NEW YORK - (Business Wire) Fitch Ratings has affirmed and assigned Rating Outlooks to LB-UBS Commercial Mortgage Trust Commercial Mortgage Pass-Through Certificates Series 2007-C2 as follows:
--$21 million class A-1 at 'AAA'; Outlook Stable;
--$447 million class A-2 'AAA'; Outlook Stable;
--$78 million class A-AB at 'AAA'; Outlook Stable;
--$1.3 billion class A-3 at 'AAA'; Outlook Stable;
--$659.5 million class A-1A at 'AAA'; Outlook Stable;
--$355.4 million class A-M at 'AAA'; Outlook Stable;
--$315.5 million class A-J at 'AAA'; Outlook Stable;
--Interest-only class X-CP at 'AAA'; Outlook Stable;
--Interest-only class X-W at 'AAA'; Outlook Stable;
--Interest-only class X-CL at 'AAA'; Outlook Stable;
--$26.7 million class B at 'AA+'; Outlook Stable;
--$53.3 million class C at 'AA; Outlook Stable;
--$40 million class D at 'AA-'; Outlook Stable;
--$13.3 million class E at 'A+'; Outlook Stable;
--$26.7 million class F at 'A'; Outlook Stable;
--$35.5 million class G at 'A-'; Outlook Stable;
--$31.1 million class H at 'BBB+'; Outlook Stable;
--$35.5 million class J at 'BBB'; Outlook Stable;
--$40 million class K at 'BBB-'; Outlook Stable;
--$17.8 million class L at 'BB+'; Outlook Stable;
--$8.9 million class M at 'BB'; Outlook Stable;
--$4.4 million class N at 'BB-'; Outlook Stable.
Fitch does not rate the following classes: $8.9 million class P, $4.4 million class Q, $ 13.3 million class S and $35.5 million class T.
The rating affirmations reflect minimal paydown and stable performance since issuance. As of the October 2008 distribution date, the transaction has paid down by 0.12% to $3.550 billion from $3.554 billion at issuance. Rating Outlooks reflect the likely direction of any rating changes over the next one to two years.
Fitch has identified eight loans of concern (2.2%), three of which are specially serviced loans (1.2%). Fitch expects losses will be absorbed by the non-rated class T. The largest loan of concern (0.7%), which is also specially serviced, is an office property in Orlando, FL. The loan was transferred to special servicing due to monetary default.
The second largest loan of concern (0.5%) is a retail property in Kailua-Kona, HI. The property has suffered from a decline in occupancy and a drop in tourism affecting releasing.
The third largest loan of concern (0.4%), which is also specially serviced loan, is a retail property located in Collier Township, PA. The property has suffered from a decline in occupancy and tenant bankruptcy.
Seven loans (26.6%) maintain Fitch investment grade shadow ratings. Fitch reviewed the most recent servicer provided operating statements: Tishman Speyer DC Portfolio II (11.3%), Extendicare Portfolio II (2.5%), Homer Building (2.5%), 2445 M Street (2.4%), 2000 Pennsylvania Avenue (2.4%) and 2100 Pennsylvania Avenue(1.9%).
The largest shadow rated loan is secured by the Tishman Speyer DC Portfolio II which consists of over 2 million square feet (sf) of office space in Washington D.C. and Northern Virginia. As of June 30, 2008 occupancy at the properties has decreased to 83% from 93% at issuance. Year-end (YE) 2007 servicer reported debt service coverage ratio (DSCR) on net operating income (NOI) was 1.53 times (x) compared to 2.08x at issuance. At origination, it was expected that approximately 40% of the leases will expire before 2010. Fitch continues to monitor the borrower's efforts to lease upcoming vacancies.
The second and third largest shadow rated loans (3.5% and 2.5%, respectively) are secured by portfolios of Extendicare healthcare facilities in various states. The servicer reported weighted-average DSCR on NOI as of YE 2007 was 2.47x and 2.33x, respectively compared to 2.77x and 2.33x at issuance.
The largest non-shadow rated loan (11.0%) is secured by an interest in the Sears tower office building in Chicago, IL. Occupancy as of YE 2007 was 78%, in-line with 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.
Fitch Ratings, New York
Michael Chakardjian, +1-212-908-0846
Adam Fox, +1-212-908-0869
Sandro Scenga, +1-212-908-0278 (Media Relations)
sandro.scenga@fitchratings.com
