Morningstar DBRS Confirms Credit Ratings on All Classes of GSMS Trust 2024-FAIR

DBRS Limited (Morningstar DBRS) confirmed the credit ratings on all classes of Commercial Mortgage Pass-Through Certificates, Series 2024-FAIR issued by GSMS Trust 2024-FAIR as follows:

-- Class A at AAA (sf)
-- Class B at AA (sf)
-- Class C at A (high) (sf)
-- Class D at BBB (low) (sf)
-- Class E at BB (low) (sf)
-- Class F at B (low) (sf)

All trends are Stable.

The credit rating confirmations reflect the stable performance of the transaction in the relatively short time since closing in July 2024.

The transaction is secured by the leasehold interest in the Fairmont Austin hotel, a 1,048-key full-service hotel in Austin, Texas. The hotel opened in 2018 and is well-located in the Austin central business district, adjacent to Rainey Street Historic District and just half a mile from 6th Street, a popular entertainment area in Austin. The hotel is adjacent to the Austin Convention Center (ACC), a significant demand driver, which is currently undergoing renovations until March 2029. Amenities at the property include five food and beverage outlets, a seventh-floor rooftop terrace with a swimming pool, 14 private cabanas, lounge spaces, an outdoor bar, and a full-service spa. Additionally, the hotel has nearly 139,000 square feet (sf) of meeting space spread across seven spaces, the largest of which is a 31,125-sf ballroom.

The transaction comprises a five-year, fixed-rate, interest-only loan totaling $430.0 million which, along with $50.3 million sponsor equity, was used to refinance existing debt and buy out the minority interest in the property. The loan is sponsored by Manchester Financial Group, a privately held hotel and commercial real estate firm focused on acquisition, development, and management of high-profile properties throughout the United States. Since its 2018 completion, the sponsor has invested approximately $9.2 million to improve back of house, cover operating capital costs, update meeting room and banquet spaces, and improve guest rooms and corridors. Additional capital improvements totaling $21.3 million are expected to be completed throughout the loan term.

According to the trailing 12-month (T-12) ended March 31, 2025, financials, the collateral reported a net cash flow (NCF) of $37.0 million, resulting in a debt service coverage ratio of 1.10 times (x), compared with the issuer's underwritten figure of $40.2 million (DSCR of 1.20x) and Morningstar DBRS NCF of $36.4 million (DSCR of 1.10x). Per the most recent STR report, the collateral reported a T-12 ended February 28, 2025, occupancy, average daily rate, and revenue per available room (RevPAR) of 67.5%, $293, and $198, respectively, slightly less than the Morningstar DBRS figures of 70.3%, $289, and $203, respectively. While Morningstar DBRS believes the property's location, strong amenities, projected capital expenditure, and experienced sponsorship could support modest RevPAR growth, given the supply increases and the threats to group travel with the ongoing renovations at the ACC, Morningstar DBRS elected to apply a discount to its RevPAR figure in its NCF analysis.

For the purposes of this credit rating action, Morningstar DBRS maintained the valuation approach from issuance, which was based on a leasehold capitalization (cap) rate of 8.14% (implied based on a fee-simple cap rate of 8.0% for the property) applied to the Morningstar DBRS NCF of $36.4 million. The resulting value of $447.0 million represents a variance of -27.3% from the issuance appraised value of $615.0 million and corresponds to a loan-to-value ratio (LTV) of 96.2%. Morningstar DBRS maintained positive qualitative adjustments of 5.5% to the LTV sizing benchmarks to account for the collateral's recent construction and strong property quality, its location in the heart of downtown Austin adjacent to several demand drivers, and historically stable performance.

Morningstar DBRS' credit ratings on the applicable classes address the credit risk associated with the identified financial obligations in accordance with the relevant transaction documents. Where applicable, a description of these financial obligations can be found in the transactions' respective press releases at issuance.

Morningstar DBRS' long-term credit ratings provide opinions on risk of default. Morningstar DBRS considers risk of default to be the risk that an issuer will fail to satisfy the financial obligations in accordance with the terms under which a long-term obligation has been issued. The Morningstar DBRS short-term debt rating scale provides an opinion on the risk that an issuer will not meet its short-term financial obligations in a timely manner.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS  
There were no Environmental/Social/Governance factor(s) that had a significant or relevant effect on the credit analysis.
 
A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (May 16, 2025), https://dbrs.morningstar.com/research/454196.

All credit ratings are subject to surveillance, which could result in credit ratings being upgraded, downgraded, placed under review, confirmed, or discontinued by Morningstar DBRS.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The principal methodology is North American CMBS Surveillance Methodology (February 28, 2025), https://dbrs.morningstar.com/research/448963.

Other methodologies referenced in this transaction are listed at the end of this press release.

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link under Related Documents or by contacting us at info-DBRS@morningstar.com.

The credit ratings were initiated at the request of the rated entity.

The rated entity or its related entities did participate in the credit rating process for these credit rating actions.

Morningstar DBRS had access to the accounts, management, and other relevant internal documents of the rated entity or its related entities in connection with these credit rating actions.

These are solicited credit ratings.

For more information on Morningstar DBRS' policy regarding the solicitation status of credit ratings, please refer to the Credit Ratings Global Policy, which can be found in the Morningstar DBRS Understanding Ratings section of the website: https://dbrs.morningstar.com/understanding-ratings

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the credit rating process.

DBRS Limited
DBRS Tower, 181 University Avenue, Suite 600
Toronto, ON M5H 3M7 Canada
Tel. +1 416 593-5577

The credit rating methodologies used in the analysis of this transaction can be found at: https://dbrs.morningstar.com/about/methodologies.

-- North American Single-Asset/Single-Borrower Ratings Methodology (February 28, 2025), https://dbrs.morningstar.com/research/448962
-- Morningstar DBRS North American Commercial Real Estate Property Analysis Criteria (September 19, 2024), https://dbrs.morningstar.com/research/439702
-- Legal Criteria for U.S. Structured Finance (December 3, 2024), https://dbrs.morningstar.com/research/444064
-- North American Commercial Mortgage Servicer Rankings (August 23, 2024), https://dbrs.morningstar.com/research/438283

A description of how Morningstar DBRS analyzes structured finance transactions and how the methodologies are collectively applied can be found at (July 17, 2023), https://dbrs.morningstar.com/research/417279.

For more information on this credit or on this industry, visit https://dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.