8-K 1 flb98c02_sep.txt SEPTEMBER 8K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report: September 20, 2004 (Date of earliest event reported) Commission File No.: 333-48943-04 First Union-Lehman Brothers-Bank of America Commercial Mortgage Trust Commercial Mortgage Pass-Through Certificates Series 1998-C2 (Exact name of registrant as specified in its charter) New York (governing law of Pooling and Servicing Agreement) (State of Incorporation) 52-2107968 52-2107969 52-2107970 52-6929147 (I.R.S. Employer Identification No.) c/o Wells Fargo Bank, N.A. 9062 Old Annapolis Road Columbia, MD 21045 (Address of principal executive offices) (Zip Code) (410) 884-2000 Registrant's Full Telephone Number (Former name, former address and former fiscal year, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act(17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act(17 CFR 240.13e-4(c)) ITEM 8.01 Other Events On September 20, 2004, a distribution was made to holders of First Union-Lehman Brothers-Bank of America Commercial Mortgage Trust, Commercial Mortgage Pass-Through Certificates, Series 1998-C2. ITEM 9.01 Financial Statements and Exhibits (c) Exhibits Exhibit Number Description EX-99.1 Monthly report distributed to holders of Commercial Mortgage Pass-Through Certificates, Series 1998-C2, relating to the September 20, 2004 distribution. Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. First Union-Lehman Brothers-Bank of America Commercial Mortgage Trust Commercial Mortgage Pass-Through Certificates Series 1998-C2 (Registrant) By: Wells Fargo Bank, N.A. as Trustee By: /s/ Beth Belfield, Assistant Vice President By: Beth Belfield, Assistant Vice President Date: September 20, 2004 INDEX TO EXHIBITS Exhibit Number Description EX-99.1 Monthly report distributed to holders of Commercial Mortgage Pass-Through Certificates, Series 1998-C2, relating to the September 20, 2004 distribution. Wells Fargo Bank, N.A. Corporate Trust Services 9062 Old Annapolis Road Columbia, MD 21045-1951 First Union-Lehman Brothers-Bank of America Commercial Mortgage Trust Commercial Mortgage Pass-Through Certificates Series 1998-C2 For Additional Information, please contact CTSLink Customer Service (301) 815-6600 Reports Available on the World Wide Web @ www.ctslink.com/cmbs Payment Date: September 20, 2004 Record Date: August 31, 2004 This Trustee refers Certificateholders to recent notices from the Special Servicer in connection with ongoing lawsuits. The notices are currently posted on www.ctslink.com/cmbs. Updates will be posted in this location as they are received from the Special Servicer. Any inquiries on this matter should be directed to the Special Servicer. DISTRIBUTION DATE STATEMENT Table of Contents STATEMENT SECTIONS PAGE(s) Certificate Distribution Detail 2 Certificate Factor Detail 3 Reconciliation Detail 4 Other Required Information 5 Cash Reconciliation 6 Ratings Detail 7 Current Mortgage Loan and Property Stratification Tables 8 - 10 Mortgage Loan Detail 11 - 29 Principal Prepayment Detail 30 Historical Detail 31 Delinquency Loan Detail 32 - 33 Specially Serviced Loan Detail 34 - 41 Modified Loan Detail 42 Liquidated Loan Detail 43 Underwriter Lehman Brothers Inc. 3 World Financial Center New York, NY 10285 Contact: Tricia Hall Phone Number: (212) 526-5850 Underwriter First Union Capital Markets One First Union Center 301 South College Street Charlotte, NC 28288 Contact: Craig M. Lieberman Phone Number: (704) 383-7407 Servicer ORIX Capital Markets, LLC 1717 Main Street, 14th Floor Dallas, TX 75201 Contact: Don Kalescky Phone Number: (214) 237-2294 Special Servicer ORIX Capital Markets, LLC 1717 Main Street, 14th Floor Dallas, TX 75201 Contact: Don Kalescky Phone Number: (214) 237-2294 This report has been compiled from information provided to Wells Fargo Bank, N.A. by various third parties, which may include the Servicer, Master Servicer, Special Servicer and others. Wells Fargo Bank, N.A. has not independently confirmed the accuracy of information received from these third parties and assumes no duty to do so. Wells Fargo Bank, N.A. expressly disclaims any responsibility for the accuracy or completeness of information furnished by third parties. Copyright 2004, Wells Fargo Bank, N.A.

