SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934
for the fiscal year ended December 31, 1998
Commission File Number: 333-45467
Morgan Stanley Capital I, Inc. issuer in respect of
Commercial Mortgage Pass-Through Certificates Series 1998-CF1
(Exact Name of registrant as specified in its charter)
Delaware 13-3291626
(State or Other Juris- (I.R.S. Employer
diction of Incorporation) Identification No.)
1585 Broadway Street, New York, New York, 10036
(Address of Principal Executive Office)
212-761-4000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the
Act: None
Securities registered pursuant to Section 12(g) of the
Act: None
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports),and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No _
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in part
III of this Form 10-K or any amendment to this Form 10-K.
Not applicable.
Aggregate market value of voting stock held by non-affiliates of
the Registrant as of December 31, 1998.
Not applicable.
Number of shares of common stock outstanding as of December 31, 1998.
Not applicable.
Table of Contents
PART I
Item 1. Business..................................................3
Item 2. Properties................................................3
Item 3. Legal Proceedings.........................................3
Item 4. Submission Of Matters To A Vote Of Security Holders.......3
PART II
Item 5. Market For Registrant's Common Equity And
Related Shareholder Matters.......................................3
Item 6. Selected Financial Data...................................3
Item 7. Management's Discussion And Analysis Of Financial Condition
And Results Of Operations...............................4
Item 8. Financial Statements And Supplementary Data...............4
Item 9. Changes In And Disagreements With Accountants On
Accounting And Financial Disclosure.....................4
PART III
Item 10. Directors And Executive Officers Of The Registrant.......4
Item 11. Executive Compensation...................................4
Item 12. Security Ownership Of Certain Beneficial Owners And
Management......................................4
Item 13. Certain Relationships And Related Transactions...4
PART IV
Item 14. Exhibits, Financial Statement Schedules And Reports
On Form 8-K.....................................4
Signatures................................................4
Exhibit Index.............................................4
PART I
ITEM 1. BUSINESS
This Annual Report on Form 10-K relates to the Trust Fund
formed, and the Commercial Mortgage Pass-Through Certificates,
Series 1998-CF1 issued, pursuant to a Pooling and Servicing
Agreement, dated as of August 3, 1998 (the "Pooling and Servicing
Agreement"), by and among Morgan Stanley Capital I, Inc.,
as depositor, ContiTrade Services LLC., Morgan Stanley Mortgage
Capital inc. and Red Mountain Funding, LLC, as sellers, Amresco
Services, as Master Servicer and Lennar Partners, Inc. as special
servicer, LaSalle National Bank, as Trustee, and ABN AMRO Bank N.V.,
as fiscal agent. The Certificates have been registered pursuant
to the Act under a Registration Statement on Form S-3 (the
"Registration Statement").
Capitalized terms used herein and not defined have the same
meanings ascribed to such terms in the Pooling and Servicing
Agreement.
This Annual Report is being filed by the Trustee, in its capacity
as such under the Pooling and Servicing Agreement, on behalf of
Registrant. The information contained herein has been supplied
to the Trustee by one or more of the Borrowers or other third
parties without independent review or investigation by the
Trustee. Pursuant to the Pooling and Servicing Agreement, the
Trustee is not responsible for the accuracy or completeness of
such information.
ITEM 2. PROPERTIES
See Exhibits 99.1 and 99.2 hereto for Servicer's Annual
Statement of Compliance and Servicer s Independent Accountant's
Report on Servicer's servicing activities.
ITEM 3. LEGAL PROCEEDINGS
Except for claims arising in the ordinary course of business and
which are covered by liability insurance, there are no material
pending legal proceedings involving the Trust Fund, the Mortgages
comprising the Trust Fund or the Trustee, the Special Servicer or
the Servicer with respect to or affecting their respective duties
under the Pooling and Servicing Agreement.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
No matters were submitted to a vote of Certificateholders during
the fiscal year covered by this report.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
There was one registered holder of the Certificate representing
an equity interest in the Trust as of December 31, 1997. To the
Registrant's knowledge, as of that date, there was no principal
market in which the Certificates representing an equity interest
in the Trust were traded.
ITEM 6. SELECTED FINANCIAL DATA
Not applicable.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF A FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Not applicable.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
The information required by Items 10, 11, 12 and 13 is not
applicable as the trust fund does not have directors or
officers and Certificateholders have no right to vote (except
with respect to required consents to certain amendments to the
Pooling and Servicing Agreement and upon certain events of
default) or control the Trust Fund.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K
(a)
1. Servicer's Annual Statement of Compliance for the period
ended 12/31/98.
2. Servicer's Independent Accountant's Report on Servicer's
servicing activities.
(b) All current Reports on Form 8-K for the Trust have been
filed as of 12/31/98.
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its by the undersigned thereunto
duly authorized.
LASALLE NATIONAL BANK, IN
ITS CAPACITY AS TRUSTEE UNDER
THE POOLING AND SERVICING
AGREEMENT ON BEHALF OF
Morgan Stanley Capital I Inc.
