8-K 1 flb98c02_may.txt MAY 8K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report: May 18, 2004 (Date of earliest event reported) Commission File No.: 333-48943-04 First Union-Lehman Brothers-Bank of America Commercial Mortgage Trust Commercial Mortgage Pass-Through Certificates Series 1998-C2 (Exact name of registrant as specified in its charter) New York (governing law of Pooling and Servicing Agreement) (State of Incorporation) 52-2107970 52-2107968 52-2107969 52-6929147 (I.R.S. Employer Identification No.) c/o Wells Fargo Bank, N.A. 9062 Old Annapolis Road Columbia, MD 21045 (Address of principal executive offices) (Zip Code) (410) 884-2000 Registrant's Full Telephone Number (Former name, former address and former fiscal year, if changed since last report) ITEM 5. Other Events On May 18, 2004, a distribution was made to holders of First Union-Lehman Brothers-Bank of America Commercial Mortgage Trust, Commercial Mortgage Pass-Through Certificates, Series 1998-C2. ITEM 7. Financial Statements and Exhibits (c) Exhibits Item 601(a) of Regulation S-K Exhibit Number Description (EX-99.1) Monthly report distributed to holders of Commercial Mortgage Pass-Through Certificates, Series 1998-C2, relating to the May 18, 2004 distribution. Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. First Union-Lehman Brothers-Bank of America Commercial Mortgage Trust Commercial Mortgage Pass-Through Certificates Series 1998-C2 By: Wells Fargo Bank, N.A. as Trustee By: /s/ Beth Belfield, Assistant Vice President By: Beth Belfield, Assistant Vice President Date: May 18, 2004 INDEX TO EXHIBITS Exhibit Number Description (EX-99.1) Monthly report distributed to holders of Commercial Mortgage Pass-Through Certificates, Series 1998-C2, relating to the May 18, 2004 distribution. Wells Fargo Bank, N.A. Corporate Trust Services 9062 Old Annapolis Road Columbia, MD 21045-1951 First Union-Lehman Brothers-Bank of America Commercial Mortgage Trust Commercial Mortgage Pass-Through Certificates Series 1998-C2 For Additional Information, please contact CTSLink Customer Service (301) 815-6600 Reports Available on the World Wide Web @ www.ctslink.com/cmbs Payment Date: May 18, 2004 Record Date: April 30, 2004 This Trustee refers Certificateholders to recent notices from the Special Servicer in connection with ongoing lawsuits. The notices are currently posted on www.ctslink.com/cmbs. Updates will be posted in this location as they are received from the Special Servicer. Any inquiries on this matter should be directed to the Special Servicer. DISTRIBUTION DATE STATEMENT Table of Contents STATEMENT SECTIONS PAGE(s) Certificate Distribution Detail 2 Certificate Factor Detail 3 Reconciliation Detail 4 Other Required Information 5 Cash Reconciliation 6 Ratings Detail 7 Current Mortgage Loan and Property Stratification Tables 8 - 10 Mortgage Loan Detail 11 - 29 Principal Prepayment Detail 30 Historical Detail 31 Delinquency Loan Detail 32 - 33 Specially Serviced Loan Detail 34 - 45 Modified Loan Detail 46 Liquidated Loan Detail 47 Underwriter Lehman Brothers Inc. 3 World Financial Center New York, NY 10285 Contact: Tricia Hall Phone Number: (212) 526-5850 Underwriter First Union Capital Markets One First Union Center 301 South College Street Charlotte, NC 28288 Contact: Craig M. Lieberman Phone Number: (704) 383-7407 Servicer ORIX Capital Markets, LLC 1717 Main Street, 14th Floor Dallas, TX 75201 Contact: Don Kalescky Phone Number: (214) 237-2294 Special Servicer ORIX Capital Markets, LLC 1717 Main Street, 14th Floor Dallas, TX 75201 Contact: Don Kalescky Phone Number: (214) 237-2294 This report has been compiled from information provided to Wells Fargo Bank, N.A. by various third parties, which may include the Servicer, Master Servicer, Special Servicer and others. Wells Fargo Bank, N.A. has not independently confirmed the accuracy of information received from these third parties and assumes no duty to do so. Wells Fargo Bank, N.A. expressly disclaims any responsibility for the accuracy or completeness of information furnished by third parties. Copyright 2004, Wells Fargo Bank, N.A.

