Fitch Ratings has downgraded seven classes of Cantor Commercial Real Estate's COMM 2012-CCRE3 commercial mortgage pass-through certificates, series 2012-CCRE3.

Fitch has also revised the Rating Outlook on five classes to Stable from Negative.

RATING ACTIONS

Entity / Debt

Rating

Prior

COMM 2012-CCRE3

A-3 12624PAE5

LT

AAAsf

Affirmed

AAAsf

A-M 12624PAJ4

LT

Asf

Downgrade

AAsf

A-SB 12624PAD7

LT

AAAsf

Affirmed

AAAsf

B 12624PAL9

LT

BBBsf

Downgrade

Asf

C 12624PAQ8

LT

BBsf

Downgrade

BBBsf

D 12624PAS4

LT

Bsf

Downgrade

BBsf

E 12624PAU9

LT

CCsf

Downgrade

CCCsf

F 12624PAW5

LT

Csf

Affirmed

Csf

G 12624PAY1

LT

Csf

Affirmed

Csf

Page

of 2

VIEW ADDITIONAL RATING DETAILS

KEY RATING DRIVERS

Regional Mall Concentration: Despite improving loan performance for the majority of the pool exposure to regional malls remains a rating concern. Fitch performed a paydown scenario assuming that the three non-defeased regional malls are the last remaining assets in the pool. This scenario, along with further certainty of losses, contributed to the downgrades and Negative Outlooks. Class A-M would be the most senior class reliant on these malls; this class was capped at 'Asf'.

Lowered Loss Expectations; Expected Paydown: Fitch's loss expectations for the pool have improved since the prior rating action due to generally stable to improved performance as loans affected by the pandemic exhibit recovering cashflow. The majority of the pool (92.3%) matures in 2022 and the remainder of the pool (7.7%) matures in the first half of 2023. The Stable Outlooks on classes A-3 and A-SB reflect increasing defeasance as well as expected paydown from upcoming maturities.

Fitch's current ratings incorporate a base case loss of 11.7%. An additional stress that factored in potential outsized losses of 50% on Solano Mall & Crossgates Mall as well as a potential outsized loss of 100% loss on Emerald Square Mall, drove the Negative Outlooks. There are 26 remaining non-defeased loans (73.4%); 12 (38.2% of the pool) are Fitch Loans of Concern, including two specially serviced regional mall loans/assets (17.7%) and two non-specially serviced regional mall loans (9.6%).

Solano Mall (11.1% of the pool), the largest FLOC, is collateralized by the inline space of a 1.0 million-sf regional mall located in Fairfield, CA. The property is anchored by non-collateral JCPenney, Macy's and a vacant former Sears. The loan is sponsored by a joint venture between Starwood Capital Group Global, L.P. and the Westfield Group. The loan is a FLOC due to declining sales and occupancy. Although inline sales prior to the pandemic had been steady since issuance, anchor tenant sales declined. Additionally, occupancy has declined to 77% as of YE 2020, from 94% at YE2019 and 100% at YE2018. The former Sears store was closed in 2018. Forever 21 (previously 8.1% NRA) moved out following its December 2019 lease expiration.

The loan transferred to the special servicer in June 2020 after falling 60 days delinquent, and the workout strategy is listed as foreclosure. Spinoso is the appointed receiver. The subject is located in a secondary location, and the primary economic driver for the area is Travis Airforce Base. The closest competing mall is located 25 miles away. The Fitch projected base case loss of 25% is based on a stressed value which implies a cap rate of 9.75%. An additional sensitivity scenario implies a cap rate of approximately 20%.

The largest contributor to expected losses is the Emerald Square Mall asset (6.6% of the pool). The asset is an enclosed regional mall located in North Attleboro, MA and anchored by JCPenney, Macy's, Macy's Men's and Home Store and Sears. The collateral for this loan consists of the JCPenney anchor (188,950 sf, 33.5% NRA through August 2024) and the in-line retail space (375,551 sf).

