New York, December 05, 2012 -- Moody's has affirmed all classes of Notes issued by Acacia CRE CDO 1, Ltd. The affirmations are due to key transaction parameters performing within levels commensurate with the existing ratings levels. The rating action is the result of Moody's on-going surveillance of commercial real estate collateralized debt obligation and re-remic (CRE CDO and Re-Remic) transactions.

Moody's rating action is as follows:

Cl. A, Affirmed at C (sf); previously on Dec 9, 2011 Downgraded to C (sf)

Cl. B, Affirmed at C (sf); previously on Mar 5, 2010 Downgraded to C (sf)

Cl. C, Affirmed at C (sf); previously on Mar 5, 2010 Downgraded to C (sf)

Cl. D, Affirmed at C (sf); previously on Mar 5, 2010 Downgraded to C (sf)

Cl. E, Affirmed at C (sf); previously on Mar 5, 2010 Downgraded to C (sf)

Cl. F, Affirmed at C (sf); previously on Mar 5, 2010 Downgraded to C (sf)

RATINGS RATIONALE

Acacia CRE CDO 1, Ltd. is a static cash transaction backed by a portfolio of commercial mortgage backed securities (CMBS) (84.6% of the pool balance), CRE CDO bonds (12.8%), and asset backed securities (ABS) (2.6%). As of the October 31, 2012 monthly trustee report, the aggregate Note balance of the transaction, including Preferred Shares, has decreased to $280.1 million from $300.0 million at issuance, as a result of the paydown directed to the Class A Notes from regular amortization of collateral, interest proceeds directed to senior classes as principal proceeds as a result of failing one or more par value tests, and reclassification of interest proceeds from defaulted securities as principal proceeds.

There are seventeen assets with par balance of $59.6 million (54.4% of the current pool balance) that are considered defaulted securities as of the October 31, 2012 monthly trustee report, compared to thirty-three defaulted securities totaling $90.0 million par amount (62.7%) at last review. Moody's does expect moderate to high losses to occur from these defaulted securities once they are realized.

Also, as of the October 31, 2012 monthly trustee report, the current par balance of the collateral, including defaulted securities, is $109.6 million, which represents a 57.3% under-collateralization to the transaction, compared to 44.8% under-collateralization at last review. This corresponds to the current senior overcollateralization ratio of 30.4%, compared to 34.5% at last review.

As of the October 2011 payment date, interest shortfalls from the underlying collateral resulted in (i) a default in the interest swap payment which triggered an early termination of the interest rate swap agreement; (ii) non-payment of interest on all Non-PIKable and PIKable classes. The default in payment of interest on Class A Notes or Class B Notes caused an Event of Default (EOD) on October 13, 2011. As of the October 9, 2012 Note Valuation report, the total amount of the termination payment on the interest rate swap due was approximately $16.9 million, which represents 15.4% of the current total collateral par amount. Currently, the EOD is continuing and the acceleration of maturity has not been declared.

Moody's has identified the following parameters as key indicators of the expected loss within CRE CDO transactions: weighted average rating factor (WARF), weighted average life (WAL), weighted average recovery rate (WARR), and Moody's asset correlation (MAC). These parameters are typically modeled as actual parameters for static deals and as covenants for managed deals.

WARF is a primary measure of the credit quality of a CRE CDO pool. We have completed updated assessments for the non-Moody's rated collateral. The bottom-dollar WARF is a measure of the default probability within a collateral pool. Moody's modeled a bottom-dollar WARF of 6,961 compared to 7,439 at last review. The current distribution of Moody's rated collateral and assessments for non-Moody's rated collateral is as follows: Aaa-Aa3 (2.7% compared to 0.0% at last review), A1-A3 (3.9% compared to 5.2% at last review),Baa1-Baa3 (3.2% compared to 4.7% at last review), Ba1-Ba3 (18.1% compared to 13.8% at last review), B1-B3 (0.9% compared to 0.7% at last review), and Caa1-Ca/C (71.2% compared to 75.6% at last review).

Moody's modeled to a WAL of 4.7 years, compared to 3.9 years at last review. The current WAL is based on the assumption about collateral extensions.

