Troubled NJ Loan Hurts Some of CMBS Deal's Ratings

DBRS has downgraded class K through class O of commercial mortgage-backed securities deal COMM2004-LNB3, citing projected liquidation losses from a delinquent Franklin Township, N.J., loan in special servicing. The Chicago office of the Canadian ratings agency said foreclosure proceedings involving the loan are expected to be completed by April 2009 and the property recently was appraised with an estimated "as is" value of $10.5 million and projected market values (after curing and deferred maintenance) of $12.5 million. Both of these values are "well below" the loan's outstanding balance of $22.4 million, DBRS said. The lowered ratings were as follows: class K to BB (low) from BB, class L to B (high) from BB (low), class M to B (low) from B (high), class N to CCC from B and class O to CCC from B (low). DBRS also said it "changed the trend on the BB (high) class J rating to Negative from stable" and confirmed the ratings of the remaining classes in the transaction.