CAPCO America Series 1998-D7 Pass-Thru Ctfs Affirmed By Fitch Ratings.

Business Editors

NEW YORK--(BUSINESS WIRE)--Sept. 30, 2002

CAPCO America Securitization Corp.'s commercial mortgage pass-through certificates, series 1998-D7, $183.6 million class A-1A, $632.3 million class A-1B, and interest-only class PS-1 certificates are affirmed at 'AAA' by Fitch Ratings. In addition, Fitch affirms the $62.3 million class A-2 certificates at 'AA', $68.5 million class A-3 at 'A', $59.2 million class A-4 at 'BBB', $21.8 million class A-5 at 'BBB-', $31.1 million class B-1 at 'BB+', $28 million class B-2 at 'BB', $15.6 million class B-3 at 'BB-', $24.9 million class B-4 at 'B' and $15.6 million class B-5 at 'B-'. The $21.8 million class B-6 and the $1,000 class B-6H certificates are not rated by Fitch. The affirmations follow Fitch's annual review of the transaction, which closed in September 1998.

The affirmations reflect the transaction's stable performance and moderate reduction of the pool collateral balance since issuance. As of the September 2002 distribution date, the pool's aggregate certificate balance has been reduced by 6.5% to $1.16 billion from $1.25 billion at issuance. No loans have realized losses. Four loans (3.8% of pool) have been defeased, including The Banyan Pool I loan (2.9%), which Fitch considered as having investment grade credit characteristics at issuance.

The pool is well diversified. The certificates are currently collateralized by 193 mortgage loans. Twenty four loans (9.5%) are credit tenant lease loans (CTL), secured by 136 properties net leased to one of six creditworthy entities. However, only 1.3% is secured by properties leased to below investment grade rated tenants. CapMark Services, L.P., the master servicer, collected year-end (YE) 2001 financials for 96% of the non-defeased, non-CTL loans. The CTLs and the defeased loans are not required to report financials. The YE 2001 weighted average debt service coverage ratio (DSCR) for those loans with financials was stable at 1.45 times (x) compared to 1.45x as of YE 2000 and up from 1.28x at issuance.

Five loans (2.5% by balance) are currently being specially serviced by Lennar Partners, Inc. (Lennar), including a 30-day delinquent (0.45%), a 90-day delinquent (0.51%), and a real estate owned (REO) loan (1.02%). The REO loan is secured by a retail property in San Antonio, TX. Several tenants including Service Merchandise and Office Depot vacated and occupancy declined to 43%. According to Lennar, a letter of intent has been signed and the transaction is scheduled to close in November 2002. A loss of approximately $5 million is expected on this loan.

The pool has a 10.6% hotel concentration. This exposure is mitigated by an improved credit rating for ACCOR, the leasee for nine CTL loans (5.9% of pool). ACCOR is currently rated 'BBB+' by Fitch, compared to 'BBB' at issuance. The second largest loan (3.9%) in the pool is secured by the Soho Grand Hotel in the Soho area of Manhattan. As of June 2002, the year-to-date occupancy was 86%, up from 85% at issuance and 92% at YE-2000. The trailing-twelve-month (ending June 2002) DSCR was 2.19x, compared to 2.14x at issuance and 3.51x as of YE-2000. Fitch is concerned about this property type and will continue to closely monitor this loan and other loans with hotel exposure in this deal. All hotel loans are current.

Three loans (4.8%) are subject to Kmart exposure. The 30-day delinquent loan (0.45%) is in special servicing as Kmart, occupying 59% of gross leasable area has closed and rejected the lease. The borrower is trying to lease up the vacant space. The cash flow form remaining tenants is nearly sufficient to meet the debt service.

Fitch applied various hypothetical scenarios taking into consideration all of the above concerns. Even under these stress scenarios subordination levels remain sufficient to affirm the ratings.

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