OREANDA-NEWS. Fitch Ratings has downgraded three classes and affirmed 16 classes of GS Mortgage Securities Corporation II (GSMSC II) commercial mortgage pass-through certificates, series 2006-GG8. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The downgrades to the already distressed classes are due to increased certainty of losses on specially serviced loans. Fitch modeled losses of 11.2% of the remaining pool. Expected losses on the original pool balance total 14.2%, including \$304.5 million (7.2% of the original pool balance) in realized losses to date. Fitch has designated 72 loans (47.9%) as Fitch Loans of Concern, which includes 10 specially serviced assets (5.8%).

As of the January 2015 distribution date, the pool's aggregate principal balance has been reduced by 37.1% to \$2.67 billion from \$4.24 billion at issuance. Per the servicer reporting, three loans (7.6% of the pool) are defeased, including the largest loan, 222 South Riverside Plaza. Interest shortfalls are currently affecting classes C through S.

The largest contributor to expected losses is the real-estate owned (REO) Ariel Preferred Portfolio (2.1% of the pool), the remaining asset isa retail outlet located in Medford, MN. Five of the original six properties have been sold. The portfolio had transferred to special servicing in June 2009 for imminent default. The most recent servicer reported occupancy was 72% as of December 2014.

The next largest contributor to modeled losses is the Gallery at Cocowalk loan (2.9% of the pool). The modified loan is split between an A-note (1.8% of the pool) and B-note or 'hope note' (1% of the pool). The loan is backed by an approximately 198,000 square foot (sf) mixed-use property located in Coconut Grove, FL, south of Miami. The tenants include a movie theater and a mix of national retailers and chain restaurants. The servicer reported September 2014 occupancy was 86.5%.

The third largest contributor to modeled losses is the Fair Lakes Office Park loan (4.4% of the pool). The pari passu loan is secured by an approximately 1.25 million sf, nine-building office property located in Fairfax, VA near I-66 and the Fairfax County Parkway. The reported occupancy as of September 2014 was 79% (down from 99% at issuance). A large tenant representing 21% of the net rentable area (NRA) is vacating two buildings in 2015. The loan is scheduled to mature in August 2016.

RATING SENSITIVITY

Rating Outlooks on classes A-4 through A-M are Stable due to increasing credit enhancement and continued paydown. All of the remaining loans are scheduled to mature before year-end 2016.

Fitch downgrades the following classes as indicated:

--\$53 million class C to 'CCsf' from 'CCCsf'; RE 0%;
--\$37.1 million class D to 'Csf' from 'CCsf'; RE 0%;
--\$37.1 million class E to 'Csf' from 'CCsf'; RE 0%.

Fitch affirms the following classes and assigns or revises Rating Outlooks and REs as indicated:

--\$424.3 million class A-M at 'Asf'; Outlook to Stable from Negative;
--\$302.3 million class A-J at 'CCCsf'; RE 80%.

Fitch affirms the following classes as indicated:

--\$1.6 billion class A-4 at 'AAAsf'; Outlook Stable;
--\$128.7 million class A-1A at 'AAAsf'; Outlook Stable;
--\$26.5 million class B at 'CCCsf'; RE 0%;
--\$42.4 million class F at 'Csf'; RE 0%;
--\$45.5 million class G at 'Dsf'; RE 0%.

Classes H, J, K, L, M, N, O, P and Q are fully depleted and are affirmed at 'Dsf', RE 0% due to realized losses.

The class A-1, A-2, A-3 and A-AB certificates have paid in full. Fitch does not rate the fully depleted class S certificates. Fitch previously withdrew the rating on the interest-only class X certificates.

Additional information on Fitch's criteria for analyzing U.S. CMBS transactions is available in the Dec. 10, 2014 report, 'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria', which is available at 'www.fitchratings.com' under the following headers:

Structured Finance >> CMBS >> Criteria Reports