Cash Reconciliation Detail Total Funds Collected Interest: Scheduled Interest 17,460,580.98 Interest reductions due to Nonrecoverability Determinations 0.00 Interest Adjustments 0.00 Deferred Interest 0.00 Net Prepayment Interest Shortfall 0.00 Net Prepayment Interest Excess 0.00 Extension Interest 0.00 Interest Reserve Withdrawal 0.00 Total Interest Collected 17,460,580.98 Principal: Scheduled Principal 5,345,525.08 Unscheduled Principal 18,522,670.81 Principal Prepayments 18,522,670.81 Collection of Principal after Maturity Date 0.00 Recoveries from Liquidation and Insurance Proceeds 0.00 Excess of Prior Principal Amounts paid 0.00 Curtailments 0.00 Negative Amortization 0.00 Principal Adjustments 0.00 Total Principal Collected 23,868,195.89 Other: Prepayment Penalties/Yield Maintenance 2,469,669.45 Repayment Fees 0.00 Borrower Option Extension Fees 0.00 Equity Payments Received 0.00 Net Swap Counterparty Payments Received 0.00 Total Other Collected: 2,469,669.45 Total Funds Collected 43,798,446.32 Total Funds Distributed Fees: Master Servicing Fee 230,085.72 Trustee Fee 2,903.53 Certificate Administration Fee 0.00 Insurer Fee 0.00 Miscellaneous Fee 0.00 Total Fees 232,989.25 Additional Trust Fund Expenses: Reimbursement for Interest on Advances 1,550.53 ASER Amount 141,436.34 Special Servicing Fee 53,066.45 Rating Agency Expenses 0.00 Attorney Fees & Expenses 0.00 Bankruptcy Expense 0.00 Taxes Imposed on Trust Fund 0.00 Non-Recoverable Advances 0.00 Other Expenses (14.36) Total Additional Trust Fund Expenses 196,038.96 Interest Reserve Deposit 0.00 Payments to Certificateholders & Others: Interest Distribution 17,031,553.40 Principal Distribution 23,868,195.90 Prepayment Penalties/Yield Maintenance 2,469,669.45 Borrower Option Extension Fees 0.00 Equity Payments Paid 0.00 Net Swap Counterparty Payments Paid 0.00 Total Payments to Certificateholders & Others 43,369,418.75 Total Funds Distributed 43,798,446.96

Net Remaining Loan Operating DSCR Note Maturity Amortization Number Income Date DSCR Date Date Term 355132459 7,350,091.00 12/31/2003 1.76 06/01/1998 05/01/2013 287 240000009 2,789,064.00 12/31/2003 1.29 02/01/1998 01/01/2008 223 440000017 1,614,064.00 12/31/2002 1.11 03/01/1998 02/01/2028 284 440000022 899,938.00 09/30/2003 0.68 04/01/1998 03/01/2028 285 245114261 1,737,597.00 12/31/2003 1.31 02/01/1998 01/01/2018 163 180000396 05/01/1998 07/01/2019 181 180000368 1,619,968.00 12/31/2003 2.09 04/01/1998 03/01/2008 285 180000369 1,375,290.00 12/31/2003 1.85 04/01/1998 03/01/2008 285 245114323 352,595.00 12/31/2003 0.49 02/01/1998 01/01/2008 223 245114157 537,520.00 06/30/2003 0.87 02/01/1998 01/01/2008 283 245114274 389,470.00 12/31/2003 0.66 01/01/1998 12/01/2007 282 240000160 (649,115.00) 09/30/2003 (1.41) 04/01/1998 03/01/2008 285 245114315 245,538.00 12/31/2003 0.55 02/01/1998 01/01/2008 283 245114324 426,066.00 12/31/2003 0.88 02/01/1998 01/01/2008 223 245114322 236,233.00 12/31/2003 0.51 02/01/1998 01/01/2008 223 440000217 361,837.00 12/31/2003 0.95 04/01/1998 03/01/2023 225 240000258 345,185.00 09/30/2003 1.00 05/01/1998 04/01/2008 226 180000295 (119,579.00) 12/31/2003 (0.40) 03/01/1998 02/01/2008 284 240000277 (485,220.00) 12/31/2003 (1.52) 05/01/1998 04/01/2008 226 245114285 239,199.00 03/31/2003 0.83 02/01/1998 01/01/2008 283 245114268 744,500.00 09/30/2003 2.72 01/01/1998 12/01/2007 222 245114181 114,075.00 09/30/2003 0.49 02/01/1998 01/01/2008 223 440000378 410,335.00 12/31/2003 1.92 04/01/1998 03/01/2023 225 240000390 96,280.00 09/30/2003 0.48 04/01/1998 03/01/2008 285 195114158 245,478.00 12/31/2003 0.99 12/01/1997 11/01/2007 185 245114246 20,908.00 09/30/2003 0.09 01/01/1998 12/01/2017 162 440000501 221,733.00 03/31/2003 1.33 02/01/1998 01/01/2025 247 240000533 88,318.00 12/31/2003 0.60 05/01/1998 04/01/2008 226 (1) Resolution Strategy Code 1 - Modification 2 - Foreclosure 3 - Bankruptcy 4 - Extension 5 - Note Sale 6 - DPO 7 - REO 8 - Resolved 9 - Pending Return to Master Servicer 10 - Deed in Lieu Of Foreclosure 11 - Full Payoff 12 - Reps and Warranties 13 - Other or TBD (2) Property Type Code MF - Multi-Family RT - Retail HC - Health Care IN - Industrial WH - Warehouse MH - Mobile Home Park OF - Office MU - Mixed Use LO - Lodging SS - Self Storage OT - Other

