LB-UBS Commercial Mortgage Trust had nine classes of its commercial mortgage pass-through certificates series 2007-C2 downgraded to D by Fitch Ratings, as the bonds have incurred principal write-down.
The bonds were all previously rated either CCCsf, CCsf, or Csf, which indicates that the New York-based ratings agency expected a default.
According to Fitch, the downgrades occurred due to losses incurred on classes A-J as a result of the liquidation of 21 specially serviced loans. Orix Capital Markets, the special servicer for these loans, placed the foreclosed real estate for sale as part of a marketing campaign focused on
The sales generated nearly $462 million in net proceeds, therefore resulting in approximately $310 million in losses, a July 2013 remittance report revealed.
In the prior month, the same 21 loans had an aggregate appraisal reduction of $370 million.
As of this month, the pools principal balance has been reduced by 41.2%, which includes 12.04% in realized loss to $2.1 billion compared to $3.55 billion at issuance.
Fitch said that following the liquidation, only two loans—representing 0.32% of the pool—are still in special servicing.
When the last rating action took place in September 2012, the largest contributors to modeled losses were the One Alliance Center (60% loss severity), the Duke Cleveland East Suburban Portfolio (60% modeled loss) and the Bethany Maryland Portfolio loans (42% modeled loss).
But after the liquidations, the largest actual losses were Duke Cleveland (58% loss severity), Bethany Maryland Portfolio (30% loss severity) and One Alliance Center (25%).
Within the next 60 days, Fitch plans on conducting a full review of the transaction, including an analysis of the remaining loans and collateral discussions with the loan servicers.
