Fitch Upgrades 4 Classes of LB-UBS 2002-C7

CHICAGO--()--Fitch Ratings has upgraded four classes and affirmed two classes of LB-UBS Commercial Mortgage Trust, series 2002-C7, commercial mortgage pass-through certificates. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The upgrades and affirmations are the result of increasing credit enhancement and continued paydown despite the pool's concentration as only 10 of the original 115 loans remain. The overall pool performance has been stable since Fitch's last rating action.

As of the March 2014 distribution date, the pool's aggregate principal balance has been reduced by 97.4% to $31 million from $1.19 billion at issuance. Per the servicer reporting, two loans (23.7% of the pool) are defeased, including the second largest loan in the pool (20.7%) which has an anticipated repayment date (ARD) of 2017 and a final maturity date of 2032. Interest shortfalls are currently affecting classes S through U. Fitch has designated four loans (38.1%) as Fitch Loans of Concern all of which are specially serviced real estate owned (REO) assets. Of the six remaining non specially serviced loans, three loans have anticipated repayment dates of 2012 (9.52%), 2015 (19.5%) and 2017 (20.7%). The loan that has passed its ARD of 2012 continues to remain current and has a final maturity date of 2032. The remaining three loans are fully amortizing loans with maturity dates in 2019 (3%) and 2020 (9.2%).

The largest contributor to expected losses and the largest concentration in the pool is a 95,527 square foot (sf) REO retail center located in Houston, TX. The loan was transferred to special servicing in October 2010 and foreclosure was completed in June 2011. As of February 2014 the property was 61% occupied with an additional tenant set to take occupancy in May 2014. The new tenant will occupy 19,085 sf which will bring the occupancy rate of the property to 79%. Fitch anticipates losses upon the liquidation of the asset based on recent property valuations obtained by the servicer.

RATING SENSITIVITY

The ratings on classes M, N and P are expected to remain stable. While credit enhancement remains high and recovery is likely, there are continuing concerns with increasing concentration, adverse selection, and limited near-term paydown given the remaining loans' longer terms. Class T will remain at 'Dsf' as losses have already been realized.

Fitch upgrades the following classes and assigns Rating Outlooks and REs as indicated:

--$2.2 million class M to 'AAAsf' from 'BBB-sf', Outlook Stable;

--$5.9 million class N to 'BBBsf' from 'BBsf', Outlook to Stable from Negative;

--$8.9 million class P to 'Bsf' from 'CCCsf', assigned Outlook Stable;

--$4.5 million class Q to 'CCCsf' from 'Csf', RE 100%.

Fitch affirms the following classes and assigns REs as indicated:

--$3 million class S at 'Csf', RE 100%;

--$6.6 million class T at 'Dsf', RE 25%.

The class A-1, A-2, A-3, A-4, A-1b, B, C, D, E, F, G, H, J, K and L certificates have paid in full. Fitch does not rate the class U certificates. Fitch previously withdrew the ratings on the interest-only class X-CL and X-CP certificates.

Additional information on Fitch's criteria for analyzing U.S. CMBS transactions is available in the Dec. 11, 2013 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

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

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' (May 24, 2013);

--'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria' (Dec. 11, 2013).

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=708661

U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=724961

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=826766

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE '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 MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Contacts

Fitch Ratings
Primary Analyst
Britt Johnson, +1-312-606-2341
Senior Director
Fitch Ratings, Inc.
70 West Madison
Chicago, IL 60602
or
Committee Chairperson
Mary MacNeill, +1-212-908-0785
Managing Director
or
Media Relations
Sandro Scenga, New York, +1-212-908-0278
sandro.scenga@fitchratings.com

Sharing

Contacts

Fitch Ratings
Primary Analyst
Britt Johnson, +1-312-606-2341
Senior Director
Fitch Ratings, Inc.
70 West Madison
Chicago, IL 60602
or
Committee Chairperson
Mary MacNeill, +1-212-908-0785
Managing Director
or
Media Relations
Sandro Scenga, New York, +1-212-908-0278
sandro.scenga@fitchratings.com