NEW YORK--(BUSINESS WIRE)--Fitch Ratings has assigned the following ratings and Ratings Outlooks to the Credit Suisse Commercial Mortgage Trust 2016-C7 pass-through certificates:
--$40,491,000 class A-1 'AAAsf'; Outlook Stable;
--$5,938,000 class A-2 'AAAsf'; Outlook Stable;
--$15,900,000 class A-3 'AAAsf'; Outlook Stable;
--$163,000,000 class A-4 'AAAsf'; Outlook Stable;
--$246,354,000 class A-5 'AAAsf'; Outlook Stable;
--$65,656,000 class A-SB 'AAAsf'; Outlook Stable;
--$590,113,000b class X-A 'AAAsf'; Outlook Stable;
--$29,746,000b class X-B 'AA-sf'; Outlook Stable;
--$52,774,000 class A-S 'AAAsf'; Outlook Stable;
--$29,746,000 class B 'AA-sf'; Outlook Stable;
--$37,422,000 class C 'A-sf'; Outlook Stable;
--$23,029,000ab class X-E 'BB-sf'; Outlook Stable;
--$9,595,000ab class X-F 'B-sf'; Outlook Stable;
--$45,098,000a class D 'BBB-sf'; Outlook Stable;
--$23,029,000a class E 'BB-sf'; Outlook Stable;
--$9,595,000a class F 'B-sf'; Outlook Stable.
Fitch does not rate the $32,624,581ab class X-NR and the $32,624,581a class NR.
a) Privately placed pursuant to Rule 144A.
b) Notional amount and interest-only.
The certificates represent the beneficial ownership interest in the trust, primary assets of which are 53 loans secured by 199 commercial properties having an aggregate principal balance of $767,627,581 as of the cut-off date. The loans were contributed to the trust by Column Financial Inc., 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 72.2% of the properties by balance, cash flow analysis of 80.6%, and asset summary reviews of 100% of the pool.
KEY RATING DRIVERS
Fitch Leverage In-Line with Recent Transactions: The Fitch loan to value (LTV) and debt service coverage ratio (DSCR) are 104.7% and 1.16x, respectively, compared to the year-to-date (YTD) averages of 105.8% and 1.19x. Excluding credit opinion loans and loans secured by multifamily cooperative properties, Fitch's normalized LTV and DSCR are 109.6% and 1.11x, respectively.
Above-Average Amortization: Based on the scheduled balance at maturity, the pool will pay down 16.2%, which is above the YTD average of 10.3%. Two loans representing 8.6% of the pool are interest-only loans, 17 loans representing 40.0% of the pool are partial interest-only, and the remaining 35 loans (51.4% of the pool) are balloon loans with loan terms of five to 10 years.
Highly Correlated Pool by Property Type and Geography: The largest property type concentration is retail at 40.7% of the pool, followed by office at 27.7% and multifamily at 18.5%. The pool is highly concentrated by geography with 30.3% of the pool in Florida. Additionally, 50.5% of the pool is located in the Southeast BEA Geographic region.
Credit Opinion Loans: Two loans, representing 8.6% of the pool, have investment-grade credit opinions. The 9 West 57th Street senior note (6.5% of the pool) contributed to the trust has an investment-grade credit opinion of 'AAAsf*' on a stand-alone basis. GLP Industrial Portfolio Pool B (2.1% of the pool) has an investment-grade credit opinion of 'A+sf*' on a stand-alone basis and 'AAAsf*' on a pooled basis.
For this transaction, Fitch's net cash flow (NCF) was 12.3% 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 CSAIL 2016-C7 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 page 10.
DUE DILIGENCE USAGE
Fitch was provided with due diligence information from KPMG LLP. The due diligence focused on a comparison and re-computation of certain characteristics with respect to each of the mortgage loans. Fitch considered this information in its analysis and the findings did not have an impact on our analysis/conclusions. A copy of the ABS Due Diligence Form 15-E received by Fitch in connection with this transaction may be obtained through the link contained on the bottom of the related rating action commentary.
REPRESENTATIONS, WARRANTIES AND ENFORCEMENT MECHANISMS
A description of the transaction's representations, warranties and enforcement mechanisms (RW&Es) that are disclosed in the offering document and which relate to the underlying asset pool is available by accessing the appendix referenced under "Related Research" below. The appendix also contains a comparison of these RW&Es to those Fitch considers typical for the asset class as detailed in the Special Report titled 'Representations, Warranties and Enforcement Mechanisms in Global Structured Finance Transactions,' dated May 31, 2016.
Additional information is available at www.fitchratings.com.
Counterparty Criteria for Structured Finance and Covered Bonds (pub. 01 Sep 2016)
Criteria for Analyzing Large Loans in U.S. Commercial Mortgage Transactions (pub. 18 Aug 2016)
Criteria for Analyzing Multiborrower U.S. and Canadian Commercial Mortgage Transactions (pub. 01 Jul 2016)
Criteria for Rating Caps and Limitations in Global Structured Finance Transactions (pub. 16 Jun 2016)
Global Structured Finance Rating Criteria (pub. 27 Jun 2016)
Rating Criteria for Structured Finance Servicers (pub. 01 Jul 2016)
Rating Criteria for U.S. Commercial Mortgage Servicers (pub. 14 Feb 2014)
U.S. and Canadian Multiborrower CMBS Surveillance Criteria (pub. 11 Nov 2016)
CSAIL 2016-C7 Commercial Mortgage Trust -- Appendix
Dodd-Frank Rating Information Disclosure Form
ABS Due Diligence Form 15E 1
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