Fitch Ratings Downgrades 4 Classes from Mezz Cap 2005-C3

2008-05-06 23:58:59 -

- Fitch Ratings has downgraded four classes and assigned a Distressed Recovery (DR) rating to two classes of Mezz Cap's commercial mortgage pass-through certificates, series 2005-C3, as follows:

--$1.6 million class F downgraded to 'BB+' from 'BBB-';

--$1.7 million class G downgraded to 'B+' from 'BB';

--$4.9 million class H downgraded to 'CCC/DR1' from 'B';

--$0.6 million class J downgraded to 'CCC/DR5' from 'B-'.

In addition, Fitch has affirmed the following classes:

--$41 million class A affirmed at 'AAA';

--Interest only class X affirmed at 'AAA';

--$1.8 million class B affirmed at 'AA';

--$1.9 million class C affirmed at 'A';

--$3.2 million class D affirmed at 'BBB';

--$1.8 million class E affirmed at 'BBB-'.

Fitch does not rate the $3.9 million class K certificates.

The downgrades and assignment of the DR ratings are the result of Fitch's expected losses on specially serviced assets. As of the April 2008 remittance report, the pool's aggregate certificate balance has decreased 1.5% to $62.5 million from $63.4 million at issuance. Two loans (2.5%) have been defeased.

The mortgage loans consist of two notes -- the A note, or senior component, which is not included in this trust's mortgage assets, and the B note. The B notes in this pool consist of subordinate interests in the first mortgage loans. All loans are secured by traditional commercial real estate property types and are subject to standard intercreditor agreements that limit the rights and remedies of the B note holder in the event of default and upon refinancing. Due to their subordinate positions, B notes which default and incur a loss are typically 100% non-recoverable.

Nine assets (1.6%) are currently in special servicing with losses expected. The non-rated class K is sufficient to absorb Fitch's expected losses; however, if additional loans become specially serviced class J will likely be impacted.

The largest specially serviced asset (1.2%) is collateralized by an industrial warehouse in Bend, OR, and is 90 days delinquent. The property transferred to the special servicer in October 2007 due to imminent default. The special servicer is pursuing foreclosure.

The second largest specially serviced asset (0.9%) is collateralized by a multifamily property in Tallahassee, FL, and is real estate owned. The asset transferred to the special servicer in February 2007 due to imminent default. The special servicer is marketing the property.

Fitch's Distressed Recovery (DR) ratings are designed to estimate recoveries on a forward-looking basis while taking into account the time value of money.

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.

Fitch Ratings
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Adam Fox, 1-212-908-0869 (New York)
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