Fitch Affirms CGCMT 2014-GC23
KEY RATING DRIVERS
The affirmations are due to overall stable performance. This stable performance reflects no material changes to pool metrics since issuance, therefore the original rating analysis was considered in affirming the transaction. As of the June 2016 distribution date, the pool's aggregate principal balance has been reduced by 1.2% to $1.22 billion from $1.23 billion at issuance. No loans are defeased. Fitch has designated three loans (5.1%) as Fitch Loans of Concern, which does not include any specially serviced loans. Interest shortfalls are currently affecting class G.
The largest loan in the pool is the 28-40 West 23rd Street loan (11.5%), secured by a 571,205 square foot (sf) mixed-use property located in the Chelsea neighborhood of Manhattan. The subject includes 452,705 sf of office space and 118,500 sf of retail space, which is fully occupied by Home Depot (rated 'A' by Fitch). The servicer reported net operating income (NOI) debt service coverage ratio (DSCR) increased to 3.95x as of year-end (YE) 2015 from 3.05x as of YE 2014. Occupancy at the property has been 100% since issuance.
The largest Fitch Loan of Concern is the NorthCross Shopping Center loan (3.2%), secured by a shopping center located in Huntersville, NC. The subject is 498,465 sf (382,829 sf of collateral) and is anchored by Lowe's, Harris Teeter, and Kohl's (rated 'BBB' by Fitch). While occupancy has held steady at 99% since issuance, the property has a high percentage (47% of NRA) of leases rolling in the next two years. Fitch will continue to monitor the loan for leasing updates.
The next largest Fitch Loan of Concern (1.0%) is secured by a portfolio of two multifamily properties located in Houston, TX. According to the master servicer, occupancy has dropped 18% since issuance at one of the two properties as a result of several major deferred maintenance issues. The drop in occupancy caused the portfolio to underperform and fail DSCR tests administered by the master servicer. Failure of the DSCR tests have led to the property currently being cash managed. Fitch will continue to monitor the loan for further declines in performance and updates on repairs.
RATING SENSITIVITIES
The Rating Outlooks on all classes remain Stable. Fitch does not foresee positive or negative ratings migration until a material economic or asset level event changes the transaction's overall portfolio-level metrics.
DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in relation to this rating action.
Fitch affirms the following classes as indicated:
--$35.2 million class A-1 at 'AAAsf'; Outlook Stable;
--$85.8 million class A-2 at 'AAAsf'; Outlook Stable;
--$300 million class A-3 at 'AAAsf'; Outlook Stable;
--$345.2 million class A-4 at 'AAAsf'; Outlook Stable;
--$81.8 million class A-AB at 'AAAsf'; Outlook Stable;
--$943.5 million* class X-A at 'AAAsf'; Outlook Stable;
--$129.3 million* class X-B at 'A-sf'; Outlook Stable
--$95.5 million class A-S at 'AAAsf'; Outlook Stable;
--$80.1 million class B at 'AAsf'; Outlook Stable;
--$49.3 million class C at 'A-sf'; Outlook Stable;
--$224.8 million class PEZ at 'A-sf'; Outlook Stable;
--$24.6 million* class X-C at 'BB-sf'; Outlook Stable;
--$64.7 million class D at 'BBB-sf'; Outlook Stable;
--$24.6 million class E at 'BB-sf'; Outlook Stable;
--$9.2 million class F at 'B-sf'; Outlook Stable.
*Notional and interest-only.
Fitch does not rate the class G or X-D certificates. The class A-S, class B and class C certificates may be exchanged for class PEZ certificates, and class PEZ certificates may be exchanged for the class A-S, class B and class C certificates.
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