Press Release|CMBS
KBRA Downgrades Three Ratings and Affirms All Other Ratings for CGCMT 2015-GC35
20 Nov 2025 | New York
KBRA downgrades the ratings of three classes of certificates and affirms all other outstanding ratings of CGCMT 2015-GC35, a $440.4 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 change in November 2024. In addition, the ratings consider the likelihood of interest shortfalls continuing and affecting classes higher in the capital structure while the servicer resolves the transaction’s specially serviced assets.
As of the November 2025 remittance period, there are six specially serviced assets (75.9% of the pool balance), of which two (22.3%) are in foreclosure and three (30.9%) are non-performing matured. KBRA identified eight K-LOCs (81.9%), including the specially serviced assets. Of the K-LOCs, five (73.1%) have estimated losses. The details of the K-LOCs are outlined below.
Paramus Park (largest, 27.2% of pool balance, Specially Serviced, Non-Performing Matured Balloon)
- The loan is collateralized by a 308,871 sf portion of a two-story, 767,928 sf regional mall located in Paramus, New Jersey, approximately 20 miles northwest of Midtown Manhattan. Macy’s is the anchor. Stew Leonard’s, a family-owned-and-operated grocery store, opened an 80,000 sf store in a portion of the former Sears space in September 2019. Neither Macy's nor the former Sears site are part of the loan collateral. Brookfield Property Partners is the sponsor.
- KBRA maintains the loan's K-LOC designation and KPO of Underperform due to its matured non-performing and specially serviced statuses. The loan transferred to the special servicer in September 2025 for maturity default when the borrower failed to pay off the loan at its scheduled maturity that month. A default notice was issued in October. Special servicer commentary indicates the borrower will attempt to cure the default. Cash management is being implemented. The servicer's annualized YTD June 2025 NCF was 61.0% below the issuer's underwritten NCF at issuance, primarily due to declining base rent.
- The most recently reported servicer-reported occupancies and DSCs are: 83.0% / 1.05x (YTD June 2025), 77.0% / 1.33x (FY 2024); at issuance these were 94.9% / 2.68x. KBRA's analysis resulted in an estimated loss of $63.0 million (52.5% estimated loss severity). The loss is based on a liquidation value of $60.5 million ($196 per sf). The value is derived from a direct capitalization approach using a KNFC of $6.7 million and a capitalization rate of 11.00%.
South Plains Mall (2nd largest, 22.7%, Specially Serviced, Current)
- The loan is collateralized by a 983,517 sf portion of a 1.1 million sf, enclosed super-regional mall located in Lubbock, Texas, approximately 330 miles west of Dallas. The mall has three anchor spaces, two of which (25.9% of collateral sf) are vacant and one of which is occupied by JCPenney (20.4%). There is also a 143,700 sf space occupied by Dillard's (non-collateral). The sponsor of the borrower is Macerich.
- KBRA maintains the loan's K-LOC designation and KPO of Underperform due to its specially serviced status and refinance risk. The loan transferred to the special servicer for imminent monetary default in October 2025 prior to maturity in November. The borrower has proposed a 36-month maturity date extension, which is under review.
- According to news reports, Dillard's vacated two anchor spaces (25.9% of collateral sf) and opened a 220,000 sf flagship store in Q4 2024 within the non-collateral box formerly vacated by Sears. Collateral occupancy was 63.8% according to the servicer's June 2025 rent roll, down from 69.5% at last review, and 96.6% at closing. Leases that generate 26.5% of total base rent will expire through 2026, inclusive of MTM leases. For the TTM period ended June 2025, comparable in-line tenants occupying less than 10,000 sf generated sales of $578 per sf, compared to $587 per sf for the TTM period ended June 2024 and $472 per sf at securitization.
- The servicer-reported occupancies and DSCs are: 80.0% / 1.75x (TTM June 2025), 77.0% / 1.86x (FY 2024); at closing these were 96.6% / 2.04x. KBRA’s analysis resulted in an estimated loss of $48.0 million (24.0% estimated loss severity) on the whole loan balance of $200.0 million. The loss is based on a KBRA liquidation value of $152.5 million ($155 per sf). The value considers a distressed non-stabilized disposition of the asset as well as comparable market values.
