Fitch Upgrades Wachovia 2003-C3

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has upgraded one class and affirmed five classes of Wachovia Bank Commercial Mortgage Trust, series 2003-C3 commercial pass-through certificates. A detailed list of rating actions follows at the end of this release.

KEY RATING DRIVERS

The upgrade is due to better than expected recoveries on a specially serviced asset, in addition class J is now fully covered by defeased collateral. Credit enhancement has improved since last review due to payoffs from the underlying pool. The pool is concentrated with only five loans remaining. The largest loan (77% of the pool) became real estate owned (REO) in March 2014. Fitch modeled losses of 40% of the remaining pool; expected losses on the original pool balance total 4.9%, including losses already incurred. The pool has experienced $41 million (4.4% of the original pool balance) in realized losses to date. Fitch has designated two loans (78%) as Fitch Loans of Concern, which includes the one specially serviced asset.

As of the March 2015 distribution date, the pool's aggregate principal balance has been reduced by 98.6% to $13.2 million from $937.3 million at issuance. Per the servicer reporting, two loans (11.2%) are defeased. Interest shortfalls are currently affecting classes K through P.

The REO asset is an 189,000 square foot (sf) office property (77%) located in Scranton, PA. The loan transferred to the special servicer in February 2013 due to cash flow issues and delinquent payments. Servicer reported occupancy at the property was 67% as of September 2014. The servicer continues to market the vacant space.

RATING SENSITIVITIES

The rating on the class J notes is expected to be stable and the class is expected to repay in full within the next one to two payment periods. The rating on the class K notes may be subject to further downgrades as losses are realized, or upgraded if recovery prospects improve.

Fitch has upgraded the following class:

--$99,662 class J notes to 'Asf' from 'Bsf'; Outlook Stable.

Fitch has affirmed the following classes as indicated:

--$9.4 million class K notes at 'CCsf'; RE 80%;

--$4.5 million class L notes at 'Dsf'; RE 0%;

--Class M notes at 'Dsf'; RE 0%;

--Class N notes at 'Dsf'; RE 0%;

--Class O notes at 'Dsf'; RE 0%.

Classes A-1, A-2, B, C, D, E, F, G, H, and IO-II have repaid in full. Fitch does not rate class P. The class IO-I notes were previously withdrawn.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' (March 2015);

--'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria' (December 2014).

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=864268

U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria

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

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=982354

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Fitch Ratings
Primary Surveillance Analyst
Karen Trebach
Senior Director
+1-212-908-0215
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Mary MacNeill
Managing Director
+1-212-908-0785
or
Media Relations
Sandro Scenga, New York, +1 212-908-0278
[email protected]

Source: Fitch Ratings

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