KBRA Downgrades Three Ratings and Affirms All Other Ratings for GSMS 2014-GC26
10 Jul 2024 | New York
KBRA downgrades the ratings of three classes of certificates and affirms all other outstanding ratings for GSMS 2014-GC26, an $835.7 million CMBS conduit transaction. The rating actions follow a surveillance review of the transaction, which has exhibited an increase in estimated losses since KBRA’s last ratings adjustments in July 2023. However, the transaction, particularly the top of the capital structure, has benefitted from deleveraging from loan payoffs, amortization, and defeasances. The rating actions also consider the likelihood that interest shortfalls could reach higher in the capital stack as K-LOCs reaching maturity in the near term are unable to pay off.
As of the June 2024 remittance period, there is one specially serviced asset (9.8% of the pool balance), which is REO. KBRA identified 12 K-LOCs (39.0%), including the specially serviced asset. Of the K-LOCs, four (30.4%) have estimated losses. The K-LOCs include:
Six top 10 assets (33.8%):
- Queen Ka'ahumanu Center (largest, 9.8% of the pool balance, REO, 88.1% estimated loss severity)
- 1201 North Market Street (2nd largest, 9.0%, 34.1%)
- 5599 San Felipe (3rd largest, 8.8%, 40.1%)
- Bank of America Plaza (5th largest, 2.8%, 35.4%)
- Overlook I (8th largest, 1.7%)
- Arlington Plaza (10th largest, 1.6%)
The remaining six K-LOCs do not have estimated losses and represent 5.2% of the pool balance.
Excluding the K-LOCs with estimated losses, the transaction’s WA KLTV is 88.7%, compared to 97.4% at last review and 102.7% at issuance. The KDSC is 1.28x, compared to 1.38x at last review and 1.55x at issuance.
Details concerning the classes with rating changes are as follows:
- Class B to A (sf) from AA (sf)
- Class PEZ to BB (sf) from BBB (sf)
- Class C to BB (sf) from BBB (sf)
To access rating and relevant documents, click here.
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