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Rating Action:

Moody's Downgrades Nine and Affirms Four CMBS Classes of CSFB 2006-TFL1

Global Credit Research - 02 Sep 2010

Approximately $545.5 Million of Structured Securities Affected

New York, September 02, 2010 -- Moody's Investors Service (Moody's) downgraded the ratings of nine classes of Credit Suisse First Boston Mortgage Securities Corp., Commercial Pass-Through Certificates, Series 2006-TFL1. Moody's rating action is as follows:

US$52.0M Cl. A-1 Certificate, Affirmed at Aaa (sf); previously on Aug 16, 2006 Definitive Rating Assigned Aaa (sf)

US$195M Cl. A-2 Certificate, Affirmed at Aaa (sf); previously on Aug 16, 2006 Definitive Rating Assigned Aaa (sf)

Cl. A-X-1 Certificate, Affirmed at Aaa (sf); previously on Aug 16, 2006 Definitive Rating Assigned Aaa (sf)

Cl. A-X-2 Certificate, Affirmed at Aaa (sf); previously on Aug 16, 2006 Definitive Rating Assigned Aaa (sf)

US$39M Cl. B Certificate, Confirmed at Aaa (sf); previously on Aug 26, 2010 Aaa (sf) Placed Under Review for Possible Downgrade

US$34M Cl. C Certificate, Downgraded to A1 (sf); previously on Aug 26, 2010 Aa1 (sf) Placed Under Review for Possible Downgrade

US$27M Cl. D Certificate, Downgraded to A3 (sf); previously on Aug 26, 2010 Aa2 (sf) Placed Under Review for Possible Downgrade

US$29M Cl. E Certificate, Downgraded to Baa1 (sf); previously on Aug 26, 2010 Aa3 (sf) Placed Under Review for Possible Downgrade

US$24M Cl. F Certificate, Downgraded to Baa3 (sf); previously on Aug 26, 2010 A2 (sf) Placed Under Review for Possible Downgrade

US$25M Cl. G Certificate, Downgraded to Ba1 (sf); previously on Aug 26, 2010 A3 (sf) Placed Under Review for Possible Downgrade

US$25M Cl. H Certificate, Downgraded to Ba2 (sf); previously on Aug 26, 2010 Baa1 (sf) Placed Under Review for Possible Downgrade

US$27M Cl. J Certificate, Downgraded to B1 (sf); previously on Aug 26, 2010 Baa3 (sf) Placed Under Review for Possible Downgrade

US$36M Cl. K Certificate, Downgraded to B2 (sf); previously on Aug 26, 2010 Ba2 (sf) Placed Under Review for Possible Downgrade

US$32.5M Cl. L Certificate, Downgraded to B3 (sf); previously on Aug 26, 2010 Ba3 (sf) Placed Under Review for Possible Downgrade

RATINGS RATIONALE

The downgrades were due to the deterioration in the performance of the two remaining assets in the trust, the Tharaldson Portfolio Loan (88% of the pool balance) and the Charleston Place Hotel Loan (12%), and refinancing risk in an adverse environment. Both loans mature in less than one year. Moody's also affirmed four pooled classes and confirmed one pooled class. The affirmations and confirmation were due to key parameters, including Moody's loan to value (LTV) ratio remaining within an acceptable range. Moody's placed ten classes on review for possible downgrade on August 26, 2010. This action concludes Moody's review.

Further downward pressure on ratings will be driven by the collateral performance and refinance risk of the Tharaldson Portfolio Loan. Moody's analysis incorporated the expectation of gradual improvement in cash flow performance to a sustainable level 10% above trailing twelve month (TTM) March 2010 cash flow of $52.5 million. The TTM cash flow has fallen 36.5% since 2007. The probability of default at loan maturity in 2011, is significant given the overall debt of $801.0 million (including $145.1 million in mezzanine debt) and the limited time remaining for robust cash flow recovery to materialize. Under the terms of the Pooling and Servicing Agreement the special servicer has the option to extend the maturity date of the loan to April 2014, seven years prior to April 2021, the Rated Final Maturity Distribution Date of the Certificates. Transferral of the loan to special servicing may result in interest shortfalls to rated classes due to special servicing and workout fees and expenses.

Moody's analysis reflects a forward-looking view of the likely range of collateral performance over the medium term. From time to time, Moody's may, if warranted, change these expectations. Performance that falls outside an acceptable range of the key parameters may indicate that the collateral's credit quality is stronger or weaker than Moody's had anticipated during the current review. Even so, deviation from the expected range will not necessarily result in a rating action. There may be mitigating or offsetting factors to an improvement or decline in collateral performance, such as increased subordination levels due to amortization and loan payoffs or a decline in subordination due to realized losses.

Primary sources of assumption uncertainty are the current stressed macroeconomic environment and continuing weakness in the commercial real estate and lending markets. Moody's currently views the commercial real estate market as stressed with further performance declines expected in the industrial, office, and retail sectors. Hotel performance has begun to rebound, albeit off a very weak base. Multifamily has also begun to rebound reflecting an improved supply / demand relationship. The availability of debt capital is improving with terms returning towards market norms. Job growth and housing price stability will be necessary precursors to commercial real estate recovery. Overall, Moody's central global scenario remains "hook-shaped" for 2010 and 2011; we expect overall a sluggish recovery in most of the world's largest economies, returning to trend growth rate with elevated fiscal deficits and persistent unemployment levels.

The principal methodology used in rating and monitoring this transaction was Moody's "CMBS: Moody's Approach to Rating Large Loan/Single Borrower Transactions", rating methodology published in July 2000. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found on Moody's website.

