OREANDA-NEWS. Fitch Ratings has issued a presale report on German American Capital Corp.'s CD Mortgage Securities Trust 2016-CD1 commercial mortgage pass-through certificates.

Fitch expects to rate the transaction and assign Rating Outlooks as follows:

--$30,826,000 class A-1 'AAAsf'; Outlook Stable;

--$40,000,000 class A-2 'AAAsf'; Outlook Stable;

--$46,236,000 class A-SB 'AAAsf'; Outlook Stable;

--$168,000,000 class A-3 'AAAsf'; Outlook Stable;

--$207,191,000 class A-4 'AAAsf'; Outlook Stable;

--$566,092,000b class X-A 'AAAsf'; Outlook Stable;

--$73,839,000 class A-M 'AAAsf'; Outlook Stable;

--$31,644,000 class B 'AA-sf'; Outlook Stable;

--$28,129,000 class C 'A-sf'; Outlook Stable;

--$59,773,000ab class X-B 'A-sf'; Outlook Stable;

--$31,645,000ab class X-C 'BBB-sf'; Outlook Stable;

--$15,823,000ab class X-D ' BB-sf'; Outlook Stable;

--$6,153,000ab class X-E ' B-sf'; Outlook Stable;

--$31,645,000a class D 'BBB-sf'; Outlook Stable;

--$15,823,000a class E 'BB-sf'; Outlook Stable;

--$6,153,000a class F 'B-sf'; Outlook Stable.

The following classes are not expected to be rated:

--$23,733,985ab class X-F;

--$23,733,985a class G.

A)Privately placed pursuant to Rule 144A.

B)Notional amount and interest-only.

The expected ratings are based on information provided by the issuer as of Aug. 2, 2016.

The certificates represent the beneficial ownership interest in the trust, primary assets of which are 32 loans secured by 58 commercial properties having an aggregate principal balance of $703,219,986 as of the cut-off date. The loans were contributed to the trust by German American Capital Corporation and Citigroup Global Markets Realty Corp.

Fitch reviewed a comprehensive sample of the transaction's collateral, including site inspections on 79.5% of the properties by balance and asset summary reviews and cash flow analysis of 90.5% of the pool.

KEY RATING DRIVERS

Low Fitch Leverage: The transaction has significantly lower leverage than other recent Fitch-rated transactions. The pool's weighted average (WA) Fitch DSCR of 1.25x is better than both the YTD 2016 average of 1.16x and the 2015 average of 1.18x. The pool's WA Fitch LTV of 95.5% is better than both the YTD 2016 average of 107.5% and the 2015 average of 109.3%. Excluding the credit opinion loans (27.7% of the pool), the Fitch DSCR and LTV are 1.17x and 108.9%, respectively.

Investment-Grade Credit Opinion Loans: Four of the 10 largest loans in the pool, representing 27.7%, have investment-grade credit opinions, this is well above the YTD 2016 average of 5.0% credit opinion loans. 10 Hudson Yards (9.2% of the pool) is the largest loan in the pool and has an investment-grade credit opinion of 'BBBsf*' on a stand-alone basis. Westfield San Francisco Centre (8.5%), the third largest loan in the pool, has an investment-grade credit opinion of 'Asf*' on a stand-alone basis. Further, Gas Company Tower (5.7%) and Vertex Pharmaceuticals (4.3%) have investment grade credit opinions of 'Asf*' and 'BBB-sf*', respectively. The implied credit enhancement levels for the conduit portion of the transaction for 'AAAsf' and 'BBB-sf' are 25.875% and 8.750%, respectively.

High Pool Concentration: The pool is more concentrated than other recent Fitch-rated multiborrower transactions. The top 10 loans comprise 66.6% of the pool, which is greater the YTD 2016 average of 54.6% and the 2015 average of 49.3%. The pool's loan concentration index (LCI) of 543 is above the YTD 2016 average of 420 and the 2015 average of 367.

RATING SENSITIVITIES

For this transaction, Fitch's net cash flow (NCF) was 9% below the most recent year's net operating income (NOI; for properties for which a full-year NOI was provided, excluding properties that were stabilizing during this period). Unanticipated further declines in property-level NCF could result in higher defaults and loss severities on defaulted loans and in potential rating actions on the certificates.

Fitch evaluated the sensitivity of the ratings assigned to CD 2016-CD1 certificates and found that the transaction displays average sensitivity to further declines in NCF. In a scenario in which NCF declined a further 20% from Fitch's NCF, a downgrade of the junior 'AAAsf' certificates to 'Asf' could result. In a more severe scenario, in which NCF declined a further 30% from Fitch's NCF, a downgrade of the junior 'AAAsf' certificates to 'BBB+sf' could result. The presale report includes a detailed explanation of additional stresses and sensitivities on page 12.

DUE DILIGENCE USAGE

Fitch was provided with third-party due diligence information from KPMG, LLP. The third-party due diligence information was provided on Form ABS Due Diligence-15E and focused on a comparison and re-computation of certain characteristics with respect to each of the mortgage loans. Fitch considered this information in its analysis and the findings did not have an impact on the analysis. A copy of the ABS Due Diligence Form-15E received by Fitch in connection with this transaction may be obtained through the link contained on the bottom of the related rating action commentary.