REGISTRANT
By: /s/ Russell Goldenberg
Name: Russell Goldenberg
Title: Senior Vice President
Dated: March 30, 1999
EXHIBIT INDEX
Exhibit No. Description
99.1 Servicer's Annual Statement of Compliance
99.2 Servicer's Independent Accountants' Report on
Servicer's servicing activities
A M R E S C 0
March 30, 1999
VIA CERTIFIED MML
RETURN RECEIPT REQUESTED
Morgan Stanley Capital I Inc.
1585 Broadway
New York, New York 10036
Attention: Mr. Russell Rahbany
Dear Mr. RahbanY:
Reference is made to the Pooling and Servicing Agreement
dated as of August 1, 1998, among Morgan Stanley Capital I
Inc., as Depositor, AMRESCO Services, L.P., ("AMRESCO") as
Master Servicer, Lennar Partners, Inc., as Special Servicer,
LaSalle National Bank, as Trustee, and ABN AMRO Bank N.V.,
as Fiscal Agent, entered into in connection with Morgan
Stanley
Capital I Inc. Mortgage Pass-Through Certificates Series
1998-CFl (the "PSA").
Commercial 01. Lrarp, aaa- 5
As Senior Vice President of AMRESCO, I have delegated to
specified officers ("Officers") the responsibility
for reviewing and monitoring the activities of
AMRESCO, and of our performance under the PSA.
Accordingly, pursuant to Section 8.12 of the PSA and
in accordance with certifications made to me by each of
the Officers, AMRESCO certifies the following:
A review of the activities of AMRESCO for the period
from August 1, 1998 to December 3 1, 1998, and of its
performance under this PSA has been made under the
supervision of the Officers, who have in turn been
under my supervision; and
To the best of my knowledge and the Officers' knowledge,
based on such review, AMRESCO has fulfilled its
obligations as Master Servicer in all material
respects under the PSA throughout the period from
August 1, 1998 to December 31, 1998.
Morgan Stanley Capital I Inc.
March 30, 1999
Page 2
Of the ten (10) Sub-Servicers currently performing
primary servicing obligations for this transaction, for the
period August 1, 1998 to December 31, 1998, only Huntoon
Hastings Capital Corp., North Coast Mortgage Company and
Mohrle-Morris and Associates, Inc. have provided AMRESCO
with unqualified annual compliance certificates and USAP
Opinions. Midland Loan Services, Inc. and Pathfinder
Mortgage Corporation have provided an unqualified Annual
Compliance letter but no USAP Opinion. HAS/Wexford Banegroup
LLC, Mortgage and Capital Investors, Inc., Crown NorthCorp.,
Inc. and CMBS Originations Limited Liability Company
have not provided either an Annual Compliance letter or a
USAP Opinion. First Security Commercial Servicing, LLC
has provided a qualified Annual Compliance letter and USAP
Opinion, which are attached hereto.
Please refer to the enclosed independent accountants' report
dated February 4, 1999, delivered pursuant to Section 8.13
of the PSA, which discusses the results of their review
of our activities under this PSA and which is
incorporated herein by reference.
Very truly yours,
Daniel B. Kirby Senior Vice President AMRESCO Services, L.P.
Enclosures
Morgan Stanley Capital I Inc.
1585 Broadway
New York, New York 10036
Attention: General Counsel
LaSalle National Bank
135 South LaSalle Street
Suite 1740
Chicago, Illinois 60674-4107
Attention: Asset-Backed Securities Trust
Services Group
Annual Compliance-Morgan Stanley 1998-CFI (Version - Final)
Morgan Stanley Capital I Inc.
March 30, 1999
Page 3
cc:
Standard & Poor's Ratings Service
26 Broadway, 10" Floor
New York, New York 10004
Attention: CMBS Surveillance
Moody's Investor Services, Inc.
99 Church Street
New York, New York 10007
Attention: CMBS Surveillance
Annual Compliance-Morgan Stanley 1998-CFI (Version - Final)
I
FIRST SECUNTY COMMERCIAL SERVICING. L.L.C.
March 15, 1999
BDO Seidman, LLP
205 N. Michigan Avenue
Suite 2100
Chicago, 11, 60601
RE: First Security Commercial Servicing, L.L.C.
Management's Assertion of Compliance
To Whom It May Concern:
150 SOUTH WACKER DRIVE, CHICAGO, IL 60606-4102
312.425.9300 FAx 312.425.9366
As and for the year ended December 31, 1998, First Security
Commercial Servicing, L.L.C., has complied in all material
respects with the minimum servicing standards set forth in
the Mortgage Bankers Association of America's (MBA's) Uniform
Sin Attestation Program for Mortgage Bankers (except, for
commercial loan servicing minimum servicing standards V.4.
andVI.1, which the MBA has interpreted as inapplicable to such
servicing) except as follows - bank reconciliations of
certain custodial bank accounts were not reconciled within
45 days following the cutoff date, and certain bank account
reconciling items were not resolved within a 90-day period.
