Fitch Upgrades GSMS 2011-GC5

CHICAGO--(BUSINESS WIRE)-- Fitch Ratings has upgraded two and affirmed eight classes of Goldman Sachs Commercial Mortgage Capital, L.P., series 2011-GC5 commercial mortgage pass-through certificates. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The upgrades are due to increased credit enhancement driven by substantial paydown from maturing five-year loans since Fitch's last rating action. The affirmations are the result of overall stable performance. The transaction continues to have a high retail concentration of 68%, with 10 (56.6%) of the top 15 loans being secured by retail properties. The majority of remaining loan maturities (96%) are concentrated in 2021.

There were variances from criteria related to classes B and C where Fitch's surveillance criteria would indicate that additional upgrades are possible. However, further upgrades were not warranted based on significant retail concentration (68% of pool), including five regional malls representing 30% of the pool. Additionally, Champlain Centre (2.6%) has seen a decline in occupancy as a result of Sears vacating in March 2016.

As of the July 2016 distribution date, the pool's aggregate principal balance has been reduced by 29.7% to $1.23 billion from $1.75 billion at issuance. Fitch has designated four loans (4.3%) as Fitch Loans of Concern, which includes one specially serviced asset (1.2%). Per the servicer reporting, four loans (8.3% of the pool) are defeased. Interest shortfalls are currently affecting class G.

The transaction's largest contributor to expected losses is a specially-serviced asset (1.2%), which is real estate owned (REO). The asset is a 236,134 square foot (sf) office complex comprising six single-story buildings located in North Richland Hills, TX. The loan transferred to special servicing in April 2013 due to imminent default following the largest tenant vacating the property in early February 2013 without providing notice. The asset became REO in July 2013 through a non-judicial foreclosure. The servicer has made capital improvements to the asset and continues to market the vacant space; however, occupancy remains at 54.1% as of May 2016.

The largest loan in the pool (15%) is secured by 478,028 sf of a 1.1 million-sf regional mall in Tucson, AZ. The property is anchored by Sears, Dillard's, Macy's and Century Theaters, which is the only anchor that is part of the collateral. The servicer-reported debt service coverage ratio (DSCR) improved slightly to 1.65x at March 2016 compared to 1.58x at YE 2015. March 2016 occupancy improved to 96% compared to 95% at YE 2015.

The largest loan of concern in the pool (1.5%) is secured by a 160,779-sf suburban office property located in Purchase, NY in Westchester County. The property was constructed in 1969 and renovated in 1990. As of YE 2015, occupancy declined to 73% from 80% in 2014 driving DSCR down to 0.71x from 1.13x in the same period. In addition to the performance decline, the property has substantial lease rollover concerns in the next 12 months. As of July 2016 the loan was current and has not been delinquent during the loan term. According to Reis March 2016 report, the Harrison/Rye/East office submarket of Westchester had a vacancy rate of 21.4% with average asking rents of $29.49 psf. The subject underperforms the market with respect to rents and vacancy.

RATING SENSITIVITIES

Rating Outlooks for all classes remain Stable due to overall stable performance of the pool and continued paydown. Upgrades reflect a sensitivity analysis performed on the Harrison Executive Park due to declining performance and upcoming rollover. Further upgrades may occur with improved pool performance and significant paydown or defeasance. Downgrades to the classes are possible should overall pool performance decline.

DUE DILIGENCE USAGE

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

Fitch has upgraded the following classes as indicated:

--$96 million class B to 'AAsf' from 'AA-sf'; Outlook Stable;

--$69.8 million class C to 'Asf' from 'A-sf'; Outlook Stable;

Fitch has affirmed the following classes as indicated:

--$48.5 million class A-2 at 'AAAsf'; Outlook Stable;

--$86.4 million class A-3 at 'AAAsf'; Outlook Stable;

--$568.2 million class A-4 at 'AAAsf'; Outlook Stable;

--$181.1 million class A-S at 'AAAsf'; Outlook Stable;

--$74.2 million class D at 'BBB-sf'; Outlook Stable;

--$28.4 million class E at 'BBsf'; Outlook Stable;

--$24 million class F at 'Bsf'; Outlook Stable;

--$884.2 million* class X-A at 'AAAsf'; Outlook Stable.

*Notional amount and interest only.

Class A-1 has paid in full. Fitch does not rate the class G and X-B certificates.

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

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1009652

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1009652

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/20160728006534/en/

Fitch Ratings
Primary Analyst
David Ro, +1-312-368-3132
Director
Fitch Ratings, Inc.
70 West Madison Street
Chicago, IL 60602
or
Committee Chairperson
R. Brook Sutherland, +1-312-606-2346
Senior Director
or
Media Relations
Sandro Scenga, +1-212-908-0278 (New York)
[email protected]

Source: Fitch Ratings

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