Fitch Ratings has affirmed 14 classes of BANK 2017-BNK9 commercial mortgage pass-through certificates, series 2017-BNK9.

In addition, the Rating Outlooks on four classes were revised to Stable from Negative.

RATING ACTIONS

Entity / Debt

Rating

Prior

BANK 2017-BNK9

A-3 06540RAD6

LT

AAAsf

Affirmed

AAAsf

A-4 06540RAE4

LT

AAAsf

Affirmed

AAAsf

A-S 06540RAH7

LT

AAAsf

Affirmed

AAAsf

A-SB 06540RAC8

LT

AAAsf

Affirmed

AAAsf

B 06540RAJ3

LT

AA-sf

Affirmed

AA-sf

C 06540RAK0

LT

A-sf

Affirmed

A-sf

D 06540RAU8

LT

BBB-sf

Affirmed

BBB-sf

E 06540RAW4

LT

Bsf

Affirmed

Bsf

F 06540RAY0

LT

CCCsf

Affirmed

CCCsf

Page

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VIEW ADDITIONAL RATING DETAILS

KEY RATING DRIVERS

Improved Loss Expectations: The Rating Outlook revisions to Stable from Negative on classes D, E, X-D and X-E reflect improved loss expectations for the overall pool since Fitch's last rating action due to the performance stabilization of several loans that were negatively affected by the pandemic. Fitch's current ratings incorporate a base case loss of 5.90%.

Twelve loans are designated as Fitch Loans of Concern (FLOCs; 42.5% of pool), which include three specially serviced loans (7.0%). One specially serviced hotel loan, Holiday Inn Camp Springs (1%), is expected to return to the master servicer.

The largest increase in loss since the last rating action is the Park Square loan (6.6%), which is secured by a 503,000-sf office building in Boston, MA. The current largest tenants include Bay State College (6.7% NRA expiring in 2029 and 2030) and HTNB (5.2% NRA expiring June 2023). This FLOC was flagged due to a significant decline in occupancy as a result of WeWork (26.8% NRA) vacating in June 2022, which was prior to its July 2032 lease expiration. WeWork paid a lease termination fee of $2.7 million. Property occupancy fell to 56.8% as of June 2022 from 86.1% at YE 2021, 89% at YE 2020, 90.4% at YE 2019 and 95% around the time of issuance. Fitch's base case loss of 14% reflects an 8.75% cap rate and a 15% stress to the YE 2021 NOI to account for the lower occupancy and cash flow.

The next largest increase in loss since the last rating action is the Warwick Mall loan (3.3%), which is secured by an approximately 588,000-sf regional mall located in Warwick, RI. The loan sponsorship consists of Bliss Properties, Lane Family Trust and Mark T. Brennan. This FLOC was flagged for its secondary market regional mall location, continued performance recovery from the pandemic and refinance concerns. The mall reopened in June 2020 after being closed in March due to the pandemic.

Non-collateral anchors include Macy's and Target. Major collateral tenants include JCPenney (23.4% NRA expiring March 2030), Jordan's Furniture (19.3%, extending for five years through December 2026), Nordstrom Rack (6.4%, November 2022) and Old Navy (3.8%, January 2026). Showcase Cinema (9.7%) vacated when its lease expired in April 2021); however, the borrower has since re-leased the space to Apple Cinemas on a 15-year term which began in November 2021, with the theater opened in March 2022.

Occupancy was 91% as of March 2022, compared with 94% occupied in June 2021. Recent tenant sales were requested from the master servicer, but not provided; the latest available inline sales were $499 psf as of TTM June 2017. Fitch's base case loss has increased to 31%, reflecting a 20% cap rate and 5% stress to the YE 2021 NOI, and factors a higher loss recognition due to anticipated refinance concerns at maturity.

Increased Credit Enhancement (CE) and Defeasance: As of the September 2022 remittance, the pool's aggregate principal balance has been paid down by 14.3% to $903.1 million from $1.05 billion at issuance. Since Fitch's last rating action, four loans totaling $125.1 million have paid off, including the previous second largest loan, Griffin Portfolio, which prepaid with yield maintenance. Additionally, four loans (6.3%) are fully defeased, three (6.1%) of which occurred since the last rating action. Of the current pool, 53.8% is full term, interest-only (IO) and 26% had a partial-term, IO component.

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 to the 'AA-sf' and 'AAAsf' rated classes are not likely due to the increasing CE, expected continued paydown and overall stable to improving performance, but may occur should interest shortfalls affect these classes. Downgrades to the 'BBB-sf' and 'A-sf' rated classes may occur should pool loss expectations increase significantly and should all of the FLOCs suffer losses, which would erode CE. Downgrades to 'Bsf' and 'CCCsf' rated classes would occur with a greater certainty of loss or should loss expectations increase from continued performance decline of the FLOCs, additional loans default or transfer to special servicing and/or higher losses are incurred on the specially serviced loans than expected.

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, particularly on the FLOCs, coupled with additional paydown and/or defeasance. Upgrades to 'BBB-sf', 'A-sf' and 'AA-sf' rated classes would only occur with significant improvement in CE, defeasance, and/or performance stabilization of FLOCs and other properties affected by the pandemic.

Upgrades to 'Bsf' and 'CCCsf' rated classes are not likely until the later years of the transaction and only if the performance of the remaining pool is stable and/or properties vulnerable to the pandemic return to pre-pandemic levels, the number of FLOCs is reduced and there is sufficient CE to the classes. Classes would not be upgraded above 'Asf' if there were likelihood of interest shortfalls.

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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