Morningstar DBRS Confirms Credit Ratings on All Classes of GSMS 2013-GCJ14

DBRS, Inc. (Morningstar DBRS) confirmed its credit rating on all classes of Commercial Mortgage Pass-Through Certificates, Series 2013-GCJ14 issued by GS Mortgage Securities Trust 2013-GCJ14 as follows:

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

Classes E and F maintain Stable trends. Class G is assigned a credit rating that typically does not carry a trend in commercial mortgage-backed securities (CMBS) credit ratings.

Since the last credit rating action, three loans that were previously in special servicing were disposed from the trust with better-than-expected recoveries. As of the October 2024 remittance, only three loans remain in the pool, two of which are still in special servicing; however, Morningstar DBRS also remains cautious about the ultimate recoverability of the one loan not in special servicing, Mall St. Matthews (Prospectus ID#6; 34.9% of the pool). Morningstar DBRS' loss projections are currently contained to the unrated Class H, but given the concentration of defaulted or previously defaulted loans, Morningstar DBRS' credit ratings remain reflective of the high credit risk of the remaining assets.

Cranberry Woods Office Park (Prospectus ID#4; 55.6% of the pool) is the largest loan in the pool and the largest asset in special servicing. It is secured by a portfolio of three suburban office properties located approximately 20 miles north of Pittsburgh. The loan transferred to special servicing in August 2023 for maturity default. As of June 2024, the combined collateral occupancy rate was 86.5%, according to the servicer. The most recent appraisal, dated November 2023, valued the property at $53.0 million, implying a loan-to value-ratio (LTV) of 83.3% based on the full-loan exposure. The resolution strategy is listed as foreclosure. Morningstar DBRS' analysis, which is based on a stress to the most recent appraised value, results in an implied loss severity under 20%.

The second-largest and only performing loan in the pool is Mall St. Matthews, which is secured by a regional mall in Louisville, Kentucky, owned and operated by Brookfield Property Group (Brookfield). The loan failed to repay at the scheduled June 2020 maturity date and was transferred to special servicing. A modification of the loan was executed in March 2022, the terms of which included an extension of the maturity date to June 2025 as well as a conversion to interest-only (IO) payments throughout the extension period. The loan is also cash managed with all excess cash being applied to pay down the principal balance. As of the October 2024 remittance, the loan continues to perform in accordance with the modification terms. The YE2023 debt service coverage ratio was reported to be 1.51 times (x), slightly below the preceding three figures. The collateral occupancy rate remains steady at 95% as of June 2024, despite a concentration of leases that were scheduled to roll over the past 12 months.

The loan is pari passu with a note securitized in the GSMS 2013-GCJ13 transaction, which is not rated by DBRS Morningstar. According to the previous servicer's commentary, on the 2025 maturity date the loan will be subject to a capital event waterfall that stipulates that a minimum of $75.0 million is to be repaid to the trusts holding the pari passu debt on the property. Additional proceeds reportedly may be split between the lender and sponsor. Based on the August 2021 appraisal, the property was valued at $83.0 million, a 70.4% decline from the issuance value of $280.0 million. Although the loan modification suggests a longer-term commitment to the property by the sponsor, Morningstar DBRS believes the steep value decline from issuance and the possibility that the loan modification allows the sponsor partial recovery of equity at repayment (even if the loan balance isn't repaid in full) mean the potential of a significant loss at resolution remains high.

The final asset remaining, Marketplace Shopping Center (Prospectus ID#33; 9.6% of the pool), is a real-estate-owned anchored retail property in the St. Louis, Missouri, metropolitan area. Occupancy and cash flow continue to decline, and two of the three largest tenants have notified that they will be vacating at their respective lease expirations in early 2025. With these departures, Morningstar DBRS expects the occupancy rate will drop to approximately 40.0%. Morningstar DBRS also expects the appraised value will continue to decline. The most recent appraisal, dated November 2023, valued the property at $5.0 million, implying an LTV approaching 150.0% based on the total loan exposure.

Morningstar DBRS' credit ratings on the applicable classes address the credit risk associated with the identified financial obligations in accordance with the relevant transaction documents. Where applicable, a description of these financial obligations can be found in the transactions' respective press releases at issuance.

Morningstar DBRS' long-term credit ratings provide opinions on risk of default. Morningstar DBRS considers risk of default to be the risk that an issuer will fail to satisfy the financial obligations in accordance with the terms under which a long-term obligation has been issued. The Morningstar DBRS short-term debt rating scale provides an opinion on the risk that an issuer will not meet its short-term financial obligations in a timely manner.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS 
There were no Environmental/Social/Governance factors that had a significant or relevant effect on the credit analysis.
 
A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (August 13, 2024) at https://dbrs.morningstar.com/research/437781.

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

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

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.

Morningstar DBRS 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.

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

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://dbrs.morningstar.com/about/methodologies.

-- Morningstar DBRS North American Commercial Real Estate Property Analysis Criteria (September 19, 2024), https://dbrs.morningstar.com/research/439702

-- North American Commercial Mortgage Servicer Rankings (August 23, 2024), https://dbrs.morningstar.com/research/438283

-- North American CMBS Multi-Borrower Rating Methodology (March 1, 2024), https://dbrs.morningstar.com/research/428797

-- Legal Criteria for U.S. Structured Finance (April 15, 2024), https://dbrs.morningstar.com/research/431205

For more information on this credit or on this industry, visit https://dbrs.morningstar.com or contact us at [email protected].