DBRS Morningstar Confirms Ratings of GS Mortgage Securities Corporation Trust 2021-IP

DBRS Limited (DBRS Morningstar) confirmed its ratings on all classes of Commercial Mortgage Pass-Through Certificates, Series 2021-IP issued by GS Mortgage Securities Corporation Trust 2021-IP as follows:

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

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction, specifically the continued strong in-line tenant sales and robust financial performance throughout 2022.

The interest-only floating-rate loan is secured by the borrower’s fee-simple and leasehold interest in the nondepartment store component of International Plaza, a 1.2 million-square foot (sf) Class A super-regional mall, of which approximately 740,000 sf serve as collateral for the loan. The property is four miles west of downtown Tampa and is anchored by noncollateral tenants in Neiman Marcus, Nordstrom, and Dillard’s, all of which remain open as of this publication date. The subject features two additional anchor boxes on the first and second floors: the first floor space serves as collateral and was formerly occupied by Lifetime Athletic while the second floor space was formerly occupied by Lord & Taylor. The second floor was divided up, and about 20,000 sf was backfilled by Ballard Designs, but the remaining 50,000-sf space has been vacant for more than 10 years and is currently used as storage space.

Goldman Sachs Bank USA originated the mortgage loan to Tampa Westshore Associates Limited Partnership, which is indirectly owned and controlled by the Taubman Realty Group LLC, Simon Property Group, L.P., Nuveen, and the Teachers Insurance and Annuity Association of America-College Retirement Equities Fund. The loan was added to the servicer’s watchlist in May 2023 ahead of its upcoming October 2023 maturity date. The loan is structured with three one-year extension options for a fully extended maturity date of October 2026. Per the most recent servicer commentary, the borrower has indicated its intentions to exercise the first of its three options; however, the borrower is required to enter into an interest rate cap agreement with a strike rate equal to 4.0% during each of the three extension periods.

As of the December 2022 rent roll, the collateral was 95.8% occupied compared with the March 2022 occupancy rate of 95.9%. The December 2022 occupancy rate does not reflect the recent departure of LifeTime Athletic (previously the largest collateral tenant with 7.6% of the net rentable area (NRA)). Per an online news article in the “Tampa Bay Business Journal” dated April 2023, it was noted that the tenant would be closing its location at the subject property ahead of its lease expiration in January 2029. The tenant is no longer listed on the mall’s directory. Currently, the largest collateral tenants include Restoration Hardware (5.9% of the NRA, lease expiry in January 2031), Forever 21 (4.7% of the NRA, lease expired in January 2022), and Crate & Barrel (4.5% of NRA, lease expiry in January 2024). Although the Forever 21 lease appears to have expired, the tenant remains open according to the subject property’s online tenant directory. DBRS Morningstar has asked for confirmation of the tenant’s renewal. The property features a strong tenant mix with many upscale retailers, including Tiffany & Co., Burberry, Saint Laurent, Gucci, and others. Near-term rollover risk is concentrated, with leases representing approximately 22.0% of the NRA scheduled to roll within the next 12 months. Given the strong historical occupancy, DBRS Morningstar expects many of these leases will be renewed.

A YE 2022 tenant sales report was provided. When excluding Apple, Tesla, and Luis Vuitton, reported sales totaled $984 per square foot (psf) compared with the YE2021 figure of $833 psf. The loan reported a debt service coverage ratio (DSCR) of 3.06 times (x) for YE2022, according to the servicer’s provided financials, and a net cash flow (NCF) of $51.2 million compared with the DBRS Morningstar DSCR of 3.63x and NCF of $38.4 million. Although the NCF has improved, the DSCR has fluctuated because of the loan’s floating rate coupon. The subject continues to perform in line with expectations, as evidenced by the robust tenant sales and reported NCF for YE2022. Although physical vacancy has increased following the departure of the previous largest collateral tenant and there is concentrated upcoming rollover, DBRS Morningstar remains optimistic the performance will remain stable based on the strong tenant mix, prime market location, and experienced sponsorship.

ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance factors that had a significant or relevant effect on the credit analysis.

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/416784 (July 4, 2023).

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

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

The principal methodology is the North American CMBS Surveillance Methodology (March 16, 2023) https://www.dbrsmorningstar.com/research/410912

Other methodologies referenced in this transaction are listed at the end of this press release.

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

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 [email protected].

The credit rating was initiated at the request of the rated entity.

The rated entity or its related entities did participate in the credit rating process for this credit rating action.

DBRS Morningstar had access to the accounts, management, and other relevant internal documents of the rated entity or its related entities in connection with this credit rating action.

This is a solicited credit rating.

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the credit rating process.

DBRS Limited
DBRS Tower, 181 University Avenue, Suite 700
Toronto, ON M5H 3M7 Canada
Tel. +1 416 593-5577

The credit rating methodologies used in the analysis of this transaction can be found at: https://www.dbrsmorningstar.com/about/methodologies.

North American Single-Asset/Single-Borrower Ratings Methodology (February 23, 2023;
https://www.dbrsmorningstar.com/research/410191)
DBRS Morningstar North American Commercial Real Estate Property Analysis Criteria (September 12, 2022; https://www.dbrsmorningstar.com/research/402646)
North American Commercial Mortgage Servicer Rankings (September 8, 2022; https://www.dbrsmorningstar.com/research/402499)
Interest Rate Stresses for U.S. Structured Finance Transactions (June 9, 2023; https://www.dbrsmorningstar.com/research/415687)

Legal Criteria for U.S. Structured Finance (December 7, 2022;
https://www.dbrsmorningstar.com/research/407008)
A description of how DBRS Morningstar analyses structured finance transactions and how the methodologies are collectively applied can be found at: https://www.dbrsmorningstar.com/research/417279.

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