Fitch Upgrades 2 Classes of CSFB 2004-C3

NEW YORK--()--Fitch Ratings has upgraded two classes and affirmed six classes of Credit Suisse First Boston Mortgage Securities Corporation's commercial mortgage pass-through certificates, series 2004-C3. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The upgrades and affirmations reflect an increase in credit enhancement and continued stable collateral performance since Fitch's last rating action. Upgrades were limited due to the lack of progress in resolving the specially serviced assets, none of which are currently being marketed for sale. Fitch modeled losses of 10.5% of the remaining pool; expected losses on the original pool balance total 8.5%, including $89.2 million (5.4% of the original pool balance) in realized losses to date. Fitch has designated 26 loans (26.1%) as Fitch Loans of Concern, which includes 12 specially serviced assets (12.8%).

As of the March 2014 distribution date, there are 67 loans remaining from the original 167 loans and the pool's aggregate principal balance has been reduced by 70.7% to $479.7 million from $1.64 billion at issuance. Per the servicer reporting, nine loans (19.1% of the pool) are defeased. Interest shortfalls are currently affecting classes D through P.

The largest contributor to expected losses is a 184,616 square foot (sf) office property in Danvers, MA, 20 miles north of Boston (3.6% of the pool). The original loan matured in April 2009, had transferred to special servicing in February 2009 upon the borrower's request for an extension of the maturity date. In May 2013 the lender took title of the property through foreclosure. Extensive renovations including the building lobby, parking lot, gym, and HVAC systems have been completed. Due to the recent improvements there is over $10 million in advances outstanding on the loan. Servicer reported occupancy at the property is 93%, primarily leased by Copyright Clearance Corporation (55% of net rentable area [NRA]) with a lease through April 2024.

The next largest contributor to expected losses is a 270 unit multifamily property in Palm Bay, FL (2.3 % of the pool). The loan transferred to the special servicer in December 2008 for payment default and became real estate owned (REO) in July 2011. The servicer reported occupancy at 87% in January 2014, down from 92% in February 2013 but a significant increase from October 2011 at 66%. The servicer is stabilizing the property through continued lease-up and completion of deferred maintenance items. The property has not been marketed for sale at this point.

The third largest contributor to expected losses is five unanchored retail properties totaling 34,930 sf located in Parkland, FL (1.2% of the pool). The loan transferred to the special servicer in May 2009 for payment default and became REO in March 2013. The servicer continues to stabilize the property and market vacant space for lease.

RATING SENSITIVITY

Rating Outlooks on classes A-5 through C are Stable due to increasing credit enhancement, continued paydown and expected payoff from defeasance. Distressed classes (those rated below 'B') may be subject to downgrades as losses are realized or if realized losses are greater than Fitch's expectations. Further upgrades are not likely until progress is made on resolving the specially serviced assets.

Fitch upgrades the following classes and revises Rating Outlooks as indicated:

--$45.1 million class B to 'Asf' from 'BBBsf'; Outlook Stable;

--$14.3 million class C to 'BBB-sf' from 'BBsf'; Outlook to Stable from Negative.

Fitch affirms the following classes as indicated:

--$264.1 million class A-5 at 'AAAsf'; Outlook Stable;

--$81.3 million class A-1-A at 'AAAsf'; Outlook Stable;

--$28.7 million class D at 'CCCsf'; RE 95%;

--$16.4 million class E at 'CCsf'; RE 0%.

--$20.5 million class F at 'Csf'; RE 0%;

--$9.2 million class G at 'Dsf'; RE 0%;

--$0 class H at 'Dsf'; RE 0%;

--$0 class J at 'Dsf'; RE 0%;

--$0 class K at 'Dsf'; RE 0%;

--$0 class L at 'Dsf'; RE 0%;

--$0 class M at 'Dsf'; RE 0%;

--$0 class O at 'Dsf'; RE 0%;

Fitch previously withdrew the ratings on the interest-only class A-X and A-SP certificates.

Additional information on Fitch's criteria for analyzing U.S. CMBS transactions is available in the Dec. 11, 2013 report, 'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria', which is available at 'www.fitchratings.com' under the following headers:

Structured Finance >> CMBS >> Criteria Reports

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

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' (May 24, 2013);

--'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria' (Dec. 11, 2013).

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=708661

U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=724961

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=827259

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE '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. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Contacts

Fitch Ratings
Primary Analyst
Darren Liss, +1 212-908-0753
Director
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Committee Chairperson
Mary MacNeill, +1 212-908-0785
Managing Director
or
Media Relations, New York
Alyssa Castelli, +1 212-908-0540
alyssa.castelli@fitchratings.com

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Contacts

Fitch Ratings
Primary Analyst
Darren Liss, +1 212-908-0753
Director
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Committee Chairperson
Mary MacNeill, +1 212-908-0785
Managing Director
or
Media Relations, New York
Alyssa Castelli, +1 212-908-0540
alyssa.castelli@fitchratings.com