Fitch Upgrades Two Classes of COMM 2004-LNB2

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has upgraded two classes and affirmed 10 classes of COMM Mortgage Trust 2004-LNB2 commercial mortgage pass-through certificates. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The upgrades reflect an increase in defeasance and stable performance of the remaining pool. There are five loans remaining, three are defeased (94.4% of the pool), including the largest (73.5%), second largest (13%), and third largest loans (4.6%); and one loan is in special servicing (3.1%). The three defeased loans mature in December 2018, March 2019, and January 2019, respectively. The one non-defeased, non-specially serviced loan (2.4%) continues to perform. Fitch modeled losses of 2.7% of the original pool balance, including 2.5% in realized losses to date.

As of the February 2016 distribution date, the pool's aggregate principal balance has been reduced by 91.9% to $78 million from $963.8 million at issuance including $23.98 million (2.5% of the original pool balance) in realized losses to date. Interest shortfalls are currently affecting classes K through P.

The specially-serviced loan is secured by a 59,933 square foot (sf) retail center located in Fort Worth, TX. The center is occupied by a mix of predominantly small local tenants with a few national tenants. The loan transferred to special servicing in January 2014 due to maturity default. Occupancy and DSCR was 65.4% and 1.03x, respectively, as of year-to-date (YTD) August 2014. Previously, the borrower filed bankruptcy on Dec. 1, 2014, which postponed a foreclosure sale. Per the special servicer, the foreclosure sale has closed and the loan became REO effective February 2, 2016. The asset manager is in the process of evaluating the asset.

The remaining performing loan (2.4% of the pool) is a single-tenant Walgreens store in College Station, TX. The Walgreens asset is a fully amortizing loan with a lease that is coterminous with the April 2028 maturity.

RATING SENSITIVITIES

The Stable rating Outlooks on classes C through J are the result of high credit enhancement due to pay down and defeasance. Downgrades to these classes are unlikely as they are fully covered by defeasance. Upgrades to classes J and K above the current rating are unlikely until there is further certainty of resolution on the specially serviced loan. In addition, the upgrade of class J is limited, as risk of interest shortfalls remains should the workout of the specially serviced asset become prolonged.

DUE DILIGENCE USAGE

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

Fitch has upgraded the following ratings:

--$10.8 million class H to 'AAAsf' from 'BBsf'; Outlook Stable;

--$4.8 million class J to 'Asf' from 'Bsf'; Outlook Stable.

Fitch has affirmed the following ratings:

--$6.8 million class C at 'AAAsf'; Outlook Stable;

--$19.3 million class D at 'AAAsf'; Outlook Stable;

--$8.4 million class E at 'AAAsf'; Outlook Stable;

--$9.6 million class F at 'AAAsf'; Outlook Stable;

--$10.8 million class G at 'AAAsf'; Outlook Stable;

--$6 million class K at 'Csf'; RE 90%;

--$1.3 million class L at 'Dsf'; RE 0%;

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

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

--$0 class O at 'Dsf'; RE 0%.

The class A-1, A-2, A-3, A-4 and B certificates have paid in full. Fitch does not rate the class P certificates. Fitch previously withdrew the ratings on the interest-only class X-1 and X-2 certificates.

Additional information is available at www.fitchratings.com.

Applicable Criteria

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=1000364

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1000364

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/20160302006555/en/

Fitch Ratings
Primary Analyst
Martin Nunnally
Associate Director
+1-212-908-0871
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Mary MacNeill
Managing Director
+1-212-908-0785
or
Media Relations
Sandro Scenga, +1 212-908-0278
[email protected]

Source: Fitch Ratings

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