The announcement to shut down Al Jazeera America, an affiliate of one of the tenants in the property securing the 123 Townsend loan in CFCRE 2016-C3 Mortgage Trust will not impact the transaction's expected ratings, according to Fitch Ratings.

On Jan. 13, 2016, eight days after Fitch issued a presale report and expected ratings for CFCRE 2016-C3 Mortgage Trust, Al Jazeera America, an affiliate of the second largest tenant at the 123 Townsend office building in San Francisco, announced that it will shut down its cable TV operations by April 30, 2016. The announcement included a statement that Al Jazeera International is committing to significant expansion of its worldwide digital operations into the U.S. market.

Al Jazeera International (USA) Inc. is the second largest tenant in the 123 Townsend property, occupying 40,345 square feet (sf) or 29% of the property's net rentable area, and contributing 36% of Fitch's gross potential rent. The occupied space is used by multiple companies in the Al Jazeera family of companies, including Al Jazeera International, Al Jazeera America, and AJ+. AJ+, Al Jazeera's online news network, is headquartered at the 123 Townsend property.

Based on information from Fitch's site inspection and provided by the issuer, it appears that Al Jazeera America occupies less than a quarter of Al Jazeera International (USA) Inc.'s leased space at the property. Given the multiple affiliates that occupy the Al Jazeera International space, the relatively modest loan leverage profile at $387 per square foot (psf), and the strong market conditions with submarket vacancy rates less than 10.0% per Reis or 4.5% per CoStar, Fitch does not anticipate that the announcement will have an impact on the transaction's expected ratings.

123 Townsend is a 6-story 137,031 sf office building located in the SoMa submarket, about 0.5 miles south of San Francisco's CBD. The property secures the second largest loan in the pool (7.53%), a $52.9 million mortgage loan originated by Cantor Commercial Real Estate Lending, LP.

The presale report is available at www.fitchratings.com

Additional information is available at www.fitchratings.com.

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CFCRE 2016-C3 -- Appendix

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=876221

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