Fitch Places Nine Classes of Six Canadian CMBS Transactions on Rating Watch

Fitch Ratings has placed nine classes from six Canadian CMBS transactions on Rating Watch Negative and has assigned Negative Outlooks to five classes. A full list of rating actions follows at the end of this release. All currencies are in Canadian dollars (CAD).

KEY RATING DRIVERS

All six transactions have exposure to properties located in Fort McMurray, Alberta. The classes were placed on Rating Watch Negative due to the significant market challenges stemming from the severe decline in oil prices and recent wildfires that have led to area evacuations.

Across the six transactions, there are a total of nine Loans of Concern, six collateralized by multi-family properties ($66.2 million), two by hotels ($19.3 million) and one by an industrial property ($11.7 million). The six multi-family loans are in special servicing. These loans transferred in March 2016 after the sponsor indicated an inability to pay debt service, as vacancy has spiked at the properties due to the economic turmoil in the energy industry. The loans are sponsored by Lanesborough REIT and have full recourse to the borrower, sponsor and manager. The sponsor continues to seek forbearance due to declining operations. The hospitality properties are sponsored by Temple REIT and the industrial property by Imperial Equities, all of which remain current and have recourse to the sponsor.

The exposure by transaction and servicer loan status as of the April 2016 remittance:

CMLS 2014-1

--Clearwater Suites (3.5%; $9.5 million; loan is current).

IMSCI 2012-2

--Lakewood Apartments (8.3%; $17.2 million; 30 days, in special servicing).

IMSCI 2013-3

--Lunar & Whimbrel Apartments (3.2%; $7.1 million; 30 days, in special servicing);

--Snowbird & Skyview Apartments (3%; $6.7 million; 30 days, in special servicing);

--Parkland & Gannet Apartments (2.6%, $5.8 million; 30 days, in special servicing).

IMSCI 2013-4

--Nelson Ridge pari passu note (7%; $21.8 million; current, in special servicing);

--Franklin Suites (3.1%; $9.8 million, current).

IMSCI 2014-5

--Nelson Ridge pari passu note (2.8%; $7.6 million; current, in special servicing).

REAL-T 2014-1

--Strongco Building Fort McMurray (4.3%, $11.7 million; current).

RATING SENSITIVITIES

The Rating Watch Negative placements and Negative Outlooks are due to the uncertainty regarding operations and ultimate recoveries of the properties listed above. Potential loan losses may be mitigated by recourse provisions and insurance proceeds. Fitch will continue to monitor the impact of oil prices and the current wildfires on the properties. As full reviews are completed, the Rating Watch and Outlooks will be revisited as more information becomes available. Downgrades of one category are possible; additional classes may be placed on Rating Watch or assigned Negative Outlooks if loss expectations exceed Fitch's conservative estimates.

DUE DILIGENCE USAGE

No third-party due diligence was provided or reviewed in relation to this rating action.

Fitch has placed the following classes on Rating Watch Negative or revised Rating Outlooks as indicated:

CMLS Issuer Corp.'s commercial mortgage pass-through certificates series 2014-1 (CMLS 2014-1):

--$2.8 million class G 'Bsf'; Rating Watch Negative.

Institutional Mortgage Capital, commercial mortgage pass-through certificates series 2012-2 (IMSCI 2012-2):

--$3.6 million class E 'BBB-sf'; Outlook to Negative from Stable;

--$3 million class F 'BBsf'; Rating Watch Negative;

--$2.4 million class G 'Bsf'; Rating Watch Negative.

Institutional Mortgage Capital, LP's commercial mortgage pass-through certificates series 2013-3 (IMSCI 2013-3):

--$6.9 million class D 'BBBsf'; Outlook to Negative from Stable;

--$3.8 million class E 'BBB-sf'; Outlook to Negative from Stable;

--$3.1 million class F 'BBsf'; Rating Watch Negative;

--$2.5 million class G 'Bsf'; Rating Watch Negative.

Institutional Mortgage Securities Canada Inc.'s Commercial Mortgage Pass-Through Certificates series 2013-4 (IMSCI 2013-4):

--$9.1 million class D 'BBBsf'; Outlook to Negative from Stable;

--$5 million class E 'BBB-sf'; Rating Watch Negative;

--$3.7 million class F 'BBsf'; Rating Watch Negative;

--$3.3 million class G 'Bsf'; Rating Watch Negative.

Institutional Mortgage Securities Canada Inc.'s commercial mortgage pass-through certificates series 2014-5 (IMSCI 2014-5):

--$3.1 million class G 'Bsf'; Rating Watch Negative.

Real Estate Asset Liquidity Trust's commercial mortgage pass-through certificates, series 2014-1 (REAL-T 2014-1):

--$2.8 million class G 'Bsf'; Outlook to Negative from Stable.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Global Structured Finance Rating Criteria (pub. 06 Jul 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952

U.S. and Canadian Fixed-Rate Multiborrower CMBS Surveillance and U.S. Re-REMIC Criteria (pub. 13 Nov 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=873395

Additional Disclosures

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1004061

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

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