NEW YORK--(BUSINESS WIRE)--Fitch Ratings has upgraded one class and affirmed 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 press release.
KEY RATING DRIVERS
The upgrade and affirmations are the result of sufficient credit enhancement despite significant pool concentration as only 14 loans remain. Fitch modeled losses of 10.6% of the remaining pool; expected losses on the original pool balance total 3.2%, including $51.9 million (2.9% of the original pool balance) in realized losses to date. Fitch has designated five loans (72.8% of the remaining pool) as Fitch Loans of Concern, which includes all three specially serviced assets (39.5%).
As of the October 2014 distribution date, the pool's aggregate principal balance has been reduced by 97.8% to $38.3 million from $1.76 billion at issuance. Per the servicer reporting, one loan (0.6% of the pool) is defeased. Interest shortfalls are currently affecting classes K, O and P.
The largest specially serviced loan is a 163,393 square foot (sf) suburban office building located in Colorado Springs, CO (22.3% of the pool). The property is a single-tenant building occupied by Honeywell International (rated 'A'; Outlook Stable by Fitch as of October 2014). The loan transferred to special servicing in February 2013 due to maturity default and foreclosure was completed in May 2014. Honeywell extended their lease in 2013 for three years to run through November 2016. According to the special servicer, Honeywell does not yet know if they will be in a position to extend after 2016. The property performance remains stable with 100% occupancy by Honeywell and a 2013 year-end net operating income debt service coverage ratio (NOI DSCR) of 1.84x. Although Fitch is not modeling losses on the property at this time, the loan will continue to be monitored as Honeywell's lease nears its expiration in November 2016.
The largest contributor to expected losses is secured by a 64,665 sf suburban office building located in Elmsford, NY. The loan initially transferred to special servicing in December 2012 for imminent maturity default. The loan was modified with terms that included an extension of the maturity through January 2015, a principal paydown of $245,755, and waiver of default interest. The loan was subsequently returned to the master servicer in September 2014. The loan is being monitored for financial hardship by the master servicer. The property continues to underperform with a 2013 year-end occupancy of 60% and NOI DSCR of 0.9x.
RATING SENSITIVITIES
The upgrade of class H is due to increasing credit enhancement and continued paydown, which offsets the increasing concentration and continued risk of adverse selection. Downgrades to class J could be possible should expected losses from the specially serviced loans increase.
Fitch upgrades the following classes and assigns or revises Rating Outlooks as indicated:
--$12.5 million class H to 'Bsf' from 'CCCsf', assigned Stable Outlook.
Fitch affirms the following classes and assigns REs as indicated:
--$19.4 million class J at 'CCsf', RE 100%;
--$6.4 million class K at 'Dsf', RE 45%;
--$0 class L at 'Dsf', RE 0%;
--$0 class M at 'Dsf', RE 0%;
--$0 class N at 'Dsf', RE 0%;
--$0 class O at 'Dsf', RE 0%.
The class A-1, A-2, A-3, A-4, A-5, A-SP, B, C, D, E, F, G and 622A through 622F certificates have paid in full. Fitch does not rate the class P certificates. Fitch previously withdrew the ratings on the interest-only class A-X and A-Y 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 then CMBS then Criteria Reports
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' (Aug. 4, 2014);
--'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=754389
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=905915
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