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Announcement:

Moody's affirms rating of Class A CMBS Notes issued by Cornerstone Titan 2006-1 plc

Global Credit Research - 17 Dec 2010

EUR 342million of CMBS affected

Frankfurt am Main, December 17, 2010 -- Moody's Investors Service has today affirmed the rating of the following class of Notes issued by Cornerstone-Titan 2006-1 plc (amount reflects initial outstanding):

- GBP393,437,000 Class A Commercial Mortgage Backed Floating Rate Notes due 2015, affirmed at A3 (sf) previously on 20 July 2009 downgraded to A3 (sf) from Aaa (sf).

Moody's does not rate the Classes B through J Notes and the Class X Notes.

1) Rating Rationale

The key parameters in Moody's analysis are the default probability of the securitised loans (both during the term and at maturity) as well as Moody's value assessment for the properties securing these loans. Moody's derives from those parameters a loss expectation for the securitised pool. Based on Moody's assessment, the loss expectation for the pool has remained stable compared to Moody's last review. As a consequence, the current credit enhancement of 30.7% for the affirmed Class A Notes is still sufficient to provide protection against the expected losses and to maintain the current rating.

In Moody's view, the overall default probability of the underlying loans has slightly increased since the last review due to a re-assessment of the refinancing risk. Moody's property value assessment remains unchanged since the last rating action. As a result, the pool's weighted average (WA) loan to value (LTV) ratio was estimated at 117% for 2010. As three loans (Woolgate Exchange, Lloyds Chamber and Argos Distribution Centre) have additional debt in the form of B-loans, the overall whole loan leverage based on estimated trough values was about 127%. The currently reported (as of October IPD) UW whole loan WA LTV ratio of 94% (based on the updated valuations) is still well below Moody's estimated level. Moody's expects a limited increase in commercial property values over the next two years, as such all the loans in the pool will be highly leveraged at refinancing. However, a substantial balance of the portfolio benefits from long-dated leases to relatively creditworthy tenants, which provides some protection against the potential negative impact of deteriorated fundamentals in the current UK occupational markets. These include falling rents, increasing vacancy rates and higher than average tenant default rates. Moody's anticipates that a large proportion of the pool will default over the transaction term. However, the higher default probability is partly offset for the Class A Notes by the currently fully sequential payment allocation to the Notes.

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 amortisation and loan re- and prepayments or a decline in subordination due to realised losses.

Moody's expectation about the collateral performance and the actual performance are also driven by wider economic and real estate market developments. Primary sources of assumption uncertainty in this respect are the macro-economic recovery, the current high stimulus monetary and fiscal policies and the level of long-term interest rates as well as the ability of banks to successfully re-capitalise in the next few years. For the EMEA commercial real estate markets, Moody's anticipates (i) delayed recovery in the lending market persisting through 2011 with gradual improvement beginning late 2012, while remaining subject to strict underwriting criteria and heavily dependent on the underlying property quality, (ii) values will overall stabilise but with a strong differentiation between prime and secondary properties, and (iii) occupational markets will remain under pressure in the short term and will only slowly recover in the medium term in line with the anticipated economic recovery. Overall, Moody's central global scenario remains 'hooked-shaped' for 2010 and 2011; Moody's expects sluggish recovery in most of the world's largest economies, returning to trend growth rate with elevated fiscal deficits and persistent unemployment levels.

2) Transaction Overview

Cornerstone Titan 2006-1 plc closed in July 2006 and represents the securitisation of initially ten mortgage loans secured by first-ranking legal mortgages over initially 35 commercial properties located across the UK.

Since closing, there have been only small changes in the portfolio composition. One loan has prepaid (Crystal Court Loan, 3.7% of the initial portfolio balance) which was cross-collateralised and cross-defaulted with a loan that remains in the pool (Lloyds Chambers Loan, 16.5% of the current portfolio balance) and there have been some property disposals from the portfolio securing the Impact Portfolio Loan (3.1% of the current portfolio balance). In addition, the Peacock Place Shopping Centre Loan which defaulted in April 2009 was worked out, whereby a discounted payoff was accepted by the Special Servicer as repayment in full of all principal and interest due on this loan. Recovery proceeds in the amount of GBP 3,762,729 have been allocated to the senior Notes and losses have been allocated to the junior Notes as of April 2010 Note IPD.

The remaining eight loans are not equally contributing to the portfolio: the largest loan (Woolgate Exchange Loan) represents 55% of the current portfolio balance while the smallest loan (Craven Hill Loan) contributes only 0.7%. Following the loan prepayment and property disposals, the remaining loans are currently secured by 24 properties which are still predominantly offices (79%) followed by warehouse/industrial (10%) and mixed-use (8.8%). The portfolio's geographic concentration with 81% properties located in Greater London and 12% in the South East is similar to the concentration at closing.

The sequential payment trigger in the transaction has been breached. Therefore all interest and principal proceeds received by the Issuer are allocated to the Notes on a fully sequential basis.

Currently, the biggest loan in the pool, Woolgate Exchange Loan, is in default due to an LTV covenant breach. The LTV ratio for the whole loan should not be greater than 84%. However, the market value of the property as provided in the most recent valuation (September 2010) is GBP 255m resulting in an LTV ratio of 106.6% calculated as of the October IPD. One additional loan, Aldermanbury Square Loan (6.8 % of the current pool), is currently in special servicing due to a similar breach. Based on the updated valuation as of June 2010 the LTV ratio for this loan is 107.4% versus the covenant of 85%. Both defaulted loans are maturing in 2011, the Aldermanbury Square Loan in January and the Woolgate Exchange Loan in July.

The principal methodologies used in rating and monitoring this transaction was "Update on Moody's Real Estate Analysis for CMBS Transaction in EMEA" June 2005 and "Moody's Updates on its Surveillance Approach for EMEA CMBS" March 2009.

The updated assessment is a result of Moody's on-going surveillance of commercial mortgage backed securities (CMBS) transactions. Moody's prior review is summarised in a Press Release dated 20 July 2009. The last Performance Overview for this transaction was published on 8 October 2010. Please see the ratings tab on the issuer / entity page on moodys.com for the last rating action and the ratings history.

Frankfurt am Main
Leokadia Szalkiewicz-Zaradzka
Vice President - Senior Analyst
Structured Finance Group
Moody's Deutschland GmbH
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

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 Deutschland GmbH
An der Welle 5
Frankfurt am Main 60322
Germany
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Moody's affirms rating of Class A CMBS Notes issued by Cornerstone Titan 2006-1 plc
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