**UNITED STATES****SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

** **

**FORM 10-K**

** **
|                                                                                                                                                                                                                                       |   | **(Mark One)**                                                                                |
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| **ý**                                                                                                                                                                                                                                 |   | **ANNUAL REPORT PURSUANT TO SECTION  13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**     |
|                                                                                                                                                                                                                                       |   |                                                                                          |
| **For the fiscal year ended December 31, 2003**                                                                                                                                                                                            |
|                                                                                                                                                                                                                                       |
| **or**                                                                                                                                                                                                                                     |
|                                                                                                                                                                                                                                       |   |                                                                                          |
| **o**                                                                                                                                                                                                                                      |   | **TRANSITION REPORT PURSUANT TO  SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|                                                                                                                                                                                                                                       |   |                                                                                          |
| **For the transition period from                   to                   ** |
|                                                                                                                                                                                                                                            |        |                                                                                               |  |

** **

**Commissionfile number 33-97994**

** **

**FIRST UNION COMMERCIAL MORTGAGE SECURITIES, INC. (In Respectof COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES,  SERIES 1997- C1)**

(Exact name of registrant as specified in its charter)

 
| **Delaware**                                                                      |   | **51643598**                         |
|-----------------------------------------------------------------------------------|--------|--------------------------------------|
| (State or other jurisdiction of incorporation or organization)                    |   | (I.R.S. Employer Identification No.) |
|                                                                              |   |                                 |
| **One First Union Center Charlotte, North  Carolina**                             |   | **282280600**                        |
| (Address of principal executive offices)                                          |   | (Zip Code)                           |
|                                                                              |   |                                 |
| Registrant’s telephone number, including area code  **(704)  374-6828** |
|                                                                              |   |                                 |
| Securities registered pursuant to Section 12(b) of the Act:  **None**        |

 
| **Title of  each class** |   | **Name of  each exchange on which registered** |
|--------------------------|--------|------------------------------------------------|
|                     |   |                                           |

 
| Securities registered pursuant to section 12(g) of the Act:  **None** |
|----------------------------------------------------------------------------|
|                                                                       |   |   |
|                                                                       |   |   |
| (Title of class)                                                           |
|                                                                       |   |   |
|                                                                       |   |   |
| (Title of class)                                                           |

 

Indicate by check mark whetherthe registrant (1) has filed all reports required to be filed by Section 13 or15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (orfor such shorter period that the registrant was required to file such reports),and (2) has been subject to such filing requirements for the past 90 days.

ýYes     oNo

 

Indicate by check mark ifdisclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, tothe best of registrant’s knowledge, in definitive proxy or informationstatements incorporated by reference in Part III of this Form 10-K or anyamendment to this Form 10-K.   o   Notapplicable

 

Indicate by check mark whetherthe registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).Yes o No ý

 

Aggregate market value of voting stock held by non-affiliates of theregistrant as of December 31, 2003.

 

Not Applicable.

 

Number of shares of common stock outstanding as of December 31, 2003.

 

Not Applicable.

 

Registrant has not been involved in bankruptcy proceedings during theproceeding five years, and is not reporting as a corporate issuer.

 

The following documents are incorporated by reference into this Form10-K.

 

None.

 

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FIRST UNION COMMERCIAL MORTGAGE SECURITIES,INC.

COMMERCIAL MORTGAGE PASS-THROUGHCERTIFICATES, SERIES 1997-C1

FORM 10-K

 

INDEX

 
| PART I.           |                                                                                                                                                                                                                   |
|-------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|              |                                                                                                                                                                                                                   |
|              | Item 1.  Business                                                                                                                                                                                                      |   |
|              | Item 2.  Properties                                                                                                                                                                                                    |   |
|              | Item 3.  Legal Proceedings                                                                                                                                                                                             |   |
|              | Item 4.  Submission of Matters to a Vote of Security Holders                                                                                                                                                           |   |
|              |                                                                                                                                                                                                                   |   |
| PART  II.         |                                                                                                                                                                                                                   |
|              |                                                                                                                                                                                                                   |   |
|              | Item 5.  Market for Registrant’s Common Equity and Related Stockholder Matters                                                                                                                                    |   |
|              | Item 6.  Selected Financial Data                                                                                                                                                                                       |   |
|              | Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of  Operations                                                                                                                   |   |
|              | Item 8.  Financial Statements and Supplementary Data                                                                                                                                                                   |   |
|              | Item 9.  Changes In and Disagreements With Accountants on Accounting and Financial  Disclosure                                                                                                                         |   |
|              |                                                                                                                                                                                                                   |   |
| PART  III.        |                                                                                                                                                                                                                   |
|              |                                                                                                                                                                                                                   |   |
|              | Item  10. Directors and Executive Officers of the Registrant                                                                                                                                                           |   |
|              | Item  11. Executive Compensation                                                                                                                                                                                       |   |
|              | Item  12. Security Ownership of Certain Beneficial Owners and Management                                                                                                                                               |   |
|              | Item  13. Certain Relationships and Related Transactions                                                                                                                                                               |   |
|              | Item  14. Control Procedures                                                                                                                                                                                           |   |
|              |                                                                                                                                                                                                                   |   |
| PART  IV.         |                                                                                                                                                                                                                   |
|              |                                                                                                                                                                                                                   |   |
|              | Item  15. Exhibits, Financial Statement Schedules and Reports on Form 8-K                                                                                                                                              |   |
|              |                                                                                                                                                                                                                   |   |
|              | Supplemental  Information to be Furnished with Reports Filed Pursuant to Section 15(d) of  the Securities Exchange Act of 1934 of Registrants Which Have Not Registered  Securities Pursuant to Section 12 of such Act |   |
|              |                                                                                                                                                                                                                   |   |
| SIGNATURES        |                                                                                                                                                                                                                   |
|              |                                                                                                                                                                                                                   |   |
| INDEX OF EXHIBITS |                                                                                                                                                                                                                   |

