Fitch Ratings has downgraded four and affirmed 11 classes of SG Commercial Mortgage Securities Trust, commercial mortgage pass-through certificates, series 2016-C5 (SGCMS 2016-C5).

Fitch has also maintained the Negative Outlooks on three classes and revised the Outlooks on five classes to Negative from Stable.

Rating ActionsENTITY/DEBT	RATING		PRIOR

SGCMS 2016-C5

A-1 78419CAA2

LT	AAAsf 	Affirmed		AAAsf

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 	Downgrade		BB-sf

F 78419CAZ7

LT	CCCsf 	Downgrade		B-sf

X-A 78419CAG9

LT	AAAsf 	Affirmed		AAAsf

X-B 78419CAH7

LT	AA-sf 	Affirmed		AA-sf

X-E 78419CAP9

LT	B-sf 	Downgrade		BB-sf

X-F 78419CAR5

LT	CCCsf 	Downgrade		B-sf

View additional rating details

KEY RATING DRIVERS

Increased Loss Expectations: The downgrades and Negative Outlooks reflect increased loss expectations and performance deterioration on a greater number of Fitch Loans of Concerns (FLOCs) that have been impacted by the slowdown in economic activity amid the coronavirus pandemic. Twenty-seven loans (56.4% of pool), including two loans in the top 15 secured by regional malls (8.6%) and 11 loans in special servicing (21.9%), were designated as FLOCs. Fitch's current ratings incorporate a base case loss of 7.10%. The Negative Outlooks reflect losses, which could reach 9.30%, if additional coronavirus specific stresses materialize.

Fitch Loans of Concern: The largest contributor in loss expectation and largest increase since Fitch's prior review, the Peachtree Mall loan (3.0%), is secured by 621,367 sf of an 822,443 sf regional mall in Columbus, GA and sponsored by Brookfield Properties Retail Group. The loan was designated a FLOC due to near term rollover concerns, declining tenant sales and risks associated with a secular shift away from regional malls. Fitch's loss expectation of approximately 28% in the base case is based on a 20% cap rate and 25% total haircut to YE 2019 NOI.

Per the September 2020 rent roll, near term rollover includes leases for 8.5% of the net rentable area (NRA) scheduled to expire in 2020 and 23% in 2021. The rollover in 2021 is concentrated with At Home, which leases 13.8% NRA and has lease expiration in October 2021. Comparable in-line sales were $343 psf as of the TTM ended November 2020, down from $409 at YE 2015 at issuance.

The collateral anchors are Macy's, which leases 22.4% NRA through September 2022 and JCPenney, which leases 13.3% NRA through November 2024. Dillard's is a non-collateral anchor. Collateral occupancy was 95% as of September 2020, and servicer-reported NOI debt service coverage ratio (DSCR) for this amortizing loan was 1.66x as of the YTD June 2020 compared to 94% and 1.69x at YE 2019 and 90% and 1.98x at issuance.

The second largest contributor to Fitch's loss expectation, Marriott Saddle Brook (2.0%), is secured by a 241-key, full service hotel in Saddle Brook, NJ. The loan, which is sponsored by Columbia Sussex, recently transferred to special servicing for Imminent Monetary Default in November 2020 at the borrower's request as a result of the coronavirus pandemic. The borrower has confirmed intention to transition the property to the lender. Fitch's loss expectation of approximately 36% in the base case is based on 11.25% cap rate and a 26% total haircut to YE 2019 NOI.

Occupancy was 30% as of the TTM ended September 2020, down from 60% at YE 2019 and 64% at issuance. Servicer-reported NOI was negative for TTM ended September 2020 with a DSCR of -0.03x, down from 1.45x at YE 2019 and 1.99x at issuance. Per STR and as of the TTM ended June 2020, the hotel was outperforming its competitive set with a RevPAR penetration rate of 104.63%.

The largest loan in the pool, The Mall at Rockingham Park (5.6%), is secured by 540,867 sf of an approximate one million sf regional mall in Salem, NH. The loan was designated a FLOC due to low occupancy after departure of collateral anchor, Lord and Taylor (29.3% of NRA and 2.7% of base rents), which closed this location in December 2020 after filing for Chapter 11 bankruptcy. As a result, collateral occupancy declined to 60% from 89% as of September 2020. Fitch's loss expectation of approximately 5% in the base case is based on a 15% cap rate and 15% total haircut to YE 2019 NOI.

Per the September 2020 rent roll, near term rollover includes 3.7% NRA in 2020, 4.6% in 2021 and 10.6% in 2022. Servicer-reported NOI DSCR for this full term interest only loan was 1.97x as of the YTD September 2020, down from 2.11x at YE 2019 and 2.31x at issuance. In-line tenant sales were $816 psf ($413 psf excluding Apple) as of the TTM ended November 2020, down from $1,020 psf at YE 2019 ($542 psf excluding Apple) at YE 2019.

The loan is sponsored by Mayflower Realty (joint venture of Simon Property Group and the Canadian Pension Plan Investment Board) and Institutional Mall Investors . The remaining anchors are Macy's and JCPenney, which are both non-collateral. Dicks Sporting Goods subleases a portion of a non-collateral (Seritage owned) former Sears space. In addition, a 12-screen Cinemark theater opened on the Seritage parcel in December 2019.

