<PAGE>
Filed Pursuant to Rule 424(b)(5)
Registration File No.: 333-63589
INFORMATION CONTAINED IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES
UNTIL THE FINAL PROSPECTUS SUPPLEMENT AND PROSPECTUS ARE DELIVERED. THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS ARE NOT AN OFFER TO SELL
THESE SECURITIES AND ARE NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY
STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION DATED JULY 26, 1999
PROSPECTUS SUPPLEMENT
(To Prospectus dated July 26, 1999)
J.P. MORGAN COMMERCIAL MORTGAGE FINANCE CORP.
Depositor
$676,299,000 (Approximate)
Mortgage Pass-Through Certificates, Series 1999-C8
THE OFFERED CERTIFICATES:
o The trust fund will issue fifteen classes of certificates. Only the
following eight classes of "offered certificates" are offered hereby:
<TABLE>
<CAPTION>
APPROXIMATE INITIAL CLASS BALANCE
CLASS OR NOTIONAL BALANCE PASS-THROUGH RATE
- ---------- ---------------------------------- ------------------
<S> <C> <C>
Class A1 $ 180,290,000
Class A2 $ 370,276,000
Class X $ 762,030,576(1)
Class B $ 38,101,000
Class C $ 34,291,000
Class D $ 15,240,000
Class E $ 26,671,000
Class F $ 11,430,000
</TABLE>
- ----------
(1) Notional amount.
YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS BEGINNING ON PAGE S-9 OF THIS
PROSPECTUS SUPPLEMENT AND PAGE 14 IN THE ACCOMPANYING PROSPECTUS.
Neither the offered certificates nor the underlying mortgage loans are
insured or guaranteed by any governmental agency or instrumentality.
The offered certificates will represent interests in the trust fund only.
They will not represent interests in or obligations of the Depositor, any of
its affiliates or any other entity.
This prospectus supplement may be used to offer and sell the offered
certificates only if accompanied by the prospectus dated July 26, 1999.
o The offered certificates will represent beneficial ownership interests in
the trust fund only.
o Interest will be payable monthly, commencing in September 1999.
o Principal payments will also be payable monthly. The outstanding class with
the highest priority of distribution will receive all principal payments until
it is paid in full. This sequential payment will continue until all classes
have their respective class balances reduced to zero.
THE TRUST FUND:
o The trust fund will consist of fixed rate mortgage loans secured by
mortgages or deeds of trust on multifamily or commercial properties.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE OFFERED CERTIFICATES OR
DETERMINED THAT THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IS ACCURATE OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE
MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
We expect that the delivery of the offered certificates will be made in
book-entry form on or about August , 1999.
J.P. Morgan Securities Inc. and Deutsche Bank Securities Inc. are acting as
co-lead managers and J.P. Morgan Securities Inc. is the sole bookrunner of all
of the offered certificates. The underwriters will offer the offered
certificates to the public in negotiated transactions at varying prices to be
determined at the time of sale. J.P. Morgan Securities Inc. is required to
purchase the offered certificates from the depositor, subject to certain
conditions. Deutsche Bank Securities Inc. is not required to sell any specific
amount of the offered certificates but will use its best efforts to sell the
offered certificates. J.P. Morgan Securities Inc. will receive a fee equal to
0.250% of the initial principal balance of the offered certificates. Deutsche
Bank Securities Inc. will receive a fee equal to 0.085% of the initial
principal balance of the offered certificates. The proceeds to the depositor
from the initial sale of the offered certificates will be approximately %
of the initial principal balance thereof plus accrued interest.
J.P. MORGAN & CO. DEUTSCHE BANC ALEX. BROWN
Prospectus Supplement dated July , 1999
<PAGE>
J.P. MORGAN COMMERCIAL MORTGAGE FINANCE
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1999-C8
ALASKA
1 property
$12,702,093
1.7% of total
IDAHO
1 property
$3,375,263
0.4% of total
NEBRASKA
3 properties
$22,646,035
3.0% of total
MISSOURI
4 properties
$24,149,080
3.2% of total
IOWA
1 property
$4,419,877
0.6% of total
MINNES0TA
3 properties
$4,373,762
0.6% of total
ILLINOIS
4 properties
$83,767,470
11.0% of total
WISCONSIN
6 properties
$69,131,849
9.1% of total
MICHIGAN
4 properties
$26,798,005
3.5% of total
CANADA
8 properties
$21,789,768
2.9% of total
<PAGE>
INDIANA
5 properties
$17,385,840
2.3% of total
OHIO
10 properties
$63,277,913
8.3% of total
PENNSYLVANIA
3 properties
$23,975,321
3.1% of total
NEW YORK
3 properties
$23,196,589
3.0% of total
MASSACHUSETTS
1 property
$22,961,612
3.0% of total
DISTRICT OF COLUMBIA
1 property
$3,889,300
0.5% of total
MARYLAND
3 properties
$13,019,729
1.7% of total
VIRGINIA
1 property
$5,375,651
0.7% of total
NORTH CAROLINA
8 properties
$25,747,947
9.4% of total
SOUTH CAROLINA
2 properties
$5,835,675
0.8% of total
GEORGIA
4 properties
$31,906,632
4.2% of total
FLORIDA
23 properties
$80,595,465
10.6% of total
ALABAMA
2 properties
$3,739,896
0.5% of total
ARKANSAS
1 property
$2,453,000
0.3% of total
<PAGE>
OKLAHOMA
3 properties
$7,395,027
1.0% of total
TEXAS
9 properties
$24,004,556
3.2% of total
COLORADO
1 property
$3,087,960
0.4% of total
NEW MEXICO
1 property
$2,213,216
0.3% of total
CALIFORNIA
17 properties
$72,596,674
9.5% of total
NEVADA
2 properties
$9,974,975
1.3% of total
OREGON
1 property
$3,845,671
0.5% of total
WASHINGTON
4 properties
$42,398,723
5.6% of total
[ ] (less than or equal to) 1.00%
of Initial Pool Balance
[ ] 1.01 - 5.00%
of Initial Pool Balance
[ ] 5.01 - 10.00%
of Initial Pool Balance
[ ] (greater than) 10.00%
of Initial Pool Balance
<PAGE>
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
WE PROVIDE INFORMATION TO YOU ABOUT THE OFFERED CERTIFICATES IN TWO
SEPARATE DOCUMENTS THAT PROGRESSIVELY PROVIDE MORE DETAIL: (A) THE ACCOMPANYING
PROSPECTUS, WHICH PROVIDES GENERAL INFORMATION, SOME OF WHICH MAY NOT APPLY TO
THE OFFERED CERTIFICATES AND (B) THIS PROSPECTUS SUPPLEMENT, WHICH DESCRIBES
THE SPECIFIC TERMS OF THE OFFERED CERTIFICATES. YOU SHOULD READ BOTH THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS BEFORE INVESTING IN ANY OF THE OFFERED
CERTIFICATES.
You should rely only on the information contained in this prospectus
supplement and accompanying prospectus. If the description of the offered
certificates in the prospectus and in this prospectus supplement varies, you
should rely on the information in this prospectus supplement.
If the terms of your certificates vary between this prospectus supplement
and the accompanying prospectus, you should rely on the information in this
prospectus supplement.
We include cross-references in this prospectus supplement and the
prospectus to captions in these materials where you can find further related
discussions. The table of contents on page ii provides the page numbers on
which these captions are located.
You can find a listing of the pages where capitalized terms used in this
prospectus supplement and the prospectus are defined under the caption "Index
of Principal Terms" on page S-89 in this prospectus supplement and under the
caption "Index of Principal Terms" beginning on page 103 in the prospectus.
LIMITATIONS ON OFFERS OR SOLICITATIONS
We do not intend this document to be an offer or solicitation:
(A) if used in a jurisdiction in which such offer or solicitation is not
authorized;
(B) if the person making such offer or solicitation is not qualified to do
so; or
(C) if such offer or solicitation is made to anyone to whom it is unlawful
to make such offer or solicitation.
You should rely only on the information contained in this document or to
which we have referred you. We have not authorized anyone to provide you with
information that is different. This document may only be used where it is legal
to sell these securities. The information in this document may only be accurate
as of the date of this document.
UNTIL 90 DAYS AFTER THE DATE OF THIS PROSPECTUS SUPPLEMENT, ALL DEALERS
THAT EFFECT TRANSACTIONS IN THESE SECURITIES, WHETHER OR NOT PARTICIPATING IN
THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO
THE DEALER'S OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS AN
UNDERWRITERAND WITH RESPECT TO UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
i
<PAGE>
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<S> <C>
Executive Summary .......................................................... S-1
Summary Of The Prospectus Supplement ....................................... S-2
Risk Factors ............................................................... S-9
Description Of The Mortgage Pool ........................................... S-28
Description Of The Certificates ............................................ S-61
Certain Prepayment, Maturity And Yield Considerations ...................... S-71
Master Servicer And Special Servicer ....................................... S-76
Description Of The Pooling And Servicing Agreement ......................... S-81
Use Of Proceeds ............................................................ S-83
Certain Federal Income Tax Consequences .................................... S-83
State Tax Considerations ................................................... S-84
ERISA Considerations ....................................................... S-85
Legal Investment ........................................................... S-86
Plan Of Distribution ....................................................... S-87
Legal Matters .............................................................. S-87
Rating ..................................................................... S-87
Index Of Principal Terms ................................................... S-89
Annex A: Certain Characteristics of the Mortgage Loans ..................... A-1
Annex B: Certain Characteristics of Multifamily and other Residential Loans B-1
Annex C: Certain Characteristics of Office, Industrial and Retail Loans .... C-1
Annex D: F/X Schedules ..................................................... D-1
Annex E: Sales Memorandum .................................................. E-1
Annex F: Trustee Reports ................................................... F-1
Annex G: Global Clearance, Settlement and Tax Documentation Procedures ..... G-1
</TABLE>
PROSPECTUS
<TABLE>
<S> <C>
Prospectus Supplement .......................................... 3
Available Information .......................................... 3
Incorporation of Certain Information by Reference .............. 5
Summary of Prospectus .......................................... 6
Risk Factors ................................................... 14
Description of the Trust Funds ................................. 22
Use of Proceeds ................................................ 28
Yield Considerations ........................................... 28
The Depositor .................................................. 31
Description of the Certificates ................................ 32
Description of the Agreements .................................. 39
Description of Credit Support .................................. 55
Certain Legal Aspects of Mortgage Loans and the Leases ......... 57
Certain Federal Income Tax Consequences ........................ 72
State Tax Considerations ....................................... 97
ERISA Considerations ........................................... 97
Legal Investment ............................................... 99
Plan of Distribution ........................................... 101
Legal Matters .................................................. 102
Financial Information .......................................... 102
Rating ......................................................... 102
Index of Principal Terms ....................................... 103
</TABLE>
ii
<PAGE>
EXECUTIVE SUMMARY
You should read carefully the detailed information appearing elsewhere in
this prospectus supplement and the accompanying prospectus in making your
investment decision. The following executive summary does not include important
information relating to the offered certificates, particularly with respect to
the risks and special considerations involved with an investment in the offered
certificates.
<TABLE>
<CAPTION>
INITIAL
AGGREGATE INITIAL WEIGHTED
RATING BY CERTIFICATE PASS- AVERAGE PRINCIPAL
DCR/ PRINCIPAL % OF % CREDIT THROUGH LIFE(2) WINDOW(2)
CLASS MOODY'S/S&P AMOUNT TOTAL SUPPORT DESCRIPTION RATE(1) (YEARS) (MONTHS)
- ------- ---------------- --------------------- ----------- ---------- ------------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Offered Certificates
A1 AAA/Aaa/AAA $ 180,290,000 23.66% 27.75% Fixed
A2 AAA/Aaa/AAA $ 370,276,000 48.59% 27.75% (4)
X AAA/Aaa/AAAr $ 762,030,576(3) N/A N/A WAC (5) N/A N/A
B AA/Aa2/AA $ 38,101,000 5.00% 22.75% WAC (6)
C A/A2/A $ 34,291,000 4.50% 18.25% WAC (6)
D A-/A3/A- $ 15,240,000 2.00% 16.25% WAC (6)
E BBB/Baa2/BBB $ 26,671,000 3.50% 12.75% WAC (6)
F BBB-/Baa3/BBB- $ 11,430,000 1.50% 11.25% WAC (6)
Private Certificates
G BB/Ba2/NR $ 38,101,000 5.00% 6.25% Fixed
H B/B2/NR $ 24,765,000 3.25% 3.00% Fixed
J B-/B3/NR $ 5,715,000 0.75% 2.25% Fixed
NR UNR $ 17,150,576 2.25% 0.00% Fixed
</TABLE>
- ----------
(1) In addition to distributions of interest and principal, holders of the
offered certificates will be entitled to receive a portion of any
prepayment premiums as described herein.
(2) Assumes no prepayments or defaults. See "Certain Prepayment, Maturity and
Yield Considerations -- Weighted Average Life of Offered Certificates"
herein.
(3) Notional amount.
(4) The pass-through rate will be equal to either a fixed rate or a rate
equal to the weighted average of the remittance rates on the mortgage
loans.
(5) The pass-through rate for the Class X Certificates will be equal to the
weighted average of the remittance rates on the mortgage loans minus the
weighted average of the pass-through rates on all other classes of
certificates. The remittance rates on the mortgage loans will represent
accrued interest on the mortgage loans net of certain servicing and
trustee fees. The initial pass-through rate on the Class X Certificates
will be approximately % per annum.
(6) The pass-through rate for the Class B, Class C, Class D, Class E and
Class F Certificates will be a rate equal to the weighted average of the
remittance rates on the mortgage loans minus %, %, %, % and %,
respectively.
S-1
<PAGE>
SUMMARY OF THE PROSPECTUS SUPPLEMENT
The following summary is a brief description of the main terms of the
offered certificates. For this reason, the summary does not contain all the
information that may be important to you. You will find a detailed description
of the terms of the offered certificates following this summary and in the
prospectus. Certain capitalized terms used in this summary are defined
elsewhere in this prospectus supplement.
TITLE OF CERTIFICATES Mortgage Pass-Through Certificates, Series
1999-C8.
THE PARTIES
DEPOSITOR J.P. Morgan Commercial Mortgage Finance Corp.,
a Delaware corporation, an indirect
wholly-owned limited purpose finance
subsidiary of J.P. Morgan & Co. Incorporated
and an affiliate of J.P. Morgan Securities
Inc., one of the underwriters. See "The
Depositor" in the prospectus.
SELLER Morgan Guaranty Trust Company of New York, an
affiliate of the depositor and of J.P. Morgan
Securities Inc., one of the underwriters,
originated or purchased all of the mortgage
loans.
MASTER SERVICER Midland Loan Services, Inc., a Delaware
corporation. See "Master Servicer and Special
Servicer" herein.
SPECIAL SERVICER Midland Loan Services, Inc., a Delaware
corporation. The special servicer may be
removed without cause under certain
circumstances described herein under "Master
Servicer and Special Servicer --
Responsibilities of Special Servicer" herein.
TRUSTEE State Street Bank and Trust Company, a
Massachusetts trust company. See "Description
of the Pooling and Servicing Agreement"
herein.
DEAL INFORMATION/ANALYTICS It is anticipated that certain mortgage pool
and certificate information will be available
from the following services: Bloomberg, Intex,
Conquest and The Trepp Group.
SIGNIFICANT DATES
CUT-OFF DATE August 1, 1999.
DELIVERY DATE On or about August , 1999.
DISTRIBUTION DATE The 15th day of each month or, if such 15th
day is not a business day, on the next
succeeding business day, beginning in
September 1999.
DETERMINATION DATE For any distribution date, the fourth business
day prior to the related distribution date.
S-2
<PAGE>
RATED FINAL DISTRIBUTION DATE The distribution date in July 2031.
REMITTANCE PERIOD For any distribution date, the period
beginning on the day after a determination
date in the immediately preceding month (or
the cut-off date, in the case of the first
remittance period) through and including the
related determination date.
THE CERTIFICATES
REGISTRATION OF THE The offered certificates initially
OFFERED CERTIFICATES will be issued in book-entry form.
Certificateholders acquiring beneficial
ownership interests in the offered
certificates may elect to hold their
book-entry certificate interests either
through The Depository Trust Company, in the
United States, or through Cedelbank or the
Euroclear System, in Europe. See "Description
of the Certificates -- Book-Entry Registration
of the Offered Certificates -- Definitive
Certificates" in this prospectus supplement
and in the prospectus under "Description of
the Certificates -- Book-Entry Registration
and Definitive Certificates".
DENOMINATIONS The certificates will be issuable in
book-entry form in denominations of (except in
the case of the Class X Certificates) $25,000
and integral multiples of $1 in excess
thereof. The Class X Certificates will be
issuable in denominations of $100,000 notional
amount and integral multiples of $1 notional
amount.
THE MORTGAGE LOANS
THE MORTGAGE POOL The trust fund will consist of a mortgage pool
of 129 fixed rate mortgage loans secured by
first liens on fee simple and/or leasehold
interests in office, multifamily, retail,
hospitality, industrial, nursing home, mixed
use, factory outlet, mobile home park,
congregate care and self storage properties,
collectively the "mortgaged properties",
located in 30 states, the District of Columbia
and Canada. See "Description of the Mortgage
Pool -- General".
S-3
<PAGE>
General Mortgage Loan Characteristics
(as of the Cut-off Date, unless otherwise indicated)
MORTGAGE POOL
-------------
<TABLE>
<S> <C>
Initial Pool Balance ................... $762,030,576
Number of Mortgage Loans ............... 129
Number of Mortgaged Properties ......... 140
Average Mortgage Loan Balance .......... $ 5,907,214
Maximum Mortgage Loan Balance .......... $ 58,136,667
Minimum Mortgage Loan Balance .......... $ 990,656
Weighted Average Mortgage Rate ......... 7.58%
Range of Mortgage Rates ................ 6.50% - 8.80%
Weighted Average Remaining Term to
the Earlier of Maturity or Anticipated
Repayment Date ....................... 117 months
Range of Remaining Term to the
Earlier of Maturity or Anticipated
Repayment Date ....................... 57-237 months
Percentage of Initial Pool Balance made
up of:
ARD Loans ............................ 42.8%
Fully Amortizing Loans (other than
ARD Loans) ......................... 5.0%
Balloon Loans ........................ 52.1%
Multi-Property Loans ................. 11.9%
Crossed Loans ........................ 6.5%
</TABLE>
For a further description of the mortgage
loans, see "Description of the Mortgage Pool"
herein.
THE CERTIFICATES
THE OFFERED CERTIFICATES Only the Class A1, Class A2, Class B, Class C,
Class D, Class E, Class F and Class X
Certificates are offered hereby. The offered
certificates will have the initial class
balances set forth on the cover hereof. The
Class X Certificates will not have a class
balance.
PASS-THROUGH RATES ON THE The pass-through rate on the Class A1
OFFERED CERTIFICATES Certificates is fixed and is set forth on the
cover hereof. The pass-through rate on the
Class A-2 Certificates will be equal to either
a fixed rate or a rate equal to the weighted
average of the remittance rates on the mortgage
loans. The pass-through rate on the Class B,
Class C, Class D, Class E and Class F
Certificates will be a rate equal to the
weighted average of the remittance rates on the
mortgage loans minus %, %, %, % and % per
annum, respectively. The pass-through rate on
the Class X Certificates is not fixed and will
be equal to the weighted average of the
remittance rates on the mortgage loans minus
the weighted average (by class balance) of the
pass-through rates on all
S-4
<PAGE>
other classes of certificates. The remittance
rates on the mortgage loans will represent
accrued interest on the mortgage loans net of
certain servicing and trustee fees. The
pass-through rate on the Class X Certificates
for the initial distribution date will be
approximately % per annum. The pass-through
rate on the Class B, Class C, Class D, Class E
and Class F Certificates for the initial
distribution date will be approximately %,
%, %, %, and % per annum,
respectively.
DISTRIBUTIONS
INTEREST DISTRIBUTIONS ON In general, holders of each class of
THE CERTIFICATES certificates will be entitled to receive on
each distribution date in the order of their
priority, to the extent available,
distributions allocable to interest equal to
the interest accrued during the interest
accrual period on the related class balance (or
notional amount) immediately prior to such
distribution date at the then-applicable
pass-through rate. The notional amount of the
Class X Certificates will equal the aggregate
class balance of all the certificates. The
notional amount does not entitle the Class X
Certificates to any distributions of principal.
Distributions will be made on each
distribution date. The chart below sets forth
the priority of each class for the payment of
interest to each class in descending order.
Class A1,
Class A2 and Class X
Class B
Class C
Class D
Class E
Class F
Private Certificates
S-5
<PAGE>
See "Description of the Certificates --
Distributions -- Interest Distributions on the
Certificates" herein.
PRINCIPAL DISTRIBUTIONS ON THE In general, holders of a class of certificates
CERTIFICATES will be entitled to receive on each
distribution date principal in the order set
forth in the chart below, until the related
class balance is reduced to zero, to the extent
available after the payment of interest for
such class of certificates.
Class A1
Class A2
Class B
Class C
Class D
Class E
Class F
Private Certificates
See "Description of the Certificates --
Distributions -- Principal Distributions on
the Offered Certificates" herein. The Class X
Certificates do not have a class balance and
are therefore not entitled to any principal
distributions.
P&I ADVANCES Generally, the servicers are required to make
advances for delinquent monthly payments on
the mortgage loans and for certain other
expenses to the extent described herein. To
the extent that a servicer fails to make any
such advance required of it, the trustee shall
make such required advance as provided in the
pooling and servicing agreement. As more fully
described herein, if either servicer or the
trustee makes such an advance (or any other
advance) it will be entitled to reimbursement
and interest on such advance. Such advances
will facilitate in making regular monthly
distributions of principal and interest on the
certificates. See "Description of the
Certificates -- Advances" herein.
S-6
<PAGE>
OTHER CONSIDERATIONS
ALLOCATION OF LOSSES Realized losses on the mortgage loans will be
allocated, first, to the private certificates,
second, to the Class F Certificates, third, to
the Class E Certificates, fourth, to the Class
D Certificates, fifth, to the Class C
Certificates, sixth, to the Class B and
thereafter, to the Class A1 and Class A2
Certificates, on a pro rata basis, based on
class balance, in each case until the related
class balance is reduced to zero. The
allocation of losses will reduce the value of
the affected certificates.
SPECIAL PRINCIPAL PAYMENT Certain of the mortgage loans have a prepayment
CONSIDERATIONS premium period and, if certain voluntary
prepayments are made during such period, a
prepayment premium will be required to be paid
during such period. See "Description of the
Mortgage Pool" herein. Distributions of
principal on classes having an earlier priority
of payment will be directly affected by the
rates of prepayments of the mortgage loans. The
timing of commencement of principal
distributions and the weighted average lives of
classes of certificates will be affected by the
rates of prepayments experienced.
SPECIAL YIELD CONSIDERATIONS A higher than anticipated rate of prepayments
would reduce the aggregate principal balance
of the mortgage loans more quickly than
expected, thereby reducing the aggregate
interest payments with respect to such
mortgage loans. Therefore, a higher rate of
principal prepayments could result in a lower
than expected yield to maturity on classes of
certificates purchased at a premium.
Conversely, a lower than anticipated rate of
principal prepayments could result in a lower
than expected yield to maturity on classes of
certificates purchased at a discount since
payments of principal with respect to the
mortgage loans would occur later than
anticipated.
The yield to investors on the Class X
Certificates will be especially sensitive to
the rate and timing of prepayments, defaults
and liquidations on the mortgage loans and
could result in the failure of investors in
the Class X Certificates to recover their
initial investments. The yield on the Class X
Certificates and any class of offered
certificates with a pass-through rate subject
to the weighted average remittance rate will
be materially and adversely affected to a
greater extent than the yields on other
offered certificates if the mortgage loans
with higher mortgage interest rates prepay
faster than the mortgage loans with lower
mortgage interest rates. See "Certain
Prepayment, Maturity and Yield
Considerations," especially "-- Class X
Certificate Yield Considerations" herein.
S-7
<PAGE>
CERTAIN FEDERAL INCOME Three separate real estate mortgage investment
TAX CONSEQUENCES conduit elections will be made with respect to
the trust fund for federal income tax purposes.
Upon the issuance of the offered certificates,
Brown & Wood LLP, counsel to the depositor,
will deliver its opinion generally to the
effect that for federal income tax purposes,
REMIC I, REMIC II and REMIC III will each
qualify as a real estate mortgage investment
conduit under Sections 860A through 860G of the
Internal Revenue Code of 1986, as amended.
The Class X Certificates will, and the other
offered certificates may, be treated as having
been issued with original issue discount for
federal income tax purposes. For further
information regarding the federal income tax
consequences of investing in the offered
certificates, see "Certain Federal Income Tax
Consequences" herein and in the prospectus.
ERISA CONSIDERATIONS Subject to important considerations described
under "ERISA Considerations" in this
prospectus supplement and in the accompanying
prospectus, the Class A1, Class A2 and Class X
Certificates will be eligible for purchase by
persons investing assets of employee benefit
plans or individual retirement accounts.
RATING The offered certificates are required to
receive the ratings from Duff & Phelps Credit
Rating Co., Moody's Investors Service, Inc.
and Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc.,
indicated in the executive summary. The
ratings on the offered certificates address
the likelihood of timely receipt of interest
and ultimate receipt of principal by the rated
final distribution date by the holders of
offered certificates. They do not address the
likely actual rate of prepayments. Such rate
of prepayments, if different than originally
anticipated, could adversely affect the yield
realized by holders of the offered
certificates or cause the Class X
Certificateholders to fail to recover their
initial investments. See "Ratings" in this
prospectus supplement and in the prospectus
for a discussion of the basis upon which
ratings are given, the limitations and
restrictions on the ratings, and conclusions
that should not be drawn from a rating.
LEGAL INVESTMENT The certificates will not be "mortgage related
securities" within the meaning of the
Secondary Mortgage Market Enhancement Act of
1984, as amended.
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RISK FACTORS
Prospective purchasers of the offered certificates should consider, among
other things, the following risk factors (as well as the risk factors set forth
under "Risk Factors" in the prospectus) in connection with an investment in the
offered certificates.
THE MORTGAGE LOANS
RISKS ASSOCIATED WITH COMMERCIAL Commercial and multifamily lending is generally
LENDING MAY BE DIFFERENT THAN thought to be riskier than single-family
RESIDENTIAL LENDING residential lending for a variety of reasons
including the likelihood that larger loans are
made to single borrowers or groups of related
mortgagors.
The mortgage loans are secured by the
following income-producing property types:
o office properties;
o multifamily properties;
o retail properties;
o hospitality properties;
o industrial properties;
o nursing home properties;
o mixed use properties;
o factory outlets;
o mobile home park properties;
o congregate care properties; and
o self storage facilities.
Repayment of loans secured by commercial and
multifamily properties typically depends on
the cash flow produced by such properties. The
ratio of net cash flow to debt service of a
loan secured by income-producing property is
an important measure of the risk of default on
such a loan. A majority of the mortgage loans
were originated within twelve months of the
cut-off date. Consequently, the mortgage loans
generally do not have a long-standing payment
history.
NET CASH FLOW PRODUCED BY A Payment on each mortgage loan is dependent
MORTGAGED PROPERTY MAY BE primarily on:
INADEQUATE TO REPAY THE
MORTGAGE LOAN o the net operating income of the related
mortgaged property; and
o at maturity (whether at scheduled maturity
or, in the event of a default under the
mortgage loan, upon the acceleration of
such maturity), the market value of the
related mortgaged property (taking into
account any adverse effect of a foreclosure
proceeding on such market
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value) or the ability of the related mortgagor
to refinance the mortgage loan.
If a mortgage loan has a relatively high loan
to value ratio or relatively low debt service
coverage ratio, a foreclosure sale is less
likely to provide enough money to satisfy the
outstanding debt. Therefore, the special
servicer may have to modify the mortgage loans
that it is servicing in order to try to
maximize recoveries. However, such flexibility
may not result in a greater recovery on a net
present value basis than liquidation.
LOANS NOT INSURED OR GUARANTEED The mortgage loans will not be an obligation
of, or be insured or guaranteed by, any
governmental entity, by any mortgage insurer,
or by the depositor, the seller, the master
servicer, the special servicer, the trustee or
any of their respective affiliates.
NONRECOURSE LOANS LIMIT THE Each mortgage loan generally is a nonrecourse
REMEDIES AVAILABLE FOLLOWING loan. If there is a default there will
A MORTGAGOR DEFAULT generally only be recourse against the specific
properties and other assets that have been
pledged to secure such mortgage loan. Even if a
mortgage loan provides for recourse to a
mortgagor or its affiliates, it is unlikely the
trust fund ultimately could recover any amounts
not covered by the mortgaged property.
FUTURE CASH FLOWS AND PROPERTY Commercial and multifamily property values and
VALUES ARE NOT PREDICTABLE cash flows are volatile and may be insufficient
to cover debt service on the related mortgage
loan at any given time. If the cash flow from a
mortgaged property is reduced (for example, if
leases are not obtained or renewed), the
mortgagor may not be able to repay the loan.
Cash flow will determine the mortgagor's
ability to cover debt service and property
values affect the ability to refinance the
property and the amount of the recovery of
proceeds upon foreclosure. Cash flow and
property value depend upon a number of factors,
including:
o national, regional and local economic
conditions;
o local real estate conditions, such as an
oversupply of space similar to the related
mortgaged property;
o changes or weakness in a specific industry
segment;
o the nature of expenses:
o as a percentage of revenue;
o whether expenses are fixed or vary with
revenue; and
o the level of required capital
expenditures for proper maintenance and
demanded by tenants;
o demographic factors;
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o changes required by retroactive building
or similar codes;
o capable management and adequate
maintenance;
o location;
o with respect to properties with uses
subject to significant regulation, changes
in applicable laws;
o perceptions by prospective tenants and, if
applicable, their customers, of the safety,
convenience, services and attractiveness of
the property;
o the age, construction quality and design
of a particular property; and
o whether the mortgaged properties are
readily convertible to alternative uses.
POOR PROPERTY MANAGEMENT WILL The successful operation of a real estate
LOWER THE PERFORMANCE OF THE project also depends on the performance and
RELATED MORTGAGED PROPERTY viability of the property manager. Properties
deriving revenues primarily from short-term
sources (such as hotels, nursing homes,
self-storage facilities and health care
facilities) generally are more management
intensive than properties leased to
creditworthy tenants under long-term leases.
The property manager is generally responsible
for:
o operating the properties;
o providing building services;
o establishing and implementing the rental
structure;
o managing operating expenses;
o responding to changes in the local market;
and
o advising the mortgagor with respect to
maintenance and capital improvements.
Property managers may not be in a financial
condition to fulfill their management
responsibilities.
Certain of the mortgaged properties are
managed by affiliates of the applicable
mortgagor. If a mortgage loan is in default or
undergoing special servicing, such
relationship could disrupt the management of
the underlying property. This may adversely
affect cash flow. However, the mortgage loans
generally permit the lender to remove the
property manager upon the occurrence of an
event of default, a decline in cash flow below
a specified level or the failure to satisfy
some other specified performance trigger.
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THE FAILURE OF A TENANT WILL Nineteen of the mortgage loans, representing
HAVE A NEGATIVE IMPACT ON approximately 16.9% of the initial pool
SINGLE TENANT PROPERTIES balance, are secured by single tenant
properties. Income from and the market value of
retail, office and industrial mortgaged
properties occupied by a single tenant would be
adversely affected under the following
circumstances:
o if space in such mortgaged properties
could not be leased or relet on terms
comparable to the prior lease;
o if tenants were unable to meet their lease
obligations;
o if a significant tenant were to become a
debtor in a bankruptcy case; and
o if for any other reason rental payments
could not be collected.
Even if vacated space is successfully relet,
the costs associated with reletting, including
tenant improvements, leasing commissions and
free rent, could exceed the amount of any
reserves maintained for such purpose and could
reduce cash flow from the mortgaged
properties. Although certain of the mortgage
loans require the mortgagor to maintain
escrows for such expenses, there can be no
assurance that such factors will not adversely
affect the ability of a mortgagor to repay a
mortgage loan.
The success of its anchor tenant is important
to a shopping center property. An anchor
tenant attracts and maintains other stores and
it generates consumer traffic. The failure of
one or more specified tenants, such as an
anchor tenant, to operate from its premises
may give certain tenants the right to
terminate or reduce rents under their leases.
SPECIAL RISKS ASSOCIATED WITH Fourteen of the mortgage loans, representing
HOSPITALITY PROPERTIES approximately 11.5% of the initial pool
balance, are secured by full service hotels or
limited service hotels. See "Description of the
Mortgage Pool -- Certain Characteristics of the
Mortgage Loans." In addition to some of the
factors discussed under "-- Future Cash Flows
and Property Values are not Predictable" above,
the value and cash flow of such hospitality
properties will depend on the following
factors:
o adverse economic conditions; because hotel
rooms generally are rented for short
periods of time, hotels tend to be more
sensitive to adverse economic conditions
and competition than are other commercial
properties;
o the physical condition of such hospitality
property;
o the financial strength and capabilities of
the owner and operator of a hotel;
o financial strength and public perception
of the franchise service mark and the
continued existence of the franchise
license agreement; and
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o the continued existence of a liquor
license.
Most of the hospitality properties have liquor
licenses. Some states do not permit liquor
licenses to be held other than by a natural
person. Consequently, liquor licenses for
hospitality properties located in such
jurisdictions are held by an individual
affiliated with the related mortgagor or
manager. Generally, a liquor license may not
be transferred without the approval of the
relevant licensing authority. In the event of
a foreclosure of a hospitality property, it is
unlikely that the trustee (or master servicer
or special servicer) or purchaser in any such
sale would be entitled to the rights under the
liquor license for such hospitality property.
Such party would be required to apply in its
own name for such license.
SPECIAL RISKS ASSOCIATED WITH Nine of the mortgage loans representing
NURSING HOMES AND CONGREGATE approximately 4.9% of the initial pool balance
CARE PROPERTIES. are secured by nursing homes and congregate
care properties. Mortgage loans secured by
liens on such residential health care
facilities have risks not associated with loans
secured by liens on other types of
income-producing real estate. These risks may
lead to adverse consequences which may have a
negative impact on the payments of the offered
certificates.
Providers of long-term nursing care and other
medical services are subject to federal and
state laws that relate to:
o the adequacy of medical care;
o distribution of pharmaceuticals;
o rate setting;
o equipment;
o personnel;
o operating policies and additions to
facilities and services; and
o the reimbursement policies of government
programs and insurers.
The failure of any of the mortgagors to
maintain or renew any required license or
regulatory approval could prevent it from
continuing operations (in which case no
revenues would be received from the related
mortgaged property or the portion thereof
requiring licensing) or bar it from
participation in certain reimbursement
programs. In the event of foreclosure, the
trustee or any other purchaser at a
foreclosure sale may not be entitled to the
rights under such licenses and such party may
have to apply in its own right for such a
license. There can be no assurance that a new
license could be obtained.
To the extent any nursing home receives a
significant portion of its revenues from
government reimbursement
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programs, primarily Medicaid and Medicare,
such revenue may be subject to:
o statutory and regulatory changes;
o retroactive rate adjustments;
o administrative rulings;
o policy interpretations;
o delays by fiscal intermediaries; and
o government funding restrictions.
Governmental payors have employed
cost-containment measures that limit payments
to health care providers, and there are
various proposals that could materially change
or curtail those payments. There can be no
assurances that payments under government
programs will, in the future, be sufficient to
fully reimburse the cost of caring for program
beneficiaries. Net operating income of the
mortgaged properties that receive substantial
revenues from those sources, and consequently,
the ability of the related mortgagors to meet
their mortgage loan obligations, could be
adversely affected.
Under applicable federal and state laws and
regulations, including those that govern
Medicare and Medicaid programs, only the
provider who actually furnished the related
medical goods and services may sue for or
enforce its rights to reimbursement. In the
event of foreclosure, none of the trustee, the
master servicer, the special servicer or a
subsequent lessee or operator of the property
would generally be entitled to obtain from
federal or state governments any outstanding
reimbursement payments relating to services
furnished at the respective properties prior
to such foreclosure.
ADVERSE CONSEQUENCES ASSOCIATED The average principal balance of the mortgage
WITH CONCENTRATION OF MORTGAGE loans as of the cut-off date is approximately
LOANS AND RELATED BORROWERS $5,907,214, which is equal to approximately
0.8% of the initial pool balance. Several of
the mortgage loans have principal balances as
of the cut-off date that are substantially
higher than the average principal balance as of
the cut-off date. In addition, there are
several groups of mortgage loans with related
mortgagors. In general, such concentrations can
result in losses that are more severe than
would be the case if the aggregate balance of
such pool were more evenly distributed among
the mortgage loans in such pool. No mortgage
loan represents more than 7.6% of the initial
pool balance and no mortgage loans with related
mortgagors represent in the aggregate more than
2.4% of the initial pool balance.
Mortgage loans with the same borrower or
related mortgagors pose certain risks. For
example, if an entity that owns or controls
several mortgaged properties
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<PAGE>
experiences financial difficulty at one
mortgaged property, it could defer maintenance
at another mortgaged property in order to
satisfy current expenses with respect to the
troubled mortgaged property. Alternatively, it
could attempt to avert foreclosure by filing a
bankruptcy petition that might have the effect
of interrupting monthly payments for an
indefinite period on all of the related
mortgage loans.
LIMITATIONS ON THE BENEFITS OF Thirteen of the mortgage loans, representing
CROSS-COLLATERALIZED AND approximately 6.5% of the initial pool balance,
CROSS-DEFAULTED PROPERTIES are cross-collateralized and/or cross-defaulted
with other mortgage loans in the mortgage pool.
These arrangements attempt to reduce the risk
that one mortgaged property may not generate
enough net operating income to pay debt
service. Securing a mortgage loan with multiple
properties generally reduces the risk that the
net operating income generated by such
properties will not be sufficient to pay debt
service and result in defaults and ultimate
losses. However, such crossed mortgaged
properties generally will be managed by the
same managers or affiliated managers or will be
subject to the management of the same borrowers
or affiliated borrowers.
Cross-collateralization arrangements involving
more than one mortgagor could be challenged as
a fraudulent conveyance if:
o one of the mortgagors were to become a
debtor in a bankruptcy case;
o such borrower did not receive fair
consideration or reasonably equivalent
value in exchange for allowing its
mortgaged property to be encumbered and,
among other things; and
o at the time the lien was granted, the
mortgagor was: (A) insolvent, (B)
inadequately capitalized or (C) unable to
pay its debts.
ADVERSE IMPACT OF ADDITIONAL The mortgage loans generally prohibit the
DEBT ON MORTGAGED PROPERTIES mortgagors from incurring any additional debt
that is secured by the related mortgaged
property without the consent of the mortgagee.
The existence of such other debt could:
o adversely affect the financial viability
of the mortgagors;
o adversely affect the security interest of
the lender in the equipment or other assets
acquired through such financings;
o complicate bankruptcy proceedings; and
o delay foreclosure on the related mortgaged
property.
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<PAGE>
The borrowers with respect to five mortgage
loans representing approximately 4.2% of the
initial pool balance have unsecured
subordinate debt or payment obligations that
are subject to subordination and standstill
agreements limiting the rights of the holder
of such additional indebtedness, including
limiting its right to commence any enforcement
or foreclosure proceeding.
Eighty-five mortgage loans representing
approximately 75.0% of the initial pool
balance were made to single-purpose entities,
which are restricted from incurring any
indebtedness other than the related mortgage
loan, normal trade accounts payable and
certain purchase financing debt.
In cases where one or more junior liens are
imposed on a mortgaged property or the
mortgagor incurs other unsecured indebtedness,
the trust fund is subjected to additional
risks, including, the risks that the mortgagor
may have greater incentives to repay the
junior or unsecured indebtedness first and
that it may be more difficult for the
mortgagor to refinance the mortgage loan or to
sell the mortgaged property for purposes of
making a balloon payment upon the maturity of
the mortgage loan.
TIMING OF PRINCIPAL PREPAYMENTS If principal payments, property releases, or
MAY LEAD TO DIFFERENT ASSET prepayments are made on a mortgage loan, the
CONCENTRATIONS THAN IN THE remaining mortgage pool may be subject to more
INITIAL MORTGAGE POOL concentrated risk with respect to the diversity
of properties, types of properties and property
characteristics and with respect to the number
of mortgagors. See the table entitled "Year of
Scheduled Maturity" under "Description of the
Mortgage Pool -- Certain Characteristics of the
Mortgage Loans" herein for a description of the
respective maturity dates of the mortgage
loans.
Because principal on the offered certificates
is payable in sequential order, and no class
receives principal until the class balance of
the preceding class or classes has been
reduced to zero, classes that have a lower
sequential priority are more likely to be
exposed to the risk of concentration discussed
under "-- Concentration of Mortgage Loans"
above than classes with a higher sequential
priority.
THE GEOGRAPHIC CONCENTRATION OF Four, 23, 17, 6, 10 and 4 of the mortgaged
MORTGAGED PROPERTIES SUBJECTS properties, representing approximately 11.0%,
THE TRUST FUND TO A GREATER 10.6%, 9.5%, 9.1%, 8.3% and 5.6%, respectively,
EXTENT TO STATE OR REGIONAL of the initial pool balance, are located in
CONDITIONS Illinois, Florida, California, Wisconsin, Ohio
and Washington, respectively. Except as
indicated in the immediately preceding
sentence, no more than 5.0% of the mortgage
loans, by initial pool balance are secured by
mortgaged properties in any one state.
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<PAGE>
The concentration of mortgaged properties in a
specific state or region will make the
performance of the mortgage pool as a whole,
more sensitive to the following in the state
or region where the mortgagors and the
mortgaged properties are located:
o economic conditions;
o conditions in the real estate market;
o changes in governmental rules and fiscal
policies;
o acts of God (which may result in uninsured
losses); and
o other factors which are beyond the control
of the mortgagors.
EXERCISE OF LEGAL REMEDIES MAY The mortgage loans may contain a due-on-sale
BE LIMITED FOLLOWING A DEFAULT clause. Such clause permits the holder of the
ON A MORTGAGE LOAN mortgage loan to accelerate the maturity of the
mortgage loan if the related mortgagor sells or
otherwise transfers or conveys the related
mortgaged property or its interest in the
mortgaged property in violation of the terms of
the mortgage loan. The mortgage loans may also
include a debt-acceleration clause, which
permits the lender to accelerate the debt upon
specified monetary or non-monetary defaults of
the mortgagor. The courts of all states will
enforce clauses providing for acceleration in
the event of a material payment default. The
equity courts of any state, however, may refuse
the foreclosure or other sale of a mortgaged
property or refuse to permit the acceleration
of the indebtedness as a result of a default
deemed to be immaterial or if the exercise of
such remedies would be inequitable or unjust or
the circumstances would render the acceleration
unconscionable.
Certain of the mortgage loans will be secured
by an assignment of leases and rents from the
mortgagor, however, the mortgagor generally
may collect rents for so long as there is no
default. As a result, the trust fund's rights
to such rents will be limited because:
o it may not have a perfected security
interest in the rent payments until the
master servicer collects them;
o the master servicer may not be entitled to
collect the rent payments without court
action; and
o the bankruptcy of the related mortgagor
could limit the master servicer's ability
to collect the rents.
See "Certain Legal Aspects of Mortgage Loans
and the Leases -- Leases and Rents" in the
prospectus.
ENVIRONMENTAL LAWS MAY Under various federal, state and local
ADVERSELY AFFECT THE VALUE OF environmental laws, ordinances and regulations,
AND CASH FLOW FROM A MORTGAGED a current or previous owner or operator of real
PROPERTY property may be liable for the costs of cleanup
of environmental contamination on, under,
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adjacent to or in such property. Such laws
often impose liability whether or not the
owner or operator knew of, or was responsible
for, the presence of such contamination. The
cost of any required cleanup and the owner's
liability for these costs are generally not
limited under these laws and could exceed the
value of the property and/or the aggregate
assets of the owner. In addition, the presence
of hazardous or toxic substances, or the
failure to properly clean up contamination on
such property, may adversely affect the
owner's or operator's ability to borrow using
such property as collateral.
Certain environmental laws impose liability
for releases of asbestos into the air. Third
parties may seek recovery from owners or
operators of real property for personal injury
associated with exposure to asbestos.
Under some environmental laws, such as the
federal Comprehensive Environmental Response,
Compensation and Liability Act as well as
certain state laws, a secured lender (such as
the trust fund) may be liable as an "owner" or
"operator", for the costs of responding to a
release or threatened release of hazardous
substances on or from a mortgagor's property.
Such liability may be imposed on the lender if
its agents or employees are deemed to have
participated in the management of the
mortgagor's property, regardless of whether a
previous owner caused the environmental
damage. The trust fund's potential exposure to
liability for cleanup costs may increase if
the trust fund actually takes possession of a
mortgagor's property, or control of its
day-to-day operations, as, for example,
through the appointment of a receiver.
An environmental site assessment of each of
the mortgaged properties was performed (in
some cases, prior assessments were updated) in
connection with the initial underwriting and
origination of the mortgage loans. Such
assessments do not generally include
environmental testing. In certain cases,
additional environmental testing was
performed.
The information in such assessments has not
been independently verified by the seller, the
depositor, the servicers, the trustee, the
underwriters, or by any of their respective
affiliates. With respect to a number of the
mortgaged properties, the assessments revealed
the presence or possible presence of
asbestos-containing materials, radon gas or
other environmental concerns. None of these
issues constituted a material violation of any
environmental law in the judgment of the
assessor. In these cases, the mortgagors
agreed to establish and implement operations
and maintenance programs or had other
remediation agreements or escrows in place.
One mortgaged property securing a mortgage
loan representing 4.0% of the initial pool
balance has known
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environmental contamination consistent with
its historical use. The borrower has obtained
two prepaid environmental insurance policies
to insure against cleanup costs associated
with such known conditions. See "Description
of the Mortgage Pool -- Borrower Concentration
and Related Borrowers -- The McCook Metals
Loan."
It is possible that the environmental site
assessments did not reveal all environmental
liabilities, that there are material
environmental liabilities of which neither the
seller nor the depositor are aware or that the
environmental condition of the mortgaged
properties could be affected in the future by
tenants, occupants, or third parties unrelated
to the mortgagors.
Each mortgagor has represented that, except as
described in the environmental reports
referred to above, each mortgaged property
was, or to the best of the mortgagor's
knowledge was, in compliance with applicable
environmental laws and regulations on the date
of the origination of the related mortgage
loan. Each mortgagor has also represented
that, except as described in the environmental
reports, no actions, suits or proceedings have
been commenced or are pending or, to the best
of the mortgagor's knowledge are threatened,
with respect to any applicable environmental
laws. Each mortgagor has represented that such
mortgagor has not received any notice of
violation of any legal requirement related to
the use and occupancy of any mortgaged
property and has agreed not to use, cause or
permit the presence on the related mortgaged
property of any hazardous materials in a
manner which violates any applicable law.
The principal security for the obligations
under each mortgage loan consists of the
mortgaged property. Therefore, if any of the
representations described in the preceding
paragraph are breached, there can be no
assurance that any other assets of the
mortgagor would be available in connection
with any exercise of remedies in response to
such a breach. In addition, most mortgagors
are structured as single asset entities and
therefore have no assets other than the
mortgaged property.
SPECIAL RISKS ASSOCIATED Eighty-five mortgage loans, representing
WITH BALLOON LOANS approximately 52.1% of the initial pool
balance, are balloon loans. The balloon loans
do not fully amortize over their terms to
maturity and, thus, require substantial
principal payments (i.e., balloon payments) at
their stated maturity. Mortgage loans with
balloon payments are riskier because the
ability of a mortgagor to make a balloon
payment will depend upon its ability either to
refinance the loan or to sell the related
mortgaged property in a timely fashion. The
ability of a mortgagor to accomplish either of
these goals will be affected by a number of
factors, including:
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o the level of available mortgage interest
rates at the time of sale or refinancing;
o the mortgagor's equity in the related
mortgaged property;
o the financial condition and operating
history of the mortgagor and the related
mortgaged property;
o tax laws;
o rent control laws (with respect to certain
multifamily properties);
o renewability of operating licenses;
o prevailing general economic conditions;
and
o the availability of credit for commercial
or multifamily real properties.
ONE ACTION JURISDICTION MAY Several states have laws that prohibit more
LIMIT THE ABILITY OF THE than one TO "judicial action" to enforce a
SPECIAL SERVICER FORECLOSE mortgage obligation, and some courts have
ON A MORTGAGED PROPERTY construed the term "judicial action" broadly.
The special servicer may need to obtain advice
of counsel prior to enforcing any of the trust
fund's rights under any of the mortgage loans
that include mortgaged properties where the
rule could be applicable.
In the case of a mortgage loan secured by
mortgaged properties located in multiple
states, the special servicer may be required
to foreclose first on properties located in
states where such "one action" rules apply
(and where non-judicial foreclosure is
permitted) before foreclosing on properties
located in states where judicial foreclosure
is the only permitted method of foreclosure.
See "Certain Legal Aspects of Mortgage Loans
and the Leases -- Foreclosure" in the
prospectus.
APPRAISALS AND MARKET STUDIES OF An appraisal of the value for each of the
MORTGAGED PROPERTIES mortgaged properties was made between October
7, 1997 and May 21, 1999. It is possible that
the market value of a mortgaged property
securing a mortgage loan has declined since the
most recent appraisal for such mortgaged
property. Appraisals represent the analysis and
opinion of the respective appraisers at or
before the time made and are not guarantees,
and may not be indicative, of present or future
value. Another appraiser may have arrived at a
different valuation, even if such appraiser
used the same general approach to, and the same
method of, appraising the property.
Appraisals seek to establish the amount a
typically motivated buyer would pay a
typically motivated seller. Such amount could
be significantly higher than the amount
obtained from the sale of a mortgaged property
under a distress or liquidation sale.
Information regarding the
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values of the mortgaged properties as of the
cut-off date is presented under "Description
of the Mortgage Pool" herein for illustrative
purposes only.
CERTAIN PARTIES MAY HAVE A substantial number of the mortgaged
CONFLICTS OF INTEREST WITH properties are managed by property managers
RESPECT TO THE MORTGAGED affiliated with the respective mortgagors.
PROPERTIES These property managers may also manage
additional properties, including properties
that may compete with the mortgaged properties.
Affiliates of the managers and/or the
mortgagors, or the managers and/or the
mortgagors themselves, may also own other
properties, including competing properties.
Therefore, the managers of the mortgaged
properties and the mortgagors may experience
conflicts of interest in the management and/or
ownership of such properties. In addition, the
seller or affiliates thereof may have other
financing arrangements with affiliates of the
mortgagors and may enter into additional
financing relationships in the future.
SPECIAL SERVICER MAY TAKE In connection with the servicing of specially
ACTIONS WHICH ARE ADVERSE serviced mortgage loans, the special servicer
TO YOU may take actions with respect to such mortgage
loans that could adversely affect you. As
described herein under "Master Servicer and
Special Servicer -- Responsibilities of Special
Servicer," the actions of the special servicer
will be subject to review by a representative
of the holders of the monitoring certificates,
who may have interests that conflict with those
of the holders of the other classes of
certificates. As a result, it is possible that
such representative may influence the special
servicer to take actions which conflict with
the interests of certain classes of
certificates; provided, however, that the
special servicer shall in all cases be required
to act in accordance with the servicing
standard. In addition, the special servicer may
be removed without cause by the directing
certificateholders as described under "Master
Servicer and Special Servicer --
Responsibilities of Special Servicer," herein.
THE STATUS OF A GROUND LEASE Five mortgage loans, representing approximately
MAY BE UNCERTAIN IN A 4.0% of the initial pool balance, are secured
BANKRUPTCY PROCEEDING in part by a leasehold interest in their
respective mortgaged properties. For the
purposes of this prospectus supplement, any
mortgaged property, a material portion of which
consists of a leasehold estate, is considered a
leasehold interest unless the trust fund also
holds a mortgage on the fee, in which case it
is considered a fee interest. Pursuant to
Section 365(h) of the Bankruptcy Code, ground
lessees are currently afforded rights not to
treat a ground lease as terminated and to
remain in possession of their leased premises
upon the bankruptcy of their ground lessor and
the rejection of the ground lease by the
representative of such ground lessor's
bankruptcy estate.
S-21
<PAGE>
The leasehold mortgages provide that the
mortgagor may not elect to treat the ground
lease as terminated on account of any such
bankruptcy of, and rejection by, the ground
lessor without the consent of the related
mortgagee. In the event of a bankruptcy of a
ground lessee/mortgagor, the ground
lessee/mortgagor under the protection of the
Bankruptcy Code has the right to assume (i.e.,
continue) or reject (i.e., terminate) any or
all of its ground leases.
In the event of concurrent bankruptcy
proceedings involving the ground lessor and
the ground lessee/mortgagor, either servicer
may be unable to enforce the bankrupt ground
lessee/mortgagor's obligation to refuse to
treat a ground lease rejected by a bankrupt
ground lessor as terminated. In such
circumstances, a ground lease could be
terminated notwithstanding lender protection
provisions contained therein or in the
mortgage.
SPECIAL RISKS ASSOCIATED WITH Twenty-nine mortgage loans, representing
ANTICIPATED REPAYMENT DATE approximately 42.8% of the initial pool
LOANS balance, are mortgage loans with anticipated
repayment dates. After the anticipated
repayment date, any excess cash flow will be
required to be applied to payments of principal
and interest on such loan. All of the
anticipated repayment date loans will have
substantial principal balances on their
anticipated repayment date. The failure to pay
such loan by the related anticipated repayment
date will not result in an event of default or
acceleration.
The ability of a mortgagor to repay a mortgage
loan on the anticipated repayment date will
depend on its ability either to refinance the
mortgage loan or to sell the related mortgaged
property. The ability of a mortgagor to
accomplish either of these goals will be
affected by a number of factors, including:
o the level of available mortgage interest
rates at the time of sale or refinancing;
o the mortgagor's equity in the related
mortgaged property;
o the financial condition and operating
history of the mortgagor and the related
mortgaged property;
o tax laws;
o rent control laws (with respect to certain
multifamily properties);
o renewability of operating licenses;
o prevailing general economic conditions;
and
o the availability of credit for commercial
or multifamily real properties.
S-22
<PAGE>
SPECIAL RISKS ASSOCIATED WITH Some of the tenant leases contain provisions
ATTORNMENT that require the tenant to attorn to (that is,
recognize as landlord under the lease) a
successor owner of the property following
foreclosure. Some of the leases may be either
subordinate to the liens created by the
mortgage loans or else contain a provision that
requires the tenant to subordinate the lease if
the mortgagee agrees to enter into a
non-disturbance agreement.
In some states, if tenant leases are
subordinate to the liens created by the
mortgage loans and such leases do not contain
attornment provisions, such leases may
terminate upon the transfer of the property to
a foreclosing lender or purchaser at
foreclosure. Accordingly, in the case of the
foreclosure of a mortgaged property located in
such a state and leased to one or more
desirable tenants under leases that do not
contain attornment provisions, such mortgaged
property could experience a further decline in
value if such tenants' leases were terminated
(e.g., if such tenants were paying
above-market rents).
If a mortgage is subordinate to a lease, the
lender will not (unless it has otherwise
agreed with the tenant) possess the right to
dispossess the tenant upon foreclosure of the
property, and if the lease contains provisions
inconsistent with the mortgage (e.g.,
provisions relating to application of
insurance proceeds or condemnation awards),
the provisions of the lease will take
precedence over the provisions of the
mortgage.
THE MORTGAGED PROPERTIES MAY Due to changes in applicable building and
NOT BE IN COMPLIANCE WITH zoning ordinances and codes which have come
CURRENT ZONING LAWS into effect after the construction of
improvements on certain of the mortgaged
properties, some improvements may not comply
fully with current zoning laws (including
density, use, parking and set-back
requirements) but qualify as permitted
non-conforming uses. Such changes may limit the
ability of the related mortgagor to rebuild the
premises "as is" in the event of a substantial
casualty loss. Such limitations may adversely
affect the ability of the mortgagor to meet its
mortgage loan obligations from cash flow.
Insurance proceeds may not be sufficient to pay
off such mortgage loan in full. In addition, if
the mortgaged property were to be repaired or
restored in conformity with then current law,
its value could be less than the remaining
balance on the mortgage loan and it may produce
less revenue than before such repair or
restoration.
INSPECTIONS MADE OF THE The mortgaged properties were inspected by
MORTGAGED PROPERTY MAY HAVE licensed engineers at the time the mortgage
MISSED NECESSARY REPAIRS loans were originated to assess the structure,
exterior walls, roofing, interior construction,
mechanical and electrical systems and general
condition of the site, buildings and other
improvements located on the mortgaged
properties. There can be no
S-23
<PAGE>
assurance that all conditions requiring repair
or replacement have been identified in such
inspections.
COMPLIANCE WITH AMERICANS WITH Under the Americans with Disabilities Act of
DISABILITIES ACT MAY RESULT IN 1990, all public accommodations are required to
ADDITIONAL LOSSES meet certain federal requirements related to
access and use by disabled persons. To the
extent the mortgaged properties do not comply
with such laws, the mortgagors may be required
to incur costs to comply with such laws. In
addition, noncompliance could result in the
imposition of fines by the federal government
or an award of damages to litigants.
LITIGATION CONCERNS There may be legal proceedings pending and,
from time to time, threatened against the
mortgagors or their affiliates relating to the
business of or arising out of the ordinary
course of business of the mortgagors and their
affiliates. There can be no assurance that
such litigation will not have a material
adverse effect on the distributions to
certificateholders.
THE OFFERED CERTIFICATES
ONLY TRUST FUND ASSETS ARE If the assets of the trust fund are
AVAILABLE TO PAY YOU insufficient to make payments on the offered
certificates, no other assets will be available
for payment of the deficiency. See "Risk
Factors -- Limited Assets" in the prospectus.
PREPAYMENTS WILL AFFECT Prepayments. The yield to maturity on the
YOUR YIELD offered certificates will depend on the rate
and timing of principal payments (including
both voluntary prepayments, in the case of
mortgage loans that permit voluntary
prepayment, and involuntary prepayments, such
as prepayments resulting from casualty or
condemnation, defaults and liquidations) on the
mortgage loans and how such payments are
allocated among the offered certificates
entitled to distributions of principal. The
yield to maturity of the Class X Certificates
will be particularly sensitive to the rate and
timing of receipt of principal since its sole
distribution is interest based upon the
aggregate principal balance of all the
certificates.
In addition, upon the occurrence of certain
limited events, a party may be required to
repurchase a mortgage loan from the trust fund
and the money paid would be passed through to
the holders of the certificates with the same
effect as if such mortgage loan had been
prepaid in full (except that no prepayment
premium would be payable with respect to any
such repurchase). No representation is made as
to the anticipated rate of prepayments
(voluntary or involuntary) on the mortgage
loans or as to the anticipated yield to
maturity of any certificate. See "Certain
Prepayment, Maturity and Yield Considerations"
herein and "Yield Considerations" in the
prospectus.
S-24
<PAGE>
Yield. In general, if you purchase an offered
certificate at a premium and principal
distributions occur at a rate faster than you
anticipated at the time of purchase, and no
prepayment premiums are collected, your actual
yield to maturity may be lower than that you
assumed at the time of purchase. In the case
of the Class X Certificates, this could result
in the failure of investors in the Class X
Certificates to recover their initial
investment. Conversely, if you purchase an
offered certificate at a discount and
principal distributions thereon occur at a
rate slower than that you assumed at the time
of purchase, your actual yield to maturity may
be lower than that you assumed at the time of
purchase.
The investment performance of the offered
certificates may be materially different from
what you expected if the rate of prepayments
on the mortgage loans is higher or lower than
what you assumed at the time of investment.
The yield on the Class X Certificates will be
adversely affected if mortgage loans with
higher mortgage interest rates pay faster than
mortgage loans with lower mortgage interest
rates.
Interest Rate Environment. In general,
mortgagors are less likely to prepay if
prevailing interest rates are at or above the
rates borne by such mortgage loans. On the
other hand, mortgagors are more likely to
prepay if prevailing rates fall significantly
below the mortgage rates of the mortgage
loans. Mortgagors are less likely to prepay
mortgage loans with a lockout period or
prepayment premium provision, to the extent
enforceable, than otherwise identical mortgage
loans without such provisions, with shorter
lockout periods or with lower prepayment
premiums.
Premiums. Provisions requiring prepayment
premiums may not be enforceable in some states
and under federal bankruptcy law, and may
constitute interest for usury purposes.
Accordingly, no assurance can be given that
the obligation to pay a prepayment premium
will be enforceable or, if enforceable, that
the foreclosure proceeds will be sufficient to
pay such prepayment premium. Additionally,
although the collateral substitution
provisions related to defeasance are not
intended to be, and do not have the same
effect on the certificateholders as a
prepayment, there can be no assurance that a
court would not interpret such provisions as
requiring a prepayment premium and thus
unenforceable or usurious under applicable
law.
BORROWER DEFAULTS MAY ADVERSELY The aggregate amount of distributions on the
AFFECT YOUR YIELD offered certificates, the yield to maturity of
the offered certificates, the rate of principal
payments on the offered certificates and the
weighted average life of the offered
certificates will be affected by the rate and
timing of delinquencies and
S-25
<PAGE>
defaults on the mortgage loans. Delinquencies
on the mortgage loans, if the delinquent
amounts are not advanced, may result in
shortfalls in distributions of interest and/or
principal to the offered certificates for the
current month. Any late payments received on
or in respect of the mortgage loans will be
distributed to the certificates in the
priorities described more fully herein, but no
interest will accrue on such shortfall during
the period of time such payment is delinquent.
If you calculate your anticipated yield based
on an assumed rate of default and an assumed
amount of losses on the mortgage loans that
are lower than the default rate and the amount
of losses actually experienced, and if such
losses are allocated to your class of
certificates, your actual yield to maturity
will be lower than the yield so calculated and
could, under certain scenarios, be negative.
The timing of any loss on a liquidated
mortgage loan also will affect the actual
yield to maturity of the offered certificates
to which all or a portion of such loss is
allocable, even if the rate of defaults and
severity of losses are consistent with your
expectations. In general, the earlier you bear
a loss, the greater the effect on your yield
to maturity. See "Prepayment and Yield
Considerations."
Even if losses on the mortgage loans are
allocated to a particular class of offered
certificates, such losses may affect the
weighted average life and yield to maturity of
other certificates. Losses on the mortgage
loans, to the extent not allocated to such
class of offered certificates, may result in a
higher percentage ownership interest evidenced
by such certificates than would otherwise have
resulted absent such loss. The consequent
effect on the weighted average life and yield
to maturity of the offered certificates will
depend upon the characteristics of the
remaining mortgage loans.
DELINQUENCIES WILL ENTITLE As and to the extent described herein, the
SERVICER TO RECEIVE CERTAIN master servicer, the special servicer or the
ADDITIONAL COMPENSATION trustee, as applicable, will be entitled to
WHICH TAKES PRECEDENCE receive interest on unreimbursed advances and
OVER YOUR RIGHT TO RECEIVE unreimbursed servicing expenses. The right of
DISTRIBUTIONS the master servicer, the special servicer or
the trustee, as applicable, to receive such
payments of interest is senior to the rights of
certificateholders to receive distributions on
the offered certificates and, consequently, may
result in losses being allocated to the offered
certificates that would not have resulted
absent the accrual of such interest. In
addition, the special servicer will receive a
fee equal to 1.00% of collections on any
specially serviced mortgage loan prior to
distributing such collections to the
certificateholders. This will result in
shortfalls which may be allocated to the
offered certificates. See "Master Servicer and
Special Servicer -- Servicing and Other
Compensation and Payment of Expenses."
S-26
<PAGE>
VOTES OF OTHER Under certain circumstances, the consent or
CERTIFICATEHOLDERS MAY approval of the holders of a specified
ADVERSELY AFFECT YOUR INTERESTS percentage of the aggregate certificate balance
of all outstanding certificates will be
required to direct, and will be sufficient to
bind all certificateholders to, certain
actions, including directing the special
servicer or the master servicer with respect to
actions to be taken with respect to certain
mortgage loans and real estate owned properties
and amending the pooling and servicing
agreement in certain circumstances. See
"Description of the Pooling and Servicing
Agreement -- Voting Rights" herein.
COMPUTERIZED SYSTEMS MAY BE The transition from the year 1999 to the year
DISRUPTED BY THE TRANSITION 2000 may disrupt the ability of computerized
TO THE YEAR 2000 systems of the master servicer, the special
servicer, the trustee, the mortgagors and other
parties to process information including:
o the collection of payments on the mortgage
loans;
o the servicing of the mortgage loans; and
o the distributions on your certificates.
The master servicer, the special servicer, and
the trustee have taken or are taking steps to
address these issues such that their systems
and applications will be year 2000 compliant.
If the master servicer, the special servicer
or trustee is unable to complete such
modifications by December 31, 1999 or if the
mortgagors or other third parties are not year
2000 compliant, the ability of the master
servicer, the special servicer or the trustee
to service the mortgage loans and make
distributions to the certificateholders,
respectively, may be materially and adversely
affected. The depositor has been advised by
the trustee, the master servicer and the
special servicer that each of them expect to
be year 2000 compliant.
S-27
<PAGE>
DESCRIPTION OF THE MORTGAGE POOL
GENERAL
The Trust Fund will consist primarily of a pool (the "Mortgage Pool") of
fixed rate mortgage loans (the "Mortgage Loans") with an aggregate principal
balance as of the Cut-off Date, after deducting payments of principal due on
such date, of approximately $762,030,576 (the "Initial Pool Balance"). Each
Mortgage Loan is evidenced by a promissory note (a "Mortgage Note") and secured
by a mortgage, deed of trust or other similar security instrument (a
"Mortgage") creating a first lien on a fee simple and/or leasehold interests in
office properties, multifamily properties, retail properties, hospitality
properties, industrial properties, nursing home properties, mixed use
properties, factory outlets, mobile home park properties, congregate care
properties and self storage facilities (each, a "Mortgaged Property"). Except
as otherwise indicated, all percentages of the Mortgage Loans described herein
are approximate percentages by aggregate principal balance as of the Cut-off
Date. The Mortgage Loans provide for scheduled payments of principal and/or
interest (the "Monthly Payments") to be due on the first day of each month (the
"Due Date").
All but six of the Mortgage Loans were originated by Morgan Guaranty Trust
Company of New York ("MGT" or the "Seller"). The six Mortgage Loans not
originated by MGT were purchased by MGT from two entities and represent 3.3% by
Initial Principal Balance. MGT is an affiliate of the Depositor and of J.P.
Morgan Securities Inc., one of the Underwriters.
The Mortgage Loans were underwritten generally in conformity with the
guidelines described below. See "-- Underwriting Guidelines and Processes"
below. The Seller will sell the Mortgage Loans to the Depositor on or prior to
the Delivery Date pursuant to a loan sale agreement (the "Loan Sale
Agreement"). The Depositor will cause the Mortgage Loans in the Mortgage Pool
to be assigned to the Trustee pursuant to the Pooling and Servicing Agreement.
See Annex A, Annex B, Annex C and the Diskette for additional information
with respect to the Mortgage Loans.
THE SELLER
Morgan Guaranty Trust Company of New York is a wholly-owned subsidiary and
the principal asset of J.P. Morgan & Co. Incorporated, a Delaware corporation
whose principal office is located in New York, New York. MGT is a commercial
bank offering a wide range of banking services to its customers both
domestically and internationally. Its business is subject to examination and
regulation by Federal and New York State banking authorities.
REPRESENTATIONS AND WARRANTIES
Under the Loan Sale Agreement, the Seller will make certain
representations and warranties to the Depositor. Pursuant to the terms of the
Loan Sale Agreement, the Seller will be obligated to cure any breach of such
representations and warranties or to repurchase any Mortgage Loan from the
Depositor as to which there exists a breach of any such representation or
warranty that materially and adversely affects the interests of the
Certificateholders in such Mortgage Loan. The Seller will covenant with the
Depositor to repurchase any Mortgage Loan from the Depositor or cure any such
breach within 90 days of receiving notice thereof. Under the Pooling and
Servicing Agreement, the Depositor will assign its rights under the Loan Sale
Agreement to the Trustee for the benefit of the Certificateholders. The sole
remedy available to the Trustee or the Certificateholders is the obligation of
the Seller to cure or repurchase any Mortgage Loan in connection with which
there has been a breach of any such representation or warranty which materially
and adversely affects the interest of the Certificateholders in such Mortgage
Loan.
The Seller has generally represented and warranted as of the Delivery Date
with respect to each Mortgage Loan, among other things, subject to certain
exceptions set forth in the related Loan Sale Agreement, that: (i) such
Mortgage Loan is not one month or more delinquent in payment of principal
S-28
<PAGE>
and interest and has not been so delinquent more than once in a twelve-month
period prior to the Delivery Date and there is no payment default and no other
default under the Mortgage Loan which has a material adverse effect on the
Mortgage Loan; (ii) such Mortgage Loan is secured by a Mortgage that is a valid
and subsisting first priority lien on the Mortgaged Property (or a leasehold
interest therein) free and clear of any liens, claims or encumbrances, subject
only to certain permitted encumbrances; (iii) such Mortgage, together with any
separate security agreements, establishes a first priority security interest in
favor of the Seller in all the related Mortgagor's personal property used in,
and reasonably necessary to operate the Mortgaged Property, and to the extent a
security interest may be created therein, the proceeds arising from the
Mortgaged Property and any other collateral securing such Mortgage subject only
to certain permitted encumbrances; (iv) there is an assignment of leases and
rents provision creating a first priority security interest in leases and rents
arising in respect of the related Mortgaged Property, subject only to certain
permitted encumbrances; (v) there are no mechanics' or other similar liens
affecting the Mortgaged Property which are or may be prior or equal to the lien
of the Mortgage, except those insured against pursuant to the applicable title
insurance policy; (vi) the related Mortgagor has good and indefeasible title in
fee simple or leasehold interest to, and no person has any outstanding
exercisable rights of record with respect to the purchase or sale of all or a
portion of, the related Mortgaged Property, except for rights of first refusal;
(vii) the Mortgaged Property is covered by a title insurance policy insuring
that the Mortgage is a valid first lien, subject only to certain permitted
encumbrances; (viii) no claims have been made under the related title insurance
policy and such policy is in full force and effect and will provide that the
insured includes the owner of the Mortgage Loan; (ix) at the time of the
assignment of such Mortgage Loan to the Depositor, the Seller had good title to
and was the sole owner of such Mortgage Loan free and clear of any pledge, lien
or encumbrance and such assignment validly transfers ownership of such Mortgage
Loan to the Depositor free and clear of any pledge, lien or encumbrance; (x)
the related assignment of mortgage and related assignment of the assignment of
rents and leases is legal, valid and binding and has been recorded or submitted
for recording in the applicable jurisdiction; (xi) the Seller's endorsement of
the related Mortgage Note constitutes the legal and binding assignment of such
Mortgage Note and together with an assignment of mortgage and the assignment of
the assignment of leases and rents, legally and validly conveys all right,
title and interest in such Mortgage Loan and related Mortgage Loan documents;
(xii) each Mortgage Loan document is a legal, valid and binding obligation of
the parties thereto, enforceable in accordance with its terms, except as the
enforceability thereof may be limited by applicable state law and by
bankruptcy, insolvency, reorganization or other laws relating to creditors'
rights and general equitable principles and except that certain provisions of
such Mortgage Loan documents are or may be unenforceable in whole or in part,
but the inclusion of such provisions does not render the Mortgage Loan
documents invalid as a whole, and such Mortgage Loan documents taken as a whole
are enforceable to the extent necessary and customary for the practical
realization of the rights and benefits afforded thereby; (xiii) the Seller has
not modified the terms of such related Mortgage Loan and related Mortgage Loan
documents have not been modified or waived in any material respect except as
set forth in the Loan Sale Agreement and the Mortgage Loan documents; (xiv)
such Mortgage Loan has not been satisfied, canceled, subordinated, released or
rescinded and the related Mortgagor has not been released from its obligations
under any Mortgage Loan document; (xv) none of the Mortgage Loan documents is
subject to any right of rescission, set-off, valid counterclaim or defense;
(xvi) each Mortgage Loan document complied in all respects with all material
applicable state or federal laws including usury to the extent non-compliance
would have a material adverse effect on the Mortgage Loan; (xvii) the related
Mortgaged Property is, in all material respects, in compliance with, and is
used and occupied in accordance with applicable law; (xviii) to the Seller's
knowledge, (a) in reliance on an engineering report, the related Mortgaged
Property is in good repair and (b) no condemnation proceedings are pending;
(xix) except as otherwise described under "--Borrower Concentration and Related
Borrowers--The McCook Metals Loan," the ESA prepared in connection with the
origination thereof reveals no known circumstances or conditions with respect
to the Mortgaged Property that would constitute or result in a material
violation of any environmental laws, require any expenditure material in
relation to the principal balance of such Mortgage Loan to achieve or maintain
compliance in all material respects with any environmental laws or require
substantial cleanup or remedial action or any other extraordinary action in
excess of the amount escrowed for such purposes; (xx) the Mortgaged Property is
covered by insurance policies providing coverage against certain losses or
damage; (xxi) all amounts
S-29
<PAGE>
required to be deposited by the Mortgagor at origination have been deposited;
(xxii) to the Seller's knowledge, all significant leases are in full force and
effect, and there has been no material default by the related Mortgagor or
lessee; and (xxiii) to the Seller's knowledge, there are no pending, or to the
Seller's actual knowledge threatened, actions, suits or proceedings by or
before any court or other governmental authority against or affecting the
related Mortgagor under such Mortgage Loan or the Mortgaged Property which, if
determined against such Mortgagor or property would materially and adversely
affect the value of such property or ability of the Mortgagor to pay principal,
interest and other amounts due under such Mortgage Loan.
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
All of the Mortgage Loans are secured by first liens on a fee simple
and/or leasehold interest in the related Mortgaged Properties. As of the
Cut-off Date, the Mortgage Loans had characteristics set forth below. The
totals in the following tables may not add up to 100% due to rounding. For a
Mortgage Loan secured by more than one Mortgaged Property the original
principal balance of such Mortgage Loan is allocated to each related Mortgaged
Property based on (1) the related appraisal values, (2) the square footage
provided in the appraisal or (3) as otherwise provided in the Mortgage Loan
documentation. The principal balance as of the Cut-off Date of such Mortgage
Loan is allocated to each related Mortgaged Property based on the allocation of
the original principal balance.
MORTGAGE INTEREST RATES AS OF THE CUT-OFF DATE
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE AGGREGATE
NUMBER PERCENT BY PRINCIPAL PRINCIPAL
OF NUMBER OF BALANCE BALANCE
MORTGAGE MORTGAGE AS OF THE AS OF THE
MORTGAGE INTEREST RATES AS OF THE CUT-OFF DATE LOANS LOANS CUT-OFF DATE CUT-OFF DATE
- ------------------------------------------------ ---------- ------------ -------------- -------------
<S> <C> <C> <C> <C>
6.5000% -- 6.7500% ............................. 11 8.5% $ 98,633,442 12.9%
6.7501% -- 7.0000% ............................. 12 9.3 58,825,136 7.7
7.0001% -- 7.2500% ............................. 12 9.3 63,206,801 8.3
7.2501% -- 7.5000% ............................. 13 10.1 154,318,501 20.3
7.5001% -- 7.7500% ............................. 14 10.9 80,502,312 10.6
7.7501% -- 8.0000% ............................. 22 17.1 99,376,667 13.0
8.0001% -- 8.2500% ............................. 15 11.6 72,421,855 9.5
8.2501% -- 8.5000% ............................. 20 15.5 80,065,893 10.5
8.5001% -- 8.8000% ............................. 10 7.8 54,679,970 7.2
-- ---- ------------ ----
Total: ........................................ 129 100.0% $762,030,576 100.0%
=== ===== ============ =====
</TABLE>
Weighted Average Mortgage Interest Rate: 7.58%
S-30
<PAGE>
CURRENT PRINCIPAL BALANCE
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE AGGREGATE
NUMBER PERCENT BY PRINCIPAL PRINCIPAL
OF NUMBER OF BALANCE BALANCE
MORTGAGE MORTGAGE AS OF THE AS OF THE
CURRENT PRINCIPAL BALANCE LOANS LOANS CUT-OFF DATE CUT-OFF DATE
- ----------------------------------- ---------- ------------ -------------- -------------
<S> <C> <C> <C> <C>
$1,000,000 or less................. 2 1.6% $ 1,986,855 0.3%
$1,000,001 -- $2,000,000........... 30 23.3 47,949,964 6.3
$2,000,001 -- $3,000,000........... 24 18.6 61,008,867 8.0
$3,000,001 -- $4,000,000........... 18 14.0 64,102,169 8.4
$4,000,001 -- $5,000,000........... 11 8.5 48,205,688 6.3
$5,000,001 -- $7,500,000........... 19 14.7 115,266,266 15.1
$7,500,001 -- $10,000,000.......... 5 3.9 41,102,574 5.4
$10,000,001 -- $12,500,000......... 5 3.9 55,162,166 7.2
$12,500,001 -- $15,000,000......... 5 3.9 68,440,416 9.0
$15,000,001 -- $17,500,000......... 2 1.6 34,405,843 4.5
$17,500,001 -- $20,000,000......... 2 1.6 35,671,983 4.7
$20,000,001 -- $25,000,000......... 3 2.3 69,128,658 9.1
$30,000,001 -- $35,000,000......... 2 1.6 61,462,461 8.1
$55,000,001 -- $60,000,000......... 1 0.8 58,136,667 7.6
-- ---- ------------ ----
Total: ........................... 129 100.0% $762,030,576 100.0%
=== ===== ============ =====
</TABLE>
Average Principal Balance per Mortgage Loan as of the Cut-off Date: $5,907,214
Average Principal Balance per Mortgage Property as of the Cut-off Date:
$5,443,076
Smallest Loan Balance: $990,656
Largest Loan Balance: $58,136,667
ORIGINAL TERM TO MATURITY/ANTICIPATED REPAYMENT DATE IN MONTHS
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE AGGREGATE
NUMBER PERCENT BY PRINCIPAL PRINCIPAL
OF NUMBER OF BALANCE BALANCE
ORIGINAL TERM TO MATURITY/ MORTGAGE MORTGAGE AS OF THE AS OF THE
ANTICIPATED REPAYMENT DATE IN MONTHS LOANS LOANS CUT-OFF DATE CUT-OFF DATE
- -------------------------------------- ---------- ------------ -------------- -------------
<S> <C> <C> <C> <C>
60 or less ........................... 1 0.8% $ 22,961,612 3.0%
61 -- 84 ............................. 9 7.0 39,269,077 5.2
85 -- 120 ............................ 97 75.2 607,062,739 79.7
121 -- 180 ........................... 11 8.5 62,210,933 8.2
181 -- 240 ........................... 11 8.5 30,526,216 4.0
-- ---- ------------ ----
Total: .............................. 129 100.0% $762,030,576 100.0%
=== ===== ============ =====
</TABLE>
Weighted Average Original Term to Maturity or Anticipated Repayment Date in
Months: 123
S-31
<PAGE>
REMAINING TERM TO MATURITY/ANTICIPATED REPAYMENT DATE IN MONTHS
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE AGGREGATE
NUMBER PERCENT BY PRINCIPAL PRINCIPAL
OF NUMBER OF BALANCE BALANCE
REMAINING TERM TO MATURITY/ MORTGAGE MORTGAGE AS OF THE AS OF THE
ANTICIPATED REPAYMENT DATE IN MONTHS LOANS LOANS CUT-OFF DATE CUT-OFF DATE
- -------------------------------------- ---------- ------------ -------------- -------------
<S> <C> <C> <C> <C>
60 or less ........................... 1 0.8% $ 22,961,612 3.0%
61 -- 84 ............................. 9 7.0 39,269,077 5.2
85 -- 120 ............................ 100 77.5 630,850,116 82.8
121 -- 180 ........................... 8 6.2 38,423,556 5.0
181 -- 240 ........................... 11 8.5 30,526,216 4.0
--- ---- ------------ ----
Total: .............................. 129 100.0% $762,030,576 100.0%
=== ===== ============ =====
</TABLE>
Weighted Average Remaining Term to Maturity or Anticipated Repayment Date in
Months: 117
MONTH AND YEAR OF ORIGINATION
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE AGGREGATE
NUMBER PERCENT BY PRINCIPAL PRINCIPAL
OF NUMBER OF BALANCE BALANCE
MORTGAGE MORTGAGE AS OF THE AS OF THE
MONTH AND YEAR OF ORIGINATION LOANS LOANS CUT-OFF DATE CUT-OFF DATE
- ------------------------------- ---------- ------------ -------------- -------------
<S> <C> <C> <C> <C>
December 1997 ................. 1 0.8% $ 2,990,258 0.4%
March 1998 .................... 1 0.8 7,503,550 1.0
May 1998 ...................... 1 0.8 6,331,137 0.8
June 1998 ..................... 2 1.6 7,547,120 1.0
July 1998 ..................... 1 0.8 7,724,507 1.0
August 1998 ................... 11 8.5 68,777,984 9.0
September 1998 ................ 11 8.5 92,792,377 12.2
October 1998 .................. 10 7.8 31,827,306 4.2
November 1998 ................. 7 5.4 29,843,422 3.9
December 1998 ................. 9 7.0 83,804,683 11.0
January 1999 .................. 8 6.2 97,035,715 12.7
February 1999 ................. 10 7.8 35,422,578 4.6
March 1999 .................... 15 11.6 61,689,961 8.1
April 1999 .................... 17 13.2 68,644,051 9.0
May 1999 ...................... 18 14 100,103,161 13.1
June 1999 ..................... 4 3.1 36,205,390 4.8
July 1999 ..................... 3 2.3 23,787,376 3.1
--- ----- ------------ -----
Total: ....................... 129 100.0% $762,030,576 100.0%
=== ===== ============ =====
</TABLE>
S-32
<PAGE>
YEAR OF SCHEDULED MATURITY/ANTICIPATED REPAYMENT DATE
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE AGGREGATE
NUMBER PERCENT BY PRINCIPAL PRINCIPAL
OF NUMBER OF BALANCE BALANCE
YEAR OF SCHEDULED MATURITY/ MORTGAGE MORTGAGE AS OF THE AS OF THE
ANTICIPATED REPAYMENT DATE LOANS LOANS CUT-OFF DATE CUT-OFF DATE
- ----------------------------- ---------- ------------ -------------- -------------
<S> <C> <C> <C> <C>
2004 ........................ 1 0.8% $ 22,961,612 3.0%
2005 ........................ 7 5.4 18,425,960 2.4
2006 ........................ 2 1.6 20,843,117 2.7
2008 ........................ 31 24.0 203,549,677 26.7
2009 ........................ 69 53.5 427,300,439 56.1
2010 ........................ 1 0.8 12,295,037 1.6
2011 ........................ 1 0.8 7,724,507 1.0
2013 ........................ 3 2.3 9,621,617 1.3
2014 ........................ 3 2.3 8,782,394 1.2
2017 ........................ 1 0.8 4,121,569 0.5
2018 ........................ 2 1.6 6,712,611 0.9
2019 ........................ 8 6.2 19,692,036 2.6
-- ---- ------------ ----
Total: ..................... 129 100.0% $762,030,576 100.0%
=== ===== ============ =====
</TABLE>
BALLOON MORTGAGE LOANS
ORIGINAL TERM TO MATURITY IN MONTHS
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE AGGREGATE
NUMBER PERCENT BY PRINCIPAL PRINCIPAL
OF NUMBER OF BALANCE BALANCE
BALLOON MORTGAGE LOANS MORTGAGE MORTGAGE AS OF THE AS OF THE
ORIGINAL TERM TO MATURITY IN MONTHS LOANS LOANS CUT-OFF DATE CUT-OFF DATE
- ------------------------------------- ---------- ------------ -------------- -------------
<S> <C> <C> <C> <C>
61 -- 84 ............................ 8 9.4% $ 21,789,768 5.5%
85 -- 120 ........................... 73 85.9 345,070,645 86.8
121 -- 180 .......................... 3 3.5 26,350,682 6.6
181 -- 240 .......................... 1 1.2 4,121,569 1.0
-- ---- ------------ ----
Total: ............................. 85 100.0% $397,332,664 100.0%
== ===== ============ =====
</TABLE>
Weighted Average Original Term to Maturity in Months: 122
S-33
<PAGE>
BALLOON MORTGAGE LOANS
REMAINING TERM TO MATURITY IN MONTHS
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE AGGREGATE
NUMBER PERCENT BY PRINCIPAL PRINCIPAL
OF NUMBER OF BALANCE BALANCE
BALLOON MORTGAGE LOANS MORTGAGE MORTGAGE AS OF THE AS OF THE
REMAINING TERM TO MATURITY IN MONTHS LOANS LOANS CUT-OFF DATE CUT-OFF DATE
- -------------------------------------- ---------- ------------ -------------- -------------
<S> <C> <C> <C> <C>
61 -- 84 ............................. 8 9.4% $ 21,789,768 5.5%
85 -- 120 ............................ 73 85.9 345,070,645 86.8
121 -- 180 ........................... 3 3.5 26,350,682 6.6
181 -- 240 ........................... 1 1.2 4,121,569 1.0
-- ---- ------------ ----
Total: .............................. 85 100.0% $397,332,664 100.0%
-- ----- ------------ -----
</TABLE>
Weighted Average Remaining Term to Maturity in Months: 114
BALLOON MORTGAGE LOANS
REMAINING AMORTIZATION TERM IN MONTHS
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE AGGREGATE
NUMBER PERCENT BY PRINCIPAL PRINCIPAL
OF NUMBER OF BALANCE BALANCE
BALLOON MORTGAGE LOANS MORTGAGE MORTGAGE AS OF THE AS OF THE
REMAINING AMORTIZATION TERM IN MONTHS LOANS LOANS CUT-OFF DATE CUT-OFF DATE
- --------------------------------------- ---------- ------------ -------------- -------------
<S> <C> <C> <C> <C>
180 or less ........................... 1 1.2% $ 3,363,808 0.8%
181 -- 240 ............................ 10 11.8 31,871,307 8.0
241 -- 300 ............................ 32 37.6 106,155,675 26.7
301 -- 360 ............................ 42 49.4 255,941,874 64.4
-- ---- ------------ ----
Total: ............................... 85 100.0% $397,332,664 100.0%
== ===== ============ =====
</TABLE>
Weighted Average Remaining Amortization Term to Maturity in Months: 324
ARD MORTGAGE LOANS
ORIGINAL TERM TO ANTICIPATED REPAYMENT DATE IN MONTHS
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE AGGREGATE
NUMBER PERCENT BY PRINCIPAL PRINCIPAL
OF NUMBER OF BALANCE BALANCE
ARD MORTGAGE LOANS MORTGAGE MORTGAGE AS OF THE AS OF THE
ORIGINAL TERM TO MATURITY IN MONTHS LOANS LOANS CUT-OFF DATE CUT-OFF DATE
- ------------------------------------- ---------- ------------ -------------- -------------
<S> <C> <C> <C> <C>
114 or less ......................... 2 6.9% $ 40,440,921 12.4%
115 -- 120 .......................... 24 82.8 261,992,094 80.3
121 -- 126 .......................... 3 10.3 23,787,376 7.3
-- ---- ------------ ----
Total: ............................. 29 100.0% $326,220,391 100.0%
== ===== ============ =====
</TABLE>
Weighted Average Original Term to Anticipated Repayment Date in Months: 114
S-34
<PAGE>
ARD MORTGAGE LOANS
REMAINING TERM TO ANTICIPATED REPAYMENT DATE IN MONTHS
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE AGGREGATE
NUMBER PERCENT BY PRINCIPAL PRINCIPAL
OF NUMBER OF BALANCE BALANCE
ARD MORTGAGE LOANS MORTGAGE MORTGAGE AS OF THE AS OF THE
REMAINING TERM TO ANTICIPATED REPAYMENT DATE IN MONTHS LOANS LOANS CUT-OFF DATE CUT-OFF DATE
- ------------------------------------------------------ ---------- ------------ -------------- -------------
<S> <C> <C> <C> <C>
108 or less ............................................ 2 6.9% $ 40,440,921 12.4%
109 -- 114 ............................................. 8 27.6 158,537,422 48.6
115 -- 120 ............................................. 19 65.5 127,242,049 39.0
-- ---- ------------ ----
Total: ................................................ 29 100.0% $326,220,391 100.0%
== ===== ============ =====
</TABLE>
Weighted Average Remaining Term to Anticipated Repayment Date in Months: 109
ARD MORTGAGE LOANS
REMAINING AMORTIZATION TERM IN MONTHS
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE AGGREGATE
NUMBER PERCENT BY PRINCIPAL PRINCIPAL
OF NUMBER OF BALANCE BALANCE
ARD MORTGAGE LOANS MORTGAGE MORTGAGE AS OF THE AS OF THE
REMAINING AMORTIZATION TERM IN MONTHS LOANS LOANS CUT-OFF DATE CUT-OFF DATE
- --------------------------------------- ---------- ------------ -------------- -------------
<S> <C> <C> <C> <C>
229 -- 234 ............................ 1 3.4% $ 30,514,076 9.4%
259 -- 264 ............................ 1 3.4 3,174,567 1.0
289 -- 294 ............................ 4 13.8 48,543,113 14.9
295 -- 300 ............................ 9 31.0 55,503,976 17.0
313 -- 318 ............................ 1 3.4 2,300,000 0.7
319 -- 324 ............................ 1 3.4 2,491,528 0.8
349 -- 354 ............................ 3 10.3 79,480,233 24.4
355 -- 360 ............................ 9 31.0 104,212,898 31.9
- ---- ------------ ----
Total: ............................... 29 100.0% $326,220,391 100.0%
== ===== ============ =====
</TABLE>
Weighted Average Remaining Amortization Term in Months: 323
FULLY AMORTIZING MORTGAGE LOANS
ORIGINAL TERM TO MATURITY IN MONTHS
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE AGGREGATE
NUMBER PERCENT BY PRINCIPAL PRINCIPAL
OF NUMBER OF BALANCE BALANCE
FULLY AMORTIZING MORTGAGE LOANS MORTGAGE MORTGAGE AS OF THE AS OF THE
ORIGINAL TERM TO MATURITY IN MONTHS LOANS LOANS CUT-OFF DATE CUT-OFF DATE
- ------------------------------------- ---------- ------------ -------------- -------------
<S> <C> <C> <C> <C>
175 -- 180 .......................... 5 33.3% $12,072,874 31.4%
235 -- 240 .......................... 10 66.7 26,404,647 68.6
-- ---- ----------- ----
Total: ............................. 15 100.0% $38,477,521 100.0%
== ===== =========== =====
</TABLE>
Weighted Average Term to Maturity in Months: 221
FULLY AMORTIZING MORTGAGE LOANS
REMAINING TERM OF MATURITY IN MONTHS
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE AGGREGATE
NUMBER PERCENT BY PRINCIPAL PRINCIPAL
OF NUMBER OF BALANCE BALANCE
FULLY AMORTIZING MORTGAGE LOANS MORTGAGE MORTGAGE AS OF THE AS OF THE
REMAINING TERM TO MATURITY IN MONTHS LOANS LOANS CUT-OFF DATE CUT-OFF DATE
- -------------------------------------- ---------- ------------ -------------- -------------
<S> <C> <C> <C> <C>
169 -- 174 ........................... 2 13.3% $ 3,290,480 8.6%
175 -- 180 ........................... 3 20.0 8,782,394 22.8
229 -- 234 ........................... 3 20.0 8,395,691 21.8
235 -- 240 ........................... 7 46.7 18,008,956 46.8
- ---- ----------- ----
Total ............................... 15 100.0% $38,477,521 100.0%
== ===== =========== =====
</TABLE>
Weighted Average Term to Maturity in Months: 216
S-35
<PAGE>
The following two tables set forth the range of Cut-off Date LTV Ratios
and Maturity Date/ Anticipated Repayment Date LTV Ratios of the Mortgage Loans.
A "Cut-off Date LTV Ratio" is a fraction, expressed as a percentage, the
numerator of which is the Cut-off Date principal balance of a Mortgage Loan,
and the denominator of which is the appraised value of the related Mortgaged
Property as determined by an appraisal thereof obtained in connection with the
origination of such Mortgage Loan. A "Maturity Date/Anticipated Repayment Date
LTV Ratio" is a fraction, expressed as a percentage, the numerator of which is
the principal balance of a Mortgage Loan on the related Maturity Date, or, in
the case of an ARD Loan, the related Anticipated Repayment Date assuming all
scheduled payments due prior thereto are made and there are no principal
prepayments, and the denominator of which is the appraised value of the related
Mortgaged Property as determined by an appraisal thereof obtained in connection
with the origination of such Mortgage Loan. Because the value of Mortgaged
Properties at the Maturity Date, or, in the case of an ARD Loan, the
Anticipated Repayment Date, may be different than such appraised value, there
can be no assurance that the loan-to-value ratio for any Mortgage Loan
determined at any time following origination thereof will be lower than the
Cut-off Date LTV Ratio or Maturity Date/Anticipated Repayment Date LTV Ratio,
notwithstanding any positive amortization of such Mortgage Loan. It is possible
that the market value of a Mortgaged Property securing a Mortgage Loan may
decline between the origination thereof and the related Maturity Date, or, in
the case of an ARD Loan, the Anticipated Repayment Date.
An appraisal of the value for each of the Mortgaged Properties was made
between October 7, 1997 and May 21, 1999. It is possible that the market value
of a Mortgaged Property securing a Mortgage Loan has declined since the most
recent appraisal for such Mortgaged Property. All appraisals were obtained in
accordance with the requirements of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989, as amended ("FIRREA").
CUT-OFF DATE LTV RATIOS
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE AGGREGATE
NUMBER PERCENT BY PRINCIPAL PRINCIPAL
OF NUMBER OF BALANCE BALANCE
MORTGAGE MORTGAGE AS OF THE AS OF THE
CUT-OFF DATE LTV RATIOS LOANS LOANS CUT-OFF DATE CUT-OFF DATE
- ----------------------------- ---------- ------------ -------------- -------------
<S> <C> <C> <C> <C>
50.00% or less .............. 4 3.1% $ 13,886,512 1.8%
50.01% -- 55.00% ............ 8 6.2 29,876,212 3.9
55.01% -- 60.00% ............ 10 7.8 37,073,016 4.9
60.01% -- 65.00% ............ 8 6.2 104,124,309 13.7
65.01% -- 70.00% ............ 31 24.0 168,461,667 22.1
70.01% -- 75.00% ............ 43 33.3 234,514,501 30.8
75.01% -- 80.00% ............ 23 17.8 157,631,244 20.7
80.01% -- 85.00%(1) ......... 2 1.6 16,463,116 2.2
-- ---- ------------ ----
Total: ..................... 129 100.0% $762,030,576 100.0%
--- ----- ------------ -----
</TABLE>
Weighted Average Cut-off Date LTV Ratio: 69.50%
(1) Sterling Woods Apartments (Loan Number 16) has an LTV Ratio of 84.21% and
Glacier Hills Apartments (Loan Number 53) has an LTV Ratio of 81.73%.
MATURITY DATE/ANTICIPATED REPAYMENT DATE
LTV RATIOS
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE AGGREGATE
NUMBER PERCENT BY PRINCIPAL PRINCIPAL
OF NUMBER OF BALANCE BALANCE
MATURITY DATE/ MORTGAGE MORTGAGE AS OF THE AS OF THE
ANTICIPATED REPAYMENT DATE LTV RATIOS LOANS LOANS CUT-OFF DATE CUT-OFF DATE
- --------------------------------------- ---------- ------------ -------------- -------------
<S> <C> <C> <C> <C>
50.00% or less ........................ 19 16.7% $103,225,983 14.3%
50.01% -- 55.00% ...................... 11 9.6 82,187,247 11.4
55.01% -- 60.00% ...................... 30 26.3 180,756,932 25.0
60.01% -- 65.00% ...................... 19 16.7 113,809,158 15.7
65.01% -- 70.00% ...................... 29 25.4 196,540,338 27.2
70.01% -- 75.00% ...................... 6 5.3 47,033,398 6.5
-- ---- ------------ ----
Total: ............................... 114 100.0% $723,553,055 100.0%
=== ===== ============ =====
</TABLE>
Weighted Average Maturity Date LTV Ratio: 59.42%
S-36
<PAGE>
The following table sets forth the range of Underwritten Cash Flow Debt
Service Coverage Ratios for the Mortgage Loans. The "Underwritten Cash Flow
Debt Service Coverage Ratio" or "UW DSCR" for any Mortgage Loan for any period
as presented in the table below or Annex A, is the ratio of Underwritten Cash
Flow (or "UW Cash Flow") calculated for the related Mortgaged Property for a
period to the amounts of principal and interest due under such Mortgage Loan
for the same period. "Underwritten Cash Flow" means the Underwritten NOI (as
defined below) for the Mortgaged Property decreased by an amount that MGT has
determined to be an appropriate allowance for average annual tenant
improvements, leasing commissions, and replacement reserves for capital items
based upon its underwriting guidelines.
"Underwritten NOI" or "UW NOI" means the NOI for the Mortgaged Property as
determined by MGT in accordance with its underwriting guidelines for similar
properties. Revenue from a Mortgaged Property ("Effective Gross Income") is
generally calculated as follows: rental revenue is calculated using actual
rental rates, in some cases, adjusted downward to market rates with vacancy
rates equal to the higher of the Mortgaged Property's historical rate, the
market rate or an assumed vacancy rate; other revenue, such as parking fees,
laundry and other income items are included only if supported by a trend and/or
is likely to be recurring. Operating expenses generally reflect the Mortgaged
Property's historical expenses, adjusted to account for inflation, significant
occupancy increases and a market rate management fee. Generally, "Net Operating
Income" ("NOI") for a Mortgaged Property equals the operating revenues
(consisting principally of rental and related revenue) for such Mortgaged
Property minus the operating expenses (such as utilities, repairs and
maintenance, general and administrative, management fees, marketing and
advertising, insurance and real estate tax expenses) for the Mortgaged
Property. NOI generally does not reflect replacement reserves, capital
expenditures, debt service, tenant improvements, leasing commissions,
depreciation, amortization and similar non-operating items.
The amounts representing "Net Operating Income", "Underwritten NOI" and
"Underwritten Cash Flow" are not a substitute for or an improvement upon net
income as determined in accordance with generally accepted accounting
principles as a measure of the results of the Mortgaged Property's operations
or a substitute for cash flows from operating activities determined in
accordance with generally accepted accounting principles as a measure of
liquidity. No representation is made as to the future net cash flow of the
properties, nor is "Net Operating Income", "Underwritten NOI" and "Underwritten
Cash Flow" set forth herein intended to represent such future net cash flow.
The UW Cash Flow and UW NOIs used as a basis for calculating the UW DSCRs
presented in the following table and in Annex A attached hereto, were derived
principally from operating statements obtained from the respective Mortgagors
(the "Operating Statements"). The Operating Statements were not audited and in
most cases were not prepared in accordance with generally accepted accounting
principles. To increase the level of consistency between the Operating
Statements, in some instances, adjustments were made to such Operating
Statements. These adjustments were principally for real estate tax and
insurance expenses (e.g., adjusting for the payment of two years of expense in
one year), and to eliminate obvious items not related to the operation of the
Mortgaged Property. However, such adjustments were subjective in nature and may
not have been made in a uniform manner.
UNDERWRITTEN CASH FLOW DEBT SERVICE COVERAGE RATIOS
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE AGGREGATE
NUMBER PERCENT BY PRINCIPAL PRINCIPAL
OF NUMBER OF BALANCE BALANCE
MORTGAGE MORTGAGE AS OF THE AS OF THE
UNDERWRITTEN CASH FLOW DEBT SERVICE COVERAGE RATIOS LOANS LOANS CUT-OFF DATE CUT-OFF DATE
- ----------------------------------------------------- ---------- ------------ -------------- -------------
<S> <C> <C> <C> <C>
1.101x -- 1.150x(1) ................................. 3 2.3% $ 18,977,073 2.5%
1.151x -- 1.200x .................................... 6 4.7 19,030,652 2.5
1.201x -- 1.250x .................................... 12 9.3 47,672,776 6.3
1.251x -- 1.300x .................................... 25 19.4 152,055,844 20.0
1.301x -- 1.400x .................................... 37 28.7 198,097,229 26.0
1.401x -- 1.500x .................................... 18 14.0 193,549,780 25.4
1.501x -- 1.600x .................................... 10 7.8 48,165,693 6.3
1.601x -- 1.700x .................................... 8 6.2 52,522,581 6.9
1.701x -- 1.800x .................................... 2 1.6 4,761,246 0.6
1.801x -- 1.900x .................................... 2 1.6 3,762,383 0.5
1.901x -- 2.000x .................................... 3 2.3 12,810,775 1.7
2.001x -- 2.100x .................................... 3 2.3 10,624,543 1.4
-- ---- ------------ ----
Total: ............................................. 129 100.0% $762,030,576 100.0%
=== ===== ============ =====
</TABLE>
Weighted Average UW DSCR: 1.40x
(1) Stuart Centre (Loan Number 21) has an UW DSCR of 1.115x, Lakeshore
Estates MHP (Loan Number 38), a fully amortizing loan, has an UW DSCR of
1.148x and Harbourside Production Studio (Loan Number 67) has an UW DSCR
of 1.150x and a 14 year amortization period.
S-37
<PAGE>
GEOGRAPHIC DISTRIBUTION
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE AGGREGATE
NUMBER PERCENT BY PRINCIPAL PRINCIPAL
OF NUMBER OF BALANCE BALANCE
MORTGAGED MORTGAGED AS OF THE AS OF THE
GEOGRAPHIC DISTRIBUTION PROPERTIES PROPERTIES CUT-OFF DATE CUT-OFF DATE
- --------------------------------- ------------ ------------ -------------- -------------
<S> <C> <C> <C> <C>
Illinois ........................ 4 2.9% $ 83,767,470 11.0%
Florida ......................... 23 16.4 80,595,465 10.6
California ...................... 17 12.1 72,596,674 9.5
Wisconsin ....................... 6 4.3 69,131,849 9.1
Ohio ............................ 10 7.1 63,277,913 8.3
Washington ...................... 4 2.9 42,398,723 5.6
Georgia ......................... 4 2.9 31,906,632 4.2
Michigan ........................ 4 2.9 26,798,005 3.5
North Carolina .................. 8 5.7 25,747,947 3.4
Missouri ........................ 4 2.9 24,149,080 3.2
Texas ........................... 9 6.4 24,004,556 3.2
Pennsylvania .................... 3 2.1 23,975,321 3.1
New York ........................ 3 2.1 23,196,589 3.0
Massachusetts ................... 1 0.7 22,961,612 3.0
Nebraska ........................ 3 2.1 22,646,035 3.0
Canada (five provinces) ......... 8 5.7 21,789,768 2.9
Indiana ......................... 5 3.6 17,385,840 2.3
Maryland ........................ 3 2.1 13,019,729 1.7
Alaska .......................... 1 0.7 12,702,093 1.7
Nevada .......................... 2 1.4 9,974,975 1.3
Oklahoma ........................ 3 2.1 7,395,027 1.0
South Carolina .................. 2 1.4 5,835,675 0.8
Virginia ........................ 1 0.7 5,375,651 0.7
Iowa ............................ 1 0.7 4,419,877 0.6
Minnesota ....................... 3 2.1 4,373,762 0.6
District of Columbia ............ 1 0.7 3,889,300 0.5
Oregon .......................... 1 0.7 3,845,671 0.5
Alabama ......................... 2 1.4 3,739,896 0.5
Idaho ........................... 1 0.7 3,375,263 0.4
Colorado ........................ 1 0.7 3,087,960 0.4
Arkansas ........................ 1 0.7 2,453,000 0.3
New Mexico ...................... 1 0.7 2,213,216 0.3
-- ---- ------------ ----
Total: ......................... 140 100.0% $762,030,576 100.0%
=== ===== ============ =====
</TABLE>
S-38
<PAGE>
PROPERTY TYPES
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE AGGREGATE
NUMBER PERCENT BY PRINCIPAL PRINCIPAL
OF NUMBER OF BALANCE BALANCE
MORTGAGED MORTGAGED AS OF THE AS OF THE
PROPERTY TYPES PROPERTIES PROPERTIES CUT-OFF DATE CUT-OFF DATE
- --------------------------- ------------ ------------ -------------- -------------
<S> <C> <C> <C> <C>
Office .................... 26 18.6% $195,783,598 25.7%
Multifamily ............... 21 15.0 156,033,194 20.5
Anchored Retail ........... 24 17.1 120,834,408 15.9
Hotel ..................... 14 10.0 87,680,787 11.5
Industrial ................ 11 7.9 66,469,283 8.7
Unanchored Retail ......... 17 12.1 36,534,343 4.8
Nursing Home .............. 7 5.0 29,453,206 3.9
Mixed Use ................. 9 6.4 24,320,571 3.2
Factory Outlet ............ 3 2.1 23,787,376 3.1
Mobile Home Park .......... 3 2.1 9,340,472 1.2
Congregate Care ........... 3 2.1 7,692,874 1.0
Self Storage .............. 2 1.4 4,100,464 0.5
-- ---- ------------ ----
Total: ................... 140 100.0% $762,030,576 100.0%
=== ===== ============ =====
</TABLE>
YEARS SINCE THE MORTGAGED PROPERTIES WERE BUILT(1)
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE AGGREGATE
NUMBER PERCENT BY PRINCIPAL PRINCIPAL
OF NUMBER OF BALANCE BALANCE
MORTGAGED MORTGAGED AS OF THE AS OF THE
YEARS SINCE THE MORTGAGED PROPERTIES WERE BUILT PROPERTIES PROPERTIES CUT-OFF DATE CUT-OFF DATE
- ------------------------------------------------- ------------ ------------ -------------- -------------
<S> <C> <C> <C> <C>
5 or less ....................................... 31 22.1% $130,828,454 17.2%
6 -- 10 ......................................... 19 13.6 90,095,752 11.8
11 -- 15 ........................................ 24 17.1 122,913,804 16.1
16 -- 20 ........................................ 11 7.9 45,535,865 6.0
21 -- 25 ........................................ 5 3.6 20,852,676 2.7
26 -- 30 ........................................ 17 12.1 100,218,520 13.2
31 or more ...................................... 33 23.6 251,585,505 33.0
-- ---- ------------ ----
Total: ......................................... 140 100.0% $762,030,576 100.0%
=== ===== ============ =====
</TABLE>
Weighted Average Property Age in Years: 27. The 51 Sleeper Property (Loan
Number 5) was built in 1900 and most recently renovated in 1988. Merrill Place
(Loan Number 10) was built in 1913 and most recently renovated in 1983. The
Tower Building (Loan Number 12) was built in 1930 and most recently renovated
in 1988. Villa Florence (Loan Number 19) was built in 1908 and most recently
renovated in 1986. These Mortgaged Properties secure Mortgage Loans
representing in the aggregate 8.5% of the Initial Pool Balance. The weighted
average property age would be 21 years if such Mortgaged Properties were
excluded.
(1) For Properties constructed in stages, the earliest date was used.
S-39
<PAGE>
PHYSICAL OCCUPANCY PERCENTAGES(1)
OFFICE
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE AGGREGATE
NUMBER PERCENT BY PRINCIPAL PRINCIPAL
OF NUMBER OF BALANCE BALANCE
PHYSICAL OCCUPANCY PERCENTAGES MORTGAGED MORTGAGED AS OF THE AS OF THE
OFFICE PROPERTIES PROPERTIES CUT-OFF DATE CUT-OFF DATE
- -------------------------------- ------------ ------------ -------------- -------------
<S> <C> <C> <C> <C>
80.01% -- 85.00% ............... 1 3.8% $ 7,480,617 3.8%
85.01% -- 90.00% ............... 2 7.7 24,586,820 12.6
90.01% -- 95.00% ............... 5 19.2 37,674,270 19.2
95.01% -- 100.00% .............. 18 69.2 126,041,891 64.4
-- ---- ------------ ----
Total: ........................ 26 100.0% $195,783,598 100.0%
== ===== ============ =====
</TABLE>
Weighted Average Occupancy Percentage: 96.21%
(1) See Annex A for dates as of which occupancy percentages were calculated
for each Mortgaged Property.
PHYSICAL OCCUPANCY PERCENTAGES(1)
RETAIL(2)
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE AGGREGATE
NUMBER PERCENT BY PRINCIPAL PRINCIPAL
OF NUMBER OF BALANCE BALANCE
PHYSICAL OCCUPANCY PERCENTAGES MORTGAGED MORTGAGED AS OF THE AS OF THE
RETAIL PROPERTIES PROPERTIES CUT-OFF DATE CUT-OFF DATE
- -------------------------------- ------------ ------------ -------------- -------------
<S> <C> <C> <C> <C>
85.01% -- 90.00% ............... 6 13.6% $ 53,204,418 29.4%
90.01% -- 95.00% ............... 6 13.6 27,802,903 15.3
95.01% -- 100.00% .............. 32 72.7 100,148,806 55.3
-- ---- ------------ ----
Total: ........................ 44 100.0% $181,156,127 100.0%
== ===== ============ =====
</TABLE>
Weighted Average Occupancy Percentage: 93.97%
(1) See Annex A for dates as of which occupancy percentages were calculated
for each Mortgaged Property.
(2) Includes Factory Outlet.
PHYSICAL OCCUPANCY PERCENTAGES(1)
MULTIFAMILY AND MOBILE HOME PARK
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE AGGREGATE
NUMBER PERCENT BY PRINCIPAL PRINCIPAL
OF NUMBER OF BALANCE BALANCE
PHYSICAL OCCUPANCY PERCENTAGES MORTGAGED MORTGAGED AS OF THE AS OF THE
MULTIFAMILY AND MOBILE HOME PARK PROPERTIES PROPERTIES CUT-OFF DATE CUT-OFF DATE
- ---------------------------------- ------------ ------------ -------------- -------------
<S> <C> <C> <C> <C>
85.01% -- 90.00% ................. 1 4.2% $ 3,375,263 2.0%
90.01% -- 95.00% ................. 11 45.8 78,022,395 47.2
95.01% -- 100.00% ................ 12 50.0 83,976,007 50.8
-- ---- ------------ ----
Total: .......................... 24 100.0% $165,373,665 100.0%
== ===== ============ =====
</TABLE>
Weighted Average Occupancy Percentage: 95.29%
(1) See Annex A for dates as of which occupancy percentages were calculated
for each Mortgaged Property.
S-40
<PAGE>
PHYSICAL OCCUPANCY PERCENTAGES(1)
HOTEL
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE AGGREGATE
NUMBER PERCENT BY PRINCIPAL PRINCIPAL
OF NUMBER OF BALANCE BALANCE
PHYSICAL OCCUPANCY PERCENTAGES MORTGAGED MORTGAGED AS OF THE AS OF THE
HOTEL PROPERTIES PROPERTIES CUT-OFF DATE CUT-OFF DATE
- -------------------------------- ------------ ------------ -------------- -------------
<S> <C> <C> <C> <C>
65.01% -- 70.00% ............... 4 28.6% $ 9,725,926 11.1%
70.01% -- 75.00% ............... 4 28.6 49,606,916 56.6
75.01% -- 80.00% ............... 2 14.3 11,323,379 12.9
80.01% -- 85.00% ............... 2 14.3 12,263,319 14.0
85.01% -- 90.00% ............... 2 14.3 4,761,246 5.4
- ---- ----------- ----
Total: ........................ 14 100.0% $87,680,787 100.0%
== ===== =========== =====
</TABLE>
Weighted Average Occupancy Percentage: 74.67%
(1) See Annex A for dates as of which occupancy percentages were calculated
for each Mortgaged Property.
PHYSICAL OCCUPANCY PERCENTAGES(1)
OTHER(2)
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE AGGREGATE
NUMBER PERCENT BY PRINCIPAL PRINCIPAL
OF NUMBER OF BALANCE BALANCE
PHYSICAL OCCUPANCY PERCENTAGES MORTGAGED MORTGAGED AS OF THE AS OF THE
OTHER PROPERTIES PROPERTIES CUT-OFF DATE CUT-OFF DATE
- -------------------------------- ------------ ------------ -------------- -------------
<S> <C> <C> <C> <C>
80.01% -- 85.00% ............... 1 3.1% $ 1,835,725 1.4%
85.01% -- 90.00% ............... 1 3.1 1,368,497 1.0
90.01% -- 95.00% ............... 7 21.9 23,301,383 17.6
95.01% -- 100.00% .............. 23 71.9 105,530,793 79.9
-- ---- ------------ ----
Total: ........................ 32 100.0% $132,036,398 100.0%
== ===== ============ =====
</TABLE>
Weighted Average Occupancy Percentage: 97.68%
(1) See Annex A for dates as of which occupancy percentages were calculated
for each Mortgaged Property.
(2) Includes Congregate Care, Nursing Home, Industrial, Mixed Use, and Self
Storage.
With certain limited exceptions relating to casualty and condemnation
proceeds, or other prepayments beyond the Mortgagor's control, all of the
Mortgage Loans prohibit the prepayment thereof until a date specified in the
related Mortgage Note (such period, the "Lock-out Period" and the date of
expiration thereof, the "Lock-out Date"). Thereafter, each Mortgage Loan
provides that until a date specified in the related Mortgage Note the related
Mortgagor will be required to pay a yield maintenance penalty (a "Prepayment
Premium") upon any voluntary principal prepayment of a Mortgage Loan or provide
for Defeasance, in whole and/or in part. The following table sets forth the
percentage of the declining aggregate principal balance of all the Mortgage
Loans that on August 1 of each of the years indicated will be within their
related Lock-out Period, are subject to Defeasance and/or in which a principal
prepayment must be accompanied by a Prepayment Premium.
S-41
<PAGE>
PREPAYMENT PROTECTION
PERCENTAGE OF MORTGAGE LOANS BY OUTSTANDING
PRINCIPAL BALANCE AS OF THE CUT-OFF DATE THAT HAVE
PREPAYMENT LOCK-OUTS OR PENALTIES (ASSUMING NO PREPAYMENTS)*
<TABLE>
<CAPTION>
AUGUST AUGUST AUGUST AUGUST
CURRENT 2000 2001 2002 2003
----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Lock-Out/Defeasance (1) ......... 100.0% 100.0% 100.0% 100.0% 97.6%
YM (2) .......................... 0.0 0.0 0.0 0.0 2.4
----- ----- ----- ----- ----
Total Lock-Out/Defeasance
and YM ......................... 100.0 100.0 100.0 100.0 100.0
No Prepayment Premium ........... 0.0 0.0 0.0 0.0 0.0
----- ----- ----- ----- -----
Total ........................... 100.0 100.0 100.0 100.0 100.0
Aggregate Mortgage Loan
Balance (3) .................... $ 762.0 $ 753.0 $ 743.0 $ 732.1 $720.4
Percentage of Balance
Outstanding .................... 100.0% 98.8% 97.5% 96.1% 94.5%
<CAPTION>
AUGUST AUGUST AUGUST AUGUST AUGUST AUGUST
2004 2005 2006 2007 2008 2009
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Lock-Out/Defeasance (1) ......... 81.6% 78.7% 78.9% 77.7% 64.4% 60.9%
YM (2) .......................... 18.0 20.0 21.1 22.3 10.7 27.9
---- ---- ---- ---- ---- ----
Total Lock-Out/Defeasance
and YM ......................... 99.6 98.7 100.0 100.0 75.1 88.8
No Prepayment Premium ........... 0.4 1.2 0.0 0.0 24.9 11.2
---- ---- ----- ----- ---- ----
Total ........................... 100.0 100.0 100.0 100.0 100.0 100.0
Aggregate Mortgage Loan
Balance (3) .................... $686.0 $665.5 $625.0 $610.6 $586.7 $ 48.4
Percentage of Balance
Outstanding .................... 90.0% 87.3% 82.0% 80.1% 77.0% 6.3%
</TABLE>
- ----------
(1) Certain Mortgage Loans permit the applicable Mortgagor after a specified
period (in most cases not less than two years from the Delivery Date), to
obtain the release of the related Mortgaged Property from the lien of the
related Mortgage upon substitution of direct non-callable obligations of
the United States providing payments in amounts equal to the scheduled
payments due on such Mortgage Loan to the related Maturity Date or, in
the case of certain of the ARD Loans, the Anticipated Repayment Date. The
Master Servicer shall, on behalf of the related Mortgagor, purchase such
obligations of the United States for deposit into the Trust Fund. Any
such substitution shall be subject to, among other things, certain
conditions set forth in the Pooling and Servicing Agreement and in
certain circumstances the receipt of written confirmation from the Rating
Agencies that such substitution will not result in a downgrade,
qualification (if applicable) or withdrawal of the then current rating of
any Certificate. Such substitution of collateral is referred to herein as
"Defeasance." For purposes of this table, to the extent a Mortgagor may
elect to defease the related Mortgage Loan, such Mortgage Loan will be
reflected in the "Lock-Out/Defeasance" category.
