2008-11-08 23:38:01 -
- Fitch Ratings has affirmed and assigned Outlooks to LB-UBS Commercial Mortgage Trust 2007-C1, commercial mortgage pass-through certificates, as follows:
--$46.7 million class A-1 at 'AAA'; Outlook Stable;
--$211 million class A-2 'AAA'; Outlook Stable;
--$225 million class A-3 'AAA'; Outlook Stable;
--$95 million class A-AB 'AAA'; Outlook Stable;
--$1.16 billion class A-4 'AAA'; Outlook
Stable;
--$849.7 million class A-1A 'AAA'; Outlook Stable;
--$371.3 million class A-M 'AAA'; Outlook Stable;
--$315.6 million class A-J 'AAA'; Outlook Stable;
--Interest-only class X-CP 'AAA'; Outlook Stable;
--Interest-only class X-W 'AAA'; Outlook Stable;
--Interest-only class X-CL 'AAA'; Outlook Stable;
--$27.8 million class B 'AA+'; Outlook Stable;
--$55.7 million class C 'AA'; Outlook Stable;
--$37.1 million class D 'AA-'; Outlook Stable;
--$18.6 million class E 'A+'; Outlook Stable;
--$32.5 million class F 'A'; Outlook Stable;
--$32.5 million class G 'A-'; Outlook Stable;
--$41.8 million class H 'BBB+'; Outlook Stable;
--$41.8 million class J 'BBB'; Outlook Stable;
--$51.1 million class K 'BBB-'; Outlook Stable;
--$9.3 million class L 'BB+'; Outlook Stable;
--$9.3 million class M 'BB'; Outlook Stable;
--$9.3 million class N 'BB-'; Outlook Stable.
Fitch does not rate the $4.6 million class P, $9.3 million class Q, $9.3 million class S, $37.1 million class T or the non-pooled $35.6 million class BMP.
The rating affirmations are a result of stable performance since issuance. The Rating Outlooks reflect the likely direction of rating changes over the next one to two years. As of the September 2008 distribution date, the transaction has paid down 0.3% to $3.73 billion from $3.75 billion at issuance.
Fitch has identified 14 Loans of Concern (6.35%), including one specially serviced (0.12%). The specially serviced asset is a 124-unit, multifamily property located in Lubbock, TX. The loan transferred to the special servicer following a monetary default and is currently 90+ days delinquent. Fitch expects that losses from the specially serviced loan will be absorbed by the non-rated classes.
Fitch reviewed the most recent servicer provided operating statement analysis reports for the six shadow rated loans (31.1%): Westfield San Francisco Emporium (11.6%), International Square (7.2%), Tishman Speyer DC Portfolio I (5.8%), Extendicare Portfolio (3.3%), Four Times Square (2.1%) and Kentucky Oaks Mall (0.8%). Based on their stable performance since issuance, five of the six loans maintain investment grade shadow ratings.
Westfield San Francisco Emporium is a 966,442 square foot (sf) regional mall located in the Union Square district of San Francisco, CA, of which 363,101 sf of retail space and 246,099 sf of office space are collateral. Anchor tenants include Bloomingdale's and Century Theatres. Major retail tenants include Bristol Farms and Borders. Office tenants include San Francisco State University and Microsoft. The property benefits from the experienced sponsorship of Westfield America Limited Partnership and Forest City Enterprises, Inc. The whole loan consists of a $300 million A-note and a $135 million B-note. Occupancy as of June 30, 2008, is 90.7% compared to 98.1% at issuance.
International Square is a one million-sf office property in Washington, DC Major tenants include Dickstein Shapiro Morin & Oshi; Merril Lynch, Pierce, Fenner; and Smith Group Midatlantic, Inc. The sponsor is a partnership between Tishman Speyer and an affiliate of Lehman Brothers. As of June 30, 2008, occupancy has improved to 94.8% from 86.3% at issuance. However, overall expenses at the property have increased due to an increase in utilities, payroll, real estate taxes and insurance. The property no longer generates sufficient cash flow to maintain an investment grade rating.
Tishman Speyer DC Portfolio I consists of four properties totaling 940,000 sf located throughout the Washington, DC metropolitan area. The largest tenants include American Chemistry Council; Skadden Arps; Effinity Financial Corporation; and CRA International. The sponsor is a partnership between Tishman Speyer and an affiliate of Lehman Brothers. As of June 30, 2008, occupancy has improved to 91.5% from 84.1% at issuance.
The Extendicare Portfolio consists of 80 skilled nursing facilities and two skilled nursing/assisted living facilities totaling 8,492 beds and located across 10 states. The sponsor is Extendicare Health Services, Inc. whose corporate management team average 26 years of experience in the health care industry, specifically in the operation of skilled nursing facilities. As of June 30, 2008 the portfolio had an occupancy of 91.2%, down slightly from 93.2% at issuance.
The Four Times Square loan is collateralized by a long-term leasehold interest in Four Times Square, a 48-story Class A office building located on Broadway between 42nd and 43rd streets in Manhattan's Times Square submarket. The sponsor is The Durst Organization (Durst) which owns and manages interests in multiple Class A buildings comprising more than 7.9 million sf in Midtown Manhattan. As of June 30, 2008, occupancy is stable at 99.8%.
The Kentucky Oaks Mall is a regional mall complex containing 827,204 sf of collateral GLA, in addition to four ground lease parcels and several owned free-standing units. The overall project floor area is 1,135,379 sf. The sponsor is a partnership between Cafaro Company, a privately owned real estate developer, and CBL & Associates Properties, Inc., a real estate investment trust (REIT). As of June 30, 2008, the occupancy was 94.1%, up from 93.2% at issuance.
At issuance, there was one loan in the top 10, Bethany Houston Portfolio, which was in the process of stabilizing. While the loan continues to have a servicer reported year-end (YE) 2007 debt-service coverage ratio (DSCR) less than 1.0 times (x), Fitch has reviewed the updated occupancy, reserve expenditure and cash flow information and has determined that it is in-line with the stabilization schedule set forth at issuance. Fitch will continue to monitor this loan.
The largest Fitch loan of concern (0.80%) is secured by a 272-unit multifamily property in Las Vegas, NV. The servicer reported YE 2007 DSCR was 0.99x, compared to 1.17x at issuance. Per servicer, the decrease in DSCR was primarily due to an increase the payroll expense. The occupancy as of June 2008 was 95.0% compared to 91.5% at issuance.
The second-largest Fitch loan of concern (0.5%) is secured by a 196-unit multifamily property in West Covina, CA. The servicer reported YE 2007 DSCR was 0.86x compared to 1.16x at issuance. Per servicer, the DSCR has been affected by an overall increase in expenses including payroll and general & administrative, as well as increased competition in the market. The occupancy as of June 2008 was 90% compared to 72% at issuance.
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.
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