Ratings On Five Morgan Stanley Capital Barclays Bank Trust 2016-MART Classes Affirmed; Class X-CP’s Rating Withdrawn

OVERVIEW
  • We affirmed our ratings on five classes from Morgan Stanley Capital Barclays Bank Trust 2016-MART, a U.S. CMBS transaction.
  • In addition, we withdrew our rating on class X-CP from the same transaction, because the pass-through is currently equal to 0.000% until the rated final distribution date.
  • The affirmations reflect our analysis of the collateral's credit characteristics and performance, as well as the transaction's structure and the liquidity available to the trust.
CENTENNIAL (S&P Global Ratings) April 19, 2019--S&P Global Ratings today 
affirmed its ratings on five classes of commercial mortgage pass-through 
certificates from Morgan Stanley Capital Barclays Bank Trust 2016-MART, a U.S. 
commercial mortgage-backed securities (CMBS) transaction. At the same time, we 
withdrew our rating on class X-CP from the same transaction (see list). 

For the affirmations on the principal- and interest-paying certificate 
classes, our expectation of credit enhancement was more or less in line with 
the affirmed rating levels.

We affirmed our rating on the class X-NCP interest-only (IO) certificates 
based on our criteria for rating IO securities, in which the ratings on the IO 
security would not be higher than that of the lowest rated reference class. 
Class X-NCP's notional balance references classes A, B, C, and D.  

The withdrawal of class X-CP's rating reflects the recent change in the bond's 
contractual pass-through rate to 0.000%. As discussed in the transaction 
document, the change became effective after the September 2018 distribution 
date and effectively leaves the IO bond with no further promise of payment. 
 
This is a stand-alone (single borrower) transaction backed by a fixed-rate IO 
mortgage loan secured by a 3.65 million-sq.-ft. mixed-use (office, showroom, 
trade show, and retail space) building in Chicago's River North submarket. Our 
property-level analysis included a reevaluation of the mixed-use property that 
secures the mortgage loan in the trust and considered the stable 
servicer-reported net operating income and occupancy for the past five years 
(2014 through trailing-12-month (TTM) Sept. 30, 2018). We then derived our 
sustainable in-place net cash flow (NCF), which we divided by an 8.34% S&P 
Global Ratings weighted average capitalization rate to determine our 
expected-case value. This yielded an overall S&P Global Ratings loan-to-value 
ratio and debt service coverage (DSC) of 66.2% and 4.51x, respectively, on the 
trust balance.

According to the April 15, 2019, trustee remittance report, the IO loan has an 
in-trust balance of $550.0 million and a whole loan balance of $675.0 million. 
The whole loan pays an annual fixed interest rate of 2.70375%. The loan 
matures on Sept. 7, 2021. To date, the trust has not incurred any principal 
losses.

The master servicer, Wells Fargo Bank N.A., reported a DSC of 4.61x on the 
trust balance for the 12 months that ended Sept. 30, 2018, and occupancy was 
94.7%, according to a combination of the Oct. 1, 2018 and the Jan. 1, 2019, 
rent rolls. Based on a combination of the Oct. 1, 2018 and the Jan. 1, 2019, 
rent roll, the five largest tenants make up 34.9% of the collateral's total 
net rentable area (NRA). In addition, 3.7% of the NRA have leases that expire 
in 2019, 8.1% in 2020 and 9.4% in 2020.
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