(2) The Mortgage Loan generally requires the payment of a Prepayment Premium
in connection with any principal prepayment, in whole or in part. Any
Prepayment Premium will equal the present value, as of the date of
prepayment, of the remaining Monthly Payments from such date of
prepayment through the related stated maturity (including the Balloon
Payment), determined by discounting such payments at a U.S. Treasury rate
(or with respect to the Canadian Loans, a Canadian Treasury rate)
specified therein, minus the then outstanding principal balance, subject
to a minimum Prepayment Premium equal to 1% of the principal balance of
such Mortgage Loan being prepaid ("Yield Maintenance").
(3) Millions of dollars.
Key: YM = Yield Maintenance.
* See Annex A and the Diskette for additional, detailed information on the
Mortgage Loans' Prepayment Penalties.
S-42
<PAGE>
BORROWER CONCENTRATION AND RELATED BORROWERS
The ten largest Mortgage Loans or groups of Mortgage Loans by Related
Borrowers by Initial Pool Balance are as follows:
THE MILLS LOAN
The Loan. The largest Mortgage Loan (the "Mills Loan," also referred to
herein as the "Mills Corp. Pool 1" loan), which represents approximately 7.6%
of the Initial Pool Balance, was originated by the Seller on January 26, 1999
and has a principal balance as of the Cut-off Date of $58,136,667 (Loan Number
1). The Mills Loan is secured by cross-collateralized and cross-defaulted
mortgages, deeds of trust or deeds to secure debt encumbering four anchored
retail centers in (collectively, the "Mills Properties" and individually, a
"Mills Property"). The Mills Loan was made to four individual special purpose
borrowers (collectively, the "Mills Borrowers"). Each of the Mills Borrowers is
controlled by The Mills Corporation, a New York Stock Exchange listed real
estate investment company (NYSE symbol: MLS). The Mills Corporation owns
interests in, develops, redevelops, leases and manages a portfolio of
super-regional malls, value and entertainment oriented malls, community
shopping centers, and an urban entertainment/retail project. The Mills
Corporation portfolio totals approximately 13.5 million square feet, of which
certain tenants own approximately 1.0 million square feet. At December 31,
1998, the Mills Corporation reported approximately 1,200 employees, total
assets of approximately $970.4 million, consolidated debt of approximately
$782.2 million and a debt-to-total market capitalization of 50.2%.
The Mills Loan has a remaining amortization term of 354 months and matures
on February 1, 2029. The Mills Loan is an ARD Loan with an Anticipated
Repayment Date of February 1, 2009. The Mills Loan may not be prepaid prior to
November 1, 2008. The Mills Loan may be prepaid, in whole or in part, without
payment of a Prepayment Premium at any time beginning thereafter. The Mills
Loan is subject to Defeasance, in whole or in part, at any time after the
second anniversary of the Delivery Date.
The Properties. The Mills Properties consist of four anchored retail
centers:
<TABLE>
<CAPTION>
LOAN PROPERTY SQUARE TYPE OF APPRAISED
NUMBER NAME LOCATION FOOTAGE PROPERTY MAJOR TENANTS OCCUPANCY(1) VALUE
- -------- --------------- ------------------ ------------ ----------------- ------------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
1.1 Western Hills Cincinnati, OH 449,496 Anchored Retail Sears 86.0% $35,000,000
Plaza Kroger
1.2 Gwinnett Duluth, GA 194,719 Anchored Retail A&P 96.0% $22,650,000
Market Fair Marshalls
1.3 Mt. Prospect Mt. Prospect, IL 298,600 Anchored Retail Walgreen Computer 97.5% $25,000,000
Plaza Dominick's Grocery
1.4 West Falls Falls Church, VA 85,584 Anchored Retail Safeway 97.0% $ 8,300,000
Church RiteAid
--------- ---- -----------
Total/Avg. 1,028,399 92.1%(2) $90,950,000
</TABLE>
- ----------
(1) Occupancy percentages as of March 1, 1999.
(2) Weighted Average based on square footage.
Release. A Mills Property may be released from the lien of its Mortgage
provided (a) an amount equal to one hundred twenty-five percent (125%) of the
allocated loan amount of such Mills Property is defeased and (b) after giving
effect to such release, the DSCR for the Mills Properties then securing the
Mills Loan shall be at least 1.40x.
Property Management. The Mills Properties are managed by Management
Associates Limited Partnership, which is affiliated with the Mills Borrowers.
The Mills Loan documents provide that the manager may be terminated upon the
occurrence of an event of default under the Mills Loan or if the DSCR for the
trailing twelve months falls to less than 1.15x.
S-43
<PAGE>
Operating History:
<TABLE>
<CAPTION>
ORIGINATOR'S
1996 ACTUAL 1997 ACTUAL 1998 ACTUAL UNDERWRITTEN
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Effective Gross Income ........... $ 10,339,542 $ 10,715,569 $ 10,404,240 $ 11,107,119
Expenses ......................... 3,336,898 3,257,187 3,340,824 3,447,106
------------ ------------ ------------ ------------
NOI .............................. $ 7,002,644 $ 7,458,382 $ 7,063,416 $ 7,660,013
============ ============ ============ ============
UW Cash Flow ..................... N/A N/A N/A $ 7,144,900
Occupancy(1) ..................... 96.8% 97.0% 95.2% 91.5%
Operating Expense Ratio(2) ....... 32.3% 30.4% 32.0% 31.0%
Debt Service Coverage Ratio based
on NOI .......................... 1.46x 1.55x 1.47x 1.59x
UW DSCR based on UW Cash Flow..... N/A N/A N/A 1.49x
</TABLE>
- ----------
(1) Weighted Average based on square footage.
(2) Expenses as a percentage of Effective Gross Income.
Lockbox and Reserves. All rents payable by tenants in the Mills Properties
are paid directly into a lockbox, which is controlled by the Mills Borrowers
until a Trigger Event occurs. A "Trigger Event" is defined as any of the
following: (i) if the DSCR for the trailing twelve months falls below 1.20x,
(ii) if an event of default occurs under the Mills Loan or (iii) January 1,
2009. After a Trigger Event occurs, the lockbox is controlled by the Master
Servicer. Funds in the lockbox account are allocated monthly to a tax and
insurance account, a debt service payment account and a replacement reserve
account and, from and after a Trigger Event, an operation and maintenance
account and curtailment account into which all excess cash flow is deposited to
prepay the Mills Loan. Prior to a Trigger Event, all excess cash flow is
released to the Mills Borrowers.
Additional terms and escrows for the Mills Loan are set forth on Annexes A
and C.
THE RIDGEWOOD LOAN
The Loan. The second largest Mortgage Loan (the "Ridgewood Loan"), which
represents approximately 4.1% of the Initial Pool Balance, was originated by
the Seller on September 18, 1998 and has a principal balance as of the Cut-off
Date of $30,948,385 (Loan Number 2). The Ridgewood Loan is secured by a first
deed of trust encumbering a multifamily community located in Fitchburg,
Wisconsin, a suburb of Madison (the "Ridgewood Property"). The Ridgewood Loan
was made to Ridgewood Associates II, LLC, a special purpose Wisconsin limited
liability company (the "Ridgewood Borrower"), the members of which are Harry A.
Marek, Jerry J. Marek, and Daniel F. Pieper.
The Ridgewood Loan has a remaining amortization term of 350 months and
matures on October 1, 2008. The Ridgewood Loan may not be prepaid prior to
November 1, 2003. On or after November 1, 2003, the Ridgewood Loan may be
prepaid, in whole but not in part, upon payment of a Prepayment Premium equal
to the greater of (i) 1% of the outstanding principal amount of the Ridgewood
Loan and (ii) an amount based on a Yield Maintenance calculation. The Ridgewood
Loan may be prepaid, in whole but not in part, without payment of a Prepayment
Premium at any time beginning July 1, 2008.
The Property. The Ridgewood Property is a 58 acre tract improved by an 862
unit multifamily garden apartment community known as Ridgewood Country Club
Apartments located at 2001 Traceway Drive in Fitchburg, Dane County, Wisconsin,
a suburb of Madison. The Ridgewood Property is located less than one mile from
Beltline Highway, the major east/west highway in the region, and less than 4
miles from the Madison central business district. While the Ridgewood Property
was constructed from 1968 through 1973, a significant renovation project
commenced in the fall of 1998 with replacement of cabinetry, carpet,
appliances, and new decks as each unit became vacant. At July 16, 1999,
including units pre-leased for August 1, 1999 occupancy, the occupancy rate was
90.8%. Project amenities include two swimming pools, a wading pool, recreation
building, two tennis courts, and golf course views.
S-44
<PAGE>
Property Management. The Ridgewood Property is managed by CMS Ridgewood,
LP, an entity which is not affiliated with the Ridgewood Borrower. This firm
has managed the Ridgewood Property for over twelve years.
Operating History:
<TABLE>
<CAPTION>
ORIGINATOR'S
1996 ACTUAL 1997 ACTUAL 1998 ACTUAL UNDERWRITTEN
-------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
Effective Gross Income ........... $ 5,563,936 $ 5,749,937 $ 5,545,165 $ 5,939,543
Expenses ......................... 2,242,216 2,343,106 2,298,634 2,494,674
----------- ----------- ----------- -----------
NOI .............................. $ 3,321,719 $ 3,406,831 $ 3,246,531 $ 3,444,869
=========== =========== =========== ===========
UW Cash Flow ..................... N/A N/A N/A $ 3,152,456
Occupancy ........................ 91.8% 94.0% 91.6% 95.0%
Operating Expense Ratio(1) ....... 40.3% 40.7% 41.5% 42.0%
Debt Service Coverage Ratio based
on NOI .......................... 1.37x 1.40x 1.34x 1.42x
UW DSCR based on UW Cash Flow..... N/A N/A N/A 1.30x
</TABLE>
- ----------
(1) Expenses as a percentage of Effective Gross Income.
Lockbox and Reserves. The Ridgewood Loan documents provide for reserves
for taxes, insurance, and on-going replacements. The Ridgewood Loan documents
do not require the establishment of a lockbox or cash collateral account.
Additional terms and escrows for the Ridgewood Loan are set forth on
Annexes A and B.
THE MCCOOK METALS LOAN
The Loan. The third largest Mortgage Loan (the "McCook Metals Loan," also
referred to herein as the "McCook Metals Building" loan), which represents
approximately 4.0% of the Initial Pool Balance, was originated by the Seller on
December 30, 1998 and has a principal balance as of the Cut-off Date of
$30,514,076 (Loan Number 3). The McCook Metals Loan is secured by a first deed
of trust encumbering an industrial building located in McCook, Cook County,
Illinois (the "McCook Metals Property"). The McCook Metals Loan was made to
McCook Properties, LLC, a special purpose Illinois limited liability company
(the "McCook Metals Borrower"), the managing member of which is Cloverleaf
Holdings, Inc., which was formed by Michigan Avenue Partners, a Chicago based
privately held buy-out firm, as a part of the overall acquisition of the real
estate and the business operations of Reynolds Metals Company.
The McCook Metals Loan has a remaining amortization term of 233 months and
matures on January 1, 2019. The McCook Metals Loan is an ARD Loan with an
Anticipated Repayment Date of January 1, 2009. The McCook Metals Loan may not
be prepaid prior to October 1, 2008. The McCook Metals Loan may be prepaid, in
whole but not in part, without payment of a Prepayment Premium, at any time
thereafter. The McCook Metals Loan is subject to Defeasance, in whole but not
in part, at any time after January 31, 2002.
The Property. The McCook Metals Property is a 2.1 million square foot
industrial plant with 19 interconnected building sections all under one roof
situated on a 102.5 acre tract located at 4900 1st Avenue, McCook, Cook County,
Illinois. Initial construction occurred in 1942 with various major additions
thereafter. The McCook Metals Property was most recently renovated in 1991.
Located at the intersection of 1st Avenue and 47th Street, the site is
approximately one mile northwest of Interstate 55 which connects with
Interstate 294, approximately 5 miles to the southwest, and the Chicago central
business district, approximately 12 miles to the northeast. The McCook Metals
Property is fully leased to McCook Metals, LLC, an affiliate of the McCook
Metals Borrower. McCook Metals, LLC manufactures and produces an assortment of
aluminum plated products used in the aerospace, computer chip manufacturing,
automotive and defense industries.
S-45
<PAGE>
The McCook Metals Property was formerly occupied by Reynolds Metals
Company for approximately 50 years. McCook Metals, LLC acquired the property
and the business operations of Reynolds Metals Company in June 1998. All of the
improvements and 102.5 acres of the site were subsequently conveyed to the
McCook Metals Borrower. Reynolds Metals Company is rated "Baa1" and "BBB" by
Moody's and Standard & Poor's, respectively.
The McCook Metals Property has known environmental contamination resulting
from its historical use as an aluminum sheet and plate production and
processing facility. In connection with the sale of the McCook Metals Property
to the McCook Metals Borrower, Reynolds Metals Company (NYSE symbol: RLM)
undertook to clean up any contamination existing on the property at the time of
such sale and identified by the McCook Metals Borrower prior to April 1, 2003.
As additional protection, the McCook Metals Borrower obtained two prepaid
environmental insurance policies from Reliance Universal Insurance Company and
Kemper Environmental LTD which provide up to $100 million of combined coverage
for environmental contamination not remediated by Reynolds Metals Company if
such contamination is identified in environmental assessments provided to such
insurers by June 1999.
Property Management. The McCook Metals Property is self-managed.
Operating History. The McCook Metals Property was owner occupied prior to
the June, 1998 acquisition. As a result, historical operating statements are
not available for underwriting purposes. The McCook Metals Loan was
underwritten based on the terms and conditions of the single tenant lease with
McCook Metals, LLC, which reflect current market rents and expense estimates,
based on information provided by the McCook Metals Borrower and the appraisal.
Underwritten NOI and UW Cash Flow total $5,020,364 and $4,578,516 respectively,
resulting in DSCR based on NOI and UW Cash flow of 1.56x and 1.42x,
respectively. The operating expense ratio for the McCook Metals Property is
43.9% as a percentage of Effective Gross Income.
Lockbox and Reserves. The McCook Metals Loan documents provide for
reserves for taxes, insurance and on-going replacements. Additionally, the
McCook Metals Loan documents provide for a tenant improvement/leasing
commission escrow payments in the amount of $62,500 per month up to an
aggregate amount of $2,250,000. The McCook Metals Loan documents provide for
the establishment of a lockbox agreement and cash collateral account on or
before October 1, 2008, which is three months prior to the Anticipated
Repayment Date.
Additional terms and escrows for the McCook Metals Loan are as set forth
in Annexes A and C.
THE WOODFIELD GARDENS LOAN
The Loan. The fourth largest Mortgage Loan (the "Woodfield Gardens Loan"),
which represents 3.2% of the Initial Pool Balance, was originated by the Seller
on June 18, 1999, and has a principal balance as of the Cut-off Date of
$24,186,478 (Loan Number 4). The Woodfield Gardens Loan is secured by a first
deed of trust encumbering a multifamily community located in Rolling Meadows,
Illinois, a suburb of Chicago (the "Woodfield Gardens Property"). The Woodfield
Gardens Loan was made to Woodfield Gardens Associates, a special purpose
Illinois limited partnership (the "Woodfield Gardens Borrower") the principals
of which are Joseph Pagliari and Daniel Sawusch. Mr. Pagliari has over 20 years
of real estate experience in both finance and development sectors having served
as Chief Operating Officer of Realcorp, Inc., Vice President of Syndications
for VMS Realty, Inc. and as a management consultant for Laventhol and Horwath.
Mr. Sawusch was the Chief Financial Officer of Realcorp, Inc., and also worked
for Coopers & Lybrand.
The proceeds from the Woodfield Gardens Loan were used to fund the
discounted payoff of a mortgage loan to the Woodfield Gardens Borrower secured
by the Woodfield Gardens Property on which the Woodfield Gardens Borrower had
defaulted. In connection with the enforcement proceeding, the Woodfield Gardens
Borrower filed for bankruptcy protection in 1997; the bankruptcy proceeding was
dismissed upon refinancing of the original loan from the proceeds of the
Woodfield Gardens Loan.
However, the Woodfield Gardens Borrower is subject to a contingent
obligation which resulted from an earlier refinancing of its debt. In 1989 the
City of Rolling Meadows issued a series of bonds in the
S-46
<PAGE>
amount of $21,855,300 and maturing in February 2004 (the "Bonds") secured by a
letter of credit (the "Letter of Credit") from Banque Paribas, New York Branch
("BPNY") and a promissory note (the "Borrower Note") from the Woodfield Gardens
Borrower. The Woodfield Gardens Borrower signed the Borrower Note pursuant to a
loan agreement with the City of Rolling Meadows which provides that the
Woodfield Gardens Borrower will receive credit against amounts due under the
Borrower Note to the extent of payments made pursuant to the Letter of Credit.
The agreement between BPNY and the Woodfield Gardens Borrower provides that
BPNY will honor the Letter of Credit without further recourse to the Woodfield
Gardens Borrower, except for certain general indemnification rights. Banque
Paribas has a long-term credit rating of A2 and A from Moody's and Standard &
Poor's, respectively. This contingent obligation of the Woodfield Gardens
Borrower is not secured by the Woodfield Gardens Property.
The Woodfield Gardens Loan has a remaining amortization term of 359 months
and matures on July 1, 2029. The Woodfield Gardens Loan is an ARD Loan with an
Anticipated Repayment Date of July 1, 2009. The Woodfield Gardens Loan may not
be prepaid prior to April 1, 2009. The Woodfield Gardens Loan may be prepaid,
in whole but not in part, without payment of a Prepayment Premium, at any time
thereafter. The Woodfield Gardens Loan is subject to Defeasance, in whole but
not in part, at any time after the second anniversary of the Delivery Date.
The Property. The Woodfield Gardens Property is a 19 building, 692 unit
multifamily community situated on a 36.265 acre tract at 4700 Arbor Drive,
Rolling Meadows, Cook County, Illinois. The Woodfield Gardens Property is
located just south of Algonquin Road which provides direct access to
Interstates 90 and 290 about one quarter of a mile from the site. Both
Interstates intersect with expressways to the Chicago central business district
and the Tri-State Tollway. The Woodfield Gardens Property was constructed in
phases in 1967 and 1969, renovated in 1999 and had an occupancy of 99% on April
28, 1999. Project amenities include a clubhouse, large playground, Olympic size
swimming pool, tennis courts, a laundry room in each building, on-site
pre-school and on-site library. The Woodfield Gardens Property offers a mix of
one, two, and three bedroom units with parking.
Property Management. The Woodfield Gardens Property is managed by Citadel
Management Company, which is an affiliate of the Woodfield Gardens Borrower.
Citadel Management Company is a sub-unit of Citadel Realty, Inc., a full
service real estate consulting and management firm providing services for the
Woodfield Gardens Borrower as well as for third parties. At the Woodfield
Gardens Property, management provides numerous community programs including
aerobics, youth field trips, summer day camp, reading programs, and
after-school tutoring and homework assistance programs. The Woodfield Gardens
Property and management have won various industry awards.
Operating History:
<TABLE>
<CAPTION>
TRAILING 12 MOS ORIGINATOR'S
1997 ACTUAL 1998 ACTUAL ENDED 4/99 UNDERWRITTEN
--------------- --------------- ----------------- ---------------
<S> <C> <C> <C> <C>
Effective Gross Income ........... $ 6,197,852 $ 6,408,202 $ 6,535,111 $ 6,549,254
Expenses ......................... 3,768,741 3,735,271 3,718,359 3,748,831
----------- ----------- ----------- -----------
NOI .............................. $ 2,429,111 $ 2,672,931 $ 2,816,752 $ 2,800,424
=========== =========== =========== ===========
UW Cash Flow ..................... N/A N/A N/A $ 2,627,424
Occupancy ........................ 97.0% 96.0% 98.0% 95.0%
Operating Expense Ratio(1) ....... 60.8% 58.3% 56.9% 57.2%
Debt Service Coverage Ratio based
on NOI .......................... 1.21x 1.33x 1.41x 1.40x
UW DSCR based on UW Cash Flow..... N/A N/A N/A 1.31x
</TABLE>
- ----------
(1) Expenses as a percentage of Effective Gross Income.
Lockbox and Reserves. All rents payable by tenants in the Woodfield
Gardens Property are deposited by the property manager directly into a lockbox
account controlled by the Master Servicer.
S-47
<PAGE>
Funds in the lockbox account are allocated monthly to a tax and insurance
account, a debt service payment account and a recurring replacement reserve
account.
Additional terms and escrows for the Woodfield Gardens Loan are as set
forth in Annexes A and B.
THE HORIZON OUTLET LOANS
The Loans. Three of the Mortgage Loans (the "Horizon Outlet Loans"),
representing in the aggregate approximately 3.1% of the Initial Pool Balance,
were originated by the Seller on July 9, 1999, and have an aggregate principal
balance as of the Cut-off Date of $23,787,376 (Loan Numbers 17, 26, & 44). The
Horizon Outlet Loans, if deemed one mortgage loan, would represent the fifth
largest Mortgage Loan. The Horizon Outlet Loans are cross-defaulted and
cross-collateralized loans secured by first deeds of trust encumbering retail
outlet shopping centers located in Gretna, Nebraska; Traverse, Michigan; and
Sealy, Texas (collectively, the "Horizon Outlet Properties"). Each of the
Horizon Outlet Loans was made to Gretna, Sealy, Traverse City Outlet Center,
LLC, a special purpose Delaware limited liability company (the "Horizon
Borrower"), which is affiliated with Horizon Group Properties, Inc. ("Horizon
Group"), a Nasdaq listed real estate investment trust (Nasdaq symbol: HGPI).
Horizon Group is a real estate investment trust based in Chicago, Illinois
which owns and operates 13 factory outlet centers and one power center in 11
states, in addition to managing two factory outlet centers, for a portfolio
total of more than 3.3 million square feet. At March 31, 1999, Horizon Group
reported total assets of approximately $163.5 million. Horizon Group was
established through a spin-off by Prime Retail, Inc. (NYSE Symbol: PRT) in
connection with its merger with Horizon Group, Inc., completed June 15, 1998.
Each of the Horizon Outlet Loans has a remaining amortization term of 299
months and mature on August 1, 2024. The Horizon Outlet Loans are ARD Loans
with Anticipated Repayment Dates of August 1, 2009. The Horizon Outlet Loans
may not be prepaid prior to May 1, 2009. The Horizon Outlet Loans may be
prepaid, in whole but not in part, without payment of a Prepayment Premium, at
any time thereafter. The Horizon Outlets Loans are subject to Defeasance, in
whole or in part, at any time after the second anniversary of the Delivery
Date.
The Properties. The Horizon Outlet Properties consist of three factory
outlet retail centers:
<TABLE>
<CAPTION>
LOAN PROPERTY SQUARE TYPE OF APPRAISED
NUMBER NAME LOCATION FOOTAGE PROPERTY MAJOR TENANTS OCCUPANCY(1) VALUE
- -------- -------------------- -------------- --------- ---------- ----------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
17 Sealy Outlet Sealy, TX 191,587 Factory Spiegel 90.6% $16,800,000
Center Outlet Liz Claiborne
26 Nebraska Gretna, NE 191,500 Factory Levis Outlet 85.2% $14,000,000
Crossing Factory Outlet Linen Barn
Store
44 Horizon Outlet Traverse, MI 153,975 Factory Horizon Cinemas 88.8% $11,700,000
Center -- Traverse Outlet Bass Co. Store
------- ---- -----------
Total/Avg. 537,062 88.2%(2) $42,500,000
</TABLE>
- ----------
(1) Occupancy percentages as of June 1, 1999.
(2) Weighted Average based on square footage.
Operating History:
<TABLE>
<CAPTION>
ORIGINATOR'S
1996 ACTUAL 1997 ACTUAL 1998 ACTUAL UNDERWRITTEN
-------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
Effective Gross Income ........... $ 6,992,400 $ 6,742,405 $ 6,467,527 $ 6,220,652
Expenses ......................... 2,056,862 2,146,163 2,149,038 2,337,827
----------- ----------- ----------- -----------
NOI .............................. $ 4,935,538 $ 4,596,242 $ 4,318,489 $ 3,882,824
=========== =========== =========== ===========
UW Cash Flow ..................... N/A N/A N/A $ 3,474,277
Occupancy ........................ 87.8% 83.1% 81.5% 85.1%
Operating Expense Ratio(1) ....... 29.4% 31.8% 33.2% 37.6%
Debt Service Coverage Ratio based
on NOI .......................... 2.15x 2.00x 1.88x 1.69x
UW DSCR based on UW Cash Flow..... N/A N/A N/A 1.52x
</TABLE>
- ----------
(1) Expenses as percentage of Effective Gross Income.
S-48
<PAGE>
Release and Substitution. A Horizon Outlet Property may be released from
the lien of its mortgage provided (a) an amount equal to one hundred and
twenty-five percent (125%) of the allocated loan amount of such Horizon Outlet
Property is defeased and (b) after giving effect to such release, the DSCR for
the Horizon Properties shall be not less than 1.52x.
A Horizon Outlet Property may be substituted with a new property if, among
other things, a written confirmation is obtained from each Rating Agency that
such release will not cause such Rating Agency to downgrade, qualify or
withdraw any of its then current ratings of any Certificates.
Property Management. Each of the Horizon Outlet Properties is managed by
the Horizon Group, an affiliate of the Horizon Borrower, which owns and
operates 13 factory outlet centers and one power center in 11 states, in
addition to managing two factory outlet centers, for a portfolio total of more
than 3.3 million square feet.
Lockbox and Reserves. All rents payable by tenants in the Horizon Outlet
Properties are paid directly into a lockbox account controlled by the Master
Servicer. Funds in the lockbox account are allocated monthly to a tax and
insurance account, a debt service payment account and a recurring replacement
reserve account. Additionally, at closing $200,000 was deposited into a reserve
account for tenant improvements and lease commissions.
Additional terms and escrows for the Horizon Outlet Loans are set forth on
Annexes A and C.
THE 51 SLEEPER LOAN
The Loan. The fifth largest Mortgage Loan (the "51 Sleeper Loan," also
referred to herein as the "51 Sleeper Street" loan), which represents
approximately 3.0% of the Initial Pool Balance, was originated by the Seller on
April 30, 1999 and has a principal balance as of the Cut-off Date of
$22,961,612 (Loan Number 5). The 51 Sleeper Loan is secured by a first mortgage
encumbering the office building located at 51 Sleeper Street in Boston,
Massachusetts (the "51 Sleeper Property"). The 51 Sleeper Loan was made to 51
Sleeper Street LLC, a special purpose Delaware limited liability company (the
"51 Sleeper Borrower"), the managing member of which is 51 Sleeper Street
Management Corporation, the principal of which is Frank H. McCourt, Jr. Mr.
McCourt has been involved in real estate ownership and development since 1977,
and currently controls over 1,000,000 square feet of real estate in Boston. In
the late 1980's various companies affiliated with Mr. McCourt defaulted on
various mortgage loans. The defaults resulted in the filing of two bankruptcy
actions. Mr. McCourt reached a settlement with all of his creditors in 1992 and
the final payments due under that settlement were made in 1998.
The 51 Sleeper Loan has a remaining amortization term of 357 months and
matures on May 1, 2029. The 51 Sleeper Loan is an ARD Loan with an Anticipated
Repayment Date of May 1, 2004. The 51 Sleeper Loan may not be prepaid prior to
April 1, 2004. The 51 Sleeper Loan may be prepaid, in whole but not in part,
without payment of a Prepayment Premium, at any time thereafter. The 51 Sleeper
Loan is subject to Defeasance, in whole but not in part, at any time after the
second anniversary of the Delivery Date
The Property. The 51 Sleeper Property is an 8-story, 147,142 square foot
office building situated on a 0.49 acre site in the Seaport District of Boston
just east of the central business district and within walking distance to
Boston's financial district. The area has many new improvements including a
newly completed Federal Courthouse and various infrastructure improvements
associated with the Central Artery Tunnel project. The 51 Sleeper Property is
fully leased for five years to the Commonwealth of Massachusetts Department of
Revenue. The 51 Sleeper Loans documents provide for monthly deposits of
$18,333, beginning on June 1, 1999 and through May 1, 2004 into an on-going
releasing cost escrow account. The total amount to be deposited into the escrow
account by May 1, 2004 will be approximately $1.1 million. Built in the 1900's,
the building systems were completely renovated in 1984 and the interior was
fully renovated in 1998.
Property Management. The 51 Sleeper Property has been managed by
CB-Richard Ellis-N.E. Partners, LP since August, 1998.
Operating History. The 51 Sleeper Property was 100% vacant when acquired
by one of the Borrower's affiliates in 1997. The 51 Sleeper Property was 100%
occupied by Blue Cross Blue Shield of Massachusetts from 1984 through 1994 and
100% occupied by Fidelity Investments from 1994 through June, 1997. The 51
Sleeper Property remained vacant until the interior renovations and tenant
S-49
<PAGE>
improvements were completed for the current tenant. As a result, historical
operating statements are not available for underwriting purposes. The 51
Sleeper Loan has been underwritten based on the terms and conditions of the
single tenant lease with the Commonwealth of Massachusetts Department of
Revenue and expense estimates as provided by the 51 Sleeper Borrower and the
appraisal. Underwritten NOI and UW Cash Flow total $2,927,313 and $2,677,908,
respectively, resulting in DSCR based on NOI and UW Cash flow of 1.47x and
1.35x, respectively. The operating expense ratio for the property is 38.7% as a
percentage of Effective Gross Income.
Lockbox and Reserves. All rents payable by the tenant in the 51 Sleeper
Property are paid directly into a lockbox account controlled by the Master
Servicer. Funds in the lockbox account are allocated monthly to a tax and
insurance account, a debt service payment account, a recurring replacement
reserve account and a tenant improvement account.
Additional terms and escrows for the 51 Sleeper Loan are as set forth on
Annexes A and C.
THE MADISON CONCOURSE LOAN
The Loan. The sixth largest Mortgage Loan (the "Madison Concourse Loan",
also referred to herein as the "Madison Concourse Hotel" loan), which
represents approximately 2.9% of the Initial Pool Balance was originated by the
Seller on September 25, 1998, and has a principal balance as of the Cut-off
Date of $21,980,569 (Loan Number 6). The Madison Concourse Loan is secured by a
first deed of trust (the "Madison Concourse Mortgage") encumbering the hotel
located at One West Dayton Street in Madison, Wisconsin (the "Madison Concourse
Property"). The Madison Concourse Loan was made to Concourse Hotel, Inc., a
special purpose Wisconsin corporation (the "Madison Concourse Borrower")
controlled by Rodney P. Burwell who has been involved in the hotel business
since 1985. He purchased the Madison Concourse Hotel in 1992 and holds equity
interests in the Silvertree Hotel and Wildwood Lodge, both of which are located
in Snowmass Village, Colorado.
The Madison Concourse Loan has a remaining amortization term of 290 months
and matures on October 1, 2023. The Madison Concourse Loan is an ARD Loan with
an Anticipated Repayment Date of October 1, 2008. The Madison Concourse Loan
may not be prepaid prior to July 1, 2008. The Madison Concourse Loan may be
prepaid, in whole but not in part, without payment of a Prepayment Premium at
any time thereafter. The Madison Concourse Loan is subject to Defeasance, in
whole but not in part, at any time after November 30, 2001.
The Property. The Madison Concourse Property is a 13-story, 356 room
(269,098 square feet) full service hotel with an attached 3-level, below-grade,
260 space parking garage, located in Madison's central business district. The
Madison Concourse Property is adjacent to the Wisconsin state capitol building
and less than 3/4 of a mile from the University of Wisconsin -- Madison campus
which has an enrollment of over 40,000 students. The Madison Concourse Property
features two restaurants, a cocktail lounge, approximately 25,000 square feet
of meeting/banquet space, an indoor pool, a Jacuzzi, a fitness center and a
business center. The 12-month average daily occupancy rate for the calendar
year 1998 for the Madison Concourse Hotel was 73% with an average daily room
rate of $96.09. The room mix includes 238 rooms with king-size beds and 118
rooms with two double beds.
Property Management. The Madison Concourse Hotel is owner-managed. Mr. Cal
Worrel is the General Manager having served in that capacity since the
acquisition in 1992. Mr. Worrel was formerly with the Hyatt Regency Chicago.
Mr. Steve Zanoni is the Vice President for Sales and Marketing and has been at
the Madison Concourse Hotel since 1988.
S-50
<PAGE>
Operating History:
<TABLE>
<CAPTION>
ORIGINATOR'S
1996 ACTUAL 1997 ACTUAL 1998 ACTUAL UNDERWRITTEN
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Effective Gross Income ........... $ 11,109,286 $ 11,809,020 $ 13,218,006 $ 12,806,692
Expenses ......................... 7,896,158 8,046,283 9,033,964 9,119,784
------------ ------------ ------------ ------------
NOI .............................. $ 3,213,128 $ 3,762,737 $ 4,184,042 $ 3,686,908
============ ============ ============ ============
UW Cash Flow ..................... N/A N/A N/A $ 3,174,640
Occupancy ........................ 67.0% 69.8% 72.7% 70.0%
Operating Expense Ratio (1) ...... 71.1% 68.1% 68.3% 71.2%
Debt Service Coverage Ratio based
on NOI .......................... 1.72x 2.01x 2.24x 1.97x
UW DSCR based on UW Cash Flow..... N/A N/A N/A 1.70x
</TABLE>
- ----------
(1) Expenses as a percentage of Effective Gross Income.
Lockbox and Reserves. The Madison Concourse Loan documents provide for
reserves for taxes, insurance, and on-going replacements. The Madison Concourse
Loan documents provide for the establishment of a lockbox account by July 1,
2008, which is three months prior to the Anticipated Repayment Date.
Additional terms and escrows for the Madison Concourse Loan are as set
forth on Annex A.
THE WESTMONT CANADIAN LOANS
The Loan. The Mortgage Loans (the "Westmont Loans") are secured by six
hotels located in Canada (collectively, the "Westmont Properties"). The
Westmont Loans are payable in Canadian dollars ("C$"). The information set
forth below is in U.S. dollars, unless otherwise indicated, calculated based on
an exchange rate of US$1.00 for C$1.4725. The Westmont Loans which represent
approximately 2.0% of the Initial Pool Balance, were originated by the Seller
on August 11, 1998 and June 30, 1998 and had an aggregate principal balance as
of the Cut-off Date of $15,435,702 (Loan Numbers 41, 80, 100, 101, 103, 116).
The Westmont Loans are secured by cross-collateralized and cross-defaulted
first mortgages encumbering the Westmont Properties.
Additionally, a Mortgage Loan (Loan Number 75, the "Additional Westmont
Loan") which represents approximately 0.4% of the Initial Pool Balance (and,
together with the Westmont Loans, represents approximately 2.4% of the Initial
Pool Balance, and together with the Westmont Loans is referred to as the
"Westmont Canadian Loans") was originated by the Seller on December 16, 1998
and has a principal balance as of the Cut-off Date of $2,990,258. The
Additional Westmont Loan is secured by a first mortgage encumbering one hotel
(the "Additional Westmont Property" and together with the Westmont Properties
is referred to herein collectively as the "Westmont Canadian Properties"). The
Additional Westmont Loan is not cross-collateralized or cross-defaulted with
the Westmont Loan.
The Westmont Canadian Loans were made to seven individual special purpose
entities (collectively, the "Westmont Canadian Borrowers") controlled by the
W-Westmont Corporation ("W-Westmont"). The Westmont Canadian Loans, if deemed
one mortgage loan, would represent the eighth largest Mortgage Loan. On May 21,
1999, W-Westmont acquired the UniHost Corporation, the previous controlling
entity. W-Westmont was formed by the Westmont Partnership which owns or manages
45 hotel properties totaling over 8,500 rooms. The Westmont Partnership is a
partnership between Westmont Hospitality Group, which holds ownership interests
in and/or manages over 300 hotels in Canada, the United States and Europe, and
the Whitehall Street Real Estate Funds, which are managed by Goldman, Sachs
Group Inc.
Each Westmont Loan has a remaining amortization term of either 229 or 227
months and matures on either September 1, 2005 or July 1, 2005. The Additional
Westmont Loan has a remaining amortization term of 281 months and matures on
January 1, 2005. Each Westmont Loan may not be prepaid prior to either December
1, 2003 or October 1, 2003, and the Additional Westmont Loan may not be prepaid
prior to April 1, 2003. On or after the aforementioned dates upon which
prepayment is permitted, the
S-51
<PAGE>
Westmont Canadian Loans may be prepaid, in whole but not in part, upon payment
of a Prepayment Premium equal to the greater of (i) 1% of the outstanding
principal balance of the applicable Mortgage Loan and (ii) an amount equal to a
Yield Maintenance calculation.(1) Each of the Westmont Loans may be prepaid, in
whole but not in part, without payment of a Prepayment Premium any time on or
after either June 1, 2005 or April 1, 2005, and the Additional Westmont Loan
may be prepaid, in whole or in part, without payment of a Prepayment Premium at
any time after June 30, 2004.
- ----------
(1) Yield Maintenance based on a Canadian Treasury rate.
The Properties. The Westmont Properties consist of six hotels and the
Additional Westmont Property is one hotel:
WESTMONT PROPERTIES
<TABLE>
<CAPTION>
LOAN PROPERTY # OF TYPE OF NATIONAL APPRAISED
NUMBER NAME LOCATION ROOMS PROPERTY CHAIN AFFILIATION OCCUPANCY(1) VALUE
- -------- --------------- --------------------- ------- ----------------- ------------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
41 Bloor Street Toronto, Ontario, 210 Limited Service Quality Hotels 73.7% $12,224,109
Quality Canada Hotel
Hotel
80 Comfort Inn- Pointe Claire, 100 Limited Service Comfort Inn 87.2% $ 4,617,997
Pointe Claire Quebec, Canada Hotel
100 Comfort Winnipeg, Manitoba, 81 Limited Service Comfort Inn 86.6% $ 3,259,762
Inn-Winnipeg Canada Hotel
101 Quality Laval, Quebec, 116 Suites Hotel Quality Hotels 70.0% $ 3,803,056
Suites-Laval Canada
103 Comfort Regina, 99 Limited Service Comfort Inn 82.9% $ 3,191,851
Inn-Regina Saskatchewan, Hotel
Canada
116 Comfort Cambridge, Ontario, 84 Limited Service Comfort Inn 67.9% $ 2,886,248
Inn-Cambridge Canada Hotel
--- ---- -----------
Sub Total/Average 690 77.2%(2) $29,983,023
ADDITIONAL WESTMONT PROPERTY
75 St. Johns- St. John's, New 162 Full Service Quality Hotels 68.9% $ 5,161,290
Quality Inn Foundland, Canada Hotel
--- ---- -----------
Total/Average 852 75.6%(2) $35,144,312
</TABLE>
- ----------
(1) Occupancy percentages on December 31, 1998.
(2) Based upon weighted average number of rooms.
Release. Notwithstanding that any Westmont Loan may be prepaid in full
without prepayment of the other Westmont Loans, no Westmont Property may be
released from the lien thereon securing the remaining Westmont Loans until all
the Westmont Loans are paid in full.
Property Management. The Westmont Canadian Properties are managed by
Journey's End Management, Inc., a wholly owned subsidiary of W-Westmont.
S-52
<PAGE>
Operating History of the Westmont Canadian Properties.
<TABLE>
<CAPTION>
ORIGINATOR'S
1996 ACTUAL 1997 ACTUAL 1998 ACTUAL UNDERWRITTEN
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Effective Gross Income ........... $ 10,520,129 $ 11,622,069 $ 12,570,636 $ 11,323,446
Expenses ......................... 7,076,259 7,405,147 7,572,901 7,135,913
------------ ------------ ------------ ------------
NOI .............................. $ 3,443,870 $ 4,216,922 $ 4,997,735 $ 4,187,533
============ ============ ============ ============
UW Cash Flow ..................... N/A N/A N/A $ 3,520,281
Occupancy ........................ 69.3% 72.9% 75.6% 68.1%
Operating Expense Ratio (1) ...... 67.3% 63.3% 60.2% 63.0%
Debt Service Coverage Ratio based
on NOI .......................... 1.86x 2.28x 2.70x 2.27x
UW DSCR based on UW Cash Flow..... N/A N/A N/A 1.91x
</TABLE>
- ----------
(1) Expenses as a percentage of Effective Gross Income.
Lockbox and Reserves The Westmont Canadian Loans documents provide for
reserves for taxes and ongoing replacements. Insurance escrows are not
required, as the Westmont Canadian Properties are covered under W-Westmont's
blanket insurance policy. The Westmont Canadian Borrowers were required at
closing to escrow three months insurance premiums on the related Westmont
Canadian Property.
Additional terms and escrows for the Westmont Canadian Loans are as set
forth on Annex A.
Foreign Currency Exchange Contract. On the Delivery Date, the Depositor
will enter into and assign to the Trustee one ISDA master agreement, a schedule
thereto and a confirmation relating to each Westmont Canadian Loan (each, a
"Foreign Currency Exchange Contract"). In accordance with each Foreign Currency
Exchange Contract, the Trustee will be required to pay MGT, as exchange
contract counterparty, on the second business day prior to each Distribution
Date (each an "F/X Payment Date") all amounts collected on the related Westmont
Canadian Loan in Canadian dollars. On each F/X Payment Date, MGT, as exchange
contract counterparty, will be required to pay the Trustee in exchange for
payments received in Canadian dollars an amount in U.S. dollars at the related
Interest F/X Rate, with respect to amounts allocated to interest on the related
Westmont Canadian Loan, and at the Principal F/X Rate, with respect to amounts
allocated to principal and any other amounts collected on the related Westmont
Canadian Loan.
The "Interest F/X Rate" for each Westmont Canadian Loan calculated as
Canadian dollars per U.S.$1 will be:
<TABLE>
<CAPTION>
INTEREST
LOAN NUMBER PROPERTY NAME F/X RATE
- ------------- ---------------------------- --------------
<S> <C> <C>
41 Bloor Street Quality Hotel 1.374097
75 St. Johns--Quality Inn 1.382982
80 Comfort Inn--Point Claire 1.384774
100 Comfort Inn--Winnipeg 1.384774
101 Quality Suites--Laval 1.384774
103 Comfort Inn--Regina 1.384774
116 Comfort Inn--Cambridge 1.384774
</TABLE>
The "Principal F/X Rate" for each Westmont Canadian Loan calculated as
Canadian dollars per U.S.$1 will be 1.47250.
The Schedule attached as Annex D hereto (the "F/X Schedule") sets forth
the interest and principal payments that would be made under each indicated
Mortgage Loan and the payments which would be made by MGT in exchange therefor
based on the terms of such Mortgage Loans as of the Cut-off Date. Any payments
in excess of or less than such scheduled amounts or pursuant to payment terms
modified after the Cut-off Date would result in payments, if any, under the
related Foreign Currency Exchange
S-53
<PAGE>
Contract different from those set forth in the F/X Schedule. MGT WILL ONLY BE
REQUIRED TO MAKE PAYMENTS ON ANY F/X PAYMENT DATE TO THE EXTENT THE TRUSTEE HAS
MADE THE CORRESPONDING PAYMENTS UNDER THE FOREIGN CURRENCY EXCHANGE CONTRACT IN
CANADIAN DOLLARS. THE TRUSTEE WILL ONLY BE REQUIRED TO MAKE PAYMENTS UNDER THE
FOREIGN CURRENCY EXCHANGE CONTRACT TO THE EXTENT COLLECTED ON THE RELATED
WESTMONT CANADIAN LOAN. Each Foreign Currency Exchange Contract will remain in
effect while the related Mortgage Loan is outstanding.
Neither the Certificates nor any of the Westmont Canadian Loans represent
an obligation of MGT or J.P. Morgan & Co. Incorporated. Certificateholders will
not have any right to proceed directly against MGT in respect of its
obligations under the Foreign Currency Exchange Contract. The Master Servicer
will administrate and perform all of the Trustee's obligations under the
Foreign Currency Exchange Contract on behalf of the Trustee for the benefit of
the Certificateholders.
To the extent that MGT fails to make a payment under any Foreign Currency
Exchange Contract, such failure would not be a default under the related
Westmont Canadian Loan and future distributions related to such Westmont
Canadian Loan would be subject to the then-current Canadian dollar/U.S. dollar
exchange rate.
One other Mortgage Loan (Loan Number 67, together with the Westmont
Canadian Loans, the "Canadian Loans"), which represents 0.4% of the Initial
Pool Balance, is also secured by property in Canada. Collections thereon are
subject to the terms of a foreign currency exchange contract similar to the
Foreign Currency Exchange Contract described above. The related Interest F/X
Rate calculated as Canadian dollars per U.S.$1 is 1.376973 and the related
Principal F/X Rate calculated as Canadian dollars per U.S.$1 is 1.47250. As
described above, the F/X Schedule sets forth the interest and principal
payments that would be made under such Mortgage Loan and the payments which
would be made by MGT in exchange therefor based on the terms of such Mortgage
Loan as of the Cut-off Date.
THE VARTAN LOAN
The Loan. The seventh largest Mortgage Loan (the "Vartan Loan," also
referred to herein as the "Vartan Building" loan), which represents
approximately 2.4% of the Initial Pool Balance, was originated by the Seller on
May 13, 1999 and has a principal balance as of the Cut-off Date of $17,898,122
(Loan Number 7). The Vartan Loan is secured by a first mortgage encumbering the
office building located at 2400 Thea Drive in Harrisburg, Pennsylvania (the
"Vartan Property"). The Vartan Loan was made to Synertech Property, LLC, a
special purpose Delaware limited liability company (the "Vartan Borrower").
The Vartan Loan has a remaining amortization term of 358 months and
matures on June 1, 2029. The Vartan Loan is an ARD Loan with an Anticipated
Repayment Date of June 1, 2009. The Vartan Loan may not be prepaid prior to
March 1, 2009. The Vartan Loan may be prepaid, in whole or in part, without
payment of a Prepayment Premium at any time thereafter. The Vartan Loan is
subject to Defeasance, in whole but not in part, at any time after the second
anniversary of the Delivery Date.
The Property. The Vartan Property is a four story Class A suburban office
building built in 1997, situated on a 10.62 acre site in Harrisburg,
Pennsylvania. The building contains 206,900 square feet and is 100% occupied by
Synertech Health Systems Solutions, Inc. ("Synertech Health Systems"), an
affiliate of the Vartan Borrower. Synertech Health Systems is a technology
service provider to managed health care organizations. Synertech Health Systems
was originally formed in 1987 and previously owned by Highmark, Inc. (formerly
Blue Cross Blue Shield of Pennsylvania) and was purchased by Platinum Equity
Holdings, LLC, a technology acquisitions specialty firm, in May 1998. Synertech
Health Systems is comprised of 1,200 employees, its 1997 revenues exceeded
$78.5 million, and Synertech provides technical services to approximately 2.5
million managed care plan members nationwide.
Property Management. The Vartan Property is self-managed by Synertech
Health Systems.
Operating History. The Vartan Property was acquired from its developer
upon completion of the buildout thereof by a related entity of the single
tenant, Synertech Health Systems in May 1999. As a result, no historical
operating statements were available for underwriting purposes on the Vartan
Property. The Vartan Loan has been underwritten based on the terms and
conditions of the single tenant
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lease with Synertech Health Systems, which reflect current market rents and
expense estimates as provided by the appraisal. Underwritten NOI and UW Cash
Flow total $2,398,420 and $2,152,467 respectively, resulting in Vartan DSCR
based on NOI and UW Cash Flow of 1.51 and 1.36x, respectively. The operating
expense ratio for the Vartan Property is 32.7% as a percentage of effective
gross income.
Lockbox and Reserves. All rents payable by Synertech Health Systems in the
Vartan Property are paid directly into a lockbox which is controlled by the
Master Servicer. Funds in the lockbox account are allocated monthly to a tax
and insurance account, debt service payment account, on-going replacement
reserve account, and tenant improvement/leasing commissions account.
Additional terms and escrows for the Vartan Loan are set forth on Annexes
A and C.
THE HYATT ROCHESTER LOAN
The Loan. The eighth largest Mortgage Loan (the "Hyatt Rochester Loan,"
also referred to herein as the "Hyatt Regency Rochester" loan), which
represents approximately 2.3% of the Initial Pool Balance, was originated by
the Seller on August 12, 1998 and has a principal balance as of the Cut-off
Date of $17,773,861 (Loan Number 8). The Hyatt Rochester Loan is secured by a
first mortgage encumbering a leasehold interest in a 335 room luxury hotel
located in the central business district of Rochester, New York at South Avenue
and East Main Street Drive (the "Hyatt Rochester Property"). The fee owner of
the Hyatt Rochester Property joined in the mortgage encumbering the Hyatt
Rochester Property. Consequently, the mortgage also encumbers the fee interest
in the Hyatt Rochester Property. The Hyatt Rochester Loan was made to Rochester
Downtown Hotel, Inc., a special purpose Kentucky corporation (the "Hyatt
Rochester Borrower"), which is controlled by William P. Butler. Mr. Butler
founded and controls the Corporex family of companies which own a portfolio of
over 40 office, industrial and full-service hotel properties and various
development parcels.
The Hyatt Rochester Loan has a remaining amortization term of 289 months
and matures on September 1, 2023. The Hyatt Rochester Loan is an ARD Loan with
an Anticipated Repayment Date of September 1, 2008. The Hyatt Rochester Loan
may not be prepaid prior to June 1, 2008. The Hyatt Rochester Loan may be
prepaid, in whole or in part, without payment of a Prepayment Premium at any
time thereafter. The Hyatt Rochester Loan is subject to Defeasance, in whole
but not in part, at any time after the second anniversary of the Delivery Date.
The Property. The Hyatt Rochester Property is a 27 story, 335 room full
service hotel built in 1992. The Hotel has access to an attached municipal
garage, in which 800 spaces are reserved exclusively for hotel guests.
Amenities include a 280 seat full service restaurant, a 60 seat lobby bar and
lounge, an indoor swimming pool, a fitness facility, a gift shop, and a
business center. The room mix includes 207 rooms with king-size beds, 111 rooms
with two double beds, 16 parlor suites and one presidential suite. The Hyatt
Rochester Property is the only 4-Diamond hotel in the Rochester Area.
Property Management. The Hyatt Rochester Property is managed by Hyatt
Hotels Corporation. Under the management agreement, the manager receives a base
management fee of 4% of the hotel's gross revenue and an incentive fee equal to
20% of the annual net income before debt service and depreciation. The initial
term of the agreement expires December 31, 2022. The Hyatt Hotel Corporation
has the right to extend the initial term for two successive periods of ten
years each.
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Operating History:
<TABLE>
<CAPTION>
ORIGINATOR'S
1996 ACTUAL 1997 ACTUAL 1998 ACTUAL UNDERWRITTEN
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Effective Gross Income ........... $ 13,362,532 $ 13,991,634 $ 15,054,468 $ 14,523,051
Expenses ......................... 10,183,190 10,470,419 11,989,388 11,611,826
------------ ------------ ------------ ------------
NOI .............................. $ 3,179,357 $ 3,521,215 $ 3,065,080 $ 2,911,225
============ ============ ============ ============
UW Cash Flow ..................... N/A N/A N/A $ 2,257,688
Occupancy ........................ 68.5% 69.6% 69.3% 69.5%
Operating Expense Ratio(1) ....... 76.2% 74.8% 79.6% 80.0%
Debt Service Coverage Ratio based
on NOI .......................... 2.03x 2.24x 1.96x 1.86x
UW DSCR based on UW Cash Flow..... N/A N/A N/A 1.44x
</TABLE>
- ----------
(1) Expenses as a percentage of Effective Gross Income.
Mezzanine Debt. A mezzanine loan with a principal balance of $2,917,557 as
of July 1, 1999, an original principal balance of $3,000,000, a maturity date
of September 1, 2008 and an amortization term of 120 months, was made by MGT to
Rochester Hotel Holding, Inc., the sole shareholder of the Hyatt Rochester
Borrower, and is secured solely by such shareholder's interest in The Hyatt
Rochester Borrower.
Lockbox and Reserves. All revenue received by the hotel manager, Hyatt
Hotels Corporation, is paid directly into a lockbox which is controlled by the
Master Servicer. Funds in the lockbox account are allocated monthly to a tax
and insurance escrow account, a debt service payment account, replacement
reserve account and an extraordinary expense account. Prior to the Anticipated
Repayment Date, provided that no event of default has occurred, all Excess Cash
Flow is released to the Hyatt Rochester Borrower.
Additional terms and escrows for the Hyatt Rochester Loan are set forth on
Annexes A and C.
CERTAIN TERMS AND CONDITIONS OF THE MORTGAGE LOANS
ARD Loans. Twenty-nine of the Mortgage Loans representing approximately
42.8% of the Initial Pool Balance are "ARD Loans." The ARD Loans substantially
fully amortize over their stated terms, which are at least 60 months after
their related Anticipated Repayment Dates (as defined below). If the related
borrower thereunder (the "Mortgagor") elects to prepay an ARD Loan in full on
the related Anticipated Repayment Date, a substantial amount of principal will
be due. If a Mortgagor elects not to prepay an ARD Loan on or before its
Anticipated Repayment Date, all or a substantial portion of Excess Cash Flow
(as defined below) collected after such date shall be applied towards the
prepayment of such ARD Loan. ARD Loans generally accrue interest at a higher
rate following the applicable Anticipated Repayment Date. As used herein, the
term "Mortgage Interest Rate" does not include the portion of the interest rate
attributable to the rate increase. The excess of interest at such higher rate
over interest at the Mortgage Interest Rate (together with interest thereon) is
referred to herein as Excess Interest. The date on which all or substantially
all of any Excess Cash Flow is required to be applied toward prepayment of such
loan and on which any such Mortgage Loan begins accruing Excess Interest is
referred to herein as the "Anticipated Repayment Date."
Once the principal balance of an ARD Loan has been reduced to zero, all
Excess Cash Flow will be applied to the payment of accrued Excess Interest.
With respect to any ARD Loan, payment of Excess Interest will be deferred until
the principal of such ARD Loan has been paid in full.
Commencing on the respective Anticipated Repayment Date each ARD Loan
generally will bear interest at a fixed rate (the "Revised Rate") per annum
equal to the Mortgage Interest Rate plus a specified percentage (no more than
2%, so long as the Mortgage Loan is included in the Trust Fund). Until the
principal balance of each such Mortgage Loan has been reduced to zero, such
Mortgage Loan will only be required to pay interest at the Mortgage Interest
Rate and the interest accrued at the excess of the
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related Revised Rate over the related Mortgage Interest Rate will be deferred
(such accrued and deferred interest and interest thereon, if any, is "Excess
Interest"). Excess Interest so accrued will, except where limited by applicable
law, not be added to the principal balance of the related Mortgage Loan but
will accrue interest at the Revised Rate. Each Mortgagor under the ARD Loans
has agreed to have all revenue from the related Mortgaged Property deposited
after the Anticipated Repayment Date into a Lockbox Account controlled by the
Master Servicer.
From and after the Anticipated Repayment Date, in addition to paying
interest (at the Mortgage Interest Rate) and principal (based on the
amortization schedule), the related Mortgagor generally will be required to
apply all monthly cash flow from the related Mortgaged Property to pay the
following amounts in the following order of priority: (i) required payments for
the tax and insurance fund and ground lease escrows fund, (ii) payment of
monthly debt service, (iii) payments to any other required escrow funds, (iv)
payment of operating expenses pursuant to the terms of an annual budget
approved by the Master Servicer or in an amount which is capped at 1/12 of 105%
of the prior year's operating expenses, (v) principal on the Mortgage Loan
until such principal is paid in full and (vi) to Excess Interest. The cash flow
from the Mortgaged Property securing an ARD Loan after payments of items (i)
through (iv) above is referred to herein as "Excess Cash Flow." As described
below, each ARD Loan generally provides that the related Mortgagor is
prohibited from prepaying the Mortgage Loan until one to six months prior to
the Anticipated Repayment Date but, upon the commencement of such period, may
prepay the loan, in whole or in part, without payment of a Prepayment Premium.
The failure to pay an ARD Loan, including any Excess Interest due, by the
related Anticipated Repayment Date will not result in an event of default or
acceleration of the related Mortgage Loan. The Anticipated Repayment Date for
each ARD Loan is listed in Annex A.
The ARD Loans are as follows:
<TABLE>
<CAPTION>
LOAN
NUMBER LOAN PRINCIPAL BALANCE
- -------- -------------------------------------- ------------------
<S> <C> <C>
1 Mills Corp Pool 1 $58,136,667
3 McCook Metals Building 30,514,076
4 Woodfield Gardens Apartments 24,186,478
5 51 Sleeper Street 22,961,612
6 Madison Concourse Hotel 21,980,569
7 Vartan Building 17,898,122
8 Hyatt Regency Rochester 17,773,861
9 Northfield Office Park I & II 17,479,309
12 The Tower Building 14,230,249
15 University Plaza Building 12,702,093
17 Sealy Outlet Center 11,106,771
26 Nebraska Crossing Factory Store 7,479,459
28 Eastland on the Lake Apts 7,113,317
29 Grand Central Office Building 6,522,437
33 Prestwick Pointe and Junction Pointe 6,126,711
Power House Office Building and
43 Theatre 5,249,733
44 Horizon Outlet Center-Traverse 5,201,147
50 Springfield Inn 4,445,366
51 First Data Building 4,419,877
52 Boca Bend Marina Apartments 4,343,317
56 Village Manor Apartments 3,991,903
59 5 & 7 Burroughs Warehouse 3,942,096
70 34th South Broadway 3,282,728
71 Pulse Athletic Club 3,174,567
76 GTS Durateck Building 2,996,216
85 7127 Riverside Building 2,499,114
86 Goddard Court Townhomes 2,491,528
</TABLE>
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<TABLE>
<CAPTION>
LOAN
NUMBER LOAN PRINCIPAL BALANCE
- -------- -------------------------- ------------------
<S> <C> <C>
89 Staples 2,300,000
109 Wilmington Athletic Club 1,671,070
---------
Total $326,220,391
============
</TABLE>
Balloon Mortgage Loans. Eighty-five of the Mortgage Loans representing
approximately 52.1% of the Initial Pool Balance provide for monthly payments of
principal based on an amortization schedule longer, and in some cases
significantly longer, than the remaining term of such Mortgage Loan (each, a
"Balloon Mortgage Loan"), thereby leaving a substantial outstanding principal
amount due and payable (the "Balloon Payment") on its Maturity Date, unless
prepaid prior thereto. See Annex A for additional information regarding the
Balloon Mortgage Loans.
Crossed Loans. Thirteen Mortgage Loans representing approximately 6.5% of
the Initial Pool Balance are cross-defaulted and cross-collateralized with
another Mortgage Loan (the "Crossed Loans"). A default under one of the Crossed
Loans will result in a default under all of the other Mortgage Loans which are
cross-collateralized and cross-defaulted with such Crossed Loan. See Annex A
for additional information regarding the Crossed Loans.
ESCROWS
One hundred twenty-two Mortgage Loans which represent approximately 97.1%
of the Initial Pool Balance, provide for monthly escrows to cover property
taxes on the Mortgaged Properties and ninety-one of the Mortgage Loans, which
represents approximately 70.7% of the Initial Pool Balance, provide for monthly
escrows to cover insurance premiums on the Mortgaged Properties. With respect
to the Mortgage Loans which do not require monthly escrows to cover insurance
premiums, if the Mortgagor does not maintain the required insurance, then (i)
the Master Servicer may obtain such coverage at the cost of the Mortgagor or
(ii) with respect to most of the Mortgage Loans, the Master Servicer may
require monthly escrows in addition to providing force-placed coverage.
One hundred twenty-three of the Mortgage Loans, which represent
approximately 94.3% of the Initial Pool Balance, also require monthly escrows
to cover ongoing replacements of furniture, fixtures and equipment and/or
capital expenditures.
Forty-three of the Mortgage Loans, which represent approximately 33.5% of
the Initial Pool Balance, also required upfront or monthly escrows for the full
term or a portion of the term of the related Mortgage Loan to cover anticipated
re-leasing costs, including tenant improvements and leasing commissions.
Seventy-three of the Mortgage Loans, which represent approximately 54.7% of the
Initial Pool Balance, have front-end escrows to cover various other
contingencies.
See Annex A for additional information pertaining to Mortgage Loan
escrows.
UNDERWRITING GUIDELINES AND PROCESS
MGT created guidelines establishing certain procedures with respect to
underwriting the Mortgage Loans, as described more fully below. All of the
Mortgage Loans were generally originated in accordance with such guidelines. In
some instances, one or more provisions of the guidelines were waived or
modified where it was determined not to adversely affect the Mortgage Loans in
any material respect.
Property Analysis. MGT performs a site inspection to evaluate the location
and quality of each Mortgaged Property. Such inspection includes an evaluation
of functionality, design, attractiveness, visibility, and accessibility, as
well as convenience to major thoroughfares, transportation centers, employment
sources, retail areas and educational or recreational facilities. MGT assesses
the submarket in which the property is located to evaluate competitive or
comparable properties as well as market trends. In addition, MGT evaluates the
property's age, physical condition, operating history, leases and tenant mix,
and management.
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Cash Flow Analysis. MGT reviews operating statements provided by the
Mortgagor and to make adjustments in order to determine the debt service
coverage ratio. See "Description of the Mortgage Pool -- Certain
Characteristics of the Mortgage Loans" herein.
Appraisal and Loan-to-Value Ratio. For each Mortgaged Property, MGT
obtains a current full narrative appraisal conforming at least to the
requirements of FIRREA. The appraisal must be based on the highest and best use
of the Mortgaged Property and must include an estimate of the current market
value of the property in its current condition. MGT determines the
loan-to-value ratio of the Mortgage Loan at the date of origination based on
the value set forth in the appraisal.
Evaluation of Mortgagor. MGT evaluates the Mortgagor and its principals
with respect to credit history and prior experience as an owner and operator of
commercial real estate properties. The evaluation generally is to include
obtaining and reviewing a credit report or other reliable indication of the
Mortgagor's financial capacity; obtaining and verifying credit references
and/or business and trade references; and obtaining and reviewing
certifications provided by the Mortgagor as to prior real estate experience and
current contingent liabilities. Finally, although the Mortgage Loans generally
are non-recourse in nature, in the case of certain Mortgage Loans, the
Mortgagor and certain principals thereof may be required to assume legal
responsibility for liabilities relating to fraud, misrepresentation,
misappropriation of funds, breach of environmental or hazardous waste
requirements and unauthorized transfer of title to the property. MGT evaluates
the financial capacity of the Mortgagor and such principals to meet any
obligations that may arise with respect to such liabilities.
Environmental Site Assessment. MGT at origination obtains or updates an
environmental site assessment ("ESA") for each Mortgaged Property prepared by a
qualified environmental firm. MGT reviews the ESA to verify the absence of
reported violations of applicable laws and regulations relating to
environmental protection and hazardous waste. In cases in which the ESA
identifies such violations, MGT requires the Mortgagor to carry out
satisfactory remediation activities prior to the origination of the Mortgage
Loan, or to establish an operations and maintenance plan and to place
sufficient funds in escrow at the time of origination of the Mortgage Loan to
complete such remediation within twelve months.
Physical Assessment Report. MGT at origination obtains a physical
assessment report ("PAR") for each Mortgaged Property prepared by a qualified
structural engineering firm. MGT reviews the PAR to verify that the property is
reported to be in satisfactory physical condition, and to determine the
anticipated costs of necessary repair, replacement and major maintenance or
capital expenditure needs over the term of the Mortgage Loan. In cases in which
the PAR identifies material repairs or replacements needed immediately, MGT is
generally obligated to require the Mortgagor to carry out such repairs or
replacements prior to the origination of the Mortgage Loan, or to place
sufficient funds in escrow at the time of origination of the Mortgage Loan to
complete such repairs or replacements within not more than twelve months.
Earthquake Analysis. An architectural and engineering consultant performed
an analysis on 21 Mortgaged Properties located in California, Washington, and
Oregon in order to evaluate the structural and seismic condition of such
properties and to assess, based on a 475-year return period, a 50-year window
and a 10% probability of exceedance, the probable maximum loss ("PML") for such
properties in a hypothetical earthquake scenario. The resulting analysis
indicated that in a hypothetical earthquake scenario, only 3 of the Mortgaged
Properties securing three Mortgage Loans, which represent 3.6% of the Initial
Pool Balance, are likely to suffer a PML in excess of 20% of the amount of the
estimated replacement cost of the improvements. Six of the 21 Mortgaged
Properties described above securing 6 Mortgage Loans which represent 5.4% of
the Initial Pool Balance are covered by earthquake insurance in an amount at
least equal to the outstanding principal balance of the related Mortgage Loan,
including each of the 3 Mortgaged Properties likely to suffer a PML in excess
of 20%.
Title Insurance Policy. The Mortgagor is required to provide, and MGT
reviews, a title insurance policy for each Mortgaged Property. The title
insurance policy must meet the following requirements: (a) the risk in
connection with any one mortgage loan assumed by one title insurance company
may not be more than 40% of the sum of such company's capital, surplus and
reserves (exceptions can be made where re-insurance or co-insurance by another
title insurance company will cover excess risk), (b) the policy
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must be written by a title insurer licensed to do business in the jurisdiction
where the Mortgaged Property is located, (c) the policy must be in an amount
equal to the original principal balance of the mortgage loan, (d) the
protection and benefits must run to the mortgagee and its successors and
assigns, (e) the policy should be written on a standard policy form of the
American Land Title Association or equivalent policy promulgated in the
jurisdiction where the Mortgaged Property is located and (f) the legal
description of the Mortgaged Property in the title policy must conform to that
shown on the survey of the Mortgaged Property, where a survey has been
required.
Property Insurance. The Mortgagor is required to provide, and MGT reviews,
certificates of required insurance with respect to the Mortgaged Property. Such
insurance generally may include: (1) commercial general liability insurance for
bodily injury or death and property damage; (2) an "All Risk of Physical Loss"
policy; (3) if applicable, boiler and machinery coverage; (4) if the Mortgaged
Property is located in a flood hazard area, flood insurance; and (5) such other
coverage as MGT may require based on the specific characteristics of the
Mortgaged Property.
With respect to the six Mortgage Loans not originated by MGT, MGT
purchased the six mortgage loans which generally conformed to the underwriting
standards established by MGT.
ADDITIONAL INFORMATION
A Current Report on Form 8-K (the "Form 8-K") will be available to
purchasers of the Offered Certificates and will be filed, together with the
Pooling and Servicing Agreement, with the Securities and Exchange Commission
within fifteen days after the initial issuance of the Offered Certificates.
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DESCRIPTION OF THE CERTIFICATES
GENERAL
The Mortgage Pass-Through Certificates, Series 1999-C8 (the
"Certificates") will be issued pursuant to the Pooling and Servicing Agreement
and will include the following eight classes of Certificates designated as the
Class A1, Class A2 (together, the "Class A Certificates"), Class B, Class C,
Class D, Class E, Class F and Class X Certificates (the "Offered
Certificates"). In addition to the Offered Certificates, the Certificates will
also include the Class G, Class H, Class J, Class NR, Class R-I, Class R-II and
Class R-III Certificates. Only the Offered Certificates are offered hereby. The
Certificates represent in the aggregate the entire beneficial ownership
interest in a Trust Fund consisting of: (i) a pool of fixed rate Mortgage Loans
and all payments under and proceeds of the Mortgage Loans received after the
Cut-off Date (exclusive of payments of principal and interest due on or before
the Cut-off Date); (ii) any Mortgaged Property acquired on behalf of the Trust
Fund through foreclosure or deed in lieu of foreclosure (upon acquisition, an
"REO Property"); (iii) such funds or assets as from time to time are deposited
in the Collection or Certificate Accounts or any account established in
connection with REO Properties (the "REO Account"); and (iv) the rights of the
mortgagee under all insurance policies with respect to the Mortgage Loans.
The Class A Certificates will evidence approximately an initial 72.25%
undivided interest in the Trust Fund. The Class B Certificates will evidence
approximately an initial 5.00% undivided interest in the Trust Fund. The Class
C Certificates will evidence approximately an initial 4.50% undivided interest
in the Trust Fund. The Class D Certificates will evidence approximately an
initial 2.00% undivided interest in the Trust Fund. The Class E Certificates
will evidence approximately an initial 3.50% undivided interest in the Trust
Fund. The Class F Certificates will evidence approximately an initial 1.50%
undivided interest in the Trust Fund.
The Offered Certificates (the "DTC Registered Certificates") will be
issued, maintained and transferred on the book-entry records of The Depository
Trust Company ("DTC") and its Participants. The DTC Registered Certificates
(other than the Class X Certificates) will be issued in minimum denominations
of $25,000 and integral multiples of $1 in excess thereof. The Class X
Certificates will be issued in denominations of $100,000 Notional Amount and
integral multiples of $1 Notional Amount.
The DTC Registered Certificates will be represented by one or more
certificates registered in the name of the nominee of DTC. The Company has been
informed by DTC that DTC's nominee will be Cede & Co. ("Cede"). No person
acquiring an interest in the DTC Registered Certificates (a "Beneficial Owner")
will be entitled to receive a Definitive Certificate (as defined below)
representing such person's interest, except as set forth below under "--
Book-Entry Registration of the Offered Certificates -- Definitive
Certificates". Unless and until Definitive Certificates are issued for the DTC
Registered Certificates under the limited circumstances described herein, all
references to actions by Certificateholders with respect to the DTC Registered
Certificates shall refer to actions taken by DTC upon instructions from its
Participants, and all references herein to distributions, notices, reports and
statements to Persons acquiring beneficial ownership interests in the
Certificates (the "Certificateholders") with respect to the DTC Registered
Certificates shall refer to distributions, notices, reports and statements to
DTC or Cede, as the registered holder of the DTC Registered Certificates, for
distribution to Beneficial Owners by DTC in accordance with DTC procedures. The
Beneficial Owners may elect to hold their Certificates through DTC, in the
United States, or Cedelbank or Euroclear System ("Euroclear"), in Europe,
through participants of such systems, or indirectly through organizations which
are participants in such systems.
BOOK-ENTRY REGISTRATION OF THE OFFERED CERTIFICATES
Book-Entry Registration. The Offered Certificates will be initially issued
through the book-entry facilities of DTC, or Cedelbank or the Euroclear if they
are participants of such systems, or indirectly through organizations which are
participants in such systems. As to any such class of Offered Certificates, the
record holder of such Certificates will be DTC's nominee. Cedelbank and
Euroclear will hold omnibus
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positions on behalf of their participants through customers' securities
accounts in Cedelbank's and Euroclear's names on the books of their respective
depositories (the "Depositories"), which in turn will hold such positions in
customers' securities accounts in Depositories' names on the books of DTC.
DTC is a limited-purpose trust company organized under the laws of the
State of New York, which holds securities for its participating organizations
("DTC Participants", and together with the Cedelbank and Euroclear
participating organizations, the "Participants") and facilitates the clearance
and settlement of securities transactions between Participants through
electronic book-entry changes in the accounts of Participants. Participants
include securities brokers and dealers, banks, trust companies and clearing
corporations and may include certain other organizations. Other institutions
that are not Participants but clear through or maintain a custodial
relationship with Participants (such institutions, "Indirect Participants")
have indirect access to DTC's clearance system.
Because of time zone differences, the securities account of a Cedelbank or
Euroclear Participant (each as defined below) as a result of a transaction with
a DTC Participant (other than a depositary holding on behalf of Cedelbank or
Euroclear) will be credited during the securities settlement processing day
(which must be a business day for Cedelbank or Euroclear, as the case may be)
immediately following the DTC settlement date. Such credits or any transactions
in such securities settled during such processing will be reported to the
relevant Euroclear Participant or Cedelbank Participant on such business day.
Cash received in Cedelbank or Euroclear as a result of sales of securities by
or through a Cedelbank Participant or Euroclear Participant to a DTC
Participant (other than the depository for Cedelbank or Euroclear) will be
received with value on the DTC settlement date, but will be available in the
relevant Cedelbank or Euroclear cash account only as of the business day
following settlement in DTC.
Transfers between Participants will occur in accordance with DTC rules.
Transfers between Cedelbank Participants or Euroclear Participants will occur
in accordance with their respective rules and operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Cedelbank
Participants or Euroclear Participants, on the other, will be effected in DTC
in accordance with DTC rules on behalf of the relevant European international
clearing system by the relevant Depositories; however, such cross-market
transactions will require delivery of instructions to the relevant European
international clearing system by the counterparty in such system in accordance
with its rules and procedures and within its established deadlines (European
time). The relevant European international clearing system will, if the
transaction meets its settlement requirements, deliver instructions to its
Depository to take action to effect final settlement on its behalf by
delivering or receiving securities in DTC, and making or receiving payment in
accordance with normal procedures for same day funds settlement applicable to
DTC. Cedelbank Participants or Euroclear Participants may not deliver
instructions directly to the Depositories.
Cedelbank, as a professional depository, holds securities for its
participating organizations ("Cedelbank Participants") and facilitates the
clearance and settlement of securities transactions between Cedelbank
Participants through electronic book-entry changes in accounts of Cedelbank
Participants, thereby eliminating the need for physical movement of
certificates. As a professional depository, Cedelbank is subject to regulation
by the Luxembourg Monetary Institute.
Euroclear was created to hold securities for participants of Euroclear
("Euroclear Participants") and to clear and settle transactions between
Euroclear Participants through simultaneous electronic book-entry delivery
against payment, thereby eliminating the need for physical movement of
certificates and any risk from lack of simultaneous transfers of securities and
cash. Euroclear is operated by the Brussels, Belgium office of Morgan Guaranty
Trust Company of New York (the "Euroclear Operator"), under contract with
Euroclear Clearance Systems S.C., a Belgian co-operative corporation (the
"Clearance Cooperative"). All operations are conducted by the Euroclear
Operator, and all Euroclear securities clearance accounts and Euroclear cash
accounts are accounts with the Euroclear Operator, not the Clearance
Cooperative. The Clearance Cooperative establishes policies for Euroclear on
behalf of Euroclear Participants. The Euroclear Operator is the Belgian branch
of a New York banking corporation which is a member bank of the Federal Reserve
System. As such, it is regulated and examined by the
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Board of Governors of the Federal Reserve System and the New York State Banking
Department, as well as the Belgian Banking Commission. Securities clearance
accounts and cash accounts with the Euroclear Operator are governed by the
Terms and Conditions Governing Use of Euroclear and the related Operating
Procedures of the Euroclear System and applicable Belgian law (collectively,
the "Terms and Conditions"). The Terms and Conditions govern transfers of
securities and cash within Euroclear, withdrawals of securities and cash from
Euroclear, and receipts of payments with respect to securities in Euroclear.
All securities in Euroclear are held on a fungible basis without attribution of
specific certificates to specific securities clearance accounts.
Distributions in respect of the DTC Registered Certificates will be
forwarded by the Trustee to DTC, and DTC will be responsible for forwarding
such payments to Participants, each of which will be responsible for disbursing
such payments to the Beneficial Owners it represents or, if applicable, to
Indirect Participants. Accordingly, Beneficial Owners may experience delays in
the receipt of payments in respect of their Certificates. Under DTC's
procedures, DTC will take actions permitted to be taken by holders of any class
of DTC Registered Certificates under the Pooling and Servicing Agreement only
at the direction of one or more Participants to whose account the DTC
Registered Certificates are credited and whose aggregate holdings represent no
less than any minimum amount of Percentage Interests or voting rights required
therefor. DTC may take conflicting actions with respect to any action of
Certificateholders of any class to the extent that Participants authorize such
actions. None of the Depositor, the Trustee or any of their respective
affiliates will have any liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the DTC
Registered Certificates or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
Beneficial Owners will not be recognized by the Trustee as
Certificateholders, as such term is used in the Pooling and Servicing
Agreement; provided, however, that Beneficial Owners will be permitted to
request and receive information furnished to Certificateholders by the Trustee
subject to receipt by the Trustee of a certification in form and substance
acceptable to the Trustee stating that the person requesting such information
is a Beneficial Owner. Otherwise, the Beneficial Owners will be permitted to
receive information furnished to Certificateholders and to exercise the rights
of Certificateholders only indirectly through DTC, its Participants and
Indirect Participants.
Although DTC, Cedelbank and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of the Offered Certificates among
Participants of DTC, Cedelbank and Euroclear, they are under no obligation to
perform or continue to perform such procedures and such procedures may be
discontinued at any time.
Definitive Certificates. Certificates initially issued in book-entry form
will be issued in fully registered, certificated form to Beneficial Owners or
their nominees ("Definitive Certificates"), rather than to DTC or its nominee
only if (i) the Depositor advises the Trustee in writing that DTC is no longer
willing or able to properly discharge its responsibilities as depository with
respect to the Certificates and the Depositor is unable to locate a qualified
successor or (ii) the Depositor, at its option, elects to terminate the
book-entry system through DTC.
Upon the occurrence of an event described in the preceding paragraph, the
Trustee is required to notify, through DTC, Participants who have ownership of
DTC Registered Certificates as indicated on the records of DTC of the
availability of Definitive Certificates for their DTC Registered Certificates.
Upon surrender by DTC of the definitive certificates representing the DTC
Registered Certificates and upon receipt of instructions from DTC for
re-registration, the Trustee will reissue the DTC Registered Certificates as
Definitive Certificates issued in the respective principal amounts owned by
individual Beneficial Owners, and thereafter the Trustee will recognize the
holders of such Definitive Certificates as Certificateholders under the Pooling
and Servicing Agreement.
DISTRIBUTIONS
Method, Timing and Amount. Distributions on the Certificates will be made
on the 15th day of each month or, if such 15th day is not a business day, then
on the next succeeding business day, commencing
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in September 1999 (each, a "Distribution Date"). All distributions (other than
the final distribution on any Certificate) will be made by the Trustee to the
persons in whose names the Certificates are registered at the close of business
on the last business day of the month preceding the month in which the related
Distribution Date occurs (the "Record Date"). Such distributions will be made
by wire transfer in immediately available funds to the account specified by the
Certificateholder at a bank or other entity having appropriate facilities
therefor, if such Certificateholder will have provided the Trustee with wiring
instructions as provided in the Pooling and Servicing Agreement or, if no such
instructions have been provided, by check mailed to the address listed for such
Certificateholder on the Certificate Register. The final distribution on any
Certificate will be made in like manner, but only upon presentment or surrender
of such Certificate at the location specified in the notice to the holder
thereof of such final distribution. All distributions made with respect to a
class of Certificates on each Distribution Date will be allocated pro rata
among the outstanding Certificates of such class based on their respective
Percentage Interests. The "Percentage Interest" evidenced by any Certificate is
equal to the initial denomination thereof as of the Delivery Date, divided by
the initial Class Balance or Notional Amount, as applicable, for such class.
The aggregate distribution to be made on the Certificates on any Distribution
Date shall equal the Available Distribution Amount.
The "Available Distribution Amount" for any Distribution Date is an amount
equal to (a) the sum of (i) the amount on deposit in the Collection Account (as
defined herein) as of the close of business on the related Determination Date,
which amount will include scheduled payments on the Mortgage Loans due on or
prior to the Due Date occurring in the Remittance Period immediately preceding,
and collected as of, such Determination Date (to the extent not distributed on
previous Distribution Dates) and unscheduled payments and other collections on
the Mortgage Loans collected during the related Remittance Period and (ii) the
aggregate amount of any P&I Advances made by a Servicer or the Trustee in
respect of such Distribution Date and payments made by the Master Servicer to
cover related Prepayment Interest Shortfalls (not otherwise included in clause
(i) above) net of (b) the portion of the amount described in clause (a)(i)
hereof that represents (i) Monthly Payments due on a Due Date subsequent to the
end of the related Remittance Period, (ii) any amounts payable or reimbursable
therefrom to any Servicer or the Trustee, (iii) any servicing and trustee
compensation or (iv) for Distribution Dates occurring in February and, if in a
year that is not a leap year, January, the Withheld Amounts (as defined herein)
with respect to the Interest Reserve Loans (as defined herein) to be deposited
into the Interest Reserve Account (as defined herein) and held for future
distribution.
Pass-Through Rate on the Offered Certificates. The rate per annum at which
any class of Certificates accrues interest from time to time is herein referred
to as its "Pass-Through Rate."
The Pass-Through Rate applicable to the Class A1 Certificates will be
fixed and, at all times, will be equal to the Pass-Through Rate specified on
the cover page hereof. The Pass-Through Rate applicable to the Class A2
Certificates will be equal to either a fixed rate or a rate equal to the
weighted average of the Remittance Rates. The Pass-Through Rate applicable to
the Class B, Class C, Class D, Class E and Class F Certificates for any
Distribution Date will be equal to a rate equal to the excess of the weighted
average of the Remittance Rates on the Mortgage Loans with respect to such
Distribution Date over %, %, %, % and % per annum, respectively. The
Pass-Through Rate on the Class X Certificates will be equal to the weighted
average of the Remittance Rates in effect from time to time on the Mortgage
Loans minus the weighted average (by Class Balance) of the Pass-Through Rates
on all other classes of Certificates. The Pass-Through Rate on the Class X
Certificates for the initial Distribution Date will be approximately % per
annum. The Pass-Through Rate on the Class B, Class C, Class D, Class E and
Class F Certificates for the initial Distribution Date will be %, %, %,
% and % per annum, respectively. The "Remittance Rate" for any Mortgage
Loan is equal to the excess of the Mortgage Interest Rate thereon (without
giving effect to any modification or other reduction thereof following the
Cut-off Date) over the sum of the applicable Master Servicing Fee Rate and the
Trustee Fee Rate; provided, however, that with respect to each Interest Reserve
Loan, (i) the Remittance Rate for the one-month period preceding the Due Dates
in (a) January and February in each year that is not a leap year or (b)
February only in each year that is a leap year will be determined net of the
Withheld Amounts and (ii) the Remittance Rate for the one-month period
preceding the Due Date in March will be
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determined after taking into account the addition of the Withheld Amounts with
respect to each such Mortgage Loan, provided, further, however, that with
respect to the Canadian Loans, the Remittance Rate will be equal to the
interest rate derived from interest payments in U.S. dollars specified in the
related Foreign Currency Exchange Contract over the sum of the applicable
Master Servicing Fee Rate and the Trustee Fee Rate. See "-- Interest Reserve
Account" herein. For purposes of calculating the Remittance Rate, the Mortgage
Interest Rate for each of the Mortgage Loans which provide for the computation
of interest other than on the basis of a 360-day year consisting of twelve
30-day months (a "30/360 basis") (that is the basis on which interest on the
Certificates accrues) will be adjusted to reflect that difference.
Interest Distributions on the Certificates. Subject to the distribution of
the Principal Distribution Amount to the Holders of classes of Certificates of
a higher priority, if any, as described under "Priority of Distributions"
below, Holders of each class of Certificates will be entitled to receive on
each Distribution Date, to the extent of the Available Distribution Amount for
such Distribution Date (net of any Net Prepayment Premium) (the "Adjusted
Available Distribution Amount"), distributions allocable to interest in an
amount (the "Interest Distribution Amount") equal to the sum of interest
accrued during the period from and including the first day of the month
preceding the month of the Distribution Date (or from the Cut-off Date in the
case of the initial Distribution Date) to and including the last day of the
month preceding the month of the Distribution Date (calculated on the basis of
a 360-day year consisting of twelve 30-day months) on the Class Balance (or the
Notional Amount, in the case of the Class X Certificates) of such class of
Certificates outstanding immediately prior to such Distribution Date, at the
then-applicable Pass-Through Rate (the "Interest Accrual Amount"), plus any
shortfall as described in the penultimate sentence of this paragraph, less such
class' pro rata share, according to the Interest Accrual Amount, of any
interest shortfall not related to a Mortgagor delinquency or default, such as
Prepayment Interest Shortfalls (as defined herein) and shortfalls associated
with exemptions provided by the Relief Act (as defined in the Prospectus). The
"Notional Amount" of the Class X Certificates will equal the aggregate of the
Class Balances of all the other Certificates. The Notional Amount does not
entitle the Class X to any distributions of principal. If the Adjusted
Available Distribution Amount for any Distribution Date is less than the
Interest Distribution Amount for such Distribution Date, the shortfall will be
part of the Interest Distribution Amount distributable to holders of
Certificates affected by such shortfall on subsequent Distribution Dates. Any
such shortfall will bear interest at the Pass-Through Rate in effect for
subsequent Distribution Dates.
To the extent not necessary to reimburse the Master Servicer for
reductions in its compensation to cover Prepayment Interest Shortfalls, in
addition to the related Interest Distribution Amount, each class of
Certificates (other than the Class X Certificates) will receive on each
Distribution Date the product of (a) any Net Prepayment Premium paid with
respect to the Mortgage Loans, (b) the related Class Prepayment Fraction and
(c) the related Allocation Fraction. On each Distribution Date, the Net
Prepayment Premium not payable to the Master Servicer or the holders of a class
of Certificates, other than the Class X Certificates, will be paid to the
holders of the Class X Certificates. On each Distribution Date, the Net
Prepayment Premium not payable to the Master Servicer or the holders of the
Offered Certificates will be paid the holders of one or more classes of Other
Certificates. The "Class Prepayment Fraction" for any class of Offered
Certificates and any Distribution Date will equal a fraction the numerator of
which is the amount of principal paid to such class in reduction of the Class
Balance thereof on such Distribution Date and the denominator of which is the
amount of principal paid to all classes of Certificates in reduction of their
respective Class Balances on such Distribution Date. The "Allocation Fraction"
for any class of Offered Certificates and any Distribution Date will equal a
fraction (not greater than one and not less than zero) (x) the numerator of
which is the excess of (a) the Pass-Through Rate of such class of Offered
Certificates over (b) the discount rate used to calculate the related Net
Prepayment Premium and (y) the denominator of which is the excess of (a) the
Mortgage Interest Rate on the related Mortgage Loan over (b) the discount rate
referenced in clause (x) above.
To the extent any Mortgage Loan is prepaid in full or in part between a
Determination Date and the related Due Date immediately following such
Determination Date, an interest shortfall may result on the second Distribution
Date following such Determination Date because interest on prepayments in full
or
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in part will only accrue to the date of payment (such shortfall, a "Prepayment
Interest Shortfall"). To the extent any Mortgage Loan is prepaid in full or in
part between the related Due Date and the Determination Date immediately
following such Due Date, the interest on such prepayment will be included in
the Available Distribution Amount for the immediately succeeding Distribution
Date (the "Prepayment Interest Excess"). If a Mortgage Loan is prepaid in full
or in part during any Remittance Period, any related Prepayment Interest
Shortfall shall be offset to the extent of any Prepayment Interest Excess and
any Prepayment Premium collected during such Remittance Period. If the
Prepayment Interest Shortfall for any Remittance Period exceeds any Prepayment
Interest Excess and any Prepayment Premiums collected during such period, such
shortfall shall only be offset by an amount up to the portion of the Master
Servicing Fee payable to the Master Servicer on the related Distribution Date
calculated assuming a Master Servicing Fee Rate of 0.02% per annum. To the
extent that any such shortfall shall have been offset by a portion of the
Master Servicing Fee, the Master Servicer shall be entitled to any excess of
the Prepayment Interest Excess and Prepayment Premiums over the Prepayment
Interest Shortfall for any subsequent period.
The "Net Prepayment Premium" with respect to any Distribution Date will
equal the excess of (a) the total amount of Prepayment Premiums received during
the related Remittance Period over (b) the Prepayment Interest Shortfall for
any Remittance Period over the Prepayment Interest Excess for any Remittance
Period.
The Pass-Through Rate on the Class X Certificates will not be affected by
the deferral of interest or reduction of the Mortgage Interest Rate on any
Mortgage Loan by the Special Servicer or by the occurrence of either such event
in connection with any bankruptcy proceeding involving the related Mortgagor.
The amount of any resulting interest shortfall will be allocated to the
Certificates, in the order described under "Subordination" below.
Interest Reserve Account. The Trustee will establish and maintain an
"Interest Reserve Account" in the name of the Trustee for the benefit of the
holders of the Certificates. With respect to each Distribution Date occurring
in February and each Distribution Date occurring in any January which occurs in
a year that is not a leap year, there shall be deposited, in respect of each
Mortgage Loan which does not provide for the computation of interest on a
30/360 basis (the "Interest Reserve Loans"), an amount equal to one day's
interest at the related Mortgage Interest Rate (net of the Master Servicing Fee
payable therefrom) on the respective Stated Principal Balance as of the
immediately preceding Due Date, to the extent a Monthly Payment or P&I Advance
is made in respect thereof (all amounts so deposited in any consecutive January
(if applicable) and February, "Withheld Amounts"). With respect to each
Distribution Date occurring in March, an amount is required to be withdrawn
from the Interest Reserve Account in respect of each Interest Reserve Loan
equal to the related Withheld Amounts from the preceding January (if
applicable) and February, if any, and deposited into the Certificate Account.
Principal Distributions on the Offered Certificates. Holders of a class of
Certificates will be entitled to receive on each Distribution Date in reduction
of the related Class Balance in the order described herein until the related
Class Balance is reduced to zero, to the extent of the balance of the Adjusted
Available Distribution Amount remaining after the payment of the Interest
Distribution Amount for such Distribution Date for such class of Certificates
and each other class of Certificates with a higher priority for interest
payments (as described under "Priority of Distributions" below), distributions
in respect of principal in an amount (the "Principal Distribution Amount")
equal to the aggregate of (i) all scheduled payments of principal (other than
Balloon Payments) due on the Mortgage Loans on the related Due Date whether or
not received and all scheduled Balloon Payments received on or before the
related Determination Date, (ii) if the scheduled Balloon Payment is not
received, with respect to any Balloon Mortgage Loans on and after the date on
which the related Mortgage Loan becomes due (the "Maturity Date") thereof, the
principal payment that would need to be received in the related month in order
to fully amortize such Balloon Mortgage Loan with level monthly payments by the
end of the term used to derive scheduled payments of principal due prior to the
related Maturity Date, (iii) to the extent not previously advanced any
unscheduled principal recoveries received during the related Remittance Period
in respect of the Mortgage Loans, whether in the form of liquidation proceeds,
insurance proceeds, condemnation proceeds or amounts received as a result of
the purchase of any Mortgage Loan out of the
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Trust Fund and (iv) any other portion of the Adjusted Available Distribution
Amount remaining undistributed after payment of any interest payable on the
Certificates for the related or any prior Distribution Date, including any
principal prepayments received during the related Remittance Period and
Prepayment Interest Excess not offset by any Prepayment Interest Shortfall
occurring during the related Remittance Period or otherwise required to
reimburse the Master Servicer, as described herein, and interest distributions
on the Mortgage Loans, in excess of interest distributions on the Certificates,
resulting from the allocation of certain amounts described in this clause (iv)
to principal distributions on the Certificates. The "Class Balance" for any
class of Certificates on any Distribution Date will equal the initial principal
balance thereof reduced by distributions in reduction thereof and Realized
Losses allocated thereto, as described under "-- Subordination" below. The
Class X Certificates do not have a Class Balance and are therefore not entitled
to any principal distributions.
PRIORITY OF DISTRIBUTIONS
The Adjusted Available Distribution Amount for each Distribution Date will
be applied in the following order of priority:
(a) to distributions of the Interest Distribution Amounts for such
Distribution Date on the Class A1, Class A2 and Class X Certificates, pro
rata, based on their respective Interest Distribution Amounts;
(b) to distributions of the Principal Distribution Amount for such
Distribution Date to Class A1 Certificates until the Class Balance thereof
is reduced to zero;
(c) to distributions of the Principal Distribution Amount (or the portion
thereof remaining after the distribution thereof to the Class A1
Certificates in reduction of the Class Balance thereof to zero) for such
Distribution Date on the Class A2 Certificates, until the Class Balance
thereof is reduced to zero;
(d) to distributions of the Interest Distribution Amount for such
Distribution Date on the Class B Certificates;
(e) to distribution of the Principal Distribution Amount (or the portion
thereof remaining after the distribution thereof to the Class A2
Certificates in reduction of the Class Balance thereof to zero) for such
Distribution Date to the Class B Certificates, until the Class Balance
thereof is reduced to zero;
(f) to distributions of the Interest Distribution Amount for such
Distribution Date on the Class C Certificates;
(g) to distributions of the Principal Distribution Amount (or the portion
thereof remaining after the distribution thereof to the Class B
Certificates in reduction of the Class Balance thereof to zero) for such
Distribution Date to the Class C Certificates until the Class Balance
thereof is reduced to zero;
(h) to the distributions of the Interest Distribution Amount for such
Distribution Date on the Class D Certificates;
(i) to distributions of the Principal Distribution Amount (or the portion
thereof remaining after the distribution thereof to the Class C
Certificates in reduction of the Class Balance thereof to zero) for such
Distribution Date on the Class D Certificates, until the Class Balance
thereof is reduced to zero;
(j) to distributions of the Interest Distribution Amount for such
Distribution Date on the Class E Certificates;
(k) to distributions of the Principal Distribution Amount (or the portion
thereof remaining after the distribution thereof to the Class D
Certificates in reduction of the Class Balance thereof to zero) for such
Distribution Date on the Class E Certificates, until the Class Balance
thereof is reduced to zero;
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(l) to distributions of the Interest Distribution Amount for such
Distribution Date on the Class F Certificates;
(m) to distributions of the Principal Distribution Amount (or the portion
thereof remaining after the distribution thereof to the Class E
Certificates in reduction of the Class Balance thereof to zero) for such
Distribution Date on the Class F Certificates, until the Class Balance
thereof is reduced to zero;
(n) to distributions of the Interest Distribution Amount for such
Distribution Date on the Class G Certificates;
(o) to distributions of the Principal Distribution Amount (or the portion
thereof remaining after the distribution thereof to the Class F
Certificates in reduction of the Class Balance thereof to zero) for such
Distribution Date on the Class G Certificates, until the Class Balance
thereof is reduced to zero;
(p) to distributions of the Interest Distribution Amount for such
Distribution Date on the Class H Certificates;
(q) to distributions of the Principal Distribution Amount (or the portion
thereof remaining after the distribution thereof to the Class G
Certificates in reduction of the Class Balance thereof to zero) for such
Distribution Date on the Class H Certificates, until the Class Balance
thereof is reduced to zero;
(r) to distributions of the Interest Distribution Amount for such
Distribution Date on the Class J Certificates;
(s) to distributions of the Principal Distribution Amount (or the portion
thereof remaining after the distribution thereof to the Class H
Certificates in reduction of the Class Balance thereof to zero) for such
Distribution Date on the Class J Certificates, until the Class Balance
thereof is reduced to zero;
(t) to distributions of the Interest Distribution Amount for such
Distribution Date on the Class NR Certificates; and
(u) to distributions of the Principal Distribution Amount (or the portion
thereof remaining after the distribution thereof to the Class J
Certificates in reduction of the Class Balance thereof to zero) for such
Distribution Date on the Class NR Certificates, until the Class Balance
thereof is reduced to zero.
To the extent only the Class A1 and Class A2 Certificates are outstanding
on any Distribution Date, the Adjusted Available Distribution Amount remaining
after application pursuant to clause (a) above shall be applied to distribution
of the Principal Distribution Amount for such Distribution Date to the Class A1
and Class A2 Certificates pro rata based on their respective Class Balances.
OTHER CERTIFICATES
The Class G, Class H, Class J, Class NR, Class R-I, Class R-II and Class
R-III Certificates (the "Other Certificates") are not offered hereby. The
Pass-Through Rates on the Class G, Class H, Class J and Class NR Certificates
for any Distribution Date will equal %, %, % and %, respectively, per
annum. The Class Balances for the Class G, Class H, Class J and Class NR
Certificates will equal $ , $ , $ , and $ , respectively.
The Class R-I, Class R-II and Class R-III Certificates will not have a
Pass-Through Rate or a Class Balance and are not entitled to distribution of
principal or interest.
An affiliate of the Depositor intends to purchase and make an investment
in the Other Certificates. The Other Certificates may be sold in whole or in
part by such affiliate at any time and from time to time.
SUBORDINATION
Neither the Offered Certificates nor the Mortgage Loans are insured or
guaranteed against losses suffered on the Mortgage Loans by any government
agency or instrumentality or by the Depositor, the Seller, the Trustee, the
Master Servicer, the Special Servicer, the Underwriters, or any affiliate
thereof.
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In addition to the payment priorities described under "-- Priority of
Distributions" above, certain Certificates will be subordinated to other
Certificates with respect to the allocation of Realized Losses. Realized Losses
on the Mortgage Loans will be allocated, first, to the Class NR, Class J, Class
H and Class G Certificates, in that order, second, to the Class F Certificates,
third, to the Class E Certificates, fourth, to the Class D Certificates, fifth,
to the Class C Certificates, sixth, to the Class B and thereafter, to the Class
A1 and Class A2 Certificates, on a pro rata basis, based on Class Balance, in
each case until the related Class Balance is reduced to zero. The Class Balance
of a class of Certificates will be reduced by the principal portion of any
Realized Losses allocated to such class.
In addition to Realized Losses, shortfalls will also occur as a result of
a Servicer's and the Trustee's right to receive payments of interest with
respect to unreimbursed advances, the related Special Servicer's right to
compensation with respect to Mortgage Loans which are or have been Specially
Serviced Mortgage Loans and as a result of other Trust Fund expenses. Such
shortfalls will be allocated as described above to the classes of Certificates
with the lowest payment priority for purposes of the application of Available
Distribution Amount in the order described herein.
A "Realized Loss", in the case of any Mortgage Loan described in clause
(a) or clause (b) of the succeeding sentence, is equal to the sum of (a) the
Stated Principal Balance of any Loss Mortgage Loan, (b) interest thereon not
previously distributed or advanced to Certificateholders through the last day
of the month in which such Mortgage Loan became a Loss Mortgage Loan, (c) any
advances made by a Servicer or the Trustee which remain unreimbursed and (d)
any interest accrued on such advances (see "-- Advances" below) as of such
time, reduced by any amounts recovered thereon as of such time and, in the case
of any Mortgage Loan described in clause (c) of the succeeding sentence, is the
amount determined to have been permanently forgiven as described in such clause
(c). A "Loss Mortgage Loan" is any Mortgage Loan (a) which is finally
liquidated, (b) with respect to which a determination has been made that an
advance which has been made or would otherwise be required to be made, is not,
or, if made, would not be, recoverable out of proceeds on such Mortgage Loan or
(c) with respect to which a portion of the principal balance thereof has been
permanently forgiven, whether pursuant to a modification or a valuation
resulting from a proceeding initiated under the Bankruptcy Code. The "Stated
Principal Balance" of any Mortgage Loan as of any date of determination is the
principal balance as of the Cut-off Date minus the sum of (i) the principal
portion of each Monthly Payment due on such Mortgage Loan after the Cut-off
Date, to the extent received from the Mortgagor or advanced and distributed to
Certificateholders, (ii) any unscheduled amounts of principal received with
respect to such Mortgage Loans, to the extent distributed to Certificateholders
and (iii) any Realized Loss previously allocated with respect to such Mortgage
Loan.
COLLATERAL VALUE ADJUSTMENT
Within 30 days after the earliest to occur of (i) 90 days after the date
on which an uncured delinquency occurs in respect of a Mortgage Loan, (ii) the
date on which a receiver is appointed in respect of a Mortgaged Property, (iii)
the date on which a Mortgaged Property becomes an REO Property (iv) the date on
which a borrower declares bankruptcy or (v) the date on which a change in the
payment rate, Mortgage Interest Rate, principal balance, amortization terms or
Maturity Date of any Specially Serviced Mortgage Loan becomes effective (the
earliest of such dates, a "Required Appraisal Date"), the Special Servicer will
use reasonable efforts to obtain an appraisal from an independent MAI appraiser
at the expense of the Trust Fund (except if an appraisal has been conducted
within the twelve-month period preceding such event). As a result of such
appraisal, a Collateral Value Adjustment may result, which Collateral Value
Adjustment will be allocated, for purposes of determining distributions of
interest to the Certificates, in the manner and priority described below.
Notwithstanding the foregoing, a Collateral Value Adjustment will be zero with
respect to such a Mortgage Loan if (i) the event giving rise to such Collateral
Value Adjustment is the extension of the maturity of such Mortgage Loan, (ii)
the payments on such Mortgage Loan were not delinquent during the twelve-month
period immediately preceding such extension and (iii) the payments on such
Mortgage Loan are then current, provided, that if at any later date there
occurs a delinquency in payment with respect to such Mortgage Loan, the
Collateral Value Adjustment will be recalculated and applied as described
above. In addition, in any case, upon the occurrence of any event giving rise
to a subsequent Collateral Value Adjustment (including the
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delinquency referred to in the immediately preceding sentence) more than twelve
months after an appraisal was obtained with respect to a Collateral Value
Adjustment, the Special Servicer will order a new appraisal as described above,
within 30 days of the occurrence of any such event giving rise to a subsequent
Collateral Value Adjustment and will adjust the amount of the Collateral Value
Adjustment in accordance therewith. If the Master Servicer is required to make
a material Advance that it did not anticipate at the time it last calculated
the Collateral Value Adjustment, it will recalculate the Collateral Value
Adjustment after it makes such an Advance.
The "Collateral Value Adjustment" with respect to any Mortgage Loan will
be an amount equal to the excess of (a) the principal balance of such Mortgage
Loan over (b) the excess of (i) 90% of the current appraised value of the
related Mortgaged Property as determined by an independent MAI appraisal of
such Mortgaged Property over (ii) the sum of (A) to the extent not previously
advanced by a Servicer, all unpaid interest on such Mortgage Loan at a per
annum rate equal to the Mortgage Interest Rate, (B) all unreimbursed Advances
and interest thereon, (C) any unpaid Servicer and Trustee fees, (D) all
currently due and delinquent real estate taxes and assessments, insurance
premiums and, if applicable, ground rents in respect of such Mortgaged Property
(net of any amount escrowed or otherwise available for payment of the amount
due on such Mortgage Loan) and (E) the Master Servicer's good faith estimate of
the items in clauses (B), (C) and (D) that will be incurred during the next
twelve months. The excess of the principal balance of any Mortgage Loan over
the related Collateral Value Adjustment is referred to herein as the "Adjusted
Collateral Value". A Collateral Value Adjustment shall result in a reduction of
the Interest Distribution Amount of one or more classes of Certificates and
shall not be a permanent reduction of the Class Balance (or Notional Amount) of
any class of Certificates prior to the occurrence of a Realized Loss.
As a result of calculating Collateral Value Adjustment with respect to a
Mortgage Loan, the P&I Advance for such Mortgage Loan for the Distribution Date
will be reduced, which will have the effect of reducing the amount of interest
available for distribution to the Certificates (other than the Class A and
Class X Certificates) in reverse alphabetical order of the Classes. See "--
Advances" below. In addition, any Collateral Value Adjustment will be allocated
to the Certificates (other than the Class A and Class X Certificates) in
reverse alphabetical order of the Classes for purposes of determining Voting
Rights and the Monitoring Certificateholders. See "Description of the Pooling
and Servicing Agreement -- Voting Rights" below and "Master Servicer and
Special Servicer -- Responsibilities of the Special Servicer" below. The
Special Servicer is required, within 30 days of each anniversary of the
Required Appraisal Date, to order an update of the prior appraisal (the cost of
which will be advanced by the Special Servicer and reimbursed thereto from the
Trust Fund). The Special Servicer will determine and report to the Trustee the
updated appraisal. A lower appraisal value will increase the Collateral Value
Adjustment. Such increase will further reduce any P&I Advances for the related
Mortgage Loan. A higher appraised value will reverse the Collateral Value
Adjustment by the amount of the reported increase.
ADVANCES
On the business day immediately preceding each Distribution Date, the
Master Servicer (and under certain circumstances, the Special Servicer) will be
obligated to make advances out of its own funds or funds held in the Collection
Account (as defined herein) that are not required to be part of the Available
Distribution Amount for such Distribution Date (each, a "P&I Advance"), in an
amount equal to the excess of all Monthly Payments (net of the Servicing Fee)
due over the amount actually received, subject to the limitations described
herein.
Notwithstanding the foregoing, if a Collateral Value Adjustment has been
made with respect to any Mortgage Loan, then, with respect to the Distribution
Date immediately following the date of such determination and with respect to
each subsequent Distribution Date, to the extent such Collateral Value
Adjustment has not been reversed, in the event of subsequent delinquencies
thereon, the interest portion of the P&I Advance in respect of such Mortgage
Loan will be reduced (no reduction to be made in the principal portion,
however) to equal the product of (i) the amount of the interest portion of such
P&I Advance that would otherwise be required to be made for such Distribution
Date without regard to this sentence, multiplied by (ii) a fraction (expressed
as a percentage), the numerator of which is equal to the
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Stated Principal Balance of such Mortgage Loan, net of such Collateral Value
Adjustment, and the denominator of which is equal to the Stated Principal
Balance of such Mortgage Loan. See "-- Subordination" above.
To the extent that the Master Servicer fails to make a P&I Advance
required of it prior to such Distribution Date, the Trustee shall make such
required P&I Advance on such Distribution Date, as provided in the Pooling and
Servicing Agreement. In addition, the Master Servicer will be required to
advance certain property related expenses. The Servicers generally may not
advance any amounts, other than P&I Advances, unless such advance (a "Property
Protection Advance") is contemplated in the related Asset Strategy Report (as
defined herein) for the related Mortgage Loan or such advance is for one of
several purposes specified in the Pooling and Servicing Agreement as "Property
Protection Expenses." All such advances will be reimbursable to a Servicer and
the Trustee from late payments, insurance proceeds, liquidation proceeds,
condemnation proceeds or amounts paid in connection with the purchase of such
Mortgage Loan to the extent such amounts are not required to be otherwise
applied pursuant to the terms of the related Mortgage Loan or, as to any such
advance that is deemed not otherwise recoverable, from any amounts required to
be deposited in the Collection Account. Notwithstanding the foregoing, a
Servicer and the Trustee will be obligated to make any such advance only to the
extent that it determines in its reasonable good faith judgment that such
advance, if made, would be recoverable out of late payments, insurance
proceeds, liquidations, condemnation proceeds or certain other collections on
the related Mortgage Loan. None of the Servicers and the Trustee will be
required to advance the full amount of any Balloon Payment not made by the
related Mortgagor. To the extent a Servicer and the Trustee are required to
make a P&I Advance on and after the Due Date for such Balloon Payment, such P&I
Advance shall not exceed an amount equal to a monthly payment calculated by the
Special Servicer necessary to fully amortize the related Mortgage Loan over the
period used for purposes of calculating the scheduled monthly payments thereon
prior to the related Maturity Date. Any failure by a Servicer to make a P&I
Advance or Property Protection Advance as required under the Pooling and
Servicing Agreement will constitute an event of default thereunder, in which
case the Trustee will be obligated to make any required advance, in accordance
with the terms of the Pooling and Servicing Agreement. The Trustee will be
entitled to a reimbursement for each P&I Advance or Property Protection Advance
(together with interest thereon) made by it in the same manner and to the same
extent, but prior to, the Servicers.
Each Servicer and the Trustee shall be entitled to interest on the
aggregate amount of all advances made by such Servicer or the Trustee at a per
annum rate equal to the Prime Rate reported in The Wall Street Journal. See
"Risk Factors -- Effect of Mortgagor Delinquencies and Defaults" herein.
CERTAIN PREPAYMENT, MATURITY AND YIELD CONSIDERATIONS
GENERAL
The yield to maturity on the Offered Certificates will be affected by the
rate of principal payments on the Mortgage Loans including, for this purpose,
prepayments, which may include amounts received by virtue of the curtailments,
voluntary repayment in full, repurchases by the Seller, condemnation or
casualty with respect to the Mortgaged Property or foreclosure pursuant to a
default on a Mortgage Loan ("Prepayment"). The rate of principal payments on
the Offered Certificates will correspond to the rate of principal payments
(including prepayments) on the related Mortgage Loans.
Each Mortgage Loan either prohibits voluntary prepayments during a certain
number of years following the origination thereof and/or allows the related
Mortgagor to prepay the principal balance thereof in whole or in part during a
certain number of years following the origination if accompanied by payment of
a Prepayment Premium. See Annex A hereto and the table entitled "Prepayment
Protection" under "Description of the Mortgage Pool -- Certain Characteristics
of the Mortgage Loan" herein. Any Net Prepayment Premium collected on a
Mortgage Loan will be distributed to the holders of the Certificates as
described herein. See "Risk Factors -- Special Prepayment Considerations"
herein, "Description of the Certificates -- Distributions -- Interest
Distributions on the Certificates" and "Certain Prepayment, Maturity and Yield
Considerations" herein, and "Yield Considerations" in the Prospectus.
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The yield to maturity on each class of the Offered Certificates will
depend on, among other things, the rate and timing of principal payments
(including prepayments, defaults, liquidations and purchases of Mortgage Loans
due to a breach of a representation and warranty) on the Mortgage Loans and the
allocation thereof to reduce the Class Balance or Notional Amount of such class
and the collection and allocation of any Prepayment Premium thereon. The yield
to investors on any Class of Offered Certificates will be adversely affected by
any allocation thereto of Prepayment Interest Shortfalls on the Mortgage Loans,
which may result from the distribution of interest only to the date of a
prepayment occurring during any month following the related Determination Date
(rather than a full month's interest) to the extent any such interest shortfall
is not offset by Prepayment Premiums, any Prepayment Interest Excess or the
Master Servicing Fee for such Distribution Date.
The Pass-Through Rate for the Class A1 Certificates will be fixed. The
Pass-Through Rate for the Class A2 Certificates will be equal to either a fixed
rate or a rate equal to the weighted average of the Remittance Rates. The
Pass-Through Rate for the Class X Certificates for any Distribution Date will
be variable and will be based on the weighted average Remittance Rates on the
Mortgage Loans for such Distribution Date. The Pass-Through Rate applicable to
the Class B, Class C, Class D, Class E and Class F Certificates for any
Distribution Date will be a rate equal to the excess of the weighted average of
the Remittance Rates on the Mortgage Loans with respect to such Distribution
Date over %, %, %, % and % per annum, respectively. Accordingly, the
yield on the Offered Certificates (other than the Class A Certificates), to the
extent the related Pass-Through Rate is calculated based on the weighted
average of the Remittance Rates, will be sensitive to changes in the relative
composition of the Mortgage Loans as a result of scheduled amortization,
voluntary prepayments, liquidations of Mortgage Loans following default and
repurchases of Mortgage Loans. Losses or payments of principal on the Mortgage
Loans with higher Remittance Rates could result in a reduction in the weighted
average of the Remittance Rates on the Mortgage Loans reducing the Pass-Through
Rates on such classes of Offered Certificates.
See "Description of the Certificates -- Pass-Through Rates" and
"Description of the Mortgage Pool -- Certain Characteristics of the Mortgage
Loans" herein.
ARD Loans may be prepaid in full on or after the Anticipated Repayment
Date without the payment of any Prepayment Premium. Excess Cash Flow on an ARD
Loan will be applied to reduce the principal thereof after its respective
Anticipated Repayment Date and the related Mortgage Interest Rate will be reset
at the related Revised Rate. There can be no assurance that any of such
Mortgage Loan will be prepaid on that date or any date prior to maturity. The
failure to pay an ARD Loan by the related Anticipated Repayment Date will not
result in an event of default.
In general, if a class of Offered Certificates is purchased at a premium
and principal distributions thereon occur at a rate faster than anticipated at
the time of purchase, the investor's actual yield to maturity will be lower
than that assumed at the time of purchase. Conversely, if a class of Offered
Certificates is purchased at a discount and principal distributions thereon
occur at a rate slower than that assumed at the time of purchase, the
investor's actual yield to maturity will be lower than that assumed at the time
of purchase.
If a Mortgage Loan becomes a Specially Serviced Mortgage Loan, the Special
Servicer may adopt a servicing strategy which affects the yield to maturity of
one or more classes of Offered Certificates.
The "Rated Final Distribution Date" for the Certificates will be the
Distribution Date in July 2031, which is the first Distribution Date preceding
the second anniversary of the date at which all the Mortgage Loans have zero
balances, assuming no prepayments, and that the Mortgage Loans which are
Balloon Loans fully amortize according to their amortization schedule and no
Balloon Payment (or final payment on the Anticipated Repayment Date) is made.
WEIGHTED AVERAGE LIFE OF THE OFFERED CERTIFICATES
Weighted average life refers to the average amount of time from the date
of issuance of a security until each dollar of principal of such security will
be repaid to the investor. The weighted average life of the Offered
Certificates will be influenced by the rate at which principal payments
(including scheduled
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payments, principal prepayments, condemnation proceeds and payments made
pursuant to any applicable policies of insurance) on the Mortgage Loans are
made. Principal payments on the Mortgage Loans may be in the form of scheduled
amortization or prepayments (for this purpose, the term "prepayment" includes
prepayments, partial prepayments and liquidations due to a default or other
dispositions of the Mortgage Loans).
Prepayments on loans are commonly measured relative to a prepayment
standard or model, such as the constant prepayment rate prepayment model
("CPR"). CPR represents a constant assumed rate of prepayment each month
relative to the then outstanding principal balance of a pool of loans for the
life of such loans. Neither CPR nor any other prepayment model or assumption
purports to be a historical description of prepayment experience or a
prediction of the anticipated rate of prepayment of any pool of loans,
including the Mortgage Loans.
The table of Percent of Initial Class Balance Outstanding for each class
of the Offered Certificates at each CPR set forth below indicates the weighted
average life of such Certificates and sets forth the percentage of the initial
principal amount of such Certificates that would be outstanding after each of
the dates shown at the indicated CPR. The table has been prepared on the basis
of the characteristics of the Mortgage Loans in Annex A and on the basis of the
following assumptions: (i) the Mortgage Loans prepay at the indicated CPR; (ii)
the Maturity Date of each of the Balloon Mortgage Loans is not extended; (iii)
distributions on the Offered Certificates are received in cash, on the 15th day
of each month, commencing in September 1999; (iv) no defaults or delinquencies
in, or modifications, waivers or amendments respecting, the payment by the
Mortgagors of principal and interest on the Mortgage Loans occur; (v)
prepayments represent payment in full of individual Mortgage Loans and are
received on the respective Due Dates and include a month's interest thereon;
(vi) there are no repurchases of Mortgage Loans due to breaches of any
representation and warranty, or pursuant to an optional termination as
described under "Description of the Pooling and Servicing Agreement --
Termination" or otherwise; (vii) the Offered Certificates are purchased on
August , 1999; and (viii) all of the ARD Loans are fully prepaid on their
related Anticipated Repayment Date and all of the other Mortgage Loans are paid
in full on their Maturity Date.
Variations in the actual prepayment experience and the balance of the
Mortgage Loans that prepay may increase or decrease the percentage of initial
Class Balance (and weighted average life) shown in the following table. Such
variations may occur even if the average prepayment experience of all such
Mortgage Loans is the same as any of the specified assumptions.
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PERCENT OF INITIAL CLASS BALANCE OUTSTANDING
AT THE FOLLOWING PERCENTAGES OF CPR (1)
<TABLE>
<CAPTION>
CLASS A1 CLASS A2 CLASS B CLASS C
DISTRIBUTION ------------------------ ------------------------ ------------------------ ------------------------
DATE 0% 25% 50% 100% 0% 25% 50% 100% 0% 25% 50% 100% 0% 25% 50% 100%
- ---------------------- ----- ----- ----- ------ ----- ----- ----- ------ ----- ----- ----- ------ ----- ----- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Initial
percentage .......... 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100
August 2000 ..........
August 2001 ..........
August 2002 ..........
August 2003 ..........
August 2004 ..........
August 2005 ..........
August 2006 ..........
August 2007 ..........
August 2008 ..........
August 2009 ..........
Weighted
Average
life in years (2)....
<CAPTION>
CLASS D CLASS E CLASS F
DISTRIBUTION ------------------------ ------------------------ -----------------------
DATE 0% 25% 50% 100% 0% 25% 50% 100% 0% 25% 50% 100%
- ---------------------- ----- ----- ----- ------ ----- ----- ----- ------ ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Initial
percentage .......... 100 100 100 100 100 100 100 100 100 100 100 100
August 2000 ..........
