Asset Sec Corp.'s 1996-MD VI P-T Ctfs Downgraded By Fitch.

Business Editors

NEW YORK--(BUSINESS WIRE)--Sept. 25, 2000

Asset Securitization Corporation's commercial mortgage pass-through certificates, series 1996-MD VI $35.8 million class B-1 and $1,000 class B-1H are downgraded to `BB-' from `BB' by Fitch. In addition, the $44.8 million class A- 4 certificates are affirmed at `A'; the $22.4 million class A-5 at `A-'; the $49.2 million class A-6 at `BBB'; and the $71.6 million class A-7 at `BBB-'. The $52.0 million class A-1A, $333.5 million class A-1B, $172.0 million class A-1C, $35.8 million class A-2, $35.8 million class A-3 and interest only classes CS-1, CS-2 and CS-3 are not rated by Fitch. The rating actions follow Fitch's annual review of the transaction, which closed in Dec. of 1996.

The downgrades are primarily attributable to the deteriorating performance of the Horizon II (Horizon) loan collateral and the current financial difficulties of the borrower, Prime Retail (Prime). The overall borrower concentration of Prime is 51% of the pool by outstanding balance. On Sept. 8, 2000, Prime stated in a press release that a senior mortgage and corporate mezzanine loan to be provided by Lehman Brothers Holdings would not close on the anticipated date of Sept. 30 and if unable to close the loans, the Company `will consider all alternatives, including seeking protection in bankruptcy court.'

The certificates are collateralized by five mortgage loans on 37 assets. The properties consist of 20 factory outlet centers (51% by principal balance), 16 hotels (45%), and one mixed-use development (4%). The properties are located in 20 states, with significant concentrations in Texas (21%), California (12%) and Florida (9%). As of the Sept. 2000 distribution date, the pool's aggregate certificate balance has decreased by 4.7%, to $852.9 million from $895.2 million at closing. No loans have paid off since closing.

As part of its review, Fitch analyzed the performance of each loan. Despite the Horizon loan's deteriorating performance, the overall financial performance of the pool has improved since closing. The overall Fitch stressed weighted average debt service coverage ratio (DSCR) for the trailing 12 months (TTM) ended 6/30/00 increased to 2.06 times (x) from 2.02x as of 6/30/99 and 1.69x at closing.

Prime Retail II is the largest loan, representing 40% of the pool. The loan is currently collateralized by 15 factory outlets concentrated in nine states. Adjusted net cash flow (NCF) for TTM 6/30/00 has declined by 7% from TTM 6/30/99 but still shows an increase of 12% from closing. The corresponding stressed DSCR, based on a 10.09% hypothetical mortgage constant, is at 1.72x compared to 1.83x for the prior year and 1.66x at closing. Average occupancy has declined slightly to 91% as of 6/30/00 from 93% for the prior year. Average store sales for the year-ended 12/31/99 were $229 per square foot (psf), a decrease of 4% from the prior year. Certain properties in the pool have been adversely affected by new competition in the market. To date, Prime has added approximately 500,000 square feet to nine of their centers and have drawn the entire $40 million from the expansion escrow funded at closing.

The Horizon loan, representing 11% of the pool, is collateralized by five factory outlets, which are located in three states. Adjusted NCF for TTM 6/30/00 has declined by 16% from TTM 6/30/99 and 15% from closing. The corresponding stressed DSCR, based on a 10.09% hypothetical mortgage constant, is at 1.35x compared to 1.57x for the prior year and 1.56x at closing. Average occupancy, at 92%, is down slightly from 94% for the previous year. Average store sales for the year-ended 12/31/99 are $229 psf, representing an increase of 4% over the prior year.

The MHP II loan, representing 30% of the pool, is collateralized by four full-service hotels, which are located in three states. Adjusted TTM 6/00 NCF has increased 10% from TTM 6/30/99 and 28% from closing. The stressed DSCR, using a 10.48% constant, is at 2.45x, compared to 2.18x for the prior year and 1.80x at closing. Revenue per available room (RevPAR) in 1999 increased 6% from 1998 and 26% since origination. The New Orleans property, which was fully renovated in 1998, contributed significantly to the increased performance.

The Columbia Sussex II loan, representing 15% of the pool, is collateralized by 12 full service hotels concentrated in eight states. Fitch's adjusted NCF for TTM 6/30/00 has remained flat from TTM 6/30/99 but has increased over 52% since closing. The stressed DSCR, using a 10.48% constant, is at 2.64x compared to 2.52x for the prior year and 1.60x at closing. RevPAR for 1999 increased 4% from 1998 and 37% from origination. The improved overall performance is primarily due to the strong performance of the two largest hotels in the pool, which are located in proximity to New York City.

The Palmer Square loan, representing 4% of the aggregate pool's principal balance, is secured by a mortgage encumbering parcels of land and six buildings comprising a full service hotel, three mixed-use office and retail buildings, and two parking facilities. The development is located in Princeton, New Jersey. The adjusted NCF for TTM 6/30/00 increased 19% from TTM 6/30/99 and 40% from closing. Fitch's stressed DSCR, based on a hypothetical 9.8% mortgage constant, is at 2.61x compared to 2.15x for the prior year and 1.79x at closing. The hotel portion's TTM 6/30/00 RevPAR increased 4% from TTM 6/30/99 and 35% from closing. Occupancy remains strong for the retail and office portions at 98% and 100%, respectively, as of June 2000.

Fitch will continue to monitor this transaction, as surveillance is ongoing.

Fitch is an international rating agency that provides global capital market investors with the highest quality ratings and research. Dual headquartered in New York and London with a major office in Chicago, Fitch rates entities in 75 countries and has some 1,100 employees in more than 40 local offices worldwide. The agency, which is a combination of Fitch IBCA and Duff & Phelps Credit Rating Co., provides ratings for Financial Institutions, Insurance, Corporates, Structured Finance, Sovereigns and Public Finance Markets worldwide.