TEXT-Fitch cuts Cornerstone Titan 2007-1 Plc

Fri Jan 25, 2013 11:42am EST

Jan 25 - Fitch Ratings has downgraded Cornerstone Titan 2007-1 plc's class
B, C and D notes and affirmed the others, as follows:

EUR3321.9m class A1 (XS0288055436) affirmed at 'AAsf'; Outlook Stable
EUR316.2m class A2 (XS0288055600) affirmed at 'BBsf'; Outlook Negative
EUR71.3m class B (XS0262561946) downgraded to 'CCCsf' from 'Bf'; Recovery
Estimate (RE) RE80%
EUR41.9m class C (XS0288057218) downgraded to 'CCsf' from 'CCCsf'; RE0%
EUR92.3m class D (XS0288057648) downgraded to 'Csf' from 'CCsf'; RE0%
EUR56.5m class E (XS0288058885) affirmed at 'Csf'; 'RE0%
EUR10.1m class F (XS0288059420) affirmed at 'Dsf'; RE0%
EUR0m class G (XS0288060196) affirmed at 'Dsf'

The affirmation of the A1 and A2 notes reflects the expected partial redemption
of the class A1 notes after the sale of the Xanadu loan was agreed (as per the
20 December 2012 RIS Notification), together with the recovery prospects for the
remaining portfolio. The expected sale price of the Xanadu loan is in excess of
that projected by Fitch in 'AAsf' and 'BBsf' stresses at the last rating action
in January 2012. However, these higher-than-expected proceeds are offset by the
continued deterioration of the remaining underlying collateral, which also
explains the downgrades of the mezzanine and junior tranches. All principal
proceeds are being allocated to the notes sequentially since 2009.
.
There are 21 outstanding loans, of which nine, (EUR226.8m by outstanding
balance), are due to mature in the next 12 months. 12 (amounting to EUR683.6m)
have passed their scheduled maturity (including the Xanadu loan) and are in
standstill or workout.

As of the January 2013 interest payment date (IPD), all classes up to the A2
notes have recorded interest shortfalls. Prior to the January IPD, available
interest funds had been sufficient to make full interest payments on the three
most senior note tranches. The shortfall has increased primarily due to higher
special servicing fees, in conjunction with the absence of any debt service
payment from the German Retail Portfolio 2 loan, whose borrower is in insolvency
and for which rental payments are upheld by the appointed receiver. No drawing
on the servicer advance facility has been made to cover this loan's payment
shortfall, since the provider retains the option to advance based on
recoverability prospects.

In this transaction, the class X notes have been structured so that the payments
due are calculated excluding administrative costs. Consequently, the special
servicing costs, which averaged EUR373,000 during the past four quarters, are
funded from interest payments otherwise due to the junior note classes, without
affecting the amounts paid to the class X holders (EUR2.4m this IPD). If the
class X notes were merely an instrument to extract surplus proceeds from the
transaction, the variable payments would take into consideration both
extraordinary costs and unpaid loan interests.

Since the last rating action in January 2012, no loans have successfully repaid,
with the vast majority of standstill agreements continuing to be extended. The
sale of the properties backing the EUR4.3m Dusseldorf loan in July 2012 resulted
in a 14.6% loss on that loan and an equivalent write down of the class F notes.

Four updated valuations have been reported since the last rating action. The
vast majority of loans have now seen substantial increases in reported
loan-to-value ratio (LTV). Fitch has estimated the weighted average LTV of the
portfolio to be 129% (excluding the Xanadu loan). The agency believes that the
continued decline in values is further evidence of the ongoing increase of
secondary yields and the decline in letting prospects from the remaining assets,
altogether limiting investor demand for these impaired assets. As a result,
enforcement for the majority of the loans over the coming years is a very likely
scenario.

Cornerstone Titan 2007-1 was originally a securitisation of 32 commercial
mortgage loans originated by Credit Suisse and Capmark Bank Europe, with an
aggregate balance of EUR1.32bn. Since closing, seven loans have repaid in full
and four with losses, leaving 21 loans outstanding with a combined balance of
EUR920.9m.

Fitch will continue to monitor the performance of the transaction. A performance
report will shortly be published on www.fitchratings.com.


Additional information is available at www.fitchratings.com. The ratings above
were solicited by, or on behalf of, the issuer, and therefore, Fitch has been
compensated for the provision of the ratings.

The sources of information used to assess these ratings were the issuer,
servicer, and periodic cash manager and servicer reports.

Applicable criteria, "EMEA CMBS Rating Criteria", dated 4 April 2012, 'Global
Structured Finance Rating Criteria', dated 6 June 2012, are available at
www.fitchratings.com.

Applicable Criteria and Related Research:
EMEA CMBS Rating Criteria
Global Structured Finance Rating Criteria
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