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Rating Action:

Moody's Affirms 22 Classes and Downgrades 8 Classes of LB-UBS 2003-C7

18 Jun 2009

Approximately $9.9 Million of Structured Securities Affected

New York, June 18, 2009 -- Moody's Investors Service ("Moody's") affirmed the ratings of fifteen pooled classes and seven rake classes and downgraded seven pooled classes and one rake class of LB-UBS Commercial Mortgage Trust 2003-7. The downgrades are due to higher expected losses for the pool resulting from anticipated losses from specially serviced loans. The action is the result of Moody's on-going surveillance of commercial mortgage backed securities ("CMBS") transactions.

As of the May 15, 2009 distribution date, the transaction's aggregate principal balance has decreased by approximately 32% to $9.9 million from $1.46 billion at securitization. The Certificates are collateralized by 50 loans, ranging in size from less than 1% to 21% of the pool, with the top ten loans representing 69% of the pool. The pool includes four loans with investment grade underlying ratings, representing 42% of the pool. At securitization, a fifth loan, the Parklawn Building Loan ($100.0 million -- 10.1%) had an underlying rating. The loan no longer has an underlying rating due to a decline in performance and the loan is now analyzed as part of the conduit pool. Twelve loans, representing 17% of the pool, have defeased and are collateralized by U.S. Government securities.

Five loans, representing 4.0% of the pool, are on the master servicer's watchlist. The watchlist includes loans which meet certain portfolio review guidelines established as part of the Commercial Mortgage Securities Association's monthly reporting package. As part of our ongoing monitoring of a transaction, Moody's reviews the watchlist to assess which loans have material issues that could impact performance.

Two loans have been liquidated from the pool resulting in a realized loss of approximately $603,597. Currently, there are three loans, representing 17.0%, in special servicing. Two of the specially serviced loans, representing 14.0% of the pool, are secured by malls owned by General Growth Properties ("GGP"). These properties were included in GGP's April 16, 2009 Chapter 11 bankruptcy filing and the loans were subsequently transferred to special servicing. At this point, Moody's does not anticipate losses from these loans. Moody's expects a $10.4 million loss (32% loss severity) for the third specially serviced loan.

Moody's was provided with full-year 2007 and partial-year 2008 operating results for 97% and 78% of the pool, respectively. Moody's weighted average loan to value ("LTV") ratio for the conduit component is 90% compared to 95% at Moody's prior full review in December 2007.

The largest loan with an underlying rating is the Bank of America Building Loan ($206.7 million -- 21.0%), which represents the pooled portion of a $212.5 million mortgage loan. The loan is secured by a 1.1 million square foot office building located in midtown Manhattan. The largest tenant is Bank of America Corporation (Moody's senior unsecured rating A2 - stable outlook), which leases 19% of the net rentable area ("NRA") through December 2013. The non-pooled portion of the loan ($5.8 million) is held within the trust and serves as security for non-pooled Class BA. The property was 89% occupied as of February 2009 compared to 93% at last review and 100% at securitization. Performance has declined due to reduced rental revenues. Moody's current underlying rating of the pooled and non-pooled loan is Baa3 compared Baa1 at last review.

The second largest loan with an underlying rating is the Valley Plaza Loan ($95.0 million -- 9.6%), which is secured by a 1.2 million square foot super regional mall located in Bakersfield, California. The center is anchored by Sears, J.C. Penney and Macy's. A fourth anchor, Gottschalks vacated the center after its bankruptcy. The loan sponsor is GGP. Moody's analysis reflects a stressed cash flow due to concerns about the weak retail environment and potential impact of GGP's bankruptcy on property performance. Moody's current underlying rating is Baa1 compared to A3 at last review.

The third largest loan with an underlying rating is the Westfield Shoppingtown Santa Anita Loan ($69.0 million -- 7.0%), which represents the senior portion of a $90.7 million mortgage loan. The loan is secured by a 1.3 million square foot regional shopping center located approximately 18 miles east of Los Angeles in Arcadia, California. The center is anchored by J.C. Penney, Macy's and Nordstrom. The $21.7 junior note is held outside the trust. The property is also encumbered by a $75.5 million B Note, which is also held outside the trust. Property performance has been stable. Moody's current underlying rating is Aaa, the same as at last review.

The fourth largest loan with an underlying rating is Visalia Mall Loan ($41.4 million -- 4.2%), which is secured by a 440,000 square foot regional center located in Visalia, California. The center is anchored by J.C. Penney, which is not part of the security. The second anchor, Gottschalks vacated the center after its bankruptcy. Performance has declined due to a decline in rental revenues. The loan sponsor is GGP. Moody's analysis reflects a stressed cash flow due to concerns about the weak retail environment and potential impact of GGP's bankruptcy on performance. Moody's current underlying rating is Baa1 compared to Aa3 at last review.

The loan that had an underlying rating at securitization is the Parklawn Building Loan ($100.0 million -- 10.1%), which is secured by a 1.4 million square foot office building located in Rockville, Maryland. The property is 98.0% occupied by the U.S. Department of Health and Human Services through July 2010. The loan matures in August 2010. Although property performance has been stable, Moody's is concerned about the near-term refinance risk given the lease rollover of the entire building and the current weak Rockville office market. Moody's analysis reflects a dark lit valuation, assuming that the tenant vacates at lease expiration and the entire building has to be retenanted. Moody's current LTV is 97% compared to 67% at last review.

