Moody's Downgrades Four and Affirms 20 CMBS Classes of LB-UBS 2003-C3

Approximately $805.1 Million of Structured Securities Affected

New York, January 20, 2012 -- Moody's Investors Service (Moody's) downgraded the ratings of four classes and affirmed 20 classes of LB-UBS Commercial Mortgage Trust 2003-C3, Commercial Mortgage Pass-Through Certificates, Series 2003-C3 as follows:

Cl. A-3, Affirmed at Aaa (sf); previously on Jun 30, 2003 Definitive Rating Assigned Aaa (sf)

Cl. A-4, Affirmed at Aaa (sf); previously on Jun 30, 2003 Definitive Rating Assigned Aaa (sf)

Cl. B, Affirmed at Aaa (sf); previously on Apr 20, 2006 Upgraded to Aaa (sf)

Cl. C, Affirmed at Aaa (sf); previously on Apr 20, 2006 Upgraded to Aaa (sf)

Cl. D, Affirmed at Aaa (sf); previously on Jun 17, 2009 Upgraded to Aaa (sf)

Cl. E, Affirmed at Aa1 (sf); previously on Jun 17, 2009 Upgraded to Aa1 (sf)

Cl. F, Affirmed at Aa2 (sf); previously on Jun 17, 2009 Upgraded to Aa2 (sf)

Cl. G, Affirmed at A1 (sf); previously on Jun 17, 2009 Upgraded to A1 (sf)

Cl. H, Affirmed at A3 (sf); previously on Jun 17, 2009 Upgraded to A3 (sf)

Cl. J, Affirmed at Baa1 (sf); previously on Jun 17, 2009 Upgraded to Baa1 (sf)

Cl. K, Affirmed at Baa3 (sf); previously on Jun 30, 2003 Definitive Rating Assigned Baa3 (sf)

Cl. L, Affirmed at Ba1 (sf); previously on Jun 30, 2003 Definitive Rating Assigned Ba1 (sf)

Cl. M, Affirmed at Ba2 (sf); previously on Jun 30, 2003 Definitive Rating Assigned Ba2 (sf)

Cl. N, Downgraded to B1 (sf); previously on Jun 30, 2003 Definitive Rating Assigned Ba3 (sf)

Cl. P, Downgraded to B2 (sf); previously on Jun 30, 2003 Definitive Rating Assigned B1 (sf)

Cl. Q, Downgraded to B3 (sf); previously on Jun 30, 2003 Definitive Rating Assigned B2 (sf)

Cl. S, Downgraded to Caa2 (sf); previously on Feb 16, 2011 Downgraded to Caa1 (sf)

Cl. X-CL, Affirmed at Aaa (sf); previously on Jun 30, 2003 Definitive Rating Assigned Aaa (sf)

Cl. X-WC, Affirmed at Aaa (sf); previously on Jun 30, 2003 Definitive Rating Assigned Aaa (sf)

Cl. X-MM1, Affirmed at Aaa (sf); previously on Jun 30, 2003 Definitive Rating Assigned Aaa (sf)

Cl. MM-1, Affirmed at Caa1 (sf); previously on Feb 16, 2011 Downgraded to Caa1 (sf)

Cl. MM-2, Affirmed at Caa2 (sf); previously on Feb 16, 2011 Downgraded to Caa2 (sf)

Cl. MM-3, Affirmed at Caa3 (sf); previously on Feb 16, 2011 Downgraded to Caa3 (sf)

Cl. X-MM2, Affirmed at Aaa (sf); previously on Jun 30, 2003 Definitive Rating Assigned Aaa (sf)

RATINGS RATIONALE

The downgrades are due to higher expected losses for the pool resulting from realized and anticipated losses from troubled loans.

The affirmations are due to key parameters, including Moody's loan to value (LTV) ratio, and Moody's stressed debt service coverage ratio (DSCR), and the Herfindahl Index (Herf) remaining within acceptable ranges. Based on our current base expected loss, the credit enhancement levels for the affirmed classes are sufficient to maintain their current ratings.

Moody's rating action reflects a cumulative base expected loss of 2.6% of the current balance. At last review, Moody's cumulative base expected loss was 1.7%. Moody's provides a current list of base and stress scenario losses for conduit and fusion CMBS transactions on moodys.com at http://v3.moodys.com/viewresearchdoc.aspx?docid=PBS_SF215255. Depending on the timing of loan payoffs and the severity and timing of losses from specially serviced loans, the credit enhancement level for investment grade classes could decline below the current levels. Due to the high level of credit subordination and defeasance, it is unlikely that investment grade classes would be downgraded even if losses are higher than Moody's expected base.