August 2001 ..........
August 2002 ..........
August 2003 ..........
August 2004 ..........
August 2005 ..........
August 2006 ..........
August 2007 ..........
August 2008 ..........
August 2009 ..........
Weighted
Average
life in years (2)....
</TABLE>
- -------
(1) Prepayments are assumed to occur after the Lock-out/Defeasance Period
and/or Yield Maintenance penalty period.
(2) The weighted average life of a class of Offered Certificates is
determined by (i) multiplying the amount of each distribution of
principal by the number of years from the date of issuance to the related
Distribution Date, (ii) adding the results and (iii) dividing the sum by
the total principal distributions on such class of Certificates.
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CLASS X CERTIFICATES YIELD CONSIDERATIONS
The following table indicates the sensitivity of the pre-tax yield to
maturity on the Class X Certificates to various constant rates of prepayment on
the Mortgage Loans by projecting the monthly aggregate payments on the Class X
Certificates and computing the corresponding pre-tax yields to maturity on a
corporate bond equivalent basis, based on the assumptions described in clauses
(i) through (viii) in the second paragraph preceding the table entitled
"Percent of Initial Class Balance Outstanding at the Following Percentages of
CPR" under the heading "Certain Prepayment, Maturity and Yield Considerations
- -- Weighted Average Life of the Offered Certificates" herein, including the
assumptions regarding the performance of the Mortgage Loans which may differ
from the actual performance thereof and assuming the aggregate purchase price
and Pass-Through Rate set forth below and assuming further that the initial
Notional Amount of the Class X Certificates is as set forth herein. Any
differences between such assumptions and the actual characteristics and
performance of the Mortgage Loans and of the Certificates may result in yields
being different from those shown in such table. Discrepancies between assumed
and actual characteristics and performance underscore the hypothetical nature
of the table, which are provided only to give a general sense of the
sensitivity of yields in varying prepayment scenarios.
PRE-TAX YIELD TO MATURITY OF THE CLASS X CERTIFICATES
<TABLE>
<CAPTION>
ASSUMED
PURCHASE PRICE
AS A PERCENTAGE
OF THE NOTIONAL ASSUMED
AMOUNT PASS-THROUGH RATE (1) CPR PREPAYMENT ASSUMPTION RATE (2)
- ----------------- ----------------------- ------------------------------------
0% 25% 50% 75% 100%
---- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
% % % % % % %
</TABLE>
- ----------
(1) Calculated based on the weighted average of the Remittance Rates on the
Mortgage Loans as of the Cut-off Date and the initial weighted average of
the Pass-Through Rates of the Certificates. The Pass-Through Rate on the
Class X Certificates will be subject to adjustment on each Distribution
Date.
(2) Prepayments are assumed to occur after the Lock-out/Defeasance period
and/or Yield Maintenance penalty period.
Each pre-tax yield to maturity set forth in the preceding table was
calculated by determining the monthly discount rate which, when applied to the
assumed stream of cash flows to be paid on the Class X Certificates would cause
the discounted present value of such assumed stream of cash flows to equal the
assumed purchase price listed in the table. Accrued interest is included in the
assumed purchase price of the Class X Certificates and is used in computing the
corporate bond equivalent yields shown. These yields do not take into account
the different interest rates at which investors may be able to reinvest funds
received by them as distributions on the Class X Certificates, and thus do not
reflect the return on any investment in the Class X Certificates when, as
applicable, any reinvestment rates other than the discount rates set forth in
the preceding table are considered.
Notwithstanding the assumed prepayment rates reflected in the preceding
table, it is highly unlikely that the Mortgage Loans will be prepaid according
to one particular pattern. For this reason and because the timing of cash flows
is critical to determining yields, the pre-tax yield to maturity on the Class X
Certificates is likely to differ from those shown in the table, even if all of
the Mortgage Loans prepay at the indicated constant percentages of CPR over any
given time period or over the entire life of the Certificates.
There can be no assurance that the Mortgage Loans will prepay at any
particular rate or that the yield on the Class X Certificates will conform to
the yields described herein. Moreover, the various remaining terms to maturity
of the Mortgage Loans could produce slower or faster principal distributions
than indicated in the preceding table at the various constant percentages of
CPR specified, even if the weighted
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average remaining term to maturity of the Mortgage Loans is as assumed.
Investors are urged to make their investment decisions based on their
determinations as to anticipated rates of prepayment under a variety of
scenarios. Investors in the Class X Certificates should fully consider the risk
that an extremely rapid rate of prepayments on the Mortgage Loans could result
in the failure of such investors to fully recover their investments. In
addition, holders of the Class X Certificates generally have rights to
relatively larger portions of interest payments on Mortgage Loans with higher
Mortgage Interest Rates; thus, the yield on the Class X Certificates will be
materially and adversely affected to a greater extent than on the other Offered
Certificates if the Mortgage Loans with higher Mortgage Interest Rates prepay
faster than the Mortgage Loans with lower Mortgage Rates.
For additional considerations relating to the yield on the Certificates,
see "Yield Considerations" in the Prospectus.
The yield to maturity on the Class X Certificates will be extremely
sensitive to losses on the Mortgage Loans (and the timing thereof) because any
such losses will be allocated to reduce the Class Balance of the Certificates
and therefore will reduce the Notional Amount of the Class X Certificates.
Investors in the Class X Certificates should fully consider the risk that
Realized Losses on the Mortgage Loans could result in a failure of such
investors to fully recover their investments.
MASTER SERVICER AND SPECIAL SERVICER
THE MASTER SERVICER AND THE SPECIAL SERVICER
Midland Loan Services, Inc. will be acting as the Master Servicer and the
Special Servicer (together, the "Servicers") under the Pooling and Servicing
Agreement.
Midland Loan Services, L.P. was organized under the laws of Missouri in
1992 as a limited partnership. On April 3, 1998, Midland Loan Services, Inc.
("Midland"), a newly formed, wholly-owned subsidiary of PNC Bank, National
Association, acquired substantially all of the assets of Midland Loan Services,
L.P. Midland is a real estate financial services company that provides loan
servicing and asset management for large pools of commercial and multifamily
real estate assets and that originates commercial real estate loans. Midland's
address is 210 West 10th Street, 6th Floor, Kansas City, Missouri 64105.
As of June 30, 1999, Midland was servicing approximately 15,300 commercial
and multifamily loans with a total principal balance of approximately $40.7
billion. The collateral for these loans is located in all 50 states, the
District of Columbia and Puerto Rico. Approximately 10,000 of the loans, with a
total principal balance of approximately $31.0 billion, pertain to commercial
and multifamily mortgage-backed securities. The portfolio includes multifamily,
office, retail, hospitality and other types of income producing properties.
Midland also services newly-originated loans and loans acquired in the
secondary market for issuers of commercial and multifamily mortgage-backed
securities, financial institutions and investors.
Standard & Poor's has approved Midland as a master servicer and special
servicer for investment grade-rated commercial and multifamily mortgage backed
securities. DCR and Moody's have approved Midland as the Master Servicer and
the Special Servicer under the Pooling and Servicing Agreement. Midland is also
a HUD/FHA-approved mortgagee and a Fannie Mae-approved multifamily loan
servicer.
The information set forth above concerning the Master Servicer and the
Special Servicer has been provided by Midland. The Depositor, the Underwriters,
the Trustee and the Seller make no representations or warranties as to its
accuracy.
RESPONSIBILITIES OF MASTER SERVICER
Under the Pooling and Servicing Agreement, the Master Servicer is required
to service and administer the Mortgage Loans solely on behalf of and in the
best interests of and for the benefit of the Certificateholders, in accordance
with the terms of the Pooling and Servicing Agreement and the
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Mortgage Loans and to the extent consistent with such terms, with the higher of
(a) the standard of care, skill, prudence and diligence with which the Master
Servicer services and administers mortgage loans that are held for other
portfolios that are similar to the Mortgage Loans and (b) the standard of care,
skill, prudence and diligence with which the Master Servicer services and
administers mortgage loans for its own portfolio that are similar to the
Mortgage Loans, in either case, giving due consideration to customary and usual
standards of practice of prudent institutional multifamily and commercial
mortgage lenders, loan servicers and asset managers (with respect to the Master
Servicer, the "Servicing Standard") and without regard to (a) any relationship
between itself and any Mortgagor, (b) any ownership of the Certificates, (c)
its obligation to make advances, (d) any debt that it extended to any Mortgagor
and (e) any servicing compensation to which the Master Servicer may be
entitled.
The Master Servicer will also be required to perform other customary
functions of a servicer of comparable loans, including maintaining (or using
its best efforts to cause the Mortgagor under each Mortgage Loan to maintain)
hazard, business interruption and general liability insurance policies (and, if
applicable, rental interruption policies) as described herein to the extent
such insurance is available at commercially reasonable rates and filing and
settling claims thereunder; maintaining escrow or impoundment accounts of
Mortgagors for payment of taxes, insurance and other items required to be paid
by any Mortgagor pursuant to the Mortgage Loan; processing, in consultation
with the Special Servicer, assumptions or substitutions in accordance with the
Servicing Standard; demanding that the Mortgagor cure delinquencies; inspecting
Mortgaged Properties under certain circumstances; and maintaining records
relating to the Mortgage Loans.
RESPONSIBILITIES OF SPECIAL SERVICER
The servicing responsibility on a particular Mortgage Loan will be
generally transferred to the Special Servicer upon the occurrence of certain
servicing transfer events (each, a "Servicing Transfer Event"), including the
following: (i) the Mortgage Loan becomes a "Defaulted Mortgage Loan" because it
is more than 60 days delinquent in whole or in part in respect of any monthly
payment or is delinquent in whole or in part in respect of the related Balloon
Payment; (ii) the related Mortgagor has entered into or consented to
bankruptcy, appointment of a receiver or conservator or a similar insolvency or
similar proceeding, or the Mortgagor has become the subject of a decree or
order for such a proceeding; (iii) the Master Servicer shall have received
notice of the foreclosure or proposed foreclosure of any other lien on the
Mortgaged Property; (iv) the related Mortgagor admits in writing its inability
to pay its debts generally as they become due, files a petition to take
advantage of any applicable insolvency or reorganization statute, makes an
assignment for the benefit of its creditors, or voluntarily suspends payment of
its obligations; (v) any other default has occurred which has materially and
adversely affected the value of the related Mortgage Loan and has continued
unremedied for the applicable grace period specified in the related Mortgage
Note; (vi) the related Mortgaged Property becomes an REO Property; or (vii) if
for any reason an assumption agreement cannot be entered into upon the transfer
by the related Mortgagor of the Mortgaged Property. A Mortgage Loan serviced by
the Special Servicer is referred to herein as a "Specially Serviced Mortgage
Loan". The Special Servicer will collect certain payments on such Specially
Serviced Mortgage Loans and make certain remittances to, and prepare certain
reports for the Master Servicer with respect to such Mortgage Loans. The Master
Servicer shall have no responsibility for the performance by the Special
Servicer of its duties under the Pooling and Servicing Agreement provided that
the Master Servicer continues to perform certain servicing functions on such
Specially Serviced Mortgage Loans and, based on the information provided to it
by the Special Servicer, prepares certain reports for the Trustee with respect
to such Specially Serviced Mortgage Loans. To the extent that any Mortgage
Loan, in accordance with its original terms or as modified in accordance with
the Pooling and Servicing Agreement, becomes a performing Mortgage Loan for at
least three consecutive months, the Special Servicer will cease to service such
Mortgage Loan.
Midland will act as the Special Servicer with respect to the Mortgage
Loans. Under the Pooling and Servicing Agreement the Special Servicer is
required to service, administer and dispose of Specially Serviced Mortgage
Loans solely in the best interests of and for the benefit of the
Certificateholders, in accordance with the Pooling and Servicing Agreement and
the Mortgage Loans and to the extent consistent with such terms, with the
higher of (a) the standard of care, skill, prudence and diligence with
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which the Special Servicer services, administers and disposes of, distressed
mortgage loans and related real property that are held for other portfolios
that are similar to the Mortgage Loans, Mortgaged Properties and REO Properties
and (b) the standard of care, skill, prudence and diligence with which the
Special Servicer services, administers and disposes of distressed mortgage
loans and related real property for its own portfolio that are similar to the
Mortgage Loans, Mortgaged Properties and REO Properties, giving due
consideration to customary and usual standards of practice of prudent
institutional multifamily and commercial mortgage lenders, loan servicers and
asset managers, so as to maximize the net present value of recoveries on the
Mortgage Loans (with respect to the Special Servicer, the "Servicing Standard")
and without regard to (a) any relationship between itself and any Mortgagor,
(b) any ownership of the Certificates, (c) its obligation to make advances, (d)
any debt that it extended to any Mortgagor and (e) any servicing compensation
to which the Master Servicer may be entitled.
The Special Servicer, on behalf of the Trust Fund, may at any time
institute foreclosure proceedings, exercise any power of sale contained in any
Mortgage Note, obtain a deed in lieu of foreclosure, or otherwise acquire, on
behalf of the Trust Fund, title to a Mortgaged Property securing a Specially
Serviced Mortgage Loan by operation of law or otherwise, if such action is
consistent with the Servicing Standard. The Special Servicer may not acquire
title to any related Mortgaged Property or take any other action that would
cause the Trustee, for the benefit of Certificateholders, or any other
specified person to be considered to hold title to, to be a
"mortgagee-in-possession" of, or to be an "owner" or an "operator" of such
Mortgaged Property within the meaning of certain federal environmental laws,
unless the Special Servicer has previously determined, based on a report
prepared by a person who regularly conducts environmental audits (the costs of
which report will be paid as an expense of the Trust Fund), that: (i) the
Mortgaged Property is in compliance with applicable environmental laws; or if
not, that taking such actions as are necessary to bring the Mortgaged Property
in compliance therewith is reasonably likely to produce a greater recovery on a
present value basis, after taking into account any risks associated therewith,
than not taking such actions; and (ii) there are no circumstances present at
the Mortgaged Property relating to the use, management or disposal of any
hazardous substances, hazardous materials, wastes, or petroleum-based materials
for which investigation, testing, monitoring, containment, clean-up or
remediation could be required under any federal, state or local law or
regulation or that, if any such materials are present, taking such action with
respect to the affected Mortgaged Property is reasonably likely to produce a
greater recovery on a present value basis, after taking into account any risks
associated therewith, than not taking such actions.
The Special Servicer, on behalf of the Trust Fund, will use its best
efforts to sell the Mortgaged Property not later than the end of the third
calendar year following the year of acquisition, unless (i) the Internal
Revenue Service grants an extension of time to sell such property or (ii) the
Special Servicer provides to the Trustee an opinion of independent counsel to
the effect that the holding of the property by the Trust Fund subsequent to the
end of the third year following the year in which such acquisition occurred
will not result in the imposition of a tax on the Trust Fund or cause the Trust
Fund to fail to qualify as a REMIC under the Code at any time that any
Certificate is outstanding. Subject to the foregoing, the Special Servicer will
be required to (i) solicit offers for any Mortgaged Property so acquired in
such a manner as will be reasonably likely to realize a fair price for such
property and (ii) accept an offer received from any person that constitutes a
fair price and which is in the best interest of the Certificateholders as
determined by the Special Servicer in accordance with Servicing Standard.
If the Trust Fund acquires title to any Mortgaged Property, the Special
Servicer, on behalf of the Trust Fund, may retain an independent contractor to
manage and operate such property. The retention of an independent contractor,
however, will not relieve the Special Servicer of any of its obligations with
respect to the management and operation of such Mortgaged Property. Any such
property acquired by the Trust Fund will be managed in a manner consistent with
the Servicing Standard.
The Special Servicer will be obligated to follow or cause to be followed
such normal practices and procedures as it deems necessary or advisable to
realize upon Specially Serviced Mortgage Loans. If the proceeds of any
liquidation of the property securing the Specially Serviced Mortgage Loan are
less than the outstanding principal balance of the Specially Serviced Mortgage
Loan plus interest accrued thereon at the Mortgage Interest Rate plus the
aggregate amount of expenses incurred by the Special Servicer in
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connection with such proceedings and which are reimbursable under the Pooling
and Servicing Agreement, the Trust Fund will realize a loss in the amount of
such difference. The Special Servicer will be entitled to be paid from the
amounts on deposit in the Collection Account, prior to the distribution to
Certificateholders, amounts representing its servicing compensation on the
Specially Serviced Mortgage Loans.
The Special Servicer shall have full power and authority to do any and all
things in connection with servicing and administering a Specially Serviced
Mortgage Loan that it may deem in its best judgment necessary or advisable,
including, without limitation, to execute and deliver on behalf of the Trust
Fund any and all instruments of satisfaction or cancellation or of partial
release or full release or discharge and all other comparable instruments, to
reduce the related Mortgage Interest Rate, and to defer or forgive payment of
interest and/or principal with respect to any Specially Serviced Mortgage Loan
or any Mortgaged Property. The Special Servicer may not permit a modification
or extension of any Mortgage Loan to a date later than three years prior to the
Rated Final Distribution Date or 10 years prior to the expiration of any Ground
Lease. Notwithstanding the foregoing, the Special Servicer may not permit any
such modification with respect to a Balloon Mortgage Loan if it results in the
extension of such Maturity Date beyond the amortization term of such Balloon
Mortgage Loan absent the related Balloon Payment. The Special Servicer will
prepare a report (an "Asset Strategy Report") for each Mortgage Loan which
becomes a Specially Serviced Mortgage Loan not later than thirty (30) days
after the servicing of such Mortgage Loan is transferred to the Special
Servicer. The holders of the fewest number of classes of Certificates
representing the most subordinate interests in the Trust Fund that equals at
least a 2.0% interest (by Class Balance (adjusted for Collateral Value
Adjustments)) in the Trust Fund (the "Monitoring Certificateholders") will
designate one Monitoring Certificateholder pursuant to the Pooling and
Servicing Agreement (the "Directing Certificateholder"). Each Asset Strategy
Report will be delivered to the Directing Certificateholder. The Directing
Certificateholder may object to any Asset Strategy Report within 10 business
days of receipt; provided, however, that the Special Servicer shall implement
the recommended action as outlined in such Asset Strategy Report if it makes an
affirmative determination that such objection is not in the best interest of
all the Certificateholders. In connection with making such affirmative
determination, the Special Servicer, by notice to the Trustee, may request a
vote by all the Certificateholders. If the Directing Certificateholder does not
disapprove an Asset Strategy Report within 10 business days, the Special
Servicer shall implement the recommended action as outlined in such Asset
Strategy Report. If the Directing Certificateholder disapproves such Asset
Strategy Report and the Special Servicer has not made the affirmative
determination described above, the Special Servicer will revise such Asset
Strategy Report as soon as practicable. The Special Servicer will revise such
Asset Strategy Report until the Directing Certificateholder fails to disapprove
such revised Asset Strategy Report except as described above, provided,
however, the Special Servicer will implement the last submitted report if 60
days have elapsed since the Mortgage Loan has become a Specially Serviced
Mortgage Loan, provided that the Special Servicer shall not be under any
obligation to perform any actions which are not consistent with applicable laws
and the related Mortgage Loan documents. Any Certificateholder may request and
obtain a copy of any Asset Strategy Report except to the extent prohibited by
applicable law or the related Mortgage Loan documents.
The Directing Certificateholder may at any time terminate the Special
Servicer and appoint a replacement (a "Replacement Special Servicer") to
perform such duties under substantially the same terms and conditions as
applicable to the Special Servicer. Such holder(s) shall designate a
replacement to so serve by the delivery to the Trustee of a written notice
stating such designation. The Trustee shall, promptly after receiving any such
notice, so notify the Rating Agencies. The designated replacement shall become
the Replacement Special Servicer as of the date the Trustee shall have
received: (i) written confirmation from each Rating Agency stating that if the
designated replacement were to serve as Special Servicer under the Pooling and
Servicing Agreement, none of the then-current rating or ratings of all
outstanding classes of the Certificates would be qualified (if applicable),
downgraded or withdrawn as a result thereof; (ii) a written acceptance of all
obligations of the Special Servicer, executed by the designated replacement;
and (iii) an opinion of counsel (obtained at the expense of the Directing
Certificateholder) to the effect that the designation of such replacement to
serve as Replacement Special Servicer is in compliance with the Pooling and
Servicing Agreement, that the designated replacement will
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be bound by the terms of the Pooling and Servicing Agreement and that the
Pooling and Servicing Agreement will be enforceable against such designated
replacement in accordance with its terms. The Special Servicer shall be deemed
to have resigned from its duties simultaneously with such designated
replacement's becoming the Replacement Special Servicer under the Pooling and
Servicing Agreement. Any Replacement Special Servicer may be similarly so
replaced by the Directing Certificateholder.
Notwithstanding such replacement, the resigning Special Servicer shall be
entitled to receive the Special Servicing Fee for any Mortgage Loan which
became a Specially Serviced Mortgage Loan and was subsequently returned to a
performing status prior to such resignation; provided that if such Mortgage
Loan once again becomes a Specially Serviced Mortgage Loan, the Replacement
Special Servicer shall thereafter be entitled to such fee. The Replacement
Special Servicer shall be entitled to the Special Servicing Fee for all other
Specially Serviced Mortgage Loans.
SERVICING AND OTHER COMPENSATION AND PAYMENT OF EXPENSES
The principal compensation to be paid to the Master Servicer in respect of
its servicing activities will be the "Master Servicing Fee". The Master
Servicing Fee will be payable monthly and will accrue at the applicable Master
Servicing Fee Rate (as defined below) and will be computed on the basis of the
principal balance (after giving effect to all scheduled (whether or not
received) and unscheduled payments of principal in reduction thereof) and for
the same period respecting which any related interest payment on each Mortgage
Loan is computed. The "Basic Master Servicing Fee Rate" will be 0.07% per annum
of the then outstanding balance with respect to the Mortgage Loans. The Master
Servicer will also receive as part of its Master Servicing Fee an additional
fee calculated based on the following rates (each, an "Additional Servicing Fee
Rate"): (i) a primary servicing fee rate of 0.07% per annum with respect to
12.8% of the Mortgage Loans by aggregate principal balance as of the Cut-off
Date, (ii) a primary servicing fee rate of 0.05% per annum with respect to
25.3% of the Mortgage Loans by aggregate principal balance as of the Cut-off
Date and (iii) a primary servicing fee rate of 0.0175% per annum with respect
to 7.6% of the Mortgage Loans by aggregate principal balance as of the Cut-off
Date. With respect to each Mortgage Loan, the sum of the Basic Master Servicing
Fee Rate and the related Additional Servicing Fee Rate, if any, is referred to
herein as the "Master Servicing Fee Rate."
In the event that the initial Master Servicer shall resign or be
terminated as the Master Servicer and a successor Master Servicer shall agree
to perform the services of the Master Servicer for an amount less than the
Master Servicing Fee, no part of any excess of such portion of the Master
Servicing Fee over the amount payable to such successor will be available for
payment to Certificateholders.
The principal compensation to be paid to the Special Servicer in respect
of its special servicing activities will be the Special Servicing Fee. The
"Special Servicing Fee" will equal 1.00% of all amounts collected with respect
to any Specially Serviced Mortgage Loan and any Mortgage Loan which became a
Specially Serviced Mortgage Loan and was subsequently returned to performing
status.
The Pooling and Servicing Agreement will provide that the Servicers will
be entitled to indemnification from the Trust Fund for any and all costs,
expenses, losses, damages, claims and liabilities incurred in connection with
any legal action relating to any Mortgage Loan and the Pooling and Servicing
Agreement, other than any cost, expense, damage, claim or liability incurred by
reason of willful misfeasance, bad faith or negligence of such Servicer in the
performance of duties thereunder or by reason of reckless disregard of such
obligations and duties.
CONFLICTS OF INTEREST
The Master Servicer, Special Servicer or their respective affiliates own
and are in the business of acquiring assets similar to the Mortgage Loans held
by the Trust Fund. To the extent that any mortgage loans owned and/or serviced
by the Special Servicer or their respective affiliates are similar to the
Mortgage Loans held by the Trust Fund, the mortgaged properties related to such
mortgage loans may, depending upon certain circumstances such as the location
of the mortgaged property, compete with the Mortgaged Properties related to the
Mortgage Loans held by the Trust Fund for tenants, purchasers, financing and
similar resources.
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DESCRIPTION OF THE POOLING AND SERVICING AGREEMENT
GENERAL
The Certificates will be issued pursuant to a Pooling and Servicing
Agreement to be dated as of August 1, 1999 (the "Pooling and Servicing
Agreement"), by and among the Depositor, the Master Servicer, the Special
Servicer and the Trustee. Following are summaries of certain provisions of the
Pooling and Servicing Agreement. The summaries do not purport to be complete
and are subject to, and are qualified in their entirety by reference to, the
provisions of the Pooling and Servicing Agreement. The Trustee will provide to
a prospective or actual Certificateholder, upon written request, a copy
(without exhibits) of the Pooling and Servicing Agreement. Requests should be
addressed to State Street Bank and Trust Company, Two Avenue de Lafayette,
Boston, Massachusetts 02111, Attention: Corporate Trust Department 6th Floor --
J.P. Morgan Commercial Mortgage Finance Corp., Series 1999-C8.
ASSIGNMENT OF THE MORTGAGE LOANS
On or prior to the Delivery Date, the Depositor will assign or cause to be
assigned the Mortgage Loans, without recourse, to the Trustee for the benefit
of the Certificateholders. On or prior to the Delivery Date, the Depositor
will, as to each Mortgage Loan, deliver to the Trustee (or the Custodian),
among other things, the following documents (collectively, as to such Mortgage
Loan, the "Mortgage Loan File"): (i) the original Mortgage, and any intervening
assignments thereof, in each case with evidence of recording thereon or in case
such documents have not been returned by the applicable recording office,
certified copies thereof; (ii) the original or, if accompanied by a "lost note"
affidavit, a copy of the Mortgage Note, endorsed by the Seller, without
recourse, in blank or to the order of Trustee; (iii) an assignment of the
Mortgage, executed by the Seller, in blank or to the order of the Trustee, in
complete and recordable form; (iv) originals or certified copies of any related
assignment of leases, rents and profits and any related security agreement (if,
in either case, such item is a document separate from the Mortgage) and any
intervening assignments of each such document or instrument; (v) assignments of
any related assignment of leases, rents and profits and any related security
agreement (if, in either case, such item is a document separate from the
Mortgage), executed by the Seller, in blank or to the order of the Trustee, in
complete and recordable form; (vi) originals or certified copies of all
assumption, modification and substitution agreements in those instances where
the terms or provisions of the Mortgage or Mortgage Note have been modified or
the Mortgage or Mortgage Note has been assumed; (vii) the originals or
certificates of a lender's title insurance policy issued on the date of the
origination of such Mortgage Loan or, with respect to each Mortgage Loan not
covered by a lender's title insurance policy, an attorney's opinion of title
given by an attorney licensed to practice law in the jurisdiction where the
Mortgaged Property is located; (viii) originals or copies of any UCC financing
statements (including originals of assignments thereof to the Trustee in form
that is complete and suitable for filing); (ix) originals or copies of any
guaranties related to such Mortgage Loan; (x) originals or copies of insurance
policies related to the Mortgaged Property; (xi) originals or certified copies
of any environmental liabilities agreement; (xii) originals or copies of any
escrow agreements; (xiii) originals or certified copies of any prior
assignments of mortgage if the Originator is not the originator of record and
(xiv) any collateral assignments of property management agreements and other
servicing agreements. The Pooling and Servicing Agreement will require the
Depositor to cause each assignment of the Mortgage described in clause (iii),
clause (v), and clause (viii) above to be submitted for recording in the real
property records of the jurisdiction in which the related Mortgaged Property is
located. Any such assignment delivered in blank will be completed to the order
of the Trustee prior to recording. The Pooling and Servicing Agreement will
also require the Depositor to cause the endorsements on the Mortgage Notes
delivered in blank to be completed to the order of the Trustee.
TRUSTEE
State Street Bank and Trust Company shall serve as Trustee under the
Pooling and Servicing Agreement pursuant to which the Certificates are being
issued. Except in circumstances such as those involving defaults (when it might
request assistance from other departments in the bank), its responsi-
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bilities as trustee are carried out by its Corporate Trust Department. The
Trustee will be entitled to a fee equal to 0.0035% per annum of the outstanding
principal balance of the Mortgage Loans (the "Trustee Fee Rate"). Its principal
corporate trust office is located at 6th Floor, Two Avenue de Lafayette,
Boston, Massachusetts 02111, Attention: J.P. Morgan Commercial Mortgage Finance
Corp., Series 1999-C8.
ACCOUNTS
The Master Servicer is required to deposit all amounts received with
respect to the Mortgage Loans, net of certain amounts retained by the Master
Servicer as additional servicing compensation and certain amounts to be
deposited into escrow accounts, into a separate Collection Account (the
"Collection Account") maintained by the Master Servicer on behalf of the Trust
Fund. The Master Servicer is required to remit to the Trustee for deposit on
the business day preceding each Distribution Date all amounts received with
respect to the Mortgage Loans into a separate account (the "Certificate
Account") maintained with the Trustee. The Trustee will be entitled to make
withdrawals from the Certificate Account to pay the Trustee fee or to reimburse
the Trustee for expenses not otherwise reimbursed from a Collection Account.
Interest or other income earned on funds in the Collection Account will be paid
to the Master Servicer maintaining such account as additional servicing
compensation. See "Description of the Trust Funds -- Mortgage Loans" and
"Description of the Agreements -- Distribution Account and Other Collection
Accounts" in the Prospectus.
REPORTS TO CERTIFICATEHOLDERS
On each Distribution Date, based upon information provided by the
Servicers, the Trustee shall make available to each Certificateholder, the
Seller, the Depositor and each Rating Agency a statement setting forth certain
information with respect to the Mortgage Loans and the Certificates required
pursuant to the Pooling and Servicing Agreement. In addition, within a
reasonable period of time after each calendar year, the Trustee shall furnish
to each person who at any time during such calendar year was the holder of a
Certificate a statement containing certain information with respect to the
Certificates required pursuant to the Pooling and Servicing Agreement,
aggregated for such calendar year or portion thereof during which such person
was a Certificateholder. Unless and until Definitive Certificates are issued,
such statements or reports will be furnished only to Cede, as nominee for DTC;
provided, however, that the Trustee shall furnish a copy of any such statement
or report to any Beneficial Owner which requests such copy and provides to the
Trustee a certification, in form acceptable to the Trustee, stating that it is
the Beneficial Owner of a Certificate. The Trustee will make available the
monthly statement to Certificateholders and certain other information through
its Corporate Trust home page on the world wide web. The web page is located at
"corporatetrust.statestreet.com". CMBS information is available by clicking the
"Investor Information & Reporting" button, and selecting the appropriate
transaction. Any Asset Strategy Report that has been delivered to the Trustee
shall be made available by the Trustee upon written request to any Beneficial
Owner of an Offered Certificate subject to receipt by the Trustee of evidence
satisfactory to it that the request is made by a Beneficial Owner and the
receipt by the Trustee of a certificate acknowledging certain limitations with
respect to the use of such statement or report. See "Description of the
Certificates -- Reports to Certificateholders" in the Prospectus. The Directing
Certificateholder shall receive all reports prepared or received by the Master
Servicer or the Special Servicer. In addition, if the Depositor so directs the
Trustee and on terms acceptable to the Trustee, the Trustee will make certain
information and certain financial reports related to the mortgage loans
available through its Corporate Trust web site.
VOTING RIGHTS
Under certain circumstances, the consent or approval of the holders of a
specified percentage of the aggregate Certificate Balance of all outstanding
Certificates ("Voting Rights") will be required to direct, and will be
sufficient to bind all Certificateholders to, certain actions, including
directing the Special Servicer or the Master Servicer with respect to actions
to be taken with respect to certain Mortgage Loans and REO Properties and
amending the Pooling and Servicing Agreement in certain circumstances. 98.0% of
all Voting Rights shall be allocated among the classes of Certificates,
including the Other Certificates,
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(other than the Class X, Class R-I, Class R-II and Class R-III Certificates) in
proportion to the respective Class Balances, 1.00% of all Voting Rights shall
be allocated to the Class X Certificates and 0.33 1/3% of all Voting Rights
shall be allocated to each of the Class R-I, Class R-II and Class R-III
Certificates. Voting Rights allocated to a class of Certificates shall be
allocated among the holders of such class in proportion to the Percentage
Interests evidenced by their respective Certificates. Allocations of Realized
Losses and Collateral Value Adjustments to a Class of Certificates and any
other event which changes such Class Balance will result in a corresponding
change to such Class' Voting Rights.
As described under "Description of the Certificates -- Book-Entry
Registration and Definitive Certificates" in the Prospectus, unless and until
Definitive Certificates are issued, except as otherwise expressly provided
herein, Certificate Owners may only exercise their rights as owners of
Certificates indirectly through DTC or their respective Participant or Indirect
Participant.
TERMINATION
The obligations created by the Pooling and Servicing Agreement will
terminate following the earlier of (i) the final payment or other liquidation
of the last Mortgage Loan or REO Property subject thereto, and (ii) the
purchase of all of the assets of the Trust Fund by and at the option of any
holder of a Class R-I Certificate, the holders of an aggregate Percentage
Interest in excess of 50% of the Most Subordinate Class of Certificates, the
Master Servicer and (to the extent all of the remaining Mortgage Loans are
being serviced by the Special Servicer) the Special Servicer (in that order).
The "Most Subordinate Class of Certificates" at the time of determination shall
be the class of Certificates to which Realized Losses would be allocated at
such time as described under "Description of the Certificates -- Subordination"
herein. Written notice of termination of the Pooling and Servicing Agreement
will be given to each Certificateholder, and the final distribution will be
made only upon surrender and cancellation of the Certificates at the office of
the Certificate Registrar specified in such notice of termination.
Any such purchase of all the Mortgage Loans and other assets in the Trust
Fund is required to be made at a price equal to the greater of (1) the
aggregate fair market value of all the Mortgage Loans and REO Properties then
included in the Trust Fund, determined pursuant to the Pooling and Servicing
Agreement, and (2) the aggregate Class Balance of all the Certificates plus
accrued and unpaid interest thereon together with any unreimbursed advances
(including any interest thereon). Such purchase will effect early retirement of
the then outstanding Certificates, but the right to effect such termination is
subject to the requirements, among other things, that the aggregate Stated
Principal Balance of the Mortgage Loans then in the Trust Fund is less than (i)
1% of the Initial Pool Balance, and (ii) the purchaser provides to the Trustee
an opinion of independent counsel, addressed to the Trustee, to the effect that
the resulting termination will be a "qualified liquidation" under Section
860F(a)(4) of the Code with respect to REMICs I, II and III.
USE OF PROCEEDS
The net proceeds from the sale of the Offered Certificates will be used by
the Depositor to pay the purchase price of the Mortgage Loans.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following summary of the anticipated material federal income tax
consequences of the purchase, ownership and disposition of Offered Certificates
is based on the advice of Brown & Wood LLP, counsel to the Depositor. This
summary is based on laws, regulations, including the REMIC regulations
promulgated by the Treasury Department (the "REMIC Regulations"), rulings and
decisions now in effect or (with respect to regulations) proposed, all of which
are subject to change either prospectively or retroactively. This summary does
not address the federal income tax consequences of an investment in Offered
Certificates applicable to all categories of investors, some of which (for
example, banks and insurance companies) may be subject to special rules.
Prospective investors should consult their tax advisors regarding the federal,
state, local and any other tax consequences to them of the purchase, ownership
and disposition of Offered Certificates.
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Three separate real estate mortgage investment conduit ("REMIC") elections
will be made with respect to the Trust Fund for federal income tax purposes.
Upon the issuance of the Certificates, Brown & Wood LLP, counsel to the
Depositor, will deliver its opinion generally to the effect that, assuming
compliance with all provisions of the Pooling and Servicing Agreement, for
federal income tax purposes, REMIC I, REMIC II and REMIC III (each as defined
in the Pooling and Servicing Agreement) will each qualify as a REMIC under the
Internal Revenue Code of 1986, as amended (the "Code").
For federal income tax purposes, the Class R-I Certificates will be the
sole class of "residual interests" in REMIC I, the Class R-II Certificates will
be the sole class of "residual interests" in REMIC II, and the Class R-III
Certificates will be the sole class of "residual interests" in REMIC III. The
Offered Certificates (other than the Class X Certificates), the Other
Certificates (other than the Class R-I, Class R-II and Class R-III
Certificates) and each component of the Class X Certificates will be "regular
interests" of REMIC III and will be treated as debt instruments of the REMIC
III. See "Certain Federal Income Tax Consequences -- REMICs" in the Prospectus.
The Class X Certificates will, and the other classes of Offered
Certificates may, be treated as having been issued with original issue discount
for federal income tax reporting purposes. For purposes of computing the rate
of accrual of original issue discount, market discount and premium, if any, for
federal income tax purposes it will be assumed that there are no prepayments on
the Mortgage Loans, except that ARD Loans prepay on their Anticipated Repayment
Dates. No representation is made that the Mortgage Loans will not prepay at
another rate. See "Certain Federal Income Tax Consequences -- REMICs --
Taxation of Owners of REMIC Regular Certificates" and "-- Original Issue
Discount" in the Prospectus.
Net Prepayment Premiums allocated to the Certificates will be taxable to
the holders of such Certificates on the date the amount of such premiums
becomes fixed.
The Offered Certificates may be treated for federal income tax purposes as
having been issued at a premium. Whether any holder of such a class of
Certificates will be treated as holding a certificate with amortizable bond
premium will depend on such Certificateholder's purchase price and the
distributions remaining to be made on such Certificate at the time of its
acquisition by such Certificateholder. Holders of such class of Certificates
should consult their own tax advisors regarding the possibility of making an
election to amortize such premium. See "Certain Federal Income Tax Consequences
- -- REMICs -- Taxation of Owners of REMIC Regular Certificates" and "-- Premium"
in the Prospectus.
The Offered Certificates will be treated as "real estate assets" within
the meaning of Section 856(c)(5)(B) of the Code generally in the same
proportion that the assets of the REMIC underlying such Certificates would be
so treated. In addition, interest (including original issue discount) on the
Offered Certificates will be interest described in Section 856(c)(3)(B) of the
Code to the extent that such Offered Certificates are treated as "real estate
assets" under Section 856(c)(5)(B) of the Code. Moreover, the Offered
Certificates will be "obligation[s] . . . which . . . [are] principally secured
by an interest in real property" within the meaning of Section 860G(a)(3)(C) of
the Code. The Offered Certificates will not be considered to represent an
interest in "loans . . . secured by an interest in real property which is . . .
residential real property" within the meaning of Section 7701(a)(19)(C)(v) of
the Code except in the proportion that the assets of the Trust Fund are
represented by Mortgage Loans secured by multifamily apartment buildings. See
"Certain Federal Income Tax Consequences -- REMICs" in the Prospectus.
For further information regarding the federal income tax consequences of
investing in the Certificates, see "Certain Federal Income Tax Consequences" in
the Prospectus.
STATE TAX CONSIDERATIONS
In addition to the federal income tax consequences described in "Certain
Federal Income Tax Consequences", potential investors should consider the state
income tax consequences of the acquisition, ownership, and disposition of the
Offered Certificates. State income tax law may differ substantially from the
corresponding federal law, and this discussion does not purport to describe any
aspect of the income tax laws of any state. Therefore, potential investors
should consult their own tax advisors with respect to the various tax
consequences of investments in the Offered Certificates.
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ERISA CONSIDERATIONS
A fiduciary of any employee benefit plan or other retirement plan or
arrangement (including individual retirement accounts and annuities and Keogh
plans) that is subject to the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), or to Section 4975 of the Code (each, a "Plan"), or of
any collective investment fund or separate account in which such Plans are
invested, should carefully review with its legal advisors whether the purchase
or holding of any Offered Certificate could give rise to a transaction that is
prohibited or is not otherwise permitted either under ERISA or Section 4975 of
the Code.
The U.S. Department of Labor has issued individual exemptions to each of
the Underwriters (Prohibited Transaction Exemption 90-23 (May 17, 1990) to J.P.
Morgan Securities Inc. and Prohibited Transaction Exemption 9734 (July 21,
1997) to Deutsche Bank AG (collectively, the "Exemption")), each of which
generally exempts from the application of the prohibited transaction provisions
of Section 406 of ERISA, and the excise taxes and other penalties imposed on
such prohibited transactions pursuant to Sections 4975(a) and (b) of the Code
and Section 502(i) of ERISA, certain transactions, among others, relating to
the servicing and operation of mortgage pools and the purchase, sale and
holding of mortgage pass-through certificates underwritten by an Underwriter,
provided that certain conditions set forth in such exemptions are satisfied.
For purposes of this Section "ERISA Considerations", the term "Underwriter"
shall include (a) J.P. Morgan Securities Inc., (b) any person directly or
indirectly, through one or more intermediaries, controlling, controlled by or
under common control with J.P. Morgan Securities Inc. and (c) any member of the
underwriting syndicate or selling group of which a person described in (a) or
(b) is a manager or co-manager with respect to the Offered Certificates.
The Exemption sets forth six general conditions which must be satisfied
for a transaction involving the purchase, sale and holding of Offered
Certificates to be eligible for exemptive relief thereunder. First, the
acquisition of Offered Certificates by a Plan must be on terms (including the
price) that are at least as favorable to the Plan as they would be in an
arm's-length transaction with an unrelated party. Second, the rights and
interests evidenced by such Offered Certificates must not be subordinate to the
rights and interests evidenced by other certificates of the same trust. Third,
such Offered Certificates at the time of acquisition by the Plan must be rated
in one of the three highest generic rating categories by Standard & Poor's,
Moody's, DCR or Fitch IBCA, Inc. Fourth, the Trustee cannot be an affiliate of
any member of the "Restricted Group" which consists of the Underwriters, the
Depositor, the Seller, the Master Servicer, the Special Servicer, any insurer
and any Mortgagor with respect to Mortgage Loans constituting more than 5% of
the aggregate unamortized principal balance of the Mortgage Loans as of the
date of initial issuance of such Offered Certificates. Fifth, the sum of all
payments made to and retained by the Underwriters must represent not more than
reasonable compensation for underwriting such Offered Certificates; the sum of
all payments made to and retained by the Depositor pursuant to the assignment
of the Mortgage Loans to the Trust Fund must represent not more than the fair
market value of such obligations; and the sum of all payments made to and
retained by the Master Servicer, any Sub-Servicer and the Special Servicer must
represent not more than reasonable compensation for such person's services
under the Pooling and Servicing Agreement and reimbursement of such person's
reasonable expenses in connection therewith. Sixth, the investing Plan must be
an accredited investor as defined in Rule 501 (a)(1) of Regulation D of the
Securities and Exchange Commission under the Securities Act of 1933.
Because the Class A1, Class A2 and Class X Certificates are not
subordinate to any other class of Certificates, the second general condition
set forth above is satisfied with respect to such Offered Certificates. It is a
condition of the issuance of the Class A1 and Class A2 Certificates that they
be rated "AAA" by DCR and Standard & Poor's and "Aaa" by Moody's and it is a
condition to the issuance of the Class X Certificates that they be rated "AAA"
by DCR, "AAAr" by Standard & Poor's and "Aaa" by Moody's. The Depositor expects
that the fourth general condition set forth above will be satisfied with
respect to each of such classes of Offered Certificates. A fiduciary of a Plan
contemplating purchasing any of such class of Offered Certificate must make its
own determination that the first, third, and fifth general conditions set forth
above will be satisfied with respect to any such class of Offered Certificates.
Each purchaser purchasing Class A1, Class A2 or Class X Certificates with the
assets of a Plan shall be deemed to represent and warrant that it is an
"accredited investor" as described in the sixth general condition set forth
above.
S-85
<PAGE>
The Class B, Class C, Class D, Class E and Class F Certificates do not
satisfy the second condition described above because they are subordinated to
the Class A1, Class A2 and Class X Certificates; furthermore the Class D, Class
E and Class F Certificates are not expected to satisfy the third condition
described above. Because the characteristics of the Class B, Class C, Class D,
Class E and Class F Certificates will not meet the requirements of the
Exemption and may not meet the requirements of any other exemption issued under
ERISA, the purchase and holding of the Class B, Class C, Class D, Class E and
Class F Certificates by a Plan may result in a prohibited transaction or the
imposition of excise taxes or civil penalties. Consequently, transfers of the
Class B, Class C, Class D, Class E and Class F Certificates will not be
registered by the Trustee unless the Trustee receives: (i) a representation
from the transferee of such Offered Certificate, acceptable to and in form and
substance satisfactory to the Trustee, to the effect that such transferee is
not a Plan or a person investing on behalf of or using the assets of a Plan to
effect such transfer; (ii) if the purchaser is an insurance company, a
representation that the purchaser is an insurance company which is purchasing
such Offered Certificates with funds contained in an "insurance company general
account" (as such term is defined in Section V(e) of the Prohibited Transaction
Class Exemption 95-60 (60 Fed. Reg. 35925, July 12, 1995) ("PTCE 95-60")) and
that the purchase and holding of such Offered Certificates are covered under
Sections I and III of PTCE 95-60; or (iii) an opinion of counsel satisfactory
to the Trustee that the purchase and holding of such Offered Certificate by a
Plan, any person acting on behalf of a Plan or using a Plan's assets will not
result in the assets of the Trust Fund being deemed to be "plan assets" and
subject to the prohibited transaction requirements of ERISA and the Code and
will not subject the Trustee to any obligation in addition to those undertaken
in the Pooling and Servicing Agreement. Such representation as described above
in (i) or (ii) shall be deemed to have been made to the Trustee by the
transferee's acceptance of a Class B, Class C, Class D, Class E or Class F
Certificate. In the event that such representation is violated or any attempt
to transfer to a Plan or person acting on behalf of a Plan or using a Plan's
assets is attempted without such opinion of counsel, such attempted transfer or
acquisition shall be void and of no effect.
In addition, to prevent prohibited transactions from arising in connection
with any Foreign Currency Exchange Contract, each purchaser of an Offered
Certificate will be deemed to represent that neither MGT nor any of its
affiliates has discretionary authority or control with respect to the
investment of the Plan's assets invested in the Offered Certificate, or gives
investment advice with respect to the investment of such assets.
Before purchasing any of such Offered Certificates, a fiduciary of a Plan
should itself confirm (a) that such Offered Certificates constitute
"certificates" for purposes of the Exemption and (b) that the specific and
general conditions of the Exemption and the other requirements set forth in the
Exemption would be satisfied. In addition to making its own determination as to
the availability of the exemptive relief provided in the Exemption, the Plan
fiduciary should consider the availability of any other prohibited transaction
exemptions.
Purchasers using insurance company general account funds to effect such
purchase should consider the availability of PTCE 95-60 issued by the U.S.
Department of Labor.
Any Plan fiduciary considering whether to purchase any Offered
Certificates on behalf of a Plan should consult with its counsel regarding the
applicability of the fiduciary responsibility and prohibited transaction
provisions of ERISA and the Code to such investment. Furthermore, any Plan
fiduciary considering a purchase of Offered Certificates should consider
whether, under the general fiduciary standards of investment prudence and
diversification, such an investment is appropriate for the Plan, taking into
account the overall investment policy of the Plan and the composition of the
Plan's investment portfolio. See "ERISA Considerations" in the Prospectus.
LEGAL INVESTMENT
The Certificates will not be "mortgage related securities" within the
meaning of the Secondary Mortgage Market Enhancement Act of 1984, as amended
("SMMEA").
In addition, institutions whose investment activities are subject to
review by certain regulatory authorities may be or may become subject to
restrictions, which may be retroactively imposed by such
S-86
<PAGE>
regulatory authorities, on the investment by such institutions in certain forms
of mortgaged backed securities. Furthermore, certain states have enacted
legislation overriding the legal investment provisions of SMMEA.
The Depositor makes no representations as to the proper characterization
of the Offered Certificates for legal investment or other purposes, or as to
the ability of particular investors to purchase the Offered Certificates under
applicable legal investment restrictions. These uncertainties may adversely
affect the legal liquidity of the Offered Certificates. Accordingly, all
institutions whose investment activities are subject to legal investment laws
and regulations, regulatory capital requirements or review by regulatory
authorities should consult with their own legal advisors in determining whether
and to what extent the Offered Certificates constitute a legal investment or is
subject to investment, capital or other restrictions. See "Legal Investment" in
the Prospectus.
PLAN OF DISTRIBUTION
Subject to the terms and conditions set forth in the underwriting
agreement among the Depositor, J.P. Morgan Securities Holdings Inc., J.P.
Morgan Securities Inc. and Deutsche Bank Securities Inc. (the "Underwriting
Agreement"), the Depositor has agreed to sell to J.P. Morgan Securities Inc.
and J.P. Morgan Securities Inc. has agreed to purchase from the Depositor the
Offered Certificates. Under the Underwriting Agreement, Deutsche Bank
Securities Inc. is not required to sell any specific amount of the Offered
Certificates but has agreed to use its best efforts to sell the Offered
Certificates.
J.P. Morgan Securities Inc. and Deutsche Bank Securities Inc. are acting
as co-lead managers. J.P. Morgan Securities Inc. is the sole bookrunner of all
of the Offered Certificates.
The obligations of the Underwriters under the Underwriting Agreement are
subject to certain conditions precedent.
Distribution of the Offered Certificates will be made by the Underwriters
from time to time in negotiated transactions or otherwise at varying prices to
be determined at the time of sale. Proceeds to the Depositor from the Offered
Certificates will be % of the initial aggregate principal balance thereof. In
connection with the purchase and sale of the Offered Certificates, (i) Deutsche
Bank Securities Inc. will receive an underwriting fee equal to 0.085% of the
aggregate Class Balance of the Offered Certificates whether or not it sells any
Offered Certificates and (ii) J.P. Morgan Securities Inc. will receive an
underwriting fee equal to 0.250% of the aggregate Class Balance of the Offered
Certificates.
The Depositor also has been advised by the Underwriters that they
currently expect to make a market in the Offered Certificates; however, they
have no obligation to do so, any market making may be discontinued at any time,
and there can be no assurance that an active public market for the Offered
Certificates will develop, or if it does develop, that it will continue.
The Depositor has agreed to indemnify the Underwriters against, or make
contributions to the Underwriters with respect to, certain liabilities,
including liabilities under the Securities Act of 1933.
The Seller has agreed to pay the expenses of the Depositor incurred in
connection with the purchase of the Mortgage Loans and the issuance of the
Certificates. One of the Underwriters is also an affiliate of the Depositor and
the Seller.
LEGAL MATTERS
Certain legal matters will be passed upon for the Depositor by Brown &
Wood LLP, New York, New York. Certain legal matters will be passed upon for the
Underwriters by Cadwalader, Wickersham & Taft, New York, New York.
RATING
It is a condition of the issuance of the Class A1 and Class A2
Certificates that they be rated "AAA" by Duff & Phelps Credit Rating Co.
("DCR") and Standard & Poor's Ratings Services, a division of The McGraw-Hill
Companies, Inc. ("Standard & Poor's") and "Aaa" by Moody's Investors Service,
Inc.
S-87
<PAGE>
("Moody's"). It is a condition of the issuance of the Class X Certificates that
they be rated "AAA" by DCR and "Aaa" by Moody's and "AAAr" by Standard &
Poor's. Standard & Poor's assigns the additional symbol of "r" to highlight
classes of securities that Standard & Poor's believes may experience high
volatility or high variability in expected returns due to non-credit risks;
however, the absence of an "r" symbol should not be taken as an indication that
a class will exhibit no volatility or variability in total return. It is a
condition of the issuance of the Class B Certificates that they be rated not
lower than "AA" by DCR and Standard & Poor's and "Aa2" by Moody's. It is a
condition of the issuance of the Class C Certificates that they be rated not
lower than "A" by DCR and Standard & Poor's and "A2" by Moody's. It is a
condition of the issuance of the Class D Certificates that they be rated not
lower than "A-" by DCR and Standard & Poor's and "A3" by Moody's. It is a
condition of the issuance of the Class E Certificates that they be rated not
lower than "BBB" by DCR and Standard & Poor's and "Baa2" by Moody's. It is a
condition of the issuance of the Class F Certificates that they be rated not
lower than "BBB-" by DCR and Standard & Poor's and "Baa3" by Moody's.
A rating on mortgage pass-through certificates addresses the likelihood of
the receipt of distributions of principal and interest to which
Certificateholders are entitled, including payment of all principal on the
Certificates by the Rated Final Distribution Date. The ratings take into
consideration the credit quality of the Mortgage Loans in the Trust Fund,
structural and legal aspects associated with the Certificates, and the extent
to which the payment stream from the pool of Mortgage Loans is adequate to make
required payments on the Certificates. The ratings on the Certificates do not
represent any assessment of (i) the likelihood or frequency of principal
prepayments on the Mortgage Loans, (ii) the degree to which such prepayments
might differ from those originally anticipated or (iii) whether and to what
extent Prepayment Premiums, Yield Maintenance charges, Excess Interest and
default interest will be received or net aggregate Prepayment Interest
Shortfalls will be realized. Also, a security rating does not represent any
assessment of the yield to maturity that investors may experience or the
possibility that the holders of the Class X Certificates might not fully
recover their investment in the event of rapid prepayments of the Mortgage
Loans (including both voluntary and involuntary prepayments).
In general, the ratings thus address credit risk and not prepayment risk.
As described herein, the amounts payable with respect to the Class X
Certificates consist only of interest. If the entire pool were to prepay in the
initial month, with the result that the Class X Certificateholders receive only
a single month's interest and thus suffer a nearly complete loss of their
investment, all amounts "due" to such Holders nevertheless will have been paid,
and such result is consistent with the "AAA" and "AAAr" ratings received on the
Class X Certificates. The Class X Certificate notional amount upon which
interest is calculated is reduced by the allocation of Realized Losses and
prepayments, whether voluntary or involuntary. The rating does not address the
timing or magnitude of reductions of such notional amount, but only the
obligation to pay interest timely on the notional amount as so reduced from
time to time. Accordingly, the ratings of the Class X Certificates should be
evaluated independently from similar ratings on other types of securities.
There can be no assurance as to whether any rating agency not requested to
rate the Offered Certificates will nonetheless issue a rating and, if so, what
such rating would be. A rating assigned to the Offered Certificates by a rating
agency that has not been requested by the Depositor to do so may be lower than
the rating assigned by DCR, Standard & Poor's or Moody's pursuant to the
Depositor's request.
The rating of the Offered Certificates should be evaluated independently
from similar ratings on other types of securities. A security rating is not a
recommendation to buy, sell or hold securities and may be subject to downgrade,
qualification (if applicable) or withdrawal at any time by the assigning rating
agency. Each security rating should be evaluated independently of any other
security rating. A security rating does not address the frequency or likelihood
of prepayments (whether voluntary or involuntary) of Mortgage Loans, or the
corresponding effect on the yield to investors.
S-88
<PAGE>
INDEX OF PRINCIPAL TERMS
<TABLE>
<S> <C>
30/360 basis ................................... S-65
51 Sleeper Borrower ............................ S-49
51 Sleeper Loan ................................ S-49
51 Sleeper Property ............................ S-49
51 Sleeper Street .............................. S-49
Additional Servicing Fee Rate .................. S-80
Additional Westmont Loan ....................... S-51
Additional Westmont Property ................... S-51
Adjusted Available Distribution Amount ......... S-65
Adjusted Collateral Value ...................... S-70
Allocation Fraction ............................ S-65
Anticipated Repayment Date ..................... S-56
ARD Loans ...................................... S-56
Asset Strategy Report .......................... S-79
Available Distribution Amount .................. S-64
Balloon Mortgage Loan .......................... S-58
Balloon Payment ................................ S-58
Basic Master Servicing Fee Rate ................ S-80
Beneficial Owner ............................... S-61
Bonds .......................................... S-47
Borrower Note .................................. S-47
BPNY ........................................... S-47
C$ ............................................. S-51
Canadian Loans ................................. S-54
Cede ........................................... S-61
Cedelbank Participants ......................... S-62
Certificate Account ............................ S-82
Certificateholders ............................. S-61
Certificates ................................... S-61
Class A Certificates ........................... S-61
Class Balance .................................. S-67
Class Prepayment Fraction ...................... S-65
Clearance Cooperative .......................... S-62
Code ........................................... S-84
Collateral Value Adjustment .................... S-70
Collection Account ............................. S-82
CPR ............................................ S-73
Crossed Loans .................................. S-58
Cut-off Date LTV Ratio ......................... S-36
DCR ............................................ S-87
Definitive Certificates ........................ S-63
Depositories ................................... S-62
Directing Certificateholder .................... S-79
Distribution Date .............................. S-64
DTC ............................................ S-61
DTC Participants ............................... S-62
DTC Registered Certificates .................... S-61
Due Date ....................................... S-28
ERISA .......................................... S-85
</TABLE>
S-89
<PAGE>
<TABLE>
<S> <C>
ESA ........................................................ S-59
Euroclear .................................................. S-61
Euroclear Operator ......................................... S-62
Euroclear Participants ..................................... S-62
Excess Cash Flow ........................................... S-57
Excess Interest ............................................ S-57
Exemption .................................................. S-85
FIRREA ..................................................... S-36
Foreign Currency Exchange Contract ......................... S-53
Form 8-K ................................................... S-60
F/X Payment Date ........................................... S-53
F/X Schedule ............................................... S-53
Global Securities .......................................... G-1
Horizon Borrower ........................................... S-48
Horizon Group .............................................. S-48
Horizon Outlet Loans ....................................... S-48
Horizon Outlet Properties .................................. S-48
Hyatt Regency Rochester .................................... S-55
Hyatt Rochester Borrower ................................... S-55
Hyatt Rochester Loan ....................................... S-55
Hyatt Rochester Property ................................... S-55
Indirect Participants ...................................... S-62
Initial Pool Balance ....................................... S-28
Interest Accrual Amount .................................... S-65
Interest Distribution Amount ............................... S-65
Interest F/X Rate .......................................... S-53
Interest Reserve Account ................................... S-66
Interest Reserve Loans ..................................... S-66
Letter of Credit ........................................... S-47
Loan Sale Agreement ........................................ S-28
Lock-out Date .............................................. S-41
Lock-out Period ............................................ S-41
Loss Mortgage Loan ......................................... S-69
Madison Concourse Borrower ................................. S-50
Madison Concourse Hotel .................................... S-50
Madison Concourse Loan ..................................... S-50
Madison Concourse Mortgage ................................. S-50
Madison Concourse Property ................................. S-50
Master Servicing Fee ....................................... S-80
Master Servicing Fee Rate .................................. S-80
Maturity Date .............................................. S-66
Maturity Date/Anticipated Repayment Date LTV Ratio ......... S-36
McCook Metals Borrower ..................................... S-45
McCook Metals Loan ......................................... S-45
McCook Metals Property ..................................... S-45
MGT ........................................................ S-28
Midland .................................................... S-76
Mills Borrowers ............................................ S-43
Mills Loan ................................................. S-43
Mills Properties ........................................... S-43
Mills Property ............................................. S-43
</TABLE>
S-90
<PAGE>
<TABLE>
<S> <C>
Monitoring Certificateholders ........... S-79
Monthly Payments ........................ S-28
Moody's ................................. S-88
Mortgage ................................ S-28
Mortgage Interest Rate .................. S-56
Mortgage Loan File ...................... S-81
Mortgage Loans .......................... S-28
Mortgage Note ........................... S-28
Mortgage Pool ........................... S-28
Mortgaged Property ...................... S-28
Mortgagor ............................... S-56
Net Operating Income .................... S-37
Net Prepayment Premium .................. S-66
NOI ..................................... S-37
Notional Amount ......................... S-65
Offered Certificates .................... S-61
Operating Statements .................... S-37
Other Certificates ...................... S-68
PAR ..................................... S-59
Participants ............................ S-62
Pass-Through Rate ....................... S-64
Percentage Interest ..................... S-64
P&I Advance ............................. S-70
Plan .................................... S-85
PML ..................................... S-59
Pooling and Servicing Agreement ......... S-81
Prepayment .............................. S-71
Prepayment Interest Excess .............. S-66
Prepayment Interest Shortfall ........... S-66
Prepayment Premium ...................... S-41
Principal Distribution Amount ........... S-66
Principal F/X Rate ...................... S-53
Priority of Distributions ............... S-66
Property Protection Advance ............. S-71
Property Protection Expenses ............ S-71
PTCE 95-60 .............................. S-86
Realized Loss ........................... S-69
Record Date ............................. S-64
REMIC ................................... S-84
REMIC Regulations ....................... S-83
Remittance Rate ......................... S-64
REO Account ............................. S-61
REO Property ............................ S-61
Replacement Special Servicer ............ S-79
Required Appraisal Date ................. S-69
Revised Rate ............................ S-56
Ridgewood Borrower ...................... S-44
Ridgewood Loan .......................... S-44
Ridgewood Property ...................... S-44
Seller .................................. S-28
Servicers ............................... S-76
</TABLE>
S-91
<PAGE>
<TABLE>
<S> <C>
Servicing Standard ......................................... S-77
Servicing Transfer Event ................................... S-77
SMMEA ...................................................... S-86
Special Servicing Fee ...................................... S-80
Specially Serviced Mortgage Loan ........................... S-77
Standard & Poor's .......................................... S-87
Stated Principal Balance ................................... S-69
Synertech Health Systems ................................... S-54
Terms and Conditions ....................................... S-63
Trigger Event .............................................. S-44
Trustee Fee Rate ........................................... S-82
Underwriting Agreement ..................................... S-87
Underwritten Cash Flow ..................................... S-37
Underwritten Cash Flow Debt Service Coverage Ratio ......... S-37
Underwritten NOI ........................................... S-37
U.S. Person ................................................ G-3
UW Cash Flow ............................................... S-37
UW DSCR .................................................... S-37
UW NOI ..................................................... S-37
Vartan Borrower ............................................ S-54
Vartan Building ............................................ S-54
Vartan Loan ................................................ S-54
Vartan Property ............................................ S-54
Voting Rights .............................................. S-82
Westmont Canadian Borrowers ................................ S-51
Westmont Canadian Loans .................................... S-51
Westmont Canadian Properties ............................... S-51
Westmont Loans ............................................. S-51
Westmont Properties ........................................ S-51
Withheld Amounts ........................................... S-66
Woodfield Gardens Borrower ................................. S-46
Woodfield Gardens Loan ..................................... S-46
Woodfield Gardens Property ................................. S-46
W-Westmont ................................................. S-51
Yield Maintenance .......................................... S-42
</TABLE>
S-92
<PAGE>
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<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
ANNEX A
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
<TABLE>
<CAPTION>
Sequence
Number Property Name Address
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1 Mills Corp Pool I Various
1.1 Western Hills Plaza 6150 Glenway Avenue
1.2 Gwinnett Market Fair 3625 & 3675 Satelite Boulevard
1.3 Mt. Prospect Plaza 1068 Mt. Prospect
1.4 West Falls Church 7395 Lee Highway
2 Ridgewood County Club Apts 2001 Traceway Dr.
3 McCook Metals Building 4900 1st Avenue
4 Woodfield Gardens Apartments 4700 Arbor Drive
5 51 Sleeper Street 51 Sleeper St
6 Madison Concourse Hotel One West Dayton St
7 Vartan Building 2400 Thea Drive
8 Hyatt Regency Rochester 125 E. Main Street
9 Northfield Office Park I & II 5600 & 5700 Crooks Rd
10 Merrill Place 411 First Avenue, South
11 Becker Office Building 401 Main Street
12 The Tower Building 1807 7th Avenue
13 Tregaron Oaks Apartments 1729 Scarborough Drive
14 USProperties Pool II Various
14.1 Cross Creek 345 Bryant Road
14.2 Summertree 9 Summertree Lane
14.3 Tealpoint 3431 North Shannon Amity Rd.
15 University Plaza Building 949 E. 36th Street
16 Sterling Woods Apartments 950 Executive Dr.
17 Sealy Outlet Center 1402 Outlet Center Dr.
18 Ludlam Point Apartments 6880 SW 44th St
19 Villa Florence Hotel 225 Powell St.
20 Riverside Centre 3403 10th Street
21 Stuart Centre 2285 South Federal Highway
22 Holiday Inn-Greenbelt 7200 Hanover Center Drive
23 Post Distribution Building 3324 142nd Ave.
24 Broadway Summit Office Building 3101 Broadway Blvd.
25 IBM Building 1798 NW 40th Street
26 Nebraska Crossing Factory Store 14333 So. Highway 31
27 Van Buren Building 733 N. Van Buren St
28 Eastland on the Lake Apts 2400 Shore Blvd
29 Grand Central Office Building 1000 Union Station
30 Deer Creek Apartments 4415 Kirk Road
31 Victoria Plaza Apartments 26101 Country Club Blvd
32 Quail Park III 501 S. Rancho Dr.
33 Prestwick Pointe and Junction Pointe 5230/5250 East US 36
33.1 Prestwick Pointe I-V 5250 East US 30
33.2 Prestwick Junction Pointe 5530 East US 30
34 Lakewood Park Health Center 12023 South Lakewood Blvd
35 Phillips Highway Commerce Park 6950 Phillips Highway
36 El Paso Commerce Various
36.1 El Paso Commerce - A 6988 Commerce Avenue
36.2 El Paso Commerce - B 6830 Industrial Avenue
36.3 El Paso Commerce - C 1000 Hawkins Boulevard
37 Downey Community Health Center 8425 Iowa St
38 Lakeshore Estates MHP 1785 State Route 28
39 Village Portico 227-299 S. West 8th Street
40 North Coast Medical 18305 Sutter Blvd
41 Bloor Street Quality Hotel 280 Bloor Street
42 Ridge Terrace Health Care Ctr. 2180 Hypoluso Road
43 Power House Office Building and Theatre 800 Union Station
44 Horizon Outlet Center-Traverse 3939 Market Place Circle
45 New Landing Shopping Center 6301 Troost
46 Plaza De Las Palmas 1125-1265 Avocado Avenue
47 Paradise Hills Convalescent 6061 Banbury St
48 Embassy Place Apts - Phase I 2219 Teakwood Cir
49 Meadow Plaza Shopping Center 3112,3120 &3128 Santa Rita Road
50 Springfield Inn 100 S. Fountain Av
51 First Data Building 416 South Bell Avenue
52 Boca Bend Marina Apartments 3100 South Dixie Highway
53 Glacier Hills Apartments 1202, 1210 & 1218 McKenna Blvd
54 Bayshore Plaza Shopping Ctr 103 Statesville Road
55 Westridge Village Shopping Ctr 3600 Sunset Avenue
56 Village Manor Apartments 2601 Soldiers Home Road
57 Deerfoot Village 1371 South Walnut St.
58 Peridot Place/ The Woodlands 825 Santa Barbara Blvd.
59 5 & 7 Burroughs Warehouse 5&7 Burroughs
60 717 Second Street, NE 709,711,717 2nd St, NE & 216 G St. NE
61 Lake Plaza South 6902 South West Lake Road
62 Agape Manor/Limestone Lodge & Manor Various
62.1 Agape Manor and Village 2582 Charity Lane (Manor) & 372/376 Jimmy Fisk Road (Village)
62.2 Limestone Lodge and Manor 600 Highway 31 North (Manor) & 1528/1532 W. Hobbs St. (Lodge)
63 Mercado del Sol 1110-1150 S. Rainbow Blv
64 Stonegate Apartments 7119 62nd Avenue
65 Ross Memorial Health Care Center 1780 Old 41 Hwy
66 Williams Sonoma s/s NW 86th Str.
67 Harbourside Production Studio 915 Lakeshore Blvd East
68 Glenwood Village Apartments 5713 Garrett Street
69 Sleep Inn - Florence 1833 Florence Park Dr
70 34th South Broadway 34 South Broadway
71 Pulse Athletic Club 100 Oakmont Drive
72 Holiday Inn Express 18240 Conneaut Lake Road
73 Willow Station Shopping Center 2305-2401 W. 27th St
74 Mt. Vernon Gateway Centre Coshoston Avenue (U.S. Route 36)
75 St. John's - Quality Inn 2 Hill O'Chips
76 GTS Durateck Building 10100 Old Columbia Road
77 Plantation Plaza 1550,1558,1560 S.E. Federal Highway
78 Giant Eagle Shopping Center West Side State Route 36
79 John Young Crossing Shop.Ctr. 300 S. Hiawassee Road
80 Comfort Inn - Pointe Claire 700 Boulevard St. Jean
81 The Fields Apartments 1333 Fenbrook Lane
82 333 Market Street 333 Market Street
83 Wells Fargo Plaza 212-220 Euclid Avenue
84 Chagrin Lee Square 16500 Chagrin Blvd
85 7127 Riverside Building 7127 S. Riverside Drive
86 Goddard Court Townhomes 11208 Goddard Court Drive
87 Petsmart 3480 Landers Road
88 Adams Building 790 N. Jackson Street
89 Staples 2975 S. Arlington Rd
90 Arroyo Grande Mini Storage 2175 Willow Road
91 Desert Knolls Convalescent Hospital 14973 Hesperia Rd
92 Crystal Lake Plaza 3500 S. Hiawassee
93 Centinela Valley Care 950 & 1000S. Flower
94 Goff Plaza 1720 Bridge Boulevard, SW
95 New York Plaza & Arcade 330 West Fairbanks Ave
96 Jackson Building 732 N. Jackson St
97 Eckerds 178-181 Broadway
98 Ponte Vedra Office Complex 217 & 221 Ponte Vedra Park Drive
99 Mobilelodge of Milpitas 1515 N. Milpitas Blvd.
100 Comfort Inn - Winnipeg 1770 Sargent Avenue
101 Quality Suites - Laval 2035 Autoroute des Laurentaides
102 Canton Bi-Lo Various
102.1 Eliada Plaza 337 New Leicester Highway
102.2 Canton Bi-Lo 1923 Harkins Cove Road
103 Comfort Inn - Regina 3321 E. Eastgate Drive
104 Overland Plaza & Self Storage 18025 Monterey Street
105 Waverly Tower Shopping Center 500 Exeter Hall,2801-2849 Greenmount Ave,2900 Mathews St.
106 Townview Mobile Home Park 1288 N. Bagley Street
107 Clarke Road Shopping Center Silver Starr and Clarke Road
108 Cripple Creek Shopping Center 884 Buford Drive
109 Wilmington Athletic Club 2026 S. 16th Street
110 Mayfair & Flamingo Apartments Various
110.1 Mayfair Apts. 740-760 NW 95 Street
110.2 Flamingo Apts. 1480 NW 95th Street
111 Westport Commercial 4666 S. 132nd Street
112 Colorado Office Park 735 Colorado Avenue
113 Four Seasons Retail 43701-43779 Van Dyke Ave
114 John Rupp Dacotah Blvd 366 Selby St.
115 Hur Warehouses 8222 Jamestown Dr., 8319 & 8335 Research Dr.
116 Comfort Inn - Cambridge 220 Holiday Inn Drive
117 Massara's Plaza 10735 Ravenna Road
118 1420 S. Lewis Avenue 1420 S. Lewis Avenue
119 Summers Village Shopping Ctr 3701 North Beltline Road
120 John Rupp Exchange Rd 26 East Exchange Street
121 Broadway/Bellfort Center 8300 Broadway
122 Willow Creek Professional Blg 1631 Willow Street
123 John Rupp University Club 420 Summit Avenue
124 Hutchinson Island Shoppes 11001 South U.S. Highway A1A
125 Hollywood Video - Miami 14601 Miller Road
126 Stirling Palm Plaza 10201-10261 Stirling Road
127 Suwannee Plaza Shopping Center 2103-2241 NW 11th Drive
128 Commercial Blvd. 2500,2633&3050 Commercial Boulevard
129 The Niland Building 320 North Clark Rd
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Number
Sequence Property Year Year of sq. ft.
Number City State Zip Code Type Built Renovated Units
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 Various Various Various Anchored Retail Various Various 1,028,399
1.1 Cincinnati OH 22209 Anchored Retail 1954 1983/1991/1992 449,496
1.2 Duluth GA 30096 Anchored Retail 1988 194,719
1.3 Mt. Prospect IL 60056 Anchored Retail 1959 1987 298,600
1.4 Falls Church VA 22044 Anchored Retail 1973 & 1982 1992 & 1996 85,584
2 Fitchburg WI 53713 Multifamily 1968-1973 1999 862
3 McCook IL 60525 Industrial 1942 1991 2,100,000
4 Rolling Meadows IL 60008 Multifamily 1967 & 1969 1999 692
5 Boston MA 02110 Office 1900 1984 & 1998 147,142
6 Madison WI 53703 Hotel 1973, 1985 1985/93/94 356
7 Harrisburg PA 17110 Office 1997 1998 206,900
8 Rochester NY 14604 Hotel 1992 335
9 Troy MI 48095 Office 1975 & 1973 1984 & 1991 211,623
10 Seattle WA 98104 Office 1913 1983 179,814
11 Peoria IL 61602-1241 Office 1992 163,521
12 Seattle WA 98101 Office 1930 1988 143,041
13 Bellevue NE 68123 Multifamily 1996 300
14 Various Various Various Multifamily Various Various 512
14.1 Spartanburg SC 29303 Multifamily 1979 1998 152
14.2 Greensboro NC 27406 Multifamily 1984 1998 144
14.3 Charlotte NC 28205 Multifamily 1972 1987/95 216
15 Anchorage AK 99501 Office 1977 1995 122,651
16 Alpharetta GA 30202 Multifamily 1988 266
17 Sealy TX 77474 Factory Outlet 1995 191,587
18 Miami FL 33155 Multifamily 1986 204
19 San Francisco CA 94102 Hotel 1908 1986 111,482
20 Riverside CA 92501 Office 1983 1994 153,149
21 Stuart FL 34994 Anchored Retail 1981 1990 196,540
22 Greenbelt MD 20770 Hotel 1984 1996/1997 204
23 Sumner WA 98390 Industrial 1997 263,800
24 Kansas City MO 64111 Office 1984 121,639
25 Boca Raton FL 33434 Mixed Use 1979 147,090
26 Gretna NE 68028 Factory Outlet 1994 191,500
27 Milwaukee WI 53202 Office 1926 1971/1982 140,006
28 Columbus OH 43232 Multifamily 1973 376
29 St. Louis MO 63103 Office 1991 61,786
30 Austintown OH 44515-5302 Multifamily 1970 & 1975 360
31 North Olmstead OH 44070 Multifamily 1971 1995-98 296
32 Las Vegas NV 89106 Office 1988 71,296
33 Danville IN 41220 Mixed Use 1994,1995 & 1998 94,578
33.1 Danville IN 41220 Mixed Use 1994,1995 & 1998 82,078
33.2 Danville IN 41220 Mixed Use 1994,1995 & 1998 12,500
34 Downey CA 90242 Nursing Home 1946 1957, 1965, 1978 231
35 Jacksonville FL 32216 Industrial 1984 1997 121,060
36 El Paso TX 79915 Industrial Various 362,621
36.1 El Paso TX 79915 Industrial 1972, 1995 45,548
36.2 El Paso TX 79915 Industrial 1965 34,523
36.3 El Paso TX 79915 Industrial 1958,1972 & 1982 282,550
37 Downey CA 90241 Nursing Home 1970 1986 198
38 Goshen OH 45122 Mobile Home Park 1967 1997 426
39 Miami FL 33130 Anchored Retail 1997 28,808
40 Morgan Hill CA 95037 Industrial 1998 73,600
41 Toronto ON M55 1V8 Hotel 1989 210
42 Lantana FL 33462 Nursing Home 1984 120
43 St. Louis MO 63103 Office 1988 1988 101,517
44 Traverse MI 49684 Factory Outlet 1990, 1999 153,975
45 Kansas City MO 64131 Anchored Retail 1961 1996 204,890
46 El Cajon CA 92020 Unanchored Retail 1987,1989 & 1994 42,186
47 San Diego CA 92139 Nursing Home 1972 162
48 Highland IN 46322 Multifamily 1998 64
49 Pleasanton CA 94566 Anchored Retail 1985/86 53,612
50 Springfield OH 45502 Hotel 1989 1994 124
51 Ames IA 50010 Office 1999 60,480
52 Boca Raton FL 33432 Multifamily 1983 104
53 Madison WI 53715 Multifamily 1989 122
54 Huntersville NC 28078 Anchored Retail 1971& 1998 1998 51,695
55 Rocky Mount NC 27804 Anchored Retail 1971&1972 1987 90,814
56 West Lafayette IN 47906 Multifamily 1965 & 1968 1996-1998 122
57 Starke FL 31091 Anchored Retail 1989 105,668
58 Cape Coral FL 33991 Congregate Care 1987, 1989, 1994 92
59 Irvine CA 92718 Industrial 1985 1990 77,852
60 Washington DC 20006 Office 1984 1989 26,556
61 Milwaukee OR 97267 Office 1998 33,211
62 Various AL Various Congregate Care Various 124
62.1 Hazel Green AL 35750 Congregate Care 1991, 1993 48
62.2 Athens AL 35611 Congregate Care 1978, 1983 76
63 Las Vegas NV 89102 Unanchored Retail 1987 30,123
64 Lakewood WA 98467 Multifamily 1986 120
65 Kennesaw GA 30152 Nursing Home 1991 100
66 Oklahoma City OK 73114 Office 1998 35,862
67 Toronto ON M4M 3L5 Industrial 1990 73,734
68 Garden City ID 83714 Multifamily 1978 136
69 Florence SC 29502 Hotel 1993 1997 106
70 White Plains NY 10601 Office 1970 1997-98 51,351
71 Greenville NC 27858 Unanchored Retail 1998 40,828
72 Meadville PA 16335 Hotel 1994 68
73 Greeley CO 80632 Unanchored Retail 1979/80 85,942
74 Mt. Vernon OH Anchored Retail 1997 42,922
75 St. John's NF A1C 6B1 Hotel 1990 162
76 Columbia MD 21046 Office 1997 35,000
77 Stuart FL 34994 Unanchored Retail 1984 68,285
78 Roaring Spring PA 16673 Anchored Retail 1994 59,900
79 Orlando FL 32835 Anchored Retail 1995-97 24,504
80 Pointe Claire PQ H9R 3KQ Hotel 1985 100
81 Bloomington IN 47401 Multifamily 1998 40
82 Oakland CA 94607 Industrial 1965 70,265
83 San Diego CA 92114 Mixed Use 1989 28,368
84 Shaker Heights OH 44120 Mixed Use 1989 & 1993 1993 52,000
85 Tulsa OK 74136 Office 1993 1998 37,250
86 Taylor MI 48322 Multifamily 1971 98
87 North Little Rock AR 72117 Unanchored Retail 1995 32,840
88 Milwaukee WI 53202 Office 1920 1985-1988 42,769
89 Akron OH 44319 Anchored Retail 1998 24,049
90 Arroyo Grande CA 93420 Self Storage 1997 74,804
91 Victorville CA 92392 Nursing Home 1962 1976 126
92 Orlando FL 32835 Anchored Retail 1963 1986 53,120
93 Inglewood CA 90301 Nursing Home 1960/62 1998 191
94 Albuquerque NM 87105-3182 Anchored Retail 1965 1997 74,791
95 Winter Park FL 32789-5093 Unanchored Retail 1942-46 1988 21,417
96 Milwaukee WI 53202 Office 1979 1991 50,809
97 Monticello NY 12701 Anchored Retail 1997 13,500
98 Ponte Vedra FL 32082 Office 1996/1997 20,013
99 Milpitas CA 95035 Mobile Home Park 1962 1996 145
100 Winnipeg MB R3H 0C8 Hotel 1987 81
101 Laval PQ H7S 1Z6 Hotel 1991 116
102 Canton/Asheville NC Various Anchored Retail Various Various 62,388
102.1 Ashville NC 28806 Anchored Retail NAV 33,748
102.2 Ashville NC 28806 Anchored Retail 1981 28,640
103 Regina SK S42 1A4 Hotel 1986 1998 99
104 Morgan Hill CA 95037 Self Storage 1990 1998 466
105 Baltimore MD 21218 Anchored Retail 1956 1984 53,540
106 Dallas TX 75211 Mobile Home Park 1964/1965 166
107 Orlando FL 32835 Anchored Retail 1993 21,004
108 Lawrenceville GA 30243 Unanchored Retail 1997 23,000
109 Wilmington NC 28401 Unanchored Retail 1983 38,500
110 Various FL Various Multifamily Various Various 82
110.1 Miami FL 33150 Multifamily 1963 1996 46
110.2 Miami FL 33150 Multifamily 1949 1996 36
111 Omaha NE 68137 Unanchored Retail 1983 1995 22,650
112 Stuart FL 34994 Mixed Use 1972 1985 29,769
113 Sterling Heights MI 48314 Unanchored Retail 1986 1998 31,550
114 St. Paul MN 55101 Office 1889 1975 30,009
115 Austin TX 78758 Mixed Use 1970s 1992 58,621
116 Caimbridge ON N3C 124 Hotel 1987 Various 84
117 Twinsburg OH 44087 Anchored Retail 1965 52,287
118 Tulsa OK 74104 Unanchored Retail 1997 11,726
119 Irving TX 75038 Unanchored Retail 1983 20,886
120 St. Paul MN 55101 Office 1910 1996 34,410
121 Houston TX 77017 Unanchored Retail 1976/1981 28,290
122 San Jose CA 95125 Office 1978 1997 16,507
123 St. Paul MN 55102 Mixed Use 1913 1980 27,000
124 Hutchinson Island FL 34957 Anchored Retail 1984 18,501
125 Miami FL 33175 Unanchored Retail 1998 7,488
126 Cooper City FL 33328 Unanchored Retail 1998 9,642
127 Chiefland FL 32626 Unanchored Retail 1995 1998 17,443
128 Ft. Lauderdale FL 33308 Mixed Use 1971/72 & 1976 15,960
129 El Paso TX 32801 Industrial 1965 1998 81,547
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Original Current
Sequence Occupancy Occupancy Appraisal Appraisal Original Principal Principal
Number Rate(19) Date Value(1) Date LTV Balance(1)(2) Balance(1)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 92.15 3/1/99 90,950,000 Various 64.21 58,400,000 58,136,667
1.1 86.00 3/1/99 35,000,000 9/11/98 24,000,000
1.2 96.00 3/1/99 22,650,000 9/18/98 14,500,000
1.3 97.50 3/1/99 25,000,000 9/23/98 14,500,000
1.4 97.00 3/1/99 8,300,000 9/24/98 5,400,000
2 90.80 7/16/99 39,500,000 8/27/98 78.99 31,200,000 30,948,385
3 100.00 12/9/98 45,600,000 12/16/98 67.65 30,850,000 30,514,076
4 99.00 4/28/99 30,900,000 5/20/99 78.32 24,200,000 24,186,478
5 100.00 3/30/99 30,900,000 1/22/99 74.43 23,000,000 22,961,612
6 73.00 12/31/98 33,500,000 8/22/98 66.42 22,250,000 21,980,569
7 100.00 6/30/99 28,500,000 5/1/99 62.87 17,918,000 17,898,122
8 70.62 12/31/98 26,500,000 5/1/98 67.92 18,000,000 17,773,861
9 98.00 4/20/99 24,500,000 2/8/99 71.43 17,500,000 17,479,309
10 100.00 3/31/99 28,200,000 12/3/98 60.28 17,000,000 16,926,533
11 93.00 5/4/99 20,600,000 8/14/98 71.36 14,700,000 14,632,298
12 89.10 3/31/99 19,550,000 7/20/98 73.45 14,360,000 14,230,249
13 99.60 4/29/99 17,000,000 9/29/98 80.00 13,600,000 13,521,651
14 93.63 3/31/99 17,200,000 7/14/98 78.37 13,480,000 13,354,125
14.1 97.00 3/31/99 3,200,000 7/14/98 2,560,000
14.2 94.00 3/31/99 5,700,000 7/13/98 4,570,000
14.3 91.00 3/31/99 8,300,000 7/14/98 6,350,000
15 100.00 5/27/99 17,000,000 12/4/98 75.00 12,750,000 12,702,093
16 96.24 3/25/99 14,600,000 4/6/98 85.00 12,410,000 12,295,037
17 90.60 6/1/99 16,800,000 5/14/99 66.16 11,115,000 11,106,771
18 100.00 3/12/99 14,500,000 3/5/99 75.86 11,000,000 10,971,716
19 80.70 9/30/98 18,800,000 11/30/98 55.85 10,500,000 10,432,071
20 86.00 4/1/99 19,900,000 12/3/98 52.26 10,400,000 10,356,571
21 87.24 3/31/99 13,300,000 7/21/98 75.19 10,000,000 9,948,429
22 79.00 12/31/98 14,400,000 12/11/98 57.64 8,300,000 8,236,804
23 100.00 5/31/99 10,450,000 4/10/98 74.64 7,800,000 7,724,507
24 93.00 4/26/99 11,500,000 4/29/99 66.96 7,700,000 7,689,284
25 100.00 12/1/98 10,200,000 12/22/97 74.51 7,600,000 7,503,550
26 85.20 6/1/99 14,000,000 5/21/99 53.46 7,485,000 7,479,459
27 84.00 6/24/99 10,500,000 2/2/99 71.43 7,500,000 7,480,617
28 93.00 4/13/99 9,150,000 8/15/98 78.14 7,150,000 7,113,317
29 93.00 3/15/99 8,700,000 2/25/99 75.00 6,525,000 6,522,437
30 94.20 3/31/99 8,610,000 7/27/98 75.49 6,500,000 6,438,772
31 91.00 3/22/99 9,360,000 3/2/99 68.59 6,420,000 6,403,408
32 92.80 2/11/99 9,600,000 4/13/98 66.67 6,400,000 6,331,137
33 99.13 3/31/99 8,500,000 3/1/99 72.35 6,150,000 6,126,711
33.1 99.00 3/31/99 7,372,738 3/1/99 5,334,393
33.2 100.00 3/31/99 1,127,262 3/1/99 815,607
34 98.00 3/23/99 8,500,000 3/23/99 70.59 6,000,000 5,989,474
35 92.00 12/31/98 7,850,000 9/17/98 76.43 6,000,000 5,955,865
36 100.00 1/1/99 7,825,000 8/5/98 75.02 5,870,000 5,841,449
36.1 100.00 1/1/99 925,000 8/5/98 693,898
36.2 100.00 1/1/99 700,000 8/5/98 525,112
36.3 100.00 1/1/99 6,200,000 8/5/98 4,650,990
37 96.10 1/28/99 8,250,000 1/28/99 70.00 5,775,000 5,765,429
38 93.00 5/21/99 7,400,000 5/5/99 77.03 5,700,000 5,664,836
39 95.00 4/1/99 7,400,000 9/7/98 75.68 5,600,000 5,531,803
40 100.00 1/1/99 7,000,000 12/1/98 79.29 5,550,000 5,504,915
41 73.69 12/31/98 12,224,109 5/25/98 45.31 5,538,200 5,407,120
42 92.00 12/31/98 9,450,000 9/21/98 56.08 5,300,000 5,258,637
43 100.00 3/15/99 7,500,000 2/25/99 70.07 5,255,000 5,249,733
44 88.80 6/1/99 11,700,000 5/1/99 44.49 5,205,000 5,201,147
45 93.00 3/1/99 6,500,000 9/2/98 72.31 4,700,000 4,687,626
46 90.00 12/31/98 6,300,000 7/1/98 73.02 4,600,000 4,499,395
47 92.20 3/31/99 6,540,000 9/15/98 68.81 4,500,000 4,472,426
48 100.00 3/31/99 5,800,000 10/8/98 77.59 4,500,000 4,471,083
49 100.00 4/1/99 6,700,000 1/15/99 66.78 4,474,000 4,452,109
50 74.00 4/1/99 6,200,000 8/20/98 72.58 4,500,000 4,445,366
51 100.00 5/1/99 6,100,000 3/23/99 72.54 4,425,000 4,419,877
52 99.00 5/4/99 5,700,000 9/15/98 77.19 4,400,000 4,343,317
53 92.60 4/12/99 5,100,000 9/8/98 82.35 4,200,000 4,168,078
54 100.00 5/28/99 5,600,000 2/1/99 74.20 4,155,000 4,124,843
55 95.50 3/31/99 5,700,000 5/26/98 73.68 4,200,000 4,121,569
56 94.00 4/21/99 5,050,000 4/12/99 79.21 4,000,000 3,991,903
57 96.00 5/6/99 5,050,000 8/15/98 79.21 4,000,000 3,964,676
58 96.00 4/6/99 5,600,000 2/19/98 71.43 4,000,000 3,952,979
59 100.00 5/1/99 5,725,000 2/10/99 69.00 3,950,000 3,942,096
60 100.00 12/31/98 5,700,000 10/9/98 68.77 3,920,000 3,889,300
61 100.00 4/20/99 5,150,000 4/6/99 74.76 3,850,000 3,845,671
62 95.00 3/23/99 5,300,000 3/22/99 70.75 3,750,000 3,739,896
62.1 95.00 3/23/99 2,250,000 3/22/99 1,750,000
62.2 95.00 3/23/99 3,050,000 3/22/99 2,000,000
63 93.00 4/1/99 5,000,000 1/20/99 73.00 3,650,000 3,643,838
64 96.00 4/16/99 5,200,000 10/20/98 67.79 3,525,000 3,517,434
65 96.00 4/1/99 4,850,000 4/5/99 72.16 3,500,000 3,493,897
66 100.00 4/1/99 4,500,000 7/23/98 76.67 3,450,000 3,450,000
67 100.00 2/23/99 6,699,491 10/1/98 50.68 3,395,586 3,363,808
68 86.80 3/25/99 4,250,000 8/12/98 80.00 3,400,000 3,375,263
69 67.70 12/31/98 4,750,000 9/17/98 70.00 3,325,000 3,299,581
70 100.00 4/2/99 4,800,000 3/13/99 68.59 3,292,500 3,282,728
71 100.00 1/13/99 4,290,000 2/11/99 74.24 3,185,000 3,174,567
72 76.00 3/31/99 4,500,000 12/16/98 68.89 3,100,000 3,086,575
73 97.00 5/1/99 4,400,000 10/22/98 70.45 3,100,000 3,087,960
74 96.00 4/20/99 4,000,000 5/8/99 75.00 3,000,000 2,997,361
75 68.90 12/31/98 5,161,290 10/7/97 59.21 3,056,027 2,990,258
76 100.00 5/10/99 4,430,000 5/4/99 67.72 3,000,000 2,996,216
77 98.00 4/1/99 4,000,000 2/23/99 75.00 3,000,000 2,995,192
78 100.00 2/9/99 3,800,000 1/13/99 78.95 3,000,000 2,990,624
79 100.00 4/1/99 4,400,000 7/31/98 65.00 2,860,000 2,839,646
80 87.15 12/31/98 4,617,997 5/25/98 62.50 2,886,248 2,830,111
81 100.00 4/23/99 3,500,000 11/13/98 80.00 2,800,000 2,796,144
82 100.00 5/1/99 3,850,000 8/20/98 68.83 2,650,000 2,631,912
83 100.00 12/1/98 3,700,000 1/4/99 70.68 2,615,000 2,602,533
84 97.59 3/31/99 3,400,000 9/18/98 75.29 2,560,000 2,531,535
85 91.00 5/20/99 3,750,000 2/1/99 66.67 2,500,000 2,499,114
86 97.00 3/2/99 3,160,000 1/14/99 79.11 2,500,000 2,491,528
87 100.00 4/1/99 3,100,000 7/24/98 79.13 2,453,000 2,453,000
88 96.00 6/24/99 3,250,000 2/2/99 73.85 2,400,000 2,393,798
89 100.00 4/1/99 3,200,000 1/7/99 71.88 2,300,000 2,300,000
90 99.00 4/5/99 3,300,000 3/3/99 68.94 2,275,000 2,264,739
91 96.00 2/28/99 3,250,000 3/15/99 69.23 2,250,000 2,246,178
92 97.60 4/1/99 3,000,000 7/17/98 75.00 2,250,000 2,233,987
93 92.00 12/31/98 3,300,000 2/15/99 67.73 2,235,000 2,227,165
94 97.00 3/1/99 3,050,000 2/11/98 73.77 2,250,000 2,213,216
95 88.00 12/1/98 3,050,000 7/21/98 72.13 2,200,000 2,184,208
96 98.00 6/24/99 3,600,000 2/2/99 60.17 2,166,000 2,160,402
97 100.00 4/1/99 2,675,000 3/25/98 80.00 2,140,000 2,140,000
98 100.00 4/1/99 2,725,000 1/18/99 73.39 2,000,000 1,994,269
99 98.62 5/5/99 3,750,000 1/13/99 53.33 2,000,000 1,986,975
100 86.60 12/31/98 3,259,762 5/28/98 60.42 1,969,440 1,931,135
101 70.00 12/31/98 3,803,056 5/25/98 51.79 1,969,440 1,931,135
102 100.00 4/27/99 2,820,000 10/14/98 65.60 1,850,000 1,837,869
102.1 100.00 4/27/99 1,650,000 10/14/98 1,000,000
102.2 100.00 4/27/99 1,170,000 10/14/98 850,000
103 82.90 12/31/98 3,191,851 5/27/98 58.51 1,867,572 1,831,248
104 82.00 12/31/98 3,200,000 8/10/98 57.81 1,850,000 1,835,725
105 100.00 5/1/99 3,700,000 11/18/98 48.65 1,800,000 1,786,709
106 94.58 2/24/99 2,450,000 12/8/98 69.39 1,700,000 1,688,661
107 100.00 4/1/99 2,600,000 7/31/98 65.38 1,700,000 1,687,901
108 100.00 1/22/99 2,400,000 12/7/98 70.83 1,700,000 1,683,080
109 100.00 2/18/99 3,200,000 2/10/99 52.34 1,675,000 1,671,070
110 96.42 4/1/99 2,300,000 6/27/98 73.91 1,700,000 1,645,555
110.1 98.00 4/1/99 1,200,000 6/27/98 886,957
110.2 94.40 4/1/99 1,100,000 6/27/98 813,043
111 100.00 6/24/99 2,700,000 8/20/98 62.96 1,700,000 1,644,925
112 95.00 4/1/99 2,200,000 3/1/99 75.00 1,650,000 1,647,394
113 100.00 12/8/98 2,750,000 2/2/99 59.45 1,635,000 1,626,021
114 98.60 1/22/99 2,950,000 9/25/98 53.90 1,590,000 1,582,242
115 100.00 2/10/99 2,600,000 8/18/98 59.62 1,550,000 1,544,153
116 67.90 12/31/98 2,886,248 5/25/98 53.18 1,534,805 1,504,953
117 100.00 4/23/99 2,985,000 4/1/99 50.25 1,500,000 1,491,536
118 100.00 3/31/99 1,850,000 1/4/99 78.38 1,450,000 1,445,913
119 92.80 3/31/99 2,160,000 5/6/98 67.13 1,450,000 1,439,120
120 99.00 4/13/99 2,130,000 9/1/98 67.14 1,430,000 1,423,023
121 95.00 1/14/99 1,960,000 1/13/99 71.43 1,400,000 1,393,746
122 100.00 2/12/99 2,450,000 10/15/98 56.94 1,395,000 1,386,963
123 88.00 2/9/99 2,050,000 9/25/98 67.07 1,375,000 1,368,497
124 100.00 3/31/99 1,800,000 2/19/99 75.00 1,350,000 1,347,836
125 100.00 4/12/99 1,630,000 9/15/98 79.75 1,300,000 1,290,012
126 100.00 3/31/99 1,600,000 10/5/98 75.63 1,210,000 1,206,494
127 100.00 3/8/99 1,570,000 1/24/99 70.06 1,100,000 1,095,802
128 100.00 3/23/99 1,500,000 2/11/99 66.67 1,000,000 996,198
129 100.00 12/10/98 1,500,000 1/5/99 66.67 1,000,000 990,656
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Current Net Mortgage
Crossed Related Mortgage Mortgage Interest Rate Annual
Sequence Loan Loan Interest Interest Accrual Debt
Number Group(3) Group(4) Rate(5)(6) Rate(6)(7) Basis(8) Service(1)(9)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 7.3000 7.2090 ACT/360 4,804,481
1.1
1.2
1.3
1.4
2 6.7500 6.6765 ACT/360 2,428,351
3 8.5300 8.4065 ACT/360 3,219,714
4 7.3600 7.2165 ACT/360 2,002,753
5 7.8100 7.7365 ACT/360 1,988,754
6 6.8900 6.8165 ACT/360 1,868,406
7 8.0500 7.9765 ACT/360 1,585,212
8 7.2800 7.1565 ACT/360 1,565,440
9 7.8100 7.7365 ACT/360 1,513,182
10 7.5000 7.3765 ACT/360 1,426,398
11 7.7500 7.6265 ACT/360 1,263,751
12 6.7200 6.5965 ACT/360 1,114,230
13 7.2500 7.1765 ACT/360 1,113,312
14 6.5700 6.4965 ACT/360 1,029,891
14.1
14.2
14.3
15 8.0600 7.9865 ACT/360 1,186,967
16 6.5000 6.4265 30/360 941,276
17 1 8.4600 8.3865 ACT/360 1,070,419
18 7.5100 7.3665 ACT/360 923,867
19 7.7500 7.6265 ACT/360 951,714
20 7.6600 7.5865 ACT/360 886,333
21 7.2500 7.1065 ACT/360 818,612
22 8.2800 8.2065 ACT/360 850,534
23 7.2500 7.1765 30/360 638,517
24 7.9800 7.9065 ACT/360 688,742
25 7.4000 7.3265 30/360 631,450
26 1 8.4600 8.3865 ACT/360 720,835
27 A 7.4900 7.3665 ACT/360 628,677
28 7.9300 7.8565 ACT/360 625,388
29 B 8.3500 8.2065 ACT/360 593,755
30 C 6.5300 6.4065 ACT/360 494,553
31 C 7.4900 7.3665 ACT/360 538,147
32 7.5300 7.4565 30/360 538,575
33 8.0200 7.9465 ACT/360 570,579
33.1
33.2
34 8.3700 8.2965 ACT/360 573,470
35 6.7500 6.6765 ACT/360 466,991
36 7.7800 7.7065 ACT/360 533,442
36.1
36.2
36.3
37 8.6500 8.5765 ACT/360 565,045
38 6.9400 6.8665 ACT/360 612,506
39 7.2500 7.1265 ACT/360 458,422
40 7.2000 7.0765 ACT/360 479,246
41 2 D 8.3050 8.1815 30/360 545,589
42 8.1100 8.0365 ACT/360 536,338
43 B 8.4200 8.2765 ACT/360 481,306
44 1 8.4600 8.3865 ACT/360 501,262
45 8.1700 8.0265 ACT/360 441,675
46 6.9500 6.8265 30/360 426,310
47 8.0700 7.9965 ACT/360 419,288
48 6.7700 6.6965 ACT/360 350,961
49 7.7500 7.6765 ACT/360 405,521
50 6.8750 6.8015 ACT/360 377,366
51 7.8900 7.7465 ACT/360 385,565
52 6.5300 6.4565 ACT/360 357,500
53 6.6000 6.4765 ACT/360 321,884
54 7.1000 6.9565 ACT/360 389,563
55 7.1000 7.0265 ACT/360 393,782
56 7.6400 7.5665 ACT/360 359,098
57 6.7500 6.6765 30/360 311,327
58 7.0600 6.9865 ACT/360 341,093
59 7.7000 7.6265 ACT/360 356,471
60 8.0700 7.9965 ACT/360 365,246
61 8.0000 7.9265 ACT/360 338,999
62 8.0600 7.9865 ACT/360 349,108
62.1
62.2
63 7.7700 7.6265 ACT/360 314,394
64 7.3300 7.2565 ACT/360 307,931
65 8.4000 8.3265 ACT/360 335,370
66 3 6.8900 6.8165 ACT/360 241,006
67 8.5550 8.4315 ACT/360 403,933
68 6.8000 6.7265 ACT/360 265,986
69 8.2000 8.0565 ACT/360 313,260
70 7.5900 7.5165 ACT/360 294,292
71 E 8.8000 8.7265 ACT/360 327,929
72 8.5200 8.3965 ACT/360 323,301
73 7.8900 7.7465 ACT/360 284,410
74 7.7500 7.6765 ACT/360 271,918
75 D 8.4220 8.2985 30/360 280,860
76 7.5600 7.4365 ACT/360 253,198
77 F 7.9500 7.8065 ACT/360 262,902
78 7.5000 7.4265 ACT/360 251,717
79 G 6.9000 6.8265 ACT/360 226,032
80 2 D 8.4430 8.3195 30/360 288,409
81 7.2100 7.1365 ACT/360 228,300
82 7.4300 7.3065 ACT/360 233,553
83 7.8800 7.8065 ACT/360 239,707
84 6.8200 6.6965 ACT/360 213,608
85 8.6000 8.5265 ACT/360 232,803
86 7.5800 7.4565 ACT/360 217,818
87 3 7.0900 7.0165 ACT/360 176,333
88 A 7.4900 7.3665 ACT/360 201,177
89 3 7.8600 7.7865 ACT/360 183,291
90 8.2500 8.1765 ACT/360 232,614
91 8.5300 8.4565 ACT/360 217,957
92 G 6.9000 6.8265 ACT/360 177,822
93 8.4100 8.3365 ACT/360 214,338
94 7.3500 7.2765 ACT/360 215,040
95 7.9100 7.7665 ACT/360 202,188
96 A 7.4900 7.3665 ACT/360 181,562
97 3 7.0500 6.9765 ACT/360 152,965
98 7.8200 7.6765 ACT/360 173,101
99 7.8900 7.7665 ACT/360 199,106
100 2 D 8.4430 8.3195 30/360 196,797
101 2 D 8.4430 8.3195 30/360 196,797
102 7.6700 7.5965 ACT/360 166,519
102.1
102.2
103 2 D 8.4430 8.3195 30/360 186,618
104 8.1500 8.0765 ACT/360 173,555
105 7.7500 7.6265 ACT/360 163,151
106 8.3200 8.2465 ACT/360 161,799
107 G 6.9000 6.8265 ACT/360 134,354
108 8.1500 8.0065 ACT/360 172,543
109 E 8.7000 8.6265 ACT/360 164,569
110 6.8500 6.7765 ACT/360 181,654
110.1
110.2
111 6.7200 6.6465 ACT/360 180,182
112 F 8.0000 7.8565 ACT/360 145,285
113 8.1600 8.0365 ACT/360 189,316
114 H 8.4000 8.2565 30/360 164,375
115 8.0400 7.9665 ACT/360 144,051
116 2 D 8.4430 8.3195 30/360 153,366
117 7.8800 7.7565 ACT/360 170,773
118 7.8800 7.8065 ACT/360 126,222
119 8.3000 8.1765 ACT/360 137,772
120 H 8.4000 8.2565 30/360 147,834
121 8.2000 8.0565 ACT/360 131,899
122 7.2500 7.1765 ACT/360 114,196
123 H 8.6500 8.5065 30/360 144,761
124 F 7.9500 7.8065 ACT/360 118,306
125 6.5500 6.4765 ACT/360 99,116
126 7.7800 7.7065 ACT/360 104,324
127 7.9800 7.9065 ACT/360 101,705
128 8.0000 7.9265 ACT/360 92,618
129 8.6400 8.5665 ACT/360 105,204
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Remaining
Remaining Remaining Amortization Payment New/Adjusted
Sequence Interest Only Term Term Origination Adjustment Annual Debt
Number Period(months) (months) (months)(10) Date Date(11) Service(12)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 114 354 1/26/99
1.1
1.2
1.3
1.4
2 110 350 9/18/98
3 113 233 12/30/98
4 119 359 6/18/99
5 57 357 4/30/99
6 110 290 9/25/98
7 118 358 5/13/99
8 109 289 8/12/98
9 82 358 5/19/99
10 114 354 1/29/99
11 113 353 12/11/98
12 109 349 8/26/98
13 112 352 11/3/98
14 109 349 8/4/98
14.1
14.2
14.3
15 116 296 3/5/99
16 134 350 9/30/98
17 120 299 7/9/99
18 116 356 3/30/99
19 114 294 12/31/98
20 114 354 1/20/99
21 113 353 12/21/98
22 115 235 2/26/99
23 144 348 7/24/98
24 118 334 5/28/99
25 104 344 3/17/98
26 120 299 7/9/99
27 116 356 3/29/99
28 112 352 12/9/98
29 119 359 6/14/99
30 109 349 8/28/98
31 116 356 4/1/99
32 166 346 5/29/98
33 116 296 3/29/99
33.1
33.2
34 118 298 5/13/99
35 111 351 10/19/98
36 115 295 2/19/99
36.1
36.2
36.3
37 118 298 5/24/99
38 178 178 5/27/99
39 111 351 10/20/98
40 113 293 12/10/98
41 71 227 6/30/98
42 235 235 2/4/99
43 118 358 5/28/99
44 120 299 7/9/99
45 117 297 4/27/99
46 229 229 8/31/98
47 114 294 1/14/99
48 112 352 11/19/98
49 115 295 2/18/99
50 110 290 9/30/98 11/1/07 412,319.16
51 118 358 5/11/99
52 110 290 9/30/98
53 111 351 10/2/98
54 236 236 3/5/99
55 218 230 9/4/98
56 118 298 5/25/99
57 110 350 9/21/98
58 110 290 9/4/98
59 118 298 5/12/99
60 112 292 11/24/98
61 118 358 5/17/99
62 117 297 4/14/99
62.1
62.2
63 117 357 4/19/99
64 118 298 5/12/99
65 118 298 5/13/99
66 14 110 307 9/14/98 11/1/00 287,247.36
67 81 165 4/15/99
68 111 351 10/27/98
69 112 292 11/24/98
70 117 297 4/9/99
71 117 261 4/7/99
72 117 237 4/23/99
73 116 296 3/19/99
74 119 299 6/23/99
75 65 281 12/16/97
76 118 358 5/28/99
77 117 357 4/14/99
78 115 355 2/16/99
79 111 351 10/2/98
80 73 229 8/11/98
81 118 358 5/3/99
82 114 294 1/28/99
83 115 295 2/18/99
84 111 291 10/30/98
85 119 359 6/8/99
86 116 320 3/31/99
87 13 109 308 8/20/98 10/1/00 207,873.48
88 116 356 3/17/99
89 20 116 317 3/24/99 5/1/01 206,898.60
90 237 237 4/29/99
91 118 298 5/28/99
92 111 351 10/2/98
93 116 296 3/29/99
94 231 231 10/14/98
95 113 293 12/10/98
96 116 356 3/29/99
97 11 106 348 6/23/98 8/11/00 173,519.88
98 115 355 2/24/99
99 236 236 3/1/99
100 73 229 8/11/98
101 73 229 8/11/98
102 114 294 1/14/99
102.1
102.2
103 73 229 8/11/98
104 112 292 11/11/98
105 113 293 12/21/98
106 113 293 12/31/98
107 111 351 10/2/98
108 234 234 1/26/99
109 117 297 4/7/99
110 170 170 9/10/98
110.1
110.2
111 170 170 9/14/98
112 117 357 4/14/99
113 178 178 5/13/99
114 237 237 4/29/99
115 116 296 3/9/99
116 73 229 8/11/98
117 178 178 5/13/99
118 115 355 2/16/99
119 112 292 11/25/98
120 237 237 4/29/99
121 115 295 2/9/99
122 112 352 11/18/98
123 237 237 4/28/99
124 117 357 4/14/99
125 111 351 10/4/98
126 115 355 2/26/99
127 116 296 3/16/99
128 116 296 3/31/99
129 114 234 1/25/99
</TABLE>
- ------------------------
(1) For the Canadian Loans (Loan Numbers 41, 67, 75, 80, 100, 101, 103, 116)
all dollar amounts are US$ and based on a conversion rate of US$1 to
C$1.4725.
(2) For Mortgage Loans secured by multiple Mortgaged Properties, the Mortgage
Loan's principal balance is allocated to the respective Mortgaged
Properties based on: 1) the terms of the Mortgage Loan, 2) the appraised
values of the Mortgaged Properties, or 3) the square footage of the
Mortgaged Properties.
(3) Each number identifies one of three groups of Crossed Loans.
(4) Each letter identifies one of eight groups of related Borrowers.
(5) The Mortgage Interest Rate on Loan Number 50 will be 7.875% on and after
October 1, 2007.
(6) For the Canadian Loans, the Current Mortgage Interest Rate is the rate
calculated based on the interest payments set forth in the related F/X
Schedule in Annex D.
(7) For each Mortgage Loan, the excess of the related Mortgage Interest Rate
over the related Master Servicing Fee Rate and the Trustee Fee Rate.
(8) "ACT/360" means interest accrues on the basis of the actual number of days
elapsed and a 360-day year.
(9) For Loan Numbers 66, 87, 89 and 97, calculated as one year of interest; for
all other Mortgage Loans, calculated as 12 times the Monthly Payment in
effect as of the Cut-off Date.
(10) For four of the Balloon Loans (Loan Numbers 66, 87, 89 and 97) the
remaining amortization term does not include the interest only period which
precedes the Payment Adjustment Date. For all other Mortgage Loans, the
remaining amortization term is equal to the original amortization term less
the number of scheduled payments through the Cut-off Date.
(11) For Loan Numbers 50, 66, 87, 89 and 97, the date on which the Monthly
Payment increases to include either payment of additional interest or
payment of principal.
(12) Twelve times the Monthly Payment after giving effect to any change in the
Monthly Payment effective on the Payment Adjustment Date.
(13) For ARD Loans, the related Anticipated Repayment Date.
(14) For ARD Loans, the ratio is calculated as of the related Anticipated
Repayment Date.
(15) For Mortgage Loans whose terms allow for Defeasance, the second anniversary
of the Delivery Date which was assumed to be August 1, 1999.
(16) With respect to Loan Number 25, NOI 97 and NOI 98 represent annualized NOI.
With respect to Loan Numbers 13, 21, 33, 42, 48, 66, 84, 86, 87, 97, 119,
120 and 125, NOI 98 represents annualized NOI. For such Mortgage Loans the
annualized NOI is calculated based on the actual NOI for the indicated
number of months. With respect to Loan Number 64, the related NOI is the
NOI for the fiscal year ending on the related September 30.
(17) Calculated as the ratio of UW Cash Flow to the greater of Annual Debt
Service or New/Adjusted Annual Debt Service.
(18) 1/12 refers to 1/12th of the annual amount.
(19) With respect to Mortgage Loans secured by multiple Mortgaged Properties,
the occupancy rate thereof is the weighted average occupancy rate for each
Mortgaged Property based on either square feet or units thereof.
