018 WA DSCR of 2.43x and DBRS Morningstar DSCR at issuance of 2.10x.

The 3300 East 1st Avenue loan (Prospectus ID#15, 3.0% of the pool balance) is on the servicer’s watchlist because of its delinquent payments between May and September 2020. However, as of the October 2020 remittance, the loan was marked current by the servicer, with the loan listed as current in the November 2020 reporting as well. The servicer also notes that a coronavirus relief request has been made, which is under review. The loan collateral is a mixed-use property located in Denver. The property reported a September 2020 occupancy rate of 81.2%. The largest tenant, Zone Athletic Club, occupies 27.2% of the net rentable area on a lease through March 2033. Cash flows have been reported in line since issuance, with 1.66x as the most recent DSCR reported for the trailing six months ended June 30, 2020.

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework and its methodologies can be found at: https://www.dbrsmorningstar.com/research/357792.

Classes X-A, X-B, and X-D 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#15 – 3300 East 1st Avenue (3.0% 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:
All figures are in U.S. dollars unless otherwise noted.

The principal methodology is North American CMBS Surveillance Methodology (March 6, 2020), which can be found on dbrsmorningstar.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 dbrsmorningstar.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.

For more information regarding the structured finance rating approach and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/359905.

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@dbrsmorningstar.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.dbrsmorningstar.com or contact us at info@dbrsmorningstar.com.

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