Fitch Ratings has affirmed 15 classes of CFCRE Commercial Mortgage Trust 2017-C8 (CFCRE 2017-C8) Commercial Mortgage Pass-Through Certificates.

RATING ACTIONS

Entity / Debt

Rating

Prior

CFCRE 2017-C8

A-3 12532CAZ8

LT

AAAsf

Affirmed

AAAsf

A-4 12532CBA2

LT

AAAsf

Affirmed

AAAsf

A-M 12532CBB0

LT

AAAsf

Affirmed

AAAsf

A-SB 12532CAY1

LT

AAAsf

Affirmed

AAAsf

B 12532CBC8

LT

AA-sf

Affirmed

AA-sf

C 12532CBD6

LT

A-sf

Affirmed

A-sf

D 12532CAA3

LT

BBB-sf

Affirmed

BBB-sf

E 12532CAC9

LT

Bsf

Affirmed

Bsf

F 12532CAE5

LT

CCCsf

Affirmed

CCCsf

Page

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VIEW ADDITIONAL RATING DETAILS

KEY RATING DRIVERS

Slight Increase In Loss Expectations: The elevated loss expectations are driven by an increase in expected losses to the Pershing Square Building loan (8.2%) and the specially serviced 340 Bryant (3%) asset. There are a total of six Fitch Loans of Concern (FLOCs; 10.7% of pool). Four loans (9.7%) are currently in special servicing, two of which are performing (6.2%). Despite loss increases on these loans, the majority of the pool continues to exhibit generally stable performance. Fitch's current ratings reflect a base case loss of 5.8%.

Largest Contributor to Loss: The largest contributor to loss is the 340 Bryant loan (3%), which is secured by a 62,270 sf, class B office building located in the heart of the SOMA district of San Francisco, CA. The loan transferred to special servicing in September 2022 due to monetary default. The borrower has communicated their intention to transition the title to the lender. The special servicer is proceeding with foreclosure. Property occupancy declined from 100% in 2020 to 23% as of YE 2021 and into 2022 as a result of WeWork (formerly 76.6% of the NRA) terminating their lease. WeWork has not paid rent since December 2020 and paid a termination fee of approximately $5 million. The sole remaining tenant Logitech (23.4%) has a lease expiring in April 2023 that is not expected to be renewed. Fitch modeled a loss of 37% which reflects a recovery value of $317 psf.

The second largest contributor to loss is the Pershing Square Building loan (8.2%), which is secured by a 153,381 sf mixed use retail (25%)/office (75%) property located in the 'Historic Core' neighborhood of downtown Los Angeles, CA. Occupancy has declined to 72% as of September 2022, from 90% in 2020. Upcoming rollover at the property includes 9.5% of the NRA in 2023, followed by 10% in 2024 and 4.2% in 2025. The servicer reported YE 2021 IO NOI debt service coverage ratio (DSCR) was 1.75x compared with 2.09x at YE 2020.

Fitch modeled a loss of approximately 13%, which utilized a 9.5% cap rate and a 15% haircut to the YE 2021 NOI to reflect upcoming rollover concerns.

The next largest contributor to loss is the Flats East Bank Phase I loan (4.1%), which is secured by a 128,070-sf mixed-use property located in downtown Cleveland, along the Lake Erie lakefront. The collateral includes the 150-key Aloft Cleveland Downtown, with 33,166 sf of ground floor retail space and a 174-space surface parking lot. The property was developed concurrently with a large 18-story office property, which is not part of the collateral. The loan transferred to special servicing in June 2020 as a result of the pandemic. According to servicer updates, the special servicer and borrower are finalizing a settlement agreement.

Performance has begun to stabilize post pandemic. Per the September 2022 STR report, the subject hotel had occupancy, ADR and RevPAR rates of 60%, $160 and $95, respectively. RevPar is up 59% yoy. The subject outperforms its competitive set in all three metrics. Fitch modeled a loss of approximately 13%, which reflects a value of $152 psf.

Change to Credit Enhancement (CE): As of the February 2023 distribution date, the pool's aggregate principal balance was reduced by 16.4% to $536.9 million from $644.7 million at issuance. There have been $2.7 million in realized losses to date, and interest shortfalls are currently affecting the non-rated class. Six loans (26%) are full-term IO, while no loans remain in their partial IO periods. The pool matures in 2026 and 2027.

RATING SENSITIVITIES

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

Downgrades to classes A-3 through A-M are not likely due to their position in the capital structure and the high CE; however, downgrades to these classes may occur should interest shortfalls occur. Downgrades to classes B, C, and D would occur if loss expectations increase significantly and/or should CE be eroded. Downgrades to classes E and F would occur if the performance of the FLOCs continues to decline and/or fail to stabilize, or should losses from specially serviced loans/assets be larger than expected or more certain.

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

Upgrades to classes B and C would likely occur with significant improvement in CE and/or defeasance; however, adverse selection and increased concentrations, or the underperformance of the FLOCs, could reverse this trend. An upgrade to class D is unlikely and would be limited based on sensitivity to concentrations or further adverse selection. Classes would not be upgraded above 'Asf' if there were a likelihood for interest shortfalls. An upgrade to classes E and F is not likely until the later years in the transaction and only if the performance of the remaining pool is stable.

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

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