Fitch Ratings Upgrades Two Classes of Nomura 1995-MD III.

CHICAGO -- Fitch Ratings upgrades the following classes of Nomura Asset Securitization Corps.' commercial mortgage pass-through certificates, series 1995-MD III:

-- Interest-only class A-3CS to 'AAA' from 'AA-';

-- $42.8 million class A-4 to 'AAA' from 'AA-'.

In addition, Fitch affirms the following:

-- $8.9 million class A-3 at 'AAA';

-- $42.8 million class B-1 at 'BB'.

The following classes are not rated by Fitch:

-- $29.7 million class B-2;

-- $2.4 million class B-3;

-- $2.5 million class B-4A;

-- $2.8 million class B-4B;

-- $1,000 class B-4C.

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

The upgrades are the result of paydown due to repayment and scheduled amortization. The certificates are currently collateralized by three mortgage loans (60.5%) on six properties and one defeased loan consisting of two notes: Hagan A (15.9%), which matures April 1, 2005 and Hagan B (23.6%), which matures April 1, 2010. Overall, the pool's balance has been reduced by 75%, to $131.9 million since issuance.

Of the remaining three non-defeased loans in the transaction, Fitch considers two, the Cayman loan (24.4%) and the Larkin loan (17.5%), to be loans of concern. The Cayman loan is collateralized by a Marriott Hotel on Grand Cayman Island in the British West Indies. The property has been REO (real estate owned) since May 2003. The property sustained approximately $8.5 million in damage during Hurricane Ivan in September 2004, and is currently undergoing renovations to bring the hotel back to 'pre-hurricane' status. The hotel is not open to tourists, but some rooms are being rented by construction workers and insurance representatives. Fitch anticipates that this loan will likely be resolved at a significant loss.

The other loan of concern, the Larkin loan, is secured by four full-service hotels in Colorado, Texas, and Montana. The loan transferred to the special servicer in late November 2004. Workout options are currently under evaluation. While the portfolio's performance improved for 2004, Fitch stressed DSCR (debt service coverage ratio), after giving credit for amortization, remains below 1 times (x), at 0.94x. Fitch will continue to closely monitor this portfolio as more information, including a new appraisal, becomes available.

The final non-defeased loan in the transaction is the Bayfront loan, representing 18.5% of the pool. The loan is secured by an 18-story office building in Miami, FL, containing 230,000 square feet (sf) of office space and 98,000 sf of retail space. Performance continues to improve, and Fitch's stressed net cash flow is up 11.4% over issuance. The current occupancy is 85%. One potential concern is the large amount of space expiring in 2005. While a large retail tenant recently renewed its lease, there is an additional 23% of space, concentrated primarily among two, long-term tenants, that expires between July and September 2005. This could cause a significant stress to the property's cash flow, should neither tenant renew its lease.