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Rating Action:

Moody's downgrades four Classes of CMBS Notes issued by Cornerstone Titan 2007-1 p.l.c.

13 May 2011

Classes A1 and X kept on review for possible downgrade

Frankfurt am Main, May 13, 2011 -- Moody's Investors Service has today downgraded the following classes of Notes issued by Cornerstone Titan 2007-1 p.l.c. (amounts reflect initial outstandings):

EUR333M Class A-2 Notes, Downgraded to A1 (sf); previously on Mar 2, 2011 Aa3 (sf) Placed Under Review for Possible Downgrade

EUR75.1M Class B Notes, Downgraded to B1 (sf); previously on Oct 8, 2009 Downgraded to Baa3 (sf)

EUR44.175M Class C Notes, Downgraded to Caa2 (sf); previously on Oct 8, 2009 Downgraded to Ba3 (sf)

EUR97.185M Class D Notes, Downgraded to Caa3 (sf); previously on Oct 8, 2009 Downgraded to B3 (sf)

At the same time Moody's has kept the Aaa (sf) ratings of the Class A1 and X Notes on review for possible downgrade. The Class A1, A2 and X Notes were previously placed on review for possible downgrade due to Moody's initial assessment of the transaction under Moody's methodology "Global Structured Finance Operational Risk Guidelines: Moody's Approach to Analyzing Performance Disruption Risk" published on March 2, 2011.

Moody's operational risk guidelines stipulate the highest achievable rating if certain operational risk factors are present which could disrupt payments to investors. In the case of Cornerstone Titan 2007-1 p.l.c., the operational risk results from having a servicer unrated by Moody's combined with uncertainty about the cash manager's access to the servicer advances if the servicer defaults. A single-A rating is the maximum achievable rating if the transaction's cash manager is investment-grade rated (like in this transaction) and the payment disruption would exceed two note interest payment dates. The Class A2 Notes of Cornerstone Titan 2007-1 p.l.c. are therefore no longer on review for downgrade due to operational risk since the current rating is now at the rating-cap level that could be imposed due to operational risk.

Moody's did not assign ratings to the Class E, F, G, VA and VB Notes of the Issuer.

Today's rating action takes into account Moody's updated central scenarios as described in Moody's Special Report "EMEA CMBS: 2011 Central Scenarios".

RATINGS 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 revised assessment of the parameters, the loss expectation for the pool has increased since the last review in October 2009.

The rating of the Class A1 Notes is driven by (i) the current credit enhancement levels and (ii) a fully sequential payment allocation to the Notes.

The rating downgrade on the Class A2, B, C and D Notes is mainly due to Moody's increased refinancing default risk and loss assessment for the remaining loans in the pool. Moody's expects most of the loans to default when they will mature over the next three years. The transaction is overly exposed to non-prime property quality. The availability of financing for this market segment decreased over the past year and Moody's does not expect a significant recovery of the lending market in the next two years, when the majority of the loans in the pool mature, as per its EMEA CMBS 2011 Central Scenario. The loans show on average a Moody's whole loan loan to value (LTV) ratio at maturity of 106%, which makes a refinancing in this lending market environment very unlikely.

Approximately 70% of the loans mature over the next 12 months. Moody's has assumed a high default probability at loan maturity for these loans. Depending on the percentage of loans actually being refinanced or defaulting at loan maturity there could be rating sensitivity.

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 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 re- prepayments or a decline in subordination due to realized losses.

Primary sources of assumption uncertainty are the current stressed macro-economic environment and continued weakness in the occupational and lending markets. Moody's anticipates (i) delayed recovery in the lending market persisting through 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 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.

MOODY'S PORTFOLIO ANALYSIS

As of the April 2011 interest payment date, the transaction's total pool balance was GBP 1,134.8 million down by 14% since closing due to repayments and prepayments.

The largest loan in the pool is the Xanadu Loan (24.8% of the current pool). The loan is secured by a portfolio of seven office properties located throughout Germany, which are fully let to a subsidiary of Deutsche Telekom AG with a weighted average (WA) remaining lease term of nine years without break options. The whole loan LTV based on Moody's current market value estimate is 101%. There is a high default risk at the loan maturity in January 2012.

The second largest loan is the Hugo Loan (16.2% of the current pool). This Shari'ah compliant loan is secured by a portfolio of four office properties located in and around Paris. The largest tenants are PSA Peugeot Citroen (Baa3) (42% of the rental income) and Alstom accounting for 29%. The WA lease term of 4.7 years is rather short but is typical for the French market; however, the lease of the largest tenant expires in July 2012. Given that the loan matures in January 2012, Moody's believes that its refinancing prospects are highly dependent on the decision of this tenant on the renewal of its lease. Moody's has taken this risk into account when analysing the default probability of the loan at maturity. Combined with an LTV ratio of 108% based on Moody's market value estimate there is a high default risk at the loan maturity.

Nine of the remaining loans accounting for 26% of the current pool balance are defaulted. Two loans (8.8% of the pool balance) have a payment default. The other loans did either not refinance or show covenant breaches.

According to a servicer notice the Loews Loan (8.7% of the current pool balance) will be worked-out shortly as a sale and purchase agreement for the underlying multifamily portfolio has been signed. Moody's expects a loss for this loan. The loan is in default since September 2008 and has been transferred to special servicing. The default was triggered by the application for opening of insolvency proceedings in Germany of the Loews borrowers and their general partners. Already in August 2008, administration orders were issued in respect of other affiliated companies of the borrower group.

Portfolio Loss Exposure: Taking into account the increased refinancing risk assessment for the remaining loans, Moody's anticipates a high amount of losses on the securitised portfolio, which will, given the back loaded default risk profile and the anticipated work-out strategy for defaulted loans, crystallise only towards the mid to end of the transaction term.

RATING METHODOLOGY

The principal methodology used in this rating was "Moody's Approach to Real Estate Analysis for CMBS in EMEA: Portfolio Analysis (MORE Portfolio)" published April 2006. Other methodology and factors considered can be found in "Update on Moody's Real Estate Analysis for CMBS Transactions in EMEA" published June 2005.

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 in the past six months.

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 08 October 2009. The last Performance Overview for this transaction was published on 05 May 2011.

For updated monitoring information, please contact monitor.cmbs@moodys.com. To obtain a copy of Moody's Presale Report on this transaction, please visit Moody's website at www.moodys.com or contact Moody's Client Service Desk in London (+44-20-7772 5454).

REGULATORY DISCLOSURES

The rating has been disclosed to the rated entity or its designated agents and issued with no amendment resulting from that disclosure.

Information sources used to prepare the credit rating are the following: parties involved in the ratings, parties not involved in the ratings and public information.

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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.

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

London
Christophe de Noaillat
Senior Vice President
Structured Finance Group
Moody's Investors Service Ltd.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

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 downgrades four Classes of CMBS Notes issued by Cornerstone Titan 2007-1 p.l.c.
No Related Data.
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