Moody's review incorporated the use of the excel-based CMBS Large Loan Model v 8.0 which is used for both large loan and single borrower transactions. The large loan model derives credit enhancement levels based on an aggregation of adjusted loan level proceeds derived from Moody's loan level LTV ratios. Major adjustments to determining proceeds include leverage, loan structure, property type, and sponsorship. These aggregated proceeds are then further adjusted for any pooling benefits associated with loan level diversity, other concentrations and correlations. The model also incorporates a supplementary tool to allow for the testing of the credit support at various rating levels. The scenario or "blow-up" analysis tests the credit support for a rating assuming that loans in the pool default with an average loss severity that is commensurate with the rating level being tested.

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. Moody's prior full review is summarized in a press release dated July 17, 2008. The previous review was part of Moody's first quarter 2009 ratings sweep and incorporated assumptions for capitalization rates and stressed cash flows that were outlined in "Rating Methodology Update: US CMBS Conduit and Fusion Review Prompted by Declining Property Values and Rising Delinquencies" dated February 5, 2009. Please see the ratings tab on the issuer / entity page on moodys.com for the last rating action and the ratings history.

Moody's Investors Service did not receive or take into account a third party due diligence report on the underlying assets or financial instruments related to the monitoring of this transaction.

As of the August 16, 2010 distribution date, the transaction's aggregate certificate balance has decreased by 50% to $545.5 million from $1.084 billion at securitization due to the payoff of five loans and the payment of release premiums associated with the Tharaldson Portfolio Loan. The Certificates are collateralized by two mortgage loans ranging in size from 12% to 88% of the pool. Neither of the two remaining loans in the pool are on the master servicer's watchlist, or in special servicing. 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. Watchlisted loans are loans which meet certain portfolio review guidelines established as part of the CRE Finance Council (CREFC) monthly reporting package. To date the pool has not experienced any losses.

Moody's was provided with full year 2009 operating results for both loans in the pool, and operating results for the trailing 12-month period ending March 31, 2010 for the Tharaldson Portfolio Loan. Moody's weighted average LTV ratio is 94% compared to 89% at Moody's prior review. Moody's stressed debt service ratio ("DSCR") is 1.32X compared to 1.40X at last review. Moody's stressed DSCR is based on Moody's NCF and a 9.25% stressed rate applied to the loan balance.

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. Large loan transactions have a Herf of less than 20. This pool has a Herf of 1, the same as at Moody's prior review.

The largest loan is the Tharaldson Portfolio Loan ($478.5 million -- 87.7% of the pool), which is secured by 105 limited service hotel properties with a total of 8,238 keys located in 26 states. Two properties, with a total of 194 rooms, have been released from the loan collateral. Payments of Release Prices associated with the two property releases has resulted in a loan pay down of approximately 2% since securitization. Each property is operated under a separate franchise agreement with 60 properties operating under a brand owned by Marriott International, Inc.; 23 properties operating under a brand owned by Choice Hotels International, Inc.; 14 properties operating under a brand owned by Hilton Hotels Corporation; 4 properties operating under a brand owned by InterContinental Hotels Group, and 4 properties operating under a brand owned by Country Inns & Suites By Carlson, Inc. Revenue per Available Room ("RevPAR") for the portfolio peaked in 2008 at $71.66, compared to $64.79 at securitization. However, RevPAR declined 16.5% to $59.82 in 2009, and continued to decline an additional 2% to $58.53 in the trailing 12-month period ending March 31, 2010. Commencing in November 2009 all excess cash flow after debt service is being deposited into a lender controlled reserve account as additional collateral for the loan. As of August 2010 the balance in the reserve account was approximately $21.6 million. Moody's LTV ratio and stressed DSC ratio are 96% and 1.31X, respectively. Moody's underlying rating is B3, compared to Ba3 at last review. The loan has a final extended maturity in April 2011. The loan sponsor is Whitehall Street Global Real Estate Limited Partnership 2005.

The second loan is the Charleston Place Hotel Loan ($67.0 million -- 12.3% of the pool), which is secured by a 442-key full-service, luxury hotel located in the historic district of Charleston, South Carolina. Collateral for the loan also includes 51,186 square feet of retail space and a theater parcel that is utilized as a conference center and ballroom. RevPAR peaked in 2007 at $191.67, compared to $168.64 at securitization. However, RevPAR declined 10% to $171.73 in 2008 and declined an additional 21% to $136.16 in 2009. Moody's LTV ratio and stressed DSC ratio are 83% and 1.40X. Moody's underlying rating is Ba2, the same as last review. The loan has a final extended maturity date in March 2011. The loan sponsors are Orient Express Hotels Ltd. and A. Alfred Taubman.

REGULATORY DISCLOSURES

Information sources used to prepare the credit 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.

Moody's considers the quality of information available on the issuer satisfactory for the purposes of maintaining a credit rating.

In addition, Moody's publishes a weekly summary of structured finance credit, ratings and methodologies, available to all registered users of our website, at www.moodys.com/SFQuickCheck.

Moody's Investors Service adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from reliable sources; however, Moody's Investors Service does not and cannot in every instance independently verify, audit or validate information received in the rating process.

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

The date on which some Credit Ratings were first released goes back to a time before Moody's Investors Service's Credit Ratings were fully digitized and accurate data may not be available. Consequently, Moody's Investors Service 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 the Credit Policy page on Moodys.com for the methodologies used in determining ratings, further information on the meaning of each rating category and the definition of default and recovery.

New York
Jay Rosen
Vice President - Senior Analyst
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Andrea M. Daniels
VP - Senior Credit Officer
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's Investors Service
250 Greenwich Street
New York, NY 10007
USA

Moody's Downgrades Nine and Affirms Four CMBS Classes of CSFB 2006-TFL1
No Related Data.
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