Fitch Ratings has affirmed 13 classes of CFCRE 2016-
Fitch has also revised the Rating Outlook on class D to Stable from Negative. The Rating Outlooks on classes E and X-E remain Negative.
RATING ACTIONS
Entity / Debt
Rating
Prior
CFCRE 2016-C6
A-2 12532AAY5
LT
AAAsf
Affirmed
AAAsf
A-3 12532AAZ2
LT
AAAsf
Affirmed
AAAsf
A-M 12532ABA6
LT
AAAsf
Affirmed
AAAsf
A-SB 12532AAX7
LT
AAAsf
Affirmed
AAAsf
B 12532ABB4
LT
AA-sf
Affirmed
AA-sf
C 12532ABC2
LT
A-sf
Affirmed
A-sf
D 12532AAA7
LT
BBB-sf
Affirmed
BBB-sf
E 12532AAC3
LT
B-sf
Affirmed
B-sf
F 12532AAE9
LT
CCCsf
Affirmed
CCCsf
Page
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VIEW ADDITIONAL RATING DETAILS
KEY RATING DRIVERS
Improved Loss Expectations: The Outlook revision to Stable from Negative on class D reflects performance stabilization of properties that were affected by the pandemic, including the return of two previously specially serviced loans to the master servicer (Inn at the Colonnade and
Seven loans (17.5%) have been flagged as Fitch Loans of Concern (FLOCs); including specially serviced loans (6.8%). Three loans (15.1%) have been flagged for high vacancy, low NOI debt service coverage ratio (DSCR) and/or pandemic-related underperformance.
The largest FLOC and largest contributor to expected losses is 7th & Pine Seattle Retail & Parking (8.2%), retail/parking garage located within the downtown Seattle CBD. Subject YE 2021 NOI DSCR has fallen to 0.58x compared to NOI DSCR of 1.71x. The decline in performance is largely due to the decline in rent from relief granted in response to the coronavirus pandemic. In particular, the subject's largest tenant, Standard Parking (NRA 93%), has been paying abated rent since 2020. At issuance, Standard Parking accounted for approximately 74% of underwritten rents.
This loan had previously transferred to special servicing in
The second largest contributor to expected losses is the
The mall is demonstrating a strong recovery from the effects of the pandemic. As of YE 2021, occupancy improved to 93% compared to 85% at YE 2020 and 92.5% at YE 2019. In addition, sales are approaching pre-pandemic levels. As of the TTM ended
Inline sales were
The third largest contributor to expected losses is
Fitch's base case loss of approximately 21.9% uses a 12% cap rate to reflect Fitch's concerns of secular changes in the demand for office properties and a 10% haircut to the YE 2021 NOI to account for recent departure of the third largest tenant.
Minimal Change in Credit Enhancement: As of the
ADDITIONAL LOSS CONSIDERATIONS
Retail and Regional Mall Concentration: In this transaction, there are 17 loans comprising 47.2% of the pool which are secured by retail properties. At issuance, Fitch classified two mixed-use properties (7th & Pine Seattle Retail & Parking and
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative rating action/downgrade:
Downgrades could be triggered by an increase in pool-level losses from underperforming or specially serviced loans. Downgrades to the classes rated 'AAAsf' are not considered likely due to position in the capital structure but may occur at 'AAAsf' or 'AA-sf' should interest shortfalls occur. Downgrades to classes C and D may occur if overall pool performance declines and/or loss expectations increase and/or 7th & Pine Seattle Retail & Parking transfer to special servicing. Downgrades to classes E and F would occur as losses are realized and/or become more certain.
Factors that could, individually or collectively, lead to positive rating action/upgrade:
Upgrades could be triggered by significantly improved performance coupled with paydown and/or defeasance. An upgrade to classes B and C could occur with stabilization of the FLOCs, but would be limited as concentrations increase. Classes would not be upgraded above 'Asf' if there is likelihood of interest shortfalls. Upgrades of class D would only occur with significant improvement in credit enhancement and stabilization of the FLOCs. An upgrade to classes E and F is not likely unless performance of the FLOCs improves, and if performance of the remaining pool is stable.
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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