<PAGE>
Filed Pursuant to Rule 424(b)(5)
Registration File No.: 333-63589
PROSPECTUS SUPPLEMENT
(To Prospectus dated July 26, 1999)
J.P. MORGAN COMMERCIAL MORTGAGE FINANCE CORP.
Depositor
$649,217,000 (Approximate)
Mortgage Pass-Through Certificates, Series 1999-C8
THE OFFERED CERTIFICATES:
o The trust fund will issue sixteen classes of certificates. Only the
following eight classes of "offered certificates" are offered hereby:
<TABLE>
<CAPTION>
APPROXIMATE INITIAL CLASS BALANCE INITIAL PASS-THROUGH RATE
CLASS OR NOTIONAL BALANCE (SUBJECT TO ADJUSTMENT)
- ---------- ----------------------------------- --------------------------
<S> <C> <C>
Class A1 $ 171,500,000 7.32500%
Class A2 $ 357,019,000 7.40000%
Class X $ 731,516,500(1) 0.40328%
Class B $ 36,575,000 7.67329%
Class C $ 32,918,000 7.67329%
Class D $ 14,630,000 7.67329%
Class E $ 25,603,000 7.67329%
Class F $ 10,972,000 7.67329%
</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 17, 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 0.088% 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 100.3%
of the initial principal balance thereof plus accrued interest.
J.P. MORGAN & CO. DEUTSCHE BANC ALEX. BROWN
Prospectus Supplement dated August 6, 1999
<PAGE>
J.P. MORGAN COMMERCIAL MORTGAGE FINANCE CORP. JP MORGAN
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1999-C8
ALASKA 1 property $12,702,093 1.7% of total
IDAHO 1 property $ 3,375,263 0.5% of total
MISSOURI 4 properties $24,149,080 3.3% of total
IOWA 1 property $ 4,419,877 0.6% of total
MINNESOTA 3 properties $ 4,373,762 0.6% of total
ILLINOIS 3 properties $53,253,394 7.3% of total
WISCONSIN 6 properties $69,131,849 9.5% of total
MICHIGAN 4 properties $26,798,005 3.7% of total
CANADA 8 properties $21,789,768 3.0% of total
INDIANA 5 properties $17,385,840 2.4% of total
OHIO 10 properties $63,277,913 8.7% of total
PENNSYLVANIA 3 properties $23,975,321 3.3% of total
NEW YORK 3 properties $23,196,589 3.2% of total
MASSACHUSETTS 1 property $22,961,612 3.1% of total
DISTRICT OF COLUMBIA 1 property $ 3,889,300 0.5% of total
MARYLAND 3 properties $13,019,729 1.8% of total
VIRGINIA 1 property $ 5,375,651 0.7% of total
NORTH CAROLINA 8 properties $25,747,947 3.5% of total
SOUTH CAROLINA 2 properties $ 5,835,675 0.8% of total
GEORGIA 4 properties $31,906,632 4.4% of total
FLORIDA 23 properties $80,595,465 11.0% of total
ALABAMA 2 properties $ 3,739,896 0.5% of total
ARKANSAS 1 property $ 2,453,000 0.3% of total
OKLAHOMA 3 properties $ 7,395,027 1.0% of total
TEXAS 9 properties $24,004,556 3.3% 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 9.9% of total
NEVADA 2 properties $ 9,974,975 1.4% of total
OREGON 1 property $ 3,845,671 0.5% of total
WASHINGTON 4 properties $42,398,723 5.8% of total
NEBRASKA 3 properties $22,646,035 3.1% of total
[ ] (less than) 1.0%
of Initial Pool Balance
[ ] 1.1 - 5.0%
of Initial Pool Balance
[ ] 5.1 - 10.0%
of Initial Pool Balance
[ ] (greater than) 10.0%
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-88 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 UNDERWRITER
AND 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-60
Certain Prepayment, Maturity and Yield Considerations ...................... S-70
Master Servicer and Special Servicer ....................................... S-75
Description of the Pooling and Servicing Agreement ......................... S-80
Use of Proceeds ............................................................ S-82
Certain Federal Income Tax Consequences .................................... S-82
State Tax Considerations ................................................... S-83
ERISA Considerations ....................................................... S-84
Legal Investment ........................................................... S-85
Plan of Distribution ....................................................... S-86
Legal Matters .............................................................. S-86
Rating ..................................................................... S-86
Index of Principal Terms ................................................... S-88
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
CERTIFICATE
PRINCIPAL DESCRIPTION INITIAL WEIGHTED
RATING BY AMOUNT OF THE PASS- AVERAGE PRINCIPAL
DCR/ OR NOTIONAL % OF % CREDIT PASS-THROUGH THROUGH LIFE(2) WINDOW(2)
CLASS MOODY'S/S&P AMOUNT TOTAL SUPPORT RATE RATE(1) (YEARS) (MONTHS)
- ------- ---------------- --------------------- ----------- ---------- -------------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Offered Certificates
A1 AAA/Aaa/AAA $ 171,500,000 23.44% 27.75% (4) 7.32500% 5.49 1-109
A2 AAA/Aaa/AAA $ 357,019,000 48.81% 27.75% (5) 7.40000% 9.37 109-116
X AAA/Aaa/AAAr $ 731,516,500(3) N/A N/A (6) 0.40328% N/A N/A
B AA/Aa2/AA $ 36,575,000 5.00% 22.75% (7) 7.67329% 9.72 116-117
C A/A2/A $ 32,918,000 4.50% 18.25% (7) 7.67329% 9.82 117-118
D A-/A3/A- $ 14,630,000 2.00% 16.25% (7) 7.67329% 9.83 118-118
E BBB/Baa2/BBB $ 25,603,000 3.50% 12.75% (7) 7.67329% 9.85 118-119
F BBB-/Baa3/BBB- $ 10,972,000 1.50% 11.25% (7) 7.67329% 9.91 119-119
Private Certificates
G BB+/Ba1/NR $ 16,459,000 2.25% 9.00% Fixed 6.00000%
H BB/Ba2/NR $ 20,116,000 2.75% 6.25% Fixed 6.00000%
J B/B2/NR $ 23,774,000 3.25% 3.00% Fixed 6.00000%
K B-/B3/NR $ 7,315,000 1.00% 2.00% Fixed 6.00000%
NR UNR $ 14,635,500 2.00% 0.00% Fixed 6.00000%
</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 for the Class A1 Certificates will be the lesser of
(i) a rate equal to the weighted average of the remittance rates on the
mortgage loans and (ii) 7.32500%.
(5) The pass-through rate for the Class A2 Certificates will be the lesser of
(i) a rate equal to the weighted average of the remittance rates on the
mortgage loans and (ii) 7.40000%.
(6) 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 0.40328% per annum.
(7) 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.
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 17, 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 offered certificates initially will be
THE OFFERED CERTIFICATES 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 128 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
-------------
Initial Pool Balance ................... $ 731,516,500
Number of Mortgage Loans ............... 128
Number of Mortgaged Properties ......... 139
Average Mortgage Loan Balance .......... $ 5,714,973
Maximum Mortgage Loan Balance .......... $ 58,136,667
Minimum Mortgage Loan Balance .......... $ 990,656
Weighted Average Mortgage Rate ......... 7.54%
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 .............................. 40.4%
Fully Amortizing Loans (other than
ARD Loans) ............................. 5.3%
Balloon Loans .......................... 54.3%
Multi-Property Loans ................... 12.4%
Crossed Loans .......................... 6.8%
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 will be the lesser of (i) a rate
equal to the weighted average of the remittance
rates on the mortgage loans and (ii) 7.40000%.
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. 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 0.40328% 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 7.67329% per annum.
DISTRIBUTIONS
-------------
INTEREST DISTRIBUTIONS In general, holders of each class of
ON 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.
Certificates
Class A1
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 TAX Three separate real estate mortgage investment
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 "Rating" 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.
S-8
<PAGE>
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 and multifamily lending is generally
COMMERCIAL LENDING MAY BE thought to be riskier than single-family
DIFFERENT THAN RESIDENTIAL residential lending for a variety of reasons
LENDING 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 o the net operating income of the
MORTGAGE LOAN 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 Commercial and multifamily property values and
PROPERTY VALUES cash flows are volatile and may be
ARE NOT PREDICTABLE 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 The successful operation of a real estate
WILL LOWER THE PERFORMANCE project also depends on the performance and
OF THE RELATED viability of the property manager. Properties
MORTGAGED PROPERTY 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 Eighteen of the mortgage loans, representing
HAVE A NEGATIVE IMPACT ON approximately 13.5% of the initial pool the
SINGLE TENANT PROPERTIES market value of retail, office and industrial
mortgaged properties occupied balance, are
secured by single tenant properties. Income
from and 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 12.0% 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 Nine of the mortgage loans representing
WITH NURSING HOMES AND approximately 5.1% of the initial pool balance
CONGREGATE 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
WITH CONCENTRATION OF MORTGAGE mortgage loans as of the cut-off date is
LOANS AND RELATED BORROWERS approximately $5,714,973, 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
7.9% of the initial pool balance and no
mortgage loans with related mortgagors
represent in the aggregate more than 2.5% 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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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 6.8% 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 4.4% 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-four mortgage loans representing
approximately 74.0% 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
INITIAL MORTGAGE POOL more 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 Twenty-three, 17, 6, 10, 3 and 4 of the
MORTGAGED PROPERTIES SUBJECTS mortgaged properties, representing
THE TRUST FUND TO A GREATER approximately 11.0%, 9.9%, 9.5%, 8.7%, 7.3%
EXTENT TO STATE OR and 5.8%, respectively, of the initial pool
REGIONAL CONDITIONS balance, are located in Florida, California,
Wisconsin, Ohio, Illinois 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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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 The mortgage loans may contain a due-on-sale
MAY BE LIMITED FOLLOWING A clause. A Such clause permits the holder of the
DEFAULT ON 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 environmental laws, ordinances and regilations,
OF AND CASH FLOW FROM a current or previous owner or operator of real
A MORTGAGED 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.
It is possible that the environmental site
assessments did not reveal all environmental
liabilities, that there are
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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 54.3% 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:
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;
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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 "judicial action" to enforce a
SPECIAL SERVICER TO 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 An appraisal of the value for each of the
OF 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 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
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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 4.2% 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.
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
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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-eight mortgage loans, representing
ANTICIPATED REPAYMENT DATE approximately 40.4% 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.
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
S-22
<PAGE>
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 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.
S-23
<PAGE>
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 If the assets of the trust fund are
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.
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.
S-24
<PAGE>
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 The aggregate amount of distributions on the
ADVERSELY 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 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
S-25
<PAGE>
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.
Losses on the mortgage loans will reduce the
notional amount of the Class X Certificates.
This could result in the failure of investors
in the Class X Certificates to recover their
initial investment. 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 "Certain
Prepayment, Maturity 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 WHICH trustee, as applicable, will be entitled to
TAKES PRECEDENCE OVER YOUR receive interest on unreimbursed advances and
RIGHT TO RECEIVE DISTRIBUTIONS unreimbursed servicing expenses. The right of
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."
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
S-26
<PAGE>
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 $731,516,500 (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 3.4% 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) 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 required to be deposited by
the Mortgagor at origination have been deposited; (xxii) to the Seller's
knowledge, all
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<PAGE>
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 8.6% $ 98,633,442 13.5%
6.7501% -- 7.0000% ............................. 12 9.4 58,825,136 8.0
7.0001% -- 7.2500% ............................. 12 9.4 63,206,801 8.6
7.2501% -- 7.5000% ............................. 13 10.2 154,318,501 21.1
7.5001% -- 7.7500% ............................. 14 10.9 80,502,312 11.0
7.7501% -- 8.0000% ............................. 22 17.2 99,376,667 13.6
8.0001% -- 8.2500% ............................. 15 11.7 72,421,855 9.9
8.2501% -- 8.5000% ............................. 20 15.6 80,065,893 10.9
8.5001% -- 9.0000% ............................. 9 7.0 24,165,894 3.3
-- ---- ------------ ----
Total: ........................................ 128 100.0% $731,516,500 100.0%
=== ===== ============ =====
</TABLE>
Weighted Average Mortgage Interest Rate: 7.54%
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 23.4 47,949,964 6.6
$2,000,001 -- $3,000,000........... 24 18.8 61,008,867 8.3
$3,000,001 -- $4,000,000........... 18 14.1 64,102,169 8.8
$4,000,001 -- $5,000,000........... 11 8.6 48,205,688 6.6
$5,000,001 -- $7,500,000........... 19 14.8 115,266,266 15.8
$7,500,001 -- $10,000,000.......... 5 3.9 41,102,574 5.6
$10,000,001 -- $12,500,000......... 5 3.9 55,162,166 7.5
$12,500,001 -- $15,000,000......... 5 3.9 68,440,416 9.4
$15,000,001 -- $17,500,000......... 2 1.6 34,405,843 4.7
$17,500,001 -- $20,000,000......... 2 1.6 35,671,983 4.9
$20,000,001 -- $25,000,000......... 3 2.3 69,128,658 9.5
$30,000,001 -- $35,000,000......... 1 0.8 30,948,385 4.2
$55,000,001 or more ............... 1 0.8 58,136,667 7.9
-- ---- ------------ ----
Total: ........................... 128 100.0% $731,516,500 100.0%
=== ===== ============ =====
</TABLE>
Average Principal Balance per Mortgage Loan as of the Cut-off Date: $5,714,973
Average Principal Balance per Mortgage Property as of the Cut-off Date:
$5,262,709
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 3.1%
61 -- 84 ............................. 9 7.0 39,269,077 5.4
85 -- 120 ............................ 96 75.0 576,548,664 78.8
121 -- 180 ........................... 11 8.6 62,210,933 8.5
181 -- 240 ........................... 11 8.6 30,526,216 4.2
-- ---- ------------ ----
Total: .............................. 128 100.0% $731,516,500 100.0%
=== ===== ============ =====
</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 3.1%
61 -- 84 ............................. 9 7.0 39,269,077 5.4
85 -- 120 ............................ 99 77.3 600,336,040 82.1
121 -- 180 ........................... 8 6.3 38,423,556 5.3
181 -- 240 ........................... 11 8.6 30,526,216 4.2
-- ---- ------------ ----
Total: .............................. 128 100.0% $731,516,500 100.0%
=== ===== ============ =====
</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 0.9
June 1998 ..................... 2 1.6 7,547,120 1.0
July 1998 ..................... 1 0.8 7,724,507 1.1
August 1998 ................... 11 8.6 68,777,984 9.4
September 1998 ................ 11 8.6 92,792,377 12.7
October 1998 .................. 10 7.8 31,827,306 4.4
November 1998 ................. 7 5.5 29,843,422 4.1
December 1998 ................. 8 6.3 53,290,607 7.3
January 1999 .................. 8 6.3 97,035,715 13.3
February 1999 ................. 10 7.8 35,422,578 4.8
March 1999 .................... 15 11.7 61,689,961 8.4
April 1999 .................... 17 13.3 68,644,051 9.4
May 1999 ...................... 18 14.1 100,103,161 13.7
June 1999 ..................... 4 3.1 36,205,390 4.9
July 1999 ..................... 3 2.3 23,787,376 3.3
-- ---- ------------ ----
Total: ....................... 128 100.0% $731,516,500 100.0%
=== ===== ============ =====
</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 3.1%
2005 ........................ 7 5.5 18,425,960 2.5
2006 ........................ 2 1.6 20,843,117 2.8
2008 ........................ 31 24.2 203,549,677 27.8
2009 ........................ 68 53.1 396,786,363 54.2
2010 ........................ 1 0.8 12,295,037 1.7
2011 ........................ 1 0.8 7,724,507 1.1
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 0.6
2018 ........................ 2 1.6 6,712,611 0.9
2019 ........................ 8 6.3 19,692,036 2.7
-- ---- ------------ ----
Total: ..................... 128 100.0% $731,516,500 100.0%
=== ===== ============ =====
</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 ANTICIPATED REPAYMENT DATE IN MONTHS LOANS LOANS CUT-OFF DATE CUT-OFF DATE
- ------------------------------------------------------- ---------- ------------ -------------- -------------
<S> <C> <C> <C> <C>
114 or less ........................................... 2 7.1% $ 40,440,921 13.7%
115 -- 120 ............................................ 23 82.1 231,478,018 78.3
121 -- 126 ............................................ 3 10.7 23,787,376 8.0
-- ---- ------------ ----
Total: ............................................... 28 100.0% $295,706,315 100.0%
== ===== ============ =====
</TABLE>
Weighted Average Original Term to Anticipated Repayment Date in Months: 113
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 7.1% $ 40,440,921 13.7%
109 -- 114 ............................................. 7 25.0 128,023,346 43.3
115 -- 120 ............................................. 19 67.9 127,242,049 43.0
-- ---- ------------ ----
Total: ................................................ 28 100.0% $295,706,315 100.0%
== ===== ============ =====
</TABLE>
Weighted Average Remaining Term to Anticipated Repayment Date in Months: 108
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>
259 -- 264 ............................ 1 3.6% $ 3,174,567 1.1%
289 -- 294 ............................ 4 14.3 48,543,113 16.4
295 -- 300 ............................ 9 32.1 55,503,976 18.8
313 -- 318 ............................ 1 3.6 2,300,000 0.8
319 -- 324 ............................ 1 3.6 2,491,528 0.8
349 -- 354 ............................ 3 10.7 79,480,233 26.9
355 -- 360 ............................ 9 32.1 104,212,898 35.2
- ---- ------------ ----
Total: ............................... 28 100.0% $295,706,315 100.0%
== ===== ============ =====
</TABLE>
Weighted Average Remaining Amortization Term in Months: 332
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 Original Term to Maturity in Months: 221
<PAGE>
FULLY AMORTIZING MORTGAGE LOANS
REMAINING 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
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 Remaining 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 1.9%
50.01% -- 55.00% ............ 8 6.3 29,876,212 4.1
55.01% -- 60.00% ............ 10 7.8 37,073,016 5.1
60.01% -- 65.00% ............ 8 6.3 104,124,309 14.2
65.01% -- 70.00% ............ 30 23.4 137,947,591 18.9
70.01% -- 75.00% ............ 43 33.6 234,514,501 32.1
75.01% -- 80.00% ............ 23 18.0 157,631,244 21.5
80.01% -- 85.00%(1) ......... 2 1.6 16,463,116 2.3
-- ---- ------------ ----
Total .................... 128 100.0% $731,516,500 100.0%
--- ----- ------------ -----
</TABLE>
