CHICAGO--(BUSINESS WIRE)-- Fitch Ratings has downgraded three classes and affirmed 19 classes of GS Mortgage Securities Corporation II (GCCFC) commercial mortgage pass-through certificates series 2006-GG6 due to an increase in expected losses form the specially serviced loans. A detailed list of rating actions follows at the end of this press release.
Fitch modeled losses of 12.7% of the remaining pool; expected losses on the original pool balance total 11.9%, including losses already incurred. The pool has experienced $101.8 million (2.6% of the original pool balance) in realized losses to date. Fitch has designated 59 loans (34.2%) as Fitch Loans of Concern, which includes 16 specially serviced assets (19.9%).
As of the September 2012 distribution date, the pool's aggregate principal balance has been reduced by 14.8% to $3.32 billion from $3.9 billion at issuance. No loans have defeased since issuance.
The largest contributor to expected losses is the specially-serviced Windsor Capital Portfolio (6% of the pool), which is secured by secured by eight full-service Embassy Suites hotels containing a total of 1,906 rooms. The hotels are primarily located in secondary markets across six states, Washington (Bellevue and Lynwood), Oregon (Tigard), Ohio (Blue Ash), Michigan (Livonia), Colorado (Colorado Springs and Denver), and Texas (El Paso). The loan transferred to the special servicer in October 2010 due to imminent maturity default. The special servicer commenced foreclosure proceedings and was granted receivership, but before the receiver could take possession the borrower filed for bankruptcy. The special servicer is trying to come to terms with the borrower on a modification.
The next largest contributor to expected losses is the specially serviced Silver Creek Portfolio Phase I loan which is secured by 37 cross-collateralized and cross-defaulted retail strip shopping centers totaling 636,166 sf located across 17 states primarily in the mid-west. Thirty of the properties (87.7% NRA) are shadow-anchored by Super Wal-Marts, while the remaining seven are unanchored. The loan transferred to the special servicer in January 2010 for monetary default. Decreasing occupancy levels and continued pressure on rental rates are the primary causes of the performance decline. The special servicer continues to negotiate with the borrower while dual tracking foreclosure.
The third largest contributor to expected losses is the modified Market Street at DC Ranch loan (1.7%) which is secured by a 184,548 sf grocery-anchored retail center located in the northeastern quadrant of Scottsdale, Arizona. The property contains 98.735 sf of retail space and 85,813 sf of office space along with a ground lease to Safeway, which operates a 53,000 sf grocery store. Property performance has decreased dramatically from underwriting due to the economic conditions of the retail market in Scottsdale, AZ which have caused both occupancies and rental rates to drop. This loan was modified by the special servicer in December 2010 and returned to the master servicer in May 2011. The loan was split into an A Note of $22.5 million and a B Note of $27.5 million.
Fitch downgrades the following classes and assigns Recovery Estimates (REs) as indicated:
--$292.6 million class A-J to 'BBsf' from 'BBB-sf'; Outlook Negative;
--$19.5 million class B to 'Bsf' from 'BBsf'; Outlook Negative;
--$48.8 million class C to 'CCCsf' from 'Bsf'; RE 10%.
Fitch affirms the following classes as indicated:
--$432.4 million class A-2 at 'AAAsf'; Outlook Stable;
--$75.6 million class A-3 at 'AAAsf'; Outlook Stable;
--$187.8 million class A-AB at 'AAAsf'; Outlook Stable;
--$1 billion class A-4 at 'AAAsf'; Outlook Stable;
--$138.8 million class A-1A at 'AAAsf'; Outlook Stable;
--$390.1 million class A-M at 'AAAsf'; Outlook Stable;
--$39 million class D at 'CCCsf'; RE 0%;
--$29.3 million class E at 'CCCsf'; RE 0%;
--$43.9 million class F at 'CCsf'; RE 0%;
--$39 million class G at 'CCsf'; RE 0%;
--$39 million class H at 'Csf'; RE 0%;
--$43.9 million class J at 'Csf'; RE 0%;
--$43.9 million class K at 'Csf'; RE 0%;
--$24.4 million class L at 'Csf'; RE 0%;
--$14.6 million class M at 'Csf'; RE 0%.
Class A-1 has paid in full. Classes N through Q have realized losses and remain at 'Dsf'; RE 0%. Fitch does not rate the class S certificates. Fitch previously withdrew the ratings on the interest-only class X-P and X-C certificates.
Additional information on Fitch's criteria for analyzing U.S. CMBS transactions is available in the Dec. 21, 2011 report, 'Surveillance Methodology for U.S. Fixed-Rate CMBS Transactions', 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);
--'Surveillance Methodology for U.S. Fixed-Rate CMBS Transactions' (Dec. 21, 2011).
Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria
Surveillance Methodology for U.S. Fixed-Rate CMBS Transactions
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Mary MacNeill, +1-212-908-0785
Sandro Scenga, +1-212-908-0278
Source: Fitch Ratings