Fitch Downgrades 1 Class of Morgan Stanley 1998-XL1.

NEW YORK -- Fitch Ratings downgrades and places on Rating Watch Negative one class of Morgan Stanley Capital I Inc.'s commercial mortgage pass-through certificates, series 1998-XL as follows:

--$27.8 million class H to 'BB-' from 'BBB-'

The following classes are affirmed by Fitch:

--$48.8 million class D at 'AAA';

--$46.3 million class E at 'AAA;

--$11.7 million class F at 'AAA;

--$30 million class G at 'AA';

--$13.9 million class J at 'C/DR5'.

Classes A-1, A-2, A-3, B and C have paid in full.

The downgrade is the result of an increase in expected losses from the Charlestowne Mall (24.8%) in St. Charles IL, a real estate owned (REO) asset.

As of the September 2008 distribution date, the collateral consisted of one mortgage loan and the above-mentioned REO asset. Through payoffs and amortization, the collateral balance has been reduced 80.7% to $178.4 million from $925.8 million at issuance.

The Charlestowne Mall transferred to special servicing when it failed to secure new financing at its anticipated maturity date in April 2005. The property is being marketed at this time and has an interested purchaser. Fitch anticipates that the net proceeds from the sale of the property will result in losses to the trust.

The Center America (75.2%) loan is collateralized by a pool of 42 retail assets located in Houston and Dallas, Texas and remains current. The portfolio was acquired by an entity related to the Centro Properties Group. The loan had an Anticipated Repayment Date (ARD) of June 1, 2008 and did not pay off. Additional interest continues to be deferred and accrue interest until the borrower secures refinancing. The final maturity date is June 1, 2028. While the weighted average (WA) occupancy in the pool has declined slightly to 86.4% from 91.7% at issuance, the debt service coverage ratio (DSCR) at year-end (YE) 2007 has risen to 2.40 times (x) compared to 1.37x at issuance, largely due to an increase in rents. Since issuance, NCF has increased 46.7%.

Fitch is monitoring the Center America properties for potential damages from Hurricane Ike.

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