DBRS Upgrades Two Classes of DBUBS 2011-LC2 Mortgage Trust and Confirms Remaining Classes

DBRS Limited (DBRS) upgraded the ratings on the following two classes of Commercial Mortgage Pass-Through Certificates, Series 2011-LC2 issued by DBUBS 2011-LC2 Mortgage Trust:

-- Class C to AA (high) (sf) from AA (sf)
-- Class E to BB (sf) from BB (low) (sf)

In addition, the following ratings were confirmed:

-- Class A-1 at AAA (sf)
-- Class A-1FL at AAA (sf)
-- Class A-1C at AAA (sf)
-- Class A-4 at AAA (sf)
-- Class B at AAA (sf)
-- Class X-A at AAA (sf)
-- Class D at BBB (sf)
-- Class X-B at B (sf)
-- Class F at B (low) (sf)
-- Class FX at B (sf)

All trends are Stable.

The rating upgrades reflect the overall strong performance of the underlying collateral since issuance. As of the March 2018 remittance, 42 of the original 67 loans remained in the pool with a collateral reduction of 40.6% and a current principal balance of approximately $1.28 billion. There are three loans (1.4% of the current pool) that have fully defeased. To date, 13 loans, representing 41.7% of the pool balance, reported YE2017 financials, and the remaining 25 non-defeased loans are reporting YE2016 financials. Based on the most recent year-end financials available, the pool had a weighted-average (WA) debt service coverage ratio (DSCR) and a WA debt yield of 1.74 times (x) and 13.3%, respectively, compared with their respective second most recent year-end financials, which reported a WA DSCR and WA debt yield of 1.71x and 13.1%, respectively. Based on the same financials, the top 15 loans (79.6% of the pool balance) reported a WA DSCR of 1.73x, representing a WA increase of 30.4% over the WA DBRS net cash flow figures derived at issuance for those loans.

As of the March 2018 remittance, there is one loan, Prospectus ID #46, Montomery Village Professional Center (0.6% of the pool), in special servicing. That loan transferred to the special servicer in May 2014 for payment default and has been real estate owned since April 2015. The servicer is working to sell the property, and DBRS expects a loss will be incurred by the trust at disposition, but expects those to be contained to the unrated Class G certificates.

As of the March 2018 remittance, there are ten loans on the servicer’s watchlist, representing 31.3% of the pool balance. Overall, these loans are performing well, with a WA DSCR and WA debt yield of 1.77x and 13.1%, respectively. The largest loan on the servicer’s watchlist, Prospectus ID #3, 498 7th Avenue (14.8% of the pool balance) is being monitored for upcoming rollover.

Classes X-A, X-B and FX are interest-only (IO) certificates that reference a single rated tranche or multiple rated tranches. The IO rating mirrors the lowest-rated reference tranche adjusted upward by one notch if senior in the waterfall.

All ratings will be subject to ongoing surveillance, which could result in ratings being upgraded, downgraded, placed under review, confirmed or discontinued by DBRS.

As part of this review, DBRS has provided updated analysis and in-depth commentary in the DBRS Viewpoint platform for the following loans in the transaction:

-- Prospectus ID #1 – US Steel Tower
-- Prospectus ID #2 – Willlowbrook Mall
-- Prospectus ID #3 – 498 7th Avenue
-- Prospectus ID #16 – Magnolia Hotel Houston
-- Propsectus ID #46 – Montgomery Village Proffessional Center

For complimentary access to this content, please register for the DBRS Viewpoint platform at www.viewpoint.dbrs.com. The platform includes issuer and servicer data for the entire commercial mortgage-backed security universe, as well as deal and loan-level commentary for all DBRS rated transactions.

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

The principal methodology is CMBS North American Surveillance, which can be found on dbrs.com under Methodologies. For a list of the Structured Finance related methodologies that may be used during the rating process, please see the DBRS Global Structured Finance Related Methodologies document on www.dbrs.com. Please note that not every related methodology listed under a principal Structured Finance asset class methodology may be used to rate or monitor an individual structured finance or debt obligation.

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link under Related Documents or by contacting us at info@dbrs.com.

This rating is endorsed by DBRS Ratings Limited for use in the European Union.

The rated entity or its related entities did participate in the rating process for this rating action. DBRS had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

For more information on this credit or on this industry, visit www.dbrs.com or contact us at info@dbrs.com.