OREANDA-NEWS. Fitch Ratings has issued a presale report on Institutional Mortgage Securities Canada Inc.'s (IMSCI) Commercial Mortgage Pass-Through Certificates, Series 2016-7.

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

--$187,994,000 class A-1 'AAAsf'; Outlook Stable;

--$117,230,000 class A-2 'AAAsf'; Outlook Stable;

--$8,809,000 class B 'AAsf'; Outlook Stable;

--$9,690,000 class C 'Asf'; Outlook Stable;

--$9,690,000 class D 'BBBsf'; Outlook Stable;

--$3,523,000 class E 'BBB-sf'; Outlook Stable;

--$4,845,000 class F 'BBsf'; Outlook Stable;

--$3,964,000 class G 'Bsf'; Outlook Stable.

All currencies are in Canadian dollars (CAD).

Fitch does not expect to rate the $352,352,065 (notional balance) interest-only class X or the non-offered $6,607,065 class H certificates.

The certificates represent the beneficial ownership interest in the trust, primary assets of which are 38 loans secured by 60 commercial properties having an aggregate principal balance of $352,352,065 as of the cut-off date. The loans were originated or acquired by IMC Limited Partnership, Trez Commercial Finance Limited Partnership, and Royal Bank of Canada.

Fitch reviewed a comprehensive sample of the transaction's collateral, including site inspections on 76.9% of the properties by balance and asset summary reviews and cash flow analysis of 100% of the pool.

KEY RATING DRIVERS

Lower Fitch Leverage: The transaction has better leverage than other recent Fitch-rated Canadian multiborrower deals. The pool's Fitch debt service coverage ratio (DSCR) of 1.19x is above the 2015 through 2016 year-to-date (YTD) average of 1.16x. The pool's Fitch loan to value (LTV) of 102.9% is below the 2015 through 2016 YTD average of 105.1%.

Significant Amortization: The pool's weighted average remaining amortization term is 25.4 years, which represents faster amortization than U. S. conduit loans. There are no partial or full interest-only loans. The pool's maturity balance represents a paydown of 22.6% of the closing balance, which represents less paydown than the 2015 through 2016 YTD Canadian average of 25.2%, but significantly more paydown than the 2016 YTD U. S. multiborrower average of 10.3%.

Canadian Loan Attributes and Historical Performance: The ratings reflect strong historical Canadian commercial real estate loan performance, including a low delinquency rate and low historical losses of less than 0.1%, as well as positive loan attributes, such as short amortization schedules, recourse to the borrower and additional guarantors. For more information on prior Canadian CMBS securitizations, see Fitch Research on 'Canadian CMBS Default and Loss Study,' dated October 2013, available on Fitch's website at www. fitchratings. com.

Loan with Recourse: Of the pool, 64.4% has full or partial recourse to the loan's non-SPE borrower and/or loan sponsor, which is less than the 2015 through 2016 YTD Canadian transaction average of 75.8%. In Fitch's analysis, the probability of default (PD) is reduced for loans with recourse.

RATING SENSITIVITIES

For this transaction, Fitch's net cash flow (NCF) was 13.5% 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). The following rating sensitivities describe how the ratings would react to further NCF declines below Fitch's NCF. The implied rating sensitivities are only indicative of some of the potential outcomes and do not consider other risk factors to which the transaction is exposed. Stressing additional risk factors may result in different outcomes. Furthermore, the implied ratings, after the further NCF stresses are applied, are more akin to what the ratings would be at deal issuance had those further stressed NCFs been in place at that time.

Fitch evaluated the sensitivity of the ratings assigned to IMSCI 2016-7 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 senior 'AAAsf' certificates to 'AA-sf' could result. In a more severe scenario, where NCF declined a further 30% from Fitch's NCF, a downgrade of the senior 'AAAsf' certificates to 'A-sf ' could result. The presale report includes a detailed explanation of additional stresses and sensitivities on page 10.

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

Fitch was provided with Form ABS Due Diligence-15E ("Form 15E") as prepared by KPMG LLP. The third-party due diligence described in Form 15E 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 it did not have an impact on Fitch's analysis or conclusions. 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.

REPRESENTATIONS, WARRANTIES AND ENFORCEMENT MECHANISMS

A description of the transaction's representations, warranties and enforcement mechanisms ("RW&Es") that are disclosed in the offering document and which relate to the underlying asset pool is available by accessing the appendix referenced under "Related Research" below. The appendix also contains a comparison of these RW&Es to those Fitch considers typical for the asset class as detailed in the Special Report titled 'Representations, Warranties and Enforcement Mechanisms in Global Structured Finance Transactions,' (May 2016).