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Rating Action:

Moody's places on review for possible downgrade and downgrades classes in GSMS 2010 C1; ratings remain on review

29 May 2020

Approximately $128 million of structured securities affected

New York, May 29, 2020 -- Moody's Investors Service, ("Moody's) has downgraded two classes, one class remains on review for downgrade, places one class under review for downgrade, and downgrades two classes that remains under review for downgrade in GS Mortgage Securities Corporation II Commercial Mortgages Pass-Through Certificates Series 2010-C1 ("GSMS 2010-C1") as follows:

Cl. B, Aaa (sf) Placed Under Review for Possible Downgrade; previously on Mar 2, 2020 Affirmed Aaa (sf)

Cl. C, Downgraded to Baa3 (sf) and Remains On Review for Possible Downgrade; previously on Mar 2, 2020 Downgraded to A1 (sf) and Placed Under Review for Possible Downgrade

Cl. D, Downgraded to Caa1 (sf) and Remains On Review for Possible Downgrade; previously on Mar 2, 2020 Downgraded to Ba2 (sf) and Placed Under Review for Possible Downgrade

Cl. E, Downgraded to C (sf); previously on Mar 2, 2020 Downgraded to B2 (sf) and Placed Under Review for Possible Downgrade

Cl. F, Downgraded to C (sf); previously on Mar 2, 2020 Downgraded to Caa2 (sf) and Placed Under Review for Possible Downgrade

Cl. X*, B3 (sf) and Remains On Review for Possible Downgrade; previously on Mar 2, 2020 Downgraded to B3 (sf) and Placed Under Review for Possible Downgrade

* Reflects interest-only classes

RATINGS RATIONALE

The ratings on four P&I classes were downgraded due to the exposure to loans in special servicing, upcoming loan maturities and the continued decline in performance of three regional malls representing 56% of the pool. The mall loans include the Burnsville Center loan (24% of the pool); Mall at Johnson City loan (18% of the pool); and the Grand Central Mall loan (14% of the pool). All three loans are currently in special servicing.

The ratings on one P&I class was placed on review for possible downgrade, and the ratings on two P&I classes remain on review for possible downgrade due to the uncertainty regarding the upcoming maturities for three loans, representing 67% of the pool which mature by July 2020. The three largest loans with near term maturities are all secured by retail properties or regional malls including 660 Madison Avenue (29% of pool), Burnsville Center (24% of the pool), and Grand Central Mall (14% of the pool).

The rating on the IO class, Cl. X, remains on review for possible downgrade due to the referenced P&I classes that are placed on review for possible downgrade.

Our analysis has considered the effect of the coronavirus outbreak on the US economy as well as the effects that the announced government measures, put in place to contain the virus, will have on the performance of commercial real estate. Stress on commercial real estate properties will be most directly stemming from declines in hotel occupancies (particularly related to conference or other group attendance) and declines in foot traffic and sales for non-essential items at retail properties.

The contraction in economic activity in the second quarter will be severe and the overall recovery in the second half of the year will be gradual. However, there are significant downside risks to our forecasts in the event that the pandemic is not contained and lockdowns have to be reinstated. As a result, the degree of uncertainty around our forecasts is unusually high. We regard the coronavirus outbreak as a social risk under our ESG framework, given the substantial implications for public health and safety.

FACTORS THAT WOULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS:

The performance expectations for a given variable indicate Moody's forward-looking view of the likely range of performance over the medium term. Performance that falls outside the given range can indicate that the collateral's credit quality is stronger or weaker than Moody's had previously expected.

Factors that could lead to an upgrade of the ratings include a significant amount of loan paydowns or amortization, an increase in the pool's share of defeasance or an improvement in pool performance.

Factors that could lead to a downgrade of the ratings include a decline in the performance of the pool, an increase in realized and expected losses from specially serviced and troubled loans or interest shortfalls.

METHODOLOGY UNDERLYING THE RATING ACTION

The principal methodology used in rating all classes except interest-only classes was "Moody's Approach to Rating Large Loan and Single Asset/Single Borrower CMBS" published in May 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_1227875. The methodologies used in rating interest-only classes were "Moody's Approach to Rating Large Loan and Single Asset/Single Borrower CMBS" published in May 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_1227875 and "Moody's Approach to Rating Structured Finance Interest-Only (IO) Securities" published in February 2019 and available at https://www.moodys.com/research/Moodys-Approach-to-Rating-Structured-Finance-Interest-Only-IO-Securities--PBS_1111179. Please see the list of ratings at the top of this announcement to identify which classes are interest-only (indicated by the *). Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of these methodologies.

DEAL PERFORMANCE

As of the May 12, 2020 distribution date, the transaction's aggregate certificate balance has decreased by 66% to $266 million from $788 million at securitization. The certificates are collateralized by seven mortgage loans ranging in size from 2% to 29% of the pool, which are secured primarily by retail properties (85% of the remaining pool, by balance).

