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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 Upgrades Four, Downgrades One and Affirms Three Classes of LBUBS 2005-C3

25 Jun 2015

Approximately $101 Million of Structured Securities Affected

New York, June 25, 2015 -- Moody's Investors Service (Moody's) has upgraded the ratings of four classes, downgraded one class, and affirmed three CMBS classes in LB-UBS Commercial Mortgage Trust, Commercial Mortgage Pass-Through Certificates, Series 2005-C3 as follows:

Cl. C, Upgraded to Aa2 (sf); previously on Feb 13, 2015 Upgraded to Baa1 (sf)

Cl. D, Upgraded to A3 (sf); previously on Feb 13, 2015 Upgraded to Ba2 (sf)

Cl. E, Upgraded to Ba3 (sf); previously on Feb 13, 2015 Affirmed B2 (sf)

Cl. F, Upgraded to B3 (sf); previously on Feb 13, 2015 Affirmed Caa1 (sf)

Cl. G, Affirmed Caa2 (sf); previously on Feb 13, 2015 Affirmed Caa2 (sf)

Cl. H, Affirmed Caa3 (sf); previously on Feb 13, 2015 Affirmed Caa3 (sf)

Cl. J, Affirmed C (sf); previously on Feb 13, 2015 Affirmed C (sf)

Cl. X-CL, Downgraded to Caa2 (sf); previously on Feb 13, 2015 Affirmed Ba3 (sf)

RATINGS RATIONALE

The ratings on the four P&I classes were upgraded primarily due to an increase in credit support since Moody's last review, resulting from paydowns and amortization. The pool has paid down by 88% since Moody's last review.

The rating on the IO Class (Class X-CL) was downgraded due to the decline in the credit performance of its reference classes resulting from principal paydowns of higher quality reference classes.

The ratings on the remaining P&I classes were affirmed because the ratings are consistent with Moody's expected loss.

Moody's rating action reflects a base expected loss of 32% of the current balance compared to 5% at Moody's last review. Moody's base expected loss plus realized losses is now 5.1% of the original pooled balance, compared to 5.5% at the last review. Moody's provides a current list of base expected losses for conduit and fusion CMBS transactions on moodys.com at http://www.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 can indicate that the collateral's credit quality is stronger or weaker than Moody's had previously expected.

Factors that could lead to an upgrade of the ratings include a significant amount of loan paydowns or amortization, an increase in the pool's share of defeasance or an improvement in pool performance.

Factors that could lead to a downgrade of the ratings include a decline in the performance of the pool, loan concentration, an increase in realized and 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.

DESCRIPTION OF MODELS USED

Moody's uses a variation of Herf to measure the diversity of loan sizes, where a higher number represents greater diversity. Loan concentration has an important bearing on potential rating volatility, including the risk of multiple notch downgrades under adverse circumstances. The credit neutral Herf score is 40. The pool has a Herf of 6, the same as at Moody's last review.

When the Herf falls below 20, Moody's uses the excel-based Large Loan Model and then reconciles and weights the results from the conduit and large loan models in formulating a rating recommendation. 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. Moody's also further adjusts these aggregated proceeds for any pooling benefits associated with loan level diversity and other concentrations and correlations.

DEAL PERFORMANCE

As of the June 17, 2015 distribution date, the transaction's aggregate certificate balance has decreased by 95% to $101 million from $1.97 billion at securitization. The certificates are collateralized by 12 mortgage loans ranging in size from 2% to 30% of the pool, with the top ten loans (excluding defeasance) constituting 96% of the pool. The pool contains no loans with investment-grade structured credit assessments and no defeased loans.

Six loans, constituting 64% of the pool, are on the master servicer's watchlist. The watchlist includes loans that meet certain portfolio review guidelines established as part of the CRE Finance Council (CREFC) monthly reporting package. As part of Moody's ongoing monitoring of a transaction, the agency reviews the watchlist to assess which loans have material issues that could affect performance.