Weighted Average Cut-off Date LTV Ratio: 69.61%
(1) Sterling Woods Apartments (Loan Number 15) has an LTV Ratio of 84.21% and
Glacier Hills Apartments (Loan Number 52) 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 ........................ 18 15.9% $ 72,711,907 10.5%
50.01% -- 55.00% ...................... 11 9.7 82,187,247 11.9
55.01% -- 60.00% ...................... 30 26.5 180,756,932 26.1
60.01% -- 65.00% ...................... 19 16.8 113,809,158 16.4
65.01% -- 70.00% ...................... 29 25.7 196,540,338 28.4
70.01% -- 75.00% ...................... 6 5.3 47,033,398 6.8
-- ---- ------------ ----
Total .............................. 113 100.0% $693,038,979 100.0%
=== ===== ============ =====
</TABLE>
Weighted Average Maturity Date LTV Ratio: 59.89%
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 .................................... 3 2.3% $ 18,977,073 2.6%
1.151x -- 1.200x .................................... 6 4.7 19,030,652 2.6
1.201x -- 1.250x .................................... 12 9.4 47,672,776 6.5
1.251x -- 1.300x .................................... 25 19.5 152,055,844 20.8
1.301x -- 1.400x .................................... 37 28.9 198,097,229 27.1
1.401x -- 1.500x .................................... 17 13.3 163,035,704 22.3
1.501x -- 1.600x .................................... 10 7.8 48,165,693 6.6
1.601x -- 1.700x .................................... 8 6.3 52,522,581 7.2
1.701x -- 1.800x .................................... 2 1.6 4,761,246 0.7
1.801x -- 1.900x .................................... 2 1.6 3,762,383 0.5
1.901x -- 2.000x .................................... 3 2.3 12,810,775 1.8
2.001x -- 2.100x .................................... 3 2.3 10,624,543 1.5
-- ---- ------------ ----
Total: ............................................. 128 100.0% $731,516,500 100.0%
=== ===== ============ =====
</TABLE>
Weighted Average UW DSCR: 1.40x
(1) Stuart Centre (Loan Number 20) has an UW DSCR of 1.115x, Lakeshore
Estates MHP (Loan Number 37), a fully amortizing loan, has an UW DSCR of
1.148x and Harbourside Production Studio (Loan Number 66) 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>
Florida ......................... 23 16.5% $ 80,595,465 11.0%
California ...................... 17 12.2 72,596,674 9.9
Wisconsin ....................... 6 4.3 69,131,849 9.5
Ohio ............................ 10 7.2 63,277,913 8.7
Illinois ........................ 3 2.2 53,253,394 7.3
Washington ...................... 4 2.9 42,398,723 5.8
Georgia ......................... 4 2.9 31,906,632 4.4
Michigan ........................ 4 2.9 26,798,005 3.7
North Carolina .................. 8 5.8 25,747,947 3.5
Missouri ........................ 4 2.9 24,149,080 3.3
Texas ........................... 9 6.5 24,004,556 3.3
Pennsylvania .................... 3 2.2 23,975,321 3.3
New York ........................ 3 2.2 23,196,589 3.2
Massachusetts ................... 1 0.7 22,961,612 3.1
Nebraska ........................ 3 2.2 22,646,035 3.1
Canada (five provinces) ......... 8 5.8 21,789,768 3.0
Indiana ......................... 5 3.6 17,385,840 2.4
Maryland ........................ 3 2.2 13,019,729 1.8
Alaska .......................... 1 0.7 12,702,093 1.7
Nevada .......................... 2 1.4 9,974,975 1.4
Oklahoma ........................ 3 2.2 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 2.2 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 0.5
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 .......................... 139 100.0% $731,516,500 100.0%
=== ===== ============ =====
</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 18.7% $195,783,598 26.8%
Multifamily ............... 21 15.1 156,033,194 21.3
Anchored Retail ........... 24 17.3 120,834,408 16.5
Hotel ..................... 14 10.1 87,680,787 12.0
Unanchored Retail ......... 17 12.2 36,534,343 5.0
Industrial ................ 10 7.2 35,955,207 4.9
Nursing Home .............. 7 5.0 29,453,206 4.0
Mixed Use ................. 9 6.5 24,320,571 3.3
Factory Outlet ............ 3 2.2 23,787,376 3.3
Mobile Home Park .......... 3 2.2 9,340,472 1.3
Congregate Care ........... 3 2.2 7,692,874 1.1
Self Storage .............. 2 1.4 4,100,464 0.6
-- ---- ------------ ----
Total: ................... 139 100.0% $731,516,500 100.0%
=== ===== ============ =====
</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 22.3% $130,828,454 17.9%
6 -- 10 ......................................... 19 13.7 90,095,752 12.3
11 -- 15 ........................................ 24 17.3 122,913,804 16.8
16 -- 20 ........................................ 11 7.9 45,535,865 6.2
21 -- 25 ........................................ 5 3.6 20,852,676 2.9
26 -- 30 ........................................ 17 12.2 100,218,520 13.7
31 or more ...................................... 32 23.0 221,071,429 30.2
-- ---- ------------ ----
Total: ......................................... 139 100.0% $731,516,500 100.0%
=== ===== ============ =====
</TABLE>
Weighted Average Property Age in Years: 26. The 51 Sleeper Property (Loan
Number 4) was built in 1900 and most recently renovated in 1988. Merrill Place
(Loan Number 9) was built in 1913 and most recently renovated in 1983. The
Tower Building (Loan Number 11) was built in 1930 and most recently renovated
in 1988. Villa Florence (Loan Number 18) was built in 1908 and most recently
renovated in 1986. These Mortgaged Properties secure Mortgage Loans
representing in the aggregate 8.8% of the Initial Pool Balance. The weighted
average property age would be 20 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 3.2% $ 1,835,725 1.8%
85.01% -- 90.00% ............... 1 3.2 1,368,497 1.3
90.01% -- 95.00% ............... 7 22.6 23,301,383 23.0
95.01% -- 100.00% .............. 22 71.0 75,016,717 73.9
-- ---- ------------ ----
Total: ........................ 31 100.0% $101,522,322 100.0%
== ===== ============ =====
</TABLE>
Weighted Average Occupancy Percentage: 96.99%
(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% 97.5%
YM (2) .......................... 0.0 0.0 0.0 0.0 2.5
----- ----- ----- ----- ----
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) .................... $ 731.5 $ 723.1 $ 713.7 $ 703.6 $692.7
Percentage of Balance
Outstanding .................... 100.0% 98.8% 97.6% 96.2% 94.7%
<CAPTION>
AUGUST AUGUST AUGUST AUGUST AUGUST AUGUST
2004 2005 2006 2007 2008 2009
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Lock-Out/Defeasance (1) ......... 80.8% 77.9% 78.0% 76.8% 63.0% 60.9%
YM (2) .......................... 18.8 20.8 22.0 23.2 11.1 27.9
---- ---- ---- ---- ---- ----
Total Lock-Out/Defeasance
and YM ......................... 99.6 98.7 100.0 100.0 74.1 88.8
No Prepayment Premium ........... 0.4 1.3 0.0 0.0 25.9 11.2
---- ---- ----- ----- ---- ----
Total ........................... 100.0 100.0 100.0 100.0 100.0 100.0
Aggregate Mortgage Loan
Balance (3) .................... $659.1 $639.5 $600.0 $586.7 $564.1 $ 48.4
Percentage of Balance
Outstanding .................... 90.1% 87.4% 82.0% 80.2% 77.1% 6.6%
</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 nine 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 7.9%
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 4.2% 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 WOODFIELD GARDENS LOAN
The Loan. The third largest Mortgage Loan (the "Woodfield Gardens Loan"),
which represents 3.3% 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 3). 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 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
S-45
<PAGE>
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. 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 3.3% of the Initial Pool Balance,
were originated by the Seller on July 9, 1999,
S-46
<PAGE>
and have an aggregate principal balance as of the Cut-off Date of $23,787,376
(Loan Numbers 16, 25, & 43). The Horizon Outlet Loans, if deemed one mortgage
loan, would represent the fourth 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>
16 Sealy Outlet Sealy, TX 191,587 Factory Spiegel 90.6% $16,800,000
Center Outlet Liz Claiborne
25 Nebraska Gretna, NE 191,500 Factory Levis Outlet 85.2% $14,000,000
Crossing Factory Outlet Linen Barn
Store
43 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.
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.
S-47
<PAGE>
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 fourth largest Mortgage Loan (the "51 Sleeper Loan," also
referred to herein as the "51 Sleeper Street" loan), which represents
approximately 3.1% 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 4). 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
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
S-48
<PAGE>
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 fifth largest Mortgage Loan (the "Madison Concourse Loan",
also referred to herein as the "Madison Concourse Hotel" loan), which
represents approximately 3.0% 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 5). 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-49
<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. Six of 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 2.1% 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 40, 79, 99, 100, 102, 115).
The Westmont Loans are secured by cross-collateralized and cross-defaulted
first mortgages encumbering the Westmont Properties.
Additionally, a Mortgage Loan (Loan Number 74, the "Additional Westmont
Loan") which represents approximately 0.4% of the Initial Pool Balance (and,
together with the Westmont Loans, represents approximately 2.5% 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-50
<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>
40 Bloor Street Toronto, Ontario, 210 Limited Service Quality Hotels 73.7% $12,224,109
Quality Canada Hotel
Hotel
79 Comfort Inn- Pointe Claire, 100 Limited Service Comfort Inn 87.2% $ 4,617,997
Pointe Claire Quebec, Canada Hotel
99 Comfort Winnipeg, Manitoba, 81 Limited Service Comfort Inn 86.6% $ 3,259,762
Inn-Winnipeg Canada Hotel
100 Quality Laval, Quebec, 116 Suites Hotel Quality Hotels 70.0% $ 3,803,056
Suites-Laval Canada
102 Comfort Regina, 99 Limited Service Comfort Inn 82.9% $ 3,191,851
Inn-Regina Saskatchewan, Hotel
Canada
115 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
74 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-51
<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 an 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>
40 Bloor Street Quality Hotel 1.374097
74 St. Johns--Quality Inn 1.382982
79 Comfort Inn--Point Claire 1.384774
99 Comfort Inn--Winnipeg 1.384774
100 Quality Suites--Laval 1.384774
102 Comfort Inn--Regina 1.384774
115 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 by MGT, as exchange
contract counterparty, in exchange for payments which would be made under each
indicated Mortgage Loan based on the terms of such Mortgage Loans as of the
Cut-off Date. Any payments in excess of or less than the scheduled amounts or
pursuant to payment terms modified after the Cut-off Date would result in
payments, if any, under the related Foreign
S-52
<PAGE>
Currency Exchange 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 66, together with the Westmont
Canadian Loans, the "Canadian Loans"), which represents 0.5% 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 sixth 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 6). 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
S-53
<PAGE>
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 seventh largest Mortgage Loan (the "Hyatt Rochester Loan,"
also referred to herein as the "Hyatt Regency Rochester" loan), which
represents approximately 2.4% 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 7). 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.
S-54
<PAGE>
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-eight of the Mortgage Loans representing approximately
40.4% 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 related Revised Rate over
the related Mortgage Interest Rate will be deferred (such accrued and deferred
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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 Woodfield Gardens Apartments 24,186,478
4 51 Sleeper Street 22,961,612
5 Madison Concourse Hotel 21,980,569
6 Vartan Building 17,898,122
7 Hyatt Regency Rochester 17,773,861
8 Northfield Office Park I & II 17,479,309
11 The Tower Building 14,230,249
14 University Plaza Building 12,702,093
16 Sealy Outlet Center 11,106,771
25 Nebraska Crossing Factory Store 7,479,459
27 Eastland on the Lake Apts 7,113,317
28 Grand Central Office Building 6,522,437
32 Prestwick Pointe and Junction Pointe 6,126,711
Power House Office Building and
42 Theatre 5,249,733
43 Horizon Outlet Center-Traverse 5,201,147
49 Springfield Inn 4,445,366
50 First Data Building 4,419,877
51 Boca Bend Marina Apartments 4,343,317
55 Village Manor Apartments 3,991,903
58 5 & 7 Burroughs Warehouse 3,942,096
69 34th South Broadway 3,282,728
70 Pulse Athletic Club 3,174,567
75 GTS Durateck Building 2,996,216
84 7127 Riverside Building 2,499,114
85 Goddard Court Townhomes 2,491,528
88 Staples 2,300,000
108 Wilmington Athletic Club 1,671,070
------------
Total $295,706,315
============
</TABLE>
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Balloon Mortgage Loans. Eighty-five of the Mortgage Loans representing
approximately 54.3% 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 6.8% 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-one Mortgage Loans which represent approximately 97.0%
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 73.7% 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-two of the Mortgage Loans, which represent
approximately 94.0% of the Initial Pool Balance, also require monthly escrows
to cover ongoing replacements of furniture, fixtures and equipment and/or
capital expenditures.
Forty-two of the Mortgage Loans, which represent approximately 30.7% 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-two of the Mortgage Loans, which represent approximately 52.9% 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.
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
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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 3.7% 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 5.6% 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 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.
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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 K, 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 the
lesser of (i) a rate equal to the weighted average of the Remittance Rates on
the mortgage loans and (ii) 7.32500%. The Pass-Through Rate applicable to the
Class A2 Certificates will be the lesser of (i) a rate equal to the weighted
average of the Remittance Rates on the mortgage loans and (ii) 7.40000%. 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. 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 0.40328% 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 7.67329% per annum. 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 determined after taking into account the addition of the Withheld
Amounts with respect
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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 in part will only accrue to the date of payment (such shortfall, a
"Prepayment Interest Shortfall"). To the
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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 Trust Fund and (iv) any other
portion of the Adjusted Available Distribution Amount remaining
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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 K Certificates;
(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 K Certificates, until the Class Balance
thereof is reduced to zero;
(v) to distributions of the Interest Distribution Amount for such
Distribution Date on the Class NR Certificates; and
(w) 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 K, 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, Class K and Class NR
Certificates for any Distribution Date will equal 6.00000%, 6.00000%, 6.00000%,
6.00000% and 6.00000%, respectively, per annum. The Class Balances for the
Class G, Class H, Class J and Class NR Certificates will equal $16,459,000,
$20,116,000, $23,774,000, $7,315,000 and $14,635,500, respectively.
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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.
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 K, 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
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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 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
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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 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
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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.
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 the lesser of
(i) a rate equal to the weighted average of the Remittance Rates on the
mortgage loans and (ii) 7.32500%. The Pass-Through Rate for the Class A2
Certificates will be the lesser of (i) a rate equal to the weighted average of
the Remittance Rates on the mortgage loans and (ii) 7.40000%. 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 weighted average of the Remittance Rates on the
Mortgage Loans with respect to such Distribution Date. Accordingly, the yield
on the Offered 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.
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<PAGE>
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 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 17, 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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<PAGE>
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 ........... 95 95 95 95 100 100 100 100 100 100 100 100 100 100 100 100
August 2001 ........... 90 90 90 90 100 100 100 100 100 100 100 100 100 100 100 100
August 2002 ........... 84 84 84 84 100 100 100 100 100 100 100 100 100 100 100 100
August 2003 ........... 77 77 77 77 100 100 100 100 100 100 100 100 100 100 100 100
August 2004 ........... 58 58 58 56 100 100 100 100 100 100 100 100 100 100 100 100
August 2005 ........... 46 46 46 42 100 100 100 100 100 100 100 100 100 100 100 100
August 2006 ........... 23 23 23 23 100 100 100 100 100 100 100 100 100 100 100 100
August 2007 ........... 16 16 16 16 100 100 100 100 100 100 100 100 100 100 100 100
August 2008 ........... 2 0 0 0 100 99 96 60 100 100 100 100 100 100 100 100
August 2009 ........... 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Weighted
Average
life in years (2)..... 5.5 5.5 5.5 5.4 9.4 9.4 9.3 9.1 9.7 9.7 9.7 9.5 9.8 9.8 9.8 9.6
<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 ........... 100 100 100 100 100 100 100 100 100 100 100 100
August 2001 ........... 100 100 100 100 100 100 100 100 100 100 100 100
August 2002 ........... 100 100 100 100 100 100 100 100 100 100 100 100
August 2003 ........... 100 100 100 100 100 100 100 100 100 100 100 100
August 2004 ........... 100 100 100 100 100 100 100 100 100 100 100 100
August 2005 ........... 100 100 100 100 100 100 100 100 100 100 100 100
August 2006 ........... 100 100 100 100 100 100 100 100 100 100 100 100
August 2007 ........... 100 100 100 100 100 100 100 100 100 100 100 100
August 2008 ........... 100 100 100 100 100 100 100 100 100 100 100 100
August 2009 ........... 0 0 0 0 0 0 0 0 0 0 0 0
Weighted
Average
life in years (2)..... 9.8 9.8 9.8 9.6 9.9 9.8 9.8 9.6 9.9 9.9 9.9 9.7
</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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<PAGE>
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>
1.8500% 0.40328% 9.5753% 9.4486% 9.3659% 9.3026% 9.0127%
</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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<PAGE>
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
13.4% 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
22.2% 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 7.9% 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 responsibilities as
trustee are carried out by its Corporate Trust Department. The Trustee will be
entitled to a fee
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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.
