8-K 1 flb98c02.txt JUNE 8-K 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: June 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 June 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 June 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: June 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 June 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: June 18, 2004 Record Date: May 28, 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 - 44 Modified Loan Detail 45 Liquidated Loan Detail 46 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 17,786,642.69 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 17,786,642.69 Principal: Scheduled Principal 4,916,625.61 Unscheduled Principal 0.00 Principal Prepayments 0.00 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 4,916,625.61 Other: Prepayment Penalties/Yield Maintenance 0.00 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: 0.00 Total Funds Collected 22,703,268.30 Total Funds Distributed Fees: Master Servicing Fee 227,476.28 Trustee Fee 2,879.82 Certificate Administration Fee 0.00 Insurer Fee 0.00 Miscellaneous Fee 0.00 Total Fees 230,356.09 Additional Trust Fund Expenses: Reimbursement for Interest on Advances 4,509.14 ASER Amount 162,334.96 Special Servicing Fee 47,336.78 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 5,446.84 Total Additional Trust Fund Expenses 219,627.72 Interest Reserve Deposit 0.00 Payments to Certificateholders & Others: Interest Distribution 17,336,659.00 Principal Distribution 4,916,625.64 Prepayment Penalties/Yield Maintenance 0.00 Borrower Option Extension Fees 0.00 Equity Payments Paid 0.00 Net Swap Counterparty Payments Paid 0.00 Total Payments to Certificateholders & Others 22,253,284.64 Total Funds Distributed 22,703,268.45

Principal Prepayment Detail No Principal Prepayments this Period

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 286 240000009 2,789,064.00 12/31/2003 1.29 02/01/1998 01/01/2008 222 440000017 1,614,064.00 12/31/2002 1.11 03/01/1998 02/01/2028 283 440000022 642,289.00 12/31/2003 0.49 04/01/1998 03/01/2028 284 180000396 05/01/1998 07/01/2019 180 180000368 1,619,968.00 12/31/2003 2.09 04/01/1998 03/01/2008 284 180000369 1,375,290.00 12/31/2003 1.85 04/01/1998 03/01/2008 284 245114323 352,595.00 12/31/2003 0.49 02/01/1998 01/01/2008 222 245114157 476,557.00 12/31/2003 0.77 02/01/1998 01/01/2008 282 245114274 389,470.00 12/31/2003 0.66 01/01/1998 12/01/2007 281 240000160 (649,115.00) 09/30/2003 (1.41) 04/01/1998 03/01/2008 284 245114315 245,538.00 12/31/2003 0.55 02/01/1998 01/01/2008 282 245114324 426,066.00 12/31/2003 0.88 02/01/1998 01/01/2008 222 245114322 236,233.00 12/31/2003 0.51 02/01/1998 01/01/2008 222 440000217 361,837.00 12/31/2003 0.95 04/01/1998 03/01/2023 224 240000258 345,185.00 09/30/2003 1.00 05/01/1998 04/01/2008 225 180000295 (99,665.00) 03/31/2004 (0.33) 03/01/1998 02/01/2008 283 240000277 (485,220.00) 12/31/2003 (1.52) 05/01/1998 04/01/2008 225 245114285 239,199.00 03/31/2003 0.83 02/01/1998 01/01/2008 282 245114268 744,500.00 09/30/2003 2.72 01/01/1998 12/01/2007 221 245114181 173,412.00 12/31/2003 0.74 02/01/1998 01/01/2008 222 440000378 410,335.00 12/31/2003 1.92 04/01/1998 03/01/2023 224 240000390 96,280.00 09/30/2003 0.48 04/01/1998 03/01/2008 284 195114158 245,478.00 12/31/2003 0.99 12/01/1997 11/01/2007 184 245114246 45,807.00 12/31/2003 0.19 01/01/1998 12/01/2017 161 240000533 88,318.00 12/31/2003 0.60 05/01/1998 04/01/2008 225 (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 35,030,000.00 440000017 17 7 02/27/2004 6,080,000.00 440000022 22 13 21,795,000.00 180000396 52 7 03/03/2004 6,850,000.00 180000368 66 13 12/03/1997 12,000,000.00 180000369 74 13 12/03/1997 11,500,000.00 245114323 90 2 03/27/2002 5,200,000.00 245114157 96 9 10/28/1997 9,400,000.00 245114274 99 9 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 2 03/27/2002 4,700,000.00 245114322 185 2 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 13 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 240000533 533 13 02/18/1998 2,800,000.00

