Feb 22 - Fitch Ratings has downgraded five classes and affirmed 17 classes
of GS Mortgage Securities Corporation II (GSMSC II) commercial mortgage
pass-through certificates, series 2006-GG8 due to increased loss expectations on
specially serviced loans and further deterioration of loan performance. A
detailed list of rating actions follows at the end of this press release.
KEY RATING DRIVERS
Fitch modeled losses of 14.6% of the remaining pool; expected losses on the
original pool balance total 13.3%, including losses already incurred. The pool
has experienced $96.1 million (2.3% of the original pool balance) in realized
losses to date. Fitch has designated 77 loans (44.9%) as Fitch Loans of Concern,
which includes 16 specially serviced assets (12.1%).
As of the February 2013 distribution date, the pool's aggregate principal
balance has been reduced by 24.2% to $3.21 billion from $4.24 billion at
issuance. No loans are defeased. Interest shortfalls of approximately $55.7
million are currently affecting classes G through S.
The largest contributor to modeled losses is the Pointe South Mountain Resort
loan (5.9% of the pool), which is secured by a 640-key resort complex located in
Phoenix, AZ. The property is now called the Arizona Grand Resort. The loan has
been modified and returned to the master servicer after the original loan was
split into an A/B note structure. Although property performance improved in 2011
and 2012, the property's cash flow is significantly below underwritten levels
and does not generate sufficient cash flow to service its total debt.
The next largest contributor to modeled losses is the real-estate owned (REO)
Ariel Preferred Portfolio (2.8%). The retail portfolio consists of the four
remaining outlet centers located in various states. Two of the original six
properties have been sold. The portfolio transferred to special servicing in
June 2009 for imminent default. The most recent servicer reported average
portfolio occupancy is 75% as of December 2012, compared to the overall
portfolio occupancy of 82.7% at issuance.
The third largest contributor to modeled losses is the specially-serviced
Rubloff Retail Portfolio loan (1.8%), which is secured by four regional malls
located in various states. The loan transferred to special servicing in late
November 2012 for imminent default. As of third-quarter 2012, the combined
occupancy of the portfolio fell below 70% as several anchor tenants have vacated
or filed for bankruptcy.
Fitch downgrades the following class, removes it from Rating Watch Negative, and
assigns an Outlook:
--$424.3 million class A-M to 'Asf' from 'AAAsf'; Outlook Stable.
Fitch downgrades the following classes as indicated:
--$302.3 million class A-J to 'CCCsf' from 'BBsf', RE 95%;
--$26.5 million class B to 'CCCsf' from 'Bsf', RE 0%;
--$42.4 million class F to 'CCsf' from 'CCCsf', RE 0%;
--$15.3 million class N to 'Dsf' from 'Csf', RE 0%.
Fitch affirms the following classes as indicated:
--$143.1 million class A-2 at 'AAAsf'; Outlook Stable;
--$52.9 million class A-3 at 'AAAsf'; Outlook Stable;
--$81.5 million class A-AB at 'AAAsf'; Outlook Stable;
--$1.6 billion class A-4 at 'AAAsf'; Outlook Stable;
--$161.4 million class A-1A at 'AAAsf'; Outlook Stable;
--$53 million class C at 'CCCsf', RE 0%.
--$37.1 million class D at 'CCCsf', RE 0%;
--$37.1 million class E at 'CCCsf', RE 0%;
--$53 million class G at 'CCsf', RE 0%;
--$47.7 million class H at 'CCsf', RE 0%;
--$53 million class J at 'Csf', RE 0%;
--$42.4 million class K at 'Csf', RE 0%;
--$26.5 million class L at 'Csf', RE 0%;
--$15.9 million class M at 'Csf', RE 0%.
Classes O, P and Q remain at 'Dsf', RE 0% due to realized losses.
The class A-1 certificates have paid in full. Fitch does not rate the class S
certificates. Fitch previously withdrew the rating on the interest-only class X
Additional information on Fitch's criteria for analyzing U.S. CMBS transactions
is available in the Dec. 18, 2012 report, 'U.S. Fixed-Rate Multiborrower CMBS
Surveillance and Re-REMIC Criteria', which is available at
'www.fitchratings.com' under the following headers:
Structured Finance >> CMBS >> Criteria Reports
Additional information is available at 'www.fitchratings.com'. The ratings above
were solicited by, or on behalf of, the issuer, and therefore, Fitch has been
compensated for the provision of the ratings.
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' (June 6, 2012);
--'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria' (Dec.
Applicable Criteria and Related Research:
U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria
Global Structured Finance Rating Criteria