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Rating Action:

Moody's Upgrades Six and Downgrades Three Classes of LB-UBS 2003-C3

17 Jun 2009

Approximately $914 Million of Structured Securities Affected

New York, June 17, 2009 -- Moody's Investors Service ("Moody's") affirmed the ratings of 16 pooled classes, upgraded six pooled classes and downgraded three rake classes of LB-UBS Commercial Mortgage Trust 2003-C3, Commercial Mortgage Pass-Through Certificates, Series 2003-C3. The upgrades are due to increased credit enhancement due to amortization and payoffs. The pool balance has decreased by 23% since Moody's last review. The downgrades are due to higher expected losses from the Monroeville Mall Loan resulting from increased leverage. The action is the result of Moody's on-going surveillance of commercial mortgage backed securities ("CMBS") transactions.

As of the June 15, 2009 distribution date, the transaction's aggregate principal balance has decreased by approximately 32% to $914 million from $1.4 billion at securitization. The Certificates are collateralized by 85 loans, ranging in size from less than 1% to 15% of the pool, with the top ten loans representing 66% of the pool. The pool includes four loans with underlying ratings, which represent 50% of the pool. Fifteen loans, representing 12% of the pool, have defeased and are collateralized by U.S. Government securities.

Seventeen loans, representing 19% 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 Commercial Mortgage Securities Association's 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.

Two loans have been liquidated from the pool, resulting in a realized loss of approximately $110,000. Currently there is one loan, representing less than 1% of the pool, in special servicing. Moody's is estimating a loss of approximately $2.9 million from this loan.

Moody's was provided with year-end 2008 and year-end 2007 operating results for 76% and 96% of the non-defeased performing loans, respectively. Moody's weighted average loan to value ("LTV") ratio for the conduit component is 91% compared to 85% at Moody's prior full review in February 2008.

The largest loan with an underlying rating is the Westfield Shoppingtown West County Loan ($134 million - 15%), which is secured by the borrower's interest in a 1.3 million square foot regional mall located in Des Peres, Missouri. The mall is anchored by Macy's, J.C. Penney and Nordstrom. The center was 99% leased as of January 2009, compared to 98% at securitization. The sponsor is CBL & Associates, who acquired the property in 2007 from Westfield America Inc. The center is also encumbered by a $19.5 million B Note that is held outside the trust. Moody's current underlying rating is A1, the same as last review.

The second largest loan with an underlying rating is the Polaris Fashion Place Loan ($111 million - 12%), which is secured by the borrower's interest in a 1.6 million square foot regional mall located in Columbus, Ohio. The mall is anchored by Sears, Macy's, J.C. Penney, Saks Fifth Avenue, Van Maur and The Great Indoors. The mall was 99% leased as of December 2008, essentially the same as at last review. The property is also encumbered by a $24.8 million B Note that is held outside the trust. Property performance has been stable. Moody's underlying rating is A2, the same as at last review.

The third largest loan with an underlying rating is the Monroeville Mall Loan ($102 million - 11%), which is secured by the borrower's interest in a 1.3 million square foot regional mall located in Monroeville, Pennsylvania. The mall is anchored by Macy's and J.C. Penney. Since our last review, the former Boscov's anchor space has become vacant; the anchor space is not part of the collateral. However, vacant anchor spaces, particularly in malls with relatively low sales productivity, can have a detrimental effect on in-line occupancy over time. Inline occupancy for the property was 90% as of December 2008, compared to 95% at last review. The sponsor is CBL & Associates, who acquired the property in 2007. 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 and X-MM2. Property performance has declined due to decreased revenues and increased expenses. At securitization, Moody's assumed the owner would exercise a purchase option for the underlying land. The date to exercise this option has passed and the property must now pay ground lease payments which have a significant impact on property performance. Moody's underlying rating is Ba3 compared to A3 at last review.

The fourth largest loan with an underlying rating is the Pembroke Lakes Mall Loan ($101 million - 11%), which is secured by the borrower's interest in a 1.1 million square foot regional mall located in Pembroke Pines, Florida. The mall is anchored by Macy's, J.C. Penney, Dillard's, Sears, Dillard's Men, and Macy's Home Store. The center was 99% leased as of December 2008, essentially the same as at last review. The sponsor is General Growth Properties. The property is also encumbered by a $30.0 million B Note that is held outside the trust. This loan was not included in the Chapter 11 bankruptcy filing of General Growth Properties (GGP) and affiliates on April 16, 2009. Performance for the mall has been stable since last review; however, Moody's has incorporated extra stress over concerns about the retail environment and the GGP bankruptcy filing. Moody's current underlying rating is Aa1 compared to Aaa at last review.

