DBRS Confirms Sixteen Classes of COMM 2004-LNB2

DBRS has today confirmed all classes of COMM 2004-LNB2 as follows:

Classes A-3, A-4, B, C and X-1 at AAA (sf)
Class D at AA (sf)
Class E at A (sf)
Class F at A (low) (sf)
Class G at BBB (sf)
Class H at B (low) (sf)
Classes J and K at CCC (sf)
Classes L, M, N and O at C (sf)

The trend on Classes A-3 through H remains Stable.

This transaction has had 91 months of seasoning and the collateral has been reduced by approximately 37.5% since issuance. Since the last DBRS review in November 2010, one loan has liquidated from the trust, and one loan has been transferred from the special servicer back to the master servicer as a corrected mortgage loan.

Hawthorne Apartments (ProspectusID#17) was scheduled to mature on December 1, 2008 and transferred to the special servicer when it was unable to refinance. The lender took title of the property in February 2011. The loan liquidated from the trust with the September 2011 remittance and incurred a realized trust loss of $2.88 million.

Three loans remain in special servicing, representing 4.75% of the current pool balance. Two of these loans share the same sponsor and have been in special servicing for over two years. 1 Northbrook Corporate Center (Prospectus ID#15, 2.30% of the current pool balance) and Northbrook (Prospectus ID#22, 1.69% of the current pool balance) are office properties located in the same business park in Bensalem, Pennsylvania, in the Bucks County submarket of Philadelphia. The properties have suffered from occupancy issues, placing negative stress on cash flow; however, the assets are in good condition, according to recent servicer site inspections. An appraisal was finalized for 1 Northbrook Corporate Center (Prospectus ID#15) in June 2011 and indicated a property value of $9.25 million, which is an improvement over the asset’s July 2009 appraised value of $8.2 million. This property was valued at $19.2 million at issuance. An updated appraisal has not been received for the Northbrook loan (Prospectus ID#22), but a June 2009 appraisal valued the property at $6.25 million. Both assets became REO in April 2011.

Woodway Pines Apartments (Prospectus ID#42, 0.76% of the current pool balance) is secured by a 281-unit multifamily property located in Huntsville, Alabama. This loan was transferred to special servicing in October 2010 for payment default. According to servicer commentary, as well as a servicer site inspection dated December 2010, the property’s physical condition is less than ideal. Issues noted in the inspection include leaking roofs, mildew growth in some units and water damage to walls and carpets. A rent roll dated March 2011 indicates the property is 74% physically occupied. An appraisal dated December 2010 valued the property at $4.1 million, down from $6.8 million at issuance. The subject became REO in April 2011.

Fourteen loans are on the servicer’s watchlist, as of the September 2011 remittance, representing 8.6% of the current pool balance. The pool is highly concentrated in the top ten, with the largest loan in the pool representing 22.3% of the current pool balance. The transaction benefits from 22% defeasance. The average debt yield of the loans reporting cash flow in the top fifteen is 12.3%, and their average DSCR is 1.56x.

As a part of this surveillance review, DBRS performed detailed analysis of the top fifteen loans, loans in special servicing, loans on the servicer’s watchlist and the shadow-rated loans. DBRS maintains investment-grade shadow-ratings on two loans in the pool, representing 32.9% of the current pool balance.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The applicable methodologies are CMBS Rating Methodology and CMBS North American Surveillance Methodology, which can be found on our website under Methodologies.