 

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**PART I**

 

Item 1.                                                             Business

 

This Annual Report on Form 10-K is beingfiled on behalf of First Union Commercial Mortgage Securities, Inc. (the“Registrant”) by U.S. Bank National Association (successor in interest to StateStreet Bank and Trust Company), solely in its capacity as successor trustee (insuch capacity, the “Trustee”) under the Pooling Agreement hereinafteridentified and with respect to the Registrant’s Commercial MortgagePass-Through Certificates, Series 1997-C1 (the “Certificates”).  The Certificates were issued under a Poolingand Servicing Agreement dated as of May 1, 1997 (the “Pooling Agreement”) amongthe Registrant, as Depositor, Wachovia Bank, National Association (formerlyknown as First Union National Bank, and prior to that, First Union NationalBank of North Carolina), as master servicer (the “Master Servicer”), Criimi MaeServices Limited Partnership (“CMSLP”), as special servicer, (the “SpecialServicer”) and State Street Bank and Trust Company, as the initial trustee.

 

Capitalized terms used herein and nototherwise defined shall have the respective meanings ascribed to such terms inthe Pooling Agreement.

 

Certain of the information contained in the Annual Report on Form 10-Khas been supplied to the Trustee by third parties without independent review orinvestigation by the Trustee and no representation or warranty of any kind ismade by the Trustee with respect to such information.

 

The information called for by this item is omitted as it is notapplicable to the Trust Fund.  As usedin this Annual Report on Form 10-K, “omitted” means that the response to thereferenced item is omitted in reliance on the procedures outlined in the noaction letter issued on March 27, 1997 by the Securities and ExchangeCommission’s Staff with respect to First Union Residential SecuritizationTransactions, Inc.

 

Item 2.                                                             Properties

 

Information regarding the mortgagedproperties securing the Mortgage Loans has been set forth in the ProspectusSupplement relating to the Certificates filed with the Commission.  The Trust Fund created under the PoolingAgreement has or will acquire title to real estate only upon default of therelated mortgages under the Mortgage Loans. The Trust Fund was the successful bidder at a foreclosure sale onOctober 7, 2003 for the property securing Mortgage Loan No. 14-5096393 andlocated at 680 Holcomb Bridge Road, Norcross, GA 30071 (the “Property”).  The scheduled balance on the Mortgage Loanas of November 30, 2003 was $2,308,550.86, with cumulative outstanding advancesof $651,984.87, which number includes total principal and interest advancesoutstanding of $286,650.95.  The totalexposure as of November 30, 2003 was $2,960,535.73.  An MAI property appraisal dated September 29, 2003 indicated anappraised value of $1,960,000 for the Property.  The Property Manager for the Property is NI-Tutera LLC, which isowned by Tutera Health Care Services LLC. The Special Servicer has reported that, as of November 30, 2003, leasingactivity has increased at the Property since foreclosure from 7 residents to 16residents.  Marcus & Millichap, realestate company, is listing the property at $1,250,000 (as of November 30,2003).

 

In late 2003, the Trustee wasmade aware of an asserted breach of representation by one of the Mortgage LoanSellers as to the Stated Maturity Date of one of the Mortgage Loansincluded in the Trust Fund.  Although the Mortgage Loan Scheduleidentified this Mortgage Loan as having a maturity date of April 1, 2007,the actual maturity date was April 1, 2004.  This loan was prepaid bythe related Borrower in November 2003, within six months preceding theactual maturity date of the loan, and therefore without the payment of any“prepayment consideration” or yield maintenance charge.  The Trustee iscontinuing to investigate this situation.