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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-85
<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 100.3% 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 0.088%
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-86
<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-87
<PAGE>
INDEX OF PRINCIPAL TERMS
<TABLE>
<S> <C>
30/360 basis ................................... S-64
51 Sleeper Borrower ............................ S-48
51 Sleeper Loan ................................ S-48
51 Sleeper Property ............................ S-48
51 Sleeper Street .............................. S-48
Additional Servicing Fee Rate .................. S-79
Additional Westmont Loan ....................... S-50
Additional Westmont Property ................... S-50
Adjusted Available Distribution Amount ......... S-64
Adjusted Collateral Value ...................... S-69
Allocation Fraction ............................ S-64
Anticipated Repayment Date ..................... S-55
ARD Loans ...................................... S-55
Asset Strategy Report .......................... S-78
Available Distribution Amount .................. S-63
Balloon Mortgage Loan .......................... S-57
Balloon Payment ................................ S-57
Basic Master Servicing Fee Rate ................ S-79
Beneficial Owner ............................... S-60
Bonds .......................................... S-45
Borrower Note .................................. S-45
BPNY ........................................... S-45
C$ ............................................. S-50
Canadian Loans ................................. S-53
Cede ........................................... S-60
Cedelbank Participants ......................... S-61
Certificate Account ............................ S-81
Certificateholders ............................. S-60
Certificates ................................... S-60
Class A Certificates ........................... S-60
Class Balance .................................. S-66
Class Prepayment Fraction ...................... S-64
Clearance Cooperative .......................... S-61
Code ........................................... S-83
Collateral Value Adjustment .................... S-69
Collection Account ............................. S-81
CPR ............................................ S-72
Crossed Loans .................................. S-57
Cut-off Date LTV Ratio ......................... S-36
DCR ............................................ S-86
Defaulted Mortgage Loan ........................ S-76
Defeasance ..................................... S-42
Definitive Certificates ........................ S-62
Depositories ................................... S-61
Directing Certificateholder .................... S-78
Distribution Date .............................. S-63
DTC ............................................ S-60
DTC Participants ............................... S-61
DTC Registered Certificates .................... S-60
</TABLE>
S-88
<PAGE>
<TABLE>
<S> <C>
Due Date ................................................... S-28
Effective Gross Income ..................................... S-37
ERISA ...................................................... S-84
ESA ........................................................ S-58
Euroclear .................................................. S-60
Euroclear Operator ......................................... S-61
Euroclear Participants ..................................... S-61
Excess Cash Flow ........................................... S-56
Excess Interest ............................................ S-56
Exemption .................................................. S-84
FIRREA ..................................................... S-36
Foreign Currency Exchange Contract ......................... S-52
Form 8-K ................................................... S-59
F/X Payment Date ........................................... S-52
F/X Schedule ............................................... S-52
Horizon Borrower ........................................... S-47
Horizon Group .............................................. S-47
Horizon Outlet Loans ....................................... S-46
Horizon Outlet Properties .................................. S-47
Hyatt Regency Rochester .................................... S-54
Hyatt Rochester Borrower ................................... S-54
Hyatt Rochester Loan ....................................... S-54
Hyatt Rochester Property ................................... S-54
Indirect Participants ...................................... S-61
Initial Pool Balance ....................................... S-28
Interest Accrual Amount .................................... S-64
Interest Distribution Amount ............................... S-64
Interest F/X Rate .......................................... S-52
Interest Reserve Account ................................... S-65
Interest Reserve Loans ..................................... S-65
Letter of Credit ........................................... S-45
Loan Sale Agreement ........................................ S-28
Lock-out Date .............................................. S-41
Lock-out Period ............................................ S-41
Loss Mortgage Loan ......................................... S-68
Madison Concourse Borrower ................................. S-49
Madison Concourse Hotel .................................... S-49
Madison Concourse Loan ..................................... S-49
Madison Concourse Mortgage ................................. S-49
Madison Concourse Property ................................. S-49
Master Servicing Fee ....................................... S-79
Master Servicing Fee Rate .................................. S-79
Maturity Date .............................................. S-65
Maturity Date/Anticipated Repayment Date LTV Ratio ......... S-36
MGT ........................................................ S-28
Midland .................................................... S-75
Mills Borrowers ............................................ S-43
Mills Corp. Pool 1 ......................................... S-43
Mills Loan ................................................. S-43
Mills Properties ........................................... S-43
Mills Property ............................................. S-43
</TABLE>
S-89
<PAGE>
<TABLE>
<S> <C>
Monitoring Certificateholders .................. S-78
Monthly Payments ............................... S-28
Moody's ........................................ S-87
Mortgage ....................................... S-28
Mortgage Interest Rate ......................... S-55
Mortgage Loan File ............................. S-80
Mortgage Loans ................................. S-28
Mortgage Note .................................. S-28
Mortgage Pool .................................. S-28
Mortgaged Property ............................. S-28
Mortgagor ...................................... S-55
Most Subordinate Class of Certificates ......... S-82
Net Operating Income ........................... S-37
Net Prepayment Premium ......................... S-65
NOI ............................................ S-37
Notional Amount ................................ S-64
Offered Certificates ........................... S-60
Operating Statements ........................... S-37
Other Certificates ............................. S-67
PAR ............................................ S-58
Participants ................................... S-61
Pass-Through Rate .............................. S-63
Percentage Interest ............................ S-63
P&I Advance .................................... S-70
Plan ........................................... S-84
PML ............................................ S-58
Pooling and Servicing Agreement ................ S-80
Prepayment ..................................... S-71
Prepayment Interest Excess ..................... S-65
Prepayment Interest Shortfall .................. S-64
Prepayment Premium ............................. S-41
Principal Distribution Amount .................. S-65
Principal F/X Rate ............................. S-52
Property Protection Advance .................... S-70
Property Protection Expenses ................... S-70
PTCE 95-60 ..................................... S-85
Rated Final Distribution Date .................. S-72
Realized Loss .................................. S-68
Record Date .................................... S-63
REMIC .......................................... S-83
REMIC Regulations .............................. S-82
Remittance Rate ................................ S-63
REO Account .................................... S-60
REO Property ................................... S-60
Replacement Special Servicer ................... S-78
Required Appraisal Date ........................ S-68
Revised Rate ................................... S-55
Ridgewood Borrower ............................. S-44
Ridgewood Loan ................................. S-44
Ridgewood Property ............................. S-44
Seller ......................................... S-28
</TABLE>
S-90
<PAGE>
<TABLE>
<S> <C>
Servicers .................................................. S-75
Servicing Standard ......................................... S-76
Servicing Transfer Event ................................... S-76
SMMEA ...................................................... S-85
Special Servicing Fee ...................................... S-79
Specially Serviced Mortgage Loan ........................... S-76
Standard & Poor's .......................................... S-86
Stated Principal Balance ................................... S-68
Synertech Health Systems ................................... S-53
Terms and Conditions ....................................... S-62
Trigger Event .............................................. S-44
Trustee Fee Rate ........................................... S-81
Underwriting Agreement ..................................... S-86
Underwritten Cash Flow ..................................... S-37
Underwritten Cash Flow Debt Service Coverage Ratio ......... S-37
Underwritten NOI ........................................... S-37
UW Cash Flow ............................................... S-37
UW DSCR .................................................... S-37
UW NOI ..................................................... S-37
Vartan Borrower ............................................ S-53
Vartan Building ............................................ S-53
Vartan Loan ................................................ S-53
Vartan Property ............................................ S-53
Voting Rights .............................................. S-81
Westmont Canadian Borrowers ................................ S-50
Westmont Canadian Loans .................................... S-50
Westmont Canadian Properties ............................... S-50
Westmont Loans ............................................. S-50
Westmont Properties ........................................ S-50
Withheld Amounts ........................................... S-65
Woodfield Gardens Borrower ................................. S-45
Woodfield Gardens Loan ..................................... S-45
Woodfield Gardens Property ................................. S-45
W-Westmont ................................................. S-50
Yield Maintenance .......................................... S-42
</TABLE>
S-91
<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 Woodfield Gardens Apartments 4700 Arbor Drive
4 51 Sleeper Street 51 Sleeper St
5 Madison Concourse Hotel One West Dayton St
6 Vartan Building 2400 Thea Drive
7 Hyatt Regency Rochester 125 E. Main Street
8 Northfield Office Park I & II 5600 & 5700 Crooks Rd
9 Merrill Place 411 First Avenue, South
10 Becker Office Building 401 Main Street
11 The Tower Building 1807 7th Avenue
12 Tregaron Oaks Apartments 1729 Scarborough Drive
13 USProperties Pool II Various
13.1 Cross Creek 345 Bryant Road
13.2 Summertree 9 Summertree Lane
13.3 Tealpoint 3431 North Shannon Amity Rd.
14 University Plaza Building 949 E. 36th Street
15 Sterling Woods Apartments 950 Executive Dr.
16 Sealy Outlet Center 1402 Outlet Center Dr.
17 Ludlam Point Apartments 6880 SW 44th St
18 Villa Florence Hotel 225 Powell St.
19 Riverside Centre 3403 10th Street
20 Stuart Centre 2285 South Federal Highway
21 Holiday Inn-Greenbelt 7200 Hanover Center Drive
22 Post Distribution Building 3324 142nd Ave.
23 Broadway Summit Office Building 3101 Broadway Blvd.
24 IBM Building 1798 NW 40th Street
25 Nebraska Crossing Factory Store 14333 So. Highway 31
26 Van Buren Building 733 N. Van Buren St
27 Eastland on the Lake Apts 2400 Shore Blvd
28 Grand Central Office Building 1000 Union Station
29 Deer Creek Apartments 4415 Kirk Road
30 Victoria Plaza Apartments 26101 Country Club Blvd
31 Quail Park III 501 S. Rancho Dr.
32 Prestwick Pointe and Junction Pointe 5230/5250 East US 36
32.1 Prestwick Pointe I-V 5250 East US 30
32.2 Prestwick Junction Pointe 5530 East US 30
33 Lakewood Park Health Center 12023 South Lakewood Blvd
34 Phillips Highway Commerce Park 6950 Phillips Highway
35 El Paso Commerce Various
35.1 El Paso Commerce - A 6988 Commerce Avenue
35.2 El Paso Commerce - B 6830 Industrial Avenue
35.3 El Paso Commerce - C 1000 Hawkins Boulevard
36 Downey Community Health Center 8425 Iowa St
37 Lakeshore Estates MHP 1785 State Route 28
38 Village Portico 227-299 S. West 8th Street
39 North Coast Medical 18305 Sutter Blvd
40 Bloor Street Quality Hotel 280 Bloor Street
41 Ridge Terrace Health Care Ctr. 2180 Hypoluso Road
42 Power House Office Building and Theatre 800 Union Station
43 Horizon Outlet Center-Traverse 3939 Market Place Circle
44 New Landing Shopping Center 6301 Troost
45 Plaza De Las Palmas 1125-1265 Avocado Avenue
46 Paradise Hills Convalescent 6061 Banbury St
47 Embassy Place Apts - Phase I 2219 Teakwood Cir
48 Meadow Plaza Shopping Center 3112,3120 &3128 Santa Rita Road
49 Springfield Inn 100 S. Fountain Av
50 First Data Building 416 South Bell Avenue
51 Boca Bend Marina Apartments 3100 South Dixie Highway
52 Glacier Hills Apartments 1202, 1210 & 1218 McKenna Blvd
53 Bayshore Plaza Shopping Ctr 103 Statesville Road
54 Westridge Village Shopping Ctr 3600 Sunset Avenue
55 Village Manor Apartments 2601 Soldiers Home Road
56 Deerfoot Village 1371 South Walnut St.
57 Peridot Place/ The Woodlands 825 Santa Barbara Blvd.
58 5 & 7 Burroughs Warehouse 5&7 Burroughs
59 717 Second Street, NE 709,711,717 2nd St, NE & 216 G St. NE
60 Lake Plaza South 6902 South West Lake Road
61 Agape Manor/Limestone Lodge & Manor Various
61.1 Agape Manor and Village 2582 Charity Lane (Manor) & 372/376 Jimmy Fisk Road (Village)
61.2 Limestone Lodge and Manor 600 Highway 31 North (Manor) & 1528/1532 W. Hobbs St. (Lodge)
62 Mercado del Sol 1110-1150 S. Rainbow Blv
63 Stonegate Apartments 7119 62nd Avenue
64 Ross Memorial Health Care Center 1780 Old 41 Hwy
65 Williams Sonoma s/s NW 86th Str.
66 Harbourside Production Studio 915 Lakeshore Blvd East
67 Glenwood Village Apartments 5713 Garrett Street
68 Sleep Inn - Florence 1833 Florence Park Dr
69 34th South Broadway 34 South Broadway
70 Pulse Athletic Club 100 Oakmont Drive
71 Holiday Inn Express 18240 Conneaut Lake Road
72 Willow Station Shopping Center 2305-2401 W. 27th St
73 Mt. Vernon Gateway Centre Coshoston Avenue (U.S. Route 36)
74 St. John's - Quality Inn 2 Hill O'Chips
75 GTS Durateck Building 10100 Old Columbia Road
76 Plantation Plaza 1550,1558,1560 S.E. Federal Highway
77 Giant Eagle Shopping Center West Side State Route 36
78 John Young Crossing Shop.Ctr. 300 S. Hiawassee Road
79 Comfort Inn - Pointe Claire 700 Boulevard St. Jean
80 The Fields Apartments 1333 Fenbrook Lane
