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KBRA Downgrades Four Ratings, Affirms Six Ratings and Withdraws Four Ratings for CGCMT 2016-P3

27 Mar 2026   |   New York

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KBRA downgrades the ratings of four classes of certificates and affirms all other outstanding ratings for CGCMT 2016-P3. The conduit transaction has been reduced to seven loans (including one defeased) and a balance of $220.9 million from 37 loans and $770.0 million at securitization. The rating actions are based on our identification of each of the non-defeased assets as a KBRA Loan of Concern(K-LOC); our estimated losses of $74.3 million (which, if realized, would impact class D) and corresponding recoveries; current interest shortfalls affecting classes B and below; and the likelihood that interest shortfalls could persist and/or reach higher in the capital structure during the resolution of the assets. While interest shortfalls could ultimately reverse or worsen for one or more classes, KBRA will continue to monitor the transaction, particularly with respect to the magnitude and timing of any additional shortfalls and related servicer advancing.

KBRA also withdraws the ratings of three classes of interest-only (IO) certificates in accordance with KBRA’s Methodology for Rating Interest-Only Certificates, as there are fewer than 10 loans remaining in the pool. Additionally, KBRA withdraws its AAA (sf) rating on Class A-4 following the reduction of the principal balance of the rated security to zero as reflected in the transaction’s March 2026 remittance report.

As of the March 2026 remittance period, three of the six K-LOCs are specially serviced (54.2% of the pool balance), of which two (44.7%) are in foreclosure and one (9.3%) is matured non-performing. The details of these assets are outlined below.

Marriott Midwest Portfolio ($50.2 million, 22.8%, K-LOC, Specially Serviced, Foreclosure)

  • The loan is collateralized by a portfolio of nine properties comprising three select-service (SpringHill Suites) and six extended-stay (TownePlace Suites) hotels that range in size from 94 to 148 keys and total 1,008 keys. The properties are located in Minnesota (six properties; 54.1% of ALA), Michigan (two; 28.2%) and Wisconsin (one; 10.2%).
  • The loan failed to payoff at its February 2026 maturity and is currently in foreclosure, with the borrower having requested an additional two-year extension. The loan was most recently transferred to special servicing in July 2024 at the borrower’s request ahead of the extended maturity date. It was subsequently modified in February 2025, extending the maturity to February 2026 and allowing for potential partial releases subject to noteholder approval. In August 2025, in connection with the September 2025 sale and release of the 95-key TownePlace Suites Detroit Livonia property, a principal curtailment was applied to the whole loan, including $4.8 million to CGCMT 2016-P3 and $2.4 million to CGCMT 2016-P4. Following the release, nine hotels totaling 1,008 keys remain as collateral.
  • The servicer reported an occupancy and DSC of 62.0% and 0.43x for the TTM period ending June 2025. An updated appraisal dated August 2024 valued the nine-property portfolio at $72.7 million ($72,173 per key), which represents a 42.5% decline from the $126.5 million ($125,496 per key) value at issuance. The asset carries an aggregate ARA of $6.3 million on the whole loan balance; however, there are no cumulative ASERs as of the current review.
  • KBRA’s analysis resulted in an estimated loss of $19.8 million (26.3% estimated loss severity) on the whole loan balance of $75.2 million. The loss is based on a KBRA liquidation value of $55.8 million ($55,357 per key). The value considers a distressed non-stabilized disposition of the asset as well as comparable market values.

Nyack College NYC ($48.7 million, 22.1%, K-LOC, Specially Serviced, Foreclosure)

  • The loan is collateralized by a condominium interest in a 22-story, 479,050 sf Class-B office building located in the Financial District of Manhattan. The subject collateral consists of 166,385 sf of space that is part of the condominium consisting of 141,654 sf of office space, 4,763 sf of ground floor retail space, and 19,968 sf of lower-level classroom and office space.
  • The loan transferred to the special servicer in October 2023 due to payment default when the loan was 90+ days delinquent. Nyack College announced in June 2023 that it would shutter its doors after losing its accreditation following financial difficulties. The former tenant is also the sponsor who filed for Chapter 7 bankruptcy in December 2024. The foreclosure was expected to be completed by November 2025, however, as of March 2026, the special servicer is still pursuing foreclosure as a workout strategy.
  • The servicer reported an occupancy and DSC of 100% and 2.01x for the YTD March 2023 period (the most recent available). An updated appraisal dated June 2025 valued the property at $28.4 million ($59 per sf), which represents a 74.2% decline from the $110.0 million ($229 per sf) value at issuance. As a result, the asset carries an ARA of $32.9 million, resulting in a cumulative ASER of $1.7 million. The loan was deemed non-recoverable in July 2025.
  • KBRA's analysis resulted in an estimated loss of $34.9 million (71.6% estimated loss severity). The loss is based on a KBRA liquidation value of $24.1 million ($145 per sf) and projected total exposure of $58.9 million. As the asset is performing below historical levels, KBRA performed a stabilized analysis to determine KNCF and value. KBRA applied a capitalization rate of 9.50% to the stabilized KNCF, resulting in a value of $33.3 million ($200 per sf). KBRA adjusted this value downward by $9.3 million to account for TI/LC costs and income lost during the stabilization period, resulting in an adjusted value of $24.1 million ($145 per sf).

