March 14 - OVERVIEW -- We raised our rating to 'AA (sf)' from 'AA- (sf)' on class E from Merrill Lynch Mortgage Investors Inc.'s series 1998-C3, a U.S. CMBS transaction. -- We also affirmed our ratings on five other classes from the same transaction. -- Our rating actions reflect our analysis of the transaction, including a review of the credit characteristics of the remaining collateral, the transaction structure, and the liquidity available to the trust. The upgrade further reflects increased credit enhancement, as well as the transaction's overall strong credit metrics. NEW YORK (Standard & Poor's) March 14, 2012--Standard & Poor's Ratings Services today raised its rating to 'AA (sf)' from 'AA- (sf)' on the class E commercial mortgage pass-through certificate from Merrill Lynch Mortgage Investors Inc.'s series 1998-C3, a U.S. commercial mortgage-backed securities (CMBS) transaction. In addition, we affirmed our ratings on five other classes from the same transaction. Our rating actions reflect our analysis of the transaction, including a review of the credit characteristics of the remaining collateral, the transaction structure, and the liquidity available to the trust. The upgrade of class E further reflects increased credit enhancement, as well as the transaction's overall strong credit metrics. Excluding five defeased loans ($15.8 million, 16.2%), we calculated a weighted average debt service coverage (DSC) of 1.87x for the remaining loans in the trust based on servicer-reported figures. Our adjusted DSC and loan-to-value (LTV) ratio were 1.42x and 56.4%, respectively. We also considered the amount of nondefeased loans maturing through year-end 2013 ($63.2 million, 64.8%). The affirmed ratings reflect subordination and liquidity support levels that are consistent with the current ratings. We affirmed our 'AAA (sf)' rating on the class IO interest-only (IO) certificate based on our current criteria. TRANSACTION SUMMARY As of the Feb. 16, 2012, trustee remittance report, the collateral pool balance was $97.7 million, which is 15.3% of the balance at issuance. The pool includes 21 loans, down from 139 loans at issuance. There are five fully defeased loans in the pool ($15.8 million, 16.2%). The master servicer, Wells Fargo Commercial Mortgage Servicing (Wells Fargo), provided financial information for 99.2% of the nondefeased pool balance, 27.1% of which was full-year 2010 data and the reminder was partial-year 2011. According to the Feb. 16, 2012, trustee remittance report, the transaction has experienced $39.3 million in realized losses to date from 11 assets. There are currently no loans with the special servicer, or on the master servicer's watchlist. All of the loans have reported DSCs greater than 1.00x. SUMMARY OF TOP 10 LOANS SECURED BY REAL ESTATE The top 10 loans secured by real estate have an aggregate outstanding balance of $76.4 million (78.2%). Using servicer-reported numbers, we calculated a weighted average DSC of 1.89x for the top 10 loans. Our adjusted DSC and LTV ratio for the top 10 loans are 1.41x and 56.9%, respectively. Details of the three largest loans ($57.8 million, 59.1%) are as follows: The 1700 Broadway loan ($46.8 million, 47.9%) is the largest loan in the pool and is secured by a 581,354 sq.-ft. office building in New York. The master servicer reported a DSC of 2.09x for nine months ended Sept. 30, 2011, and 86.6% occupancy according to the September 2011 rent roll. The loan has an anticipated repayment date of Sept. 1, 2013. The BJ's Wholesale Club loan ($5.8 million, 5.9%) is secured by a 104,708-sq.-ft. retail property in Philadelphia and is 100% occupied by BJ's Wholesale Club. The master servicer reported a DSC of 1.35x for year-end 2010. The balloon loan and matures on Oct. 1, 2013. The Republic Beverage Building loan ($5.2 million, 5.3%) is secured by a 384,895-sq.-ft. industrial property in Grand Prarie, Texas, and is 100% occupied by Republic Beverage Building Co. The master servicer reported a DSC of 1.16x for year-end 2010. The fully amortizing loan matures on Nov. 1, 2018. Standard & Poor's stressed the remaining collateral in the pool according to its current criteria. The resultant credit enhancement levels are consistent with our raised and affirmed ratings. STANDARD & POOR'S 17G-7 DISCLOSURE REPORT SEC Rule 17g-7 requires an NRSRO, for any report accompanying a credit rating relating to an asset-backed security as defined in the Rule, to include a description of the representations, warranties and enforcement mechanisms available to investors and a description of how they differ from the representations, warranties and enforcement mechanisms in issuances of similar securities. The Rule applies to in-scope securities initially rated (including preliminary ratings) on or after Sept. 26, 2011. If applicable, the Standard & Poor's 17g-7 Disclosure Reports included in this credit rating report are available atRELATED CRITERIA AND RESEARCH -- Global Structured Finance Scenario And Sensitivity Analysis: The Effects Of The Top Five Macroeconomic Factors, published Nov. 4, 2011. -- U.S. Government Support In Structured Finance And Public Finance Ratings, published Sept. 19, 2011. -- Updated Defeasance Criteria For U.S. CMBS Transactions, published Aug. 16, 2011. -- U.S. CMBS Rating Methodology And Assumptions For Conduit/Fusion Pools, published Nov. 3, 2010. -- Methodology And Assumptions For Analyzing The Major Property Types In U.S. CMBS Transactions, published June 14, 2010. -- Global Methodology For Rating Interest-Only Securities, published April 15, 2010. -- U.S. CMBS 'AAA' Scenario Loss And Recovery Application, published July 21, 2009. -- Standard & Poor's Defeasance Criteria For U.S. CMBS Transactions, published April 4, 2003. RATING RAISED Merrill Lynch Mortgage Investors Inc. Commercial mortgage pass-through certificates series 1998-C3 Rating Class To From Credit enhancement (%) E AA (sf) AA- (sf) 46.13 RATINGS AFFIRMED Merrill Lynch Mortgage Investors Inc. Commercial mortgage pass-through certificates series 1998-C3 Class Rating Credit enhancement (%) C AAA (sf) 93.52 D AA+ (sf) 54.30 F BB (sf) 10.17 G B (sf) 5.27 IO AAA (sf) N/A N/A-Not applicable.