DBRS Morningstar Confirms All Classes of GS Mortgage Securities Trust 2013-GCJ16, Changes Trends on Three Classes to Stable

DBRS, Inc. (DBRS Morningstar) confirmed the following ratings of the Commercial Mortgage Pass-Through Certificates, Series 2013-GCJ16 issued by GS Mortgage Securities Trust 2013-GCJ16 (the Issuer):

-- Class A-3 at AAA (sf)
-- Class A-4 at AAA (sf)
-- Class A-AB at AAA (sf)
-- Class A-S at AAA (sf)
-- Class X-A at AAA (sf)
-- Class X-B at AAA (sf)
-- Class B at AA (high) (sf)
-- Class PEZ at A (high) (sf)
-- Class C at A (high) (sf)
-- Class X-C at B (sf)
-- Class D at BBB (high) (sf)
-- Class F at BB (low) (sf)
-- Class G at B (low) (sf)

DBRS Morningstar changed the trends on Classes F, G, and X-C to Stable from Negative. All other trends remain Stable, which reflects improving credit metrics in the pool, most notably the return of four specially serviced loans back to the master servicer, and the overall stable performance of the underlying collateral in the pool.

As of the December 2021 remittance, 62 loans remain in the pool with a pool balance of $748.7 million, a collateral reduction of 31.1% from $1.1 billion at issuance as a result of loan amortization and the payoff of 15 loans. There is a high concentration of retail properties, representing more than 40.0% of the pool balance. Twenty-five loans, representing 29.1% of the pool, have been fully defeased. There have been no losses to the trust to date. There are 11 loans, representing 37.2% of the pool on the servicer’s watchlist. These loans are being monitored for various reasons, including transfer from special servicing, low debt service coverage ratio (DSCR) or occupancy, tenant rollover risk, and/or pandemic-related forbearance requests. Two loans, representing 2.13% of the pool, are specially serviced. Since DBRS Morningstar’s last review, four loans, representing 10.1% of the pool were transferred back to the master servicer after modifications were approved and/or the loans were brought current, including the previous largest specially serviced loan, the Walpole Shopping Mall (5.8% of the pool).

The largest loan, Miracle Mile Shops (Prospectus ID#2, 8.9% of the pool balance), remains on the servicer’s watchlist for cash flow concerns. The loan is pari passu with another loan and is secured by a 450,000-square-foot retail center on Las Vegas Boulevard. The property performed well pre-pandemic as net cash flow was up 12.2% from issuance levels while occupancy remained strong at 98% in 2019. However, because the Las Vegas economy highly depends on the tourism industry, foot traffic and in turn cash flow were severely disrupted because of the strict travel limitations in place throughout much of the 2020 Coronavirus Disease (COVID-19) pandemic. While the loan remained current, YE2020 net cash flow decreased by 27.3% since issuance. Furthermore, occupancy decreased to 89% as of September 2021 from 98% at issuance. The loan received a forbearance in July 2020 that included interest-only (IO) payments from August 2020 through February 2021, with principal and reserve payments being deferred.

The second-largest loan on the watchlist is the Windsor Court New Orleans loan (Prospectus ID#1, 8.5% of the pool balance) that is secured by a 316-key full-service luxury hotel that is well located in the Riverside/Convention Center submarket of New Orleans. The property is the only hotel in New Orleans to be awarded the AAA Four-Diamond Award and the Forbes Four Star Award. The loan remains on the servicer’s watchlist for low DSCR. The loan received a forbearance in April 2020, which allowed the use of furniture, fixtures, and equipment (FF&E) reserves to make principal and interest payments from October to December 2020 and deferred the monthly FF&E deposit for six months with a payback period from April through September 2021. The forbearance also included a DSCR trigger waiver from April to June 2021 and approved a $2.5 million Paycheck Protection Program loan.

Cash flow for the trailing 12 months (T-12) ended September 2021 was positive after falling negative in 2020 but remains well below the Issuer’s underwritten net cash flow of $3.8 million. Occupancy was 36.0% in September 2021, 36.0% in December 2020, and 72.0% at issuance. As of the T-12 ended September 2021 STR report, the hotel outperformed its competitive set with a revenue per available room penetration rate of 192.4%, suggesting the property is well positioned for recovery. While cash flow and occupancy have yet to reach pre-pandemic levels, the positive metrics from the STR report and the fact that the loan avoided special servicing throughout the pandemic suggests a recovery is likely.

At issuance, DBRS Morningstar assigned investment-grade shadow ratings to The Gates at Manhasset (Prospectus ID#4, 6.8% of the pool). DBRS Morningstar has confirmed that the performance of this loan remains consistent with the investment-grade loan characteristics.

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/373262.

Classes X-A, X-B, and X-C are IO certificates that reference a single rated tranche or multiple rated tranches. The IO rating mirrors the lowest-rated applicable reference obligation tranche adjusted upward by one notch if senior in the waterfall.

All ratings are subject to surveillance, which could result in ratings being upgraded, downgraded, placed under review, confirmed, or discontinued by DBRS Morningstar.

DBRS Morningstar provides updated analysis and in-depth commentary in the DBRS Viewpoint platform for the following loan in the transaction:

-- Prospectus ID#1 – Windsor Court New Orleans (8.5% of the pool)

For complimentary access to this content, please register for the DBRS Viewpoint platform at www.viewpoint.dbrsmorningstar.com. The platform includes issuer and servicer data for most outstanding CMBS transactions (including non-DBRS Morningstar rated), as well as loan-level and transaction-level commentary for most DBRS Morningstar-rated and -monitored transactions.

Notes:
All figures are in U.S dollars unless otherwise noted.

The principal methodology North American CMBS Surveillance Methodology (March 26, 2021), which can be found on dbrsmorningstar.com under Methodologies & Criteria. For a list of the structured-finance-related methodologies that may be used during the rating process, please see the DBRS Morningstar Global Structured Finance Related Methodologies document, which can be found on dbrsmorningstar.com in the Commentary tab under Regulatory Affairs. Please note that not every related methodology listed under a principal structured finance asset class methodology may be used to rate or monitor an individual structured finance or debt obligation.

The DBRS Morningstar Sovereign group releases baseline macroeconomic scenarios for rated sovereigns. DBRS Morningstar analysis considered impacts consistent with the baseline scenarios as set forth in the following report: https://www.dbrsmorningstar.com/research/384482/baseline-macroeconomic-scenarios-application-to-credit-ratings.

The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the rating process.

For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at info@dbrsmorningstar.com.

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