79 Madison Avenue ($45.0 million, 20.4%, K-LOC, Current)

  • The loan is collateralized by a 274,084 sf, Class-B office building located on Madison Avenue and 28th Street, north of Madison Square Park, in Manhattan.
  • The loan was not paid off at its January 2026 maturity. The property's performance declined primarily because the largest tenant, WeWork, reduced its footprint from 205,667 sf to 97,667 sf. In February 2026, the borrower was granted a 180-day forbearance extending the maturity to July 2026. As of February 2026, there is $4.7 million in an excess cash flow reserve. The servicer reported an occupancy and DSC of 42.0% and -0.39x for the YTD September 2025 period.
  • As of March 2026, the loan is current on payments and not specially serviced. However, in the event of a default, KBRA estimates the loan could experience an estimated loss of $25.2 million (29.7% estimated loss severity) on a whole loan balance of $85.0 million, of which $13.4 million of the estimated loss given default is allocated to this trust. The estimated loss is based on a KBRA liquidation value of $59.8 million ($218 per sf) and projected total exposure of $85.0 million. The value considers a distressed non-stabilized disposition of the asset.

5 Penn Plaza ($42.0 million, 19.1%, K-LOC, Current)

  • The loan is collateralized by a 650,329 sf, Class-B office building located in the Penn Station section of Manhattan. The 26-story building was constructed in 1917 and includes 17,180 sf of ground-level retail space (2.6% of collateral sf).
  • The loan transferred to the special servicer in November 2024 due to imminent monetary default. It was modified in November 2025, and terms included a two-year maturity extension to January 2028, a one-time 12-month forbearance option at the extended maturity date, an equity contribution of approximately $9.0 million, and the setup of cash management, among other items.
  • According to the June 2025 rent roll the property was 85.0% leased. After accounting for the departure of the property’s second-largest tenant, Thomas Publishing Company (13.9% of collateral sf), which vacated at lease expiration in December 2025, the property was 71.1% leased. The loan was returned to the master servicer in February 2026. The servicer reported an occupancy and DSC of 85.0% and 0.92x for the YTD September 2025 period.
  • As of March 2026, the loan was current in payments and not specially serviced. However, in the event of a default or second transfer to special servicing, KBRA estimates that the loan could experience a loss of $57.4 million (22.1% estimated loss severity) on a whole loan balance of $260.0 million, of which $9.3 million of the estimated loss given default is allocated to this trust. The estimated loss is based on a KBRA liquidation value of $202.7 million ($308 per sf) and projected total exposure of $260.1 million. The value is derived from a direct capitalization approach using a KNCF of $16.8 million, assuming an occupancy rate of 71.1%, which is consistent with physical occupancy, and a capitalization rate of 8.29%.

The Round ($20.5 million, 9.3%, K-LOC, Specially Serviced, Non-Performing Matured Balloon)

  • The loan is collateralized by a 146,027 sf office and retail complex that is part of a larger mixed-use development. The property is located eight miles southwest of the Portland CBD in Beaverton, Oregon.
  • The loan transferred to special servicing in March 2026 due to the borrower’s inability to pay off the loan at maturity. The borrower has indicated a desire for an extension, but a formal proposal has not yet been received, according to the special servicer. The property’s occupancy declined because of the departure of 24 Hour Fitness (30.0% of issuance base rent) and Pioneer Pacific College (10.0%). The former vacated in June 2020 as part of bankruptcy proceedings while the latter closed due to the pandemic. The loan transferred to special servicing for the first time in September 2020 for payment default and was subsequently modified to include a forbearance agreement before returning to the master servicer.
  • The servicer reported an occupancy and DSC of 74.0% and 1.63x for the TTM period ending September 2025. An appraisal dated October 2020 valued the property at $22.9 million ($157 per sf), which is 22.4% below the $29.5 million ($202 per sf) value at issuance.
  • KBRA's analysis resulted in an estimated loss of $6.3 million (30.5% estimated loss severity). The estimated loss is based on a KBRA liquidation value of $15.6 million ($107 per sf). The value considers an income capitalization approach, using a stabilized KNCF of $1.5 million and a capitalization rate of 9.50%.

Home2Suites Aberdeen ($9.6 million, 4.4%, K-LOC, Current)

  • The loan is collateralized by a five-story, 107-key, extended-stay hotel located in Aberdeen, Maryland, 35 miles northeast of Baltimore. The property was built in 2014.
  • The collateral property's performance has deteriorated significantly since issuance. The servicer-reported NCF for FY 2025 was $692,896, representing a 43.7% decline from issuance and resulting in a DSC of 0.88x.
  • The servicer reported occupancy and DSC of 61.0% and 0.88x for FY 2025. At this time, KBRA does not estimate a loss on this asset.

Details concerning the rating downgrades are as follows:

  • Class A-S to AA (sf) from AAA (sf)
  • Class X-A to AA (sf) from AAA (sf)
  • Class X-B to AA (sf) from AAA (sf)
  • Class B to BBB- (sf) from AA (sf)

Details concerning the rating affirmations are as follows:

  • Class C at B (sf)
  • Class EC at B (sf)
  • Class D at CCC (sf)
  • Class X-D at CCC (sf)
  • Class E at CC (sf)
  • Class F at C (sf)

Details concerning the withdrawn ratings are as follows:

  • Class A-4 to WR from AAA (sf)
  • Class X-A to WR from AA (sf)
  • Class X-B to WR from AA (sf)
  • Class X-D to WR from CCC (sf)

Ratings Sensitivities

Future rating actions will be dependent upon the ongoing assessment of the timing and likelihood of ultimate payment of principal and accrued interest on the rated certificates. The assessment will consider the expected and actual losses on the remaining assets in the transaction, as well as the magnitude and extent of interest shortfalls, if any, on the certificates.

To access ratings and relevant documents, click here.

Related Publication

Methodologies

Disclosures

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA), one of the major credit rating agencies (CRA), is a full-service CRA registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a Designated Rating Organization (DRO) by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized as a Qualified Rating Agency by Taiwan’s Financial Supervisory Commission and is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider (CRP) in the U.S.

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