CAPCO AMERICA SECURITIZATION CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-D7
Supplement, dated June 11, 1999, to Prospectus Supplement dated September 25,
1998.
PASS-THROUGH RATES
Notwithstanding anything to the contrary set forth in the Prospectus Supplement,
the Pass-Through Rates for the Class A-3 and Class A-4 Certificates shall be as
follows:
The Pass-Through Rate for the Class A-3 Certificates for any Distribution Date
will be equal to the lesser of (i) 6.7400% and (ii) the Weighted Average Net
Mortgage Pass-Through Rate for such Distribution Date.
The Pass-Through Rate for the Class A-4 Certificates for any Distribution Date
will be equal to the lesser of (i) 7.2300% and (ii) the Weighted Average Net
Mortgage Pass-Through Rate for such Distribution Date.
In the event of the prepayment of Mortgage Loans having relatively high interest
rates, the Weighted Average Net Mortgage Pass-Through Rate could be lower than
7.2300% or 6.7400%.
CONSIDERATIONS RELATING TO YEAR 2K
GENERAL. The Depositor is aware of the issues associated with the programming
code in existing computer systems as the year 2000 approaches. The "year 2000
problem" is pervasive and complex; virtually every computer operation will be
affected in some way by the rollover of the two digit year value to 00. The
issue is whether computer systems will properly recognize date-sensitive
information when the year changes to 2000. Systems that do not properly
recognize such information could generate erroneous data or cause a system to
fail. However, neither the Depositor nor any affiliate of the Depositor has made
any independent investigation of the computer systems of the Servicer or the
Trustee. In the event that computer problems arise out of a failure of such
efforts to be completed on time, or in the event that the computer systems of
the Servicer or the Trustee are not fully year 2000 compliant, the resulting
disruptions in the collection or accounting of receipts on the Mortgage Loans
could adversely affect distributions on the Certificates.
THE DEPOSITORY TRUST COMPANY. DTC has informed members of the financial
community that is has developed and is implementing a program so that its
systems, as the same relate to the timely payment of distributions (including
principal and interest payments) to security holders, book-entry deliveries, and
settlement of trades within DTC, continue to function appropriately on and after
January 1, 2000. This program includes a technical assessment and a remediation
plan, each of which is complete. Additionally, DTC's plan includes a testing
phase, which is expected to be completed within appropriate timeframes.
However, DTC's ability to perform properly its services is also dependent upon
other parties, including, but not limited to, its participating organizations
(through which Certificateholders will hold their Offered Certificates), as well
as the computer systems of third-party service providers. DTC has informed the
financial community that it is contacting (and will continue to contact)
third-party vendors from whom DTC acquires services to: (i) impress upon them
the importance of such services being year 2000 compliant and (ii) determine the
extent of their efforts with respect to remediation of year 2000 problems with
(and, as appropriate, testing of) their services. In addition, DTC has stated
that it is in the process of developing such contingency plans as it deems
appropriate. If problems associated with the year 2000 issue were to occur with
respect to DTC and the services described above, distributions to
Certificateholders could be delayed or otherwise adversely affected.
RECENT DEVELOPMENTS
On April 23, 1999, The Nomura Securities Co., Ltd. ("NSC"), the ultimate
parent of CCA, NACC (CCA's parent) and NHA (NACC's parent), reported that its
consolidated after-tax losses for the year ending March 31, 1999 was
$3,900,000,000 and NHA reported it had incurred a pre-tax loss of $1,851,814,000
for the same period. Approximately $782,000,000 of that loss was attributable to
mark-to-market losses in the value of CCA's assets. Since September 25, 1998,
NSC has made equity and subordinated debt investments in NHA in an aggregate
amount of approximately $3 billion. Of that amount, approximately $600 million
was invested in CCA as equity capital.
Market uncertainty and volatility have had, and may continue to have,
further significant adverse impact on the financial condition of CCA and
therefore NHA. There can be no assurance that either CCA or NHA will not
experience further losses. In addition, in the event further losses occur, NSC
has not committed to make additional capital contributions to NHA and NHA has
not committed to make additional capital contributions to CCA. In March of 1999,
Moody's revised its long-term ratings of NSC from "A3" to "Baa1" and S&P revised
its long-term and short-term ratings of NSC from "A-" and "A2" to "BBB" and
"A3". Moody's currently has a negative credit outlook with respect to NSC. A
negative credit outlook means that a rating may be lowered. There can be no
assurance that the ratings of NSC by Moody's and S&P will not be further
lowered.
On December 11, 1998, CCA announced that it will not undertake any new
loan commitments. CCA also closed its regional offices and has consolidated and
centralized its activities in New York. As a result of its termination of loan
origination activities, a significant number of employees primarily related to
these activities have been terminated. These employees represent a substantial
majority of CCA's staff.
The Capital Company of America Client Services LLC has sold its rights to
service the Mortgage Loans under the Pooling and Servicing Agreement to AMRESCO
Services, L.P. and therefore there is no longer an Operating Advisor with
respect to the Preferred Equity Loans.
COLLATERAL INFORMATION
The Mortgage Loan known as 2100 Swift Road, which has a current balance
(after the April 11, 1998 payment) of $4,716,870, has appeared on the Servicer
Watch List since December 1998. The Mortgaged Property was occupied by a single
tenant which has experienced serious erosion in its financial condition. In a
February 19, 1999 press release, the tenant announced that it filed a voluntary
petition for reorganization under Chapter 11 of the United States Bankruptcy
Code in the United States Bankruptcy Court for the District of Delaware. The
loan remains current, and the borrower has negotiated a new lease with a
replacement tenant and has submitted the lease to the Servicer for approval.
The Servicer has received a request from the Borrower under the Mortgage
Loan known as Prime Retail III to substitute a new property for the Mortgaged
Property known as Kittery Outlet Village.
Beckman Coulter, Inc., the credit tenant under the Beckman-Miami and
Beckman-Brea credit lease loans has been placed on negative credit watch by
Moody's.
The long-term unsecured debt rating of First Union National Bank, the
guarantor of the Money Store credit lease loan, has been changed from
A+/AA-/Aa3/NA to A/A+/A1/A+ by Standard & Poor's, Fitch, Moody's and Duff &
Phelps, respectively.
EXHIBIT E
Exhibit E to the Prospectus Supplement sets forth the Weighted Average Net
Mortgage Rate (WAC) calculated for the Mortgage Pool for each Distribution Date
based on certain assumptions. Each WAC shown on Exhibit E is 0.005% less than
the actual WAC calculated for each Distribution Date.
BASE PROSPECTUS
The Legal Investment section, on pages 84-86 is amended as follows:
Replace the last sentence of the second paragraph with the following:
Section 347 also provides that the enactment by a state of any such
legislative restrictions shall not affect the validity of any contractual
commitment to purchase, hold or invest in securities qualifying as "mortgage
related securities" solely by reason of Section 347 that was made, and shall not
require the sale of disposition of any securities acquired, prior to the
enactment of such state legislation. Accordingly, the investors affected by any
such legislation, when and if enacted, will be authorized to invest in
Certificates qualifying as "mortgage related securities" only to the extent
provided in such legislation.
Add the following sentence to the end of the third paragraph:
The Office of Thrift Supervision (the "OTS") has issued Thrift Bulletin
13a (December 1, 1998), "Management of Interest Rate Risk, Investment
Securities, and Derivatives Activities," which thrift institutions subject to
the jurisdiction of the OTS should consider before investing in any of the
Certificates.
Delete the last sentence of the fourth paragraph.
