Fitch Downgrades 1 & Upgrades 6 Classes of LB 1998-C1.

NEW YORK -- Fitch Ratings has taken action on LB Commercial Mortgage Trust's commercial mortgage pass-through certificates, series 1998-C1, as follows:

--$17.3 million class L downgraded to 'C' from 'CC'.

Additionally, Fitch upgrades the following classes:

--$90.7 million class D to 'AAA' from 'AA+';

--$34.6 million class E to 'AAA' from 'A+';

--$51.8 million class F to 'AA' from 'BBB';

--$34.6 million class G to 'BBB+' from 'BB+';

--$17.3 million class H to 'BBB' from 'BB';

--$43.2 million class J to 'BB-' from 'B'.

The following classes are affirmed by Fitch:

--$582.1 million class A-3 at 'AAA';

--Interest only class IO at 'AAA';

--$86.4 million class B at 'AAA';

--$86.4 million class C at 'AAA';

--$17.3 million class K at 'B-'.

Fitch does not rate the $7.1 million class M certificates.

The upgrades reflect the defeasance of an additional 2.3% of the pool as well as 3.3% paydown since Fitch's previous rating action. Since issuance, 14.5% of the pool has defeased. As of the January 2006 distribution date, the collateral balance has been reduced by 38.2%, to $1.07 billion from $1.73 billion at issuance. The deal benefits from being diverse, both geographically and by loan size, with the five largest loans comprising only 11% of the pool.

There are six assets, representing 4.4% of the pool, in special servicing, including two 90-days delinquent (1.3%) and two real estate owned (REO) (1.8%). Losses are expected on most of the specially serviced loans. The largest of them (1.4%) is a retail center in Kansas City, MO, and is currently approximately 60% occupied. The asset is REO and the special servicer is soliciting proposals from brokers.

The next specially serviced loan (1.0%) is secured by a multifamily property in Durham, NC. The loan is currently 90-days delinquent and the servicer is evaluating workout options. The third specially serviced asset (0.38%) is an office property in Nashville, TN. The asset is REO and will be marketed upon stabilization.

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