CHICAGO--(BUSINESS WIRE)--Fitch Ratings has upgraded two classes and affirmed six 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 upgrades of classes F and G reflect the repayment of 37 loans in the last 12 months, including several loans that were previously in special servicing. No new loans have transferred to special servicing since Fitch's last rating action, and Fitch's base case loss estimates for the remaining specially serviced loans remain largely unchanged.
The affirmations of classes H through N are based on the continued expectation that they will incur realized losses with the disposition of the loans currently in special servicing. There are six loans left in the pool as of the June 2015 remittance, three of which are in special servicing(76%), including the two largest loans.
Fitch modelled losses of 54.8% of the remaining pool. Realized trust loss to date totals $20.6 million. Interest shortfalls currently reach up to class G, following the repayment of unpaid interest to class F with the May remittance. As of the June 2015 distribution date, the pool has experienced 92.4% of collateral reduction since issuance. Fitch has designated four loans (83.7% of the pool) Fitch Loans of Concern, which includes the three loans in special servicing as well as the single loan on the servicer's watchlist. There is one fully defeased loan(12.4%) in the pool, with an outstanding principal balance of $9.6 million. It is scheduled to mature in July 2016.
The largest contributor to expected losses is Northridge Business Park (43% of the pool), which is a seven-building office property totalling 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 gave back the large majority of its space, which represented 45% of net rentable area (NRA), upon lease expiration. Despite some recent leasing activity, occupancy has remained low (41.9% as of April 2015). The property has been real estate owned (REO) since February 2012 and the special servicer is actively working to stabilize the asset, which is not currently listed for sale.
The next largest contributor to expected losses is Stockdale Tower (26.1% of the pool), an eleven-story, Class A office building in Bakersfield, CA. Following a payment default, the loan transferred to special servicing in December 2009 and became REO in February 2013. The property was originally developed as the headquarters for a single tenant (Shell Oil). Since transferring to special servicing, several improvements have been made to the property and it now functions as a multi-tenant office building, although most tenants are still oil industry related. According to an April 2015 rent roll, it was 90.4% occupied. The sale strategy for the asset remains unclear at this time.
Rating Outlooks on classes F and G are Stable as no additional rating changes are expected due to increasing credit enhancement, which offsets concerns with concentration and the propensity for interest shortfalls. 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 upgraded the following classes as indicated:
--$14.3 million Class F to 'BBBsf' from 'BBsf'; Outlook Stable
--$11.8 million Class G to 'BBsf' from 'B-sf'; Outlook to Stable from Negative.
Fitch has affirmed the following classes as indicated:
--$11.8 million class H at 'CCsf'; RE 70%
--$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.
Global Structured Finance Rating Criteria (pub. 31 Mar 2015)
U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria (pub. 10 Dec 2014)
Dodd-Frank Rating Information Disclosure Form