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KEARNY STREET REAL ESTATE CO. $250 MILLION SECURED CLASS A NOTES 'AA' BY FITCH -- FITCH FINANCIAL WIRE --

 NEW YORK, June 29 /PRNewswire/ -- Kearny Street Real Estate Co., LP's $250 million floating-rate secured pay-through notes, class A, due 2000 are rated "AA" by Fitch. In addition, the $91.9 million 6.55 percent secured pay-through notes, class B, due 2000 are rated "A"; $80 million 7.70 percent notes, class C, due 2001 "BBB"; and $55 million 9.56 percent notes, class D, due 2003 "BB-". Fitch's rating does not address the likelihood of receipt of the class D prepayment premium.
 The ratings reflect a $69.7 million equity contribution by Kearny Street (a Morgan Stanley Real Estate Fund, LP affiliate), the experience of Morgan Stanley Real Estate Fund and its servicers, and Fitch's calculation of debt service coverage as 2.67 times on the class A bonds. Other positive features include a $17 million initial interest reserve and $39.5 million initial asset reserve for the benefit of noteholders, an interest rate cap for the floating-rate debt, as well as a structure whereby all cash flow is paid to amortize debt with no payments to equity, other than actual direct costs of operations, until all debt is retired. Additional comfort is derived from the fact that many collateral loans are paying as agreed and recent collection history from the assets has been good. Although asset quality is above average, concerns include the pool's concentration in California, the presence of a disproportionately large asset (9.3 percent of the total collateral balance), and the concentration of office and hotel properties.
 The portfolio consists of 114 subperforming and nonperforming mortgage loans or participation interests with an aggregate customer principal balance of $1.3 billion at March 31, 1993. Also included in the pool are eight properties owned by the company with real estate asset balances totaling $63 million. Retail properties comprise approximately 25 percent of the pool by customer and real estate asset balance, with office (24 percent), multifamily and residential (17 percent), and hospitality (18 percent), representing other major uses in the pool. The properties are located primarily in California (55 percent), Washington (10 percent), Arizona (9 percent), and metropolitan Washington, D.C. (8 percent). The loans, participation interests, and real estate assets were acquired from BankAmerica Corp. affiliates.
 Morgan Stanley Real Estate Fund previously acquired the $900 million AmeriFirst portfolio. The asset purchase price and reserve funds were funded through note issuance and a $69.7 million equity contribution from the fund. Hanford/Healy Asset Management Co., ranked by Fitch as an "Above Average" servicer of nonperforming loans, will handle loan modifications, workouts, and property management activities, while The First National Bank of Chicago is loan administrator.
 -0- 6/29/93
 /CONTACT: Janet Forst, 212-908-0527, or Ron Wechsler, 212-908-0527, both of Fitch/


CO: Kearny Street Real Estate Co. ST: IN: SU: RTG

TS -- NY072 -- 6818 06/29/93 15:24 EDT
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Date:Jun 29, 1993
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