Cash Reconciliation Detail Total Funds Collected Interest: Scheduled Interest 17,457,470.44 Interest reductions due to Nonrecoverability Determinations 0.00 Interest Adjustments 0.00 Deferred Interest 0.00 Net Prepayment Interest Shortfall 0.00 Net Prepayment Interest Excess 0.00 Extension Interest 0.00 Interest Reserve Withdrawal 0.00 Total Interest Collected 17,457,470.44 Principal: Scheduled Principal 4,964,469.12 Unscheduled Principal 8,507,062.19 Principal Prepayments 8,064,714.43 Collection of Principal after Maturity Date 0.00 Recoveries from Liquidation and Insurance Proceeds 5,662.86 Excess of Prior Principal Amounts paid 0.00 Curtailments 436,684.90 Negative Amortization 0.00 Principal Adjustments 0.00 Total Principal Collected 13,471,531.31 Other: Prepayment Penalties/Yield Maintenance 844,592.77 Repayment Fees 0.00 Borrower Option Extension Fees 0.00 Equity Payments Received 0.00 Net Swap Counterparty Payments Received 0.00 Total Other Collected: 844,592.77 Total Funds Collected 31,773,594.52 Total Funds Distributed Fees: Master Servicing Fee 223,146.26 Trustee Fee 2,826.58 Certificate Administration Fee 0.00 Insurer Fee 0.00 Miscellaneous Fee 0.00 Total Fees 225,972.85 Additional Trust Fund Expenses: Reimbursement for Interest on Advances 21,280.93 ASER Amount 102,889.71 Special Servicing Fee 44,692.82 Rating Agency Expenses 0.00 Attorney Fees & Expenses 0.00 Bankruptcy Expense 0.00 Taxes Imposed on Trust Fund 0.00 Non-Recoverable Advances 0.00 Other Expenses 401,017.38 Total Additional Trust Fund Expenses 569,880.84 Interest Reserve Deposit 0.00 Payments to Certificateholders & Others: Interest Distribution 16,661,617.63 Principal Distribution 13,471,531.38 Prepayment Penalties/Yield Maintenance 844,592.77 Borrower Option Extension Fees 0.00 Equity Payments Paid 0.00 Net Swap Counterparty Payments Paid 0.00 Total Payments to Certificateholders & Others 30,977,741.78 Total Funds Distributed 31,773,595.47

Net Remaining Loan Operating DSCR Note Maturity Amortization Number Income Date DSCR Date Date Term 355132459 6,910,160.00 03/31/2004 1.65 06/01/1998 05/01/2013 283 240000009 2,785,067.00 03/31/2004 1.29 02/01/1998 01/01/2008 219 440000022 658,139.00 12/31/2003 0.65 04/01/1998 03/01/2028 281 180000396 05/01/1998 07/01/2019 177 245114323 352,595.00 12/31/2003 0.49 02/01/1998 01/01/2008 219 240000160 (649,115.00) 09/30/2003 (1.41) 04/01/1998 03/01/2008 281 245114324 426,066.00 12/31/2003 0.88 02/01/1998 01/01/2008 219 245114322 236,233.00 12/31/2003 0.51 02/01/1998 01/01/2008 219 440000217 348,248.00 03/31/2004 0.92 04/01/1998 03/01/2023 221 240000258 345,185.00 09/30/2003 1.00 05/01/1998 04/01/2008 222 180000295 (99,665.00) 03/31/2004 (0.33) 03/01/1998 02/01/2008 280 240000277 (485,220.00) 12/31/2003 (1.52) 05/01/1998 04/01/2008 222 245114285 239,199.00 03/31/2003 0.83 02/01/1998 01/01/2008 279 245114268 1,214,280.00 03/31/2004 4.43 01/01/1998 12/01/2007 218 245114181 233,496.00 03/31/2004 1.00 02/01/1998 01/01/2008 219 240000390 96,280.00 09/30/2003 0.48 04/01/1998 03/01/2008 281 195114158 286,064.00 03/31/2004 1.15 12/01/1997 11/01/2007 181 245114290 388,368.00 09/30/2003 1.86 04/01/1998 03/01/2018 161 240000533 88,318.00 12/31/2003 0.60 05/01/1998 04/01/2008 222 (1) Resolution Strategy Code 1 - Modification 2 - Foreclosure 3 - Bankruptcy 4 - Extension 5 - Note Sale 6 - DPO 7 - REO 8 - Resolved 9 - Pending Return to Master Servicer 10 - Deed in Lieu Of Foreclosure 11 - Full Payoff 12 - Reps and Warranties 13 - Other or TBD (2) Property Type Code MF - Multi-Family RT - Retail HC - Health Care IN - Industrial WH - Warehouse MH - Mobile Home Park OF - Office MU - Mixed Use LO - Lodging SS - Self Storage OT - Other

