Fitch Downgrades 3 Classes of COMM 2004-LNB2

NEW YORK--(BUSINESS WIRE)--

Fitch Ratings has downgraded three classes and affirmed 11 classes of COMM Mortgage Trust 2004-LNB2, commercial mortgage pass-through certificates. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

Fitch modeled losses of 2.6% of the remaining pool; expected losses on the original pool balance total 4%, including losses already incurred. The pool has experienced $24 million (2.5% of the original pool balance) in realized losses to date. Fitch has designated 14 loans (7.5% of the pool) as Fitch Loans of Concern; however, no loans are currently in special servicing.

As of the April 2013 distribution date, the pool's aggregate principal balance has been reduced by 43.4% to $545.9 million from $963.8 million at issuance. Per the servicer reporting, nine loans (34.2% of the pool) are defeased. Interest shortfalls are currently affecting classes K, L and P.

The largest contributor to expected losses is a 144-unit apartment complex (0.6% of the pool) located in Biloxi, MS less than five miles north of the Gulf of Mexico. The latest reported occupancy is 65.2% as of March 2013 up slightly from year-end (YE) 2011 at 63.9%. The most recent reported NOI debt service coverage ratio (DSCR) was 0.44x as of YE 2012. The property had previously been in special servicing and transferred back to the master servicer in 2009, but the loan continues to struggle with occupancy with modest improvement.

The second largest contributor to expected losses is a 176-unit student housing complex (1.4% of the pool) located in Oxford, MS less than a mile east of the University of Mississippi. Occupancy was 98.3% as of September 2012, which was a slight improvement from 97.2% as of YE 2011. In addition, NOI DSCR improved from 0.94x as of YE 2011 to 1.12x as of September 2012.

RATING SENSITIVITY

The ratings of investment grade classes A-4 to D are expected to remain stable due to the high amount of defeasance and expected increase in credit enhancement from future paydown. Fitch remains cautious related to the percentage of near-term loan maturities that occur in 2013 and 2014 (84.9% of the pool) , therefore classes E, F and G may be subject to further rating actions should realized losses be greater than Fitch's expectations. The distressed classes (those rated below 'B') may be subject to further downgrades as losses are realized.

Fitch downgrades the following classes and assigns or revises Recovery Estimates (REs) as indicated:

--$10.8 million class H to 'CCCsf' from 'Bsf', RE 100%;

--$4.8 million class J to 'CCsf' from 'CCCsf', RE 80%;

--$6 million class K to 'Csf' from 'CCsf', RE 0%.

Fitch affirms the following classes as indicated:

--$439.8 million class A-4 at 'AAAsf', Outlook Stable;

--$25.3 million class B at 'AAAsf', Outlook Stable;

--$9.6 million class C at 'AAAsf', Outlook Stable;

--$19.3 million class D at 'AAsf', Outlook Stable;

--$8.4 million class E at 'AAsf', Outlook to Negative from Stable;

--$9.6 million class F at 'BBBsf', Outlook to Negative from Stable;

--$10.8 million class G at 'BBsf', Outlook Negative;

--$1.3 million class L at 'Dsf', RE 0%;

--$0 class M at 'Dsf', RE 0%;

--$0 class N at 'Dsf', RE0%;

--$0 class O at 'Dsf', RE0%.

The class A-1, A-2 and A-3 certificates have paid in full. Fitch does not rate the class P certificates. Fitch previously withdrew the ratings on the interest-only class X-1 and X-2 certificates.

Additional information on Fitch's criteria for analyzing U.S. CMBS transactions is available in the Dec. 18, 2012 report, 'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria', which is available at 'www.fitchratings.com' under the following headers:

Structured Finance then CMBS then Criteria Reports

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' (June 6, 2012);

--'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria' (Dec. 18, 2012).

Applicable Criteria and Related Research

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=679923

U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=696969

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=790191

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.