Specially Serviced Loan Detail - Part 2 Offering Document Resolution Site Other REO Loan Cross Strategy Inspection Phase 1 Appraisal Appraisal Property Number Reference Code (1) Date Date Date Value Revenue 355132459 5 9 03/27/1998 105,000,000.00 240000009 9 13 32,605,000.00 440000017 17 7 03/10/2003 6,350,000.00 440000022 22 13 21,795,000.00 245114261 33 9 24,200,000.00 180000396 52 7 03/03/2004 6,885,000.00 180000368 66 13 12/03/1997 12,000,000.00 180000369 74 13 12/03/1997 11,500,000.00 245114323 90 13 03/27/2002 5,200,000.00 245114157 96 9 10/28/1997 9,400,000.00 245114274 99 13 10/07/1997 9,000,000.00 240000160 160 9 12/27/1997 7,710,000.00 245114315 166 13 10/07/1997 6,900,000.00 245114324 180 13 03/27/2002 4,700,000.00 245114322 185 13 03/27/2002 3,200,000.00 440000217 217 9 11/17/1997 5,900,000.00 240000258 258 3 12/02/1997 7,910,000.00 180000295 268 9 11/10/2003 2,850,000.00 240000277 277 3 03/24/2004 1,690,000.00 245114285 286 7 06/05/2003 3,580,000.00 245114268 342 9 09/01/1997 4,300,000.00 245114181 375 13 03/05/2004 3,170,000.00 440000378 378 13 10/27/1997 3,800,000.00 240000390 390 10 12/11/2003 1,500,000.00 195114158 398 13 06/30/2003 3,200,000.00 245114246 401 13 10/24/2002 2,350,000.00 440000501 501 11 08/15/2003 2,350,000.00 240000533 533 13 02/18/1998 2,800,000.00

Loan Number Comments from Special Servicer 355132459 The loan transferred to SS on 9/18/03 due to default related to borrower's failure to get lease approval. The subject lease (Sutherland, Asbill and Brennan, LP) was for 195,144 sf and a term of 12 years. Approval obtained 5/03. Collateral is a 605, 084 sf Class A office building in Atlanta, GA. YTD 9/30/03 DSC of 1.86 and occupancy of 90%.Borrower is contesting default interest that accrued while the loan was in default. Default interest is still outstanding. Loan will be returned when all issues are resolved. 240000009 Transferred to Special Servicing due to the Holiday Inn Express in Cave City, KY changing its flag to a Quality Inn.Based upon legal issues in KY, OCM believes negotiating a consent to the change in flag is best option - in process of receiving informatio n and evaluating.Third party inspections underway. Anticipate receiving by mid May. YTD 12/31/03 statements indicate an NOI DSCR of 1.50x 440000017 No Comments 440000022 Transferred to SS on 7/23/03, due to reasonably foreseeable default. Borrower has sold 2 of the 11 properties (approved by SS).Although case has been approved to sell 201 S. Central, contract was terminated in March, 2003. Borrower continues to attempt to sell 201 S. CentralLoan performing under forbearance agreement that provides for all rents to be placed in blocked account and Borrower receives an allowance to pay operating expensesForbearance Agreement expires end of May '04, at which time all past due amounts must be paid. We will likely extend the agreement for 30 - 60 days.If 201 S. Central is sold, proceeds would be used to bring loan current with remainder as a principal reduction. 245114261 Loan was transferred to Special Servicing August 7, 2003 due to Borrower's failure to provide general liability insurance. Policy expired January 2003.Borrower executed Forbearance Agreement week of 11/03/03 whereby Special Servicer waived the requiremen t for general liability insurance coverage until 5/31/04. In return, Borrower agreed to provide Lender with indemnification from CAP Care of Arkansas, Inc., CAP Care Group, Inc. and Evergreene Properties of North Carolina (nursing home operator). In add ition, Ronnel S. Parker paid $9,400 for expenses incurred by servicerand personally guaranteed that no material adverse changes will occur with respect to any parties providing indemnification. Borrower obtained general liability insurance(3/2). AM waiti ng on executed Forbearance Termination Agreement, AM to return to MS upon receipt. 