<PAGE>
<TABLE>
<CAPTION>
Maturity
Date/Anticipated ARD Final
Sequence New/Adjusted Repayment Maturity Balloon Ending Lockout Defeasance
Number Interest Rate Date(13) Date Balance(1) LTV(14) End Date(15) End Date
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 2/1/09 2/1/29 51,398,524 56.51 7/31/01 10/31/08
1.1
1.2
1.3
1.4
2 10/1/08 27,081,511 68.56 10/31/03
3 1/1/09 1/1/19 22,254,750 48.80 1/31/02 9/30/08
4 7/1/09 7/1/29 21,348,679 69.09 7/31/01 3/31/09
5 5/1/04 5/1/29 22,013,005 71.24 7/31/01 3/31/04
6 10/1/08 10/1/23 17,793,073 53.11 11/30/01 6/30/08
7 6/1/09 6/1/29 16,069,847 56.39 7/31/01 2/28/09
8 9/1/08 9/1/23 14,562,713 54.95 7/31/01 5/31/08
9 6/1/06 6/1/29 16,340,517 66.70 7/31/01 2/28/06
10 2/1/09 15,037,046 53.32 2/28/02 10/31/08
11 1/1/09 13,084,660 63.52 1/31/05
12 9/1/08 9/1/28 12,450,738 63.69 7/31/01 5/31/08
13 12/1/08 11,960,411 70.36 12/31/01 8/31/08
14 9/1/08 11,640,128 67.68 8/31/01 5/31/08
14.1
14.2
14.3
15 4/1/09 4/1/24 10,557,464 62.10 7/31/01 12/31/08
16 10/1/10 9,996,768 68.47 8/31/01 6/30/10
17 8/1/09 8/1/24 9,287,145 55.28 7/31/01 4/30/09
18 4/1/09 9,737,644 67.16 4/30/03 12/31/08
19 2/1/09 8,611,382 45.81 2/29/04
20 2/1/09 9,235,371 46.41 7/31/01 10/31/08
21 1/1/09 8,791,310 66.10 12/31/02 9/30/08
22 3/1/09 5,947,469 41.30 3/31/03 11/30/08
23 8/1/11 6,245,238 59.76 7/31/03
24 6/1/09 6,712,235 58.37 7/31/01 2/28/09
25 4/1/08 6,593,767 64.64 4/30/01 4/30/03
26 8/1/09 8/1/24 6,254,096 44.67 7/31/01 4/30/09
27 4/1/09 6,635,994 63.20 4/30/03 12/31/08
28 12/11/08 12/11/28 6,390,902 69.85 8/10/01 6/10/08
29 7/1/09 7/1/29 5,895,072 67.76 7/31/01 3/31/09
30 9/1/08 5,606,652 65.12 9/30/03
31 4/1/09 5,680,410 60.69 4/30/04
32 6/1/13 4,847,073 50.49 6/30/05
33 4/1/09 4/1/24 5,086,628 59.84 7/31/01 12/31/08
33.1
33.2
34 6/1/09 5,011,429 58.96 7/31/01 2/28/09
35 11/1/08 5,206,315 66.32 11/30/01 7/31/08
36 3/1/09 4,825,683 61.67 7/31/01 11/30/08
36.1
36.2
36.3
37 6/1/09 4,860,679 58.92 7/31/01 2/28/09
38 6/1/14 154,625 2.09 7/31/01 5/31/13
39 11/1/08 4,861,889 65.70 11/30/04
40 1/1/09 4,478,980 63.99 1/31/04
41 7/1/05 4,477,600 36.63 9/30/03
42 3/1/19 288,450 3.05 3/31/03 11/30/18
43 6/1/09 6/1/29 4,753,368 63.38 7/31/01 2/28/09
44 8/1/09 8/1/24 4,349,041 37.17 7/31/01 4/30/09
45 5/1/09 3,905,472 60.08 7/31/01 1/31/09
46 9/1/18 35,323 0.56 9/30/06
47 2/1/09 3,724,516 56.95 2/28/03 10/31/08
48 12/1/08 3,907,979 67.38 12/31/01 8/31/08
49 3/1/09 3,674,819 54.85 2/28/03 11/30/08
50 7.875 10/1/08 10/1/13 3,599,094 58.05 10/31/01 10/31/07
51 6/1/09 6/1/29 3,953,552 64.81 7/31/01 2/28/09
52 10/1/08 10/1/13 3,478,818 61.03 10/31/01 9/30/03
53 11/1/08 3,629,627 71.17 11/30/03
54 4/1/19 172,571 3.08 7/31/01 3/31/16
55 10/1/17 539,288 9.46 10/31/06
56 6/1/09 6/1/24 3,272,066 64.79 7/31/01 2/28/09
57 10/1/08 3,418,754 67.70 10/31/01 6/30/08
58 10/1/08 3,215,630 57.42 10/31/03
59 6/1/09 6/1/24 3,236,851 56.54 7/31/01 2/28/09
60 12/1/08 3,246,598 56.96 12/31/03
61 6/1/09 3,448,822 66.97 7/31/01 2/28/09
62 5/1/09 3,106,359 58.61 7/31/01 1/31/09
62.1
62.2
63 5/1/09 3,252,980 65.06 7/31/01 1/31/09
64 6/1/09 2,857,048 54.94 7/31/01 2/28/09
65 6/1/09 2,925,763 60.33 7/31/01 2/28/09
66 6.89 10/1/08 2,964,653 65.88 7/31/01 3/31/08
67 5/1/06 2,211,447 33.01 7/31/01 1/31/06
68 11/1/08 2,954,206 69.51 11/30/03
69 12/1/08 2,763,929 58.19 12/31/02 8/31/08
70 5/1/09 5/1/24 2,690,432 56.05 7/31/01 1/31/09
71 5/1/09 5/1/21 2,496,187 58.19 7/31/01 1/31/09
72 5/1/09 2,238,197 49.74 5/31/04
73 4/1/09 2,554,457 58.06 7/31/01 12/31/08
74 7/1/09 2,462,875 61.57 7/31/01 3/31/09
75 1/1/05 2,697,319 52.26 3/31/03
76 6/1/09 6/1/29 2,658,936 60.02 6/30/04
77 5/1/09 2,685,287 67.13 7/31/01 1/31/09
78 3/1/09 2,657,137 69.92 3/31/03 11/30/08
79 11/1/08 2,491,633 56.63 11/30/03
80 9/1/05 2,342,555 50.73 11/30/03
81 6/1/09 2,459,860 70.28 7/31/01 2/28/09
82 2/1/09 2,153,038 55.92 7/31/01 10/31/08
83 3/1/09 2,156,031 58.27 7/31/01 11/30/08
84 11/1/08 2,042,022 60.06 11/30/01 7/31/08
85 7/1/09 7/1/29 2,271,425 60.57 7/31/01 3/31/09
86 4/1/09 4/1/26 2,122,084 67.15 7/31/01 12/31/08
87 7.09 9/1/08 2,118,559 68.34 7/31/01 2/29/08
88 4/1/09 2,123,517 65.34 4/30/03 12/31/08
89 7.86 4/1/09 4/1/14 2,041,860 63.81 7/31/01 12/31/08
90 5/1/19 127,894 3.88 7/31/01 4/30/16
91 6/1/09 1,887,589 58.08 7/31/01 2/28/09
92 11/1/08 1,960,201 65.34 11/30/03
93 4/1/09 1,868,909 56.63 4/30/03 12/31/08
94 11/1/18 97,326 3.19 11/30/01 4/30/18
95 1/1/09 1,812,997 59.44 12/31/01 9/30/08
96 4/1/09 1,916,474 53.24 4/30/03 12/31/08
97 7.05 6/11/08 1,926,128 72.00 8/10/01 12/10/07
98 3/1/09 1,785,446 65.52 7/31/01 11/30/08
99 4/1/19 101,712 2.71 7/31/01 3/31/16
100 9/1/05 1,598,450 49.04 11/30/03
101 9/1/05 1,598,450 42.03 11/30/03
102 2/1/09 1,513,720 53.68 1/31/02 10/31/08
102.1
102.2
103 9/1/05 1,515,771 47.49 11/30/03
104 12/1/08 1,535,664 47.99 12/31/03
105 1/1/09 1,476,534 39.91 1/31/04
106 1/1/09 1,417,231 57.85 1/31/04
107 11/1/08 1,481,040 56.96 11/30/03
108 2/1/19 88,611 3.69 2/28/03 2/28/16
109 5/1/09 5/1/24 1,412,403 44.14 7/31/01 1/31/09
110 10/1/13 44,844 1.95 10/31/05
110.1
110.2
111 10/1/13 43,702 1.62 10/31/01 10/31/06
112 5/1/09 1,478,664 67.21 7/31/01 1/31/09
113 6/1/14 56,280 2.05 7/31/01 5/31/12
114 5/1/19 13,604 0.46 7/31/01 4/30/16
115 4/1/09 1,282,727 49.34 7/31/01 12/31/08
116 9/1/05 1,245,688 43.16 11/30/03
117 6/1/14 48,921 1.64 7/31/01 5/31/12
118 3/1/09 1,296,325 70.07 3/31/04
119 12/1/08 1,208,696 55.96 12/31/03
120 5/1/19 12,237 0.57 7/31/01 4/30/16
121 3/1/09 1,164,892 59.43 3/31/03 11/30/08
122 12/1/08 1,226,821 50.07 11/30/01 8/31/08
123 5/1/19 11,976 0.58 7/31/01 4/30/16
124 5/1/09 1,208,375 67.13 7/31/01 1/31/09
125 11/1/08 1,121,917 68.83 11/30/03
126 3/1/09 1,079,146 67.45 3/31/04
127 4/1/09 908,765 57.88 4/30/03 12/31/08
128 4/1/09 826,623 55.11 7/31/01 12/31/08
129 2/1/09 723,790 48.25 2/28/03 10/31/08
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Yield
Sequence Maintenance NOI Months NOI Months NOI Months Ending
Number End Date 96(1) 96 97(1)(16) 97 98(1)(16) 98 Date 98
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 7,002,644 12 7,458,382 12 7,063,416 12 12/31/98
1.1 2,841,069 12 2,804,215 12 2,487,728 12 12/31/98
1.2 1,727,428 12 2,027,260 12 1,859,685 12 12/31/98
1.3 1,796,604 12 1,935,166 12 1,952,710 12 12/31/98
1.4 637,543 12 691,741 12 763,293 12 12/31/98
2 6/30/08 3,321,719 12 3,406,831 12 3,246,531 12 12/31/98
3
4 2,429,111 12 2,672,931 12 12/31/98
5
6 3,213,128 12 3,762,737 12 4,184,042 12 12/31/98
7
8 3,179,357 12 3,521,215 12 3,065,080 12 12/31/98
9 1,912,230 12 2,001,097 12 2,346,757 12 12/31/98
10 2,309,717 12 2,453,592 12 1,770,621 12 12/31/98
11 9/30/08 1,572,874 12 1,646,355 12 1,777,144 12 12/31/98
12 1,255,723 12 1,488,227 12 1,574,819 12 12/31/98
13 334,414 8 998,737 12 Annualized 9 months
14 1,342,363 12 1,442,826 12 1,486,731 12 12/31/98
14.1 221,869 12 276,051 12 307,553 12 12/31/98
14.2 472,934 12 494,284 12 548,048 12 12/31/98
14.3 647,560 12 672,491 12 631,130 12 12/31/98
15 1,663,590 12 1,640,479 12 1,905,592 12 6/30/98
16 1,222,281 12 1,271,901 12 1,366,060 12 12/31/98
17 1,910,905 12 1,872,471 12 1,805,691 12 12/31/98
18 1,173,285 12 1,249,812 12 1,287,369 12 12/31/98
19 10/31/08 1,297,245 12 1,592,204 12 1,738,112 12 12/31/98
20 1,356,940 12 1,105,972 12 1,133,014 12 12/31/98
21 1,022,127 12 983,481 12 1,053,611 12 Annualized 9.5 months
22 1,235,450 12 1,525,010 12 1,648,816 12 12/31/98
23 1/31/11 1,012,605 12 12/31/98
24 878,995 12 1,060,116 12 985,334 12 12/31/98
25 9/30/07 944,682 12 976,621 12 Annualized 9.5 months
26 2,170,366 12 1,940,232 12 1,746,609 12 12/31/98
27 1,196,122 12 1,075,751 12 908,568 12 12/31/98
28 1,044,951 12 12/31/98
29 829,800 12 801,009 12 837,704 12 12/31/98
30 5/31/08 715,805 12 633,786 12 818,047 12 12/31/98
31 12/31/08 828,755 12 903,189 12 871,867 12 12/31/98
32 5/31/08 962,650 12 788,030 12 750,686 12 12/31/98
33 473,528 12 518,358 12 715,342 12 Annualized 10 months
33.1
33.2
34 1,155,493 12 1,085,303 12 1,154,873 12 9/30/98
35 307,005 12 498,900 12 708,664 12 12/31/98
36
36.1
36.2
36.3
37 1,715,495 12 1,669,548 12 1,980,686 12 12/31/98
38 576,697 12 602,163 12 12/31/98
39 7/31/08 62,816 5 245,707 12 12/31/98
40 9/30/08
41 3/31/05 944,177 12 1,188,055 12 1,407,119 12 12/31/98
42 1,043,526 12 1,090,500 12 1,901,132 12 Annualized 11 months
43 964,143 12 489,491 12 739,898 12 12/31/98
44 854,267 12 783,539 12 766,189 12 12/31/98
45 477,966 12 542,165 12 518,710 12 12/31/98
46 8/31/13 591,286 12 627,151 12 708,631 12 12/31/98
47 377,599 12 890,899 12 1,020,588 12 12/31/98
48 407,750 12 Annualized 6 months
49 469,621 12 490,808 12 523,837 12 12/31/98
50 831,012 12 791,252 12 801,610 12 12/31/98
51
52 6/30/08 633,503 12 655,343 12 12/31/98
53 7/31/08 474,273 12 450,828 12 463,846 12 12/31/98
54 173,630 12 273,202 12 330,231 12 6/30/98
55 9/30/14 613,211 12 631,540 12 689,123 12 12/31/98
56 452,383 12 516,928 12 12/31/98
57 468,337 12 492,699 12 372,954 12 12/31/98
58 6/30/08 312,609 12 535,396 12 12/31/98
59 371,082 12 436,041 12 454,861 12 12/31/98
60 8/31/08 97,859 12 167,243 12 282,276 12 12/31/98
61
62 531,137 12 643,473 12 621,001 12 12/31/98
62.1
62.2
63 468,369 12 494,860 12 475,355 12 12/31/98
64 333,416 12 387,146 12 422,359 12 FYE 9/30/98
65 524,259 12 501,957 12 528,544 12 6/30/98
66 480,930 12 Annualized 4 months
67
68 7/31/08 370,278 12 369,265 12 388,276 12 12/31/98
69 357,232 12 458,373 12 498,455 12 12/31/98
70 86,419 12 377,429 12 12/31/98
71 505,347 12 327,144 12 222,709 12 12/31/98
72 1/31/09 535,468 12 571,680 12 538,640 12 3/31/98
73 247,246 12 371,527 12 399,672 12 12/31/98
74
75 6/30/04 575,890 12 937,509 12 874,054 12 12/31/98
76 2/28/09 432,847 12 397,092 12 12/31/98
77 387,817 12 345,795 12 528,705 12 12/31/98
78 364,074 12 325,266 12 386,650 12 12/31/98
79 7/31/08 302,248 12 458,516 12 12/31/98
80 5/31/05 572,448 12 597,684 12 773,476 12 12/31/98
81
82 379,948 12 392,724 12 332,168 12 12/31/98
83 344,480 12 387,511 12 412,824 12 12/31/98
84 202,114 12 242,286 12 286,107 12 Annualized 8 months
85
86 257,479 12 250,493 12 286,570 12 Annualized 6 months
87 265,420 12 309,540 12 Annualized 4.7 months
88 286,163 12 267,107 12 270,846 12 12/31/98
89
90 249,127 12 12/31/98
91 440,372 12 504,196 12 524,731 12 12/31/98
92 7/31/08 313,191 12 302,721 12 298,077 12 12/31/98
93 (97,838) 12 151,453 12 1,400,658 12 12/31/98
94 163,102 12 195,735 12 310,347 12 12/31/98
95 209,025 12 225,924 12 12/31/98
96 237,955 12 116,725 12 314,895 12 12/31/98
97 244,591 12 Annualized 6 months
98 224,555 12 12/31/98
99 290,618 12 311,988 12 278,902 12 12/31/98
100 5/31/05 405,587 12 445,387 12 487,121 12 12/31/98
101 5/31/05 342,948 12 435,196 12 509,190 12 12/31/98
102 279,334 12 272,201 12 282,198 12 12/31/98
102.1
102.2
103 5/31/05 344,712 12 366,168 12 564,838 12 12/31/98
104 8/31/08 204,884 12 204,581 12 217,191 12 12/31/98
105 9/30/08 331,512 12 273,900 12 271,146 12 12/31/98
106 9/30/08 127,684 12 136,616 12 208,007 12 12/31/98
107 7/31/08 273,479 12 286,650 12 12/31/98
108 125,364 12 224,333 12 12/31/98
109 329,684 12 304,277 12 340,256 12 12/31/98
110 3/31/13 285,097 12 265,848 12 308,123 12 12/31/98
110.1
110.2
111 6/30/13 197,253 12 245,434 12 290,995 12 12/31/98
112 227,047 12 175,749 12 204,052 12 12/31/98
113 166,822 12 277,463 12 12/31/98
114 197,281 12 200,047 12 215,740 12 12/31/98
115 61,235 12 141,859 12 250,969 12 12/31/98
116 5/31/05 258,107 12 300,411 12 328,484 12 12/31/98
117 251,061 12 192,384 12 231,144 12 12/31/98
118 11/30/08 159,434 12 12/31/98
119 8/31/08 218,891 12 193,196 12 197,277 12 Annualized 8 months
120 165,380 12 197,030 12 247,426 12 1998 Annualized
121 205,746 12 183,848 12 247,995 12 12/31/98
122 183,557 12 206,977 12 220,281 12 12/31/98
123 302,929 12 1,450,084 12 330,651 12 12/31/98
124 187,112 12 198,186 12 202,174 12 12/31/98
125 7/31/08 130,162 NAV Annualized 6 months
126 11/30/08 70,169 12 12/31/98
127 119,707 12 136,170 12 140,315 12 12/31/98
128 159,292 12 159,992 12 164,092 12 12/31/98
129
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Repairs Other
Sequence UW UW Cash UW & Remediatio TI/LC Environmental Upfront
Number NOI(1) Flow(1) DSCR(17) Deposit(1) Deposit(1) Deposit(1) Deposit(1)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 7,660,013 7,144,900 1.487
1.1 3,158,849 2,941,552
1.2 1,861,212 1,790,452
1.3 1,924,704 1,744,136
1.4 715,248 668,760
2 3,444,869 3,152,456 1.298 250,000
3 5,020,364 4,578,516 1.422 925,500
4 2,800,424 2,627,424 1.312
5 2,927,313 2,677,908 1.347 13,750
6 3,686,908 3,174,640 1.699
7 2,398,420 2,152,467 1.358 5,000
8 2,911,225 2,257,688 1.442 95,000
9 2,249,304 1,962,530 1.297
10 2,269,469 2,049,566 1.437
11 1,918,657 1,694,951 1.341 12,500
12 1,791,237 1,576,475 1.415 39,625 10,000
13 1,423,508 1,363,508 1.225
14 1,528,860 1,392,145 1.352 6,850
14.1 296,916 265,756
14.2 515,446 475,555
14.3 716,498 650,834
15 1,717,190 1,538,093 1.296
16 1,315,459 1,209,059 1.284 1,125
17 1,853,009 1,732,121 1.618 66,667
18 1,242,318 1,187,238 1.285
19 1,309,067 1,277,729 1.343 650,000
20 1,663,966 1,367,621 1.543
21 1,045,250 913,046 1.115 1,625 30,000
22 1,456,959 1,290,209 1.517 14,063
23 941,936 860,374 1.347
24 1,044,661 897,220 1.303 147,413
25 827,867 741,084 1.174 2,625
26 1,138,722 1,018,701 1.413 66,667
27 1,033,977 872,799 1.388 3,982
28 875,255 781,255 1.249 669,750
29 915,253 839,991 1.415
30 800,321 708,005 1.432 3,938
31 893,941 819,941 1.524 3,000
32 862,545 777,397 1.443
33 830,391 737,489 1.293
33.1
33.2
34 961,544 903,794 1.576 60,250
35 839,632 769,610 1.648
36 865,615 743,049 1.393 4,375
36.1
36.2
36.3
37 1,152,150 1,102,650 1.951 62,875
38 724,496 703,196 1.148
39 616,675 595,450 1.299 2,375 250,000
40 614,276 586,649 1.224 28,005 3,916
41 1,280,467 1,104,287 2.024 51,740
42 1,097,906 1,067,906 1.991
43 727,658 625,859 1.300
44 891,093 723,455 1.443 66,667
45 690,592 580,731 1.315 79,700
46 569,285 518,886 1.217 35,000
47 682,648 637,774 1.521 2,813
48 490,806 476,086 1.357
49 524,962 496,901 1.225 1,875
50 685,205 537,007 1.423
51 559,618 494,480 1.282 15,000
52 578,767 551,243 1.542 2,500
53 450,396 421,737 1.310
54 498,598 456,135 1.171 217,363 125,000
55 578,779 519,172 1.318 19,688
56 498,925 464,233 1.293 9,000
57 488,313 437,487 1.405
58 587,341 568,149 1.666 12,125
59 505,374 461,730 1.295
60 538,253 513,143 1.405 688
61 474,626 434,953 1.283
62 580,145 539,225 1.545 6,875
62.1 290,072 269,612
62.2 290,073 269,613
63 455,413 427,097 1.358 7,313 8,000
64 417,220 386,970 1.257 32,353
65 581,544 556,544 1.659 8,950
66 411,234 388,207 1.351
67 501,866 464,697 1.150 14,304
68 375,089 341,544 1.284 4,125
69 498,791 448,975 1.433
70 446,169 370,683 1.260 22,435 165,000
71 446,819 428,188 1.306 17,719 100,000
72 522,682 470,147 1.454
73 446,309 372,977 1.311 161,014
74 362,715 340,976 1.254 9,125
75 786,396 582,661 2.075 621,011 220,713
76 372,765 352,688 1.393
77 390,725 345,863 1.316 7,656 70,000
78 335,814 319,245 1.268
79 393,692 380,601 1.684
80 578,939 515,321 1.787 33,616
81 297,411 286,839 1.256
82 314,193 293,418 1.256 8,329
83 316,460 297,245 1.240
84 300,079 276,100 1.293 48,840
85 331,919 300,963 1.293 1,000
86 296,927 269,483 1.237
87 279,673 267,105 1.285 822
88 312,164 276,854 1.376
89 269,001 253,635 1.226 301
90 314,787 303,569 1.305
91 371,303 339,803 1.559
92 266,387 242,905 1.366 3,750
93 493,717 445,967 2.081 1,250
94 257,250 257,250 1.196 8,063 143,000
95 314,982 290,933 1.439 250,000
96 298,594 236,021 1.300
97 210,968 208,196 1.200 564
98 262,478 231,386 1.337 255
99 275,151 267,901 1.346 14,875
100 393,834 343,651 1.746 27,334
101 416,598 365,834 1.859 12,649
102 259,261 227,854 1.368
102.1 148,464 134,742
102.2 148,464 134,742
103 415,226 351,593 1.884 27,080
104 256,069 243,515 1.403 625 84,375
105 354,472 319,400 1.958 19,250
106 225,956 213,506 1.320 16,688
107 231,837 223,786 1.666
108 249,350 234,440 1.359
109 234,781 213,338 1.296
110 260,816 244,416 1.345 4,035
110.1 130,408 122,208
110.2 130,408 122,208
111 263,322 232,905 1.293
112 223,887 197,151 1.357
113 269,158 222,059 1.173 12,000
114 228,922 214,525 1.305 38,125
115 228,157 196,161 1.362
116 316,075 256,934 1.675 15,186
117 273,447 224,798 1.316
118 158,236 152,942 1.212
119 188,164 170,261 1.236 14,188
120 198,669 175,428 1.187 6,375
121 199,277 180,180 1.366 8,594
122 202,628 181,640 1.591
123 208,597 201,170 1.390 1,875
124 167,682 157,400 1.330
125 142,855 139,667 1.409
126 144,984 130,392 1.250
127 141,499 127,133 1.250
128 137,755 122,755 1.325
129 176,188 160,608 1.527
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Total Capital Expense TI/LC Environmental Other Tax Insurance
Sequence Upfront Monthly Escrow(1) Monthly Escrows(1) Monthly Monthly Monthly
Number Deposit(1) Escrow(1) Reserve(1) Escrow(1)(18) Escrow(1)(18)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 12,855 1/12 1/12
1.1
1.2
1.3
1.4
2 250,000 24,368 1/12 1/12
3 925,500 83,333 62,500 1/12
4 13,338 1/12 1/12
5 13,750 2,452 18,333 1/12
6 40,029 1/12 1/12
7 5,000 3,448 4,219 1/12
8 95,000 1/12
9 4,204 17,500 1/12 1/12
10 1,500 1/12 1/12
11 12,500 2,744 13,000 1/12
12 49,625 1,333 1/12 1/12
13 2,724 1/12 1/12
14 6,850 10,084 1/12 1/12
14.1
14.2
14.3
15 2,771 11,750 1/12 1/12
16 1,125 4,238 1/12 1/12
17 66,667 2,395 1/12 1/12
18 4,590 1/12 1/12
19 650,000 1,433 1,178 1/12 1/12
20 2,551 1/12 1/12
21 31,625 3,767 1/12 1/12
22 14,063 17,225 1/12
23 1/12 1/12
24 147,413 2,788 4,167 1/12 1/12
25 2,625 2,574 6,129
26 66,667 2,394 1/12 1/12
27 3,982 10,232 1/12 1/12
28 669,750 7,833 1/12 1/12
29 772 4,283 1/12 1/12
30 3,938 7,680 1/12
31 3,000 5,124 1/12 1/12
32 1,379 1/12 1/12
33 1,571 6,167 1/12 1/12
33.1
33.2
34 60,250 1/12
35 1,521 4,322 1/12 1/12
36 4,375 3,928 1/12
36.1
36.2
36.3
37 62,875 1/12 1/12
38 931 1/12
39 252,375 364 1/12
40 31,921 613 3,916 1/12
41 51,740 9,026 1/12
42 2,500 1/12 1/12
43 1,269 5,922 1/12 1/12
44 66,667 7,314 1/12 1/12
45 79,700 2,550 10,833 1/12 1/12
46 35,000 816 4,000 1/12 1/12
47 2,813 3,693 1/12 1/12
48 533 1/12
49 1,875 1,162 1/12
50 12,278 1/12 1/12
51 15,000 344
52 2,500 2,167 1/12 1/12
53 2,388 1/12
54 342,363 916 2,833 1/12 1/12
55 19,688 2,302 2,695 1,667 1/12 1/12
56 9,000 2,891 1/12 1/12
57 1,382 1/12 1/12
58 12,125 1,599 1/12 1/12
59 1,492 2,917 1/12
60 688 398 1/12 1/12
61 183 2,214 1/12
62 6,875 3,410 1/12 1/12
62.1
62.2
63 15,313 814
64 32,353 2,618 1/12 1/12
65 8,950 2,083 1/12 1/12
66 1/12 1/12
67 14,304 418 2,263 1/12
68 4,125 2,795 1/12 1/12
69 4,120 1/12 1/12
70 187,435 998 3,750 1/12 1/12
71 117,719 340 1/12 1/12
72 4,378 1/12 1/12
73 161,014 1,361 1/12 1/12
74 9,125 1/12 1/12
75 841,724 19,808 1/12
76 223 1,688 1/12
77 77,656 1,345 2,394 1/12 1/12
78 236 1/12 1/12
79 344 1/12 1/12
80 33,616 3,964 1/12
81 500 1/12 1/12
82 8,329 703 1/12 1/12
83 591 1/12 1/12
84 48,840 717 1/12 1/12
85 1,000 621 1/12 1/12
86 2,287 1/12 1/12
87 822 274 1/12 1/12
88 915 1/12 1/12
89 301 301
90 169 1/12 1/12
91 2,625 1/12
92 3,750 649 1,737 1/12 1/12
93 1,250 2,817 1/12 1/12
94 151,063 417 2,415 1/12 1/12
95 250,000 607 1/12 1/12
96 1,791 1/12 1/12
97 564 113 1/12 1/12
98 255 334 2,250 1/12 1/12
99 14,875 520 1/12 1/12
100 27,334 4,182 1/12
101 12,649 4,230 1/12
102 908 2,333 1/12 1/12
102.1
102.2
103 27,080 5,303 1/12
104 85,000 621 1/12 1/12
105 19,250 730 1/12 1/12
106 16,688 1,038 1/12 1/12
107 263 1/12 1/12
108 288 1,610 1/12 1/12
109 995 1/12 1/12
110 4,035 1,367 1/12 1/12
110.1
110.2
111 1,500 1/12
112 505 1,723 1/12 1/12
113 12,000 1,132 1,371 1/12 1/12
114 38,125 500 668
115 1,215 1/12 1/12
116 15,186 4,928 1/12
117 583 1/12
118 98 333 1/12
119 14,188 429 1/12 1/12
120 6,375 574 1,250
121 8,594 465 1,126 1/12 1/12
122 170 1/12 1/12
123 1,875 450
124 231 626 1/12 1/12
125 2,000 1/12
126 121 606 1/12 1/12
127 218 1,084 1/12 1/12
128 319 1,250 1/12 1/12
129 680 1/12 1/12
</TABLE>
<PAGE>
ANNEX B
CERTAIN CHARACTERISTICS OF MULTIFAMILY LOANS AND OTHER RESIDENTIAL LOANS
<TABLE>
<CAPTION>
Detailed
Sequence Property
Number Property Name City State Zip Code Type
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
2 Ridgewood County Club Apts Fitchburg WI 53713 Multifamily
4 Woodfield Gardens Apartments Rolling Meadows IL 60008 Multifamily
13 Tregaron Oaks Apartments Bellevue NE 68123 Multifamily
14.1 Cross Creek Spartanburg SC 29303 Multifamily
14.2 Summertree Greensboro NC 27406 Multifamily
- ----------------------------------------------------------------------------------------------------------------------------
14.3 Tealpoint Charlotte NC 28205 Multifamily
16 Sterling Woods Apartments Alpharetta GA 30202 Multifamily
18 Ludlam Point Apartments Miami FL 33155 Multifamily
28 Eastland on the Lake Apts Columbus OH 43232 Multifamily
30 Deer Creek Apartments Austintown OH 44515-5302 Multifamily
- ----------------------------------------------------------------------------------------------------------------------------
31 Victoria Plaza Apartments North Olmstead OH 44070 Multifamily
34 Lakewood Park Health Center Downey CA 90242 Nursing Home
37 Downey Community Health Center Downey CA 90241 Nursing Home
38 Lakeshore Estates MHP Goshen OH 45122 Mobile Home Park
42 Ridge Terrace Health Care Ctr. Lantana FL 33462 Nursing Home
- ----------------------------------------------------------------------------------------------------------------------------
47 Paradise Hills Convalescent San Diego CA 92139 Nursing Home
48 Embassy Place Apts - Phase I Highland IN 46322 Multifamily
52 Boca Bend Marina Apartments Boca Raton FL 33432 Multifamily
53 Glacier Hills Apartments Madison WI 53715 Multifamily
56 Village Manor Apartments West Lafayette IN 47906 Multifamily
- ----------------------------------------------------------------------------------------------------------------------------
58 Peridot Place/ The Woodlands Cape Coral FL 33991 Congregate Care
62.1 Agape Manor and Village Hazel Green AL 35750 Congregate Care
62.2 Limestone Lodge and Manor Athens AL 35611 Congregate Care
64 Stonegate Apartments Lakewood WA 98467 Multifamily
65 Ross Memorial Health Care Center Kennesaw GA 30152 Nursing Home
- ----------------------------------------------------------------------------------------------------------------------------
68 Glenwood Village Apartments Garden City ID 83714 Multifamily
81 The Fields Apartments Bloomington IN 47401 Multifamily
86 Goddard Court Townhomes Taylor MI 48322 Multifamily
91 Desert Knolls Convalescent Hospital Victorville CA 92392 Nursing Home
93 Centinela Valley Care Inglewood CA 90301 Nursing Home
- ----------------------------------------------------------------------------------------------------------------------------
99 Mobilelodge of Milpitas Milpitas CA 95035 Mobile Home Park
106 Townview Mobile Home Park Dallas TX 75211 Mobile Home Park
110.1 Mayfair Apts. Miami FL 33150 Multifamily
110.2 Flamingo Apts. Miami FL 33150 Multifamily
<CAPTION>
Original Initial Pool
Sequence Allocated Balance
Number Loan Balance(2) per Unit Utilities Paid by Tenant
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
2 31,200,000 35,903 Electricity, Gas, Water
4 24,200,000 34,952 Electricity
13 13,600,000 45,072 Electricity, Gas
14.1 2,560,000 16,685 Electricity, Gas, Water
14.2 4,570,000 31,440 Electricity, Gas, Water
- ----------------------------------------------------------------------------------------------
14.3 6,350,000 29,124 Electricity
16 12,410,000 46,222 Electricity, Gas, Water
18 11,000,000 53,783 NAV
28 7,150,000 18,918 Electricity
30 6,500,000 17,885 Electricity
- ----------------------------------------------------------------------------------------------
31 6,420,000 21,633 Electricity, Gas
34 6,000,000 25,928 None
37 5,775,000 29,118 None
38 5,700,000 13,298 NAV
42 5,300,000 43,822 None
- ----------------------------------------------------------------------------------------------
47 4,500,000 27,608 None
48 4,500,000 69,861 NAV
52 4,400,000 41,763 Electricity, Gas, Water
53 4,200,000 34,165 Electricity, Gas
56 4,000,000 32,721 NAV
- ----------------------------------------------------------------------------------------------
58 4,000,000 42,967 None
62.1 1,750,000 36,360 None
62.2 2,000,000 26,245 None
64 3,525,000 29,312 NAV
65 3,500,000 34,939 None
- ----------------------------------------------------------------------------------------------
68 3,400,000 24,818 Electricity, Water
81 2,800,000 69,904 Electricity, Gas, Water
86 2,500,000 25,424 NAV
91 2,250,000 17,827 None
93 2,235,000 11,661 None
- ----------------------------------------------------------------------------------------------
99 2,000,000 13,703 NAV
106 1,700,000 10,173 Electricity, Gas, Water
110.1 886,957 18,664 Electricity, Gas
110.2 813,043 21,861 Electricity, Gas
<CAPTION>
Studios/Beds/Pads (1)
-------------------------------------------------------------------------------
Sequence Avg. Rent Min. Rent Max. Rent
Number # of Units per mo ($)(3) per mo ($) per mo ($)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
2
4
13
14.1
14.2
- --------------------------------------------------------------------------------------------------------
14.3
16
18
28
30
- --------------------------------------------------------------------------------------------------------
31
34 231 83
37 198 95
38 426 184
42 120 169 169 180
- --------------------------------------------------------------------------------------------------------
47 162 86
48
52 5 535
53 29 480 470 485
56
- --------------------------------------------------------------------------------------------------------
58 92 53
62.1 48 47
62.2 76 53
64
65 100 99
- --------------------------------------------------------------------------------------------------------
68
81
86
91 126 112
93 191 78
- --------------------------------------------------------------------------------------------------------
99 145 255 216 350
106 166 221 220 270
110.1 2 375
110.2
<CAPTION>
1 Bedroom
-------------------------------------------------------------------------------
Sequence Avg. Rent Min. Rent Max. Rent
Number # of Units per mo ($)(3) per mo ($) per mo ($)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
2 243 543 530 550
4 170 750 750 750
13 196 571 535 640
14.1 152 355 300 355
14.2 56 465 435 455
- --------------------------------------------------------------------------------------------------------
14.3 83 494 490 500
16 98 683 645 720
18 72 750 750 750
28 240 385 325 475
30 168 370
- --------------------------------------------------------------------------------------------------------
31 165 514
34
37
38
42
- --------------------------------------------------------------------------------------------------------
47
48
52 56 610
53 81 605 585 625
56 58 475 460 490
- --------------------------------------------------------------------------------------------------------
58
62.1
62.2
64 45 535
65
- --------------------------------------------------------------------------------------------------------
68 40 470 465 475
81 4 705 700 720
86 6 468 480
91
93
- --------------------------------------------------------------------------------------------------------
99
106
110.1 44 475 475 475
110.2 8 475 475 475
<PAGE>
<CAPTION>
2 Bedrooms
-------------------------------------------------------------------------------
Sequence Avg. Rent Min. Rent Max. Rent
Number # of Units per mo ($)(3) per mo ($) per mo ($)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
2 541 637 625 695
4 394 848 830 880
13 104 719 690 755
14.1
14.2 88 560 464 560
- --------------------------------------------------------------------------------------------------------
14.3 133 620 600 640
16 98 748 700 795
18 132 900 900 900
28 136 484 395 545
30 180 470
- --------------------------------------------------------------------------------------------------------
31 112 619
34
37
38
42
- --------------------------------------------------------------------------------------------------------
47
48 64 1,010 975 1,045
52 39 700
53 12 687 675 700
56 30 620 620 620
- --------------------------------------------------------------------------------------------------------
58
62.1
62.2
64 75 635
65
- --------------------------------------------------------------------------------------------------------
68 96 555 550 560
81 31 938 875 1,020
86 80 550
91
93
- --------------------------------------------------------------------------------------------------------
99
106
110.1
110.2 28 575 575 575
<CAPTION>
3 Bedrooms
-------------------------------------------------------------------------------
Sequence Avg. Rent Min. Rent Max. Rent Elevator
Number # of Units per mo ($)(3) per mo ($) per mo ($) (Yes/No)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
2 78 818 810 825 No
4 128 1,036 1,020 1,055 No
13 No
14.1 No
14.2 No
- ------------------------------------------------------------------------------------------------------------------------
14.3 No
16 70 853 825 880 No
18 No
28 No
30 12 525 No
- ------------------------------------------------------------------------------------------------------------------------
31 19 719 Yes
34 No
37 No
38 No
42 No
- ------------------------------------------------------------------------------------------------------------------------
47 No
48 No
52 4 850 No
53 No
56 34 755 730 780 No
- ------------------------------------------------------------------------------------------------------------------------
58 No
62.1 No
62.2 No
64 No
65 No
- ------------------------------------------------------------------------------------------------------------------------
68 No
81 5 1,060 1,060 1,060 No
86 12 650 No
91 No
93 No
- ------------------------------------------------------------------------------------------------------------------------
99 No
106 No
110.1 No
110.2 No
</TABLE>
- -------------------------
(1) Number of studios with respect to multifamily properties, number of beds
with respect to nursing homes and congregate care facilities and number of
pads with respect to mobile home parks.
(2) For Mortgage Loans secured by multiple Mortgaged Properties, the Mortgage
Loan's principal balance is allocated to the respective Mortgaged
Properties based on either: 1) the terms of the Mortgage Loan; 2) the
appraised values of the Mortgaged Properties; or 3) the square footage of
the Mortgaged Properties.
(3) Average rents were determined based on an average of the current asking
rents set forth in the appraisal for the related Mortgaged Property.
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
ANNEX C
CERTAIN CHARACTERISTICS OF OFFICE, INDUSTRIAL AND RETAIL LOANS
<TABLE>
<CAPTION>
Sequence
Number Property Name City State Zip Code
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1.1 Western Hills Plaza Cincinnati OH 22209
1.2 Gwinnett Market Fair Duluth GA 30096
1.3 Mt. Prospect Plaza Mt. Prospect IL 60056
1.4 West Falls Church Falls Church VA 22044
3 McCook Metals Building McCook IL 60525
- ------------------------------------------------------------------------------------------------------------------------------
5 51 Sleeper Street Boston MA 02110
7 Vartan Building Harrisburg PA 17110
9 Northfield Office Park I & II Troy MI 48095
10 Merrill Place Seattle WA 98104
11 Becker Office Building Peoria IL 61602-1241
- ------------------------------------------------------------------------------------------------------------------------------
12 The Tower Building Seattle WA 98101
15 University Plaza Building Anchorage AK 99501
17 Sealy Outlet Center Sealy TX 77474
20 Riverside Centre Riverside CA 92501
21 Stuart Centre Stuart FL 34994
- ------------------------------------------------------------------------------------------------------------------------------
23 Post Distribution Building Sumner WA 98390
24 Broadway Summit Office Building Kansas City MO 64111
25 IBM Building Boca Raton FL 33434
26 Nebraska Crossing Factory Store Gretna NE 68028
27 Van Buren Building Milwaukee WI 53202
- ------------------------------------------------------------------------------------------------------------------------------
29 Grand Central Office Building St. Louis MO 63103
32 Quail Park III Las Vegas NV 89106
33.1 Prestwick Pointe I-V Danville IN 41220
33.2 Prestwick Junction Pointe Danville IN 41220
35 Phillips Highway Commerce Park Jacksonville FL 32216
- ------------------------------------------------------------------------------------------------------------------------------
36.1 El Paso Commerce - A El Paso TX 79915
36.2 El Paso Commerce - B El Paso TX 79915
36.3 El Paso Commerce - C El Paso TX 79915
39 Village Portico Miami FL 33130
40 North Coast Medical Morgan Hill CA 95037
- ------------------------------------------------------------------------------------------------------------------------------
43 Power House Office Building and Theatre St. Louis MO 63103
44 Horizon Outlet Center-Traverse Traverse MI 49684
45 New Landing Shopping Center Kansas City MO 64131
46 Plaza De Las Palmas El Cajon CA 92020
49 Meadow Plaza Shopping Center Pleasanton CA 94566
- ------------------------------------------------------------------------------------------------------------------------------
51 First Data Building Ames IA 50010
54 Bayshore Plaza Shopping Ctr Huntersville NC 28078
55 Westridge Village Shopping Ctr Rocky Mount NC 27804
57 Deerfoot Village Starke FL 31091
59 5 & 7 Burroughs Warehouse Irvine CA 92718
- ------------------------------------------------------------------------------------------------------------------------------
60 717 Second Street, NE Washington DC 20006
61 Lake Plaza South Milwaukee OR 97267
63 Mercado del Sol Las Vegas NV 89102
66 Williams Sonoma Oklahoma City OK 73114
67 Harbourside Production Studio Toronto ON M4M 3L5
- ------------------------------------------------------------------------------------------------------------------------------
70 34th South Broadway White Plains NY 10601
71 Pulse Athletic Club Greenville NC 27858
73 Willow Station Shopping Center Greeley CO 80632
74 Mt. Vernon Gateway Centre Mt. Vernon OH
76 GTS Durateck Building Columbia MD 21046
- ------------------------------------------------------------------------------------------------------------------------------
77 Plantation Plaza Stuart FL 34994
78 Giant Eagle Shopping Center Roaring Spring PA 16673
79 John Young Crossing Shop.Ctr. Orlando FL 32835
82 333 Market Street Oakland CA 94607
83 Wells Fargo Plaza San Diego CA 92114
- ------------------------------------------------------------------------------------------------------------------------------
84 Chagrin Lee Square Shaker Heights OH 44120
85 7127 Riverside Building Tulsa OK 74136
87 Petsmart North Little Rock AR 72117
88 Adams Building Milwaukee WI 53202
89 Staples Akron OH 44319
- ------------------------------------------------------------------------------------------------------------------------------
92 Crystal Lake Plaza Orlando FL 32835
94 Goff Plaza Albuquerque NM 87105-3182
95 New York Plaza & Arcade Winter Park FL 32789-5093
96 Jackson Building Milwaukee WI 53202
97 Eckerds Monticello NY 12701
- ------------------------------------------------------------------------------------------------------------------------------
98 Ponte Vedra Office Complex Ponte Vedra FL 32082
102.1 Eliada Plaza Ashville NC 28806
102.2 Canton Bi-Lo Ashville NC 28806
105 Waverly Tower Shopping Center Baltimore MD 21218
107 Clarke Road Shopping Center Orlando FL 32835
- ------------------------------------------------------------------------------------------------------------------------------
108 Cripple Creek Shopping Center Lawrenceville GA 30243
109 Wilmington Athletic Club Wilmington NC 28401
111 Westport Commercial Omaha NE 68137
112 Colorado Office Park Stuart FL 34994
113 Four Seasons Retail Sterling Heights MI 48314
- ------------------------------------------------------------------------------------------------------------------------------
114 John Rupp Dacotah Blvd St. Paul MN 55101
115 Hur Warehouses Austin TX 78758
117 Massara's Plaza Twinsburg OH 44087
118 1420 S. Lewis Avenue Tulsa OK 74104
119 Summers Village Shopping Ctr Irving TX 75038
- ------------------------------------------------------------------------------------------------------------------------------
120 John Rupp Exchange Rd St. Paul MN 55101
121 Broadway/Bellfort Center Houston TX 77017
122 Willow Creek Professional Blg San Jose CA 95125
123 John Rupp University Club St. Paul MN 55102
124 Hutchinson Island Shoppes Hutchinson Island FL 34957
- ------------------------------------------------------------------------------------------------------------------------------
125 Hollywood Video - Miami Miami FL 33175
126 Stirling Palm Plaza Cooper City FL 33328
127 Suwannee Plaza Shopping Center Chiefland FL 32626
128 Commercial Blvd. Ft. Lauderdale FL 33308
129 The Niland Building El Paso TX 32801
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Original/ Initial Pool
Sequence Detailed Allocated Balance
Number Property Type Loan Balance(2) per Sq. Ft.
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1.1 Anchored Retail 24,000,000 53.15
1.2 Anchored Retail 14,500,000 74.13
1.3 Anchored Retail 14,500,000 48.34
1.4 Anchored Retail 5,400,000 62.81
3 Industrial 30,850,000 14.53
- -------------------------------------------------------------------------------------------------
5 Office 23,000,000 156.05
7 Office 17,918,000 86.51
9 Office 17,500,000 82.60
10 Office 17,000,000 94.13
11 Office 14,700,000 89.48
- -------------------------------------------------------------------------------------------------
12 Office 14,360,000 99.48
15 Office 12,750,000 103.56
17 Factory Outlet 11,115,000 57.97
20 Office 10,400,000 67.62
21 Anchored Retail 10,000,000 50.62
- -------------------------------------------------------------------------------------------------
23 Industrial 7,800,000 29.28
24 Office 7,700,000 63.21
25 Mixed Use 7,600,000 51.01
26 Factory Outlet 7,485,000 39.06
27 Office 7,500,000 53.43
- -------------------------------------------------------------------------------------------------
29 Office 6,525,000 105.56
32 Office 6,400,000 88.80
33.1 Mixed Use 5,334,393 64.75
33.2 Mixed Use 815,607 65.00
35 Industrial 6,000,000 49.20
- -------------------------------------------------------------------------------------------------
36.1 Industrial 693,898 15.16
36.2 Industrial 525,112 15.14
36.3 Industrial 4,650,990 16.38
39 Anchored Retail 5,600,000 192.02
40 Industrial 5,550,000 74.80
- -------------------------------------------------------------------------------------------------
43 Office 5,255,000 51.71
44 Factory Outlet 5,205,000 33.78
45 Anchored Retail 4,700,000 22.88
46 Unanchored Retail 4,600,000 106.66
49 Anchored Retail 4,474,000 83.04
- -------------------------------------------------------------------------------------------------
51 Office 4,425,000 73.08
54 Anchored Retail 4,155,000 79.79
55 Anchored Retail 4,200,000 45.38
57 Anchored Retail 4,000,000 37.52
59 Industrial 3,950,000 50.64
- -------------------------------------------------------------------------------------------------
60 Office 3,920,000 146.46
61 Office 3,850,000 115.80
63 Unanchored Retail 3,650,000 120.97
66 Office 3,450,000 96.20
67 Industrial 3,395,586 45.62
- -------------------------------------------------------------------------------------------------
70 Office 3,292,500 63.93
71 Unanchored Retail 3,185,000 77.75
73 Unanchored Retail 3,100,000 35.93
74 Anchored Retail 3,000,000 69.83
76 Office 3,000,000 85.61
- -------------------------------------------------------------------------------------------------
77 Unanchored Retail 3,000,000 43.86
78 Anchored Retail 3,000,000 49.93
79 Anchored Retail 2,860,000 115.88
82 Industrial 2,650,000 37.46
83 Mixed Use 2,615,000 91.74
- -------------------------------------------------------------------------------------------------
84 Mixed Use 2,560,000 48.68
85 Office 2,500,000 67.09
87 Unanchored Retail 2,453,000 74.70
88 Office 2,400,000 55.97
89 Anchored Retail 2,300,000 95.64
- -------------------------------------------------------------------------------------------------
92 Anchored Retail 2,250,000 42.06
94 Anchored Retail 2,250,000 29.59
95 Unanchored Retail 2,200,000 101.98
96 Office 2,166,000 42.52
97 Anchored Retail 2,140,000 158.52
- -------------------------------------------------------------------------------------------------
98 Office 2,000,000 99.65
102.1 Anchored Retail 1,000,000 29.44
102.2 Anchored Retail 850,000 29.48
105 Anchored Retail 1,800,000 33.37
107 Anchored Retail 1,700,000 80.36
- -------------------------------------------------------------------------------------------------
108 Unanchored Retail 1,700,000 73.18
109 Unanchored Retail 1,675,000 43.40
111 Unanchored Retail 1,700,000 72.62
112 Mixed Use 1,650,000 55.34
113 Unanchored Retail 1,635,000 51.54
- -------------------------------------------------------------------------------------------------
114 Office 1,590,000 52.73
115 Mixed Use 1,550,000 26.34
117 Anchored Retail 1,500,000 28.53
118 Unanchored Retail 1,450,000 123.31
119 Unanchored Retail 1,450,000 68.90
- -------------------------------------------------------------------------------------------------
120 Office 1,430,000 41.35
121 Unanchored Retail 1,400,000 49.27
122 Office 1,395,000 84.02
123 Mixed Use 1,375,000 50.69
124 Anchored Retail 1,350,000 72.85
- -------------------------------------------------------------------------------------------------
125 Unanchored Retail 1,300,000 172.28
126 Unanchored Retail 1,210,000 125.13
127 Unanchored Retail 1,100,000 62.82
128 Mixed Use 1,000,000 62.42
129 Industrial 1,000,000 12.15
- -------------------------------------------------------------------------------------------------
<CAPTION>
Largest Tenant (1)
---------------------------------------------------------------------------------------------------------------
Sequence Lease Exp.
Number Name Sq. Ft. Date
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1.1 Sears (A2/A-) 129,615 12/31/14
1.2 A&P (Baa3/BBB-) 46,193 1/31/08
1.3 Walgreen Computer (Aa3/A+) 72,897 11/30/05
1.4 Safeway (Baa2/BBB) 37,841 1/31/13
3 McCook Metals 2,100,000 12/14/23
- -----------------------------------------------------------------------------------------------------------------------------------
5 Commonwealth of Massachusetts (Aa3/AA-) 147,142 1/21/04
7 Synertech Health Systems Solutions 206,900 4/30/09
9 General Motors (A2/A) 22,169 7/31/03
10 Tera Computer 85,000 12/8/08
11 IDOT 58,600 6/30/03
- -----------------------------------------------------------------------------------------------------------------------------------
12 Fisher Broad. 14,351 8/31/05
15 IRS/Minerals Mgmt. Services 51,815 10/18/04
17 Spiegel (Ba3/NR) 25,550 1/31/08
20 Stewart Title 20,968 9/3/03
21 TJ Maxx (A3/A-) 32,249 9/30/08
- -----------------------------------------------------------------------------------------------------------------------------------
23 Post Distribution 263,800 2/13/13
24 Central Business 19,800 10/31/07
25 IBM (A1/A+) 147,090 2/27/02
26 Levi's Outlet by M.O.S.T 10,000 7/31/01
27 Ameritech (Aa3/AA+) 28,932 12/31/00
- -----------------------------------------------------------------------------------------------------------------------------------
29 TBWA Advertising 31,188 4/1/01
32 NovaCare 4,920 12/31/02
33.1 Tower Club 31,258 10/31/99
33.2 J.A.K In the Box 6,500 5/5/01
35 Mordar Realty 3,770 8/31/03
- -----------------------------------------------------------------------------------------------------------------------------------
36.1 Broker's Logistics 45,548 10/31/10
36.2 Broker's Logistics 34,523 10/31/10
36.3 Broker's Logistics 282,550 10/31/10
39 Eckerd Drug (A3/BBB+) 10,523 8/9/17
40 North Coast Medical 73,600 11/30/10
- -----------------------------------------------------------------------------------------------------------------------------------
43 Wallace Theaters 43,703 5/31/03
44 Horizon Cinemas 26,000 5/31/16
45 CJ's Gold 35,702 10/31/02
46 Century 21 6,581 8/31/02
49 Nob Hill Store 33,161 4/30/10
- -----------------------------------------------------------------------------------------------------------------------------------
51 First Data Solutions Inc. (A2/A) 60,480 4/30/09
54 Village Furniture 19,777 1/1/05
55 Harris Teeter 35,475 12/9/08
57 Wal-Mart (Aa2/AA) 43,553 1/31/09
59 UCAR Composites 77,852 6/1/04
- -----------------------------------------------------------------------------------------------------------------------------------
60 America's Voice 16,164 6/30/99
61 FMC Dialysis 11,415 2/1/09
63 Kasey Designs & Sofa Gallery 9,901 3/31/05
66 Williams-Sonoma 35,862 8/31/08
67 Showline Ltd. 73,734 12/2/08
- -----------------------------------------------------------------------------------------------------------------------------------
70 NHWC, Inc. 4,800 MTM
71 Athletic Clubs Inc. 40,828 5/31/05
73 Metro ARC 21,504 9/30/03
74 Staples (Baa2/BBB-) 23,925 12/31/13
76 GTS Duratek 35,000 12/31/06
- -----------------------------------------------------------------------------------------------------------------------------------
77 Stuart Lanes 40,408 12/31/22
78 Giant Eagle 46,900 4/30/15
79 Eckerd Drug (A3/BBB+) 9,504 1/9/16
82 Darcoid Rubber Co. 27,733 1/31/01
83 American Red Cross 4,370 9/30/01
- -----------------------------------------------------------------------------------------------------------------------------------
84 US Postal Service 17,132 8/31/02
85 Ikon Office Solutions (Baa1/BBB+) 28,188 9/30/08
87 Petsmart (Caa1/B+) 26,040 1/31/16
88 Executive Director 24,000 4/30/09
89 Staples (Baa2/BBB-) 24,049 11/30/13
- -----------------------------------------------------------------------------------------------------------------------------------
92 WinnDixie 31,900 1/1/07
94 Furrs 42,543 8/31/15
95 Wyhuma Inc. 5,878 12/1/04
96 Computer People Unl. 32,475 11/30/01
97 Eckerd Drug (A3/BBB+) 13,500 1/31/18
- -----------------------------------------------------------------------------------------------------------------------------------
98 Tucker Federal Bank 7,500 6/30/03
102.1 Bi-Lo (A3/A) 25,298 2/28/03
102.2 Bi-Lo (A3/A) 20,000 2/28/04
105 Food-A-Rama Group, Inc. 22,826 1/31/00
107 Eckerd Drug (A3/BBB+) 9,504 12/16/13
- -----------------------------------------------------------------------------------------------------------------------------------
108 Music ans Arts Center 5,000 7/14/00
109 Athletic Clubs Incorporated 38,800 5/31/05
111 Entertainment Concepts 9,220 6/30/02
112 Wachovia Bank (Aa3/AA-) 7,615 12/9/00
113 Yankee Carpenter 5,900 5/1/02
- -----------------------------------------------------------------------------------------------------------------------------------
114 WA Frost 15,000 9/1/18
115 Hur Chemical & Packaging 13,720 12/31/01
117 Massara Grocery 28,922 4/30/14
118 Blockbuster (Baa3/BBB-) 6,500 10/31/07
119 Blockbuster (Baa3/BBB-) 6,185 2/1/00
- -----------------------------------------------------------------------------------------------------------------------------------
120 Science Museum of MN 7,013 1/1/00
121 Califf Inv. Inc. 3,700 8/31/99
122 Mitchell, Burrow, et al 5,109 12/31/04
123 University Club 27,000 11/1/18
124 Island Fine Food 6,864 2/8/00
- -----------------------------------------------------------------------------------------------------------------------------------
125 Hollywood Video (B3/B+) 7,488 8/25/13
126 Meds Express 2,125 10/31/03
127 Hibbett Sporting 4,800 7/31/03
128 Dr. John W. Holston, Jr. 2,731 5/31/04
129 Niland Co. 81,547 1/31/14
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
2nd Largest Tenant (1)
---------------------------------------------------------------------------------------------------------------
Sequence Lease Exp.
Number Name Sq. Ft. Date
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1.1 Kroger (Baa3/BBB-) 62,232 4/30/10
1.2 Marshalls (A3/A-) 27,054 1/31/03
1.3 Dominick's Groc. (Baa2/BBB) 37,600 10/31/05
1.4 Rite Aid (Baa1/BBB) 9,191 12/10/00
3 NA NA NA
- -----------------------------------------------------------------------------------------------------------------------------------
5 NA NA NA
7 NA NA NA
9 National Bank of Detroit (Aa3/A+) 19,988 12/31/01
10 Tera Pocket Space 35,848 12/8/08
11 Magna Bank/Union Bank 18,211 12/31/02
- -----------------------------------------------------------------------------------------------------------------------------------
12 Virtual Adv. 13,696 7/31/01
15 VECO Engineering 29,150 12/31/05
17 Liz Claiborne 12,000 8/31/10
20 Ernst & Young 17,396 9/30/08
21 Home Goods 30,000 9/30/08
- -----------------------------------------------------------------------------------------------------------------------------------
23 NA NA NA
24 US Postal Inspector 13,500 4/30/02
25 NA NA NA
26 Linen Barn 9,770 6/30/04
27 Cramer-Krasselt 27,654 8/31/02
- -----------------------------------------------------------------------------------------------------------------------------------
29 Van de Kamp 12,349 4/1/01
32 Staffmark 4,520 8/31/03
33.1 Mulligans 8,450 5/16/00
33.2 Ridgegate Inc. 2,375 8/31/01
35 Leigh Fogal Fine Arts 3,600 10/31/01
- -----------------------------------------------------------------------------------------------------------------------------------
36.1 NA NA NA
36.2 NA NA NA
36.3 NA NA NA
39 Dante' Market 2,760 3/31/08
40 NA NA NA
- -----------------------------------------------------------------------------------------------------------------------------------
43 Emmis Broadcasting 15,048 10/1/07
44 Linen Barn 10,048 5/31/04
45 West Lake Hardware 34,555 11/30/02
46 Payless Shoes 3,055 12/31/99
49 Pleasanton Urgent Care 4,067 10/1/02
- -----------------------------------------------------------------------------------------------------------------------------------
51 NA NA NA
54 Eckerd Drug (A3/BBB+) 10,908 1/31/19
55 Arnold's Drug 7,200 2/28/03
57 Food Lion (A3/A-) 25,000 2/26/09
59 NA NA NA
- -----------------------------------------------------------------------------------------------------------------------------------
60 Free Congress 10,301 11/14/18
61 Willamette Dental 6,300 9/30/03
63 Simmons Beauty Rest 3,500 3/31/02
66 NA NA NA
67 NA NA NA
- -----------------------------------------------------------------------------------------------------------------------------------
70 NY School of Court 4,257 1/14/05
71 NA NA NA
73 All American Rentals 9,072 10/31/01
74 On Cue 5,000 1/31/07
76 NA NA NA
- -----------------------------------------------------------------------------------------------------------------------------------
77 Sakura Restaurant 5,218 8/31/03
78 Family Dollar 7,200 7/31/03
79 Super Video Games 3,980 8/1/01
82 Johnstone Supply 21,299 7/31/05
83 CRASH Inc. 3,708 11/30/00
- -----------------------------------------------------------------------------------------------------------------------------------
84 St. Lukes Hospital 15,509 9/30/03
85 National Bank of Commerce 5,830 8/31/08
87 Concentra 6,800 7/31/04
88 Bailey's 5,600 6/30/02
89 NA NA NA
- -----------------------------------------------------------------------------------------------------------------------------------
92 Eckerd Drug (A3/BBB+) 9,520 12/31/06
94 Family Dollar 8,704 12/31/01
95 Cuisine 2000 3,400 9/30/08
96 Indus, Inc. 7,000 5/31/03
97 NA NA NA
- -----------------------------------------------------------------------------------------------------------------------------------
98 Tucker Federal Bank 3,445 10/31/01
102.1 CVS (A3/A) 8,450 10/31/02
102.2 Eckerd Drug (A3/BBB+) 8,640 10/1/01
105 Family Dollar Stores of Maryland, Inc. 10,000 12/31/03
107 Blockbuster Video (Baa3/BBB-) 5,500 10/31/06
- -----------------------------------------------------------------------------------------------------------------------------------
108 X-Tra Touch Dry Cleaners 3,000 1/31/08
109 NA NA NA
111 Immanuel Medical Ctr 7,450 8/31/99
112 Sunshine Music Group 3,569 6/30/00
113 Orphaned Furniture 5,400 2/28/03
- -----------------------------------------------------------------------------------------------------------------------------------
114 The 106 Group 3,581 10/31/01
115 Buffet Palace 5,259 5/31/01
117 Bettys Hallmark 6,300 1/31/02
118 Healthsouth (Baa3/BBB) 5,226 4/30/03
119 Judge Beans 5,232 7/31/03
- -----------------------------------------------------------------------------------------------------------------------------------
120 Ewald Crossing 3,925 9/30/02
121 So. Texas Dental 3,030 11/30/02
122 McFarlane & Cazale 4,152 11/30/03
123 NA NA NA
124 Sunrise Surf Shop 3,375 11/30/99
- -----------------------------------------------------------------------------------------------------------------------------------
125 NA NA NA
126 Mommy & Me Nails 1,565 10/1/03
127 Dollar Tree 3,990 4/30/00
128 American Home Loan Mortgage 2,500 8/31/99
129 NA NA NA
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
3rd Largest Tenant (1)
---------------------------------------------------------------------------------------------------------------
Sequence Lease Exp.
Number Name Sq. Ft. Date
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1.1 Media Play 40,440 1/31/05
1.2 T.J. Maxx (A3/A-) 24,300 9/30/02
1.3 Marshalls (A3/A-) 35,000 1/31/02
1.4 Bath & Tile 6,640 4/30/05
3 NA NA NA
- ------------------------------------------------------------------------------------------------------------------------------------
5 NA NA NA
7 NA NA NA
9 Hayman Co 12,716 4/30/04
10 Freeshop 18,803 5/31/03
11 Hedec Law 15,090 10/31/08
- ------------------------------------------------------------------------------------------------------------------------------------
12 Viewpoint 8,214 7/31/01
15 VECO 15,054 9/30/00
17 Reebok Factory Store (Baa3/BBB-) 10,000 9/30/02
20 Burker, Williams, Sorensen 13,980 10/9/01
21 Office Depot (Baa2/BBB) 25,000 6/30/01
- ------------------------------------------------------------------------------------------------------------------------------------
23 NA NA NA
24 Wilson 12,598 10/31/00
25 NA NA NA
26 Dress Barn 9,000 6/30/02
27 Peterson Johnson 15,733 8/31/03
- ------------------------------------------------------------------------------------------------------------------------------------
29 GSA - General Accounting (Aaa/AAA) 9,255 12/1/07
32 Advanstaff 4,416 9/30/00
33.1 Amerigas (Ba3/BB+) 4,350 11/30/00
33.2 Candles & Stuff 1,250 10/31/00
35 GTE Communications (Baa1/A) 3,280 9/30/03
- ------------------------------------------------------------------------------------------------------------------------------------
36.1 NA NA NA
36.2 NA NA NA
36.3 NA NA NA
39 Havana Cafe 2,100 6/30/08
40 NA NA NA
- ------------------------------------------------------------------------------------------------------------------------------------
43 Maekey & Assoc. 14,000 12/1/03
44 Bass Co. Store 8,500 12/31/04
45 David Kim 23,790 7/31/02
46 China Diamond 3,000 2/28/05
49 Grand Slam Pizza 3,306 11/30/02
- ------------------------------------------------------------------------------------------------------------------------------------
51 NA NA NA
54 Captains Galley 7,005 8/31/02
55 AAA Travel Agency 4,200 8/31/99
57 Scotty's Hardware 10,000 9/10/99
59 NA NA NA
- ------------------------------------------------------------------------------------------------------------------------------------
60 Coalitions of America 525 12/31/99
61 American Express (A1/A+) 4,601 1/31/04
63 Honey Baked Ham 3,120 10/31/00
66 NA NA NA
67 NA NA NA
- ------------------------------------------------------------------------------------------------------------------------------------
70 Allee King Rowsen 4,209 12/31/02
71 NA NA NA
73 BIO Medical Applications 6,580 1/31/04
74 Shastar 4,800 1/31/06
76 NA NA NA
- ------------------------------------------------------------------------------------------------------------------------------------
77 Amer. Auto 4,734 7/14/03
78 Pro Care 2,400 5/31/00
79 Mega Wash Systems 3,500 7/5/06
82 San Francisco News Paper Agency 21,233 7/31/02
83 U.S. Post Office 3,695 1/31/01
- ------------------------------------------------------------------------------------------------------------------------------------
84 Walgreens (Aa3/A+) 13,500 12/31/14
85 NA NA NA
87 NA NA NA
88 Shabahang Rugs 2,531 12/31/06
89 NA NA NA
- ------------------------------------------------------------------------------------------------------------------------------------
92 Center Stage 2,800 12/31/01
94 Familia Mexicana 8,000 3/30/02
95 Euro Pine Furniture 2,483 7/15/01
96 Sigma Property Management 8,310 4/30/99
97 NA NA NA
- ------------------------------------------------------------------------------------------------------------------------------------
98 Walter, Koegler & Dilleingham 3,282 9/1/02
102.1 NA NA NA
102.2 NA NA NA
105 Parts America, Inc. 9,000 12/31/08
107 Great Clips 1,375 12/17/99
- ------------------------------------------------------------------------------------------------------------------------------------
108 Mattress for Less 2,500 10/14/01
109 NA NA NA
111 Westport Dental 1,640 7/31/99
112 Housecall Home 3,520 8/14/00
113 Mesquite Tavern 4,850 12/1/05
- ------------------------------------------------------------------------------------------------------------------------------------
114 1000 Friends 1,677 10/1/01
115 Brake Centers of SW, Inc. 4,820 3/31/03
117 Maxx Dougans 5,550 9/30/00
118 NA NA NA
119 Dr Stone 2,094 6/30/01
- ------------------------------------------------------------------------------------------------------------------------------------
120 Thomas Olsen 3,355 10/30/99
121 Stop N Drive 2,400 4/30/02
122 Sigforms 2,464 11/30/00
123 NA NA NA
124 United States Postal 2,475 4/30/02
- ------------------------------------------------------------------------------------------------------------------------------------
125 NA NA NA
126 Dairy Queen 1,200 4/2/03
127 Radio Shack (Baa1/A-) 2,450 1/31/04
128 Dr. John Watson, MD 2,184 5/31/04
129 NA NA NA
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------
(1) The rating set forth next to the name of each tenant, as reported by the
related Borrower, is the rating most recently reported by Moody's or
Standard & Poor's (in that order) for the tenant, if not available, the
senior unsecured debt thereof, or, if not available, the subordinated debt
thereof. If such ratings were not available for the tenant or its debt, the
indicated rating will be the rating most recently reported by Moody's or
Standard & Poor's (in that order) for an affiliate of the tenant, if not
available, the senior unsecured debt of such affiliate, or, if not
available, the subordinated debt of such affiliate. To the extent such
ratings represent the rating of an entity other than the indicated tenant,
such entity may have no obligation under the related lease or any other
arrangement to support the tenant, satisfy its obligation under the lease
or otherwise assist the tenant in performing its obligations under the
lease.
(2) For Mortgage Loans secured by multiple Mortgaged Properties, the Mortgage
Loan's principal balance is allocated to the respective Mortgaged
Properties based on: 1) the terms of the Mortgage Loan; 2) the appraised
values of the Mortgaged Properties; or 3) the square footage of the
Mortgaged Properties.
C-1
<PAGE>
<TABLE>
<CAPTION>
ANNEX D
ANNEX D
F/X SCHEDULES
Loan Number 41: Bloor Street Quality Hotel
- -------------------------------- ---------------------------------------------------------------------------------
Payment Date Total Payment Principal Payment Interest Payment
- -------------------------------- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
September 1, 1999 47,966.57 10,544.79 37,421.78
October 1, 1999 47,961.70 10,612.90 37,348.80
November 1, 1999 47,956.79 10,681.44 37,275.35
December 1, 1999 47,951.84 10,750.42 37,201.42
January 1, 2000 47,946.87 10,819.85 37,127.02
February 1, 2000 47,941.87 10,889.73 37,052.14
March 1, 2000 47,936.83 10,960.06 36,976.77
April 1, 2000 47,931.77 11,030.85 36,900.92
May 1, 2000 47,926.66 11,102.08 36,824.58
June 1, 2000 47,921.53 11,173.79 36,747.74
July 1, 2000 47,916.36 11,245.95 36,670.41
August 1, 2000 47,911.16 11,318.58 36,592.58
September 1, 2000 47,905.93 11,391.68 36,514.25
October 1, 2000 47,900.66 11,465.25 36,435.41
November 1, 2000 47,895.35 11,539.29 36,356.06
December 1, 2000 47,890.02 11,613.82 36,276.20
January 1, 2001 47,884.65 11,688.83 36,195.82
February 1, 2001 47,879.24 11,764.32 36,114.92
March 1, 2001 47,873.79 11,840.29 36,033.50
April 1, 2001 47,868.32 11,916.76 35,951.56
May 1, 2001 47,862.80 11,993.72 35,869.08
June 1, 2001 47,857.27 12,071.19 35,786.08
July 1, 2001 47,851.68 12,149.15 35,702.53
August 1, 2001 47,846.06 12,227.61 35,618.45
September 1, 2001 47,840.41 12,306.58 35,533.83
October 1, 2001 47,834.72 12,386.06 35,448.66
November 1, 2001 47,828.98 12,466.05 35,362.93
December 1, 2001 47,823.22 12,546.56 35,276.66
January 1, 2002 47,817.42 12,627.59 35,189.83
February 1, 2002 47,811.58 12,709.15 35,102.43
March 1, 2002 47,805.70 12,791.23 35,014.47
April 1, 2002 47,799.78 12,873.83 34,925.95
May 1, 2002 47,793.83 12,956.98 34,836.85
June 1, 2002 47,787.84 13,040.66 34,747.18
July 1, 2002 47,781.81 13,124.88 34,656.93
August 1, 2002 47,775.73 13,209.64 34,566.09
September 1, 2002 47,769.62 13,294.95 34,474.67
October 1, 2002 47,763.48 13,380.82 34,382.66
November 1, 2002 47,757.29 13,467.24 34,290.05
December 1, 2002 47,751.06 13,554.21 34,196.85
January 1, 2003 47,744.79 13,641.75 34,103.04
February 1, 2003 47,738.48 13,729.85 34,008.63
March 1, 2003 47,732.13 13,818.53 33,913.60
April 1, 2003 47,725.74 13,907.77 33,817.97
May 1, 2003 47,719.31 13,997.59 33,721.72
June 1, 2003 47,712.83 14,087.99 33,624.84
July 1, 2003 47,706.32 14,178.98 33,527.34
August 1, 2003 47,699.76 14,270.55 33,429.21
September 1, 2003 47,693.17 14,362.72 33,330.45
October 1, 2003 47,686.52 14,455.48 33,231.04
November 1, 2003 47,679.84 14,548.84 33,131.00
December 1, 2003 47,673.10 14,642.79 33,030.31
January 1, 2004 47,666.33 14,737.36 32,928.97
February 1, 2004 47,659.51 14,832.54 32,826.97
March 1, 2004 47,652.65 14,928.33 32,724.32
April 1, 2004 47,645.75 15,024.75 32,621.00
May 1, 2004 47,638.80 15,121.78 32,517.02
June 1, 2004 47,631.81 15,219.44 32,412.37
July 1, 2004 47,624.76 15,317.73 32,307.03
August 1, 2004 47,617.68 15,416.66 32,201.02
September 1, 2004 47,610.55 15,516.22 32,094.33
October 1, 2004 47,603.37 15,616.43 31,986.94
November 1, 2004 47,596.15 15,717.29 31,878.86
December 1, 2004 47,588.89 15,818.80 31,770.09
January 1, 2005 47,581.57 15,920.96 31,660.61
February 1, 2005 47,574.20 16,023.78 31,550.42
March 1, 2005 47,566.79 16,127.27 31,439.52
April 1, 2005 47,559.34 16,231.43 31,327.91
May 1, 2005 47,551.83 16,336.26 31,215.57
June 1, 2005 47,544.27 16,441.76 31,102.51
July 1, 2005 4,508,588.52 4,477,599.80 30,988.72
August 1, 2005 0.00 0.00 0.00
September 1, 2005 0.00 0.00 0.00
October 1, 2005 0.00 0.00 0.00
November 1, 2005 0.00 0.00 0.00
December 1, 2005 0.00 0.00 0.00
January 1, 2006 0.00 0.00 0.00
February 1, 2006 0.00 0.00 0.00
March 1, 2006 0.00 0.00 0.00
April 1, 2006 0.00 0.00 0.00
May 1, 2006 0.00 0.00 0.00
June 1, 2006 0.00 0.00 0.00
<PAGE>
<CAPTION>
Loan Number 67: Harbourside Production Studio
- -------------------------------- ---------------------------------------------------------------------------------
Payment Date Total Payment Principal Payment Interest Payment
- -------------------------------- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
September 1, 1999 35,268.68 10,488.16 24,780.52
October 1, 1999 35,211.97 11,305.60 23,906.37
November 1, 1999 35,258.27 10,638.30 24,619.97
December 1, 1999 35,201.81 11,451.88 23,749.93
January 1, 2000 35,247.70 10,790.47 24,457.23
February 1, 2000 35,242.55 10,864.81 24,377.74
March 1, 2000 35,135.66 12,405.55 22,730.11
April 1, 2000 35,231.42 11,025.11 24,206.31
May 1, 2000 35,175.68 11,828.81 23,346.87
June 1, 2000 35,220.50 11,182.55 24,037.95
July 1, 2000 35,165.02 11,982.21 23,182.81
August 1, 2000 35,209.43 11,342.13 23,867.30
September 1, 2000 35,204.01 11,420.26 23,783.75
October 1, 2000 35,148.96 12,213.85 22,935.11
November 1, 2000 35,192.72 11,583.08 23,609.64
December 1, 2000 35,137.96 12,372.50 22,765.46
January 1, 2001 35,181.27 11,748.11 23,433.16
February 1, 2001 35,175.66 11,829.04 23,346.62
March 1, 2001 35,023.98 14,015.42 21,008.56
April 1, 2001 35,163.31 12,007.08 23,156.23
May 1, 2001 35,109.29 12,785.64 22,323.65
June 1, 2001 35,151.45 12,177.87 22,973.58
July 1, 2001 35,097.74 12,952.06 22,145.68
August 1, 2001 35,139.45 12,350.99 22,788.46
September 1, 2001 35,133.54 12,436.07 22,697.47
October 1, 2001 35,080.29 13,203.66 21,876.63
November 1, 2001 35,121.30 12,612.71 22,508.59
December 1, 2001 35,068.35 13,375.77 21,692.58
January 1, 2002 35,108.87 12,791.74 22,317.13
February 1, 2002 35,102.76 12,879.86 22,222.90
March 1, 2002 34,957.68 14,971.08 19,986.60
April 1, 2002 35,089.44 13,071.71 22,017.73
May 1, 2002 35,037.33 13,823.04 21,214.29
June 1, 2002 35,076.59 13,256.99 21,819.60
July 1, 2002 35,024.80 14,003.57 21,021.23
August 1, 2002 35,063.57 13,444.79 21,618.78
September 1, 2002 35,057.14 13,537.41 21,519.73
October 1, 2002 35,005.85 14,276.81 20,729.04
November 1, 2002 35,043.85 13,729.02 21,314.83
December 1, 2002 34,992.89 14,463.51 20,529.38
January 1, 2003 35,030.37 13,923.23 21,107.14
February 1, 2003 35,023.71 14,019.14 21,004.57
March 1, 2003 34,885.80 16,007.21 18,878.59
April 1, 2003 35,009.37 14,226.00 20,783.37
May 1, 2003 34,959.30 14,947.78 20,011.52
June 1, 2003 34,995.42 14,426.97 20,568.45
July 1, 2003 34,945.71 15,143.61 19,802.10
August 1, 2003 34,981.29 14,630.68 20,350.61
September 1, 2003 34,974.30 14,731.47 20,242.83
October 1, 2003 34,925.12 15,440.31 19,484.81
November 1, 2003 34,959.88 14,939.32 20,020.56
December 1, 2003 34,911.07 15,642.84 19,268.23
January 1, 2004 34,945.27 15,150.00 19,795.27
February 1, 2004 34,938.02 15,254.36 19,683.66
March 1, 2004 34,848.82 16,540.20 18,308.62
April 1, 2004 34,922.83 15,473.39 19,449.44
May 1, 2004 34,874.97 16,163.25 18,711.72
June 1, 2004 34,907.71 15,691.33 19,216.38
July 1, 2004 34,860.24 16,375.61 18,484.63
August 1, 2004 34,892.39 15,912.24 18,980.15
September 1, 2004 34,884.77 16,021.85 18,862.92
October 1, 2004 34,837.89 16,697.67 18,140.22
November 1, 2004 34,869.14 16,247.25 18,621.89
December 1, 2004 34,822.65 16,917.30 17,905.35
January 1, 2005 34,853.29 16,475.72 18,377.57
February 1, 2005 34,845.42 16,589.22 18,256.20
March 1, 2005 34,723.64 18,344.56 16,379.08
April 1, 2005 34,828.72 16,829.87 17,998.85
May 1, 2005 34,783.27 17,485.02 17,298.25
June 1, 2005 34,812.32 17,066.27 17,746.05
July 1, 2005 34,767.29 17,715.36 17,051.93
August 1, 2005 34,795.69 17,305.87 17,489.82
September 1, 2005 34,787.43 17,425.09 17,362.34
October 1, 2005 34,743.04 18,065.01 16,678.03
November 1, 2005 34,770.47 17,669.58 17,100.89
December 1, 2005 34,726.51 18,303.23 16,423.28
January 1, 2006 34,753.27 17,917.39 16,835.88
February 1, 2006 34,744.71 18,040.82 16,703.89
March 1, 2006 34,632.05 19,664.71 14,967.34
April 1, 2006 34,726.70 18,300.58 16,426.12
May 1, 2006 2,227,213.05 2,211,447.27 15,765.78
June 1, 2006 0.00 0.00 0.00
<CAPTION>
Loan Number 75: St. John's - Quality Inn
- -------------------------------- ---------------------------------------------------------------------------------
Payment Date Total Payment Principal Payment Interest Payment
- -------------------------------- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
September 1, 1999 24,680.85 3,694.22 20,986.63
October 1, 1999 24,679.27 3,718.57 20,960.70
November 1, 1999 24,677.68 3,743.08 20,934.60
December 1, 1999 24,676.09 3,767.76 20,908.33
January 1, 2000 24,674.49 3,792.60 20,881.89
February 1, 2000 24,672.87 3,817.60 20,855.27
March 1, 2000 24,671.24 3,842.76 20,828.48
April 1, 2000 24,669.60 3,868.09 20,801.51
May 1, 2000 24,667.95 3,893.59 20,774.36
June 1, 2000 24,666.28 3,919.25 20,747.03
July 1, 2000 24,664.61 3,945.09 20,719.52
August 1, 2000 24,662.93 3,971.09 20,691.84
September 1, 2000 24,661.24 3,997.27 20,663.97
October 1, 2000 24,659.52 4,023.61 20,635.91
November 1, 2000 24,657.81 4,050.14 20,607.67
December 1, 2000 24,656.09 4,076.84 20,579.25
January 1, 2001 24,654.35 4,103.71 20,550.64
February 1, 2001 24,652.59 4,130.76 20,521.83
March 1, 2001 24,650.83 4,157.99 20,492.84
April 1, 2001 24,649.05 4,185.39 20,463.66
May 1, 2001 24,647.27 4,212.98 20,434.29
June 1, 2001 24,645.47 4,240.75 20,404.72
July 1, 2001 24,643.67 4,268.71 20,374.96
August 1, 2001 24,641.85 4,296.85 20,345.00
September 1, 2001 24,640.01 4,325.17 20,314.84
October 1, 2001 24,638.16 4,353.68 20,284.48
November 1, 2001 24,636.31 4,382.38 20,253.93
December 1, 2001 24,634.44 4,411.27 20,223.17
January 1, 2002 24,632.55 4,440.34 20,192.21
February 1, 2002 24,630.66 4,469.61 20,161.05
March 1, 2002 24,628.76 4,499.08 20,129.68
April 1, 2002 24,626.83 4,528.73 20,098.10
May 1, 2002 24,624.90 4,558.58 20,066.32
June 1, 2002 24,622.95 4,588.63 20,034.32
July 1, 2002 24,621.00 4,618.88 20,002.12
August 1, 2002 24,619.02 4,649.32 19,969.70
September 1, 2002 24,617.04 4,679.97 19,937.07
October 1, 2002 24,615.05 4,710.82 19,904.23
November 1, 2002 24,613.04 4,741.87 19,871.17
December 1, 2002 24,611.02 4,773.13 19,837.89
January 1, 2003 24,608.98 4,804.59 19,804.39
February 1, 2003 24,606.93 4,836.26 19,770.67
March 1, 2003 24,604.86 4,868.14 19,736.72
April 1, 2003 24,602.79 4,900.23 19,702.56
May 1, 2003 24,600.70 4,932.53 19,668.17
June 1, 2003 24,598.60 4,965.05 19,633.55
July 1, 2003 24,596.47 4,997.77 19,598.70
August 1, 2003 24,594.34 5,030.72 19,563.62
September 1, 2003 24,592.20 5,063.88 19,528.32
October 1, 2003 24,590.04 5,097.26 19,492.78
November 1, 2003 24,587.85 5,130.85 19,457.00
December 1, 2003 24,585.66 5,164.67 19,420.99
January 1, 2004 24,583.47 5,198.72 19,384.75
February 1, 2004 24,581.24 5,232.98 19,348.26
March 1, 2004 24,579.01 5,267.48 19,311.53
April 1, 2004 24,576.76 5,302.20 19,274.56
May 1, 2004 24,574.50 5,337.15 19,237.35
June 1, 2004 24,572.22 5,372.33 19,199.89
July 1, 2004 24,569.94 5,407.75 19,162.19
August 1, 2004 24,567.64 5,443.40 19,124.24
September 1, 2004 24,565.30 5,479.27 19,086.03
October 1, 2004 24,562.97 5,515.39 19,047.58
November 1, 2004 24,560.62 5,551.75 19,008.87
December 1, 2004 24,558.24 5,588.34 18,969.90
January 1, 2005 2,716,249.47 2,697,318.79 18,930.68
February 1, 2005 0.00 0.00 0.00
March 1, 2005 0.00 0.00 0.00
April 1, 2005 0.00 0.00 0.00
May 1, 2005 0.00 0.00 0.00
June 1, 2005 0.00 0.00 0.00
July 1, 2005 0.00 0.00 0.00
August 1, 2005 0.00 0.00 0.00
September 1, 2005 0.00 0.00 0.00
October 1, 2005 0.00 0.00 0.00
November 1, 2005 0.00 0.00 0.00
December 1, 2005 0.00 0.00 0.00
January 1, 2006 0.00 0.00 0.00
February 1, 2006 0.00 0.00 0.00
March 1, 2006 0.00 0.00 0.00
April 1, 2006 0.00 0.00 0.00
May 1, 2006 0.00 0.00 0.00
June 1, 2006 0.00 0.00 0.00
<CAPTION>
Loan Number 80: Comfort Inn - Pointe Claire
- -------------------------------- ----------------------------------------------------------------------------
Payment Date Total Payment Principal Payment Interest Payment
- -------------------------------- ----------------------------------------------------------------------------
<S> <C> <C> <C>
September 1, 1999 25,220.36 5,308.17 19,912.19
October 1, 1999 25,218.13 5,343.29 19,874.84
November 1, 1999 25,215.90 5,378.65 19,837.25
December 1, 1999 25,213.64 5,414.23 19,799.41
January 1, 2000 25,211.37 5,450.06 19,761.31
February 1, 2000 25,209.09 5,486.12 19,722.97
March 1, 2000 25,206.79 5,522.42 19,684.37
April 1, 2000 25,204.47 5,558.96 19,645.51
May 1, 2000 25,202.14 5,595.74 19,606.40
June 1, 2000 25,199.80 5,632.77 19,567.03
July 1, 2000 25,197.44 5,670.04 19,527.40
August 1, 2000 25,195.05 5,707.55 19,487.50
September 1, 2000 25,192.67 5,745.32 19,447.35
October 1, 2000 25,190.25 5,783.33 19,406.92
November 1, 2000 25,187.83 5,821.60 19,366.23
December 1, 2000 25,185.39 5,860.12 19,325.27
January 1, 2001 25,182.93 5,898.89 19,284.04
February 1, 2001 25,180.47 5,937.93 19,242.54
March 1, 2001 25,177.98 5,977.22 19,200.76
April 1, 2001 25,175.48 6,016.77 19,158.71
May 1, 2001 25,172.95 6,056.58 19,116.37
June 1, 2001 25,170.41 6,096.65 19,073.76
July 1, 2001 25,167.85 6,136.99 19,030.86
August 1, 2001 25,165.29 6,177.60 18,987.69
September 1, 2001 25,162.69 6,218.47 18,944.22
October 1, 2001 25,160.08 6,259.61 18,900.47
November 1, 2001 25,157.46 6,301.03 18,856.43
December 1, 2001 25,154.81 6,342.72 18,812.09
January 1, 2002 25,152.16 6,384.69 18,767.47
February 1, 2002 25,149.49 6,426.94 18,722.55
March 1, 2002 25,146.80 6,469.47 18,677.33
April 1, 2002 25,144.08 6,512.27 18,631.81
May 1, 2002 25,141.35 6,555.36 18,585.99
June 1, 2002 25,138.61 6,598.74 18,539.87
July 1, 2002 25,135.84 6,642.40 18,493.44
August 1, 2002 25,133.05 6,686.34 18,446.71
September 1, 2002 25,130.25 6,730.59 18,399.66
October 1, 2002 25,127.43 6,775.12 18,352.31
November 1, 2002 25,124.59 6,819.95 18,304.64
December 1, 2002 25,121.72 6,865.07 18,256.65
January 1, 2003 25,118.85 6,910.50 18,208.35
February 1, 2003 25,115.95 6,956.22 18,159.73
March 1, 2003 25,113.04 7,002.25 18,110.79
April 1, 2003 25,110.10 7,048.58 18,061.52
May 1, 2003 25,107.15 7,095.22 18,011.93
June 1, 2003 25,104.18 7,142.17 17,962.01
July 1, 2003 25,101.19 7,189.43 17,911.76
August 1, 2003 25,098.16 7,236.99 17,861.17
September 1, 2003 25,095.14 7,284.88 17,810.26
October 1, 2003 25,092.08 7,333.08 17,759.00
November 1, 2003 25,089.01 7,381.60 17,707.41
December 1, 2003 25,085.91 7,430.44 17,655.47
January 1, 2004 25,082.80 7,479.61 17,603.19
February 1, 2004 25,079.67 7,529.10 17,550.57
March 1, 2004 25,076.50 7,578.91 17,497.59
April 1, 2004 25,073.34 7,629.07 17,444.27
May 1, 2004 25,070.13 7,679.54 17,390.59
June 1, 2004 25,066.92 7,730.36 17,336.56
July 1, 2004 25,063.67 7,781.50 17,282.17
August 1, 2004 25,060.41 7,832.99 17,227.42
September 1, 2004 25,057.13 7,884.82 17,172.31
October 1, 2004 25,053.82 7,936.99 17,116.83
November 1, 2004 25,050.50 7,989.51 17,060.99
December 1, 2004 25,047.15 8,042.37 17,004.78
January 1, 2005 25,043.78 8,095.59 16,948.19
February 1, 2005 25,040.38 8,149.15 16,891.23
March 1, 2005 25,036.97 8,203.07 16,833.90
April 1, 2005 25,033.53 8,257.35 16,776.18
May 1, 2005 25,030.07 8,311.99 16,718.08
June 1, 2005 25,026.58 8,366.98 16,659.60
July 1, 2005 25,023.07 8,422.34 16,600.73
August 1, 2005 25,019.54 8,478.07 16,541.47
September 1, 2005 2,359,036.51 2,342,554.69 16,481.82
October 1, 2005 0.00 0.00 0.00
November 1, 2005 0.00 0.00 0.00
December 1, 2005 0.00 0.00 0.00
January 1, 2006 0.00 0.00 0.00
February 1, 2006 0.00 0.00 0.00
March 1, 2006 0.00 0.00 0.00
April 1, 2006 0.00 0.00 0.00
May 1, 2006 0.00 0.00 0.00
June 1, 2006 0.00 0.00 0.00
D-1
<PAGE>
ANNEX D
F/X SCHEDULES
<CAPTION>
Loan Number 100: Comfort Inn - Winnipeg
- -------------------------------- ---------------------------------------------------------------------------------
Payment Date Total Payment Principal Payment Interest Payment
- -------------------------------- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
September 1, 1999 17,209.18 3,622.04 13,587.14
October 1, 1999 17,207.66 3,646.00 13,561.66
November 1, 1999 17,206.14 3,670.13 13,536.01
December 1, 1999 17,204.60 3,694.42 13,510.18
January 1, 2000 17,203.05 3,718.86 13,484.19
February 1, 2000 17,201.48 3,743.46 13,458.02
March 1, 2000 17,199.93 3,768.24 13,431.69
April 1, 2000 17,198.34 3,793.17 13,405.17
May 1, 2000 17,196.76 3,818.27 13,378.49
June 1, 2000 17,195.15 3,843.53 13,351.62
July 1, 2000 17,193.54 3,868.96 13,324.58
August 1, 2000 17,191.92 3,894.56 13,297.36
September 1, 2000 17,190.29 3,920.33 13,269.96
October 1, 2000 17,188.64 3,946.27 13,242.37
November 1, 2000 17,186.99 3,972.38 13,214.61
December 1, 2000 17,185.32 3,998.66 13,186.66
January 1, 2001 17,183.64 4,025.12 13,158.52
February 1, 2001 17,181.96 4,051.76 13,130.20
March 1, 2001 17,180.27 4,078.57 13,101.70
April 1, 2001 17,178.55 4,105.55 13,073.00
May 1, 2001 17,176.82 4,132.71 13,044.11
June 1, 2001 17,175.10 4,160.06 13,015.04
July 1, 2001 17,173.36 4,187.59 12,985.77
August 1, 2001 17,171.59 4,215.29 12,956.30
September 1, 2001 17,169.84 4,243.19 12,926.65
October 1, 2001 17,168.05 4,271.26 12,896.79
November 1, 2001 17,166.26 4,299.52 12,866.74
December 1, 2001 17,164.46 4,327.97 12,836.49
January 1, 2002 17,162.65 4,356.61 12,806.04
February 1, 2002 17,160.82 4,385.43 12,775.39
March 1, 2002 17,158.98 4,414.45 12,744.53
April 1, 2002 17,157.13 4,443.66 12,713.47
May 1, 2002 17,155.27 4,473.06 12,682.21
June 1, 2002 17,153.40 4,502.66 12,650.74
July 1, 2002 17,151.52 4,532.46 12,619.06
August 1, 2002 17,149.61 4,562.44 12,587.17
September 1, 2002 17,147.70 4,592.63 12,555.07
October 1, 2002 17,145.77 4,623.02 12,522.75
November 1, 2002 17,143.84 4,653.61 12,490.23
December 1, 2002 17,141.88 4,684.40 12,457.48
January 1, 2003 17,139.92 4,715.40 12,424.52
February 1, 2003 17,137.94 4,746.59 12,391.35
March 1, 2003 17,135.95 4,778.00 12,357.95
April 1, 2003 17,133.95 4,809.62 12,324.33
May 1, 2003 17,131.93 4,841.44 12,290.49
June 1, 2003 17,129.90 4,873.47 12,256.43
July 1, 2003 17,127.86 4,905.72 12,222.14
August 1, 2003 17,125.81 4,938.18 12,187.63
September 1, 2003 17,123.73 4,970.85 12,152.88
October 1, 2003 17,121.65 5,003.74 12,117.91
November 1, 2003 17,119.55 5,036.85 12,082.70
December 1, 2003 17,117.44 5,070.18 12,047.26
January 1, 2004 17,115.32 5,103.73 12,011.59
February 1, 2004 17,113.17 5,137.49 11,975.68
March 1, 2004 17,111.03 5,171.49 11,939.54
April 1, 2004 17,108.85 5,205.70 11,903.15
May 1, 2004 17,106.67 5,240.15 11,866.52
June 1, 2004 17,104.48 5,274.83 11,829.65
July 1, 2004 17,102.26 5,309.72 11,792.54
August 1, 2004 17,100.04 5,344.86 11,755.18
September 1, 2004 17,097.80 5,380.22 11,717.58
October 1, 2004 17,095.54 5,415.82 11,679.72
November 1, 2004 17,093.27 5,451.65 11,641.62
December 1, 2004 17,090.99 5,487.73 11,603.26
January 1, 2005 17,088.69 5,524.04 11,564.65
February 1, 2005 17,086.38 5,560.59 11,525.79
March 1, 2005 17,084.05 5,597.39 11,486.66
April 1, 2005 17,081.70 5,634.42 11,447.28
May 1, 2005 17,079.34 5,671.70 11,407.64
June 1, 2005 17,076.96 5,709.23 11,367.73
July 1, 2005 17,074.56 5,747.00 11,327.56
August 1, 2005 17,072.16 5,785.03 11,287.13
September 1, 2005 1,609,696.00 1,598,449.58 11,246.42
October 1, 2005 0.00 0.00 0.00
November 1, 2005 0.00 0.00 0.00
December 1, 2005 0.00 0.00 0.00
January 1, 2006 0.00 0.00 0.00
February 1, 2006 0.00 0.00 0.00
March 1, 2006 0.00 0.00 0.00
April 1, 2006 0.00 0.00 0.00
May 1, 2006 0.00 0.00 0.00
June 1, 2006 0.00 0.00 0.00
<CAPTION>
Loan Number 101: Quality Suites - Laval
- -------------------------------- ---------------------------------------------------------------------------------
Payment Date Total Payment Principal Payment Interest Payment
- -------------------------------- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
September 1, 1999 17,209.18 3,622.04 13,587.14
October 1, 1999 17,207.66 3,646.00 13,561.66
November 1, 1999 17,206.14 3,670.13 13,536.01
December 1, 1999 17,204.60 3,694.42 13,510.18
January 1, 2000 17,203.05 3,718.86 13,484.19
February 1, 2000 17,201.48 3,743.46 13,458.02
March 1, 2000 17,199.93 3,768.24 13,431.69
April 1, 2000 17,198.34 3,793.17 13,405.17
May 1, 2000 17,196.76 3,818.27 13,378.49
June 1, 2000 17,195.15 3,843.53 13,351.62
July 1, 2000 17,193.54 3,868.96 13,324.58
August 1, 2000 17,191.92 3,894.56 13,297.36
September 1, 2000 17,190.29 3,920.33 13,269.96
October 1, 2000 17,188.64 3,946.27 13,242.37
November 1, 2000 17,186.99 3,972.38 13,214.61
December 1, 2000 17,185.32 3,998.66 13,186.66
January 1, 2001 17,183.64 4,025.12 13,158.52
February 1, 2001 17,181.96 4,051.76 13,130.20
March 1, 2001 17,180.27 4,078.57 13,101.70
April 1, 2001 17,178.55 4,105.55 13,073.00
May 1, 2001 17,176.82 4,132.71 13,044.11
June 1, 2001 17,175.10 4,160.06 13,015.04
July 1, 2001 17,173.36 4,187.59 12,985.77
August 1, 2001 17,171.59 4,215.29 12,956.30
September 1, 2001 17,169.84 4,243.19 12,926.65
October 1, 2001 17,168.05 4,271.26 12,896.79
November 1, 2001 17,166.26 4,299.52 12,866.74
December 1, 2001 17,164.46 4,327.97 12,836.49
January 1, 2002 17,162.65 4,356.61 12,806.04
February 1, 2002 17,160.82 4,385.43 12,775.39
March 1, 2002 17,158.98 4,414.45 12,744.53
April 1, 2002 17,157.13 4,443.66 12,713.47
May 1, 2002 17,155.27 4,473.06 12,682.21
June 1, 2002 17,153.40 4,502.66 12,650.74
July 1, 2002 17,151.52 4,532.46 12,619.06
August 1, 2002 17,149.61 4,562.44 12,587.17
September 1, 2002 17,147.70 4,592.63 12,555.07
October 1, 2002 17,145.77 4,623.02 12,522.75
November 1, 2002 17,143.84 4,653.61 12,490.23
December 1, 2002 17,141.88 4,684.40 12,457.48
January 1, 2003 17,139.92 4,715.40 12,424.52
February 1, 2003 17,137.94 4,746.59 12,391.35
March 1, 2003 17,135.95 4,778.00 12,357.95
April 1, 2003 17,133.95 4,809.62 12,324.33
May 1, 2003 17,131.93 4,841.44 12,290.49
June 1, 2003 17,129.90 4,873.47 12,256.43
July 1, 2003 17,127.86 4,905.72 12,222.14
August 1, 2003 17,125.81 4,938.18 12,187.63
September 1, 2003 17,123.73 4,970.85 12,152.88
October 1, 2003 17,121.65 5,003.74 12,117.91
November 1, 2003 17,119.55 5,036.85 12,082.70
December 1, 2003 17,117.44 5,070.18 12,047.26
January 1, 2004 17,115.32 5,103.73 12,011.59
February 1, 2004 17,113.17 5,137.49 11,975.68
March 1, 2004 17,111.03 5,171.49 11,939.54
April 1, 2004 17,108.85 5,205.70 11,903.15
May 1, 2004 17,106.67 5,240.15 11,866.52
June 1, 2004 17,104.48 5,274.83 11,829.65
July 1, 2004 17,102.26 5,309.72 11,792.54
August 1, 2004 17,100.04 5,344.86 11,755.18
September 1, 2004 17,097.80 5,380.22 11,717.58
October 1, 2004 17,095.54 5,415.82 11,679.72
November 1, 2004 17,093.27 5,451.65 11,641.62
December 1, 2004 17,090.99 5,487.73 11,603.26
January 1, 2005 17,088.69 5,524.04 11,564.65
February 1, 2005 17,086.38 5,560.59 11,525.79
March 1, 2005 17,084.05 5,597.39 11,486.66
April 1, 2005 17,081.70 5,634.42 11,447.28
May 1, 2005 17,079.34 5,671.70 11,407.64
June 1, 2005 17,076.96 5,709.23 11,367.73
July 1, 2005 17,074.56 5,747.00 11,327.56
August 1, 2005 17,072.16 5,785.03 11,287.13
September 1, 2005 1,609,696.00 1,598,449.58 11,246.42
October 1, 2005 0.00 0.00 0.00
November 1, 2005 0.00 0.00 0.00
December 1, 2005 0.00 0.00 0.00
January 1, 2006 0.00 0.00 0.00
February 1, 2006 0.00 0.00 0.00
March 1, 2006 0.00 0.00 0.00
April 1, 2006 0.00 0.00 0.00
May 1, 2006 0.00 0.00 0.00
June 1, 2006 0.00 0.00 0.00
<CAPTION>
Loan Number 103: Comfort Inn - Regina
- -------------------------------- ---------------------------------------------------------------------------------
Payment Date Total Payment Principal Payment Interest Payment
- -------------------------------- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
September 1, 1999 16,319.06 3,434.70 12,884.36
October 1, 1999 16,317.61 3,457.42 12,860.19
November 1, 1999 16,316.17 3,480.30 12,835.87
December 1, 1999 16,314.71 3,503.33 12,811.38
January 1, 2000 16,313.24 3,526.51 12,786.73
February 1, 2000 16,311.76 3,549.84 12,761.92
March 1, 2000 16,310.27 3,573.33 12,736.94
April 1, 2000 16,308.77 3,596.97 12,711.80
May 1, 2000 16,307.26 3,620.77 12,686.49
June 1, 2000 16,305.75 3,644.73 12,661.02
July 1, 2000 16,304.23 3,668.85 12,635.38
August 1, 2000 16,302.68 3,693.12 12,609.56
September 1, 2000 16,301.14 3,717.56 12,583.58
October 1, 2000 16,299.57 3,742.15 12,557.42
November 1, 2000 16,298.00 3,766.91 12,531.09
December 1, 2000 16,296.43 3,791.84 12,504.59
January 1, 2001 16,294.84 3,816.93 12,477.91
February 1, 2001 16,293.24 3,842.19 12,451.05
March 1, 2001 16,291.63 3,867.61 12,424.02
April 1, 2001 16,290.01 3,893.20 12,396.81
May 1, 2001 16,288.38 3,918.96 12,369.42
June 1, 2001 16,286.73 3,944.89 12,341.84
July 1, 2001 16,285.08 3,970.99 12,314.09
August 1, 2001 16,283.41 3,997.26 12,286.15
September 1, 2001 16,281.74 4,023.71 12,258.03
October 1, 2001 16,280.06 4,050.34 12,229.72
November 1, 2001 16,278.36 4,077.14 12,201.22
December 1, 2001 16,276.65 4,104.12 12,172.53
January 1, 2002 16,274.93 4,131.27 12,143.66
February 1, 2002 16,273.20 4,158.61 12,114.59
March 1, 2002 16,271.45 4,186.12 12,085.33
April 1, 2002 16,269.70 4,213.82 12,055.88
May 1, 2002 16,267.93 4,241.70 12,026.23
June 1, 2002 16,266.16 4,269.77 11,996.39
July 1, 2002 16,264.36 4,298.02 11,966.34
August 1, 2002 16,262.56 4,326.46 11,936.10
September 1, 2002 16,260.74 4,355.08 11,905.66
October 1, 2002 16,258.92 4,383.90 11,875.02
November 1, 2002 16,257.09 4,412.91 11,844.18
December 1, 2002 16,255.24 4,442.11 11,813.13
January 1, 2003 16,253.38 4,471.50 11,781.88
February 1, 2003 16,251.50 4,501.09 11,750.41
March 1, 2003 16,249.62 4,530.87 11,718.75
April 1, 2003 16,247.72 4,560.85 11,686.87
May 1, 2003 16,245.80 4,591.02 11,654.78
June 1, 2003 16,243.88 4,621.40 11,622.48
July 1, 2003 16,241.94 4,651.98 11,589.96
August 1, 2003 16,239.99 4,682.76 11,557.23
September 1, 2003 16,238.03 4,713.75 11,524.28
October 1, 2003 16,236.05 4,744.93 11,491.12
November 1, 2003 16,234.06 4,776.33 11,457.73
December 1, 2003 16,232.06 4,807.93 11,424.13
January 1, 2004 16,230.04 4,839.74 11,390.30
February 1, 2004 16,228.02 4,871.77 11,356.25
March 1, 2004 16,225.97 4,904.00 11,321.97
April 1, 2004 16,223.92 4,936.45 11,287.47
May 1, 2004 16,221.85 4,969.11 11,252.74
June 1, 2004 16,219.76 5,001.99 11,217.77
July 1, 2004 16,217.67 5,035.09 11,182.58
August 1, 2004 16,215.56 5,068.41 11,147.15
September 1, 2004 16,213.43 5,101.94 11,111.49
October 1, 2004 16,211.30 5,135.70 11,075.60
November 1, 2004 16,209.14 5,169.68 11,039.46
December 1, 2004 16,206.97 5,203.88 11,003.09
January 1, 2005 16,204.80 5,238.32 10,966.48
February 1, 2005 16,202.60 5,272.98 10,929.62
March 1, 2005 16,200.38 5,307.86 10,892.52
April 1, 2005 16,198.17 5,342.99 10,855.18
May 1, 2005 16,195.92 5,378.34 10,817.58
June 1, 2005 16,193.67 5,413.93 10,779.74
July 1, 2005 16,191.40 5,449.75 10,741.65
August 1, 2005 16,189.12 5,485.81 10,703.31
September 1, 2005 1,526,435.52 1,515,770.81 10,664.71
October 1, 2005 0.00 0.00 0.00
November 1, 2005 0.00 0.00 0.00
December 1, 2005 0.00 0.00 0.00
January 1, 2006 0.00 0.00 0.00
February 1, 2006 0.00 0.00 0.00
March 1, 2006 0.00 0.00 0.00
April 1, 2006 0.00 0.00 0.00
May 1, 2006 0.00 0.00 0.00
June 1, 2006 0.00 0.00 0.00
<CAPTION>
Loan Number 116: Comfort Inn - Cambridge
- -------------------------------- ---------------------------------------------------------------------------------
Payment Date Total Payment Principal Payment Interest Payment
- -------------------------------- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
September 1, 1999 13,411.30 2,822.70 10,588.60
October 1, 1999 13,410.11 2,841.37 10,568.74
November 1, 1999 13,408.92 2,860.17 10,548.75
December 1, 1999 13,407.73 2,879.10 10,528.63
January 1, 2000 13,406.52 2,898.15 10,508.37
February 1, 2000 13,405.30 2,917.32 10,487.98
March 1, 2000 13,404.07 2,936.62 10,467.45
April 1, 2000 13,402.84 2,956.05 10,446.79
May 1, 2000 13,401.60 2,975.61 10,425.99
June 1, 2000 13,400.37 2,995.31 10,405.06
July 1, 2000 13,399.10 3,015.12 10,383.98
August 1, 2000 13,397.85 3,035.08 10,362.77
September 1, 2000 13,396.57 3,055.16 10,341.41
October 1, 2000 13,395.29 3,075.37 10,319.92
November 1, 2000 13,394.00 3,095.72 10,298.28
December 1, 2000 13,392.70 3,116.20 10,276.50
January 1, 2001 13,391.39 3,136.82 10,254.57
February 1, 2001 13,390.08 3,157.58 10,232.50
March 1, 2001 13,388.76 3,178.47 10,210.29
April 1, 2001 13,387.42 3,199.50 10,187.92
May 1, 2001 13,386.08 3,220.67 10,165.41
June 1, 2001 13,384.73 3,241.98 10,142.75
July 1, 2001 13,383.37 3,263.43 10,119.94
August 1, 2001 13,382.01 3,285.03 10,096.98
September 1, 2001 13,380.63 3,306.76 10,073.87
October 1, 2001 13,379.24 3,328.64 10,050.60
November 1, 2001 13,377.84 3,350.66 10,027.18
December 1, 2001 13,376.45 3,372.84 10,003.61
January 1, 2002 13,375.03 3,395.15 9,979.88
February 1, 2002 13,373.61 3,417.62 9,955.99
March 1, 2002 13,372.17 3,440.23 9,931.94
April 1, 2002 13,370.73 3,462.99 9,907.74
May 1, 2002 13,369.28 3,485.91 9,883.37
June 1, 2002 13,367.82 3,508.97 9,858.85
July 1, 2002 13,366.35 3,532.19 9,834.16
August 1, 2002 13,364.87 3,555.56 9,809.31
September 1, 2002 13,363.37 3,579.08 9,784.29
October 1, 2002 13,361.88 3,602.77 9,759.11
November 1, 2002 13,360.37 3,626.61 9,733.76
December 1, 2002 13,358.85 3,650.60 9,708.25
January 1, 2003 13,357.32 3,674.76 9,682.56
February 1, 2003 13,355.78 3,699.07 9,656.71
March 1, 2003 13,354.22 3,723.54 9,630.68
April 1, 2003 13,352.66 3,748.18 9,604.48
May 1, 2003 13,351.09 3,772.98 9,578.11
June 1, 2003 13,349.51 3,797.95 9,551.56
July 1, 2003 13,347.92 3,823.08 9,524.84
August 1, 2003 13,346.31 3,848.37 9,497.94
September 1, 2003 13,344.71 3,873.84 9,470.87
October 1, 2003 13,343.08 3,899.47 9,443.61
November 1, 2003 13,341.44 3,925.27 9,416.17
December 1, 2003 13,339.81 3,951.25 9,388.56
January 1, 2004 13,338.15 3,977.39 9,360.76
February 1, 2004 13,336.48 4,003.71 9,332.77
March 1, 2004 13,334.79 4,030.19 9,304.60
April 1, 2004 13,333.11 4,056.86 9,276.25
May 1, 2004 13,331.41 4,083.71 9,247.70
June 1, 2004 13,329.69 4,110.72 9,218.97
July 1, 2004 13,327.98 4,137.93 9,190.05
August 1, 2004 13,326.24 4,165.30 9,160.94
September 1, 2004 13,324.49 4,192.86 9,131.63
October 1, 2004 13,322.74 4,220.61 9,102.13
November 1, 2004 13,320.97 4,248.54 9,072.43
December 1, 2004 13,319.19 4,276.65 9,042.54
January 1, 2005 13,317.39 4,304.94 9,012.45
February 1, 2005 13,315.59 4,333.43 8,982.16
March 1, 2005 13,313.77 4,362.10 8,951.67
April 1, 2005 13,311.94 4,390.96 8,920.98
May 1, 2005 13,310.10 4,420.01 8,890.09
June 1, 2005 13,308.25 4,449.26 8,858.99
July 1, 2005 13,306.39 4,478.70 8,827.69
August 1, 2005 13,304.50 4,508.33 8,796.17
September 1, 2005 1,254,452.63 1,245,688.18 8,764.45
October 1, 2005 0.00 0.00 0.00
November 1, 2005 0.00 0.00 0.00
December 1, 2005 0.00 0.00 0.00
January 1, 2006 0.00 0.00 0.00
February 1, 2006 0.00 0.00 0.00
March 1, 2006 0.00 0.00 0.00
April 1, 2006 0.00 0.00 0.00
May 1, 2006 0.00 0.00 0.00
June 1, 2006 0.00 0.00 0.00
</TABLE>
D-2
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
ANNEX E
J.P. MORGAN COMMERCIAL MORTGAGE FINANCE CORP.
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1999-C8
$676,299,000
J.P. MORGAN & CO. DEUTSCHE BANC ALEX. BROWN
J.P. Morgan Commercial Mortgage Finance Corp., Series 1999-C8
07/27/99 12:36 AM Page 1
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan does not warrant its completeness or accuracy.
These materials are subject to change from time to time without notice. Past
performance is not indicative of future results. All information contained
herein, whether regarding the mortgage loans or otherwise, supersedes any
previous such information delivered to you and will be superseded by any such
information subsequently delivered and ultimately by the final prospectus
relating to the securities. These materials are not intended as an offer or
solicitation with respect to the purchase or sale of any security, and have been
provided to you for informational purposes only and may not be relied upon by
you in evaluating the merits of investing in the securities. Any investment
decision with respect to the securities should be made by you based solely upon
the information contained in the final prospectus relating to the securities. No
assurance or representation can be made as to the actual rate or timing of
principal payments or prepayments on any of the mortgage loans or the
performance characteristics of the securities. This information was prepared in
reliance on information regarding the mortgage loans furnished by the seller of
the mortgage loans. J.P. Morgan and/or its affiliates and employees may hold a
position or act as market maker in the financial instruments of any issuer
discussed herein or act as underwriter, placement agent, advisor or lender to
such issuer. J.P. Morgan Securities Inc. is a member of SIPC. Copyright 1999
J.P. Morgan & Co. Incorporated. Clients should contact analysts at and execute
transactions through a J.P. Morgan entity in their home jurisdiction unless
governing law permits otherwise.
<PAGE>
J.P. MORGAN COMMERCIAL MORTGAGE FINANCE CORP.
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1999-C8
$676,299,000
J.P. MORGAN:
TRADING Brian Baker (212) 648-1413
Andrew Taylor (212) 648-1413
STRUCTURING Thomas Doherty (212) 648-1413
Theresa Dooley (212) 648-0651
RESEARCH Patrick Corcoran (212) 648-6130
Joshua Philips (212) 648-6562
PRODUCT MANAGEMENT Michael Glover (212) 648-0258
DEUTSCHE BANC ALEX. BROWN:
TRADING Justin Kennedy (212) 469-3867
Scott Waynebern (212) 469-7730
J.P. MORGAN & CO. DEUTSCHE BANC ALEX. BROWN
J.P. Morgan Commercial Mortgage Finance Corp., Series 1999-C8
07/27/99 12:36 AM Page 2
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan does not warrant its completeness or accuracy.
These materials are subject to change from time to time without notice. Past
performance is not indicative of future results. All information contained
herein, whether regarding the mortgage loans or otherwise, supersedes any
previous such information delivered to you and will be superseded by any such
information subsequently delivered and ultimately by the final prospectus
relating to the securities. These materials are not intended as an offer or
solicitation with respect to the purchase or sale of any security, and have been
provided to you for informational purposes only and may not be relied upon by
you in evaluating the merits of investing in the securities. Any investment
decision with respect to the securities should be made by you based solely upon
the information contained in the final prospectus relating to the securities. No
assurance or representation can be made as to the actual rate or timing of
principal payments or prepayments on any of the mortgage loans or the
performance characteristics of the securities. This information was prepared in
reliance on information regarding the mortgage loans furnished by the seller of
the mortgage loans. J.P. Morgan and/or its affiliates and employees may hold a
position or act as market maker in the financial instruments of any issuer
discussed herein or act as underwriter, placement agent, advisor or lender to
such issuer. J.P. Morgan Securities Inc. is a member of SIPC. Copyright 1999
J.P. Morgan & Co. Incorporated. Clients should contact analysts at and execute
transactions through a J.P. Morgan entity in their home jurisdiction unless
governing law permits otherwise.
<PAGE>
J.P. MORGAN COMMERCIAL MORTGAGE FINANCE CORP.
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1999-C8
$676,299,000
TRANSACTION OVERVIEW
<TABLE>
<CAPTION>
LOAN AVG.
RATING CURRENT TO LIFE PRINCIPAL
(DCR/ SIZE % OF CREDIT VALUE (YRS) WINDOW COUPON PRICE PRICE ERISA(4)
CLASS MDY/S&P) ($)(1) TOTAL SUPPORT (%)(2) (3) (MONTHS)(3) DESCRIPTION ($) TALK SMMEA
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
A-1 AAA / Aaa / AAA $180,290,000 23.7% 27.75 49.5% 5.50 1-109 Fixed Yes/No
A-2 AAA / Aaa / AAA 370,276,000 48.6 27.75 49.5 9.37 109-116 Fixed/WAC Yes/No
X AAA / Aaa / AAAr 762,030,576(5) 5.64(6) WAC Yes/No
B AA / Aa2 / AA 38,101,000 5.0 22.75 52.9 9.70 116-117 WAC No/No
C A / A2 / A 34,291,000 4.5 18.25 56.0 9.81 117-118 WAC No/No
D A- / A3 / A- 15,240,000 2.0 16.25 57.4 9.83 118-118 WAC No/No
E BBB / Baa2 / BBB 26,671,000 3.5 12.75 59.8 9.84 118-119 WAC No/No
F BBB- / Baa3 / BBB- 11,430,000 1.5 11.25 60.8 9.92 119-119 WAC No/No
RETAINED CLASSES 85,731,576(7) 11.3 Fixed No/No
TOTAL $762,030,576 100.0% 68.5% 8.82
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Approximate, subject to change
2 The sum of the principal balance of each bond and the bonds senior to
it, divided by the aggregate appraised value of the properties
collateralizing the mortgage loan pool
3 Assumes a prepayment rate of 0% CPR, optional redemption is not
exercised, and a closing date of August [ ], 1999
4 ERISA eligibility is subject to certain limitations described in the
prospectus supplement under "Certain ERISA Considerations"
5 Notional balance
6 Implied average life
7 Includes Classes G, H, J and NR
MORTGAGE POOL CHARACTERISTICS
The mortgage pool consists of 129 fixed rate mortgage loans secured by one or
more first liens on fee simple and/or, with respect to 5 leaseholds, interests
in multifamily, retail, office, hotel and other commercial properties located in
30 states, the District of Columbia and 5 provinces of Canada. The three largest
geographic concentrations are Illinois (11.0%), Florida (10.6%) and California
(9.5%). The mortgage loans will have an initial pool balance of $762,030,576 and
individual principal balances as of the Cut-off Date of at least $990,656 but
not more than $58,136,667 with an average principal balance of approximately
$5,907,214. The mortgage pool has a weighted average loan-to-value of 69.50% and
a weighted average debt service coverage ratio of 1.40x.
J.P. MORGAN & CO. DEUTSCHE BANC ALEX. BROWN
J.P. Morgan Commercial Mortgage Finance Corp., Series 1999-C8
07/27/99 12:36 AM Page 3
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan does not warrant its completeness or accuracy.
These materials are subject to change from time to time without notice. Past
performance is not indicative of future results. All information contained
herein, whether regarding the mortgage loans or otherwise, supersedes any
previous such information delivered to you and will be superseded by any such
information subsequently delivered and ultimately by the final prospectus
relating to the securities. These materials are not intended as an offer or
solicitation with respect to the purchase or sale of any security, and have been
provided to you for informational purposes only and may not be relied upon by
you in evaluating the merits of investing in the securities. Any investment
decision with respect to the securities should be made by you based solely upon
the information contained in the final prospectus relating to the securities. No
assurance or representation can be made as to the actual rate or timing of
principal payments or prepayments on any of the mortgage loans or the
performance characteristics of the securities. This information was prepared in
reliance on information regarding the mortgage loans furnished by the seller of
the mortgage loans. J.P. Morgan and/or its affiliates and employees may hold a
position or act as market maker in the financial instruments of any issuer
discussed herein or act as underwriter, placement agent, advisor or lender to
such issuer. J.P. Morgan Securities Inc. is a member of SIPC. Copyright 1999
J.P. Morgan & Co. Incorporated. Clients should contact analysts at and execute
transactions through a J.P. Morgan entity in their home jurisdiction unless
governing law permits otherwise.
<PAGE>
DEAL SUMMARY
<TABLE>
<CAPTION>
<S> <C>
LEAD MANAGER J.P. Morgan Securities Inc.
CO-LEAD MANAGER Deutsche Bank Securities Inc.
PRICING SPEED 0% CPR
DEPOSITOR J.P. Morgan Commercial Mortgage Finance Corp., an indirect wholly-owned
limited purpose finance subsidiary of J.P. Morgan & Co. Incorporated and an
affiliate of J.P. Morgan Securities Inc. ("JPMSI"), an Underwriter
ORIGINATOR 96.7% of the mortgage loans were originated by Morgan Guaranty Trust Company of
New York and 3.3% were purchased
MASTER SERVICER Midland Loan Services Inc.
SPECIAL SERVICER Midland Loan Services Inc.
TRUSTEE State Street Bank and Trust Company
TRUSTEE WEBSITE corporatetrust.statestreet.com
RATING AGENCIES Duff & Phelps Credit Rating Co.
Moody's Investors Service
Standard & Poor's Ratings Services
----------------------------------------
LEGAL STATUS All offered certificates are public
CUT-OFF DATE August 1, 1999
SETTLEMENT DATE On or about August ____, 1999
DELIVERY DTC, Euroclear and Cedel
RATED FINAL MATURITY DATE The distribution date in July 2031
MONTHLY DISTRIBUTION DATES Pays monthly on the 15th day of every month or, if any such 15th day is not a
business day, then the next succeeding business day
FIRST PAYMENT DATE September 15, 1999, 14 day delay
OPTIONAL REDEMPTION When pool pays down to 1% of original pool balance
DEAL INFORMATION / ANALYTICS Bloomberg, Conquest, Intex and The Trepp Group
ERISA ELIGIBLE Classes A1, A2 and X
</TABLE>
J.P. MORGAN & CO. DEUTSCHE BANC ALEX. BROWN
J.P. Morgan Commercial Mortgage Finance Corp., Series 1999-C8
07/27/99 12:36 AM Page 4
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan does not warrant its completeness or accuracy.
These materials are subject to change from time to time without notice. Past
performance is not indicative of future results. All information contained
herein, whether regarding the mortgage loans or otherwise, supersedes any
previous such information delivered to you and will be superseded by any such
information subsequently delivered and ultimately by the final prospectus
relating to the securities. These materials are not intended as an offer or
solicitation with respect to the purchase or sale of any security, and have been
provided to you for informational purposes only and may not be relied upon by
you in evaluating the merits of investing in the securities. Any investment
decision with respect to the securities should be made by you based solely upon
the information contained in the final prospectus relating to the securities. No
assurance or representation can be made as to the actual rate or timing of
principal payments or prepayments on any of the mortgage loans or the
performance characteristics of the securities. This information was prepared in
reliance on information regarding the mortgage loans furnished by the seller of
the mortgage loans. J.P. Morgan and/or its affiliates and employees may hold a
position or act as market maker in the financial instruments of any issuer
discussed herein or act as underwriter, placement agent, advisor or lender to
such issuer. J.P. Morgan Securities Inc. is a member of SIPC. Copyright 1999
J.P. Morgan & Co. Incorporated. Clients should contact analysts at and execute
transactions through a J.P. Morgan entity in their home jurisdiction unless
governing law permits otherwise.
