NEW YORK, Feb. 11 /PRNewswire/ -- Standard & Poor's today affirmed its
ratings on various classes of LB Commercial Mortgage Trust's commercial
mortgage pass-through certificates series 1998-C4 (see list).
The affirmations reflect the stable operating performance of the
collateral pool. The pool has experienced slight increases in subordination
levels due to loan amortization. None of the pool's initial 285 loans have
paid off.
The largest loan in the pool (12% of the principal balance) is secured by
five crosscollateralized and crossdefaulted full-service hotels. The
properties are performing well according to the servicer, First Union National
Bank (FUNB), although there was a decline in debt service coverage (DSC) for
the nine months ended Sept. 30, 2001. For this period, DSC was reported at
1.85 times (x) compared to 2.44x for year-end 2000.
As of January 2002, the pool collateral consisted of $1.95 billion of
principal balance, down from $2.02 billion, at issuance. The weighted average
fixed-rate coupon is 6.84%. Standard & Poor's calculated DSC of 1.89x (based
on 93% year-end 2000 financial information), compared to 1.64x at issuance.
These calculations exclude credit lease loans, which represent 3.9% of the
pool's balance. Seventy-five percent of the borrowers in the pool have
reported interim 2001 financials, resulting in a DSC of 1.75x. The lower
2001 DSC is due in part to the seasonality of the collateral. The top
10 mortgages represent 41.8% of the pool. DSC for these loans improved to
2.32x for year-end 2000 from 2.03x at issuance. Property inspection reports
for the top 10 mortgages revealed rankings of good to excellent.
The pool's collateral is located in 35 states, with concentrations in
California (19.5% of principal balance) Texas (11.4%), and New York (10.4%).
No other states have property concentrations greater than 10%. The property
type concentration includes retail (44.1% of principal balance), lodging
(17.5%), multifamily (17.4%), and office (15.1%).
Currently, there are no delinquencies or realized losses to date.
Appraisal reduction amounts of $4.30 million, or .22% of the pool, have been
taken. Two loans, or .5% of principal balance, are being specially serviced.
Both loans are expected to be transferred back shortly to FUNB.
There are 49 mortgages totaling $178 million (9.4% of principal balance)
on FUNB's watchlist. The average watchlist loan balance is $3.63 million. Most
of the mortgages appear on the watchlist because of low or declining DSCs and
because of occupancy levels. Standard & Poor's has identified 14 loans with
Kmart stores as partial or full collateral (loans that have some Kmart
exposure total approximately $69 million). Three of the loans are credit lease
transactions. Based on discussions with the servicer, none of the stores have
been identified as stores that are scheduled for closing.
Based on Standard & Poor's loss analysis, which included the stressing of
watchlist loans and the possibility of several future Kmart store closings,
the resultant stressed subordination levels adequately support the affirmed
ratings.
RATINGS AFFIRMED
LB Commercial Mortgage Trust
Commercial mortgage pass-thru certs series 1998-C4
Class Rating Credit Support%
A-1-a AAA 28.48
A-1-b AAA 28.48
A-2 AAA 28.48
X AAA N/A
B AA 23.05
C A 17.61
D BBB 11.39
E BBB- 9.84
F BB+ 7.25
SOURCE Standard & Poor's
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Related links:
http://www.standardandpoors.com/ratings
CONTACT:
Larry Kay, +1-212-438-2504, or Amy Yan,
+1-212-438-2639, both of Standard & Poor's
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