Press Release|CMBS

KBRA Downgrades Three Ratings and Affirms All Other Ratings for GSMS 2014-GC26

9 Jul 2025 | New York

KBRA downgrades the ratings of three classes of certificates and affirms all other outstanding ratings for GSMS 2014-GC26, a $252.1 million CMBS conduit transaction which has five assets remaining in the pool, each of which have been identified as K-LOCs. The rating actions follow a surveillance review of the transaction and are based on the performance and expected recovery of the transaction's five assets. As of the June 2025 remittance period, one asset (32.0% of the pool balance) is REO, two (30.4%) are in foreclosure, and one (9.2%) has a non-performing matured balloon status with the special servicer. The remaining loan (28.4%) is current in payment. The details of the assets are outlined below.

Queen Ka'ahumanu Center (largest, 32.0%, K-LOC, Specially Serviced, REO)

The asset is a 570,904 sf regional mall in Kahului, Hawaii, on the island of Maui, approximately three miles west of the Kahului airport. The mall is anchored by Foodland Supermarket and Macy's. Sears, which previously operated subject to a ground lease, vacated its store in November 2021. Ka'ahumanu Theatres, which previously leased approximately 28,000 sf, vacated in July 2023.
KBRA maintains the asset's K-LOC designation and its KPO of Underperform due to its REO status. The loan was transferred to the special servicer for imminent monetary default in June 2020 when the borrower requested COVID-19 relief, and a foreclosure sale occurred in December 2021. A receiver is in place and has been working to redevelop the property. In 2024, the county council voted to approve zoning changes which would allow the redevelopment to include mixed-use space.
The servicer-reported occupancies and DSCs are: 55.0% / 0.42x (FY 2024), 79.0% / 0.38x (FY 2023); at closing these were 93.3% / 1.23x. The subject was reappraised for $37.6 million ($66 per sf) in June 2024, which is 68.7% below the $120.0 million ($210 per sf) value at issuance. As a result, an ARA of $60.2 million was assigned to the loan in August 2024, resulting in a cumulative ASER of $5.2 million. The asset was deemed non-recoverable by the servicer in November 2024, and cumulative non-recoverable interest totaled $2.5 million. Additionally, a cumulative amount of $8.4 million has been advanced by the trust for the asset to date. KBRA's analysis resulted in an estimated loss of $64.7 million on an outstanding loan balance of $81.1 million (79.8% estimated loss severity). The loss is based on a distressed liquidation value of $19.0 million ($33 per sf). The value considers a distressed non-stabilized disposition of the asset as well as comparable market values.

1201 North Market Street (2nd largest, 29.3%, K-LOC, Specially Serviced, Foreclosure)

The loan is collateralized by a 447,439 sf, 12-story, Class-A office building located in the Wilmington, Delaware CBD. The property's second floor functions as a data telecom carrier hotel (colocation center), which provides high speed data connections to area networks and providers.
KBRA maintains the loan's K-LOC designation based on its foreclosure status. The loan transferred to the special servicer in November 2024 after failing to pay off at maturity. According to special servicer commentary, the lender will dual track the foreclosure process while discussing workout alternatives with the borrower. The property has suffered from declining occupancy and a low DSC.
The servicer-reported occupancies and DSCs are: 73.0% / 1.02x (FY 2024), 71.0% / 1.04x (FY 2023); at closing these were 84.6% / 1.61x. The subject was reappraised for $44.8 million ($100 per sf) in August 2024, which is 63.5% below the $123.0 million ($275 per sf) value at issuance. As a result, an ARA of $34.3 million was assigned to the loan in March 2025. The loan was deemed non-recoverable by the servicer in May 2025. KBRA's analysis resulted in an estimated loss of $35.5 million on the loan balance of $74.3 million (47.8% estimated loss severity). The loss is based on a distressed liquidation value of $39.1 million ($89 per sf). The value considers a distressed non-stabilized disposition of the asset.

