OREANDA-NEWS. Fitch Ratings has upgraded five classes, downgraded two classes, and affirmed nine classes of LB-UBS Commercial Mortgage Trust (LBUBS) commercial mortgage pass-through certificates series 2005-C7. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The upgrades reflect the increase in credit enhancement due to significant loan paydown since Fitch's last rating action in March 2015. The downgrades reflect incurred losses on the subordinate tranches. Fitch modeled losses of 13.9% of the remaining pool; expected losses on the original pool balance total 6.2%, including $110.9 million (4.7% of the original pool balance) in realized losses to date. Fitch has designated six loans (19%) as Fitch Loans of Concern, which includes three specially serviced assets (15.5%).

As of the September 2015 distribution date, the pool's aggregate principal balance has been reduced by 89.7% to $240.2 million from $2.34 billion at issuance. The pool is highly concentrated with only 28 of the original 137 loans remaining in the transaction. Per the servicer reporting, three loans (6.3% of the pool) are defeased. Interest shortfalls are currently affecting classes G through T.

The largest contributor to expected losses is the specially-serviced Sarasota Main Plaza (14.55%). The loan is secured by a 253,504 sf mixed use (office/retail) building located in the downtown sector of Sarasota, FL. Occupancy at the subject property continues to decline since issuance reporting at 62% per the September 2015 rent roll, down from 81% in September 2014, and 99% at issuance. The original $36 million loan on this property had transferred to the special servicer in December 2008 for imminent default. The loan was modified while in special servicing, and returned back to the master servicer in 2013. Terms of the modification included an extension of the interest only payment period, and bifurcation of the loan into a senior ($21.3 million) and junior ($14.6 million) component. Any recovery to the B-note is contingent upon full recovery to the A-note proceeds. Unless collateral performance improves, recovery to the B-note component is unlikely.

The loans have had subsequent transfers to special servicing starting in October 2013, with several failed efforts to sell the collateral property and pay off the loan under the terms of the 2012 modification agreement. The loans most recently transferred back to special servicing prior to the subject loans maturity in September 2015. According to the servicer, the borrower is seeking an additional extension of the maturity date but no formal proposals have been presented.

RATING SENSITIVITIES

The ratings on the 'AAA' rated class A-J and class B are expected to remain stable as the classes benefit from increasing credit enhancement and continued delevering of the transaction through amortization and repayment of maturing loans. The Positive Outlook on class C reflects the possibility for future upgrades due to an expected increase in credit enhancement as maturing loans pay off this year (62% of the current pool matures prior to the end of 2015). Despite increased credit enhancement, the Outlooks for classes D and E are considered Stable as loan repayments from maturing loans are expected to further increase adverse selection risk from the already concentrated pool. Additional downgrades to the distressed classes (those rated below 'Bsf') are expected as losses are realized.

DUE DILIGENCE USAGE

No third party due diligence was provided or reviewed in relation to this rating action.

Fitch has upgraded the following ratings and revised Rating Outlooks as indicated:

--$79.2 million class A-J to 'AAAsf' from 'AAsf'; Outlook to Stable from Positive;
--$14.2 million class B to 'AAAsf' from 'BBBsf'; Outlook to Stable from Positive;
--$35.2 million class C to 'Asf' from 'BBB-sf'; Outlook Positive;
--$29.3 million class D to 'BBBsf' from 'BBsf'; Outlook Stable;
--$23.5 million class E to 'BBsf' from 'Bsf'; Outlook Stable.

Fitch has downgraded the following ratings:

--$26.4 million class G to 'Csf' from 'CCsf'; RE 20%;
--$9 million class H to 'Dsf' from 'CCsf'; RE 0%.

Fitch has affirmed the following ratings:

--$23.5 million class F at 'CCCsf'; RE 100%;
--$0 class J at 'Dsf'; RE 0%;
--$0 class K at 'Dsf'; RE 0%;
--$0 class L at 'Dsf'; RE 0%;
--$0 class M at 'Dsf'; RE 0%;
--$0 class N at 'Dsf'; RE 0%;
--$0 class P at 'Dsf'; RE 0%;
--$0 class Q at 'Dsf'; RE 0%;
--$0 class S at 'Dsf'; RE 0%.

The class A-1, A-2, A-3, A-AB, A-4, A-1A, A-M, CM-1, CM-2, CM-3, and CM-4 certificates have paid in full. Fitch does not rate the class T certificate. Fitch previously withdrew the ratings on the interest-only class X-CP and X-CL certificates.

Fitch does not rate the SP-1 through SP-7 rake classes, which are specific to the Station Place I $63 million B-note. A $450,276 A-note for Station Place I is included in the pooled portion of the trust.