The largest hotel loan, Holiday Inn Express - Nashville Downtown (4.5%), is secured by a 287-key, limited service hotel built in 1968 and renovated in 2015 and a leasehold interest in an adjoining parking lot located in downtown Nashville, TN. The loan, which was assumed by Highland Capital in January 2019 after they purchased the hotel from JRK Property Holdings, transferred to special servicing for Imminent Monetary Default in June 2020 at borrowers request as a result of the coronavirus pandemic. The special servicer filed a foreclosure action; however, the borrower has since resumed forbearance discussions with the special servicer and is working on finalizing an agreement.

Occupancy and servicer-reported NOI DSCR for this amortizing loan were 36% and 0.32x as of YTD September 2020. This is down from 83% and 1.96x at YE 2019 and 83% and 2.20x at issuance. Per the Smith Travel Research report for TTM ended July 2019, the hotel was underperforming its competitive set with a RevPAR penetration rate of 74%. Fitch's base case loss expectation is approximately 9%, based off a 35% haircut to the servicer's October 2020 appraisal value and implies a 10.5% cap rate and 26% haircut to the YE 2019 NOI.

Exposure to Coronavirus Pandemic: Twelve loans (20.2%) are secured by hotel properties. The weighted average NOI DSCR for the hotel loans is 1.85x. These hotel loans could sustain a weighted average decline in NOI of 46% before DSCR falls below 1.00x. Twelve loans (31.8%) are secured by retail properties. The weighted average NOI DSCR for the retail loans is 1.96x. These retail loans could sustain a weighted average decline in NOI of 49% before DSCR falls below 1.00x. Additional coronavirus specific stresses were applied to all 12 hotel loans (20.2%), seven retail loans (14.7%), one multifamily loan (3.4%) and one office loan (0.2%). These additional stresses contributed to the Negative Outlooks on classes A-M, B, C, D, E, X-A, X-B and X-E.

Minimal Change to Credit Enhancement: There has been minimal change to credit enhancement (CE) since issuance. As of the February 2021 distribution date, the pool's aggregate balance has been paid down by 3.9% to $708.9 million from $736.8 million at issuance. All original 47 loans remain in the pool. Nine loans (33.1%) are full-term interest only. Eleven loans (23.4%) have a partial-term interest only component of which eight have begun to amortize. Six loans (12.7%) are scheduled to mature in by July 2021. There are no defeased loans. Interest shortfalls of $710,899 are currently impacting classes F and G.

Pool Concentration: The top 10 loans comprise 44.5% of the pool. Loan maturities are concentrated in 2026 (66.1%). Six loans (12.7%) mature in 2021 and 10 loans (21.2%) in 2025. Based on property type, the largest concentrations are retail at 31.8%, office at 31.4% and hotel at 20.2%.

RATING SENSITIVITIES

The Negative Outlooks on classes A-M, B, C, D, E, X-A, X-B and X-E reflects the potential for downgrades due to concerns on the FLOCs and concerns surrounding the ultimate impact of the coronavirus pandemic with additional loan transfers to special servicing and potentially higher than expected losses. The Stable Outlooks on classes A-1, A-2, A-3, A-4 and A-SB reflect overall stable performance for the majority of the pool, and the expectation of continued paydown from scheduled amortization.

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 coupled with paydown and/or defeasance. The Negative Outlooks on classes A-M and X-A, could be revised if non-delinquent loans maturing in 2021 (11%) pay in full, including Plaza Mexico-Los Angeles (5.1%), which is currently in special servicing but remains current and/or expected losses decline due to improved performance of the FLOCs. Upgrades of classes B and X-B would only occur with significant improvement in CE and/or defeasance and with the stabilization of performance on the FLOCs and/or the properties affected by the coronavirus pandemic.

Upgrades of classes C and D are not likely until the later years in the transaction and only if the performance of the remaining pool is stable and/or properties vulnerable to coronavirus return to pre-pandemic levels and there is sufficient CE to the classes. Classes E, F, X-E and X-F are unlikely to be upgraded absent significant performance improvement on the FLOCs, primarily the regional malls and loans expected to be impacted by the coronavirus pandemic in the near term but could occur if performance of the FLOCs improves significantly and/or if there is sufficient CE. Classes would not be upgraded above 'Asf' if there is a likelihood for interest shortfalls.

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

Sensitivity factors that may lead to downgrades include an increase in pool level expected losses from underperforming or specially serviced loans. Downgrades of classes A-1 through A-SB are not likely due to the expected receipt of continued amortization. A downgrade of classes A-M, B, C, D and X-A, X-B could occur should loss expectations increase and if performance and valuations of the FLOCs or loans vulnerable to the coronavirus pandemic fail to stabilize or additional loans default and/or transfer to the special servicer. Classes E, F, X-E and X-F would be downgraded further if performance of FLOCs declines and/or losses are realized.

In addition to its baseline scenario related to the coronavirus, Fitch also envisions a downside scenario where the health crisis is prolonged beyond 2021; should this scenario play out, Fitch expects further negative rating actions, including additional downgrades and/or Negative Outlook revisions.

For more information on Fitch's original rating sensitivity on the transaction, please refer to the new issuance report.

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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