5599 San Felipe (3rd largest, 28.4%, K-LOC, Current)

The loan is collateralized by a a 436,253 sf, 21-story urban office tower located in the Galleria/West Loop North submarket of Houston, Texas, approximately eight miles west of the CBD.
KBRA maintains the loan's K-LOC designation based on its modification. The loan was modified in November 2024, extending the loan term by 36 months through November 2027. According to servicer commentary, the borrower was unable to secure refinancing due to the upcoming lease expiration of the largest tenant, Schlumberger Technology Corp (78.7% of base rent, 69.7% of sf), which expires in 2027. The tenant has reported declining revenue and a large reduction of its workforce following the COVID-19 pandemic. The most recent servicer update noted that the tenant was only utilizing approximately 40.0% of its space.
The servicer-reported occupancies and DSCs are: 94.0% / 1.41x (YTD June 2024), 94.0% / 1.53x (FY 2023); at closing these were 98.5% / 1.58x. As of June 2025, the loan is current on payments and not specially serviced. However, in the event of a default, KBRA estimates that it could experience a loss given default of $21.3 million on the loan balance of $72.0 million (29.6% estimated loss severity). The loss is based on a KBRA liquidation value of $43.6 million ($100 per sf). The value is derived from a direct capitalization approach using a KNCF of $3.9 million and a capitalization rate of 9.00%.

Bank of America Plaza (4th largest, 9.2%, K-LOC, Specially Serviced, Non-Performing Matured Balloon)

The loan is collateralized by a 1.4 million sf, Class-A office building in Los Angeles, California, within the city’s CBD.
KBRA maintains the loan's K-LOC designation based on its non-performing matured status with the special servicer as of May 2025, and heightened risk surrounding the sponsor Brookfield DLTA Holdings LLC. The loan failed to pay off at its September 2024 maturity. According to commentary, the special servicer is dual tracking modification discussions and other workout remedies. Cash management is currently in effect. In addition, the subject's third largest tenant Sheppard, Mullin, Richter & Hampton LLP (14.7%, 12.9%) vacated since last review, dropping physical occupancy to 66.8%, compared to 80.7% at last review and 89.5% at closing.
The servicer-reported occupancies and DSCs are: 67.0% / 1.61x (YTD March 2025), 79.0% / 2.04x (FY 2024), 86.0% / 2.23x (FY 2023); at closing these were 89.5% / 2.08x. The subject was reappraised for $212.5 million ($148 per sf) in December 2024, which is 64.8% below the $605.0 million ($422 per sf) value at issuance. As a result, an ARA of $202.7 million was assigned to the loan in January 2025, of which $11.8 million was allocated to the GSMS 2014-GC26 transaction. The ARA resulted in a cumulative ASER of $41,079 for this transaction. KBRA's analysis resulted in an estimated loss of $240.7 million on a whole loan balance of $400.0 million (60.2% estimated loss severity). The loss is based on a KBRA liquidation value of $170.0 million ($119 per sf). The value is derived from a direct capitalization approach using a KNCF of $17.0 million and a capitalization rate of 10.00%.

Rite Aid Pontiac (5th largest, 1.1%, K-LOC, Specially Serviced, Foreclosure)

The loan is collateralized by a 14,564 sf one-story retail property in Pontiac, Michigan. The property's sole tenant, Rite Aid, rejected its lease and the store was subsequently closed.
KBRA maintains the loan's K-LOC designation based on its foreclosure status. The loan was transferred to the special servicer in September 2024, after it became clear it would default at its October 2024 maturity. The lender began dual tracking foreclosure with potential workout strategies.
The servicer-reported occupancies and DSCs are: 100% / 0.82x (YTD June 2024), 100% / 1.42x (FY 2023); at closing these were 100% / 1.41x. The subject was reappraised for $2.1 million ($145 per sf) in January 2025, which is 60.5% below the $5.4 million ($367 per sf) value at issuance. As a result, an ARA of $586,366 was assigned to the loan in March 2025, resulting in a cumulative ASER of $9,401. KBRA's analysis resulted in an estimated loss of $1.6 million on the loan balance of $2.7 million (61.4% estimated loss severity). The loss is based on a distressed liquidation value of $1.2 million ($82 per sf). The value considers a distressed non-stabilized disposition of the asset.

Details concerning the ratings adjustments are as follows:

Class B to BBB (sf) from A (sf)
Class C to B (sf) from BB (sf)
Class PEZ to B (sf) from BB (sf)

Rating Sensitivities

Future rating actions will be dependent upon the ongoing assessment of the timing and likelihood of ultimate payment of principal and accrued interest on the rated certificates. The assessment will consider the expected and actual losses on the remaining assets in the transaction, as well as, the magnitude and extent of interest shortfalls, if any, on the certificates.

To access ratings and relevant documents, click here.

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CMBS: GSMS 2014-GC26 Pre-Sale Report

KBRA Downgrades Three Ratings and Affirms All Other Ratings for GSMS 2014-GC26

Rating Sensitivities

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