The top three conduit exposures represent 11.9% of the pool. The largest conduit loan is the Moorestown Mall Loan ($58.1 million -- 5.9%), which is secured by a 1.1 million square foot regional mall located in Moorestown, New Jersey. The mall is anchored by Sears, Boscov's, Lord & Taylor and Macy's. Moody's LTV is 85% compared to 81% at last review and 88.0% at securitization.

The second largest conduit exposure is the Shops at Gainey Village Loan ($37.2 million - 3.8%), which is secured by a 138,000 square foot unanchored shopping center located in Scottsdale, Arizona. The property was 94% leased as of January 2009 compared to 83% at last review. Property performance has declined due to increased expenses. Moody's LTV is 95% compared to 92% at last review.

The third largest conduit exposure is the Gotham Plaza ($22.1 million -- 2.3%), which is secured by an office building located in New York City. The property is 100% occupied. Moody's LTV is 67% compared to 75% at last review.

Moody's rating action is as follows:

-Class A-2, $137,852,097 affirmed at Aaa; previously affirmed at Aaa on 12/12/07

-Class A-3, $187,000,000 affirmed at Aaa; previously affirmed at Aaa on 12/12/07

-Class A-4, $355,336,000 affirmed at Aaa; previously affirmed at Aaa on 12/12/07

-Class A-1B, $79,517,882 affirmed at Aaa; previously affirmed at Aaa on 12/12/07

-Class X-CL, Notional, affirmed at Aaa; previously affirmed at Aaa on 12/12/07 12/12/07

-Class X-CP, Notional, affirmed at Aaa; previously affirmed at Aaa on 12/12/07

-Class X-SU, Notional, affirmed at Aaa; previously upgraded to Aaa from Aa3 12/12/07

-Class B, $18,090,000 affirmed at Aaa; previously affirmed at Aaa on 12/12/07

-Class C, $21,707,000 affirmed at Aaa; previously affirmed at Aaa on 12/12/07

-Class D, $16,281,000 affirmed at Aa2; previously affirmed at Aa2 on 12/12/07

-Class E, $16,280,000 affirmed at Aa3; previously affirmed at Aa3 on 12/12/07

-Class F, $12,663,000 affirmed at A2; previously affirmed at A2 on 12/12/07

-Class G, $23,516,000 affirmed at A3; previously affirmed at A3 on 12/12/07

-Class H, $21,708,000 affirmed at Baa1; previously affirmed at Baa1 on 12/12/07

-Class J, $14,471,000 affirmed at Baa2; previously affirmed at Baa2 on 12/12/07

-Class K, $14,472,000 downgraded to Ba1 from Baa3; previously affirmed at Baa3 on 12/12/07

-Class L, $12,663,000 downgraded to Ba3 from Ba1; previously affirmed at Ba1 on 12/12/07

-Class M, $7,235,000 downgraded to B1 from Ba2; previously affirmed at Ba2 on 12/12/07

-Class N, $3,618,000 downgraded to B2 from Ba3; previously affirmed at Ba3 on 12/12/07

-Class P, $3,618,000 downgraded to B3 from B1; previously affirmed at B1 on 12/12/07

-Class Q, $3,618,000 downgraded to Caa2 from B2; previously affirmed at B2 on 12/12/07

-Class S, $3,618,000 downgraded to Caa3 from B3; previously affirmed at B3 on 12/12/07

-Class BA, $5,800,000 downgraded to Baa3 from Baa1; previously affirmed at Baa1 on 12/12/07

-Class SU-1, $1,300,000 affirmed at Aaa; previously upgraded to Aaa from Aa3 12/12/07

-Class SU-2, $1,470,000 affirmed at Aaa; previously upgraded to Aaa from A1 12/12/07

-Class SU-3, $1,730,000 affirmed at Aaa; previously upgraded to Aaa from A2 12/12/07

-Class SU-4, $1,270,000 affirmed at Aaa; previously upgraded to Aaa from A3 12/12/07

-Class SU-5, $1,355,000 affirmed at Aaa; previously upgraded to Aaa from Baa1 12/12/07

-Class SU-6, $1,625,000 affirmed at Aaa; previously upgraded to Aaa from Baa2 12/12/07

-Class SU-7, $2,250,000 affirmed at Aaa; previously upgraded to Aaa from Baa3 12/12/07

Moody's monitors transactions on both a monthly basis through two sets of quantitative tools: MOST® (Moody's Surveillance Trends) and CMM on Trepp, and a periodic basis through a full review. Moody's prior full review is summarized in a press release dated July 23, 2007.

The principal methodology used in rating and monitoring this transaction is "CMBS: Moody's Approach to Rating Fusion Transactions" dated April 19, 2005, which can be found at www.moodys.com in the Credit Policy & Methodologies directory, in the Ratings Methodologies subdirectory. Other methodologies and factors that may have been considered in the process of rating this issue can also be found in the Credit Policy & Methodologies directory.

New York
Sandra Ruffin
VP - Senior Credit Officer
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Michael M. Gerdes
Senior Vice President
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's Affirms 22 Classes and Downgrades 8 Classes of LB-UBS 2003-C7
No Related Data.
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