Illinois Center (4th largest, 12.6%, Specially Serviced, Foreclosure)
- The loan is collateralized by two adjacent LEED Silver-certified, Class-A office towers containing 2.1 million sf in aggregate, located in the East Loop submarket of Chicago, Illinois. The two 32-story towers, 111 East Wacker and 233 North Michigan Avenue, are situated on a 3.4-acre site and were originally constructed in 1969 and 1972, respectively.
- KBRA maintains the loan's K-LOC designation and KPO of Underperform because it transferred to the special servicer in April 2024 due to delinquency. The special servicer sent a notice of default in June 2024 and filed for foreclosure in November 2024. According to the March 2025 rent roll, inclusive of additional leasing updates, the property is 35.9% leased; 111 East Wacker is 54.4% leased and 223 North Michigan is 17.8% leased. The property’s former largest tenant, GSA – Department of Health (8.3% of collateral sf), and second-largest tenant, Bankers Life and Casualty (6.6% of collateral sf), vacated at their respective lease expirations in 2023. iHeartMedia + Entertainment Inc. (formerly 5.1% of collateral sf, currently 1.6% of collateral sf) reduced its footprint when it did not renew multiple leases in 2024.
- The servicer-reported occupancies and DSCs are: 36.0% / 1.18x (YTD March 2025), 37.0% / 0.64x (FY 2024); at closing these were 72.0% / 1.35x. The loan was deemed non-recoverable by the servicer in May 2025, cumulative nonrecoverable interest totals $1.5 million, and cumulative advances by the trust total $3.1 million. KBRA’s analysis resulted in an estimated loss of $185.0 million (77.2% estimated loss severity) on the whole loan balance of $239.5 million. The estimated loss is based on a KBRA liquidation value of $65.9 million ($31 per sf), which considers a protracted workout and resolution of the distressed asset.
750 Lexington Avenue (5th largest, 9.8%, Specially Serviced, Foreclosure)
- The loan is collateralized by the borrower’s fee and leasehold interests in a 31-story, 358,256 sf office property located in Midtown Manhattan. The collateral includes 22,680 sf of ground floor retail space. A portion of the property is subject to a ground lease that expires in 2041, with three 12-year renewal options remaining. The ground lease rent was previously reset in 2018 and will reset every 12 years thereafter.
- KBRA maintains the loan's K-LOC designation and KPO of Underperform due to its status with the special servicer. The loan most recently transferred to the special servicer in October 2023 due to delinquency. A foreclosure action was filed in May 2024 and summary judgment was granted in June 2025. The property’s largest tenant, WeWork, assumed and amended its lease in May 2024 through the tenant’s bankruptcy proceedings to reduce the lease term, reduce base rent, convert to a gross lease, add revenue sharing, and reduce the tenant’s guaranty. According to the March 2025 rent roll, WeWork was the property’s second-largest tenant by base rent (17.3%) and largest tenant by physical footprint (22.6% of collateral sf) with a lease expiration in February 2029. According to the March 2025 rent roll, the property was 73.1% leased.
- The servicer-reported occupancies and DSCs are: 70.0% / -0.09x (TTM March 2025), 69.0% / 0.06x (FY 2024); at closing these were 100% / 1.48x. An updated January 2025 appraisal valued the property at $41.0 million ($107 per sf), which was 86.3% below the $300.0 million ($785 per sf) appraisal value at issuance. The loan was deemed non-recoverable in March 2024, cumulative non-recoverable interest for the trust totaled $3.5 million, and cumulative advances by the trust total $1.9 million. KBRA’s analysis resulted in an estimated loss of $95.7 million (77.9% estimated loss severity) on the whole loan balance of $122.9 million. The estimated loss is based on a KBRA liquidation value of $36.9 million ($102 per sf), which considers a potentially protracted workout process for the loan.
