Approximately $133.6 Million of Structured Securities Affected
New York, November 11, 2010 -- Moody's Investors Service (Moody's) affirmed the ratings of eight pooled
classes and upgraded the rating of one non-pooled or rake class
of GS Mortgage Securities Corporation II, Commercial Mortgage Pass-Through
Certificates, Series 2006-GSFL VIII. Moody's rating
action is as follows:
Cl. X, Affirmed at Aaa (sf); previously on Aug 11,
2006 Definitive Rating Assigned Aaa (sf)
Cl. B, Affirmed at Aaa (sf); previously on Jul 5,
2007 Upgraded to Aaa (sf)
Cl. C, Affirmed at Aaa (sf); previously on Mar 18,
2008 Upgraded to Aaa (sf)
Cl. D, Affirmed at A3 (sf); previously on Dec 3,
2009 Downgraded to A3 (sf)
Cl. E, Affirmed at Baa3 (sf); previously on Dec 3,
2009 Downgraded to Baa3 (sf)
Cl. F, Affirmed at B1 (sf); previously on Dec 3,
2009 Downgraded to B1 (sf)
Cl. G, Affirmed at Caa1 (sf); previously on Dec 3,
2009 Downgraded to Caa1 (sf)
Cl. H, Affirmed at Caa2 (sf); previously on Dec 3,
2009 Downgraded to Caa2 (sf)
Cl. H-HP, Upgraded to Caa1 (sf); previously on
Dec 3, 2009 Downgraded to C (sf)
The affirmations are due to key parameters, including Moody's loan
to value (LTV) ratio and Moody's stressed debt service coverage ratio
(DSCR), remaining within acceptable ranges. The upgrade of
the non-pooled, or rake, class is due to the reduced
loan balance of the Hardage Portfolio Loan resulting from principal payments.
Moody's analysis reflects a forward-looking view of the likely
range of collateral performance over the medium term. From time
to time, Moody's may, if warranted change these expectations.
Performance that falls outside an acceptable range of the key parameters
may indicate that the collateral's credit quality is stronger or weaker
than Moody's had anticipated during the previous review. Even so,
deviation from the expected range will not necessarily result in a rating
action. There may be mitigating or offsetting factors to an improvement
or decline in collateral performance, such as increased subordination
levels due to amortization and loan payoffs or a decline in subordination
due to realized losses.
Primary sources of assumption uncertainty are the current stressed macroeconomic
environment and continuing weakness in the commercial real estate and
lending markets. Moody's currently views the commercial real estate
market as stressed with further performance declines expected in the industrial,
office, and retail sectors. Hotel performance has begun to
rebound, albeit off a very weak base. Multifamily has also
begun to rebound reflecting an improved supply / demand relationship.
The availability of debt capital is improving with terms returning towards
market norms. Job growth and housing price stability will be necessary
precursors to commercial real estate recovery. Overall, Moody's
central global scenario remains "Hook-shaped" for 2010 and 2011;
we expect overall a sluggish recovery in most of the world's largest economies,
returning to trend growth rate with elevated fiscal deficits and persistent
The principal methodology used in these ratings was "Moody's Approach
to Rating Large Loan/Single Borrower Transactions" published in July 2000.
Other methodologies and factors that may have been considered in the process
of rating this issuer can also be found on Moody's website.
In addition, Moody's publishes a weekly summary of structured finance
credit, ratings and methodologies, available to all registered
users of our website, at www.moodys.com/SFQuickCheck.
Moody's review incorporated the use of the excel-based Large Loan
Model v 8.0. The large loan model derives credit enhancement
levels based on an aggregation of adjusted loan level proceeds derived
from Moody's loan level LTV ratios. Major adjustments to determining
proceeds include leverage, loan structure, property type,
and sponsorship. These aggregated proceeds are then further adjusted
for any pooling benefits associated with loan level diversity, other
concentrations and correlations.
Moody's ratings are determined by a committee process that considers both
quantitative and qualitative factors. Therefore, the rating
outcome may differ from the model output.
The rating action is a result of Moody's on-going surveillance
of commercial mortgage backed securities (CMBS) transactions. Moody's
monitors transactions on a monthly basis through two sets of quantitative
tools -- MOST® (Moody's Surveillance Trends) and CMM
(Commercial Mortgage Metrics) on Trepp -- and on a periodic
basis through a comprehensive review. Moody's prior full review
is summarized in a press release dated December 3, 2009.
Please see the ratings tab on the issuer / entity page on moodys.com
for the last rating action and the ratings history.
Moody's Investors Service received and took into account one or
more third party due diligence reports on the underlying assets or financial
instruments in this transaction and the due diligence reports had a neutral
impact on the ratings.
