OREANDA-NEWS. Fitch Ratings has upgraded one class and affirmed three classes of Morgan Stanley Capital I Trust's commercial mortgage pass-through certificates series 1998-HF2. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The upgrade reflects increased credit enhancement from paydown, an increase in defeasance, and the liquidation of a previous specially serviced loan. Fitch modeled losses of 3.4% of the remaining pool, including \$28.3 million (2.7% of the original pool balance) in realized losses to date.

As of the March 2015 distribution date, the pool's aggregate principal balance has been reduced by 97% to \$31.7 million from \$1.06 billion at issuance. Per the servicer reporting, four loans (31.9% of the pool) are defeased. Interest shortfalls are currently affecting classes L through N.

The largest loan in the pool is a retail center in Pleasant Hill, CA. The property has been 100% occupied for the last several years and is anchored by Staples (lease expiration Oct. 2016) and Rite Aid (lease expiration Nov. 2016). The year-end (YE) 2014 debt service coverage ratio (DSCR) has increased to 1.88x as of YE 2014 compared to 1.67x as of YE 2013. The loan is scheduled to mature in 2018.

Out of the remaining 15 loans eight non-defeased loans (52.1% of the pool) are represented by retail properties. A portion of the retail exposure consists of five single-tenant drug store assets (8.7% of the pool) including one Walgreens and four CVS stores, all located in secondary or tertiary markets. The second largest loan (13.7% of the pool) was included in the single-tenant retail total as of last review; however, since then the loan has defeased.

RATING SENSITIVITIES

Classes J and K are expected to remain stable due to high credit enhancement and continued expected paydown. In addition, class L, which has previously taken losses, should be sufficient to absorb upcoming expected losses. Downgrades are not expected on classes J and K, as the performance of the remaining pool has been stable with no loans in special servicing. Upgrades are not expected to class K as the pool has become concentrated.

Fitch upgrades the following class as indicated:
--\$10.6 million class K to 'BBBsf' from 'BBsf'; Outlook Stable;

Fitch affirms the following classes as indicated:
--\$12.4 million class J at 'AAAsf', Outlook Stable;
--\$8.7 million class L at 'Dsf', RE 90%;
--\$0 class M at 'Dsf', RE 0%.

The class A-1, A-2, B, C, D, E, F, G and H certificates have paid in full. Fitch does not rate the class N certificates. Fitch previously withdrew the rating on the interest-only class X certificates.