DBRS Morningstar Confirms All Classes of GS Mortgage Securities Trust 2013-GCJ16

DBRS, Inc. (DBRS Morningstar) confirmed the ratings on all classes of Commercial Mortgage Pass-Through Certificates, Series 2013-GCJ16 issued by GS Mortgage Securities Trust 2013-GCJ16 as follows:

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

DBRS Morningstar assigned Negative trends to Classes F, G, and X-C due to the increasing risks associated with the specially serviced loans. All other trends are Stable.

As of the February 2021 remittance, the pool’s balance has been reduced from $1.1 billion at issuance to $761.2 million resulting from the payoff of 15 loans in addition to amortization. There have been no losses to the trust to date. There are eight loans, representing 25.3% of the pool on the servicer’s watchlist, including the Windsor Court New Orleans loan, the second-largest loan in the pool. These loans are being monitored for various reasons, including low debt service coverage ratio (DSCR) or occupancy, tenant rollover risk, and/or pandemic-related forbearance requests.

Six loans, representing 12.2% of the pool, are with the special servicer. The largest specially serviced loan is the Walpole Shopping Mall loan (Prospectus ID#6, 5.8% of the pool), which is secured by a 397,971 square foot (sf) anchored retail center in Walpole, Massachusetts, about 20 miles outside of downtown Boston. The loan is a $44.4 million pari passu participation in a $70.9 million whole loan and was transferred to the special servicer in May 2020 due to a Coronavirus Disease (COVID-19) relief request. Occupancy at the property dropped to 89% after Office Max, formerly the third-largest tenant, vacated at its lease expiration in January 2020. A 2020 appraisal valued the property at $50.9 million, which is about $20.0 million below the loan balance, and DBRS Morningstar assumed a loss in this analysis.

The second-largest specially serviced loan is the Portland Paramount Hotel loan (Prospectus ID#18, 1.8% of the pool balance), which is secured by a 54-room full-service hotel in downtown Portland. Since issuance, the hotel performed well with a DSCR above 2.00x, but in 2020 cash flow quickly deteriorated to below breakeven due to the ongoing effects of the coronavirus pandemic restrictions. While temporary legal restrictions in the state of Oregon likely delayed workout discussions, the servicer commentary indicates the borrower and special servicer are discussing next steps. A 2020 appraisal valued the property at $29 million, which is above the $14.1 million loan balance and implies a 48.5% loan to value.

The two largest loans in the pool have received modifications due to coronavirus relief requests. The Windsor Court New Orleans loan (Prospectus ID#1, 8.5% of the pool balance) is secured by a 316-room full-service luxury hotel that is well located in the Riverside/Convention Center submarket of New Orleans. The hotel displayed strong performance pre-coronavirus and completed a $15 million renovation in 2018, which led to a 27% increase in net cash flow (when compared to the issuance level) and a 2.19 times DSCR in 2019. However, cash flow was crippled in 2020 due to the strict travel restrictions in place and for the trailing 12-month period ending September 2020, net cash flow was $2.6 million compared to the issuer’s underwritten cash flow level of $8.2 million. While the loan has been kept current, it received a forbearance in April 2020, which included using FF&E reserves to make P&I payments for October 2020 to December 2020, deferring the monthly FF&E deposit for six months (with past due amounts being repaid between April 2021 and September 2021), waiving the DSCR Trigger from April 2021 through June 2021, and granting approval for a $2.5 million PPP loan. Additionally, the Miracle Mile Shops loan (Prospectus ID#2, 9.0% of the pool balance), which is a $68.2 million pari passu participation in a $565.5 million whole loan secured by a 450,000-sf retail center located on Las Vegas Boulevard, also received a forbearance. The property performed well since issuance with net cash flow 12% above the underwritten level and stable occupancy at 98% in 2019. However, as the Las Vegas economy is highly dependent on the tourism industry, foot traffic and in turn cash flow were severely disrupted due to the strict travel limitations in place throughout much of the 2020 coronavirus pandemic. While the loan remained current, the year-end 2020 financials reported a small 2% drop in occupancy to 96% while cash flow declined by 27% below the issuer’s underwritten level. The loan was modified by the special servicer, the terms of which included interest-only payments from August 2020 through February 2021, with principal and reserve payments being deferred. Although a repayment period was not defined, excess cash, when available, will be placed in a debt service and reserves account.

ESG CONSIDERATIONS
A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/373262.

Classes X-A, X-B, and X-C 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 – Windsor Court New Orleans (8.5% of the pool)
-- Prospectus ID#2 – Miracle Mile Shops (9.0% of the pool)
-- Prospectus ID#6 – Walpole Shopping Mall (5.8% of the pool)
-- Prospectus ID#18 – The Portland Paramount Hotel (1.8% 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 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.

Generally, the conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. DBRS Morningstar’s outlooks and ratings are monitored.

For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at [email protected].

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