81 333 Market Street 333 Market Street
82 Wells Fargo Plaza 212-220 Euclid Avenue
83 Chagrin Lee Square 16500 Chagrin Blvd
84 7127 Riverside Building 7127 S. Riverside Drive
85 Goddard Court Townhomes 11208 Goddard Court Drive
86 Petsmart 3480 Landers Road
87 Adams Building 790 N. Jackson Street
88 Staples 2975 S. Arlington Rd
89 Arroyo Grande Mini Storage 2175 Willow Road
90 Desert Knolls Convalescent Hospital 14973 Hesperia Rd
91 Crystal Lake Plaza 3500 S. Hiawassee
92 Centinela Valley Care 950 & 1000S. Flower
93 Goff Plaza 1720 Bridge Boulevard, SW
94 New York Plaza & Arcade 330 West Fairbanks Ave
95 Jackson Building 732 N. Jackson St
96 Eckerds 178-181 Broadway
97 Ponte Vedra Office Complex 217 & 221 Ponte Vedra Park Drive
98 Mobilelodge of Milpitas 1515 N. Milpitas Blvd.
99 Comfort Inn - Winnipeg 1770 Sargent Avenue
100 Quality Suites - Laval 2035 Autoroute des Laurentaides
101 Canton Bi-Lo Various
101.1 Eliada Plaza 337 New Leicester Highway
101.2 Canton Bi-Lo 1923 Harkins Cove Road
102 Comfort Inn - Regina 3321 E. Eastgate Drive
103 Overland Plaza & Self Storage 18025 Monterey Street
104 Waverly Tower Shopping Center 500 Exeter Hall,2801-2849 Greenmount Ave,2900 Mathews St.
105 Townview Mobile Home Park 1288 N. Bagley Street
106 Clarke Road Shopping Center Silver Starr and Clarke Road
107 Cripple Creek Shopping Center 884 Buford Drive
108 Wilmington Athletic Club 2026 S. 16th Street
109 Mayfair & Flamingo Apartments Various
109.1 Mayfair Apts. 740-760 NW 95 Street
109.2 Flamingo Apts. 1480 NW 95th Street
110 Westport Commercial 4666 S. 132nd Street
111 Colorado Office Park 735 Colorado Avenue
112 Four Seasons Retail 43701-43779 Van Dyke Ave
113 John Rupp Dacotah Blvd 366 Selby St.
114 Hur Warehouses 8222 Jamestown Dr., 8319 & 8335 Research Dr.
115 Comfort Inn - Cambridge 220 Holiday Inn Drive
116 Massara's Plaza 10735 Ravenna Road
117 1420 S. Lewis Avenue 1420 S. Lewis Avenue
118 Summers Village Shopping Ctr 3701 North Beltline Road
119 John Rupp Exchange Rd 26 East Exchange Street
120 Broadway/Bellfort Center 8300 Broadway
121 Willow Creek Professional Blg 1631 Willow Street
122 John Rupp University Club 420 Summit Avenue
123 Hutchinson Island Shoppes 11001 South U.S. Highway A1A
124 Hollywood Video - Miami 14601 Miller Road
125 Stirling Palm Plaza 10201-10261 Stirling Road
126 Suwannee Plaza Shopping Center 2103-2241 NW 11th Drive
127 Commercial Blvd. 2500,2633&3050 Commercial Boulevard
128 The Niland Building 320 North Clark Rd
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENCE PROPERTY YEAR
NUMBER CITY STATE ZIP CODE TYPE BUILT
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 Various Various Various Anchored Retail Various
1.1 Cincinnati OH 22209 Anchored Retail 1954
1.2 Duluth GA 30096 Anchored Retail 1988
1.3 Mt. Prospect IL 60056 Anchored Retail 1959
1.4 Falls Church VA 22044 Anchored Retail 1973 & 1982
2 Fitchburg WI 53713 Multifamily 1968-1973
3 Rolling Meadows IL 60008 Multifamily 1967 & 1969
4 Boston MA 02110 Office 1900
5 Madison WI 53703 Hotel 1973, 1985
6 Harrisburg PA 17110 Office 1997
7 Rochester NY 14604 Hotel 1992
8 Troy MI 48095 Office 1975 & 1973
9 Seattle WA 98104 Office 1913
10 Peoria IL 61602-1241 Office 1992
11 Seattle WA 98101 Office 1930
12 Bellevue NE 68123 Multifamily 1996
13 Various Various Various Multifamily Various
13.1 Spartanburg SC 29303 Multifamily 1979
13.2 Greensboro NC 27406 Multifamily 1984
13.3 Charlotte NC 28205 Multifamily 1972
14 Anchorage AK 99501 Office 1977
15 Alpharetta GA 30202 Multifamily 1988
16 Sealy TX 77474 Factory Outlet 1995
17 Miami FL 33155 Multifamily 1986
18 San Francisco CA 94102 Hotel 1908
19 Riverside CA 92501 Office 1983
20 Stuart FL 34994 Anchored Retail 1981
21 Greenbelt MD 20770 Hotel 1984
22 Sumner WA 98390 Industrial 1997
23 Kansas City MO 64111 Office 1984
24 Boca Raton FL 33434 Mixed Use 1979
25 Gretna NE 68028 Factory Outlet 1994
26 Milwaukee WI 53202 Office 1926
27 Columbus OH 43232 Multifamily 1973
28 St. Louis MO 63103 Office 1991
29 Austintown OH 44515-5302 Multifamily 1970 & 1975
30 North Olmstead OH 44070 Multifamily 1971
31 Las Vegas NV 89106 Office 1988
32 Danville IN 41220 Mixed Use 1994,1995 & 1998
32.1 Danville IN 41220 Mixed Use 1994,1995 & 1998
32.2 Danville IN 41220 Mixed Use 1994,1995 & 1998
33 Downey CA 90242 Nursing Home 1946
34 Jacksonville FL 32216 Industrial 1984
35 El Paso TX 79915 Industrial Various
35.1 El Paso TX 79915 Industrial 1972, 1995
35.2 El Paso TX 79915 Industrial 1965
35.3 El Paso TX 79915 Industrial 1958,1972 & 1982
36 Downey CA 90241 Nursing Home 1970
37 Goshen OH 45122 Mobile Home Park 1967
38 Miami FL 33130 Anchored Retail 1997
39 Morgan Hill CA 95037 Industrial 1998
40 Toronto ON M55 1V8 Hotel 1989
41 Lantana FL 33462 Nursing Home 1984
42 St. Louis MO 63103 Office 1988
43 Traverse MI 49684 Factory Outlet 1990, 1999
44 Kansas City MO 64131 Anchored Retail 1961
45 El Cajon CA 92020 Unanchored Retail 1987,1989 & 1994
46 San Diego CA 92139 Nursing Home 1972
47 Highland IN 46322 Multifamily 1998
48 Pleasanton CA 94566 Anchored Retail 1985/86
49 Springfield OH 45502 Hotel 1989
50 Ames IA 50010 Office 1999
51 Boca Raton FL 33432 Multifamily 1983
52 Madison WI 53715 Multifamily 1989
53 Huntersville NC 28078 Anchored Retail 1971& 1998
54 Rocky Mount NC 27804 Anchored Retail 1971&1972
55 West Lafayette IN 47906 Multifamily 1965 & 1968
56 Starke FL 31091 Anchored Retail 1989
57 Cape Coral FL 33991 Congregate Care 1987, 1989, 1994
58 Irvine CA 92718 Industrial 1985
59 Washington DC 20006 Office 1984
60 Milwaukee OR 97267 Office 1998
61 Various AL Various Congregate Care Various
61.1 Hazel Green AL 35750 Congregate Care 1991, 1993
61.2 Athens AL 35611 Congregate Care 1978, 1983
62 Las Vegas NV 89102 Unanchored Retail 1987
63 Lakewood WA 98467 Multifamily 1986
64 Kennesaw GA 30152 Nursing Home 1991
65 Oklahoma City OK 73114 Office 1998
66 Toronto ON M4M 3L5 Industrial 1990
67 Garden City ID 83714 Multifamily 1978
68 Florence SC 29502 Hotel 1993
69 White Plains NY 10601 Office 1970
70 Greenville NC 27858 Unanchored Retail 1998
71 Meadville PA 16335 Hotel 1994
72 Greeley CO 80632 Unanchored Retail 1979/80
73 Mt. Vernon OH Anchored Retail 1997
74 St. John's NF A1C 6B1 Hotel 1990
75 Columbia MD 21046 Office 1997
76 Stuart FL 34994 Unanchored Retail 1984
77 Roaring Spring PA 16673 Anchored Retail 1994
78 Orlando FL 32835 Anchored Retail 1995-97
79 Pointe Claire PQ H9R 3KQ Hotel 1985
80 Bloomington IN 47401 Multifamily 1998
81 Oakland CA 94607 Industrial 1965
82 San Diego CA 92114 Mixed Use 1989
83 Shaker Heights OH 44120 Mixed Use 1989 & 1993
84 Tulsa OK 74136 Office 1993
85 Taylor MI 48322 Multifamily 1971
86 North Little Rock AR 72117 Unanchored Retail 1995
87 Milwaukee WI 53202 Office 1920
88 Akron OH 44319 Anchored Retail 1998
89 Arroyo Grande CA 93420 Self Storage 1997
90 Victorville CA 92392 Nursing Home 1962
91 Orlando FL 32835 Anchored Retail 1963
92 Inglewood CA 90301 Nursing Home 1960/62
93 Albuquerque NM 87105-3182 Anchored Retail 1965
94 Winter Park FL 32789-5093 Unanchored Retail 1942-46
95 Milwaukee WI 53202 Office 1979
96 Monticello NY 12701 Anchored Retail 1997
97 Ponte Vedra FL 32082 Office 1996/1997
98 Milpitas CA 95035 Mobile Home Park 1962
99 Winnipeg MB R3H 0C8 Hotel 1987
100 Laval PQ H7S 1Z6 Hotel 1991
101 Canton/Asheville NC Various Anchored Retail Various
101.1 Ashville NC 28806 Anchored Retail NAV
101.2 Ashville NC 28806 Anchored Retail 1981
102 Regina SK S42 1A4 Hotel 1986
103 Morgan Hill CA 95037 Self Storage 1990
104 Baltimore MD 21218 Anchored Retail 1956
105 Dallas TX 75211 Mobile Home Park 1964/1965
106 Orlando FL 32835 Anchored Retail 1993
107 Lawrenceville GA 30243 Unanchored Retail 1997
108 Wilmington NC 28401 Unanchored Retail 1983
109 Various FL Various Multifamily Various
109.1 Miami FL 33150 Multifamily 1963
109.2 Miami FL 33150 Multifamily 1949
110 Omaha NE 68137 Unanchored Retail 1983
111 Stuart FL 34994 Mixed Use 1972
112 Sterling Heights MI 48314 Unanchored Retail 1986
113 St. Paul MN 55101 Office 1889
114 Austin TX 78758 Mixed Use 1970s
115 Caimbridge ON N3C 124 Hotel 1987
116 Twinsburg OH 44087 Anchored Retail 1965
117 Tulsa OK 74104 Unanchored Retail 1997
118 Irving TX 75038 Unanchored Retail 1983
119 St. Paul MN 55101 Office 1910
120 Houston TX 77017 Unanchored Retail 1976/1981
121 San Jose CA 95125 Office 1978
122 St. Paul MN 55102 Mixed Use 1913
123 Hutchinson Island FL 34957 Anchored Retail 1984
124 Miami FL 33175 Unanchored Retail 1998
125 Cooper City FL 33328 Unanchored Retail 1998
126 Chiefland FL 32626 Unanchored Retail 1995
127 Ft. Lauderdale FL 33308 Mixed Use 1971/72 & 1976
128 El Paso TX 32801 Industrial 1965
</TABLE>
<PAGE>
<TABLE>
NUMBER
SEQUENCE YEAR OF SQ. FT. OCCUPANCY OCCUPANCY APPRAISAL APPRAISAL
NUMBER RENOVATED UNITS RATE(19) DATE VALUE(1) DATE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 Various 1,028,399 92.15 3/1/99 90,950,000 Various
1.1 1983/1991/1992 449,496 86.00 3/1/99 35,000,000 9/11/98
1.2 194,719 96.00 3/1/99 22,650,000 9/18/98
1.3 1987 298,600 97.50 3/1/99 25,000,000 9/23/98
1.4 1992 & 1996 85,584 97.00 3/1/99 8,300,000 9/24/98
2 1999 862 90.80 7/16/99 39,500,000 8/27/98
3 1999 692 99.00 4/28/99 30,900,000 5/20/99
4 1984 & 1998 147,142 100.00 3/30/99 30,900,000 1/22/99
5 1985/93/94 356 73.00 12/31/98 33,500,000 8/22/98
6 1998 206,900 100.00 6/30/99 28,500,000 5/1/99
7 335 70.62 12/31/98 26,500,000 5/1/98
8 1984 & 1991 211,623 98.00 4/20/99 24,500,000 2/8/99
9 1983 179,814 100.00 3/31/99 28,200,000 12/3/98
10 163,521 93.00 5/4/99 20,600,000 8/14/98
11 1988 143,041 89.10 3/31/99 19,550,000 7/20/98
12 300 99.60 4/29/99 17,000,000 9/29/98
13 Various 512 93.63 3/31/99 17,200,000 7/14/98
13.1 1998 152 97.00 3/31/99 3,200,000 7/14/98
13.2 1998 144 94.00 3/31/99 5,700,000 7/13/98
13.3 1987/95 216 91.00 3/31/99 8,300,000 7/14/98
14 1995 122,651 100.00 5/27/99 17,000,000 12/4/98
15 266 96.24 3/25/99 14,600,000 4/6/98
16 191,587 90.60 6/1/99 16,800,000 5/14/99
17 204 100.00 3/12/99 14,500,000 3/5/99
18 1986 111,482 80.70 9/30/98 18,800,000 11/30/98
19 1994 153,149 86.00 4/1/99 19,900,000 12/3/98
20 1990 196,540 87.24 3/31/99 13,300,000 7/21/98
21 1996/1997 204 79.00 12/31/98 14,400,000 12/11/98
22 263,800 100.00 5/31/99 10,450,000 4/10/98
23 121,639 93.00 4/26/99 11,500,000 4/29/99
24 147,090 100.00 12/1/98 10,200,000 12/22/97
25 191,500 85.20 6/1/99 14,000,000 5/21/99
26 1971/1982 140,006 84.00 6/24/99 10,500,000 2/2/99
27 376 93.00 4/13/99 9,150,000 8/15/98
28 61,786 93.00 3/15/99 8,700,000 2/25/99
29 360 94.20 3/31/99 8,610,000 7/27/98
30 1995-98 296 91.00 3/22/99 9,360,000 3/2/99
31 71,296 92.80 2/11/99 9,600,000 4/13/98
32 94,578 99.13 3/31/99 8,500,000 3/1/99
32.1 82,078 99.00 3/31/99 7,372,738 3/1/99
32.2 12,500 100.00 3/31/99 1,127,262 3/1/99
33 1957, 1965, 1978 231 98.00 3/23/99 8,500,000 3/23/99
34 1997 121,060 92.00 12/31/98 7,850,000 9/17/98
35 362,621 100.00 1/1/99 7,825,000 8/5/98
35.1 45,548 100.00 1/1/99 925,000 8/5/98
35.2 34,523 100.00 1/1/99 700,000 8/5/98
35.3 282,550 100.00 1/1/99 6,200,000 8/5/98
36 1986 198 96.10 1/28/99 8,250,000 1/28/99
37 1997 426 93.00 5/21/99 7,400,000 5/5/99
38 28,808 95.00 4/1/99 7,400,000 9/7/98
39 73,600 100.00 1/1/99 7,000,000 12/1/98
40 210 73.69 12/31/98 12,224,109 5/25/98
41 120 92.00 12/31/98 9,450,000 9/21/98
42 1988 101,517 100.00 3/15/99 7,500,000 2/25/99
43 153,975 88.80 6/1/99 11,700,000 5/1/99
44 1996 204,890 93.00 3/1/99 6,500,000 9/2/98
45 42,186 90.00 12/31/98 6,300,000 7/1/98
46 162 92.20 3/31/99 6,540,000 9/15/98
47 64 100.00 3/31/99 5,800,000 10/8/98
48 53,612 100.00 4/1/99 6,700,000 1/15/99
49 1994 124 74.00 4/1/99 6,200,000 8/20/98
50 60,480 100.00 5/1/99 6,100,000 3/23/99
51 104 99.00 5/4/99 5,700,000 9/15/98
52 122 92.60 4/12/99 5,100,000 9/8/98
53 1998 51,695 100.00 5/28/99 5,600,000 2/1/99
54 1987 90,814 95.50 3/31/99 5,700,000 5/26/98
55 1996-1998 122 94.00 4/21/99 5,050,000 4/12/99
56 105,668 96.00 5/6/99 5,050,000 8/15/98
57 92 96.00 4/6/99 5,600,000 2/19/98
58 1990 77,852 100.00 5/1/99 5,725,000 2/10/99
59 1989 26,556 100.00 12/31/98 5,700,000 10/9/98
60 33,211 100.00 4/20/99 5,150,000 4/6/99
61 124 95.00 3/23/99 5,300,000 3/22/99
61.1 48 95.00 3/23/99 2,250,000 3/22/99
61.2 76 95.00 3/23/99 3,050,000 3/22/99
62 30,123 93.00 4/1/99 5,000,000 1/20/99
63 120 96.00 4/16/99 5,200,000 10/20/98
64 100 96.00 4/1/99 4,850,000 4/5/99
65 35,862 100.00 4/1/99 4,500,000 7/23/98
66 73,734 100.00 2/23/99 6,699,491 10/1/98
67 136 86.80 3/25/99 4,250,000 8/12/98
68 1997 106 67.70 12/31/98 4,750,000 9/17/98
69 1997-98 51,351 100.00 4/2/99 4,800,000 3/13/99
70 40,828 100.00 1/13/99 4,290,000 2/11/99
71 68 76.00 3/31/99 4,500,000 12/16/98
72 85,942 97.00 5/1/99 4,400,000 10/22/98
73 42,922 96.00 4/20/99 4,000,000 5/8/99
74 162 68.90 12/31/98 5,161,290 10/7/97
75 35,000 100.00 5/10/99 4,430,000 5/4/99
76 68,285 98.00 4/1/99 4,000,000 2/23/99
77 59,900 100.00 2/9/99 3,800,000 1/13/99
78 24,504 100.00 4/1/99 4,400,000 7/31/98
79 100 87.15 12/31/98 4,617,997 5/25/98
80 40 100.00 4/23/99 3,500,000 11/13/98
81 70,265 100.00 5/1/99 3,850,000 8/20/98
82 28,368 100.00 12/1/98 3,700,000 1/4/99
83 1993 52,000 97.59 3/31/99 3,400,000 9/18/98
84 1998 37,250 91.00 5/20/99 3,750,000 2/1/99
85 98 97.00 3/2/99 3,160,000 1/14/99
86 32,840 100.00 4/1/99 3,100,000 7/24/98
87 1985-1988 42,769 96.00 6/24/99 3,250,000 2/2/99
88 24,049 100.00 4/1/99 3,200,000 1/7/99
89 74,804 99.00 4/5/99 3,300,000 3/3/99
90 1976 126 96.00 2/28/99 3,250,000 3/15/99
91 1986 53,120 97.60 4/1/99 3,000,000 7/17/98
92 1998 191 92.00 12/31/98 3,300,000 2/15/99
93 1997 74,791 97.00 3/1/99 3,050,000 2/11/98
94 1988 21,417 88.00 12/1/98 3,050,000 7/21/98
95 1991 50,809 98.00 6/24/99 3,600,000 2/2/99
96 13,500 100.00 4/1/99 2,675,000 3/25/98
97 20,013 100.00 4/1/99 2,725,000 1/18/99
98 1996 145 98.62 5/5/99 3,750,000 1/13/99
99 81 86.60 12/31/98 3,259,762 5/28/98
100 116 70.00 12/31/98 3,803,056 5/25/98
101 Various 62,388 100.00 4/27/99 2,820,000 10/14/98
101.1 33,748 100.00 4/27/99 1,650,000 10/14/98
101.2 28,640 100.00 4/27/99 1,170,000 10/14/98
102 1998 99 82.90 12/31/98 3,191,851 5/27/98
103 1998 466 82.00 12/31/98 3,200,000 8/10/98
104 1984 53,540 100.00 5/1/99 3,700,000 11/18/98
105 166 94.58 2/24/99 2,450,000 12/8/98
106 21,004 100.00 4/1/99 2,600,000 7/31/98
107 23,000 100.00 1/22/99 2,400,000 12/7/98
108 38,500 100.00 2/18/99 3,200,000 2/10/99
109 Various 82 96.42 4/1/99 2,300,000 6/27/98
109.1 1996 46 98.00 4/1/99 1,200,000 6/27/98
109.2 1996 36 94.40 4/1/99 1,100,000 6/27/98
110 1995 22,650 100.00 6/24/99 2,700,000 8/20/98
111 1985 29,769 95.00 4/1/99 2,200,000 3/1/99
112 1998 31,550 100.00 12/8/98 2,750,000 2/2/99
113 1975 30,009 98.60 1/22/99 2,950,000 9/25/98
114 1992 58,621 100.00 2/10/99 2,600,000 8/18/98
115 Various 84 67.90 12/31/98 2,886,248 5/25/98
116 52,287 100.00 4/23/99 2,985,000 4/1/99
117 11,726 100.00 3/31/99 1,850,000 1/4/99
118 20,886 92.80 3/31/99 2,160,000 5/6/98
119 1996 34,410 99.00 4/13/99 2,130,000 9/1/98
120 28,290 95.00 1/14/99 1,960,000 1/13/99
121 1997 16,507 100.00 2/12/99 2,450,000 10/15/98
122 1980 27,000 88.00 2/9/99 2,050,000 9/25/98
123 18,501 100.00 3/31/99 1,800,000 2/19/99
124 7,488 100.00 4/12/99 1,630,000 9/15/98
125 9,642 100.00 3/31/99 1,600,000 10/5/98
126 1998 17,443 100.00 3/8/99 1,570,000 1/24/99
127 15,960 100.00 3/23/99 1,500,000 2/11/99
128 1998 81,547 100.00 12/10/98 1,500,000 1/5/99
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ORIGINAL CURRENT CROSSED RELATED CURRENT MORTGAGE
SEQUENCE ORIGINAL PRINCIPAL PRINCIPAL LOAN LOAN INTEREST
NUMBER LTV BALANCE(1)(2) BALANCE(1) GROUP(3) GROUP(4) RATE(5)(6)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 64.21 58,400,000 58,136,667 7.3000
1.1 24,000,000
1.2 14,500,000
1.3 14,500,000
1.4 5,400,000
2 78.99 31,200,000 30,948,385 6.7500
3 78.32 24,200,000 24,186,478 7.3600
4 74.43 23,000,000 22,961,612 7.8100
5 66.42 22,250,000 21,980,569 6.8900
6 62.87 17,918,000 17,898,122 8.0500
7 67.92 18,000,000 17,773,861 7.2800
