Fitch Places Wells Fargo's CMBS Servicer Ratings on Rating Watch Negative

CHICAGO--(BUSINESS WIRE)--On Oct. 3, 2008, Wells Fargo Bank (Wells Fargo), a large Fitch-rated CMBS servicer, announced that it reached a definitive agreement to merge with Wachovia Corporation, parent company of Wachovia Securities (Wachovia), another large Fitch-rated CMBS servicer.

The stress and distraction associated with merger activity at the parent level has the potential to negatively impact operations of the servicing entities involved. In addition, Wells Fargo, like all CMBS servicers is facing increased challenges associated with servicing in today's difficult commercial real estate market. Although Fitch has not observed any degradation in Wells Fargo's servicing performance, the challenging servicing environment coupled with the uncertainty associated with the integration of these two large, active commercial mortgage servicing operations has led Fitch to place the CMBS servicer ratings of Wells Fargo on Rating Watch Negative.

Fitch rates Wells Fargo as follows:

--Primary Servicer 'CPS1';

--Master Servicer 'CMS2';

--Special Servicer 'CSS1'.

According to the Mortgage Bankers Association survey, as of June 30, 2008, Wells Fargo acted as primary and/or master servicer for 13,355 securitized loans totaling $132.5 billion. At the same date, the bank was named special servicer for 499 securitized loans totaling $2.9 billion.

The ratings of the CMBS transactions serviced by Wells Fargo are not expected to be negatively impacted by the servicer Rating Watch status. Fitch considers master servicers who maintain at least a 'CMS3' rating, and special servicers who maintain at least a 'CSS3' rating to be fully acceptable to service CMBS transactions. Fitch will continue to closely monitor the status of the merger and the operational performance of Wells Fargo and will take ratings actions or provide further commentary, as necessary.

Fitch rates commercial mortgage primary, master, and special servicers on a scale of 1 to 5, with 1 being the highest rating. Within each of these rating levels, Fitch further differentiates ratings by plus (+) and minus (-) as well as the flat rating. For more information about Fitch commercial mortgage servicer ratings or rating criteria, refer to the report titled "U.S. Commercial Mortgage Servicer Rating Criteria" dated September 14, 2007, which is available on Fitch's web site at www.fitchratings.com.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, 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.