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09 Mar 2011
Approximately $6 million of Structured Securities Affected
New York, March 09, 2011 -- Moody's Investors Service (Moody's) downgraded the ratings of three rake,
or non-pooled classes, of Lehman Brothers Floating Rate Commercial
Mortgage Trust, Commercial Mortgage Pass-Through Certificates,
Series 2006-LLF C5. Moody's rating action is as follows:
Cl. PR2 Certificate, Downgraded to B2 (sf); previously
on December 17, 2010 Downgraded to Ba3 (sf) and Placed Under Review
for Possible Downgrade
Cl. PR31 Certificate, Downgraded to B2 (sf); previously
on December 17, 2010 Downgraded to B1 (sf) and Placed Under Review
for Possible Downgrade
Cl. PR32 Certificate, Downgraded to B3 (sf); previously
on December 17, 2010 Downgraded to B2 (sf) and Placed Under Review
for Possible Downgrade
The downgrades of the rake classes are due to interest shortfalls,
outstanding principal and interest (P&I) advances, and uncertainty
surrounding the outcome and timing of the resolution. On December
17, 2010 Moody's placed the three rake classes on review for
possible downgrade. This action concludes our review.
Moody's analysis reflects a forward-looking view of the likely
range of collateral performance over the medium term. From time
to time, Moody's may, if warranted, change these expectations.
Performance that falls outside an acceptable range of the key parameters
may indicate that the collateral's credit quality is stronger or weaker
than Moody's had anticipated during the current review. Even so,
deviation from the expected range will not necessarily result in a rating
action. There may be mitigating or offsetting factors to an improvement
or decline in collateral performance, such as increased subordination
levels due to amortization and loan payoffs or a decline in subordination
due to realized losses.
Primary sources of assumption uncertainty are the current sluggish macroeconomic
environment and varying performance in the commercial real estate property
markets. However, Moody's expects to see increasing or stabilizing
property values, higher transaction volumes, a slowing in
the pace of loan delinquencies and greater liquidity for commercial real
estate in 2011. The hotel and multifamily sectors are continuing
to show signs of recovery, while recovery in the office and retail
sectors will be tied to recovery of the broader economy. The availability
of debt capital continues to improve with terms returning toward market
norms. Moody's central global macroeconomic scenario reflects an
overall sluggish recovery through 2012, amidst ongoing individual,
corporate and governmental deleveraging, persistent unemployment,
and government budget considerations.
The principal methodology used in this rating was "Moody's Approach to
Rating Large Loan/Single Borrower Transactions" published in July 2000.
In addition, Moody's publishes a weekly summary of structured finance
credit, ratings and methodologies, available to all registered
users of our website, at www.moodys.com/SFQuickCheck.
Moody's review incorporated the use of the excel-based Large Loan
Model v 8.0. The large loan model derives credit enhancement
levels based on an aggregation of adjusted loan level proceeds derived
from Moody's loan level LTV ratios. Major adjustments to determining
proceeds include leverage, loan structure, property type,
and sponsorship. These aggregated proceeds are then further adjusted
for any pooling benefits associated with loan level diversity, other
concentrations and correlations.
Moody's ratings are determined by a committee process that considers both
quantitative and qualitative factors. Therefore, the rating
outcome may differ from the model output.
The rating action is a result of Moody's on-going surveillance
of commercial mortgage backed securities (CMBS) transactions. Moody's
monitors transactions on a monthly basis through two sets of quantitative
tools -- MOST® (Moody's Surveillance Trends) and CMM
(Commercial Mortgage Metrics) on Trepp -- and on a periodic
basis through a comprehensive review. Moody's prior full review
is summarized in a press release dated December 17, 2010.
Please see the ratings tab on the issuer / entity page on moodys.com
for the last rating action and the ratings history.
Moody's Investors Service did not receive or take into account a third-party
due diligence report on the underlying assets or financial instruments
related to the monitoring of this transaction in the past six months.
Praedium Rental Portfolio II ($28.6 million -- 4.1%
of the pooled balance) and Praedium Rental Portfolio III ($22.7
million -- 3.2% of the pooled balance) were transferred
to special servicing in September 2010 due to imminent default.
As of February 15, 2011 distribution date, interest shortfalls
totaling $39,307 have been incurred by rake classes PR2,
PR31 and PR32, up from $19,291 when these classes were
placed on review for possible downgrade. Total outstanding P&I
Advances are $67,904 for Praedium Rental Portfolio II and
$53,118 for Praedium Rental Portfolio III, respectively.
Foreclosure complaints were filed on January 26, 2011 for both of
the loans. According to the special servicer (TriMont Real Estate
Advisors), the anticipated resolution timing is early 2011.
Cash management has been sprung for both of the loans.
Praedium Rental Portfolio II had a Net Operating Income (NOI) of $1.9
million in 2010, which is slightly lower than what was anticipated
during last review. Praedium Rental Portfolio III achieved a NOI
of $1.5 million during the same period, lower than
what was anticipated during last review.
The maturity date for Praedium Portfolio I ($18.3 million
-- 2.6% of the pooled balance) was extended to August
8, 2011. There are no interest shortfalls outstanding for
the rake classes associated with this portfolio (classes PR11 and PR12).
Information sources used to prepare the credit rating are the following:
parties involved in the ratings, parties not involved in the ratings,
public information, and confidential and proprietary Moody's Investors
Moody's Investors Service considers the quality of information available
on the issuer or obligation satisfactory for the purposes of maintaining
a credit rating.
Moody's adopts all necessary measures so that the information it uses
in assigning a credit rating is of sufficient quality and from sources
Moody's considers to be reliable including, when appropriate,
independent third-party sources. However, Moody's
is not an auditor and cannot in every instance independently verify or
validate information received in the rating process.
Please see ratings tab on the issuer/entity page on Moodys.com
for the last rating action and the rating history.
The date on which some Credit Ratings were first released goes back to
a time before Moody's Investors Service's Credit Ratings were fully digitized
and accurate data may not be available. Consequently, Moody's
Investors Service provides a date that it believes is the most reliable
and accurate based on the information that is available to it.
Please see the ratings disclosure page on our website www.moodys.com
for further information.
Please see the Credit Policy page on Moodys.com for the methodologies
used in determining ratings, further information on the meaning
of each rating category and the definition of default and recovery.
Eun Jee Park
VP - Senior Credit Officer
Structured Finance Group
Moody's Investors Service
Michael M. Gerdes
Senior Vice President
Structured Finance Group
Moody's Investors Service
Moody's Investors Service
Moody's Downgrades Three CMBS Classes of LBFRC 2006-LLF C5
250 Greenwich Street
New York, NY 10007
No Related Data.
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