Fitch Downgrades 2 Classes From Taberna III Following Payment Default.

NEW YORK -- Fitch Ratings has downgraded two classes of notes from Taberna Preferred Funding III, Ltd./Inc. (Taberna III). A full list of rating actions follows at the end of this press release.

The downgrades incorporate the transaction's non-payment of the full interest due to the class B-1 and B-2 notes (collectively, the class B notes) on the Aug. 5, 2009 payment date. All available proceeds went to pay the class A notes' interest in full, and the remaining interest proceeds were exhausted when paying the class B notes. The class B notes received only 39.3% of their $523,552 interest due. This partial interest payment is considered a payment default.

Taberna III is expected to enter into an Event of Default as a result of the partial non-payment of interest to the class B notes. However, Fitch has not received a notice of an event of default.

These notes are backed by trust preferred securities (TruPS) and subordinated debt issued by subsidiaries of real estate investment trusts (REITs), real estate operating companies, homebuilders and specialty finance companies, as well as commercial mortgage-backed securities (CMBS).

Fitch has taken the following actions:

--$91,250,000 class B-1 notes downgraded to 'D' from 'CC';

--$7,500,000 class B-2 notes downgraded to 'D' from 'CC'.

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.