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Dec 21 - Fitch Ratings has downgraded six classes and affirmed 12 classes of LB-UBS commercial mortgage trust series 2007-C1 due to an increase in Fitch's expected loss. A detailed list of rating actions follows at the end of this press release.
Fitch modeled losses of 13.7% of the remaining pool; expected losses on the original pool balance total 15.1%, including losses already incurred. The pool has experienced $130.4 million (3.5% of the original pool balance) in realized losses to date. Fitch has designated 25 loans (20.4%) as Fitch Loans of Concern, which includes 13 specially serviced assets (15.3%).
As of the December 2012 distribution date, the pool's aggregate principal balance has been reduced by 14.9% to $3.19 billion from $3.75 billion at issuance. No loans have defeased since issuance. Interest shortfalls are currently affecting classes G through BMP.
The largest contributor to expected losses is the specially-serviced Bethany Portfolio (9.3% of the pool), which is secured by 16 multifamily properties located in Austin, TX, Houston, TX, and Maryland. The loan was transferred back to the special servicer in February 2011 for imminent default and the loan was brought current in August 2012. Property performance and cash flow remain below expectations due to soft market conditions and high concessions. The loan was previously modified in March 2010 which increased the term and IO period by 60 months and reduced the interest rate from 5.28% to 4.94%.
The next largest contributor to expected losses is 1745 Broadway (10.7%), which is secured by a 636,598 square foot (sf) class A office in the midtown west submarket of New York, NY. The building is 100% occupied by Random House, which uses this location as its headquarters. Random House (parent company and guarantor is Bertelsman AG [rated 'BBB+' by Fitch]) occupies its space pursuant to a triple net lease expiring in June 2018. The loan is scheduled to mature in November 2017 and Random House's lease is significantly below market.
The third largest contributor to expected losses is a 517,887 sf industrial building (1.5%) located in University Park, IL. The loan was transferred to the special servicer in April 2011 for imminent payment default and a deed in lieu of foreclosure was closed in March 2012. The special servicer continues working to stabilize the property.
Fitch downgrades the following classes and assigns or revises Recovery Estimates (REs) as indicated:
--$371.3 million class A-M to 'Asf' from 'AAAsf'; Outlook Stable;
--$315.6 million class A-J to 'CCCsf' from 'BBsf'; RE 70%;
--$55.7 million class C to 'CCsf' from 'CCCsf'; RE 0%;
--$37.1 million class D to 'CCsf' from 'CCCsf'; RE 0%;
--$18.6 million class E to 'CCsf' from 'CCCsf'; RE 0%;
--$32.5 million class F to 'Csf' from 'CCsf'; RE 0%.
Fitch affirms the following classes and assigns or revises REs as indicated:
--$27.8 million class B at 'CCCsf'; RE 0%;
--$32.5 million class G at 'Csf'; RE 0%;
--$41.8 million class H at 'Csf'; RE 0%;
--$41.8 million class J at 'Csf'; RE 0%;
--$49.2 million 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%.
Fitch affirms the following classes:
--$213.3 million class A-3 at 'AAAsf'; Outlook Stable;
--$79.2 million class A-AB at 'AAAsf'; Outlook Stable;
--$1.2 billion class A-4 at 'AAAsf'; Outlook Stable;
--$714.9 million class A-1A at 'AAAsf'; Outlook Stable.
Fitch previously withdrew the ratings on the interest-only class X-CP, X-W and X-CL 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