The performance expectations for a given variable indicate Moody's forward-looking view of the likely range of performance over the medium term. From time to time, Moody's may, if warranted, change these expectations. Performance that falls outside the given range may indicate that the collateral's credit quality is stronger or weaker than Moody's had anticipated when the related securities ratings were issued. Even so, a deviation from the expected range will not necessarily result in a rating action nor does performance within expectations preclude such actions. The decision to take (or not take) a rating action is dependent on an assessment of a range of factors including, but not exclusively, the performance metrics.

Primary sources of assumption uncertainty are the extent of the slowdown in growth in the current macroeconomic environment and the commercial real estate property markets. While commercial real estate property markets are gaining momentum, a consistent upward trend will not be evident until the volume of transactions increases, distressed properties are cleared from the pipeline and job creation rebounds. The hotel and multifamily sectors are in recovery and improvements in the office sector continue, with fundamentals in Gateway cities outperforming their suburban counterparts. However, office demand is closely tied to employment, where fundamentals remain weak, so significant improvement may be delayed. Performance in the retail sector has been mixed with on-going rent deflation and leasing challenges. Across all property sectors, the availability of debt capital continues to improve with monetary policy expected to remain supportive and interest rate hikes postponed. Moody's central global macroeconomic scenario reflects an overall downward revision of forecasts since last quarter, amidst ongoing fiscal consolidation efforts, household and banking sector deleveraging, persistently high unemployment levels, and weak housing markets that will continue to constrain growth.

The principal methodologies used in this rating were "CMBS: Moody's Approach to Rating Fusion Transactions" published in April 2005, and "Moody's Approach to Rating Large Loan/Single Borrower Transactions" published in July 2000. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.

Moody's noted that on November 22, 2011, it released a Request for Comment, in which the rating agency has requested market feedback on potential changes to its rating methodology for Interest-Only Securities. If the revised methodology is implemented as proposed the rating on LB-UBS 2000-C3 Classes X-CL, X-WC, X-MM1 and X-MM2 may be negatively affected. Please refer to Moody's request for Comment, titled "Proposal Changing the Global Rating Methodology for Structured Finance Interest-Only Securities," for further details regarding the implications of the proposed methodology change on Moody's rating. Please see the Credit Policy page on www.moodys.com for a copy of this methodology and the Request for Comment.

Moody's review incorporated the use of the excel-based CMBS Conduit Model v 2.60 which is used for both conduit and fusion transactions. Conduit model results at the Aa2 (sf) level are driven by property type, Moody's actual and stressed DSCR, and Moody's property quality grade (which reflects the capitalization rate used by Moody's to estimate Moody's value). Conduit model results at the B2 (sf) level are driven by a paydown analysis based on the individual loan level Moody's LTV ratio. Moody's Herfindahl score (Herf), a measure of loan level diversity, is a primary determinant of pool level diversity and has a greater impact on senior certificates. Other concentrations and correlations may be considered in our analysis. Based on the model pooled credit enhancement levels at Aa2 (sf) and B2 (sf), the remaining conduit classes are either interpolated between these two data points or determined based on a multiple or ratio of either of these two data points. For fusion deals, the credit enhancement for loans with investment-grade credit estimates is melded with the conduit model credit enhancement into an overall model result. Fusion loan credit enhancement is based on the credit estimate of the loan which corresponds to a range of credit enhancement levels. Actual fusion credit enhancement levels are selected based on loan level diversity, pool leverage and other concentrations and correlations within the pool. Negative pooling, or adding credit enhancement at the credit estimate level, is incorporated for loans with similar credit estimates in the same transaction.

Moody's uses a variation of Herf to measure diversity of loan size, where a higher number represents greater diversity. Loan concentration has an important bearing on potential rating volatility, including risk of multiple notch downgrades under adverse circumstances. The credit neutral Herf score is 40. The pool has a Herf of 10 compared to 11 at Moody's prior review.

Moody's ratings are determined by a committee process that considers both quantitative and qualitative factors. Therefore, the rating outcome may differ from the model output.

