S&P Lowers CRIIMI MAE Sr Rtg to B+; Outlook NowNeg.

NEW YORK--(BUSINESS WIRE)--Sept. 30, 1998--NY-Standard & Poor's CreditWire 9/30/98 -- Standard & Poor's today lowered its long-term counterparty and senior debt ratings of CRIIMI MAE Inc. to single-'B'-plus from double-'BB'. In addition, S&P revised its outlook on the company's long-term

The downgrade of the Rockville, Md.-based REIT's ratings reflects the growing volatility, and in some cases illiquidity, of the commercial mortgage-backed securities (CMBS) market and the negative impact this volatility is having on the company's capitalization and financial flexibility. Of particular concern is the steep decline in the value of CMBS securities in the noninvestment-grade and unrated categories. At June 30, 1998, CRIIMI MAE had invested in approximately $1.1 billion of noninvestment-grade CMBS bonds (or 156% of capital) and $158 million of unrated CMBS securities (or 15% of capital). As unrealized market losses in these portfolios have been charged against capital, Standard & Poor's believes that capitalization has materially weakened. If the U.S. economy continues to slow, investor worries over credit issues, whether perceived or real, could depress the market for these securities for a prolonged period. Should this occur, CRIIMI MAE may find itself incurring additional market losses on its investment portfolio.

OUTLOOK: NEGATIVE

The current volatility in the CMBS market poses funding risks to companies such as CRIIMI MAE that have levered up aggressively using CMBS investments to secure additional borrowings. If the value of these securities continues to decline, the REIT will likely have to seek out other sources of funding to grow its business and meet unexpected cash demands, Standard & Poor's said. - CreditWire