S&P Lowers, Afms Var Asset Sec Corp Ser 1997-D4 Rtgs.

Business Editors

NEW YORK--(BUSINESS WIRE)--Sept. 9, 2003

Standard & Poor's Ratings Services today lowered its ratings on classes B-2, B-3, B-4, B-5, and B-6 of Asset Securitization Corp.'s commercial mortgage pass-through certificates series 1997-D4. At the same time, the ratings on classes A-1B, A-1C, A-1D, A-6, A-8, and B-1 from the same transaction are affirmed (see list). Standard & Poor's did not rate any other certificates in this transaction.

The lowered ratings reflect anticipated credit support erosion upon the eventual disposition of some of the specially serviced assets, particularly retail and lodging assets; concerns regarding some of the loans on the servicer's watchlist; ongoing interest shortfalls on class B-6; and the susceptibility of class B-5 to future shortfalls.

The affirmations reflect credit support levels that adequately support the existing ratings under various stress scenarios.

There are eight specially serviced loans, with a current combined balance of $126.6 million, or 10.2% of the pool. Four of these loans are current and four are 90-plus days delinquent (combined balance of $57.7 million, or 4.6% of the pool). There are no other delinquent loans in the pool. Hudson Hotels, the sixth largest loan at $51.3 million, or 4.1% of the pool, is current, but specially serviced by GMAC Commercial Mortgage Corp. (GMACCM), which recently purchased Lend Lease Asset Management. The loan is secured by 16 lodging properties consisting of three full-service and 13 limited-service hotels totaling 1,809 rooms. Eight of the limited-service hotels are exterior-corridor Fairfield Inns. The loan was placed in special servicing due to the bankruptcy of Hudson Hotels Corp., the borrower's parent corporation. GMACCM reports an overall net cash flow (NCF) debt service coverage ratio (DSCR) of 0.84x on a trailing 12-month (TTM) basis as of June 30, 2003, down from 1.07x for 2002 and 1.20x for 2001. The hotel portfolio reports overall occupancy of 58.5% and an average daily rate (ADR) of $60.73 and revenue per available room of $36.61 for 2002. GMACCM received a broker's opinion of value in excess of the loan balance from a broker who had prior dealings with some of the assets.

Two large retail loans, with a combined balance of $44.6 million, or 3.58% of the pool, and two lodging properties (combined $13.1 million, or 1.05% of the pool), merit concern and are discussed below:

-- Prime Retail II has a current balance of $24.5 million (1.97%

of the pool) and is secured by three factory outlet centers

located in Coeur D'Alene, Idaho (50% occupied); Bend, Ore.

(94% occupied); and Sedona, Ariz. (83% occupied). The loan is

90-plus days delinquent, and the borrower has indicated a

desire to return the properties to the lender, as they do not

support the current debt. The loan carries a coupon of 8.35%,

and reported a year-end 2002 DSCR of 0.84x and a March 31,

2003 TTM DSCR of 0.83x. GMACCM is seeking a deed-in-lieu

foreclosure. The largest of the three, the Coeur D'Alene

property, is performing extremely poorly. The property has a

poor physical layout, as it is constructed with the rear end

of the buildings facing the nearby interstate.

-- The Century Square Mall loan has a balance of $20 million, and is

secured by a 415,713-square-foot retail shopping center built in

1991 and located in West Mifflin, Penn. (about nine miles

southeast of Pittsburgh, and close to the Allegheny County

Airport). It is 90-plus days delinquent. Several tenants have gone

bankrupt and either left the center or have had their rents

reduced. The latest servicer-reported DSCR was 0.58x TTM as of

March 31, 2003, with occupancy at 75%. A loss is expected upon

disposition.

-- There are two delinquent lodging loans in special servicing:

the full-service Radisson Hotel in Columbus, Ohio ($8.7

million, or 0.70% of the pool), and the extended-stay Clarion

Suites Inn in Manchester, Conn., near Hartford ($4.4 million,

or 0.35% of the pool). Both loans are 90-plus days delinquent

and are suffering from poor performance, with low occupancies

and ADRs. Significant losses could occur on the Radisson Loan,

as the hotel is operating at a loss.

The servicer's watchlist includes 25 loans totaling $227.1 million (18.2% of the pool). Of note, there are two top 10 loans that appear on the servicer's watchlist. The Saracen Office portfolio, the second largest loan, at $64.9 million, consisting of six office properties located near Boston, Mass., appears on the watchlist due to low DSCRs and occupancies for some of the assets. However, one vacant property has been substantially renovated and enlarged and is now available for leasing. The fifth largest loan, Burnham Pacific, at $52.9 million, consists of two retail shopping centers in California. The loan appears on the watchlist due to occupancy problems (74%) at one of the properties relating to the borrower's inability to re-lease the vacant Home Base space.

As of August 2003, the trust collateral consisted of 114 commercial mortgages, with an outstanding balance of $1.244 billion, down from $1.403 billion at issuance. Cumulative pool losses to date from eight loans total $8.9 million. The master servicer, GMACCM, formerly CapMark Services L.P., reported full-year 2002 NCF DSCRs for 88% of the pool. Approximately 10% of the pool (six loans) has been fully defeased and need not report DSCRs. Based on this information, Standard & Poor's calculated the weighted average DSCR for the pool to be 1.56x, up from 1.42x at issuance. The current weighted average DSCR for the top 10 loans totaling $506.35 million, or 40.7% of the pool (excluding defeasance), has increased to 1.52x for year-end 2002, compared to 1.42x at issuance. All but two of the top 10 loans reported improved DSCR performance since issuance.

The pool has significant geographic concentrations in California (21%), New York (7%), Massachusetts (6%), and Florida (5%). Significant collateral type concentrations include retail (34%), office (17%), lodging (14%), multifamily (13%), and treasuries (10%).

Based on discussions with GMACCM, Standard & Poor's stressed various loans in the mortgage pool as part of its analysis. The expected losses and resultant credit levels adequately support the rating actions.

RATINGS LOWERED

Asset Securitization Corp.
Commercial mortgage pass-thru certs series 1997-D4

           Rating
Class    To        From      Credit Enhancement (%)
B-2      BB-       BB                         6.05
B-3      B+        BB-                        4.92
B-4      B-        B+                         3.23
B-5      CCC       B                          2.10
B-6      D         CCC                        0.97

RATINGS AFFIRMED

Asset Securitization Corp.
Commercial mortgage pass-thru certs series 1997-D4

Class    Rating   Credit Enhancement (%)
A1-B     AAA                      35.39
A1-C     AAA                      35.39
A1-D     AAA                      35.39
A-6      BBB                      15.08
A-8      BBB-                     11.69
B-1      BB+                       8.87