8 71.43 17,500,000 17,479,309 7.8100
9 60.28 17,000,000 16,926,533 7.5000
10 71.36 14,700,000 14,632,298 7.7500
11 73.45 14,360,000 14,230,249 6.7200
12 80.00 13,600,000 13,521,651 7.2500
13 78.37 13,480,000 13,354,125 6.5700
13.1 2,560,000
13.2 4,570,000
13.3 6,350,000
14 75.00 12,750,000 12,702,093 8.0600
15 85.00 12,410,000 12,295,037 6.5000
16 66.16 11,115,000 11,106,771 1 8.4600
17 75.86 11,000,000 10,971,716 7.5100
18 55.85 10,500,000 10,432,071 7.7500
19 52.26 10,400,000 10,356,571 7.6600
20 75.19 10,000,000 9,948,429 7.2500
21 57.64 8,300,000 8,236,804 8.2800
22 74.64 7,800,000 7,724,507 7.2500
23 66.96 7,700,000 7,689,284 7.9800
24 74.51 7,600,000 7,503,550 7.4000
25 53.46 7,485,000 7,479,459 1 8.4600
26 71.43 7,500,000 7,480,617 A 7.4900
27 78.14 7,150,000 7,113,317 7.9300
28 75.00 6,525,000 6,522,437 B 8.3500
29 75.49 6,500,000 6,438,772 C 6.5300
30 68.59 6,420,000 6,403,408 C 7.4900
31 66.67 6,400,000 6,331,137 7.5300
32 72.35 6,150,000 6,126,711 8.0200
32.1 5,334,393
32.2 815,607
33 70.59 6,000,000 5,989,474 8.3700
34 76.43 6,000,000 5,955,865 6.7500
35 75.02 5,870,000 5,841,449 7.7800
35.1 693,898
35.2 525,112
35.3 4,650,990
36 70.00 5,775,000 5,765,429 8.6500
37 77.03 5,700,000 5,664,836 6.9400
38 75.68 5,600,000 5,531,803 7.2500
39 79.29 5,550,000 5,504,915 7.2000
40 45.31 5,538,200 5,407,120 2 D 8.3050
41 56.08 5,300,000 5,258,637 8.1100
42 70.07 5,255,000 5,249,733 B 8.4200
43 44.49 5,205,000 5,201,147 1 8.4600
44 72.31 4,700,000 4,687,626 8.1700
45 73.02 4,600,000 4,499,395 6.9500
46 68.81 4,500,000 4,472,426 8.0700
47 77.59 4,500,000 4,471,083 6.7700
48 66.78 4,474,000 4,452,109 7.7500
49 72.58 4,500,000 4,445,366 6.8750
50 72.54 4,425,000 4,419,877 7.8900
51 77.19 4,400,000 4,343,317 6.5300
52 82.35 4,200,000 4,168,078 6.6000
53 74.20 4,155,000 4,124,843 7.1000
54 73.68 4,200,000 4,121,569 7.1000
55 79.21 4,000,000 3,991,903 7.6400
56 79.21 4,000,000 3,964,676 6.7500
57 71.43 4,000,000 3,952,979 7.0600
58 69.00 3,950,000 3,942,096 7.7000
59 68.77 3,920,000 3,889,300 8.0700
60 74.76 3,850,000 3,845,671 8.0000
61 70.75 3,750,000 3,739,896 8.0600
61.1 1,750,000
61.2 2,000,000
62 73.00 3,650,000 3,643,838 7.7700
63 67.79 3,525,000 3,517,434 7.3300
64 72.16 3,500,000 3,493,897 8.4000
65 76.67 3,450,000 3,450,000 3 6.8900
66 50.68 3,395,586 3,363,808 8.5550
67 80.00 3,400,000 3,375,263 6.8000
68 70.00 3,325,000 3,299,581 8.2000
69 68.59 3,292,500 3,282,728 7.5900
70 74.24 3,185,000 3,174,567 E 8.8000
71 68.89 3,100,000 3,086,575 8.5200
72 70.45 3,100,000 3,087,960 7.8900
73 75.00 3,000,000 2,997,361 7.7500
74 59.21 3,056,027 2,990,258 D 8.4220
75 67.72 3,000,000 2,996,216 7.5600
76 75.00 3,000,000 2,995,192 F 7.9500
77 78.95 3,000,000 2,990,624 7.5000
78 65.00 2,860,000 2,839,646 G 6.9000
79 62.50 2,886,248 2,830,111 2 D 8.4430
80 80.00 2,800,000 2,796,144 7.2100
81 68.83 2,650,000 2,631,912 7.4300
82 70.68 2,615,000 2,602,533 7.8800
83 75.29 2,560,000 2,531,535 6.8200
84 66.67 2,500,000 2,499,114 8.6000
85 79.11 2,500,000 2,491,528 7.5800
86 79.13 2,453,000 2,453,000 3 7.0900
87 73.85 2,400,000 2,393,798 A 7.4900
88 71.88 2,300,000 2,300,000 3 7.8600
89 68.94 2,275,000 2,264,739 8.2500
90 69.23 2,250,000 2,246,178 8.5300
91 75.00 2,250,000 2,233,987 G 6.9000
92 67.73 2,235,000 2,227,165 8.4100
93 73.77 2,250,000 2,213,216 7.3500
94 72.13 2,200,000 2,184,208 7.9100
95 60.17 2,166,000 2,160,402 A 7.4900
96 80.00 2,140,000 2,140,000 3 7.0500
97 73.39 2,000,000 1,994,269 7.8200
98 53.33 2,000,000 1,986,975 7.8900
99 60.42 1,969,440 1,931,135 2 D 8.4430
100 51.79 1,969,440 1,931,135 2 D 8.4430
101 65.60 1,850,000 1,837,869 7.6700
101.1 1,000,000
101.2 850,000
102 58.51 1,867,572 1,831,248 2 D 8.4430
103 57.81 1,850,000 1,835,725 8.1500
104 48.65 1,800,000 1,786,709 7.7500
105 69.39 1,700,000 1,688,661 8.3200
106 65.38 1,700,000 1,687,901 G 6.9000
107 70.83 1,700,000 1,683,080 8.1500
108 52.34 1,675,000 1,671,070 E 8.7000
109 73.91 1,700,000 1,645,555 6.8500
109.1 886,957
109.2 813,043
110 62.96 1,700,000 1,644,925 6.7200
111 75.00 1,650,000 1,647,394 F 8.0000
112 59.45 1,635,000 1,626,021 8.1600
113 53.90 1,590,000 1,582,242 H 8.4000
114 59.62 1,550,000 1,544,153 8.0400
115 53.18 1,534,805 1,504,953 2 D 8.4430
116 50.25 1,500,000 1,491,536 7.8800
117 78.38 1,450,000 1,445,913 7.8800
118 67.13 1,450,000 1,439,120 8.3000
119 67.14 1,430,000 1,423,023 H 8.4000
120 71.43 1,400,000 1,393,746 8.2000
121 56.94 1,395,000 1,386,963 7.2500
122 67.07 1,375,000 1,368,497 H 8.6500
123 75.00 1,350,000 1,347,836 F 7.9500
124 79.75 1,300,000 1,290,012 6.5500
125 75.63 1,210,000 1,206,494 7.7800
126 70.06 1,100,000 1,095,802 7.9800
127 66.67 1,000,000 996,198 8.0000
128 66.67 1,000,000 990,656 8.6400
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NET
MORTGAGE MORTGAGE ANNUAL REMAINING REMAINING
SEQUENCE INTEREST INTEREST RATE DEBT INTEREST ONLY TERM
NUBMER RATE(6)(7) ACCRUAL BASIS(8) SERVICE(1)(9) PERIOD (MONTHS) (MONTHS)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 7.2090 ACT/360 4,804,481 114
1.1
1.2
1.3
1.4
2 6.6765 ACT/360 2,428,351 110
3 7.2165 ACT/360 2,002,753 119
4 7.7365 ACT/360 1,988,754 57
5 6.8165 ACT/360 1,868,406 110
6 7.9765 ACT/360 1,585,212 118
7 7.1565 ACT/360 1,565,440 109
8 7.7365 ACT/360 1,513,182 82
9 7.3765 ACT/360 1,426,398 114
10 7.6265 ACT/360 1,263,751 113
11 6.5965 ACT/360 1,114,230 109
12 7.1765 ACT/360 1,113,312 112
13 6.4965 ACT/360 1,029,891 109
13.1
13.2
13.3
14 7.9865 ACT/360 1,186,967 116
15 6.4265 30/360 941,276 134
16 8.3865 ACT/360 1,070,419 120
17 7.3665 ACT/360 923,867 116
18 7.6265 ACT/360 951,714 114
19 7.5865 ACT/360 886,333 114
20 7.1065 ACT/360 818,612 113
21 8.2065 ACT/360 850,534 115
22 7.1765 30/360 638,517 144
23 7.9065 ACT/360 688,742 118
24 7.3265 30/360 631,450 104
25 8.3865 ACT/360 720,835 120
26 7.3665 ACT/360 628,677 116
27 7.8565 ACT/360 625,388 112
28 8.2065 ACT/360 593,755 119
29 6.4065 ACT/360 494,553 109
30 7.3665 ACT/360 538,147 116
31 7.4565 30/360 538,575 166
32 7.9465 ACT/360 570,579 116
32.1
32.2
33 8.2965 ACT/360 573,470 118
34 6.6765 ACT/360 466,991 111
35 7.7065 ACT/360 533,442 115
35.1
35.2
35.3
36 8.5765 ACT/360 565,045 118
37 6.8665 ACT/360 612,506 178
38 7.1265 ACT/360 458,422 111
39 7.0765 ACT/360 479,246 113
40 8.1815 30/360 545,589 71
41 8.0365 ACT/360 536,338 235
42 8.2765 ACT/360 481,306 118
43 8.3865 ACT/360 501,262 120
44 8.0265 ACT/360 441,675 117
45 6.8265 30/360 426,310 229
46 7.9965 ACT/360 419,288 114
47 6.6965 ACT/360 350,961 112
48 7.6765 ACT/360 405,521 115
49 6.8015 ACT/360 377,366 110
50 7.7465 ACT/360 385,565 118
51 6.4565 ACT/360 357,500 110
52 6.4765 ACT/360 321,884 111
53 6.9565 ACT/360 389,563 236
54 7.0265 ACT/360 393,782 218
55 7.5665 ACT/360 359,098 118
56 6.6765 30/360 311,327 110
57 6.9865 ACT/360 341,093 110
58 7.6265 ACT/360 356,471 118
59 7.9965 ACT/360 365,246 112
60 7.9265 ACT/360 338,999 118
61 7.9865 ACT/360 349,108 117
61.1
61.2
62 7.6265 ACT/360 314,394 117
63 7.2565 ACT/360 307,931 118
64 8.3265 ACT/360 335,370 118
65 6.8165 ACT/360 241,006 14 110
66 8.4315 ACT/360 403,933 81
67 6.7265 ACT/360 265,986 111
68 8.0565 ACT/360 313,260 112
69 7.5165 ACT/360 294,292 117
70 8.7265 ACT/360 327,929 117
71 8.3965 ACT/360 323,301 117
72 7.7465 ACT/360 284,410 116
73 7.6765 ACT/360 271,918 119
74 8.2985 30/360 280,860 65
75 7.4365 ACT/360 253,198 118
76 7.8065 ACT/360 262,902 117
77 7.4265 ACT/360 251,717 115
78 6.8265 ACT/360 226,032 111
79 8.3195 30/360 288,409 73
80 7.1365 ACT/360 228,300 118
81 7.3065 ACT/360 233,553 114
82 7.8065 ACT/360 239,707 115
83 6.6965 ACT/360 213,608 111
84 8.5265 ACT/360 232,803 119
85 7.4565 ACT/360 217,818 116
86 7.0165 ACT/360 176,333 13 109
87 7.3665 ACT/360 201,177 116
88 7.7865 ACT/360 183,291 20 116
89 8.1765 ACT/360 232,614 237
90 8.4565 ACT/360 217,957 118
91 6.8265 ACT/360 177,822 111
92 8.3365 ACT/360 214,338 116
93 7.2765 ACT/360 215,040 231
94 7.7665 ACT/360 202,188 113
95 7.3665 ACT/360 181,562 116
96 6.9765 ACT/360 152,965 11 106
97 7.6765 ACT/360 173,101 115
98 7.7665 ACT/360 199,106 236
99 8.3195 30/360 196,797 73
100 8.3195 30/360 196,797 73
101 7.5965 ACT/360 166,519 114
101.1
101.2
102 8.3195 30/360 186,618 73
103 8.0765 ACT/360 173,555 112
104 7.6265 ACT/360 163,151 113
105 8.2465 ACT/360 161,799 113
106 6.8265 ACT/360 134,354 111
107 8.0065 ACT/360 172,543 234
108 8.6265 ACT/360 164,569 117
109 6.7765 ACT/360 181,654 170
109.1
109.2
110 6.6465 ACT/360 180,182 170
111 7.8565 ACT/360 145,285 117
112 8.0365 ACT/360 189,316 178
113 8.2565 30/360 164,375 237
114 7.9665 ACT/360 144,051 116
115 8.3195 30/360 153,366 73
116 7.7565 ACT/360 170,773 178
117 7.8065 ACT/360 126,222 115
118 8.1765 ACT/360 137,772 112
119 8.2565 30/360 147,834 237
120 8.0565 ACT/360 131,899 115
121 7.1765 ACT/360 114,196 112
122 8.5065 30/360 144,761 237
123 7.8065 ACT/360 118,306 117
124 6.4765 ACT/360 99,116 111
125 7.7065 ACT/360 104,324 115
126 7.9065 ACT/360 101,705 116
127 7.9265 ACT/360 92,618 116
128 8.5665 ACT/360 105,204 114
</TABLE>
<TABLE>
<CAPTION>
REMAINING NEW/ADJUSTED
SEQUENCE AMORTIZATION ORIGINATION PAYMENT ANNUAL DEBT NEW/ADJUSTED
NUMBER TERM (MONTHS)(10) DATE ADJUSTMENT DATE(11) SERVICE(12) INTEREST RATE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 354 1/26/99
1.1
1.2
1.3
1.4
2 350 9/18/98
3 359 6/18/99
4 357 4/30/99
5 290 9/25/98
6 358 5/13/99
7 289 8/12/98
8 358 5/19/99
9 354 1/29/99
10 353 12/11/98
11 349 8/26/98
12 352 11/3/98
13 349 8/4/98
13.1
13.2
13.3
14 296 3/5/99
15 350 9/30/98
16 299 7/9/99
17 356 3/30/99
18 294 12/31/98
19 354 1/20/99
20 353 12/21/98
21 235 2/26/99
22 348 7/24/98
23 334 5/28/99
24 344 3/17/98
25 299 7/9/99
26 356 3/29/99
27 352 12/9/98
28 359 6/14/99
29 349 8/28/98
30 356 4/1/99
31 346 5/29/98
32 296 3/29/99
32.1
32.2
33 298 5/13/99
34 351 10/19/98
35 295 2/19/99
35.1
35.2
35.3
36 298 5/24/99
37 178 5/27/99
38 351 10/20/98
39 293 12/10/98
40 227 6/30/98
41 235 2/4/99
42 358 5/28/99
43 299 7/9/99
44 297 4/27/99
45 229 8/31/98
46 294 1/14/99
47 352 11/19/98
48 295 2/18/99
49 290 9/30/98 11/1/07 412,319.16 7.875
50 358 5/11/99
51 290 9/30/98
52 351 10/2/98
53 236 3/5/99
54 230 9/4/98
55 298 5/25/99
56 350 9/21/98
57 290 9/4/98
58 298 5/12/99
59 292 11/24/98
60 358 5/17/99
61 297 4/14/99
61.1
61.2
62 357 4/19/99
63 298 5/12/99
64 298 5/13/99
65 307 9/14/98 11/1/00 287,247.36 6.89
66 165 4/15/99
67 351 10/27/98
68 292 11/24/98
69 297 4/9/99
70 261 4/7/99
71 237 4/23/99
72 296 3/19/99
73 299 6/23/99
74 281 12/16/97
75 358 5/28/99
76 357 4/14/99
77 355 2/16/99
78 351 10/2/98
79 229 8/11/98
80 358 5/3/99
81 294 1/28/99
82 295 2/18/99
83 291 10/30/98
84 359 6/8/99
85 320 3/31/99
86 308 8/20/98 10/1/00 207,873.48 7.09
87 356 3/17/99
88 317 3/24/99 5/1/01 206,898.60 7.86
89 237 4/29/99
90 298 5/28/99
91 351 10/2/98
92 296 3/29/99
93 231 10/14/98
94 293 12/10/98
95 356 3/29/99
96 348 6/23/98 8/11/00 173,519.88 7.05
97 355 2/24/99
98 236 3/1/99
99 229 8/11/98
100 229 8/11/98
101 294 1/14/99
101.1
101.2
102 229 8/11/98
103 292 11/11/98
104 293 12/21/98
105 293 12/31/98
106 351 10/2/98
107 234 1/26/99
108 297 4/7/99
109 170 9/10/98
109.1
109.2
110 170 9/14/98
111 357 4/14/99
112 178 5/13/99
113 237 4/29/99
114 296 3/9/99
115 229 8/11/98
116 178 5/13/99
117 355 2/16/99
118 292 11/25/98
119 237 4/29/99
120 295 2/9/99
121 352 11/18/98
122 237 4/28/99
123 357 4/14/99
124 351 10/4/98
125 355 2/26/99
126 296 3/16/99
127 296 3/31/99
128 234 1/25/99
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MATURITY
DATE/ANTICIPATED
SEQUENCE REPAYMENT ARD FINAL BALLOON ENDING LOCKOUT
NUMBER DATE(13) MATURITY DATE BALANCE(1) LTV(14) END DATE(15)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 2/1/09 2/1/29 51,398,524 56.51 7/31/01
1.1
1.2
1.3
1.4
2 10/1/08 27,081,511 68.56 10/31/03
3 7/1/09 7/1/29 21,348,679 69.09 7/31/01
4 5/1/04 5/1/29 22,013,005 71.24 7/31/01
5 10/1/08 10/1/23 17,793,073 53.11 11/30/01
6 6/1/09 6/1/29 16,069,847 56.39 7/31/01
7 9/1/08 9/1/23 14,562,713 54.95 7/31/01
8 6/1/06 6/1/29 16,340,517 66.70 7/31/01
9 2/1/09 15,037,046 53.32 2/28/02
10 1/1/09 13,084,660 63.52 1/31/05
11 9/1/08 9/1/28 12,450,738 63.69 7/31/01
12 12/1/08 11,960,411 70.36 12/31/01
13 9/1/08 11,640,128 67.68 8/31/01
13.1
13.2
13.3
14 4/1/09 4/1/24 10,557,464 62.10 7/31/01
15 10/1/10 9,996,768 68.47 8/31/01
16 8/1/09 8/1/24 9,287,145 55.28 7/31/01
17 4/1/09 9,737,644 67.16 4/30/03
18 2/1/09 8,611,382 45.81 2/29/04
19 2/1/09 9,235,371 46.41 7/31/01
20 1/1/09 8,791,310 66.10 12/31/02
21 3/1/09 5,947,469 41.30 3/31/03
22 8/1/11 6,245,238 59.76 7/31/03
23 6/1/09 6,712,235 58.37 7/31/01
24 4/1/08 6,593,767 64.64 4/30/01
25 8/1/09 8/1/24 6,254,096 44.67 7/31/01
26 4/1/09 6,635,994 63.20 4/30/03
27 12/11/08 12/11/28 6,390,902 69.85 8/10/01
28 7/1/09 7/1/29 5,895,072 67.76 7/31/01
29 9/1/08 5,606,652 65.12 9/30/03
30 4/1/09 5,680,410 60.69 4/30/04
31 6/1/13 4,847,073 50.49 6/30/05
32 4/1/09 4/1/24 5,086,628 59.84 7/31/01
32.1
32.2
33 6/1/09 5,011,429 58.96 7/31/01
34 11/1/08 5,206,315 66.32 11/30/01
35 3/1/09 4,825,683 61.67 7/31/01
35.1
35.2
35.3
36 6/1/09 4,860,679 58.92 7/31/01
37 6/1/14 154,625 2.09 7/31/01
38 11/1/08 4,861,889 65.70 11/30/04
39 1/1/09 4,478,980 63.99 1/31/04
40 7/1/05 4,477,600 36.63 9/30/03
41 3/1/19 288,450 3.05 3/31/03
42 6/1/09 6/1/29 4,753,368 63.38 7/31/01
43 8/1/09 8/1/24 4,349,041 37.17 7/31/01
44 5/1/09 3,905,472 60.08 7/31/01
45 9/1/18 35,323 0.56 9/30/06
46 2/1/09 3,724,516 56.95 2/28/03
47 12/1/08 3,907,979 67.38 12/31/01
48 3/1/09 3,674,819 54.85 2/28/03
49 10/1/08 10/1/13 3,599,094 58.05 10/31/01
50 6/1/09 6/1/29 3,953,552 64.81 7/31/01
51 10/1/08 10/1/13 3,478,818 61.03 10/31/01
52 11/1/08 3,629,627 71.17 11/30/03
53 4/1/19 172,571 3.08 7/31/01
54 10/1/17 539,288 9.46 10/31/06
55 6/1/09 6/1/24 3,272,066 64.79 7/31/01
56 10/1/08 3,418,754 67.70 10/31/01
57 10/1/08 3,215,630 57.42 10/31/03
58 6/1/09 6/1/24 3,236,851 56.54 7/31/01
59 12/1/08 3,246,598 56.96 12/31/03
60 6/1/09 3,448,822 66.97 7/31/01
61 5/1/09 3,106,359 58.61 7/31/01
61.1
61.2
62 5/1/09 3,252,980 65.06 7/31/01
63 6/1/09 2,857,048 54.94 7/31/01
64 6/1/09 2,925,763 60.33 7/31/01
65 10/1/08 2,964,653 65.88 7/31/01
66 5/1/06 2,211,447 33.01 7/31/01
67 11/1/08 2,954,206 69.51 11/30/03
68 12/1/08 2,763,929 58.19 12/31/02
69 5/1/09 5/1/24 2,690,432 56.05 7/31/01
70 5/1/09 5/1/21 2,496,187 58.19 7/31/01
71 5/1/09 2,238,197 49.74 5/31/04
72 4/1/09 2,554,457 58.06 7/31/01
73 7/1/09 2,462,875 61.57 7/31/01
74 1/1/05 2,697,319 52.26 3/31/03
75 6/1/09 6/1/29 2,658,936 60.02 6/30/04
76 5/1/09 2,685,287 67.13 7/31/01
77 3/1/09 2,657,137 69.92 3/31/03
78 11/1/08 2,491,633 56.63 11/30/03
79 9/1/05 2,342,555 50.73 11/30/03
80 6/1/09 2,459,860 70.28 7/31/01
81 2/1/09 2,153,038 55.92 7/31/01
82 3/1/09 2,156,031 58.27 7/31/01
83 11/1/08 2,042,022 60.06 11/30/01
84 7/1/09 7/1/29 2,271,425 60.57 7/31/01
85 4/1/09 4/1/26 2,122,084 67.15 7/31/01
86 9/1/08 2,118,559 68.34 7/31/01
87 4/1/09 2,123,517 65.34 4/30/03
88 4/1/09 4/1/14 2,041,860 63.81 7/31/01
89 5/1/19 127,894 3.88 7/31/01
90 6/1/09 1,887,589 58.08 7/31/01
91 11/1/08 1,960,201 65.34 11/30/03
92 4/1/09 1,868,909 56.63 4/30/03
93 11/1/18 97,326 3.19 11/30/01
94 1/1/09 1,812,997 59.44 12/31/01
95 4/1/09 1,916,474 53.24 4/30/03
96 6/11/08 1,926,128 72.00 8/10/01
97 3/1/09 1,785,446 65.52 7/31/01
98 4/1/19 101,712 2.71 7/31/01
99 9/1/05 1,598,450 49.04 11/30/03
100 9/1/05 1,598,450 42.03 11/30/03
101 2/1/09 1,513,720 53.68 1/31/02
101.1
101.2
102 9/1/05 1,515,771 47.49 11/30/03
103 12/1/08 1,535,664 47.99 12/31/03
104 1/1/09 1,476,534 39.91 1/31/04
105 1/1/09 1,417,231 57.85 1/31/04
106 11/1/08 1,481,040 56.96 11/30/03
107 2/1/19 88,611 3.69 2/28/03
108 5/1/09 5/1/24 1,412,403 44.14 7/31/01
109 10/1/13 44,844 1.95 10/31/05
109.1
109.2
110 10/1/13 43,702 1.62 10/31/01
111 5/1/09 1,478,664 67.21 7/31/01
112 6/1/14 56,280 2.05 7/31/01
113 5/1/19 13,604 0.46 7/31/01
114 4/1/09 1,282,727 49.34 7/31/01
115 9/1/05 1,245,688 43.16 11/30/03
116 6/1/14 48,921 1.64 7/31/01
117 3/1/09 1,296,325 70.07 3/31/04
118 12/1/08 1,208,696 55.96 12/31/03
