Fitch Removed TrizecHahn Series 2001-TZH Class E-3 & E-4 from Rating Watch Negative; All Classes Affirmed.

Business Editors

NEW YORK--(BUSINESS WIRE)--Nov. 13, 2003

TrizecHahn Office Properties Trust's, Commercial Mortgage Pass-Through Certificates, Series 2001-TZH Class E-3 and E-4 are removed from Ratings Watch Negative by Fitch Ratings. The following classes are affirmed: the $249.2 million class A-1FL, the $71.7 million A-2, the $236.7 million A-3FL, the $78.9 million class A-3, and the $240.6 million class A-4 at 'AAA', the $46.5 million class B-1FL, the $43.5 million class B-3FL, the $14.5 million class B-3, and the $47.0 million class B-4 at 'AA', the $101.4 million class C-3 and the $45.6 million class C-4 at 'A', the $106.1 million class D-3 and the $40.7 million class D-4 at 'BBB', and the $73.3 million class E-3 and the $32.3 million class E-4 at 'BBB-'.

The removal of the classes from Rating Watch Negative is due to the positive cash flow effect of the substitution of 550 West Washington in Chicago for two lesser quality assets, Clark Tower in Memphis, and Park Central in Dallas, and the strong leasing activity in three Houston assets. Fitch adjusted net cash flow (NCF) at 550 West Washington is 47.5% higher than NCF for Clark Tower and Park Central combined.

The Fitch adjusted debt service coverage ratio (DSCR) for the portfolio increased slightly to 1.31x compared to 1.30x at issuance. Fitch adjusted DSCR was calculated using June 30, 2003 financials, adjusting for the property substitutions, deducting leases expiring in the remainder of 2003, and incorporating additional leases signed from July 1 to November 1, 2003.

The certificates are backed by fee and leasehold mortgages on 27 office properties. The properties are located in 11 different states and Washington, D.C., with the largest concentrations in Houston (34% by allocated loan amount), Atlanta (18%) and Washington, D.C. (16%). The majority of the properties are located in Central Business Districts. The portfolio totals approximately 17.7 million square feet (sf) of gross leasable area (GLA), with properties ranging in size from 140,000 sf to 3.2 million sf.

Although the overall portfolio has shown recovery, Fitch has concerns with certain properties in the deal. Three Texas properties, accounting for 39% of the outstanding principal balance, experienced significant drops in their stressed NCF relative to Fitch's underwritten NCF. Allen Center, located in Houston, TX accounts for 24% of the allocated principal balance. Occupancy as of June 30, 2003 is approximately 86.5%. However, occupancy decreased further in July 2003 as a result of the expiration of Shell Oil Company's lease. Additional expirations account for a total 20.1% lease rollover from June 30, 2003 to December 31, 2003. Following Enron's bankruptcy filing in December 2001, approximately 660,000 sf (out of approx. 3.2 million sf of GLA) were vacated by Enron. Management has been actively marketing the space, and has signed leases totaling approximately 475,500 sf since July 1, 2003. Pro forma occupancy is approximately 81.7%.

Other Texas properties experiencing NCF declines since year end 2002 include Continental Centers I (8%) in Houston, and Plaza of the Americas (5 %) in Dallas. Continental Center I also experienced decreased occupancy as a result of Shell Oil Services lease expiration, representing 12.6% of NRA, in August 2003. Fitch stressed NCF, on a pro forma basis, decreased 25.9%. At Plaza of the Americas (5%) NCF decreased 42.3% since issuance. The decline is primarily due to the expiration of the Amresco lease in March 2002 Occupancy as of June 30, 2003 is 71%, compared to 84% at issuance.

Fitch is concerned with properties in other markets with declining NCF and occupancy. The Capital Center II & III in Sacramento (2%) experienced a 42.4% drop in NCF as of June 30, 2003, as space expired in 2002 and the property experienced slightly higher operating expenses. Occupancy at Capital II & III decreased to 75% from 94%, at issuance. One Reston Crescent in Washington, DC (2%) remained completely vacant as of June 30, 2003. The property's former sole tenant, Proxicom, Inc, terminated its lease in December 2001.

Other properties in the Washington, D.C. market have performed well. NCF increased 27% at 1550 & 1560 Wilson (2%), and 22% at Silver Spring Centre (1%). Robust leasing activity at Continental Center II (2%) in Houston has increased Fitch stressed NCF as of November 1, 2003 33.5% since issuance on a pro forma basis, accounting for new leases signed.

Fitch will continue to monitor this transaction as surveillance is ongoing.