Fitch Downgrades Class C of CSFB 2004-C3

Fitch Ratings has downgraded one and affirmed 10 classes of Credit Suisse First Boston Mortgage Securities Corporation's commercial mortgage pass-through certificates, series 2004-C3. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The downgrade of class C reflects the high concentration of specially serviced assets and lack of progress in resolving them. As of the September 2015 distribution date, 12 of the remaining 14 assets are specially serviced (95% of the pool), including nine real estate owned (REO) assets (89.2%). Fitch modeled losses of 63.9% of the remaining pool; expected losses on the original pool balance total 8%, including $90.4 million (5.5% of the original pool balance) in realized losses to date.

As of the September 2015 distribution date, the pool's aggregate principal balance has been reduced by 94.8% to $64.7 million from $1.64 billion at issuance. The pool is extremely concentrated with only 14 assets remaining. The two non-specially serviced loans, which include one Fitch Loan of Concern (0.8%), have maturity dates in June 2019 (4.3%) and February 2024 (0.8%). Interest shortfalls in the amount of $15.1 million are currently affecting classes D through P.

The pool is undercollateralized as the aggregate balance of the certificates is $20.2 million greater than the aggregate collateral balance. This disparity of principal balances is due to the servicer recovering Workout-Delayed Reimbursement Amounts (WODRA) from the transaction's principal collections, and per the transaction documents, the subordinate certificates are not written down. Fitch is anticipating that the $20.2 million difference will ultimately result in realized losses.

The largest contributor to expected losses is the REO Tower at Northwoods (26.6% of the pool), an 184,616 square foot (sf) office property located in Danvers, MA, 20 miles north of Boston. The loan transferred to special servicing in February 2009 due to imminent default upon the borrower's request for an extension of the maturity date. The asset became REO in May 2013. The servicer-reported occupancy was 93% as of June 2015, unchanged from year-end (YE) 2014. The largest tenant leases 55% of the property's net rentable area (NRA) through April 2024. Extensive renovations to the building lobby, parking lot, gym, and HVAC systems were completed in 2013. The special servicer is working on leasing the property and there are currently no plans to market the asset for sale.

The second largest contributor to expected losses is the REO Lighthouse Pointe Apartments (16.7%), a 270-unit multifamily property in Palm Bay, FL. The loan transferred to the special servicer in December 2008 for payment default and the asset became REO in December 2012. The servicer-reported occupancy was 99% as of June 2015, up slightly from 98% at YE 2014. The property is currently undergoing deferred maintenance work to relocate standard unit HVAC units from sidewalks to locations next to the buildings. This is a significant project required by code enforcement and is a life safety precaution. A leveling project to alleviate a drainage problem affecting the foundation and building siding was completed in July 2015. The special servicer reports that they are continuing to market the asset for lease.

The third largest contributor to expected losses is the REO Counsel Square (12.1%), an eight-building, 109,146 sf suburban office complex in New Port Richey, FL. The loan transferred to special servicing in November 2012 due to imminent non-monetary default, and the asset became REO in October 2013. The servicer-reported occupancy at the property was 65% as of June 2015, compared to 73% at YE 2014 and 62% at Fitch's last rating action as of the September 2014 rent roll. Approximately 30% of net rentable area (NRA) expires over the next two years, including the largest tenant (21.9% of NRA) in June 2016. According to the special servicer, occupancy increased to 69% during the third quarter of 2015, when an existing tenant expanded into an additional 3,022 sf. The special servicer has yet to market the property for sale.

RATING SENSITIVITIES

The Stable Outlook for class C reflects the class's seniority in the capital structure and expectation of continued paydown. The distressed classes (those rated below 'Bsf') are subject to further downgrades should additional losses be realized. Additional information on rating sensitivity is available in the report 'Credit Suisse First Boston Mortgage Securities Corp., Series 2004-C3' (Aug. 5, 2004), available at www.fitchratings.com.

DUE DILIGENCE USAGE

No third party due diligence was provided or reviewed in relation to this rating action.

Fitch downgrades the following class and revises the Rating Outlook as indicated:

--$11.4 million class C to 'BBsf' from 'BBB-sf', Outlook to Stable from Negative.

Fitch has affirmed the following ratings and Recovery Estimates (REs):

--$28.7 million class D at 'CCsf', RE 5%;

--$16.4 million class E at 'Csf', RE 0%;

--$20.5 million class F at 'Csf', RE 0%;

--$7.9 million class G at 'Dsf', RE 0%;

--$0 class H at 'Dsf', RE 0%;

--$0 class J at 'Dsf', RE 0%;

--$0 class K at 'Dsf', RE 0%;

--$0 class L at 'Dsf', RE 0%;

--$0 class M at 'Dsf', RE 0%;

--$0 class O at 'Dsf', RE 0%.

The class A-1 through A-5, A-1-A, and B certificates have paid in full. Fitch does not rate the class N and P certificates. Fitch previously withdrew the ratings on the interest-only class A-X and A-SP certificates.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Global Structured Finance Rating Criteria (pub. 06 Jul 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952

U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria (pub. 10 Dec 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=812608

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=992064

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=992064

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

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