119 5/1/19 12,237 0.57 7/31/01
120 3/1/09 1,164,892 59.43 3/31/03
121 12/1/08 1,226,821 50.07 11/30/01
122 5/1/19 11,976 0.58 7/31/01
123 5/1/09 1,208,375 67.13 7/31/01
124 11/1/08 1,121,917 68.83 11/30/03
125 3/1/09 1,079,146 67.45 3/31/04
126 4/1/09 908,765 57.88 4/30/03
127 4/1/09 826,623 55.11 7/31/01
128 2/1/09 723,790 48.25 2/28/03
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
YIELD
SEQUENCE DEFEASANCE MAINTENANCE NOI MONTHS NOI
NUMBER END DATE END DATE 96(1) 96 97(1)(16)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 10/31/08 7,002,644 12 7,458,382
1.1 2,841,069 12 2,804,215
1.2 1,727,428 12 2,027,260
1.3 1,796,604 12 1,935,166
1.4 637,543 12 691,741
2 6/30/08 3,321,719 12 3,406,831
3 3/31/09 2,429,111
4 3/31/04
5 6/30/08 3,213,128 12 3,762,737
6 2/28/09
7 5/31/08 3,179,357 12 3,521,215
8 2/28/06 1,912,230 12 2,001,097
9 10/31/08 2,309,717 12 2,453,592
10 9/30/08 1,572,874 12 1,646,355
11 5/31/08 1,255,723 12 1,488,227
12 8/31/08 334,414
13 5/31/08 1,342,363 12 1,442,826
13.1 221,869 12 276,051
13.2 472,934 12 494,284
13.3 647,560 12 672,491
14 12/31/08 1,663,590 12 1,640,479
15 6/30/10 1,222,281 12 1,271,901
16 4/30/09 1,910,905 12 1,872,471
17 12/31/08 1,173,285 12 1,249,812
18 10/31/08 1,297,245 12 1,592,204
19 10/31/08 1,356,940 12 1,105,972
20 9/30/08 1,022,127 12 983,481
21 11/30/08 1,235,450 12 1,525,010
22 1/31/11
23 2/28/09 878,995 12 1,060,116
24 4/30/03 9/30/07 944,682
25 4/30/09 2,170,366 12 1,940,232
26 12/31/08 1,196,122 12 1,075,751
27 6/10/08
28 3/31/09 829,800 12 801,009
29 5/31/08 715,805 12 633,786
30 12/31/08 828,755 12 903,189
31 5/31/08 962,650 12 788,030
32 12/31/08 473,528 12 518,358
32.1
32.2
33 2/28/09 1,155,493 12 1,085,303
34 7/31/08 307,005 12 498,900
35 11/30/08
35.1
35.2
35.3
36 2/28/09 1,715,495 12 1,669,548
37 5/31/13 576,697
38 7/31/08 62,816
39 9/30/08
40 3/31/05 944,177 12 1,188,055
41 11/30/18 1,043,526 12 1,090,500
42 2/28/09 964,143 12 489,491
43 4/30/09 854,267 12 783,539
44 1/31/09 477,966 12 542,165
45 8/31/13 591,286 12 627,151
46 10/31/08 377,599 12 890,899
47 8/31/08
48 11/30/08 469,621 12 490,808
49 10/31/07 831,012 12 791,252
50 2/28/09
51 9/30/03 6/30/08 633,503
52 7/31/08 474,273 12 450,828
53 3/31/16 173,630 12 273,202
54 9/30/14 613,211 12 631,540
55 2/28/09 452,383
56 6/30/08 468,337 12 492,699
57 6/30/08 312,609
58 2/28/09 371,082 12 436,041
59 8/31/08 97,859 12 167,243
60 2/28/09
61 1/31/09 531,137 12 643,473
61.1
61.2
62 1/31/09 468,369 12 494,860
63 2/28/09 333,416 12 387,146
64 2/28/09 524,259 12 501,957
65 3/31/08
66 1/31/06
67 7/31/08 370,278 12 369,265
68 8/31/08 357,232 12 458,373
69 1/31/09 86,419
70 1/31/09 505,347 12 327,144
71 1/31/09 535,468 12 571,680
72 12/31/08 247,246 12 371,527
73 3/31/09
74 6/30/04 575,890 12 937,509
75 2/28/09 432,847
76 1/31/09 387,817 12 345,795
77 11/30/08 364,074 12 325,266
78 7/31/08 302,248
79 5/31/05 572,448 12 597,684
80 2/28/09
81 10/31/08 379,948 12 392,724
82 11/30/08 344,480 12 387,511
83 7/31/08 202,114 12 242,286
84 3/31/09
85 12/31/08 257,479 12 250,493
86 2/29/08 265,420
87 12/31/08 286,163 12 267,107
88 12/31/08
89 4/30/16
90 2/28/09 440,372 12 504,196
91 7/31/08 313,191 12 302,721
92 12/31/08 (97,838) 12 151,453
93 4/30/18 163,102 12 195,735
94 9/30/08 209,025
95 12/31/08 237,955 12 116,725
96 12/10/07
97 11/30/08
98 3/31/16 290,618 12 311,988
99 5/31/05 405,587 12 445,387
100 5/31/05 342,948 12 435,196
101 10/31/08 279,334 12 272,201
101.1
101.2
102 5/31/05 344,712 12 366,168
103 8/31/08 204,884 12 204,581
104 9/30/08 331,512 12 273,900
105 9/30/08 127,684 12 136,616
106 7/31/08 273,479
107 2/28/16 125,364
108 1/31/09 329,684 12 304,277
109 3/31/13 285,097 12 265,848
109.1
109.2
110 10/31/06 6/30/13 197,253 12 245,434
111 1/31/09 227,047 12 175,749
112 5/31/12 166,822
113 4/30/16 197,281 12 200,047
114 12/31/08 61,235 12 141,859
115 5/31/05 258,107 12 300,411
116 5/31/12 251,061 12 192,384
117 11/30/08
118 8/31/08 218,891 12 193,196
119 4/30/16 165,380 12 197,030
120 11/30/08 205,746 12 183,848
121 8/31/08 183,557 12 206,977
122 4/30/16 302,929 12 1,450,084
123 1/31/09 187,112 12 198,186
124 7/31/08
125 11/30/08
126 12/31/08 119,707 12 136,170
127 12/31/08 159,292 12 159,992
128 10/31/08
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENCE MONTHS NOI MONTHS ENDING UW
NUMBER 97 98(1)(16) 98 DATE 98 NOI(1)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 12 7,063,416 12 12/31/98 7,660,013
1.1 12 2,487,728 12 12/31/98 3,158,849
1.2 12 1,859,685 12 12/31/98 1,861,212
1.3 12 1,952,710 12 12/31/98 1,924,704
1.4 12 763,293 12 12/31/98 715,248
2 12 3,246,531 12 12/31/98 3,444,869
3 12 2,672,931 12 12/31/98 2,800,424
4 2,927,313
5 12 4,184,042 12 12/31/98 3,686,908
6 2,398,420
7 12 3,065,080 12 12/31/98 2,911,225
8 12 2,346,757 12 12/31/98 2,249,304
9 12 1,770,621 12 12/31/98 2,269,469
10 12 1,777,144 12 12/31/98 1,918,657
11 12 1,574,819 12 12/31/98 1,791,237
12 8 998,737 12 Annualized 9 months 1,423,508
13 12 1,486,731 12 12/31/98 1,528,860
13.1 12 307,553 12 12/31/98 296,916
13.2 12 548,048 12 12/31/98 515,446
13.3 12 631,130 12 12/31/98 716,498
14 12 1,905,592 12 6/30/98 1,717,190
15 12 1,366,060 12 12/31/98 1,315,459
16 12 1,805,691 12 12/31/98 1,853,009
17 12 1,287,369 12 12/31/98 1,242,318
18 12 1,738,112 12 12/31/98 1,309,067
19 12 1,133,014 12 12/31/98 1,663,966
20 12 1,053,611 12 Annualized 9.5 months 1,045,250
21 12 1,648,816 12 12/31/98 1,456,959
22 1,012,605 12 12/31/98 941,936
23 12 985,334 12 12/31/98 1,044,661
24 12 976,621 12 Annualized 9.5 months 827,867
25 12 1,746,609 12 12/31/98 1,138,722
26 12 908,568 12 12/31/98 1,033,977
27 1,044,951 12 12/31/98 875,255
28 12 837,704 12 12/31/98 915,253
29 12 818,047 12 12/31/98 800,321
30 12 871,867 12 12/31/98 893,941
31 12 750,686 12 12/31/98 862,545
32 12 715,342 12 Annualized 10 months 830,391
32.1
32.2
33 12 1,154,873 12 9/30/98 961,544
34 12 708,664 12 12/31/98 839,632
35 865,615
35.1
35.2
35.3
36 12 1,980,686 12 12/31/98 1,152,150
37 12 602,163 12 12/31/98 724,496
38 5 245,707 12 12/31/98 616,675
39 614,276
40 12 1,407,119 12 12/31/98 1,280,467
41 12 1,901,132 12 Annualized 11 months 1,097,906
42 12 739,898 12 12/31/98 727,658
43 12 766,189 12 12/31/98 891,093
44 12 518,710 12 12/31/98 690,592
45 12 708,631 12 12/31/98 569,285
46 12 1,020,588 12 12/31/98 682,648
47 407,750 12 Annualized 6 months 490,806
48 12 523,837 12 12/31/98 524,962
49 12 801,610 12 12/31/98 685,205
50 559,618
51 12 655,343 12 12/31/98 578,767
52 12 463,846 12 12/31/98 450,396
53 12 330,231 12 6/30/98 498,598
54 12 689,123 12 12/31/98 578,779
55 12 516,928 12 12/31/98 498,925
56 12 372,954 12 12/31/98 488,313
57 12 535,396 12 12/31/98 587,341
58 12 454,861 12 12/31/98 505,374
59 12 282,276 12 12/31/98 538,253
60 474,626
61 12 621,001 12 12/31/98 580,145
61.1 290,072
61.2 290,073
62 12 475,355 12 12/31/98 455,413
63 12 422,359 12 FYE 9/30/98 417,220
64 12 528,544 12 6/30/98 581,544
65 480,930 12 Annualized 4 months 411,234
66 501,866
67 12 388,276 12 12/31/98 375,089
68 12 498,455 12 12/31/98 498,791
69 12 377,429 12 12/31/98 446,169
70 12 222,709 12 12/31/98 446,819
71 12 538,640 12 3/31/98 522,682
72 12 399,672 12 12/31/98 446,309
73 362,715
74 12 874,054 12 12/31/98 786,396
75 12 397,092 12 12/31/98 372,765
76 12 528,705 12 12/31/98 390,725
77 12 386,650 12 12/31/98 335,814
78 12 458,516 12 12/31/98 393,692
79 12 773,476 12 12/31/98 578,939
80 297,411
81 12 332,168 12 12/31/98 314,193
82 12 412,824 12 12/31/98 316,460
83 12 286,107 12 Annualized 8 months 300,079
84 331,919
85 12 286,570 12 Annualized 6 months 296,927
86 12 309,540 12 Annualized 4.7 months 279,673
87 12 270,846 12 12/31/98 312,164
88 269,001
89 249,127 12 12/31/98 314,787
90 12 524,731 12 12/31/98 371,303
91 12 298,077 12 12/31/98 266,387
92 12 1,400,658 12 12/31/98 493,717
93 12 310,347 12 12/31/98 257,250
94 12 225,924 12 12/31/98 314,982
95 12 314,895 12 12/31/98 298,594
96 244,591 12 Annualized 6 months 210,968
97 224,555 12 12/31/98 262,478
98 12 278,902 12 12/31/98 275,151
99 12 487,121 12 12/31/98 393,834
100 12 509,190 12 12/31/98 416,598
101 12 282,198 12 12/31/98 259,261
101.1 148,464
101.2 148,464
102 12 564,838 12 12/31/98 415,226
103 12 217,191 12 12/31/98 256,069
104 12 271,146 12 12/31/98 354,472
105 12 208,007 12 12/31/98 225,956
106 12 286,650 12 12/31/98 231,837
107 12 224,333 12 12/31/98 249,350
108 12 340,256 12 12/31/98 234,781
109 12 308,123 12 12/31/98 260,816
109.1 130,408
109.2 130,408
110 12 290,995 12 12/31/98 263,322
111 12 204,052 12 12/31/98 223,887
112 12 277,463 12 12/31/98 269,158
113 12 215,740 12 12/31/98 228,922
114 12 250,969 12 12/31/98 228,157
115 12 328,484 12 12/31/98 316,075
116 12 231,144 12 12/31/98 273,447
117 159,434 12 12/31/98 158,236
118 12 197,277 12 Annualized 8 months 188,164
119 12 247,426 12 1998 Annualized 198,669
120 12 247,995 12 12/31/98 199,277
121 12 220,281 12 12/31/98 202,628
122 12 330,651 12 12/31/98 208,597
123 12 202,174 12 12/31/98 167,682
124 130,162 NAV Annualized 6 months 142,855
125 70,169 12 12/31/98 144,984
126 12 140,315 12 12/31/98 141,499
127 12 164,092 12 12/31/98 137,755
128 176,188
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
REPAIRS
SEQUENCE UW & REMEDIATION TI/LC ENVIRONMENTAL
NUMBER UW CASH FLOW(1) DSCR(17) DEPOSIT(1) DEPOSIT(1) DEPOSIT(1)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 7,144,900 1.487
1.1 2,941,552
1.2 1,790,452
1.3 1,744,136
1.4 668,760
2 3,152,456 1.298 250,000
3 2,627,424 1.312
4 2,677,908 1.347 13,750
5 3,174,640 1.699
6 2,152,467 1.358 5,000
7 2,257,688 1.442 95,000
8 1,962,530 1.297
9 2,049,566 1.437
10 1,694,951 1.341 12,500
11 1,576,475 1.415 39,625 10,000
12 1,363,508 1.225
13 1,392,145 1.352 6,850
13.1 265,756
13.2 475,555
13.3 650,834
14 1,538,093 1.296
15 1,209,059 1.284 1,125
16 1,732,121 1.618 66,667
17 1,187,238 1.285
18 1,277,729 1.343
19 1,367,621 1.543
20 913,046 1.115 1,625
21 1,290,209 1.517 14,063
22 860,374 1.347
23 897,220 1.303 147,413
24 741,084 1.174 2,625
25 1,018,701 1.413 66,667
26 872,799 1.388 3,982
27 781,255 1.249 669,750
28 839,991 1.415
29 708,005 1.432 3,938
30 819,941 1.524 3,000
31 777,397 1.443
32 737,489 1.293
32.1
32.2
33 903,794 1.576 60,250
34 769,610 1.648
35 743,049 1.393 4,375
35.1
35.2
35.3
36 1,102,650 1.951 62,875
37 703,196 1.148
38 595,450 1.299 2,375
39 586,649 1.224 28,005
40 1,104,287 2.024 51,740
41 1,067,906 1.991
42 625,859 1.300
43 723,455 1.443 66,667
44 580,731 1.315 79,700
45 518,886 1.217 35,000
46 637,774 1.521 2,813
47 476,086 1.357
48 496,901 1.225 1,875
49 537,007 1.423
50 494,480 1.282 15,000
51 551,243 1.542 2,500
52 421,737 1.310
53 456,135 1.171 217,363
54 519,172 1.318 19,688
55 464,233 1.293 9,000
56 437,487 1.405
57 568,149 1.666 12,125
58 461,730 1.295
59 513,143 1.405 688
60 434,953 1.283
61 539,225 1.545 6,875
61.1 269,612
61.2 269,613
62 427,097 1.358 7,313 8,000
63 386,970 1.257 32,353
64 556,544 1.659 8,950
65 388,207 1.351
66 464,697 1.150 14,304
67 341,544 1.284 4,125
68 448,975 1.433
69 370,683 1.260 22,435
70 428,188 1.306 17,719
71 470,147 1.454
72 372,977 1.311 161,014
73 340,976 1.254 9,125
74 582,661 2.075 621,011
75 352,688 1.393
76 345,863 1.316 7,656
77 319,245 1.268
78 380,601 1.684
79 515,321 1.787 33,616
80 286,839 1.256
81 293,418 1.256 8,329
82 297,245 1.240
83 276,100 1.293 48,840
84 300,963 1.293 1,000
85 269,483 1.237
86 267,105 1.285 822
87 276,854 1.376
88 253,635 1.226 301
89 303,569 1.305
90 339,803 1.559
91 242,905 1.366 3,750
92 445,967 2.081 1,250
93 257,250 1.196 8,063
94 290,933 1.439
95 236,021 1.300
96 208,196 1.200 564
97 231,386 1.337 255
98 267,901 1.346 14,875
99 343,651 1.746 27,334
100 365,834 1.859 12,649
101 227,854 1.368
101.1 134,742
101.2 134,742
102 351,593 1.884 27,080
103 243,515 1.403 625 84,375
104 319,400 1.958 19,250
105 213,506 1.320 16,688
106 223,786 1.666
107 234,440 1.359
108 213,338 1.296
109 244,416 1.345 4,035
109.1 122,208
109.2 122,208
110 232,905 1.293
111 197,151 1.357
112 222,059 1.173 12,000
113 214,525 1.305 38,125
114 196,161 1.362
115 256,934 1.675 15,186
116 224,798 1.316
117 152,942 1.212
118 170,261 1.236 14,188
119 175,428 1.187 6,375
120 180,180 1.366 8,594
121 181,640 1.591
122 201,170 1.390 1,875
123 157,400 1.330
124 139,667 1.409
125 130,392 1.250
126 127,133 1.250
127 122,755 1.325
128 160,608 1.527
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
OTHER TOTAL TI/LC
SEQUENCE UPFRONT UPFRONT CAPITAL EXPENSES MONTHLY ENVIRONMENTAL
NUMBER DEPOSIT(1) DEPOSIT(1) MONTHLY ESCROW(1) ESCROW(1) ESCROWS(1)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 12,855
1.1
1.2
1.3
1.4
2 250,000 24,368
3 13,338
4 13,750 2,452 18,333
5 40,029
6 5,000 3,448 4,219
7 95,000
8 4,204 17,500
9 1,500
10 12,500 2,744 13,000
11 49,625 1,333
12 2,724
13 6,850 10,084
13.1
13.2
13.3
14 2,771 11,750
15 1,125 4,238
16 66,667 2,395
17 4,590
18 650,000 650,000 1,433 1,178
19 2,551
20 30,000 31,625 3,767
21 14,063 17,225
22
23 147,413 2,788 4,167
24 2,625 2,574 6,129
25 66,667 2,394
26 3,982 10,232
27 669,750 7,833
28 772 4,283
29 3,938 7,680
30 3,000 5,124
31 1,379
32 1,571 6,167
32.1
32.2
33 60,250
34 1,521 4,322
35 4,375 3,928
35.1
35.2
35.3
36 62,875
37 931
38 250,000 252,375 364
39 3,916 31,921 613
40 51,740 9,026
41 2,500
42 1,269 5,922
43 66,667 7,314
44 79,700 2,550 10,833
45 35,000 816 4,000
46 2,813 3,693
47 533
48 1,875 1,162
49 12,278
50 15,000 344
51 2,500 2,167
52 2,388
53 125,000 342,363 916 2,833
54 19,688 2,302 2,695 1,667
55 9,000 2,891
56 1,382
57 12,125 1,599
58 1,492 2,917
59 688 398
60 183 2,214
61 6,875 3,410
61.1
61.2
62 15,313 814
63 32,353 2,618
64 8,950 2,083
65
66 14,304 418 2,263
67 4,125 2,795
68 4,120
69 165,000 187,435 998 3,750
70 100,000 117,719 340
71 4,378
72 161,014 1,361
73 9,125
74 220,713 841,724 19,808
75 223 1,688
76 70,000 77,656 1,345 2,394
77 236
78 344
79 33,616 3,964
80 500
81 8,329 703
82 591
83 48,840 717
84 1,000 621
85 2,287
86 822 274
87 915
88 301 301
89 169
90 2,625
91 3,750 649 1,737
92 1,250 2,817
93 143,000 151,063 417 2,415
94 250,000 250,000 607
95 1,791
96 564 113
97 255 334 2,250
98 14,875 520
99 27,334 4,182
100 12,649 4,230
101 908 2,333
101.1
101.2
102 27,080 5,303
103 85,000 621
104 19,250 730
105 16,688 1,038
106 263
107 288 1,610
108 995
109 4,035 1,367
109.1
109.2
110 1,500
111 505 1,723
112 12,000 1,132 1,371
113 38,125 500 668
114 1,215
115 15,186 4,928
116 583
117 98 333
118 14,188 429
119 6,375 574 1,250
120 8,594 465 1,126
121 170
122 1,875 450
123 231 626
124 2,000
125 121 606
126 218 1,084
127 319 1,250
128 680
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
OTHER TAX INSURANCE
SEQUENCE MONTHLY MONTHLY MONTHLY
NUMBER RESERVE(1) ESCROW(1)(18) ESCROW(1)(18)
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 1/12 1/12
1.1
1.2
1.3
1.4
2 1/12 1/12
3 1/12 1/12
4 1/12
5 1/12 1/12
6 1/12
7 1/12
8 1/12 1/12
9 1/12 1/12
10 1/12
11 1/12 1/12
12 1/12 1/12
13 1/12 1/12
13.1
13.2
13.3
14 1/12 1/12
15 1/12 1/12
16 1/12 1/12
17 1/12 1/12
18 1/12 1/12
19 1/12 1/12
20 1/12 1/12
21 1/12
22 1/12 1/12
23 1/12 1/12
24
25 1/12 1/12
26 1/12 1/12
27 1/12 1/12
28 1/12 1/12
29 1/12
30 1/12 1/12
31 1/12 1/12
32 1/12 1/12
32.1
32.2
33 1/12
34 1/12 1/12
35 1/12
35.1
35.2
35.3
36 1/12 1/12
37 1/12
38 1/12
39 3,916 1/12
40 1/12
41 1/12 1/12
42 1/12 1/12
43 1/12 1/12
44 1/12 1/12
45 1/12 1/12
46 1/12 1/12
47 1/12
48 1/12
49 1/12 1/12
50
51 1/12 1/12
52 1/12
53 1/12 1/12
54 1/12 1/12
55 1/12 1/12
56 1/12 1/12
57 1/12 1/12
58 1/12
59 1/12 1/12
60 1/12
61 1/12 1/12
61.1
61.2
62
63 1/12 1/12
64 1/12 1/12
65 1/12 1/12
66 1/12
67 1/12 1/12
68 1/12 1/12
69 1/12 1/12
70 1/12 1/12
71 1/12 1/12
72 1/12 1/12
73 1/12 1/12
74 1/12
75 1/12
76 1/12 1/12
77 1/12 1/12
78 1/12 1/12
79 1/12
80 1/12 1/12
81 1/12 1/12
82 1/12 1/12
83 1/12 1/12
84 1/12 1/12
85 1/12 1/12
86 1/12 1/12
87 1/12 1/12
88
89 1/12 1/12
90 1/12
91 1/12 1/12
92 1/12 1/12
93 1/12 1/12
94 1/12 1/12
95 1/12 1/12
96 1/12 1/12
97 1/12 1/12
98 1/12 1/12
99 1/12
100 1/12
101 1/12 1/12
101.1
101.2
102 1/12
103 1/12 1/12
104 1/12 1/12