The rating action is a result of Moody's on-going surveillance of commercial mortgage backed securities (CMBS) transactions. Moody's monitors transactions on a monthly basis through two sets of quantitative tools -- MOST® (Moody's Surveillance Trends) and CMM (Commercial Mortgage Metrics) on Trepp -- and on a periodic basis through a comprehensive review. Please see the ratings tab on the issuer / entity page on moodys.com for the last rating action and the ratings history.

DEAL PERFORMANCE

As of the January 18, 2012 distribution date, the transaction's aggregate certificate balance has decreased by 39% to $817.9 million from $1.35 billion at securitization. The Certificates are collateralized by 79 mortgage loans ranging in size from less than 1% to 16% of the pool, with the top ten loans representing 65% of the pool. The pool includes three loans, representing 40% of the pool, with investment-grade credits estimates. Fifteen loans, representing 15% of the pool, have defeased and are collateralized with U.S. Government securities.

Twelve loans, representing 17% of the pool, are on the master servicer's watchlist. The watchlist includes loans which meet certain portfolio review guidelines established as part of the CRE Finance Council (CREFC) monthly reporting package. As part of our ongoing monitoring of a transaction, Moody's reviews the watchlist to assess which loans have material issues that could impact performance.

Five loan have been liquidated from the pool since securitization, resulting in a $5.5 million loss (38% loss severity overall). Currently, there are four loans in special servicing, representing 1% of the pool. Moody's has estimated an aggregate $5.5 million loss for the specially serviced loans (52% overall expected loss).

Moody's has assumed a high default probability for three poorly performing loans representing 1% of the pool and has estimated an aggregate $1.98 million loss (20% expected loss based on a 50% probability default) for the troubled loans.

Moody's was provided with full year 2010 and partial 2011 operating results for 98% and 97%, respectively, for the non-defeased pool. Excluding specially serviced and troubled loans, Moody's weighted average conduit LTV is 90% compared to 86% at last review. Moody's net cash flow reflects a weighted average haircut of 12% to the most recently available net operating income. Moody's value reflects a weighted average capitalization rate of 9.6%.

Excluding specially serviced and troubled loans, Moody's actual and stressed DSCRs are 1.27X and 1.22X, respectively, compared to 1.33X and 1.23X at last review. Moody's actual DSCR is based on Moody's net cash flow (NCF) and the loan's actual debt service. Moody's stressed DSCR is based on Moody's NCF and a 9.25% stressed rate applied to the loan balance.

The largest loan with a credit estimate is the Westfield Shoppingtown West County Loan ($125.4 million -- 16% of the pool), which is secured by the borrower's interest in a 1.3 million square foot regional mall located in Des Peres, Missouri. The center is also encumbered by a $19.8 million B-Note that is held outside the trust. The mall is anchored by Macy's, J.C. Penney and Nordstrom. As of September 2011, the center was 98% leased compared 96% at last review. Annualized September 2011 net operating income (NOI) was 5% higher than in 2010 due to rent step-ups. The loan has amortized 2% since last review. The sponsor is CBL & Associates. Moody's current credit estimate and stressed DSCR are A1 and 1.52X, respectively, compared to A1 and 1.45X at last review.

The second largest loan with a credit estimate is the Polaris Fashion Place Loan ($103.5 million -- 13% of the pool), which is secured by the borrower's interest in a 1.6 million square foot regional mall located in Columbus, Ohio. The property is also encumbered by a $24.8 million B-Note that is held outside the trust. The mall is anchored by Sears, Macy's, J.C. Penney, Saks Fifth Avenue, Van Maur and The Great Indoors. As of November 2011, the in-line mall was 99% leased compared to 98% at last review. Since last review, the mall's performance has improved with net operating income increasing by approximately 8% in 2010 from 2009. The sponsor is Glimcher Realty. Moody's current credit estimate and stressed DSCR are A2 and 1.65X, respectively, compared to A2 and 1.53X at last review.

The third largest loan with a credit estimate is the Pembroke Lakes Mall Loan ($95.0 million -- 12% of the pool), which is secured by the borrower's interest in a 1.1 million square foot regional mall located in Pembroke Pines, Florida. The property is also encumbered by a $27.2 million B-Note that is held outside the trust. The sponsor is General Growth Properties (GGP). This loan was not included in GGP's Chapter 11 bankruptcy filing in April 2009. The mall is anchored by Macy's, J.C. Penney, Dillard's, Sears, Dillard's Men, and Macy's Home Store. As of September 2011, the in-line space was 89% leased compared to 91% at last review. The performance remains stable. Moody's current credit estimate and stressed DSCR are Aaa and 2.14X, essentially the same as at last review.

