Fitch Takes Various Actions on LBUBS 2006-C7

KEY RATING DRIVERS
The upgrade reflects the overall improved performance of the transaction and high concentration of defeasance (44% of the transaction). The downgrades are due to incurred losses on the distressed classes. Fitch modeled losses of 5.1% of the remaining pool; expected losses on the original pool balance total 13.8%, including $316.5 million (10.5% of the original pool balance) in realized losses to date. Fitch has designated 18 loans (8.4%) as Fitch Loans of Concern, which includes four specially serviced assets (1.9%).

There are 126 loans (98.3% of the pool) scheduled to mature by the end of 2016. The bulk of the maturities (95.1%) are concentrated in the last four months of the year. This includes 12 loans (44.2%) which are fully defeased.

As of the December 2015 distribution date, the pool's aggregate principal balance has been reduced by 35.8% to $1.94 billion from $3.02 billion at issuance. Interest shortfalls are currently affecting class A-J.

The largest contributor to expected losses is the specially-serviced Triangle Town Center - Subordinate Tranche loan (1.3% of the pool). The B-note contributed to the trust is subordinate to a $108.4 million A-note in the LBUBS 2006-C1 transaction. The loan is secured by a mall and lifestyle center in Raleigh, North Carolina. It is owned and operated by CBL & Associates Properties and the non-collateral anchor tenants include Dillard's, Belk, Macy's, Saks Fifth Avenue and Sears. The loan, which was originally scheduled to mature in December 2015, transferred to special servicing in September 2015 for imminent default and is now delinquent. As of June 2015, net operating income debt service coverage ratio (NOI DSCR) for the combined A and B note was 0.75x. As of the September 2015 rent roll, occupancy declined to 86% from 97% at year-end 2014. The mall continues to face competition from a nearby mall approximately 10 miles away, contributing to leasing challenges within the lifestyle component of the mall.

The next largest contributor to expected losses is a portfolio of 10 mobile home parks (2.3%) totaling 1,649 pads located in Michigan, Florida and Ohio. Fitch has identified this loan as a Fitch Loan of Concern. The portfolio has historically underperformed underwriting at issuance. As of June 2015 portfolio occupancy was 78% with NOI DSCR of 0.87x, as compared to 85% occupancy and NOI DSCR of 1.27x at issuance. Of the 10 mobile home parks, seven of the properties have NOI insufficient to cover debt service, including three properties with NOI DSCR below 0.65x as of June 2015. The loan shares the same sponsor as the third largest contributor to losses. The loan remains current as of the December 2015 remittance and has not been delinquent during the life of the loan.

The third largest contributor to expected losses is a portfolio of three mobile home parks (1.1%) totaling 1,150 pads located in western Michigan. Fitch has identified this loan as a Fitch Loan of Concern. Performance of the portfolio continues to deteriorate since issuance. As of June 2015 portfolio occupancy declined to 63% with NOI DSCR of 0.89x as compared to occupancy of 68% and NOI DSCR of 1.27x at issuance. The loan shares the same sponsor as the second largest contributor to losses. The loan remains current as of the December 2015 remittance and has not been delinquent during the life of the loan.

RATING SENSITIVITIES
Rating Outlooks remain Stable due to increasing credit enhancement and continued delevering of the transaction through amortization and repayment of maturing loans. Fitch applied various NOI stress scenarios when considering the upgrade to account for refinance risk related to loans maturing this year.

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

Fitch upgrades the following class as indicated:

--$302 million class A-M to 'AAsf' from 'Asf'; Outlook Stable.

Fitch affirms the following classes as indicated:

--$90.8 million class A-2 at 'AAAsf'; Outlook Stable;
--$968.1 million class A-3 at 'AAAsf'; Outlook Stable;
--$290 million class A-1A at 'AAAsf'; Outlook Stable;
--$0 class C at 'Dsf'; RE 0%;
--$0 class D at 'Dsf'; RE 0%;
--$0 class E at 'Dsf'; RE 0%;
--$0 class F at 'Dsf'; RE 0%;
--$0 class G at 'Dsf'; RE 0%;
--$0 class H at 'Dsf'; RE 0%;
--$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%.

Fitch downgrades the following classes due to realized losses:

--$287.6 million class A-J to 'Dsf' from 'CCCsf'; RE 65%;
--$0 class B to 'Dsf' from 'CCCsf'; RE 0% .

Classes A-1 and A-AB have paid in full. Fitch does not rate the class T certificates. Fitch previously withdrew the ratings on the interest-only class X-CP, X-CL and X-W certificates.