NEW YORK--(BUSINESS WIRE)--Fitch Ratings has issued a presale report on the Societe Generale Commercial Mortgage Securities Trust 2016-C5 Pass-Through Certificates, Series 2016-C5. Fitch expects to rate the transaction and assign Rating Outlooks as follows:
--$30,047,000 class A-1 'AAAsf'; Outlook Stable;
--$92,155,000 class A-2 'AAAsf'; Outlook Stable;
--$165,000,000 class A-3 'AAAsf'; Outlook Stable;
--$188,922,000 class A-4 'AAAsf'; Outlook Stable;
--$39,644,000 class A-SB 'AAAsf'; Outlook Stable;
--$50,656,000 class A-M 'AAAsf'; Outlook Stable;
--$566,424,000b class X-A 'AAAsf'; Outlook Stable;
--$35,919,000b class X-B 'AA-sf'; Outlook Stable;
--$33,157,000b class X-C 'A-sf'; Outlook Stable;
--$35,919,000 class B 'AA-sf'; Outlook Stable;
--$33,157,000 class C 'A-sf'; Outlook Stable;
--$39,603,000ab class X-D 'BBB-sf'; Outlook Stable;
--$19,342,000ab class X-E 'BB-sf'; Outlook Stable;
--$8,289,000ab class X-F 'B-sf'; Outlook Stable;
--$39,603,000a class D 'BBB-sf'; Outlook Stable;
--$19,342,000a class E 'BB-sf'; Outlook Stable;
--$8,289,000a class F 'B-sf'; Outlook Stable.
(a) Privately placed and pursuant to Rule 144A.
(b) Notional amount and interest-only.
The expected ratings are based on information provided by the issuer as of June 20, 2016. Fitch does not expect to rate the following classes:
--$34,077,980 class X-G;
--$34,077,980 class G.
The certificates represent the beneficial ownership interest in the trust, primary assets of which are 47 loans secured by 138 commercial properties having an aggregate principal balance of approximately $736.8 million as of the cutoff date. The loans were contributed to the trust by Societe Generale, Cantor Commercial Real Estate Lending, L.P., Natixis Real Estate Capital LLC, Benefit Street Partners CRE Finance LLC, and Silverpeak Real Estate Finance LLC.
Fitch reviewed a comprehensive sample of the transaction's collateral including site inspections on 71.4% of the properties by balance, cash flow analysis of 80.6%, and asset summary reviews on 80.6% of the pool.
KEY RATING DRIVERS
Fitch Leverage: The pool's leverage statistics are in line with other recent Fitch-rated, fixed-rate multiborrower transactions. The pool's Fitch debt service coverage ratio (DSCR) of 1.15x is slightly below the year-to-date (YTD) 2016 average of 1.17x and full-year 2015 average of 1.18x. The pool's Fitch loan to value (LTV) of 107.7% is in line with the YTD 2016 average of 107.5% and below the full-year 2015 average of 109.3%.
High Hotel Concentration: Approximately 20.9% of the pool by balance, including one of the top 10 loans (4.7%), consists of a hotel property, which is higher than the YTD 2016 average of 15.9% and the 2015 average of 17.0%; hotels have the highest probability of default in Fitch's multiborrower CMBS model.
Less Concentrated Pool: The largest 10 loans in the transaction compose 43.4% of the pool by balance. Compared to other Fitch-rated U.S. multiborrower deals, the concentration in this transaction is lower than the YTD 2016 and full-year 2015 average concentrations of 55.4% and 49.3%, respectively. The pool's concentration results in a loan concentration index (LCI) of 308, which is lower than the 2015 average of 367.
RATING SENSITIVITIES
For this transaction, Fitch's net cash flow (NCF) was 14.1% below the most recent year's net operating income (NOI; for properties for which a full-year NOI was provided, excluding properties that were stabilizing during this period). Unanticipated further declines in property-level NCF could result in higher defaults and loss severities on defaulted loans and in potential rating actions on the certificates.
Fitch evaluated the sensitivity of the ratings assigned to SGCMS 2016-C5 certificates and found that the transaction displays average sensitivity to further declines in NCF. In a scenario in which NCF declined a further 20% from Fitch's NCF, a downgrade of the junior 'AAAsf' certificates to 'BBB+sf' could result. In a more severe scenario, in which NCF declined a further 30% from Fitch's NCF, a downgrade of the junior 'AAAsf' certificates to 'BBB-sf' could result. The presale report includes a detailed explanation of additional stresses and sensitivities on pages 10-11.
DUE DILIGENCE USAGE
No third-party due diligence was provided to or reviewed by Fitch in relation to this transaction.
Additional information is available at www.fitchratings.com.
SG Commercial Mortgage Securities Trust 2016-C5
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=883243
Applicable Criteria
Criteria for Analyzing Large Loans in U.S. Commercial Mortgage Transactions (pub. 27 Aug 2015)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=870009
Criteria for Analyzing Multiborrower U.S. and Canadian Commercial Mortgage Transactions (pub. 03 Mar 2016)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=878298
Criteria for Rating Caps and Limitations in Global Structured Finance Transactions (pub. 16 Jun 2016)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=882401
Exposure Draft: Counterparty Criteria for Structured Finance and Covered Bonds (pub. 14 Apr 2016)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=878412
Global Structured Finance Rating Criteria (pub. 06 Jul 2015)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952
Rating Criteria for Structured Finance Servicers (pub. 23 Apr 2015)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=864375
Rating Criteria for U.S. Commercial Mortgage Servicers (pub. 14 Feb 2014)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=735382
U.S. and Canadian Fixed-Rate Multiborrower CMBS Surveillance and U.S. Re-REMIC Criteria (pub. 13 Nov 2015)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=873395
Related Research
SG Commercial Mortgage Securities Trust 2016-C5 - Appendix
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=884053
Additional Disclosures
Dodd-Frank Rating Information Disclosure Form
https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1007828
Solicitation Status
https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1007828
Endorsement Policy
https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.