105 1/12 1/12
106 1/12 1/12
107 1/12 1/12
108 1/12 1/12
109 1/12 1/12
109.1
109.2
110 1/12
111 1/12 1/12
112 1/12 1/12
113
114 1/12 1/12
115 1/12
116 1/12
117 1/12
118 1/12 1/12
119
120 1/12 1/12
121 1/12 1/12
122
123 1/12 1/12
124 1/12
125 1/12 1/12
126 1/12 1/12
127 1/12 1/12
128 1/12 1/12
________________________
(1) For the Canadian Loans (Loan Numbers 40, 66, 74, 79, 99, 100, 102, 115) 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 49 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 65, 86, 88 and 96, 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 65, 86, 88 and 96) 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 49, 65, 86, 88 and 96, 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 24, NOI 97 and NOI 98 represent annualized NOI. With respect to Loan Numbers 12, 20, 32, 41, 47,
65, 83, 85, 86, 96, 118, 119 and 124, 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.
</TABLE>
<PAGE>
ANNEX B
CERTAIN CHARACTERISTICS OF MULTIFAMILY LOANS AND OTHER RESIDENTIAL LOANS
<TABLE>
<CAPTION>
SEQUENCE
NUMBER PROPERTY NAME CITY STATE ZIP CODE
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
2 Ridgewood County Club Apts Fitchburg WI 53713
3 Woodfield Gardens Apartments Rolling Meadows IL 60008
12 Tregaron Oaks Apartments Bellevue NE 68123
13.1 Cross Creek Spartanburg SC 29303
13.2 Summertree Greensboro NC 27406
- ---------------------------------------------------------------------------------------------------------------------
13.3 Tealpoint Charlotte NC 28205
15 Sterling Woods Apartments Alpharetta GA 30202
17 Ludlam Point Apartments Miami FL 33155
27 Eastland on the Lake Apts Columbus OH 43232
29 Deer Creek Apartments Austintown OH 44515-5302
- ---------------------------------------------------------------------------------------------------------------------
30 Victoria Plaza Apartments North Olmstead OH 44070
33 Lakewood Park Health Center Downey CA 90242
36 Downey Community Health Center Downey CA 90241
37 Lakeshore Estates MHP Goshen OH 45122
41 Ridge Terrace Health Care Ctr. Lantana FL 33462
- ---------------------------------------------------------------------------------------------------------------------
46 Paradise Hills Convalescent San Diego CA 92139
47 Embassy Place Apts - Phase I Highland IN 46322
51 Boca Bend Marina Apartments Boca Raton FL 33432
52 Glacier Hills Apartments Madison WI 53715
55 Village Manor Apartments West Lafayette IN 47906
- ---------------------------------------------------------------------------------------------------------------------
57 Peridot Place/ The Woodlands Cape Coral FL 33991
61.1 Agape Manor and Village Hazel Green AL 35750
61.2 Limestone Lodge and Manor Athens AL 35611
63 Stonegate Apartments Lakewood WA 98467
64 Ross Memorial Health Care Center Kennesaw GA 30152
- ---------------------------------------------------------------------------------------------------------------------
67 Glenwood Village Apartments Garden City ID 83714
80 The Fields Apartments Bloomington IN 47401
85 Goddard Court Townhomes Taylor MI 48322
90 Desert Knolls Convalescent Hospital Victorville CA 92392
92 Centinela Valley Care Inglewood CA 90301
- ---------------------------------------------------------------------------------------------------------------------
98 Mobilelodge of Milpitas Milpitas CA 95035
105 Townview Mobile Home Park Dallas TX 75211
109.1 Mayfair Apts. Miami FL 33150
109.2 Flamingo Apts. Miami FL 33150
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENCE DETAILED ORIGINAL/ INITIAL POOL
NUMBER PROPERTY ALLOCATED BALANCE
TYPE LOAN BALANCE(2) PER UNIT UTILITIES PAID BY TENANT
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
2 Multifamily 31,200,000 35,903 Electricity, Gas, Water
3 Multifamily 24,200,000 34,952 Electricity
12 Multifamily 13,600,000 45,072 Electricity, Gas
13.1 Multifamily 2,560,000 16,685 Electricity, Gas, Water
13.2 Multifamily 4,570,000 31,440 Electricity, Gas, Water
- ---------------------------------------------------------------------------------------------------------------------
13.3 Multifamily 6,350,000 29,124 Electricity
15 Multifamily 12,410,000 46,222 Electricity, Gas, Water
17 Multifamily 11,000,000 53,783 NAV
27 Multifamily 7,150,000 18,918 Electricity
29 Multifamily 6,500,000 17,885 Electricity
- ---------------------------------------------------------------------------------------------------------------------
30 Multifamily 6,420,000 21,633 Electricity, Gas
33 Nursing Home 6,000,000 25,928 None
36 Nursing Home 5,775,000 29,118 None
37 Mobile Home Park 5,700,000 13,298 NAV
41 Nursing Home 5,300,000 43,822 None
- ---------------------------------------------------------------------------------------------------------------------
46 Nursing Home 4,500,000 27,608 None
47 Multifamily 4,500,000 69,861 NAV
51 Multifamily 4,400,000 41,763 Electricity, Gas, Water
52 Multifamily 4,200,000 34,165 Electricity, Gas
55 Multifamily 4,000,000 32,721 NAV
- ---------------------------------------------------------------------------------------------------------------------
57 Congregate Care 4,000,000 42,967 None
61.1 Congregate Care 1,750,000 36,360 None
61.2 Congregate Care 2,000,000 26,245 None
63 Multifamily 3,525,000 29,312 NAV
64 Nursing Home 3,500,000 34,939 None
- ---------------------------------------------------------------------------------------------------------------------
67 Multifamily 3,400,000 24,818 Electricity, Water
80 Multifamily 2,800,000 69,904 Electricity, Gas, Water
85 Multifamily 2,500,000 25,424 NAV
90 Nursing Home 2,250,000 17,827 None
92 Nursing Home 2,235,000 11,661 None
- ---------------------------------------------------------------------------------------------------------------------
98 Mobile Home Park 2,000,000 13,703 NAV
105 Mobile Home Park 1,700,000 10,173 Electricity, Gas, Water
109.1 Multifamily 886,957 18,664 Electricity, Gas
109.2 Multifamily 813,043 21,861 Electricity, Gas
</TABLE>
<PAGE>
<TABLE>
<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
3
12
13.1
13.2
- -----------------------------------------------------------------------------------------
13.3
15
17
27
29
- -----------------------------------------------------------------------------------------
30
33 231 83
36 198 95
37 426 184
41 120 169 169 180
- -----------------------------------------------------------------------------------------
46 162 86
47
51 5 535
52 29 480 470 485
55
- -----------------------------------------------------------------------------------------
57 92 53
61.1 48 47
61.2 76 53
63
64 100 99
- -----------------------------------------------------------------------------------------
67
80
85
90 126 112
92 191 78
- -----------------------------------------------------------------------------------------
98 145 255 216 350
105 166 221 220 270
109.1 2 375
109.2
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1 BEDROOM
--------------------------------------------------
SEQUENCE AVG. RENT MIN. RENT MAX. RENT
NUMBER # OF UNITS PER MO ($)(3) PER MO ($) PER MO ($)
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
2 243 543 530 550
3 170 750 750 750
12 196 571 535 640
13.1 152 355 300 355
13.2 56 465 435 455
- -----------------------------------------------------------------------------------------
13.3 83 494 490 500
15 98 683 645 720
17 72 750 750 750
27 240 385 325 475
29 168 370
- -----------------------------------------------------------------------------------------
30 165 514
33
36
37
41
- -----------------------------------------------------------------------------------------
46
47
51 56 610
52 81 605 585 625
55 58 475 460 490
- -----------------------------------------------------------------------------------------
57
61.1
61.2
63 45 535
64
- -----------------------------------------------------------------------------------------
67 40 470 465 475
80 4 705 700 720
85 6 468 480
90
92
- -----------------------------------------------------------------------------------------
98
105
109.1 44 475 475 475
109.2 8 475 475 475
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
2 BEDROOMS
--------------------------------------------------
SEQUENCE AVG. RENT MIN. RENT MAX. RENT
NUMBER # OF UNITS PER MO ($)(3) PER MO ($) PER MO ($)
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
2 541 637 625 695
3 394 848 830 880
12 104 719 690 755
13.1
13.2 88 560 464 560
- -----------------------------------------------------------------------------------------
13.3 133 620 600 640
15 98 748 700 795
17 132 900 900 900
27 136 484 395 545
29 180 470
- -----------------------------------------------------------------------------------------
30 112 619
33
36
37
41
- -----------------------------------------------------------------------------------------
46
47 64 1,010 975 1,045
51 39 700
52 12 687 675 700
55 30 620 620 620
- -----------------------------------------------------------------------------------------
57
61.1
61.2
63 75 635
64
- -----------------------------------------------------------------------------------------
67 96 555 550 560
80 31 938 875 1,020
85 80 550
90
92
- -----------------------------------------------------------------------------------------
98
105
109.1
109.2 28 575 575 575
</TABLE>
<PAGE>
<TABLE>
<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
3 128 1,036 1,020 1,055 No
12 No
13.1 No
13.2 No
- -------------------------------------------------------------------------------------------------
13.3 No
15 70 853 825 880 No
17 No
27 No
29 12 525 No
- -------------------------------------------------------------------------------------------------
30 19 719 Yes
33 No
36 No
37 No
41 No
- -------------------------------------------------------------------------------------------------
46 No
47 No
51 4 850 No
52 No
55 34 755 730 780 No
- -------------------------------------------------------------------------------------------------
57 No
61.1 No
61.2 No
63 No
64 No
- -------------------------------------------------------------------------------------------------
67 No
80 5 1,060 1,060 1,060 No
85 12 650 No
90 No
92 No
- -------------------------------------------------------------------------------------------------
98 No
105 No
109.1 No
109.2 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.
B-1
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
ANNEX C
CERTAIN CHARACTERISTICS OF OFFICE, INDUSTRIAL AND RETAIL LOANS
<TABLE>
<CAPTION>
SEQUENCE PROPERTY NAME CITY STATE
NUMBER
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1.1 Western Hills Plaza Cincinnati OH
1.2 Gwinnett Market Fair Duluth GA
1.3 Mt. Prospect Plaza Mt. Prospect IL
1.4 West Falls Church Falls Church VA
- ----------------------------------------------------------------------------------------------------------
4 51 Sleeper Street Boston MA
6 Vartan Building Harrisburg PA
8 Northfield Office Park I & II Troy MI
9 Merrill Place Seattle WA
10 Becker Office Building Peoria IL
- ----------------------------------------------------------------------------------------------------------
11 The Tower Building Seattle WA
14 University Plaza Building Anchorage AK
16 Sealy Outlet Center Sealy TX
19 Riverside Centre Riverside CA
20 Stuart Centre Stuart FL
- ----------------------------------------------------------------------------------------------------------
22 Post Distribution Building Sumner WA
23 Broadway Summit Office Building Kansas City MO
24 IBM Building Boca Raton FL
25 Nebraska Crossing Factory Store Gretna NE
26 Van Buren Building Milwaukee WI
- ----------------------------------------------------------------------------------------------------------
28 Grand Central Office Building St. Louis MO
31 Quail Park III Las Vegas NV
32.1 Prestwick Pointe I-V Danville IN
32.2 Prestwick Junction Pointe Danville IN
34 Phillips Highway Commerce Park Jacksonville FL
- ----------------------------------------------------------------------------------------------------------
35.1 El Paso Commerce - A El Paso TX
35.2 El Paso Commerce - B El Paso TX
35.3 El Paso Commerce - C El Paso TX
38 Village Portico Miami FL
39 North Coast Medical Morgan Hill CA
- ----------------------------------------------------------------------------------------------------------
42 Power House Office Building and Theatre St. Louis MO
43 Horizon Outlet Center-Traverse Traverse MI
44 New Landing Shopping Center Kansas City MO
45 Plaza De Las Palmas El Cajon CA
48 Meadow Plaza Shopping Center Pleasanton CA
- ----------------------------------------------------------------------------------------------------------
50 First Data Building Ames IA
53 Bayshore Plaza Shopping Ctr Huntersville NC
54 Westridge Village Shopping Ctr Rocky Mount NC
56 Deerfoot Village Starke FL
58 5 & 7 Burroughs Warehouse Irvine CA
- ----------------------------------------------------------------------------------------------------------
59 717 Second Street, NE Washington DC
60 Lake Plaza South Milwaukee OR
62 Mercado del Sol Las Vegas NV
65 Williams Sonoma Oklahoma City OK
66 Harbourside Production Studio Toronto ON
- ----------------------------------------------------------------------------------------------------------
69 34th South Broadway White Plains NY
70 Pulse Athletic Club Greenville NC
72 Willow Station Shopping Center Greeley CO
73 Mt. Vernon Gateway Centre Mt. Vernon OH
75 GTS Durateck Building Columbia MD
- ----------------------------------------------------------------------------------------------------------
76 Plantation Plaza Stuart FL
77 Giant Eagle Shopping Center Roaring Spring PA
78 John Young Crossing Shop.Ctr. Orlando FL
81 333 Market Street Oakland CA
82 Wells Fargo Plaza San Diego CA
- ----------------------------------------------------------------------------------------------------------
83 Chagrin Lee Square Shaker Heights OH
84 7127 Riverside Building Tulsa OK
86 Petsmart North Little Rock AR
87 Adams Building Milwaukee WI
88 Staples Akron OH
- ----------------------------------------------------------------------------------------------------------
91 Crystal Lake Plaza Orlando FL
93 Goff Plaza Albuquerque NM
94 New York Plaza & Arcade Winter Park FL
95 Jackson Building Milwaukee WI
96 Eckerds Monticello NY
- ----------------------------------------------------------------------------------------------------------
97 Ponte Vedra Office Complex Ponte Vedra FL
101.1 Eliada Plaza Ashville NC
101.2 Canton Bi-Lo Ashville NC
104 Waverly Tower Shopping Center Baltimore MD
106 Clarke Road Shopping Center Orlando FL
- ----------------------------------------------------------------------------------------------------------
107 Cripple Creek Shopping Center Lawrenceville GA
108 Wilmington Athletic Club Wilmington NC
110 Westport Commercial Omaha NE
111 Colorado Office Park Stuart FL
112 Four Seasons Retail Sterling Heights MI
- ----------------------------------------------------------------------------------------------------------
113 John Rupp Dacotah Blvd St. Paul MN
114 Hur Warehouses Austin TX
116 Massara's Plaza Twinsburg OH
117 1420 S. Lewis Avenue Tulsa OK
118 Summers Village Shopping Ctr Irving TX
- ----------------------------------------------------------------------------------------------------------
119 John Rupp Exchange Rd St. Paul MN
120 Broadway/Bellfort Center Houston TX
121 Willow Creek Professional Blg San Jose CA
122 John Rupp University Club St. Paul MN
123 Hutchinson Island Shoppes Hutchinson Island FL
- ----------------------------------------------------------------------------------------------------------
124 Hollywood Video - Miami Miami FL
125 Stirling Palm Plaza Cooper City FL
126 Suwannee Plaza Shopping Center Chiefland FL
127 Commercial Blvd. Ft. Lauderdale FL
128 The Niland Building El Paso TX
- ----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ORIGINAL/ INITIAL POOL
SEQUENCE ZIP CODE DETAILED ALLOCATED BALANCE
NUMBER PROPERTY TYPE LOAN BALANCE(2) PER SQ. FT.
