OREANDA-NEWS. February 29, 2016. Fitch Ratings has affirmed four 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 affirmations reflect stable performance since the last rating action with 41.9% of the pool (six loans) defeased according to servicer reporting. The pool has experienced \\$28.3 million (2.7% of the original pool balance) in realized losses to date.

As of the February 2016 distribution date, the pool's aggregate principal balance has been reduced by 97.3% to \\$28.2 million from \\$1.06 billion at issuance. The second largest loan (13.3% of pool) is defeased and matures in June 2016, 2% matures in 2017, and 60.4% matures in 2018. 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 (29.1% net rentable area [NRA], expiration Oct. 2016), Rite Aid (23.5% NRA, expiration Nov. 2016), and Smart & Final (17.5% NRA, expiration Nov. 2016). Per the borrower, both Staples and Smart & Final plan on staying at the property. Currently, Rite Aid has not provided notice of renewal but has until May to confirm. The debt service coverage ratio (DSCR) was stable at 1.76x as of YE 2015. The loan is scheduled to mature in 2018.

Eight of the remaining nine non-defeased loans (53.4% of the pool) are represented by retail properties. A portion of the retail exposure consists of five single-tenant drug store assets (7.0% of the pool) including one Walgreens and four CVS stores, all located in secondary or tertiary markets.

RATING SENSITIVITIES
Classes J and K are expected to remain stable due to high credit enhancement and continued expected paydown. 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. In addition, class L, which has previously taken losses, should be sufficient to absorb potential losses.

DUE DILIGENCE USAGE
No third-party due diligence was provided or reviewed in relation to this rating action.

Fitch has affirmed the following classes:

--\\$8.9 million class J at 'AAAsf', Outlook Stable;
--\\$10.6 million class K at 'BBBsf', 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.