NEW YORK--(BUSINESS WIRE)--Fitch Ratings has downgraded four classes and affirmed one class of LB-UBS commercial mortgage trust pass-through certificates series 2003-C5. A detailed list of rating actions follows at the end of this press release.
KEY RATING DRIVERS
The downgrades to classes K through N reflect the pool's high concentration and uncertain recoveries of the remaining loans. There are three loans remaining, the smallest of which is defeased (15.4%) and has an anticipated repayment date (ARD) of April 2018. As of the May 2015 distribution date, the pool's aggregate principal balance has been reduced by 95.9% to $57.9 million from $1.41 billion at issuance. The pool has experienced $5.7 million (0.4% of the original pool balance) in realized losses to date. Interest shortfalls are currently affecting classes L through T.
The largest asset is a 568,657 square foot (sf) mall located in Scranton, PA (64.1% of the pool). The loan was transferred to the special servicer in March 2010 due to imminent default and matured without repayment in July 2013. Several tenants have vacated over the last few years, including one of the anchors, Bon-Ton, as well as the movie theater. The asset became REO as of December 2014. As of Feb. 2015, the servicer reported occupancy and debt service coverage ratio (DSCR) were 61% and 0.17x, respectively. Further, the asset's total trust exposure is likely to increase further in the event a resolution of the asset is not completed in the near term.
The second largest loan (20.5% of the pool) is secured by a 256,384 sf single-tenant, office property located in Buffalo Grove, IL. The loan passed its anticipated repayment date (ARD) of June 2013 without repayment, its final maturity date is June 2033. The single tenant, Siemens has a lease expiration in October 2016, prior to maturity. No update on the leasing status has been received. The servicer reported DSCR was 1.69x as of year-end 2014.
The Rating Outlook on class J remains Stable due to increasing credit enhancement from continued pay down and the high percentage of defeased collateral. The class is capped at 'A' as it has previously incurred interest shortfalls. Fitch will not assign or maintain 'AAAsf' or 'AAsf' ratings for notes that it believes have a high level of vulnerability to interest shortfalls or deferrals, even if permitted under the terms of the documents (see 'Criteria for Rating Caps and Limitations in Global Structured Finance Transactions', dated May 28, 2014, for more details).
The Negative Outlook on Class K reflects the uncertain resolution of the largest loan and the risk that the second largest loan's single tenant elects not to renew its lease. The distressed classes are subject to further downgrade should additional losses be realized.
Fitch downgrades the following classes as indicated:
--$14.0 million class K to 'BBsf' from 'BBB-sf'; Outlook Negative;
--$12.3 million class L to 'Csf' from 'B'; RE 50%;
--$5.3 million class M to 'Csf' from 'CCCsf'; RE 0%;
--$3.5 million class N 'Csf' from 'CCCsf'; RE 0%
Fitch affirms the following class as indicated:
--$402 thousand class J at 'Asf; Outlook Stable.
Fitch does not rate classes P, Q, S, and T and classes A-1, A-2, A-3, A-4, B, C, D, E, F, G, H and X-CP have paid in full. Fitch previously withdrew the rating on the interest-only class X-CL certificates.
Additional information on Fitch's criteria for analyzing U.S. CMBS transactions is available in the Dec. 10, 2014 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' (March 31, 2015);
--'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria' (Dec. 10, 2014);
--'Criteria for Rating Caps and Limitations in Global Structured Finance Transactions' (May 28, 2014).
Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria
U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria
Criteria for Rating Caps and Limitations in Global Structured Finance Transactions