KBRA Withdraws Three Ratings and Affirms All Other Ratings for GSMS 2016-GS2
8 May 2026 | New York
KBRA withdraws three ratings and affirms all other outstanding ratings for GSMS 2016-GS2, a CMBS conduit transaction. The withdrawal of the ratings on three interest-only certificates is in accordance with KBRA's Methodology for Rating Interest-Only Certificates, as there are 10 loans remaining in the pool. The transaction has been reduced to 10 loans with an aggregate balance of $292.7 million from 37 loans totaling $750.6 million at securitization. The affirmations follow a surveillance review of the transaction, which has exhibited an increase in KBRA's estimated losses; however, the magnitude of the estimated losses does not warrant rating adjustments at this time. The affirmations are also based on the performance and expected recovery of the transaction's 10 remaining loans.
Nine (80.0% of pool balance) of the 10 loans have been identified as K-LOCs. The third-largest loan, Cedarbrook Plaza ($58.5 million, 20.0%, Current), is performing and matures in May 2025. The master servicer indicates the borrower is pursuing a refinance, with no expected delays in repayment.
As of the April 2026 remittance period, all of the K-LOCs (80.0%) are specially serviced, of which nine (78.9%) are matured non-performing and one (1.1%) is in foreclosure. The details of these assets are outlined below.
Twenty Ninth Street Retail ($75.0 million, 25.6%, K-LOC, Specially Serviced, Matured Non-Performing)
- Twenty Ninth Street Retail is collateralized by the fee simple and leasehold interests in 704,713 sf of an 854,994 sf regional lifestyle center located in Boulder, Colorado, approximately 29 miles northwest of the Denver CBD. The development consists of 22 single- and two-story buildings with 718,542 sf of retail space and 136,452 sf of office space. Macy’s which owns its improvements and underlying land is not part of the subject loan’s collateral.
- The loan transferred to the special servicer in February 2026 due to imminent maturity default and subsequently failed to pay off. According to the June 2025 rent roll, the property was 91.3% leased compared to 91.5% at last review and 99.0% at issuance. The current KNCF is 39.9% below KNCF at securitization primarily driven by declining base rent and increased expenses. The servicer reported FY 2024 NCF of $10.1 million has declined 42.1% from the issuer's underwritten NCF of $17.4 million.
- KBRA's analysis resulted in an estimated loss of $6.9 million (5.3% estimated loss severity) on the whole loan balance of $150.0 million, of which $1.8 million of the estimated loss is allocated to this trust. The loss is based on a KBRA liquidation value of $143.1 million ($171 per sf) and projected total exposure of $151.0 million. The value considers a distressed non-stabilized disposition of the asset.
Panorama Corporate Center ($74.5 million, 25.5%, K-LOC, Specially Serviced, Matured Non-Performing)
- The loan is collateralized by a 780,648 sf, Class-A office complex located in Centennial, Colorado, approximately 15 miles southeast of the Denver CBD.
- The loan transferred to the special servicer in February 2026 due to maturity default. According to the January 2026 rent roll, the property’s occupancy declined to 78.1% from 93.1% at closing following the 2025 lease expiration of Travelport (formerly 15.0% of base rent) and downsizing by Comcast from 376,016 sf to 308,999 sf. Base rent also declined as United Launch Alliance (33.5% of current base rent) renewed at a rate 35.4% below its prior lease. The servicer reported an occupancy and DSC of 98% and 2.57x for the YTD June 2025 period.
- KBRA's analysis resulted in an estimated loss of $10.5 million (14.1% estimated loss severity). The loss is based on a KBRA liquidation value of $115.2 million ($107 per sf) and projected total exposure of $134 million. The value is derived from a direct capitalization approach using a KNCF of $10.4 million and a capitalization rate of 9.00%.
The remaining seven K-LOCs account for 28.9% of the pool balance and are collateralized by one to three tenant buildings with long term leases. However, the 18th Ave, Beverley Road, Stillwell Avenue, and Church Avenue loans have leases with early termination options starting in 2028, 2027, 2030, and 2032, respectively. Two of the K-LOCs (7.3%) have estimated losses:
86 Street ($18.1 million, 6.2%, K-LOC, Specially Serviced, Matured Non-Performing)
- The loan is collateralized by an 11,800 sf, retail property located in the Bensonhurst neighborhood of New York City’s borough of Brooklyn, approximately 11 miles south of Midtown Manhattan.
- The property's largest tenant, Walgreens (76.0% of GLA), went dark in 2019 but remains current on lease payments. Walgreens' lease is scheduled to expire in 2049; however, the lease includes early termination options beginning in 2029. KBRA's analysis resulted in an estimated loss of $2.8 million (15.3% estimated loss severity). The loss is based on a KBRA liquidation value of $16.6 million ($1407 per sf) and projected total exposure of $19.4 million. The value considers a distressed non-stabilized disposition of the asset.
Rite Aid Ashland ($3.2 million, 1.1%, K-LOC, Specially Serviced, Foreclosure)
- The loan is collateralized by an 11,157 sf, single tenant retail property located in Ashland, Ohio.
- The property has been fully vacant since sole tenant Rite Aid vacated in 2025 following its second bankruptcy filing. An updated appraisal dated February 2026 valued the property at $1.3 million ($112 per sf), which represents a 76.5% decline from the $5.3 million ($476 per sf) value at issuance. The asset carries an aggregate ARA of $2.2 million on the whole loan balance, resulting in a cumulative ASER of $15,886. KBRA's analysis resulted in an estimated loss of $2.1 million (64.4% estimated loss severity). The loss is based on a KBRA liquidation value of $1.3 million ($112 per sf), which is equal to the appraisal value, and projected total exposure of $3.3 million.
Details concerning the rating affirmations are as follows:
- Class A-4 at AAA (sf)
- Class A-S at AAA (sf)
- Class B at AA (sf)
- Class C at A- (sf)
- Class PEZ at A- (sf)
- Class D at BBB- (sf)
- Class E at BB- (sf)
- Class F at B- (sf)
Details concerning the withdrawn ratings are as follows:
- Class X-A from AAA (sf) to WR (sf)
- Class X-B from AAA (sf) to WR (sf)
- Class X-D from BBB- (sf) to WR (sf)
Ratings 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.