Fitch Affirms Cobalt 2007-C3; Assigns Outlooks

NEW YORK--(BUSINESS WIRE)--Fitch Ratings has affirmed and assigned Outlooks to Cobalt CMBS Commercial Mortgage Trust 2007-C3 commercial mortgage pass-through certificates as follows:

--$12 million class A-1 at 'AAA'; Outlook Stable;

--$107.7 million class A-2 at 'AAA'; Outlook Stable;

--$93.9 million class A-3 at 'AAA'; Outlook Stable;

--$45.5 million class A-PB at 'AAA'; Outlook Stable;

--$783.0 million class A-4 at 'AAA'; Outlook Stable;

--$367.6 million class A-1A at 'AAA'; Outlook Stable;

--$201.7 million class A-M at 'AAA'; Outlook Stable;

--$153.8 million class A-J at 'AAA'; Outlook Stable;

--Interest only class IO at 'AAA'; Outlook Stable;

--$40.3 million class B at 'AA'; Outlook Stable;

--$20.2 million class C at 'AA-'; Outlook Stable;

--$25.2 million class D at 'A'; Outlook Stable;

--$20.2 million class E at 'A-'; Outlook Stable;

--$25.2 million class F at 'BBB+'; Outlook Stable

--$22.7 million class G at 'BBB'; Outlook Negative;

--$25.2 million class H at 'BBB-'; Outlook Negative;

--$7.6 million class J at 'BB+'; Outlook Negative;

--$5 million class K at 'BB'; Outlook Negative;

--$10.1 million class L at 'BB-'; Outlook Negative;

--$5 million class M at 'B+'; Outlook Negative;

--$2.5 million class N at 'B'; Outlook Negative;

--$5 million class O at 'B-'; Outlook Negative.

Fitch does not rate $35.3 million class P.

The rating affirmations are the result of stable performance and limited paydown since issuance. Classes G through O have been assigned negative outlooks due to the high concentration of Fitch Loans of Concern. Rating outlooks reflect likely rating changes over the next one to two years.

As of the September 2008 distribution date, the transaction has paid down 0.1% to $2.015 billion. The collateral consists of 124 loans on multifamily and commercial real estate properties in 35 states. There have been no specially serviced loans since issuance.

Fitch has identified nine loans (12.7%) as Fitch Loans of Concern, including two top-10 loans (9.3%). These include loans with debt service coverage ratios (DSCR) below 1.00 times (x) and loans with occupancy or other performance issues.

The largest Loan of Concern (6.8%), the Irvine EOP San Diego Portfolio, is also the second largest loan in the transaction and is secured by seven office properties located in the San Diego, CA market. The servicer reported first-quarter 2008 DSCR of 0.40x and occupancy of 87.6% as of June 2008. In-place cash flow at underwriting was below 1.00x. There is a $20 million B-note facility in place.

The second largest Loan of Concern (2.5%) is the Arbors at Broadlands, a 240-unit multifamily property located in Ashburn, VA. Although servicer-reported second-quarter 2008 DSCR was 0.85x, occupancy has improved to 90.4% from an actual physical occupancy of 74.6% at underwriting. The loan is structured guaranty to the sponsors until DSCR reaches 1.2x.

There are two Fitch shadow rated loans (2.6%) in the transaction. The largest shadow rated loan, Tradewinds Hospitality Portfolio (2.5%), is collateralized by a portfolio of three hotel properties (796 rooms) located in St. Petersburg, FL and had a reported year-end (YE) 2007 DSCR of 1.94x. The second shadow rated loan, the Dalhmann Campus Inn (0.1%), is secured by a 74-room limited-service hotel property in Madison, WI, and had a reported YE 2007 DSCR of 3.90x. Due to their stable performance, the loans maintain investment grade shadow ratings.

The largest loan in the transaction, Charles River Plaza North (7.2%), is secured by a 354,594-square foot office property located in Boston, MA. At issuance, this property was 100% occupied by Massachusetts General Hospital. Reported second-quarter 2008 DSCR was 1.16x. The loan is pari passu with an A-2 note held in another transaction.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.