Goldman Sachs is lead manager on the $306.32 million single-loan CMBS transaction called GSMS 2014-NEW that is backed 25 independent living facilities.

The capital structure includes four tranches rated ‘AAA’/ ‘AAA’ respectively by Kroll Bond Ratings and Morningstar.

The class B notes are rated ‘AA’/ ‘AA’ and  the class C notes are rated ‘A’/ ‘A’.  The class D notes are rated ‘BBB-’/ ‘BBB+’ and the class E notes are rated ‘BB-’/ ‘BB+’ respectively by KBRA and Morningstar.

GS Commercial Real Estate LP originated the 7-year fixed rated loan in December 2013. The CMBS pool also includes $49.51 million of mezzanine financing, according to the presale reports.

The 25 independent living facilities backing the deal are located in 17 states. Florida, New York, Texas and Colorado represent more than 10.0% of the portfolio balance by allocated loan amount. 

Newcastle Investment Corp. (Newcastle), a public real estate investment trust (REIT) managed by FIG LLC, a subsidiary of Fortress Investment Group LLC is the loan sponsor.  NCT focuses on investing in and managing senior housing real estate assets. The firm has invested over $500 million of equity capital in the senior housing sector, including investments, which have been made over the past 20 months in Holiday Retirement Corporation and Brookdale Senior Living.

KBRA noted that the in-trust loan-to-value (KLTV) is 85.3%, which high compared to other single borrower CMBS securitizations. Higher leverage levels increase default risk, and generally result in higher loss, according to the presale.  

Independent living facilities are age-restricted multi-family rental properties with central dining facilities that provide residents with access to meals and other services such as housekeeping, linen service, transportation, and social and recreational activities as part of their monthly fee.

KBRA said in the presale that typically there is more cashflow volatility associated with Senior housing properties than traditional multifamily housing, because the flow depends on ancillary income, which can fluctuate overtime. However GSMS 2014-NEW is less dependent on ancillary income and their revenue stream is not dependent on healthcare reimbursements from Medicare and Medicaid programs, which are facing increasing budgetary constraints.  

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