Fitch Upgrades LNR CDO 2003-1, Ltd.

NEW YORK -- Fitch upgrades 11 classes and affirms two classes of the notes issued by LNR CDO 2003-1, Ltd. (LNR 2003-1) as follows:

--$99,160,000 class A floating rate notes, due 2018, affirm at 'AAA';

--$78,184,000 class B floating rate notes, due 2036, affirm at 'AAA';

--$34,000,000 class C-FL, due 2036, upgrade to 'AAA' from 'AA';

--$9,860,000 class C-FX, due 2036, upgrade to 'AAA' from 'AA';

--$5,000,000 class D-FL, due 2036, upgrade to 'AA+' from 'AA-';

--$40,766,000 class D-FX, due 2036, upgrade to 'AA+' from 'AA-';

--$48,000,000 class E-FL, due 2036, upgrade to 'A+' from 'BBB+';

--$41,626,000 class E-FX, due 2036, upgrade to 'A+' from 'BBB+';

--$6,000,000 class F-FL, due 2036, upgrade to 'A' from 'BBB+';

--$44,724,000 class F-FX, due 2036, upgrade to 'A' from 'BBB+';

--$12,204,000 class G, due 2036, upgrade to 'A-' from 'BBB';

--$30,511,000 class H, due 2036, upgrade to 'BBB-' from 'BB';

--$43,478,000 class J, due 2036, upgrade to 'BB' from 'B'.

LNR 2003-1 is a collateralized debt obligation (CDO), which closed July 2, 2003. It is supported by a static pool of commercial mortgage-backed securities. LNR Partners, Inc. ('CSS1' commercial mortgage special servicer rating) selected the initial collateral and serves as the collateral administrator.

The upgrades are driven primarily by the improved credit quality of the portfolio and the seasoning of the collateral. Since the last review, 23.7% of the portfolio has been upgraded by a weighted average of 1.4 notches, with no downgrades. The weighted average rating factor has improved to 'B+' as of the April 2007 trustee report from 'B+'/'B' at the last review. All overcollateralization and interest coverage ratios have remained stable since inception. Although 19.4% of the collateral consists of non-rated first loss CMBS tranches, the transaction is supported by a relatively large preference shares class. The credit enhancement to the class J notes is in excess of 33%. The current portfolio vintage distribution is concentrated in 2002 and 2003 assets, with 49% and 33% respectively.

Fitch conducted cash flow modeling utilizing various default timing and interest rate scenarios to measure the breakeven default rates going forward relative to the minimum cumulative default rates required for the rated liabilities.

The ratings on the class A, B, C-FL and C-FX notes address the timely payment of interest and ultimate payment of principal. The ratings on the class 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 payment of principal.

Fitch will continue to monitor and review this transaction for future rating adjustments. Additional deal information and historical data are available on the Derivative Fitch web site at www.derivativefitch.com. For more information on the Fitch VECTOR Model, see 'Global Rating Criteria for Collateralised Debt Obligations,' dated Oct. 4, 2006 and also available at www.derivativefitch.com.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.derivativefitch.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 means Fitch, Inc., Fitch Ratings, Ltd. and their subsidiaries including Derivative Fitch, Inc. and Derivative Fitch Ltd. and any successor or successors thereto.