Fitch Takes Rating Actions on Commercial Mortgage Acceptance Corp., Series 1998-C2

NEW YORK--(BUSINESS WIRE)--Fitch Ratings upgrades one class of Commercial Mortgage Acceptance Corp., commercial mortgage pass-through certificates, series 1998-C2, as follows:

-- $36.1 million class H to 'AA-' from 'A+';

In addition, Fitch downgrades one class as follows:

-- $14.7 million class L to 'C/DR5' from 'CC/DR4';

Fitch also affirms the following classes:

-- Interest-only class X at 'AAA';

-- $120.8 million class C at 'AAA';

-- $173.5 million class D at 'AAA';

-- $43.4 million class E at 'AAA';

-- $21.7 million class G at 'AAA';

-- $65.1 million class J at 'BB';

-- $21.7 million class K at 'B+'.

Fitch does not rate the $122.9 million class F certificates. Class M has been reduced to zero due to realized losses. Classes A-1, A-2, A-3, and B have paid in full.

The upgrade reflects increased credit enhancement levels due to the repayment of 111 loans, the liquidation of three loans, and scheduled amortization that have occurred since the last Fitch rating action (15.0%). As of the July 2008 distribution date, the pool's aggregate balance has been reduced 78.6% to $619.7 million from $2.89 billion at issuance. Of the original 512 loans, 142 remain in the pool. Twenty-four loans (30.7%) have defeased, including five of the top 10 loans (20.3%).

The downgrade is due to potential losses on three loans recently transferred to special servicing (3.0%). In total, four assets (3.4%) are in special servicing, including one real estate owned (REO) (0.4%).

The largest specially serviced loan (2.2%) was transferred May 7, 2008, due to imminent default. The loan is collateralized by a 245,010 square foot (sf) grocery-anchored retail center located in Lafayette, IN. As of Dec. 31, 2007, the center was 76% occupied, and had a servicer-reported debt service coverage ratio (DSCR) of 0.66 times (x). The special servicer has ordered an appraisal, and is considering workout options. Losses are possible.

The second largest specially serviced loan (0.4%) is secured by a 78,000 sf industrial property located in San Jose, CA. The property was 100% occupied and had a servicer-reported DSCR of 0.63x as of June 30, 2007. The loan was transferred to special servicing April 1, 2008, due to maturity default. The borrower is reportedly in the process of refinancing the loan.

The third largest specially serviced asset (0.4%) is a retail center located in Greenwood, SC that became real estate owned REO in June 2006. The special servicer recently leased a majority of space, and is currently soliciting bids for the build-out. Losses are possible.

The smallest specially serviced loan (0.4%) was transferred May 20, 2008. The loan is secured by a 150,965 sf grocery-anchored retail center in Dayton, OH. As of May 2008, the property is 47% leased; and the year-end 2007 servicer-reported DSCR was 0.35x. The special servicer has ordered third party reports as well as note sale proposals, which are not yet available.

Fitch Loans of Concern total 10.5%, and include the four specially serviced loans.

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