Kroll Bond Rating Agency Assigns Preliminary Ratings to GSMS 2014-NEW

Kroll Bond Rating Agency (KBRA) is pleased to announce the assignment of preliminary ratings to the GSMS 2014-NEW transaction (see ratings list below). GSMS 2014-NEW is a CMBS single borrower transaction that is collateralized by a $306.3 million 7-year, fixed rate loan that was originated GS Commercial Real Estate LP. Proceeds from the mortgage loan along with approximately $146.0 million of cash equity contributed by the loan sponsor and a $49.7 million mezzanine loan provided by GS Commercial Real Estate LP were used by indirect subsidiaries of Newcastle Investment Corp. (NYSE: NCT) to acquire 25 senior housing properties from subsidiaries of Harvest Facility Holdings LP, an affiliate of Holiday Retirement Corporation (Holiday) pursuant to a $495.6 million sale-leaseback transaction.

The loan is secured by the borrower’s fee simple interests in 25 independent living senior housing properties. The properties in the collateral pool are located in 17 states, with four states that represent more than 10.0% of the portfolio balance by allocated loan amount (“ALA”), as follows: Florida (13.2%), New York, (10.6%), Texas (10.4%), and Colorado (10.3%).

A subsidiary of Holiday Retirement Corporation (Holiday) will continue to operate the assets pursuant to a 17-year triple net master lease that was executed in conjunction with this financing. Founded in 1971, Holiday is majority owned by private equity funds controlled by a subsidiary of Fortress Investment Group. Holiday is the largest private operator of senior housing in the United States, with a national portfolio of 333 properties under management that comprise approximately 35,000 units.

KBRA’s analysis of the transaction included a detailed evaluation of the properties’ cash flows using our CMBS Property Evaluation Guidelines, and the application of our CMBS Single Borrower & Large Loan Rating Methodology. The results of the analysis produced an individual KNCF for each property. We applied KBRA capitalization rates to each property’s KNCF to arrive at KBRA value. The analysis produced an aggregate KNCF and KBRA value of $34.1 million and $359.1 million, respectively. The resulting in trust KLTV is 85.3%.

For further details on KBRA’s analysis of the transaction, please see our Pre-Sale Report, entitled GSMS 2014-NEW, which was published today at www.krollbondratings.com.

The preliminary ratings are based on information known to KBRA at the time of this publication. Information received subsequent to this release could result in the assignment of final ratings that differ from the preliminary ratings.

Preliminary Ratings Assigned: GSMS 2014-NEW

*Balance represents notional amount.

17g-7 Disclosure:

All Nationally Recognized Statistical Rating Organizations are required, pursuant to SEC Rule 17g-7, to provide a description of a transaction’s representations, warranties and enforcement mechanisms that are available to investors when issuing credit ratings. KBRA’s disclosure for this transaction can be found in the report entitled GSMS 2014-NEW 17g-7 Disclosure Report.

Related publications:

CMBS Property Evaluation Guidelines, published June 10, 2011

CMBS Single Borrower & Large Loan Rating Methodology, published August 8, 2011

About Kroll Bond Rating Agency

Kroll Bond Rating Agency, Inc. (www.krollbondratings.com) is registered with the SEC as a nationally recognized statistical rating organization (NRSRO). Kroll Bond Rating Agency was established in 2010 to restore trust in credit ratings by establishing new standards for assessing risk and by offering accurate, clear, and transparent ratings.