 

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The Annual Statement as to Compliance of Wachovia Bank, NationalAssociation, as Master Servicer is annexed hereto as Exhibit 15(a)(1)(i).  The Annual Servicing Report of KPMG LLP, anindependent public accountant, with respect to Wachovia Bank, NationalAssociation as the Master Servicer required to be delivered under the PoolingAgreement is annexed hereto as Exhibit 15(a)(1)(ii).

 

The certification from Wachovia Bank, National Association, as MasterServicer required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, isannexed hereto as Exhibit 15(a)(1)(iii).

 

The Annual Statement as to Compliance of CMSLP as the Special Servicerrequired under the Pooling Agreement is annexed hereto as Exhibit15(a)(1)(iv).  The Annual IndependentPublic Accountant’s Servicing Report of Ernst & Young LLP, an independentpublic accountant, with respect to CMSLP as the Special Servicer required to bedelivered under the Pooling Agreement is annexed hereto as Exhibit 15(a)(1)(v).

 

Item 3. LegalProceedings

 

The Registrant knows of no material pendinglegal proceedings involving either of (i) the Mortgage Properties or (ii) tothe extent related to the Trust Fund, the Registrant, the Master Servicer, theSpecial Servicer, or the Trustee, in each case, with respect to the Trust Fundother than ordinary routine litigation, if any, incidental to the Trustee’s,the Master Servicer’s, the Special Servicer’s, or the Registrant’s duties underthe Pooling Agreement and not material when taken as a whole.

 

Item 4. Submissionof Matters to a Vote of Security Holders

 

No matters were submitted to a vote orconsent of the holders of the Certificates during the period covered by thisreport.

 

**PART II**

 

Item 5.                                                             Marketfor the Registrant’s Common Equity and Related Stockholder Matters

 

Presently, there is no established tradingmarket for the Certificates known to the Registrant.  As of December 31, 2003, there are an aggregate of 104 registeredholders of all Classes of the Registrant’s Commercial Mortgage Pass-ThroughCertificates Series, 1997-C1, including direct participants of the DepositoryTrust Company (“DTC”) but excluding (except for the Class F Certificates) Cede& Co., DTC’s nominee.  Thecomputation of the approximate number of holders is based in part upon thenumber of individual participants in a security position listings provided byDTC.

 

Information as to distributions to Certificateholders have beenprovided in the Registrant’s monthly Form 8-K filings with respect to theCertificates.

 

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Item 6.                                                             SelectedFinancial Data

 

Omitted.

 

Item 7.                                                             Management’sDiscussion and Analysis of Financial Condition and Results of Operations

 

Omitted.

 

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Item 8.                                                             FinancialStatements and Supplementary Data

 

Omitted.

 

Item 9.                                                             ChangesIn and Disagreements with Accountants on Accounting and Financial Disclosure

 

The Registrant knows of no changes ordisagreements with accountants on accounting and financial disclosure withrespect to the Trust Fund or the Certificates.

 

**PART III**

 

Item 10.                                                       Directorsand Executive Officers of the Registrant

 

Omitted.

 

Item 11.                                                       ExecutiveCompensation

 

Omitted.

 

Item 12.                                                       SecurityOwnership of Certain Beneficial Owners and Management

 

(a)                                  TheRegistrant is responding to this item by providing information with respect tothe security ownership of certain owners of the Certificates, which informationis annexed hereto as Exhibit 99.1

 

(b)                                 Omitted.

 

(c)                                  As of December 31, 2003, the Class KCertificates constitute the “Controlling Class” of Certificates within themeaning and bearing the rights and limitations set forth in the PoolingAgreement, including without limitation the right to designate an entity toserve as Special Servicer under the Pooling Agreement and to advise the SpecialServicer with respect to certain actions enumerated in the PoolingAgreement.  Reference is hereby made inall respects to the Pooling Agreement for a complete description of the rightsand limitations of the Controlling Class. The Registrant has been informed that the records of the Trustee reflectthat the registered holder of the Class K Certificates is LaSalle National Bankas Trustee for Criimi Mae Series 1998-C1.

 

Item 13.                                                       CertainRelationships and Related Transactions

 

Not Applicable.

 

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Item 14.                                                       Controlsand Proceedures

 

Not Applicable (Asset-BackedIssuer)

 

**PARTIV**

 

Item 15.                                                       Exhibits,Financial Statement Schedules and Reports on Form 8-K

 

(a)(1) **Financial Statements**

 

(i) The Statement as to Compliance to be delivered by Wachovia Bank,National Association as Master Servicer under the Pooling Agreement is annexedhereto as Exhibit 15(a)(1)(i).