Specially Serviced Loan Detail - Part 2 Offering Document Resolution Site Other REO Loan Cross Strategy Inspection Phase 1 Appraisal Appraisal Property Number Reference Code (1) Date Date Date Value Revenue 355132459 5 9 03/27/1998 105,000,000.00 240000009 9 9 35,030,000.00 440000022 22 13 9,840,000.00 180000396 52 7 03/03/2004 6,850,000.00 245114323 90 2 04/27/2004 4,300,000.00 240000160 160 9 12/27/1997 7,710,000.00 245114324 180 2 04/27/2004 4,600,000.00 245114322 185 2 04/26/2004 3,300,000.00 440000217 217 9 11/17/1997 5,900,000.00 240000258 258 3 06/01/2004 3,300,000.00 180000295 268 9 11/10/2003 2,850,000.00 240000277 277 3 03/05/2004 1,690,000.00 245114285 286 7 06/05/2003 3,580,000.00 245114268 342 9 09/01/1997 4,300,000.00 245114181 375 13 03/02/2004 3,170,000.00 240000390 390 7 12/11/2003 1,500,000.00 195114158 398 13 06/30/2003 3,200,000.00 245114290 461 13 11/28/1997 2,950,000.00 240000533 533 13 03/24/2004 1,500,000.00

Loan Number Comments from Special Servicer 355132459 See Servicer reporting as comments are too long to include 240000009 Transferred to Special Servicing due to the Holiday Inn Express in Cave City, KY changing its flag to a Quality Inn.Based upon legal issues in KY, OCM believes negotiating a consent to the change in flag is best option - received information and evaluatin g. Draft comfort letter acceptable.TTM 6/30/04 statements indicate an NOI DSCR of 1.55xApproval for ex-post facto consent of change of franchise affiliation granted. OCM and Choice Hotels to execute the Comfort letter and Borrower to remit consent and leg al fees by 9/30/2004. 440000022 Transferred to SS on 7/23/03, due to reasonably foreseeable default. Borrower has sold 3 of the 11 properties (approved by SS).201 S. Central was sold and released, and loan is close to a 1.0 dscr. However, there remains significant risk due to poor ten ant mix, market, etc.The most recent Forebearance Agreement terminated automatically upon the sale of 201 S. Central. 180000396 The Trust acquired title at sheriff's sale on 3/31/04 with single credit bid of $4,566,667. 00. There was no competitive bidding. Deed will be issued to the trust in the name of WFBM West Monroe, LLC. The property is listed with CB Commercial and will b e marketed nationallyMarketing commenced in May with fliers and brochures to over 750 buyers of similar properties. CB also marketed the property at the national ICSC convention in Las Vegas.Received six offers ranging from 500k - 6.825M. Property is un der contract at $6. 825M with closing expected by 10/31/04.CB continues to solicit a backup offer(s) in the event the high bidder requests a signficant re-trade or drops the contract. 245114323 ML transferred due to delinquency as well as notice of default from franchisor due to delinquent franchise fees. Receiver appointed by court ex-parte effective 3/31/04. Complaint against guarantor filed - in process of discovery phase.Guarantor will be pur sued for carve-out violations following foreclosure. Foreclosure sale was held on 9/8/04. Dinesh Patel (a third party) was the successful bidder at the sale on 9/8/04 with a bid of $5,500,000. In NC, there is a 10-day upset bid period, where anyone can bi d 5% more than the last bid with a 5% deposit. The upset bid period will expire at 5pm EST on 9/20/04. 240000160 Transferred to Special Servicing due to Imminent Default; 5/24/02 explosion and fire caused by tenant destroyed 10 units and damaged approx. 40 others. Property is 100% vacant during repairs/renovation.Asbestos abatement issues resolved and major constru ction is progressing well, though slower than expected. Estimated completion date November 2004. Construction is being monitored on a weekly basis. Rental interruption insurance payments were paid through May 2003; Borrower is now making debt service fro m own funds. The Borrower has significant equity in the property and no payment default is anticipated. 245114324 ML transferred due to delinquency as well as notice of default from franchisor due to delinquent franchise fees. Receiver appointed by court ex-parte effective 3/31/04. Complaint against guarantor filed - in process of discovery phase.Guarantor will be pur sued for carve-out violations following foreclosure. Foreclosure sale was held on 9/8/04. Noteholder was the successful bidder at the sale on 9/8/04 with a bid of $4,450,000. In NC, there is a 10-day upset bid period, where anyone can bid 5% more than the last bid with a 5% deposit. The upset bid period will expire at 5pm EST on 9/20/04. 