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 is due to increasing credit enhancement from continued pay down (62.0% of the pool is fully amortizing) in addition to defeased collateral (14.9%).

As of the May 2015 distribution date, the pool's aggregate principal balance has been reduced by 98.2% to $31.0 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. Fitch has designated two loans (17.6%) as Fitch Loans of Concern. There are no specially serviced loans. Interest shortfalls are currently affecting the distressed classes K through M.

The largest loan in the pool is a multifamily property located in Largo, FL (26.7%). The property caters to residents 55 and over. The most recent servicer reported Debt Service Coverage Ratio (DSCR) and occupancy were 1.95x and 93.4%, respectively as of year-end (YE) 2014. The second largest loan (15.1%) is also a multifamily property, primarily student housing, located in Greenville, NC; Fitch considers this a Loan of Concern as DSCR declined to 0.88x as of September 2014 compared to 1.05x at YE 2013 due to a 15% increase in total operating expenses.

RATING SENSITIVITIES

The Rating Outlook on class J remains Stable due to the overall low leverage and continued amortization of the remaining loans in the pool. Further upgrades to class J may be limited due to the highly concentrated nature of the pool (17 loans remain) and secondary market location of the collateral. The distressed classes are subject to further downgrade should additional 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 as indicated:

--$19.7 million class J to 'BBBsf' from 'BBsf'; Outlook Stable.

Fitch has affirmed the following classes as indicated:

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

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

The class A-1, A-2, A-3, B, C, D, E, F, G and H certificates have paid in full. Fitch does not rate the class M certificate. Fitch previously withdrew the rating on the interest-only class IO certificate.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Global Structured Finance Rating Criteria (pub. 31 Mar 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=864268

U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria (pub. 10 Dec 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=812608

Additional Disclosures

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=985497

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/20150528006594/en/

Fitch Ratings
Primary Analyst:
Tiffany Pierce, +1-212-908-9107
Associate Director
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson:
Mary MacNeill, +1-212-908-0785
Managing Director
or
Sandro Scenga, +1-212-908-0278
Media Relations, New York
[email protected]

Source: Fitch Ratings

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