Fitch Ratings has affirmed 14 classes of Morgan Stanley Capital I Trust 2016-UBS12.

The Rating Outlooks on classes A-S, B, X-B, C, D and X-D have been revised to Stable from Negative.

RATING ACTIONS

Entity / Debt

Rating

Prior

MSC 2016-UBS12

A-3 61691EAZ8

LT

AAAsf

Affirmed

AAAsf

A-4 61691EBA2

LT

AAAsf

Affirmed

AAAsf

A-S 61691EBD6

LT

AAAsf

Affirmed

AAAsf

A-SB 61691EAY1

LT

AAAsf

Affirmed

AAAsf

B 61691EBE4

LT

AA-sf

Affirmed

AA-sf

C 61691EBF1

LT

A-sf

Affirmed

A-sf

D 61691EAJ4

LT

Bsf

Affirmed

Bsf

E 61691EAL9

LT

CCCsf

Affirmed

CCCsf

F 61691EAN5

LT

CCCsf

Affirmed

CCCsf

Page

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VIEW ADDITIONAL RATING DETAILS

KEY RATING DRIVERS

Increased Credit Enhancement (CE): The affirmations and Outlook revisions to Stable reflect improving CE, primarily due to loan payoffs and amortization. As of the August 2022 distribution date, the pool's aggregate principal balance was reduced by 12.8% to $719.4 million from $824.4 million at issuance. There has been $1.4 million in realized losses to date and interest shortfalls are currently affecting the non-rated class G. The increase in CE is primarily due to two loans (6.4%) paying off at maturity since Fitch's prior rating action. Seven loans (46.3%) are full-term IO, and no loans remain in their partial IO periods.

Continued High Loss Expectations: The high loss expectations are driven primarily by the continued underperformance of the Wolfchase Galleria (9.2%), and concerns about refinanceability. There are seven Fitch Loans of Concern (FLOCs). Four loans are in special servicing, which includes two loans (7.5%) that are still current.

Largest Contributor to Loss: The largest contributor to loss is the Wolfchase Galleria loan (6.1%), which is secured by a 391,862-sf interest in a regional mall located in Memphis, TN. The subject is anchored by Macy's (non-collateral), Dillard's (non-collateral), J.C. Penney (non-collateral) and Malco Theatres. The loan transferred to special servicing in June 2020 due to a monetary default, but was subsequently returned to the master servicer in May 2021.

Collateral occupancy has remained in the high 70s for several years after declining from 81% at YE 2019: 79% (March 2022), 78% (YE 2021) and 79% (YE 2020). Leases represented 22% of the NRA roll in 2022, followed by 13% in 2023 and 13% in 2024. The servicer reported NOI debt service coverage ratio (DSCR) was 1.24x at YE 2021 compared to 1.17x at YE 2020, 1.29x at YE 2019 and 1.35x at YE 2018. While the subject is the dominant mall in its trade area, it is also located in a secondary market with fewer demand drivers. Fitch requested a recent sales report from the servicer, but has not received one to date. Fitch's base case loss of 38% was based on a 15% cap rate applied to the YE 2021 NOI.

The next largest contributor to loss is the 681 Fifth Avenue loan (11.1%), which is secured by a mixed-use property located in the Manhattan Plaza District in New York, NY. The property's largest tenant, Tommy Hilfiger (27.3% of NRA and 89% of base rent) vacated in 2019. The lease expires in May 2023. Fitch will continue to monitor the loan.

RATING SENSITIVITIES

Factors that could, individually or collectively, lead to negative rating action/downgrade:

Downgrades to classes A-3 through C are not expected given the position in the capital structure but may occur should interest shortfalls affect these classes.

Downgrades to the classes rate B-sf', would occur if loss expectations increase significantly and/or the FLOCs decline and/or fail to stabilize or should losses from specially serviced loans/assets be larger than expected.

Downgrades to the distressed classes rated 'CCCsf' would occur with a greater certainty of losses and/or as losses are realized.

Fitch has identified both a baseline and a worse-than-expected, adverse stagflation scenario based on fallout from the Russia-Ukraine war whereby growth is sharply lower amid higher inflation and interest rates; even if the adverse scenario should play out, Fitch expects virtually no impact on ratings performance, indicating very few rating or Outlook changes. However, for some transactions with concentrations in underperforming retail exposure, the ratings impact may be mild to modest, indicating some changes on sub-investment grade notes.

Factors that could, individually or collectively, lead to positive rating action/upgrade:

Sensitivity factors that lead to upgrades would include stable to improved asset performance, particularly on the FLOCs, coupled with paydown and/or defeasance. Upgrades of the 'AA-sf' and 'A-sf' category would likely occur with significant improvement in CE and/or defeasance; however, adverse selection and increased concentrations or the underperformance of particular loan(s) could cause this trend to reverse.

Classes would not be upgraded above 'Asf' if there is likelihood for interest shortfalls.

The 'Bsf' and 'CCCsf' classes are unlikely to be upgraded absent significant performance improvement and substantially higher recoveries than expected on the specially serviced loans/assets.

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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