Fitch Affirms LNR CDO 2003-1.

NEW YORK -- Fitch Ratings has affirmed all classes of notes issued by LNR CDO 2003-1, Ltd./Corp., (LNR CDO 2003-1) as follows:

-- $99,160,000 class A at 'AAA';

-- $78,184,000 class B at 'AAA';

-- $34,000,000 class C-FL at 'AAA';

-- $9,860,000 class C-FX at 'AAA';

-- $5,000,000 class D-FL at 'AA+';

-- $40,766,000 class D-FX at 'AA+';

-- $48,000,000 class E-FL at 'A+';

-- $41,626,000 class E-FX at 'A+';

-- $6,000,000 class F-FL at 'A';

-- $44,724,000 class F-FX at 'A';

-- $12,204,000 class G at 'A-';

-- $30,511,000 class H at 'BBB-';

-- $43,478,000 class J at 'BB'.

Despite realized and projected losses to the collateral, the current credit enhancement to the rated classes in relation to the credit quality of the remaining collateral warrants the affirmations.

LNR CDO 2003-1 is a commercial real estate collateralized debt obligation (CRE CDO) that closed July 2, 2003. The portfolio is backed by commercial mortgage backed securities (CMBS) B-pieces. LNR CDO 2003-1 is a static transaction. LNR Partners, Inc. selected the initial collateral and serves as the collateral administrator.

CMBS B-piece resecuritizations (also referred to as first loss CRE CDOs/ReREMICs) are CRE CDOs and ReREMIC transactions that include the most junior bonds of CMBS transactions.

In reviewing CRE CDOs, Fitch has targeted expected losses in different rating stresses based on the quality of the underlying CMBS collateral. The overall expected losses reflect the single sector exposure, the concentrated nature of these portfolios, and the low expected recoveries upon bond default, especially for more junior and thinner classes of CMBS tranches. Additional ratings considerations include seasoning of underlying collateral, obligor diversity, actual bond performance and projected losses. The specific credit characteristics that are factored into Fitch's rating review are discussed below.

LNR CDO 2003-1 is collateralized by all or a portion of 140 classes of fixed-rate CMBS in 34 separate underlying transactions. All performance and collateral information is based on the March 22, 2008 trustee report. The pool's obligor diversity is considered average for CMBS B-piece resecuritizations, and the vintage distribution of the CMBS collateral ranges from 1999 to 2003 (an average of 5.8 years of seasoning). Approximately 22.6% of the collateral currently is rated below 'B-' or not rated, and therefore, is more susceptible to losses in the near-term. While overall a significant portion of the collateral is below investment grade, approximately 20.8% is investment grade. LNR CDO 2003-1 holds 34.1% in the 'BB' category and 22.5% in the 'B' category.

The collateral has realized $22 million in losses to date, which represents 2.9% of the original collateral. According to the current trustee report, $323.8 million of the underlying collateral is currently 60 days or more delinquent.

Fitch conducted cash flow modeling to test the transaction's structure under various default and interest rate stress scenarios. The ratings on the class A, B, C-FL, and C-FX notes address the timely payment of interest and ultimate repayment of principal. The ratings on the classes D-FL, D-FX, E-FL, E-FX, F-FL, F-FX, G, H, and J notes address the ultimate payment of interest and ultimate repayment of principal.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, 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.