OREANDA-NEWS. Fitch Ratings downgrades one class and affirms six classes of Capital Trust RE CDO 2005-1 (Capital Trust 2005-1). Fitch also withdraws the rating on class B due to lack of relevancy. A detailed list of rating actions follows at the end of this release.

KEY RATING DRIVERS
Capital Trust 2005-1 is highly concentrated with assets from only three obligors remaining in the portfolio. The CDO is significantly under collateralized. Further, 100% of the portfolio is considered either defaulted or Fitch assets of concern. Since Fitch's last rating action, the capital structure has paid down by $33.3 million with no additional realized losses. As of the February 2016 trustee report, the CDO was 58% invested in two B-notes, one of which is defaulted (16.1%) and expected to have a full loss, and 42% in three non-senior CRE CDOs from the same obligor, CT CDO IV Ltd 2006-1 (all rated 'Csf'). Total recoveries are expected to be low due to the subordinate and/or distressed nature of the remaining collateral.

On March 20, 2012, the Trustee declared an event of default (EOD) due to non-payment of full and timely accrued interest to the class B notes. The class B notes are a non-deferrable class and, while now paid in full, are affirmed at 'Dsf' due to the earlier default in the timely payment of its accrued interest. Class C, which is now the senior most class and thus non-deferrable, is downgraded to 'Dsf' due to the missed timely payment of the full accrued interest. On March 3, 2016, the Trustee declared an EOD with respect to class C, as interest proceeds received were insufficient to pay the full timely interest to the class. Interest proceeds were received from only one CDO asset, a B-note (41.9%) secured by a full service hotel located in Long Beach, CA.

As of the time of this rating action, the noteholders have not given direction to accelerate the notes or liquidate the portfolio.

The 'Csf' ratings for classes D through H reflect the classes' negative credit enhancement, and expectation of eventual default.

This transaction was analyzed according to the 'Surveillance Criteria for U.S. CREL CDOs', which applies stresses to property cash flows and debt service coverage ratio (DSCR) tests to project future default levels for the underlying collateral in the portfolio.

Capital Trust 2005-1 is a commercial real estate (CRE) CDO managed by CT Investment Management Co., LLC (CTIMCO).

RATING SENSITIVITIES
Classes D through H are subject to further downgrade to 'Dsf' should the classes default at legal maturity or earlier.

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

Fitch has downgraded the following ratings:

--$18.9 million class C to 'Dsf' from 'Csf'; RE 35%.

Fitch has affirmed the following ratings:

--$0 class B at 'Dsf' and withdrawn;
--$14.4 million class D at 'Csf'; RE 0%;
--$15.2 million class E at 'Csf'; RE 0%;
--$6.8 million class F at 'Csf'; RE 0%;
--$6.8 million class G at 'Csf'; RE 0%;
--$10.1 million class H at 'Csf'; RE 0%.

Class A is paid in full. Fitch does not rate the class J and X-J certificates or the preferred shares.