Loan Number Comments from Special Servicer 355132459 Refer to Delinquency Loan Detail report. 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 - received information and eval uat ing. Draft comfort letter acceptable.YTD 12/31/03 statements indicate an NOI DSCR of 1.50x 440000017 Lawsuit filed 2/13/04 against the borrower, Hickory Ridge Management, Inc (GP) and Skinner & Broadbent Company (property management company) claiming misrepresentation and fraud. Borrower has filed papers removing case to federal court. Breach lette r s ent to Lehman Brothers giving them 90 days to repurchase the loan based upon numerous breaches. Lehman responded that it did not agree with OCM's allegations. Claim for repurchase added to litigation pending in Dallas, Texas against Lehman. Tri al dat e is August, 2004. Borrower provided falsified rent roll to obtain the loan by including a tenant that was no longer paying rent or at property. Borrower also failed to disclose material changes including the development of a new regional mall a nd Noncon nah highway that diverted traffic away from the collateral. Borrower committed waste by not maintaing roofing and fire prevention systems. As a result of borrower's breaches the management company is liable for all fees and commissions f 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 att emp t to sell 201 S. CentralLoan performed under forbearance agreement until May 31, at which time the agreement expired. This loan is at a critical point at which SS can foreclose, extend the forbearance, or make significant modifications to the loa n.AM h as suggested extension of forbearance to allow more time for 201 S. Central to be sold. Proposal under review by management at this time.Sale of 201 S. Central is complicated by lack of estoppel letter for ground lease. 180000396 The Trust acquired title at sheriff's sale on 3/31/04 with single credit bid of $4,566,667. 00. There was no competitive bidding. Deed will be issued to the trust in the name of WFBM West Monroe, LLC. The property is listed with CB Commercial and w ill be marketed nationallyMarketing commenced in May with fliers and brochures to over 750 buyers of similar properties. CB also marketed the poroperty at the national ICSC convention in Las Vegas. 180000368 Refer to Delinquency Loan Detail report. 180000369 Refer to delinqueny loan detail report. 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.Receiv er appointed by court ex-parte effective 3/31/04 - in process of evaluating status of hotel and franchise. Foreclosure sale scheduled for late July; third party reports received and under review; complaint against guarantor filed. 245114157 On May 12, 2004 the Borrower reinstated the loan by paying the $138,774 in past due 2003 taxes on the property. ORIX will require the Borrower to escrow for taxes commencing June 1, 2004 in order to ensure there are adequate funds to pay the 2004 tax es. Borrower will also reimburse ORIX for all legal fees and will also pay $8,471 in Default interest for the period May 1st to May 12th.Loan remains current on P+I. YTD March 2004 financials indicate the property had a 95% occupancy and 1.44 DCR. B orrowe r 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 ha s b een received. SS has notified Borrower that 18 month I/O is not acceptable. Nothing more has been heard from the Borrower. Certain credit file documents are missing and AM has been unable to obtain them despite asking originator, closing law fir m, sub servicer, etc.In 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.AM inspected both properties in May, 2004 and found them to be in fairly good c onditionw ith qualified and responsive management.AM intends to transfer these two loans to MS once June '04 payment is made (if made on time), unless they need to be retained to pursue any remedies for lack of file information. 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 is 100% vacant during repairs/renovation.Asbestos abatement issues resolved and major co nst ruction is progressing well, though slower than expected. Estimated completion date July 31, 2004. Construction is being monitored on a weekly basis. Rental interruption insurance payments were paid through May 2003; Borrower is now making debt s ervice from own funds. The Borrower has significant equity in the property and no payment default is anticipated. Pre-leasing on select finished units expected to begin in early July 2004. The property has not been re-tenanted during construction bec ause a ce rtificate of occupancy cannot be obtained until the fire alarm system for the entire complex is operational. The system should be completed in July 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 ha s b een received. SS has notified Borrower that 18 month I/O is not acceptable. Nothing more has been heard from the