Press Release|CMBS
View PDF

KBRA Downgrades Three Ratings and Removes Three Classes from Watch Downgrade for GSMS 2015-GC28

25 Aug 2025   |   New York

Contacts

KBRA downgrades all outstanding ratings for GSMS 2015-GC28, a $72.6 million CMBS conduit transaction that has four specially serviced assets remaining in the underlying mortgage pool. Simultaneously, KBRA removes the ratings from Watch Downgrade (DN), where they were placed on May 27, 2025. The rating actions are driven by an increase in KBRA's estimated losses for the four remaining assets. We also considered the magnitude, recoverability and likelihood of continued interest shortfalls across the capital structure as the special servicer works to resolve the non-performing assets. The servicer has already made non-recoverable determinations for all four of the loans.

As of the August 2025 remittance period, the transaction has four remaining assets, each of which has been identified as a K-LOC and is specially serviced. Two loans are in foreclosure (70.9% of the pool) and two are matured non-performing (29.1%). The details of the remaining assets are outlined below.

 The Avenue at Lubbock (largest, 49.2%, K-LOC, Specially Serviced, Foreclosure)

  • The loan is collateralized by a 788-bed (263 unit), Class-A student housing complex located in Lubbock, Texas, approximately two miles west of Texas Tech University (TTU). The property consists of 19 three-story buildings.
  • KBRA maintains the loan's K-LOC designation and KPO of Underperform based on its transfer to the special servicer in December 2024 after failing to pay off at loan maturity. Financial performance at the subject property declined between 2020 and 2023 as a result of an increase in operating expenses, mainly repairs and maintenance expenses. The sponsor listed the asset for sale in August 2024 but was unable to sell it prior to loan maturity. The special servicer initiated the foreclosure process in July 2025.
  • The servicer-reported occupancies and DSCs are: 73.0% / 1.02x (FY 2024); 94.0% / 1.15x (FY 2023); at closing these were 97.0% / 1.28x. An appraisal dated March 2025 valued the property at $29.5 million ($37,437 per bed), which is 43.6% below the $52.3 million ($66,371 per bed) value at issuance. The asset was deemed non-recoverable in February 2025 and an ARA of $8.1 million was applied to the loan in April 2025. KBRA’s analysis resulted in an estimated loss of $15.1 million (42.2% estimated loss severity). The loss is based on a KBRA liquidation value of $21.9 million ($27,780 per bed). The value is derived from a direct capitalization approach using a KNCF of $2.0 million and a capitalization rate of 9.00%.

411 Seventh Avenue (2nd largest, 24.9%, K-LOC, Specially Serviced, Matured Non-Performing)

  • The loan is collateralized by a 301,771 sf, Class-B office building located in the Pittsburgh, Pennsylvania CBD. The development consists of a 16-story building that features a 14,711 sf conference center and 5,425 sf of ground-floor retail space. The asset does not offer onsite parking; however, it is within walking distance of several neighborhood parking facilities.
  • KBRA maintains the loan's K-LOC designation and KPO of Underperform due to its matured non-performing status with the special servicer, along with a decline in occupancy and DSC since closing. The subject property faced a decline in occupancy since issuance, with the most recent occupancy reported at 59.0% in September 2024. Additionally, the largest tenant at the property, Duquesne Light Company (51.3% of base rent), gave notice that it will vacate the property prior to lease expiration in October 2029. The company's departure would reduce occupancy to roughly 23.0%. Given the timing of the tenant's exit plans, the borrower was unable to refinance the loan prior to loan maturity in January 2025. In July 2025, the special servicer indicated that the borrower was considering a forbearance agreement.
  • The servicer-reported occupancies and DSCs are: 59.0% / 1.12x (YTD September 2024); 67.0% / 1.12x (FY 2023); at closing these were 83.0% / 1.28x. An appraisal dated March 2025 valued the property at $16.4 million ($42 per sf), which is 48.9% below the $32.1 million ($106 per sf) value at issuance. The asset was deemed non-recoverable in February 2025 and an ARA of $2.1 million was applied to the loan in May 2025. KBRA’s analysis resulted in an estimated loss of $5.9 million (32.6% estimated loss severity). The loss is based on a KBRA liquidation value of $12.7 million ($42 per sf). The value is derived from a direct capitalization approach using a stabilized KNCF of $1.3 million and a capitalization rate of 9.25%.

