Fitch Affirms LB-UBS 2001-C3; Revises Outlooks

Fitch Ratings has affirmed the ratings on Lehman Brothers-UBS (LB-UBS) Commercial Mortgage Trust Commercial Mortgage 2001-C3 pass-through certificates. A full list of rating actions follows at the end of this press release.

The affirmations are due to the pool's stable performance and minimal future expected losses following Fitch's prospective review of potential stresses to the transaction. Fitch modeled losses of 15.91% of the outstanding pool. The expected losses of the original pool are 3.55%, which includes 1.72% in losses realized to date.

As of the April 2012 distribution date, the pool's certificate balance has been reduced 86.7% (including realized losses) to $159.2 million from $1.38 billion at issuance. The pool has become extremely concentrated with only 10 of the original 169 loans remaining in the transaction, one of which (1.95%) is defeased.

Fitch has designated eight loans (95.74% of pool balance) as Fitch Loans of Concern, which include the six specially serviced assets (46.6%). Interest shortfalls totaling $1.81 million are currently affecting unrated classes L through Q.

The largest contributor to Fitch-modeled losses is the Shoppingtown Mall (24%). The collateral is 697,000 square feet (sf) of a 774,000sf mall located in DeWitt, NY. Major collateral tenants include JC Penney, (22% net rentable area [NRA]), Regal Cinemas (9.8% NRA), and Dicks Sporting Goods (7.2% NRA). Non-collateral anchors include Sears and Macy's. The property has experienced occupancy declines due to a borrower decision in 2007 to vacate tenants in a corridor of the subject property for future development. Due to the economic downturn the planned development was halted.

The servicer-reported current occupancy at approximately 91%, however, over 20% of the gross leasable area is occupied by temporary tenants in the previously vacated wing. The year end (YE) December 2010 net operating income (NOI) debt service coverage ratio (DSCR) reported at 0.77x. The loan had matured and transferred to special servicing in May 2011. In December 2011, the lender had obtained title to the property via a deed-in-lieu (DIL). The servicer has hired Jones Lang Lasalle as the property manager and leasing agent.

The second largest contributor to Fitch modeled losses is a 331,866sf office property comprised of seven one-story buildings in Phoenix, AZ (17.92%). The February 2012 rent roll reported occupancy at 72%. The YE December 2010 NOI DSCR reported at 0.91x. The subject loan has been in and out of special servicing since 2010 for payment default, with its most recent transfer in July 2011. A receiver was appointed in February 2012 and the property became lender REO in May 2012.

The remaining four specially serviced loans represent 4.68% of the outstanding portfolio. Fitch stressed the cash flow of the remaining non-defeased, non-specially serviced loans by applying a 5% reduction to 2011 or 2010 fiscal YE net operating income. Fitch also applied an adjusted market cap rate between 9% and 11% to determine value.

Each non-defeased, non-specially serviced loan also underwent a refinance test by applying an 8% interest rate and 30-year amortization schedule based on the stressed cash flow. Under this scenario, two loans (49.14%) are not expected to pay off at maturity with one of these loans (2.06%) incurring a loss when compared to Fitch's stressed value. The current weighted average debt service coverage ratio for the non-defeased and non-specially-serviced loans is 1.13x.

Fitch has affirmed the following classes and revised the Rating Outlooks as indicated:

--$34.3 million class C at 'AAAsf'; Outlook Stable;

--$16 million class D at 'AAAsf'; Outlook Stable;

--$18 million class E at 'AA-sf'; Outlook to Stable from Positive;

--$18 million class F at 'A+sf'; Outlook to Stable from Positive;

--$12.1 million class G at 'Asf'; Outlook to Negative from Stable.

Classes A-1, A-2, and B have paid in full. Fitch does not rate classes H, J, K, L, M, N, P, and Q.

Fitch previously withdrew the rating on the interest-only class X.

Additional information on Fitch's criteria for analyzing U.S. CMBS is available in the rating agency's Dec. 21, 2011 report, 'Surveillance Methodology for U.S. Fixed-Rate CMBS Transactions', available at 'www.fitchratings.com'.

Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' (Aug. 4, 2011);

--'Surveillance Methodology for U.S. Fixed-Rate CMBS Transactions' (Dec. 21, 2011).

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=646569

Surveillance Methodology for U.S. Fixed-Rate CMBS Transactions

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=662869

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Contacts:

Fitch Ratings
Primary Analyst
Benson Thomas, [phone]
Associate Director
Fitch, Inc.
One State Street Plaza
New York, NY 10004
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Committee Chairperson
Mary MacNeill, [phone]
Managing Director
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Media Relations
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