Fitch Affirms LB 2001-C2; Removes Class P From Rating Watch Negative.

Business Editors

CHICAGO--(BUSINESS WIRE)--July 28, 2003

LB-UBS Commercial Mortgage Trust's commercial mortgage pass-through certificates, series 2001-C2, $3.3 million class P is affirmed at 'CCC' and removed from Rating Watch Negative by Fitch Ratings. Fitch also affirms the following classes:

-- $217.7 million class A-1 'AAA';

-- $789.3 million class A-2 'AAA';

-- Notional class X 'AAA';

-- $49.5 million class B 'AA';

-- $62.7 million class C 'A';

-- $16.5 million class D 'A-';

-- $13.2 million class E 'BBB+';

-- $19.8 million class F 'BBB'

-- $16.5 million class G 'BBB-';

-- $23.1 million class H 'BB+';

-- $14.8 million class J 'BB';

-- $11.5 million class K 'BB-';

-- $9.9 million class L 'B+';

-- $13.2 million class M 'B';

-- $6.6 million class N 'B-'.

Fitch does not rate class Q.

Fitch removes class P from Rating Watch Negative following the successful re-leasing of the 10950 Tantau property, as well as the fact that Fitch is not expecting any realized losses to the pool at this time. However, Fitch has concerns with the performance of three of the credit assessed loans in the pool, which have been assigned non-investment grade assessments.

The pool's overall performance has declined slightly since issuance, as evidenced by a weighted average debt service coverage ratio (DSCR) of 1.27 times (x) as of year-end (YE) 2002, compared to 1.34x at issuance for comparable loans, excluding the six credit assessed loans. Wachovia Securities, Inc., the master servicer, collected 99% of YE 2002 financial statements as of July 2003. The loans have paid down 2.9% to $1.28 billion as of the July 2003 distribution date, from $1.32 billion at issuance.

The 10950 Tantau loan, 2% of the pool, is collateralized by a single tenant office property in Cupertino, CA. The property transferred to the special servicer after the former tenant vacated the property. The borrower has recently executed a new long term lease with Kaiser Foundation Hospitals, who is currently working on tenant improvements and will take partial occupancy of their space by the end of the year and the remaining space thereafter. GMAC Commercial Mortgage Corp, the special servicer, expects the loan to return to the master servicer soon. While the new tenant is paying higher than current market rent, the income from the new lease is substantially less than at issuance. The Fitch pro forma DSCR is 1.32x, which is calculated using the Fitch cash flow accounting for vacancy and adjusted tenant improvements and leasing commissions (TI/LC), and a debt constant of 9.66%. The Fitch cash flow is determined by using average lease payments of the new tenant over the loan term. At issuance, the comparable DSCR was 1.57x. Fitch expects the loan to perform consistently through out the loan term due to the long term lease and the quality of the tenant. However, the non-investment grade credit assessment reflects the lower cash flow.

The 529 Bryant Street loan (1.5%) is collateralized by an office property in Palo Alto, CA with two tenants. One of the original two tenants vacated and a new tenant is paying half the original tenant's rent. The building remains 100% occupied. However, the new rental income is substantially less than the income at issuance. The Fitch YE 2002 DSCR is 1.30x, using a cash flow adjusted for vacancy and TI/LC, and a 9.23% debt constant. Again, while Fitch feels the Outlook for this loan is Stable, the new DSCR reflects a non-investment grade credit assessment.

The Courtyard by Marriott loan (2.5%) is collateralized by a full service hotel in Philadelphia, PA. The property remains well occupied with an average occupancy at YE 2002 of 70%. However, the average daily rate (ADR) and revenue per available room (RevPAR) are below issuance levels. At YE 2002, ADR and RevPAR were $120 and $84 respectively compared to $141 and $90 at issuance. The lower room income has affected the Fitch DSCR, which is 1.29x at YE 2002, compared to 1.91x at issuance. The Fitch DSCR is calculated using a cash flow adjusted for management fees and furniture, fixtures and equipment (FF&E) and an 11.33% debt constant. While the property is master leased to Marriott, Fitch reviews the loan based on actual property operations. The decline in performance results in a non investment grade credit assessment.

Three other credit assessed loans maintain investment grade assessments. The largest loan in the pool, the Westfield Shoppingtown Meriden (6.1%), consists of the A note of a $96.4 million whole loan securitized by a regional mall in Meriden, CT. The A note portion is currently $78.1 million, while the B note, which securitizes a separate trust, Westfield Shoppingtown 2001-C2A, is $18.2 million. The trailing twelve month (TTM) February 2003 DSCR for the whole loan is 1.35x, compared to 1.31x at issuance. The DSCR is calculated using a Fitch stressed cash flow and debt constant of 9.50%.

The NewPark Mall (5.7%) loan is also secured by a regional mall, located in Newark, CA. The performance has improved since issuance, as demonstrated by a YE 2002 Fitch DSCR of 1.47x compared to a 1.34x at issuance. The DSCR is calculated using a stressed cash flow adjusted for vacancy and TI/LC using a debt constant of 9.50%.

Hartz Mountain Industries, also known as 400 Plaza (1.7%) is collateralized by an office property in Secaucus, NJ. The performance of this loan remains relatively consistent, with a Fitch YE 2002 DSCR of 1.27x, compared to 1.33x at issuance. The DSCR is calculated using a stressed cash flow and a debt constant of 9.66%.

There is currently one loan other than 10950 Tantau at the special servicer. The loan (0.4%) is collateralized by an industrial property located in Manassas, VA. The special servicer has approved a loan assumption and expects to return the loan to the master servicer this year. No losses are expected.

In its review, Fitch re-modeled each loan based on current performance, including the six credit assessed loans. The change to non-investment grade ratings of three of these loans is seen as a negative event for the deal. If additional declines are reported to these loans or other credit assessed loans, or additional loans become specially serviced, ratings downgrades are possible. Further declines in credit assessed loans could cause downgrades to investment grade rated classes. However at this time, the resulted credit enhancement levels remained sufficient to affirm all ratings and remove class P from Rating Watch Negative.