Fitch Ratings Affirms Heller Financial's 1999 PH-1 Certificates

Business Wire, Oct 25, 2002

Business Editors

NEW YORK--(BUSINESS WIRE)--Oct. 25, 2002

Heller Financial Commercial Mortgage Asset Corp.'s mortgage pass-through certificates, series 1999 PH-1, $151.4 million class A-1, $535.6 million class A-2, and interest-only class X are affirmed at 'AAA' by Fitch. In addition, the $22.7 million class B is affirmed at 'AAA', the $20.2 million class C at 'AA', the $53.0 million class D at 'A', the $12.6 million class E at 'A-', the $37.9 million class F at 'BBB', the $17.7 million class G at 'BBB-', the $35.3 million class H at 'BB ', and the $20.2 million class J at 'BB'. The $7.6 million class K is affirmed at 'BB-', the $15.1 million class L at 'B', and the $7.6 million class M at 'B-'. The $18.8 million class N is not rated by Fitch. The rating affirmations follow Fitch's review of the transaction, which closed in May 1999.

The rating affirmations reflect the consistent loan performance, investment grade credit assessments of two loans (9.30% of the pool) and minimal reduction of the pool collateral balance since closing. As of the October 2002 distribution date, the pool's aggregate certificate balance has decreased by 5.3% since closing, to $955.7 million from $1.0 billion. The certificates are collateralized by 187 fixed-rate mortgage loans, consisting primarily of retail (31% by balance), multifamily (25%), and office (23%) properties, with concentrations in Texas (13%), New Jersey (10%), and California (10%).

Wachovia Securities, the master servicer, provided year-end (YE) 2001 borrower operating statements for 94% of the pool's outstanding balance. The weighted average debt service coverage ratio (DSCR) for YE 2001 increased to 1.47 times (x) from 1.39x at closing. Ten loans (3.14%) reported YE 2001 DSCRs below 1.00x. There are currently no delinquent loans and only one loan (0.31%) in special servicing. Since Fitch's previous review, the Trust incurred approximately $1.4 million in losses due to the disposition of two assets (one hotel and one office).

Fitch reviewed the performance and underlying collateral of the South Plains Mall (6.58%) and the Station Plaza Office Complex (2.72%) loans, which both have investment grade credit assessments. The DSCR for each of these loans is calculated using borrower financials less required reserves and debt service payments based on the original balance and Fitch stressed refinance constant.

The South Plains Mall, located in Lubbock, Texas, consists of 1.1 million sq. ft., of which 1.0 million sq. ft. is collateral for the loan. Total mall occupancy is 98% as of 6/30/02, which is flat to the 98% occupancy at closing. The anchors at the mall, JC Penney, Dillard's, Dillard's Home, Mervyn's, Beall's, and Sears, have reported YE 2001 sales per sq. ft. that are generally consistent with the historical performance at the property. The trailing-twelve-month (TTM) 6/30/02 DSCR is 1.87x, up from 1.70x at TTM 6/30/01 and 1.47x at closing.

The Station Plaza Office Complex consists of three office buildings (320,477 sf) located in Trenton, New Jersey. Property occupancy is at 100%, which is flat to closing. The largest tenant is the State of New Jersey, rated 'AA' by Fitch, which leases 87% of the buildings under a lease expiring in 2017. The loan will fully amortize by August 2013. The TTM 6/30/02 DSCR is 1.28x, compared to 1.32x at TTM 6/30/01 and 1.36x at closing.

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