8-K 1 flb98c02.txt AUGUST 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: August 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 8.01 Other Events On August 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 9.01 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 August 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: August 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 August 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: August 18, 2004 Record Date: July 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 - 42 Modified Loan Detail 43 Liquidated Loan Detail 44 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 17,517,826.71 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 17,517,826.71 Principal: Scheduled Principal 4,943,240.20 Unscheduled Principal 4,426,709.63 Principal Prepayments 3,164,770.25 Collection of Principal after Maturity Date 0.00 Recoveries from Liquidation and Insurance Proceeds 110,371.08 Excess of Prior Principal Amounts paid 0.00 Curtailments 1,151,568.30 Negative Amortization 0.00 Principal Adjustments 0.00 Total Principal Collected 9,369,949.83 Other: Prepayment Penalties/Yield Maintenance 214,504.50 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: 214,504.50 Total Funds Collected 27,102,281.04 Total Funds Distributed Fees: Master Servicing Fee 224,017.92 Trustee Fee 2,836.14 Certificate Administration Fee 0.00 Insurer Fee 0.00 Miscellaneous Fee 0.00 Total Fees 226,854.06 Additional Trust Fund Expenses: Reimbursement for Interest on Advances 2,532.88 ASER Amount 126,598.04 Special Servicing Fee 37,903.91 Rating Agency Expenses 0.00 Attorney Fees & Expenses 0.00 Bankruptcy Expense 0.00 Taxes Imposed on Trust Fund 0.00 Non-Recoverable Advances 7,783.00 Other Expenses 0.00 Total Additional Trust Fund Expenses 174,817.83 Interest Reserve Deposit 0.00 Payments to Certificateholders & Others: Interest Distribution 17,116,153.72 Principal Distribution 9,369,949.85 Prepayment Penalties/Yield Maintenance 214,504.50 Borrower Option Extension Fees 0.00 Equity Payments Paid 0.00 Net Swap Counterparty Payments Paid 0.00 Total Payments to Certificateholders & Others 26,700,608.07 Total Funds Distributed 27,102,279.96

Net Remaining Loan Operating DSCR Note Maturity Amortization Number Income Date DSCR Date Date Term 355132459 6,910,160.00 03/31/2004 1.65 06/01/1998 05/01/2013 284 240000009 2,785,067.00 03/31/2004 1.29 02/01/1998 01/01/2008 220 440000022 642,289.00 12/31/2003 0.49 04/01/1998 03/01/2028 282 180000396 05/01/1998 07/01/2019 178 245114323 352,595.00 12/31/2003 0.49 02/01/1998 01/01/2008 220 245114157 476,557.00 12/31/2003 0.77 02/01/1998 01/01/2008 280 240000160 (649,115.00) 09/30/2003 (1.41) 04/01/1998 03/01/2008 282 245114324 426,066.00 12/31/2003 0.88 02/01/1998 01/01/2008 220 245114322 236,233.00 12/31/2003 0.51 02/01/1998 01/01/2008 220 440000217 348,248.00 03/31/2004 0.92 04/01/1998 03/01/2023 222 240000258 345,185.00 09/30/2003 1.00 05/01/1998 04/01/2008 223 180000295 (99,665.00) 03/31/2004 (0.33) 03/01/1998 02/01/2008 281 240000277 (485,220.00) 12/31/2003 (1.52) 05/01/1998 04/01/2008 223 245114285 239,199.00 03/31/2003 0.83 02/01/1998 01/01/2008 280 245114268 666,537.00 12/31/2003 2.43 01/01/1998 12/01/2007 219 245114181 233,496.00 03/31/2004 1.00 02/01/1998 01/01/2008 220 440000378 289,968.00 03/31/2004 1.36 04/01/1998 03/01/2023 222 240000390 96,280.00 09/30/2003 0.48 04/01/1998 03/01/2008 282 195114158 245,478.00 12/31/2003 0.99 12/01/1997 11/01/2007 182 245114246 45,807.00 12/31/2003 0.19 01/01/1998 12/01/2017 159 240000533 88,318.00 12/31/2003 0.60 05/01/1998 04/01/2008 223 (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 440000022 22 13 21,795,000.00 180000396 52 7 03/03/2004 6,850,000.00 245114323 90 2 04/27/2004 4,300,000.00 245114157 96 9 10/28/1997 9,400,000.00 240000160 160 9 12/27/1997 7,710,000.00 245114324 180 2 04/27/2004 4,600,000.00 245114322 185 2 04/26/2004 3,300,000.00 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 03/05/2004 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 03/02/2004 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 6 10/24/2002 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 s f Class A office building in Atlanta, GA. YE 12/31/03 DSC of 1.81 and occupancy of 95%. Borrower deposited $606,131.35 (the contested default interest) into the registry of the court. Borrower filed a Complaint seeking a declaratory judgment that it is not obligated to pay certain "fees" under its contractual agreements with the Noteholder. OCM filed a Motion to Dismiss and a Complaint for Declaratory Judgment on 1/8/04. On 5/19/04, Court granted OCM motion to dismiss with respect to 999 Peachtree'sc laim to recover $310,000 that it had paid previously to obtain OCM consent for the transfer of an ownership interest. This was the largest of the claims for damages that 999 Peachtree has asserted in its separate case against ORIX. The dismissal was wit 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 evaluatin g. Draft comfort letter acceptable.YTD 12/31/03 statements indicate an NOI DSCR of 1.50xProcessing approval for ex-post facto consent of change of franchise affiliation - expected to be completed by 8/31/04. 440000022 Transferred to SS on 7/23/03, due to reasonably foreseeable default. Borrower has sold 2 of the 11 properties (approved by SS).Case has been approved to sell 201 S. Central and closing is set for August 3. Once 201 S. Central sells this loan should be cl ose to a 1.0 dscr. However, there remains significant risk due to poor tenant mix, market, etc. 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 will b e 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.Received six offers ranging from 500k - 6.825M. OCM obtaining internal approval to go under contract at $6.825M with closing expected by 10/31/04.CB continues to solicit a backup offer(s) in the event the high bidder requests a signficant re-trade or drops the contract. 