Fitch Lowers Class A-5 of ASC 1997-D5; Removes 3 Classes From Watch Negative.

NEW YORK -- Asset Securitization Corp.'s (ASC) commercial mortgage pass-through certificates, series 1997-D5, $39.5 million class A-5 is downgraded to 'B+' from 'BB' and removed from Rating Watch Negative by Fitch Ratings.

Fitch also affirms and removes the following classes from Rating Watch Negative:

-- $43.9 million class A-6 'B';

-- $21.9 million class A-7 'B-'.

The following remain on Rating Watch Negative:

-- $87.7 million class A-2 'AA';

-- $52.6 million class A-3 'A+';

-- $26.3 million class A-4 'A'.

Fitch also affirms the following classes:

-- $126.4 million class A-1B 'AAA';

-- $713 million class A-1C 'AAA';

-- $229.8 million class A-1D 'AAA';

-- $52.6 million class A-1E 'AAA';

-- Interest-only class PS-1 'AAA'.

The following classes remain at their current levels:

-- $39.5 million class B-1 'C';

-- $39.5 million class B-2 'C';

-- $8.8 million class B-3 'C';

-- $13.2 million class B-4 'C';

-- $13.2 million class B-5 'C';

-- $11.6 million class B-6 'D'.

The downgrade of class A-5 reflects the losses expected on several specially serviced loans, with a majority of losses due to occur after the disposition of the Hyde Park loan, secured by a vacant hospital in Chicago, IL. A lawsuit, filed on behalf of the trust against the depositor and mortgage loan seller to have the Hyde Park loan repurchased, is likely to continue through 2005 unless a settlement is reached beforehand.

The Fitch expected principal losses to the Hyde Park loan are due to unpaid principal balance, legal fees and assumed future legal fees, accruing at approximately $500,000 per month.

Additionally, Fitch anticipates losses of approximately $10 million on four other specially serviced loans (1%).

Classes A-2 through A-4 remain on Rating Watch Negative. Although the interest shortfalls on these classes have been paid in full, Fitch remains concerned about the continuing deterioration of the pool's collateral. The interest shortfalls are currently affecting classes A-5 through B-6.

Realized losses to date total $31.7 million or 1.77% of the original principal balance.

While there has been a decline in the pool performance due to the increased number of loans of concern, five loans, the Saul Centers pool, 3 Penn Plaza, the Fath Multifamily pool, Swiss Bank Tower and Comsat maintain investment grade credit assessments. One loan, the Westin Casuarina Resort, maintains a below investment grade credit assessment.

Fitch will continue to monitor this transaction for developments on the Hyde Park repurchase claim, the loans in special servicing and any other potential issues. Further rating actions might be necessary if there is an increase in loans of concern in the pool or if the expected losses continue to increase.