Iron Horse Hotel (3rd largest, 21.7%, K-LOC, Specially Serviced, Foreclosure)

  • The loan is collateralized by a six-story, 100-key, full-service boutique hotel located in Milwaukee, Wisconsin, within the Walker’s Point neighborhood south of the CBD.
  • KBRA maintains the loan’s K-LOC designation and KPO of Underperform due to its delinquency and specially serviced status. The property's cash flow declined prior to the pandemic and the loan was transferred to the special servicer for imminent monetary default in April 2020. In mid-2022, the borrower filed for bankruptcy protection. Servicer watchlist commentary in July 2024 stated the borrower and lender entered into a forbearance agreement. However, no details were provided regarding the forbearance agreement. In June 2025, a receiver was appointed to the property and a foreclosure sale is anticipated in October or November 2025.
  • The servicer-reported occupancies and DSCs are: 63.0% / 0.26x (FY 2024); 61.0% / -0.03x (FY 2023); at closing these were 80.0% / 1.83x. An appraisal dated May 2025 valued the property at $22.5 million ($225,000 per key), which is 23.0% below the $29.2 million ($292,000 per key) value at issuance. The asset was deemed non-recoverable in February 2025. KBRA’s analysis resulted in an estimated loss of $7.4 million (47.3% estimated loss severity). The loss is based on a KBRA liquidation value of $9.3 million ($93,000 per key). The value is derived from a direct capitalization approach using a KNCF of $717,611 and a capitalization rate of 11.00%.

Denim Lofts (4th largest, 4.2%, K-LOC, Matured Non-Performing)

  • The loan is collateralized by a 23-unit multifamily property in St. Louis, Missouri, within the city's CBD. The seven-story property is located near Interstate 44 and Interstate 64, with access to Illinois.
  • KBRA maintains the loan as a K-LOC and assigned a KPO of Underperform due to its non-performing status, low DSCR, and specially serviced status. The loan transferred to the special servicer in November 2024 after falling delinquent prior to maturity. The borrower then submitted a DPO offer, which was not accepted by the special servicer. In May 2025, the special servicer received approval to initiate foreclosure proceedings and a receiver was appointed. The receiver is working on operational items and repairs at the property.
  • The servicer-reported occupancies and DSCs are: 96.0% / 0.90x (FY 2024); 100.0% / 1.05x (FY 2023); at closing these were 87.0% / 1.27x. An appraisal dated April 2025 valued the property at $3.0 million ($131,304 per unit), which is 17.8% below the $5.1 million ($222,174 per unit) value at issuance. The asset was deemed non-recoverable in February 2025 and an ARA of $226,000 was applied to the loan in May 2025. KBRA’s analysis resulted in an estimated loss of $1.2 million (40.5% estimated loss severity). The loss is based on a KBRA liquidation value of $2.1 million ($91,367 per unit). The value is derived from a direct capitalization approach using a KNCF of $183,876 and a capitalization rate of 8.75%.

Details concerning the classes with ratings changes, including the three classes that were removed from Watch Downgrade are as follows:

  • Class D to BB (sf) from BBB- (sf) DN
  • Class E to CCC (sf) from B (sf) DN
  • Class F to CC (sf) from CCC (sf) DN

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.

Related Publications

Methodologies

Disclosures

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA), one of the major credit rating agencies (CRA), is a full-service CRA registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a Designated Rating Organization (DRO) by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized as a Qualified Rating Agency by Taiwan’s Financial Supervisory Commission and is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider (CRP) in the U.S.

Doc ID: 1010932