Fitch Ratings has affirmed 14 classes of
The Rating Outlook on class D has been revised to Stable from Negative, and the Outlooks on classes E and X-E remain Negative.
RATING ACTIONS
Entity / Debt
Rating
Prior
SGCMS 2016-C5
A-2 78419CAB0
LT
AAAsf
Affirmed
AAAsf
A-3 78419CAC8
LT
AAAsf
Affirmed
AAAsf
A-4 78419CAD6
LT
AAAsf
Affirmed
AAAsf
A-M 78419CAF1
LT
AAAsf
Affirmed
AAAsf
A-SB 78419CAE4
LT
AAAsf
Affirmed
AAAsf
B 78419CAK0
LT
AA-sf
Affirmed
AA-sf
C 78419CAL8
LT
A-sf
Affirmed
A-sf
D 78419CAV6
LT
BBB-sf
Affirmed
BBB-sf
E 78419CAX2
LT
B-sf
Affirmed
B-sf
Page
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VIEW ADDITIONAL RATING DETAILS
KEY RATING DRIVERS
Stable Loss Expectations: While Fitch's base case loss expectations have remained relatively stable since Fitch's prior rating action, the Outlook revision to Stable from Negative on class D reflects sufficient credit enhancement (CE) and the better than expected performance of loans affected by the pandemic.
This includes better than expected recoveries on one specially serviced retail asset,
Fitch's current ratings reflect a base case loss of 6.80%. Ten loans (25.4%), including six (9.8%) in special servicing, were designated FLOCs. The Negative Outlooks on classes E and X-E were maintained to reflect concerns with two regional mall FLOCs (9.6%) and one suburban office,
The largest specially serviced loan,
Fitch's base case loss of approximately 26% reflects a 12% cap rate and 15% total haircut to the YE 2021 NOI.
Regional Mall FLOCs: The largest loan in the pool,
Per the
The loan is sponsored by
Fitch's base case loss of approximately 10% reflects a 15% cap rate and 15% total haircut to the YE 2021 NOI.
Comparable in-line tenant sales were
Fitch's base case loss of approximately 32% reflects a 20% cap rate and 5% stress to the YE 2021 NOI. Fitch increased the loss recognition to account for the likelihood of maturity default.
Increasing Credit Enhancement: As of the
Pool Concentration: The top 10 loans comprise 47.2% of the pool. Loan maturities are concentrated in 2026 (70.9%), with two loans (5.8%) maturing in 2023 and 10 (23.2%) in 2025. Based on property type, the largest concentrations are office at 34.3%, retail at 29.7% and hotel at 19.9%.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative rating action/downgrade:
Downgrades of classes rated in the 'AAAsf' and 'AAsf' categories are not likely due to sufficient CE and the expected receipt of continued amortization but could occur if interest shortfalls affect the class. Classes C and D would be downgraded if additional loans become FLOCs or if performance of the FLOCs deteriorates further. Classes E, X-E, F and X-F would be downgraded if loss expectations increase, primarily on the regional mall FLOCs and specially serviced loans, additional loans transfer to special servicing or if losses are realized.
Fitch has identified both a baseline and a worse-than-expected, adverse stagflation scenario based on fallout from the
Factors that could, individually or collectively, lead to positive rating action/upgrade:
Upgrades of classes B, X-B, C and D may occur with significant improvement in CE and/or defeasance but would be limited based on sensitivity to concentrations or the potential for future concentration. Classes would not be upgraded above 'Asf' if there is a likelihood for interest shortfalls. Upgrades of classes E, X-E, F and X-F could occur if performance of the FLOCs improves significantly and/or if there is sufficient CE, which would likely occur if the non-rated classes are not eroded and the senior classes pay-off.
Best/Worst Case Rating Scenario
International scale credit ratings of Structured Finance transactions have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of seven notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of seven notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAAsf' to 'Dsf'. Best- and worst-case scenario credit ratings are based on historical performance. For more information about the methodology used to determine sector-specific best- and worst-case scenario credit ratings, visit https://www.fitchratings.com/site/re/10111579.
USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10
Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
ESG Considerations
Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg.
Additional information is available on www.fitchratings.com
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