Fitch Downgrades One Distressed Class of LBUBS 2004-C6

CHICAGO--()--Fitch Ratings has downgraded one class and affirmed seven classes of LB-UBS Commercial Mortgage Trust commercial mortgage pass-through certificates, series 2004-C6 (LBUBS 2004-C6). A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The downgrade of class H is a result of higher certainty of losses since Fitch's last rating action. Although credit enhancement for the non-distressed classes is high, affirmations are warranted given the significant concentrations within the pool. There are six loans remaining, three of which (76.8%) are in special servicing. Given the concentrations, Fitch used additional deterministic stress scenarios in its analysis.

Realized losses to date total $20.5 million. Interest shortfalls currently affect classes G through P. As of the April 2016 distribution date, the pool has paid down 94.3% since issuance. There is one fully defeased loan (12.4%) in the pool, with an outstanding principal balance of $9.5 million. It is scheduled to mature in July 2016.

The largest contributor to expected losses is Northridge Business Park (43.5%), which is a seven-building office property totaling 471,034 square feet (sf) in Atlanta, GA. The loan has been in special servicing since 2009 following the borrower's request for a loan modification. In February 2011, the property's largest tenant vacated the vast majority of its space, which represented 45% of net rentable area (NRA), upon lease expiration. Despite some recent leasing activity, occupancy has remained low (43% as of December 2015). The property has been real estate owned (REO) since February 2012 and the special servicer and is expected to be sold at auction July 2016.

The second highest contributor to expected losses is the Stockdale Tower (26.4%) loan. The loan is secured by an approximately 176,000 square foot (sf), office property in Bakersfield, CA. Chevron, the property's largest tenant which accounted for 33.5% of NRA vacated. This build-to-suit property also originally housed Shell Oil but transferred to special in late 2009 upon its departure. Despite this, occupancy rose to 87% by 2011, driven by new leases with several energy-related tenants. Year-end 2015 occupancy was 52.8%; however, multiple new tenants have signed leases at the property.

RATING SENSITIVITIES

The Rating Outlooks on classes F and G continue to be Stable. The ratings reflect the additional deterministic stresses which assumed higher losses on the specially serviced loans. No additional rating changes are expected due to increasing credit enhancement. Downgrades are possible with loan-level losses in excess of Fitch's stressed expectations. Conversely upgrades are possible with significant reduction in expected losses or realized losses. Distressed classes will be downgraded as losses are realized.

DUE DILIGENCE USAGE

No third-party due diligence was provided or reviewed in relation to this rating action.

Fitch has downgraded the following class as indicated:

--$11.8 million class H to 'Csf' from 'CCsf'; RE 70%.

Fitch has affirmed the following classes as indicated:

--$14.3 million Class F at 'BBBsf'; Outlook Stable;

--$11.8 million Class G at 'BBsf'; Outlook Stable;

--$8.4 million class J at 'Csf'; RE 0%;

--$16.8 million class K at 'Csf'; RE 0%;

--$1.7 million class L at 'Csf'; RE 0%;

--$6.7 million class M at 'Csf'; RE 0%;

--$5 million class N at 'Csf'; RE 0%.

The certificates for classes A-1 through E have paid in full. Fitch does not rate the class P, Q, S and T certificates. Fitch previously withdrew the ratings on the interest-only class XCL and XCP certificates.

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

Applicable Criteria

Criteria for Rating Caps and Limitations in Global Structured Finance Transactions (pub. 28 May 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748781

Exposure Draft: Counterparty Criteria for Structured Finance and Covered Bonds (pub. 14 Apr 2016)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=878412

Global Structured Finance Rating Criteria (pub. 06 Jul 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952

U.S. and Canadian Fixed-Rate Multiborrower CMBS Surveillance and U.S. Re-REMIC Criteria (pub. 13 Nov 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=873395

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1004698

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1004698

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

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Contacts

Fitch Ratings
Primary Analyst
Roxanna Tangen
Associate Director
+1-312-368-3116
Fitch Ratings, Inc.
70 West Madison Street
Chicago, IL 60602
or
Committee Chairperson
Britt Johnson
Managing Director
+1-312-606-2341
or
Media Relations:
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Roxanna Tangen
Associate Director
+1-312-368-3116
Fitch Ratings, Inc.
70 West Madison Street
Chicago, IL 60602
or
Committee Chairperson
Britt Johnson
Managing Director
+1-312-606-2341
or
Media Relations:
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com