<PAGE>
STRUCTURAL OVERVIEW
o Interest payments will be pro-rata to the Class A1, A2 and X Certificates
and then interest will be paid sequentially to the Class B, C, D, E, F, G,
H, J and NR Certificates
o The Class A1, G, H, J and NR Certificates will have a fixed coupon. The
Class A2 Certificates will have either a fixed coupon or a weighted average
coupon. The Class B, C, D, E and F Certificates will have a weighted
average coupon. The Class X Certificates will receive the net interest on
the mortgage loans less the interest paid on the other certificates
o All Classes offered will pay interest on a 30/360 basis
o The Class X Certificates will have the same interest payment priority as
the Class A1 and A2 Certificates
o Principal payments will be paid sequentially to the Class A1, A2, B, C, D,
E, F, G, H, J and NR Certificates, until each class is retired. The Class X
Certificates do not have a class principal balance and are therefore not
entitled to any principal distributions
o Losses will be born by the Classes in reverse sequential order, from the
Class NR Certificates up to the Class B Certificates and then pro-rata to
the Class A1 and A2 Certificates
o If the principal balance of the mortgage pool is less than or equal to the
aggregate bond balance of the Class A1 and A2 Certificates, the principal
will be allocated pro-rata to the Class A1 and A2 Certificates
o Prepayment premiums received will be allocated first to the interest
bearing certificates, according to a specified formula, with any remaining
amount paid to the Class X Certificates. For the amount payable to any
interest-bearing Class, the formula is as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Principal Paid to Class (Pass-Through Rate on Class--Discount Rate)
Prepayment Premium x ----------------------- x ------------------------------------------
Total Principal Paid (Mortgage Rate on Loan -- Discount Rate)
</TABLE>
o The deal will provide for the standard collateral value adjustment feature
for problem or delinquent loans. Generally, when a loan becomes 90 days
delinquent, the special servicer obtains a new appraisal. To the extent any
such adjustment is not reversed, the interest portion of any P&I Advance
will be reduced in proportion to such adjustment
COLLATERAL CHARACTERISTICS
PRINCIPAL BALANCE $762,030,576
NUMBER OF LOANS 129
NUMBER OF MORTGAGED PROPERTIES 140
AVG. PRINCIPAL BALANCE
PER LOAN $5,907,214
PER PROPERTY $5,443,076
W.A. MORTGAGE RATE 7.5819%
W.A. REMAINING TERM 117 months
W.A. UNDERWRITTEN DSCR 1.40x
W.A. CUT-OFF DATE LTV RATIO 69.50%
W.A. SEASONING 6 months
J.P. MORGAN & CO. DEUTSCHE BANC ALEX. BROWN
J.P. Morgan Commercial Mortgage Finance Corp., Series 1999-C8
07/27/99 12:36 AM Page 5
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan does not warrant its completeness or accuracy.
These materials are subject to change from time to time without notice. Past
performance is not indicative of future results. All information contained
herein, whether regarding the mortgage loans or otherwise, supersedes any
previous such information delivered to you and will be superseded by any such
information subsequently delivered and ultimately by the final prospectus
relating to the securities. These materials are not intended as an offer or
solicitation with respect to the purchase or sale of any security, and have been
provided to you for informational purposes only and may not be relied upon by
you in evaluating the merits of investing in the securities. Any investment
decision with respect to the securities should be made by you based solely upon
the information contained in the final prospectus relating to the securities. No
assurance or representation can be made as to the actual rate or timing of
principal payments or prepayments on any of the mortgage loans or the
performance characteristics of the securities. This information was prepared in
reliance on information regarding the mortgage loans furnished by the seller of
the mortgage loans. J.P. Morgan and/or its affiliates and employees may hold a
position or act as market maker in the financial instruments of any issuer
discussed herein or act as underwriter, placement agent, advisor or lender to
such issuer. J.P. Morgan Securities Inc. is a member of SIPC. Copyright 1999
J.P. Morgan & Co. Incorporated. Clients should contact analysts at and execute
transactions through a J.P. Morgan entity in their home jurisdiction unless
governing law permits otherwise.
<PAGE>
AVERAGE LIFE SENSITIVITIES
PREPAYMENT SPEEDS (CPR)(1)
AVERAGE LIFE (YEARS)
------------- ------------- ------------- ------------- -----------
CLASS 0% 25% 50% 75% 100%
- ----------- ------------- ------------- ------------- ------------- -----------
A1 5.50 5.49 5.48 5.47 5.39
A2 9.37 9.36 9.34 9.31 9.11
B 9.70 9.69 9.67 9.67 9.44
C 9.81 9.79 9.77 9.72 9.55
D 9.83 9.83 9.83 9.80 9.58
E 9.84 9.83 9.83 9.83 9.58
F 9.92 9.91 9.87 9.83 9.66
X(2) 5.64 5.58 5.52 5.52 5.40
1 Assumes no prepayment during the lockout and yield maintenance periods
and optional redemptions are not exercised
2 Implied average life
PREPAYMENT PROTECTION
PERCENTAGE OF MORTGAGE LOANS BY OUTSTANDING PRINCIPAL BALANCE AS OF THE CUT-OFF
DATE THAT HAVE PREPAYMENT LOCKOUTS OR PENALTIES (ASSUMING NO PREPAYMENTS)
<TABLE>
<CAPTION>
CURRENT 8/00 8/01 8/02 8/03 8/04 8/05 8/06 8/07 8/08 8/09
- ------------------------------- ---------- ------- -------- ------- -------- ------- -------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Lockout/Defeasance 100.0 100.0 100.0 100.0 97.6 81.6 78.7 78.9 77.7 64.4 60.9
Yield Maintenance(1) 0.0 0.0 0.0 0.0 2.4 18.0 20.0 21.1 22.3 10.7 27.9
Total Lockout and YM 100.0 100.0 100.0 100.0 100.0 99.6 98.8 100.0 100.0 75.1 88.8
No Prepayment Premium 0.0 0.0 0.0 0.0 0.0 0.4 1.2 0.0 0.0 24.9 11.2
- ------------------------------- ---------- ------- -------- ------- -------- ------- -------- -------- ------- -------- -------
TOTAL 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
- ------------------------------- ---------- ------- -------- ------- -------- ------- -------- -------- ------- -------- -------
AGGREGATE MORTGAGE BALANCE ($) 762.0 753.0 743.0 732.1 720.4 686.0 665.5 625.0 610.6 586.7 48.4
% OF CUT-OFF DATE BALANCE 100.0 98.8 97.5 96.1 94.5 90.0 87.3 82.0 80.1 77.0 6.3
</TABLE>
1 U.S. Treasury rate; 1% floor
J.P. MORGAN & CO. DEUTSCHE BANC ALEX. BROWN
J.P. Morgan Commercial Mortgage Finance Corp., Series 1999-C8
07/27/99 12:36 AM Page 6
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan does not warrant its completeness or accuracy.
These materials are subject to change from time to time without notice. Past
performance is not indicative of future results. All information contained
herein, whether regarding the mortgage loans or otherwise, supersedes any
previous such information delivered to you and will be superseded by any such
information subsequently delivered and ultimately by the final prospectus
relating to the securities. These materials are not intended as an offer or
solicitation with respect to the purchase or sale of any security, and have been
provided to you for informational purposes only and may not be relied upon by
you in evaluating the merits of investing in the securities. Any investment
decision with respect to the securities should be made by you based solely upon
the information contained in the final prospectus relating to the securities. No
assurance or representation can be made as to the actual rate or timing of
principal payments or prepayments on any of the mortgage loans or the
performance characteristics of the securities. This information was prepared in
reliance on information regarding the mortgage loans furnished by the seller of
the mortgage loans. J.P. Morgan and/or its affiliates and employees may hold a
position or act as market maker in the financial instruments of any issuer
discussed herein or act as underwriter, placement agent, advisor or lender to
such issuer. J.P. Morgan Securities Inc. is a member of SIPC. Copyright 1999
J.P. Morgan & Co. Incorporated. Clients should contact analysts at and execute
transactions through a J.P. Morgan entity in their home jurisdiction unless
governing law permits otherwise.
<PAGE>
DEAL SUMMARY BY PROPERTY TYPE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
% OF REM.
NO. OF PRINCIPAL PRINCIPAL AVERAGE GROSS WAM WA LTV WA UW WA OCC.
PROPERTY TYPE LOANS BALANCE ($) BALANCE BALANCE ($) WAC (%) (MOS) RATIO (%) DSCR RATE (%)(1) % BALLOON
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
OFFICE 26 $195,783,598 25.7% $7,530,138 7.744% 109 68.54% 1.36X 96.21% 98.47%
RETAIL 40 181,156,127 23.8 4,528,903 7.576 127 67.21 1.39 93.90 90.46
Anchored 20 120,834,408 15.9 6,041,720 7.340 124 68.02 1.39 94.19 93.52
Unanchored 17 36,534,343 4.8 2,149,079 7.781 140 70.96 1.30 96.46 74.12
Factory Outlet 3 23,787,376 3.1 7,929,125 8.460 120 57.39 1.52 88.51 100.00
MULTIFAMILY 21 165,373,665 21.7 7,874,936 7.052 119 77.40 1.31 95.32 94.38
Conventional 18 156,033,194 20.5 8,668,511 7.031 115 77.83 1.32 95.38 98.95
Mobile Home Park 3 9,340,472 1.2 3,113,491 7.392 179 70.16 1.22 94.48 18.08
HOTEL 14 87,680,787 11.5 6,262,913 7.625 103 61.88 1.60 NA 100.00
Full Service 5 57,622,125 7.6 11,524,425 7.244 108 64.30 1.55 NA 100.00
Limited Service 9 30,058,662 3.9 3,339,851 8.355 93 57.24 1.68 NA 100.00
INDUSTRIAL 9 66,469,283 8.7 7,385,476 7.956 115 69.50 1.39 99.28 100.00
HEALTHCARE 9 37,146,080 4.9 4,127,342 8.185 133 67.94 1.73 94.97 85.84
Nursing Home 7 29,453,206 3.9 4,207,601 8.352 138 67.25 1.76 94.83 82.15
Congregate Care 2 7,692,874 1.0 3,846,437 7.546 113 70.58 1.61 95.51 100.00
OTHER (2) 10 28,421,035 3.7 2,842,103 7.793 128 70.32 1.28 97.49 87.22
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL/AVG/WA: 129 $762,030,576 100.0% $5,907,214 7.582% 117 69.50% 1.40X 95.66% 94.95%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Excludes hotels
2 Includes Mixed Use and Self Storage
RESERVES
- --------------------------------------------------------------------------------
% OF LOANS WITH
ANNUAL ESCROWS CURRENT BALANCE(1) ANNUAL DEPOSIT
- --------------------------------------------------------------------------------
Replacement Reserves 94.3% $6,211,409 $5,406,403
Taxes 97.1 7,579,458 16,876,333
Insurance 70.7 1,265,961 1,712,985
- --------------------------------------------------------------------------------
1 Current balance as of July 12, 1999 may include any balance associated
with up-front deposits that have not been completely disbursed
J.P. MORGAN & CO. DEUTSCHE BANC ALEX. BROWN
J.P. Morgan Commercial Mortgage Finance Corp., Series 1999-C8
07/27/99 12:36 AM Page 7
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan does not warrant its completeness or accuracy.
These materials are subject to change from time to time without notice. Past
performance is not indicative of future results. All information contained
herein, whether regarding the mortgage loans or otherwise, supersedes any
previous such information delivered to you and will be superseded by any such
information subsequently delivered and ultimately by the final prospectus
relating to the securities. These materials are not intended as an offer or
solicitation with respect to the purchase or sale of any security, and have been
provided to you for informational purposes only and may not be relied upon by
you in evaluating the merits of investing in the securities. Any investment
decision with respect to the securities should be made by you based solely upon
the information contained in the final prospectus relating to the securities. No
assurance or representation can be made as to the actual rate or timing of
principal payments or prepayments on any of the mortgage loans or the
performance characteristics of the securities. This information was prepared in
reliance on information regarding the mortgage loans furnished by the seller of
the mortgage loans. J.P. Morgan and/or its affiliates and employees may hold a
position or act as market maker in the financial instruments of any issuer
discussed herein or act as underwriter, placement agent, advisor or lender to
such issuer. J.P. Morgan Securities Inc. is a member of SIPC. Copyright 1999
J.P. Morgan & Co. Incorporated. Clients should contact analysts at and execute
transactions through a J.P. Morgan entity in their home jurisdiction unless
governing law permits otherwise.
<PAGE>
COLLATERAL SUMMARY
In the following tables, Principal Balance refers to Aggregate Cut-off Date
Principal Balance
PROPERTY TYPES
% OF PRINCIPAL
PROPERTY TYPE NO. OF PROPERTIES PRINCIPAL BALANCE ($) BALANCE
- ----------------------- ------------------- --------------------- --------------
Office 26 $195,783,598 25.7%
Multifamily 21 156,033,194 20.5
Anchored Retail 24 120,834,408 15.9
Hotel 14 87,680,787 11.5
Industrial 11 66,469,283 8.7
Unanchored Retail 17 36,534,343 4.8
Nursing Home 7 29,453,206 3.9
Mixed Use 9 24,320,571 3.2
Factory Outlet 3 23,787,376 3.1
Mobile Home Park 3 9,340,472 1.2
Congregate Care 3 7,692,874 1.0
Self Storage 2 4,100,464 0.5
- ----------------------- --------- ------------------------ -----------------
TOTAL 140 $762,030,576 100.0%
- ----------------------- --------- ------------------------ -----------------
GEOGRAPHIC DISTRIBUTION
% OF PRINCIPAL
PROPERTY STATE NO. OF PROPERTIES PRINCIPAL BALANCE ($) BALANCE
- ----------------------------------- --------------------------------------------
Illinois 4 $83,767,470 11.0%
Florida 23 80,595,465 10.6
California 17 72,596,674 9.5
Wisconsin 6 69,131,849 9.1
Ohio 10 63,277,913 8.3
Washington 4 42,398,723 5.6
Georgia 4 31,906,632 4.2
Michigan 4 26,798,005 3.5
North Carolina 8 25,747,947 3.4
Missouri 4 24,149,080 3.2
Texas 9 24,004,556 3.2
Pennsylvania 3 23,975,321 3.1
New York 3 23,196,589 3.0
Massachusetts 1 22,961,612 3.0
Nebraska 3 22,646,035 3.0
Other 37 124,876,704 16.4
- ----------------------------------- ------------------------ -----------------
TOTAL 140 $762,030,576 100.0%
- ----------------------------------- ------------------------ -----------------
J.P. MORGAN & CO. DEUTSCHE BANC ALEX. BROWN
J.P. Morgan Commercial Mortgage Finance Corp., Series 1999-C8
07/27/99 12:36 AM Page 8
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan does not warrant its completeness or accuracy.
These materials are subject to change from time to time without notice. Past
performance is not indicative of future results. All information contained
herein, whether regarding the mortgage loans or otherwise, supersedes any
previous such information delivered to you and will be superseded by any such
information subsequently delivered and ultimately by the final prospectus
relating to the securities. These materials are not intended as an offer or
solicitation with respect to the purchase or sale of any security, and have been
provided to you for informational purposes only and may not be relied upon by
you in evaluating the merits of investing in the securities. Any investment
decision with respect to the securities should be made by you based solely upon
the information contained in the final prospectus relating to the securities. No
assurance or representation can be made as to the actual rate or timing of
principal payments or prepayments on any of the mortgage loans or the
performance characteristics of the securities. This information was prepared in
reliance on information regarding the mortgage loans furnished by the seller of
the mortgage loans. J.P. Morgan and/or its affiliates and employees may hold a
position or act as market maker in the financial instruments of any issuer
discussed herein or act as underwriter, placement agent, advisor or lender to
such issuer. J.P. Morgan Securities Inc. is a member of SIPC. Copyright 1999
J.P. Morgan & Co. Incorporated. Clients should contact analysts at and execute
transactions through a J.P. Morgan entity in their home jurisdiction unless
governing law permits otherwise.
<PAGE>
CUT-OFF BALANCES
% OF PRINCIPAL
PRINCIPAL BALANCE ($) NO. OF LOANS PRINCIPAL BALANCE ($) BALANCE
- ------------------------------------- ------------------------ -----------------
500,001 - 1,000,000 2 $1,986,855 0.3%
1,000,001 - 2,000,000 30 47,949,964 6.3
2,000,001 - 3,000,000 24 61,008,867 8.0
3,000,001 - 4,000,000 18 64,102,169 8.4
4,000,001 - 5,000,000 11 48,205,688 6.3
5,000,001 - 7,500,000 19 115,266,266 15.1
7,500,001 - 10,000,000 5 41,102,574 5.4
10,000,001 - 12,500,000 5 55,162,166 7.2
12,500,001 - 15,000,000 5 68,440,416 9.0
15,000,001 - 17,500,000 2 34,405,843 4.5
17,500,001 - 20.000,000 2 35,671,983 4.7
20,000,001 - 25,000,000 3 69,128,658 9.1
30,000,001 - 35,000,000 2 61,462,461 8.1
55,000,001 - 60,000,000 1 58,136,667 7.6
- ------------------------------------- ------------------------ -----------------
TOTAL: 129 $762,030,576 100.0%
- ------------------------------------- ------------------------ -----------------
AVERAGE PER LOAN: $5,907,241
AVERAGE PER PROPERTY: $5,443,076
MORTGAGE INTEREST RATES
% OF PRINCIPAL
MORTGAGE INTEREST RATE (%) NO. OF LOANS PRINCIPAL BALANCE ($) BALANCE
6.5000 - 6.7500 11 $98,633,442 12.9%
6.7501 - 7.0000 12 58,825,136 7.7
7.0001 - 7.2500 12 63,206,801 8.3
7.2501 - 7.5000 13 154,318,501 20.3
7.5001 - 7.7500 14 80,502,312 10.6
7.7501 - 8.0000 22 99,376,667 13.0
8.0001 - 8.2500 15 72,421,855 9.5
8.2501 - 8.5000 20 80,065,893 10.5
8.5001 - 8.8000 10 54,679,970 7.2
- -----------------------------------------------------------------------------
TOTAL 129 $762,030,576 100.0%
- -------------------------------------------------------------------------------
WEIGHTED AVERAGE: 7.5819%
J.P. MORGAN & CO. DEUTSCHE BANC ALEX. BROWN
J.P. Morgan Commercial Mortgage Finance Corp., Series 1999-C8
07/27/99 12:36 AM Page 9
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan does not warrant its completeness or accuracy.
These materials are subject to change from time to time without notice. Past
performance is not indicative of future results. All information contained
herein, whether regarding the mortgage loans or otherwise, supersedes any
previous such information delivered to you and will be superseded by any such
information subsequently delivered and ultimately by the final prospectus
relating to the securities. These materials are not intended as an offer or
solicitation with respect to the purchase or sale of any security, and have been
provided to you for informational purposes only and may not be relied upon by
you in evaluating the merits of investing in the securities. Any investment
decision with respect to the securities should be made by you based solely upon
the information contained in the final prospectus relating to the securities. No
assurance or representation can be made as to the actual rate or timing of
principal payments or prepayments on any of the mortgage loans or the
performance characteristics of the securities. This information was prepared in
reliance on information regarding the mortgage loans furnished by the seller of
the mortgage loans. J.P. Morgan and/or its affiliates and employees may hold a
position or act as market maker in the financial instruments of any issuer
discussed herein or act as underwriter, placement agent, advisor or lender to
such issuer. J.P. Morgan Securities Inc. is a member of SIPC. Copyright 1999
J.P. Morgan & Co. Incorporated. Clients should contact analysts at and execute
transactions through a J.P. Morgan entity in their home jurisdiction unless
governing law permits otherwise.
<PAGE>
UNDERWRITTEN DEBT SERVICE COVERAGE RATIOS
% OF PRINCIPAL
UW DSCR (x) NO. OF LOANS PRINCIPAL BALANCE ($) BALANCE
- ------------------------------------- ------------------------ -----------------
1.101 - 1.150 1 3 $18,977,073 2.5%
1.151 - 1.200 6 19,030,652 2.5
1.201 - 1.250 12 47,672,776 6.3
1.251 - 1.300 25 152,055,844 20.0
1.301 - 1.400 37 198,097,229 26.0
1.401 - 1.500 18 193,549,780 25.4
1.501 - 1.600 10 48,165,693 6.3
1.601 - 1.700 8 52,522,581 6.9
1.701 - 1.800 2 4,761,246 0.6
1.801 - 1.900 2 3,762,383 0.5
1.901 - 2.000 3 12,810,775 1.7
2.001 - 2.100 3 10,624,543 1.4
- ------------------------------------- ------------------------ -----------------
TOTAL 129 $762,030,576 100.0%
- -------------------------------------------------------------------------------
WEIGHTED AVERAGE: 1.40X
1 Stuart Centre ($9,948,429) has an UW DSCR of 1.115x, Lakeshore Estates MHP
($5,664,836), a fully amortizing loan, has an UW DSCR of 1.148x, and
Harbourside Production Studio ($3,363,808) has an UW DSCR of 1.150x and a
14-year amortization.
LOAN-TO-VALUE RATIOS
% OF PRINCIPAL
LTV (%) NO. OF LOANS PRINCIPAL BALANCE ($) BALANCE
- --------------------------------------- ------------------------ ---------------
Less than or equal to 50.00% 4 13,886,512 1.8%
50.01% - 55.00% 8 29,876,212 3.9
55.01% - 60.00% 10 37,073,016 4.9
60.01% - 65.00% 0 8 104,124,309 13.7
65.01% - 70.00% 31 168,461,667 22.1
70.01% - 75.00% 43 234,514,501 30.8
75.01% - 80.00% 23 157,631,244 20.7
80.01% - 85.00%(1) 2 16,463,116 2.2
- --------------------------------------- ------------------------ ---------------
TOTAL 129 762,030,576 100.0%
- --------------------------------------- ---------------------------------------
WEIGHTED AVERAGE: 69.50%
1 Sterling Woods Apartments ($12,295,037) has an LTV Ratio of 84.21% and
Glacier Hills Apartments ($4,168,078) has an LTV Ratio of 81.73%.
J.P. MORGAN & CO. DEUTSCHE BANC ALEX. BROWN
J.P. Morgan Commercial Mortgage Finance Corp., Series 1999-C8
07/27/99 12:36 AM Page 10
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan does not warrant its completeness or accuracy.
These materials are subject to change from time to time without notice. Past
performance is not indicative of future results. All information contained
herein, whether regarding the mortgage loans or otherwise, supersedes any
previous such information delivered to you and will be superseded by any such
information subsequently delivered and ultimately by the final prospectus
relating to the securities. These materials are not intended as an offer or
solicitation with respect to the purchase or sale of any security, and have been
provided to you for informational purposes only and may not be relied upon by
you in evaluating the merits of investing in the securities. Any investment
decision with respect to the securities should be made by you based solely upon
the information contained in the final prospectus relating to the securities. No
assurance or representation can be made as to the actual rate or timing of
principal payments or prepayments on any of the mortgage loans or the
performance characteristics of the securities. This information was prepared in
reliance on information regarding the mortgage loans furnished by the seller of
the mortgage loans. J.P. Morgan and/or its affiliates and employees may hold a
position or act as market maker in the financial instruments of any issuer
discussed herein or act as underwriter, placement agent, advisor or lender to
such issuer. J.P. Morgan Securities Inc. is a member of SIPC. Copyright 1999
J.P. Morgan & Co. Incorporated. Clients should contact analysts at and execute
transactions through a J.P. Morgan entity in their home jurisdiction unless
governing law permits otherwise.
<PAGE>
MORTGAGE LOAN TYPE
% OF PRINCIPAL
MORTGAGE LOAN TYPE NO. OF LOANS PRINCIPAL BALANCE ($) BALANCE
- ---------------------------------- ------------------------ -----------------
Balloon 85 $397,332,664 52.1%
Hyper-Amortizing 29 326,220,391 42.8
Fully-Amortizing 15 38,477,521 5.0
- ---------------------------------- ------------------------ -----------------
TOTAL 129 $762,030,576 100.0%
- ---------------------------------- ------------------------ -----------------
REMAINING TERM TO MATURITY/ARD (MONTHS)
REMAINING TERM TO % OF PRINCIPAL
MATURITY/ARD (MONTHS) NO. OF LOANS PRINCIPAL BALANCE ($) BALANCE
- ---------------------------------- ------------------------ -----------------
Less than 60 1 $22,961,612 3.0%
61 - 84 9 39,269,007 5.2
85 - 120 100 630,850,116 82.8
121 - 180 8 38,423,556 5.0
181 - 240 11 30,526,216 4.0
- ---------------------------------- ------------------------ -----------------
TOTAL 129 $762,030,576 100.0%
- ---------------------------------- ------------------------ -----------------
WEIGHTED AVERAGE: 117 MONTHS
REMAINING AMORTIZATION TERM (MONTHS)
REMAINING AMORTIZATION % OF PRINCIPAL
TERM (MONTHS) NO. OF LOANS PRINCIPAL BALANCE ($) BALANCE
- ------------------------------------------------------------------------------
121 - 180 6 $15,436,682 2.0%
181 - 240 21 88,790,029 11.7
Greater than 240 102 657,803,865 86.3
- ------------------------------------------------------------------------------
TOTAL 129 $762,030,576 100.0%
- ------------------------------------------------------------------------------
WEIGHTED AVERAGE: 318 MONTHS
J.P. MORGAN & CO. DEUTSCHE BANC ALEX. BROWN
J.P. Morgan Commercial Mortgage Finance Corp., Series 1999-C8
07/27/99 12:36 AM Page 11
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan does not warrant its completeness or accuracy.
These materials are subject to change from time to time without notice. Past
performance is not indicative of future results. All information contained
herein, whether regarding the mortgage loans or otherwise, supersedes any
previous such information delivered to you and will be superseded by any such
information subsequently delivered and ultimately by the final prospectus
relating to the securities. These materials are not intended as an offer or
solicitation with respect to the purchase or sale of any security, and have been
provided to you for informational purposes only and may not be relied upon by
you in evaluating the merits of investing in the securities. Any investment
decision with respect to the securities should be made by you based solely upon
the information contained in the final prospectus relating to the securities. No
assurance or representation can be made as to the actual rate or timing of
principal payments or prepayments on any of the mortgage loans or the
performance characteristics of the securities. This information was prepared in
reliance on information regarding the mortgage loans furnished by the seller of
the mortgage loans. J.P. Morgan and/or its affiliates and employees may hold a
position or act as market maker in the financial instruments of any issuer
discussed herein or act as underwriter, placement agent, advisor or lender to
such issuer. J.P. Morgan Securities Inc. is a member of SIPC. Copyright 1999
J.P. Morgan & Co. Incorporated. Clients should contact analysts at and execute
transactions through a J.P. Morgan entity in their home jurisdiction unless
governing law permits otherwise.
<PAGE>
MONTH AND YEAR OF ORIGINATION
% OF PRINCIPAL
MONTH AND YEAR OF ORIGINATION NO. OF LOANS PRINCIPAL BALANCE ($) BALANCE
- ----------------------------- ------------ ------------------------ -----------
December 1997 1 $2,990,258 0.4%
March 1998 1 7,503,550 1.0
May 1998 1 6,331,137 0.8
June 1998 2 7,547,120 1.0
July 1998 1 7,724,507 1.0
August 1998 11 68,777,984 9.0
September 1998 11 92,792,377 12.2
October 1998 10 31,827,306 4.2
November 1998 7 29,843,422 3.9
December 1998 9 83,804,683 11.0
January 1999 8 97,035,715 12.7
February 1999 10 35,422,578 4.6
March 1999 15 61,689,961 8.1
April 1999 17 68,644,051 9.0
May 1999 18 100,103,161 13.1
June 1999 4 36,205,390 4.8
July 1999 3 23,787,376 3.1
- ------------------------------------------- ------------------------ -----------
TOTAL 129 $762,030,576 100.0%
- ------------------------------------------- ------------------------ -----------
YEAR OF SCHEDULED MATURITY/ARD
YEAR OF % OF PRINCIPAL
SCHEDULED MATURITY/ARD NO. OF LOANS PRINCIPAL BALANCE ($) BALANCE
- ----------------------- ----------- ---------------------- --------------
2004 1 $22,961,612 3.0%
2005 7 18,425,960 2.4
2006 2 20,843,117 2.7
2008 31 203,549,677 26.7
2009 69 427,300,439 56.1
2010 1 12,295,037 1.6
2011 1 7,724,507 1.0
2013 3 9,621,617 1.3
2014 3 8,782,394 1.2
2017 1 4,121,569 0.5
2018 2 6,712,611 0.9
2019 8 19,692,036 2.6
- ------------------------------------- ------------------------ ------------
TOTAL 129 $762,030,576 100.0%
- ------------------------------------- ------------------------ ------------
J.P. MORGAN & CO. DEUTSCHE BANC ALEX. BROWN
J.P. Morgan Commercial Mortgage Finance Corp., Series 1999-C8
07/27/99 12:36 AM Page 12
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan does not warrant its completeness or accuracy.
These materials are subject to change from time to time without notice. Past
performance is not indicative of future results. All information contained
herein, whether regarding the mortgage loans or otherwise, supersedes any
previous such information delivered to you and will be superseded by any such
information subsequently delivered and ultimately by the final prospectus
relating to the securities. These materials are not intended as an offer or
solicitation with respect to the purchase or sale of any security, and have been
provided to you for informational purposes only and may not be relied upon by
you in evaluating the merits of investing in the securities. Any investment
decision with respect to the securities should be made by you based solely upon
the information contained in the final prospectus relating to the securities. No
assurance or representation can be made as to the actual rate or timing of
principal payments or prepayments on any of the mortgage loans or the
performance characteristics of the securities. This information was prepared in
reliance on information regarding the mortgage loans furnished by the seller of
the mortgage loans. J.P. Morgan and/or its affiliates and employees may hold a
position or act as market maker in the financial instruments of any issuer
discussed herein or act as underwriter, placement agent, advisor or lender to
such issuer. J.P. Morgan Securities Inc. is a member of SIPC. Copyright 1999
J.P. Morgan & Co. Incorporated. Clients should contact analysts at and execute
transactions through a J.P. Morgan entity in their home jurisdiction unless
governing law permits otherwise.
<PAGE>
TEN LARGEST LOANS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------- -----------------
% OF PRINCIPAL
LOAN PRINCIPAL BALANCE ($) BALANCE LTV UW DSCR PROPERTY TYPE
- ---------------------------------- ----------------------- ---------------- ------------ -------------- -----------------
<S> <C> <C> <C> <C> <C>
Mills Portfolio $58,136,667 7.6% 63.92% 1.49x Anchored Retail
Ridgewood Country Club 30,948,385 4.1 78.35 1.30 Multifamily
McCook Metals Building 30,514,076 4.0 66.92 1.42 Industrial
Woodfield Garden 24,186,478 3.2 78.27 1.31 Multifamily
51 Sleeper Street 22,961,612 3.0 74.31 1.35 Office
Madison Concourse 21,980,569 2.9 65.61 1.70 Hotel
Vartan Building 17,898,122 2.3 62.80 1.36 Office
Hyatt Regency Rochester 17,773,861 2.3 67.07 1.44 Hotel
Northfield Office Park I & II 17,479,309 2.3 71.34 1.30 Office
Merrill Place 16,926,533 2.2 60.02 1.44 Office
- ---------------------------------- ----------------------- ---------------- ------------ --------------- -----------------
TOTAL $258,805,612 34.0% 68.79% 1.42X
- ---------------------------------- ----------------------- ---------------- ------------ --------------- -----------------
DEAL TOTAL $762,030,576 100.0% 69.50% 1.40X
- ---------------------------------- ----------------------- ---------------- ------------ --------------- -----------------
</TABLE>
J.P. MORGAN & CO. DEUTSCHE BANC ALEX. BROWN
J.P. Morgan Commercial Mortgage Finance Corp., Series 1999-C8
07/27/99 12:36 AM Page 13
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan does not warrant its completeness or accuracy.
These materials are subject to change from time to time without notice. Past
performance is not indicative of future results. All information contained
herein, whether regarding the mortgage loans or otherwise, supersedes any
previous such information delivered to you and will be superseded by any such
information subsequently delivered and ultimately by the final prospectus
relating to the securities. These materials are not intended as an offer or
solicitation with respect to the purchase or sale of any security, and have been
provided to you for informational purposes only and may not be relied upon by
you in evaluating the merits of investing in the securities. Any investment
decision with respect to the securities should be made by you based solely upon
the information contained in the final prospectus relating to the securities. No
assurance or representation can be made as to the actual rate or timing of
principal payments or prepayments on any of the mortgage loans or the
performance characteristics of the securities. This information was prepared in
reliance on information regarding the mortgage loans furnished by the seller of
the mortgage loans. J.P. Morgan and/or its affiliates and employees may hold a
position or act as market maker in the financial instruments of any issuer
discussed herein or act as underwriter, placement agent, advisor or lender to
such issuer. J.P. Morgan Securities Inc. is a member of SIPC. Copyright 1999
J.P. Morgan & Co. Incorporated. Clients should contact analysts at and execute
transactions through a J.P. Morgan entity in their home jurisdiction unless
governing law permits otherwise.
<PAGE>
MILLS PORTFOLIO
LOAN INFORMATION
- ------------------------------------------------------------
PRINCIPAL BALANCE
ORIGINAL $58,400,000
CUT-OFF DATE $58,136,667
ORIGINATION DATE January 26, 1999
INTEREST RATE 7.3000%
AMORTIZATION 360
HYPERAMORTIZATION After the Anticipated
Repayment Date, all excess
cashflow is used to reduce
the outstanding principal
ANTICIPATED REPAYMENT DATE February 1, 2009
MATURITY DATE February 1, 2029
BORROWER/SPONSOR(1) Four individual special
purpose borrowers, each a
special purpose entity
directly or indirectly
owned by The Mills
Corporation
CALL PROTECTION Prepayment locked out until
the third month preceding
the Anticipated Repayment
Date. U.S. Treasury
defeasance allowed, in
whole or part, on or after
August 1, 2001
REMOVAL OF PROPERTY MANAGER Lender has the right to
remove the property manager
if there is an event of a
default, the DSCR falls
below 1.15x or the debt is
not repaid on or before the
Anticipated Repayment Date.
The Lender must approve any
replacement
COLLECTION ACCOUNT Springing Lockbox;
Triggered either by the
DSCR falling below 1.20x in
any twelve month period or
failure to repay the debt
one month prior to the
Anticipated Repayment Date
MEZZANINE LOANS/PREFERRED None
EQUITY
- --------------------------------------------------------------
PROPERTY INFORMATION
- -------------------------------- -----------------------------
SINGLE ASSET/PORTFOLIO Portfolio of 4 assets
PROPERTY TYPE Anchored Retail
LOCATION Ohio, Georgia, Illinois,
and Virginia
YEARS BUILT/RENOVATED 1954-1988 / 1983-1996
THE COLLATERAL Four anchored retail
centers located in four
states with a total of
1,028,399 sq. ft. of NRA
Square
Footage Major Tenants
----------- ---------------------
WESTERN HILLS PLAZA 449,496 Sears,
Cincinnati, OH Kroger,
Media Play
GWINNETT MARKET FAIR 194,719 A&P,
Duluth, GA Marshalls,
TJ Maxx
MT. PROSPECT PLAZA 298,600 Walgreen Computer,
Mt. Prospect, IL Dominick's Grocery,
Marshalls
WEST FALLS CHURCH 85,584 Safeway,
Falls Church, VA RiteAid,
Bath & Tile
PROPERTY MANAGEMENT Management Associates,
Limited Partnership
OCCUPANCY AS OF 3/1/99(2) 92.15%
NET OPERATING INCOME $7,063,416
YEAR ENDING 12/31/98
UNDERWRITTEN NET CASH FLOW $7,144,900
APPRAISED VALUE $90,950,000
APPRAISAL DATE September 11-24, 1998
CUT-OFF DATE
LOAN PER SQUARE FOOT $56.53
LTV 63.92%
UW DSCR 1.49x
- -------------------------------- -----------------------------
1 This loan is secured by four cross-collateralized and cross-defaulted
mortgages, deeds of trust or deeds to secure debt encumbering the four
anchored retail centers
2 Weighted average occupancy based on square footage
J.P. MORGAN & CO. DEUTSCHE BANC ALEX. BROWN
J.P. Morgan Commercial Mortgage Finance Corp., Series 1999-C8
07/27/99 12:36 AM Page 14
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan does not warrant its completeness or accuracy.
These materials are subject to change from time to time without notice. Past
performance is not indicative of future results. All information contained
herein, whether regarding the mortgage loans or otherwise, supersedes any
previous such information delivered to you and will be superseded by any such
information subsequently delivered and ultimately by the final prospectus
relating to the securities. These materials are not intended as an offer or
solicitation with respect to the purchase or sale of any security, and have been
provided to you for informational purposes only and may not be relied upon by
you in evaluating the merits of investing in the securities. Any investment
decision with respect to the securities should be made by you based solely upon
the information contained in the final prospectus relating to the securities. No
assurance or representation can be made as to the actual rate or timing of
principal payments or prepayments on any of the mortgage loans or the
performance characteristics of the securities. This information was prepared in
reliance on information regarding the mortgage loans furnished by the seller of
the mortgage loans. J.P. Morgan and/or its affiliates and employees may hold a
position or act as market maker in the financial instruments of any issuer
discussed herein or act as underwriter, placement agent, advisor or lender to
such issuer. J.P. Morgan Securities Inc. is a member of SIPC. Copyright 1999
J.P. Morgan & Co. Incorporated. Clients should contact analysts at and execute
transactions through a J.P. Morgan entity in their home jurisdiction unless
governing law permits otherwise.
<PAGE>
RIDGEWOOD COUNTRY CLUB APARTMENTS
LOAN INFORMATION
- --------------------------------------------------------------
PRINCIPAL BALANCE
ORIGINAL $31,200,000
CUT-OFF DATE $30,948,385
ORIGINATION DATE September 18, 1998
INTEREST RATE 6.7500%
AMORTIZATION 360
HYPERAMORTIZATION NA
ANTICIPATED REPAYMENT DATE NA
MATURITY DATE October 1, 2008
BORROWER/SPONSOR Ridgewood Associates II,
LLC, special purpose
entity, the members of
which are Harry A. Marek,
Jerry J. Marek and Daniel
F. Pieper
CALL PROTECTION Prepayment locked out for
five years. On or after
November 1, 2003, a
prepayment premium of the
greater of yield
maintenance or 1% of the
outstanding principal
balance is required. No
prepayment restrictions
three months prior to the
Maturity Date
REMOVAL OF PROPERTY MANAGER Lender has the right to remove the property
manager at any time for cause or upon event
of default under the loan. The Lender must
approve any replacement
COLLECTION ACCOUNT None
MEZZANINE LOANS/PREFERRED None
EQUITY
- ----------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------
SINGLE ASSET/PORTFOLIO Single asset
PROPERTY TYPE Multifamily
LOCATION 2001 Traceway Drive
Fitchburg, Wisconsin
YEARS BUILT/RENOVATED 1968-1973 / 1999
THE COLLATERAL Located in Fitchburg, a
suburb of Madison, the property is a 58-acre
tract improved by an 862-unit multifamily
garden apartment community. Built in phases
between 1968 and 1973, a significant renovation
project commenced in the fall of 1998 with
replacement of cabinetry, carpet, appliances
and new decks as each unit became vacant.
Project amenities include two swimming pools, a
wading pool, recreation building, and two
tennis courts
PROPERTY MANAGEMENT CMS Ridgewood, LP
OCCUPANCY AS OF 7/16/99 90.80%
NET OPERATING INCOME $3,246,531
YEAR ENDING 12/31/98
UNDERWRITTEN NET CASH FLOW $3,152,456
APPRAISED VALUE $39,500,000
APPRAISAL DATE August 27, 1998
CUT-OFF DATE
LOAN PER UNIT $35,903
LTV 78.35%
UW DSCR 1.30x
- -------------------------------- -----------------------------
J.P. MORGAN & CO. DEUTSCHE BANC ALEX. BROWN
J.P. Morgan Commercial Mortgage Finance Corp., Series 1999-C8
07/27/99 12:36 AM Page 15
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan does not warrant its completeness or accuracy.
These materials are subject to change from time to time without notice. Past
performance is not indicative of future results. All information contained
herein, whether regarding the mortgage loans or otherwise, supersedes any
previous such information delivered to you and will be superseded by any such
information subsequently delivered and ultimately by the final prospectus
relating to the securities. These materials are not intended as an offer or
solicitation with respect to the purchase or sale of any security, and have been
provided to you for informational purposes only and may not be relied upon by
you in evaluating the merits of investing in the securities. Any investment
decision with respect to the securities should be made by you based solely upon
the information contained in the final prospectus relating to the securities. No
assurance or representation can be made as to the actual rate or timing of
principal payments or prepayments on any of the mortgage loans or the
performance characteristics of the securities. This information was prepared in
reliance on information regarding the mortgage loans furnished by the seller of
the mortgage loans. J.P. Morgan and/or its affiliates and employees may hold a
position or act as market maker in the financial instruments of any issuer
discussed herein or act as underwriter, placement agent, advisor or lender to
such issuer. J.P. Morgan Securities Inc. is a member of SIPC. Copyright 1999
J.P. Morgan & Co. Incorporated. Clients should contact analysts at and execute
transactions through a J.P. Morgan entity in their home jurisdiction unless
governing law permits otherwise.
<PAGE>
MCCOOK METALS BUILDING
LOAN INFORMATION
- --------------------------------------------------------------
PRINCIPAL BALANCE
ORIGINAL $30,850,000
CUT-OFF DATE $30,514,076
ORIGINATION DATE December 30, 1998
INTEREST RATE 8.5300%
AMORTIZATION 240
HYPERAMORTIZATION After the Anticipated
Repayment Date, all excess
cashflow is used to reduce
the outstanding principal
ANTICIPATED REPAYMENT DATE January 1, 2009
MATURITY DATE January 1, 2019
BORROWER/SPONSOR McCook Properties, LLC, a
special purpose entity, the
managing member of which is
Cloverleaf Holdings, Inc.
CALL PROTECTION Prepayment locked out until
the third month preceding
the Anticipated Repayment
Date. U.S. Treasury
defeasance allowed, in
whole or part, on or after
February 1, 2002
REMOVAL OF PROPERTY MANAGER Lender has the right to
remove the property manager at any time for
cause or upon event of default under the loan.
The Lender must approve any replacement
COLLECTION ACCOUNT Springing Lockbox;
Triggered by failure to
repay the debt three months
prior to the Anticipated
Repayment Date
MEZZANINE LOANS/PREFERRED None
EQUITY
- -------------------------------- -----------------------------
PORPERTY INFORMATION
- --------------------------------------------------------------
SINGLE ASSET/PORTFOLIO Single asset
PROPERTY TYPE Industrial
LOCATION 4900 First Avenue
McCook, Illinois
YEARS BUILT/RENOVATED 1942 / 1991
THE COLLATERAL The property is a 2.1 million square foot
industrial plant with 19 sections all under
one roof situated on a 102.5-acre tract. The
initial construction occurred in 1942 with
various major additions thereafter. The
property was most recently renovated in 1991.
The building is fully leased to McCook Metals,
LLC
PROPERTY MANAGEMENT Self-managed by the
Borrower and its principals
OCCUPANCY AS OF 12/9/98 100.0%
NET OPERATING INCOME Not available
YEAR ENDING 12/31/98
UNDERWRITTEN NET CASH FLOW $4,578,516
APPRAISED VALUE $45,600,000
APPRAISAL DATE December 16, 1998
CUT-OFF DATE
LOAN PER SQUARE FOOT $14.53
LTV 66.92%
UW DSCR 1.42x
- -------------------------------- -----------------------------
J.P. MORGAN & CO. DEUTSCHE BANC ALEX. BROWN
J.P. Morgan Commercial Mortgage Finance Corp., Series 1999-C8
07/27/99 12:36 AM Page 16
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan does not warrant its completeness or accuracy.
These materials are subject to change from time to time without notice. Past
performance is not indicative of future results. All information contained
herein, whether regarding the mortgage loans or otherwise, supersedes any
previous such information delivered to you and will be superseded by any such
information subsequently delivered and ultimately by the final prospectus
relating to the securities. These materials are not intended as an offer or
solicitation with respect to the purchase or sale of any security, and have been
provided to you for informational purposes only and may not be relied upon by
you in evaluating the merits of investing in the securities. Any investment
decision with respect to the securities should be made by you based solely upon
the information contained in the final prospectus relating to the securities. No
assurance or representation can be made as to the actual rate or timing of
principal payments or prepayments on any of the mortgage loans or the
performance characteristics of the securities. This information was prepared in
reliance on information regarding the mortgage loans furnished by the seller of
the mortgage loans. J.P. Morgan and/or its affiliates and employees may hold a
position or act as market maker in the financial instruments of any issuer
discussed herein or act as underwriter, placement agent, advisor or lender to
such issuer. J.P. Morgan Securities Inc. is a member of SIPC. Copyright 1999
J.P. Morgan & Co. Incorporated. Clients should contact analysts at and execute
transactions through a J.P. Morgan entity in their home jurisdiction unless
governing law permits otherwise.
<PAGE>
WOODFIELD GARDENS APARTMENTS
LOAN INFORMATION
- --------------------------------------------------------------
PRINCIPAL BALANCE
ORIGINAL $24,200,000
CUT-OFF DATE $24,186,478
ORIGINATION DATE June 18, 1999
INTEREST RATE 7.3600%
AMORTIZATION 360
HYPERAMORTIZATION After the Anticipated
Repayment Date, all excess
cashflow is used to reduce
the outstanding principal
ANTICIPATED REPAYMENT DATE July 1, 2009
MATURITY DATE July 1, 2029
BORROWER/SPONSOR Woodfield Gardens
Associates, a special
purpose limited
partnership, the principals
of which are Joseph
Pagliari and Daniel Sawusch
CALL PROTECTION Prepayment locked out until
the third month preceding
the Anticipated Repayment
Date. U.S. Treasury
defeasance allowed, in
whole or part, on or after
August 1, 2001
REMOVAL OF PROPERTY MANAGER Lender has the right to remove the property
manager at any time for cause or upon event
of default under the loan. The Lender must
approve any replacement
COLLECTION ACCOUNT Hard Lockbox. All rents payable by tenants
are deposited by the property manager directly
into a Cash Management Account, and on the
first day of each month, so long as no
Event of Default has occurred, all funds shall
be disbursed upon the discretion of the Lender
MEZZANINE LOANS/PREFERRED None
EQUITY
- -------------------------------- -----------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------
SINGLE ASSET/PORTFOLIO Single asset
PROPERTY TYPE Multifamily
LOCATION 4700 Arbor Drive
Rolling Meadows, Illinois
YEARS BUILT/RENOVATED 1967 and 1969 / 1999
THE COLLATERAL The property is a 19
building, 692-unit multifamily community
situated on a 36.265-acre tract and offers a
mix of one, two, and three bedroom units. The
complex was constructed in phases between 1967
and 1969. Project amenities include a
clubhouse, large playground, Olympic-size
swimming pool, tennis courts, a laundry room in
each building, on-site pre-school and on-site
library. In addition, the management provides
numerous community programs including aerobics,
youth field trips, summer day camp, reading
programs, and after- school tutoring and
homework assistance programs. The property and
management have won various industry awards
PROPERTY MANAGEMENT Citadel Management, Inc.
OCCUPANCY AS OF 4/28/99 99.0%
NET OPERATING INCOME $2,672,931
YEAR ENDING 12/31/98
UNDERWRITTEN NET CASH FLOW $2,627,424
APPRAISED VALUE $30,900,000
APPRAISAL DATE May 20, 1999
CUT-OFF DATE
LOAN PER UNIT $34,952
LTV 78.27%
UW DSCR 1.31x
- -------------------------------- -----------------------------
J.P. MORGAN & CO. DEUTSCHE BANC ALEX. BROWN
J.P. Morgan Commercial Mortgage Finance Corp., Series 1999-C8
07/27/99 12:36 AM Page 17
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan does not warrant its completeness or accuracy.
These materials are subject to change from time to time without notice. Past
performance is not indicative of future results. All information contained
herein, whether regarding the mortgage loans or otherwise, supersedes any
previous such information delivered to you and will be superseded by any such
information subsequently delivered and ultimately by the final prospectus
relating to the securities. These materials are not intended as an offer or
solicitation with respect to the purchase or sale of any security, and have been
provided to you for informational purposes only and may not be relied upon by
you in evaluating the merits of investing in the securities. Any investment
decision with respect to the securities should be made by you based solely upon
the information contained in the final prospectus relating to the securities. No
assurance or representation can be made as to the actual rate or timing of
principal payments or prepayments on any of the mortgage loans or the
performance characteristics of the securities. This information was prepared in
reliance on information regarding the mortgage loans furnished by the seller of
the mortgage loans. J.P. Morgan and/or its affiliates and employees may hold a
position or act as market maker in the financial instruments of any issuer
discussed herein or act as underwriter, placement agent, advisor or lender to
such issuer. J.P. Morgan Securities Inc. is a member of SIPC. Copyright 1999
J.P. Morgan & Co. Incorporated. Clients should contact analysts at and execute
transactions through a J.P. Morgan entity in their home jurisdiction unless
governing law permits otherwise.
<PAGE>
51 SLEEPER STREET
LOAN INFORMATION
- --------------------------------------------------------------
PRINCIPAL BALANCE
ORIGINAL $23,000,000
CUT-OFF DATE $22,961,612
ORIGINATION DATE April 30, 1999
INTEREST RATE 7.8100%
AMORTIZATION 360
HYPERAMORTIZATION After the Anticipated
Repayment Date, all excess
cashflow is used to reduce
the outstanding principal
ANTICIPATED REPAYMENT DATE May 1, 2004
MATURITY DATE May 1, 2029
BORROWER/SPONSOR 51 Sleeper Street LLC
CALL PROTECTION Prepayment locked out until
the third month preceding
the Anticipated Repayment
Date. U.S. Treasury
defeasance allowed, in
whole or part, on or after
August 1, 2001
REMOVAL OF PROPERTY MANAGER Lender has the right to
remove the property manager at any time for
cause or upon event of default under the loan.
The Lender must approve any replacement
COLLECTION ACCOUNT Hard Lockbox. All rents
payable by tenants are paid
directly into a Cash
Management Account, and on
the first day of each
month, so long as no Event
of Default has occurred,
all funds shall be
disbursed upon the
discretion of the Lender
MEZZANINE LOANS/PREFERRED None
EQUITY
- -------------------------------- -----------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------
SINGLE ASSET/PORTFOLIO Single asset
PROPERTY TYPE Office
LOCATION 51 Sleeper Street
Boston, Massachusetts
YEARS BUILT/RENOVATED 1900 / 1984 and 1998
THE COLLATERAL The property is an 8-story
147,142 square foot office building situated on
a 0.49-acre site in the Seaport District of
Boston just east of the central business
district and within walking distance of
Boston's Financial District. The property is
fully leased for five years to the Commonwealth
of Massachusetts Department of Revenue. Built
in the 1900's, the building systems were
completely renovated in 1984 and the interior
was fully renovated in 1998
PROPERTY MANAGEMENT CB Richard Ellis-N.E.
Partners, LP
OCCUPANCY AS OF 3/30/99 100.0%
NET OPERATING INCOME Not available
YEAR ENDING 12/31/98
UNDERWRITTEN NET CASH FLOW $2,677,908
APPRAISED VALUE $30,900,000
APPRAISAL DATE January 22, 1999
CUT-OFF DATE
LOAN PER SQUARE FOOT $156.05
LTV 74.31%
UW DSCR 1.35x
- -------------------------------- -----------------------------
J.P. MORGAN & CO. DEUTSCHE BANC ALEX. BROWN
J.P. Morgan Commercial Mortgage Finance Corp., Series 1999-C8
07/27/99 12:36 AM Page 18
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan does not warrant its completeness or accuracy.
These materials are subject to change from time to time without notice. Past
performance is not indicative of future results. All information contained
herein, whether regarding the mortgage loans or otherwise, supersedes any
previous such information delivered to you and will be superseded by any such
information subsequently delivered and ultimately by the final prospectus
relating to the securities. These materials are not intended as an offer or
solicitation with respect to the purchase or sale of any security, and have been
provided to you for informational purposes only and may not be relied upon by
you in evaluating the merits of investing in the securities. Any investment
decision with respect to the securities should be made by you based solely upon
the information contained in the final prospectus relating to the securities. No
assurance or representation can be made as to the actual rate or timing of
principal payments or prepayments on any of the mortgage loans or the
performance characteristics of the securities. This information was prepared in
reliance on information regarding the mortgage loans furnished by the seller of
the mortgage loans. J.P. Morgan and/or its affiliates and employees may hold a
position or act as market maker in the financial instruments of any issuer
discussed herein or act as underwriter, placement agent, advisor or lender to
such issuer. J.P. Morgan Securities Inc. is a member of SIPC. Copyright 1999
J.P. Morgan & Co. Incorporated. Clients should contact analysts at and execute
transactions through a J.P. Morgan entity in their home jurisdiction unless
governing law permits otherwise.
<PAGE>
MADISON CONCOURSE HOTEL
LOAN INFORMATION
- --------------------------------------------------------------
PRINCIPAL BALANCE
ORIGINAL $22,250,000
CUT-OFF DATE $21,980,569
ORIGINATION DATE September 25, 1998
INTEREST RATE 6.8900%
AMORTIZATION 300
HYPERAMORTIZATION After the Anticipated
Repayment Date, all excess
cashflow is used to reduce
the outstanding principal
ANTICIPATED REPAYMENT DATE October 1, 2008
MATURITY DATE October 1, 2023
BORROWER/SPONSOR Concourse Hotel, Inc., a
special purpose corporation
controlled by Rodney P.
Burwell
CALL PROTECTION Prepayment locked out until
the third month preceding
the Anticipated Repayment
Date. U.S. Treasury
defeasance allowed, in
whole or part, on or after
December 1, 2001
REMOVAL OF PROPERTY MANAGER Lender has the right to remove the property
manager at any time for cause or upon event
of default under the loan. The Lender must
approve any replacement
COLLECTION ACCOUNT Springing Lockbox;
Triggered by failure to
repay the debt three months
prior to the Anticipated
Repayment Date
MEZZANINE LOANS/PREFERRED None
EQUITY
- -------------------------------- -----------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------
SINGLE ASSET/PORTFOLIO Single asset
PROPERTY TYPE Hotel
LOCATION One West Dayton Street
Madison, Wisconsin
YEARS BUILT/RENOVATED 1973, 1985 / 1985, 1993 and
1994
THE COLLATERAL This property is a
13-story, 356-room full
service hotel with an
attached 3-level,
below-grade, 260-space
parking garage, located in
Madison's central business
district. The hotel is
adjacent to the Wisconsin
state capital building and
less than3/4of a mile from
the University of Wisconsin
- Madison campus that has
an enrollment of over
40,000 students. The hotel
features two restaurants, a
cocktail lounge,
approximately 25,000 square
feet of meeting/ banquet
space, an indoor pool, a
Jacuzzi, a fitness center,
and a business center. The
room mix includes 238 rooms
with king-size beds and 118
rooms with two double beds
PROPERTY MANAGEMENT Self-managed by the
Borrower and its principals
OCCUPANCY AS OF 12/31/99 73.0%
NET OPERATING INCOME $4,184,042
YEAR ENDING 12/31/98
UNDERWRITTEN NET CASH FLOW $3,174,640
APPRAISED VALUE $33,500,000
APPRAISAL DATE August 22, 1998
CUT-OFF DATE
LOAN PER ROOM $61,743
LTV 65.61%
UW DSCR 1.70x
- -------------------------------- -----------------------------
J.P. MORGAN & CO. DEUTSCHE BANC ALEX. BROWN
J.P. Morgan Commercial Mortgage Finance Corp., Series 1999-C8
07/27/99 12:36 AM Page 19
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan does not warrant its completeness or accuracy.
These materials are subject to change from time to time without notice. Past
performance is not indicative of future results. All information contained
herein, whether regarding the mortgage loans or otherwise, supersedes any
previous such information delivered to you and will be superseded by any such
information subsequently delivered and ultimately by the final prospectus
relating to the securities. These materials are not intended as an offer or
solicitation with respect to the purchase or sale of any security, and have been
provided to you for informational purposes only and may not be relied upon by
you in evaluating the merits of investing in the securities. Any investment
decision with respect to the securities should be made by you based solely upon
the information contained in the final prospectus relating to the securities. No
assurance or representation can be made as to the actual rate or timing of
principal payments or prepayments on any of the mortgage loans or the
performance characteristics of the securities. This information was prepared in
reliance on information regarding the mortgage loans furnished by the seller of
the mortgage loans. J.P. Morgan and/or its affiliates and employees may hold a
position or act as market maker in the financial instruments of any issuer
discussed herein or act as underwriter, placement agent, advisor or lender to
such issuer. J.P. Morgan Securities Inc. is a member of SIPC. Copyright 1999
J.P. Morgan & Co. Incorporated. Clients should contact analysts at and execute
transactions through a J.P. Morgan entity in their home jurisdiction unless
governing law permits otherwise.
<PAGE>
VARTAN BUILDING
- --------------------------------------------------------------
PRINCIPAL BALANCE
ORIGINAL $17,918,000
CUT-OFF DATE $17,898,122
ORIGINATION DATE May 13, 1999
INTEREST RATE 8.0500%
AMORTIZATION 360
HYPERAMORTIZATION After the Anticipated
Repayment Date, all excess
cashflow is used to reduce
the outstanding principal
ANTICIPATED REPAYMENT DATE June 1, 2009
MATURITY DATE June 1, 2029
BORROWER/SPONSOR Synertech Property, LLC, a special purpose
entity, which is a wholly owned subsidiary of
Platinum Equity Holdings, LLC
CALL PROTECTION Prepayment locked out until
the third month preceding
the Anticipated Repayment
Date. U.S. Treasury
defeasance allowed, in
whole or part, on or after
August 1, 2001
REMOVAL OF PROPERTY MANAGER Lender has the right to remove the property
manager at any time for cause or upon event
of default under the loan. The Lender must
approve any replacement
COLLECTION ACCOUNT Hard Lockbox. All rent payable by the tenant
is paid directly into a Cash Management
Account, and on the first day of each
month, so long as no Event of Default has
occurred, all funds shall be disbursed upon
the discretion of the Lender
MEZZANINE LOANS/PREFERRED None
EQUITY
- -------------------------------- -----------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------
SINGLE ASSET/PORTFOLIO Single asset
PROPERTY TYPE Office
LOCATION 2400 Thea Drive
Harrisburg, Pennsylvania
YEARS BUILT/RENOVATED 1997 / 1998
THE COLLATERAL This property is a four story Class A suburban
office building built in 1997 and situated on
a 10.62-acre site. The building contains 206,
900 square feet and is 100% occupied by
Synertech Health Systems Solutions, Inc.
Synertech Heath Systems is a technology
service provider to managed healthcare
organizations
PROPERTY MANAGEMENT Self-managed by Synertech
Health Systems Solutions
Inc.
OCCUPANCY AS OF 6/30/99 100.0%
NET OPERATING INCOME NA
YEAR ENDING 12/31/98
UNDERWRITTEN NET CASH FLOW $2,152,467
APPRAISED VALUE $28,500,000
APPRAISAL DATE May 1, 1999
CUT-OFF DATE
LOAN PER SQUARE FOOT $86.51
LTV 62.80%
UW DSCR 1.36x
- -------------------------------- -----------------------------
J.P. MORGAN & CO. DEUTSCHE BANC ALEX. BROWN
J.P. Morgan Commercial Mortgage Finance Corp., Series 1999-C8
07/27/99 12:36 AM Page 20
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan does not warrant its completeness or accuracy.
These materials are subject to change from time to time without notice. Past
performance is not indicative of future results. All information contained
herein, whether regarding the mortgage loans or otherwise, supersedes any
previous such information delivered to you and will be superseded by any such
information subsequently delivered and ultimately by the final prospectus
relating to the securities. These materials are not intended as an offer or
solicitation with respect to the purchase or sale of any security, and have been
provided to you for informational purposes only and may not be relied upon by
you in evaluating the merits of investing in the securities. Any investment
decision with respect to the securities should be made by you based solely upon
the information contained in the final prospectus relating to the securities. No
assurance or representation can be made as to the actual rate or timing of
principal payments or prepayments on any of the mortgage loans or the
performance characteristics of the securities. This information was prepared in
reliance on information regarding the mortgage loans furnished by the seller of
the mortgage loans. J.P. Morgan and/or its affiliates and employees may hold a
position or act as market maker in the financial instruments of any issuer
discussed herein or act as underwriter, placement agent, advisor or lender to
such issuer. J.P. Morgan Securities Inc. is a member of SIPC. Copyright 1999
J.P. Morgan & Co. Incorporated. Clients should contact analysts at and execute
transactions through a J.P. Morgan entity in their home jurisdiction unless
governing law permits otherwise.
<PAGE>
HYATT REGENCY ROCHESTER
LOAN INFORMATION
- --------------------------------------------------------------
PRINCIPAL BALANCE
ORIGINAL $18,000,000
CUT-OFF DATE $17,773,861
ORIGINATION DATE August 12, 1998
INTEREST RATE 7.2800%
AMORTIZATION 300
HYPERAMORTIZATION After the Anticipated
Repayment Date, all excess
cashflow is used to reduce
the outstanding principal
ANTICIPATED REPAYMENT DATE September 1, 2008
MATURITY DATE September 1, 2023
BORROWER/SPONSOR Rochester Downtown Hotel,
Inc.
CALL PROTECTION Prepayment locked out until
the third month preceding
the Anticipated Repayment
Date. U.S. Treasury
defeasance allowed, in
whole or part, on or after
August 1, 2001
REMOVAL OF PROPERTY MANAGER Lender has the right to remove the property
manager at any time for cause or upon event
of default under the loan.
The Lender must approve any replacement
COLLECTION ACCOUNT Hard Lockbox. All revenue
received by the hotel
manager is paid directly
into a Cash Management
Account, and on the first
day of each month, so long
as no Event of Default has
occurred and prior to the
Anticipated Repayment Date,
all funds shall be
disbursed upon the
discretion of the Lender
MEZZANINE LOANS/PREFERRED A mezzanine loan with a
EQUITY principal balance of
$2,917,557 as of July 1, 1999, an original
principal balance of $3,000,000, a maturity
date of September 1, 2008 and an amortization
term of 120 months, was made by Morgan Guaranty
Trust Company of New York to Rochester Hotel
Holding, Inc., the sole shareholder of
Rochester Downtown Hotel, Inc., and is secured
solely by such shareholder's interest in the
Rochester Downtown Hotel, Inc.
- -------------------------------- -----------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------
SINGLE ASSET/PORTFOLIO Single asset
PROPERTY TYPE Hotel
LOCATION 125 East Main Street
Rochester, New York
YEARS BUILT/RENOVATED 1992 / NA
THE COLLATERAL This 27-story, 335-room
full service hotel was
built in 1992. The hotel
has access to an attached
municipal garage, in which
800 spaces are reserved
exclusively for hotel
guests. Amenities include a
280-seat full service
restaurant, a 60-seat lobby
bar and lounge, an indoor
swimming pool, a fitness
facility, a gift shop, and
a business center. The
room mix includes 207 rooms
with king-size beds, 111
rooms with two double beds,
16 parlor suites, and one
presidential suite. The
hotel is the only 4-Diamond
hotel in the Rochester area
PROPERTY MANAGEMENT Hyatt Hotels Corporation
OCCUPANCY AS OF 4/30/99 70.62%
NET OPERATING INCOME $3,065,080
YEAR ENDING 12/31/98
UNDERWRITTEN NET CASH FLOW $2,257,688
APPRAISED VALUE $26,500,000
APPRAISAL DATE May 1, 1998
CUT-OFF DATE
LOAN PER SQUARE FOOT $53,056
LTV 67.07%
UW DSCR 1.44x
- -------------------------------- -----------------------------
J.P. MORGAN & CO. DEUTSCHE BANC ALEX. BROWN
J.P. Morgan Commercial Mortgage Finance Corp., Series 1999-C8
07/27/99 12:36 AM Page 21
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan does not warrant its completeness or accuracy.
These materials are subject to change from time to time without notice. Past
performance is not indicative of future results. All information contained
herein, whether regarding the mortgage loans or otherwise, supersedes any
previous such information delivered to you and will be superseded by any such
information subsequently delivered and ultimately by the final prospectus
relating to the securities. These materials are not intended as an offer or
solicitation with respect to the purchase or sale of any security, and have been
provided to you for informational purposes only and may not be relied upon by
you in evaluating the merits of investing in the securities. Any investment
decision with respect to the securities should be made by you based solely upon
the information contained in the final prospectus relating to the securities. No
assurance or representation can be made as to the actual rate or timing of
principal payments or prepayments on any of the mortgage loans or the
performance characteristics of the securities. This information was prepared in
reliance on information regarding the mortgage loans furnished by the seller of
the mortgage loans. J.P. Morgan and/or its affiliates and employees may hold a
position or act as market maker in the financial instruments of any issuer
discussed herein or act as underwriter, placement agent, advisor or lender to
such issuer. J.P. Morgan Securities Inc. is a member of SIPC. Copyright 1999
J.P. Morgan & Co. Incorporated. Clients should contact analysts at and execute
transactions through a J.P. Morgan entity in their home jurisdiction unless
governing law permits otherwise.
<PAGE>
NORTHFIELD OFFICE PARK I & II
LOAN INFORMATION
- --------------------------------------------------------------
PRINCIPAL BALANCE
ORIGINAL $17,500,000
CUT-OFF DATE $17,479,309
ORIGINATION DATE May 19, 1999
INTEREST RATE 7.8100%
AMORTIZATION 360
HYPERAMORTIZATION After the Anticipated
Repayment Date, all excess
cashflow is used to reduce
the outstanding principal
ANTICIPATED REPAYMENT DATE June 1, 2006
MATURITY DATE June 1, 2029
BORROWER/SPONSOR Northfield Plaza
Associates, Ltd.
CALL PROTECTION Prepayment locked out until
the third month preceding
the Anticipated Repayment
Date. U.S. Treasury
defeasance allowed, in
whole or part, on or after
August 1, 2001
REMOVAL OF PROPERTY MANAGER Lender has the right to
remove the property manager at any time for
cause or upon event of default under the loan.
The Lender must approve any replacement
COLLECTION ACCOUNT Springing Lockbox;
Triggered by failure to
repay the debt three months
prior to the Anticipated
Repayment Date
MEZZANINE LOANS/PREFERRED None
EQUITY
- -------------------------------- -----------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------
SINGLE ASSET/PORTFOLIO Single asset
PROPERTY TYPE Office
LOCATION 5600-5700 Crooks Road
Troy, Michigan
YEARS BUILT/RENOVATED 1973, 1975 / 1984 and 1991
THE COLLATERAL The property consists of
two Class B suburban office buildings totaling
211,623 square feet located on approximately
17.74 acres. The first building was constructed
in 1975 and is a one- and two-story structure.
The second building is four stories and was
constructed in 1973. Each building has been
continuously operated as multi-tenant office
buildings since construction. Major tenants
include General Motors (22,169 square feet),
National Bank of Detroit (19,988 square feet),
and The Hayman Company (12,716 square feet)
PROPERTY MANAGEMENT The Hayman Company
OCCUPANCY AS OF 4/30/99 98.0%
NET OPERATING INCOME $2,346,757
YEAR ENDING 12/31/98
UNDERWRITTEN NET CASH FLOW $1,962,530
APPRAISED VALUE $24,500,000
APPRAISAL DATE February 8, 1999
CUT-OFF DATE
LOAN PER SQUARE FOOT $82.60
LTV 71.34%
UW DSCR 1.30x
- -------------------------------- -----------------------------
J.P. MORGAN & CO. DEUTSCHE BANC ALEX. BROWN
J.P. Morgan Commercial Mortgage Finance Corp., Series 1999-C8
07/27/99 12:36 AM Page 22
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan does not warrant its completeness or accuracy.
These materials are subject to change from time to time without notice. Past
performance is not indicative of future results. All information contained
herein, whether regarding the mortgage loans or otherwise, supersedes any
previous such information delivered to you and will be superseded by any such
information subsequently delivered and ultimately by the final prospectus
relating to the securities. These materials are not intended as an offer or
solicitation with respect to the purchase or sale of any security, and have been
provided to you for informational purposes only and may not be relied upon by
you in evaluating the merits of investing in the securities. Any investment
decision with respect to the securities should be made by you based solely upon
the information contained in the final prospectus relating to the securities. No
assurance or representation can be made as to the actual rate or timing of
principal payments or prepayments on any of the mortgage loans or the
performance characteristics of the securities. This information was prepared in
reliance on information regarding the mortgage loans furnished by the seller of
the mortgage loans. J.P. Morgan and/or its affiliates and employees may hold a
position or act as market maker in the financial instruments of any issuer
discussed herein or act as underwriter, placement agent, advisor or lender to
such issuer. J.P. Morgan Securities Inc. is a member of SIPC. Copyright 1999
J.P. Morgan & Co. Incorporated. Clients should contact analysts at and execute
transactions through a J.P. Morgan entity in their home jurisdiction unless
governing law permits otherwise.
<PAGE>
MERRILL PLACE
LOAN INFORMATION
- --------------------------------------------------------------
PRINCIPAL BALANCE
ORIGINAL $17,000,000
CUT-OFF DATE $16,926,533
ORIGINATION DATE January 29, 1999
INTEREST RATE 7.5000%
AMORTIZATION 360
HYPERAMORTIZATION NA
ANTICIPATED REPAYMENT DATE NA
MATURITY DATE February 1, 2009
BORROWER/SPONSOR Merrill Place, LLC, a
special purpose entity
whose principals directly
manage the subject
CALL PROTECTION Prepayment locked out until
the third month preceding
the Anticipated Repayment
Date. U.S. Treasury
defeasance allowed, in
whole or part, on or after
March 1, 2002
REMOVAL OF PROPERTY MANAGER Lender has the right to remove the property
manager at any time for
cause or upon event of default under the loan.
The Lender must approve any replacement
COLLECTION ACCOUNT None
MEZZANINE LOANS/PREFERRED None
EQUITY
- -------------------------------- -----------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------
SINGLE ASSET/PORTFOLIO Single asset
PROPERTY TYPE Office
LOCATION 411 First Avenue South
Seattle, Washington
YEARS BUILT/RENOVATED 1913 / 1983
THE COLLATERAL Situated on 1.60 acres, the
property consists of a
seven-story urban office
complex containing 179,814
square housed in three
buildings constructed
between 1909 and 1913.
There is an adjacent
three-story parking
structure with 131 stalls.
Significantly updated in
1983, the property has
recently undergone over
$3.5 million in tenant
improvements for major
technology tenants. The
three buildings are
historical landmarks for
the city of Seattle and are
also known as the Hambach
Building, the Sellar
Building and the
Schwabacher Building and
Warehouse
PROPERTY MANAGEMENT Nitzi-Stagen & Co., Inc.
OCCUPANCY AS OF 3/31/99 100.0%
NET OPERATING INCOME $1,770,621
YEAR ENDING 12/31/98
UNDERWRITTEN NET CASH FLOW $2,049,566
APPRAISED VALUE $28,200,000
APPRAISAL DATE December 3, 1998
CUT-OFF DATE
LOAN PER SQUARE FOOT $94.13
LTV 60.02%
UW DSCR 1.44x
- -------------------------------- -----------------------------
J.P. MORGAN & CO. DEUTSCHE BANC ALEX. BROWN
J.P. Morgan Commercial Mortgage Finance Corp., Series 1999-C8
07/27/99 12:36 AM Page 23
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan does not warrant its completeness or accuracy.
These materials are subject to change from time to time without notice. Past
performance is not indicative of future results. All information contained
herein, whether regarding the mortgage loans or otherwise, supersedes any
previous such information delivered to you and will be superseded by any such
information subsequently delivered and ultimately by the final prospectus
relating to the securities. These materials are not intended as an offer or
solicitation with respect to the purchase or sale of any security, and have been
provided to you for informational purposes only and may not be relied upon by
you in evaluating the merits of investing in the securities. Any investment
decision with respect to the securities should be made by you based solely upon
the information contained in the final prospectus relating to the securities. No
assurance or representation can be made as to the actual rate or timing of
principal payments or prepayments on any of the mortgage loans or the
performance characteristics of the securities. This information was prepared in
reliance on information regarding the mortgage loans furnished by the seller of
the mortgage loans. J.P. Morgan and/or its affiliates and employees may hold a
position or act as market maker in the financial instruments of any issuer
discussed herein or act as underwriter, placement agent, advisor or lender to
such issuer. J.P. Morgan Securities Inc. is a member of SIPC. Copyright 1999
J.P. Morgan & Co. Incorporated. Clients should contact analysts at and execute
transactions through a J.P. Morgan entity in their home jurisdiction unless
governing law permits otherwise.
<PAGE>
COLLATERAL PERFORMANCE OF PREVIOUS JPMC TRANSACTIONS
<TABLE>
<CAPTION>
30 TO 90 DAYS DELINQUENT(1)
------------------------------------
PRICING # OF LOANS SECURITIZED LOAN BALANCE % OF TOTAL # OF
DEAL DATE AT ISSUANCE BALANCE ($000) ($000) BALANCE LOANS FORECLOSURE LOSSES
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
C1 Jul-95 36 $172,165 $12,922(2) 7.51% 1 $0 $0
C2 Jan-96 91 304,650 7,554(3) 2.48 1 0 0
C3 Jun-96 124 400,936 0 0.00 0 0 0
C4 Jan-97 127 406,985 1,542 0.38 1 0 0
C5 Sep-97 93(4) 401,244(4) 2,591(5) 0.65 1 0 0
C6 Mar-98 91 796,414 0 0.00 0 0 0
MC2 (6) Jun-98 25(7) 138,896(7) 0 0.00 0 0 0
C7 Apr-99 145 801,352 0 0.00 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL 732 $3,422,642 $24,608 0.72% 4 $0 $0
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1 As of June 1999 remittances
2 Delinquent loan is secured by a retail outlet mall in Martinsburg, VA.
Tenant occupancy has dropped due to competing outlet centers in nearby
Baltimore, MD and Washington, DC.
3 Delinquent loan is secured by a medical office building in Salt Lake
City, UT. The tenant, Bonneville Health Systems, Inc. ("BHS"), stopped
paying rent in August 1997 due to financial difficulties. Alpine
Medical Group, a medical consulting firm, is currently evaluating a
potential acquisition of BHS. Since November 1998, Alpine has been
paying to the borrower monthly rent of $75,000, an amount that covers
the current debt service.
4 Represents J.P. Morgan's contribution to the total pool
5 Delinquent loan is secured by a corporate apartment building in
Atlanta, GA. The collateral property has suffered in the last year due
to the construction of two competing properties and the re-routing of
the access road to the subject property.
6 Mortgage Capital Funding, Inc., Multifamily/Commercial Mortgage
Pass-Through Certificates, Series 1998-MC2
7 Represents J.P. Morgan's contribution to the pool
J.P. Morgan Commercial Mortgage Finance Corp., Series 1999-C8
07/26/99 5:05 PM Page 24
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan does not warrant its completeness or accuracy.
These materials are subject to change from time to time without notice. Past
performance is not indicative of future results. All information contained
herein, whether regarding the mortgage loans or otherwise, supersedes any
previous such information delivered to you and will be superseded by any such
information subsequently delivered and ultimately by the final prospectus
relating to the securities. These materials are not intended as an offer or
solicitation with respect to the purchase or sale of any security, and have been
provided to you for informational purposes only and may not be relied upon by
you in evaluating the merits of investing in the securities. Any investment
decision with respect to the securities should be made by you based solely upon
the information contained in the final prospectus relating to the securities. No
assurance or representation can be made as to the actual rate or timing of
principal payments or prepayments on any of the mortgage loans or the
performance characteristics of the securities. This information was prepared in
reliance on information regarding the mortgage loans furnished by the seller of
the mortgage loans. J.P. Morgan and/or its affiliates and employees may hold a
position or act as market maker in the financial instruments of any issuer
discussed herein or act as underwriter, placement agent, advisor or lender to
such issuer. J.P. Morgan Securities Inc. is a member of SIPC. Copyright 1999
J.P. Morgan & Co. Incorporated. Clients should contact analysts at and execute
transactions through a J.P. Morgan entity in their home jurisdiction unless
governing law permits otherwise.
<PAGE>
ANNEX F
J.P. MORGAN COMMERCIAL MORTGAGE FINANCE CORP. W.A.C.
MORTGAGE PASS-THROUGH CERTIFICATES W.A.M.
SERIES 1999-C8 PAYMENT DATE
RECORD DATE
TRUSTEE'S REPORT TO CERTIFICATEHOLDERS
PAYMENT SUMMARY
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Current
Pass-Through Interest Fitch/S&P Original Beginning Principal Interest Total Ending
Class CUSIP Rate Type Rating ** Balance Balance Paid Paid Paid Balance
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Totals:
-----------------------------------------------------------------------------
</TABLE>
DISTRIBUTIONS PER CERTIFICATE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Beginning Principal Interest Ending
Class Certificate Factor Distribution Distribution Certificate Factor
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
STATE STREET
Serving Institutional Investors Worldwide
- -------------------------------------------------------------------------------
This report has been prepared by or based on information furnished to State
Street Bank and Trust Company ("State Street") by one or more third parties
(e.g.,Servicer, Master Servicer, etc.).State Street shall not have and does not
undertake responsibility for the accuracy or completeness of information
provided by such third parties, and makes no representations or warranties with
respect to the accuracy or completeness thereof or the sufficiency thereof for
any particular purpose. State Street has not independently verified information
received from third parties, and shall have no liability for any inaccuracies
therein or caused thereby.
<PAGE>
J.P. MORGAN COMMERCIAL MORTGAGE FINANCE CORP. W.A.C.
MORTGAGE PASS-THROUGH CERTIFICATES W.A.M.
SERIES 1999-C8 PAYMENT DATE
RECORD DATE
TRUSTEE'S REPORT TO CERTIFICATEHOLDERS
PRINCIPAL DETAIL
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Beginning Scheduled Unscheduled Other Principal/ Total Principal Realized Losses/
Class Balance Principal Principal Cash Adjustments Distribution Amount Balance Adj.
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
TOTALS:
----------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------
Appraisal Ending Cumulative Cumulative
Reduction Amt. Balance Realized Losses Appraisal Reduction
- -----------------------------------------------------------------------
<C> <C> <C> <C>
- -----------------------------------------------------------------------
- -----------------------------------------------------------------------
</TABLE>
INTEREST DETAIL
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Accrued Beg. Unpaid Prepayment Current Interest Additional Trust Prepayment
Class Certificate Interest Interest Int. Shortfall Shortfalls Fund Expenses Premiums
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------------------
Totals:
---------------------------------------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------------
Additional Total Interest Cumulative Unpaid
Adjustments Distr. Amount Interest Shortfall
- -------------------------------------------------------------
<C> <C> <C>
- ------------------------------------------------------------------
- ------------------------------------------------------------------
</TABLE>
<PAGE>
J.P. MORGAN COMMERCIAL MORTGAGE FINANCE CORP. W.A.C.
MORTGAGE PASS-THROUGH CERTIFICATES W.A.M.
SERIES 1999-C8 PAYMENT DATE
RECORD DATE
TRUSTEE'S REPORT TO CERTIFICATEHOLDERS
BOND CLASS RATING, SUBORDINATION LEVEL AND MATURITIES:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
Ratings Original Current Last Original Current Orig. Class Maturity
Class As Of Date Rating Rating Rating Subordination Level Sub.Level @ 0% CPR
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
DELINQUENCIES One Month Two Months Three+Months Foreclosures Total
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
# of Loans 0 0 0 0 0
----------------------------------------------------------------------------------------------------------------------------
Ending APB $0.00 $0.00 $0.00 $0.00 $0.00
----------------------------------------------------------------------------------------------------------------------------
</TABLE>
TWELVE MONTH SUMMARY OF PREPAYMENTS AND PREPAYMENT PENALTIES:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
MONTH/YEAR PREPAYMENTS PENALTIES
---------- ----------- ---------
<S> <C> <C>
--------------------------------------------------------------------------------------------------------------------
</TABLE>
SUBORDINATION:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
ORIGINAL CURRENT
CLASS SUBORDINATION SUBORDINATION
---------- --------------- -------------
<S> <C> <C>
-----------------------------------------------------------------------
</TABLE>
APPRAISAL REDUCTIONS:
<TABLE>
<CAPTION>
Current Total Cum.Total
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Loan # 0 0 0 0 0 0
Amount $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
J.P. MORGAN COMMERCIAL MORTGAGE FINANCE CORP. W.A.C.
MORTGAGE PASS-THROUGH CERTIFICATES W.A.M.
SERIES 1999-C8 PAYMENT DATE
RECORD DATE
TRUSTEE'S REPORT TO CERTIFICATEHOLDERS
<TABLE>
<CAPTION>
Other Information
===================================================================================================================================
AVAILABLE DISTRIBUTION AMOUNT
COLLATERAL INFORMATION: CLOSING BEG ENDING
COLL. BALANCE COLL. BALANCE COLL. BALANCE
------------- ------------- -------------
<S> <C> <C> <C>
LOAN COUNT
Aggregate amount of P&I Advances made during current period:
SERVICING FEES:
Aggregate Amount of servicing compensation paid to Master Servicer
Aggregate Amount of servicing compensation paid to Trustee:
Additional Special Servicing Fee
AGGREGATE AMOUNT OF:
Additional Trust Fund Expenses
Mortgage Loans that have been paid in full:
Mortgage Loans that have been paid at their Maturity Date:
Prepayment Penalties paid on the Mortgage Loans:
- -----------------------------------------------------------------------------------------------------------------------------------
SPEED HISTORY CPR%*
1 month 0.00%
3 month 0.00%
6 month 0.00%
12 month N/A
Life 0.00%
* Principal received within 1 month of maturity is not
considered prepayment in the calculation of CPR.
===================================================================================================================================
</TABLE>
<PAGE>
J.P. MORGAN COMMERCIAL MORTGAGE FINANCE CORP.
MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-C8
UNDERWRITER: J.P. MORGAN
<TABLE>
<CAPTION>
DISTRIBUTION OF CURRENT SCHEDULED PRINCIPAL BALANCES
- ---------------------------------------------------------------------------------------------------------------------
Current
Scheduled # of Aggregate % Tot Weighted Averages
Principal Mtg Sched Prin Sched Mnths Mort
Balance Loans Balance Bal DSCR to Mat Rate
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
<1,000,000.00
1,000,000.00+
2,000,000.00+
3,000,000.00+
4,000,000.00+
5,000,000.00+
5,999,999.91+
7,000,000.00+
8,000,000.00+
9,000,000.00+
10,000,000.00+
15,000,000.00+
20,000,000.00+
- ---------------------------------------------------------------------------------------------------------------------
Total
</TABLE>
Distribution of Current Mortgage Interest Rates
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Current
Mortgage # of Aggregate % Tot Weighted Averages
Interest Mtg Sched Prin Sched Mnths Mort
Rate Loans Balance Bal DSCR to Mat Rate
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
<6.75%
7.00% +
7.25% +
7.50% +
7.75% +
8.00% +
8.25% +
8.50% +
8.75% +
- ----------------------------------------------------------------------------------------------------------------
Total
</TABLE>
STATE STREET CORPORATE TRUST
WEB: CORPORATETRUST.STATESTREET.COM
PAYMENT DATE
REPORT #
DISTRIBUTION OF STATES BY BALANCE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
# of Aggregate % Tot Weighted Averages
Mtg Sched Prin Sched Mnths Mort
States Loans Balance Bal DSCR to Mat Rate
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
California
Florida
Maryland
Illinois
Michigan
North Carolina
Minnesota
Washington
Massachusetts
South Carolina
Colorado
Georgia
Nevada
Pennsylvania
Virginia
Indiana
Wisconsin
Hawaii
Ohio
New Jersey
Texas
New York
Mississippi
Arkansas
Louisiana
Nebraska
New Mexico
Arizona
Connecticut
- ----------------------------------------------------------------------------------------------------------------------------------
Total
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
DISTRIBUTION OF PROPERTY TYPE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
# of Aggregate % Tot Weighted Averages
Property Mtg Sched Prin Sched Mnths Mort
Types Loans Balance Bal DSCR to Mat Rate
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Multifamily
Office
Anchored Retail
Hotel
Office/Retail
Unanchored Retail
Congregate Care
Industrial
Mobile Home Park
Industrial/Office
Nursing Home
- ----------------------------------------------------------------------------------------------------------------------------------
Total
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
J.P. MORGAN COMMERCIAL MORTGAGE FINANCE CORP.
MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-C8
UNDERWRITER: J.P. MORGAN
DISTRIBUTION OF REMAINING STATED TERM (BALLOON LOANS ONLY)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Remaining
Stated # of Aggregate % Tot Weighted Averages
Term Mtg Sched Prin Sched Mnths Mort
(Months) Loans Balance Bal DSCR to Mat Rate
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
<60
60+
96+
132+
180+
240+
- --------------------------------------------------------------------------------------------------------------
Total
- --------------------------------------------------------------------------------------------------------------
</TABLE>
DIST. OF REMAINING STATED TERM (FULLY AMORTIZING LOANS ONLY)
<TABLE>
<CAPTION>
Remaining
Stated # of Aggregate % Tot Weighted Averages
Term Mtg Sched Prin Sched Mnths Mort
(Months) Loans Balance Bal DSCR to Mat Rate
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
<60
60+
96+
132+
180+
240+
- -------------------------------------------------------------------------------------------------------------
Total
- -------------------------------------------------------------------------------------------------------------
</TABLE>
DISTRIBUTION OF REMAINING STATED TERM (ALL LOANS)
<TABLE>
<CAPTION>
Remaining
Stated # of Aggregate % Tot Weighted Averages
Term Mtg Sched Prin Sched Mnths Mort
(Months) Loans Balance Bal DSCR to Mat Rate
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
0+
60+
96+
132+
180+
240+
- -------------------------------------------------------------------------------------------------------------
Total
- -------------------------------------------------------------------------------------------------------------
</TABLE>
STATE STREET CORPORATE TRUST
WEB: CORPORATETRUST.STATESTREET.COM
PAYMENT DATE
REPORT #
<TABLE>
<CAPTION>
DISTRIBUTION OF REMAINING AMORTIZATION TERM
- -----------------------------------------------------------------------------------------------------------------
Original # of Aggregate % Tot Weighted Averages
Amortization Mtg Sched Prin Sched Mnths Mort
Term Loans Balance Bal DSCR to Mat Rate
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
<60
60+
120+
180+
240+
300+
360+
- ----------------------------------------------------------------------------------------------------------------------------------
Total
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
DISTRIBUTION OF SEASONING
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
# of Aggregate % Tot Weighted Averages
Seasoning Mtg Sched Prin Sched Mnths Mort
(months) Loans Balance Bal DSCR to Mat Rate
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
<13
13-24
25-36
37-48
49-60
61-120
121+
- -------------------------------------------------------------------------------------------------------------
Total
- -------------------------------------------------------------------------------------------------------------
</TABLE>
DISTRIBUTION OF ORIGINAL TERM TO STATED MATURITY
<TABLE>
<CAPTION>
Original # of Aggregate % Tot Weighted Averages
Term to Mtg Sched Prin Sched Mnths Mort
Maturity Loans Balance Bal DSCR to Mat Rate
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
0+
50+
100+
150+
200+
250+
300+
400+
- ---------------------------------------------------------------------------------------------------------------
Total
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
J.P. MORGAN COMMERICAL MORTGAGE FINANCE CORP.
MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-C8
UNDERWRITER: J.P. MORGAN
<TABLE>
<CAPTION>
DISTRIBUTION OF LOAN TO VALUE RATIO
- ----------------------------------------------------------------------------------------------------------------
Most # of Aggregate % Tot Weighted Averages
Recent Mtg Sched Prin Sched Mnths Mort
LTV Loans Balance Bal DSCR to Mat Rate
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Not Populated
<50.01
50.01 +
55.01 +
60.01 +
65.01 +
70.01 +
75.01 +
80.01+
- -----------------------------------------------------------------------------------------------------------------
Total
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
DISTRIBUTION OF AMORTIZATION TYPE
<TABLE>
<CAPTION>
# of Aggregate % Tot Weighted Averages
Amortization Mtg Sched Prin Sched Mnths Mort
Type Loans Balance Bal DSCR to Mat Rate
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balloon
Fully Amortizing
ARD
- ----------------------------------------------------------------------------------------------------------------------------------
Total
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
STATE STREET CORPORATE TRUST
WEB: CORPORATETRUST.STATESTREET.COM
PAYMENT DATE
REPORT #
DISTRIBUTION OF MOST RECENT DEBT SERVICE COVERAGE RATIO
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
# of Aggregate % Tot Weighted Averages
Mtg Sched Prin Sched Mnths Mort
DSCR Loans Balance Bal DSCR to Mat Rate
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Not populated
<1.20x
1.20x +
1.25x +
1.30x +
1.35x +
1.40x +
1.45x +
1.50x +
1.55x +
1.60x +
1.70x +
1.80x +
- --------------------------------------------------------------------------------------------------------------------
Total
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
J.P. MORGAN COMMERCIAL MORTGAGE FINANCE CORP. STATE STREET CORPORATE TRUST
MORTGAGE PASS-THROUGH CERTIFICATES WEB: CORPORATETRUST.STATESTREET.COM
SERIES 1999-C8 PAYMENT DATE
UNDERWRITER: J.P. MORGAN REPORT
SERVICER WATCH LIST
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SHORT NAME SCHEDULED PAID
PROSPECTUS (WHEN PROPERTY LOAN THRU MATURITY REASON ON
ID APPROPRIATE) TYPE CITY STATE BALANCE DATE DATE LTM* DSCR COMMENT / WATCH LIST
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
List all loans on watch list and reason sorted in decending balance order.
- ------------------------------------------------------------------------------------------------------------------------------------
Total: $
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*LTM - Last 12 months either trailing or last annual
<PAGE>
J.P. MORGAN COMMERCIAL MORTGAGE FINANCE CORP. STATE STREET CORPORATE TRUST
MORTGAGE PASS-THROUGH CERTIFICATES WEB: CORPORATETRUST.STATESTREET.COM
SERIES 1999-C8 PAYMENT DATE
UNDERWRITER: J.P. MORGAN REPORT
LOAN LEVEL DETAIL
<TABLE>
<CAPTION>
CLOSING TERMS
- -----------------------------------------------------------------------------------------------------------------------------------
Offer Property Sched Note Maturity Sched
Control# Type City State Bal Rate Date Bal
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
totals
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
CURRENT TERMS
- ---------------------------------------------------------------------------------------------------------------------------
Note Maturity Sched Prepay/ Prepay Paid Thru Prepmt Transfer Loan
Rate Date P&I Liquid/adj Date Date Premium Date Status
- ---------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
Loan Status:
A=Payment not rec'd. but still in grace period, B= Late payment, but less than
1mo., 0= Current, 1= 1 mo. delinquent, 2= 2mo. delinquent, 3= Three or more mo.
delinquent 4=Assumed scheduled payment (performing matured balloon), 7=
Foreclosure, 9=REO
- --------------------------------------------------------------------------------
<PAGE>
J.P. MORGAN COMMERCIAL MORTGAGE FINANCE CORP. STATE STREET CORPORATE TRUST
MORTGAGE PASS-THROUGH CERTIFICATES WEB: CORPORATETRUST.STATESTREET.COM
SERIES 1999-C8 PAYMENT DATE
UNDERWRITER: J.P. MORGAN REPORT
DELINQUENCY/PREPAYMENT REPORTING HISTORY: ROLLING 24 MONTHS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Dist Delinq 1 Month Delinq 2 Months Delinq 3+ Months Foreclosure/Bank REO
-----------------------------------------------------------------------------------------------------------------
Date # Bal # Bal # Bal # Bal # Bal
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------
Modifications Specially Serviced Prepayments
- ----------------------------------------------------------------------------
# Bal # Bal # Bal
- ----------------------------------------------------------------------------
<C> <C> <C>
- ----------------------------------------------------------------------------
</TABLE>
<PAGE>
J.P. MORGAN COMMERCIAL MORTGAGE FINANCE CORP. STATE STREET CORPORATE TRUST
MORTGAGE PASS-THROUGH CERTIFICATES WEB: CORPORATETRUST.STATESTREET.COM
SERIES 1999-C8 PAYMENT DATE
UNDERWRITER: J.P. MORGAN REPORT
DELINQUENT LOAN STATUS REPORT
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
OTHER
SHORT NAME TOTAL P&I TOTAL ADVANCES
PROSPECTUS (WHEN PAID THRO ADVANCES EXPENSES (TAXES & TOTAL TRANSFER RESOLUTION FORECLOSURE
ID APPROPRIATE) DATE TO DATE TO DATE ESCROW) EXPOSURE DATE DATE DATE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
30 DAYS DELINQUENT
60 DAYS DELINQUENT
90 + DAYS DELINQUENT
Current & at Special Servicer
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------
WORKOUT
STRATEGY COMMENTS
- -----------------------------------------
<C> <C>
- -----------------------------------------------------------------------
</TABLE>
*Workout Strategy should match the CSSA Loan file using abreviated words in
place of a code number such as (FCL - In Foreclosure, MOD - Modification, DPO -
Discount Payoff, NS - Note Sale, BK - Bankrupcy, PP - Payment Plan, TBD - To Be
Determined etc...). It is possible to combine the status codes if the loan is
going in more than one direction. (i.e. FCL/Mod, BK/Mod, BK/FCL/DPO)
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
ANNEX G
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered J.P. Morgan
Commercial Mortgage Finance Corp. Mortgage Pass-Through Certificates, Series
1999-C8 (the "Global Securities") will be available only in book-entry form.
Investors in the Global Securities may hold such Global Securities through any
of DTC, Cedelbank or Euroclear. The Global Securities will be tradeable as home
market instruments in both the European and U.S. domestic markets. Initial
settlement and all secondary trades will settle in same day funds. Capitalized
terms used but not defined in this Annex F have the meanings assigned to them
in the Prospectus Supplement and the Prospectus.
Secondary market trading between investors holding Global Securities
through Cedelbank and Euroclear will be conducted in the ordinary way in
accordance with their normal rules and operating procedures and in accordance
with conventional eurobond practice (i.e., seven calendar day settlement).
Secondary market trading between investors holding Global Securities through
DTC will be conducted according to the rules and procedures applicable to U.S.
corporate debt obligations.
Secondary cross-market trading between Cedelbank or Euroclear and DTC
Participants holding Certificates will be effected on a
delivery-against-payment basis through the respective Depositaries of Cedelbank
and Euroclear (in such capacity) and as DTC Participants.
Non-U.S. holders (as described below) of Global Securities will be subject
to U.S. withholding taxes unless such holders meet certain requirements and
deliver appropriate U.S. tax documents to the securities clearing organizations
or their participants.
INITIAL SETTLEMENT
All Global Securities will be held in book-entry form by DTC in the name
of Cede & Co. as nominee of DTC. Investors' interests in the Global Securities
will be represented through financial institutions acting on their behalf as
direct and indirect Participants in DTC. As a result, Cedelbank and Euroclear
will hold positions on behalf of their participants through their respective
Depositaries, which in turn will hold such positions in accounts as DTC
Participants.
Investors electing to hold their Global Securities through DTC will follow
the settlement practices applicable to similar issues of pass-through
certificates. Investors' securities custody accounts will be credited with
their holdings against payment in same-day funds on the settlement date.
Investors electing to hold their Global Securities through Cedelbank or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global security
and no "lock-up" or restricted period. Global Securities will be credited to
the securities custody accounts on the settlement date against payments in
same-day funds.
SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired value
date.
Trading between DTC Participants. Secondary market trading between DTC
Participants will be settled using the procedures applicable to similar issues
of pass-through certificates in same-day funds.
Trading between Cedelbank and/or Euroclear Participants. Secondary market
trading between Cedelbank Participants or Euroclear Participants will be
settled using the procedures applicable to conventional eurobonds in same-day
funds.
Trading between DTC seller and Cedelbank or Euroclear purchaser. When
Global Securities are to be transferred from the account of a DTC Participant
to the account of a Cedelbank Participant or a Euroclear Participant, the
purchaser will send instructions to Cedelbank or Euroclear through a
G-1
<PAGE>
Cedelbank Participant or Euroclear Participant at least one business day prior
to settlement. Cedelbank or Euroclear will instruct the respective Depositary,
as the case may be, to receive the Global Securities against payment. Payment
will include interest accrued on the Global Securities from and including the
last coupon payment date to and excluding the settlement date. Payment will
then be made by the respective Depositary to the DTC Participant's account
against delivery of the Global Securities. After settlement has been completed,
the Global Securities will be credited to the respective clearing system and by
the clearing system, in accordance with its usual procedures, to the Cedelbank
Participant's or Euroclear Participant's account. The Global Securities credit
will appear the next day (European time) and the cash debit will be back-valued
to, and the interest on the Global Securities will accrue from, the value date
(which would be the preceding day when settlement occurred in New York). If
settlement is not completed on the intended value date (i.e., the trade fails),
the Cedelbank or Euroclear cash debit will be valued instead as of the actual
settlement date.
Cedelbank Participants and Euroclear Participants will need to make
available to the respective clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to pre-position
funds for settlement, either from cash on hand or existing lines of credit, as
they would for any settlement occurring within Cedelbank or Euroclear. Under
this approach, they may take on credit exposure to Cedelbank or Euroclear until
the Global Securities are credited to their accounts one day later.
As an alternative, if Cedelbank or Euroclear has extended a line of credit
to them, Cedelbank Participants or Euroclear Participants can elect not to
pre-position funds and allow that credit line to be drawn upon the finance
settlement. Under this procedure, Cedelbank Participants or Euroclear
Participants purchasing Global Securities would incur overdraft charges for one
day, assuming they cleared the overdraft when the Global Securities were
credited to their accounts. However, interest on the Global Securities would
accrue from the value date. Therefore, in many cases the investment income on
the Global Securities earned during that one day period may substantially
reduce or offset the amount of such overdraft charges, although this result
will depend on each Cedelbank Participant's or Euroclear Participant's
particular cost of funds.
Since the settlement is taking place during New York business hours, DTC
Participants can employ their usual procedures for sending Global Securities to
the respective Depositary for the benefit of Cedelbank Participants or
Euroclear Participants. The sale proceeds will be available to the DTC seller
on the settlement date. Thus, to the DTC Participant a cross-market transaction
will settle no differently than a trade between two DTC Participants.
Trading between Cedelbank or Euroclear seller and DTC purchaser. Due to
time zone differences in their favor, Cedelbank Participants and Euroclear
Participants may employ their customary procedures for transactions in which
Global Securities are to be transferred by the respective clearing system,
through the respective Depositary, to a DTC Participant. The seller will send
instructions to Cedelbank or Euroclear through a Cedelbank Participant or
Euroclear Participant at least one business day prior to settlement. In these
cases, Cedelbank or Euroclear will instruct the respective Depositary, as
appropriate, to deliver the bonds to the DTC Participant's account against
payment. Payment will include interest accrued on the Global Securities from
and including the last coupon payment date to and excluding the settlement
date. The payment will then be reflected in the account of the Cedelbank
Participant or Euroclear Participant the following day, and receipt of the cash
proceeds in the Cedelbank Participant's or Euroclear Participant's account
would be back-valued to the value date (which would be the preceding day, when
settlement occurred in New York). Should the Cedelbank Participant or Euroclear
Participant have a line of credit with its respective clearing system and elect
to be in debit in anticipation of receipt of the sale proceeds in its account,
the back-valuation will extinguish any overdraft charges incurred over that
one-day period. If settlement is not completed on the intended value date
(i.e., the trade fails), receipt of the cash proceeds in the Cedelbank
Participant's or Euroclear Participant's account would instead be valued as of
the actual settlement date. Finally, day traders that use Cedelbank or
Euroclear and that purchase Global Securities from DTC Participants for
delivery to Cedelbank Participants or Euroclear Participants should note that
these trades would automatically fail on the sale side unless affirmative
action were taken. At least three techniques should be readily available to
eliminate this potential problem:
G-2
<PAGE>
(a) borrowing through Cedelbank or Euroclear for one day (until the
purchase side of the day trade is reflected in their Cedelbank or Euroclear
accounts) in accordance with the clearing system's customary procedures;
(b) borrowing the Global Securities in the U.S. from a DTC Participant no
later than one day prior to settlement, which would give the Global
Securities sufficient time to be reflected in their Cedelbank or Euroclear
account in order to settle the sale side of the trade; or
(c) staggering the value dates for the buy and sell sides of the trade so
that the value date for the purchase from the DTC Participant is at least
one day prior to the value date for the sale to the Cedelbank Participant
or Euroclear Participant.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A Beneficial Owner of Global Securities holding securities through
Cedelbank or Euroclear (or through DTC if the holder has an address outside the
U.S.) will be subject to the 30% U S. withholding tax that generally applies to
payments of interest (including original issue discount) on registered debt
issued by U.S. Persons, unless (i) each clearing system, bank or other
financial institution that holds customers' securities in the ordinary course
of its trade or business in the chain of intermediaries between such Beneficial
Owner and the U.S. entity required to withhold tax complies with applicable
certification requirements and (ii) such beneficial owner takes one of the
following steps to obtain an exemption or reduced tax rate:
Exemption for non-U.S. Persons (Form W-8). Beneficial Owners of
Certificates that are non-U.S. Persons can obtain a complete exemption from the
withholding tax by filing a signed Form W-8 (Certificate of Foreign Status). If
the information shown on Form W-8 changes, a new Form W-8 must be filed within
30 days of such change.
Exemption for non-U.S. Persons with effectively connected income (Form
4224). A non-U.S. Person, including a non-U.S. corporation or bank with a U.S.
branch, for which the interest income is effectively connected with its conduct
of a trade or business in the United States can obtain an exemption from the
withholding tax by filing Form 4224 (Exemption from Withholding of Tax on
Income Effectively Connected with the Conduct of a Trade or Business in the
United States).
Exemption or reduced rate for non-U.S. Persons resident in treaty
countries (Form 1001). Non-U.S. Persons that are Beneficial Owners residing in
a country that has a tax treaty with the United States can obtain an exemption
or reduced tax rate (depending on the treaty terms) by filing Form 1001
(Ownership, Exemption or Reduced Rate Certificate). If the treaty provides only
for a reduced rate, withholding tax will be imposed at that rate unless the
filer alternatively files Form W-8. Form 1001 may be filed by the Beneficial
Owner or his agent.
Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a complete
exemption from the withholding tax by filing Form W-9 (Payer's Request for
Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The Beneficial Owner of a
Global Security or, in the case of a Form 1001 or a Form 4224 filer, his agent,
files by submitting the appropriate form to the person through whom it holds
(the clearing agency, in the case of persons holding directly on the books of
the clearing agency). Form W-8 and Form 1001 are effective for three calendar
years and Form 4224 is effective for one calendar year.
The term "U.S. Person" means (i) a citizen or resident of the United
States, (ii) a corporation or partnership organized in or under the laws of the
United States or any political subdivision thereof or (iii) an estate the
income of which is includable in gross income for United States tax purposes,
regardless of its source or a trust if a court within the United States is able
to exercise primary supervision of the administration of the trust and one or
more United States fiduciaries have the authority to control all substantial
decisions of the trust. This summary does not deal with all aspects of U.S.
Federal income tax withholding that may be relevant to foreign holders of the
Global Securities. Investors are advised to consult their own tax advisors for
specific tax advice concerning their holding and disposing of the Global
Securities.
G-3
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
PROSPECTUS
Mortgage Pass-Through Certificates
(Issuable in Series)
J.P. MORGAN COMMERCIAL MORTGAGE FINANCE CORP.
DEPOSITOR
The Certificates offered hereby and by Supplements to this Prospectus (the
"Offered Certificates") will be offered from time to time in one or more
series (each, a "Series"). Each Series of Certificates will represent in the
aggregate the entire beneficial ownership interest in a trust fund (with
respect to any Series, the "Trust Fund") consisting of one or more segregated
pools of various types of multifamily or commercial mortgage loans (the
"Mortgage Loans"), mortgage participations, mortgage pass-through
certificates or other mortgage-backed securities evidencing interests in or
secured by multifamily or commercial mortgage loans (collectively, the
"CMBS") or a combination of Mortgage Loans and/or CMBS (with respect to any
Series, collectively, the "Mortgage Assets"). If so specified in the related
Prospectus Supplement, some or all of the Mortgage Loans will include
assignments of the leases of the related Mortgaged Properties (as defined
herein) and/or assignments of the rental payments due from the lessees under
such leases (each type of assignment, a "Lease Assignment"). A significant or
the sole source of payments on certain Commercial Loans (as defined herein)
and, therefore, of distributions on certain Series of Certificates, will be
such rent payments. If so specified in the related Prospectus Supplement, the
Trust Fund for a Series of Certificates may include letters of credit,
insurance policies, guarantees, reserve funds or other types of credit
support, or any combination thereof (with respect to any Series,
collectively, "Credit Support"), and currency or interest rate exchange
agreements and other financial assets, or any combination thereof (with
respect to any Series, collectively, "Cash Flow Agreements"). See
"Description of the Trust Funds," "Description of the Certificates" and
"Description of Credit Support."
Each Series of Certificates will consist of one or more classes of
Certificates that may (i) provide for the accrual of interest thereon based
on fixed, variable or floating rates; (ii) be senior or subordinate to one or
more other classes of Certificates in respect of certain distributions on the
Certificates; (iii) be entitled to principal distributions, with
disproportionately low, nominal or no interest distributions; (iv) be
entitled to interest distributions, with disproportionately low, nominal or
no principal distributions; (v) provide for distributions of accrued interest
thereon commencing only following the occurrence of certain events, such as
the retirement of one or more other classes of Certificates of such Series;
(vi) provide for distributions of principal sequentially, based on specified
payment schedules or other methodologies; and/or (vii) provide for
distributions based on a combination of two or more components thereof with
one or more of the characteristics described in this paragraph, to the extent
of available funds, in each case as described in the related Prospectus
Supplement. Any such classes may include classes of Offered Certificates. See
"Description of the Certificates."
(Continued on next page)
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS OR THE RELATED PROSPECTUS
SUPPLEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PROSPECTIVE INVESTORS SHOULD REVIEW THE INFORMATION APPEARING UNDER THE
CAPTION "RISK FACTORS" HEREIN AND SUCH INFORMATION AS MAY BE SET FORTH UNDER
THE CAPTION "RISK FACTORS" IN THE RELATED PROSPECTUS SUPPLEMENT BEFORE
PURCHASING ANY OFFERED CERTIFICATE.
Prior to issuance there will have been no market for the Certificates of any
Series and there can be no assurance that a secondary market for any Offered
Certificates will develop or that, if it does develop, it will continue. This
Prospectus may not be used to consummate sales of the Offered Certificates of
any Series unless accompanied by the Prospectus Supplement for such Series.
Offers of the Offered Certificates may be made through one or more different
methods, including offerings through underwriters as more fully described
under "Method of Distribution" herein and in the related Prospectus
Supplement.
JULY 26, 1999
<PAGE>
(continued from the preceding page)
Principal and interest with respect to Certificates will be distributable
monthly, quarterly, semi-annually or at such other intervals and on the dates
specified in the related Prospectus Supplement. Distributions on the
Certificates of any Series will be made only from the assets of the related
Trust Fund.
The Certificates of each Series will not represent an obligation of or
interest in the Depositor, any Master Servicer, any Primary Servicer, any
Special Servicer or any of their respective affiliates, except to the limited
extent described herein and in the related Prospectus Supplement. Neither the
Certificates nor any assets in the related Trust Fund will be guaranteed or
insured by any governmental agency or instrumentality or by any other person,
unless otherwise provided in the related Prospectus Supplement. The Assets in
each Trust Fund will be held in trust for the benefit of the holders of the
related Series of Certificates pursuant to a Pooling and Servicing Agreement
and one or more Servicing Agreements, or a Trust Agreement, as more fully
described herein.
The yield on each class of Certificates of a Series will be affected by,
among other things, the rate of payment of principal (including prepayments,
repurchase and defaults) on the Mortgage Assets in the related Trust Fund and
the timing of receipt of such payments as described under the caption "Yield
Considerations" herein and in the related Prospectus Supplement. A Trust Fund
may be subject to early termination under the circumstances described herein
and in the related Prospectus Supplement.
If so provided in the related Prospectus Supplement, one or more elections
may be made to treat the related Trust Fund or a designated portion thereof
as a "real estate mortgage investment conduit" for federal income tax
purposes. See also "Certain Federal Income Tax Consequences" herein.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Prospectus Supplement......................................... 3
Available Information......................................... 3
Incorporation of Certain Information by Reference ............ 5
Summary of Prospectus......................................... 6
Risk Factors.................................................. 14
Description of the Trust Funds................................ 22
Use of Proceeds............................................... 28
Yield Considerations.......................................... 28
The Depositor................................................. 31
Description of the Certificates............................... 32
Description of the Agreements................................. 39
Description of Credit Support................................. 55
Certain Legal Aspects of the Mortgage Loans and the Leases ... 57
Certain Federal Income Tax Consequences....................... 72
State Tax Considerations...................................... 97
ERISA Considerations.......................................... 97
Legal Investment.............................................. 99
Plan of Distribution.......................................... 101
Legal Matters ................................................ 102
Financial Information......................................... 102
Rating........................................................ 102
Index of Principal Terms...................................... 103
</TABLE>
Until 90 days after the date of each Prospectus Supplement, all dealers
effecting transactions in the Offered Certificates covered by such Prospectus
Supplement, whether or not participating in the distribution thereof, may be
required to deliver such Prospectus Supplement and this Prospectus. This is
in addition to the obligation of dealers to deliver a Prospectus and
Prospectus Supplement when acting as underwriters and with respect to their
unsold allotments or subscriptions.
2
<PAGE>
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus and any
Prospectus Supplement with respect hereto and, if given or made, such
information or representations must not be relied upon. This Prospectus and
any Prospectus Supplement with respect hereto do not constitute an offer to
sell or a solicitation of an offer to buy any securities other shall the
Offered Certificates or an offer of the Offered Certificates to any person in
any state or other jurisdiction in which such offer would be unlawful. The
delivery of this Prospectus at any time does not imply that information
herein is correct as of any time subsequent to its date; however, if any
material change occurs while this Prospectus is required by law to be
delivered, this Prospectus will be amended or supplemented accordingly.
PROSPECTUS SUPPLEMENT
As more particularly described herein, the Prospectus Supplement relating
to the Offered Certificates of each Series will, among other things, set
forth with respect to such Certificates, as appropriate: (i) a description of
the class or classes of Certificates, the payment provisions with respect to
each such class and the Pass-Through Rate or method of determining the
Pass-Through Rate with respect to each such class; (ii) the aggregate
principal amount and distribution dates relating to such Series and, if
applicable, the initial and final scheduled distribution dates for each
class; (iii) information as to the assets comprising the Trust Fund,
including the general characteristics of the assets included therein,
including the Mortgage Assets and any Credit Support and Cash Flow Agreements
(with respect to the Certificates of any Series, the "Trust Assets"); (iv)
the circumstances, if any, under which the Trust Fund may be subject to early
termination; (v) additional information with respect to the method of
distribution of such Certificates; (vi) whether one or more REMIC elections
will be made and designation of the regular interests and residual interests;
(vii) the aggregate original percentage ownership interest in the Trust Fund
to be evidenced by each class of Certificates; (viii) information as to any
Master Servicer, any Primary Servicer, any Special Servicer (or provision for
the appointment thereof) and the Trustee, as applicable; (ix) information as
to the nature and extent of subordination with respect to any class of
Certificates that is subordinate in right of payment to any other class; and
(x) whether such Certificates will be initially issued in definitive or
book-entry form.
AVAILABLE INFORMATION
The Depositor has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (of which this Prospectus forms a
part) under the Securities Act of 1933, as amended, with respect to the
Offered Certificates. This Prospectus and the Prospectus Supplement relating
to each Series of Certificates contain summaries of the material terms of the
documents referred to herein and therein, but do not contain all of the
information set forth in the Registration Statement pursuant to the rules and
regulations of the Commission. For further information, reference is made to
such Registration Statement and the exhibits thereto. Such Registration
Statement and exhibits can be inspected and copied at prescribed rates at the
public reference facilities maintained by the Commission at its Public
Reference Section, 450 Fifth Street, N.W, Washington, D.C. 20549, and at its
Regional Offices located as follows: Chicago Regional Office, Citicorp
Center, 500 West Madison Street, Chicago, Illinois 60661; and New York
Regional Office, Seven World Trade Center, New York, New York 10048. The
Commission maintains a Web site at http://www.sec.gov containing reports,
proxy and information statements and other information regarding registrants,
including J.P. Morgan Commercial Mortgage Finance Corp., that file
electronically with the Commission.
To the extent described in the related Prospectus Supplement, some or all
of the Mortgage Loans may be secured by an assignment of the lessors' (i.e.,
the related Mortgagors') rights in one or more leases (each, a "Lease") on
the related Mortgaged Property. Unless otherwise specified in the related
Prospectus Supplement, no Series of Certificates will represent interests in
or obligations of any lessee (each, a "Lessee") under a Lease. If indicated,
however, in the Prospectus Supplement for a given Series, a significant or
the sole source of payments on the Mortgage Loans in such Series, and,
therefore, of distributions on such Certificates, will be rental payments due
from the Lessees under the Leases. Under such circumstances, prospective
investors in the related Series of Certificates may wish to consider
3
<PAGE>
publicly available information, if any, concerning the Lessees. Reference
should be made to the related Prospectus Supplement for information
concerning the Lessees and whether any such Lessees are subject to the
periodic reporting requirements of the Securities Exchange Act of 1934, as
amended.
A Master Servicer or the Trustee will be required to mail to holders of
Definitive Certificates (as defined herein) of each Series periodic unaudited
reports concerning the related Trust Fund. Unless and until Definitive
Certificates are issued, or unless otherwise provided in the related
Prospectus Supplement, such reports will be sent on behalf of the related
Trust Fund to Cede & Co. ("Cede"), as nominee of The Depository Trust Company
("DTC") and registered holder of the Offered Certificates, pursuant to the
applicable Agreement. Such reports may be available to Beneficial Owners (as
defined herein) in the Certificates upon request to their respective DTC
Participants or Indirect Participants (as defined herein). See "Description
of the Certificates--Reports to Certificateholders" and "Description of the
Agreements--Evidence as to Compliance."
The Depositor will file or cause to be filed with the Commission such
periodic reports with respect to each Trust Fund as are required under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
rules and regulations of the Commission thereunder. The Depositor intends to
make a written request to the staff of the Commission that the staff either
(i) issue an order pursuant to Section 12(h) of the Exchange Act exempting
the Depositor from certain reporting requirements under the Exchange Act with
respect to each Trust Fund or (ii) state that the staff will not recommend
that the Commission take enforcement action if the Depositor fulfills its
reporting obligations as described in its written request. If such request is
granted, the Depositor will file or cause to be filed with the Commission as
to each Trust Fund the periodic unaudited reports to holders of the Offered
Certificates referenced in the preceding paragraph; however, because of the
nature of the Trust Funds, it is unlikely that any significant additional
information will be filed. In addition, because of the limited number of
Certificateholders expected for each series, the Depositor anticipates that a
significant portion of such reporting requirements will be permanently
suspended following the first fiscal year for the related Trust Fund.
4
<PAGE>
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
There are incorporated herein by reference all documents and reports filed
or caused to be filed by the Depositor with respect to a Trust Fund pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the
termination of an offering of Offered Certificates evidencing interests
therein. The Depositor will provide or cause to be provided without charge to
each person to whom this Prospectus is delivered in connection with the
offering of one or more classes of Offered Certificates, a copy of any or all
documents or reports incorporated herein by reference, in each case to the
extent such documents or reports relate to one or more of such classes of
such Offered Certificates, other than the exhibits to such documents (unless
such exhibits are specifically incorporated by reference in such documents).
Requests to the Depositor should be directed in writing to J.P. Morgan
Commercial Mortgage Finance Corp., c/o J.P. Morgan Securities Inc., 60 Wall
Street, New York, New York 10260-0060, Attention: Secretary. The Depositor
has determined that its financial statements are not material to the offering
of any Offered Certificates.
5
<PAGE>
SUMMARY OF PROSPECTUS
The following summary of certain pertinent information is qualified in its
entirety by reference to the more detailed information appearing elsewhere in
this Prospectus and by reference to the information with respect to each
Series of Certificates contained in the Prospectus Supplement to be prepared
and delivered in connection with the offering of such "Series." An Index of
Principal Definitions is included at the end of this Prospectus.
Title of Certificates ......... Mortgage Pass-Through Certificates, issuable
in Series (the "Certificates").
Depositor ..................... J.P. Morgan Commercial Mortgage Finance
Corp., an indirect wholly-owned subsidiary
of J.P. Morgan & Co. Incorporated. See "The
Depositor."
Master Servicer ............... The master servicer (the "Master Servicer"),
if any, for each Series of Certificates,
which may be an affiliate of the Depositor,
will be named in the related Prospectus
Supplement. See "Description of the
Agreements--Collection and Other Servicing
Procedures."
Special Servicer .............. The special servicer (the "Special
Servicer"), if any, for each Series of
Certificates, which may be an affiliate of
the Depositor, will be named, or the
circumstances in accordance with which a
Special Servicer will be appointed will be
described, in the related Prospectus
Supplement. See "Description of the
Agreements--Special Servicers."
Primary Servicer .............. The primary servicer (the "Primary
Servicer"), if any, for each Series of
Certificates, which may be an affiliate of
the Depositor, will be named in the related
Prospectus Supplement. See "Description of
the Agreements--Collection and Other
Servicing Procedures."