245114322 ML transferred due to delinquency as well as notice of default from franchisor due to delinquent franchise fees. Receiver appointed by court ex-parte effective 3/31/04. Complaint against guarantor filed - in process of discovery phase.Guarantor will be pur sued for carve-out violations following foreclosure. Foreclosure sale was held on 9/8/04. Noteholder was the successful bidder at the sale on 9/8/04 with a bid of $3,650,000. In NC, there is a 10-day upset bid period, where anyone can bid 5% more than the last bid with a 5% deposit. The upset bid period will expire at 5pm EST on 9/20/04. 440000217 Orchard Plaza Shopping Center is a retail shopping center that consists of two single-story buildings and a total of 86,048 square feet. Property is currently 42.58% occupied, only vacant unit is the anchor space.Loan transferred on 11/18/03 after Borrow er requested a modification of the note terms on 11/13/03 due to the Anchor tenant seeking to have their lease rejected in Bankruptcy court.Counsel engaged week of 11/24/03 to file POC on behalf of Lender in Penn Traffic (BiLo) bankruptcy. Judge granted Penn Traffic the right to sell their interest in the lease on 12/18, but no sale occurred. Penn Traffic rejected the lease eff 1/25/04.AM inspected property on 1/14/04. Property was in good condition with no def. maint. noted. AM received executed Big Lots lease to bring occupancy to 100% (4/21/04). Borrower claims Big Lots will try to open before 10/24/04. Loan will be returned to Master when Big Lots is open for business and paying rent. 240000258 HMH Associates, Inc., one of the three GP's for this loan (d/b/a HMH Management Company, d/b/a Lynnwood Manor Health Care Center), filed for voluntary Chapter 11 bankruptcyon 4/20/2004. The borrower is continued to make monthly loan payments until 8/1/2 004. H&M Properties has agreed (verbally) to a motion for lift from the bankruptcy stay. Operating/financial information requested by OCM has not been provided. A new appraisal has been received - $3,300,000 (as of 6/1/2004). The appraisal has been rev iewed and accepted. 180000295 Collateral is a 157-unit apartment complex in Victoria, TX. Transferred to Special Servicing 9/11/03 due to Borrower's request for debt service relief for 1 year. Monetary default subsequently occurred in 9/03. Winstead Secrest engaged to represent the trust. Borrower reinstated the loan on 1/28/04.Borrower again defaulted on 5/1/04 payment. Borrower reinstated in 6/04 after f/c was initiated. The loan is current.Property is 70% occupied. TTM (3/31/04) operating analysis indicates (.20) DSCR. Disma l performance is due to market pressures and reduced rents.Collateral is in good condition per 6/29/04 inspection report. Appraisal and Phase I ESA ordered. Appraisal received with value of $2, 850,000 (11/03). SS will continue to monitor the property unt il operating levels warrant a return to MS. 240000277 See Servicer reporting as comments are too long to include 245114285 Collateral is a 157-unit apartment complex in Victoria, TX. Transferred to Special Servicing 9/11/03 due to Borrower's request for debt service relief for 1 year. Monetary default subsequently occurred in 9/03. Winstead Secrest engaged to represent the trust. Borrower reinstated the loan on 1/28/04.Borrower again defaulted on 5/1/04 payment. Borrower reinstated in 6/04 after f/c was initiated. The loan is current.Property is 70% occupied. TTM (3/31/04) operating analysis indicates (.20) DSCR. Disma l performance is due to market pressures and reduced rents.Collateral is in good condition per 6/29/04 inspection report. Appraisal and Phase I ESA ordered. Appraisal received with value of $2, 850,000 (11/03). SS will continue to monitor the property unt il operating levels warrant a return to MS. 245114268 See Servicer reporting as comments are too long to include 245114181 Borrower did not provide adequate liability insurance coverage per loan documents ($4MM required in Sec. 1.4 of the Deed of Trust). The borrower's request for acceptance of a lesser amount was rejected. Loan transferred to Special Servicer 12/4/03.Force place coverage obtained by Primary-Servicer 12/17/03. Premium paid from funds held in the insurance escrow account. Notice of default sent to borrower 1/22/04. Inspection complete 2/19/04. Property in good condition (95% occupied). Appraisal reviewed and accepted $3. 