180000396 No Comments 180000368 The loan was transferred to Special Servicing on February 18, 2004 because the Borrower failed to remit quarterly financials; however has regularly provided annual statements. OCM sent default notices to the borrower for the failure to provide quarterly financial statements through internal legal counsel. OCM internal legal counsel contacted the Borrower, who was apparently completely uncooperative----even rejecting OCM's offer to settle the amount. The Borrower's response was to file a lawsuit. Within the pleading, the Borrower claimed he was reasonably compliant with loan document requirements. OCM responded to the lawsuit by filing a Motion to Dismiss on February 23, 2004. The Motion to Dismiss hearing was sceduled for March 18, 2004.The hearing wa s postponed and a hearing date has not been set. OCM and the Borrower are currently in Settlement Discussions 180000369 The loan was transferred to Special Servicing on February 18, 2004 because the Borrower failed to remit quarterly financials; however has regularly provided annual statements. OCM sent default notices to the borrower for the failure to provide quarterly financial statements through internal legal counsel. OCM internal legal counsel contacted the Borrower, who was apparently completely uncooperative----even rejecting OCM's offer to settle the amount. The Borrower's response was to file a lawsuit. Within the pleading, the Borrower claimed he was reasonably compliant with loan document requirements. OCM responded to the lawsuit by filing a Motion to Dismiss on February 23, 2004. The Motion to Dismiss hearing was sceduled for March 18, 2004.The hearing wa s postponed and a hearing date has not been set. OCM and the Borrower are currently in Settlement Discussions. 245114323 ML transferred due to delinquency - due for 2/1/04, as well as notice of default from franchisor due to delinquent franchise fees. Sent hello delinquency letter to Borrower; engaged legal counsel and instituted legal action to appoint receiver.Receiver ap pointed by court ex-parte effective 3/31/04 - in process of evaluating status of hotel and franchise. Hearing date set for foreclosure motion - May 24, 2004; third party reports ordered; complaint against gaurantor to be filed 5/10/04. 245114157 Borrower failed to pay the $106,339 in past due taxes by the April 30, 2004 deadline. Borrower indicated he would be in a position to pay the past due real estate taxes by May 15, 2004.ORIX counsel has sent the Borrower a formal NOD invoking the default rate of interest effective May 1, 2004 and providing Borrower until May 17, 2004 to reinstate the loan in order to avoid acceleration and foreclosure proceedings.Loan remains current on P+I. YTD March 2004 financials indicate the property had a 95% occ upancy and 1.44 DCR. Borrower currently has the property listed with the Seattle office of Cushman and Wakefield. 245114274 See also loan 245114315 AM received files early March, 2004. Borrower indicates that sluggish demand and new competition have driven down revenues. Initial review of operating history reveals downward trendAll information requested from Borrower has bee n received. SS has notified Borrower that 18 month I/O is not acceptable. Borrower is assessing its options. Certain credit file documents are missing and AM has been unable to obtain them despite asking originator, closing law firm, sub servicer, etc.I n 2000, 7 related loans (including these 2) were the subject of a sale of ownership interest to AIMCO. Other 5 properties appear to be cash flowing. 240000160 Transferred to Special Servicing due to Imminent Default; 5/24/02 explosion and fire caused by tenant destroyed 10 units and damaged approx. 40 others. Property 100% vacant during repairs/renovation.Asbestos abatement issues resolved and major constructi on is progressing well; estimated completion date June 2004. Construction is being monitored on a weekly basis. Rental interruption insurance payments were paid through May 2003; Borrower is now making debt service from own funds. The Borrower has signif icant equity in the property and no payment default is anticipated. Pre-leasing on select finished units expected to begin in early June 2004. The property has not been re-tenanted during construction because a certificate of occupancy cannot be obtained until the fire alarm system for the entire complex is operational. The system should be completed in May 2004. 