DBRS Morningstar Confirms All Classes of GS Mortgage Securities Corporation Trust 2020-UPTN

DBRS, Inc. (DBRS Morningstar) confirmed the ratings on the Commercial Mortgage Pass-Through Certificates, Series 2020-UPTN issued by GS Mortgage Securities Corporation Trust 2020-UPTN (the Issuer) as follows:

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

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction since issuance. The underlying loan is secured by the fee-simple interest in portions of The Union, a mixed-use complex in the Uptown/Turtle Creek submarket of Dallas, built in 2018. The overall development consists of four components–office, retail, parking, and apartments–all of which are individually structured as condominium units. The collateral for the subject loan includes three condominium units including the 21-story LEED Gold-certified office building, a retail and restaurant cluster of three buildings surrounding an open courtyard, and a parking structure with three subterranean levels and six above-ground levels. The fourth, noncollateral, condominium unit is The Christopher, a 309-unit apartment building.

The five-year $222.0 million loan is interest only (IO) through the entire term and there is no additional pari passu or subordinate debt. The transaction funded the collateral property’s acquisition by the sponsor, KB Asset Management Co., Ltd., which injected $163.5 million of cash equity as part of the transaction. The property is managed by the developer, RED Development.

The largest office tenant is Salesforce, which occupies 23.1% of the total net rentable area (NRA), paying a gross rental rate of $54.57 per square foot (psf) on a lease expiring in May 2025. The loan is structured with a full cash sweep if Salesforce does not execute its first of two five-year extension options one year in advance of its May 2025 lease expiration, which would result in available funds in excess of $6.0 million. Salesforce reportedly spent over $200 psf of its own capital to customize the space, a significant investment that would suggest a longer-term commitment to the property. Remaining large office tenants include Akin Gump Strauss Hauer & Feld LLP (14.6% of total NRA; lease expiring in September 2034), Weaver and Tidwell, LLP (11.6% of total NRA; lease expiring in October 2030), and HBK Services LLC (8.6% of total NRA; lease expiring in November 2028).

The subject continues to operate above the submarket in terms of vacancy and rental rates. According to Reis, Class A office space in the Uptown submarket reported average vacancy and rental rates of 20.1% and $32 psf gross, respectively, for Q4 2021. As of September 2021, the property was 94.5% occupied with an average rental rate of $36 psf. There is minimal scheduled lease roll during the loan term. As of Q3 2021, the loan had a debt service coverage ratio of 2.32 times (x), up from 2.17x at YE2020. The annualized net cash flow indicates performance remains in line with DBRS Morningstar’s expectations at issuance.

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.

Class X-A is an IO certificate that references 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 this transaction.

For complimentary access to this content, please register for the DBRS Viewpoint platform at www.viewpoint.dbrsmorningstar.com The platform includes loan-level 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 4, 2022), 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.

The DBRS Morningstar Sovereign group releases baseline macroeconomic scenarios for rated sovereigns. DBRS Morningstar analysis considered impacts consistent with the baseline scenarios as set forth in the following report: https://www.dbrsmorningstar.com/research/384482/baseline-macroeconomic-scenarios-application-to-credit-ratings.

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.

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

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