CAPCO AMERICA SECURITIZATION CORPORATION
(formerly known as NOMURA ASSET SECURITIES CORPORATION), Depositor
NOMURA ASSET CAPITAL CORPORATION, Mortgage Loan Seller
NASC Commercial Mortgage Trust 1998-D6, Trust Fund
Commercial Mortgage Pass-Through Certificates, Series 1998-D6
Supplement, dated October 27, 1998, to
Prospectus Supplement dated March 27, 1998
Recent Developments
Following losses experienced by NACC's subsidiary, The Capital Company of
America LLC ("CCA") and Nomura Holding America Inc. ("NHA") (NACC's parent), the
Board of Directors (the "NSC Board") of the ultimate parent of all of these
companies, Nomura Securities Co., Ltd. ("NSC"), on September 21, 1998 authorized
NSC to provide additional capital to NHA (which, in turn, authorized a capital
contribution to CCA) designed to substantially restore the total capitalization
(shareholder's equity plus subordinated debt) of NHA and CCA to the levels that
existed on April 1, 1998 (that is, approximately $843 million of subordinated
debt and common shareholder's equity) in the case of NHA, and to the level that
existed on June 29, 1998 (that is, approximately $500 million of common
shareholder's equity) in the case of CCA.
As of September 25, 1998, and as authorized by the NSC Board as described
above, NSC made an equity investment in NHA of approximately $380 million, and
acquired (through Nomura Global Funding plc) subordinated debt of NHA in the
amount of approximately $250 million. Accordingly, NHA on or about that time
received a total of approximately $628 million in cash from or at the direction
of NSC and wired approximately $214 million of that amount to CCA as equity
capital. Although the September 25, 1998 investment in CCA was intended to
restore CCA's shareholder's equity to it's June 1998 level, a September 28, 1998
mark-to-market estimate of the value of CCA's assets indicated that the $214
million contributed to CCA was insufficient (by approximately $150 to $200
million) to restore CCA's capitalization to that level. NHA subsequently
contributed additional equity of another $214 million to CCA, based on CCA's
mark-to-market losses then estimated, sufficient to restore CCA's shareholder
equity to approximately $500 million as of September 30, 1998. On October 22,
1998, NSC reported that its consolidated after-tax losses for the six-month
period ending September 30, 1998 was $1,504,000,000 and NHA reported it had
incurred a pre-tax loss of $1,160,000,000 for the same period. Following the
report of those losses, NSC made an additional equity investment in NHA in the
amount of $1,200,000,000.
There can be no assurance that either CCA or NHA will not experience
further losses, that NSC will provide additional capitalization to NHA or that
NHA will contribute capital to CCA beyond what is currently authorized. In
addition, current market uncertainty and volatility have had, and may continue
to have, further significant adverse impact on the financial condition of CCA
and NHA.
In another development, Ethan Penner, who was appointed Chief Executive
Officer and President of CCA at its formation on June 29, 1998, resigned that
office and was appointed Vice Chairman of the Board of Directors of CCA on
August 14, 1998. Mr. Penner resigned as Vice Chairman of the Board of Directors
on September 16, 1998. Also, William Wraith, IV, the co-chief executive officer
and co-president of NHA and the chairman of the Board of Directors of NSI, and
Mark McGauley, the chief operating officer of NHA, have resigned from those
positions and as members of the CCA Board of Managers.
In another development, CRIIMI MAE Inc., the parent of CRIIMI MAE Services
Limited Partnership (the "Special Servicer"), filed for bankruptcy law
protection on October 5, 1998 under Chapter 11 of the U.S. Bankruptcy Code. As a
result of that filing, Standard & Poor's Rating Services ("S&P") removed the
Special Servicer from its approved servicer list as a commercial asset
manager/special servicer. Fitch IBCA, Inc. ("Fitch") placed the Special
Servicer's rating of "Above Average" on "Rating Alert" with negative
implications, stating that special servicing functions could be affected by the
loss of personnel resulting from bankruptcy-related disruptions. With regard to
the ratings on the Series 1998-D6 Certificates (the "Certificates"), Fitch and
Moody's Investors Service, Inc. each affirmed its ratings for the Certificates.
S&P stated that the developments have no immediate impact on the ratings for the
Certificates. Duff & Phelps Credit Rating Co. ("DCR") placed the ratings for the
Certificates on "Ratings Watch-Down." DCR has also reported that a new special
servicer will be appointed as a result of a determination by the trustee for the
Certificates that a special servicer event of default has occurred. Under the
terms of the Pooling and Servicing Agreement, an affiliate of the Special
Servicer, as holder of the most subordinate Class of Certificates, has the right
to appoint the successor special servicer. In addition, on October 7, 1998, S&P
lowered its subordinated debt rating on AMRESCO Inc., the parent of AMRESCO
Services, L.P. (the "Servicer"), from "B" to "CCC+" and its long-term
counterparty credit rating from "BB-" to "B." As a result of these rating
downgrades, S&P revised its commercial loan servicer rating for the Servicer
from "Strong" to "Average." The Servicer remains on S&P's approved list of
servicers.
