Fitch Ratings has affirmed 13 classes of Morgan Stanley Capital I Trust (MSCI) Commercial Mortgage Pass-Through Certificates, series 2016-UBS9.

The Negative Rating Outlook is maintained on class F.

RATING ACTIONS

Entity / Debt

Rating

Prior

MSCI 2016-UBS9

A-3 61766CAD1

LT

AAAsf

Affirmed

AAAsf

A-4 61766CAE9

LT

AAAsf

Affirmed

AAAsf

A-S 61766CAG4

LT

AAAsf

Affirmed

AAAsf

A-SB 61766CAF6

LT

AAAsf

Affirmed

AAAsf

B 61766CAK5

LT

AA-sf

Affirmed

AA-sf

C 61766CAL3

LT

A-sf

Affirmed

A-sf

D 61766CAV1

LT

BBB-sf

Affirmed

BBB-sf

E 61766CAX7

LT

BB-sf

Affirmed

BB-sf

F 61766CAZ2

LT

B-sf

Affirmed

B-sf

Page

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VIEW ADDITIONAL RATING DETAILS

KEY RATING DRIVERS

Increased Loss Expectations: Fitch's expected losses have increased since the prior rating action driven by continued declining performance of the outlet malls in the pool. The pool has exposure to three outlet malls which in total represent 12.4% of the pool. While imminent losses are not expected as there are no specially serviced loans, the Negative Outlook reflects the potential for downgrade should occupancy and cashflow of outlet malls and underperforming office properties in the top 15 deteriorate further, elevating the risk for term default.

Fitch's ratings reflect a base case loss of 5.2% Fitch has identified seven loans (27.7%) as Fitch loans of concern (FLOCs), including five (25.0%) loans among the top 15 loans. No loans are in special servicing.

Fitch Loans of Concern - Outlet Malls: The pool has exposure to three Simon-owned outlet malls (Ellenton Premium Outlets - 7.1%, Grove City Premium Outlets - 3.6%, Gulfport Premium Outlets - 1.7%) which in total represent 12.4% of the pool. All of the Simon outlet mall loans are 10-year IO loans.

Grove City Premium Outlets (3.6%) is secured by a 531,200-sf outlet center located in Grove City, PA, approximately 50 miles north of Pittsburgh. Performance of the center continues to decline with occupancy falling to 70% as of March 2022 from 77% at YE 2020 and 82% at YE 2019. As of the first quarter of 2022, servicer-reported NOI DSCR was 2.06x as compared to 2.29x at YE 2021, 2.23x at YE 2020 and 2.71x prior to the pandemic in 2019. The mall reported in-line sales of $381 psf as of YE 2021 as compared to TTM November 2018 sales of $363 and YE 2017 sales of $367. Sales reported at Issuance were $333 psf. Although sales on PSF basis have improved, total sales for 2021 are down 14% from YE 2017.

Approximately 37% of leases expire by the end of 2023. A substantial portion of tenants with prior lease expirations did not renew and the tenants that have remained extended for abbreviated lease terms and reduced rates. Fitch's base case loss of 37% reflects a 15% cap rate and a 5% stress to YE 2021 NOI to reflect downward-trending occupancy and cash flow.

Ellenton Premium Outlets loan (7.1%), which is secured by a 476,481-sf outlet center in Ellenton, FL. Occupancy declined to 82% as of June 2022, down from 88% at YE 2021 and 97% in 2018. As of the June 2022 rent roll, upcoming lease rollover includes 15% of the NRA in 2022, 21% in 2023 and 13% in 2024. VF Factory Outlet (4.9%) executed a one-year lease extension through January 2023. Most recently reported in-line sales were $442 psf as of YE 2021 an improvement from $426 psf at YE 2019, but below sales of $502 psf at issuance.

Fitch's base case loss of 7% reflects a cap rate of 10% applying a 15% stress to the YE 2021 NOI to reflect near-term lease rollover concerns and declining occupancy.

Gulfport Premium Outlets (1.7%) is secured by a 300,238-sf outlet center located in Gulfport, MS. Occupancy for the center continues to decline, falling to 74% as of June 2022 from 76% at YE 2021, 80% at YE 2020 and 85% at YE 2019. The servicer reported a YE 2021 NOI DSCR of 2.87x. The largest tenants include H&M (6.5%; January 2029), VF Factory Outlet (5.8%; January 2023), Nike Factory Store (4.5%; January 2022) and Polo Ralph Lauren Factory Store (3.5%; January 2026). Leases totaling approximately 49% of NRA expire by 204, including 17% in 2022 and 14% in 2023. Most recently reported in-line sales as of YE 2021 were $433 psf as compared to $318 in 2019, $326 in 2018, and $347 psf in 2016.

Fitch's base case loss of 16% reflects a 15% cap rate and 10% stress to the YE 2021 NOI to address near-term rollover concerns and declining occupancy.

Office Loans of Concern: Two office properties identified as FLOC include 2100 Ross (9.7% of pool balance) and the Princeton Pike Corporate Center (8.1%). Occupancy for the 2100 Ross building declined to 60% as of the 2nd quarter of 2022 due to CBRE (15% of NRA, 20% base rent) vacating at lease expiration in March 2022 and relocating to an office tower in the uptown area of Dallas. As of June 2022, NOI DSCR was 1.54x in-line with YE 2021. Per Costar, the Dallas CBD submarket had a vacancy rate of 24.4% with an elevated availability rate of 30.9% as of Q3-2022.

The Princeton Pike Corporate Center loan returned to master servicing after the close of a modification in September 2021. Terms of the modification included the conversion of monthly payments to interest-only for the remaining loan term and an ongoing cash trap. The loan has remained current since returning to the master servicer. The property was 76% occupied as of June 2022 in line with YE 2021, but a decline from 82% as of YE 2020.

Change in Credit Enhancement: As of the September 2022 distribution date, the pool's aggregate principal balance has been paid down by 17.6% to $549.4 million from $666.6 million at issuance. Six loans (14.8% of current pool) are fully defeased. Two loans (11.0% of original pool balance) have paid off since issuance. There have been no realized losses since issuance. Loan maturities are concentrated in 2025 and 2026 when 45.6% and 49.3% of the pool mature, respectively.

RATING SENSITIVITIES

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

Downgrades would occur with an increase in pool level losses from underperforming or specially serviced loans. Downgrades of the 'AA-sf' and 'AAAsf' categories are not considered likely due to the position in the capital structure and the relatively stable performance of the pool, but may occur should interest shortfalls affect these classes. Downgrades of the 'A-sf' and 'BBB-sf' categories could occur if expected losses increase significantly or the performance of the FLOCs continue to decline further and/or fail to stabilize. Downgrades to the 'B-sf' and 'BB-sf' categories would occur should overall pool performance decline and/or loans of concern, in particular outlet malls and underperforming office loans, continue to deteriorate.

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:

Upgrades would occur with stable to improved asset performance coupled with paydown and/or defeasance. Upgrades of the 'A-sf' and 'AA-sf' categories would likely occur with significant improvement in credit enhancement (CE) and/or defeasance; however, adverse selection, increased concentrations and further underperformance of the FLOCs and/or loans considered to be negatively impacted by the coronavirus pandemic could cause this trend to reverse.

An upgrade to the 'BBB-sf' category is considered unlikely and would be limited based on sensitivity to concentrations or the potential for future concentration. Classes would not be upgraded above 'Asf' if there is likelihood for interest shortfalls. Upgrades to the 'B-sf' and 'BB-sf' categories are not likely until the later years in a transaction and only if the performance of the remaining pool is stable and there is sufficient CE to the classes.

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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