Moody's modeled a fixed 4.9% WARR, compared to 4.5% at last review.

Moody's modeled a MAC of 100.0%, the same as last review.

Moody's review incorporated CDOROM® v2.8, one of Moody's CDO rating models, which was released on March 22, 2012.

The cash flow model, CDOEdge® v3.2.1.2, was used to analyze the cash flow waterfall and its effect on the capital structure of the deal.

Changes in any one or combination of the key parameters may have rating implications on certain classes of rated notes. However, in many instances, a change in key parameter assumptions in certain stress scenarios may be offset by a change in one or more of the other key parameters. In general, the rated notes are particularly sensitive to changes in recovery rate assumptions. However, in light of the performance indicators noted above, Moody's believes that it is unlikely that the ratings announced today are sensitive to further change.

The performance expectations for a given variable indicate Moody's forward-looking view of the likely range of performance over the medium term. From time to time, Moody's may, if warranted, change these expectations. Performance that falls outside the given range may indicate that the collateral's credit quality is stronger or weaker than Moody's had anticipated when the related securities ratings were issued. Even so, a deviation from the expected range will not necessarily result in a rating action nor does performance within expectations preclude such actions. The decision to take (or not take) a rating action is dependent on an assessment of a range of factors including, but not exclusively, the performance metrics.

Primary sources of assumption uncertainty are the extent of growth in the current macroeconomic environment given the weak pace of recovery and commercial real estate property markets. Commercial real estate property values are continuing to move in a modestly positive direction along with a rise in investment activity and stabilization in core property type performance. Limited new construction and moderate job growth have aided this improvement. However, a consistent upward trend will not be evident until the volume of investment activity steadily increases for a significant period, non-performing properties are cleared from the pipeline, and fears of a Euro area recession are abated.

The hotel sector is performing strongly with nine straight quarters of growth and the multifamily sector continues to show increases in demand with a growing renter base and declining home ownership. Recovery in the office sector continues at a measured pace with minimal additions to supply. However, office demand is closely tied to employment, where growth remains slow and employers are considering decreases in the leased space per employee. Also, primary urban markets are outperforming secondary suburban markets. Performance in the retail sector continues to be mixed with retail rents declining for the past four years, weak demand for new space and lackluster sales driven by internet sales growth. Across all property sectors, the availability of debt capital continues to improve with robust securitization activity of commercial real estate loans supported by a monetary policy of low interest rates.

Moody's central global macroeconomic scenario is for continued below-trend growth in US GDP over the near term, with consumer spending remaining soft in the US. Hurricane Sandy may skew near-term economic data but is unlikely to have any long-term macroeconomic effects. Primary downside risks include: a deeper than expected recession in the euro area accompanied by deeper credit contraction; the potential for a hard landing in major emerging markets, including China, India and Brazil; an oil supply shock, albeit abated in recent months; and given recent political gridlock, excessive fiscal tightening in the US in 2013 leading the US into recession. However, the Federal Reserve has shown signs of support for activity by continuing with quantitative easing.

The methodologies used in this rating were "Moody's Approach to Rating SF CDOs" published in May 2012, and "Moody's Approach to Rating Commercial Real Estate CDOs" published in July 2011. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.

REGULATORY DISCLOSURES

The Global Scale Credit Ratings on this press release that are issued by one of Moody's affiliates outside the EU are endorsed by Moody's Investors Service Ltd., One Canada Square, Canary Wharf, London E 14 5FA, UK, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that has issued a particular Credit Rating is available on www.moodys.com.

For ratings issued on a program, series or category/class of debt, this announcement provides relevant regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides relevant regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides relevant regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

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Please see Moody's Rating Symbols and Definitions on the Rating Process page on www.moodys.com for further information on the meaning of each rating category and the definition of default and recovery.

Please see ratings tab on the issuer/entity page on www.moodys.com for the last rating action and the rating history. The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

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Biao He Analyst Structured Finance Group Moody'sInvestors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 Deryk Meherik VP - Senior Credit Officer Structured Finance Group JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 Releasing Office: Moody's Investors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653(C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

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