Fitch Ratings Upgrades Merrill Lynch's 1996-C2 Pass-Thru Ctfs.

Business Editors

NEW YORK--(BUSINESS WIRE)--Sept. 4, 2002

Merrill Lynch Mortgage Investors, Inc.'s commercial mortgage pass-through certificates, series 1996-C2, are upgraded by Fitch Ratings as follows: $68.3 million class B to 'AA+' from 'AA', $62.6 million class C to 'A+' from 'A', $56.9 million class D to 'BBB+' from 'BBB' and $28.5 million class E to 'BBB' from 'BBB-'. In addition, Fitch affirms the following classes: $79.6 million class A-2, $343.8 million class A-3 and interest-only class IO at 'AAA'; $62.6 million class F at 'BB-' and $39.8 million class G at 'B-'. Fitch does not rate the $33.6 million class H certificates. The rating affirmations follow Fitch's annual review of the transaction, which closed in November 1996.

The upgrades reflect the pool's stable operating performance, good diversification and a 32% reduction in the certificate balance since issuance. Fitch expects that the losses currently projected on the fifteen (7.2%) specially serviced loans will not exceed the most subordinate tranche, the unrated class H. The specially serviced loans include fifteen delinquencies. One loan (0.2%) is 30 days delinquent; 10 loans (4.7%) are 90+ days delinquent; one loan (0.1%) is in foreclosure; and three loans (2.1%) are real estate owned (REO). In July 2002, CRIIMI MAE Services LP (CRIIMI), the special servicer, disposed of the eighteen Service Merchandise loans without a loss to the Trust. These loans accounted for 4.3% of the pool as of Fitch's December 2001 review.

Fitch is concerned with the exposure to 22 hotel properties (13.1%), 20 of which (12.5%) are either specially serviced or on the servicer's watch list. Among these troubled hotel loans are the four specially serviced 90+ days delinquent Shilo Inn loans (4.1%) and two REO loans secured by Ramada Inns (1.4%). The borrowers have filed Chapter 11 bankruptcy for the four cross defaulted and cross-collateralized Shilo Inns, which reported a year-to-date May 2002 average occupancy that is significantly down from issuance. The properties, all located in Oregon, were found to be in good to excellent condition as of their most recent inspections (between January and June 2001). The two REO Ramada Inn loans are also located in Oregon, one in Portland (0.9%) and one in Beaverton (0.6%). Listing agents have been engaged for both of these sites, which were found to be in good condition at their 2002 inspections. To date, appraisal reductions calculated for the two Ramada Inns total $7.8 million.

As of the August 2002 distribution date, the pool's certificate balance has been reduced to $775.7 million from $1.14 billion at issuance. The certificates are collateralized by 218 fixed-rate mortgage loans, consisting primarily of multifamily (40%), retail (25%), and hotel (13%) properties, with concentrations in California (14%), Florida (13%), and Texas (9%).

CRIIMI, the primary servicer, provided year-end 2001 financials for 92.7% of the pool by principal balance. According to this information, the 2001 weighted average debt service coverage ratio (DSCR) is 1.41 times (x), which is relatively unchanged from 1.40x in 2000, but above the underwritten DSCR for the same loans of 1.31x. A total of 28 loans (11.7%) have 2001 DSCRs below 1.00x, including five (4%) that are in special servicing. Fitch reviewed the exception report and found 44 loans (18.4%) with material exceptions.

Fitch analyzed each loan in the pool and assumed stressed default probabilities and loss severities for loans of concern, including the liquidation scenarios of certain specially serviced loans. The required credit enhancement that resulted from this remodeling of the pool warranted the upgrades on the senior classes B, C, D and E. Fitch will continue to monitor this transaction, as surveillance is ongoing.