Fitch Ratings announced downgrades impacting eight classes of commercial-mortgage pass-through certificates. The ratings actions are driven by performances on loans extended to two regional mall loans, an office building in Chicago, a retail property in Manhattan’s Chelsea neighborhood, and a retail property in Port Chester, N.Y.
Six classes of pass-through certificates in the GS Mortgage Securities Trust, 2013-GC13 were downgraded, reflecting increased loss expectations on the pool related to specialty-serviced loans on two regional malls.
Fitch said the pool had a substantial concentration of loans of concern, about 34.5%, in the pool, as well as four specially serviced loans, representing 27.6% of the pool.
Two retail property loans, both sponsored by Brookfield Properties, account for the largest contributors to Fitch’s base case losses on the collateral pool. The loan on the 670,376-square-foot portion of a 1 million-square-foot Mall at St. Matthews, representing 11.7% of the pool, is the largest contributor to loss expectations, Fitch said.
While the property was 92% leased as of the September 2021 rent rolls, it was transferred to special servicing in June 2020, after it failed to pay off after its maturity date. Brookfield Properties sponsored the transaction, according to Fitch.
The next largest contributor to expected losses is the specially serviced Crossroads Center, accounting for 7.9% of the collateral pool. The borrower is unwilling to inject additional funds into the loan, but is willing to manage the property, according to Fitch.
Fitch also downgraded one class on the COMM 2013-CCRE13 Mortgage Trust. A 22-story, 1.45 million-square-foot office building at 175 West Jackson Boulevard in downtown Chicago, accounting for 10.4% of the pool, is the largest contributor to overall losses.
An occupancy level languishing below 70% since 2018 continues to challenge the property. The office building had a 65% occupancy level as of September 2021, up slightly from 63% at yearend 2020, 67% at 2019 and 61% at yearend 2018.
The next largest contributor to losses is a loan on a 16,225-square-foot retail property at 525 West 22nd Street, in Manhattan’s Chelsea neighborhood. It had recently lost a tenant, Danese Gallery, which sank its occupancy level to 41.5%. Existing tenant Ameringer Yohe expanded into the vacant space, recovering its occupancy somewhat, to 68% as of June 2021, Fitch said.
Fitch also announced that it has downgraded the class F on the Morgan Stanley Bank of America Merrill Lynch Trust (MSBAM) 2015-C22, noting higher losses on the specially serviced Hilton Houston Westchase loan, which defaulted in March 2020.
The Westchase loan accounts for 4.3% of the collateral pool, and is secured by a 297-key, full-service hotel located in Houston’s energy corridor. The Westchase loan defaulted after being beset by lower oil and gas prices and oversupply in the Houston housing market. The economic impact of the coronavirus pandemic exacerbated matters, Fitch said. The borrower had been granted forbearance from April to July 2020, but had been unable to reach terms on a long-term modification afterward.
The downgrades were not the only actions on the deals. Fitch affirmed ratings on seven classes of notes on the GS Mortgage Securities Trust deal; 10 classes on the COMM 2013-CCRE13; and 12 classes on the MSBAM transaction.