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. complaint against guarantor filed - in process of discovery phase. .NEW COMMENT - foreclosure sale to be scheduled for 8/31/04; Received check from Rece iver representing excess cash flow iao $131,823 - will likely apply to outstanding P&I - discussing issue with counsel. 245114157 On May 12, 2004 the Borrower reinstated the loan by paying the $138,774 in past due 2003 taxes on the property.To prevent an escrow shortage in the future Borrower is now required to escrow for taxes and insurance.Borrower made the June 2004 P+I payment i nclusive of $8, 471 in default interest and the required monthly escrows for taxes and insurance. Projected return date to Master servicer is August 15, 2004. 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 constru ction is progressing well, though slower than expected. Estimated completion date September, 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 significant equity in the property and no payment default is anticipated. 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. complaint against guarantor filed - in process of discovery phase. .NEW COMMENT - foreclosure sale to be scheduled for 8/31/04; Received check from Rec eiver representing excess cash flow iao $203,567 - will likely apply to outstanding P&I - discussing issue with counsel 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. complaint against guarantor filed - in process of discovery phase. .NEW COMMENT - foreclosure sale to be scheduled for 8/31/04; Received check from Rec eiver representing excess cash flow iao $92,667. Will likely apply to outstanding P&I - discussing issue with counsel. 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 condition with no def. maint. noted. AM received executed 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 stay. T he 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. A new appraisal has been received - $3,300,000 (a s of 6/1/2004). The appraisal is currently being reviewed and has not yet been accepted. 180000295 Collateral is a 157-unit apartment complex in Victoria, TX. Transferred to Special Servicing 9/11/03 due to Borrower's request for debt service relief for 1 year. Monetary default subsequently occurred in 9/03. Winstead Secrest engaged to represent the trust. Borrower reinstated the loan on 1/28/04.Borrower again defaulted on 5/1/04 payment. Borrower reinstated in 6/04 after f/c was initiated. Payment is due for 7/04.Property is 70% occupied. TTM (3/31/04) operating analysis indicates (.20) DSCR. D ismal performance is due to market pressures and reduced rents.Collateral is in good condition per 6/29/04 inspection report. Appraisal and Phase I ESA ordered. Appraisal received with value of $2,850,000. 240000277 Notice was received on 12/9/03 from managing GP of borrower stating that due to economic conditions and a continuing decline in occupancy the lessee (HMH Management Company) does not believe that it can continue to operate the facility. Loan transferred to Special Servicing on 12/16/2003. Occupancy at 12/31/2003 was ~50%. Lessee is planning an "orderly" closure; however, lease will not be terminated and monthly rent payments will be made.Site inspection 2/17/04. Property is in average-good condition w ith minimal deferred maintenance. New appraisal $1.69MM (3/5/2004). Facility closed on 2/20/04. Lessee continues to pay rent and the borrower continues to make monthly loan payments. The borrower cured one non-monetary default issue (reporting). Serv icer continues investigation for other potential non-monetary defaults. Borrower is looking for a viable purchaser of the property.HMH Assoc., Inc. (one of the 3 GPs signing the note and mtg.) filed Chapt. 11 bankruptcy 4/20/2004. No further loan payment 245114285 Marketing efforts as of 12/10/03 1) Announcement Cards: distributed 10/7/03 count: 6,188 2) Flyers: 773 ) 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 Blast: 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. Property fell 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 agreement is expect ed 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 $3.25MMCurrently under contract at $3.25mm with closing anticipated on August 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 $108K. 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 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. Forc e 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. Inspection complete 2/19/04. Property in good condition (95% occupied). Appraisal reviewe d and accepted $3. 17MM (3/02/2004).Borrower continues to make monthly loan payments. Proposed discounted payoff (including partial default interest/prepayment consideration) was rejected. Counter-proposal for loan modification. Waiting on borrower resp onse. 440000378 The Borrower is not expected to default on the Loan. The Borrower has been successful in negotiating terms of a lease with Ross to take a portion of the vacant Kmart space and continues discussions with a Broker representing Petsmart and Hobby Lobby. T he Borrower's discussions with Home Depot for a six-month lease of the vacant Kmart ended when Home Depot learned that it would take less time than expected to repair its current location that was damaged by weather.Its permanent location is being repaire d. 240000390 ORIX documented a Deed in Lieu of foreclosure on the subject property on 7/19/04. Purchase offer of $1,912,500 from third party has been accepted by ORIX and approved by the REO Committee. Parties are in the process of negotiating the final terms of the Purchase and Sale Agreement.Purchase offer from United Realty Companies provides for a 5 day Review Period and a 25 day closing. P & A expected to be signed by August 13, 2004 with a closing by mid-September. 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 ana lyzed. 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 - forbearance to be negotiated in the interim. 245114246 No Comments Available 240000533 On June 30, 2004 OCM and the Borrower agreed to a Settlement of the loan upon receiving committee approval.The August 2, 2004, trial date was postponed to a later date. (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