245114315 See also loan 245114274 AM received files early March, 2004. Borrower indicates that sluggish demand and new competition have driven down revenues. Initial review of operating history reveals downward trendAll information requested from Borrower has bee n received. SS has notified Borrower that 18 month I/O is not acceptable. Borrower is assessing its options. Certain documents are missing and AM has been unable to obtain them despite asking originator, closing law firm, sub servicer, etc.In 2000, 7 re lated loans (including these 2) were the subject of a sale of ownership interest to AIMCO. Other 5 properties appear to be cash flowing. 245114324 ML transferred due to delinquency - due for 2/1/04, as well as notice of default from franchisor due to delinquent franchise fees. Sent hello delinquency letter to Borrower; engaged legal counsel and instituted legal action to appoint receiver.Receiver ap pointed by court ex-parte effective 3/31/04 - in process of evaluating status of hotel and franchise. Hearing date set for foreclosure motion - May 24, 2004; third party reports ordered; complaint against gaurantor to be filed 5/10/04. 245114322 ML transferred due to delinquency - due for 2/1/04, as well as notice of default from franchisor due to delinquent franchise fees. Sent hello delinquency letter to Borrower; engaged legal counsel and instituted legal action to appoint receiver.Receiver ap pointed by court ex-parte effective 3/31/04 - in process of evaluating status of hotel and franchise. Hearing date set for foreclosure motion - May 24, 2004; third party reports ordered; complaint against gaurantor to be filed 5/10/04. 440000217 Orchard Plaza Shopping Center is a retail shopping center that consists of two single-story buildings and a total of 86,048 square feet. Property is currently 42.58% occupied, only vacant unit is the anchor space.Loan transferred on 11/18/03 after Borrow er requested a modification of the note terms on 11/13/03 due to the Anchor tenant seeking to have their lease rejected in Bankruptcy court.Counsel engaged week of 11/24/03 to file POC on behalf of Lender in Penn Traffic (BiLo) bankruptcy. Judge granted Penn Traffic the right to sell their interest in the lease on 12/18, but no sale occurred. Penn Traffic rejected the lease eff 1/25/04.AM inspected property on 1/14/03. Property was in good shape with no def. maint. needed. AM received executed Big Lot s lease to bring occupancy to 100% (4/21/04). Borrower hopes Big Lots will open before 10/1/04. 240000258 HMH Associates, Inc., one of the three GP's for this loan (d/b/a HMH Management Company, d/b/a Lynnwood Manor Health Care Center), filed for voluntary Chapter 11 bankruptcy protection. The loan has been performing. It is anticipated that OCM will file a motion for lift from stay. 180000295 Transferred to Special Servicing 9/11/03 due to Borrower's request for debt service relief for 1 year. Monetary default subsequently occurred. Winstead Secrest engaged to represent the trust. Collateral is a 157-unit apartment complex in Victoria, TX. Property is 85% occupied. Collateral is in good condition per 9/24/03 inspection report. Appraisal and Phase I ESA ordered. Appraisal received with value of $2,850,000. Borrower reinstated the loan on 1/28/04.All advances have been reimbursed by borrowe r, loan is current. Foreclosure sale cancelled. OCM will continue to monitor until operating levels are sufficient enough to warrant return to Master Servicer. 