Subsequent to December 31, 1998, all reconciling items were
resolved. First Security Commercial Servicing, L.L.C.'s
noncompliance with the above noted exceptions did not have
a material effect on the custodial bank account balances.
As of and for this same period, First Security Commercial
Servicing, L.L.C. had in effect a fidelity bond and errors
and omissions insurance policy in the amount of $ 1,000,000
and $5,000,000, respectively.
Respectfully submitted,
Barry L. Powell
Executive Vice President
Tom Rosenfeld
Senior Vice President
February 4, 1999
Deloitte & Touche LLP
Texas Commerce Tower
220 Ross Avenue
Suite 1600
Dallas, Texas 75201
Dear Sirs:
9&
A M R E S C 0
As of and for the year ended December 31, 1998, AMRESCO
Services, L. P., a subsidiary of AMRESCO. 1'-N'C., has
complied in all material respectswith the minimum servicing
standards set forth in Appendix A. Such standards were
established by ANMRESCO Services, L. P. based on
Mortgage Bankers Association of America's Uniform Single
Attestation Program for Nfortaage Bankers (USAP).
A list of the securitized and bond-related sen-icincy
contracts covered by this representation is included in
Appendix B.
For the period January 1. 1998 through December 30. 1998.
ANIRESCO Services, L. P. had in effect a fidelitv bond
in the amount of S2' )..000.000, errors and omissions
liabilitv coverage in the amount of S 10.000.000. and
mortgage impairment protection in the amount of
S23 ,000.000.
Beginning December 31, 1998, ANIRESCO Services, L. P.
increased its coverage, resulting in a fidelitv bond
in the amount of $43,000.000. and mortgage impairment
protection in the amount of S43.000,000. Errors and
omissions liability coverage remained at $10,000,000.
Date
Donnie M. Skidmore
President
Daniel B. Kirby
Senior Vice President
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors of AMRESCO Services, L.P.:
Deloitte & Touche LLP
Suite 1600
Chase Tower
2200 Ross Avenue
Dallas, Texas 75201-6778
Telephone: (214) 777-7000
We have examined manacrement's assertion about AMRESCO Services,
L.P.'s (the "Company") (a wholly owned subsidiary of AMRESCO,
INC.) compliance with the Company's servicing standards
identified in the Appendix as of and for the year ended
December 3 1, 1998, included in the accompanying management
assertion. Such standards were established by the Company's
manauement based on the Mortgage Bankers Association of
America's Uniform Single Attestation Program for 11fortgage
Bankers ("USAP"). Management is responsible for the Company's
compliance %vith these servicing standards. Our responsibility
is to express an opinion on management*s assertion about the
Company's compliance based on our examination.
Our examination was made in accordance with standards
established by the American Institute of Certified Public
Accountants and accordingly, included examining, on a test
basis. evidence about the Companv*s compliance with the
servicing standards and performing such other procedures as
we considered necessary in the circumstances. We believe
that our examination provides a reasonable basis for our
opinion. Our examination does not provide a legal
determination on the Company's compliance with the servicing
standards or its servicing agreements.
In our opinion. mana-ement's assertion that ANIRESCO Services,
L.P. complied with its established servicing standards
identified in the Appendix as of and for the year ended
December 31. 1998, is fairly stated.. in all material respects.
February 4, 1999
BDO Seidman, LLP
205N Michigan Avenue, Suite 2100
Accountants and Consultants
Chicago. Illinois 60601
Telephone: (3121856-9100
Fax: (312) 856-1379
Independent Auditors' Report
Members
First Security Commercial Servicing, L.L.C.
Chicago, Illinois
We have examined management's assertion about First
Security Commercial Servicing, L.L.C.'s compliance with the
minimum servicing standards identified in the Mortgage
Bankers Association of America's (MBA) Uniform Single
Attestation Program for Mortgjkge Bankers (USAP) (except,
for commercial loan servicing, minimum servicing standards
V.4 and VI. 1, which the M13A has interpreted as
inapplicable to such servicing) as of and for the year
ended December 31, 1998 included in the accompanying
management assertion. Management is responsible for
compliance with those minimum servicing standards. Our
responsibility is to express an opinion on management's
assertion about First Security Commercial Servicing,
L.L.C.'s compliance based on our examination.
Our examination was made in accordance with standards
established by the American Institute of Certified Public
Accountants and, accordingly, included examining, on a
test basis, evidence about First Security Commercial
Servicing, L.L.C.'s compliance with the minimum servicing
standards and performing such other procedures as we
considered necessary in the circumstances. We believe
that our examination provides a reasonable basis for
our opinion. Our examination does not provide a legal
determination on First Security Commercial Servicing,
L.L.C.'s compliance with the minimum servicing standards.
In our opinion, management's assertion that First
Security Commercial Servicing, L.L.C. complied with
the aforementioned minimum servicing standards, except
for the noncompliance matters noted in the assertion, as
of and for the year ended December 31, 1998 is fairly stated,
in all material
respects.
Chicago, Illinois
March 15, 1999
