Fitch Affirms CGCMT 2012-GC8

CHICAGO--(BUSINESS WIRE)-- Fitch Ratings has affirmed 12 classes of Citigroup Commercial Mortgage Trust 2012-GC8 commercial mortgage pass-through certificates. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The affirmations are based on generally stable performance of the underlying collateral pool. As of the July 2016 distribution date, the pool's aggregate principal balance has been reduced by 4.6% to $0.99 billion from $1.04 billion at issuance. Full year 2015 financials were available for all of the remaining loans in the pool. The pool has no realized losses to date. Historically one loan (0.7% of balance) has been delinquent but has since become current. There is $12,854 of interest shortfalls currently affecting class G.

There was one variance from the surveillance criteria related to class C. The surveillance criteria indicated that rating upgrades were possible for class C. However, Fitch determined that upgrades are not warranted as an upgrade may result in rating volatility as Fitch has noted deterioration in financial performance among several loans in the top 15.

The largest loan of the pool (10.9%) is the Miami Center, which is secured by a 786,836 square foot (sf), Class A office tower located on Biscayne Bay in downtown Miami. The property, the second largest office building in the state of Florida, is 35-stories and includes an attached nine-story parking garage with 918 spaces. The servicer-reported occupancy as of first-quarter 2016 was 73.6% compared to 86.3% as of first-quarter of 2015. Decreased occupancy is the result of one of the largest tenants in the building, Shutts & Bowen (8.6% NRA), vacating at their lease expiration. According to the servicer, two additional tenants, BNP Paribas (3.5% NRA) and Kenny Nachwalter, P.A. (2.9% NRA), have also vacated since first quarter of 2016. This loan is on the servicer watch list as the March 2016 YTD NOI DSCR of 1.07x is less than 1.10x.

The second largest loan, 222 Broadway (10.1%), is secured by a 786,552 sf office tower located in Manhattan's Financial District. Occupancy has increased from 79.1% at issuance to 97.5% as of first quarter 2016. YE 2015 NOI DSCR was 2.62x, which compares favorably with YE 2014 DSCR of 1.16x. The low DSCR from 2014 was primarily due to rent abatements, which have since expired.

Notably, the fourth largest loan in the pool, Pinnacle at Westchase (7.6%), is at risk for higher vacancy as a result of the relocation of the second largest tenant to a newly constructed headquarters nearby. The tenant, Phillips 66 (44.7% NRA), has a lease that expires at the end of July in 2019, but is actively seeking to sublease its space beginning in August of 2016, which coincides with the completion of their new headquarters. The other tenant, Frontica Business Solutions (53.1% of NRA), recently exercised a contraction option and will vacate the third floor (11.4% of NRA) in November 2016. The parent companies of both tenants are oil and gas related. This asset will be closely monitored for any changes in leasing status, which could materially impact this loan.

RATING SENSITIVITIES

The Rating Outlook remains Stable for the rated classes. Further upgrades may occur with improved pool performance and significant paydown or defeasance. Downgrades to the classes are possible should overall pool performance decline. Downgrades may occur or Negative Outlooks may be assigned depending on the uncertainty surrounding the Pinnacle at Westchase loan.

USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G-10

No third party due diligence was provided or reviewed in relation to this rating action.

Fitch has affirmed the following classes:

--$10.7 million class A-1 at 'AAAsf'; Outlook Stable;

--$181.6 million class A-2 at 'AAAsf'; Outlook Stable;

--$27.7 million class A-3 at 'AAAsf'; Outlook Stable;

--$379.6 million class A-4 at 'AAAsf'; Outlook Stable;

--$80.3 million class A-AB at 'AAAsf'; Outlook Stable;

--$93.6 million class A-S at 'AAAsf'; Outlook Stable;

--$61.1 million class B at 'AA-sf'; Outlook Stable;

--$39 million class C at 'A-sf'; Outlook Stable;

--$45.5 million class D at 'BBB-sf'; Outlook Stable;

--$19.5 million class E at 'BBsf'; Outlook Stable;

--$19.5 million class F at 'Bsf'; Outlook Stable;

--$773.5 million* class X-A at 'AAAsf'; Outlook Stable.

Fitch does not rate the class G and X-B certificates.

*Notional and interest only.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria

Counterparty Criteria for Structured Finance and Covered Bonds (pub. 18 Jul 2016)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=884963

Criteria for Rating Caps and Limitations in Global Structured Finance Transactions (pub. 16 Jun 2016)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=882401

Global Structured Finance Rating Criteria (pub. 27 Jun 2016)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=883130

U.S. and Canadian Fixed-Rate Multiborrower CMBS Surveillance and U.S. Re-REMIC Criteria (pub. 13 Nov 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=873395

Related Research

CGCMT Commercial Mortgage Trust 2012-GC8 -- Appendix

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=708957

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1010279

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1010279

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

View source version on businesswire.com: http://www.businesswire.com/news/home/20160811006079/en/

Fitch Ratings
Primary Analyst
Robert Buckley
Analyst
+1-312-368-5447
Fitch Ratings, Inc.
70 West Madison St.
Chicago, IL 60602
or
Committee Chairperson
Mary MacNeill
Managing Director
+1-212-908-0785
or
Media Relations
Sandro Scenga
+1-212-908-0278
New York
[email protected]

Source: Fitch Ratings

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