Twenty-one loans have been liquidated from the pool, contributing to an aggregate realized loss of $68 million (for an average loss severity of 35%). Three loans, constituting 25% of the pool, are currently in special servicing. The largest specially serviced loan is the Commerce Center II Loan ($17.4 million -- 17% of the pool), which is secured by a 123,000 square foot office property in Greenbelt, Maryland, a suburb of Washington, DC. The property is fully vacant, following the departure of the sole remaining tenant in March 2015. A September 2014 appraisal valued the property at $8.6 million. The loan is REO and the servicer has actively marketed the property for sale.

The remaining two specially serviced loans are secured by retail properties in Wheat Ridge, Colorado, and Norfolk, Virginia. Moody's estimates an aggregate $16 million loss for the specially serviced loans (64% expected loss on average).

Moody's has assumed a high default probability for two poorly performing loans, constituting 14% of the pool, and has estimated an aggregate loss of $2 million (a 15% expected loss based on a 50% probability default) from these troubled loans.

Moody's received full year 2014 operating results for 100% of the pool, and partial year 2015 operating results for 78% of the pool. Moody's weighted average conduit LTV is 112%, compared to 93% at Moody's last review. Moody's conduit component excludes loans with structured credit assessments, defeased and CTL loans, and specially serviced and troubled loans. Moody's net cash flow (NCF) reflects a weighted average haircut of 12.6% to the most recently available net operating income (NOI). Moody's value reflects a weighted average capitalization rate of 9.7%.

Moody's actual and stressed conduit DSCRs are 1.16X and 0.99X, respectively, compared to 1.34X and 1.23X at the last review. Moody's actual DSCR is based on Moody's NCF and the loan's actual debt service. Moody's stressed DSCR is based on Moody's NCF and a 9.25% stress rate the agency applied to the loan balance.

The top three performing conduit loans represent 51% of the pool balance. The largest loan is the Medlock Crossing Loan ($30.2 million -- 30% of the pool), which is secured by a 159,000 square foot retail property located in Duluth, Georgia. The loan is on the watchlist for low DSCR. The anchor tenant is Regal Cinemas, which occupies its space under a lease set to expire in February 2019. The property was 90% occupied as of March 2015, unchanged from Moody's last review. The loan metrics benefit from amortization. Moody's LTV and stressed DSCR are 129% and 0.79X, respectively, compared to 130% and 0.79X at prior review.

The second largest loan is the University Square Loan ($13.2 million -- 13% of the pool). The loan is secured by a 76,000 square foot retail center in San Antonio, Texas. The loan was added to the watchlist in August 2014 for upcoming lease expirations. In Q4 2014, the largest tenant, which occupied 26,520 square feet (34% NRA), vacated the property at lease expiration in Q4 2014. The property was 65% leased as of March 2015. Moody's LTV and stressed DSCR are 115% and 0.99X, respectively, compared to 102% and 1.11X at the last review.

The third largest loan is The Crossing ($8.7 million -- 9% of the pool) which is secured by a 95,000 square foot retail strip center in Matthews, North Carolina. As of March 2015, the property was 40% occupied. Occupancy declined sharply following the departure of the anchor tenant which had occupied 30,000 square feet (31% NRA). Moody's has identified this as a troubled loan and incorporates a moderate expected loss for this loan in its analysis.

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.

The analysis includes an assessment of collateral characteristics and performance to determine the expected collateral loss or a range of expected collateral losses or cash flows to the rated instruments. As a second step, Moody's estimates expected collateral losses or cash flows using a quantitative tool that takes into account credit enhancement, loss allocation and other structural features, to derive the expected loss for each rated instrument.

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.

Wesley Flamer-Binion
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

Annelise Osborne
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 Upgrades Four, Downgrades One and Affirms Three Classes of LBUBS 2005-C3
No Related Data.
© 2019 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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