The remaining K-LOCs account for 9.7% of the pool balance:
- Chicago Crossed Loan Group (7th largest, 3.6%, Specially Serviced, Non-Performing Matured Balloon) is collateralized by two adjacent properties west of the Chicago CBD: 700 North Sacramento Boulevard (82.5% of ALA) is a 149,585 sf office property, and 627 North Albany Avenue (17.5%) is a 67,650 sf industrial property. KBRA identified the loan as a K-LOC due to its matured non-performing and specially serviced statuses. The loans transferred to the special servicer in September 2025 for maturity default when the borrower failed to pay off the loan group at maturity in the same month. Special servicer commentary in September indicated the borrower was working to refinance the loans and had received instructions for requesting a payoff. At this time, KBRA does not estimate a loss on this $16.1 million crossed loan group.
- Cortez Plaza East (8th largest, 3.2%, Current) is collateralized by a 176,164 sf retail center in Bradenton, Florida, approximately 35 miles south of Tampa. KBRA maintains the loan’s K-LOC designation due to its recent status with the special servicer and recent loan modification. According to servicer commentary, the loan’s performance was negatively impacted by higher operating expenses, in part related to a sinkhole that formed on the property in 2018. The loan was transferred to the special servicer in June 2018 due to payment default. It was accelerated in July, and a receiver was appointed in August 2018. Following a receiver sale in November 2021, the loan was modified and assumed by the purchaser. Per the terms of the loan modification, the loan's maturity date was extended through July 2025 with an additional one-year extension option available. The borrower used its extension option, moving final maturity to July 2026. The DSC has been below breakeven since 2016, primarily due to elevated repairs and maintenance expenses. The servicer reported occupancy was 91.0% as of June 2025, compared to 92.0% as of December 2024 and 90.0% at closing. At this time, KBRA does not estimate a loss on this $13.9 million loan.
- 411 East Franklin Street (9th largest, 2.1%, Performing Matured Balloon) is collateralized by a 140,040 sf office building located in Richmond, Virginia, within the city’s CBD. KBRA identified the loan as a K-LOC due to its default at maturity in October 2025. Watchlist commentary indicates the borrower has requested a forbearance. A cash trap was activated as the largest tenant, Hourigan Construction (32.5% of total base rents, 27.5% of collateral sf), failed to renew its lease by January 2025. The Hourigan Construction lease was subsequently extended until January 2029. At this time, KBRA does not estimate a loss on this $9.1 million loan.
- Rite Aid Allentown (10th largest, 0.8%, Delinquent) is collateralized by a 13,824 sf single-tenant retail store located in Allentown, Pennsylvania. KBRA maintains the loan’s K-LOC designation as the borrower failed to pay off the loan at its November 2025 maturity and it became 30 days delinquent. The former sole tenant, Rite Aid, filed for bankruptcy in October 2023 and vacated in December 2024. A cash trap is active due to a below threshold DSC and the vacancy created by Rite Aid. The property operated at a cash flow deficit during the YTD September 2025 and FY 2024. As of November 2025, the loan is 30 days delinquent but not specially serviced. However, in the event of a default, KBRA estimates that the loan could experience a loss given default of $2.0 million (65.3% estimated loss severity) on the outstanding balance of $3.4 million.
Details concerning the classes with ratings changes are as follows:
- Class B to BBB- (sf) from A- (sf)
- Class C to B- (sf) from BB- (sf)
- Class PEZ to B- (sf) from BB- (sf)
Details concerning the ratings affirmations are as follows:
- Class A-4 at AAA (sf)
- Class A-S at AAA (sf)
- Class D at CCC (sf)
- Class E at CC (sf)
- Class F at C (sf)
- Class G at C (sf)
- Class X-A at AAA (sf)
- Class X-B at AAA (sf)
- Class X-D at CCC (sf)
Rating Sensitivities
Future rating actions will be dependent upon the ongoing assessment of the timing and likelihood of ultimate payment of principal and accrued interest on the rated certificates. The assessment will consider the expected and actual losses on the remaining assets in the transaction, as well as, the magnitude and extent of interest shortfalls, if any, on the certificates.
To access ratings and relevant documents, click here.