KBRA Affirms All Outstanding Ratings for GSMS 2012-GCJ9
21 Mar 2025 | New York
KBRA affirms all outstanding ratings for GSMS 2012-GCJ9, a $116.8 million CMBS conduit transaction. The affirmations follow a surveillance review of the transaction and are based on the performance and expected recovery of the transaction's remaining two loans, which have not meaningfully changed since KBRA's last ratings change in March 2024.
As of the February 2025 remittance period, there are two loans in the transaction, the largest of which is Jamaica Center (54.0% of pool balance), which is in foreclosure and for which interest was deemed non-recoverable in December 2023. The second loan is Gansevoort Park Avenue (46.0%), which was modified a second time, extending its maturity to December 2025. The non-recoverable determination for Jamaica Center has resulted in interest shortfalls affecting all remaining classes of the transaction. The details of both loans are outlined below.
Jamaica Center (largest, 54.0%, K-LOC, Specially Serviced, Foreclosure, Non-Performing Matured Balloon)
- The loan is collateralized by a 215,806 sf, three-story, mixed-use complex located in Queens, New York. The property combines office, retail, theater, and parking uses. The City of New York serves as an equity partner in the property through a 99-year ground lease structure which allows the city the right to participate in cash flows derived from the property.
- KBRA maintains the loan's K-LOC designation based on its foreclosure status and its maturity default in November 2022. The loan was initially transferred to the special servicer in August 2020 due to the impact of COVID-19 and continuing delinquency. The special servicer is exclusively pursuing foreclosure and litigation remains ongoing. In addition, National Amusements, which operated a 15-screen movie theatre and accounted for 8.0% of total base rent at last review and 83,000 sf (38.7% of total sf), has vacated at its scheduled lease expiration April 2024. As a result, occupancy has declined to below 65.0%.
- KBRA's analysis resulted in an estimated loss of $15.6 million (24.7% estimated loss severity) on the $63.1 million loan balance. The loss is based on a KBRA liquidation value of $51.2 million ($237 per sf). The value considers a distressed non-stabilized disposition of the asset as well as the value derived from a direct capitalization approach using a KNCF of $2.9 million and a capitalization rate of 9.30%.
Gansevoort Park Avenue (2nd largest, 46.0%, K-LOC, Specially Serviced, Performing Matured Balloon)
- The loan is collateralized by a 19-story, 249-key, luxury boutique hotel located in the Gramercy Park/Flatiron neighborhood of Manhattan in New York City.
- KBRA maintains the loan’s K-LOC designation following its transfer to the special servicer in June 2024, after the borrower failed to repay the loan by its extended maturity date. In July 2021, the special servicer approved a loan modification, extending the loan’s term by two years to June 2024. Since 2014, the property’s performance has steadily declined, a trend further exacerbated by the COVID-19 pandemic. The poor performance is primarily driven by a decrease in food and beverage revenue and rising real estate taxes. An additional modification was executed, which granted an 18-month forbearance period beginning in June 2024, effectively extending the loan to December 2025. The loan will remain with the special servicer until it is fully repaid.
- Additionally, an ownership transfer occurred in December 2017, at which time the collateral was valued at approximately $200.0 million ($803,212 per key). In conjunction with the permitted transfer, an entity affiliated with the sponsor at issuance retained an equity stake, a new joint venture of GreenOak Real Estate and Highgate purchased an equity stake, the $20.0 million mezzanine loan was paid off, and the hotel was re-branded as Royalton Park Avenue.
- The servicer-reported occupancies and DSCs are: 77.0% / 0.50x (FY 2023), 65.0% / 0.41x (FY 2022); at closing, these were 84.0% and 1.77x. An appraisal dated July 2024 valued the asset at $118.0 million ($473,896 per key), representing a 20.2% increase from its value in June 2021 ($98.2 million; $394,378 per key), and a 57.6% decrease from the $278.0 million ($1.1 million per key) value at issuance. KBRA's analysis resulted in an estimated loss of $51.9 million (44.8% estimated loss severity) on the whole loan balance of $115.7 million. The loss is based on a KBRA liquidation value of $68.2 million ($273,801 per key). The value considers a distressed non-stabilized disposition of the asset as well as the value derived from a direct capitalization approach using a KNCF of $4.6 million and a capitalization rate of 10.50%.
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 continuing magnitude and extent of interest shortfalls on the certificates.
To access ratings and relevant documents, click here.
Related Publication
Methodologies
- Structured Finance: Global Structured Finance Counterparty Methodology
- CMBS: Methodology for Rating Interest-Only Certificates in CMBS Transactions
- CMBS: North American CMBS Property Evaluation Methodology
- CMBS: North American CMBS Single Borrower & Large Loan Rating Methodology
- ESG Global Rating Methodology