Fitch Downgrades 3 Classes of LB-UBS 2001-C3
NEW YORK -- May 3, 2013
Fitch Ratings has downgraded three classes and affirmed two classes of Lehman
Brothers-UBS Commercial Mortgage Trust (LB-UBS) commercial mortgage
pass-through certificates, series 2001-C3 due to an increase in expected
losses as well as concerns with significant concentration. A detailed list of
rating actions follows at the end of this press release.
KEY RATING DRIVERS
Fitch modeled losses of 34.5% of the remaining pool; expected losses on the
original pool balance total 5.54%. The pool has experienced $23.6 million
(1.7% of the original pool balance) in realized losses to date. Fitch has
designated seven loans (98.1% of the current pool balance) as Fitch Loans of
Concern, which includes five specially serviced assets (48.2%).
As of the April 2013 distribution date, the pool's aggregate principal balance
has been reduced by 88.9% to $153.2 million from $1.38 billion at issuance.
The pool has become extremely concentrated with only eight of the original 169
loans remaining in the transaction, one of which (1.9%) is defeased. Interest
shortfalls are currently affecting classes H through Q.
The Negative Outlooks reflects the extreme concentration and adverse selection
of the remaining pool, with five out of the eight remaining loans currently in
special servicing. In addition, the Negative Outlook reflects performance
concerns for the largest loan in the pool, Vista Ridge Mall (48%).
The largest contributor to expected losses is the specially-serviced
Shoppingtown Mall loan (24.5% of the pool), which is secured by 697,000 square
feet (sf) of a 774,000sf mall located in DeWitt, NY. Major collateral tenants
include JC Penney, (22% net rentable area [NRA]), Regal Cinemas (9.8% NRA),
and Dicks Sporting Goods (7.2% NRA). Non-collateral anchors include Sears and
Macy's. The property has experienced occupancy declines due to a borrower
decision in 2007 to vacate tenants in a corridor of the subject property for
future development. Due to the economic downturn the planned development was
halted. In December 2011, the lender had obtained title to the property via a
deed-in-lieu. The servicer continues to evaluate disposition strategies, and
has hired Jones Lang Lasalle as the property manager and leasing agent.
The next largest contributor to expected losses is the specially-serviced Park
Central loan (18.3%), which is secured by a 331,866sf office property
comprised of seven, one-story buildings in Phoenix, AZ. The March 2013 rent
roll reported occupancy at 71%. The subject loan has been in and out of
special servicing since 2010 for payment default, with its most recent
transfer in July 2011. A receiver was appointed in February 2012 and the
property became lender REO in May 2012.
The third largest contributor to expected losses is the Vista Ridge Mall loan
(47.6%), the largest loan in the pool, which is secured by a 1.1 million sf
mall located in Lewisville, TX. Anchor tenants include Dillards, Macy's,
Sears, JCPenney, and Cinemark Theaters. Despite occupancy reporting at 97% for
December 2012, the net operating income (NOI) debt service coverage ratio
(DSCR) reported low at 1.12x. The property has experienced NOI declines since
2009 due to a decrease in base rents and revenues stemming from unfavorable
conversion to percentage rents from base rents for several tenants. The loan
remains current as of the April 2013 remittance date.
Fitch downgrades the following classes and assigns or revises Rating Outlooks
--$18 million class E to 'Asf' from 'AA-sf'; Outlook to Negative from Stable;
--$18 million class F to 'BBBsf' from 'A+sf'; Outlook to Negative from Stable;
--$12.1 million class G to 'BBsf' from 'Asf'; Outlook Negative.
Fitch affirms the following classes and revises the Rating Outlooks as
--$28.3 million class C at 'AAAsf'; Outlook to Negative from Stable;
--$16 million class D at 'AAAsf'; Outlook to Negative from Stable.
The class A-1, A-2 and B certificates have paid in full. Fitch does not rate
the class H, J, K, L, M, N, P and Q certificates. Fitch previously withdrew
the rating on the interest-only class X 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
'www.fitchratings.com' under the following headers:
Structured Finance >> CMBS >> Criteria Reports
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.
Benson Thomas, +1-212-908-0645
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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