Borrower. Certain documents are missing and AM has been unable to obtain them despite asking originator, closing law firm, sub servi cer, e tc.In 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.AM inspected both properties in May, 2004 and found them to be in fairly good condition wit h qualifi ed and responsive management.AM intends to transfer these two loans to MS once June '04 payment is made (if made on time), unless they need to be retained to pursue any remedies for lack of file information 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.Receiv er appointed by court ex-parte effective 3/31/04 - in process of evaluating status of hotel and franchise. Foreclosure sale scheduled for late July; third party reports received and under review; complaint against guarantor filed. 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.Receiv er appointed by court ex-parte effective 3/31/04 - in process of evaluating status of hotel and franchise. Foreclosure sale scheduled for late July; third party reports received and under review; complaint against guarantor filed. 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 B orr ower 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. Judg e gran ted 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 condition with no def. maint. noted. AM receive d execute d Big Lots lease to bring occupancy to 100% (4/21/04). Borrower claims Big Lots will try to open before 10/1/04. Loan will be returned to Master when Big Lots is open for business and paying rent. 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. The loan has been performing. OCM will file a motion for lift from the sta y. The borrower is continuing to make monthly loan payments, but will not consent to an agreed motion for lift from the bankruptcy stay. Operating/financial information requested by OCM has not been provided. 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 borro wer. Foreclosure sale cancelled. Borrower has again defaulted on payment and is due for 5/1/04. Resolution is not yet known but foreclosure process will be initiated. 240000277 Refer to Delinquency Loan Detail report. 245114285 Marketing efforts as of 12/10/03 1) Announcement Cards: distributed 10/7/03 count: 6,188 2) Flyers: 773 3) Websites: posted on www.oboyleproperties.com www.arausa.com www.rcm1. com and www.loopnet.com as of today, 10/31/03 4) Real Capital Markets Bl ast: sent to 762 principals - 117 people reviewed property blast 5) Full Sales Packages: 42 mailed 6) Site Visits: 10Property occupancy increased from 70% to 93% since 8/03 foreclosure. Insurance claim paid for a full roof replacement. Proper ty fel l out of contract at $3. 2 mm. The prospective buyer determined selling as individual condos would be very difficult to accomplish b/c of market demographics. A new buyer has submitted an LOI at $3.2 with a 7/31/04 close. A purchase & sale ag reement i s expected to be fully executed by 6/11/04. O'Boyle, listing broker, took it back out to the market after contract fell out at a reduced listing price from $4MM to $3.25MM 245114268 Refer to Delinquency Loan Detail report. 245114181 Borrower did not provide adequate liability insurance coverage per loan documents ($4MM required in Sec. 1.4 of the Deed of Trust). The borrower's request for acceptance of a lesser amount was rejected. Loan transferred to Special Servicer 12/4/03. For ce place coverage obtained by Primary-Servicer 12/17/03. Premium paid from funds held in the insurance escrow account. Notice of default sent to borrower 1/22/04. Borrower continues to make monthly loan payments. Proposes to either modify loan (to dea l with insurance issue) or pay debt (including partial default interest or prepayment consideration). Inspection complete 2/19/04. Property in good condition (95% occupied). Appraisal reviewed and accepted $3.17MM (3/02/2004). 440000378 Refer to Delinquency Loan Detail report. 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 tha t t itle will transfer to Special Servicer by June 20, 2004. 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 agreem ent was 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 analyzed. 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 negotia ted in th e interim. 245114246 Refer to Delinquency Loan Detail report. 240000533 Refer to delinquency Loan Detail report. (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 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