The top three non-defeased conduit loans represent 27% of the pool. The largest conduit loan is the Broadcasting Square Loan ($46 million - 13%), which is secured by a 467,000 square foot power center located in Reading, Pennsylvania. The largest tenants are Weis Market, Dick's Clothing & Sports, and Bed Bath & Beyond. The center was 100% leased as of December 2008; the same as last review. Moody's LTV is 83% compared to 88% at last review.

The second largest conduit loan is the LIRA Apartments Loan ($29 million - 9%), which is secured by a 152- unit apartment building located in New York City. The property has maintained near 100% occupancy since securitization. The loan benefits from the property's location in the strong NYC multifamily market and amortization. Moody's LTV is 64% compared to 79% at last review.

The third largest conduit loan is the Lynnfield Office Park Loan ($16 million - 5%), which is secured by a 282,000 square foot office building located in Memphis, Tennessee. The property was 86% leased as of March 2009 compared to 79% at last review. Despite the increased occupancy, property performance has declined due to decreased rental revenue and increased expenses. Moody's LTV is 110% compared to 95% at last review.

Moody's full rating action is as follows:

-Class A-3, $146,355,477, affirmed at Aaa; previously affirmed at Aaa on 2/07/08.

-Class A-4, $550,837,000, affirmed at Aaa; previously affirmed at Aaa on 2/07/08.

-Class X-CL, Notional, affirmed at Aaa; previously affirmed at Aaa on 2/07/08.

-Class X-CP, Notional, affirmed at Aaa; previously affirmed at Aaa on 2/07/08.

-Class X-WC, Notional, affirmed at Aaa; previously affirmed at Aaa on 2/07/08.

-Class X-MM1, Notional, affirmed at Aaa; previously affirmed at Aaa on 2/07/08.

-Class B, $20,044,000, affirmed at Aaa; previously affirmed at Aaa on 2/07/08.

-Class C, $20,044,000, affirmed at Aaa; previously affirmed at Aaa on 2/07/08.

-Class D, $13,363,000, upgraded to Aaa from Aa2; previously affirmed at Aa2 on 2/07/08.

-Class E, $13,363,000, upgraded to Aa1 from Aa3; previously affirmed at Aa3 on 2/07/08.

-Class F, $23,384,000, upgraded to Aa2 from A1; previously affirmed at A1 on 2/07/08.

-Class G, $10,023,000, upgraded to A1 from A3; previously affirmed at A3 on 2/07/08.

-Class H, $20,044,000, upgraded to A3 from Baa1; previously affirmed at Baa1 on 2/07/08.

-Class J, $10,022,000, upgraded to Baa1 from Baa2; previously affirmed at Baa2 on 2/07/08.

-Class K, $13,363,000, affirmed at Baa3; previously affirmed at Baa3 on 2/07/08.

-Class L, $11,692,000, affirmed at Ba1; previously affirmed at Ba1 on 2/07/08.

-Class M, $6,681,000, affirmed at Ba2; previously affirmed at Ba2 on 2/07/08.

-Class N, $6,682,000, affirmed at Ba3; previously affirmed at Ba3 on 2/07/08.

-Class P, $1,670,000, affirmed at B1; previously affirmed at B1 on 2/07/08.

-Class Q, $8,352,000, affirmed at B2; previously affirmed at B2 on 2/07/08.

-Class S, $3,341,000, affirmed at B3; previously affirmed at B3 on 2/07/08.

-Class MM-1, $6,800,000, downgraded to B1 from Baa1; previously affirmed at Baa1 on 2/07/08.

-Class MM-2, $5,300,000, downgraded to B2 from Baa2; previously affirmed at Baa2 on 2/07/08.

-Class MM-3, $4,567,108, downgraded to B3 from Baa3; previously affirmed at Baa3 on 2/07/08.

-Class X-MM2, Notional, affirmed at Aaa; previously affirmed at Aaa on 2/07/08.

Moody's monitors transactions on both a monthly basis through two sets of quantitative tools: MOST® (Moody's Surveillance Trends) and CMM on Trepp, and a periodic basis through a full review. Moody's prior full review is summarized in a press release February 7, 2008.

The principal methodology used in rating and monitoring this transaction is "CMBS: Moody's Approach to Rating Fusion Transactions" dated April 19, 2005, which can be found at www.moodys.com in the Credit Policy & Methodologies directory, in the Ratings Methodologies subdirectory. Other methodologies and factors that may have been considered in the process of rating this issue can also be found in the Credit Policy & Methodologies directory.

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

New York
Sandra Ruffin
VP - Senior Credit Officer
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's Upgrades Six and Downgrades Three Classes of LB-UBS 2003-C3
No Related Data.
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