Fitch Ratings has downgraded three classes and affirmed one class GS Mortgage Securities Trust (GSMS) 2013-G1.

The Rating Outlook on class B has been revised to Stable from Negative. A Negative Outlook was assigned to class C following the downgrade. Classes A-1, A-2 and the interest-only class X-A are paid in full.

RATING ACTIONS

Entity / Debt

Rating

Prior

GSMS 2013-G1

A-2 36197QAC3

LT

PIFsf

Paid In Full

AAAsf

B 36197QAG4

LT

AAsf

Affirmed

AAsf

C 36197QAJ8

LT

BB-sf

Downgrade

Asf

D 36197QAL3

LT

CCCsf

Downgrade

BBsf

DM 36197QAN9

LT

CCCsf

Downgrade

Bsf

X-A 36197QAE9

LT

PIFsf

Paid In Full

AAAsf

Page

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VIEW ADDITIONAL RATING DETAILS

KEY RATING DRIVERS

Decline in Performance of Remaining Asset; Refinance Risk: The downgrades and Negative Outlook are the result of a sustained decline in performance of the remaining asset, Deptford Mall, over the last two years, high upcoming tenant rollover and concerns regarding refinance risk as the loan matures in April 2023. Given the current performance and lack of refinancing prospects in the current environment for large mall assets, an extension or default at maturity is possible. The two other mall assets included in the transaction, Great Lakes Crossing Outlets and Katy Mills, have paid in full.

Fitch's net cash flow (NCF) was $13.4 million, a 21% decline from pre-pandemic NCF due to lower rental income. The current Fitch NCF assumes leases in place as of September 2022, with partial credit given for holdover tenants that remain open. The decline is due to lower base rents, leases rolling or restructured to lower rents or percentage rent, in addition to the decline in collateral occupancy which was 86% as of the September 2022 rent roll. This compares to 89% as of September 2021, 85% as of September 2020, 98% as of YE 2019, and 96.8% at issuance. Per the rent roll, there are several tenants paying percentage in lieu of rent, including Forever 21, H&M and Charlotte Russe. Approximately 112,400 sf of the non-anchor space rolls over through YE 2023, including Forever 21 (5.9% of NRA, expiry January 2023). Fitch requested a leasing update from the servicer regarding rollover; however, none was received at this time.

Fitch applied a 13% cap rate in its analysis, consistent with comparable properties and given the outlook for regional malls, the current performance and concerns with refinancing. The cap rate is an increase from a 10% cap rate modeled in prior rating actions. The Fitch debt service coverage ratio (DSCR) and loan to value (LTV) for the remaining loan, inclusive of the B-note, is 0.65x and 144%, respectively.

The transaction collateral consists of one mortgage loan secured by a 343,910-sf portion of the 1.04-million-sf Deptford Mall located in Deptford, NJ, approximately 12 miles southeast of downtown Philadelphia, PA. The sponsor is The Macerich Partnership, LP (Macerich), one of the largest owner/operators of shopping centers in the U.S.

Comparable in-line sales were $599 psf for the TTM period through September 2022, compared with $636psf as of September 2021, $403 psf as of September 2020 (which includes a pandemic closure period), $518psf as of June 2019, and $496 psf at issuance (YE 2012). The property has limited direct competition in the region. The nearest mall is Cherry Hill Mall about nine miles to the north, which serves a different trade area and market segment.

There are four non-collateral anchor tenants at the Deptford Mall, Macy's, JC Penney, Boscov's, and Dick's Sporting Goods (which opened in 2020 after taking over a portion of the former Sears space). The sponsor added a location of Round1 Bowling and Amusement at the mall in 2020 to former top floor Sears space. A brewery is expected to open at the mall later in 2023. Sears terminated its ground lease in January 2019, prior to its 2026 lease expiration. Crunch Fitness opened in late October 2021 in the former Sear's Auto outparcel space.

The loan's scheduled maturity is in April 2023. The Negative Outlook on class C the uncertainty around the ability to refinance the mortgage by the loan's scheduled maturity date in April 2023. The trust A-note and B-note have a fixed coupon of 3.73%.

Paydown and Amortization: The transaction has experienced significant paydown due to the payoff of two of the three loans, Great Lakes Crossing Outlets and Katy Mills. As of the January 2023 distribution date, the Deptford Mall loan has amortized 21.1% and expected to amortize through the loan term. Class A-2 has paid in full. The current pooled debt per square foot is $411 psf ($469 psf inclusive of the B-note). The subordinate B-note $19.8 million backs the class DM rake bond and is also secured by the mall collateral.

RATING SENSITIVITIES

Factors that could, individually or collectively, lead to negative rating action/downgrade:

Factors that could lead to downgrades for the remaining classes include if mall occupancy does not stabilize and cash flow deteriorates and/or the loan is not able to refinance or extend with favorable terms for recovery.

Fitch has identified both a baseline and a worse-than-expected, adverse stagflation scenario based on fallout from the Russia-Ukraine war whereby growth is sharply lower amid higher inflation and interest rates; even if the adverse scenario should play out, Fitch expects virtually no impact on ratings performance, indicating very few rating or Outlook changes. However, for some transactions with concentrations in underperforming retail exposure, the ratings impact may be mild to modest, indicating some changes on sub-investment-grade notes.

Factors that could, individually or collectively, lead to positive rating action/upgrade:

Upgrades are currently not expected given Fitch's concern with the upcoming loan maturity but are possible with significant and sustained occupancy and cash flow improvements. Classes would not be upgraded above 'Asf' if there is likelihood for interest shortfalls, which could occur if the remaining loan were to become delinquent.

Best/Worst Case Rating Scenario

International scale credit ratings of Structured Finance transactions have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of seven notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of seven notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAAsf' to 'Dsf'. Best- and worst-case scenario credit ratings are based on historical performance. For more information about the methodology used to determine sector-specific best- and worst-case scenario credit ratings, visit https://www.fitchratings.com/site/re/10111579.

USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10

Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action.

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

The principal sources of information used in the analysis are described in the Applicable Criteria.

ESG Considerations

Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg

Additional information is available on www.fitchratings.com