Fitch Downgrades 10 classes of CSFB 2004-C3; Revises Outlooks

Business Wire, June 23, 2009

CHICAGO -- Fitch Ratings downgrades and revises Rating Outlooks for ten classes of Credit Suisse First Boston (CSFB) Mortgage Securities Corp. commercial mortgage pass-through certificates, series 2004-C3, as follows:

--$14.3 million class C to 'A' from 'AA'; Outlook Negative;

--$28.7 million class D to 'BBB' from 'A '; Outlook Negative;

--$16.4 million class E to 'BBB-' from 'A-'; Outlook Negative;

--$20.5 million class F to 'B' from 'BBB '; Outlook Negative;

--$16.4 million class G to 'CCC/RR1' from 'BBB-';

--$22.5 million class H to 'CCC/RR2' from 'BB-';

--$8.2 million class J to 'CC/RR4' from 'B';

--$6.1 million class K to 'CC/RR5' from 'B-';

--$8.2 million class L to 'C/RR6' from 'CCC/DR2';

--$6.1 million class M to 'C/RR6' from 'CC/DR4';

--$2.1 million class O to 'C/RR6' from 'C/DR6'.

In addition, Fitch has affirmed and assigned Outlooks to the following classes:

--$136.9 million class A-3 at 'AAA'; Outlook Stable;

--$102.9 million class A-4 at 'AAA'; Outlook Stable;

--$694.5 million class A-5 at 'AAA'; Outlook Stable;

--$304.3 million class A-1-A at 'AAA'; Outlook Stable;

--Interest Only class A-X at 'AAA'; Outlook Stable;

--Interest Only class A-SP at 'AAA'; Outlook Stable;

--$45.1 million class B at 'AA '; Outlook Negative.

The $6.1 million class N and the $19.3 million class P are not rated by Fitch. Classes A-1 and A-2 have paid in full.

The rating downgrades are due to projected losses on 12 (8.8%) of the 15 loans that are specially serviced (12.5%). Nine additional loans became specially serviced since Fitch's last rating action. The Rating Outlooks reflect the likely direction of any rating changes over the next one or two years. Thirty-nine loans (22.7%) are considered Fitch Loans of Concern, including the specially serviced loans.

The largest specially serviced loan (3.2%) is a regional mall located in Grand Rapids, MI. The mall suffered the loss of its largest tenant, Klingman's Furniture, as well as both Linens N Things and Steve & Barry's. As of year-end 2008 occupancy was 67%. The borrower was granted a modification of the loan in order to reposition the asset and attempt to lease vacant space. The modification includes two years of interest only payments and the monthly tenant improvement/leasing cost impound requirement will be suspended. The loan will be returned to the master servicer after three timely debt service payments.

The second largest specially serviced loan (1.6% of the pool) is collateralized by a multifamily property located in Duluth, GA. The borrower has verbally informed the master servicer that they will not be remitting payments. As of April 2008, the property was 47% occupied with a servicer reported first quarter 2009 debt service coverage ratio (DSCR) of 0.20 times (x). Losses are expected.

The third largest specially serviced loan (0.8% of the pool), is a retail property located in Hilton Head Island, SC. The loan was transferred to the special servicer due to borrower's written request for debt service relief. The loan had remained current due to active cash management, although it is currently short for the April 11, 2009 payment. Losses are expected.

There are two shadow rated loans within the transaction: The largest, One Park Avenue (11%), has defeased. The Mizner Park loan (3.5%) no longer maintains an investment grade shadow rating and is considered a Fitch Loan Of Concern. The loan is scheduled to mature on July 1, 2009, and the borrower has requested an extension because they have been unable to obtain reasonable financing. The loan is likely to be transferred to the special servicer.

The Mizner Park loan is secured by six mixed-use buildings (50% office, 50% retail) in Boca Raton, FL. The loan contains A and B notes, with the A note included in the trust. As of year-end 2008, the servicer reported DSCR based on the actual interest rate of 4.84%, was 2.67x compared to 2.09x at issuance. March 2009 occupancy was 81.8%, down from issuance occupancy of 89%.

As of the June 2009 distribution date, the pool's aggregate certificate balance has decreased 14.8% to $1.396 billion from $1.639 billion at issuance. In addition, twenty-five loans (23.8%) have defeased.

The transaction has near-term maturity risk of 8.7% maturing in 2009, 0% in 2010 and 2% in 2011; the weighted average most recent servicer reported DSCR for these loans is 1.81x. Of the non-defeased loans outstanding, 63.8% of the pool matures in 2014.

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.