Fitch Affirms CGCMT 2014-GC23
KEY RATING DRIVERS
The affirmations reflect the transaction's stable performance since issuance. As of the June 2015 distribution date, the pool's aggregate principal balance has been reduced by 0.4% to $1.451 billion from $1.457 billion at issuance. No loans are defeased and no classes are experiencing interest shortfalls. Eighty-eight percent of the loans by balance reported year-end 2014 financials.
There are seven loans on the servicer watchlist, two of which are considered Fitch Loans of Concern. The two loans (1% and 0.4% of the pool) both had large tenants exercise termination options. In both cases the termination notice triggered a springing lockbox. Fitch will continue to monitor the loans.
The largest loan in the pool is 28-40 West 23rd Street (11.4% of the pool) is a 571,205-sf mixed-use office and retail building located in the Flatiron District of Manhattan. The property includes 452,705 sf of office space and 118,500 sf of retail space fully occupied by Home Depot (rated A- by Fitch) through 2024. The largest office tenant is AppNexus (38.4% of NRA). The debt service coverage ratio (DSCR) was reported to be 3.12x as of year-end (YE) 2014. Occupancy was reported to be 100%, which is an improvement from 87.1% at issuance.
The next largest loan in the pool is the Selig Portfolio loan (7.9%). The loan is secured by seven office buildings comprising approximately 1.1 million sf located in and around the central business district (CBD) of Seattle, WA. The portfolio is approximately 91% leased, and the properties were developed by the sponsor, Martin Selig, between 1970 and 2008. The portfolio also secures a $100 million pari passu piece securitized in GSMS 2014-GC22 .
The third largest loan in the pool is the Hyatt NYC Portfolio loan (7.3%), which is secured by s secured by two recently built midtown Manhattan properties: the 122-room Hyatt Herald Square, which opened in January 2012, and the 185-unit Hyatt Place Midtown South, which opened in March 2013. The sponsor, Chesapeake Lodging, rebranded the Hyatt Herald Square from a Holiday Inn. The portfolio DSCR was reported to be 2.39x as of YE 2014. Occupancy was reported to be 96%, which is in line with the occupancy at issuance.
RATING SENSITIVITIES
The Rating Outlook for all classes remains Stable due to stable collateral performance. Fitch does not foresee positive or negative ratings migration until a material economic or asset-level event changes the transaction's portfolio-level metrics.
DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in relation to this rating action.
Fitch has affirmed the following ratings:
--$44 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;
--$952.3 million* class X-A at 'AAAsf'; Outlook Stable;
--$129.4 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;
--$224.9 million class PEZ at 'A-sf'; Outlook Stable;
--$49.3 million class C 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;
--$24.7 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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