240000277 Notice was received on 12/9/03 from managing GP of borrower stating that due to economic conditions and a continuing decline in ccupancy the lessee (HMH Management Company) does not believe that it can continue to operate the facility. Although the lesse e is planning an "orderly" closure of the property, the lease will not be terminated and monthly rent payments will be made. Occupancy at 12/31/03 was approximately 50%.The loan has been transferred to the Special Servicer. A new appraisal has been orde red and a site inspection is scheduled for 02/18/04.Site inspection completed 2/17/04. Property is in average-good condition with minimal deferred maintenance. Appraisal due 3/19/04. Facility closed on 2/20/04. Lessee continues to pay rent and the bor rower continues to make monthly loan payments. The borrower cured the non-monetary default issue and continues to make monthly loan payments. Other potential non-monetary defaults are being investigated as the borrower looks for a viable purchaser.HMH A 245114285 No Comments 245114268 The Subject Loan was transferred on September 8, 2003 due to inadequate Liability Insurance coverage. Wachovia has force placed Insurance Coverage on a monthly basis and is deducting the payments from the Insurance Escrow account, which currently is over $100K. Wachovia has provided the Certificate of Liability Insurance and the coverage is sufficient.The property's current occupancy is 94% and the most recent DSCR's approach 2. 5x, which has held steady for 2 years. Updated appraisal is not warranted a t this time. Borrower did not know about the required levels in the Mortgage and lowered their limits due to increasing insurance costs in the health care industry. Previously, it had been on a blanket property with 8 other properties. Borrower said quot e was too high and is not opposed to being Force Placed at the current rate ($16,474/yr).Property Condition Survey received 12/29/03. Borrower submitted deferred maintenance cure plan (1/30/04) and it was approved (2/6/04), deadline to cure is 7/30/04. 245114181 The borrower did not provide adequate liability insurance coverage per loan documents ($4MM as required in Sec. 1.4 of the Deed of Trust). The borrower's request for acceptance of a lesser amount was rejected.Force place coverage was acquired by the Prim ary-Servicer as of 01/01/04. The premium was paid from funds held in the insurance escrow account. The loan was transferred to the Special Servicer.Notice of the default was sent to the borrower on January 22, 2004. An appraisal was ordered and an ins pection was scheduled.Inspection completed 2/19/04 - property is in good condition (95% occupied). Appraisal received on 3/2/2004. The borrower continues to make monthly payments and wants to discuss the possibility of a loan modification /payoff.Borrow er continues to make monthly loan payments. Appraisal reviewed and accepted $3.17MM (3/02/2004). Borrower has proposed to pay loan in full, including $100,000 toward default int. and pre-payment consideration. 440000378 The Borrower is not expected to default on the Loan. Ross has obtained approval from its credit committee for terms of a lease at the collateral property. Ross has submitted its standard form of lease to the Borrower for comments. The Borrower continu es discussions with a Broker representing Petsmart and Hobby Lobby. The workout strategy code is "other" due to the fact the Borrower will require additional financing to retrofit the property for the new tenants and would have to refi the Trust's Loan. The Special Servicer has approved a Borrower's request for Lenders consent of a reciprocal easement agreement. The reciprocal easement agreement was requested to allow access between the collateral property and an adjacent pad site currently being devel oped for Walgreen. The adjacent pad site is owned by Omni-Galveston 03, L.P. The costs and construction of the driveway access is the responsibility of Omni-Galveston 03, L.P. 240000390 The Borrower has offered a deed-in lieu of foreclosure in exchange for a release. The proposal was accepted by ORIX subject to receipt of a clean Phase I ESA. ORIX has appointed Grubb and Ellis as the Receiver for the property. It is projected that tit le will transfer to Special Servicer by June 15, 2004.This loan is secured by first lien on a Class B-, eight story, 98,374 sf office building situated on a 0.35 acre site. The building was originally constructed in 1924 as a