Fitch Downgrades LBUBS 2001-C2

NEW YORK--(BUSINESS WIRE)--Fitch Ratings downgrades and revises the recovery rating of one class of LBUBS 2001-C2 commercial mortgage pass-through certificates, series 2001-C2, as indicated:

--$14.8 million class J to 'Csf/RR3' from 'CCCsf/RR1'.

Fitch also affirms the following classes and revises Rating Outlooks as indicated:

--$14.2 million class C at 'AAAsf/LS3'; Outlook Stable;

--$16.5 million class D at 'AAsf/LS5'; Outlook Stable;

--$13.2 million class E at 'AAAsf/LS5'; Outlook Stable;

--$19.8 million class F at 'AA-sf/LS5'; Outlook to Stable from Negative;

--$16.5 million class G at 'BBBsf/LS5'; Outlook to Stable from Negative;

--$23.1 million class H at 'Bsf/LS5'; Outlook Negative.

Fitch affirms the following class and revises the Recovery Rating as indicated:

--$4.9 million class K from 'Dsf/RR3' to 'Dsf/RR6'.

Classes L, M, N and P remain at 'Dsf/RR6' and have been fully depleted due to losses. Fitch does not rate classes X and Q, and classes A-1, A-2, and B have all paid in full.

The downgrade is the result of Fitch expected losses from specially serviced assets. Fitch modeled losses of 8.9% of the remaining pool.

As of the June 2011 remittance report, the transaction has paid down 90.7% to $122.9 million from $1.3 billion at issuance. Fourteen loans remain in the transaction, of which 12 (40.6%) are in special servicing.

Fitch stressed the cash flow of the remaining loans by applying a 5% reduction to the most recent fiscal year-end net operating income, and applying an adjusted market cap rate between 8.10% and 9.5% to determine value. All the loans also underwent a refinance test by applying an 8% interest rate and 30-year amortization schedule based on the stressed cash flow. All of the loans are modeled to pay off at maturity, and could refinance to a debt-service coverage ratio (DSCR) above 1.25 times (x).

The largest contributor to Fitch modeled losses is secured by three office buildings that total 197,000 square feet (sf) located 15 miles north of Atlanta, GA. The loan transferred to special servicing on Feb. 02, 2010 for imminent default, and was foreclosed on Sept. 07, 2010. The special servicer is marketing the property for sale and working to maintain occupancy.

The second largest contributor to Fitch modeled losses is a 106,000 sf office property in Carrolton, TX. A receiver has been appointed following the disappearance of the loan sponsor. The special servicer foreclosed on the property in June 2011 and is working to stabilize the asset.

Additional information on Fitch's criteria is available in the Nov. 17, 2010 report, 'Surveillance Methodology for U.S. Fixed-Rate CMBS Transactions', which is available at 'www.fitchratings.com' under the following headers:

Structured Finance >> CMBS >> Criteria Reports

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

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' (Aug. 13, 2010);

--'Surveillance Methodology for U.S. Fixed -Rate CMBS Transactions' (Nov. 17, 2010).

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=547326

Surveillance Methodology for U.S. Fixed-Rate CMBS Transactions

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=574208

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