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KBRA Affirms Six Ratings and Withdraws Five Ratings for CFCRE 2016-C3

9 Jan 2026   |   New York

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KBRA affirms all outstanding ratings for CFCRE 2016-C3, a $142.1 million CMBS conduit transaction. The affirmations follow a surveillance review of the transaction, which has exhibited pool performance generally in line with last review. Six assets remain in the mortgage pool; five (88.0% of the pool balance) have been identified as K-LOCs, with only one (18.4%) having an estimated loss.  The ratings withdrawals of Classes A-M and X-A follow the reduction of the respective principal and notional balances of the rated securities to zero as reflected in the transaction's December 2025 remittance report. The ratings withdrawals of Class X-B, X-C, and X-D are done in accordance with KBRA’s Methodology for Rating Interest-Only Certificates (the transaction has 10 or fewer loans remaining).

As of the December 2025 remittance period, there are two specially serviced assets (46.5%), of which one (28.1%) is 30 days delinquent and one (18.4%) is matured non-performing. Details regarding the K-LOCs are outlined below.

215 West 34th Street & 218 West 35th Street (largest, 28.1% , Specially Serviced, 30 days delinquent)

  • The loan is collateralized by a 40-story, 300,287 sf, mixed-use retail and hotel development located in the Penn Station area of Manhattan. The collateral consists of a 78,287 sf retail component and a 350-key Renaissance by Marriott hotel. The hotel component is owned subject to a 68-year space lease with an affiliate of the borrower. The source of debt service payments for the subject loan is derived from the net cash flow generated by the retail component and the hotel space lease payments.
  • KBRA identified the loan as a K-LOC and revised the KPO to Underperform from Perform based on the loan’s transfer to the special servicer in October 2025 due to imminent maturity default. The loan is in early stages of workout; however, initial commentary from the special servicer indicated discussions regarding a potential maturity extension. According to the June 2025 rent roll, the retail component of the collateral is 100% leased to five tenants.
  • The servicer-reported occupancies and DSCs are: 100% / 2.51x (YTD June September 2025), 100% / 2.11x (FY 2024); at closing these were 100% / 1.88x. At this time, KBRA does not estimate a loss on this asset.

One Commerce Plaza (2nd largest, 23.4%, Watchlist)

  • The loan is collateralized by a 738,708 sf, Class-B office building located in Albany, New York, within the city’s CBD.
  • KBRA identified the loan as a K-LOC and revised the KPO to Underperform from Perform due to declines in financial performance as the loan approaches its January 2026 maturity date. The borrower is in the process of refinancing and plans to pay off the loan through an assignment. Financial performance has declined year over year since 2020 with the most recent financials from September 2024 reporting a DSCR of 1.09x. Contributing to the decline in performance is an increase in operating expenses, largely from the utilities and repair expenses. Additionally, the New York State Department of Health (NYSDOH), formerly the largest tenant representing 21.8% of base rent and 23.5% of GLA, has relocated its headquarters to Corning Tower at Empire State Plaza. While NYSDOH continues to occupy a small portion of the property, the August 2025 rent roll, reflecting the tenant’s vacating of the majority of its space, indicates occupancy of 81.5%, compared to 94.5% at last review and 96.2% at issuance.
  • The servicer-reported occupancies and DSCs are: 95.0% / 1.09x (YTD Annualized September 2024), 95.0% / 1.17x (FY 2022), at issuance these were 96.4% / 1.30x. At this time, KBRA does not estimate a loss on this asset.

Springfield Mall (3rd largest, 18.4%, Specially Serviced, Matured Non-Performing)

  • The loan is collateralized by a 611,079 sf, regional mall located in Springfield Township, Pennsylvania, approximately 11 miles southwest of the Philadelphia CBD. The mall is anchored by Macy's and Target, neither of which serve as collateral. The loan sponsors are Simon Property Group and PREIT.
  • KBRA maintains the loan's K-LOC designation and KPO of Underperform based on elevated lease rollover risk, low DSCR and failure to pay off by the October 2025 maturity date. According to the March 2025 rent roll, leases generating 40.3% of base rent are scheduled to expire by YE 2026, including tenants with month-to-month leases that contribute 11.6% of rent. The rollover risk is mitigated by tenant granularity. Of the 10 tenants currently operating on MTM leases, none represents more than 5.1% of base rent. The loan was added to the servicer's watchlist in June 2024 when the DSCR declined to 1.17x. As such, the servicer is implementing cash management.
  • The servicer-reported occupancies and DSCs are: 89.0% / 1.11x (YTD annualized June 2025); 93.0% / 1.27x (FY 2024); at closing these were 95.4% / 1.76x. KBRA’s analysis resulted in an estimated loss of $18.4 million (35.2% estimated loss severity) on the whole loan balance of $52.2 million. The loss is based on a KBRA liquidation value of $34.5 million ($155 per sf). The value is derived from a direct capitalization approach using a KNCF of $3.8 million and a capitalization rate of 11.0% which was increased 50 bps from KBRA's last review.

Glenridge Medical Center I (4th largest, 16.8%, Matured Performing)

  • The loan is collateralized by a 110,576 sf, Class-B medical office building located in Atlanta, Georgia, approximately 14 miles north of the city’s CBD. The 6.8-acre property features one, five-story building that offers 367 surface parking spaces, as well as a 1.9-acre parcel which includes a portion of the current parking lot and is available for a potential future Phase II development. The subject is located within walking distance to three hospitals: Northside Hospital, Emory St. Joseph’s Hospital, and the Children’s Hospital at Scottish Rite.
  • KBRA identified the loan as a K-LOC and revised the KPO to Underperform from Perform due to its matured performing status. The borrower failed to repay the loan at its November 2025 maturity and is currently in discussions with the asset manager regarding potential resolution options.
  • The servicer-reported occupancies and DSCs are: 95.0% / 1.09x (YTD Annualized June 2025), 95.0% / 1.36x (FY 2024), at issuance these were 95.1% / 1.25x. At this time, KBRA does not estimate a loss on this asset.

Torrey Center (6th largest, 1.3%, Watchlist)

  • This loan is collateralized by the borrower’s leasehold interest in a 29,007-sf industrial flex space in San Diego CA.
  • KBRA maintains the loan’s K-LOC designation and its KPO of Underperform due to occupancy concerns, lease rollover concerns, and a below breakeven debt service coverage ratio. The property is 65.6% occupied by two tenants, Speed Xpress Inc. (50.9% of GLA) through 2028 and Villa Musica (14.6%) through 2030. Despite the increased occupancy from last year (40.4%), the servicer reported a negative annualized YTD June 2025 NCF . The loan matures in January 2026, and the borrower has been contacted regarding its maturity plans.
  • The servicer-reported occupancies and DSCs are: 91.0% / 1.62x (FY 2023); at issuance these were 100.0% / 1.29x. At this time, KBRA does not estimate a loss on this asset.

Details regarding the ratings affirmations are as follows:

  • Class B at AA- (sf)
  • Class C at A- (sf)
  • Class D at BBB- (sf)
  • Class E at BB+ (sf)
  • Class F at BB (sf)
  • Class G at B- (sf)

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.

Doc ID: 1012926