six-story office building, a nd the east wing and two upper floors were added in 1928. In 1970 the building underwent substantial renovations including all mechanicals, electrical, roof, and a new facade. February 2004 Structural Report reflects the need for either the removal or re covering of the epoxy aggregate exterior. These two options are priced at $530,000 for the removal and $325,000 for the recovering. Building has an appraised value of $1,500,000 or $15/SF. 195114158 ML transferred due to chronic slow pay and due to low DSCR; Borrower has maintained ML current; after review of operating statements determined that Borrower had been overstating expense which resulted in lower DSCR; after adjustments; License agreement w as renewed w/o obtaining new tri-party agreement - in process of curing this deficiency; Counsel engaged to assist in documentation issues w/ tri-party agreement - Borrower working to resolve non-monetary defaults.YTD 12/03 stmnts rcvd and are being an alyzed. TTM 12/03 occ 51.4% YTD NOI approx. $350,000.Due to numerous non-monetary defaults and inability of Borrower to cure several in a timely manner, Borrower attempting to refinance loan and payoff ML - possible forbearance to be negotiated in the int erim. 245114246 Subject Loan was previously in Special from August 2002 to June 2003. Loan Recently transferred to Special Servicer due to Borrower request for deferral of payments. Borrower provided additional information regarding the property and guarantors.An agreeme nt has been made to defer replacement reserve payments for 6 months beginning on 11/1/03 in an effort to provide enough monetary relief to the Borrower, so that he will be able to continue to make monthly payments. Beginning on 5/1/04, Borrowerwill begin making additional reserve payments based on an agreed repayment plan to replenish the reserve account. The bridge construction that had closed the exit to the property for over a year was completed and the exit reopened on 12/9/03. Borrower received a Not ice of Termination Letter from Choice Hotels stating the franchise agreement is terminated as of 12/29/04. Choice has the right to terminate the Agreement on the 5th, 10th, 15th anniversary of the Opening Date (12/29/99). This Noticeis not a default until 440000501 No Comments 240000533 Settlement discussions took place in the latter part of 12/03. No agreement was reached at that time. Since settlement discussions, both parties have agreed to try and resolve this matter in the courts as soon as possible. A hearing took place on March 3 0, 2004, regarding the use of the ITC escrow funds. At the hearing, the judge did not release any funds to the Borrower and set a trial date for either July 19, 2004, or September 18, 2004, to resolve this matter. On April 1, 2004, the judge ruled on For tune's request to free-up the existing $625K escrow. Fortune asked the judge to release to them $420,142, or almost 70% of the escrow. The judge ruled and gave Fortune $124,500 of the escrow money, or about 30% of what they asked for. The judge did not buy Fortune's argument that they had "earned" back $340,542 of the escrowed amount simply through the passage of time. Even though Fortune has remained "current" with respect to principal and interest payments, the Judge refused to give them back the IT (1) Resolution Strategy Code 1 - Modification 2 - Foreclosure 3 - Bankruptcy 4 - Extension 5 - Note Sale 6 - DPO 7 - REO 8 - Resolved 9 - Pending Return to Master Servicer 10 - Deed in Lieu Of Foreclosure 11 - Full Payoff 12 - Reps and Warranties 13 - Other or TBD

Modified Loan Detail Loan Modification Description Number 240000148 Maturity Date extended to 2006/01/01 240000148 Chapter 11 plan was confirmed. Loan was reinstated. Maturity date extened by one year. All attorney fees were reimbursed. Loan returned to Servicer as a corrected loan. 440000425 Prior borrower filed BK. Assumption/modification negotiated by BK court. Arrearage capitalized onto Prin Bal. Note reamortized and monthly payment increased.

FIRST UNION LEH BRO BANK OF AMER COM MOR PA TH CE SE 1998-C2 8-K