Trustee ....................... The trustee (the "Trustee") for each Series
of Certificates will be named in the related
Prospectus Supplement. See "Description of
the Agreements--The Trustee."
The Trust Assets .............. Each Series of Certificates will represent
in the aggregate the entire beneficial
ownership interest in a Trust Fund
consisting primarily of:
(a) Mortgage Assets ......... The Mortgage Assets with respect to each
Series of Certificates will consist of a
pool of multifamily and/or commercial
mortgage loans (collectively, the "Mortgage
Loans") and mortgage participations,
mortgage pass-through certificates or other
mortgage-backed securities evidencing
interests in or secured by Mortgage Loans
(collectively, the "CMBS") or a combination
of Mortgage Loans and CMBS. The Mortgage
Loans will not be guaranteed or insured by
the Depositor or any of its affiliates or,
unless otherwise provided in the Prospectus
Supplement, by any governmental agency or
instrumentality or other
6
<PAGE>
person. The CMBS may be guaranteed or
insured by an affiliate of the Depositor,
the Federal Home Loan Mortgage Corporation,
the Federal National Mortgage Association,
the Government National Mortgage
Association, or any other person specified
in the related Prospectus Supplement. As
more specifically described herein, the
Mortgage Loans will be secured by first or
junior liens on, or security interests in,
properties consisting of (i) residential
properties consisting of five or more rental
or cooperatively owned dwelling units (the
"Multifamily Properties") or (ii) office
buildings, retail centers, hotels or motels,
nursing homes, congregate care facilities,
industrial properties, mini-warehouse
facilities or self-storage facilities,
mobile home parks, mixed use or other types
of commercial properties (the "Commercial
Properties"). The term "Mortgaged
Properties" shall refer to Multifamily
Properties or Commercial Properties, or
both.
To the extent described in the related
Prospectus Supplement, some or all of the
Mortgage Loans may also be secured by an
assignment of one or more leases (each, a
"Lease") of one or more lessees (each, a
"Lessee") of all or a portion of the related
Mortgaged Properties. Unless otherwise
specified in the related Prospectus
Supplement, a significant or the sole source
of payments on certain Commercial Loans (as
defined herein) will be the rental payments
due under the related Leases. In certain
circumstances, with respect to Commercial
Properties, the material terms and
conditions of the related Leases may be set
forth in the related Prospectus Supplement.
See "Description of the Trust
Funds--Mortgage Loans--Leases" and "Risk
Factors--Limited Assets" herein.
The Mortgaged Properties may be located in
or outside the United States. All Mortgage
Loans will have original terms to maturity
of not more than 40 years. All Mortgage
Loans will have been originated by persons
other than the Depositor, and all Mortgage
Assets will have been purchased, either
directly or indirectly, by the Depositor on
or before the date of initial issuance of
the related Series of Certificates. The
related Prospectus Supplement will indicate
if any such persons are affiliates of the
Depositor.
Each Mortgage Loan may provide for no
accrual of interest or for accrual of
interest thereon at an interest rate (a
"Mortgage Interest Rate") that is fixed over
its term or that adjusts from time to time,
or is partially fixed and partially floating
or that may be converted from a floating to
a fixed Mortgage Interest Rate, or from a
fixed to a floating Mortgage Interest Rate,
from time to time at the Mortgagor's
election, in each case as described in the
related Prospectus Supplement. The floating
Mortgage Interest Rates on the Mortgage
Loans in a Trust Fund may be based on one or
more indices. Each Mortgage Loan may provide
for scheduled payments to maturity, payments
that adjust from time to time to accommodate
changes in the
7
<PAGE>
Mortgage Interest Rate or to reflect the
occurrence of certain events, and may
provide for negative amortization or
accelerated amortization, in each case as
described in the related Prospectus
Supplement. Each Mortgage Loan may be fully
amortizing or require a balloon payment due
on its stated maturity date, in each case as
described in the related Prospectus
Supplement. Each Mortgage Loan may contain
prohibitions on prepayment or require
payment of a premium or a yield maintenance
penalty in connection with a prepayment, in
each case as described in the related
Prospectus Supplement. The Mortgage Loans
may provide for payments of principal,
interest or both, on due dates that occur
monthly, quarterly, semi-annually or at such
other interval as is specified in the
related Prospectus Supplement. See
"Description of the Trust Funds--Assets."
(b) Collection Accounts ..... Each Trust Fund will include one or more
accounts established and maintained on
behalf of the Certificateholders into which
the person or persons designated in the
related Prospectus Supplement will, to the
extent described herein and in such
Prospectus Supplement, deposit all payments
and collections received or advanced with
respect to the Mortgage Assets and other
assets in the Trust Fund. Such an account
may be maintained as an interest bearing or
a non-interest bearing account, and funds
held therein may be held as cash or invested
in certain short-term, investment grade
obligations, in each case as described in
the related Prospectus Supplement. See
"Description of the Agreements--Distribution
Account and Other Collection Accounts."
(c) Credit Support .......... If so provided in the related Prospectus
Supplement, partial or full protection
against certain defaults and losses on the
Mortgage Assets in the related Trust Fund
may be provided to one or more classes of
Certificates of the related Series in the
form of subordination of one or more other
classes of Certificates of such Series,
which other classes may include one or more
classes of Offered Certificates, or by one
or more other types of credit support, such
as a letter of credit, insurance policy,
guarantee, reserve fund or another type of
credit support, or a combination thereof
(any such coverage with respect to the
Certificates of any Series, "Credit
Support"). The amount and types of coverage,
the identification of the entity providing
the coverage (if applicable) and related
information with respect to each type of
Credit Support, if any, will be described in
the Prospectus Supplement for a Series of
Certificates. The Prospectus Supplement for
any Series of Certificates evidencing an
interest in a Trust Fund that includes CMBS
will describe any similar forms of credit
support that are provided by or with respect
to, or are included as part of the trust
fund evidenced by or providing security for,
such CMBS. See "Risk Factors--Credit Support
Limitations" and "Description of Credit
Support."
8
<PAGE>
(d) Cash Flow Agreements .... If so provided in the related Prospectus
Supplement, the Trust Fund may include
guaranteed investment contracts pursuant to
which moneys held in the funds and accounts
established for the related Series will be
invested at a specified rate. The Trust Fund
may also include certain other agreements,
such as interest rate exchange agreements,
interest rate cap or floor agreements,
currency exchange agreements or similar
agreements provided to reduce the effects of
interest rate or currency exchange rate
fluctuations on the Mortgage Assets of one
or more classes of Certificates. The
principal terms of any such guaranteed
investment contract or other agreement (any
such agreement, a "Cash Flow Agreement"),
including, without limitation, provisions
relating to the timing, manner and amount of
payments thereunder and provisions relating
to the termination thereof, will be
described in the Prospectus Supplement for
the related Series. In addition, the related
Prospectus Supplement will provide certain
information with respect to the obligor
under any such Cash Flow Agreement. The
Prospectus Supplement for any Series of
Certificates evidencing an interest in a
Trust Fund that includes CMBS will describe
any cash flow agreements that are included
as part of the trust fund evidenced by or
providing security for such CMBS. See
"Description of the Trust Funds--Cash Flow
Agreements."
Description of Certificates ... Each Series of Certificates evidencing an
interest in a Trust Fund that includes
Mortgage Loans as part of its assets will be
issued pursuant to a pooling and servicing
agreement, and each Series of Certificates
evidencing an interest in a Trust Fund that
does not include Mortgage Loans will be
issued pursuant to a trust agreement. The
Mortgage Loans shall be serviced pursuant to
a pooling and servicing agreement or a
servicing agreement. Pooling and servicing
agreements, servicing agreements and trust
agreements are referred to herein as the
"Agreements." Each Series of Certificates
will include one or more classes. Each
Series of Certificates (including any class
or classes of Certificates of such Series
not offered hereby) will represent in the
aggregate the entire beneficial ownership
interest in the Trust Fund. Each class of
Certificates (other than certain Stripped
Interest Certificates, as defined below)
will have a stated principal amount (a
"Certificate Balance") and (other than
certain Stripped Principal Certificates, as
defined below), will accrue interest thereon
based on a fixed, variable or floating
interest rate (a "Pass-Through Rate"). The
related Prospectus Supplement will specify
the Certificate Balance, if any, and the
Pass-Through Rate, if any, for each class of
Certificates or, in the case of a variable
or floating Pass-Through Rate, the method
for determining the Pass-Through Rate.
Distributions on Certificates . Each Series of Certificates will consist of
one or more classes of Certificates that may
(i) provide for the accrual of interest
thereon based on fixed, variable or floating
rates; (ii) be senior (collectively, "Senior
Certificates") or subordinate (collectively,
9
<PAGE>
"Subordinate Certificates") to one or more
other classes of Certificates in respect of
certain distributions on the Certificates;
(iii) be entitled to principal
distributions, with disproportionately low,
nominal or no interest distributions
(collectively, "Stripped Principal
Certificates"); (iv) be entitled to interest
distributions, with disproportionately low,
nominal or no principal distributions
(collectively, "Stripped Interest
Certificates"); (v) provide for
distributions of accrued interest thereon
commencing only following the occurrence of
certain events, such as the retirement of
one or more other classes of Certificates of
such Series (collectively, "Accrual
Certificates"); (vi) provide for
distributions of principal sequentially,
based on specified payment schedules or
other methodologies; and/or (vii) provide
for distributions based on a combination of
two or more components thereof with one or
more of the characteristics described in
this paragraph, including a Stripped
Principal Certificate component and a
Stripped Interest Certificate component, to
the extent of available funds, in each case
as described in the related Prospectus
Supplement. Any such classes may include
classes of Offered Certificates. With
respect to Certificates with two or more
components, references herein to Certificate
Balance, notional amount and Pass-Through
Rate refer to the principal balance, if any,
notional amount, if any, and the
Pass-Through Rate, if any, for any such
component.
The Certificates will not be guaranteed or
insured by the Depositor or any of its
affiliates, by any governmental agency or
instrumentality or by any other person,
unless otherwise provided in the related
Prospectus Supplement. See "Risk
Factors--Limited Assets" and "Description of
the Certificates."
(a) Interest ................ Interest on each class of Offered
Certificates (other than Stripped Principal
Certificates and certain classes of Stripped
Interest Certificates) of each Series will
accrue at the applicable Pass-Through Rate
on the outstanding Certificate Balance
thereof and will be distributed to
Certificateholders as provided in the
related Prospectus Supplement (each of the
specified dates on which distributions are
to be made, a "Distribution Date").
Distributions with respect to interest on
Stripped Interest Certificates may be made
on each Distribution Date on the basis of a
notional amount as described in the related
Prospectus Supplement. Distributions of
interest with respect to one or more classes
of Certificates may be reduced to the extent
of certain delinquencies, losses, prepayment
interest shortfalls, and other contingencies
described herein and in the related
Prospectus Supplement. Stripped Principal
Certificates with no stated Pass-Through
Rate will not accrue interest. See "Risk
Factors--Prepayments and Effect on Average
Life of Certificates and Yields," "Yield
Considerations" and "Description of the
Certificates--Distributions of Interest on
the Certificates."
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(b) Principal ............... The Certificates of each Series initially
will have an aggregate Certificate Balance
no greater than the outstanding principal
balance of the Mortgage Assets as of, unless
the related Prospectus Supplement provides
otherwise, the close of business on the
first day of the month of formation of the
related Trust Fund (the "Cut-off Date"),
after application of scheduled payments due
on or before such date, whether or not
received. The Certificate Balance of a
Certificate outstanding from time to time
represents the maximum amount that the
holder thereof is then entitled to receive
in respect of principal from future cash
flow on the assets in the related Trust
Fund. Unless otherwise provided in the
related Prospectus Supplement, distributions
of principal will be made on each
Distribution Date to the class or classes of
Certificates entitled thereto until the
Certificate Balances of such Certificates
have been reduced to zero. Unless otherwise
specified in the related Prospectus
Supplement, distributions of principal of
any class of Certificates will be made on a
pro rata basis among all of the Certificates
of such class or by random selection, as
described in the related Prospectus
Supplement or otherwise established by the
related Trustee. Stripped Interest
Certificates with no Certificate Balance
will not receive distributions in respect of
principal. See "Description of the
Certificates--Distributions of Principal of
the Certificates."
Advances ...................... Unless otherwise provided in the related
Prospectus Supplement, the Primary Servicer,
the Special Servicer or the Master Servicer
(each, a "Servicer") will be obligated as
part of its servicing responsibilities to
make certain advances with respect to
delinquent scheduled payments on the Whole
Loans in such Trust Fund which it deems
recoverable. Any such advances will be made
under and subject to any determinations or
conditions set forth in the related
Prospectus Supplement. Neither the Depositor
nor any of its affiliates will have any
responsibility to make such advances.
Advances made by a Servicer are reimbursable
generally from subsequent recoveries in
respect of such Whole Loans and otherwise to
the extent described herein and in the
related Prospectus Supplement. If and to the
extent provided in the Prospectus Supplement
for any "Series," each Servicer will be
entitled to receive interest on its
outstanding advances, payable from amounts
in the related Trust Fund. The Prospectus
Supplement for any Series of Certificates
evidencing an interest in a Trust Fund that
includes CMBS will describe any
corresponding advancing obligation of any
person in connection with such CMBS. See
"Description of the Certificates--Advances
in Respect of Delinquencies."
Termination ................... If so specified in the related Prospectus
Supplement, a Series of Certificates may be
subject to optional early termination
through the repurchase of the Mortgage
Assets in the related Trust Fund by the
party specified therein, under the
circumstances and in the manner set forth
therein. If so provided in the related
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<PAGE>
Prospectus Supplement, upon the reduction of
the Certificate Balance of a specified class
or classes of Certificates by a specified
percentage or amount or on and after a date
specified in such Prospectus Supplement, the
party specified therein will solicit bids
for the purchase of all of the Mortgage
Assets of the Trust Fund, or of a sufficient
portion of such Mortgage Assets to retire
such class or classes, or purchase such
Mortgage Assets at a price set forth in the
related Prospectus Supplement. In addition,
if so provided in the related Prospectus
Supplement, certain classes of Certificates
may be purchased subject to similar
conditions. See "Description of the
Certificates--Termination."
Registration of Certificates .. If so provided in the related Prospectus
Supplement, one or more classes of the
Offered Certificates will initially be
represented by one or more Certificates
registered in the name of Cede & Co., as the
nominee of DTC. No person acquiring an
interest in Offered Certificates so
registered will be entitled to receive a
definitive certificate representing such
person's interest except in the event that
definitive certificates are issued under the
limited circumstances described herein. See
"Risk Factors--Book-Entry Registration" and
"Description of the Certificates--Book-Entry
Registration and Definitive Certificates."
Tax Status of the
Certificates .................. The Certificates of each Series will
constitute either (i) "regular interests"
("REMIC Regular Certificates") or "residual
interests" ("REMIC Residual Certificates")
in a Trust Fund treated as a real estate
mortgage investment conduit ("REMIC") under
Sections 860A through 860G of the Code, or
(ii) interests ("Grantor Trust
Certificates") in a Trust Fund treated as a
grantor trust under applicable provisions of
the Code.
(a) REMIC ................... REMIC Regular Certificates generally will be
treated as debt obligations of the
applicable REMIC for federal income tax
purposes. Certain REMIC Regular Certificates
may be issued with original issue discount
for federal income tax purposes. See
"Certain Federal Income Tax Consequences" in
the Prospectus Supplement.
The Offered Certificates will be treated as
(i) "loans" within the meaning of the assets
described in section 7701(a)(19)(C) of the
Internal Revenue Code of 1986, as amended
(the "Code") and (ii) "real estate assets"
within the meaning of section 856(c)(5)(A)
of the Code, in each case to the extent
described herein and in the related
Prospectus Supplement. See "Certain Federal
Income Tax Consequences" herein and in the
Prospectus.
(b) Grantor Trust ........... If no election is made to treat the Trust
Fund relating to a Series of Certificates as
a REMIC, the Trust Fund will be classified
as a grantor trust and not as an association
taxable as a corporation
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for federal income tax purposes, and
therefore holders of Certificates will be
treated as the owners of undivided pro rata
interest in the Mortgage Pool or pool of
securities and any other assets held by the
Trust Fund.
Investors are advised to consult their tax
advisors and to review "Certain Federal
Income Tax Consequences" herein and in the
related Prospectus Supplement.
ERISA Considerations .......... A fiduciary of an employee benefit plan or
other retirement plan or arrangement,
including individual retirement accounts,
annuities and Keogh plans, that is subject
to the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), or
Section 4975 of the Code and an investment
manager of a collective investment fund or
separate account in which such plans,
accounts, annuities or arrangements are
invested, should carefully review with its
legal advisors whether the purchase or
holding of Offered Certificates could give
rise to a transaction that is prohibited or
is not otherwise permissible either under
ERISA or Section 4975 of the Code. See
"ERISA Considerations" herein and in the
related Prospectus Supplement. Certain
classes of Certificates may not be
transferred unless the Trustee and the
Depositor are furnished with a letter of
representations or an opinion of counsel to
the effect that such transfer will not
result in a violation of the prohibited
transaction provisions of ERISA and the Code
and will not subject the Trustee, the
Depositor or the Master Servicer to
additional obligations. See "Description of
the Certificates--General" and "ERISA
Considerations."
Legal Investment .............. The related Prospectus Supplement will
specify whether the Offered Certificates
will constitute "mortgage related
securities" for purposes of the Secondary
Mortgage Market Enhancement Act of 1984.
Investors whose investment authority is
subject to legal restrictions should consult
their own legal advisors to determine
whether and to what extent the Offered
Certificates constitute legal investments
for them. See "Legal Investment" herein and
in the related Prospectus Supplement.
Rating ........................ At the date of issuance, as to each Series,
each class of Offered Certificates will be
rated not lower than investment grade by one
or more nationally recognized statistical
rating agencies (each, a "Rating Agency").
See "Rating" herein and in the related
Prospectus Supplement.
A security rating is not a recommendation to
buy, sell or hold securities and may be
subject to revision or withdrawal at any
time by the assigning rating organization.
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RISK FACTORS
Investors should consider, in connection with the purchase of Offered
Certificates, among other things, the following factors and certain other
factors as may be set forth in "Risk Factors" in the related Prospectus
Supplement.
LIMITED LIQUIDITY
There can be no assurance that a secondary market for the Certificates of
any Series will develop or, if it does develop, that it will provide holders
with liquidity of investment or will continue while Certificates of such
Series remain outstanding. Any such secondary market may provide less
liquidity to investors than any comparable market for securities evidencing
interests in single family mortgage loans. The market value of Certificates
will fluctuate with changes in prevailing rates of interest. Consequently,
sale of Certificates by a holder in any secondary market that may develop may
be at a discount from 100% of their original principal balance or from their
purchase price. Furthermore, secondary market purchasers may look only
hereto, to the related Prospectus Supplement and to the reports to
Certificateholders delivered pursuant to the related Agreement as described
herein under the heading "Description of the Certificates--Reports to
Certificateholders," "--Book-Entry Registration and Definitive Certificates"
and "Description of the Agreements--Evidence as to Compliance" for
information concerning the Certificates. Except to the extent described
herein and in the related Prospectus Supplement, Certificateholders will have
no redemption rights and the Certificates are subject to early retirement
only under certain specified circumstances described herein and in the
related Prospectus Supplement. See "Description of the
Certificates--Termination."
LIMITED ASSETS
The Certificates will not represent an interest in or obligation of the
Depositor, any Servicer, or any of their affiliates. The only obligations
with respect to the Certificates or the Mortgage Assets will be the
obligations (if any) of the Depositor (or, if otherwise provided in the
related Prospectus Supplement, the person identified therein as the person
making certain representations and warranties with respect to the Mortgage
Loans, as applicable, the "Warranting Party") pursuant to certain limited
representations and warranties made with respect to the Mortgage Loans. Since
certain representations and warranties with respect to the Mortgage Assets
may have been made and/or assigned in connection with transfers of such
Mortgage Assets prior to the Closing Date, the rights of the Trustee and the
Certificateholders with respect to such representations or warranties will be
limited to their rights as an assignee thereof. Unless otherwise specified in
the related Prospectus Supplement, none of the Depositor, any Servicer or any
affiliate thereof will have any obligation with respect to representations or
warranties made by any other entity. Unless otherwise specified in the
related Prospectus Supplement, neither the Certificates nor the underlying
Mortgage Assets will be guaranteed or insured by any governmental agency or
instrumentality, or by the Depositor, any Servicer or any of their
affiliates. Proceeds of the assets included in the related Trust Fund for
each Series of Certificates (including the Mortgage Assets and any form of
credit enhancement) will be the sole source of payments on the Certificates,
and there will be no recourse to the Depositor or any other entity in the
event that such proceeds are insufficient or otherwise unavailable to make
all payments provided for under the Certificates.
Unless otherwise specified in the related Prospectus Supplement, a Series
of Certificates will not have any claim against or security interest in the
Trust Funds for any other Series. If the related Trust Fund is insufficient
to make payments on such Certificates, no other assets will be available for
payment of the deficiency. Additionally, certain amounts remaining in certain
funds or accounts, including the Distribution Account, the Trust Master
Collection Account, Trust Primary Collection Account and Trust REO Account
and any accounts maintained as Credit Support, may be withdrawn under certain
conditions, as described in the related Prospectus Supplement. In the event
of such withdrawal, such amounts will not be available for future payment of
principal of or interest on the Certificates. If so provided in the
Prospectus Supplement for a Series of Certificates consisting of one or more
classes of Subordinate Certificates, on any Distribution Date in respect of
which losses or shortfalls in collections on the Trust Assets have been
incurred, the amount of such losses or shortfalls will be borne first by one
or more
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<PAGE>
classes of the Subordinate Certificates, and, thereafter, by the remaining
classes of Certificates in the priority and manner and subject to the
limitations specified in such Prospectus Supplement.
PREPAYMENTS AND EFFECT ON AVERAGE LIFE OF CERTIFICATES AND YIELDS
Prepayments (including those caused by defaults) on the Mortgage Assets in
any Trust Fund generally will result in a faster rate of principal payments
on one or more classes of the related Certificates than if payments on such
Mortgage Assets were made as scheduled. Thus, the prepayment experience on
the Mortgage Assets may affect the average life of each class of related
Certificates. The rate of principal payments on pools of mortgage loans
varies between pools and from time to time is influenced by a variety of
economic, demographic, geographic, social, tax, legal and other factors.
There can be no assurance as to the rate of prepayment on the Mortgage Assets
in any Trust Fund or that the rate of payments will conform to any model
described herein or in any Prospectus Supplement. If prevailing interest
rates fall significantly below the applicable mortgage interest rates,
principal prepayments are likely to be higher than if prevailing rates remain
at or above the rates borne by the Mortgage Loans underlying or comprising
the Mortgage Assets in any Trust Fund. As a result, the actual maturity of
any class of Certificates could occur significantly earlier than expected. A
Series of Certificates may include one or more classes of Certificates with
priorities of payment and, as a result, yields on other classes of
Certificates, including classes of Offered Certificates, of such Series may
be more sensitive to prepayments on Mortgage Assets. A Series of Certificates
may include one or more classes offered at a significant premium or discount.
Yields on such classes of Certificates will be sensitive, and in some cases
extremely sensitive, to prepayments on Mortgage Assets and, where the amount
of interest payable with respect to a class is disproportionately high, as
compared to the amount of principal, as with certain classes of Stripped
Interest Certificates, a holder might, in some prepayment scenarios, fail to
recoup its original investment. A Series of Certificates may include one or
more classes of Certificates, including classes of Offered Certificates, that
provide for distribution of principal thereof from amounts attributable to
interest accrued but not currently distributable on one or more classes of
Accrual Certificates and, as a result, yields on such Certificates will be
sensitive to (a) the provisions of such Accrual Certificates relating to the
timing of distributions of interest thereon and (b) if such Accrual
Certificates accrue interest at a variable or floating Pass-Through Rate,
changes in such rate. See "Yield Considerations" herein and, if applicable,
in the related Prospectus Supplement.
LIMITED NATURE OF RATINGS
Any rating assigned by a Rating Agency to a class of Certificates will
reflect such Rating Agency's assessment solely of the likelihood that holders
of Certificates of such class will receive payments to which such
Certificateholders are entitled under the related Agreement. Such rating will
not constitute an assessment of the likelihood that principal prepayments
(including those caused by defaults) on the related Mortgage Assets will be
made, the degree to which the rate of such prepayments might differ from that
originally anticipated or the likelihood of early optional termination of the
Series of Certificates. Such rating will not address the possibility that
prepayment at higher or lower rates than anticipated by an investor may cause
such investor to experience a lower than anticipated yield or that an
investor purchasing a Certificate at a significant premium might fail to
recoup its initial investment under certain prepayment scenarios. Each
Prospectus Supplement will identify any payment to which holders of Offered
Certificates of the related Series are entitled that is not covered by the
applicable rating.
The amount, type and nature of credit support, if any, established with
respect to a Series of Certificates will be determined on the basis of
criteria established by each Rating Agency rating classes of such "Series."
Such criteria are sometimes based upon an actuarial analysis of the behavior
of mortgage loans in a larger group. Such analysis is often the basis upon
which each Rating Agency determines the amount of credit support required
with respect to each such class. There can be no assurance that the
historical data supporting any such actuarial analysis will accurately
reflect future experience nor any assurance that the data derived from a
large pool of mortgage loans accurately predicts the delinquency, foreclosure
or loss experience of any particular pool of Mortgage Assets. No assurance
can be given that values of any Mortgaged Properties have remained or will
remain at their levels on the respective dates
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<PAGE>
of origination of the related Mortgage Loans. Moreover, there is no assurance
that appreciation of real estate values generally will limit loss experiences
on the Mortgaged Properties. If the commercial or multifamily residential
real estate markets should experience an overall decline in property values
such that the outstanding principal balances of the Mortgage Loans underlying
or comprising the Mortgage Assets in a particular Trust Fund and any
secondary financing on the related Mortgaged Properties become equal to or
greater than the value of the Mortgaged Properties, the rates of
delinquencies, foreclosures and losses could be higher than those now
generally experienced by institutional lenders. In addition, adverse economic
conditions (which may or may not affect real property values) may affect the
timely payment by Mortgagors of scheduled payments of principal and interest
on the Mortgage Loans and, accordingly, the rates of delinquencies,
foreclosures and losses with respect to any Trust Fund. To the extent that
such losses are not covered by the Credit Support, if any, described in the
related Prospectus Supplement, such losses will be borne, at least in part,
by the holders of one or more classes of the Certificates of the related
Series. See "Description of Credit Support" and "Rating."
RISKS ASSOCIATED WITH MORTGAGE LOANS AND MORTGAGED PROPERTIES
Mortgage loans made with respect to multifamily or commercial property may
entail risks of delinquency and foreclosure, and risks of loss in the event
thereof, that are greater than similar risks associated with single family
property. See "Description of the Trust Funds--Assets." The ability of a
Mortgagor to repay a loan secured by an income-producing property typically
is dependent primarily upon the successful operation of such property rather
than any independent income or assets of the Mortgagor; thus, the value of an
income-producing property is directly related to the net operating income
derived from such property. In contrast, the ability of a Mortgagor to repay
a single family loan typically is dependent primarily upon the Mortgagor's
household income, rather than the capacity of the property to produce income;
thus, other than in geographical areas where employment is dependent upon a
particular employer or an industry, the Mortgagor's income tends not to
reflect directly the value of such property. A decline in the net operating
income of an income-producing property will likely affect both the
performance of the related loan as well as the liquidation value of such
property, whereas a decline in the income of a Mortgagor on a single family
property will likely affect the performance of the related loan but may not
affect the liquidation value of such property. Moreover, a decline in the
value of a Mortgaged Property will increase the risk of loss particularly
with respect to any related junior Mortgage Loan. See "--Junior Mortgage
Loans."
The performance of a mortgage loan secured by an income-producing property
leased by the Mortgagor to tenants as well as the liquidation value of such
property may be dependent upon the business operated by such tenants in
connection with such property, the creditworthiness of such tenants or both;
the risks associated with such loans may be offset by the number of tenants
or, if applicable, a diversity of types of business operated by such tenants.
It is anticipated that a substantial portion of the Mortgage Loans
included in any Trust Fund will be nonrecourse loans or loans for which
recourse may be restricted or unenforceable, as to which, in the event of
Mortgagor default, recourse may be had only against the specific property and
such other assets, if any, as have been pledged to secure the related
Mortgage Loan. With respect to those Mortgage Loans that provide for recourse
against the Mortgagor and its assets generally, there can be no assurance
that such recourse will ensure a recovery in respect of a defaulted Mortgage
Loan greater than the liquidation value of the related Mortgaged Property.
Further, the concentration of default, foreclosure and loss risks in
individual Mortgagors or Mortgage Loans in a particular Trust Fund or the
related Mortgaged Properties will generally be greater than for pools of
single family loans both because the Mortgage Assets in a Trust Fund will
generally consist of a smaller number of loans than would a single family
pool of comparable aggregate unpaid principal balance and because of the
higher principal balance of individual Mortgage Loans. Mortgage Assets in a
Trust Fund may consist of only a single or limited number of Mortgage Loans
and/or relate to Leases to only a single Lessee or a limited number of
Lessees.
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<PAGE>
If applicable, certain legal aspects of the Mortgage Loans for a Series of
Certificates may be described in the related Prospectus Supplement. See also
"Certain Legal Aspects of the Mortgage Loans and the Leases" herein.
RISKS ASSOCIATED WITH COMMERCIAL LOANS AND LEASES
If so described in the related Prospectus Supplement, each Mortgagor under
a Commercial Loan may be an entity created by the owner or purchaser of the
related Commercial Property solely to own or purchase such property, in part
to isolate the property from the debts and liabilities of such owner or
purchaser. Unless otherwise specified, each such Commercial Loan will
represent a nonrecourse obligation of the related Mortgagor secured by the
lien of the related Mortgage and the related Lease Assignments. Whether or
not such loans are recourse or nonrecourse obligations, it is not expected
that the Mortgagors will have any significant assets other than the
Commercial Properties and the related Leases, which will be pledged to the
Trustee under the related Agreement. Therefore, the payment of amounts due on
any such Commercial Loans, and, consequently, the payment of principal of and
interest on the related Certificates, will depend primarily or solely on
rental payments by the Lessees. Such rental payments will, in turn, depend on
continued occupancy by, and/or the creditworthiness of, such Lessees, which
in either case may be adversely affected by a general economic downturn or an
adverse change in their financial condition. Moreover, to the extent a
Commercial Property was designed for the needs of a specific type of tenant
(e.g., a nursing home, hotel or motel), the value of such property in the
event of a default by the Lessee or the early termination of such Lease may
be adversely affected because of difficulty in re-leasing the property to a
suitable substitute lessee or, if re-leasing to such a substitute is not
possible, because of the cost of altering the property for another more
marketable use. As a result, without the benefit of the Lessee's continued
support of the Commercial Property, and absent significant amortization of
the Commercial Loan, if such loan is foreclosed on and the Commercial
Property liquidated following a lease default, the net proceeds might be
insufficient to cover the outstanding principal and interest owing on such
loan, thereby increasing the risk that holders of the Certificates will
suffer some loss.
BALLOON PAYMENTS
Certain of the Mortgage Loans (the "Balloon Mortgage Loans") as of the
Cut-off Date may not be fully amortizing over their terms to maturity and,
thus, will require substantial principal payments (i.e., balloon payments) at
their stated maturity. Mortgage Loans with balloon payments involve a greater
degree of risk because the ability of a Mortgagor to make a balloon payment
typically will depend upon its ability either to timely refinance the loan or
to timely sell the related Mortgaged Property. The ability of a Mortgagor to
accomplish either of these goals will be affected by a number of factors,
including the level of available mortgage interest rates at the time of sale
or refinancing, the Mortgagor's equity in the related Mortgaged Property, the
financial condition and operating history of the Mortgagor and the related
Mortgaged Property, tax laws, rent control laws (with respect to certain
Multifamily Properties and mobile home parks), reimbursement rates (with
respect to certain nursing homes), renewability of operating licenses,
prevailing general economic conditions and the availability of credit for
commercial or multifamily real properties, as the case may be, generally.
JUNIOR MORTGAGE LOANS
To the extent specified in the related Prospectus Supplement, certain of
the Mortgage Loans may be secured primarily by junior mortgages. In the case
of liquidation, Mortgage Loans secured by junior mortgages are entitled to
satisfaction from proceeds that remain from the sale of the related Mortgaged
Property after the mortgage loans senior to such Mortgage Loans have been
satisfied. If there are not sufficient funds to satisfy such junior Mortgage
Loans and senior mortgage loans, such Mortgage Loan would suffer a loss and,
accordingly, one or more classes of Certificates would bear such loss.
Therefore, any risks of deficiencies associated with first Mortgage Loans
will be greater with respect to junior Mortgage Loans. See "--Risks
Associated with Mortgage Loans and Mortgaged Properties."
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OBLIGOR DEFAULT
If so specified in the related Prospectus Supplement, in order to maximize
recoveries on defaulted Whole Loans, a Master Servicer or a Special Servicer
will be permitted (within prescribed parameters) to extend and modify Whole
Loans that are in default or as to which a payment default is imminent,
including in particular with respect to balloon payments. In addition, a
Master Servicer or a Special Servicer may receive a workout fee based on
receipts from or proceeds of such Whole Loans. While any such entity
generally will be required to determine that any such extension or
modification is reasonably likely to produce a greater recovery on a present
value basis than liquidation, there can be no assurance that such flexibility
with respect to extensions or modifications or payment of a workout fee will
increase the present value of receipts from or proceeds of Whole Loans that
are in default or as to which a payment default is imminent. Additionally, if
so specified in the related Prospectus Supplement, certain of the Mortgage
Loans included in the Mortgage Pool for a Series may have been subject to
workouts or similar arrangements following periods of delinquency and
default.
MORTGAGOR TYPE
Mortgage Loans made to partnerships, corporations or other entities may
entail risks of loss from delinquency and foreclosure that are greater than
those of Mortgage Loans made to individuals. The Mortgagor's sophistication
and form of organization may increase the likelihood of protracted litigation
or bankruptcy in default situations.
CREDIT SUPPORT LIMITATIONS
The Prospectus Supplement for a Series of Certificates will describe any
Credit Support in the related Trust Fund, which may include letters of
credit, insurance policies, guarantees, reserve funds or other types of
credit support, or combinations thereof. Use of Credit Support will be
subject to the conditions and limitations described herein and in the related
Prospectus Supplement. Moreover, such Credit Support may not cover all
potential losses or risks; for example, Credit Support may or may not cover
fraud or negligence by a mortgage loan originator or other parties.
A Series of Certificates may include one or more classes of Subordinate
Certificates (which may include Offered Certificates), if so provided in the
related Prospectus Supplement. Although subordination is intended to reduce
the risk to holders of Senior Certificates of delinquent distributions or
ultimate losses, the amount of subordination will be limited and may decline
under certain circumstances. In addition, if principal payments on one or
more classes of Certificates of a Series are made in a specified order of
priority, any limits with respect to the aggregate amount of claims under any
related Credit Support may be exhausted before the principal of the lower
priority classes of Certificates of such Series has been repaid. As a result,
the impact of significant losses and shortfalls on the Trust Assets may fall
primarily upon those classes of Certificates having a lower priority of
payment. Moreover, if a form of Credit Support covers more than one Series of
Certificates (each, a "Covered Trust"), holders of Certificates evidencing an
interest in a Covered Trust will be subject to the risk that such Credit
Support will be exhausted by the claims of other Covered Trusts.
The amount of any applicable Credit Support supporting one or more classes
of Offered Certificates, including the subordination of one or more classes
of Certificates, will be determined on the basis of criteria established by
each Rating Agency rating such classes of Certificates based on an assumed
level of defaults, delinquencies, other losses or other factors. There can,
however, be no assurance that the loss experience on the related Mortgage
Assets will not exceed such assumed levels. See "--Limited Nature of
Ratings," "Description of the Certificates" and "Description of Credit
Support."
Regardless of the form of credit enhancement provided, the amount of
coverage will be limited in amount and in most cases will be subject to
periodic reduction in accordance with a schedule or formula. The Master
Servicer will generally be permitted to reduce, terminate or substitute all
or a portion of the credit enhancement for any Series of Certificates, if the
applicable Rating Agency indicates that the then-current rating thereof will
not be adversely affected. The rating of any Series of Certificates by any
applicable Rating Agency may be lowered following the initial issuance
thereof as a result of the
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downgrading of the obligations of any applicable credit support provider, or
as a result of losses on the related Mortgage Assets substantially in excess
of the levels contemplated by such Rating Agency at the time of its initial
rating analysis. None of the Depositor, the Master Servicer or any of their
affiliates will have any obligation to replace or supplement any credit
enhancement, or to take any other action to maintain any rating of any Series
of Certificates.
ENFORCEABILITY
Mortgages may contain a due-on-sale clause, which permits the lender to
accelerate the maturity of the Mortgage Loan if the Mortgagor sells,
transfers or conveys the related Mortgaged Property or its interest in the
Mortgaged Property. Mortgages may also include a debt-acceleration clause,
which permits the lender to accelerate the debt upon a monetary or
non-monetary default of the Mortgagor. Such clauses are generally enforceable
subject to certain exceptions. The courts of all states will enforce clauses
providing for acceleration in the event of a material payment default. The
equity courts of any state, however, may refuse the foreclosure of a mortgage
or deed of trust when an acceleration of the indebtedness would be
inequitable or unjust or the circumstances would render the acceleration
unconscionable.
If so specified in the related Prospectus Supplement, the Mortgage Loans
will be secured by an assignment of leases and rents pursuant to which the
Mortgagor typically assigns its right, title and interest as landlord under
the leases on the related Mortgaged Property and the income derived therefrom
to the lender as further security for the related Mortgage Loan, while
retaining a license to collect rents for so long as there is no default. In
the event the Mortgagor defaults, the license terminates and the lender is
entitled to collect rents. Such assignments are typically not perfected as
security interests prior to actual possession of the cash flows. Some state
laws may require that the lender take possession of the Mortgaged Property
and obtain a judicial appointment of a receiver before becoming entitled to
collect the rents. In addition, if bankruptcy or similar proceedings are
commenced by or in respect of the Mortgagor, the lender's ability to collect
the rents may be adversely affected. See "Certain Legal Aspects of the
Mortgage Loans and the Leases--Leases and Rents."
ENVIRONMENTAL RISKS
Real property pledged as security for a mortgage loan may be subject to
certain environmental risks. Under the laws of certain states, contamination
of a property may give rise to a lien on the property to assure the costs of
cleanup. In several states, such a lien has priority over the lien of an
existing mortgage against such property. In addition, under the laws of some
states and under the federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA") a lender may be liable, as
an "owner" or "operator," for costs of addressing releases or threatened
releases of hazardous substances that require remedy at a property, if agents
or employees of the lender have become sufficiently involved in the
operations of the Mortgagor, regardless of whether or not the environmental
damage or threat was caused by a prior owner. A lender also risks such
liability on foreclosure of the mortgage. Each Pooling and Servicing
Agreement will provide that no Servicer, acting on behalf of the Trust Fund,
may acquire title to a Mortgaged Property securing a Mortgage Loan or take
over its operation unless such Servicer has previously determined, based upon
a report prepared by a person who regularly conducts environmental audits,
that: (i) the Mortgaged Property is in compliance with applicable
environmental laws or, if not, that taking such actions as are necessary to
bring the Mortgaged Property in compliance therewith is likely to produce a
greater recovery on a percent value basis, after taking into account any
risks associated therewith, than not taking such actions and (ii) there are
no circumstances present at the Mortgaged Property relating to the use,
management or disposal of any Hazardous Materials (as defined herein) for
which investigation, testing, monitoring, containment, cleanup or remediation
could be required under any federal, state or local law or regulation, or
that, if any Hazardous Materials are present for which such action would be
required, taking such actions with respect to the affected Mortgaged Property
is reasonably likely to produce a greater recovery on a percent value basis,
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after taking into account any risks associated therewith, than not taking
such actions. Any additional restrictions on acquiring title to a Mortgaged
Property may be set forth in the related Prospectus Supplement. See "Certain
Legal Aspects of the Mortgage Loans and the Leases--Environmental
Legislation."
DELINQUENT AND NON-PERFORMING MORTGAGE LOANS
If so provided in the related Prospectus Supplement, the Trust Fund for a
particular series of Certificates may include Mortgage Loans that are past
due or are non-performing. Unless otherwise described in the related
Prospectus Supplement, the servicing of such Mortgage Loans as to which a
specified number of payments are delinquent will be performed by the Special
Servicer; however, the same entity may act as both Master Servicer and
Special Servicer. Credit Support provided with respect to a particular series
of Certificates may not cover all losses related to such delinquent or
nonperforming Mortgage Loans, and investors should consider the risk that the
inclusion of such Mortgage Loans in the Trust Fund may adversely affect the
rate of defaults and prepayments on the Mortgage Assets in such Trust Fund
and the yield on the Certificates of such series.
RISKS ASSOCIATED WITH MORTGAGED PROPERTIES NOT LOCATED IN THE UNITED STATES
If so provided in the related Prospectus Supplement, the Trust Fund for a
particular Series of Certificates may include Mortgage Loans secured by
Mortgaged Properties not located in the United States. The related Prospectus
Supplement will set forth certain material risks associated with such
Mortgage Loans which are different and additional to those associated with
similar properties in the United States including restrictions on enforcement
of the rights of the holder of the related Mortgage Notes, currency exchange
rate fluctuations, currency exchange controls and general trends or
conditions in the related real estate market.
ERISA CONSIDERATIONS
Generally, ERISA applies to investments made by employee benefit plans and
transactions involving the assets of such plans. Due to the complexity of
regulations which govern such plans, prospective investors that are subject
to ERISA are urged to consult their own counsel regarding consequences under
ERISA of acquisition, ownership and disposition of the Offered Certificates
of any Series.
CERTAIN FEDERAL TAX CONSIDERATIONS REGARDING REMIC RESIDUAL CERTIFICATES
Holders of REMIC Residual Certificates will be required to report on their
federal income tax returns as ordinary income their pro rata share of the
taxable income of the REMIC, regardless of the amount or timing of their
receipt of cash payments, as described in "Certain Federal Income Tax
Consequences--REMICs." Accordingly, under certain circumstances, holders of
Offered Certificates that constitute REMIC Residual Certificates may have
taxable income and tax liabilities arising from such investment during a
taxable year in excess of the cash received during such period. Individual
holders of REMIC Residual Certificates may be limited in their ability to
deduct servicing fees and other expenses of the REMIC. In addition, REMIC
Residual Certificates are subject to certain restrictions on transfer.
Because of the special tax treatment of REMIC Residual Certificates, the
taxable income arising in a given year on a REMIC Residual Certificate will
not be equal to the taxable income associated with investment in a corporate
bond or stripped instrument having similar cash flow characteristics and
pre-tax yield. Therefore, the after-tax yield on the REMIC Residual
Certificate may be significantly less than that of a corporate bond or
stripped instrument having similar cash flow characteristics. Additionally,
prospective purchasers of a REMIC Residual Certificate should be aware that
recently finalized regulations provide that REMIC residual interests cannot
be marked to market. See "Certain Federal Income Tax Consequences--REMICs."
CONTROL
Under certain circumstances, the consent or approval of the holders of a
specified percentage of the aggregate Certificate Balance of all outstanding
Certificates of a Series or a similar means of allocating
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decision-making under the related Agreement ("Voting Rights") will be
required to direct, and will be sufficient to bind all Certificateholders of
such Series to, certain actions, including directing the Special Servicer or
the Master Servicer with respect to actions to be taken with respect to
certain Mortgage Loans and REO Properties and amending the related Agreement
in certain circumstances. See "Description of the Agreements--Events of
Default," "--Rights Upon Event of Default," "--Amendment" and "--List of
Certificateholders."
BOOK-ENTRY REGISTRATION
If so provided in the Prospectus Supplement, one or more classes of the
Certificates will be initially represented by one or more certificates
registered in the name of Cede, the nominee for DTC, and will not be
registered in the names of the Beneficial Owners or their nominees. Because
of this, unless and until Definitive Certificates are issued, Beneficial
Owners will not be recognized by the Trustee as "Certificateholders" (as that
term is to be used in the related Agreement). Hence, until such time,
Beneficial Owners will be able to exercise the rights of Certificateholders
only indirectly through DTC and its participating organizations. See
"Description of the Certificates--Book-Entry Registration and Definitive
Certificates."
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DESCRIPTION OF THE TRUST FUNDS
ASSETS
The primary assets of each Trust Fund will include (i) one or more
multifamily and/or commercial mortgage loans (the "Mortgage Loans"), (ii)
mortgage participations, pass-through certificates or other mortgage-backed
securities evidencing interests in or secured by one or more Mortgage Loans
or other similar participations, certificates or securities (collectively,
the "CMBS"), or (iii) a combination of Mortgage Loans and CMBS. As used
herein, "Mortgage Loans" refers to both whole Mortgage Loans and Mortgage
Loans underlying CMBS. Mortgage Loans that secure, or interests in which are
evidenced by, CMBS are herein sometimes referred to as "Underlying Mortgage
Loans." Mortgage Loans that are not Underlying Mortgage Loans are sometimes
referred to as "Whole Loans." Any mortgage participations, pass-through
certificates or other asset-backed certificates in which an CMBS evidences an
interest or which secure an CMBS are sometimes referred to herein also as
CMBS or as "Underlying CMBS." Mortgage Loans and CMBS are sometimes referred
to herein as "Mortgage Assets." No CMBS originally issued in a private
placement will be included as an asset of a Trust Fund until the holding
period provided for under Rule 144(k) promulgated under the Securities Act of
1933, as amended, has expired or such CMBS has been registered under the
Securities Act of 1933, as amended. The Mortgage Assets will not be
guaranteed or insured by J.P. Morgan Commercial Mortgage Finance Corp. (the
"Depositor") or any of its affiliates or, unless otherwise provided in the
Prospectus Supplement, by any governmental agency or instrumentality or by
any other person. Each Mortgage Asset will be selected by the Depositor for
inclusion in a Trust Fund from among those purchased, either directly or
indirectly, from a prior holder thereof (an "Asset Sellers"), which may be an
affiliate of the Depositor and, with respect to Mortgage Assets, which prior
holder may or may not be the originator of such Mortgage Loan or the issuer
of such CMBS.
Unless otherwise specified in the related Prospectus Supplement, the
Certificates will be entitled to payment only from the assets of the related
Trust Fund and will not be entitled to payments in respect of the assets of
any other trust fund established by the Depositor. If specified in the
related Prospectus Supplement, the assets of a Trust Fund will consist of
certificates representing beneficial ownership interests in another trust
fund that contains the Mortgage Assets.
MORTGAGE LOANS
General
The Mortgage Loans will be secured by liens on, or security interests in,
Mortgaged Properties consisting of (i) residential properties consisting of
five or more rental or cooperatively owned dwelling units in high-rise,
mid-rise or garden apartment buildings ("Multifamily Properties" and the
related loans, "Multifamily Loans") or (ii) office buildings, retail centers,
hotels or motels, nursing homes, congregate care facilities, industrial
properties, mini-warehouse facilities or self-storage facilities, mobile home
parks, mixed use or other types of commercial properties ("Commercial
Properties" and the related loans, "Commercial Loans") located, unless
otherwise specified in the related Prospectus Supplement, in any one of the
fifty states, the District of Columbia or the Commonwealth of Puerto Rico. To
the extent specified in the related Prospectus Supplement, the Mortgage Loans
will be secured by first mortgages or deeds of trust or other similar
security instruments creating a first lien on Mortgaged Property. Multifamily
Property may include mixed commercial and residential structures and may
include apartment buildings owned by private cooperative housing corporations
("Cooperatives"). The Mortgaged Properties may include leasehold interests in
properties, the title to which is held by third party lessors. The Prospectus
Supplement will specify whether the term of any such leasehold exceeds the
term of the mortgage note by at least ten years. Each Mortgage Loan will have
been originated by a person (the "Originator") other than the Depositor. The
related Prospectus Supplement will indicate if any Originator is an affiliate
of the Depositor. The Mortgage Loans will be evidenced by promissory notes
(the "Mortgage Notes") secured by mortgages or deeds of trust (the
"Mortgages") creating a lien on the Mortgaged Properties. Mortgage Loans will
generally also be secured by an assignment of leases and rents and/or
operating or other cash flow guarantees relating to the Mortgage Loan.
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Leases
To the extent specified in the related Prospectus Supplement, the
Commercial Properties may be leased to Lessees that respectively occupy all
or a portion of such properties. Pursuant to a Lease Assignment, the related
Mortgagor may assign its rights, title and interest as lessor under each
Lease and the income derived therefrom to the related mortgagee, while
retaining a license to collect the rents for so long as there is no default.
If the Mortgagor defaults, the license terminates and the mortgagee or its
agent is entitled to collect the rents from the related Lessee or Lessees for
application to the monetary obligations of the Mortgagor. State law may limit
or restrict the enforcement of the Lease Assignments by a mortgagee until it
takes possession of the related Mortgaged Property and/or a receiver is
appointed. See "Certain Legal Aspects of the Mortgage Loans and the
Leases--Leases and Rents." Alternatively, to the extent specified in the
related Prospectus Supplement, the Mortgagor and the mortgagee may agree that
payments under Leases are to be made directly to a Servicer.
To the extent described in the related Prospectus Supplement, the Leases
may require the Lessees to pay rent that is sufficient in the aggregate to
cover all scheduled payments of principal and interest on the related
Mortgage Loans and, in certain cases, their pro rata share of the operating
expenses, insurance premiums and real estate taxes associated with the
Mortgaged Properties. Certain of the Leases may require the Mortgagor to bear
costs associated with structural repairs and/or the maintenance of the
exterior or other portions of the Mortgaged Property or provide for certain
limits on the aggregate amount of operating expenses, insurance premiums,
taxes and other expenses that the Lessees are required to pay. If so
specified in the related Prospectus Supplement, under certain circumstances
the Lessees may be permitted to set off their rental obligations against the
obligations of the Mortgagors under the Leases. In those cases where payments
under the Leases (net of any operating expenses payable by the Mortgagors)
are insufficient to pay all of the scheduled principal and interest on the
related Mortgage Loans, the Mortgagors must rely on other income or sources
(including security deposits) generated by the related Mortgaged Property to
make payments on the related Mortgage Loan. To the extent specified in the
related Prospectus Supplement, some Commercial Properties may be leased
entirely to one Lessee. In such cases, absent the availability of other
funds, the Mortgagor must rely entirely on rent paid by such Lessee in order
for the Mortgagor to pay all of the scheduled principal and interest on the
related Commercial Loan. To the extent specified in the related Prospectus
Supplement, certain of the Leases may expire prior to the stated maturity of
the related Mortgage Loan. In such cases, upon expiration of the Leases the
Mortgagors will have to look to alternative sources of income, including rent
payment by any new Lessees or proceeds from the sale or refinancing of the
Mortgaged Property, to cover the payments of principal and interest due on
such Mortgage Loans unless the Lease is renewed. As specified in the related
Prospectus Supplement, certain of the Leases may provide that upon the
occurrence of a casualty affecting a Mortgaged Property, the Lessee will have
the right to terminate its Lease, unless the Mortgagor, as lessor, is able to
cause the Mortgaged Property to be restored within a specified period of
time. Certain Leases may provide that it is the lessor's responsibility,
while other Leases provide that it is the Lessee's responsibility, to restore
the Mortgaged Property after a casualty to its original condition. Certain
Leases may provide a right of termination to the related Lessee if a taking
of a material or specified percentage of the leased space in the Mortgaged
Property occurs, or if the ingress or egress to the leased space has been
materially impaired.
Default and Loss Considerations with Respect to the Mortgage Loans
Mortgage loans secured by commercial and multifamily properties are
markedly different from owner-occupied single family mortgage loans. The
repayment of loans secured by commercial or multifamily properties is
typically dependent upon the successful operation of such property rather
than upon the liquidation value of the real estate. Unless otherwise
specified in the Prospectus Supplement, the Mortgage Loans will be
non-recourse loans, which means that, absent special facts, the mortgagee may
look only to the Net Operating Income from the property for repayment of the
mortgage debt, and not to any other of the Mortgagor's assets, in the event
of the Mortgagor's default. Lenders typically look to the Debt Service
Coverage Ratio of a loan secured by income-producing property as an important
measure of the risk of default on such a loan. The "Debt Service Coverage
Ratio" of a Mortgage Loan at any given time is the ratio of the Net Operating
Income for a twelve-month period to the annualized
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scheduled payments on the Mortgage Loan. "Net Operating Income" means, for
any given period, unless otherwise specified in the related Prospectus
Supplement, the total operating revenues derived from a Mortgaged Property
during such period, minus the total operating expenses incurred in respect of
such Mortgaged Property during such period other than (i) non-cash items such
as depreciation and amortization, (ii) capital expenditures and (iii) debt
service on loans secured by the Mortgaged Property. The Net Operating Income
of a Mortgaged Property will fluctuate over time and may be sufficient or
insufficient to cover debt service on the related Mortgage Loan at any given
time.
As the primary component of Net Operating Income, rental income (as well
as maintenance payments from tenant-stockholders of a Cooperative) is subject
to the vagaries of the applicable real estate market and/or business climate.
Properties typically leased, occupied or used on a short-term basis, such as
health care-related facilities, hotels and motels, and mini-warehouse and
self-storage facilities, tend to be affected more rapidly by changes in
market or business conditions than do properties leased, occupied or used for
longer periods, such as (typically) retail centers, office buildings and
industrial properties. Commercial Loans may be secured by owner-occupied
Mortgaged Properties or Mortgaged Properties leased to a single tenant.
Accordingly, a decline in the financial condition of the Mortgagor or single
tenant, as applicable, may have a disproportionately greater effect on the
Net Operating Income from such Mortgaged Properties than would be the case
with respect to Mortgaged Properties with multiple tenants.
Changes in the expense components of Net Operating Income due to the
general economic climate or economic conditions in a locality or industry
segment, such as increases in interest rates, real estate and personal
property tax rates and other operating expenses, including energy costs;
changes in governmental rules, regulations and fiscal policies, including
environmental legislation; and acts of God may also affect the risk of
default on the related Mortgage Loan. As may be further described in the
related Prospectus Supplement, in some cases leases of Mortgaged Properties
may provide that the Lessee rather than the Mortgagor, is responsible for
payment of some or all of these expenses; however, because leases are subject
to default risks as well when a tenant's income is insufficient to cover its
rent and operating expenses, the existence of such "net of expense"
provisions will only temper, not eliminate, the impact of expense increases
on the performance of the related Mortgage Loan. See "--Leases" above.
While the duration of leases and the existence of any "net of expense"
provisions are often viewed as the primary considerations in evaluating the
credit risk of mortgage loans secured by certain income-producing properties,
such risk may be affected equally or to a greater extent by changes in
government regulation of the operator of the property. Examples of the latter
include mortgage loans secured by health care-related facilities, the income
from which and the operating expenses of which are subject to state and/or
federal regulations, such as Medicare and Medicaid, and multifamily
properties and mobile home parks, which may be subject to state or local rent
control regulation and, in certain cases, restrictions on changes in use of
the property. Low-and moderate-income housing in particular may be subject to
legal limitations and regulations but, because of such regulations, may also
be less sensitive to fluctuations in market rents generally.
The Debt Service Coverage Ratio should not be relied upon as the sole
measure of the risk of default of any loan, however, since other factors may
outweigh a high Debt Service Coverage Ratio. With respect to a Balloon
Mortgage Loan, for example, the risk of default as a result of the
unavailability of a source of funds to finance the related balloon payment at
maturity on terms comparable to or better than those of such Balloon Mortgage
Loans could be significant even though the related Debt Service Coverage
Ratio is high.
The liquidation value of any Mortgaged Property may be adversely affected
by risks generally incident to interests in real property, including declines
in rental or occupancy rates. Lenders generally use the Loan-to-Value Ratio
of a mortgage loan as a measure of risk of loss if a property must be
liquidated upon a default by the Mortgagor.
Appraised values of income-producing properties may be based on the market
comparison method (recent resale value of comparable properties at the date
of the appraisal), the cost replacement method (the cost of replacing the
property at such date), the income capitalization method (a projection of
value
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based upon the property's projected net cash flow), or upon a selection from
or interpolation of the values derived from such methods. Each of these
appraisal methods presents analytical challenges. It is often difficult to
find truly comparable properties that have recently been sold; the
replacement cost of a property may have little to do with its current market
value; and income capitalization is inherently based on inexact projections
of income and expense and the selection of an appropriate capitalization
rate. Where more than one of these appraisal methods are used and create
significantly different results, or where a high Loan-to-Value Ratio
accompanies a high Debt Service Coverage Ratio (or vice versa), the analysis
of default and loss risks is even more difficult.
While the Depositor believes that the foregoing considerations are
important factors that generally distinguish the Multifamily and Commercial
Loans from single family mortgage loans and provide insight to the risks
associated with income-producing real estate, there is no assurance that such
factors will in fact have been considered by the Originators of the
Multifamily and Commercial Loans, or that, for any of such Mortgage Loans,
they are complete or relevant. See "Risk Factors--Risks Associated with
Mortgage Loans and Mortgaged Properties," "--Balloon Payments," "--Junior
Mortgage Loans," "--Obligor Default" and "--Mortgagor Type."
Loan-to-Value Ratio
The "Loan-to-Value Ratio" of a Mortgage Loan at any given time is the
ratio (expressed as a percentage) of the then outstanding principal balance
of the Mortgage Loan to the Value of the related Mortgaged Property. The
"Value" of a Mortgaged Property, other than with respect to Refinance Loans,
is generally the lesser of (a) the appraised value determined in an appraisal
obtained by the originator at origination of such loan and (b) the sales
price for such property. "Refinance Loans" are loans made to refinance
existing loans. Unless otherwise set forth in the related Prospectus
Supplement, the Value of the Mortgaged Property securing a Refinance Loan is
the appraised value thereof determined in an appraisal obtained at the time
of origination of the Refinance Loan. The Value of a Mortgaged Property as of
the date of initial issuance of the related Series of Certificates may be
less than the value at origination and will fluctuate from time to time based
upon changes in economic conditions and the real estate market.
Mortgage Loan Information in Prospectus Supplements
Each Prospectus Supplement will contain information, as of the date of
such Prospectus Supplement and to the extent then applicable and specifically
known to the Depositor, with respect to the Mortgage Loans, including (i) the
aggregate outstanding principal balance and the largest, smallest and average
outstanding principal balance of the Mortgage Loans as of the applicable
Cut-off Date, (ii) the type of property securing the Mortgage Loans (e.g.,
Multifamily Property or Commercial Property and the type of property in each
such category), (iii) the weighted average (by principal balance) of the
original and remaining terms to maturity of the Mortgage Loans, (iv) the
earliest and latest origination date and maturity date of the Mortgage Loans,
(v) the weighted average (by principal balance) of the Loan-to-Value Ratios
at origination of the Mortgage Loans, (vi) the Mortgage Interest Rates or
range of Mortgage Interest Rates and the weighted average Mortgage Interest
Rate borne by the Mortgage Loans, (vii) the state or states in which most of
the Mortgaged Properties are located, (viii) information with respect to the
prepayment provisions, if any, of the Mortgage Loans, (ix) the weighted
average Retained Interest, if any, (x) with respect to Mortgage Loans with
floating Mortgage Interest Rates ("ARM Loans"), the index, the frequency of
the adjustment dates, the highest, lowest and weighted average note margin
and pass-through margin, and the maximum Mortgage Interest Rate or monthly
payment variation at the time of any adjustment thereof and over the life of
the ARM Loan and the frequency of such monthly payment adjustments, (xi) the
Debt Service Coverage Ratio either at origination or as of a more recent date
(or both) and (xii) information regarding the payment characteristics of the
Mortgage Loans, including without limitation balloon payment and other
amortization provisions. The related Prospectus Supplement will also contain
certain information available to the Depositor with respect to the provisions
of leases and the nature of tenants of the Mortgaged Properties and other
information referred to in a general manner under "--Mortgage Loans--Default
and Loss Considerations with Respect to the Mortgage Loans" above. If
specific information respecting the Mortgage Loans is not known to the
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Depositor at the time Certificates are initially offered, more general
information of the nature described above will be provided in the Prospectus
Supplement, and specific information will be set forth in a report which will
be available to purchasers of the related Certificates at or before the
initial issuance thereof and will be filed as part of a Current Report on
Form 8-K with the Securities and Exchange Commission within fifteen days
after such initial issuance.
Payment Provisions of the Mortgage Loans
Unless otherwise specified in the related Prospectus Supplement, all of
the Mortgage Loans will (i) have original terms to maturity of not more than
40 years and (ii) provide for payments of principal, interest or both, on due
dates that occur monthly, quarterly or semi-annually or at such other
interval as is specified in the related Prospectus Supplement. Each Mortgage
Loan may provide for no accrual of interest or for accrual of interest
thereon at an interest rate (a "Mortgage Interest Rate") that is fixed over
its term or that adjusts from time to time, or that is partially fixed and
partially floating, or that may be converted from a floating to a fixed
Mortgage Interest Rate, or from a fixed to a floating Mortgage Interest Rate,
from time to time pursuant to an election or as otherwise specified on the
related Mortgage Note, in each case as described in the related Prospectus
Supplement. Each Mortgage Loan may provide for scheduled payments to maturity
or payments that adjust from time to time to accommodate changes in the
Mortgage Interest Rate or to reflect the occurrence of certain events, and
may provide for negative amortization or accelerated amortization, in each
case as described in the related Prospectus Supplement. Each Mortgage Loan
may be fully amortizing or require a balloon payment due on its stated
maturity date, in each case as described in the related Prospectus
Supplement. Each Mortgage Loan may contain prohibitions on prepayment (a
"Lock-out Period" and the date of expiration thereof, a "Lock-out Date") or
require payment of a premium or a yield maintenance penalty (a "Prepayment
Premium") in connection with a prepayment, in each case as described in the
related Prospectus Supplement. In the event that holders of any class or
classes of Offered Certificates will be entitled to all or a portion of any
Prepayment Premiums collected in respect of Mortgage Loans, the related
Prospectus Supplement will specify the method or methods by which any such
amounts will be allocated. A Mortgage Loan may also contain provisions
entitling the mortgagee to a share of profits realized from the operation or
disposition of the Mortgaged Property ("Equity Participations"), as described
in the related Prospectus Supplement. In the event that holders of any class
or classes of Offered Certificates will be entitled to all or a portion of an
Equity Participation, the related Prospectus Supplement will specify the
terms and provisions of the Equity Participation and the method or methods by
which distributions in respect thereof will be allocated among such
Certificates.
CMBS
Any CMBS will have been issued pursuant to a participation and servicing
agreement, a pooling and servicing agreement, a trust agreement, an indenture
or similar agreement (a "CMBS Agreement"). A seller (the "CMBS Issuer")
and/or servicer (the "CMBS Servicer") of the underlying Mortgage Loans (or
Underlying CMBS) will have entered into the CMBS Agreement with a trustee or
a custodian under the CMBS Agreement (the "CMBS Trustee"), if any, or with
the original purchaser of the interest in the underlying Mortgage Loans or
CMBS evidenced by the CMBS.
Distributions of any principal or interest, as applicable, will be made on
CMBS on the dates specified in the related Prospectus Supplement. The CMBS
may be issued in one or more classes with characteristics similar to the
classes of Certificates described in this Prospectus. Any principal or
interest distributions will be made on the CMBS by the CMBS Trustee or the
CMBS Servicer. The CMBS Issuer or the CMBS Servicer or another person
specified in the related Prospectus Supplement may have the right or
obligation to repurchase or substitute assets underlying the CMBS after a
certain date or under other circumstances specified in the related Prospectus
Supplement.
Enhancement in the form of reserve funds, subordination or other forms of
credit support similar to that described for the Certificates under
"Description of Credit Support" may be provided with respect to the CMBS. The
type, characteristics and amount of such credit support, if any, will be a
function of certain characteristics of the Mortgage Loans or Underlying CMBS
evidenced by or securing such CMBS
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and other factors and generally will have been established for the CMBS on
the basis of requirements of either any Rating Agency that may have assigned
a rating to the CMBS or the initial purchasers of the CMBS.
The Prospectus Supplement for a Series of Certificates evidencing
interests in Mortgage Assets that include CMBS will specify, to the extent
available, (i) the aggregate approximate initial and outstanding principal
amount or notional amount, as applicable, and type of the CMBS to be included
in the Trust Fund, (ii) the original and remaining term to stated maturity of
the CMBS, if applicable, (iii) whether such CMBS is entitled only to interest
payments, only to principal payments or to both, (iv) the pass-through or
bond rate of the CMBS or formula for determining such rates, if any, (v) the
applicable payment provisions for the CMBS, including, but not limited to,
any priorities, payment schedules and subordination features, (vi) the CMBS
Issuer, CMBS Servicer and CMBS Trustee, as applicable, (vii) certain
characteristics of the credit support, if any, such as subordination, reserve
funds, insurance policies, letters of credit or guarantees relating to the
related Underlying Mortgage Loans, the Underlying CMBS or directly to such
CMBS, (viii) the terms on which the related Underlying Mortgage Loans or
Underlying CMBS for such CMBS or the CMBS may, or are required to, be
purchased prior to their maturity, (ix) the terms on which Mortgage Loans or
Underlying CMBS may be substituted for those originally underlying the CMBS,
(x) the servicing fees payable under the CMBS Agreement, (xi) to the extent
available to the Depositor, the type of information in respect of the
Underlying Mortgage Loans described under "--Mortgage Loans--Mortgage Loan
Information in Prospectus Supplements" above, and the type of information in
respect of the Underlying CMBS described in this paragraph, (xii) the
characteristics of any cash flow agreements that are included as part of the
trust fund evidenced or secured by the CMBS and (xiii) whether the CMBS is in
certificated form, book-entry form or held through a depository such as The
Depository Trust Company or the Participants Trust Company.
ACCOUNTS
Each Trust Fund will include one or more accounts established and
maintained on behalf of the Certificateholders into which the person or
persons designated in the related Prospectus Supplement will, to the extent
described herein and in such Prospectus Supplement deposit all payments and
collections received or advanced with respect to the Mortgage Assets and
other assets in the Trust Fund. Such an account may be maintained as an
interest bearing or a non-interest bearing account, and funds held therein
may be held as cash or invested in certain short-term, investment grade
obligations, in each case as described in the related Prospectus Supplement.
See "Description of the Agreement--Distribution Account and Other Collection
Accounts."
CREDIT SUPPORT
If so provided in the related Prospectus Supplement, partial or full
protection against certain defaults and losses on the Trust Assets in the
related Trust Fund may be provided to one or more classes of Certificates in
the related Series in the form of subordination of one or more other classes
of Certificates in such Series or by one or more other types of credit
support, such as a letter of credit, insurance policy, guarantee, reserve
fund or another type of credit support, or a combination thereof (any such
coverage with respect to the Certificates of any Series, "Credit Support").
The amount and types of coverage, the identification of the entity providing
the coverage (if applicable) and related information with respect to each
type of Credit Support, if any, will be described in the Prospectus
Supplement for a Series of Certificates. See "Risk Factors--Credit Support
Limitations" and "Description of Credit Support."
CASH FLOW AGREEMENTS
If so provided in the related Prospectus Supplement, the Trust Fund may
include guaranteed investment contracts pursuant to which moneys held in the
funds and accounts established for the related Series will be invested at a
specified rate. The Trust Fund may also include certain other agreements,
such as interest rate exchange agreements, interest rate cap or floor
agreements, currency exchange agreements or similar agreements provided to
reduce the effects of interest rate or currency exchange rate fluctuations on
the Mortgage Assets or on one or more classes of Certificates. The principal
terms of any
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such guaranteed investment contract or other agreement (any such agreement, a
"Cash Flow Agreement"), including, without limitation, provisions relating to
the timing, manner and amount of payments thereunder and provisions relating
to the termination thereof, will be described in the Prospectus Supplement
for the related Series. In addition, the related Prospectus Supplement will
provide certain information with respect to the obligor under any such Cash
Flow Agreement.
USE OF PROCEEDS
The net proceeds to be received from the sale of the Certificates will be
applied by the Depositor to the purchase of Trust Assets and to pay for
certain expenses incurred in connection with such purchase of Trust Assets
and sale of Certificates. The Depositor expects to sell the Certificates from
time to time, but the timing and amount of offerings of Certificates will
depend on a number of factors, including the volume of Mortgage Assets
acquired by the Depositor, prevailing interest rates, availability of funds
and general market conditions.
YIELD CONSIDERATIONS
GENERAL
The yield on any Offered Certificate will depend on the price paid by the
Certificateholder, the Pass-Through Rate of the Certificate, the receipt and
timing of receipt of distributions on the Certificate and the weighted
average life of the Mortgage Assets in the related Trust Fund (which may be
affected by prepayments, defaults, liquidations or repurchases). See "Risk
Factors."
PASS-THROUGH RATE
Certificates of any class within a Series may have fixed, variable or
floating Pass-Through Rates, which may or may not be based upon the interest
rates borne by the Mortgage Assets in the related Trust Fund. The Prospectus
Supplement with respect to any Series of Certificates will specify the
Pass-Through Rate for each class of such Certificates or, in the case of a
variable or floating Pass-Through Rate, the method of determining the
Pass-Through Rate; the effect, if any, of the prepayment of any Mortgage
Asset on the Pass-Through Rate of one or more classes of Certificates; and
whether the distributions of interest on the Certificates of any class will
be dependent, in whole or in part, on the performance of any obligor under a
Cash Flow Agreement.
The effective yield to maturity to each holder of Certificates entitled to
payments of interest will be below that otherwise produced by the applicable
Pass-Through Rate and purchase price of such Certificate because, while
interest may accrue on each Mortgage Asset during a certain period, the
distribution of such interest will be made on a day which may be several
days, weeks or months following the period of accrual.
TIMING OF PAYMENT OF INTEREST
Each payment of interest on the Certificates (or addition to the
Certificate Balance of a class of Accrual Certificates) on a Distribution
Date will include interest accrued during the Interest Accrual Period for
such Distribution Date. As indicated above under "--The Pass-Through Rate,"
if the Interest Accrual Period ends on a date other than a Distribution Date
for the related Series, the yield realized by the holders of such
Certificates may be lower than the yield that would result if the Interest
Accrual Period ended on such Distribution Date. In addition, if so specified
in the related Prospectus Supplement, interest accrued for an Interest
Accrual Period for one or more classes of Certificates may be calculated on
the assumption that distributions of principal (and additions to the
Certificate Balance of Accrual Certificates) and allocations of losses on the
Mortgage Assets may be made on the first day of the Interest Accrual Period
for a Distribution Date and not on such Distribution Date. Such method would
produce a lower effective yield than if interest were calculated on the basis
of the actual principal amount outstanding during an Interest Accrual Period.
The Interest Accrual Period for any class of Offered Certificates will be
described in the related Prospectus Supplement.
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PAYMENTS OF PRINCIPAL; PREPAYMENTS
The yield to maturity on the Certificates will be affected by the rate of
principal payments on the Mortgage Assets (including principal prepayments on
Mortgage Loans resulting from voluntary prepayments by the Mortgagors,
insurance proceeds, condemnations and involuntary liquidations). Such
payments may be directly dependent upon the payments on Leases underlying
such Mortgage Loans. The rate at which principal prepayments occur on the
Mortgage Loans will be affected by a variety of factors, including, without
limitation, the terms of the Mortgage Loans, the level of prevailing interest
rates, the availability of mortgage credit and economic, demographic,
geographic, tax, legal and other factors. In general, however, if prevailing
interest rates fall significantly below the Mortgage Interest Rates on the
Mortgage Loans comprising or underlying the Mortgage Assets in a particular
Trust Fund, such Mortgage Loans are likely to be the subject of higher
principal prepayments than if prevailing rates remain at or above the rates
borne by such Mortgage Loans. In this regard, it should be noted that certain
Mortgage Assets may consist of Mortgage Loans with different Mortgage
Interest Rates and the stated pass-through or pay-through interest rate of
certain CMBS may be a number of percentage points higher or lower than
certain of the underlying Mortgage Loans. The rate of principal payments on
some or all of the classes of Certificates of a Series will correspond to the
rate of principal payments on the Mortgage Assets in the related Trust Fund
and is likely to be affected by the existence of Lock-out Periods and
Prepayment Premium provisions of the Mortgage Loans underlying or comprising
such Mortgage Assets, and by the extent to which the servicer of any such
Mortgage Loan is able to enforce such provisions. Mortgage Loans with a
Lock-out Period or a Prepayment Premium provision, to the extent enforceable,
generally would be expected to experience a lower rate of principal
prepayments than otherwise identical Mortgage Loans without such provisions,
with shorter Lock-out Periods or with lower Prepayment Premiums.
If the purchaser of a Certificate offered at a discount calculates its
anticipated yield to maturity based on an assumed rate of distributions of
principal that is faster than that actually experienced on the Mortgage
Assets, the actual yield to maturity will be lower than that so calculated.
Conversely, if the purchaser of a Certificate offered at a premium calculates
its anticipated yield to maturity based on an assumed rate of distributions
of principal that is slower than that actually experienced on the Mortgage
Assets, the actual yield to maturity will be lower than that so calculated.
In either case, if so provided in the Prospectus Supplement for a Series of
Certificates, the effect on yield on one or more classes of the Certificates
of such Series of prepayments of the Mortgage Assets in the related Trust
Fund may be mitigated or exacerbated by any provisions for sequential or
selective distribution of principal to such classes.
When a full prepayment is made on a Mortgage Loan, the Mortgagor is
charged interest on the principal amount of the Mortgage Loan so prepaid for
the number of days in the month actually elapsed up to the date of the
prepayment. Unless otherwise specified in the related Prospectus Supplement,
the effect of prepayments in full will be to reduce the amount of interest
paid in the following month to holders of Certificates entitled to payments
of interest because interest on the principal amount of any Mortgage Loan so
prepaid will be paid only to the date of prepayment rather than for a full
month. Unless otherwise specified in the related Prospectus Supplement, a
partial prepayment of principal is applied so as to reduce the outstanding
principal balance of the related Mortgage Loan as of the Due Date in the
month in which such partial prepayment is received. As a result, unless
otherwise specified in the related Prospectus Supplement, the effect of a
partial prepayment on a Mortgage Loan will be to reduce the amount of
interest passed through to holders of Certificates in the month following the
receipt of such partial prepayment by an amount equal to one month's interest
at the applicable Pass-Through Rate on the prepaid amount.
The timing of changes in the rate of principal payments on the Mortgage
Assets may significantly affect an investor's actual yield to maturity, even
if the average rate of distributions of principal is consistent with an
investor's expectation. In general, the earlier a principal payment is
received on the Mortgage Assets and distributed on a Certificate, the greater
the effect on such investor's yield to maturity. The effect on an investor's
yield of principal payments occurring at a rate higher (or lower) than the
rate anticipated by the investor during a given period may not be offset by a
subsequent like decrease (or increase) in the rate of principal payments.
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PREPAYMENTS--MATURITY AND WEIGHTED AVERAGE LIFE
The rates at which principal payments are received on the Mortgage Assets
included in or comprising a Trust Fund and the rate at which payments are
made from any Credit Support or Cash Flow Agreement for the related Series of
Certificates may affect the ultimate maturity and the weighted average life
of each class of such "Series." Prepayments on the Mortgage Loans comprising
or underlying the Mortgage Assets in a particular Trust Fund will generally
accelerate the rate at which principal is paid on some or all of the classes
of the Certificates of the related "Series."
If so provided in the Prospectus Supplement for a Series of Certificates,
one or more classes of Certificates may have a final scheduled Distribution
Date, which is the date on or prior to which the Certificate Balance thereof
is scheduled to be reduced to zero, calculated on the basis of the
assumptions applicable to such Series set forth therein.
Weighted average life refers to the average amount of time that will
elapse from the date of issue of a security until each dollar of principal of
such security will be repaid to the investor. The weighted average life of a
class of Certificates of a Series will be influenced by the rate at which
principal on the Mortgage Loans comprising or underlying the Mortgage Assets
is paid to such class, which may be in the form of scheduled amortization or
prepayments (for this purpose, the term "prepayment" includes prepayments, in
whole or in part, and liquidations due to default).
In addition, the weighted average life of the Certificates may be affected
by the varying maturities of the Mortgage Loans comprising or underlying the
CMBS. If any Mortgage Loans comprising or underlying the Mortgage Assets in a
particular Trust Fund have actual terms to maturity of less than those
assumed in calculating final scheduled Distribution Dates for the classes of
Certificates of the related Series, one or more classes of such Certificates
may be fully paid prior to their respective final scheduled Distribution
Dates, even in the absence of prepayments. Accordingly, the prepayment
experience of the Mortgage Assets will, to some extent, be a function of the
mix of Mortgage Interest Rates and maturities of the Mortgage Loans
comprising or underlying such Mortgage Assets. See "Description of the Trust
Funds."
Prepayments on loans are also commonly measured relative to a prepayment
standard or model, such as the Constant Prepayment Rate ("CPR") prepayment
model. CPR represents a constant assumed rate of prepayment each month
relative to the then outstanding principal balance of a pool of loans for the
life of such loans.
Neither CPR nor any other prepayment model or assumption purports to be a
historical description of prepayment experience or a prediction of the
anticipated rate of prepayment of any pool of loans, including the Mortgage
Loans underlying or comprising the Mortgage Assets. Moreover, CPR was
developed based upon historical prepayment experience for single family
loans. Thus, it is likely that prepayment of any Mortgage Loans comprising or
underlying the Mortgage Assets for any Series will not conform to any
particular level of CPR.
The Depositor is not aware of any meaningful publicly available prepayment
statistics for multifamily or commercial mortgage loans.
The Prospectus Supplement with respect to each Series of Certificates will
contain tables, if applicable, setting forth the projected weighted average
life of each class of Offered Certificates of such Series and the percentage
of the initial Certificate Balance of each such class that would be
outstanding on specified Distribution Dates based on the assumptions stated
in such Prospectus Supplement, including assumptions that prepayments on the
Mortgage Loans comprising or underlying the related Mortgage Assets are made
at rates corresponding to various percentages of CPR or at such other rates
specified in such Prospectus Supplement. Such tables and assumptions are
intended to illustrate the sensitivity of weighted average life of the
Certificates to various prepayment rates and will not be intended to predict
or to provide information that will enable investors to predict the actual
weighted average life of the Certificates. It is unlikely that prepayment of
any Mortgage Loans comprising or underlying the Mortgage Assets for any
Series will conform to any particular level of CPR or any other rate
specified in the related Prospectus Supplement.
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OTHER FACTORS AFFECTING WEIGHTED AVERAGE LIFE
Type of Mortgage Asset
A number of Mortgage Loans may have balloon payments due at maturity, and
because the ability of a Mortgagor to make a balloon payment typically will
depend upon its ability either to refinance the loan or to sell the related
Mortgaged Property, there is a risk that a number of Mortgage Loans having
balloon payments may default at maturity, or that the servicer may extend the
maturity of such a Mortgage Loan in connection with a workout. In the case of
defaults, recovery of proceeds may be delayed by, among other things,
bankruptcy of the Mortgagor or adverse conditions in the market where the
property is located. In order to minimize losses on defaulted Mortgage Loans,
the servicer may, to the extent and under the circumstances set forth in the
related Prospectus Supplement be permitted to modify Mortgage Loans that are
in default or as to which a payment default is imminent. Any defaulted
balloon payment or modification that extends the maturity of a Mortgage Loan
will tend to extend the weighted average life of the Certificates, thereby
lengthening the period of time elapsed from the date of issuance of a
Certificate until it is retired.
Foreclosures and Payment Plans
The number of foreclosures and the principal amount of the Mortgage Loans
comprising or underlying the Mortgage Assets that are foreclosed in relation
to the number and principal amount of Mortgage Loans that are repaid in
accordance with their terms will affect the weighted average life of the
Mortgage Loans comprising or underlying the Mortgage Assets and that of the
related Series of Certificates. Servicing decisions made with respect to the
Mortgage Loans, including the use of payment plans prior to a demand for
acceleration and the restructuring of Mortgage Loans in bankruptcy
proceedings, may also have an effect upon the payment patterns of particular
Mortgage Loans and thus the weighted average life of the Certificates.
Due-on-Sale and Due-on-Encumbrance Clauses
Acceleration of mortgage payments as a result of certain transfers of or
the creation of encumbrances upon underlying Mortgaged Property is another
factor affecting prepayment rates that may not be reflected in the prepayment
standards or models used in the relevant Prospectus Supplement. A number of
the Mortgage Loans comprising or underlying the Mortgage Assets may include
"due-on-sale" clauses or "due-on-encumbrance" clauses that allow the holder
of the Mortgage Loans to demand payment in full of the remaining principal
balance of the Mortgage Loans upon sale or certain other transfers of or the
creation of encumbrances upon the related Mortgaged Property. With respect to
any Whole Loans, unless otherwise provided in the related Prospectus
Supplement, the Master Servicer, on behalf of the Trust Fund, will be
required to exercise (or waive its right to exercise) any such right that the
Trustee may have as mortgagee to accelerate payment of the Whole Loan in a
manner consistent with the Servicing Standard. See "Certain Legal Aspects of
the Mortgage Loans and the Leases--Due-on-Sale and Due-on-Encumbrance" and
"Description of the Agreements--Due-on-Sale and Due-on-Encumbrance
Provisions."
Single Mortgage Loan or Single Mortgagor
The Mortgage Assets in a particular Trust Fund may consist of a single
Mortgage Loan or obligations of a single Mortgagor or related Mortgagors as
specified in the related Prospectus Supplement. Assumptions used with respect
to the prepayment standards or models based upon analysis of the behavior of
mortgage loans in a larger group will not necessarily be relevant in
determining prepayment experience on a single Mortgage Loan or with respect
to a single Mortgagor.
THE DEPOSITOR
J.P. Morgan Commercial Mortgage Finance Corp., the Depositor, is an
indirect wholly-owned subsidiary of J.P. Morgan & Co. Incorporated and was
incorporated in the State of Delaware on September 19, 1994. The principal
executive offices of the Depositor are located at 60 Wall Street, New York,
New York 10260-0060. Its telephone number is (212) 648-3636.
The Depositor does not have, nor is it expected in the future to have, any
significant assets.
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DESCRIPTION OF THE CERTIFICATES
GENERAL
The Certificates of each Series (including any class of Certificates not
offered hereby) will represent the entire beneficial ownership interest in
the Trust Fund created pursuant to the related Agreement. Each Series of
Certificates will consist of one or more classes of Certificates that may (i)
provide for the accrual of interest thereon based on fixed, variable or
floating rates; (ii) be senior (collectively, "Senior Certificates") or
subordinate (collectively, "Subordinate Certificates") to one or more other
classes of Certificates in respect of certain distributions on the
Certificates; (iii) be entitled to principal distributions, with
disproportionately low, nominal or no interest distributions (collectively,
"Stripped Principal Certificates"); (iv) be entitled to interest
distributions, with disproportionately low, nominal or no principal
distributions (collectively, "Stripped Interest Certificates"); (v) provide
for distributions of accrued interest thereon commencing only following the
occurrence of certain events, such as the retirement of one or more other
classes of Certificates of such Series (collectively, "Accrual
Certificates"); (vi) provide for payments of principal sequentially, based on
specified payment schedules, from only a portion of the Trust Assets in such
Trust Fund or based on specified calculations, to the extent of available
funds, in each case as described in the related Prospectus Supplement; and/or
(vii) provide for distributions based on a combination of two or more
components thereof with one or more of the characteristics described in this
paragraph including a Stripped Principal Certificate component and a Stripped
Interest Certificate component. Any such classes may include classes of
Offered Certificates.
Each class of Offered Certificates of a Series will be issued in minimum
denominations corresponding to the Certificate Balances or, in case of
Stripped Interest Certificates, notional amounts or percentage interests
specified in the related Prospectus Supplement. The transfer of any Offered
Certificates may be registered and such Certificates may be exchanged without
the payment of any service charge payable in connection with such
registration of transfer or exchange, but the Depositor or the Trustee or any
agent thereof may require payment of a sum sufficient to cover any tax or
other governmental charge. One or more classes of Certificates of a Series
may be issued in definitive form ("Definitive Certificates") or in book-entry
form ("Book-Entry Certificates"), as provided in the related Prospectus
Supplement. See "Risk Factors--Book-Entry Registration" and "Description of
the Certificates--Book-Entry Registration and Definitive Certificates."
Definitive Certificates will be exchangeable for other Certificates of the
same class and Series of a like aggregate Certificate Balance, notional
amount or percentage interest but of different authorized denominations. See
"Risk Factors Limited Liquidity" and "Limited Assets."
DISTRIBUTIONS
Distributions on the Certificates of each Series will be made by or on
behalf of the Trustee on each Distribution Date as specified in the related
Prospectus Supplement from the Available Distribution Amount for such Series
and such Distribution Date. Except as otherwise specified in the related
Prospectus Supplement, distributions (other than the final distribution) will
be made to the persons in whose names the Certificates are registered at the
close of business on the last business day of the month preceding the month
in which the Distribution Date occurs (the "Record Date"), and the amount of
each distribution will be determined as of the close of business on the date
specified in the related Prospectus Supplement (the "Determination Date").
All distributions with respect to each class of Certificates on each
Distribution Date will be allocated pro rata among the outstanding
Certificates in such class or by random selection, as described in the
related Prospectus Supplement or otherwise established by the related
Trustee. Payments will be made either by wire transfer in immediately
available funds to the account of a Certificateholder at a bank or other
entity having appropriate facilities therefor, if such Certificateholder has
so notified the Trustee or other person required to make such payments no
later than the date specified in the related Prospectus Supplement (and, if
so provided in the related Prospectus Supplement, holds Certificates in the
requisite amount specified therein), or by check mailed to the address of the
person entitled thereto as it appears on the Certificate Register; provided,
however, that the final distribution in retirement of the Certificates
(whether Definitive Certificates or Book-Entry Certificates) will be made
only upon presentation and surrender of the Certificates at the location
specified in the notice to Certificateholders of such final distribution.
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AVAILABLE DISTRIBUTION AMOUNT
All distributions on the Certificates of each Series on each Distribution
Date will be made from the Available Distribution Amount described below, in
accordance with the terms described in the related Prospectus Supplement.
Unless provided otherwise in the related Prospectus Supplement, the
"Available Distribution Amount" for each Distribution Date equals the sum of
the following amounts:
(i) the total amount of all cash on deposit in the related Distribution
Account as of the corresponding Determination Date, including Servicer
advances, net of any scheduled payments due and payable after such
Distribution Date;
(ii) interest or investment income on amounts on deposit in the
Distribution Account, including any net amounts paid under any Cash Flow
Agreements; and
(iii) to the extent not on deposit in the related Distribution Account as
of the corresponding Determination Date, any amounts collected under, from
or in respect of any Credit Support with respect to such Distribution
Date.
As described below, the entire Available Distribution Amount will be
distributed among the related Certificates (including any Certificates not
offered hereby) on each Distribution Date, and accordingly will be released
from the Trust Fund and will not be available for any future distributions.
DISTRIBUTIONS OF INTEREST ON THE CERTIFICATES
Each class of Certificates (other than classes of Stripped Principal
Certificates that have no Pass-Through Rate) may have a different
Pass-Through Rate, which will be a fixed, variable or floating rate at which
interest will accrue on such class or a component thereof (the "Pass-Through
Rate"). The related Prospectus Supplement will specify the Pass-Through Rate
for each class or component or, in the case of a variable or floating
Pass-Through Rate, the method for determining the Pass-Through Rate. Unless
otherwise specified in the related Prospectus Supplement, interest on the
Certificates will be calculated on the basis of a 360-day year consisting of
twelve 30-day months.
Distributions of interest in respect of the Certificates of any class will
be made on each Distribution Date (other than any class of Accrual
Certificates, which will be entitled to distributions of accrued interest
commencing only on the Distribution Date, or under the circumstances,
specified in the related Prospectus Supplement, and any class of Stripped
Principal Certificates that are not entitled to any distributions of
interest) based on the Accrued Certificate Interest for such class and such
Distribution Date, subject to the sufficiency of the portion of the Available
Distribution Amount allocable to such class on such Distribution Date. Prior
to the time interest is distributable on any class of Accrual Certificates,
the amount of Accrued Certificate Interest otherwise distributable on such
class will be added to the Certificate Balance thereof on each Distribution
Date. With respect to each class of Certificates and each Distribution Date
(other than certain classes of Stripped Interest Certificates), "Accrued
Certificate Interest" will be equal to interest accrued for a specified
period on the outstanding Certificate Balance thereof immediately prior to
the Distribution Date, at the applicable Pass-Through Rate, reduced as
described below. Unless otherwise provided in the Prospectus Supplement,
Accrued Certificate Interest on Stripped Interest Certificates will be equal
to interest accrued for a specified period on the outstanding notional amount
thereof immediately prior to each Distribution Date, at the applicable
Pass-Through Rate, reduced as described below. The method of determining the
notional amount for any class of Stripped Interest Certificates will be
described in the related Prospectus Supplement. Reference to notional amount
is solely for convenience in certain calculations and does not represent the
right to receive any distributions of principal. Unless otherwise provided in
the related Prospectus Supplement, the Accrued Certificate Interest on a
Series of Certificates will be reduced in the event of prepayment interest
shortfalls, which are shortfalls in collections of interest for a full
accrual period resulting from prepayments prior to the due date in such
accrual period on the Mortgage Loans comprising or underlying the Mortgage
Assets in the Trust Fund for such Series. The particular manner in which such
shortfalls are to be allocated among some or all of the classes of
Certificates of that Series will be specified in the related Prospectus
Supplement.
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The related Prospectus Supplement will also describe the extent to which
the amount of Accrued Certificate Interest that is otherwise distributable on
(or, in the case of Accrual Certificates, that may otherwise be added to the
Certificate Balance of) a class of Offered Certificates may be reduced as a
result of any other contingencies, including delinquencies, losses and
deferred interest on or in respect of the Mortgage Loans comprising or
underlying the Mortgage Assets in the related Trust Fund. Unless otherwise
provided in the related Prospectus Supplement, any reduction in the amount of
Accrued Certificate Interest otherwise distributable on a class of
Certificates by reason of the allocation to such class of a portion of any
deferred interest on the Mortgage Loans comprising or underlying the Mortgage
Assets in the related Trust Fund will result in a corresponding increase in
the Certificate Balance of such class. See "Risk Factors--Prepayments and
Effect on Average Life of Certificates and Yields" and "Yield
Considerations."
DISTRIBUTIONS OF PRINCIPAL OF THE CERTIFICATES
The Certificates of each Series, other than certain classes of Stripped
Interest Certificates, will have a "Certificate Balance" which, at any time,
will equal the then maximum amount that the holder will be entitled to
receive in respect of principal out of the future cash flow on the Mortgage
Assets and other assets included in the related Trust Fund. The outstanding
Certificate Balance of a Certificate will be reduced to the extent of
distributions of principal thereon from time to time and, if and to the
extent so provided in the related Prospectus Supplement, by the amount of
losses incurred in respect of the related Mortgage Assets, may be increased
in respect of deferred interest on the related Mortgage Loans to the extent
provided in the related Prospectus Supplement and, in the case of Accrual
Certificates prior to the Distribution Date on which distributions of
interest are required to commence, will be increased by any related Accrued
Certificate Interest. Unless otherwise provided in the related Prospectus
Supplement, the initial aggregate Certificate Balance of all classes of
Certificates of a Series will not be greater than the outstanding aggregate
principal balance of the related Mortgage Assets as of the applicable Cut-off
Date. The initial aggregate Certificate Balance of a Series and each class
thereof will be specified in the related Prospectus Supplement. Unless
otherwise provided in the related Prospectus Supplement, distributions of
principal will be made on each Distribution Date to the class or classes of
Certificates entitled thereto in accordance with the provisions described in
such Prospectus Supplement until the Certificate Balance of such class has
been reduced to zero. Stripped Interest Certificates with no Certificate
Balance are not entitled to any distributions of principal.
COMPONENTS
To the extent specified in the related Prospectus Supplement, distribution
on a class of Certificates may be based on a combination of two or more
different components as described under "--General" above. To such extent,
the descriptions set forth under "--Distributions of Interests on the
Certificates" and "--Distributions of Principal of the Certificates" above
also relate to components of such a class of Certificates. In such case,
reference in such sections to Certificate Balance and Pass-Through Rate refer
to the principal balance, if any, of any such component and the Pass-Through
Rate, if any, on any such component, respectively.
DISTRIBUTIONS ON THE CERTIFICATES OF PREPAYMENT PREMIUMS OR IN RESPECT OF
EQUITY PARTICIPATIONS
If so provided in the related Prospectus Supplement, Prepayment Premiums
or payments in respect of Equity Participations that are collected on the
Mortgage Assets in the related Trust Fund will be distributed on each
Distribution Date to the class or classes of Certificates entitled thereto in
accordance with the provisions described in such Prospectus Supplement.
ALLOCATION OF LOSSES AND SHORTFALLS
If so provided in the Prospectus Supplement for a Series of Certificates
consisting of one or more classes of Subordinate Certificates, on any
Distribution Date in respect of which losses or shortfalls in collections on
the Mortgage Assets have been incurred, the amount of such losses or
shortfalls will be borne first by a class of Subordinate Certificates in the
priority and manner and subject to the limitations specified in such
Prospectus Supplement. See "Description of Credit Support" for a description
of the types of protection that may be included in shortfalls on Mortgage
Assets comprising such Trust Fund.
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ADVANCES IN RESPECT OF DELINQUENCIES
With respect to any Series of Certificates evidencing an interest in a
Trust Fund, unless otherwise provided in the related Prospectus Supplement, a
Servicer or another entity described therein will be required as part of its
servicing responsibilities to advance on or before each Distribution Date its
own funds or funds held in the Distribution Account that are not included in
the Available Distribution Amount for such Distribution Date, in an amount
equal to the aggregate of payments of principal (other than any balloon
payments) and interest (net of related servicing fees and Retained Interest)
that were due on the Whole Loans in such Trust Fund and were delinquent on
the related Determination Date, subject to such Servicer's (or another
entity's) good faith determination that such advances will be reimbursable
from Related Proceeds (as defined below). In the case of a Series of
Certificates that includes one or more classes of Subordinate Certificates
and if so provided in the related Prospectus Supplement, each Servicer's (or
another entity's) advance obligation may be limited only to the portion of
such delinquencies necessary to make the required distributions on one or
more classes of Senior Certificates and/or may be subject to such Servicer's
(or another entity's) good faith determination that such advances will be
reimbursable not only from Related Proceeds but also from collections on
other Trust Assets otherwise distributable on one or more classes of such
Subordinate Certificates. See "Description of Credit Support."
Advances are intended to maintain a regular flow of scheduled interest and
principal payments to holders of the class or classes of Certificates
entitled thereto, rather than to guarantee or insure against losses. Unless
otherwise provided in the related Prospectus Supplement, advances of a
Servicer's (or another entity's) funds will be reimbursable only out of
related recoveries on the Mortgage Loans (including amounts received under
any form of Credit Support) respecting which such advances were made (as to
any Mortgage Loan, "Related Proceeds") and, if so provided in the Prospectus
Supplement, out of any amounts otherwise distributable on one or more classes
of Subordinate Certificates of such Series; provided, however, that any such
advance will be reimbursable from any amounts in the Distribution Account
prior to any distributions being made on the Certificates to the extent that
a Servicer (or such other entity) shall determine in good faith that such
advance (a "Nonrecoverable Advance") is not ultimately recoverable from
Related Proceeds or, if applicable, from collections on other Trust Assets
otherwise distributable on such Subordinate Certificates. If advances have
been made by a Servicer from excess funds in the Distribution Account, such
Servicer is required to replace such funds in the Distribution Account on any
future Distribution Date to the extent that funds in the Distribution Account
on such Distribution Date are less than payments required to be made to
Certificateholders on such date. If so specified in the related Prospectus
Supplement, the obligations of a Servicer (or another entity) to make
advances may be secured by a cash advance reserve fund, a surety bond, a
letter of credit or another form of limited guaranty. If applicable,
information regarding the characteristics of, and the identity of any obligor
on, any such surety bond, will be set forth in the related Prospectus
Supplement.
If and to the extent so provided in the related Prospectus Supplement, a
Servicer (or another entity) will be entitled to receive interest at the rate
specified therein on its outstanding advances and will be entitled to pay
itself such interest periodically from general collections on the Trust
Assets prior to any payment to Certificateholders or as otherwise provided in
the related Agreement and described in such Prospectus Supplement.
The Prospectus Supplement for any Series of Certificates evidencing an
interest in a Trust Fund that includes CMBS will describe any corresponding
advancing obligation of any person in connection with such CMBS.
REPORTS TO CERTIFICATEHOLDERS
Unless otherwise provided in the Prospectus Supplement, with each
distribution to holders of any class of Certificates of a Series, the Master
Servicer or the Trustee, as provided in the related Prospectus Supplement,
will forward or cause to be forwarded to each such holder, to the Depositor
and to such other parties as may be specified in the related Agreement, a
statement setting forth, in each case to the extent applicable and available:
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(i) the amount of such distribution to holders of Certificates of such
class applied to reduce the Certificate Balance thereof;
(ii) the amount of such distribution to holders of Certificates of such
class allocable to Accrued Certificate Interest;
(iii) the amount of such distribution allocable to (a) Prepayment
Premiums and (b) payments on account of Equity Participations;
(iv) the amount of related servicing compensation received by each
Servicer and such other customary information as any such Master Servicer
or the Trustee deems necessary or desirable, or that a Certificateholder
reasonably requests, to enable Certificateholders to prepare their tax
returns;
(v) the aggregate amount of advances included in such distribution, and
the aggregate amount of any unreimbursed advances at the close of business
on such Distribution Date;
(vi) the aggregate principal balance of the Mortgage Assets at the close
of business on such Distribution Date;
(vii) the number and aggregate principal balance of Whole Loans in
respect of which (a) one scheduled payment is delinquent, (b) two
scheduled payments are delinquent, (c) three or more scheduled payments
are delinquent and (d) foreclosure proceedings have been commenced;
(viii) with respect to each Whole Loan that is delinquent two or more
months, (a) the loan number thereof, (b) the unpaid balance thereof, (c)
whether the delinquency is in respect of any balloon payment, (d) the
aggregate amount of unreimbursed servicing expenses and unreimbursed
advances in respect thereof, (e) if applicable, the aggregate amount of
any interest accrued and payable on related servicing expenses and related
advances assuming such Mortgage Loan is subsequently liquidated through
foreclosure, (f) whether a notice of acceleration has been sent to the
Mortgagor and, if so, the date of such notice, (g) whether foreclosure
proceedings have been commenced and, if so, the date so commenced and (h)
if such Mortgage Loan is more than three months delinquent and foreclosure
has not been commenced, the reason therefor;
(ix) with respect to any Whole Loan liquidated during the related Due
Period (other than by payment in full), (a) the loan number thereof, (b)
the manner in which it was liquidated and (c) the aggregate amount of
liquidation proceeds received;
(x) with respect to any Whole Loan liquidated during the related Due
Period, (a) the portion of such liquidation proceeds payable or
reimbursable to each Servicer (or any other entity) in respect of such
Mortgage Loan and (b) the amount of any loss to Certificateholders;
(xi) with respect to each REO Property relating to a Whole Loan and
included in the Trust Fund as of the end of the related Due Period, (a)
the loan number of the related Mortgage Loan and (b) the date of
acquisition;
(xii) with respect to each REO Property relating to a Whole Loan and
included in the Trust Fund as of the end of the related Due Period, (a)
the fair market value based on the most recent appraisal obtained by a
Servicer, (b) the principal balance of the related Mortgage Loan
immediately following such Distribution Date (calculated as if such
Mortgage Loan were still outstanding taking into account certain limited
modifications to the terms thereof specified in the Agreement), (c) the
aggregate amount of unreimbursed servicing expenses and unreimbursed
advances in respect thereof and (d) if applicable, the aggregate amount of
interest accrued and payable on related servicing expenses and related
advances;
(xiii) with respect to any such REO Property sold during the related Due
Period (a) the loan number of the related Mortgage Loan, (b) the aggregate
amount of sale proceeds, (c) the portion of such sales proceeds payable or
reimbursable to each Servicer in respect of such REO Property or the
related Mortgage Loan and (d) the amount of any loss to Certificateholders
in respect of the related Mortgage Loan;
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(xiv) the aggregate Certificate Balance or notional amount, as the case
may be, of each class of Certificates (including any class of Certificates
not offered hereby) at the close of business on such Distribution Date,
separately identifying any reduction in such Certificate Balance due to
the allocation of any loss and increase in the Certificate Balance of a
class of Accrual Certificates in the event that Accrued Certificate
Interest has been added to such balance;
(xv) the aggregate amount of principal prepayments made during the
related Due Period;
(xvi) the aggregate Accrued Certificate Interest and unpaid Accrued
Certificate Interest, if any, on each class of Certificates at the close
of business on such Distribution Date;
(xvii) in the case of Certificates with a variable Pass-Through Rate, the
Pass-Through Rate applicable to such Distribution Date, and, if available,
the immediately succeeding Distribution Date, as calculated in accordance
with the method specified in the related Prospectus Supplement;
(xviii) in the case of Certificates with a floating Pass-Through Rate,
for statements to be distributed in any month in which an adjustment date
occurs, the floating Pass-Through Rate applicable to such Distribution
Date and the immediately succeeding Distribution Date as calculated in
accordance with the method specified in the related Prospectus Supplement;
(xix) as to any Series which includes Credit Support, the amount of
coverage of each instrument of Credit Support included therein as of the
close of business on such Distribution Date; and
(xx) the aggregate amount of payments by the Mortgagors of (a) default
interest, (b) late charges and (c) assumption and modification fees
collected during the related Due Period.
In the case of information furnished pursuant to subclauses (i)-(iv)
above, the amounts shall be expressed as a dollar amount per minimum
denomination of Certificates or for such other specified portion thereof In
addition, in the case of information furnished pursuant to subclauses (i),
(ii), (xiv), (xvi) and (xvii) above, such amounts shall also be provided with
respect to each component, if any, of a class of Certificates. The Master
Servicer or the Trustee, as specified in the related Prospectus Supplement,
will forward or cause to be forwarded to each holder, to the Depositor and to
such other parties as may be specified in the Agreement, a copy of any
statements or reports received by the Master Servicer or the Trustee, as
applicable, with respect to any CMBS. The Prospectus Supplement for each
Series of Offered Certificates will describe any additional information to be
included in reports to the holders of such Certificates.
Within a reasonable period of time after the end of each calendar year,
the Master Servicer or the Trustee, as provided in the related Prospectus
Supplement, shall furnish to each person who at any time during the calendar
year was a holder of a Certificate a statement containing the information set
forth in subclauses (i)-(iv) above, aggregated for such calendar year or the
applicable portion thereof during which such person was a Certificateholder.
Such obligation of the Master Servicer or the Trustee shall be deemed to have
been satisfied to the extent that substantially comparable information shall
be provided by the Master Servicer or the Trustee pursuant to any
requirements of the Code as are from time to time in force.
Unless and until Definitive Certificates are issued, or unless otherwise
provided in the related Prospectus Supplement, such statements or reports
will be forwarded by the Master Servicer or the Trustee to Cede. Such
statements or reports may be available to Beneficial Owners upon request to
DTC or their respective Participant or Indirect Participant. In addition, the
Trustee shall furnish a copy of any such statement or report to any
Beneficial Owner which requests such copy and certifies to the Trustee or the
Master Servicer, as applicable, that it is the Beneficial Owner of a
Certificate. See "Description of the Certificates--Book-Entry Registration
and Definitive Certificates."
TERMINATION
The obligations created by the Agreements for each Series of Certificates
will terminate upon the payment to Certificateholders of that Series of all
amounts held in the Distribution Account or by any Servicer, if any, or the
Trustee and required to be paid to them pursuant to such Agreements following
the earlier of (i) the final payment or other liquidation of the last
Mortgage Asset subject thereto or the
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disposition of all property acquired upon foreclosure of any Whole Loan
subject thereto and (ii) the purchase of all of the assets of the Trust Fund
by the party entitled to effect such termination, under the circumstances and
in the manner set forth in the related Prospectus Supplement. In no event,
however, will the trust created by the Agreements continue beyond the date
specified in the related Prospectus Supplement. Written notice of termination
of the Agreements will be given to each Certificateholder, and the final
distribution will be made only upon presentation and surrender of the
Certificates at the location to be specified in the notice of termination.
If so specified in the related Prospectus Supplement, a Series of
Certificates may be subject to optional early termination through the
repurchase of the assets in the related Trust Fund by the party specified
therein, under the circumstances and in the manner set forth therein. If so
provided in the related Prospectus Supplement, upon the reduction of the
Certificate Balance of a specified class or classes of Certificates by a
specified percentage or amount, the party specified therein will solicit bids
for the purchase of all assets of the Trust Fund, or of a sufficient portion
of such assets to retire such class or classes or purchase such class or
classes at a price set forth in the related Prospectus Supplement, in each
case, under the circumstances and in the manner set forth therein.
BOOK-ENTRY REGISTRATION AND DEFINITIVE CERTIFICATES
If so provided in the related Prospectus Supplement, one or more classes
of the Offered Certificates of any Series will be issued as Book-Entry
Certificates, and each such class will be represented by one or more single
Certificates registered in the name of a nominee for the depository, The
Depository Trust Company ("DTC").
DTC is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the Uniform Commercial Code ("UCC") and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934, as amended. DTC was created to hold
securities for its participating organizations ("Participants") and
facilitate the clearance and settlement of securities transactions between
Participants through electronic book-entry changes in their accounts, thereby
eliminating the need for physical movement of certificates. Participants
include J.P. Morgan Securities Inc., securities brokers and dealers, banks,
trust companies and clearing corporations and may include certain other
organizations. Indirect access to the DTC system also is available to others
such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a Participant, either directly or
indirectly ("Indirect Participants").
Unless otherwise provided in the related Prospectus Supplement, investors
that are not Participants or Indirect Participants but desire to purchase,
sell or otherwise transfer ownership of, or other interests in Book-Entry
Certificates may do so only through Participants and Indirect Participants.
In addition, such investors ("Beneficial Owners") will receive all
distributions on the Book-Entry Certificates through DTC and its
Participants. Under a book-entry format, Beneficial Owners will receive
payments after the related Distribution Date because, while payments are
required to be forwarded to Cede & Co., as nominee for DTC ("Cede"), on each
such date DTC will forward such payments to its Participants which thereafter
will be required to forward them to Indirect Participants or Beneficial
Owners. Unless otherwise provided in the related Prospectus Supplement, the
only "Certificateholder" (as such term is used in the Agreement) will be
Cede, as nominee of DTC, and the Beneficial Owners will not be recognized by
the Trustee as Certificateholders under the Agreements. Beneficial Owners
will be permitted to exercise the rights of Certificateholders under the
related Agreements only indirectly through the Participants who in turn will
exercise their rights through DTC. Under the rules, regulations and
procedures creating and affecting DTC and its operations, DTC is required to
make book-entry transfers among Participants on whose behalf it acts with
respect to the Book-Entry Certificates and is required to receive and
transmit distributions of principal of and interest on the Book-Entry
Certificates. Participants and Indirect Participants with which Beneficial
Owners have accounts with respect to the Book-Entry Certificates similarly
are required to make book-entry transfers and receive and transmit such
payments on behalf of their respective Beneficial Owners.
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Because DTC can act only on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a
Beneficial Owner to pledge its interest in the Book-Entry Certificates to
persons or entities that do not participate in the DTC system, or otherwise
take actions in respect of its interest in the Book-Entry Certificates, may
be limited due to the lack of a physical certificate evidencing such
interest.
DTC has advised the Depositor that it will take any action permitted to be
taken by a Certificateholder under an Agreement only at the direction of one
or more Participants to whose account with DTC interests in the Book-Entry
Certificates are credited. Under DTC's procedures, DTC will take actions
permitted to be taken by Holders of any class of Book-Entry Certificates
under the Pooling and Servicing Agreement only at the direction of one or
more Participants to whose account the Book-Entry Certificates are credited
and whose aggregate holdings represent no less than any minimum amount of
Voting Rights required therefor. Therefore, Beneficial Owners will only be
able to exercise their Voting Rights to the extent permitted, and subject to
the procedures established, by their Participant and/or Indirect Participant,
as applicable. DTC may take conflicting actions with respect to any action of
Certificateholders of any Class to the extent that Participants authorize
such actions. None of the Servicers, the Depositor, the Trustee or any of
their respective affiliates will have any liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in the Book-Entry Certificates, or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
Unless otherwise specified in the related Prospectus Supplement,
Certificates initially issued in book-entry form will be issued in fully
registered, certificated form to Beneficial Owners or their nominees
("Definitive Certificates"), rather than to DTC or its nominee only if (i)
the Depositor advises the Trustee in writing that DTC is no longer willing or
able to properly discharge its responsibilities as depository with respect to
the Certificates and the Depositor is unable to locate a qualified successor
or (ii) the Depositor, at its option, elects to terminate the book-entry
system through DTC.
Upon the occurrence of either of the events described in the immediately
preceding paragraph, DTC is required to notify all Participants of the
availability through DTC of Definitive Certificates for the Beneficial
Owners. Upon surrender by DTC of the certificate or certificates representing
the Book-Entry Certificates, together with instructions for reregistration,
the Trustee will issue (or cause to be issued) to the Beneficial Owners
identified in such instructions the Definitive Certificates to which they are
entitled, and thereafter the Trustee will recognize the holders of such
Definitive Certificates as Certificateholders under the Agreement.
DESCRIPTION OF THE AGREEMENTS
The Certificates of each Series evidencing interests in a Trust Fund
including Whole Loans will be issued pursuant to a Pooling and Servicing
Agreement among the Depositor, a Master Servicer, if specified in the related
Prospectus Supplement, a Special Servicer and the Trustee. The Certificates
of each Series evidencing interests in a Trust Fund not including Whole Loans
will be issued pursuant to a Trust Agreement between the Depositor and a
Trustee. The Master Servicer, any Special Servicer and the Trustee with
respect to any Series of Certificates will be named in the related Prospectus
Supplement. In lieu of appointing a Master Servicer, a servicer may be
appointed pursuant to the Pooling and Servicing Agreement for any Trust Fund.
The Mortgage Loans shall be serviced pursuant to the terms of the Pooling and
Servicing Agreement and, unless otherwise specified in the Prospectus
Supplement, a Servicing Agreement among the Depositor (or an affiliate
thereof), a Master Servicer, a Special Servicer and a Primary Servicer. A
manager or administrator may be appointed pursuant to the Trust Agreement for
any Trust Fund to administer such Trust Fund. The provisions of each
Agreement will vary depending upon the nature of the Certificates to be
issued thereunder and the nature of the related Trust Fund. A form of a
Pooling and Servicing Agreement and a form of Servicing Agreement has been
filed as an exhibit to the Registration Statement of which this Prospectus is
a part. Any Trust Agreement will generally conform to the form of Pooling and
Servicing Agreement filed herewith, but will not contain provisions with
respect to the servicing and maintenance of Whole Loans. The following
summaries describe certain provisions that may appear in each Agreement. The
Prospectus Supplement for a Series
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of Certificates will describe any provision of the Agreements relating to
such Series that materially differs from the description thereof contained in
this Prospectus. The summaries do not purport to be complete and are subject
to, and are qualified in their entirety by reference to, all of the
provisions of the Agreements for each Trust Fund and the description of such
provisions in the related Prospectus Supplement. As used herein with respect
to any Series, the term "Certificate" refers to all of the Certificates of
that Series, whether or not offered hereby and by the related Prospectus
Supplement, unless the context otherwise requires. The Depositor will provide
a copy of the Agreements (without exhibits) relating to any Series of
Certificates without charge upon written request of a holder of a Certificate
of such Series addressed to the Trustee specified in the related Prospectus
Supplement.
Unless otherwise specified in the related Prospectus Supplement, the
Mortgage Loans included in each Trust Fund were being serviced prior to the
issuance of the related Series of Certificates pursuant to the terms of a
Servicing Agreement by the Master Servicer, the Special Servicer and/or a
Primary Servicer. Unless otherwise specified in the related Prospectus
Supplement, following the issuance of the related Series of Certificates,
such Mortgage Loans will continue to be serviced pursuant to such Servicing
Agreement, together with the related Pooling and Servicing Agreement.
Pursuant to the terms of each Servicing Agreement, a Primary Servicer or a
Special Servicer will service the Mortgage Loans directly and a Master
Servicer may monitor the activities of each Primary Servicer and Special
Servicer. The Depositor shall assign its rights under each Servicing
Agreement to the Trustee for the benefit of the Certificateholders.
ASSIGNMENT OF ASSETS; REPURCHASES
At the time of issuance of any Series of Certificates, the Depositor will
assign (or cause to be assigned) to the designated Trustee the Trust Assets
to be included in the related Trust Fund, together with all principal and
interest to be received on or with respect to such Trust Assets after the
Cut-off Date, other than principal and interest due on or before the Cut-off
Date and other than any Retained Interest. The Trustee will, concurrently
with such assignment, deliver the Certificates to the Depositor in exchange
for the Trust Assets and the other assets comprising the Trust Fund for such
Series. Each Mortgage Asset will be identified in a schedule appearing as an
exhibit to the related Agreement. Unless otherwise provided in the related
Prospectus Supplement, such schedule will include detailed information (i) in
respect of each Whole Loan included in the related Trust Fund, including
without limitation, the address of the related Mortgaged Property and type of
such property, the Mortgage Interest Rate and, if applicable, the applicable
index, margin, adjustment date and any rate cap information, the original and
remaining term to maturity, the original and outstanding principal balance
and balloon payment, if any, the Value, Loan-to-Value Ratio and the Debt
Service Coverage Ratio as of the date indicated and payment and prepayment
provisions, if applicable, and (ii) in respect of each CMBS included in the
related Trust Fund, including without limitation, the CMBS Issuer, CMBS
Servicer and CMBS Trustee, the pass-through or bond rate or formula for
determining such rate, the issue date and original and remaining term to
maturity, if applicable, the original and outstanding principal amount and
payment provisions, if applicable.
With respect to each Whole Loan, the Depositor will deliver or cause to be
delivered to the Trustee (or to the custodian hereinafter referred to)
certain loan documents, which unless otherwise specified in the related
Prospectus Supplement will include the original Mortgage Note endorsed,
without recourse, in blank or to the order of the Trustee, the original
Mortgage (or a certified copy thereof) with evidence of recording indicated
thereon and an assignment of the Mortgage to the Trustee in recordable form.
Notwithstanding the foregoing, a Trust Fund may include Mortgage Loans where
the original Mortgage Note is not delivered to the Trustee if the Company
delivers to the Trustee or the custodian a copy or a duplicate original of
the Mortgage Note, together with an affidavit certifying that the original
thereof has been lost or destroyed. With respect to such Mortgage Loans, the
Trustee (or its nominee) may not be able to enforce the Mortgage Note against
the related borrower. Unless otherwise provided in the related Prospectus
Supplement, the related Agreements will require that the Depositor or another
party specified therein promptly cause each such assignment of Mortgage to be
recorded in the appropriate public office for real property records, except
in states where, in the opinion of counsel acceptable to the Trustee, such
recording is not required to protect the Trustee's interest in the related
Whole Loan against the claim of
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any subsequent transferee or any successor to or creditor of the Depositor,
the Master Servicer, the relevant Asset Sellers or any other prior holder of
the Whole Loan.
The Trustee (or a custodian) will review such Whole Loan documents within
a specified period of days after receipt thereof, and the Trustee (or a
custodian) will hold such documents in trust for the benefit of the
Certificateholders. Unless otherwise specified in the related Prospectus
Supplement, if any such document is found to be missing or defective in any
material respect, the Trustee (or such custodian) shall immediately notify
the Depositor. If the Depositor cannot cure the omission or defect within a
specified number of days after receipt of such notice, then unless otherwise
specified in the related Prospectus Supplement, the Depositor will be
obligated, within a specified number of days of receipt of such notice, to
repurchase the related Whole Loan from the Trustee at the Purchase Price or
substitute for such Mortgage Loan. Unless otherwise specified in the related
Prospectus Supplement, this repurchase or substitution obligation constitutes
the sole remedy available to the Certificateholders or the Trustee for
omission of, or a material defect in, a constituent document. To the extent
specified in the related Prospectus Supplement, in lieu of curing any
omission or defect in the Mortgage Asset or repurchasing or substituting for
such Mortgage Asset, the Depositor may agree to cover any losses suffered by
the Trust Fund as a result of such breach or defect.
