Fitch Affirms 14 and Downgrades 4 Distressed Classes of LBUBS 2005-C5
NEW YORK -- May 3, 2013
Fitch Ratings has affirmed 14 and downgraded four classes of LB-UBS Commercial
Mortgage Trust (LBUBS) commercial mortgage pass-through certificates series
2005-C5. A detailed list of rating actions follows at the end of this press
KEY RATING DRIVERS
The downgrades to the four distressed classes are the result of increased
expected losses primarily due to newly transferred specially serviced loans.
The affirmations are the result of sufficient credit enhancement in light of
continued amortization and overall stable performance of the non-specially
Fitch modeled losses of 7.1% of the remaining pool; expected losses on the
original pool balance total 5.2%, including losses already incurred. The pool
has experienced $2.5 million (0.1% of the original pool balance) in realized
losses to date. Fitch has designated 20 loans (18%) as Fitch Loans of Concern,
which includes eight specially serviced assets (10.6%).
The ratings of the super senior classes are expected to remain stable. Classes
E through G may be subject to negative rating actions should realized losses
be greater than Fitch's expectations. The distressed classes (those rated
below 'B') are expected to be subject to further downgrades as losses are
As of the March 2013 distribution date, the pool's aggregate principal balance
has been reduced by 28.5% to $1.68 billion from $2.34 billion at issuance. One
loan is defeased (0.6%). Interest shortfalls are currently affecting classes K
The largest contributor to Fitch-modeled losses is the real estate owned (REO)
TAG Portfolio (2.3% of the pool), which at issuance consisted of two adjoining
office buildings in Downers Grove, IL and an office building in Dulles, VA
totaling approximately 405,000 square feet (sf). The assets transferred to
special servicing in April 2010 for imminent default and became REO in
November 2011. The office building in Dulles was sold in Sept. 2012 and
proceeds were used to pay down the outstanding loan balance. The remaining
collateral is currently being offered for sale by auction.
The next largest contributor to expected losses is secured by a 449,443sf,
four building office complex located in Germantown, MD (4.2%). The property
transferred to special servicing in January 2013 due imminent default. As of
YE 2012, the property was 55% occupied after Boeing vacated approximately 30%
of the space at their lease expiration of December 31, 2012. The special
servicer continues to pursue foreclosure and placing the property under
The next largest contributor to expected losses is the Sandpiper Apartments
loan (1.9%), which is secured by a 488-unit apartment complex built in 1987
and located just west of the strip in Las Vegas. Over the past several years,
occupancy had fallen into the low- to mid-70% range. The borrower continues to
offer concessions to attract new tenants and occupancy improved to
approximately 85% as of October 2012 and the net operating income debt service
coverage ratio (DSCR) was reported above a 1.10x. The loan remains current as
of the March 2013 remittance date.
Fitch affirms the following classes and revises the Rating Outlook as
--$10.7 million class A-3 at 'AAAsf'; Outlook Stable;
--$29.6 million class A-AB at 'AAAsf'; Outlook Stable;
--$809.5 million class A-4 at 'AAAsf'; Outlook Stable;
--$124.6 million class A-1A at 'AAAsf'; Outlook Stable;
--$234.4 million class A-M at 'AAAsf'; Outlook Stable;
--$187.5 million class A-J at 'AAsf'; Outlook Stable;
--$20.5 million class B at 'AAsf'; Outlook to Negative from Stable;
--$32.2 million class C at 'Asf'; Outlook to Negative from Stable;
--$29.3 million class D at 'BBBsf'; Outlook to Negative from Stable;
--$23.4 million class E at 'BBB-sf'; Outlook to Negative from Stable;
--$29.3 million class F at 'BBsf'; Outlook to Negative from Stable;
--$26.4 million class G at 'Bsf'; Outlook to Negative from Stable;
--$5.9 million class M at 'Csf'; RE 0%;
--$8.8 million class N at 'Csf'; RE 0%.
In addition, Fitch downgrades the following classes and assigns or revises
Recovery Estimates (REs) as indicated:
--$23.4 million class H to 'CCCsf' from 'B-sf'; RE 65%;
--$14.7 million class J to 'CCsf' from 'CCCsf'; RE 0%;
--$20.5 million class K to 'Csf' from 'CCsf'; RE 0%;
--$8.8 million class L to 'Csf' from 'CCsf'; RE 0%.
The class A-1 and A-2 certificates have paid in full. Fitch does not rate the
class P, Q, S and T certificates. Fitch previously withdrew the ratings on the
interest-only class X-CL and X-CP certificates.
Additional information on Fitch's criteria for analyzing U.S. CMBS
transactions is available in the Dec. 18, 2012 report, 'U.S. Fixed-Rate
Multiborrower CMBS Surveillance and Re-REMIC Criteria', which is available at
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' (June 6, 2012);
--'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria'
(Dec. 18, 2012).
Applicable Criteria and Related Research
Global Structured Finance Rating Criteria
U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria
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ON THE FITCH WEBSITE.
Scarlett Shao, +1 212-908-9169
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
Britt Johnson, +1 312-606-2341
Sandro Scenga, +1 212-908-0278
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