DBRS Morningstar Upgrades Credit Ratings on Three Classes of GS Mortgage Securities Trust 2013-GCJ16

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

-- Class C to AAA (sf) from A (high) (sf)
-- Class PEZ to AAA (sf) from A (high) (sf)
-- Class D to A (low) (sf) from BBB (high) (sf)

DBRS Morningstar also confirmed its credit ratings on three classes as follows:

-- Class F at BB (low) (sf)
-- Class X-C at B (sf)
-- Class G at B (low) (sf)

The credit ratings for Classes B and X-B were discontinued in conjunction with this rating action, as they were repaid in full as of the October 2023 remittance. All remaining classes maintain Stable trends.

The credit rating upgrades reflect the continued deleveraging of the trust, as 52 loans have repaid since the last rating action in November 2022. There are currently 10 loans remaining, representing a collateral reduction of 86.7% since issuance. Credit support to the outstanding bonds has improved as Class C is now the senior-most certificate with an outstanding principal balance that is fully covered by defeased collateral, representing 23.3% of the pool. There is only one loan in special servicing as of the October 2023 remittance, representing 10.6% of the pool, and it is the only loan backed by an office property. All other loans are scheduled to mature by the end of 2023. The weighted-average debt service coverage ratio (DSCR) and debt yield for these loans are 1.50 times (x) and 11.6%, respectively.

Given the concentration of the pool, DBRS Morningstar’s credit ratings are based on a recoverability analysis of the remaining assets. The only specially serviced loan is McAllister Plaza (Prospectus ID#16, 10.6% of the pool), which is secured by a suburban office property in San Antonio, Texas. The loan transferred to special servicing in July 2023 and subsequently missed its scheduled October 2023 maturity date. According to the servicer commentary, the borrower has requested an extension of the maturity date. The property was 91% occupied as of June 2023 and reported an annualized DSCR of 1.79x. Reis indicated that Northwest San Antonio was experiencing an average vacancy rate of 17.1% for office space as of Q2 2023, and the submarket vacancy is expected to increase over the next five years. DBRS Morningstar’s projected loss severity is under 20%; however, even a full loss on this loan would be contained to the unrated Class H certificate.

DBRS Morningstar identified three loans representing 39.0% of the pool balance as being at increased risk of maturity default based on current performance or payment status. All three of these loans are current as of the October 2023 remittance, although one loan representing 2.9% of the pool did not make its October 2023 debt service payment. The loan is still in its grace period and is backed by a self-storage property exhibiting strong historical performance. The largest loan is The Gates at Manhasset (Prospecuts ID#4, 33.7% of the pool), which is secured by a retail property in Manhasset, New York. Tenants include Crate & Barrel, Nike, Athleta, and Sephora. The subject’s historical occupancy has suffered, primarily because of below-grade spaces that are difficult to lease up. The property was 66% occupied as of June 2023, with a corresponding DSCR and debt yield of 1.21x and 8.9%, respectively. Another retail-backed loan representing 2.4% of the pool is secured by a ground floor retail space in New York City. The space has been vacant since the sole tenant, a gym, vacated in 2019. The loan has stayed current, despite the dark tenant’s lease expiration in February 2023.

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).

Class X-C is an interest-only (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 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 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 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.

DBRS Morningstar notes that a sensitivity analysis was not performed for this review as the transaction is in wind-down, with only a few loans remaining. In those cases, the DBRS Morningstar credit ratings are typically based on a recoverability analysis for the remaining loans.

DBRS, Inc.
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Chicago, IL 60602 USA
Tel. +1 312 332-3429

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

North American CMBS Multi-Borrower Rating Methodology (March 16, 2023)/North American CMBS Insight Model v 1.1.0.0 (https://www.dbrsmorningstar.com/research/410913)

Rating North American CMBS Interest-Only Certificates (December 19, 2022; https://www.dbrsmorningstar.com/research/407577)

DBRS Morningstar North American Commercial Real Estate Property Analysis Criteria (September 22, 2023; https://www.dbrsmorningstar.com/research/420982)

North American Commercial Mortgage Servicer Rankings (August 23, 2023; https://www.dbrsmorningstar.com/research/419592)

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)

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