Breaking News

Tweet TWEET

Fitch Downgrades 2 Classes of LBUBS 2006-C1

  Fitch Downgrades 2 Classes of LBUBS 2006-C1

Business Wire

CHICAGO -- February 21, 2014

Fitch Ratings has downgraded two classes of LB-UBS Commercial Mortgage
Securities Trust (LBUBS) commercial mortgage pass-through certificates series
2006-C1. A detailed list of rating actions follows at the end of this press
release.

KEY RATING DRIVERS

Fitch modeled losses of 7.8% of the remaining pool; expected losses on the
original pool balance total 10.9%, including $124.4 million (5% of the
original pool balance) in realized losses to date. Fitch has designated 34
loans (16.6%) as Fitch Loans of Concern, which includes eight specially
serviced assets (4.6%).

As of the January 2014 distribution date, the pool's aggregate principal
balance has been reduced by 23.7% to $1.89 billion from $2.48 billion at
issuance. Per the servicer reporting, 11 loans (2.3% of the pool) are
defeased. Interest shortfalls are currently affecting classes G through T.

The largest contributor to expected losses is the DHL Center loan (3% of the
pool), which is secured by an approximate 490,000 square foot (sf)
distribution facility located in Breinigsville, PA. The facility was operated
and 100% occupied by DHL Express (USA), Inc . DHL ceased shipping operations
within the United States in January 2009 and has vacated the building. DHL is
current on rent payments and maintains on site security and maintenance. The
20 year lease commenced in 2006, has a termination option at year 15 in 2021,
and is guaranteed by Deutsche Post AG (Fitch rated 'BBB+'). The loan is
current on payments through the January 2014 remittance date and matures in
January 2016.

The next largest contributor to expected losses is the River Valley Mall loan
(2.5%), which is secured by an approximate 578,000 sf regional mall located in
Lancaster, OH. Current tenants include Dick's Sporting Goods (expires 2021),
Sears (expires 2016), JC Penney (expires 2017), and Elder Beerman (expires
2018). Regal Cinemas vacated at the expiration of their lease in December
2013. The servicer-reported DSCR was 1.14x at year end 2012, down from 1.61x
at origination. The loan has been on the servicer watchlist since February
2009 and remains current on payments through the January 2014 remittance date.

The third largest contributor to expected losses is the Sterling Portfolio
(2.5%), which is secured by four office buildings totaling approximately
401,000 sf located in Nassau County and Suffolk County, NY. The
servicer-reported DSCR dropped to 0.77x at year end 2012, down from 1.44x at
year end 2010. Consolidated occupancy across the properties remained at 82%,
unchanged from the previous year end. The property has been under cash
management since June 2013. The loan has been on the servicer watchlist since
September 2011 and remains current on payments through the January 2014
remittance date.

RATING SENSITIVITY

Rating Outlooks on classes A-3 through A-M remain Stable due to increasing
credit enhancement and continued paydown. The Rating Outlook on class A-J is
Negative due to increasing risk of adverse selection as 95% of the pool is
scheduled to mature in the next two years. The Rating Outlook remains Stable
on rake classes IUU-1 and IUU-2 due to increasing credit enhancement from
amortization on the associated senior notes.

Fitch downgrades the following classes and assigns or revises Recovery
Estimates (REs) as indicated:

--$221 million class A-J to 'Bsf' from 'BBsf', Outlook Negative;

--$15.4 million class B to 'CCCsf' from 'Bsf', RE 55%;

Fitch affirms the following classes as indicated:

--$90.9 million class A-3 at 'AAAsf', Outlook Stable;

--$22 million class A-AB at 'AAAsf', Outlook Stable;

--$1.1 billion class A-4 at 'AAAsf', Outlook Stable;

--$245.6 million class A-M at 'AAAsf', Outlook Stable;

--$27.6 million class C at 'CCCsf', RE 0%;

--$24.6 million class D at 'CCsf', RE 0%;

--$18.4 million class E at 'CCsf', RE 0%;

--$21.5 million class F at 'Csf', RE 0%;

--$21.5 million class G at 'Csf', RE 0%;

--$16.7 million class H at 'Dsf', RE 0%;

--$0 class J at 'Dsf', RE 0%;

--$0 class K at 'Dsf', RE 0%;

--$0 class L at 'Dsf', RE 0%;

--$0 class M at 'Dsf', RE 0%;

--$0 class N at 'Dsf', RE 0%;

--$5.9 million class IUU-1 at 'BBsf', Outlook to Stable from Negative;

--$2.6 million class IUU-2 at 'Bsf', Outlook to Stable from Negative;

--$3.6 million class IUU-3 at 'Bsf', Outlook Negative;

--$1.9 million class IUU-4 at 'CCsf';

--$1.3 million class IUU-5 at 'CCsf';

--$908,999 class IUU-6 at 'CCsf';

--$960,210 class IUU-7 at 'CCsf';

--$1 million class IUU-8 at 'CCsf';

--$1.1 million class IUU-9 at 'CCsf'.

The class A-1 and A-2 certificates have paid in full. Fitch does not rate the
class P, Q, S, T and IUU-10 certificates. Fitch previously withdrew the
ratings on the interest-only class X-CP and X-CL certificates.

Additional information on Fitch's criteria for analyzing U.S. CMBS
transactions is available in the Dec. 11, 2013 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 then CMBS then Criteria Reports

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' (May 24, 2013);

--'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria'
(Dec. 18, 2012).

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=708661

U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=724961

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=821215

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS.
PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK:
HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING
DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S
PUBLIC WEBSITE '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. FITCH MAY HAVE PROVIDED ANOTHER
PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS
OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN
EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER
ON THE FITCH WEBSITE.

Contact:

Fitch Ratings
Primary Analyst
Valerie Jayson, +1 312-368-3116
Associate Director
Fitch Ratings, Inc.
70 West Madison St
Chicago, IL 60602
or
Committee Chairperson
Mary MacNeill, +1 212-908-0785
Managing Director
or
Media Relations:
Elizabeth Fogerty, +1 212-908-0526
elizabeth.fogerty@fitchratings.com
 
Press spacebar to pause and continue. Press esc to stop.