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By clicking “I AGREE” [at the end of this document], you indicate that you understand and intend these terms and conditions to be the legal equivalent of a signed, written contract and equally binding, and that you accept such terms and conditions as a condition of viewing any and all Moody’s inform​ation that becomes accessible to you [after clicking “I AGREE”] (the “Information”).   References herein to “Moody’s” include Moody’s Corporation, Inc. and each of its subsidiaries and affiliates.

 

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Rating Action:

Moody's Affirms Three, Downgrades One Classes of LBUBS 2002-C2

13 Dec 2013

Approximately $11 Million of Structured Securities Affected

NOTE: On December 31, 2013 the Press Release was revised as follows: Moody’s omitted to reference the Primary Methodology that was used in the rating action. The LOSS AND CASH FLOW ANALYSIS header and section is deleted in its entirety and replaced with the following: METHODOLOGY UNDERLYING THE RATING ACTION The principal methodology used in this rating was 'Moody’s Approach to Rating CMBS Large Loan/Single Borrower Transactions' published in July 2000. Please see the Credit Policy page on www.moodys.com for a copy of this methodology. Revised release follows:

New York, December 13, 2013 -- Moody's Investors Service (Moody's) affirmed the ratings of three classes and downgraded one class of LB-UBS Commercial Mortgage Trust 2002-C2, Commercial Mortgage Pass-Through Certificates, Series 2002-C2 as follows:

Cl. Q, Affirmed Caa3 (sf); previously on Feb 28, 2013 Affirmed Caa3 (sf)

Cl. S, Affirmed C (sf); previously on Feb 28, 2013 Affirmed C (sf)

Cl. T, Affirmed C (sf); previously on Feb 28, 2013 Affirmed C (sf)

Cl. X-CL, Downgraded to C (sf); previously on Feb 28, 2013 Downgraded to Caa3 (sf)

RATINGS RATIONALE

The ratings of the three P&I classes are consistent with Moody's expected loss and thus are affirmed.

The downgrade of the IO Class, Class X-CL, is due to a decline in the credit performance (or the weighted average rating factor or WARF) of its referenced classes. The IO class is also impacted by interest shortfalls.

Moody's rating action reflects a base expected loss of 52.7% of the current balance compared to 51.3% at Moody's prior review. Moody's base expected loss plus realized losses is now 1.7% of the original pooled balance compared to 1.6% at the prior review. Moody's provides a current list of base expected losses for conduit and fusion CMBS transactions on moodys.com at http://v3.moodys.com/viewresearchdoc.aspx?docid=PBS_SF215255.

FACTORS THAT WOULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING

The performance expectations for a given variable indicate Moody's forward-looking view of the likely range of performance over the medium term. Performance that falls outside the given range may indicate that the collateral's credit quality is stronger or weaker than Moody's had previously anticipated. Factors that may cause an upgrade of the ratings include significant loan paydowns or amortization, an increase in the pool's share of defeasance or overall improved pool performance. Factors that may cause a downgrade of the ratings include a decline in the overall performance of the pool, loan concentration, increased expected losses from specially serviced and troubled loans or interest shortfalls.

METHODOLOGY UNDERLYING THE RATING ACTION

The principal methodology used in this rating was 'Moody’s Approach to Rating CMBS Large Loan/Single Borrower Transactions' published in July 2000. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

Moody's utilized a loss and recovery approach in rating the P&I classes in this deal since 97% of the pool is in special servicing and the other 3% is fully defeased. There are no performing conduit loans. In this approach, Moody's determines a probability of default for each specially serviced loan that we expect will generate a loss and estimates a loss given default based on a review of broker's opinions of value (if available), other information from the special servicer, available market data and Moody's internal data. The loss given default for each loan also takes into consideration repayment of servicer advances to date, estimated future advances and closing costs. Translating the probability of default and loss given default into an expected loss estimate, Moody's then applies the aggregate loss from specially serviced loans to the most junior class(es) and the recovery as a pay down of principal to the most senior class(es).

DESCRIPTION OF MODELS USED

Moody's review utilized the excel-based IO calculator, which uses the following inputs to calculate the proposed IO rating based on the published methodology: original and current bond ratings and credit assessments; original and current bond balances grossed up for losses for all bonds the IO(s) reference(s) within the transaction; and IO type as defined in the published methodology. The calculator then returns a calculated IO rating based on both a target and mid-point for consideration by the rating committee.

Moody's uses a variation of Herf to measure diversity of loan size, where a higher number represents greater diversity. Loan concentration has an important bearing on potential rating volatility, including risk of multiple notch downgrades under adverse circumstances. The credit neutral Herf score is 40. The pool has a Herf of 2, the same as at prior review.

DEAL PERFORMANCE

As of the November 18, 2013 distribution date, the transaction's aggregate certificate balance has decreased by 99% to $11 million from $1.2 billion at securitization. The Certificates are collateralized by three mortgage loans ranging in size from 3% to 52% of the pool. One loan, representing 3% of the pool, has defeased and is secured by US Government securities.

No loans are on the master servicer's watchlist. The watchlist includes loans which meet certain portfolio review guidelines established as part of the CRE Finance Council (CREFC) 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.

Fourteen loans have been liquidated at a loss from the pool, resulting in an aggregate realized loss of $15 million (18% loss severity on average). The largest specially serviced loan is the South Rivers Market Loan ($5.5 million -- 52.2 % of the pool), which is secured by an 81,000 square foot (SF) retail property located in Greensville, Mississippi. The loan transferred to special servicing in August 2009 due to payment default after the property's anchor tenant vacated the property. The property became real estate owned (REO) in March 2011. A replacement anchor took occupancy in March 2011 and the property was 88% leased as of October 2013 compared to 89% as of December 2012. The servicer is currently looking to sell the property.

The second largest loan in special servicing is the Square 67 Shopping Center Loan ($4.7 million -- 44.8% of the pool), which is secured by a 183,000 SF retail property in Dallas, Texas. The loan transferred to special servicing in April 2012 due to maturity default and the borrower's bankruptcy filing. The property became REO in October 2013. The collateral is 52% leased as of November 2013 compared to 94% at last review. The servicer is currently evaluating loan resolution strategies.

The servicer has recognized an aggregate $4.1 million appraisal reduction for the two specially serviced loans. Moody's has estimated an aggregate $5.6 million loss (54% average loss severity) for the specially serviced loans.

There is no conduit level information because the pool does not have any remaining conduit loans.

REGULATORY DISCLOSURES

For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions of the disclosure form.

Moody's did not receive or take into account a third-party assessment on the due diligence performed regarding the underlying assets or financial instruments related to the monitoring of this transaction in the past six months.

Moody's describes its loss and cash flow analysis in the section "Ratings Rationale" of this press release.

Moody's did not use any stress scenario simulations in its analysis.

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this rating action, and whose ratings may change as a result of this rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Peter Simon
Associate Analyst
Structured Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Keith Banhazl
VP - Sr Credit Officer/Manager
Structured Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's Affirms Three, Downgrades One Classes of LBUBS 2002-C2
No Related Data.
© 2021 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

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