Fitch Downgrades One Distressed Class of CSFB 2003-C5

Fri Jun 7, 2013 12:07pm EDT

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Fitch Downgrades One Distressed Class of CSFB 2003-C5

Fitch Ratings has downgraded one and affirmed 14 classes of Credit Suisse First Boston Mortgage Securities Corp., commercial mortgage pass-through certificates, series 2003-C5. A detailed list of rating actions follows at the end of this press release.

KEY RATINGS DRIVERS

The affirmations are the result of continued amortization and resulting increased credit enhancement since the last annual review. The downgrade is the result of increased certainty of losses on the loans in special servicing. Fitch modeled losses of 8.4% of the remaining pool; expected losses of the original pool are at 3.7% including losses already incurred to date.

As of the May 2013 remittance report, the transaction has paid down 56.3% to $551.2 million from $1.261 billion at issuance. Twelve loans (25.9%) have defeased. Interest shortfalls totaling $4.1 million are currently affecting classes J through P. As of the May 2013 distribution date, five loans (3.9%) are in special servicing.

RATINGS SENSITIVITY

The ratings of classes A-4 through E are expected to remain stable. The ratings on classes F and G could be subject to further downgrades should realized losses be greater than Fitch expectations. The distressed classes (those rated below 'B') are expected to be subject to further downgrades as losses are realized.

The largest contributor to modeled losses, Baseline Corporate Center (3% of the pool), is secured by a 2 building 149,629 sf office complex in Tempe, Arizona. The loan transferred to special servicing effective August 2011. The loan was modified in April 2013 and the loan was split into an A/B note structure. The term was extended for 37 months with the new maturity date set for December 2016. The center resides west of the I-10 Freeway and is situated along the commercial corridor due to its close proximity to the freeway and Baseline Road off ramp. The performance of the complex has been volatile due to the asset's inability to retain tenants at lease expiration. The current servicer rent roll listed the vacancy at 30% which is in line with the market competitive set.

The second largest contributor to modeled losses is an approximately 223,000 square foot (sf) industrial building (2.5% of the pool) located in Troy, Michigan. The loan was returned to the master servicer September 2011 after a modification that resulted in a loan bifurcation to an A/B structure. Since the modification, performance has steadily improved with the servicer-reported occupancy as of June 2012 at 74%.

The third largest contributor to modeled losses is Deer Valley Financial Center (1.8%), 126,569 sf office building located in Phoenix, Arizona. The building, located less than one half mile from Deer Valley Airport, sits on 19th Avenue a primary thoroughfare that provides good visibility and access to the surrounding area. The loan continues to underperform; however, occupancy has continued to improve since vacancy peaked in late 2009 at 46% with the servicer-reported vacancy as of March 2012 at 36%.

Fitch has downgraded the following class:

--$6.3 million class L to 'Csf' from 'CCsf'; RE 0%.

In addition, Fitch affirms the following classes:

--$267.3 million class A-4 at 'AAAsf'; Outlook Stable;

--$152 million class A-1A at 'AAAsf'; Outlook Stable;

--$39.4 million class B at 'AAAsf'; Outlook Stable;

--$15.8 million class C at 'AAAsf'; Outlook Stable;

--$31.5 million class D at 'AAsf'; Outlook Stable from Negative;

--$17.3 million class E at 'Asf'; Outlook Stable from Negative;

--$17.3 million class F at 'BBsf'; Outlook Negative;

--$14.2 million class G at 'B-sf'; Outlook Negative;

--$14.2 million class H at 'CCCsf'; RE45%;

--$9.5 million class J at 'CCsf'; RE0%;

--$6.3 million class K at 'CCsf'; RE0%;

--$7.9 million class M at 'Csf'; RE0%;

--$1.6 million class N at 'Csf'; RE0%;

--$3.2 million class O at 'Dsf'; RE0%.

Classes A-1, A-2 and A-3 have paid in full. Fitch does not rate the class P. Classes A-SP and A-X were previously withdrawn.

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

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' (June 6, 2012);

--'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria' (Dec. 18, 2012).

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=696969

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=793149

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Fitch Ratings
Primary Analyst
Jay Bullie
Associate Director
+1-312-368-2079
Fitch Ratings, Inc.
70 W. Madison Street
Chicago, IL 60602
or
Committee Chairperson
Mary MacNeill
Managing Director
+1-212-908-0785
or
Media Relations:
Sandro Scenga, New York, +1 212-908-0278
sandro.scenga@fitchratings.com