CHICAGO--(BUSINESS WIRE)-- Fitch Ratings downgrades five classes of GS Mortgage Securities Corporation II, series 2006-GG6, commercial mortgage pass-through certificates, due to further deterioration of performance, increased loss expectations on the specially serviced loans and realized losses from dispositions. A detailed list of rating actions follows at the end of this release.

The downgrades reflect a slight increase in Fitch modeled losses across the pool combined with greater certainty of losses for the loans in special servicing. Fitch modeled losses of 10.4% (10.6% cumulative transaction losses, which includes losses realized to date) based on expected losses on the specially serviced loans and loans that could not refinance at maturity.

As of the October 2011 distribution date, the pool's aggregate principal balance has decreased 17.8% to $3.2 billion from $3.9 billion at issuance. As of October 2011, there are cumulative interest shortfalls in the amount of $21.3 million, currently affecting classes F through S. Fitch has designated 65 loans (39.2%) as Fitch Loans of Concern, which includes 25 specially serviced loans (23.7%).

The largest contributor to losses is the Showplace Portfolio loan (1.1%). The loan had a balance of $78.3 million which was written down to $36.8 million as part of a modification. The loan is secured by five properties comprising 699,474 square feet (sf) located in High Point, North Carolina. The properties contain showroom (72.9% of NRA), office/retail space (15.8% of NRA) as well as exhibition space (11.2% of NRA). The properties are situated in an area known as the International Home Furnishings Market, an area of High Point that consists of more than 12 million sf of showroom and exhibition space across 180 buildings that serve the home furnishing industry.

The loan transferred to the special servicer in November 2010 for maturity default. The portfolio was sold in July 2011 and the loan was assumed, extended and the principal balance was written down. Realized losses have been incurred by the trust as a result of the write down. The loan remains more than 90 days delinquent, but is expected to be made current and returned to the master servicer once the modification is finalized.

The second largest contributor to loss is the Silver Creek Portfolio Phase I loan (2.1%), which is secured by 37 cross-collateralized and cross-defaulted retail strip shopping centers totaling 636,166 sf located across 17 states primarily in the mid-west. Thirty of the properties (87.7% NRA) are shadow-anchored by Super Wal-Marts, while the remaining seven are unanchored. The loan transferred to the special servicer in January 2010 for monetary default. Decreasing occupancy levels and continued pressure on rental rates are the primary causes of the performance decline. The special servicer continues to negotiate with the borrower while dual tracking foreclosure. A recent appraisal indicates significant losses. The loan is more than 90 days delinquent.

The third largest contributor to losses is the Atrium at Empire Lakes loan (1.6%) which is collateralized by a two-story, 390,480 sf office building located in Rancho Cucamonga, California. The loan transferred to the special servicer in June 2009 when the largest tenant (75% of NRA) vacated the premises. There has been some progress in leasing but the environment remains challenging and the property is 37% occupied. A recent appraisal indicates significant losses. The loan is more than 90 days delinquent.

Fitch has downgraded the following classes as indicated:

--$43.9 million class F to 'CCsf/RR3' from 'CCCsf/RR3';

--$39 million class H to 'Csf/RR6' from 'CCsf/RR6';

--$43.9 million class J to 'Csf/RR6' from 'CCsf/RR6';

--$43.9 million class K to 'Csf/RR6' from 'CCsf/RR6';

--$24.4 million class L to 'Csf/RR6' from 'CCsf/RR6'.

Additionally, Fitch has affirmed and assigned Recovery the following classes:

--$579.5 million class A-2 at 'AAAsf'; Outlook Stable;

--$75.6 million class A-3 at 'AAAsf'; Outlook Stable;

--$169.5 million class A-AB at 'AAAsf'; Outlook Stable;

--$1 billion class A-4 at 'AAAsf'; Outlook Stable;

--$288.2 million class A-1A at 'AAAsf'; Outlook Stable;

--$390.1 million class A-M at 'AAAsf'; Outlook Stable;

--$292.6 million class A-J at 'BBB-'; Outlook Negative.

--$19.5 million class B at 'BBsf'; Outlook Negative;

--$48.8 million class C at 'Bsf'; Outlook Negative;

--$39 million class D at 'CCCsf/RR1';

--$29.3 million class E at 'CCCsf/RR1';

--$39 million class G at 'CCsf/RR4';

--$14.6 million class M at 'Csf/RR6';

--$19.5 million class N at 'Csf/RR6'.

Class A-1 has been paid in full. Class S is not rated by Fitch. Classes O, P and Q have realized losses and remain at 'Dsf/RR6'. Fitch withdrew the ratings of the interest only classes X-C and X-P. (For additional information, see 'Fitch Revises Practice for Rating IO & Pre-Payment Related Structured Finance Securities', dated June 23, 2010.)

Additional information on Fitch's criteria for analyzing U.S. CMBS transactions is available in the Nov. 17, 2010 report, 'Surveillance Methodology for U.S. Fixed-Rate CMBS Transactions', which is available at 'www.fitchratings.com' under the following headers:

Structured Finance then CMBS then Criteria Reports

Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' (Aug. 4, 2011);

--'Surveillance Methodology for U.S. Fixed-Rate CMBS Transactions' (Nov. 17, 2010).

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=646569

Surveillance Methodology for U.S. Fixed-Rate CMBS Transactions

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=574208

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