If so provided in the related Prospectus Supplement, the Depositor will,
as to some or all of the Mortgage Loans, assign or cause to be assigned to
the Trustee the related Lease Assignments. In certain cases, the Trustee, or
Primary Servicer, as applicable, may collect all moneys under the related
Leases and distribute amounts, if any, required under the Lease for the
payment of maintenance, insurance and taxes, to the extent specified in the
related Lease agreement. The Trustee, or if so specified in the Prospectus
Supplement, the Master Servicer, as agent for the Trustee, may hold the Lease
in trust for the benefit of the Certificateholders.
With respect to each CMBS in certificated form, the Depositor will deliver
or cause to be delivered to the Trustee (or the custodian) the original
certificate or other definitive evidence of such CMBS together with bond
power or other instruments, certifications or documents required to transfer
fully such CMBS to the Trustee for the benefit of the Certificateholders.
With respect to each CMBS in uncertificated or book-entry form or held
through a "clearing corporation" within the meaning of the UCC the Depositor
and the Trustee will cause such CMBS to be registered directly or on the
books of such clearing corporation or of a financial intermediary in the name
of the Trustee for the benefit of the Certificateholders. Unless otherwise
provided in the related Prospectus Supplement, the related Agreement will
require that either the Depositor or the Trustee promptly cause any CMBS in
certificated form not registered in the name of the Trustee to be
re-registered, with the applicable persons, in the name of the Trustee.
REPRESENTATIONS AND WARRANTIES; REPURCHASES
Unless otherwise provided in the related Prospectus Supplement the
Depositor will, with respect to each Whole Loan, make or assign
representations and warranties, as of a specified date (the person making
such representations and warranties, the "Warranting Party") covering, by way
of example, the following types of matters: (i) the accuracy of the
information set forth for such Whole Loan on the schedule of Mortgage Assets
appearing as an exhibit to the related Agreement; (ii) the existence of title
insurance insuring the lien priority of the Whole Loan; (iii) the authority
of the Warranting Party to sell the Whole Loan; (iv) the payment status of
the Whole Loan and the status of payments of taxes, assessments and other
charges affecting the related Mortgaged Property; (v) the existence of
customary provisions in the related Mortgage Note and Mortgage to permit
realization against the Mortgaged Property of the benefit of the security of
the Mortgage; and (vi) the existence of hazard and extended perils insurance
coverage on the Mortgaged Property.
Any Warranting Party, if other than the Depositor, shall be an Asset
Sellers or an affiliate thereof or such other person acceptable to the
Depositor and shall be identified in the related Prospectus Supplement.
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Representations and warranties made in respect of a Whole Loan may have
been made as of a date prior to the applicable Cut-off Date. A substantial
period of time may have elapsed between such date and the date of initial
issuance of the related Series of Certificates evidencing an interest in such
Whole Loan.
Unless otherwise specified in the related Prospectus Supplement, in the
event of a breach of any such representation or warranty, the Warranting
Party will either cure such breach or repurchase or replace the affected
Whole Loan as described below. Since the representations and warranties may
not address events that may occur following the date as of which they were
made, the Warranting Party will have a cure, repurchase or substitution
obligation in connection with a breach of such a representation and warranty
only if the relevant event that causes such breach occurs prior to such date.
Such party would have no such obligations if the relevant event that causes
such breach occurs after such date.
Unless otherwise provided in the related Prospectus Supplement, the
Agreements will provide that the Master Servicer and/or Trustee will be
required to notify promptly the relevant Warranting Party of any breach of
any representation or warranty made by it in respect of a Whole Loan that
materially and adversely affects the value of such Whole Loan or the
interests therein of the Certificateholders. If such Warranting Party cannot
cure such breach within a specified period following the date on which such
party was notified of such breach, then such Warranting Party will be
obligated to repurchase such Whole Loan from the Trustee within a specified
period from the date on which the Warranting Party was notified of such
breach, at the Purchase Price therefor.
As to any Whole Loan, unless otherwise specified in the related Prospectus
Supplement, the "Purchase Price" is equal to the sum of the unpaid principal
balance thereof, plus unpaid accrued interest thereon at the Mortgage
Interest Rate from the date as to which interest was last paid to the due
date in the Due Period in which the relevant purchase is to occur, plus
certain servicing expenses that are reimbursable to each Servicer. If so
provided in the Prospectus Supplement for a Series, a Warranting Party,
rather than repurchase a Whole Loan as to which a breach has occurred, will
have the option, within a specified period after initial issuance of such
Series of Certificates, to cause the removal of such Whole Loan from the
Trust Fund and substitute in its place one or more other Whole Loans, in
accordance with the standards described in the related Prospectus Supplement.
Unless otherwise specified in the related Prospectus Supplement, this cure,
repurchase or substitution obligation will constitute the sole remedy
available to holders of Certificates or the Trustee for a breach of
representation by a Warranting Party.
Neither the Depositor (except to the extent that it is the Warranting
Party) nor any Servicer will be obligated to purchase, cure or substitute for
a Whole Loan if a Warranting Party defaults on its obligation to do so, and
no assurance can be given that Warranting Parties will carry out such
obligations with respect to Whole Loans.
Unless otherwise provided in the related Prospectus Supplement the
Warranting Party will, with respect to a Trust Fund that includes CMBS, make
or assign certain representations or warranties, as of a specified date, with
respect to such CMBS, covering (i) the accuracy of the information set forth
therefor on the schedule of Mortgage Assets appearing as an exhibit to the
related Agreement and (ii) the authority of the Warranting Party to sell such
Mortgage Assets. The related Prospectus Supplement will describe the remedies
for a breach thereof.
Each Servicer will make certain representations and warranties regarding
its authority to enter into, and its ability to perform its obligations
under, the related Agreement. A breach of any such representation in a
Pooling and Servicing Agreement of a Master Servicer or Special Servicer
which materially and adversely affects the interests of the
Certificateholders and which continues unremedied for thirty days after the
giving of written notice of such breach to such Servicer by the Trustee or
the Depositor, or to such Servicer, the Depositor and the Trustee by the
holders of Certificates evidencing not less than 25% of the Voting Rights
(unless otherwise specified in the related Prospectus Supplement), will
constitute an Event of Default under such Pooling and Servicing Agreement. A
breach of any such representation in a Servicing Agreement of a Servicer
which continues unremedied for thirty days after giving notice of such breach
to such Servicer will constitute an Event of Default under such Servicing
Agreement. See "Events of Default" and "Rights Upon Event of Default."
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ACCOUNTS
General
Each Servicer and/or the Trustee will, as to each Trust Fund, establish
and maintain or cause to be established and maintained one or more separate
accounts for the collection of payments on the related Mortgage Assets
(collectively, the "Accounts"), which must generally, among others be either
(i) an account or accounts the deposits in which are insured by the Bank
Insurance Fund or the Savings Association Insurance Fund of the Federal
Deposit Insurance Corporation ("FDIC") (to the limits established by the
FDIC) and the uninsured deposits in which are otherwise secured such that the
Certificateholders have a claim with respect to the funds on Account or a
perfected first priority security interest against any collateral securing
such funds that is superior to the claims of any other depositors or general
creditors of the institution with which such Account is maintained or (ii)
otherwise maintained with a bank or trust company, and in a manner,
satisfactory to the Rating Agencies rating any class of Certificates of such
Series. The collateral eligible to secure amounts in an Account is generally
limited to United States government securities and other obligations
acceptable to the Rating Agencies specified in the Agreement ("Permitted
Investments"). An Account may be maintained as an interest bearing or a
non-interest bearing account and the funds held therein may be invested
pending each succeeding Distribution Date in certain short-term Permitted
Investments. Unless otherwise provided in the related Prospectus Supplement,
any interest or other income earned on funds in an Account will be paid to a
Servicer or its designee as additional servicing compensation. An Account may
be maintained with an institution that is an affiliate of a Servicer provided
that such institution meets the standards imposed by the Rating Agencies. If
permitted by the Rating Agencies and so specified in the related Prospectus
Supplement, an Account may contain funds relating to more than one Series of
mortgage pass-through certificates and may contain other funds respecting
payments on mortgage loans belonging to a Servicer or serviced or master
serviced by it on behalf of others.
Deposits
Unless otherwise provided in the related Prospectus Supplement, the
Servicer will deposit or cause to be deposited in an Account on a daily
basis, unless otherwise provided in the related Agreement, the following
payments and collections received, or advances made, by the Servicer:
(i) all payments on account of principal, including principal
prepayments, on the Mortgage Assets;
(ii) all payments on account of interest on the Mortgage Assets,
including any default interest collected, in each case net of any portion
thereof retained by a Servicer as its servicing compensation;
(iii) all proceeds of the hazard, business interruption and general
liability insurance policies to be maintained in respect of each Mortgaged
Property securing a Whole Loan in the Trust Fund (to the extent such
proceeds are not applied to the restoration of the property or released to
the Mortgagor in accordance with the normal servicing procedures of a
Servicer, subject to the terms and conditions of the related Mortgage and
Mortgage Note) and all proceeds of rental interruption policies, if any,
insuring against losses arising from the failure of Lessees under a Lease
to make timely rental payments because of certain casualty events
(collectively, "Insurance Proceeds") and all other amounts received and
retained in connection with the liquidation of defaulted Mortgage Loans in
the Trust Fund, by foreclosure, condemnation or otherwise ("Liquidation
Proceeds"), together with the net proceeds on a monthly basis with respect
to any Mortgaged Properties acquired for the benefit of Certificateholders
by foreclosure or by deed in lieu of foreclosure or otherwise;
(iv) any advances made as described under "Description of the
Certificates--Advances in Respect of Delinquencies";
(v) any amounts representing Prepayment Premiums;
(vi) any amounts received from a Special Servicer;
but excluding any REO Proceeds and penalties or modification fees which may
be retained by the Primary Servicer. REO Proceeds shall be maintained in an
Account by the Special Servicer.
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Once a month the Primary Servicer and the Special Servicer remit funds on
deposit in the Account each maintains together with any P&I Advances to the
Master Servicer for deposit in an Account maintained by the Master Servicer.
Withdrawals
A Servicer may, from time to time, unless otherwise provided in the
related Agreement and described in the related Prospectus Supplement, make
withdrawals from an Account for each Trust Fund for any of the following
purposes:
(i) to reimburse a Servicer for unreimbursed amounts advanced as
described under "Description of the Certificates--Advances in Respect of
Delinquencies";
(ii) to reimburse a Servicer for unpaid servicing fees earned and certain
unreimbursed servicing expenses incurred with respect to Whole Loans and
properties acquired in respect thereof, such reimbursement to be made out
of amounts that represent Liquidation Proceeds and Insurance Proceeds
collected on the particular Whole Loans and properties, and net income
collected on the particular properties, with respect to which such fees
were earned or such expenses were incurred;
(iii) to reimburse a Servicer for any advances described in clause (i)
above and any servicing expenses described in clause (ii) above which, in
the Master Servicer's good faith judgment, will not be recoverable from
the amounts described in clauses (i) and (ii), respectively, such
reimbursement to be made from amounts collected on other Trust Assets or,
if and to the extent so provided by the related Agreement and described in
the related Prospectus Supplement, just from that portion of amounts
collected on other Trust Assets that is otherwise distributable on one or
more classes of Subordinate Certificates, if any, remain outstanding, and
otherwise any outstanding class of Certificates, of the related Series;
(iv) if and to the extent described in the related Prospectus Supplement,
to pay a Servicer interest accrued on the advances described in clause (i)
above and the servicing expenses described in clause (ii) above while such
remain outstanding and unreimbursed;
(v) unless otherwise provided in the related Prospectus Supplement, to
pay a Servicer, as additional servicing compensation, interest and
investment income earned in respect of amounts held in the Account; and
(vi) to make any other withdrawals permitted by the related Agreement and
described in the related Prospectus Supplement.
If and to the extent specified in the Prospectus Supplement amounts may be
withdrawn from any Account to cover additional costs, expenses or liabilities
associated with: the preparation of environmental site assessments with
respect to, and for containment, clean-up or remediation of hazardous wastes
and materials, the proper operation, management and maintenance of any
Mortgaged Property acquired for the benefit of Certificateholders by
foreclosure or by deed in lieu of foreclosure or otherwise, such payments to
be made out of income received on such property; if one or more elections
have been made to treat the Trust Fund or designated portions thereof as a
REMIC, any federal, state or local taxes imposed on the Trust Fund or its
assets or transactions, as and to the extent described under "Certain Federal
Income Tax Consequences--REMICS--Prohibited Transactions Tax and Other
Taxes"; retaining an independent appraiser or other expert in real estate
matters to determine a fair sale price for a defaulted Whole Loan or a
property acquired in respect thereof in connection with the liquidation of
such Whole Loan or property; and obtaining various opinions of counsel
pursuant to the related Agreement for the benefit of Certificateholders.
Distribution Account
Unless otherwise specified in the related Prospectus Supplement, the
Trustee will, as to each Trust Fund, establish and maintain, or cause to be
established and maintained, one or more separate Accounts for the collection
of payments from the Master Servicer immediately preceding each Distribution
Date (the "Distribution Account"). The Trustee will also deposit or cause to
be deposited in a Distribution Account the following amounts:
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(i) any amounts paid under any instrument or drawn from any fund that
constitutes Credit Support for the related Series of Certificates as
described under "Description of Credit Support";
(ii) any amounts paid under any Cash Flow Agreement, as described under
"Description of the Trust Funds--Cash Flow Agreements";
(iii) all proceeds of any Trust Asset or, with respect to a Whole Loan,
property acquired in respect thereof purchased by the Depositor, any Asset
Sellers or any other specified person, and all proceeds of any Mortgage
Asset purchased as described under "Description of the
Certificates--Termination" (also, "Liquidation Proceeds");
(iv) any other amounts required to be deposited in the Distribution
Account as provided in the related Agreement and described in the related
Prospectus Supplement.
The Trustee may, from time to time, unless otherwise provided in the
related Agreements and described in the related Prospectus Supplement, make a
withdrawal from a Distribution Account to make distributions to the
Certificateholders on each Distribution Date.
Other Collection Accounts
Notwithstanding the foregoing, if so specified in the related Prospectus
Supplement, the Agreement for any Series of Certificates may provide for the
establishment and maintenance of a separate collection account into which the
Master Servicer or any related Primary Servicer or Special Servicer will
deposit on a daily basis the amounts described under "--Deposits" above for
one or more Series of Certificates. Any amounts on deposit in any such
collection account will be withdrawn therefrom and deposited into the
appropriate Distribution Account by a time specified in the related
Prospectus Supplement. To the extent specified in the related Prospectus
Supplement, any amounts which could be withdrawn from the Distribution
Account as described under "--Withdrawals" above, may also be withdrawn from
any such collection account. The Prospectus Supplement will set forth any
restrictions with respect to any such collection account, including
investment restrictions and any restrictions with respect to financial
institutions with which any such collection account may be maintained.
COLLECTION AND OTHER SERVICING PROCEDURES
Primary Servicer
Unless otherwise specified in the related Prospectus Supplement, the
Primary Servicer is required under each Servicing Agreement to make
reasonable efforts to collect all scheduled payments under the Mortgage Loans
and will follow or cause to be followed such collection procedures as it
would follow with respect to mortgage loans that are comparable to the
Mortgage Loans and held for its own account, provided such procedures are
consistent with (i) the terms of the related Servicing Agreement, (ii)
applicable law and (iii) the general servicing standard specified in the
related Prospectus Supplement or, if no such standard is so specified, its
normal servicing practices (in either case, the "Servicing Standard").
Each Primary Servicer will also be required to perform other customary
functions of a servicer of comparable loans, including maintaining (or
causing the Mortgagor or Lessee on each Mortgage or Lease to maintain)
hazard, business interruption and general liability insurance policies (and,
if applicable, rental interruption policies) as described herein and in any
related Prospectus Supplement, and filing and settling claims thereunder;
maintaining escrow or impoundment accounts of Mortgagors for payment of
taxes, insurance and other items required to be paid by any Mortgagor
pursuant to the Mortgage Loan; processing assumptions or substitutions in
accordance with the Servicing Standard; attempting to cure delinquencies;
supervising foreclosures; inspecting Mortgaged Properties under certain
circumstances; and maintaining accounting records relating to the Mortgage
Loans.
Master Servicer
Unless otherwise specified in the related Prospectus Supplement, the
Master Servicer shall monitor the actions of the Primary Servicer and the
Special Servicer to confirm compliance with the Agreements.
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Unless otherwise specified in the related Prospectus Supplement, a Master
Servicer, as servicer of the Mortgage Loans, on behalf of itself, the Trustee
and the Certificateholders, will present claims to the obligor under each
instrument of Credit Support, and will take such reasonable steps as are
necessary to receive payment or to permit recovery thereunder with respect to
defaulted Mortgage Loans. See "Description of Credit Support."
If a Master Servicer or its designee recovers payments under any
instrument of Credit Support with respect to any defaulted Mortgage Loan, the
Master Servicer will be entitled to withdraw or cause to be withdrawn from
the Distribution Account out of such proceeds, prior to distribution thereof
to Certificateholders, amounts representing its normal servicing compensation
on such Mortgage Loan, unreimbursed servicing expenses incurred with respect
to the Mortgage Loan and any unreimbursed advances of delinquent payments
made with respect to the Mortgage Loan. See "Hazard Insurance Policies" and
"Description of Credit Support."
Special Servicer
A Mortgagor's failure to make required payments may reflect inadequate
income or the diversion of that income from the service of payments due under
the Mortgage Loan, and may call into question such Mortgagor's ability to
make timely payment of taxes and to pay for necessary maintenance of the
related Mortgaged Property. Unless otherwise provided in the related
Prospectus Supplement, upon the occurrence of any of the following events,
among others (each a "Servicing Transfer Event"), with respect to a Mortgage
Loan, servicing for such Mortgage Loan (thereafter, a "Specially Serviced
Mortgage Loan") will be transferred from the Primary Servicer to the Special
Servicer:
(a) such Mortgage Loan becomes a defaulted Mortgage Loan,
(b) the occurrence of certain events indicating the possible insolvency
of the Mortgagor,
(c) the receipt by a Servicer of a notice of foreclosure of any other
lien on the related Mortgaged Property,
(d) the Servicer determines that a payment default is imminent,
(e) with respect to a Balloon Mortgage Loan, no assurances have been
given as to the ability of the Mortgagor to make the final payment
thereon, or
(f) the occurrence of certain other events constituting defaults under
the terms of such Mortgage Loan.
The Special Servicer is required to monitor any Mortgage Loan which is in
default, contact the Mortgagor concerning the default, evaluate whether the
causes of the default can be cured over a reasonable period without
significant impairment of the value of the Mortgaged Property, initiate
corrective action in cooperation with the Mortgagor if cure is likely,
inspect the Mortgaged Property and take such other actions as are consistent
with the Servicing Standard. A significant period of time may elapse before
the Special Servicer is able to assess the success of such corrective action
or the need for additional initiatives.
The time within which the Special Servicer makes the initial determination
of appropriate action evaluates the success of corrective action, develops
additional initiatives, institutes foreclosure proceedings and actually
forecloses (or takes a deed to a Mortgaged Property in lieu of foreclosure)
on behalf of the Certificateholders, may vary considerably depending on the
particular Mortgage Loan, the Mortgaged Property, the Mortgagor, the presence
of an acceptable party to assume the Mortgage Loan and the laws of the
jurisdiction in which the Mortgaged Property is located. Under federal
bankruptcy law, the Special Servicer in certain cases may not be permitted to
accelerate a Mortgage Loan or to foreclose on a Mortgaged Property for a
considerable period of time. See "Certain Legal Aspects of the Mortgage Loans
and the Leases."
Any Agreement relating to a Trust Fund that includes Mortgage Loans may
grant to the Master Servicer and/or the holder or holders of certain classes
of Certificates a right of first refusal to purchase from the Trust Fund at a
predetermined purchase price any such Mortgage Loan as to which a specified
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number of scheduled payments thereunder are delinquent. Any such right
granted to the holder of an Offered Certificate will be described in the
related Prospectus Supplement. The related Prospectus Supplement will also
describe any such right granted to any person if the predetermined purchase
price is less than the Purchase Price described under "Representations and
Warranties; Repurchases."
The Special Servicer may agree to modify, waive or amend any term of any
Specially Serviced Mortgage Loan in a manner consistent with the Servicing
Standard so long as the modification, waiver or amendment will not (i) affect
the amount or timing of any scheduled payments of principal or interest on
the Mortgage Loan or (ii) in its judgment, materially impair the security for
the Mortgage Loan or reduce the likelihood of timely payment of amounts due
thereon. The Special Servicer also may agree to any modification, waiver or
amendment that would so affect or impair the payments on, or the security
for, a Mortgage Loan if, unless otherwise provided in the related Prospectus
Supplement, (i) in its judgment, a material default on the Mortgage Loan has
occurred or a payment default is imminent and (ii) in its judgment, such
modification, waiver or amendment is reasonably likely to produce a greater
recovery with respect to the Mortgage Loan on a present value basis than
would liquidation. The Special Servicer is required to notify the Trustee in
the event of any modification, waiver or amendment of any Mortgage Loan.
The Special Servicer, on behalf of the Trustee, may at any time institute
foreclosure proceedings, exercise any power of sale contained in any
mortgage, obtain a deed in lieu of foreclosure, or otherwise acquire title to
a Mortgaged Property securing a Mortgage Loan by operation of law or
otherwise, if such action is consistent with the Servicing Standard and a
default on such Mortgage Loan has occurred or, in the Special Servicer's
judgment, is imminent. Unless otherwise specified in the related Prospectus
Supplement, the Special Servicer may not acquire title to any related
Mortgaged Property or take any other action that would cause the Trustee, for
the benefit of Certificateholders, or any other specified person to be
considered to hold title to, to be a "mortgagee-in-possession" of, or to be
an "owner" or an "operator" of such Mortgaged Property within the meaning of
certain federal environmental laws, unless the Special Servicer has
previously determined, based on a report prepared by a person who regularly
conducts environmental audits (which report will be an expense of the Trust
Fund), that:
(i) the Mortgaged Property is in compliance with applicable environmental
laws; or if not, that taking such actions as are necessary to bring the
Mortgaged Property in compliance therewith is reasonably likely to produce
a greater recovery on a present value basis, after taking into account any
risks associated therewith, than not taking such actions; and
(ii) and there are no circumstances present at the Mortgaged Property
relating to the use, management or disposal of any hazardous substances,
hazardous materials, wastes, or petroleum-based materials for which
investigation, testing, monitoring, containment, clean-up or remediation
could be required under any federal, state or local law or regulation or
that, if any such materials are present, taking such action with respect
to the affected Mortgaged Property is reasonably likely to produce a
greater recovery on a present value basis, after taking into account any
risks associated therewith, than not taking such actions.
Unless otherwise provided in the related Prospectus Supplement, if title
to any Mortgaged Property is acquired by a Trust Fund as to which a REMIC
election has been made, the Special Servicer, on behalf of the Trust Fund,
will be required to sell the Mortgaged Property not later than the end of the
third calendar year following the year of acquisition, unless (i) the
Internal Revenue Service grants an extension of time to sell such property or
(ii) the Trustee receives an opinion of independent counsel to the effect
that the holding of the property by the Trust Fund subsequent to the end of
the third year following the year in which such acquisition occurred will not
result in the imposition of a tax on the Trust Fund or cause the Trust Fund
to fail to qualify as a REMIC under the Code at any time that any Certificate
is outstanding. Subject to the foregoing, the Special Servicer will be
required to (i) solicit bids or offers for any Mortgaged Property so acquired
in such a manner as will be reasonably likely to realize a fair price for
such property and (ii) accept the first (and, if multiple bids are
contemporaneously received, the highest) cash bid or offer received from any
person that constitutes a fair price.
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If the Trust Fund acquires title to any Mortgaged Property, the Special
Servicer, on behalf of the Trust Fund, may retain an independent contractor
to manage and operate such property. The retention of an independent
contractor, however, will not relieve the Special Servicer of any of its
obligations with respect to the management and operation of such Mortgaged
Property. Unless otherwise specified in the related Prospectus Supplement,
any such property acquired by the Trust Fund will be managed in a manner
consistent with the management and operation of similar property by a prudent
lending institution.
The limitations imposed by the related Agreement and the REMIC provisions
of the Code (if a REMIC election has been made with respect to the related
Trust Fund) on the operations and ownership of any Mortgaged Property
acquired on behalf of the Trust Fund may result in the recovery of an amount
less than the amount that would otherwise be recovered. See "Certain Legal
Aspects of the Mortgage Loans and the Leases--Foreclosure."
If recovery on a defaulted Mortgage Loan under any related instrument of
Credit Support is not available, the Special Servicer nevertheless will be
obligated to follow or cause to be followed such normal practices and
procedures as it deems necessary or advisable to realize upon the defaulted
Mortgage Loan. If the proceeds of any liquidation of the property securing
the defaulted Mortgage Loan are less than the outstanding principal balance
of the defaulted Mortgage Loan plus interest accrued thereon at the Mortgage
Interest Rate plus the aggregate amount of expenses incurred by the Special
Servicer in connection with such proceedings and which are reimbursable under
the Agreement, the Trust Fund will realize a loss in the amount of such
difference. The Servicers will be entitled to withdraw or cause to be
withdrawn from a related Account out of the Liquidation Proceeds recovered on
any defaulted Mortgage Loan, prior to the distribution of such Liquidation
Proceeds to Certificateholders, amounts representing its normal servicing
compensation on the Mortgage Loan, unreimbursed servicing expenses incurred
with respect to the Mortgage Loan and any unreimbursed advances of delinquent
payments made with respect to the Mortgage Loan with interest thereon.
HAZARD INSURANCE POLICIES
Unless otherwise specified in the related Prospectus Supplement, each
Agreement for a Trust Fund that includes Whole Loans will require the
Servicer to cause the Mortgagor on each Whole Loan to maintain a hazard
insurance policy providing for such coverage as is required under the related
Mortgage. Unless otherwise specified in the related Prospectus Supplement,
such coverage will be in general in an amount equal to the amount necessary
to fully compensate for any damage or loss to the improvements on the
Mortgaged Property on a replacement cost basis, but not less than the amount
necessary to avoid the application of any co-insurance clause contained in
the hazard insurance policy. The ability of the Servicer to assure that
hazard insurance proceeds are appropriately applied may be dependent upon its
being named as an additional insured under any hazard insurance policy and
under any other insurance policy referred to below, or upon the extent to
which information in this regard is furnished by Mortgagors. All amounts
collected by the Servicer under any such policy (except for amounts to be
applied to the restoration or repair of the Mortgaged Property or released to
the Mortgagor in accordance with the Servicer's normal servicing procedures,
subject to the terms and conditions of the related Mortgage and Mortgage
Note) will be deposited in a related Account.
In general, the standard form of fire and extended coverage policy covers
physical damage to or destruction of the improvements of the property by
fire, lightning, explosion, smoke, windstorm and hail, and riot, strike and
civil commotion, subject to the conditions and exclusions specified in each
policy. Although the policies relating to the Whole Loans will be
underwritten by different insurers under different state laws in accordance
with different applicable state forms, and therefore will not contain
identical terms and conditions, the basic terms thereof are dictated by
respective state laws, and most such policies typically do not cover any
physical damage resulting from war, revolution, governmental actions, floods
and other water-related causes, earth movement (including earthquakes,
landslides and mudflows), wet or dry rot, vermin, domestic animals and
certain other kinds of uninsured risks.
The hazard insurance policies covering the Mortgaged Properties securing
the Whole Loans will typically contain a co-insurance clause that in effect
requires the insured at all times to carry insurance of a specified
percentage (generally 80% to 90%) of the full replacement value of the
improvements on the
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property in order to recover the full amount of any partial loss. If the
insured's coverage falls below this specified percentage, such clause
generally provides that the insurer's liability in the event of partial loss
does not exceed the lesser of (i) the replacement cost of the improvements
less physical depreciation and (ii) such proportion of the loss as the amount
of insurance carried bears to the specified percentage of the full
replacement cost of such improvements.
The Agreements for a Trust Fund that includes Whole Loans will require the
Servicer to cause the Mortgagor on each Whole Loan, or, in certain cases, the
related Lessee, to maintain all such other insurance coverage with respect to
the related Mortgaged Property as is consistent with the terms of the related
Mortgage, which insurance may typically include flood insurance (if the
related Mortgaged Property was located at the time of origination in a
federally designated flood area).
In addition, to the extent required by the related Mortgage, the Servicer
may require the Mortgagor or related Lessee to maintain other forms of
insurance including, but not limited to, loss of rent endorsements, business
interruption insurance and comprehensive public liability insurance. Any cost
incurred by the Servicer in maintaining any such insurance policy will be
added to the amount owing under the Mortgage Loan where the terms of the
Mortgage Loan so permit; provided, however, that the addition of such cost
will not be taken into account for purposes of calculating the distribution
to be made to Certificateholders. Such costs may be recovered by a Servicer
from a related Account, with interest thereon, as provided by the Agreements.
RENTAL INTERRUPTION INSURANCE POLICY
If so specified in the related Prospectus Supplement, the Servicer or the
Mortgagors will maintain rental interruption insurance policies in full force
and effect with respect to some or all of the Leases. Although the terms of
such policies vary to some degree, a rental interruption insurance policy
typically provides that, to the extent that a Lessee fails to make timely
rental payments under the related Lease due to a casualty event, such losses
will be reimbursed to the insured. If so specified in the related Prospectus
Supplement, the Servicer will be required to pay from its servicing
compensation the premiums on the rental interruption policy on a timely
basis. If so specified in the Prospectus Supplement, if such rental
interruption policy is canceled or terminated for any reason (other than the
exhaustion of total policy coverage), the Servicer will exercise its best
reasonable efforts to obtain from another insurer a replacement policy
comparable to the rental interruption policy with a total coverage that is
equal to the then existing coverage of the terminated rental interruption
policy; provided that if the cost of any such replacement policy is greater
than the cost of the terminated rental interruption policy, the amount of
coverage under the replacement policy will, unless otherwise specified in the
related Prospectus Supplement, be reduced to a level such that the applicable
premium does not exceed, by a percentage that may be set forth in the related
Prospectus Supplement, the cost of the rental interruption policy that was
replaced. Any amounts collected by the Servicer under the rental interruption
policy in the nature of insurance proceeds will be deposited in a related
Account.
FIDELITY BONDS AND ERRORS AND OMISSIONS INSURANCE
Unless otherwise specified in the related Prospectus Supplement, the
Agreements will require that the Servicers obtain and maintain in effect a
fidelity bond or similar form of insurance coverage (which may provide
blanket coverage) or any combination thereof insuring against loss occasioned
by fraud, theft or other intentional misconduct of the officers and employees
of such Servicer. The related Agreements will allow a Servicer to self-insure
against loss occasioned by the errors and omissions of the officers,
employees and agents of the Master Servicer or the Special Servicer so long
as certain criteria set forth in the Agreements are met.
DUE-ON-SALE AND DUE-ON-ENCUMBRANCE PROVISIONS
Certain of the Whole Loans may contain clauses requiring the consent of
the mortgagee to any sale or other transfer of the related Mortgaged
Property, or due-on-sale clauses entitling the mortgagee to accelerate
payment of the Whole Loan upon any sale or other transfer of the related
Mortgaged Property.
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Certain of the Whole Loans may contain clauses requiring the consent of the
mortgagee to the creation of any other lien or encumbrance on the Mortgaged
Property or due-on-encumbrance clauses entitling the mortgagee to accelerate
payment of the Whole Loan upon the creation of any other lien or encumbrance
upon the Mortgaged Property. Unless otherwise provided in the related
Prospectus Supplement, the Primary Servicer, on behalf of the Trust Fund,
will exercise any right the Trustee may have as mortgagee to accelerate
payment of any such Whole Loan or to withhold its consent to any transfer or
further encumbrance. Unless otherwise specified in the related Prospectus
Supplement, any fee collected by or on behalf of the Primary Servicer for
entering into an assumption agreement will be retained by or on behalf of the
Primary Servicer as additional servicing compensation. See "Certain Legal
Aspects of the Mortgage Loans and the Leases--Due-on-Sale and
Due-on-Encumbrance."
RETAINED INTEREST; SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The Prospectus Supplement for a Series of Certificates will specify
whether there will be any Retained Interest in the Mortgage Assets, and, if
so, the initial owner thereof. If so, the Retained Interest will be
established on a loan-by-loan basis and will be specified on an exhibit to
the related Agreement. A "Retained Interest" in a Mortgage Asset represents a
specified portion of the interest payable thereon. The Retained Interest will
be deducted from Mortgagor payments as received and will not be part of the
related Trust Fund.
Unless otherwise specified in the related Prospectus Supplement, each
Servicer's primary servicing compensation with respect to a Series of
Certificates will come from the periodic payment to it of a portion of the
interest payment on each Mortgage Asset. Since any Retained Interest and a
Servicer's primary compensation are percentages of the principal balance of
each Mortgage Asset, such amounts will decrease in accordance with the
amortization of the Mortgage Assets. The Prospectus Supplement with respect
to a Series of Certificates evidencing interests in a Trust Fund that
includes Whole Loans may provide that, as additional compensation, a Servicer
may retain all or a portion of assumption fees, modification fees, late
payment charges or Prepayment Premiums collected from Mortgagors and any
interest or other income which may be earned on funds held in a related
Account.
The Master Servicer may, to the extent provided in the related Prospectus
Supplement, pay from its servicing compensation certain expenses incurred in
connection with its servicing and managing of the Mortgage Assets, including,
without limitation, payment of the fees and disbursements of the Trustee and
independent accountants, payment of expenses incurred in connection with
distributions and reports to Certificateholders, and payment of any other
expenses described in the related Prospectus Supplement. Certain other
expenses, including certain expenses relating to defaults and liquidations on
the Whole Loans and, to the extent so provided in the related Prospectus
Supplement, interest thereon at the rate specified therein, and the fees of
any Special Servicer, may be borne by the Trust Fund.
EVIDENCE AS TO COMPLIANCE
Each Servicing Agreement will provide that on or before a specified date
in each year, beginning on a date specified therein, a firm of independent
public accountants will furnish a statement to the Trustee to the effect
that, on the basis of the examination by such firm conducted substantially in
compliance with either the Uniform Single Attestation Program for Mortgage
Bankers, the servicing by or on behalf of each Servicer was conducted in
compliance with the terms of such agreements except for any exceptions the
Uniform Single Attestation Program for Mortgage Bankers requires it to
report.
Each Servicing Agreement will also provide for delivery to the Trustee, on
or before a specified date in each year, of an annual statement signed by an
officer of each Servicer to the effect that such Servicer has fulfilled its
obligations in all material respects under the Agreement throughout the
preceding calendar year or other specified twelve-month period.
Unless otherwise provided in the related Prospectus Supplement, copies of
such annual accountants' statement and such statements of officers will be
obtainable by Certificateholders and Beneficial Owners without charge upon
written request to the Master Servicer at the address set forth in the
related Prospectus Supplement; provided that such Beneficial Owner shall have
certified to the Master Servicer that it is the Beneficial Owner of a
Certificate.
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CERTAIN MATTERS REGARDING EACH SERVICER AND THE DEPOSITOR
The Master Servicer, the Primary Servicer and the Special Servicer, or a
servicer for substantially all the Whole Loans under each Agreement will be
named in the related Prospectus Supplement. Each entity serving as Servicer
(or as such servicer) may be an affiliate of the Depositor and may have other
normal business relationships with the Depositor or the Depositor's
affiliates. Reference herein to a Servicer shall be deemed to be to the
servicer of substantially all of the Whole Loans, if applicable.
Unless otherwise specified in the related Prospectus Supplement, the
related Agreement will provide that any Servicer may resign from its
obligations and duties thereunder only upon the appointment of a successor
servicer or upon a determination that its duties under the Agreement are no
longer permissible under applicable law. If a Primary Servicer resigns, the
Master Servicer shall assume the obligations thereof.
Unless otherwise specified in the related Prospectus Supplement, each
Servicing Agreement will further provide that none of the Servicers, or any
officer, employee, or agent thereof will be under any liability to the
related Trust Fund or Certificateholders for any action taken, or for
refraining from the taking of any action in accordance with the Servicing
standards set forth in the Servicing Agreement, in good faith pursuant to the
related Servicing Agreement; provided, however, that no Servicer nor any such
person will be protected against any breach of a representation or warranty
made in such Agreement, or against any liability specifically imposed
thereby, or against any liability which would otherwise be imposed by reason
of willful misfeasance, bad faith or negligence in the performance of duties
thereunder or by reason of reckless disregard of obligations and duties
thereunder. Unless otherwise specified in the related Prospectus Supplement,
the Depositor shall be liable only to the extent of its obligations
specifically imposed upon and undertaken by the Depositor. Unless otherwise
specified in the related Prospectus Supplement, each Servicing Agreement will
further provide that each Servicer will be entitled to indemnification by the
related Trust Fund against any loss, liability or expense incurred in
connection with any legal action relating to the related Servicing Agreement
or the Mortgage Loans; provided, however, that such indemnification will not
extend to any loss, liability or expense incurred by reason of willful
misfeasance, bad faith or negligence in the performance of obligations or
duties thereunder, or by reason of reckless disregard of such obligations or
duties. In addition, each Servicing Agreement will provide that no Servicer
will be under any obligation to appear in, prosecute or defend any legal
action which is not incidental to its responsibilities under the Servicing
Agreement and which in its opinion may involve it in any expense or
liability. Any Servicer may, however, with the consent of the Trustee
undertake any such action which it may deem necessary or desirable with
respect to the Agreement and the rights and duties of the parties thereto and
the interests of the Certificateholders thereunder. In such event, the legal
expenses and costs of such action and any liability resulting therefrom will
be expenses, costs and liabilities of the Certificateholders, and the
Servicer will be entitled to be reimbursed therefor.
Any person into which a Servicer or the Depositor may be merged or
consolidated, or any person resulting from any merger or consolidation to
which a Servicer or the Depositor is a party, or any person succeeding to the
business of a Servicer or the Depositor will be the successor of such
Servicer or the Depositor, as applicable, under the related Agreements.
EVENTS OF DEFAULT
Unless otherwise provided in the related Prospectus Supplement for a Trust
Fund that includes Whole Loans, Events of Default with respect to a Servicer
under the related Agreements will include, among other things, (i) any
failure by such Servicer to distribute or cause to be distributed to the
Trustee, another Servicer or the Certificateholders, any required payment
within one Business Day of the date due; (ii) any failure by such Servicer to
timely deliver a report that continues unremedied for two Business Days after
receipt of notice of such failure has been given to such Servicer by the
Trustee or another Servicer; (iii) any failure by such Servicer duly to
observe or perform in any material respect any of its other covenants or
obligations under the Agreement which continues unremedied for thirty days
after written notice of such failure has been given to such Servicer; (iv)
any breach of a representation or warranty made by such Servicer under the
Agreement which materially and adversely affects the interests of
Certificateholders and which continues unremedied for thirty days after
written notice of such breach
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has been given to such Servicer; (v) certain events of insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings and certain actions by or on behalf of such Servicer indicating
its insolvency or inability to pay its obligations; and (vi) any failure by
such Servicer to maintain a required license to do business or service the
Mortgage Loans pursuant to the related Agreements which remains uncured as
specified in the Agreement. Material variations to the foregoing Events of
Default (other than to shorten cure periods or eliminate notice requirements)
will be specified in the related Prospectus Supplement. Unless otherwise
specified in the related Prospectus Supplement, the Trustee shall, not later
than the later of 60 days after the occurrence of any event which constitutes
or, with notice or lapse of time or both, would constitute an Event of
Default and five days after certain officers of the Trustee become aware of
the occurrence of such an event, transmit by mail to the Depositor and all
Certificateholders of the applicable Series notice of such occurrence, unless
such default shall have been cured or waived.
RIGHTS UPON EVENT OF DEFAULT
So long as an Event of Default under an Agreement remains unremedied, the
Depositor or the Trustee may, and at the direction of holders of Certificates
evidencing not less than 25% of the Voting Rights, the Trustee shall,
terminate all of the rights and obligations of the related Servicer under the
Agreement and in and to the Mortgage Loans (other than as a Certificateholder
or as the owner of any Retained Interest), whereupon the Master Servicer (or
if such Servicer is the Master Servicer, the Trustee) will succeed to all of
the responsibilities, duties and liabilities of such Servicer under the
Agreements (except that if the Trustee is prohibited by law from obligating
itself to make advances regarding delinquent mortgage loans, or if the
related Prospectus Supplement so specifies, then the Trustee will not be
obligated to make such advances) and will be entitled to similar compensation
arrangements. Unless otherwise specified in the related Prospectus
Supplement, in the event that the Trustee is unwilling or unable so to act,
it may or, at the written request of the holders of Certificates entitled to
at least 25% of the Voting Rights, it shall appoint, or petition a court of
competent jurisdiction for the appointment of, a loan servicing institution
acceptable to the Rating Agency with a net worth at the time of such
appointment of at least $15,000,000 to act as successor to the Master
Servicer under the Agreement. Pending such appointment, the Trustee is
obligated to act in such capacity. The Trustee and any such successor may
agree upon the servicing compensation to be paid, which in no event may be
greater than the compensation payable to the Master Servicer under the
Agreement.
Unless otherwise described in the related Prospectus Supplement, the
holders of Certificates representing at least 66 2/3% of the Voting Rights
allocated to the respective classes of Certificates affected by any Event of
Default will be entitled to waive such Event of Default; provided, however,
that an Event of Default involving a failure to distribute a required payment
to Certificateholders described in clause (i) under "Events of Default" may
be waived only by all of the Certificateholders. Upon any such waiver of an
Event of Default, such Event of Default shall cease to exist and shall be
deemed to have been remedied for every purpose under the Agreement.
No Certificateholder will have the right under any Agreement to institute
any proceeding with respect thereto unless such holder previously has given
to the Trustee written notice of default and unless the holders of
Certificates evidencing not less than 25% of the Voting Rights have made
written request upon the Trustee to institute such proceeding in its own name
as Trustee thereunder and have offered to the Trustee reasonable indemnity,
and the Trustee for sixty days has neglected or refused to institute any such
proceeding. The Trustee, however, is under no obligation to exercise any of
the trusts or powers vested in it by any Agreement or to make any
investigation of matters arising thereunder or to institute, conduct or
defend any litigation thereunder or in relation thereto at the request, order
or direction of any of the holders of Certificates covered by such Agreement,
unless such Certificateholders have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which may
be incurred therein or thereby.
As described under "Description of the Certificates--Book-Entry
Registration and Definitive Certificates," unless and until Definitive
Certificates are issued, Beneficial Owners may only exercise their rights as
owners of Certificates indirectly through DTC, or their respective
Participants and Indirect Participants.
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AMENDMENT
Each Agreement may be amended by the parties thereto, without the consent
of any of the holders of Certificates covered by the Agreement, (i) to cure
any ambiguity, (ii) to correct, modify or supplement any provision therein
which may be inconsistent with any other provision therein, (iii) to make any
other provisions with respect to matters or questions arising under the
Agreement which are not inconsistent with the provisions thereof, or (iv) to
comply with any requirements imposed by the Code; provided that such
amendment (other than an amendment for the purpose specified in clause (iv)
above) will not (as evidenced by an opinion of counsel to such effect)
adversely affect in any material respect the interests of any holder of
Certificates covered by the Agreement. Unless otherwise specified in the
related Prospectus Supplement, each Agreement may also be amended by the
Depositor, the Master Servicer, if any, and the Trustee, with the consent of
the holders of Certificates affected thereby evidencing not less than 51% of
the Voting Rights, for any purpose; provided, however, that unless otherwise
specified in the related Prospectus Supplement, no such amendment may (i)
reduce in any manner the amount of or delay the timing of, payments received
or advanced on Mortgage Loans which are required to be distributed on any
Certificate without the consent of the holder of such Certificate, (ii)
adversely affect in any material respect the interests of the holders of any
class of Certificates in a manner other than as described in (i), without the
consent of the holders of all Certificates of such class or (iii) modify the
provisions of such Agreement described in this paragraph without the consent
of the holders of all Certificates covered by such Agreement then
outstanding. However, with respect to any Series of Certificates as to which
a REMIC election is to be made, the Trustee will not consent to any amendment
of the Agreement unless it shall first have received an opinion of counsel to
the effect that such amendment will not result in the imposition of a tax on
the related Trust Fund or cause the related Trust Fund to fail to qualify as
a REMIC at any time that the related Certificates are outstanding.
THE TRUSTEE
The Trustee under each Agreement will be named in the related Prospectus
Supplement. The commercial bank, national banking association, banking
corporation or trust company serving as Trustee may have a banking
relationship with the Depositor and its affiliates and with any Master
Servicer and its affiliates.
DUTIES OF THE TRUSTEE
The Trustee will make no representations as to the validity or sufficiency
of any Agreement, the Certificates or any Trust Asset or related document and
is not accountable for the use or application by or on behalf of any Servicer
of any funds paid to such Servicer or its designee in respect of the
Certificates or the Trust Assets, or deposited into or withdrawn from any
Account or any other account by or on behalf of any Servicer. If no Event of
Default has occurred and is continuing, the Trustee is required to perform
only those duties specifically required under the related Agreements.
However, upon receipt of the various certificates, reports or other
instruments required to be furnished to it, the Trustee is required to
examine such documents and to determine whether they conform to the
requirements of the Agreements.
CERTAIN MATTERS REGARDING THE TRUSTEE
Unless otherwise specified in the related Prospectus Supplement, the
Trustee and any director, officer, employee or agent of the Trustee shall be
entitled to indemnification out of the Distribution Account for any loss,
liability or expense (including costs and expenses of litigation, and of
investigation, counsel fees, damages, judgments and amounts paid in
settlement) incurred in connection with the Trustee's (i) enforcing its
rights and remedies and protecting the interests, and enforcing the rights
and remedies, of the Certificateholders during the continuance of an Event of
Default, (ii) defending or prosecuting any legal action in respect of the
related Agreement or Series of Certificates, (iii) being the mortgagee of
record with respect to the Mortgage Loans in a Trust Fund and the owner of
record with respect to any Mortgaged Property acquired in respect thereof for
the benefit of Certificateholders, or (iv) acting or refraining from acting
in good faith at the direction of the holders of the related Series of
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Certificates entitled to not less than 25% (or such higher percentage as is
specified in the related Agreement with respect to any particular matter) of
the Voting Rights for such Series; provided, however, that such
indemnification will not extend to any loss, liability or expense that
constitutes a specific liability of the Trustee pursuant to the related
Agreement, or to any loss, liability or expense incurred by reason of willful
misfeasance, bad faith or negligence on the part of the Trustee in the
performance of its obligations and duties thereunder, or by reason of its
reckless disregard of such obligations or duties, or as may arise from a
breach of any representation, warranty or covenant of the Trustee made
therein.
RESIGNATION AND REMOVAL OF THE TRUSTEE
The Trustee may at any time resign from its obligations and duties under
an Agreement by giving written notice thereof to the Depositor, the Master
Servicer, if any, and all Certificateholders. Upon receiving such notice of
resignation, the Depositor is required promptly to appoint a successor
trustee acceptable to the Master Servicer, if any. If no successor trustee
shall have been so appointed and have accepted appointment within 30 days
after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a
successor trustee.
If at any time the Trustee shall cease to be eligible to continue as such
under the related Agreements, or if at any time the Trustee shall become
incapable of acting, or shall be adjudged bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then
the Depositor may remove the Trustee and appoint a successor trustee
acceptable to the Master Servicer, if any. Holders of the Certificates of any
Series entitled to at least 51% of the Voting Rights for such Series may at
any time remove the Trustee without cause and appoint a successor trustee.
Any resignation or removal of the Trustee and appointment of a successor
trustee shall not become effective until acceptance of appointment by the
successor trustee.
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DESCRIPTION OF CREDIT SUPPORT
GENERAL
For any Series of Certificates, Credit Support may be provided with
respect to one or more classes thereof or the related Mortgage Assets. Credit
Support may be in the form of the subordination of one or more classes of
Certificates, letters of credit, insurance policies, guarantees, the
establishment of one or more reserve funds or another method of Credit
Support described in the related Prospectus Supplement, or any combination of
the foregoing. If so provided in the related Prospectus Supplement, any form
of Credit Support may be structured so as to be drawn upon by more than one
Series to the extent described therein.
Unless otherwise provided in the related Prospectus Supplement for a
Series of Certificates, the Credit Support will not provide protection
against all risks of loss and will not guarantee repayment of the entire
Certificate Balance of the Certificates and interest thereon. If losses or
shortfalls occur that exceed the amount covered by Credit Support or that are
not covered by Credit Support, Certificateholders will bear their allocable
share of deficiencies. Moreover, if a form of Credit Support covers more than
one Series of Certificates (each, a "Covered Trust"), holders of Certificates
evidencing interests in any of such Covered Trusts will be subject to the
risk that such Credit Support will be exhausted by the claims of other
Covered Trusts prior to such Covered Trust receiving any of its intended
share of such coverage.
If Credit Support is provided with respect to one or more classes of
Certificates of a Series, or the related Mortgage Assets, the related
Prospectus Supplement will include a description of (a) the nature and amount
of coverage under such Credit Support, (b) any conditions to payment
thereunder not otherwise described herein, (c) the conditions (if any) under
which the amount of coverage under such Credit Support may be reduced and
under which such Credit Support may be terminated or replaced and (d) the
material provisions relating to such Credit Support. Additionally, the
related Prospectus Supplement will set forth certain information with respect
to the obligor under any instrument of Credit Support, including (i) a brief
description of its principal business activities, (ii) its principal place of
business, place of incorporation and the jurisdiction under which it is
chartered or licensed to do business, (iii) if applicable, the identity of
regulatory agencies that exercise primary jurisdiction over the conduct of
its business and (iv) its total assets, and its stockholders' or
policyholders' surplus, if applicable, as of the date specified in the
Prospectus Supplement. See "Risk Factors--Credit Support Limitations."
SUBORDINATE CERTIFICATES
If so specified in the related Prospectus Supplement, one or more classes
of Certificates of a Series may be Subordinate Certificates. To the extent
specified in the related Prospectus Supplement, the rights of the holders of
Subordinate Certificates to receive distributions of principal and interest
from the Distribution Account on any Distribution Date will be subordinated
to such rights of the holders of Senior Certificates. If so provided in the
related Prospectus Supplement, the subordination of a class may apply only in
the event of (or may be limited to) certain types of losses or shortfalls.
The related Prospectus Supplement will set forth information concerning the
amount of subordination of a class or classes of Subordinate Certificates in
a Series, the circumstances in which such subordination will be applicable
and the manner, if any, in which the amount of subordination will be
effected.
CROSS-SUPPORT PROVISIONS
If the Mortgage Assets for a Series are divided into separate groups, each
supporting a separate class or classes of Certificates of a Series, credit
support may be provided by cross-support provisions requiring that
distributions be made on Senior Certificates evidencing interests in one
group of Mortgage Assets prior to distributions on Subordinate Certificates
evidencing interests in a different group of Mortgage Assets within the Trust
Fund. The Prospectus Supplement for a Series that includes a cross-support
provision will describe the manner and conditions for applying such
provisions.
INSURANCE OR GUARANTEES WITH RESPECT TO THE WHOLE LOANS
If so provided in the Prospectus Supplement for a Series of Certificates,
the Whole Loans in the related Trust Fund will be covered for various default
risks by insurance policies or guarantees. A copy
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of any such material instrument for a Series will be filed with the
Commission as an exhibit to a Current Report on Form 8-K to be filed within
15 days of issuance of the Certificates of the related Series.
LETTER OF CREDIT
If so provided in the Prospectus Supplement for a Series of Certificates,
deficiencies in amounts otherwise payable on such Certificates or certain
classes thereof will be covered by one or more letters of credit, issued by a
bank or financial institution specified in such Prospectus Supplement (the
"L/C Bank"). Under a letter of credit, the L/C Bank will be obligated to
honor draws thereunder in an aggregate fixed dollar amount, net of
unreimbursed payments thereunder, generally equal to a percentage specified
in the related Prospectus Supplement of the aggregate principal balance of
the Mortgage Assets on the related Cut-off Date or of the initial aggregate
Certificate Balance of one or more classes of Certificates. If so specified
in the related Prospectus Supplement, the letter of credit may permit draws
in the event of only certain types of losses and shortfalls. The amount
available under the letter of credit will, in all cases, be reduced to the
extent of the unreimbursed payments thereunder and may otherwise be reduced
as described in the related Prospectus Supplement. The obligations of the L/C
Bank under the letter of credit for each Series of Certificates will expire
at the earlier of the date specified in the related Prospectus Supplement or
the termination of the Trust Fund. A copy of any such letter of credit for a
Series will be filed with the Commission as an exhibit to a Current Report on
Form 8-K to be filed within 15 days of issuance of the Certificates of the
related Series.
INSURANCE POLICIES AND SURETY BONDS
If so provided in the Prospectus Supplement for a Series of Certificates,
deficiencies in amounts otherwise payable on such Certificates or certain
classes thereof will be covered by insurance policies and/or surety bonds
provided by one or more insurance companies or sureties. Such instruments may
cover, with respect to one or more classes of Certificates of the related
Series, timely distributions of interest and/or full distributions of
principal on the basis of a schedule of principal distributions set forth in
or determined in the manner specified in the related Prospectus Supplement. A
copy of any such instrument for a Series will be filed with the Commission as
an exhibit to a Current Report on Form 8-K to be filed with the Commission
within 15 days of issuance of the Certificates of the related Series.
RESERVE FUNDS
If so provided in the Prospectus Supplement for a Series of Certificates,
deficiencies in amounts otherwise payable on such Certificates or certain
classes thereof will be covered by one or more reserve funds in which cash, a
letter of credit, Permitted Investments, a demand note or a combination
thereof will be deposited, in the amounts so specified in such Prospectus
Supplement. The reserve funds for a Series may also be funded over time by
depositing therein a specified amount of the distributions received on the
related Trust Assets as specified in the related Prospectus Supplement.
Amounts on deposit in any reserve fund for a Series, together with the
reinvestment income thereon, if any, will be applied for the purposes, in the
manner, and to the extent specified in the related Prospectus Supplement. A
reserve fund may be provided to increase the likelihood of timely
distributions of principal of and interest on the Certificates. If so
specified in the related Prospectus Supplement, reserve funds may be
established to provide limited protection against only certain types of
losses and shortfalls. Following each Distribution Date amounts in a reserve
fund in excess of any amount required to be maintained therein may be
released from the reserve fund under the conditions and to the extent
specified in the related Prospectus Supplement and will not be available for
further application to the Certificates.
Moneys deposited in any Reserve Funds will be invested in Permitted
Investments, except as otherwise specified in the related Prospectus
Supplement. Unless otherwise specified in the related Prospectus Supplement,
any reinvestment income or other gain from such investments will be credited
to the related Reserve Fund for such Series, and any loss resulting from such
investments will be charged to such Reserve Fund. However, such income may be
payable to any related Master Servicer or another service provider as
additional compensation. The Reserve Fund, if any, for a Series will not be a
part of the Trust Fund unless otherwise specified in the related Prospectus
Supplement.
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Additional information concerning any Reserve Fund will be set forth in
the related Prospectus Supplement, including the initial balance of such
Reserve Fund, the balance required to be maintained in the Reserve Fund, the
manner in which such required balance will decrease over time, the manner of
funding such Reserve Fund, the purposes for which funds in the Reserve Fund
may be applied to make distributions to Certificateholders and use of
investment earnings from the Reserve Fund, if any.
CREDIT SUPPORT WITH RESPECT TO CMBS
If so provided in the Prospectus Supplement for a Series of Certificates,
the CMBS in the related Trust Fund and/or the Mortgage Loans underlying such
CMBS may be covered by one or more of the types of Credit Support described
herein. The related Prospectus Supplement will specify as to each such form
of Credit Support the information indicated above with respect thereto, to
the extent such information is material and available.
CERTAIN LEGAL ASPECTS OF THE MORTGAGE LOANS AND THE LEASES
The following discussion contains general summaries of certain legal
aspects of loans secured by commercial and multifamily residential properties
that are general in nature. Because such legal aspects are governed by
applicable state law (which laws may differ substantially), the summaries do
not purport to be complete nor to reflect the laws of any particular state,
nor to encompass the laws of all states in which the security for the
Mortgage Loans is situated. The summaries are qualified in their entirety by
reference to the applicable federal and state laws governing the Mortgage
Loans. See "Description of the Trust Funds--Assets."
GENERAL
All of the Mortgage Loans are loans evidenced by a note or bond and
secured by instruments granting a security interest in real property which
may be mortgages, deeds of trust, security deeds or deeds to secure debt,
depending upon the prevailing practice and law in the state in which the
Mortgaged Property is located. Mortgages, deeds of trust and deeds to secure
debt are herein collectively referred to as "mortgages." Any of the foregoing
types of mortgages will create a lien upon, or grant a title interest in, the
subject property, the priority of which will depend on the terms of the
particular security instrument, as well as separate, recorded, contractual
arrangements with others holding interests in the mortgaged property, the
knowledge of the parties to such instrument as well as the order of
recordation of the instrument in the appropriate public recording office.
However, recording does not generally establish priority over governmental
claims for real estate taxes and assessments and other charges imposed under
governmental police powers.
TYPES OF MORTGAGE INSTRUMENTS
A mortgage either creates a lien against or constitutes a conveyance of
real property between two parties--a Mortgagor (the borrower and usually the
owner of the subject property) and a mortgagee (the lender). In contrast, a
deed of trust is a three-party instrument, among a trustor (the equivalent of
a Mortgagor), a trustee to whom the mortgaged property is conveyed, and a
beneficiary (the lender) for whose benefit the conveyance is made. As used in
this Prospectus, unless the context otherwise requires, "Mortgagor" includes
the trustor under a deed of trust and a grantor under a security deed or a
deed to secure debt. Under a deed of trust, the Mortgagor grants the
property, irrevocably until the debt is paid, in trust, generally with a
power of sale as security for the indebtedness evidenced by the related note.
A deed to secure debt typically has two parties. By executing a deed to
secure debt, the grantor conveys title to, as opposed to merely creating a
lien upon, the subject property to the grantee until such time as the
underlying debt is repaid, generally with a power of sale as security for the
indebtedness evidenced by the related mortgage note. In case the Mortgagor
under a mortgage is a land trust, there would be an additional party because
legal title to the property is held by a land trustee under a land trust
agreement for the benefit of the Mortgagor. At origination of a mortgage loan
involving a land trust, the Mortgagor executes a separate undertaking to make
payments on the mortgage note. The mortgagee's authority under a mortgage,
the trustee's authority under a deed of trust and the grantee's authority
under a deed
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to secure debt are governed by the express provisions of the mortgage, the
law of the state in which the real property is located, certain federal laws
(including, without limitation, the Soldiers' and Sailors' Civil Relief Act
of 1940) and, in some cases, in deed of trust transactions, the directions of
the beneficiary.
INTEREST IN REAL PROPERTY
The real property covered by a mortgage, deed of trust, security deed or
deed to secure debt is most often the fee estate in land and improvements.
However, such an instrument may encumber other interests in real property
such as a tenant's interest in a lease of land or improvements, or both, and
the leasehold estate created by such lease. An instrument covering an
interest in real property other than the fee estate requires special
provisions in the instrument creating such interest or in the mortgage, deed
of trust, security deed or deed to secure debt, to protect the mortgagee
against termination of such interest before the mortgage, deed of trust,
security deed or deed to secure debt is paid. The Sellers will make certain
representations and warranties in the Agreement with respect to the Mortgage
Loans which are secured by an interest in a leasehold estate. Such
representation and warranties will be set forth in the Prospectus Supplement
if applicable.
LEASES AND RENTS
Mortgages that encumber income-producing property often contain an
assignment of rents and leases, pursuant to which the Mortgagor assigns its
right, title and interest as landlord under each lease and the income derived
therefrom to the lender, while the Mortgagor retains a revocable license to
collect the rents for so long as there is no default. Under such assignments,
the Mortgagor typically assigns its right, title and interest as lessor under
each lease and the income derived therefrom to the mortgagee, while retaining
a license to collect the rents for so long as there is no default under the
mortgage loan documentation. The manner of perfecting the mortgagee's
interest in rents may depend on whether the Mortgagor's assignment was
absolute or one granted as security for the loan. Failure to properly perfect
the mortgagee's interest in rents may result in the loss of substantial pool
of funds, which could otherwise serve as a source of repayment for such loan.
If the Mortgagor defaults, the license terminates and the lender is entitled
to collect the rents. Local law may require that the lender take possession
of the property and/or obtain a court-appointed receiver before becoming
entitled to collect the rents. In most states, hotel and motel room rates are
considered accounts receivable under the UCC; generally these rates are
either assigned by the Mortgagor, which remains entitled to collect such
rates absent a default, or pledged by the Mortgagor, as security for the
loan. In general, the lender must file financing statements in order to
perfect its security interest in the rates and must file continuation
statements, generally every five years, to maintain perfection of such
security interest. Even if the lender's security interest in room rates is
perfected under the UCC, the lender will generally be required to commence a
foreclosure or otherwise take possession of the property in order to collect
the room rates after a default.
Even after a foreclosure, the potential rent payments from the property
may be less than the periodic payments that had been due under the mortgage.
For instance, the net income that would otherwise be generated from the
property may be less than the amount that would have been needed to service
the mortgage debt if the leases on the property are at below-market rents, or
as the result of excessive maintenance, repair or other obligations which a
lender succeeds to as landlord.
Lenders that actually take possession of the property, however, may incur
potentially substantial risks attendant to being a mortgagee in possession.
Such risks include liability for environmental clean-up costs and other risks
inherent in property ownership. See "Environmental Legislation" below.
PERSONALTY
Certain types of Mortgaged Properties, such as hotels, motels and
industrial plants, are likely to derive a significant part of their value
from personal property which does not constitute "fixtures" under applicable
state real property law and, hence, would not be subject to the lien of a
mortgage. Such property is generally pledged or assigned as security to the
lender under the UCC. In order to perfect its security interest therein, the
lender generally must file UCC financing statements and, to maintain
perfection of such security interest, file continuation statements generally
every five years.
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COOPERATIVE LOANS
If specified in the Prospectus Supplement relating to a Series of Offered
Certificate, the Mortgage Loans may also consist of cooperative apartment
loans ("Cooperative Loans") secured by security interests in shares issued by
cooperative housing corporation (a "Cooperative") and in the related
proprietary leases or occupancy agreements granting exclusive rights to
occupy specific dwelling units in the cooperatives' buildings. The security
agreement will create a lien upon, or grant a title interest in, the property
which it covers, the priority of which will depend on the terms of the
particular security agreement as well as the order of recordation of the
agreement in the appropriate recording office. Such a lien or title interest
is not prior to the lien for real estate taxes and assessments and other
charges imposed under governmental police powers.
Each cooperative owns in fee or has a leasehold interest in all the real
property and owns in fee or leases the building and all separate dwelling
units therein. The cooperative is directly responsible for property
management and, in most cases, payment of real estate taxes, other
governmental impositions and hazard and liability insurance. If there is a
blanket mortgage or mortgages on the cooperative apartment building or
underlying land, as is generally the case, or an underlying lease of the
land, as is the case in some instances, the cooperative, as property
Mortgagor, or lessee, as the case may be, is also responsible for meeting
these mortgage or rental obligations. A blanket mortgage is ordinarily
incurred by the cooperative in connection with either the construction or
purchase of the cooperative's apartment building or obtaining of capital by
the cooperative. The interest of the occupant under proprietary leases or
occupancy agreements as to which that cooperative is the landlord are
generally subordinate to the interest of the holder of a blanket mortgage and
to the interest of the holder of a land lease. If the cooperative is unable
to meet the payment obligations (i) arising under a blanket mortgage, the
mortgagee holding a blanket mortgage could foreclose on that mortgage and
terminate all subordinate proprietary leases and occupancy agreements or (ii)
arising under its land lease, the holder of the landlord's interest under the
land lease could terminate it and all subordinate proprietary leases and
occupancy agreements. Also, a blanket mortgage on a cooperative may provide
financing in the form of a mortgage that does not fully amortize, with a
significant portion of principal being due in one final payment at maturity.
The inability of the cooperative to refinance a mortgage and its consequent
inability to make such final payment could lead to foreclosure by the
mortgagee. Similarly, a land lease has an expiration date and the inability
of the cooperative to extend its term or, in the alternative, to purchase the
land could lead to termination of the cooperative's interest in the property
and termination of all proprietary leases and occupancy agreements. In either
event, a foreclosure by the holder of a blanket mortgage or the termination
of the underlying lease could eliminate or significantly diminish the value
of any collateral held by whomever financed the purchase by an individual
tenant stockholder of cooperative shares or, in the case of the Mortgage
Loans, the collateral securing the Cooperative Loans.
The cooperative is owned by tenant-stockholders who, through ownership of
stock or shares in the corporation, receive proprietary lease or occupancy
agreements which confer exclusive rights to occupy specific units. Generally,
a tenant-stockholder of a cooperative must make a monthly payment to the
cooperative representing such tenant-stockholder's pro rata share of the
cooperative's payments for its blanket mortgage, real property taxes,
maintenance expenses and other capital or ordinary expenses. An ownership
interest in a cooperative and accompanying occupancy rights are financed
through a cooperative share loan evidenced by a promissory note and secured
by an assignment of and a security interest in the occupancy agreement or
proprietary lease and a security interest in the related cooperative shares.
The lender generally takes possession of the share certificate and a
counterpart of the proprietary lease or occupancy agreement and a financing
statement covering the proprietary lease or occupancy agreement and the
cooperative shares is filed in the appropriate state and local offices to
perfect the lender's interest in its collateral. Subject to the limitations
discussed below, upon default of the tenant-stockholder, the lender may sue
for judgment on the promissory note, dispose of the collateral at a public or
private sale or otherwise proceed against the collateral or
tenant-stockholder as an individual as provided in the security agreement
covering the assignment of the proprietary lease or occupancy agreement and
the pledge of cooperative shares. See "Foreclosure--Cooperative Loans" below.
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FORECLOSURE
General
Foreclosure is a legal procedure that allows the mortgagee to recover its
mortgage debt by enforcing its rights and available legal remedies under the
mortgage. If the Mortgagor defaults in payment or performance of its
obligations under the note or mortgage, the mortgagee has the right to
institute foreclosure proceedings to sell the mortgaged property at public
auction to satisfy the indebtedness.
Foreclosure procedures with respect to the enforcement of a mortgage vary
from state to state. Two primary methods of foreclosing a mortgage are
judicial foreclosure and non-judicial foreclosure pursuant to a power of sale
granted in the mortgage instrument. There are several other foreclosure
procedures available in some states that are either infrequently used or
available only in certain limited circumstances, such as strict foreclosure.
Judicial Foreclosure
A judicial foreclosure proceeding is conducted in a court having
jurisdiction over the mortgaged property. Generally, the action is initiated
by the service of legal pleadings upon all parties having a subordinate
interest of record in the real property and all parties in possession of the
property, under leases or otherwise, whose interests are subordinate to the
mortgage. Delays in completion of the foreclosure may occasionally result
from difficulties in locating defendants. When the lender's right to
foreclose is contested, the legal proceedings can be time-consuming. Upon
successful completion of a judicial foreclosure proceeding, the court
generally issues a judgment of foreclosure and appoints a referee or other
officer to conduct a public sale of the mortgaged property, the proceeds of
which are used to satisfy the judgment. Such sales are made in accordance
with procedures that vary from state to state.
Equitable Limitations on Enforceability of Certain Provisions
United States courts have traditionally imposed general equitable
principles to limit the remedies available to a mortgagee in connection with
foreclosure. These equitable principles are generally designed to relieve the
Mortgagor from the legal effect of mortgage defaults, to the extent that such
effect is perceived as harsh or unfair. Relying on such principles, a court
may alter the specific terms of a loan to the extent it considers necessary
to prevent or remedy an injustice, undue oppression or overreaching, or may
require the lender to undertake affirmative and expensive actions to
determine the cause of the Mortgagor's default and the likelihood that the
Mortgagor will be able to reinstate the loan. In some cases, courts have
substituted their judgment for the lender's and have required that lenders
reinstate loans or recast payment schedules in order to accommodate
Mortgagors who are suffering from a temporary financial disability. In other
cases, courts have limited the right of the lender to foreclose if the
default under the mortgage is not monetary, e.g., the Mortgagor failed to
maintain the mortgaged property adequately or the Mortgagor executed a junior
mortgage on the mortgaged property. The exercise by the court of its equity
powers will depend on the individual circumstances of each case presented to
it. Finally, some courts have been faced with the issue of whether federal or
state constitutional provisions reflecting due process concerns for adequate
notice require that a Mortgagor receive notice in addition to
statutorily-prescribed minimum notice. For the most part, these cases have
upheld the reasonableness of the notice provisions or have found that a
public sale under a mortgage providing for a power of sale does not involve
sufficient state action to afford constitutional protections to the
Mortgagor.
A foreclosure action is subject to most of the delays and expenses of
other lawsuits if defenses are raised or counterclaims are interposed, and
sometimes require several years to complete. Moreover, as discussed below, a
non-collusive, regularly conducted foreclosure sale may be challenged as a
fraudulent conveyance, regardless of the parties' intent, if a court
determines that the sale was for less than fair consideration and such sale
occurred while the Mortgagor was insolvent (or the Mortgagor was rendered
insolvent as a result of such sale) and within one year (or within the state
statute of limitations if the trustee in bankruptcy elects to proceed under
state fraudulent conveyance law) of the filing of bankruptcy.
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Non-Judicial Foreclosure/Power of Sale
Foreclosure of a deed of trust is generally accomplished by a non-judicial
trustee's sale pursuant to the power of sale granted in the deed of trust. A
power of sale is typically granted in a deed of trust. It may also be
contained in any other type of mortgage instrument. A power of sale allows a
non-judicial public sale to be conducted generally following a request from
the beneficiary/lender to the trustee to sell the property upon any default
by the Mortgagor under the terms of the mortgage note or the mortgage
instrument and after notice of sale is given in accordance with the terms of
the mortgage instrument, as well as applicable state law. In some states,
prior to such sale, the trustee under a deed of trust must record a notice of
default and notice of sale and send a copy to the Mortgagor and to any other
party who has recorded a request for a copy of a notice of default and notice
of sale. In addition in some states the trustee must provide notice to any
other party having an interest of record in the real property, including
junior lienholders. A notice of sale must be posted in a public place and, in
most states, published for a specified period of time in one or more
newspapers. The Mortgagor or junior lienholder may then have the right,
during a reinstatement period required in some states, to cure the default by
paying the entire actual amount in arrears (without acceleration) plus the
expenses incurred in enforcing the obligation. In other states, the Mortgagor
or the junior lienholder is not provided a period to reinstate the loan, but
has only the right to pay off the entire debt to prevent the foreclosure
sale. Generally, the procedure for public sale, the parties entitled to
notice, the method of giving notice and the applicable time periods are
governed by state law and vary among the states. Foreclosure of a deed to
secure debt is also generally accomplished by a non-judicial sale similar to
that required by a deed of trust, except that the lender or its agent, rather
than a trustee, is typically empowered to perform the sale in accordance with
the terms of the deed to secure debt and applicable law.
Public Sale
A third party may be unwilling to purchase a mortgaged property at a
public sale because of the difficulty in determining the value of such
property at the time of sale, due to, among other things, redemption rights
which may exist and the possibility of physical deterioration of the property
during the foreclosure proceedings. For these reasons, it is common for the
lender to purchase the mortgaged property for an amount equal to or less than
the underlying debt and accrued and unpaid interest plus the expenses of
foreclosure. Generally, state law controls the amount of foreclosure costs
and expenses which may be recovered by a lender. Thereafter, subject to the
Mortgagor's right in some states to remain in possession during a redemption
period, if applicable, the lender will become the owner of the property and
have both the benefits and burdens of ownership of the mortgaged property.
For example, the lender will have the obligation to pay debt service on any
senior mortgages, to pay taxes, obtain casualty insurance and to make such
repairs at its own expense as are necessary to render the property suitable
for sale. Frequently, the lender employs a third party management company to
manage and operate the property. The costs of operating and maintaining a
commercial or multifamily residential property may be significant and may be
greater than the income derived from that property. The costs of management
and operation of those mortgaged properties which are hotels, motels,
restaurants, nursing or convalescent homes or hospitals may be particularly
significant because of the expertise, knowledge and, with respect to nursing
or convalescent homes or hospitals, regulatory compliance, required to run
such operations and the effect which foreclosure and a change in ownership
may have on the public's and the industry's (including franchisors')
perception of the quality of such operations. The lender will commonly obtain
the services of a real estate broker and pay the broker's commission in
connection with the sale of the property. Depending upon market conditions,
the ultimate proceeds of the sale of the property may not equal the lender's
investment in the property. Moreover, a lender commonly incurs substantial
legal fees and court costs in acquiring a mortgaged property through
contested foreclosure and/or bankruptcy proceedings. Furthermore, a few
states require that any environmental contamination at certain types of
properties be cleaned up before a property may be resold. In addition, a
lender may be responsible under federal or state law for the cost of cleaning
up a mortgaged property that is environmentally contaminated. See
"Environmental Legislation." Generally state law controls the amount of
foreclosure expenses and costs, including attorneys' fees, that may be
recovered by a lender.
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A junior mortgagee may not foreclose on the property securing the junior
mortgage unless it forecloses subject to senior mortgages and any other prior
liens, in which case it may be obliged to make payments on the senior
mortgages to avoid their foreclosure. In addition, in the event that the
foreclosure of a junior mortgage triggers the enforcement of a "due-on-sale"
clause contained in a senior mortgage, the junior mortgagee may be required
to pay the full amount of the senior mortgage to avoid its foreclosure.
Accordingly, with respect to those Mortgage Loans which are junior mortgage
loans, if the lender purchases the property the lender's title will be
subject to all senior mortgages, prior liens and certain governmental liens.
The proceeds received by the referee or trustee from the sale are applied
first to the costs, fees and expenses of sale and then in satisfaction of the
indebtedness secured by the mortgage under which the sale was conducted. Any
proceeds remaining after satisfaction of senior mortgage debt are generally
payable to the holders of junior mortgages and other liens and claims in
order of their priority, whether or not the Mortgagor is in default. Any
additional proceeds are generally payable to the Mortgagor. The payment of
the proceeds to the holders of junior mortgages may occur in the foreclosure
action of the senior mortgage or a subsequent ancillary proceeding or may
require the institution of separate legal proceedings by such holders.
In connection with a Series of Certificates for which an election is made
to qualify the Trust Fund, or a portion thereof, as a REMIC, the REMIC
Provisions and the Agreement may require the Master Servicer to hire an
independent contractor to operate any foreclosed property relating to Whole
Loans.
Rights of Redemption
The purposes of a foreclosure action are to enable the mortgagee to
realize upon its security and to bar the Mortgagor, and all persons who have
an interest in the property which is subordinate to the mortgage being
foreclosed, from exercise of their "equity of redemption." The doctrine of
equity of redemption provides that, until the property covered by a mortgage
has been sold in accordance with a properly conducted foreclosure and
foreclosure sale, those having an interest which is subordinate to that of
the foreclosing mortgagee have an equity of redemption and may redeem the
property by paying the entire debt with interest. In addition, in some
states, when a foreclosure action has been commenced, the redeeming party
must pay certain costs of such action. Those having an equity of redemption
must generally be made parties and joined in the foreclosure proceeding in
order for their equity of redemption to be cut off and terminated.
The equity of redemption is a common-law (non-statutory) right which
exists prior to completion of the foreclosure, is not waivable by the
Mortgagor, must be exercised prior to foreclosure sale and should be
distinguished from the post-sale statutory rights of redemption. In some
states, after sale pursuant to a deed of trust or foreclosure of a mortgage,
the Mortgagor and foreclosed junior lienors are given a statutory period in
which to redeem the property from the foreclosure sale. In some states,
statutory redemption may occur only upon payment of the foreclosure sale
price. In other states, redemption may be authorized if the former Mortgagor
pays only a portion of the sums due. The effect of a statutory right of
redemption is to diminish the ability of the lender to sell the foreclosed
property. The exercise of a right of redemption would defeat the title of any
purchaser from a foreclosure sale or sale under a deed of trust.
Consequently, the practical effect of the redemption right is to force the
lender to maintain the property and pay the expenses of ownership until the
redemption period has expired. In some states, a post-sale statutory right of
redemption may exist following a judicial foreclosure, but not following a
trustee's sale under a deed of trust.
Under the REMIC Provisions currently in effect, property acquired by
foreclosure generally must not be held for more than three calendar years
following the year of acquisition. Unless otherwise provided in the related
Prospectus Supplement, with respect to a Series of Certificates for which an
election is made to qualify the Trust Fund or a part thereof as a REMIC, the
Agreement will permit foreclosed property to be held for more than two years
if the Internal Revenue Service grants an extension of time within which to
sell such property or independent counsel renders an opinion to the effect
that holding such property for such additional period is permissible under
the REMIC Provisions.
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Anti-Deficiency Legislation
Some or all of the Mortgage Loans may be nonrecourse loans, as to which
recourse may be had only against the specific property securing the related
Mortgage Loan and a personal money judgment may not be obtained against the
Mortgagor. Even if a mortgage loan by its terms provides for recourse to the
Mortgagor, some states impose prohibitions or limitations on such recourse.
For example, statutes in some states limit the right of the lender to obtain
a deficiency judgment against the Mortgagor following foreclosure or sale
under a deed of trust. A deficiency judgment would be a personal judgment
against the former Mortgagor equal to the difference between the net amount
realized upon the public sale of the real property and the amount due to the
lender.
Some states require the lender to exhaust the security afforded under a
mortgage by foreclosure in an attempt to satisfy the full debt before
bringing a personal action against the Mortgagor. In certain other states,
the lender has the option of bringing a personal action against the Mortgagor
on the debt without first exhausting such security; however, in some of these
states, the lender, following judgment on such personal action, may be deemed
to have elected a remedy and may be precluded from exercising remedies with
respect to the security. In some cases, a lender will be precluded from
exercising any additional rights under the note or mortgage if it has taken
any prior enforcement action. Consequently, the practical effect of the
election requirement, in those states permitting such election, is that
lenders will usually proceed against the security first rather than bringing
a personal action against the Mortgagor. Finally, other statutory provisions
limit any deficiency judgment against the former Mortgagor following a
judicial sale to the excess of the outstanding debt over the fair market
value of the property at the time of the public sale. The purpose of these
statutes is generally to prevent a lender from obtaining a large deficiency
judgment against the former Mortgagor as a result of low or no bids at the
judicial sale.
Leasehold Risks
Mortgage Loans may be secured by a mortgage on a ground lease. Leasehold
mortgages are subject to certain risks not associated with mortgage loans
secured by the fee estate of the Mortgagor. The most significant of these
risks is that the ground lease creating the leasehold estate could terminate,
leaving the leasehold mortgagee without its security. The ground lease may
terminate if, among other reasons, the ground lessee breaches or defaults in
its obligations under the ground lease or there is a bankruptcy of the ground
lessee or the ground lessor. This risk may be minimized if the ground lease
contains certain provisions protective of the mortgagee, but the ground
leases that secure Mortgage Loans may not contain some of these protective
provisions, and mortgages may not contain the other protections discussed in
the next paragraph. Protective ground lease provisions include the right of
the leasehold mortgagee to receive notices from the ground lessor of any
defaults by the Mortgagor; the right to cure such defaults, with adequate
cure periods; if a default is not susceptible of cure by the leasehold
mortgagee, the right to acquire the leasehold estate through foreclosure or
otherwise; the ability of the ground lease to be assigned to and by the
leasehold mortgagee or purchaser at a foreclosure sale and for the
concomitant release of the ground lessee's liabilities thereunder; and the
right of the leasehold mortgagee to enter into a new ground lease with the
ground lessor on the same terms and conditions as the old ground lease in the
event of a termination thereof.
In addition to the foregoing protections, a leasehold mortgagee may
require that the ground lease or leasehold mortgage prohibit the ground
lessee from treating the ground lease as terminated in the event of the
ground lessor's bankruptcy and rejection of the ground lease by the trustee
for the debtor-ground lessor. As further protection, a leasehold mortgage may
provide for the assignment of the debtor-ground lessee's right to reject a
lease pursuant to Section 365 of the Bankruptcy Reform Act of 1978, as
amended (Title 11 of the United States Code) (the "Bankruptcy Code"),
although the enforceability of such clause has not been established. Without
the protections described above, a leasehold mortgagee may lose the
collateral securing its leasehold mortgage. In addition, terms and conditions
of a leasehold mortgage are subject to the terms and conditions of the ground
lease. Although certain rights given to a ground lessee can be limited by the
terms of a leasehold mortgage, the rights of a ground lessee or a leasehold
mortgagee with respect to, among other things, insurance, casualty and
condemnation will be governed by the provisions of the ground lease.
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Cooperative Loans
The cooperative shares owned by the tenant-stockholder and pledged to the
lender are, in almost all cases, subject to restrictions on transfer as set
forth in the Cooperative's Certificate of Incorporation and By-laws, as well
as the proprietary lease or occupancy agreement, and may be cancelled by the
cooperative for failure by the tenant-stockholder to pay rent or other
obligations or charges owed by such tenant-stockholder, including mechanics'
liens against the cooperative apartment building incurred by such
tenant-stockholder. The proprietary lease or occupancy agreement generally
permits the Cooperative to terminate such lease or agreement in the an
obligor fails to make payments or defaults in the performance of covenants
required thereunder. Typically, the lender and the Cooperative enter into a
recognition agreement which establishes the rights and obligations of both
parties in the event of a default by the tenant-stockholder under the
proprietary lease or occupancy agreement will usually constitute a default
under the security agreement between the lender and the tenant-stockholder.
The recognition agreement generally provides that, in the event that the
tenant-stockholder has defaulted under the proprietary lease or occupancy
agreement is terminated, the Cooperative will recognize the lender's lien
against proceeds from the sale of the Cooperative apartment, subject,
however, to the Cooperative's right to sums due under such proprietary lease
or occupancy agreement. The total amount owed to the Cooperative by the
tenant-stockholder, which the lender generally cannot restrict and does not
monitor, could reduce the value of the collateral below the outstanding
principal balance of the Cooperative Loan and accrued and unpaid interest
thereon.
Recognition agreements also provide that in the event of a foreclosure on
a Cooperative Loan, the lender must obtain the approval or consent of the
Cooperative as required by the proprietary lease before transferring the
Cooperative shares or assigning the proprietary lease. Generally, the lender
is not limited in any rights it may have to dispossess the
tenant-stockholders.
In some states, foreclosure on the Cooperative shares is accomplished by a
sale in accordance with the provisions of Article 9 of the UCC and the
security agreement relating to those shares. Article 9 of the UCC requires
that a sale be conducted in a "commercially reasonable" manner. Whether a
foreclosure sale has been conducted in a "commercially reasonable" manner
will depend on the facts in each case. In determining commercial
reasonableness, a court will look to the notice given the debtor and the
method, manner, time, place and terms of the foreclosure. Generally, a sale
conducted according to the usual practice of banks selling similar collateral
will be considered reasonably conducted.
Article 9 of the UCC provides that the proceeds of the sale will be
applied first to pay the costs and expenses of the sale and then to satisfy
the indebtedness secured by the lender's security interest. The recognition
agreement, however, generally provides that the lender's right to
reimbursement is subject to the right of the Cooperatives to receive sums due
under the proprietary lease or occupancy agreement. If there are proceeds
remaining, the lender must account to the tenant-stockholder for the surplus.
Conversely, if a portion of the indebtedness remains unpaid, the
tenant-stockholder is generally responsible for the deficiency.
In the case of foreclosure on a building which was converted from a rental
building to a building owned by a Cooperative under a non-eviction plan, some
states require that a purchaser at a foreclosure sale take the property
subject to rent control and rent stabilization laws which apply to certain
tenants who elected to remain in the building was so converted.
BANKRUPTCY LAWS
The Bankruptcy Code and related state laws may interfere with or affect
the ability of a lender to realize upon collateral and/or to enforce a
deficiency judgment. For example, under the Bankruptcy Code, virtually all
actions (including foreclosure actions and deficiency judgment proceedings)
are automatically stayed upon the filing of the bankruptcy petition, and,
usually, no interest or principal payments are made during the course of the
bankruptcy case. The delay and the consequences thereof caused by such
automatic stay can be significant. Also, under the Bankruptcy Code, the
filing of a petition in bankruptcy by or on behalf of a junior lienor may
stay the senior lender from taking action to foreclose out such junior lien.
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Under the Bankruptcy Code, provided certain substantive and procedural
safeguards for the lender are met, the amount and terms of a mortgage secured
by property of the debtor may be modified under certain circumstances. In
many jurisdictions, the outstanding amount of the loan secured by the real
property may be reduced to the then-current value of the property (with a
corresponding partial reduction of the amount of lender's security interest)
pursuant to a confirmed plan or lien avoidance proceeding, thus leaving the
lender a general unsecured creditor for the difference between such value and
the outstanding balance of the loan. Other modifications may include the
reduction in the amount of each scheduled payment, which reduction may result
from a reduction in the rate of interest and/or the alteration of the
repayment schedule (with or without affecting the unpaid principal balance of
the loan), and/or an extension (or reduction) of the final maturity date.
Some courts with federal bankruptcy jurisdiction have approved plans, based
on the particular facts of the reorganization case, that effected the curing
of a mortgage loan default by paying arrearages over a number of years. Also,
under federal bankruptcy law, a bankruptcy court may permit a debtor through
its rehabilitative plan to de-accelerate a secured loan and to reinstate the
loan even though the lender accelerated the mortgage loan and final judgment
of foreclosure had been entered in state court (provided no sale of the
property had yet occurred) prior to the filing of the debtor's petition. This
may be done even if the full amount due under the original loan is never
repaid.
Federal bankruptcy law provides generally that rights and obligation under
an unexpired lease of the debtor/lessee may not be terminated or modified at
any time after the commencement of a case under the Bankruptcy Code solely on
the basis of a provision in the lease to such effect or because of certain
other similar events. This prohibition on so-called "ipso facto clauses"
could limit the ability of the Trustee for a Series of Certificates to
exercise certain contractual remedies with respect to the Leases. In
addition, Section 362 of the Bankruptcy Code operates as an automatic stay
of, among other things, any act to obtain possession of property from a
debtor's estate, which may delay a Trustee's exercise of such remedies for a
related Series of Certificates in the event that a related Lessee or a
related Mortgagor becomes the subject of a proceeding under the Bankruptcy
Code. For example, a mortgagee would be stayed from enforcing a Lease
Assignment by a Mortgagor related to a Mortgaged Property if the related
Mortgagor was in a bankruptcy proceeding. The legal proceedings necessary to
resolve the issues could be time-consuming and might result in significant
delays in the receipt of the assigned rents. Similarly, the filing of a
petition in bankruptcy by or on behalf of a Lessee of a Mortgaged Property
would result in a stay against the commencement or continuation of any state
court proceeding for past due rent, for accelerated rent, for damages or for
a summary eviction order with respect to a default under the Lease that
occurred prior to the filing of the Lessee's petition. Rents and other
proceeds of a Mortgage Loan may also escape an assignment thereof if the
assignment is not fully perfected under state law prior to commencement of
the bankruptcy proceeding. See "--Leases and Rents" above.
In addition, the Bankruptcy Code generally provides that a trustee or
debtor-in-possession may, subject to approval of the court, (a) assume the
lease and retain it or assign it to a third party or (b) reject the lease. If
the lease is assumed, the trustee in bankruptcy on behalf of the lessee, or
the lessee as debtor-in-possession, or the assignee, if applicable, must cure
any defaults under the lease, compensate the lessor for its losses and
provide the lessor with "adequate assurance" of future performance. Such
remedies may be insufficient, however, as the lessor may be forced to
continue under the lease with a lessee that is a poor credit risk or an
unfamiliar tenant if the lease was assigned, and any assurances provided to
the lessor may, in fact, be inadequate. If the lease is rejected, such
rejection generally constitutes a breach of the executory contract or
unexpired lease immediately before the date of filing the petition. As a
consequence, the other party or parties to such lease, such as the Mortgagor,
as lessor under a Lease, would have only an unsecured claim against the
debtor for damages resulting from such breach, which could adversely affect
the security for the related Mortgage Loan. In addition, pursuant to Section
502(b)(6) of the Bankruptcy Code, a lessor's damages for lease rejection in
respect of future rent installments are limited to the rent reserved by the
lease, without acceleration, for the greater of one year or 15%, not to
exceed three years, of the remaining term of the lease.
If a trustee in bankruptcy on behalf of a lessor, or a lessor as
debtor-in-possession, rejects an unexpired lease of real property, the lessee
may treat such lease as terminated by such rejection or, in the
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alternative, the lessee may remain in possession of the leasehold for the
balance of such term and for any renewal or extension of such term that is
enforceable by the lessee under applicable nonbankruptcy law. The Bankruptcy
Code provides that if a lessee elects to remain in possession after such a
rejection of a lease, the lessee may offset against rents reserved under the
lease for the balance of the term after the date of rejection of the lease,
and any such renewal or extension thereof, any damages occurring after such
date caused by the nonperformance of any obligation of the lessor under the
lease after such date. To the extent provided in the related Prospectus
Supplement, the Lessee will agree under certain Leases to pay all amounts
owing thereunder the Master Servicer without offset. To the extent that such
a contractual obligation remains enforceable against the Lessee, the Lessee
would not be able to avail itself of the rights of offset generally afforded
to lessees of real property under the Bankruptcy Code.
In a bankruptcy or similar proceeding of a Mortgagor, action may be taken
seeking the recovery, as a preferential transfer or on other grounds, of any
payments made by the Mortgagor, or made directly by the related Lessee, under
the related Mortgage Loan to the Trust Fund. Payments on long-term debt may
be protected from recovery as preferences if they are payments in the
ordinary course of business made on debts incurred in the ordinary course of
business. Whether any particular payment would be protected depends upon the
facts specific to a particular transaction.
A trustee in bankruptcy, in some cases, may be entitled to collect its
costs and expenses in preserving or selling the mortgaged property ahead of
payment to the lender. In certain circumstances, a debtor in bankruptcy may
have the power to grant liens senior to the lien of a mortgage, and analogous
state statutes and general principles of equity may also provide a Mortgagor
with means to halt a foreclosure proceeding or sale and to force a
restructuring of a mortgage loan on terms a lender would not otherwise
accept. Moreover, the laws of certain states also give priority to certain
tax liens over the lien of a mortgage or deed of trust. Under the Bankruptcy
Code, if the court finds that actions of the mortgagee have been
unreasonable, the lien of the related mortgage may be subordinated to the
claims of unsecured creditors.
To the extent described in the related Prospectus Supplement, certain of
the Mortgagors may be partnerships. The laws governing limited partnerships
in certain states provide that the commencement of a case under the
Bankruptcy Code with respect to a general partner will cause a person to
cease to be a general partner of the limited partnership, unless otherwise
provided in writing in the limited partnership agreement. This provision may
be construed as an "ipso facto" clause and, in the event of the general
partner's bankruptcy, may not be enforceable. To the extent described in the
related Prospectus Supplement, certain limited partnership agreements of the
Mortgagors may provide that the commencement of a case under the Bankruptcy
Code with respect to the related general partner constitutes an event of
withdrawal (assuming the enforceability of the clause is not challenged in
bankruptcy proceedings or, if challenged, is upheld) that might trigger the
dissolution of the limited partnership, the winding up of its affairs and the
distribution of its assets, unless (i) at the time there was at least one
other general partner and the written provisions of the limited partnership
permit the business of the limited partnership to be carried on by the
remaining general partner and that general partner does so or (ii) the
written provisions of the limited partnership agreement permit the limited
partner to agree within a specified time frame (often 60 days) after such
withdrawal to continue the business of the limited partnership and to the
appointment of one or more general partners and the limited partners do so.
In addition, the laws governing general partnerships in certain states
provide that the commencement of a case under the Bankruptcy Code or state
bankruptcy laws with respect to a general partner of such partnerships
triggers the dissolution of such partnership, the winding up of its affairs
and the distribution of its assets. Such state laws, however, may not be
enforceable or effective in a bankruptcy case. The dissolution of a
Mortgagor, the winding up of its affairs and the distribution of its assets
could result in an acceleration of its payment obligation under a related
Mortgage Loan, which may reduce the yield on the related Series of
Certificates in the same manner as a principal prepayment.
In addition, the bankruptcy of the general partner of a Mortgagor that is
a partnership may provide the opportunity for a trustee in bankruptcy for
such general partner, such general partner as a debtor-in-possession, or a
creditor of such general partner to obtain an order from a court
consolidating the assets and liabilities of the general partner with those of
the Mortgagor pursuant to the doctrines of
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substantive consolidation or piercing the corporate veil. In such a case, the
respective Mortgaged Property, for example, would become property of the
estate of such bankrupt general partner. Not only would the Mortgaged
Property be available to satisfy the claims of creditors of such general
partner, but an automatic stay would apply to any attempt by the Trustee to
exercise remedies with respect to such Mortgaged Property. However, such an
occurrence should not affect the Trustee's status as a secured creditor with
respect to the Mortgagor or its security interest in the Mortgaged Property.
ENVIRONMENTAL LEGISLATION
Real property pledged as security to a lender may be subject to unforeseen
environmental liabilities. Of particular concern may be those Mortgaged
Properties which are, or have been, the site of manufacturing, industrial or
disposal activity. Such environmental liabilities may give rise to (i) a
diminution in value of property securing any Mortgage Loan, (ii) limitation
on the ability to foreclose against such property or (iii) in certain
circumstances as more fully described below, liability for clean up costs or
other remedial actions, which liability could exceed the value of the
principal balance of the related Mortgage Loan or of such Mortgaged Property.
Under the laws of many states, contamination on a property may give rise
to a lien on the property for cleanup costs. In several states, such a lien
has priority over all existing liens (a "superlien") including those of
existing mortgages; in these states, the lien of a mortgage contemplated by
this transaction may lose its priority to such a superlien.
Under the federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), a lender may be liable either
to the government or to private parties for cleanup costs on a property
securing a loan, even if the lender does not cause or contribute to the
contamination. CERCLA imposes strict, as well as joint and several, liability
on several classes of potentially responsible parties, including current
owners and operators of the property, regardless of whether they caused or
contributed to the contamination. Many states have laws similar to CERCLA.
Lenders may be held liable under CERCLA as owners or operators. Excluded
from CERCLA's definition of "owner or operator," however, is a person "who
without participating in the management of the facility, holds indicia of
ownership primarily to protect his security interest." This exemption for
holders of a security interest such as a secured lender applies only in
circumstances where the lender acts to protect its security interest in the
contaminated facility or property. Thus, if a lender's activities encroach on
the actual management of such facility or property, the lender faces
potential liability as an "owner or operator" under CERCLA. Similarly, when a
lender forecloses and takes title to a contaminated facility or property
(whether it holds the facility or property as an investment or leases it to a
third party), the lender may incur potential CERCLA liability.
Whether actions taken by a lender would constitute such participation in
the management of a facility or property, so that the lender loses the
protection of this "second creditor exclusion," has been a matter of judicial
interpretation of the statutory language, and court decisions have
historically been inconsistent. In 1990, the United States Court of Appeals
for the Eleventh Circuit suggested, in United States v. Fleet Factors Corp.,
that the mere capacity of the lender to influence a borrower's decisions
regarding disposal of hazardous substances was sufficient participation in
the management of the borrower's business to deny the protection of the
secured creditor exclusion to the lender, regardless of whether the lender
actually exercised such influence. Other judicial decisions did not interpret
the secured creditor exclusion as narrowly as did the Eleventh Circuit.
This ambiguity appears to have been resolved by the enactment of the Asset
Conservation, Lender Liability and Deposit Insurance Protection Act of 1996
(the "Asset Conservation Act"), which took effect on September 30, 1996. The
Asset Conservation Act provides that in order to be deemed to have
participated in the management of a secured property, a lender must actually
participate in the operational affairs of the property or of the borrower.
The Asset Conservation Act also provides that participation in the management
of the property does not include "merely having the capacity to influence, or
unexercised right to control" operations. Rather, a lender will lose the
protection of the secured creditor exclusion only if it exercises
decision-making control over the borrower's environmental
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compliance and hazardous substance handling and disposal practices, or
assumes day-to-day management of all operational functions of the secured
property.
The secured-creditor exemption does not protect a lender from liability
under CERCLA in cases where the lender arranges for disposal of hazardous
substances or for transportation of hazardous substances. The definition of
"hazardous substances" under CERCLA specifically excludes petroleum products,
and the secured-creditor exemption does not govern liability for cleanup
costs under federal laws other than CERCLA, in particular Subtitle I of the
federal Resource Conservation and Recovery Act ("RCRA"), which regulates
underground petroleum (other than heating oil) storage tanks. However, the
EPA has adopted a lender liability rule for underground storage tanks under
Subtitle I of RCRA. Under such rule, a holder of a security interest in an
underground storage tank or real property containing an underground storage
tank is not considered an operator of the underground storage tank as long as
petroleum is not added to, stored in or dispensed from the tank. It should be
noted, however, that liability for cleanup of petroleum contamination may be
governed by state law, which may not provide for any specific protections for
secured creditors.
If a lender is or becomes liable, it may bring an action for contribution
against the owner or operator who created the environmental hazard, but that
person or entity may be bankrupt or otherwise judgment proof. It is possible
that cleanup costs could become a liability of the Trust Fund and occasion a
loss to Certificateholders in certain circumstances described above if such
remedial costs were incurred.
The related Agreement will provide that the Special Servicer, acting on
behalf of the Trustee, may not acquire title to a Mortgaged Property or take
over its operation unless the Special Servicer has previously determined,
based on a report prepared by a person who regularly conducts environmental
assessments, that: (i) such Mortgaged Property is in compliance with
applicable environmental laws, or, if not, that taking such actions as are
necessary to bring the Mortgaged Property in compliance therewith is likely
to produce a greater recovery on a present value basis, after taking into
account any risks associated therewith, than not taking such actions and (ii)
there are no circumstances present at the Mortgaged Property relating to the
use, management or disposal of any Hazardous Materials for which
investigation, testing, monitoring, containment, clean-up or remediation
could be required under any federal, state or local law or regulation. This
requirement effectively precludes enforcement of the security for the related
Mortgage Note until a satisfactory environmental inquiry is undertaken, or
that, if any Hazardous Materials are present for which such action could be
required, taking such actions with respect to the affected Mortgaged Property
is reasonably likely to produce a greater recovery on a present value basis,
after taking into account any risks associated therewith, than not taking
such actions, reducing the likelihood that a given Trust Fund will become
liable for any condition or circumstance that may give rise to any
environmental claim (an "Environmental Hazard Condition") affecting a
Mortgaged Property, but making it more difficult to realize on the security
for the Mortgage Loan. However, there can be no assurance that any
environmental assessment obtained by the Special Servicer will detect all
possible Environmental Hazard Conditions, that any estimate of the costs of
effecting compliance at any Mortgaged Property and the recovery thereon will
be correct, or that the other requirements of the Agreement, even if fully
observed by the Master Servicer or Special Servicer, as the case may be, will
in fact insulate a given Trust Fund from liability for Environmental Hazard
Conditions. Any additional restrictions on acquiring titles to a Mortgaged
Property may be set forth in the related Prospectus Supplement.
Unless otherwise specified in the related Prospectus Supplement, the
Depositor generally will not have determined whether environmental
assessments have been conducted with respect to the Mortgaged Properties
relating to the Mortgage Loans included in the Mortgage Pool for a Series,
and it is likely that any environmental assessments which would have been
conducted with respect to any of the Mortgaged Properties would have been
conducted at the time of the origination of the related Mortgage Loans and
not thereafter. If specified in the related Prospectus Supplement, a
Warranting Party will represent and warrant that based on an environmental
audit commissioned by Warranting Party, as of the date of the origination of
a Mortgage Loan, the related Mortgaged Property is not affected by a
Disqualifying Condition (as defined below). No such person will however, be
responsible for any Disqualifying Condition which may arise on a Mortgaged
Property after the date of origination of the related Mortgage
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Loan, whether due to actions of the Mortgagor, the Master Servicer, the
Primary Servicer, the Special Servicer or any other person. It may not always
be possible to determine whether a Disqualifying Condition arose prior or
subsequent to the date of the origination of the related Mortgage Loan.
A "Disqualifying Condition" is defined generally as a condition which
would reasonably be expected to (1) constitute or result in a violation of
applicable environmental laws, (2) require any expenditure material in
relation to the principal balance of the related Mortgage Loan to achieve or
maintain compliance in all material respects with any applicable
environmental laws, or (3) require substantial cleanup, remedial action or
other extraordinary response under any applicable environmental laws in
excess of a specified escrowed amount.
"Hazardous Materials" are generally defined under several federal and
state statutes, and include dangerous toxic or hazardous pollutants,
chemicals, wastes or substances, including, without limitation, those so
identified pursuant to CERCLA, and specifically including, asbestos and
asbestos containing materials, polychlorinated biphenyls, radon gas,
petroleum and petroleum products and urea formaldehyde.
DUE-ON-SALE AND DUE-ON-ENCUMBRANCE
Certain of the Mortgage Loans may contain due-on-sale and
due-on-encumbrance clauses. These clauses generally provide that the lender
may accelerate the maturity of the loan if the Mortgagor sells or otherwise
transfers or encumbers the mortgaged property. Certain of these clauses may
provide that, upon an attempted breach thereof by the Mortgagor of an
otherwise non-recourse loan, the Mortgagor becomes personally liable for the
mortgage debt. The enforceability of due-on-sale clauses has been the subject
of legislation or litigation in many states and, in some cases, the
enforceability of these clauses was limited or denied. However, with respect
to certain loans the Garn-St Germain Depository Institutions Act of 1982
preempts state constitutional, statutory and case law that prohibits the
enforcement of due-on-sale clauses and permits lenders to enforce these
clauses in accordance with their terms subject to certain limited exceptions.
Unless otherwise provided in the related Prospectus Supplement, a Master
Servicer, on behalf of the Trust Fund, will determine whether to exercise any
right the Trustee may have as mortgagee to accelerate payment of any such
Mortgage Loan or to withhold its consent to any transfer or further
encumbrance in a manner consistent with the Servicing Standard.
In addition, under federal bankruptcy laws, due-on-sale clauses may not be
enforceable in bankruptcy proceedings and may, under certain circumstances,
be eliminated in any modified mortgage resulting from such bankruptcy
proceeding.
SUBORDINATE FINANCING
Where the Mortgagor encumbers mortgaged property with one or more junior
liens, the senior lender is subjected to additional risk. First, the
Mortgagor may have difficulty servicing and repaying multiple loans. In
addition, if the junior loan permits recourse to the Mortgagor (as junior
loans often do) and the senior loan does not, a Mortgagor may be more likely
to repay sums due on the junior loan than those on the senior loan. Second,
acts of the senior lender that prejudice the junior lender or impair the
junior lender's security may create a superior equity in favor of the junior
lender. For example, if the Mortgagor and the senior lender agree to an
increase in the principal amount of or the interest rate payable on the
senior loan, the senior lender may lose its priority to the extent any
existing junior lender is harmed or the Mortgagor is additionally burdened.
Third, if the Mortgagor defaults on the senior loan and/or any junior loan or
loans, the existence of junior loans and actions taken by junior lenders can
impair the security available to the senior lender and can interfere with or
delay the taking of action by the senior lender. Moreover, the bankruptcy of
a junior lender may operate to stay foreclosure or similar proceedings by the
senior lender.
DEFAULT INTEREST, PREPAYMENT CHARGES AND PREPAYMENTS
Forms of notes and mortgages used by lenders may contain provisions
obligating the Mortgagor to pay a late charge or additional interest if
payments are not timely made, and in some circumstances may
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provide for prepayment fees or yield maintenance penalties if the obligation
is paid prior to maturity or prohibit such prepayment for a specified period.
In certain states, there are or may be specific limitations upon the late
charges which a lender may collect from a Mortgagor for delinquent payments.
Certain states also limit the amounts that a lender may collect from a
Mortgagor as an additional charge if the loan is prepaid. The enforceability,
under the laws of a number of states of provisions providing for prepayment
fees or penalties upon, or prohibition of, an involuntary prepayment is
unclear, and no assurance can be given that, at the time a Prepayment Premium
is required to be made on a Mortgage Loan in connection with an involuntary
prepayment, the obligation to make such payment, or the provisions of any
such prohibition, will be enforceable under applicable state law. The absence
of a restraint on prepayment, particularly with respect to Mortgage Loans
having higher Mortgage Interest Rates, may increase the likelihood of
refinancing or other early retirements of the Mortgage Loans.
ACCELERATION ON DEFAULT
Unless otherwise specified in the related Prospectus Supplement, some of
the Mortgage Loans included in the Mortgage Pool for a Series will include a
"debt-acceleration" clause, which permits the lender to accelerate the full
debt upon a monetary or nonmonetary default of the Mortgagor. The courts of
all states will enforce clauses providing for acceleration in the event of a
material payment default after giving effect to any appropriate notices. The
equity courts of the state, however, may refuse to foreclose a mortgage or
deed of trust when an acceleration of the indebtedness would be inequitable
or unjust or the circumstances would render the acceleration unconscionable.
Furthermore, in some states, the Mortgagor may avoid foreclosure and
reinstate an accelerated loan by paying only the defaulted amounts and the
costs and attorneys' fees incurred by the lender in collecting such defaulted
payments.
APPLICABILITY OF USURY LAWS
Title V of the Depository Institutions Deregulation and Monetary Control
Act of 1980, enacted in March 1980 ("Title V"), provides that state usury
limitations shall not apply to certain types of residential (including
multifamily but not other commercial) first mortgage loans originated by
certain lenders after March 31, 1980. A similar federal statute was in effect
with respect to mortgage loans made during the first three months of 1980.
The statute authorized any state to reimpose interest rate limits by
adopting, before April 1, 1983, a law or constitutional provision that
expressly rejects application of the federal law. In addition, even where
Title V is not so rejected, any state is authorized by the law to adopt a
provision limiting discount points or other charges on mortgage loans covered
by Title V. Certain states have taken action to reimpose interest rate limits
and/or to limit discount points or other charges.
The Depositor has been advised by counsel that a court interpreting Title
V would hold that residential first mortgage loans that are originated on or
after January 1, 1980 are subject to federal preemption. Therefore, in a
state that has not taken the requisite action to reject application of Title
V or to adopt a provision limiting discount points or other charges prior to
origination of such mortgage loans, any such limitation under such state's
usury law would not apply to such mortgage loans.
In any state in which application of Title V has been expressly rejected
or a provision limiting discount points or other charges is adopted, no
Mortgage Loan originated after the date of such state action will be eligible
for inclusion in a Trust Fund unless (i) such Mortgage Loan provides for such
interest rate, discount points and charges as are permitted in such state or
(ii) such Mortgage Loan provides that the terms thereof shall be construed in
accordance with the laws of another state under which such interest rate,
discount points and charges would not be usurious and the Mortgagor's counsel
has rendered an opinion that such choice of law provision would be given
effect.
Statutes differ in their provisions as to the consequences of a usurious
loan. One group of statutes requires the lender to forfeit the interest due
above the applicable limit or impose a specified penalty. Under this
statutory scheme, the borrower may cancel the recorded mortgage or deed of
trust upon paying its debt with lawful interest, and the lender may
foreclose, but only for the debt plus lawful interest. A second group of
statutes is more severe. A violation of this type of usury law results in the
invalidation of the transaction, thereby permitting the borrower to cancel
the recorded mortgage or deed of trust without any payment or prohibiting the
lender from foreclosing.
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CERTAIN LAWS AND REGULATIONS; TYPES OF MORTGAGED PROPERTIES
The Mortgaged Properties will be subject to compliance with various
federal, state and local statutes and regulations. Failure to comply
(together with an inability to remedy any such failure) could result in
material diminution in the value of a Mortgage Property which could, together
with the possibility of limited alternative uses for a particular Mortgaged
Property (e.g., a nursing or convalescent home or hospital), result in a
failure to realize the full principal amount of the related Mortgage Loan.
Mortgages on Mortgaged Properties which are owned by the Mortgagor under a
condominium form of ownership are subject to the declaration, by-laws and
other rules and regulations of the condominium association. Mortgaged
Properties which are hotels or motels may present additional risk in that
hotels and motels are typically operated pursuant to franchise, management
and operating agreements which may be terminable by the operator, and the
transferability of the hotel's operating, liquor and other licenses to the
entity acquiring the hotel either through purchases or foreclosure is subject
to the vagaries of local law requirements. In addition, Mortgaged Properties
which are multifamily residential properties may be subject to rent control
laws, which could impact the future cash flows of such properties.
AMERICANS WITH DISABILITIES ACT
Under Title III of the Americans with Disabilities Act of 1990 and rules
promulgated thereunder (collectively, the "ADA"), in order to protect
individuals with disabilities, public accommodations (such as hotels,
restaurants, shopping centers, hospitals, schools and social service center
establishments) must remove architectural and communication barriers which
are structural in nature from existing places of public accommodation to the
extent "readily achievable." In addition, under the ADA, alterations to a
place of public accommodation or a commercial facility are to be made so
that, to the maximum extent feasible, such altered portions are readily
accessible to and usable by disabled individuals. The "readily achievable"
standard takes into account, among other factors, the financial resources of
the affected site, owner, landlord or other applicable person. In addition to
imposing a possible financial burden on the Mortgagor in its capacity as
owner or landlord, the ADA may also impose such requirements on a foreclosing
lender who succeeds to the interest of the Mortgagor as owner of landlord.
Furthermore, since the "readily achievable" standard may vary depending on
the financial condition of the owner or landlord, a foreclosing lender who is
financially more capable than the Mortgagor of complying with the
requirements of the ADA may be subject to more stringent requirements than
those to which the Mortgagor is subject.
SOLDIERS' AND SAILORS' CIVIL RELIEF ACT OF 1940
Under the terms of the Soldiers' and Sailors' Civil Relief Act of 1940, as
amended (the "Relief Act"), a Mortgagor who enters military service after the
origination of such Mortgagor's Mortgage Loan (including a Mortgagor who was
in reserve status and is called to active duty after origination of the
Mortgage Loan), may not be charged interest (including fees and charges)
above an annual rate of 6% during the period of such Mortgagor's active duty
status, unless a court orders otherwise upon application of the lender. The
Relief Act applies to Mortgagors who are members of the Army, Navy, Air
Force, Marines, National Guard, Reserves, Coast Guard and officers of the
U.S. Public Health Service assigned to duty with the military. Because the
Relief Act applies to Mortgagors who enter military service (including
reservists who are called to active duty) after origination of the related
Mortgage Loan, no information can be provided as to the number of loans that
may be affected by the Relief Act. Application of the Relief Act would
adversely affect, for an indeterminate period of time, the ability of any
servicer to collect full amounts of interest on certain of the Mortgage
Loans. Any shortfalls in interest collections resulting from the application
of the Relief Act would result in a reduction of the amounts distributable to
the holders of the related Series of Certificates, and would not be covered
by advances or, unless otherwise specified in the related Prospectus
Supplement, any form of Credit Support provided in connection with such
Certificates. In addition, the Relief Act imposes limitations that would
impair the ability of the servicer to foreclose on an affected Mortgage Loan
during the Mortgagor's period of active duty status, and, under certain
circumstances, during an additional three month period thereafter. Thus, in
the event that such a Mortgage Loan goes into default, there may be delays
and losses occasioned thereby.
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FORFEITURES IN DRUG AND RICO PROCEEDINGS
Federal law provides that property owned by persons convicted of
drug-related crimes or of criminal violations of the Racketeer Influenced and
Corrupt Organizations ("RICO") statute can be seized by the government if the
property was used in, or purchased with the proceeds of, such crimes. Under
procedures contained in the Comprehensive Crime Control Act of 1984 (the
"Crime Control Act"), the government may seize the property even before
conviction. The government must publish notice of the forfeiture proceeding
and may give notice to all parties "known to have an alleged interest in the
property," including the holders of mortgage loans.
A lender may avoid forfeiture of its interest in the property if it
establishes that: (i) its mortgage was executed and recorded before
commission of the crime upon which the forfeiture is based, or (ii) the
lender was, at the time of execution of the mortgage, "reasonably without
cause to believe" that the property was used in, or purchased with the
proceeds of, illegal drug or RICO activities.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following summary of the anticipated material federal income tax
consequences of the purchase, ownership and disposition of Offered
Certificates is based on the advice of Brown & Wood llp, counsel to the
Depositor. This summary is based on laws, regulations, including the REMIC
regulations promulgated by the Treasury Department (the "REMIC Regulations"),
rulings and decisions now in effect or (with respect to regulations)
proposed, all of which are subject to change either prospectively or
retroactively. Brown & Wood llp will deliver an opinion to the Depositor that
the information set forth under this caption, "Certain Federal Income Tax
Consequences," to the extent that it constitutes matters of law or legal
conclusions, is correct in all material respects. This summary does not
address the federal income tax consequences of an investment in Certificates
applicable to all categories of investors, some of which (for example, banks
and insurance companies) may be subject to special rules. Prospective
investors should consult their tax advisors regarding the federal, state,
local and any other tax consequences to them of the purchase, ownership and
disposition of Certificates.
GENERAL
The federal income tax consequences to Certificateholders will vary
depending on whether an election is made to treat the Trust Fund relating to
a particular Series of Certificates as a REMIC under the Code. The Prospectus
Supplement for each Series of Certificates will specify whether a REMIC
election will be made.
GRANTOR TRUST FUNDS
If a REMIC election is not made, Brown & Wood llp will deliver its opinion
that the Trust Fund will not be classified as an association taxable as a
corporation and that each such Trust Fund will be classified as a grantor
trust under subpart E, Part I of subchapter J of the Code. In this case,
owners of Certificates will be treated for federal income tax purposes as
owners of a portion of the Trust Fund's assets as described below.
A. SINGLE CLASS OF GRANTOR TRUST CERTIFICATES
Characterization. The Trust Fund may be created with one class of Grantor
Trust Certificates. In this case, each Grantor Trust Certificateholder will
be treated as the owner of a pro rata undivided interest in the interest and
principal portions of the Trust Fund represented by the Grantor Trust
Certificates and will be considered the equitable owner of a pro rata
undivided interest in each of the Mortgage Assets in the Pool. Any amounts
received by a Grantor Trust Certificateholder in lieu of amounts due with
respect to any Mortgage Asset because of a default or delinquency in payment
will be treated for federal income tax purposes as having the same character
as the payments they replace.
Each Grantor Trust Certificateholder will be required to report on its
federal income tax return in accordance with such Grantor Trust
Certificateholder's method of accounting its pro rata share of the
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entire income from the Mortgage Loans in the Trust Fund represented by
Grantor Trust Certificates, including interest, original issue discount
("OID"), if any, prepayment fees, assumption fees, any gain recognized upon
an assumption and late payment charges received by the Master Servicer. Under
Code Sections 162 or 212 each Grantor Trust Certificateholder will be
entitled to deduct its pro rata share of servicing fees, prepayment fees,
assumption fees, any loss recognized upon an assumption and late payment
charges retained by the Master Servicer, provided that such amounts are
reasonable compensation for services rendered to the Trust Fund. Grantor
Trust Certificateholders that are individuals, estates or trusts will be
entitled to deduct their share of expenses as itemized deductions only to the
extent such expenses plus all other Code Section 212 expenses exceed two
percent of its adjusted gross income. In addition, the amount of itemized
deductions otherwise allowable for the taxable year for an individual whose
adjusted gross income exceeds the applicable amount (which amount will be
adjusted for inflation) will be reduced by the lesser of (i) 3% of the excess
of adjusted gross income over the applicable amount or (ii) 80% of the amount
of itemized deductions otherwise allowable for such taxable year. A Grantor
Trust Certificateholder using the cash method of accounting must take into
account its pro rata share of income and deductions as and when collected by
or paid to the Master Servicer. A Grantor Trust Certificateholder using an
accrual method of accounting must take into account its pro rata share of
income and deductions as they become due or are paid to the Master Servicer,
whichever is earlier. If the servicing fees paid to the Master Servicer are
deemed to exceed reasonable servicing compensation, the amount of such excess
could be considered as an ownership interest retained by the Master Servicer
(or any person to whom the Master Servicer assigned for value all or a
portion of the servicing fees) in a portion of the interest payments on the
Mortgage Assets. The Mortgage Assets would then be subject to the "coupon
stripping" rules of the Code discussed below.
