Fitch: U.S. CMBS Should Weather Interest Rate Hikes Well in 2005.

NEW YORK -- Coming off of what likely will be a record year in domestic issuance, the U.S. commercial mortgage-backed securities sector will likely maintain its consistent pace in 2005 despite anticipated interest rate increases, according to Fitch Ratings. With 64 deals totaling $68 billion already completed through third-quarter 2004 compared to 56 deals totaling $51 billion through the same period in 2003, Fitch expects total U.S. CMBS issuance to reach approximately $95 billion by year-end, versus $74 billion in 2003.

'The CMBS sector's ability to attract capital and competition for both debt and equity product will likely be undeterred by interest rate hikes so long as they do not increase dramatically,' said Mary O'Rourke, Senior Director, Fitch Ratings. 'The CMBS sector's superior performance relative to alternative investments has encouraged investors to increase CMBS allocations.'

A positive development for CMBS in 2005 is that loans securitized in the mid-1990's are beginning to mature, which according to O'Rourke, 'creates opportunities to refinance existing securitized loans.' The efficiency of pricing and risk allocation created by the CMBS market will also allow the industry to continue to gain market share relative to other non-securitized lending sources.

Fitch's 'Global Structured Finance: 2005 Outlook and 2004 Review' encompasses an overview of rating performance in the past year for all of the major structured finance sectors in the U.S. and overseas, in addition to its 2005 forecast for the global ABS, CMBS, RMBS and CDOs sectors. The report is available on the Fitch Ratings web site at 'www.fitchratings.com'.