EQI CMBS Classes Downgraded

Two classes of EQI Financing Partnership I LP's commercial mortgage bonds, series 1997-1, have been downgraded by Fitch Ratings and removed from Rating Watch Negative.Class B was downgraded from A to A-minus, and class C was downgraded from BBB-minus to BB. In addition, the triple-A rating on class A was affirmed. Fitch attributed the downgrades mainly to a continued decline in performance of the portfolio, which consists of cross-collateralized and cross-defaulted first mortgages on 20 hotels. Fitch's stressed net cash flow has declined each year since 1998, and the trailing 12-month stressed net cash flow was down 35% from issuance as of June 30, the rating agency said. "The decline in performance is generally attributed to increased competition and the impact of the current economic conditions on the properties," Fitch said. The rating agency can be found on the Web at http://www.fitchratings.com.