Fitch Downgrades 2 Classes of LB-UBS 2006-C1

NEW YORK--(BUSINESS WIRE)--Fitch Ratings has downgraded two classes of Lehman Brothers-UBS commercial mortgage pass- through certificates , series 2006-C1 as follows:

--$9.2 million class M to 'BB-' from 'BB';

--$9.2 million class N to 'B+' from 'BB-' .

In addition, Fitch has affirmed the following classes:

--$36.9 million class A-1 at 'AAA';

--$326 million class A-2 at 'AAA';

--$92 million class A-3 at 'AAA';

--$94 million class A-AB at 'AAA';

--$1.14 billion class A-4 at 'AAA';

--$245.6 million class A-M at 'AAA';

--$221 million class A-J at 'AAA';

--Interest-only class X-CL at 'AAA';

--Interest-only class X-CP at 'AAA';

--$15.4 million class B at 'AA+';

--$27.6 million class C at 'AA';

--$24.6 million class D at 'AA-';

--$18.4 million class E at 'A+';

--$21.5 million class F at 'A';

--$21.5 million class G at 'A-';

--$24.6 million class H at 'BBB+';

--$18.4 million class J at 'BBB';

--$24.6 million class K at 'BBB-';

--$12.3 million class L at 'BB+';

--$7 million class IUU-1 at 'BBB+';

--$2.6 million class IUU-2 at 'BBB';

--$3.6 million class IUU-3 at 'BBB-';

--$1.9 million class IUU-4 at 'BB+';

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

--$ 900,000 class IUU-6 at 'BB-';

--$1 million class IUU-7 at 'B+';

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

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

Fitch does not rate the $6.1 million class P; $6.1 million class Q; $6.1 million class S; $24.6 million class T; or, $6.9 million class IUU-10 certificates.

The downgrades reflect the expected losses on six assets that are in special servicing (1.14%). The rating affirmations are due to sufficient credit enhancement and stable performance of the non specially serviced loans. As of the August 2008 distribution date, the pool's aggregate certificate balance has decreased 1.10% to $2.45 billion from $2.48 billion at issuance.

There are currently six specially serviced assets (1.14%), five of which are real estate owned (REO) (0.60%) or in foreclosure (0.30%) and are currently being marketed for sale. Three of the specially serviced assets (0.60%) are multi-family properties that had the same borrower who was unable to properly manage the properties, in addition to the properties performance being negatively impacted by their locations in or near Detroit, MI. Current listing prices for these properties are well below the outstanding debt amounts, and losses are expected.

The largest specially serviced loan is the Country Inn and Suites located in Omaha, NE (0.25%). The loan is current and the borrower is looking for approval for a new guaranty to cover the completion of the mandated property improvements required by the Franchisor, and is seeking a nine-month forbearance to pay past due charges.

At issuance, Fitch shadow rated the following seven loans (33.1%): 1301 Avenue of the Americas; Triangle Town Center; Courtyard by Marriott portfolio; One Financial; Intel Corporate Center; U-Haul 26 portfolio; and, U-Haul SAC portfolio. These loans maintain their investment grade credit assessments based on stable performance and occupancy levels since issuance.

1301 Avenue of the Americas is the largest loan in the transaction (17.1%). The property was recently purchased and the loan was assumed by Paramount Group, Inc. from Harry Macklowe. The building is located in the heart of Manhattan's midtown office district within the Sixth Avenue/Rockefeller Center submarket. At issuance the property was 99.3% occupied. As of YE 2007, the servicer reported debt service coverage ratio (DSCR) and occupancy were 3.34x and 100%, respectively. The loan matures on Jan. 11, 2016.

The transaction has minimal near-term maturity risk as only 9.15% of the loans mature in 2010, and 72.6% mature in 2015-2016.

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.