Fitch Takes Various Actions on CSFB 2003-C3

NEW YORK--(BUSINESS WIRE)--Fitch Ratings has downgraded six classes of Credit Suisse First Boston Mortgage Securities Corp., series 2003-C3 (CSFB 2003-C3) commercial mortgage pass-through certificates. A detailed list of rating actions follows at the end of this release.

The downgrades reflect Fitch modeled losses of 4.56% of the remaining pool; modeled losses of the original pool are at 3.88%, including losses already incurred to date. Fitch has identified 25 loans (13.8%) as Fitch Loans of Concern, which includes six specially-serviced loans (3.5%). Of the six loans in special servicing, three loans (3.3%) are in foreclosure and three loans (.27%) are 90 days or more delinquent. Fitch expects losses from loans currently in special servicing to deplete classes N through P and impact class M significantly.

As of the May 2011 distribution date, the pool's aggregate principal balance has reduced by 33.4% to $1.17 billion from $1.76 billion at issuance. In addition 27 loans (17.3%) have been fully defeased. Interest shortfalls totaling $692,970 are currently affecting classes M through P.

The largest contributor to modeled losses is a loan (2.25%) secured by a 216,416 square foot (sf) office complex located in Farmington Hills, Michigan, 25 miles northwest of Detroit. The servicer reported occupancy has declined to 60% which has resulted in a low debt service coverage ratio (DSCR) of 1.0 times (x) as of year-end (YE) 2010. All of the tenants at the property have leases that expire by 2013 and have above market rental rates for this location.

The second largest contributor to modeled losses is a specially-serviced loan (1.8%) secured by a 708 unit multifamily property in Houston, TX. The loan was transferred to special servicing in January 2010 due to imminent payment default and foreclosure is being pursued. The property incurred damage from hurricane Ike and the borrower was involved in ongoing litigation with the insurance company, which has since settled with the borrower and issued a claims check. A judge ruled that the foreclosure process must be handled judicially and this is expected to add months to the foreclosure process.

The third largest contributor to modeled losses is a specially-serviced loan (.8%) secured by an 81,054 square foot (sf) office building in Exton, PA. The loan transferred to special servicing in December 2009 due to payment default. The servicer-reported DSCR as of YE 2010 was .52x and the occupancy as of March 2011was 67%. The loan is currently in foreclosure since July 2010.

The largest loan in the transaction, 622 Third Avenue, (19.2%), is secured by a one million sf class A office building located in midtown Manhattan. The whole loan is divided into a $188.3 million pooled portion, a $37.1 million non-pooled portion (representing classes 622A through 622F) and a B-note held outside of the trust. As of March 2011, occupancy is 99% compared to 98% at issuance.

Fitch has downgraded and assigned Recovery Ratings (RRs) to the following classes as indicated:

--$19.4 million class J to 'B-/LS5' from 'B/LS4'; Outlook Negative;

--$12.9 million class K to 'CCC/RR1' from 'B-/LS5';

--$6.5 million class L to 'CC/RR1' from 'B-/LS5';

--$10.8 million class M to 'CC/RR4' from 'CCC/RR3';

--$2.2 million class N to 'C/RR6' from 'CCC/RR6';

--$4.3 million class O to 'C/RR6' from 'CCC/RR6'.

Also, Fitch has affirmed the following classes and revised Outlooks and Loss Severity ratings as indicated:

--$35.8 million class A-4 at 'AAA/LS1'; Outlook Stable;

--$862.4 million class A-5 at 'AAA/LS1'; Outlook Stable;

--$47.4 million class B at 'AAA/LS4' from 'AAA/LS3'; Outlook Stable;

--$19.4 million class C at 'AAA/LS5' from 'AAA/LS4'; Outlook Stable;

--$38.8 million class D at 'AA/LS5' from 'AA/LS3'; Outlook to Positive from Stable;

--$19.4 million class E at 'A+/LS5' from 'A+/LS4'; Outlook to Positive from Stable;

--$19.4 million class F at 'A/LS5' from 'A/LS4'; Outlook Stable;

--$12.9 million class G at 'A-/LS5'; Outlook Stable;

--$19.4 million class H at 'BB/LS5' from 'BB/LS4'; Outlook to Stable from Negative;

--$2.4 million class 622A at 'BBB-'; Outlook Stable;

--$5.6 million class 622B at 'BBB-'; Outlook Stable;

--$5.6 million class 622C at 'BBB-'; Outlook Stable;

--$5.6 million class 622D at 'BBB-'; Outlook Stable;

--$16.5 million class 622E at 'BB'; Outlook Stable;

--$1.5 million class 622F at 'BB'; Outlook Stable.

The $6.7 million class P is not rated by Fitch. Class A-1, A-2, A-3, and A-SP have paid in full.

Fitch has withdrawn the ratings on the interest-only classes A-X, and A-Y. (For additional information on the withdrawal of the rating on the interest-only class, see 'Fitch Revises Practice for Rating IO & Pre-Payment Related Structured Finance Securities', dated June 23, 2010.)

Additional information on Fitch's amended criteria for analyzing U.S. fixed-rate CMBS transactions is provided in the Nov. 17, 2010 report 'Surveillance Methodology for U.S. Fixed-Rate CMBS Transactions', which is available at 'www.fitchratings.com' under the following headers:

Structured Finance then CMBS then Criteria Reports

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' (Aug. 13, 2010);

--'Surveillance Methodology for U.S. Fixed-Rate CMBS Transactions' (Nov. 17, 2010).

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=547326

Surveillance Methodology for U.S. Fixed-Rate CMBS Transactions

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=574208

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