May 30, 2012 / 5:58 PM / 5 years ago

TEXT-Fitch affirms LB-UBS Commercial Mtg Trust 2001-C2

(The following statement was released by the rating agency)	
May 30 - Fitch Ratings has affirmed 11 classes of LB-UBS Commercial Mortgage
Trust 2001-C2 commercial mortgage pass-through certificates, series 2001-C2, as
follows:	
	
--$6.4 million class D notes at 'AAAsf'; Outlook Stable;	
--$13.2 million class E notes at 'AAAsf'; Outlook Stable;	
--$19.8 million class F notes at 'AA-sf'; Outlook Stable;	
--$16.5 million class G notes at 'BBBsf'; Outlook Stable;	
--$23.1 million class H notes at 'Bsf'; Outlook Negative;	
--$14.8 million class J notes at 'Csf'; RE 50%;	
--$3.4 million class K notes at 'Dsf'; RE 0%;	
--Class L notes at 'Dsf'; RE 0%;	
--Class M notes at 'Dsf'; RE 0%;	
--Class N notes at 'Dsf'; RE 0%;	
--Class P notes at 'Dsf'; RE 0%.	
	
As of the May 2012 remittance report the transaction balance has been reduced by	
92.6% to $97.3 million from $1.3 billion at issuance. Six loans remain in the 	
transaction, of which three loans (26.8%) are in special servicing. Fitch 	
modeled additional losses of 11.4% of the remaining pool for a total, including 	
losses to date, of 5% of the original balance. 	
	
Fitch stressed the cash flow of the remaining loans by applying a 5% reduction 	
to 2011 or 2010 fiscal year-end net operating income, and applying an adjusted 	
market cap rate between 8.1% and 9% to determine value. All the loans also 	
underwent a refinance test by applying an 8% interest rate and 30-year 	
amortization schedule to the stressed cash flow. Only one of the loans was 	
modeled to pay off at maturity, and could refinance to a debt-service coverage 	
ratio (DSCR) above 1.25x. While the credit enhancement of the class F through H 	
notes has improved, an upgrade is not warranted given the increasing 	
concentration and expected pool losses.	
	
The largest loan in the portfolio (66.1% of the remaining pool balance) is 	
secured by 1,168,681 square foot (sf) mall located 12 miles south east of 	
Oakland, CA. The loan has maintained high occupancy for the past few years but 	
has experienced declining income due to lower rental rates. Additionally, one of	
the original anchors recently vacated the property. The loan was not modeled to 	
experience a loss.	
	
The largest contributor to modeled losses is secured by three office buildings 	
(12.7%) that total 197,000 sf located 15 miles north of Atlanta, GA. The loan 	
transferred to special servicing on Feb. 2, 2010 for imminent default, and was 	
foreclosed on Sept. 7, 2010. The special servicer is marketing the property for 	
sale and working to maintain occupancy.	
	
The second largest contributor to modeled losses is a 106,000 sf office property	
(9.6%) in Carrolton, TX. The special servicer foreclosed on the property on June	
7, 2011 and is working to stabilize the asset.	
	
Fitch does not rate the class Q notes and previously withdrew the ratings on the	
X notes. Classes A-1, A-2, B, and C notes have paid in full.	
	
 (Caryn Trokie, New York Ratings Unit)

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