 

(ii) The Annual Servicing Report of KPMG LLP, an independent publicaccountant relating to master servicing by Wachovia Bank, National Associationis annexed hereto as Exhibit 15(a)(1)(ii).

 

(iii) The certification from Wachovia Bank, National Association, as MasterServicer, required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002,is annexed hereto as Exhibit 15(a)(1)(iii).

 

(iv) The Annual Statement as to Compliance by CMSLP as Special Servicerrequired pursuant to the Pooling Agreement is annexed hereto as Exhibit15(a)(1)(iv).

 

(v) The Annual Independent Accountant’s Servicing Report of Ernst &Young LLP, an independent public accountant, with respect to CMSLP as SpecialServicer is annexed hereto as Exhibit 15(a)(1)(v).

 

(a)(2) **Financial Statement Schedules**

 

Omitted.

 

(a)(3) **Exhibits**

 

Unless otherwise indicated, the following exhibits required by Item 601of Regulation S-K and previously furnished to the Commission as exhibits to aReport on Form 8-K, are incorporated into this Form 10-K by reference:

 

4.                                       Pooling andServicing Agreement dated as of May 1, 1997, by and among First UnionCommercial Mortgage Securities, Inc., as depositor, First Union National Bankof North Carolina as Master Servicer, Criimi Mae Services Limited Partnershipas Special Servicer, and State Street Bank and Trust Company, as Trustee.

 

7

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99.1*                    Security Ownership of CertainBeneficial Owners.

 

(b)                     The following Reports on Form 8-Kwere filed with the Commission by or on behalf of the Registrant with respectto the Certificates during the last three months of the period covered by thisreport:

 

1.  Report of Form 8K datedNovember 11, 2003 responding to items 5 and 7.

 

2.  Report on Form 8K datedDecember 10, 2003 responding to items 5 and 7.

 

99.2*                    Aggregate Data With Respect toDistributions on the Certificates Made in 2003.

 

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*  Filed herewith

 

SUPPLEMENTALINFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION 15(D) OF THESECURITIES EXCHANGE ACT OF 1934 OF REGISTRANTS WHICH HAVE NOT REGISTEREDSECURITIES PURSUANT TO SECTION 12 OF SUCH ACT.

 

The Registrant has not sent an annual report or proxy material to theholders of its Certificates.  The Registrantwill not be sending an annual report or proxy materials to the holders of itsCertificates subsequent to the filing of this Form 10-K.

 

8

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**SIGNATURES**

 

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 theundersigned, thereunto duly authorized.

 

 
|                        |   | FIRST UNION  COMMERCIAL MORTGAGE SECURITIES, INC. (In Respect of its COMMERCIAL MORTGAGE  PASS-THROUGH CERTIFICATES, SERIES 1997-C1)                                                                                                                                                                                                   |
|-----------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                        |
| Dated:  March 30, 2004 |   | By:      U.S. Bank National Association  (successor in interest to State Street Bank and Trust Company), solely in its  capacity as Trustee of the Trust Fund for the Registrant’s Commercial  Mortgage Pass-Through Certificates, Series 1997-C1 and not individually on  behalf of the Registrant |
|                        |   |                                                                                                                                                                                                                                                                                                                                   |
|                        |   | By:                                                                                                                                                                                                                                                                                                                                    | /s/ Peter M. Mitrano |
|                             |        |                                                                                                                                                                                                                                                                                                                                        |  |  |

 

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**INDEX OF EXHIBITS**

 

**DESCRIPTION**

 
| 15(a)(1)(i)   |   | Annual Statement as to Compliance by Wachovia Bank, National  Association as Master Servicer.                                                                         |
|---------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|          |   |                                                                                                                                                                  |
| 15(a)(1)(ii)  |   | Annual Independent Accountant’s Report of KPMG LLP, an independent  public accountant, with respect to master servicing by Wachovia Bank,  National Association. |
|          |   |                                                                                                                                                                  |
| 15(a)(1)(iii) |   | Certification from Wachovia Bank, National Association under Section  302 of the Sarbanes-Oxley Act of 2002.                                                          |
|          |   |                                                                                                                                                                  |
| 15(a)(1)(iv)  |   | Annual Statement as to Compliance by CMSLP, as Special Servicer.                                                                                                      |
|          |   |                                                                                                                                                                  |
| 15(a)(1)(v)   |   | Annual Independent Accountant’s Servicing Report of Ernst & Young  LLP, with respect to special servicing by CMSLP.                                          |
|          |   |                                                                                                                                                                  |
| 99.1          |   | Security Ownership of Certain Beneficial Owners (with original  principal balances).                                                                                  |
|          |   |                                                                                                                                                                  |
| 99.2          |   | Aggregate Data With Respect to Distributions on the Certificates Made  in 2003.                                                                                       |

 

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