The top three conduit loans represent 19% of the pool. The largest conduit loan is the Monroeville Mall Loan ($92.9 million -- 12% of pool), which is secured by the borrower's interest in a 1.3 million square foot regional mall located in Monroeville, Pennsylvania. The property is also encumbered by a $16.7 million B Note that is held within the trust and serves as security for non-pooled Classes MM-1, MM-2, MM-3, M-MM1 and X-MM2. The mall is anchored by Macy's and J.C. Penney. The former Boscov's anchor space, which is not part of the collateral, remains vacant. As of October 2011, the in-line occupancy was 95% compared to 90% at last review. However, excluding tenants with one-year leases or less that expire in 2012, the in-line occupancy is approximately 86%. Overall, the mall's performance continues to deteriorate due to a decline in base revenue, percentage rents and expense recoveries. According to the Master Servicer's watch list, the mall has been negatively impacted by the recession and by the increase in competition from new and existing retail properties in the vicinity. The loan has an anticipated repayment date (ARD) of January 1, 2013. The sponsor is CBL & Associates. Moody's LTV and stressed DSCR for the A note are 106% and 0.94X, respectively, compared to 92% and 1.06X at last review.

The second largest conduit loan is the Broadcasting Square Loan ($43.9 million -- 5.5% of the pool), which is secured by a 467,000 square foot power center located in Reading, Pennsylvania. The center is shadow anchored by Target, which is not part of the collateral. The largest tenants are Weis Market, Dick's Clothing & Sports, and Bed Bath & Beyond. As of September 2011, the center was 99% leased, essentially the same as at last review. Moody's LTV and stressed DSCR are 76% and 1.43X, respectively, compared to 77% and 1.41X at last review.

The third largest conduit loan is the Lynnfield Office Park ($15.1 million -- 1.9% of the pool), which is secured by a 280,000 square foot office property located in Memphis, Tennessee. First Tennessee Bank is the largest tenant and leases 43% of the net rentable area . As of October 2011, the property was 79% leased compared to 82% at last review. At last review, the net cash flow was stressed due to the possibility that First Tennessee Bank lease would vacate at the end of its lease term. The tenant has since renewed its lease through 2018. Moody's LTV and stressed DSCR are 109% and 1.0X, respectively, compared to 129% and 0.86X at last review.

REGULATORY DISCLOSURES

Although this credit rating has been issued in a non-EU country which has not been recognized as endorsable at this date, this credit rating is deemed "EU qualified by extension" and may still be used by financial institutions for regulatory purposes until 31 January 2012. ESMA may extend the use of credit ratings for regulatory purposes in the European Community for three additional months, until 30 April 2012, if ESMA decides that exceptional circumstances arise that may imply potential market disruption or financial instability. Further information on the EU endorsement status and on the Moody's office that has issued a particular Credit Rating is available on www.moodys.com.

For ratings issued on a program, series or category/class of debt, this announcement provides relevant regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides relevant regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides relevant regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

Information sources used to prepare the rating are the following: parties involved in the ratings, parties not involved in the ratings, public information, confidential and proprietary Moody's Investors Service information, and confidential and proprietary Moody's Analytics information.

Moody's did not receive or take into account a third-party assessment on the due diligence performed regarding the underlying assets or financial instruments related to the monitoring of this transaction in the past six months.

Moody's considers the quality of information available on the rated entity, obligation or credit satisfactory for the purposes of issuing a rating.

Moody's adopts all necessary measures so that the information it uses in assigning a rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Please see the ratings disclosure page on www.moodys.com for general disclosure on potential conflicts of interests.

Please see the ratings disclosure page on www.moodys.com for information on (A) MCO's major shareholders (above 5%) and for (B) further information regarding certain affiliations that may exist between directors of MCO and rated entities as well as (C) the names of entities that hold ratings from MIS that have also publicly reported to the SEC an ownership interest in MCO of more than 5%. A member of the board of directors of this rated entity may also be a member of the board of directors of a shareholder of Moody's Corporation; however, Moody's has not independently verified this matter.

Please see Moody's Rating Symbols and Definitions on the Rating Process page on www.moodys.com for further information on the meaning of each rating category and the definition of default and recovery.

Please see ratings tab on the issuer/entity page on www.moodys.com for the last rating action and the rating history.

The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Juan Acosta
Analyst
Structured Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Michael M. Gerdes
MD - Structured Finance
Structured Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653