Unless otherwise specified in the related Prospectus Supplement, as to
each Series of Certificates Brown & Wood llp will have advised the Depositor
that:
(i) a Grantor Trust Certificate owned by a "domestic building and loan
association" within the meaning of Code Section 7701(a)(19) representing
principal and interest payments on Mortgage Assets will be considered to
represent "loans . . . secured by an interest in real property which is .
. . residential property" within the meaning of Code Section
7701(a)(19)(C)(v), to the extent that the Mortgage Assets represented by
that Grantor Trust Certificate are of a type described in such Code
section;
(ii) a Grantor Trust Certificate owned by a real estate investment trust
representing an interest in Mortgage Assets will be considered to
represent "real estate assets" within the meaning of Code Section
856(c)(5)(A), and interest income on the Mortgage Assets will be
considered "interest on obligations secured by mortgages on real property"
within the meaning of Code Section 856(c)(3)(B), to the extent that the
Mortgage Assets represented by that Grantor Trust Certificate are of a
type described in such Code section; and
(iii) a Grantor Trust Certificate owned by a REMIC will represent
"obligation[s] . . . which [are] principally secured by an interest in
real property" within the meaning of Code Section 860G(a)(3).
The Small Business Job Protection Act of 1996, as part of the repeal of
the bad debt reserve method for thrift institutions, repealed the application
of Code Section 593(d) to any taxable year beginning after December 31, 1995.
Stripped Bonds and Coupons. Certain Trust Funds may consist of Government
Securities which constitute "stripped bonds" or "stripped coupons" as those
terms are defined in Section 1286 of the Code, and, as a result, such assets
would be subject to the stripped bond provisions of the Code.
Under these rules, such Government Securities are treated as having
original issue discount based on the purchase price and the stated redemption
price at maturity of each Security. As such, Grantor Trust Certificateholders
would be required to include in income their pro rata share of the original
issue discount on each Government Security recognized in any given year on an
economic accrual basis even if the Grantor Trust Certificateholder is a cash
method taxpayer. Accordingly, the sum of the income includible to the Grantor
Trust Certificateholder in any taxable year may exceed amounts actually
received during such year.
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Premium. The price paid for a Grantor Trust Certificate by a holder will
be allocated to such holder's undivided interest in each Mortgage Asset based
on each Mortgage Asset's relative fair market value, so that such holder's
undivided interest in each Mortgage Asset will have its own tax basis. A
Grantor Trust Certificateholder that acquires an interest in Mortgage Assets
at a premium may elect to amortize such premium under a constant interest
method, provided that the underlying mortgage loans with respect to such
Mortgage Assets were originated after September 27, 1985. Premium allocable
to mortgage loans originated on or before September 27, 1985 should be
allocated among the principal payments on such mortgage loans and allowed as
an ordinary deduction as principal payments are made. Amortizable bond
premium will be treated as an offset to interest income on such Grantor Trust
Certificate. The basis for such Grantor Trust Certificate will be reduced to
the extent that amortizable premium is applied to offset interest payments.
It is not clear whether a reasonable prepayment assumption should be used in
computing amortization of premium allowable under Code Section 171. A
Certificateholder that makes this election for a Certificate that is acquired
at a premium will be deemed to have made an election to amortize bond premium
with respect to all debt instruments having amortizable bond premium that
such Certificateholder acquires during the year of the election or
thereafter.
If a premium is not subject to amortization using a reasonable prepayment
assumption, the holder of a Grantor Trust Certificate acquired at a premium
should recognize a loss if a Mortgage Loan (or an underlying mortgage loan
with respect to a Mortgage Asset) prepays in full, equal to the difference
between the portion of the prepaid principal amount of such Mortgage Loan (or
underlying mortgage loan) that is allocable to the Certificate and the
portion of the adjusted basis of the Certificate that is allocable to such
Mortgage Loan (or underlying mortgage loan). If a reasonable prepayment
assumption is used to amortize such premium, it appears that such a loss
would be available, if at all, only if prepayments have occurred at a rate
faster than the reasonable assumed prepayment rate. It is not clear whether
any other adjustments would be required to reflect differences between an
assumed prepayment rate and the actual rate of prepayments.
On December 30, 1997 the IRS issued finalized regulations (the
"Amortizable Bond Premium Regulations") dealing with amortizable bond
premium. These regulations specifically do not apply to prepayable debt
instruments subject to Code Section 1272(a)(6) such as the Securities. Absent
further guidance from the IRS, the Trustee intends to account for amortizable
bond premium in the manner described above. Prospective purchasers of the
Securities should consult their tax advisors regarding the possible
application of the Amortizable Bond Premium Regulations.
Original Issue Discount. The Internal Revenue Service (the "IRS") has
stated in published rulings that, in circumstances similar to those described
herein, the special rules of the Code relating to original issue discount
("OID") (currently Code Sections 1271 through 1273 and 1275) and Treasury
regulations issued on January 27, 1994, under such Sections (the "OID
Regulations"), will be applicable to a Grantor Trust Certificateholder's
interest in those Mortgage Assets meeting the conditions necessary for these
sections to apply. Rules regarding periodic inclusion of OID income are
applicable to mortgages of corporations originated after May 27, 1969,
mortgages of noncorporate Mortgagors (other than individuals) originated
after July 1, 1982, and mortgages of individuals originated after March 2,
1984. Such OID could arise by the financing of points or other charges by the
originator of the mortgages in an amount greater than a statutory de minimis
exception to the extent that the points are not currently deductible under
applicable Code provisions or are not for services provided by the lender.
OID generally must be reported as ordinary gross income as it accrues under a
constant interest method. See "--Multiple Classes of Grantor Trust
Certificates--Accrual of Original Issue Discount" below.
Market Discount. A Grantor Trust Certificateholder that acquires an
undivided interest in Mortgage Assets may be subject to the market discount
rules of Code Sections 1276 through 1278 to the extent an undivided interest
in a Mortgage Asset is considered to have been purchased at a "market
discount." Generally, the amount of market discount is equal to the excess of
the portion of the principal amount of such Mortgage Asset allocable to such
holder's undivided interest over such holder's tax basis in such interest.
Market discount with respect to a Grantor Trust Certificate will be
considered to be zero if the amount allocable to the Grantor Trust
Certificate is less than 0.25% of the Grantor Trust Certificate's
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stated redemption price at maturity multiplied by the weighted average
maturity remaining after the date of purchase. Treasury regulations
implementing the market discount rules have not yet been issued; therefore,
investors should consult their own tax advisors regarding the application of
these rules and the advisability of making any of the elections allowed under
Code Sections 1276 through 1278.
The Code provides that any principal payment (whether a scheduled payment
or a prepayment) or any gain on disposition of a market discount bond
acquired by the taxpayer after October 22, 1986 shall be treated as ordinary
income to the extent that it does not exceed the accrued market discount at
the time of such payment. The amount of accrued market discount for purposes
of determining the tax treatment of subsequent principal payments or
dispositions of the market discount bond is to be reduced by the amount so
treated as ordinary income.
The Code also grants the Treasury Department authority to issue
regulations providing for the computation of accrued market discount on debt
instruments, the principal of which is payable in more than one installment.
While the Treasury Department has not yet issued regulations, rules described
in the relevant legislative history will apply. Under those rules, the holder
of a market discount bond may elect to accrue market discount either on the
basis of a constant interest rate or according to one of the following
methods. If a Grantor Trust Certificate is issued with OID, the amount of
market discount that accrues during any accrual period would be equal to the
product of (i) the total remaining market discount and (ii) a fraction, the
numerator of which is the OID accruing during the period and the denominator
of which is the total remaining OID at the beginning of the accrual period.
For Grantor Trust Certificates issued without OID, the amount of market
discount that accrues during a period is equal to the product of (i) the
total remaining market discount and (ii) a fraction, the numerator of which
is the amount of stated interest paid during the accrual period and the
denominator of which is the total amount of stated interest remaining to be
paid at the beginning of the accrual period. For purposes of calculating
market discount under any of the above methods in the case of instruments
(such as the Grantor Trust Certificates) that provide for payments that may
be accelerated by reason of prepayments of other obligations securing such
instruments, the same prepayment assumption applicable to calculating the
accrual of OID will apply. Because the regulations described above have not
been issued, it is impossible to predict what effect those regulations might
have on the tax treatment of a Grantor Trust Certificate purchased at a
discount or premium in the secondary market.
A holder who acquired a Grantor Trust Certificate at a market discount
also may be required to defer a portion of its interest deductions for the
taxable year attributable to any indebtedness incurred or continued to
purchase or carry such Grantor Trust Certificate purchased with market
discount. For these purposes, the de minimis rule referred above applies. Any
such deferred interest expense would not exceed the market discount that
accrues during such taxable year and is, in general, allowed as a deduction
not later than the year in which such market discount is includible in
income. If such holder elects to include market discount in income currently
as it accrues on all market discount instruments acquired by such holder in
that taxable year or thereafter, the interest deferral rule described above
will not apply.
Election to Treat All Interest as OID. The OID Regulations permit a
Certificateholder to elect to accrue all interest, discount (including de
minimis market or original issue discount) and premium in income as interest,
based on a constant yield method for Certificates acquired on or after April
4, 1994. If such an election were to be made with respect to a Grantor Trust
Certificate with market discount, the Certificateholder would be deemed to
have made an election to include in income currently market discount with
respect to all other debt instruments having market discount that such
Certificateholder acquires during the year of the election or thereafter.
Similarly, a Certificateholder that makes this election for a Certificate
that is acquired at a premium will be deemed to have made an election to
amortize bond premium with respect to all debt instruments having amortizable
bond premium that such Certificateholder owns or acquires. See "--Regular
Certificates--Premium" herein. The election to accrue interest, discount and
premium on a constant yield method with respect to a Certificate is
irrevocable.
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B. MULTIPLE CLASSES OF GRANTOR TRUST CERTIFICATES
1. Stripped Bonds and Stripped Coupons
Pursuant to Code Section 1286, the separation of ownership of the right to
receive some or all of the interest payments on an obligation from ownership
of the right to receive some or all of the principal payments results in the
creation of "stripped bonds" with respect to principal payments and "stripped
coupons" with respect to interest payments. For purposes of Code Sections
1271 through 1288, Code Section 1286 treats a stripped bond or a stripped
coupon as an obligation issued on the date that such stripped interest is
created. If a Trust Fund is created with two classes of Grantor Trust
Certificates, one class of Grantor Trust Certificates may represent the right
to principal and interest, or principal only, on all or a portion of the
Mortgage Assets (the "Stripped Bond Certificates"), while the second class of
Grantor Trust Certificates may represent the right to some or all of the
interest on such portion (the "Stripped Coupon Certificates").
Servicing fees in excess of reasonable servicing fees ("excess servicing")
will be treated under the stripped bond rules. If the excess servicing fee is
less than 100 basis points (i.e., 1% interest on the Mortgage Asset principal
balance) or the Certificates are initially sold with a de minimis discount
(assuming no prepayment assumption is required), any non de minimis discount
arising from a subsequent transfer of the Certificates should be treated as
market discount. The IRS appears to require that reasonable servicing fees be
calculated on a Mortgage Asset by Mortgage Asset basis, which could result in
some Mortgage Assets being treated as having more than 100 basis points of
interest stripped off. See "--Non-REMIC Certificates" and "Multiple Classes
of Grantor Trust Certificates--Stripped Bonds and Stripped Coupons" herein.
Although not entirely clear, a Stripped Bond Certificate generally should
be treated as an interest in Mortgage Assets issued on the day such
Certificate is purchased for purposes of calculating any OID. Generally, if
the discount on a Mortgage Asset is larger than a de minimis amount (as
calculated for purposes of the OID rules) a purchaser of such a Certificate
will be required to accrue the discount under the OID rules of the Code. See
"--Non-REMIC Certificates" and "--Single Class of Grantor Trust
Certificates--Original Issue Discount" herein. However, a purchaser of a
Stripped Bond Certificate will be required to account for any discount on the
Mortgage Assets as market discount rather than OID if either (i) the amount
of OID with respect to the Mortgage Assets is treated as zero under the OID
de minimis rule when the Certificate was stripped or (ii) no more than 100
basis points (including any amount of servicing fees in excess of reasonable
servicing fees) is stripped off of the Trust Fund's Mortgage Assets. Pursuant
to Revenue Procedure 91-49, issued on August 8, 1991, purchasers of Stripped
Bond Certificates using an inconsistent method of accounting must change
their method of accounting and request the consent of the IRS to the change
in their accounting method on a statement attached to their first timely tax
return filed after August 8, 1991.
The precise tax treatment of Stripped Coupon Certificates is substantially
uncertain. The Code could be read literally to require that OID computations
be made for each payment from each Mortgage Asset. However, based on the
recent IRS guidance, it appears that all payments from a Mortgage Asset
underlying a Stripped Coupon Certificate should be treated as a single
installment obligation subject to the OID rules of the Code, in which case,
all payments from such Mortgage Asset would be included in the Mortgage
Asset's stated redemption price at maturity for purposes of calculating
income on such certificate under the OID rules of the Code.
It is unclear under what circumstances, if any, the prepayment of Mortgage
Assets will give rise to a loss to the holder of a Stripped Bond Certificate
purchased at a premium or a Stripped Coupon Certificate. If such Certificate
is treated as a single instrument (rather than an interest in discrete
mortgage loans) and the effect of prepayments is taken into account in
computing yield with respect to such Grantor Trust Certificate, it appears
that no loss will be available as a result of any particular prepayment
unless prepayments occur at a rate faster than the assumed prepayment rate.
However, if such Certificate is treated as an interest in discrete Mortgage
Assets, or if no prepayment assumption is used, then when a Mortgage Asset is
prepaid, the holder of such Certificate should be able to recognize a loss
equal to the portion of the adjusted issue price of such Certificate that is
allocable to such Mortgage Asset.
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Holders of Stripped Bond Certificates and Stripped Coupon Certificates are
urged to consult with their own tax advisors regarding the proper treatment
of these Certificates for federal income tax purposes.
Treatment of Certain Owners. Several Code sections provide beneficial
treatment to certain taxpayers that invest in Mortgage Assets of the type
that make up the Trust Fund. With respect to these Code sections, no specific
legal authority exists regarding whether the character of the Grantor Trust
Certificates, for federal income tax purposes, will be the same as that of
the underlying Mortgage Assets. While Code Section 1286 treats a stripped
obligation as a separate obligation for purposes of the Code provisions
addressing OID, it is not clear whether such characterization would apply
with regard to these other Code sections. Although the issue is not free from
doubt, based on policy considerations, each class of Grantor Trust
Certificates, unless otherwise specified in the related Prospectus
Supplement, should be considered to represent "real estate assets" within the
meaning of Code Section 856(c)(6)(B) and "loans . . . secured by, an interest
in real property which is . . . residential real property" within the meaning
of Code Section 7701(a)(19)(C)(v), and interest income attributable to
Grantor Trust Certificates should be considered to represent "interest on
obligations secured by mortgages on real property" within the meaning of Code
Section 856(c)(3)(B), provided that in each case the underlying Mortgage
Assets and interest on such Mortgage Assets qualify for such treatment.
Prospective purchasers to which such characterization of an investment in
Certificates is material should consult their own tax advisors regarding the
characterization of the Grantor Trust Certificates and the income therefrom.
Grantor Trust Certificates will be "obligation[s] . . . which [are]
principally secured, directly or indirectly, by an interest in real property"
within the meaning of Code Section 860G(a)(3).
2. Grantor Trust Certificates Representing Interests in Loans Other Than
ARM Loans
The original issue discount rules of Code Sections 1271 through 1275 will
be applicable to a Certificateholder's interest in those Mortgage Assets as
to which the conditions for the application of those sections are met. Rules
regarding periodic inclusion of original issue discount in income are
applicable to mortgages of corporations originated after May 27, 1969,
mortgages of noncorporate Mortgagors (other than individuals) originated
after July 1, 1982, and mortgages of individuals originated after March 2,
1984. Under the OID Regulations, such original issue discount could arise by
the charging of points by the originator of the mortgage in an amount greater
than the statutory de minimis exception, including a payment of points that
is currently deductible by the borrower under applicable Code provisions, or
under certain circumstances, by the presence of "teaser" rates on the
Mortgage Assets. OID on each Grantor Trust Certificate must be included in
the owner's ordinary income for federal income tax purposes as it accrues, in
accordance with a constant interest method that takes into account the
compounding of interest, in advance of receipt of the cash attributable to
such income. The amount of OID required to be included in an owner's income
in any taxable year with respect to a Grantor Trust Certificate representing
an interest in Mortgage Assets other than Mortgage Assets with interest rates
that adjust periodically ("ARM Loans") likely will be computed as described
below under "--Accrual of Original Issue Discount." The following discussion
is based in part on the OID Regulations and in part on the provisions of the
Tax Reform Act of 1986 (the "1986 Act"). The OID Regulations generally are
effective for debt instruments issued on or after April 4, 1994, but may be
relied upon as authority with respect to debt instruments, such as the
Grantor Trust Certificates, issued after December 21, 1992. Alternatively,
proposed Treasury regulations issued December 21, 1992 may be treated as
authority for debt instruments issued after December 21, 1992 and prior to
April 4, 1994, and proposed Treasury regulations issued in 1986 and 1991 may
be treated as authority for instruments issued before December 21, 1992. In
applying these dates, the issue date of the Mortgage Assets should be used,
or, in the case of Stripped Bond Certificates or Stripped Coupon
Certificates, the date such Certificates are acquired. The holder of a
Certificate should be aware, however, that neither the proposed OID
Regulations nor the OID Regulations adequately address certain issues
relevant to prepayable securities.
Under the Code, the Mortgage Assets underlying the Grantor Trust
Certificate will be treated as having been issued on the date they were
originated with an amount of OID equal to the excess of such Mortgage Asset's
stated redemption price at maturity over its issue price. The issue price of
a Mortgage Asset is generally the amount lent to the mortgagee, which may be
adjusted to take into account certain
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loan origination fees. The stated redemption price at maturity of a Mortgage
Asset is the sum of all payments to be made on such Mortgage Asset other than
payments that are treated as qualified stated interest payments. The accrual
of this OID, as described below under "--Accrual of Original Issue Discount,"
will, unless otherwise specified in the related Prospectus Supplement,
utilize the original yield to maturity of the Grantor Trust Certificate
calculated based on a reasonable assumed prepayment rate for the mortgage
loans underlying the Grantor Trust Certificates (the "Prepayment
Assumption"), and will take into account events that occur during the
calculation period. The Prepayment Assumption will be determined in the
manner prescribed by regulations that have not yet been issued. The
legislative history of the 1986 Act (the "Legislative History") provides,
however, that the regulations will require that the Prepayment Assumption be
the prepayment assumption that is used in determining the offering price of
such Certificate. No representation is made that any Certificate will prepay
at the Prepayment Assumption or at any other rate. The prepayment assumption
contained in the Code literally only applies to debt instruments
collateralized by other debt instruments that are subject to prepayment
rather than direct ownership interests in such debt instruments, such as the
Certificates represent. However, no other legal authority provides guidance
with regard to the proper method for accruing OID on obligations that are
subject to prepayment, and, until further guidance is issued, the Master
Servicer intends to calculate and report OID under the method described
below.
Accrual of Original Issue Discount. Generally, the owner of a Grantor
Trust Certificate must include in gross income the sum of the "daily
portions," as defined below, of the OID on such Grantor Trust Certificate for
each day on which it owns such Certificate, including the date of purchase
but excluding the date of disposition. In the case of an original owner, the
daily portions of OID with respect to each component generally will be
determined as set forth under the OID Regulations. A calculation will be made
by the Master Servicer or such other entity specified in the related
Prospectus Supplement of the portion of OID that accrues during each
successive monthly accrual period (or shorter period from the date of
original issue) that ends on the day in the calendar year corresponding to
each of the Distribution Dates on the Grantor Trust Certificates (or the day
prior to each such date). This will be done, in the case of each full month
accrual period, by (i) adding (a) the present value at the end of the accrual
period (determined by using as a discount factor the original yield to
maturity of the respective component under the Prepayment Assumption) of all
remaining payments to be received under the Prepayment Assumption on the
respective component and (b) any payments included in the state redemption
price at maturity received during such accrual period, and (ii) subtracting
from that total the "adjusted issue price" of the respective component at the
beginning of such accrual period. The adjusted issue price of a Grantor Trust
Certificate at the beginning of the first accrual period is its issue price;
the adjusted issue price of a Grantor Trust Certificate at the beginning of a
subsequent accrual period is the adjusted issue price at the beginning of the
immediately preceding accrual period plus the amount of OID allocable to that
accrual period reduced by the amount of any payment other than a payment of
qualified stated interest made at the end of or during that accrual period.
The OID accruing during such accrual period will then be divided by the
number of days in the period to determine the daily portion of OID for each
day in the period. With respect to an initial accrual period shorter than a
full monthly accrual period, the daily portions of OID must be determined
according to an appropriate allocation under any reasonable method.
Original issue discount generally must be reported as ordinary gross
income as it accrues under a constant interest method that takes into account
the compounding of interest as it accrues rather than when received. However,
the amount of original issue discount includible in the income of a holder of
an obligation is reduced when the obligation is acquired after its initial
issuance at a price greater than the sum of the original issue price and the
previously accrued original issue discount, less prior payments of principal.
Accordingly, if such Mortgage Assets acquired by a Certificateholder are
purchased at a price equal to the then unpaid principal amount of such
Mortgage Asset, no original issue discount attributable to the difference
between the issue price and the original principal amount of such Mortgage
Asset (i.e., points) will be includible by such holder. Other original issue
discount on the Mortgage Assets (e.g., that arising from a "teaser" rate)
would still need to be accrued.
3. Grantor Trust Certificates Representing Interests in ARM Loans
The OID Regulations do not address the treatment of instruments, such as
the Grantor Trust Certificates, which represent interests in ARM Loans.
Additionally, the IRS has not issued guidance
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under the Code's coupon stripping rules with respect to such instruments. In
the absence of any authority, the Master Servicer will report OID on Grantor
Trust Certificates attributable to ARM Loans ("Stripped ARM Obligations") to
holders in a manner it believes is consistent with the rules described above
under the heading "--Grantor Trust Certificates Representing Interests in
Loans Other Than ARM Loans" and with the OID Regulations. In general,
application of these rules may require inclusion of income on a Stripped ARM
Obligation in advance of the receipt of cash attributable to such income.
Further, the addition of interest deferred by reason of negative amortization
("Deferred Interest") to the principal balance of an ARM Loan may require the
inclusion of such amount in the income of the Grantor Trust Certificateholder
when such amount accrues. Furthermore, the addition of Deferred Interest to
the Grantor Trust Certificate's principal balance will result in additional
income (including possibly OID income) to the Grantor Trust Certificateholder
over the remaining life of such Grantor Trust Certificates.
Because the treatment of Stripped ARM Obligations is uncertain, investors
are urged to consult their tax advisors regarding how income will be
includible with respect to such Certificates.
C. SALE OR EXCHANGE OF A GRANTOR TRUST CERTIFICATE
Sale or exchange of a Grantor Trust Certificate prior to its maturity will
result in gain or loss equal to the difference, if any, between the amount
received and the owner's adjusted basis in the Grantor Trust Certificate.
Such adjusted basis generally will equal the seller's purchase price for the
Grantor Trust Certificate, increased by the OID included in the seller's
gross income with respect to the Grantor Trust Certificate, and reduced by
principal payments on the Grantor Trust Certificate previously received by
the seller. Such gain or loss will be capital gain or loss to an owner for
which a Grantor Trust Certificate is a "capital asset" within the meaning of
Code Section 1221, and will be long-term or short-term depending on whether
the Grantor Trust Certificate has been owned for the long-term capital gain
holding period (generally more than one year).
Grantor Trust Certificates will be "evidences of indebtedness" within the
meaning of Code Section 582(c)(1), so that gain or loss recognized from the
sale of a Grantor Trust Certificate by a bank or a thrift institution to
which such section applies will be treated as ordinary income or loss.
D. NON-U.S. PERSONS
Generally, to the extent that a Grantor Trust Certificate evidences
ownership in underlying Mortgage Assets that were issued on or before July
18, 1984, interest or OID paid by the person required to withhold tax under
Code Section 1441 or 1442 to (i) an owner that is not a U.S. Person (as
defined below) or (ii) a Grantor Trust Certificateholder holding on behalf of
an owner that is not a U.S. Person will be subject to federal income tax,
collected by withholding, at a rate of 30% or such lower rate as may be
provided for interest by an applicable tax treaty. Accrued OID recognized by
the owner on the sale or exchange of such a Grantor Trust Certificate also
will be subject to federal income tax at the same rate. Generally, such
payments would not be subject to withholding to the extent that a Grantor
Trust Certificate evidences ownership in Mortgage Assets issued after July
18, 1984, by natural persons if such Grantor Trust Certificateholder complies
with certain identification requirements (including delivery of a statement,
signed by the Grantor Trust Certificateholder under penalties of perjury,
certifying that such Grantor Trust Certificateholder is not a U.S. Person and
providing the name and address of such Grantor Trust Certificateholder).
Additional restrictions apply to Mortgage Assets of where the Mortgagor is
not a natural person in order to qualify for the exemption from withholding.
The term "U.S. Person" means a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in or under the
laws of the United States or any political subdivision thereof (other than a
partnership that is not treated as a United States person under any
applicable Treasury regulations), an estate whose income is subject to U.S.
federal income tax regardless of its source of income, or a trust if a court
within the United States is able to exercise primary supervision of the
administration of the trust and one or more United States persons have the
authority to control all substantial decisions of the trust. Notwithstanding
the preceding sentence, to the extent provided in Treasury regulations,
certain trusts in existence on August 20, 1996, and treated as United States
persons prior to such date, that elect to continue to be treated as United
States persons also will be a U.S. Holder.
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E. INFORMATION REPORTING AND BACKUP WITHHOLDING
The Master Servicer or Trustee will furnish or make available, within a
reasonable time after the end of each calendar year, to each person who was a
Certificateholder at any time during such year, such information as may be
deemed necessary or desirable to assist Certificateholders in preparing their
federal income tax returns, or to enable holders to make such information
available to beneficial owners or financial intermediaries that hold such
Certificates as nominees on behalf of beneficial owners. If a holder,
beneficial owner, financial intermediary or other recipient of a payment on
behalf of a beneficial owner fails to supply a certified taxpayer
identification number or if the Secretary of the Treasury determines that
such person has not reported all interest and dividend income required to be
shown on its federal income tax return, 31% backup withholding may be
required with respect to any payments. Any amounts deducted and withheld from
a distribution to a recipient would be allowed as a credit against such
recipient's federal income tax liability.
F. NEW WITHHOLDING REGULATIONS
On October 6, 1997, the Treasury Department issued new regulations (the
"New Regulations") which make certain modifications to the withholding,
backup withholding and information reporting rules described above. The New
Regulations attempt to unify certification requirements and modify reliance
standards. The New Regulations will generally be effective for payments made
after December 31, 2000, subject to certain transition rules. Prospective
investors are urged to consult their own tax advisors regarding the New
Regulations.
REMICS
The Trust Fund relating to a Series of Certificates may elect to be
treated as a REMIC. Qualification as a REMIC requires ongoing compliance with
certain conditions. Although a REMIC is not generally subject to federal
income tax (see, however "--Taxation of Owners of REMIC Residual
Certificates" and "--Prohibited Transactions" below), if a Trust Fund with
respect to which a REMIC election is made fails to comply with one or more of
the ongoing requirements of the Code for REMIC status during any taxable
year, including the implementation of restrictions on the purchase and
transfer of the residual interests in a REMIC as described below under
"Taxation of Owners of REMIC Residual Certificates," the Code provides that a
Trust Fund will not be treated as a REMIC for such year and thereafter. In
that event, such entity may be taxable as a separate corporation, and the
related Certificates (the "REMIC Certificates") may not be accorded the
status or given the tax treatment described below. While the Code authorizes
the Treasury Department to issue regulations providing relief in the event of
an inadvertent termination of the status of a trust fund as a REMIC, no such
regulations have been issued. Any such relief, moreover, may be accompanied
by sanctions, such as the imposition of a corporate tax on all or a portion
of the REMIC's income for the period in which the requirements for such
status are not satisfied. With respect to each Trust Fund that elects REMIC
status, Brown & Wood llp will deliver its opinion generally to the effect
that, under then existing law and assuming compliance with all provisions of
the related Pooling and Servicing Agreement, such Trust Fund will qualify as
a REMIC, and the related Certificates will be considered to be regular
interests ("REMIC Regular Certificates") or a sale class of residual
interests ("REMIC Residual Certificates") in the REMIC. The related
Prospectus Supplement for each Series of Certificates will indicate whether
the Trust Fund will make a REMIC election and whether a class of Certificates
will be treated as a regular or residual interest in the REMIC.
A "qualified mortgage" for REMIC purposes is any obligation (including
certificates of participation in such an obligation) that is principally
secured by an interest in real property and that is transferred to the REMIC
within a prescribed time period in exchange for regular or residual interests
in the REMIC.
In general, with respect to each Series of Certificates for which a REMIC
election is made, (i) Certificates held by a thrift institution taxed as a
"domestic building and loan association" will constitute assets described in
Code Section 7701(a)(19)(C); (ii) Certificates held by a real estate
investment trust will constitute "real estate assets" within the meaning of
Code Section 856(c)(6)(B); and (iii) interest on Certificates held by a real
estate investment trust will be considered "interest on obligations secured
by
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mortgages on real property" within the meaning of Code Section 856(c)(3)(B).
If less than 95% of the REMIC's assets are assets qualifying under any of the
foregoing Code sections, the Certificates will be qualifying assets only to
the extent that the REMIC's assets are qualifying assets. In addition,
payments on Mortgage Assets held pending distribution on the REMIC
Certificates will be considered to be real estate assets for purposes of Code
Section 856(c).
Tiered REMIC Structures. For certain Series of Certificates, two separate
elections may be made to treat designated portions of the related Trust Fund
as REMICs (respectively, the "Subsidiary REMIC" and the "Master REMIC") for
federal income tax purposes. Upon the issuance of any such Series of
Certificates, Brown & Wood llp, counsel to the Depositor, will deliver its
opinion generally to the effect that, assuming compliance with all provisions
of the related Agreement, the Master REMIC as well as any Subsidiary REMIC
will each qualify as a REMIC, and the REMIC Certificates issued by the Master
REMIC and the Subsidiary REMIC, respectively, will be considered to evidence
ownership of REMIC Regular Certificates or REMIC Residual Certificates in the
related REMIC within the meaning of the REMIC provisions.
Only REMIC Certificates, other than the residual interest in the
Subsidiary REMIC, issued by the Master REMIC will be offered hereunder. The
Subsidiary REMIC and the Master REMIC will be treated as one REMIC solely for
purposes of determining whether the REMIC Certificates will be (i) "real
estate assets" within the meaning of Section 856(c)(6)(B) of the Code; (ii)
"loans secured by an interest in real property" under Section 7701(a)(19)(C)
of the Code; and (iii) whether the income on such Certificates is interest
described in Section 856(c)(3)(B) of the Code.
The Small Business Job Protection Act of 1996, as part of the repeal of
the bad debt reserve method for thrift institutions, repealed the application
of Code Section 593(d) to any taxable year beginning after December 31, 1995.
A. TAXATION OF OWNERS OF REMIC REGULAR CERTIFICATES
General. Except as otherwise stated in this discussion, REMIC Regular
Certificates will be treated for federal income tax purposes as debt
instruments issued by the REMIC and not as ownership interests in the REMIC
or its assets. Moreover, holders of REMIC Regular Certificates that otherwise
report income under a cash method of accounting will be required to report
income with respect to REMIC Regular Certificates under an accrual method.
Original Issue Discount and Premium. The REMIC Regular Certificates may be
issued with OID. Generally, such OID, if any, will equal the difference
between the "stated redemption price at maturity" of a REMIC Regular
Certificate and its "issue price." Holders of any class of Certificates
issued with OID will be required to include such OID in gross income for
federal income tax purposes as it accrues, in accordance with a constant
interest method based on the compounding of interest as it accrues rather
than in accordance with receipt of the interest payments. The following
discussion is based in part on the OID Regulations and in part on the
provisions of the 1986 Act. Holders of REMIC Regular Certificates (the "REMIC
Regular Certificateholders") should be aware, however, that the OID
Regulations do not adequately address certain issues relevant to prepayable
securities, such as the REMIC Regular Certificates.
Rules governing OID are set forth in Code Sections 1271 through 1273 and
1275. These rules require that the amount and rate of accrual of OID be
calculated based on the Prepayment Assumption and the anticipated
reinvestment rate, if any, relating to the REMIC Regular Certificates and
prescribe a method for adjusting the amount and rate of accrual of such
discount where the actual prepayment rate differs from the Prepayment
Assumption. Under the Code, the Prepayment Assumption must be determined in
the manner prescribed by regulations, which regulations have not yet been
issued. The Legislative History provides, however, that Congress intended the
regulations to require that the Prepayment Assumption be the prepayment
assumption that is used in determining the initial offering price of such
REMIC Regular Certificates. The Prospectus Supplement for each Series of
REMIC Regular Certificates will specify the Prepayment Assumption to be used
for the purpose of determining the amount and rate of accrual of OID. No
representation is made that the REMIC Regular Certificates will prepay at the
Prepayment Assumption or at any other rate.
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In general, each REMIC Regular Certificate will be treated as a single
installment obligation issued with an amount of OID equal to the excess of
its "stated redemption price at maturity" over its "issue price." The issue
price of a REMIC Regular Certificate is the first price at which a
substantial amount of REMIC Regular Certificates of that class are first sold
to the public (excluding bond houses, brokers, underwriters or wholesalers).
If less than a substantial amount of a particular class of REMIC Regular
Certificates is sold for cash on or prior to the date of their initial
issuance (the "Closing Date"), the issue price for such class will be treated
as the fair market value of such class on the Closing Date. The issue price
of a REMIC Regular Certificate also includes the amount paid by an initial
Certificateholder for accrued interest that relates to a period prior to the
issue date of the REMIC Regular Certificate. The stated redemption price at
maturity of a REMIC Regular Certificate includes the original principal
amount of the REMIC Regular Certificate, but generally will not include
distributions of interest if such distributions constitute "qualified stated
interest." Qualified stated interest generally means interest payable at a
single fixed rate or qualified variable rate (as described below) provided
that such interest payments are unconditionally payable at intervals of one
year or less during the entire term of the REMIC Regular Certificate.
Interest is payable at a single fixed rate only if the rate appropriately
takes into account the length of the interval between payments. Distributions
of interest on REMIC Regular Certificates with respect to which Deferred
Interest will accrue will not constitute qualified stated interest payments,
and the stated redemption price at maturity of such REMIC Regular
Certificates includes all distributions of interest as well as principal
thereon.
Where the interval between the issue date and the first Distribution Date
on a REMIC Regular Certificate is longer than the interval between subsequent
Distribution Dates, the greater of any original issue discount (disregarding
the rate in the first period) and any interest foregone during the first
period is treated as the amount by which the stated redemption price at
maturity of the Certificate exceeds its issue price for purposes of the de
minimis rule described below. The OID Regulations suggest that all interest
on a long first period REMIC Regular Certificate that is issued with non-de
minimis OID, as determined under the foregoing rule, will be treated as OID.
Where the interval between the issue date and the first Distribution Date on
a REMIC Regular Certificate is shorter than the interval between subsequent
Distribution Dates, interest due on the first Distribution Date in excess of
the amount that accrued during the first period would be added to the
Certificates stated redemption price at maturity. REMIC Regular
Certificateholders should consult their own tax advisors to determine the
issue price and stated redemption price at maturity of a REMIC Regular
Certificate.
Under the de minimis rule, OID on a REMIC Regular Certificate will be
considered to be zero if such OID is less than 0.25% of the stated redemption
price at maturity of the REMIC Regular Certificate multiplied by the weighted
average maturity of the REMIC Regular Certificate. For this purpose, the
weighted average maturity of the REMIC Regular Certificate is computed as the
sum of the amounts determined by multiplying the number of full years (i.e.,
rounding down partial years) from the issue date until each distribution in
reduction of stated redemption price at maturity is scheduled to be made by a
fraction, the numerator of which is the amount of each distribution included
in the stated redemption price at maturity of the REMIC Regular Certificate
and the denominator of which is the stated redemption price at maturity of
the REMIC Regular Certificate. Although currently unclear, it appears that
the schedule of such distributions should be determined in accordance with
the Prepayment Assumption. The Prepayment Assumption with respect to a Series
of REMIC Regular Certificates will be set forth in the related Prospectus
Supplement. Holders generally must report de minimis OID pro rata as
principal payments are received, and such income will be capital gain if the
REMIC Regular Certificate is held as a capital asset. However, accrual method
holders may elect to accrue all de minimis OID as well as market discount
under a constant interest method.
The Prospectus Supplement with respect to a Trust Fund may provide for
certain REMIC Regular Certificates to be issued at prices significantly
exceeding their principal amounts or based on notional principal balances
(the "Super-Premium Certificates"). The income tax treatment of such REMIC
Regular Certificates is not entirely certain. For information reporting
purposes, the Trust Fund intends to take the position that the stated
redemption price at maturity of such REMIC Regular Certificates is the sum of
all payments to be made on such REMIC Regular Certificates determined under
the Prepayment
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Assumption, with the result that such REMIC Regular Certificates would be
issued with OID. The calculation of income in this manner could result in
negative original issue discount (which delays future accruals of OID rather
than being immediately deductible) when prepayments on the Mortgage Assets
exceed those estimated under the Prepayment Assumption. If the Super Premium
Certificates were treated as contingent payment obligations, it is unclear
how holders of those Certificates would report income or recover their basis.
In the alternative, the IRS could assert that the stated redemption price at
maturity of such REMIC Regular Certificates should be limited to their
principal amount (subject to the discussion below under "--Accrued Interest
Certificates"), so that such REMIC Regular Certificates would be considered
for federal income tax purposes to be issued at a premium. If such a position
were to prevail, the rules described below under "--Taxation of Owners of
REMIC Regular Certificates--Premium" would apply. It is unclear when a loss
may be claimed for any unrecovered basis for a Super-Premium Certificate. It
is possible that a holder of a Super-Premium Certificate may only claim a
loss when its remaining basis exceeds the maximum amount of future payments,
assuming no further prepayments or when the final payment is received with
respect to such Super-Premium Certificate.
The Internal Revenue Service (the "IRS") recently issued final regulations
(the "Contingent Regulations") governing the calculation of OID on
instruments having contingent interest payments. The Contingent Regulations
specifically do not apply for the purposes of calculating OID on debt
instruments subject to Code Section 1272(a)(6), such as the REMIC Regular
Certificates. Additionally, the OID Regulations do not contain provisions
specifically interpreting Code Section 1272(a)(6). Until the Treasury issues
guidance to the contrary, the Trustee intends to base its computation on Code
Section 1272(a)(6) and the OID Regulations as described in this Prospectus.
However, because no regulatory guidance currently exists under Code Section
1272(a)(6), there can be no assurance that such methodology represents the
correct manner of calculating OID.
Under the REMIC Regulations, if the issue price of a REMIC Regular
Certificate (other than REMIC Regular Certificate based on a notional amount)
does not exceed 125% of its actual principal amount, the interest rate is not
considered disproportionately high. Accordingly, such REMIC Regular
Certificate generally should not be treated as a Super-Premium Certificate
and the rules described below under "--REMIC Regular Certificates--Premium"
should apply. However, it is possible that holders of REMIC Regular
Certificates issued at a premium, even if the premium is less than 25% of
such Certificate's actual principal balance, will be required to amortize the
premium under an original issue discount method or contingent interest method
even though no election under Code Section 171 is made to amortize such
premium.
Generally, a REMIC Regular Certificateholder must include in gross income
the "daily portions," as determined below, of the OID that accrues on a REMIC
Regular Certificate for each day a Certificateholder holds the REMIC Regular
Certificate, including the purchase date but excluding the disposition date.
In the case of an original holder of a REMIC Regular Certificate, a
calculation will be made of the portion of the OID that accrues during each
successive period (an "accrual period") that ends on the day in the calendar
year corresponding to a Distribution Date (or if Distribution Dates are on
the first day or first business day of the immediately preceding month,
interest may be treated as payable on the last day of the immediately
preceding month) and begins on the day after the end of the immediately
preceding accrual period (or on the issue date in the case of the first
accrual period). This will be done, in the case of each full accrual period,
by (i) adding (a) the present value at the end of the accrual period
(determined by using as a discount factor the original yield to maturity of
the REMIC Regular Certificates as calculated under the Prepayment Assumption)
of all remaining payments to be received on the REMIC Regular Certificates
under the Prepayment Assumption and (b) any payments included in the stated
redemption price at maturity received during such accrual period, and (ii)
subtracting from that total the adjusted issue price of the REMIC Regular
Certificates at the beginning of such accrual period. The adjusted issue
price of a REMIC Regular Certificate at the beginning of the first accrual
period is its issue price; the adjusted issue price of a REMIC Regular
Certificate at the beginning of a subsequent accrual period is the adjusted
issue price at the beginning of the immediately preceding accrual period plus
the amount of OID allocable to that accrual period and reduced by the amount
of any payment other than a payment of qualified stated interest made at the
end of or during that accrual period. The OID
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accrued during an accrual period will then be divided by the number of days
in the period to determine the daily portion of OID for each day in the
accrual period. The calculation of OID under the method described above will
cause the accrual of OID to either increase or decrease (but never below
zero) in a given accrual period to reflect the fact that prepayments are
occurring faster or slower than under the Prepayment Assumption. With respect
to an initial accrual period shorter than a full accrual period, the daily
portions of OID may be determined according to an appropriate allocation
under any reasonable method.
A subsequent purchaser of a REMIC Regular Certificate issued with OID who
purchases the REMIC Regular Certificate at a cost less than the remaining
stated redemption price at maturity will also be required to include in gross
income the sum of the daily portions of OID on that REMIC Regular
Certificate. In computing the daily portions of OID for such a purchaser (as
well as an initial purchaser that purchases at a price higher than the
adjusted issue price but less than the stated redemption price at maturity),
however, the daily portion is reduced by the amount that would be the daily
portion for such day (computed in accordance with the rules set forth above)
multiplied by a fraction, the numerator of which is the amount, if any, by
which the price paid by such holder for that REMIC Regular Certificate
exceeds the following amount: (a) the sum of the issue price plus the
aggregate amount of OID that would have been includible in the gross income
of an original REMIC Regular Certificateholder (who purchased the REMIC
Regular Certificate at its issue price), less (b) any prior payments included
in the stated redemption price at maturity, and the denominator of which is
the sum of the daily portions for that REMIC Regular Certificate for all days
beginning on the date after the purchase date and ending on the maturity date
computed under the Prepayment Assumption. A holder who pays an acquisition
premium instead may elect to accrue OID by treating the purchase as a
purchase at original issue.
Variable Rate REMIC Regular Certificates. REMIC Regular Certificates may
provide for interest based on a variable rate. Interest based on a variable
rate will constitute qualified stated interest and not contingent interest
if, generally, (i) such interest is unconditionally payable at least
annually, (ii) the issue price of the debt instrument does not exceed the
total noncontingent principal payments and (iii) interest is based on a
"qualified floating rate," an "objective rate," a combination of a single
fixed rate and one or more "qualified floating rates," one "qualified inverse
floating rate," or a combination of "qualified floating rates" that do not
operate in a manner that significantly accelerates or defers interest
payments on such REMIC Regular Certificate.
The amount of OID with respect to a REMIC Regular Certificate bearing a
variable rate of interest will accrue in the manner described above under
"--Original Issue Discount and Premium" by assuming generally that the index
used for the variable rate will remain fixed throughout the term of the
Certificate. Appropriate adjustments are made for the actual variable rate.
Although unclear at present, the Depositor intends to treat interest on a
REMIC Regular Certificate that is a weighted average of the net interest
rates on Mortgage Loans as qualified stated interest.
In such case, the weighted average rate used to compute the initial
pass-through rate on the REMIC Regular Certificates will be deemed to be the
index in effect through the life of the REMIC Regular Certificates. It is
possible, however, that the IRS may treat some or all of the interest on
REMIC Regular Certificates with a weighted average rate as taxable under the
rules relating to obligations providing for contingent payments. Such
treatment may effect the timing of income accruals on such REMIC Regular
Certificates.
Election to Treat All Interest as OID. The OID Regulations permit a
Certificateholder to elect to accrue all interest, discount (including de
minimis market or original issue discount) and premium in income as interest,
based on a constant yield method. If such an election were to be made with
respect to a REMIC Regular Certificate with market discount, the
Certificateholder would be deemed to have made an election to include in
income currently market discount with respect to all other debt instruments
having market discount that such Certificateholder acquires during the year
of the election or thereafter. Similarly, a Certificateholder that makes this
election for a Certificate that is acquired at a premium will be deemed to
have made an election to amortize bond premium with respect to all debt
instruments having amortizable bond premium that such Certificateholder owns
or acquires. See "--REMIC Regular Certificates--Premium" herein. The election
to accrue interest, discount and premium on a constant yield method with
respect to a Certificate is irrevocable.
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Market Discount. A purchaser of a REMIC Regular Certificate may also be
subject to the market discount provisions of Code Sections 1276 through 1278.
Under these provisions and the OID Regulations, "market discount" equals the
excess, if any, of (i) the REMIC Regular Certificate's stated principal
amount or, in the case of a REMIC Regular Certificate with OID, the adjusted
issue price (determined for this purpose as if the purchaser had purchased
such REMIC Regular Certificate from an original holder) over (ii) the price
for such REMIC Regular Certificate paid by the purchaser. A Certificateholder
that purchases a REMIC Regular Certificate at a market discount will
recognize income upon receipt of each distribution representing amounts
included in such certificate's stated redemption price at maturity. In
particular, under Section 1276 of the Code such a holder generally will be
required to allocate each such distribution first to accrued market discount
not previously included in income, and to recognize ordinary income to that
extent. A Certificateholder may elect to include market discount in income
currently as it accrues rather than including it on a deferred basis in
accordance with the foregoing. If made, such election will apply to all
market discount bonds acquired by such Certificateholder on or after the
first day of the first taxable year to which such election applies.
Market discount with respect to a REMIC Regular Certificate will be
considered to be zero if the amount allocable to the REMIC Regular
Certificate is less than 0.25% of such REMIC Regular Certificate's stated
redemption price at maturity multiplied by such REMIC Regular Certificate's
weighted average maturity remaining after the date of purchase. If market
discount on a REMIC Regular Certificate is considered to be zero under this
rule, the actual amount of market discount must be allocated to the remaining
principal payments on the REMIC Regular Certificate, and gain equal to such
allocated amount will be recognized when the corresponding principal payment
is made. Treasury regulations implementing the market discount rules have not
yet been issued; therefore, investors should consult their own tax advisors
regarding the application of these rules and the advisability of making any
of the elections allowed under Code Sections 1276 through 1278.
The Code provides that any principal payment (whether a scheduled payment
or a prepayment) or any gain on disposition of a market discount bond
acquired by the taxpayer after October 22, 1986, shall be treated as ordinary
income to the extent that it does not exceed the accrued market discount at
the time of such payment. The amount of accrued market discount for purposes
of determining the tax treatment of subsequent principal payments or
dispositions of the market discount bond is to be reduced by the amount so
treated as ordinary income.
The Code also grants authority to the Treasury Department to issue
regulations providing for the computation of accrued market discount on debt
instruments, the principal of which is payable in more than one installment.
Until such time as regulations are issued by the Treasury, rules described in
the Legislative History will apply. Under those rules, the holder of a market
discount bond may elect to accrue market discount either on the basis of a
constant interest method rate or according to one of the following methods.
For REMIC Regular Certificates issued with OID, the amount of market discount
that accrues during a period is equal to the product of (i) the total
remaining market discount and (ii) a fraction, the numerator of which is the
OID accruing during the period and the denominator of which is the total
remaining OID at the beginning of the period. For REMIC Regular Certificates
issued without OID, the amount of market discount that accrues during a
period is equal to the product of (a) the total remaining market discount and
(b) a fraction, the numerator of which is the amount of stated interest paid
during the accrual period and the denominator of which is the total amount of
stated interest remaining to be paid at the beginning of the period. For
purposes of calculating market discount under any of the above methods in the
case of instruments (such as the REMIC Regular Certificates) that provide for
payments that may be accelerated by reason of prepayments of other
obligations securing such instruments, the same Prepayment Assumption
applicable to calculating the accrual of OID will apply.
A holder who acquired a REMIC Regular Certificate at a market discount
also may be required to defer a portion of its interest deductions for the
taxable year attributable to any indebtedness incurred or continued to
purchase or carry such Certificate purchased with market discount. For these
purposes, the de minimis rule referred to above applies. Any such deferred
interest expense would not exceed the market discount that accrues during
such taxable year and is, in general, allowed as a deduction not later
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than the year in which such market discount is includible in income. If such
holder elects to include market discount in income currently as it accrues on
all market discount instruments acquired by such holder in that taxable year
or thereafter, the interest deferral rule described above will not apply.
Premium. A purchaser of a REMIC Regular Certificate that purchases the
REMIC Regular Certificate at a cost (not including accrued qualified stated
interest) greater than its remaining stated redemption price at maturity will
be considered to have purchased the REMIC Regular Certificate at a premium
and may elect to amortize such premium under a constant yield method. A
Certificateholder that makes this election for a Certificate that is acquired
at a premium will be deemed to have made an election to amortize bond premium
with respect to all debt instruments having amortizable bond premium that
such Certificateholder acquires during the year of the election or
thereafter. It is not clear whether the Prepayment Assumption would be taken
into account in determining the life of the REMIC Regular Certificate for
this purpose. However, the Legislative History states that the same rules
that apply to accrual of market discount (which rules require use of a
Prepayment Assumption in accruing market discount with respect to REMIC
Regular Certificates without regard to whether such Certificates have OID)
will also apply in amortizing bond premium under Code Section 171. The Code
provides that amortizable bond premium will be allocated among the interest
payments on such REMIC Regular Certificates and will be applied as an offset
against such interest payment.
The IRS has issued final regulations (the "Amortizable Bond Premium
Regulations") dealing with amortizable bond premium. These regulations
specifically do not apply to prepayable debt instruments subject to Code
Section 1272(a)(6) such as the Securities. Absent further guidance from the
IRS, the Trustee intends to account for amortizable bond premium in the
manner described above. Prospective purchasers of the Securities should
consult their tax advisors regarding the possible application of the
Amortizable Bond Premium Regulations.
Deferred Interest. Certain classes of REMIC Regular Certificates may
provide for the accrual of Deferred Interest with respect to one or more ARM
Loans. Any Deferred Interest that accrues with respect to a class of REMIC
Regular Certificates will constitute income to the holders of such
Certificates prior to the time distributions of cash with respect to such
Deferred Interest are made. It is unclear, under the OID Regulations, whether
any of the interest on such Certificates will constitute qualified stated
interest or whether all or a portion of the interest payable on such
Certificates must be included in the stated redemption price at maturity of
the Certificates and accounted for as OID (which could accelerate such
inclusion). Interest on REMIC Regular Certificates must in any event be
accounted for under an accrual method by the holders of such Certificates
and, therefore, applying the latter analysis may result only in a slight
difference in the timing of the inclusion in income of interest on such REMIC
Regular Certificates.
Effects of Defaults and Delinquencies. Certain Series of Certificates may
contain one or more classes of Subordinated Certificates, and in the event
there are defaults or delinquencies on the Mortgage Assets, amounts that
would otherwise be distributed on the Subordinated Certificates may instead
be distributed on the Senior Certificates. Subordinated Certificateholders
nevertheless will be required to report income with respect to such
Certificates under an accrual method without giving effect to delays and
reductions in distributions on such Subordinated Certificates attributable to
defaults and delinquencies on the Mortgage Assets, except to the extent that
it can be established that such amounts are uncollectible. As a result, the
amount of income reported by a Subordinated Certificateholder in any period
could significantly exceed the amount of cash distributed to such holder in
that period. The holder will eventually be allowed a loss (or will be allowed
to report a lesser amount of income) to the extent that the aggregate amount
of distributions on the Subordinated Certificate is reduced as a result of
defaults and delinquencies on the Mortgage Assets. Timing and
characterization of such losses is discussed in "--REMIC Regular
Certificates--Treatment of Realized Losses" below.
Sale, Exchange or Redemption. If a REMIC Regular Certificate is sold,
exchanged, redeemed or retired, the seller will recognize gain or loss equal
to the difference between the amount realized on the sale, exchange,
redemption, or retirement and the seller's adjusted basis in the REMIC
Regular Certificate. Such adjusted basis generally will equal the cost of the
REMIC Regular Certificate to the
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seller, increased by any OID and market discount included in the seller's
gross income with respect to the REMIC Regular Certificate, and reduced (but
not below zero) by payments included in the stated redemption price at
maturity previously received by the seller and by any amortized premium.
Similarly, a holder who receives a payment that is part of the stated
redemption price at maturity of a REMIC Regular Certificate will recognize
gain equal to the excess, if any, of the amount of the payment over the
holder's adjusted basis in the REMIC Regular Certificate. A REMIC Regular
Certificateholder who receives a final payment that is less than the holder's
adjusted basis in the REMIC Regular Certificate will generally recognize a
loss. Except as provided in the following paragraph and as provided under
"--Market Discount" above, any such gain or loss will be capital gain or
loss, provided that the REMIC Regular Certificate is held as a "capital
asset" (generally, property held for investment) within the meaning of Code
Section 1221.
Gain from the sale or other disposition of a REMIC Regular Certificate
that might otherwise be capital gain will be treated as ordinary income to
the extent that such gain does not exceed the excess, if any, of (i) the
amount that would have been includible in such holder's income with respect
to the REMIC Regular Certificate had income accrued thereon at a rate equal
to 110% of the AFR as defined in Code Section 1274(d) determined as of the
date of purchase of such REMIC Regular Certificate, over (ii) the amount
actually includible in such holder's income.
The Certificates will be "evidences of indebtedness" within the meaning of
Code Section 582(c)(1), so that gain or loss recognized from the sale of a
REMIC Regular Certificate by a bank or a thrift institution to which such
Section applies will be ordinary income or loss.
The REMIC Regular Certificate information reports will include a statement
of the adjusted issue price of the REMIC Regular Certificate at the beginning
of each accrual period. In addition, the reports will include information
necessary to compute the accrual of any market discount that may arise upon
secondary trading of REMIC Regular Certificates. Because exact computation of
the accrual of market discount on a constant yield method would require
information relating to the holder's purchase price which the REMIC may not
have, it appears that the information reports will only require information
pertaining to the appropriate proportionate method of accruing market
discount.
Accrued Interest Certificates. Certain of the REMIC Regular Certificates
("Payment Lag Certificates") may provide for payments of interest based on a
period that corresponds to the interval between Distribution Dates but that
ends prior to each such Distribution Date. The period between the Closing
Date for Payment Lag Certificates and their first Distribution Date may or
may not exceed such interval. Purchasers of Payment Lag Certificates for
which the period between the Closing Date and the first Distribution Date
does not exceed such interval could pay upon purchase of the REMIC Regular
Certificates accrued interest in excess of the accrued interest that would be
paid if the interest paid on the Distribution Date were interest accrued from
Distribution Date to Distribution Date. If a portion of the initial purchase
price of a REMIC Regular Certificate is allocable to interest that has
accrued prior to the issue date ("pre-issuance accrued interest") and the
REMIC Regular Certificate provides for a payment of stated interest on the
first payment date (and the first payment date is within one year of the
issue date) that equals or exceeds the amount of the pre-issuance accrued
interest, then the REMIC Regular Certificates' issue price may be computed by
subtracting from the issue price the amount of pre-issuance accrued interest,
rather than as an amount payable on the REMIC Regular Certificate. However,
it is unclear under this method how the OID Regulations treat interest on
Payment Lag Certificates. Therefore, in the case of a Payment Lag
Certificate, the Trust Fund intends to include accrued interest in the issue
price and report interest payments made on the first Distribution Date as
interest to the extent such payments represent interest for the number of
days that the Certificateholder has held such Payment Lag Certificate during
the first accrual period.
Investors should consult their own tax advisors concerning the treatment
for federal income tax purposes of Payment Lag Certificates.
Non-Interest Expenses of the REMIC. Under temporary Treasury regulations,
if the REMIC is considered to be a "single-class REMIC," a portion of the
REMIC's servicing, administrative and other non-interest expenses will be
allocated as a separate item to those REMIC Regular Certificateholders that
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are "pass-through interest holders." Certificateholders that are pass-through
interest holders should consult their own tax advisors about the impact of
these rules on an investment in the REMIC Regular Certificates. See
"Pass-Through of Non-Interest Expenses of the REMIC" under "--Taxation of
Owners of REMIC Residual Certificates" below.
Treatment of Realized Losses. Although not entirely clear, it appears that
holders of REMIC Regular Certificates that are corporations should in general
be allowed to deduct as an ordinary loss any loss sustained during the
taxable year on account of any such Certificates becoming wholly or partially
worthless, and that, in general, holders of Certificates that are not
corporations should be allowed to deduct as a short-term capital loss any
loss sustained during the taxable year on account of any such Certificates
becoming wholly worthless. Although the matter is not entirely clear,
non-corporate holders of Certificates may be allowed a bad debt deduction at
such time that the principal balance of any such Certificate is reduced to
reflect realized losses resulting from any liquidated Mortgage Assets. The
Internal Revenue Service, however, could take the position that non-corporate
holders will be allowed a bad debt deduction to reflect realized losses only
after all Mortgage Assets remaining in the related Trust Fund have been
liquidated or the Certificates of the related Series have been otherwise
retired. Potential investors and holders of the Certificates are urged to
consult their own tax advisors regarding the appropriate timing, amount and
character of any loss sustained with respect to such Certificates, including
any loss resulting from the failure to recover previously accrued interest or
discount income. Special loss rules are applicable to banks and thrift
institutions, including rules regarding reserves for bad debts. Such
taxpayers are advised to consult their tax advisors regarding the treatment
of losses on Certificates.
Non-U.S. Persons. Generally, payments of interest (including any payment
with respect to accrued OID) on the REMIC Regular Certificates to a REMIC
Regular Certificateholder who is not a U.S. Person and is not engaged in a
trade or business within the United States will not be subject to federal
withholding tax if (i) such REMIC Regular Certificateholder does not actually
or constructively own 10 percent or more of the combined voting power of all
classes of equity in the Issuer; (ii) such REMIC Regular Certificateholder is
not a controlled foreign corporation (within the meaning of Code Section 957)
related to the Issuer; and (iii) such REMIC Regular Certificateholder
complies with certain identification requirements (including delivery of a
statement, signed by the REMIC Regular Certificateholder under penalties of
perjury, certifying that such REMIC Regular Certificateholder is a foreign
person and providing the name and address of such REMIC Regular
Certificateholder). If a REMIC Regular Certificateholder is not exempt from
withholding, distributions of interest to such holder, including
distributions in respect of accrued OID, may be subject to a 30% withholding
tax, subject to reduction under any applicable tax treaty.
Further, a REMIC Regular Certificate will not be included in the estate of
a non-resident alien individual and will not be subject to United States
estate taxes. However, Certificateholders who are non-resident alien
individuals should consult their tax advisors concerning this question.
REMIC Regular Certificateholders who are not U.S. Persons and persons
related to such holders should not acquire any REMIC Residual Certificates,
and holders of REMIC Residual Certificates (the "REMIC Residual
Certificateholder") and persons related to REMIC Residual Certificateholders
should not acquire any REMIC Regular Certificates without consulting their
tax advisors as to the possible adverse tax consequences of doing so.
Information Reporting and Backup Withholding. The Master Servicer or
Trustee will furnish or make available, within a reasonable time after the
end of each calendar year, to each person who was a REMIC Regular
Certificateholder at any time during such year, such information as may be
deemed necessary or desirable to assist REMIC Regular Certificateholders in
preparing their federal income tax returns, or to enable holders to make such
information available to beneficial owners or financial intermediaries that
hold such REMIC Regular Certificates on behalf of beneficial owners. If a
holder, beneficial owner, financial intermediary or other recipient of a
payment on behalf of a beneficial owner fails to supply a certified taxpayer
identification number or if the Secretary of the Treasury determines that
such person has not reported all interest and dividend income required to be
shown on its federal income tax return, 31% backup withholding may be
required with respect to any payments. Any amounts deducted and withheld from
a distribution to a recipient would be allowed as a credit against such
recipient's federal income tax liability.
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New Withholding Regulations. On October 6, 1997, the Treasury Department
issued new regulations (the "New Regulations") which make certain
modifications to the withholding, backup withholding and information
reporting rules described above. The New Regulations attempt to unify
certification requirements and modify reliance standards. The New Regulations
will generally be effective for payments made after December 31, 1999,
subject to certain transition rules. Prospective investors are urged to
consult their own tax advisors regarding the New Regulations.
B. TAXATION OF OWNERS OF REMIC RESIDUAL CERTIFICATES
Allocation of the Income of the REMIC to the REMIC Residual
Certificates. The REMIC will not be subject to federal income tax except with
respect to income from prohibited transactions and certain other
transactions. See "--Prohibited Transactions and Other Taxes" below. Instead,
each original holder of a REMIC Residual Certificate will report on its
federal income tax return, as ordinary income, its share of the taxable
income of the REMIC for each day during the taxable year on which such holder
owns any REMIC Residual Certificates. The taxable income of the REMIC for
each day will be determined by allocating the taxable income of the REMIC for
each calendar quarter ratably to each day in the quarter. Such a holder's
share of the taxable income of the REMIC for each day will be based on the
portion of the outstanding REMIC Residual Certificates that such holder owns
on that day. The taxable income of the REMIC will be determined under an
accrual method and will be taxable to the holders of REMIC Residual
Certificates without regard to the timing or amounts of cash distributions by
the REMIC. Ordinary income derived from REMIC Residual Certificates will be
"portfolio income" for purposes of the taxation of taxpayers subject to the
limitations on the deductibility of "passive losses." As residual interests,
the REMIC Residual Certificates will be subject to tax rules, described
below, that differ from those that would apply if the REMIC Residual
Certificates were treated for federal income tax purposes as direct ownership
interests in the Certificates or as debt instruments issued by the REMIC.
A REMIC Residual Certificateholder may be required to include taxable
income from the REMIC Residual Certificate in excess of the cash distributed.
For example, a structure where principal distributions are made serially on
regular interests (that is, a fast-pay, slow-pay structure) may generate such
a mismatching of income and cash distributions (that is, "phantom income").
This mismatching may be caused by the use of certain required tax accounting
methods by the REMIC, variations in the prepayment rate of the underlying
Mortgage Assets and certain other factors. Depending upon the structure of a
particular transaction, the aforementioned factors may significantly reduce
the after-tax yield of a REMIC Residual Certificate to a REMIC Residual
Certificateholder. Investors should consult their own tax advisors concerning
the federal income tax treatment of a REMIC Residual Certificate and the
impact of such tax treatment on the after-tax yield of a REMIC Residual
Certificate.
A subsequent REMIC Residual Certificateholder also will report on its
federal income tax return amounts representing a daily share of the taxable
income of the REMIC for each day that such REMIC Residual Certificateholder
owns such REMIC Residual Certificate. Those daily amounts generally would
equal the amounts that would have been reported for the same days by an
original REMIC Residual Certificateholder, as described above. The
Legislative History indicates that certain adjustments may be appropriate to
reduce (or increase) the income of a subsequent holder of a REMIC Residual
Certificate that purchased such REMIC Residual Certificate at a price greater
than (or less than) the adjusted basis such REMIC Residual Certificate would
have in the hands of an original REMIC Residual Certificateholder. See
"--Sale or Exchange of REMIC Residual Certificates" below. It is not clear,
however, whether such adjustments will in fact be permitted or required and,
if so, how they would be made. The REMIC Regulations do not provide for any
such adjustments.
Taxable Income of the REMIC Attributable to Residual Interests. The
taxable income of the REMIC will reflect a netting of (i) the income from the
Mortgage Assets and the REMIC's other assets and (ii) the deductions allowed
to the REMIC for interest and OID on the REMIC Regular Certificates and,
except as described above under "--Taxation of Owners of REMIC Regular
Certificates--Non-Interest Expenses of the REMIC," other expenses. REMIC
taxable income is generally determined in the same manner as the taxable
income of an individual using the accrual method of accounting, except that
(i) the limitations on deductibility of investment interest expense and
expenses for the production of income do
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not apply, (ii) all bad loans will be deductible as business bad debts, and
(iii) the limitation on the deductibility of interest and expenses related to
tax-exempt income will apply. The REMIC's gross income includes interest,
original issue discount income, and market discount income, if any, on the
Mortgage Loans, reduced by amortization of any premium on the Mortgage Loans,
plus income on reinvestment of cash flows and reserve assets, plus any
cancellation of indebtedness income upon allocation of realized losses to the
REMIC Regular Certificates. Note that the timing of cancellation of
indebtedness income recognized by REMIC Residual Certificateholders resulting
from defaults and delinquencies on Mortgage Assets may differ from the time
of the actual loss on the Mortgage Asset. The REMIC's deductions include
interest and original issue discount expense on the REMIC Regular
Certificates, servicing fees on the Mortgage Loans, other administrative
expenses of the REMIC and realized losses on the Mortgage Loans. The
requirement that REMIC Residual Certificateholders report their pro rata
share of taxable income or net loss of the REMIC will continue until there
are no Certificates of any class of the related Series outstanding.
For purposes of determining its taxable income, the REMIC will have an
initial aggregate tax basis in its assets equal to the sum of the issue
prices of the REMIC Regular Certificates and the REMIC Residual Certificates
(or, if a class of Certificates is not sold initially, its fair market
value). Such aggregate basis will be allocated among the Mortgage Assets and
other assets of the REMIC in proportion to their respective fair market
value. A Mortgage Asset will be deemed to have been acquired with discount or
premium to the extent that the REMIC's basis therein is less than or greater
than its principal balance, respectively. Any such discount (whether market
discount or OID) will be includible in the income of the REMIC as it accrues,
in advance of receipt of the cash attributable to such income, under a method
similar to the method described above for accruing OID on the REMIC Regular
Certificates. The REMIC expects to elect under Code Section 171 to amortize
any premium on the Mortgage Assets. Premium on any Mortgage Asset to which
such election applies would be amortized under a constant yield method. It is
not clear whether the yield of a Mortgage Asset would be calculated for this
purpose based on scheduled payments or taking account of the Prepayment
Assumption. Additionally, such an election would not apply to the yield with
respect to any underlying mortgage loan originated on or before September 27,
1985. Instead, premium with respect to such a mortgage loan would be
allocated among the principal payments thereon and would be deductible by the
REMIC as those payments become due.
The REMIC will be allowed a deduction for interest and OID on the REMIC
Regular Certificates. The amount and method of accrual of OID will be
calculated for this purpose in the same manner as described above with
respect to REMIC Regular Certificates except that the 0.25% per annum de
minimis rule and adjustments for subsequent holders described therein will
not apply.
A REMIC Residual Certificateholder will not be permitted to amortize the
cost of the REMIC Residual Certificate as an offset to its share of the
REMIC's taxable income. However, REMIC taxable income will not include cash
received by the REMIC that represents a recovery of the REMIC's basis in its
assets, and, as described above, the issue price of the REMIC Residual
Certificates will be added to the issue price of the REMIC Regular
Certificates in determining the REMIC's initial basis in its assets. See
"--Sale or Exchange of REMIC Residual Certificates" below. For a discussion
of possible adjustments to income of a subsequent holder of a REMIC Residual
Certificate to reflect any difference between the actual cost of such REMIC
Residual Certificate to such holder and the adjusted basis such REMIC
Residual Certificate would have in the hands of an original REMIC Residual
Certificateholder, see "--Allocation of the Income of the REMIC to the REMIC
Residual Certificates" above.
Net Losses of the REMIC. The REMIC will have a net loss for any calendar
quarter in which its deductions exceed its gross income. Such net loss would
be allocated among the REMIC Residual Certificateholders in the same manner
as the REMIC's taxable income. The net loss allocable to any REMIC Residual
Certificate will not be deductible by the holder to the extent that such net
loss exceeds such holder's adjusted basis in such REMIC Residual Certificate.
Any net loss that is not currently deductible by reason of this limitation
may only be used by such REMIC Residual Certificateholder to offset its share
of the REMIC's taxable income in future periods (but not otherwise). The
ability of REMIC Residual Certificateholders that are individuals or closely
held corporations to deduct net losses may be subject to additional
limitations under the Code.
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Mark to Market Rules. Prospective purchasers of a REMIC Residual
Certificate should be aware that the IRS recently finalized regulations (the
"Mark-to-Market Regulations") which provide that a REMIC Residual Certificate
acquired after January 3, 1995 cannot be marked-to-market.
Pass-Through of Non-Interest Expenses of the REMIC. As a general rule, all
of the fees and expenses of a REMIC will be taken into account by holders of
the REMIC Residual Certificates. In the case of a single class REMIC,
however, the expenses and a matching amount of additional income will be
allocated, under temporary Treasury regulations, among the REMIC Regular
Certificateholders and the REMIC Residual Certificateholders on a daily basis
in proportion to the relative amounts of income accruing to each
Certificateholder on that day. In general terms, a single class REMIC is one
that either (i) would qualify, under existing Treasury regulations, as a
grantor trust if it were not a REMIC (treating all interests as ownership
interests, even if they would be classified as debt for federal income tax
purposes) or (ii) is similar to such a trust and is structured with the
principal purpose of avoiding the single class REMIC rules. Unless otherwise
stated in the applicable Prospectus Supplement, the expenses of the REMIC
will be allocated to holders of the related REMIC Residual Certificates in
their entirety and not to holders of the related REMIC Regular Certificates.
In the case of individuals (or trusts, estates or other persons that
compute their income in the same manner as individuals) who own an interest
in a REMIC Regular Certificate or a REMIC Residual Certificate directly or
through a pass-through interest holder that is required to pass miscellaneous
itemized deductions through to its owners or beneficiaries (e.g., a
partnership, an S corporation or a grantor trust), such expenses will be
deductible under Code Section 67 only to the extent that such expenses, plus
other "miscellaneous itemized deductions" of the individual, exceed 2% of
such individual's adjusted gross income. In addition, Code Section 68
provides that the amount of itemized deductions otherwise allowable for an
individual whose adjusted gross income exceeds a certain amount (the
"Applicable Amount") will be reduced by the lesser of (i) 3% of the excess of
the individual's adjusted gross income over the Applicable Amount or (ii) 80%
of the amount of itemized deductions otherwise allowable for the taxable
year. The amount of additional taxable income recognized by REMIC Residual
Certificateholders who are subject to the limitations of either Code Section
67 or Code Section 68 may be substantial. Further, holders (other than
corporations) subject to the alternative minimum tax may not deduct
miscellaneous itemized deductions in determining such holders' alternative
minimum taxable income. The REMIC is required to report to each pass-through
interest holder and to the IRS such holder's allocable share, if any, of the
REMIC's non-interest expenses. The term "pass-through interest holder"
generally refers to individuals, entities taxed as individuals and certain
pass-through entities, but does not include real estate investment trusts.
REMIC Residual Certificateholders that are pass-through interest holders
should consult their own tax advisors about the impact of these rules on an
investment in the REMIC Residual Certificates.
Excess Inclusions. A portion of the income on a REMIC Residual Certificate
(referred to in the Code as an "excess inclusion") for any calendar quarter
will be subject to federal income tax in all events. Thus, for example, an
excess inclusion (i) may not be offset by any unrelated losses, deductions or
loss carryovers of a REMIC Residual Certificateholder; (ii) will be treated
as "unrelated business taxable income" within the meaning of Code Section 512
if the REMIC Residual Certificateholder is a pension fund or any other
organization that is subject to tax only on its unrelated business taxable
income (see "--Tax-Exempt Investors" below); and (iii) is not eligible for
any reduction in the rate of withholding tax in the case of a REMIC Residual
Certificateholder that is a foreign investor. See "--Non-U.S. Persons" below.
With respect to any REMIC Residual Certificateholder, the excess
inclusions for any calendar quarter is the excess, if any, of (i) the income
of such REMIC Residual Certificateholder for that calendar quarter from its
REMIC Residual Certificate over (ii) the sum of the "daily accruals" (as
defined below) for all days during the calendar quarter on which the REMIC
Residual Certificateholder holds such REMIC Residual Certificate. For this
purpose, the daily accruals with respect to a REMIC Residual Certificate are
determined by allocating to each day in the calendar quarter its ratable
portion of the product of the "adjusted issue price" (as defined below) of
the REMIC Residual Certificate at the beginning of the calendar quarter and
120 percent of the "Federal long-term rate" in effect at the time
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the REMIC Residual Certificate is issued. For this purpose, the "adjusted
issue price" of a REMIC Residual Certificate at the beginning of any calendar
quarter equals the issue price of the REMIC Residual Certificate, increased
by the amount of daily accruals for all prior quarters, and decreased (but
not below zero) by the aggregate amount of payments made on the REMIC
Residual Certificate before the beginning of such quarter. The "federal
long-term rate" is an average of current yields on Treasury securities with a
remaining term of greater than nine years, computed and published monthly by
the IRS.
In the case of any REMIC Residual Certificates held by a real estate
investment trust, the aggregate excess inclusions with respect to such REMIC
Residual Certificates, reduced (but not below zero) by the real estate
investment trust taxable income (within the meaning of Code Section
857(b)(2), excluding any net capital gain), will be allocated among the
shareholders of such trust in proportion to the dividends received by such
shareholders from such trust, and any amount so allocated will be treated as
an excess inclusion with respect to a REMIC Residual Certificate as if held
directly by such shareholder. Regulated investment companies, common trust
funds and certain cooperatives are subject to similar rules.
The Small Business Job Protection Act of 1996 has eliminated the special
rule permitting Section 593 institutions ("thrift institutions") to use net
operating losses and other allowable deductions to offset their excess
inclusion income from REMIC residual certificates that have "significant
value" within the meaning of the REMIC Regulations, effective for taxable
years beginning after December 31, 1995, except with respect to residual
certificates continuously held by a thrift institution since November 1,
1995.
In addition, the Small Business Job Protection Act of 1996 provides three
rules for determining the effect on excess inclusions on the alternative
minimum taxable income of a residual holder. First, alternative minimum
taxable income for such residual holder is determined without regard to the
special rule that taxable income cannot be less than excess inclusions.
Second, a residual holder's alternative minimum taxable income for a tax year
cannot be less than excess inclusions for the year. Third, the amount of any
alternative minimum tax net operating loss deductions must be computed
without regard to any excess inclusions. These rules are effective for tax
years beginning after December 31, 1986, unless a residual holder elects to
have such rules apply only to tax years beginning after August 20, 1996.
Payments. Any distribution made on a REMIC Residual Certificate to a REMIC
Residual Certificateholder will be treated as a non-taxable return of capital
to the extent it does not exceed the REMIC Residual Certificateholder's
adjusted basis in such REMIC Residual Certificate. To the extent a
distribution exceeds such adjusted basis, it will be treated as gain from the
sale of the REMIC Residual Certificate.
Sale or Exchange of REMIC Residual Certificates. If a REMIC Residual
Certificate is sold or exchanged, the seller will generally recognize gain or
loss equal to the difference between the amount realized on the sale or
exchange and its adjusted basis in the REMIC Residual Certificate (except
that the recognition of loss may be limited under the "wash sale" rules
described below). A holder's adjusted basis in a REMIC Residual Certificate
generally equals the cost of such REMIC Residual Certificate to such REMIC
Residual Certificateholder, increased by the taxable income of the REMIC that
was included in the income of such REMIC Residual Certificateholder with
respect to such REMIC Residual Certificate, and decreased (but not below
zero) by the net losses that have been allowed as deductions to such REMIC
Residual Certificateholder with respect to such REMIC Residual Certificate
and by the distributions received thereon by such REMIC Residual
Certificateholder. In general, any such gain or loss will be capital gain or
loss provided the REMIC Residual Certificate is held as a capital asset.
However, REMIC Residual Certificates will be "evidences of indebtedness"
within the meaning of Code Section 582(c)(1), so that gain or loss recognized
from sale of a REMIC Residual Certificate by a bank or thrift institution to
which such Section applies would be ordinary income or loss.
Except as provided in Treasury regulations yet to be issued, if the seller
of a REMIC Residual Certificate reacquires such REMIC Residual Certificate,
or acquires any other REMIC Residual Certificate, any residual interest in
another REMIC or similar interest in a "taxable mortgage pool" (as defined in
Code Section 7701(i)) during the period beginning six months before, and
ending six months after, the date of such sale, such sale will be subject to
the "wash sale" rules of Code Section 1091. In that event, any loss realized
by the REMIC Residual Certificateholder on the sale will not be deductible,
but, instead, will increase such REMIC Residual Certificateholder's adjusted
basis in the newly acquired asset.
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PROHIBITED TRANSACTIONS AND OTHER TAXES
The Code imposes a tax on REMICs equal to 100% of the net income derived
from "prohibited transactions" (the "Prohibited Transactions Tax"). In
general, subject to certain specified exceptions, a prohibited transaction
means the disposition of a Mortgage Asset, the receipt of income from a
source other than a Mortgage Asset or certain other permitted investments,
the receipt of compensation for services, or gain from the disposition of an
asset purchased with the payments on the Mortgage Assets for temporary
investment pending distribution on the Certificates. It is not anticipated
that the Trust Fund for any Series of Certificates will engage in any
prohibited transactions in which it would recognize a material amount of net
income.
In addition, certain contributions to a Trust Fund as to which an election
has been made to treat such Trust Fund as a REMIC made after the day on which
such Trust Fund issues all of its interests could result in the imposition of
a tax on the Trust Fund equal to 100% of the value of the contributed
property (the "Contributions Tax"). No Trust Fund for any Series of
Certificates will accept contributions that would subject it to such tax.
In addition, a Trust Fund as to which an election has been made to treat
such Trust Fund as a REMIC may also be subject to federal income tax at the
highest corporate rate on "net income from foreclosure property," determined
by reference to the rules applicable to real estate investment trusts. "Net
income from foreclosure property" generally means income from foreclosure
property other than qualifying income for a real estate investment trust.
Where any Prohibited Transactions Tax, Contributions Tax, tax on net
income from foreclosure property or state or local income or franchise tax
that may be imposed on a REMIC relating to any Series of Certificates arises
out of or results from (i) a breach of the related Master Servicer's,
Trustee's or Sellers' obligations, as the case may be, under the related
Agreement for such Series, such tax will be borne by such Master Servicer,
Trustee or Sellers, as the case may be, out of its own funds or (ii) the
Sellers' obligation to repurchase a Mortgage Loan, such tax will be borne by
the Sellers. In the event that such Master Servicer, Trustee or Sellers, as
the case may be, fails to pay or is not required to pay any such tax as
provided above, such tax will be payable out of the Trust Fund for such
Series and will result in a reduction in amounts available to be distributed
to the Certificateholders of such Series.
LIQUIDATION AND TERMINATION
If the REMIC adopts a plan of complete liquidation, within the meaning of
Code Section 860F(a)(4)(A)(i), which may be accomplished by designating in
the REMIC's final tax return a date on which such adoption is deemed to
occur, and sells all of its assets (other than cash) within a 90-day period
beginning on such date, the REMIC will not be subject to any Prohibited
Transaction Tax, provided that the REMIC credits or distributes in
liquidation all of the sale proceeds plus its cash (other than the amounts
retained to meet claims) to holders of Regular and REMIC Residual
Certificates within the 90-day period.
The REMIC will terminate shortly following the retirement of the REMIC
Regular Certificates. If a REMIC Residual Certificateholder's adjusted basis
in the REMIC Residual Certificate exceeds the amount of cash distributed to
such REMIC Residual Certificateholder in final liquidation of its interest,
then it would appear that the REMIC Residual Certificateholder would be
entitled to a loss equal to the amount of such excess. It is unclear whether
such a loss, if allowed, will be a capital loss or an ordinary loss.
ADMINISTRATIVE MATTERS
Solely for the purpose of the administrative provisions of the Code, the
REMIC generally will be treated as a partnership and the REMIC Residual
Certificateholders will be treated as the partners. Certain information will
be furnished quarterly to each REMIC Residual Certificateholder who held a
REMIC Residual Certificate on any day in the previous calendar quarter.
Each REMIC Residual Certificateholder is required to treat items on its
return consistently with their treatment on the REMIC's return, unless the
REMIC Residual Certificateholder either files a
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statement identifying the inconsistency or establishes that the inconsistency
resulted from incorrect information received from the REMIC. The IRS may
assert a deficiency resulting from a failure to comply with the consistency
requirement without instituting an administrative proceeding at the REMIC
level. The REMIC does not intend to register as a tax shelter pursuant to
Code Section 6111 because it is not anticipated that the REMIC will have a
net loss for any of the first five taxable years of its existence. Any person
that holds a REMIC Residual Certificate as a nominee for another person may
be required to furnish the REMIC, in a manner to be provided in Treasury
regulations, with the name and address of such person and other information.
TAX-EXEMPT INVESTORS
Any REMIC Residual Certificateholder that is a pension fund or other
entity that is subject to federal income taxation only on its "unrelated
business taxable income" within the meaning of Code Section 512 will be
subject to such tax on that portion of the distributions received on a REMIC
Residual Certificate that is considered an excess inclusion. See "--Taxation
of Owners of REMIC Residual Certificates--Excess Inclusions" above.
RESIDUAL CERTIFICATE PAYMENTS NON-U.S. PERSONS
Amounts paid to REMIC Residual Certificateholders who are not U.S. Persons
(see "--Taxation of Owners of REMIC Regular Certificates--Non-U.S. Persons"
above) are treated as interest for purposes of the 30% (or lower treaty rate)
United States withholding tax. Amounts distributed to holders of REMIC
Residual Certificates should qualify as "portfolio interest," subject to the
conditions described in "--Taxation of Owners of REMIC Regular Certificates"
above, but only to the extent that the underlying mortgage loans were
originated after July 18, 1984. Furthermore, the rate of withholding on any
income on a REMIC Residual Certificate that is excess inclusion income will
not be subject to reduction under any applicable tax treaties. See
"--Taxation of Owners of REMIC Residual Certificates--Excess Inclusions"
above. If the portfolio interest exemption is unavailable, such amount will
be subject to United States withholding tax when paid or otherwise
distributed (or when the REMIC Residual Certificate is disposed of) under
rules similar to those for withholding upon disposition of debt instruments
that have OID. The Code, however, grants the Treasury Department authority to
issue regulations requiring that those amounts be taken into account earlier
than otherwise provided where necessary to prevent avoidance of tax (for
example, where the REMIC Residual Certificates do not have significant
value). See "--Taxation of Owners of REMIC Residual Certificates--Excess
Inclusions" above. If the amounts paid to REMIC Residual Certificateholders
that are not U.S. persons are effectively connected with their conduct of a
trade or business within the United States, the 30% (or lower treaty rate)
withholding will not apply. Instead, the amounts paid to such non-U.S. Person
will be subject to U.S. federal income taxation at regular graduated rates.
For special restrictions on the transfer of REMIC Residual Certificates, see
"--Tax-Related Restrictions on Transfers of REMIC Residual Certificates"
below.
REMIC Regular Certificateholders and persons related to such holders
should not acquire any REMIC Residual Certificates, and REMIC Residual
Certificateholders and persons related to REMIC Residual Certificateholders
should not acquire any REMIC Regular Certificates, without consulting their
tax advisors as to the possible adverse tax consequences of such acquisition.
TAX-RELATED RESTRICTIONS ON TRANSFERS OF REMIC RESIDUAL CERTIFICATES
Disqualified Organizations. An entity may not qualify as a REMIC unless
there are reasonable arrangements designed to ensure that residual interests
in such entity are not held by "disqualified organizations" (as defined
below). Further, a tax is imposed on the transfer of a residual interest in a
REMIC to a "disqualified organization." The amount of the tax equals the
product of (A) an amount (as determined under the REMIC Regulations) equal to
the present value of the total anticipated "excess inclusions" with respect
to such interest for periods after the transfer and (B) the highest marginal
federal income tax rate applicable to corporations. The tax is imposed on the
transferor unless the transfer is through an agent (including a broker or
other middleman) for a disqualified organization, in which event
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the tax is imposed on the agent. The person otherwise liable for the tax
shall be relieved of liability for the tax if the transferee furnished to
such person an affidavit that the transferee is not a disqualified
organization and, at the time of the transfer, such person does not have
actual knowledge that the affidavit is false. A "disqualified organization"
means (A) the United States, any State, possession or political subdivision
thereof, any foreign government, any international organization or any agency
or instrumentality of any of the foregoing (provided that such term does not
include an instrumentality if all its activities are subject to tax and,
except for FHLMC, a majority of its board of directors is not selected by any
such governmental agency), (B) any organization (other than certain farmers'
cooperatives) generally exempt from federal income taxes unless such
organization is subject to the tax on "unrelated business taxable income" and
(C) a rural electric or telephone cooperative.
A tax is imposed on a "pass-through entity" (as defined below) holding a
residual interest in a REMIC if at any time during the taxable year of the
pass-through entity a disqualified organization is the record holder of an
interest in such entity. The amount of the tax is equal to the product of (A)
the amount of excess inclusions for the taxable year allocable to the
interest held by the disqualified organization and (B) the highest marginal
federal income tax rate applicable to corporations. The pass-through entity
otherwise liable for the tax, for any period during which the disqualified
organization is the record holder of an interest in such entity, will be
relieved of liability for the tax if such record holder furnishes to such
entity an affidavit that such record holder is not a disqualified
organization and, for such period, the pass-through entity does not have
actual knowledge that the affidavit is false. For this purpose, a
"pass-through entity" means (i) a regulated investment company, real estate
investment trust or common trust fund, (ii) a partnership, trust or estate
and (iii) certain cooperatives. Except as may be provided in Treasury
regulations not yet issued, any person holding an interest in a pass-through
entity as a nominee for another will, with respect to such interest, be
treated as a pass-through entity. The tax on pass-through entities is
generally effective for periods after March 31, 1988, except that in the case
of regulated investment companies, real estate investment trusts, common
trust funds and publicly-traded partnerships the tax shall apply only to
taxable years of such entities beginning after December 31, 1988.
In order to comply with these rules, the Agreement will provide that no
record or beneficial ownership interest in a REMIC Residual Certificate may
be purchased, transferred or sold, directly or indirectly, without the
express written consent of the Master Servicer. The Master Servicer will
grant such consent to a proposed transfer only if it receives the following:
(i) an affidavit from the proposed transferee to the effect that it is not a
disqualified organization and is not acquiring the REMIC Residual Certificate
as a nominee or agent for a disqualified organization and (ii) a covenant by
the proposed transferee to the effect that the proposed transferee agrees to
be bound by and to abide by the transfer restrictions applicable to the REMIC
Residual Certificate.
Noneconomic REMIC Residual Certificates. The REMIC Regulations disregard,
for federal income tax purposes, any transfer of a Noneconomic REMIC Residual
Certificate to a "U.S. Person," as defined above, unless no significant
purpose of the transfer is to enable the transferor to impede the assessment
or collection of tax. A Noneconomic REMIC Residual Certificate is any REMIC
Residual Certificate (including a REMIC Residual Certificate with a positive
value at issuance) unless, at the time of transfer, taking into account the
Prepayment Assumption and any required or permitted clean up calls or
required liquidation provided for in the REMIC's organizational documents,
(i) the present value of the expected future distributions on the REMIC
Residual Certificate at least equals the product of the present value of the
anticipated excess inclusions and the highest corporate income tax rate in
effect for the year in which the transfer occurs and (ii) the transferor
reasonably expects that the transferee will receive distributions from the
REMIC at or after the time at which taxes accrue on the anticipated excess
inclusions in an amount sufficient to satisfy the accrued taxes. A
significant purpose to impede the assessment or collection of tax exists if
the transferor, at the time of the transfer, either knew or should have known
that the transferee would be unwilling or unable to pay taxes due on its
share of the taxable income of the REMIC. A transferor is presumed not to
have such knowledge if (i) the transferor conducted a reasonable
investigation of the transferee and (ii) the transferee acknowledges to the
transferor that the residual interest may generate tax liabilities in excess
of the cash flow and the transferee represents that it intends to pay such
taxes associated with the residual interest as they become
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due. If a transfer of a Noneconomic REMIC Residual Certificate is
disregarded, the transferor would continue to be treated as the owner of the
REMIC Residual Certificate and would continue to be subject to tax on its
allocable portion of the net income of the REMIC.
Foreign Investors. The REMIC Regulations provide that the transfer of a
REMIC Residual Certificate that has a "tax avoidance potential" to a "foreign
person" will be disregarded for federal income tax purposes. This rule
appears to apply to a transferee who is not a U.S. Person unless such
transferee's income in respect of the REMIC Residual Certificate is
effectively connected with the conduct of a United States trade or business.
A REMIC Residual Certificate is deemed to have a tax avoidance potential
unless, at the time of transfer, the transferor reasonably expects that the
REMIC will distribute to the transferee amounts that will equal at least 30
percent of each excess inclusion, and that such amounts will be distributed
at or after the time the excess inclusion accrues and not later than the end
of the calendar year following the year of accrual. If the non-U.S. Person
transfers the REMIC Residual Certificate to a U.S. Person, the transfer will
be disregarded, and the foreign transferor will continue to be treated as the
owner, if the transfer has the effect of allowing the transferor to avoid tax
on accrued excess inclusions. The provisions in the REMIC Regulations
regarding transfers of REMIC Residual Certificates that have tax avoidance
potential to foreign persons are effective for all transfers after June 30,
1992. The Agreement will provide that no record of beneficial ownership
interest in a REMIC Residual Certificate may be transferred, directly or
indirectly, to a non-U.S. Person unless such person provides the Trustee with
a duly completed I.R.S. Form 4224 and the Trustee consents to such transfer
in writing.
Any attempted transfer or pledge in violation of the transfer restrictions
shall be absolutely null and void and shall vest no rights in any purported
transferee. Investors in REMIC Residual Certificates are advised to consult
their own tax advisors with respect to transfers of the REMIC Residual
Certificates and, in addition, pass-through entities are advised to consult
their own tax advisors with respect to any tax which may be imposed on a
pass-through entity.
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STATE TAX CONSIDERATIONS
In addition to the federal income tax consequences described in "Certain
Federal Income Tax Consequences," potential investors should consider the
state income tax consequences of the acquisition, ownership, and disposition
of the Offered Certificates. State income tax law may differ substantially
from the corresponding federal law, and this discussion does not purport to
describe any aspect of the income tax laws of any state. Therefore, potential
investors should consult their own tax advisors with respect to the various
tax consequences of investments in the Offered Certificates.
ERISA CONSIDERATIONS
GENERAL
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and Section 4975 of the Code impose certain restrictions on employee benefit
plans subject to ERISA and on certain other retirement plans and arrangements
(including, but not limited to individual retirement accounts and Keogh
plans) ("Plans") and on persons who are parties in interest or disqualified
persons ("parties in interest") with respect to such Plans. Certain employee
benefit plans, such as governmental plans and church plans (if no election
has been made under Section 410(d) of the Code), are not subject to the
restrictions of ERISA or Section 4975 of the Code, and assets of such plans
may be invested in the Certificates without regard to the ERISA
considerations described below, subject to other applicable federal and state
law. However, any such governmental or church plan which is qualified under
Section 401(a) of the Code and exempt from taxation under Section 501(a) of
the Code is subject to the prohibited transaction rules set forth in Section
503 of the Code.
Investments by Plans are subject to ERISA's general fiduciary
requirements, including the requirement of investment prudence and
diversification and the requirement that a Plan's investments be made in
accordance with the documents governing the Plan.
PROHIBITED TRANSACTIONS
General
Section 406 of ERISA prohibits parties in interest with respect to a Plan
from engaging in certain transactions involving a Plan and its assets unless
a statutory, regulatory or administrative exemption applies to the
transaction. Section 4975 of the Code imposes certain excise taxes (or, in
some cases, a civil penalty may be assessed pursuant to Section 502(i) of
ERISA) on parties in interest which engage in nonexempt prohibited
transactions.
The United States Department of Labor ("Labor") has issued a final
regulation (29 C.F.R. Section 2510.3-101) containing rules for determining
what constitutes the assets of a Plan. This regulation provides that, as a
general rule, the underlying assets and properties of corporations,
partnerships, trusts and certain other entities in which a Plan makes an
"equity investment" will be deemed for purposes of ERISA to be assets of the
Plan unless certain exceptions apply.
Under the terms of the regulation, the Trust may be deemed to hold plan
assets by reason of a Plan's investment in a Certificate; such plan assets
would include an undivided interest in the Mortgage Loans and any other
assets held by the Trust. In such an event, the Depositor, the Servicers, the
Trustee, any insurer of the Mortgage Assets and other persons, in providing
services with respect to the assets of the Trust, may be parties in interest,
subject to the fiduciary responsibility provisions of Title I of ERISA,
including the prohibited transaction provisions of Section 406 of ERISA (and
of Section 4975 of the Code), with respect to transactions involving such
assets unless such transactions are subject to a statutory, regulatory or
administrative exemption.
The regulations contain a de minimis safe-harbor rule that exempts any
entity from plan assets status as long as the aggregate equity investment in
such entity by Plans is not significant. For this purpose, equity
participation in the entity will be significant if immediately after any
acquisition of any equity
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interest in the entity, "benefit plan investors" in the aggregate, own 25% or
more of the value of any class of equity interest (excluding from the
calculation the value of equity interests held by persons who have
discretionary authority or control with respect to the assets of the entity
(or held by affiliates of such persons)). "Benefit plan investors" are
defined as Plans as well as employee benefit plans not subject to ERISA
(e.g., governmental plans) and entities whose underlying assets include plan
assets by reason of Plan investment in such entities. To fit within this safe
harbor, benefit plan investors must own less than 25% of each class of
certificates, regardless of the portion of total equity value represented by
such class, on an ongoing basis.
Availability of Underwriter's Exemption for Certificates
Labor has granted to J.P. Morgan Securities Inc. Prohibited Transaction
Exemption 90-23 (the "Exemption"), which exempts from the application of the
prohibited transaction rules transactions relating to: (1) the acquisition,
sale and holding by Plans of certain certificates representing an undivided
interest in certain asset-backed pass-through trusts, with respect to which
J.P. Morgan Securities Inc. or any of its affiliates is the sole underwriter
or the manager or co-manager of the underwriting syndicate; and (2) the
servicing, operation and management of such asset-backed pass-through trusts,
provided that the general conditions and certain other conditions set forth
in the Exemption are satisfied.
The Exemption sets forth the following general conditions which must be
satisfied before a transaction involving the acquisition, sale and holding of
the Certificates or a transaction in connection with the servicing, operation
and management of the Trust Fund may be eligible for exemptive relief
thereunder:
(1) The acquisition of the Certificates by a Plan is on terms (including
the price for such Certificates) that are at least as favorable to the
investing Plan as they would be in an arm's-length transaction with an
unrelated party;
(2) The rights and interests evidenced by the Certificates acquired by
the Plan are not subordinated to the rights and interests evidenced by
other certificates of the Trust Fund;
(3) The Certificates acquired by the Plan have received a rating at the
time of such acquisition that is in one of the three highest rating
categories from any of Duff & Phelps Inc., Fitch IBCA, Inc., Moody's
Investors Service, Inc. and Standard & Poor's Ratings Group (each, a
"Rating Agency");
(4) The Trustee is not an affiliate of the Underwriters, the Depositor,
the Servicers, any borrower whose obligations under one or more Mortgage
Loans constitute more than 5% of the aggregate unamortized principal
balance of the assets in the Trust, or any of their respective affiliates
(the "Restricted Group");
(5) The sum of all payments made to and retained by the Underwriters in
connection with the distribution of the Certificates represents not more
than reasonable compensation for underwriting such Certificates; the sum
of all payments made to and retained by the Depositor pursuant to the sale
of the Mortgage Loans to the Trust represents not more than the fair
market value of such Mortgage Loans; the sum of all payments made to and
retained by the Servicers represent not more than reasonable compensation
for the Servicers' services under the Agreements and reimbursement of the
Servicer's reasonable expenses in connection therewith; and
(6) The Plan investing in the Certificates is an "accredited investor" as
defined in Rule 501(a)(1) of Regulation D of the Securities and Exchange
Commission under the Securities Act of 1933 as amended.
The Trust Fund must also meet the following requirements:
(i) the corpus of the Trust Fund must consist solely of assets of the
type that have been included in other investment pools;
(ii) certificates evidencing interests in such other investment pools
must have been rated in one of the three highest rating categories of a
Rating Agency for at least one year prior to the Plan's acquisition of the
Certificates; and
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(iii) certificates evidencing interests in such other investment pools
must have been purchased by investors other than Plans for at least one
year prior to any Plan's acquisition of the Certificates.
On July 21, 1997, Labor published in the Federal Register an amendment to
the Exemption, which extends exemptive relief to certain mortgage-backed and
asset-backed securities transactions using pre-funding accounts for trusts
issuing pass-through certificates. The amendment generally allows mortgage
loans or other secured receivables (the "Obligations") supporting payments to
certificateholders, and having a value equal to no more than twenty-five
percent (25%) of the total principal amount of the certificates being offered
by the trust, to be transferred to the trust within a 90-day or three-month
period following the closing date (the "Pre-Funding Period"), instead of
requiring that all such Obligations be either identified or transferred on or
before the Closing Date. The relief is available when certain conditions are
met.
Moreover, the Exemption provides relief from certain self-dealing/conflict
of interest prohibited transactions that may occur when any person who has
discretionary authority or renders investment advice with respect to the
investment of plan assets causes a Plan to acquire certificates in a trust,
provided that, among other requirements: (i) such person (or its affiliate)
is an obligor with respect to five percent or less of the fair market value
of the obligations or receivables contained in the trust; (ii) the Plan is
not a plan with respect to which any member of the Restricted Group is the
"plan sponsor" (as defined in Section 3(16)(B) of ERISA); (iii) in the case
of an acquisition in connection with the initial issuance of certificates, at
least fifty percent of each class of certificates in which Plans have
invested is acquired by persons independent of the Restricted Group and at
least fifty percent of the aggregate interest in the trust fund is acquired
by persons independent of the Restricted Group; (iv) a Plan's investment in
certificates of any class does not exceed twenty-five percent of all of the
certificates of that class outstanding at the time of the acquisition; and
(v) immediately after the acquisition, no more than twenty-five percent of
the assets of any Plan with respect to which such person has discretionary
authority or renders investment advice are invested in certificates
representing an interest in one or more trusts containing assets sold or
serviced by the same entity. The Exemption does not apply to Plans sponsored
by any member of the Restricted Group.
Before purchasing a Certificate, a fiduciary of a Plan should itself
confirm (a) that the Certificates constitute "certificates" for purposes of
the Exemption and (b) that the specific and general conditions set forth in
the Exemption and the other requirements set forth in the Exemption would be
satisfied.
REVIEW BY PLAN FIDUCIARIES
Any Plan fiduciary considering whether to purchase any Certificates on
behalf of a Plan should consult with its counsel regarding the applicability
of the fiduciary responsibility and prohibited transaction provisions of
ERISA and the Code to such investment. Among other things, before purchasing
any Certificates, a fiduciary of a Plan subject to the fiduciary
responsibility provisions of ERISA or an employee benefit plan subject to the
prohibited transaction provisions of the Code should make its own
determination as to the availability of the exemptive relief provided in the
Exemption, and also consider the availability of any other prohibited
transaction exemptions. The Prospectus Supplement with respect to a Series of
Certificates may contain additional information regarding the application of
the Exemption, PTCE 83-1, or any other exemption, with respect to the
Certificates offered thereby.
LEGAL INVESTMENT
The Prospectus Supplement for each Series of Offered Certificates will
identify those classes of Offered Certificates, if any, which constitute
"mortgage related securities" for purposes of the Secondary Mortgage Market
Enhancement Act of 1984 ("SMMEA"). Such classes will constitute "mortgage
related securities" for so long as they are rated in one of the two highest
rating categories by at least one nationally recognized statistical rating
organization (the "SMMEA Certificates"). As "mortgage related securities,"
the SMMEA Certificates will constitute legal investments for persons, trusts,
corporations, partnerships, associations, business trusts and business
entities (including, but not limited to, state chartered savings banks,
commercial banks, savings and loan associations and insurance companies, as
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well as trustees and state government employee retirement systems) created
pursuant to or existing under the laws of the United States or of any state
(including the District of Columbia and Puerto Rico) whose authorized
investments are subject to state regulation to the same extent that, under
applicable law, obligations issued by or guaranteed as to principal and
interest by the United States or any agency or instrumentality thereof
constitute legal investments for such entities. A number of states enacted
legislation, on or before the October 4, 1991 cutoff established by SMMEA for
such enactments, limiting to varying extents the ability of certain entities
(in particular, insurance companies) to invest in mortgage related
securities, in most cases by requiring the affected investors to rely solely
upon existing state law, and not SMMEA. Accordingly, the investors affected
by such legislation will be authorized to invest in SMMEA Certificates only
to the extent provided in such legislation. Accordingly, investors whose
investment authority is subject to legal restrictions should consult their
own legal advisors to determine whether and to what extent the Offered
Certificates constitute legal investments for them.
SMMEA also amended the legal investment authority of federally chartered
depository institutions as follows: federal savings and loan associations and
federal savings banks may invest in, sell or otherwise deal with "mortgage
related securities" without limitation as to the percentage of their assets
represented thereby, federal credit unions may invest in such securities, and
national banks may purchase such securities for their own account without
regard to the limitations generally applicable to investment securities set
forth in 12 U.S.C. 24 (Seventh), subject in each case to such regulations as
the applicable federal regulatory authority may prescribe.
The Riegle Community Development and Regulatory Improvement Act of 1994
modified the definition of "mortgage related securities" and expanded the
types of loans to which such securities may relate to include loans secured
by "one or more parcels of real estate upon which is located one or more
commercial structures". In addition, the related legislative history states
that this expanded definition includes multifamily residential loans secured
by more than one parcel of real estate upon which is located more than one
structure. Until September 23, 2001 any state may enact legislation limiting
the extent to which "mortgage related securities" under this expanded
definition would constitute legal investments under that state's laws.
Institutions where investment activities are subject to legal investment
laws or regulations or review by certain regulatory authorities may be
subject to restrictions on investment in certain classes of Offered
Certificates. Any financial institution which is subject to the jurisdiction
of the Comptroller of the Currency, the Board of Governors of the Federal
Reserve System, the Federal Deposit Insurance Corporation ("FDIC"), the
Office of Thrift Supervision ("OTS"), the National Credit Union
Administration ("NCUA") or other federal or state agencies with similar
authority should review any applicable rules, guidelines and regulations
prior to purchasing any Offered Certificate. All depository institutions
considering an investment in the Offered Certificates should review the
"Supervisory Policy Statement on Investment Securities and End-User
Derivatives Activities" (the "1998 Policy Statement") of the Federal
Financial Institutions Examiniation Council, which has been adopted by the
Board of Governors of the Federal Reserve System, the OCC, the Federal
Deposit Insurance Corporation and the OTS, effective May 26, 1998, and by the
NCUA, effective October 1, 1998. The 1998 Policy Statement sets forth general
guidelines which depository institutions must follow in managing risks
(including market, credit, liquidity, operational (transaction), and legal
risks) applicable to all securities (including mortgage pass-through
securities and mortgage-derivative products) used for investment purposes.
The NCUA issued final regulations effective December 2, 1991 that restrict
and in some instances prohibit the investment by federal credit unions in
certain types of mortgage related securities.
In September 1993 the National Association of Insurance Commissioners
released a draft model investment law (the "Model Law") which sets forth
model investment guidelines for the insurance industry. Institutions subject
to insurance regulatory authorities may be subject to restrictions on
investment similar to those set forth in the Model Law and other
restrictions.
If specified in the related Prospectus Supplement, other classes of
Offered Certificates offered pursuant to this Prospectus will not constitute
"mortgage related securities" under SMMEA. The appropriate characterization
of this Offered Certificate under various legal investment restrictions, and
thus the ability of investors subject to these restrictions to purchase such
Offered Certificates, may be subject to significant interpretive
uncertainties.
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Notwithstanding SMMEA, there may be other restrictions on the ability of
certain investors, including depository institutions, either to purchase any
Offered Certificates or to purchase Offered Certificates representing more
than a special percentage of the investors' assets.
Except as to the status of SMMEA Certificates identified in the Prospectus
Supplement for a Series as "mortgage related securities" under SMMEA, the
Depositor will make no representations as to the proper characterization of
the Certificates for legal investment or financial institution regulatory
purposes, or as to the ability of particular investors to purchase any
Offered Certificates under applicable legal investment restrictions. The
uncertainties described above (and any unfavorable future determinations
concerning legal investment or financial institution regulatory
characteristics of the Certificates) may adversely affect the liquidity of
the Certificates.
The foregoing does not take into consideration the applicability of
statutes, rules, regulations, orders, guidelines or agreements generally
governing investments made by a particular investor, including, but not
limited to, "prudent investor" provisions, percentage-of-assets limits and
provisions which may restrict or prohibit investment in securities which are
not "interest bearing" or "income paying."
There may be other restrictions on the ability of certain investors,
including depository institutions, either to purchase Offered Certificates or
to purchase Offered Certificates representing more than a specified
percentage of the investor's assets. Investors should consult their own legal
advisors in determining whether and to what extent the Offered Certificates
constitute legal investments for such investors.
PLAN OF DISTRIBUTION
The Offered Certificates offered hereby and by the Supplements to this
Prospectus will be offered in series. The distribution of the Certificates
may be effected from time to time in one or more transactions, including
negotiated transactions, at a fixed public offering price or at varying
prices to be determined at the time of sale or at the time of commitment
therefor. If so specified in the related Prospectus Supplement, the Offered
Certificates will be distributed in a firm commitment underwriting, subject
to the terms and conditions of the underwriting agreement, by J.P. Morgan
Securities Inc. ("JPMSI") acting as underwriter with other underwriters, if
any, named therein. In such event, the Prospectus Supplement may also specify
that the underwriters will not be obligated to pay for any Offered
Certificates agreed to be purchased by purchasers pursuant to purchase
agreements acceptable to the Depositor. In connection with the sale of
Offered Certificates, underwriters may receive compensation from the
Depositor or from purchasers of Offered Certificates in the form of
discounts, concessions or commissions. The Prospectus Supplement will
describe any such compensation paid by the Depositor.
Alternatively, the Prospectus Supplement may specify that Offered
Certificates will be distributed by JPMSI acting as agent or in some cases as
principal with respect to Offered Certificates that it has previously
purchased or agreed to purchase. If JPMSI acts as agent in the sale of
Offered Certificates, JPMSI will receive a selling commission with respect to
such Offered Certificates, depending on market conditions, expressed as a
percentage of the aggregate Certificate Balance or notional amount of such
Offered Certificates as of the Cut-off Date. The exact percentage for each
Series of Certificates will be disclosed in the related Prospectus
Supplement. To the extent that JPMSI elects to purchase Offered Certificates
as principal, JPMSI may realize losses or profits based upon the difference
between its purchase price and the sales price. The Prospectus Supplement
with respect to any Series offered other than through underwriters will
contain information regarding the nature of such offering and any agreements
to be entered into between the Depositor and purchasers of Offered
Certificates of such Series.
The Depositor will indemnify JPMSI and any underwriters against certain
civil liabilities, including liabilities under the Securities Act of 1933, or
will contribute to payments JPMSI and any underwriters may be required to
make in respect thereof.
In the ordinary course of business, JPMSI and the Depositor may engage in
various securities and financing transactions, including repurchase
agreements to provide interim financing of the Depositor's mortgage loans
pending the sale of such mortgage loans or interests therein, including the
Certificates.
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Offered Certificates will be sold primarily to institutional investors.
Purchasers of Offered Certificates, including dealers, may, depending on the
facts and circumstances of such purchases, be deemed to be "underwriters"
within the meaning of the Securities Act of 1933 in connection with reoffers
and sales by them of Offered Certificates. Certificateholders should consult
with their legal advisors in this regard prior to any such reoffer or sale.
As to each Series of Certificates, only those classes rated in an
investment grade rating category by any Rating Agency will be offered hereby.
Any non-investment grade class may be initially retained by the Depositor,
and may be sold by the Depositor at any time in private transactions.
LEGAL MATTERS
Certain legal matters in connection with the Certificates, including
certain federal income tax consequences, will be passed upon for the
Depositor by Brown & Wood llp, New York, New York.
FINANCIAL INFORMATION
A new Trust Fund will be formed with respect to each Series of
Certificates and no Trust Fund will engage in any business activities or have
any assets or obligations prior to the issuance of the related Series of
Certificates. Accordingly, no financial statements with respect to any Trust
Fund will he included in this Prospectus or in the related Prospectus
Supplement.
RATING
It is a condition to the issuance of any class of Offered Certificates
that they shall have been rated not lower than investment grade, that is, in
one of the four highest rating categories, by a Rating Agency.
Ratings on mortgage pass-through certificates address the likelihood of
receipt by certificateholders of all distributions on the underlying mortgage
loans. These ratings address the structural, legal and issuer-related aspects
associated with such certificates, the nature of the underlying mortgage
loans and the credit quality of the guarantor, if any. Ratings on mortgage
pass-through certificates do not represent any assessment of the likelihood
of principal prepayments by Mortgagors or of the degree by which such
prepayments might differ from those originally anticipated. As a result,
certificateholders might suffer a lower than anticipated yield, and, in
addition, holders of stripped interest certificates in extreme cases might
fail to recoup their initial investments.
A security rating is not a recommendation to buy, sell or hold securities
and may be subject to revision or withdrawal at any time by the assigning
rating organization. Each security rating should be evaluated independently
of any other security rating.
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INDEX OF PRINCIPAL TERMS
<TABLE>
<CAPTION>
<S> <C>
1986 Act .................................77
Accounts ................................. 43
Accrual Certificates ..................... 10, 32
accrual period ........................... 83
Accrued Certificate Interest ............. 33
ADA ...................................... 71
Agreements ............................... 9
Amortizable Bond Premium Regulations .... 74, 86
Applicable Amount ........................ 91
ARM Loans ................................ 25, 77
Asset Conservation Act ................... 67
Asset Sellers ............................ 22
Available Distribution Amount ............ 33
Balloon Mortgage Loans ................... 17
Bankruptcy Code .......................... 63
Beneficial Owners ........................ 38
benefit plan investors ................... 98
Book-Entry Certificates .................. 32
Cash Flow Agreement ...................... 9, 28
Cash Flow Agreements ..................... 1
Cede ..................................... 4, 38
CERCLA ................................... 19, 67
Certificate .............................. 40
Certificate Balance ...................... 9, 34
Certificateholder ........................ 38
Certificateholders ....................... 21
Certificates ............................. 6
Closing Date ............................. 82
CMBS ..................................... 1, 6, 22
CMBS Agreement ........................... 26
CMBS Issuer .............................. 26
CMBS Servicer ............................ 26
CMBS Trustee ............................. 26
Code ..................................... 12
Commercial Loans ......................... 22
Commercial Properties .................... 7, 22
Commission ............................... 3
Contingent Regulations ................... 83
Contributions Tax ........................ 93
Cooperative .............................. 59
Cooperative Loans ........................ 59
Cooperatives ............................. 22
Covered Trust ............................ 18, 55
CPR ...................................... 30
Credit Support ........................... 1, 8, 27
Crime Control Act ........................ 72
Cut-off Date ............................. 11
daily portions ........................... 83
Debt Service Coverage Ratio .............. 23
103
<PAGE>
Deferred Interest ........................ 79
Definitive Certificates .................. 32, 39
Depositor ................................ 22
Determination Date ....................... 32
Disqualifying Condition .................. 69
Distribution Account ..................... 45
Distribution Date ........................ 10
DTC ...................................... 4, 38
Environmental Hazard Condition ........... 68
Equity Participations .................... 26
ERISA .................................... 13, 97
excess servicing ......................... 76
Exchange Act ............................. 4
Exemption ................................ 98
FDIC ..................................... 43, 100
Grantor Trust Certificates ............... 12
Hazardous Materials ...................... 69
Indirect Participants .................... 38
Insurance Proceeds ....................... 43
IRS ...................................... 74, 83
JPMSI .................................... 101
Labor .................................... 97
L/C Bank ................................. 56
Lease .................................... 3, 7
Lease Assignment ......................... 1
Legislative History ...................... 78
Lessee ................................... 3, 7
Liquidation Proceeds ..................... 43, 45
Loan-to-Value Ratio ...................... 25
Lock-out Date ............................ 26
Lock-out Period .......................... 26
Mark-to-Market Regulations ............... 91
Master REMIC ............................. 81
Master Servicer .......................... 6
Model Law ................................ 100
Mortgage Assets .......................... 1, 22
Mortgage Interest Rate ................... 7, 26
Mortgage Loans ........................... 1, 6, 22
Mortgage Notes ........................... 22
Mortgaged Properties ..................... 7
Mortgages ................................ 22
Mortgagor ................................ 57
Multifamily Loans ........................ 22
Multifamily Properties ................... 7, 22
NCUA ..................................... 100
Net Operating Income ..................... 24
New Regulations .......................... 80, 89
Nonrecoverable Advance ................... 35
Obligations .............................. 99
Offered Certificates ..................... 1
OID ...................................... 73, 74
104
<PAGE>
OID Regulations .......................... 74
Originator ............................... 22
OTS ...................................... 100
Participants ............................. 38
parties in interest ...................... 97
Pass-Through Rate ........................ 9, 33
Payment Lag Certificates ................. 87
Permitted Investments .................... 43
Plans .................................... 97
Pre-Funding Period ....................... 99
pre-issuance accrued interest ............ 87
Prepayment Assumption .................... 78
Prepayment Premium ....................... 26
Primary Servicer ......................... 6
Prohibited Transactions Tax .............. 93
Purchase Price ........................... 42
qualified mortgage ....................... 80
Rating Agency ............................ 13, 98
RCRA ..................................... 68
Record Date .............................. 32
Refinance Loans .......................... 25
Related Proceeds ......................... 35
Relief Act ............................... 71
REMIC .................................... 12
REMIC Certificates ....................... 80
REMIC Regular Certificateholders ........ 81
REMIC Regular Certificates ............... 12, 80
REMIC Regulations ........................ 72
REMIC Residual Certificateholder ........ 88
REMIC Residual Certificates .............. 12, 80
Restricted Group ......................... 98
Retained Interest ........................ 50
RICO ..................................... 72
Senior Certificates ...................... 9, 32
Series ................................... 1, 15, 30
Servicer ................................. 11
Servicing Standard ....................... 45
Servicing Transfer Event ................. 46
SMMEA .................................... 99
SMMEA Certificates ....................... 99
Special Servicer ......................... 6
Specially Serviced Mortgage Loan ........ 46
Stripped ARM Obligations ................. 79
Stripped Bond Certificates ............... 76
Stripped Coupon Certificates ............. 76
Stripped Interest Certificates ........... 10, 32
Stripped Principal Certificates .......... 10, 32
Subordinate Certificates ................. 10, 32
Subsidiary REMIC ......................... 81
Super-Premium Certificates ............... 82
Title V .................................. 70
105
<PAGE>
Trust Assets ............................. 3
Trust Fund ............................... 1
Trustee .................................. 6
UCC ...................................... 38
Underlying CMBS .......................... 22
Underlying Mortgage Loans ................ 22
U.S. Person .............................. 79
Value .................................... 25
Voting Rights ............................ 21
Warranting Party ......................... 14, 41
Whole Loans .............................. 22
</TABLE>
106
<PAGE>
The attached diskette contains a Microsoft Excel,(1) Version 5.0
spreadsheet file (the "Spreadsheet File") that can be put on a user-specified
hard drive or network drive. The Spreadsheet File is "1999C8.XLS". It
provides, in electronic format, certain statistical information that appears
under the caption "Description of the Mortgage Pool--Certain Characteristics
of the Mortgage Loans" in the Prospectus Supplement and in Annex A, Annex B,
Annex C and Annex D to the Prospectus Supplement. Defined terms used in the
Spreadsheet File but not otherwise defined therein shall have the respective
meanings assigned to them in the Prospectus Supplement. All the information
contained in the Spreadsheet File is subject to the same limitations and
qualifications contained in this Prospectus Supplement. Prospective investors
are strongly urged to read the Prospectus Supplement in its entirety prior to
accessing the Spreadsheet File.
- ------------
(1) Microsoft Excel is a registered trademark of Microsoft Corporation.