17MM (3/02/2004).Borrower continues to make monthly loan payments. Proposed discounted payoff (including partial default interest/prepayment consideration) was rejected. Counter-proposal for loan modification. Waiting on borrower resp onse. 240000390 ORIX documented a Deed in Lieu of foreclosure on the subject property on 7/19/04. Purchase offer of $1,912,500 from third party has been accepted by ORIX and approved by the REO Committee. Parties are in the process of negotiating the final terms of the Purchase and Sale Agreement.Purchase offer from United Realty Companies provides for a 5 day Review Period and a 25 day closing. Prospective Purchaser has not executed P & A but continues to perform due diligence on property. Several easement related i ssues have delayed buyer execution of the agreement due to the short time frame (5-days) of the review period and money going hard.Easement issues are very close to being resolved which benefit Orix in the absence of an immediate sale of the property. Of fer amount significantly exceeds BOV and OCM valuation of approximately $1.5MM 195114158 ML transferred due to chronic slow pay and due to low DSCR; Borrower has maintained ML current; after review of operating statements determined that Borrower had been overstating expense which resulted in lower DSCR; after adjustments.License agreeme nt was renewed w/o obtaining new tri-party agreement - in process of curing this deficiency. Counsel engaged to assist in documentation issues w/ tri-party agreement - Borrower working to resolve non-monetary defaults.Due to numerous non-monetary defaults and inability of Borrower to cure several in a timely manner, Borrower attempting to refinance loan and payoff ML. A forbearance agreement is being negotiated, which will include agreed upon terms for a pay-off.Although Borrower is dragging its feet about agreeing to forbearance, Forbearance agreement is being sent to Borrower for execution, or alternative action will be commenced. 245114290 Loan Transferred to Special Servicer due to delinquency extending beyond 45 days. 240000533 On June 30, 2004 OCM and the Borrower agreed to a Settlement of the loan upon receiving committee approval. Committee approved the Settlement and the lawsuit was dropped by Fortune.The salient terms are the following: Fortune Partners will payoff the loan by October 29, 2004 and pay the Noteholder $138,000 in expenses.The Noteholder has already received (received on 9/7/04) all of the lease termination proceeds and will apply the proceeds to principal after deducting the $138,000, the 9/1 Payment, and fut ure accrued interest (total proceeds are roughly $508,000).As part of the Agreement, the Noteholder will also apply all Reseves (approximately $80,000) to principal. The Maturity Date of the loan will be amended to October 29, 2004 and upon receipt of the Payoff Amount, the Borrower and the Noteholder will exchange mutual releases. (1) Resolution Strategy Code 1 - Modification 2 - Foreclosure 3 - Bankruptcy 4 - Extension 5 - Note Sale 6 - DPO 7 - REO 8 - Resolved 9 - Pending Return to Master Servicer 10 - Deed in Lieu Of Foreclosure 11 - Full Payoff 12 - Reps and Warranties 13 - Other or TBD

Modified Loan Detail Loan Modification Description Number 440000022 240000148 Chapter 11 plan was confirmed. Loan was reinstated. Maturity date extened by one year. All attorney fees were reimbursed. Loan returned to Servicer as a corrected loan. 440000425 Prior borrower filed BK. Assumption/modification negotiated by BK court. Arrearage capitalized onto Prin Bal. Note reamortized and monthly payment increased.

FIRST UNION LEH BRO BANK OF AMER COM MOR PA TH CE SE 1998-C2 8-K