Fitch Upgrades LB 1998-C1

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has upgraded one class and affirmed two classes of Lehman Brothers (LB) Commercial Mortgage Trust's commercial mortgage pass-through certificates series 1998-C1. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The upgrade to class J reflects the class's increasing credit enhancement from loan payoffs and continuing amortization (64.1% of the pool is fully amortizing); as well as the percentage of defeased collateral (14.8%). The portfolio is concentrated with only 16 loans remaining; the largest loan comprises 35.9% of the collateral. There are limited near-term maturities (68.2% matures between 2021 and 2023).

While the credit enhancement to class J is high relative to modeled expected loss, Fitch capped the ratings based on the pool's concentration. Fitch designated one Fitch Loan of Concern (19.5%). There are no specially serviced loans. Interest shortfalls are currently affecting the distressed classes K through M.

As of the April 2016 distribution date, the pool's aggregate principal balance has been reduced by 98.7% to $22 million from $1.73 billion at issuance. Fitch modeled losses of 4.3% of the remaining pool; expected losses on the original pool balance total 3.2%, including $53.4 million (3.1% of the original pool balance) in realized losses to date.

The largest loan in the pool is a multifamily property located in Largo, FL (35.9%). The property caters to residents 55 and over. The most recent servicer reported Debt Service Coverage Ratio (DSCR) and occupancy are 1.89x and 93.3%, respectively as of year-end (YE) 2015. The second largest loan (19.5%) is also a multifamily property, primarily student housing, located in Greenville, NC. Fitch considers this a Loan of Concern as DSCR has remained low at a reported 1.03x as of YE 2015.

RATING SENSITIVITIES

The Rating Outlook on class J remains Stable as no rating changes are anticipated at this time. Further upgrades should be limited due to the concentrated nature of the pool. Downgrades are possible should pool performance decline or further losses be realized.

DUE DILIGENCE USAGE

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

Fitch has upgraded the following class:

--$10.6 million class J to 'Asf' from 'BBBsf'; Outlook Stable.

Fitch has affirmed the following classes:

--$11.4 million class K at 'Dsf'; RE 35%;

--$0 class L at 'Dsf'; RE 0%;

Classes A-1, A-2, A-3, B, C, D, E, F, G and H were paid in full.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Counterparty Criteria for Structured Finance and Covered Bonds (pub. 14 May 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=744158

Global Structured Finance Rating Criteria (pub. 06 Jul 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952

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

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=873395

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1003655

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1003655

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

View source version on businesswire.com: http://www.businesswire.com/news/home/20160429005887/en/

Fitch Ratings
Primary Analyst
Tiffany Pierce
Associate Director
+1-212-908-9107
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Mary MacNeill
Managing Director
+1-212-908-0785
or
Media Relations:
Alyssa Castelli, +1 212-908-0540
[email protected]
Elizabeth Fogerty, +1 212-908-0526
[email protected]

Source: Fitch Ratings

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