DBRS Morningstar Upgrades One Class of COMM 2004-LNB2

DBRS Limited (DBRS Morningstar) upgraded the rating on the following class of Commercial Mortgage Pass-Through Certificates, Series 2004-LNB2 issued by COMM 2004-LNB2:

-- Class K to BBB (sf) from C (sf)

In addition, DBRS Morningstar assigned a Stable trend to Class K.

The rating upgrade reflects DBRS Morningstar’s outlook for the remaining loan in the pool, Prospectus ID#62, which is secured by a single-tenant retail property occupied by the Walgreen Company (Walgreens), an investment-grade-rated tenant. Walgreens is on a triple-net lease with extension options until May 2078. The loan is fully amortizing and the Walgreens lease expires at loan maturity in April 2028.

Previously, DBRS Morningstar downgraded the rating on Class K to C as part of a February 2019 review of the transaction. The downgrade was reflective of the projected loss for the Alta Mesa loan, which was secured by a retail property in Fort Worth, Texas, and was in special servicing for a maturity default after the property’s grocery anchor was closed. As part of the February 2019 review, a loss was assumed based on the most recent appraisal available at the time, which reported a value for the Alta Mesa property of $2.9 million as of February 2018, which suggested a minor loss to the Class K certificate. Following that review, an updated appraisal was obtained showing an as-is value of $3.5 million and. ultimately, the loan was liquidated with a lower than projected loss of $396,097, all of which was contained to the non-rated Class L.

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

DBRS Morningstar provides updated analysis and in-depth commentary in the DBRS Viewpoint platform for the remaining loan in the transaction:

-- Prospectus ID#62 – Walgreens College Station

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 most outstanding CMBS transactions (including non-DBRS Morningstar rated), as well as loan-level and transaction-level commentary for most DBRS Morningstar-rated and -monitored transactions.

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

The principal methodology is the North American CMBS Surveillance Methodology, which can be found on www.dbrs.com under Methodologies & Criteria. For a list of the structured-finance-related methodologies that may be used during the rating process, please see the DBRS Morningstar Global Structured Finance Related Methodologies document, which can be found on www.dbrs.com in the Commentary tab under Regulatory Affairs. 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.

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

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the rating process. Please note a sensitivity analysis is not performed for CMBS bonds rated CCC or lower. The DBRS Morningstar long-term rating scale definition indicates that ratings of CCC or lower are assigned when the bond is highly likely to default or default is imminent, thereby prevailing over a sensitivity analysis.

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

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