As of the November 8, 2010 distribution date, the transaction's
aggregate certificate balance has decreased by 78% to $145.3
million from $661.2 million at securitization. The
Certificates are collateralized by three mortgage loans ranging in size
from 7% to 52% of the pool.
Moody's weighted average pooled loan to value (LTV) ratio is 110%
compared to 125% at last review. Moody's stressed debt service
coverage ratio (DSCR) is 0.97X compared to 0.93X at last
Currently, two loans representing 93% of the pool balance
are in special servicing. The largest loan in the pool, the
CarrAmerica Corporate Center Loan ($75.0 million; 52%
of the pool), was transferred to special servicing in October 2010
due to the inability to refinance the loan at the November 2010 maturity.
According to the November Trustee Statement, a loan extension is
being negotiated. The loan is secured by a campus of eight Class
A office buildings with 1,013,280 square feet of net rentable
area (NRA) located in Pleasanton, California. The largest
tenants include AT&T, Ross Stores and Farmers Insurance.
As of June 2010, the occupancy rate was 51% compared to 73%
at securitization. Moody's pooled LTV is over 100% and Moody's
stressed DSCR is 0.78X. Moody's credit estimate rating for
the pooled balance is C compared to Caa3 at last review.
The second largest loan in the pool, representing 42% of
the pool, is also in special servicing. The Hardage Portfolio
Loan ($61.2 million pooled balance and $4.7
million rake balance) is secured by eight extended stay hotel properties
(1,049 keys) located in California, Maryland, Florida,
Utah and Louisiana. The loan was transferred to special servicing
on February 23, 2009 due to the borrower's inability to refinance
the loan. Parties are currently working out a resolution.
The loan is current and a March 2010 appraisal values the portfolio at
$86.3 million. Moody's pooled LTV is 86% and
Moody's stressed DSCR is 1.09X. Moody's current credit estimate
for the pooled balance is B3 compared to Caa3 at last review.
Moody's credit estimate for the rake class H-HP, associated
with the Hardage Portfolio loan, is Caa1 compared to C at last review.
The class has experienced $16,906 in principal losses due
to the payment of outstanding trust expenses which equates to a 0.3%
cumulative loss. As of November 8, 2010, outstanding
interest shortfalls on class H-HP totaled $83,074.
Interest shortfalls are caused by special servicing fees, including
workout and liquidation fees, appraisal subordinate entitlement
reductions (ASERs) and extraordinary trust expenses associated with specially
The third loan in the pool, the Investcorp Retail Portfolio Loan
($9.5 million; 7% of the pool), is a floating
rate senior pari passu interest secured by 23 shopping centers located
in three Texas MSA's (Dallas, Houston and San Antonio). There
is additional debt including a $125.4 million fixed rate
pari passu component and $123.0 million in fixed non-trust
junior debt. The loan is interest-only for the full term
and matures in April 2011. The floating rate securitized note has
paid down 85% since securitization due to property releases and
the whole loan has paid down 29% since securitization. The
loan has continued to perform. Moody's LTV for the pooled balance
is 63% and Moody's stressed DSCR is 1.72X. Moody's
underlying rating for the pooled balance is Baa2, compared to Ba3
at last review.
Information sources used to prepare the credit rating are the following:
parties involved in the ratings, parties not involved in the ratings,
public information, and confidential and proprietary Moody's Investors
Moody's Investors Service considers the quality of information available
on the issuer or obligation satisfactory for the purposes of maintaining
a credit rating.
Moody's adopts all necessary measures so that the information it uses
in assigning a credit rating is of sufficient quality and from sources
Moody's considers to be reliable including, when appropriate,
independent third-party sources. However, Moody's
is not an auditor and cannot in every instance independently verify or
validate information received in the rating process.
Please see ratings tab on the issuer/entity page on Moodys.com
for the last rating action and the rating history.
The date on which some Credit Ratings were first released goes back to
a time before Moody's Investors Service's Credit Ratings were fully digitized
and accurate data may not be available. Consequently, Moody's
Investors Service provides a date that it believes is the most reliable
and accurate based on the information that is available to it.
Please see the ratings disclosure page on our website www.moodys.com
for further information.
Please see the Credit Policy page on Moodys.com for the methodologies
used in determining ratings, further information on the meaning
of each rating category and the definition of default and recovery.
Vice President - Senior Analyst
Structured Finance Group
Moody's Investors Service
Michael M. Gerdes
Senior Vice President
Structured Finance Group
Moody's Investors Service
Moody's Investors Service
Moody's Upgrades One and Affirms Eight CMBS Classes of GSMSC II 2006-GSFL VIII
250 Greenwich Street
New York, NY 10007