Fitch Affirms LB-UBS 2003-C1

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has affirmed five classes of LB-UBS Commercial Mortgage Trust commercial mortgage pass-through certificates series 2003-C1. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The affirmations reflect the pool's concentration with only five loans remaining and potential performance volatility stemming from increased vacancy at the property securing the second largest loan (40.9% of the current balance). As of the October distribution date, the pool's aggregate principal balance has been reduced by 97.9% to $28.4 million from $1.4 billion at issuance. Interest shortfalls are currently affecting classes Q thru T.

Large Tenant Departure: The second largest loan (40.9%) in the pool is secured by a 100,283 sf retail center located in Fort Worth, TX. Per servicer reporting, the property was 90% occupied as of year-end (YE) 2015 with a net operating income (NOI) debt service coverage ratio (DSCR) of 1.55x. Upon their lease expiration in July 2016, Staples (17.5% of net rentable area) vacated their space at the property. Additionally, leases on 19.8% of the net rentable area (NRA) are scheduled to expire in 2017. According the servicer, the borrower is currently working to lease up the vacant Staples space. Fitch will continue to monitor the loan for leasing updates and further performance deterioration.

Property Type and Geographic Concentrations: All five loans remaining in the pool are secured by retail properties. The two largest loans in the pool (85.7%) are secured by properties in the Dallas/Fort Worth MSA.

Single-Tenant Risk: Three of the remaining loans (14.2%) are all secured by single-tenant retail properties located in Compton, CA, Hackettstown, NJ and Franklin, NH. All are fully-occupied by Rite Aid (currently rated 'B' by Fitch) through triple-net (NNN) leases. The leases with Rite Aid are all set to expire before the loans mature in August 2021. The Rite Aid at the property located in Hackettstown, NJ (4.4%) closed April 2014 and is currently being sublet to the Salvation Army. Per servicer reporting, the borrower on the property in Compton, CA (6.2%) did not make full tax payments on the property and the master servicer was forced to advance $46,761.81 on their behalf. Attempts to contact the borrower have gone unanswered and the master servicer has indicated that tax escrow accounts may be sprung to collect for the shortage and for future tax payments. All of the subject loans are fully-amortizing.

RATING SENSITIVITIES

The Rating Outlooks on all classes remain Stable. Further upgrades are unlikely until there is an indication that the two largest loans in the pool will be refinanced. Downgrades are not likely as the loans benefit from amortization.

USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G-10

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

Fitch has affirmed the following ratings:

--$4.3 million class M at 'AAAsf'; Outlook Stable;

--$6.9 million class N at 'BBBsf'; Outlook Stable;

--$10.3 million class P at 'BBsf'; Outlook Stable;

--$5.1 million class Q at 'Bsf'; Outlook Stable;

--$1.8 million class S at 'Dsf'; RE 0%.

The class A-1, A-2, A-3, A-4, A-1B, B, C, D, E, F, G, H, J, K, L, and XCP certificates have all paid in full. Fitch does not rate the class T certificates. Fitch previously withdrew the rating on the interest-only class XCL certificates.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Criteria for Country Risk in Global Structured Finance and Covered Bonds (pub. 26 Sep 2016)

https://www.fitchratings.com/site/re/881269

Criteria for Rating Caps and Limitations in Global Structured Finance Transactions (pub. 16 Jun 2016)

https://www.fitchratings.com/site/re/882401

Global Structured Finance Rating Criteria (pub. 27 Jun 2016)

https://www.fitchratings.com/site/re/883130

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

https://www.fitchratings.com/site/re/873395

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1013882

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1013882

Endorsement Policy

https://www.fitchratings.com/regulatory

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View source version on businesswire.com: http://www.businesswire.com/news/home/20161027006901/en/

Fitch Ratings
Primary Analyst
Zachary Johnson, +1-646-582-4815
Associate Director
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Christopher Bushart, +1-212-908-0606
Senior Director
or
Media Relations, New York
Sandro Scenga, +1-212-908-0278
[email protected]

Source: Fitch Ratings

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