Three loans, constituting 44% of the pool, are on the master servicer's watchlist. The watchlist includes loans that meet certain portfolio review guidelines established as part of the CRE Finance Council (CREFC) monthly reporting package. As part of Moody's ongoing monitoring of a transaction, the agency reviews the watchlist to assess which loans have material issues that could affect performance.

Three loans, constituting 56% of the pool, are currently in special servicing. The largest specially serviced loan is the Burnsville Center Loan ($63.8 million -- 24.0% of the pool), which is secured by a portion of a regional mall located in Burnsville, Minnesota, a suburb located south of Minneapolis and St. Paul. The non-collateral anchors include Macy's and JC Penney, and collateral anchor stores include Dick's Sporting Goods and Gordman's. The property has one currently vacant non-collateral anchor, a former Sears that closed in 2017. Furthermore, Stage Stores (Gordman's parent company) filed for bankruptcy in May 2020 and may eventually liquidate all stores if they cannot find a buyer. The mall's performance peaked in 2015 and has since declined annually in both occupancy and tenant sales per square foot (PSF), with a significant drop during 2018 and 2019. According to CBL's 10k filings, the property's occupancy for tenants under 20,000 square feet (SF) was 82% leased in December 2019, down from 94% in December 2017 and 96% in December 2016 and mall store sales for tenants under 20,000 SF were $276 PSF in 2019, down from $292 PSF in 2018, $320 PSF in 2017 and $339 PSF in 2016. While Burnsville Center is the only regional mall within the market south of the Minnesota River, it also competes with Twin Cities Premium Outlets. As a result of declining revenue, the 2019 reported net operating income (NOI) was 37% lower than in 2010. The departure of any additional anchor stores could trigger co-tenancy provisions and further accelerate the decline of the property's cash flow. The loan transferred to special servicing on January 8, 2020 due to imminent maturity default ahead of its July 2020 remittance date. Special servicer commentary indicates that the borrower has requested a three month forbearance for loan relief regarding COVID-19 as well as an extension.

The second largest specially serviced loan is the Mall at Johnson City Loan ($47.7 million -- 17.9% of the pool), which is secured by a 571,319 square foot (SF) portion of a regional mall located in Johnson City, Tennessee. The mall is anchored by JC Penney, Belk, Dick's Sporting Goods, Forever 21 and formerly a Sears. The Sears store closed in January 2020. As of December 2018, in-line (<10,000 SF) occupancy was 99% and in-line sales were $357 PSF. This loan transferred to special servicing in November 2019 due to imminent maturity default. In December 2019, the loan was modified with a three-year loan maturity extension through May 2023 which required the borrower to fund reserve accounts and pay $5 million of principal prior to the May 2020 payment date. Due to the COVID-19 closure, the borrower was not able to make those required reserve and principal payments. The mall opened on May 4, 2020 after being temporarily closed for COVID-19. The special servicer is in discussions with the borrower about possible resolutions.

The third largest loan specially serviced loan is the Grand Central Mall Loan ($38.4 million -- 14.4% of the pool), which is located in Vienna, West Virginia and is anchored by JC Penney, Belk, Regal, H&M and Dunham's Sports. The former Sears space has been demolished and the sponsor, Washington Prime, has begun construction on new inline space which will add four major tenants to the center to include Ross Dress For Less, HomeGoods, TJ Maxx and PetSmart. The new expansion is expected to be open in November 2020. The mall opened on May 22, 2020 after being temporarily closed for COVID-19. The mall's performance peaked in 2015, however, starting in 2016 the property's NOI has declined annually. The loan has amortized 14.1% from securitization. The loan matures in July 2020.

The largest loan in the pool is the 660 Madison Avenue Retail Loan ($77.1 million -- 29% of the pool), which is secured by a 264,000 SF retail property that formerly served as the Barneys New York flagship store. Barneys filed for Chapter 11 bankruptcy in August 2019 and was sold to Authentic Brands Group. Authentic Brands Group closed this location in February 2020. The property benefits from its superior location on Madison Avenue between East 60th Street and East 61st Street in Manhattan. The loan has amortized 23% from securitization. The loan matures in July 2020. Moody's loan to value (LTV) ratio and stressed DSCR are 69% and 1.31X, respectively.

The remaining three loans represent 15% of the pool and mature in July or August this year. The loans are secured by a suburban office property in Lehi, Utah and a ground lease in New York. The third loan paid off on May 6, 2020.

REGULATORY DISCLOSURES

For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.

The analysis includes an assessment of collateral characteristics and performance to determine the expected collateral loss or a range of expected collateral losses or cash flows to the rated instruments. As a second step, Moody's estimates expected collateral losses or cash flows using a quantitative tool that takes into account credit enhancement, loss allocation and other structural features, to derive the expected loss for each rated instrument.

Moody's did not use any stress scenario simulations in its analysis.

For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.

These ratings are solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1133569.

At least one ESG consideration was material to the credit rating action(s) announced and described above.

The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the EU and is endorsed by Moody's Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Christopher Bergman
Analyst
Structured Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Romina Padhi
VP - Senior Credit Officer
Structured Finance Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

No Related Data.
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