OREANDA-NEWS. Fitch Ratings has affirmed the following classes of SCG 2013-CWP Hotel Issuer Inc., commercial pass-through certificates, series 2013-CWP (all currency amounts are Canadian dollars unless noted otherwise):

--$135.9 million class A-2 at 'AAAsf'; Outlook Stable;

--$25 million class B at 'AAsf'; Outlook Stable;

--$40 million class C at 'Asf'; Outlook Stable;

--$65 million class D at 'BBBsf'; Outlook Stable;

--$40 million class E at 'BBB-sf'; Outlook Stable.

The interest-only class X is not rated by Fitch. Class A-1 is paid in full.

KEY RATING DRIVERS

Although leverage has decreased since one of the original five hotel properties was released in 2015, affirmations are warranted at this time as cash flow has experienced some volatility. Excluding the sold hotel, overall portfolio net cash flow (NCF) remains above issuance levels. However, the servicer-reported trailing 12-month (TTM) NCF as of April 2016 declined 4.5% to $51.1 million from $53.6 million a year earlier. Additionally, some of the hotels have had or will have new competition in their respective markets. Fitch's stressed debt service coverage ratio (DSCR) and loan to value (LTV) for the trust component of the debt are 1.64x and 63.6%, respectively. There is a $64.6 million interest-only mezzanine loan subordinate to and co-terminus with the trust mortgage. The transaction has a standard sequential-pay structure.

The portfolio consists of four, Westin-flagged hotels that are well-located in the downtown core of four of Canada's six largest cities. The Westin Bayshore (Vancouver) was sold in 2015 with proceeds allocated to the senior classes. Both the Calgary and Edmonton Westin hotels had a decline in revenue per available room (RevPAR) and occupancy year-over-year (as of end of April 2016). The Ottawa Westin property performance has been stable. Operations at the Westin Harbour Castle (Toronto) were affected in late 2015 by a flood at the North Tower with rooms being taken off. It is expected that the rooms will be updated to current brand standards as part of the remediation.

Between 2005 and 2012, the properties underwent approximately $181 million ($61,887 per key) in capital expenditures. Therefore, there were no property improvement plans (PIPs) required upon the loan sponsor, Starwood Capital Group's, purchase of the portfolio. Also, prior to issuance, the sponsor signed a 30-year management agreement with Starwood Hotels.

The ratings reflect strong historical Canadian commercial real estate loan performance, including a low delinquency rate and low historical losses. In addition, the legal framework generally favors lenders' rights.

RATING SENSITIVITIES

The Rating Outlook for all classes remains Stable. As the transaction continues to amortize with strong cash flow and no further economic headwinds from the decline in oil prices, upgrades may be possible. Conversely, no downward rating actions are expected unless there is significant deterioration of property occupancy and cash flow.

USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G-10

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