Fitch Places LBUBS 2006-C7 on Rating Watch Negative

NEW YORK--()--Fitch Ratings has placed the following class of LB-UBS Commercial Mortgage Trust, series 2006-C7 on Rating Watch Negative:

--$302 million class A-M 'AAsf'.

SENSITIVITY/RATING DRIVERS

The class has been placed on Rating Watch Negative based on an increase in expected losses on loans in special servicing and deterioration in collateral performance. An update to a recent valuation on the fifth largest loan in the pool, currently in special servicing, indicated a significant increase in expected losses. In addition, the most recent criteria updates reflect higher cap-rate scenarios for multifamily and hotel loans.

Fitch expects to resolve the Rating Watch status upon a complete review of the transaction within the next several months, and include an analysis of updated valuations and performance data. Fitch expects class A-M could be downgraded at least one category given the high percentage of expected losses coupled with limited subordination of the remaining classes.

Additional information on Fitch's criteria for analyzing U.S. fixed rate CMBS 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 >> CMBS >> Criteria Reports

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' (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

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