Occupancy was 82% as of March 2021, down from 85% at YE 2020 and 90% at YE 2019. JCPenney recently exercised a five-year extension option. Macy's is not on any of the retailer's store closure lists, but the non-collateral Sears anchor closed in April 2021 according to media sources. Despite being a non-collateral tenant, the closing of Sears triggers co-tenancy clauses, further stressing revenues following a difficult year marked by the pandemic. According to the September 2020 rent roll, leases representing 19.6% of the NRA were scheduled to roll by YE2021 and 4.5% in 2022. Prior to the onset of the pandemic, inline sales were $325 psf as of YE2019, down from $331 psf the year prior.

The loan, which is sponsored by Simon Property Group, transferred to the special servicer in June 2020 for payment default and the special servicer is evaluating all enforcement and disposition options. JLL is the appointed receiver. The Fitch projected base case loss is based on a haircut to the most recent appraisal to reflect upcoming rollover and potential for an extended disposition timeline.

Improved Credit Enhancement: Credit enhancement has improved since Fitch's last rating action due to continued scheduled amortization and increased defeasance. As of January 2022, the pool's aggregate principal balance has been reduced by 24.3% to $947.7 million from $1.251 billion at issuance. There have been no realized losses to date. Fourteen loans (26.6% of the pool) are defeased, including two loans (9.6%) which have defeased since the last rating action.

RATING SENSITIVITIES

Factors that could, individually or collectively, lead to negative rating action/downgrade:

Factors that could lead to downgrades include an increase in pool level losses from underperforming or specially serviced loans.

Downgrades to the classes rated 'AAAsf' are not expected as credit enhancement remains high and the classes are expected to payoff as loans reach maturity. Downgrades to classes A-M and B are not expected unless the mall loans significantly deteriorate. Downgrades to classes C, D, and PEZ are possible should FLOCs fail to stabilize and performance continues to decline, including if the regional mall values decline further. Downgrades to the distressed classes are expected as losses are realized.

Factors that could, individually or collectively, lead to positive rating action/upgrade:

Upgrades are not currently expected given the pool's exposure to regional malls and the outlook for retail performance. Factors that lead to upgrades would include significantly improved performance coupled with pay down and/or defeasance.

An upgrade to class A-M is not possible as the rating is capped due to the regional mall exposure. Classes B, C, D, and PEZ should only be upgraded should one or more of the regional malls dispose at greater than expected recoveries. Upgrades to the distressed classes are not likely.

Best/Worst Case Rating Scenario

International scale credit ratings of Structured Finance transactions have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of seven notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of seven notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAAsf' to 'Dsf'. Best- and worst-case scenario credit ratings are based on historical performance. For more information about the methodology used to determine sector-specific best- and worst-case scenario credit ratings, visit https://www.fitchratings.com/site/re/10111579.

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

Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action.

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

The principal sources of information used in the analysis are described in the Applicable Criteria.

ESG Considerations

Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg

Additional information is available on www.fitchratings.com

PARTICIPATION STATUS

The rated entity (and/or its agents) or, in the case of structured finance, one or more of the transaction parties participated in the rating process except that the following issuer(s), if any, did not participate in the rating process, or provide additional information, beyond the issuer's available public disclosure.

APPLICABLE CRITERIA

North America and Asia-Pacific Multiborrower CMBS Surveillance Criteria (pub. 08 Apr 2021) (including rating assumption sensitivity)

Global Structured Finance Rating Criteria (pub. 26 Oct 2021) (including rating assumption sensitivity)

Structured Finance and Covered Bonds Counterparty Rating Criteria (pub. 04 Nov 2021)

APPLICABLE MODELS

Numbers in parentheses accompanying applicable model(s) contain hyperlinks to criteria providing description of model(s).

CMBS Conduit Surveillance Model, v1.19.5 (1)

ADDITIONAL DISCLOSURES

Dodd-Frank Rating Information Disclosure Form

Solicitation Status

Endorsement Policy

ENDORSEMENT STATUS

COMM 2012-CCRE3 	EU Endorsed, UK Endorsed

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