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1.1 22209 Anchored Retail 24,000,000 53.15
1.2 30096 Anchored Retail 14,500,000 74.13
1.3 60056 Anchored Retail 14,500,000 48.34
1.4 22044 Anchored Retail 5,400,000 62.81
- --------------------------------------------------------------------------------------------------
4 02110 Office 23,000,000 156.05
6 17110 Office 17,918,000 86.51
8 48095 Office 17,500,000 82.60
9 98104 Office 17,000,000 94.13
10 61602-1241 Office 14,700,000 89.48
- --------------------------------------------------------------------------------------------------
11 98101 Office 14,360,000 99.48
14 99501 Office 12,750,000 103.56
16 77474 Factory Outlet 11,115,000 57.97
19 92501 Office 10,400,000 67.62
20 34994 Anchored Retail 10,000,000 50.62
- --------------------------------------------------------------------------------------------------
22 98390 Industrial 7,800,000 29.28
23 64111 Office 7,700,000 63.21
24 33434 Mixed Use 7,600,000 51.01
25 68028 Factory Outlet 7,485,000 39.06
26 53202 Office 7,500,000 53.43
- --------------------------------------------------------------------------------------------------
28 63103 Office 6,525,000 105.56
31 89106 Office 6,400,000 88.80
32.1 41220 Mixed Use 5,334,393 64.75
32.2 41220 Mixed Use 815,607 65.00
34 32216 Industrial 6,000,000 49.20
- --------------------------------------------------------------------------------------------------
35.1 79915 Industrial 693,898 15.16
35.2 79915 Industrial 525,112 15.14
35.3 79915 Industrial 4,650,990 16.38
38 33130 Anchored Retail 5,600,000 192.02
39 95037 Industrial 5,550,000 74.80
- --------------------------------------------------------------------------------------------------
42 63103 Office 5,255,000 51.71
43 49684 Factory Outlet 5,205,000 33.78
44 64131 Anchored Retail 4,700,000 22.88
45 92020 Unanchored Retail 4,600,000 106.66
48 94566 Anchored Retail 4,474,000 83.04
- --------------------------------------------------------------------------------------------------
50 50010 Office 4,425,000 73.08
53 28078 Anchored Retail 4,155,000 79.79
54 27804 Anchored Retail 4,200,000 45.38
56 31091 Anchored Retail 4,000,000 37.52
58 92718 Industrial 3,950,000 50.64
- --------------------------------------------------------------------------------------------------
59 20006 Office 3,920,000 146.46
60 97267 Office 3,850,000 115.80
62 89102 Unanchored Retail 3,650,000 120.97
65 73114 Office 3,450,000 96.20
66 M4M 3L5 Industrial 3,395,586 45.62
- --------------------------------------------------------------------------------------------------
69 10601 Office 3,292,500 63.93
70 27858 Unanchored Retail 3,185,000 77.75
72 80632 Unanchored Retail 3,100,000 35.93
73 Anchored Retail 3,000,000 69.83
75 21046 Office 3,000,000 85.61
- --------------------------------------------------------------------------------------------------
76 34994 Unanchored Retail 3,000,000 43.86
77 16673 Anchored Retail 3,000,000 49.93
78 32835 Anchored Retail 2,860,000 115.88
81 94607 Industrial 2,650,000 37.46
82 92114 Mixed Use 2,615,000 91.74
- --------------------------------------------------------------------------------------------------
83 44120 Mixed Use 2,560,000 48.68
84 74136 Office 2,500,000 67.09
86 72117 Unanchored Retail 2,453,000 74.70
87 53202 Office 2,400,000 55.97
88 44319 Anchored Retail 2,300,000 95.64
- --------------------------------------------------------------------------------------------------
91 32835 Anchored Retail 2,250,000 42.06
93 87105-3182 Anchored Retail 2,250,000 29.59
94 32789-5093 Unanchored Retail 2,200,000 101.98
95 53202 Office 2,166,000 42.52
96 12701 Anchored Retail 2,140,000 158.52
- --------------------------------------------------------------------------------------------------
97 32082 Office 2,000,000 99.65
101.1 28806 Anchored Retail 1,000,000 29.44
101.2 28806 Anchored Retail 850,000 29.48
104 21218 Anchored Retail 1,800,000 33.37
106 32835 Anchored Retail 1,700,000 80.36
- --------------------------------------------------------------------------------------------------
107 30243 Unanchored Retail 1,700,000 73.18
108 28401 Unanchored Retail 1,675,000 43.40
110 68137 Unanchored Retail 1,700,000 72.62
111 34994 Mixed Use 1,650,000 55.34
112 48314 Unanchored Retail 1,635,000 51.54
- --------------------------------------------------------------------------------------------------
113 55101 Office 1,590,000 52.73
114 78758 Mixed Use 1,550,000 26.34
116 44087 Anchored Retail 1,500,000 28.53
117 74104 Unanchored Retail 1,450,000 123.31
118 75038 Unanchored Retail 1,450,000 68.90
- --------------------------------------------------------------------------------------------------
119 55101 Office 1,430,000 41.35
120 77017 Unanchored Retail 1,400,000 49.27
121 95125 Office 1,395,000 84.02
122 55102 Mixed Use 1,375,000 50.69
123 34957 Anchored Retail 1,350,000 72.85
- --------------------------------------------------------------------------------------------------
124 33175 Unanchored Retail 1,300,000 172.28
125 33328 Unanchored Retail 1,210,000 125.13
126 32626 Unanchored Retail 1,100,000 62.82
127 33308 Mixed Use 1,000,000 62.42
128 32801 Industrial 1,000,000 12.15
- --------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LARGEST TENANT (1)
---------------------------------------------------------------------------------------------
SEQUENCE NAME SQ. FT. LEASE EXP.
NUMBER 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
- --------------------------------------------------------------------------------------------------------------
4 Commonwealth of Massachusetts (Aa3/AA-) 147,142 1/21/04
6 Synertech Health Systems Solutions 206,900 4/30/09
8 General Motors (A2/A) 22,169 7/31/03
9 Tera Computer 85,000 12/8/08
10 IDOT 58,600 6/30/03
- --------------------------------------------------------------------------------------------------------------
11 Fisher Broad. 14,351 8/31/05
14 IRS/Minerals Mgmt. Services 51,815 10/18/04
16 Spiegel (Ba3/NR) 25,550 1/31/08
19 Stewart Title 20,968 9/3/03
20 TJ Maxx (A3/A-) 32,249 9/30/08
- --------------------------------------------------------------------------------------------------------------
22 Post Distribution 263,800 2/13/13
23 Central Business 19,800 10/31/07
24 IBM (A1/A+) 147,090 2/27/02
25 Levi's Outlet by M.O.S.T 10,000 7/31/01
26 Ameritech (Aa3/AA+) 28,932 12/31/00
- --------------------------------------------------------------------------------------------------------------
28 TBWA Advertising 31,188 4/1/01
31 NovaCare 4,920 12/31/02
32.1 Tower Club 31,258 10/31/99
32.2 J.A.K In the Box 6,500 5/5/01
34 Mordar Realty 3,770 8/31/03
- --------------------------------------------------------------------------------------------------------------
35.1 Broker's Logistics 45,548 10/31/10
35.2 Broker's Logistics 34,523 10/31/10
35.3 Broker's Logistics 282,550 10/31/10
38 Eckerd Drug (A3/BBB+) 10,523 8/9/17
39 North Coast Medical 73,600 11/30/10
- --------------------------------------------------------------------------------------------------------------
42 Wallace Theaters 43,703 5/31/03
43 Horizon Cinemas 26,000 5/31/16
44 CJ's Gold 35,702 10/31/02
45 Century 21 6,581 8/31/02
48 Nob Hill Store 33,161 4/30/10
- --------------------------------------------------------------------------------------------------------------
50 First Data Solutions Inc. (A2/A) 60,480 4/30/09
53 Village Furniture 19,777 1/1/05
54 Harris Teeter 35,475 12/9/08
56 Wal-Mart (Aa2/AA) 43,553 1/31/09
58 UCAR Composites 77,852 6/1/04
- --------------------------------------------------------------------------------------------------------------
59 America's Voice 16,164 6/30/99
60 FMC Dialysis 11,415 2/1/09
62 Kasey Designs & Sofa Gallery 9,901 3/31/05
65 Williams-Sonoma 35,862 8/31/08
66 Showline Ltd. 73,734 12/2/08
- --------------------------------------------------------------------------------------------------------------
69 NHWC, Inc. 4,800 MTM
70 Athletic Clubs Inc. 40,828 5/31/05
72 Metro ARC 21,504 9/30/03
73 Staples (Baa2/BBB-) 23,925 12/31/13
75 GTS Duratek 35,000 12/31/06
- --------------------------------------------------------------------------------------------------------------
76 Stuart Lanes 40,408 12/31/22
77 Giant Eagle 46,900 4/30/15
78 Eckerd Drug (A3/BBB+) 9,504 1/9/16
81 Darcoid Rubber Co. 27,733 1/31/01
82 American Red Cross 4,370 9/30/01
- --------------------------------------------------------------------------------------------------------------
83 US Postal Service 17,132 8/31/02
84 Ikon Office Solutions (Baa1/BBB+) 28,188 9/30/08
86 Petsmart (Caa1/B+) 26,040 1/31/16
87 Executive Director 24,000 4/30/09
88 Staples (Baa2/BBB-) 24,049 11/30/13
- --------------------------------------------------------------------------------------------------------------
91 WinnDixie 31,900 1/1/07
93 Furrs 42,543 8/31/15
94 Wyhuma Inc. 5,878 12/1/04
95 Computer People Unl. 32,475 11/30/01
96 Eckerd Drug (A3/BBB+) 13,500 1/31/18
- --------------------------------------------------------------------------------------------------------------
97 Tucker Federal Bank 7,500 6/30/03
101.1 Bi-Lo (A3/A) 25,298 2/28/03
101.2 Bi-Lo (A3/A) 20,000 2/28/04
104 Food-A-Rama Group, Inc. 22,826 1/31/00
106 Eckerd Drug (A3/BBB+) 9,504 12/16/13
- --------------------------------------------------------------------------------------------------------------
107 Music ans Arts Center 5,000 7/14/00
108 Athletic Clubs Incorporated 38,800 5/31/05
110 Entertainment Concepts 9,220 6/30/02
111 Wachovia Bank (Aa3/AA-) 7,615 12/9/00
112 Yankee Carpenter 5,900 5/1/02
- --------------------------------------------------------------------------------------------------------------
113 WA Frost 15,000 9/1/18
114 Hur Chemical & Packaging 13,720 12/31/01
116 Massara Grocery 28,922 4/30/14
117 Blockbuster (Baa3/BBB-) 6,500 10/31/07
118 Blockbuster (Baa3/BBB-) 6,185 2/1/00
- --------------------------------------------------------------------------------------------------------------
119 Science Museum of MN 7,013 1/1/00
120 Califf Inv. Inc. 3,700 8/31/99
121 Mitchell, Burrow, et al 5,109 12/31/04
122 University Club 27,000 11/1/18
123 Island Fine Food 6,864 2/8/00
- --------------------------------------------------------------------------------------------------------------
124 Hollywood Video (B3/B+) 7,488 8/25/13
125 Meds Express 2,125 10/31/03
126 Hibbett Sporting 4,800 7/31/03
127 Dr. John W. Holston, Jr. 2,731 5/31/04
128 Niland Co. 81,547 1/31/14
- --------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
2ND LARGEST TENANT (1)
---------------------------------------------------------------------------------------------
SEQUENCE NAME SQ. FT. LEASE EXP.
NUMBER 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
- --------------------------------------------------------------------------------------------------------------
4 NA NA NA
6 NA NA NA
8 National Bank of Detroit (Aa3/A+) 19,988 12/31/01
9 Tera Pocket Space 35,848 12/8/08
10 Magna Bank/Union Bank 18,211 12/31/02
- --------------------------------------------------------------------------------------------------------------
11 Virtual Adv. 13,696 7/31/01
14 VECO Engineering 29,150 12/31/05
16 Liz Claiborne 12,000 8/31/10
19 Ernst & Young 17,396 9/30/08
20 Home Goods 30,000 9/30/08
- --------------------------------------------------------------------------------------------------------------
22 NA NA NA
23 US Postal Inspector 13,500 4/30/02
24 NA NA NA
25 Linen Barn 9,770 6/30/04
26 Cramer-Krasselt 27,654 8/31/02
- --------------------------------------------------------------------------------------------------------------
28 Van de Kamp 12,349 4/1/01
31 Staffmark 4,520 8/31/03
32.1 Mulligans 8,450 5/16/00
32.2 Ridgegate Inc. 2,375 8/31/01
34 Leigh Fogal Fine Arts 3,600 10/31/01
- --------------------------------------------------------------------------------------------------------------
35.1 NA NA NA
35.2 NA NA NA
35.3 NA NA NA
38 Dante' Market 2,760 3/31/08
39 NA NA NA
- --------------------------------------------------------------------------------------------------------------
42 Emmis Broadcasting 15,048 10/1/07
43 Linen Barn 10,048 5/31/04
44 West Lake Hardware 34,555 11/30/02
45 Payless Shoes 3,055 12/31/99
48 Pleasanton Urgent Care 4,067 10/1/02
- --------------------------------------------------------------------------------------------------------------
50 NA NA NA
53 Eckerd Drug (A3/BBB+) 10,908 1/31/19
54 Arnold's Drug 7,200 2/28/03
56 Food Lion (A3/A-) 25,000 2/26/09
58 NA NA NA
- --------------------------------------------------------------------------------------------------------------
59 Free Congress 10,301 11/14/18
60 Willamette Dental 6,300 9/30/03
62 Simmons Beauty Rest 3,500 3/31/02
65 NA NA NA
66 NA NA NA
- --------------------------------------------------------------------------------------------------------------
69 NY School of Court 4,257 1/14/05
70 NA NA NA
72 All American Rentals 9,072 10/31/01
73 On Cue 5,000 1/31/07
75 NA NA NA
- --------------------------------------------------------------------------------------------------------------
76 Sakura Restaurant 5,218 8/31/03
77 Family Dollar 7,200 7/31/03
78 Super Video Games 3,980 8/1/01
81 Johnstone Supply 21,299 7/31/05
82 CRASH Inc. 3,708 11/30/00
- --------------------------------------------------------------------------------------------------------------
83 St. Lukes Hospital 15,509 9/30/03
84 National Bank of Commerce 5,830 8/31/08
86 Concentra 6,800 7/31/04
87 Bailey's 5,600 6/30/02
88 NA NA NA
- --------------------------------------------------------------------------------------------------------------
91 Eckerd Drug (A3/BBB+) 9,520 12/31/06
93 Family Dollar 8,704 12/31/01
94 Cuisine 2000 3,400 9/30/08
95 Indus, Inc. 7,000 5/31/03
96 NA NA NA
- --------------------------------------------------------------------------------------------------------------
97 Tucker Federal Bank 3,445 10/31/01
101.1 CVS (A3/A) 8,450 10/31/02
101.2 Eckerd Drug (A3/BBB+) 8,640 10/1/01
104 Family Dollar Stores of Maryland, Inc. 10,000 12/31/03
106 Blockbuster Video (Baa3/BBB-) 5,500 10/31/06
- --------------------------------------------------------------------------------------------------------------
107 X-Tra Touch Dry Cleaners 3,000 1/31/08
108 NA NA NA
110 Immanuel Medical Ctr 7,450 8/31/99
111 Sunshine Music Group 3,569 6/30/00
112 Orphaned Furniture 5,400 2/28/03
- --------------------------------------------------------------------------------------------------------------
113 The 106 Group 3,581 10/31/01
114 Buffet Palace 5,259 5/31/01
116 Bettys Hallmark 6,300 1/31/02
117 Healthsouth (Baa3/BBB) 5,226 4/30/03
118 Judge Beans 5,232 7/31/03
- --------------------------------------------------------------------------------------------------------------
119 Ewald Crossing 3,925 9/30/02
120 So. Texas Dental 3,030 11/30/02
121 McFarlane & Cazale 4,152 11/30/03
122 NA NA NA
123 Sunrise Surf Shop 3,375 11/30/99
- --------------------------------------------------------------------------------------------------------------
124 NA NA NA
125 Mommy & Me Nails 1,565 10/1/03
126 Dollar Tree 3,990 4/30/00
127 American Home Loan Mortgage 2,500 8/31/99
128 NA NA NA
- --------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
3RD LARGEST TENANT (1)
---------------------------------------------------------------------------------------------
SEQUENCE NAME SQ. FT. LEASE EXP.
NUMBER 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
- --------------------------------------------------------------------------------------------------------------
4 NA NA NA
6 NA NA NA
8 Hayman Co 12,716 4/30/04
9 Freeshop 18,803 5/31/03
10 Hedec Law 15,090 10/31/08
- --------------------------------------------------------------------------------------------------------------
11 Viewpoint 8,214 7/31/01
14 VECO 15,054 9/30/00
16 Reebok Factory Store (Baa3/BBB-) 10,000 9/30/02
19 Burker, Williams, Sorensen 13,980 10/9/01
20 Office Depot (Baa2/BBB) 25,000 6/30/01
- --------------------------------------------------------------------------------------------------------------
22 NA NA NA
23 Wilson 12,598 10/31/00
24 NA NA NA
25 Dress Barn 9,000 6/30/02
26 Peterson Johnson 15,733 8/31/03
- --------------------------------------------------------------------------------------------------------------
28 GSA - General Accounting (Aaa/AAA) 9,255 12/1/07
31 Advanstaff 4,416 9/30/00
32.1 Amerigas (Ba3/BB+) 4,350 11/30/00
32.2 Candles & Stuff 1,250 10/31/00
34 GTE Communications (Baa1/A) 3,280 9/30/03
- --------------------------------------------------------------------------------------------------------------
35.1 NA NA NA
35.2 NA NA NA
35.3 NA NA NA
38 Havana Cafe 2,100 6/30/08
39 NA NA NA
- --------------------------------------------------------------------------------------------------------------
42 Maekey & Assoc. 14,000 12/1/03
43 Bass Co. Store 8,500 12/31/04
44 David Kim 23,790 7/31/02
45 China Diamond 3,000 2/28/05
48 Grand Slam Pizza 3,306 11/30/02
- --------------------------------------------------------------------------------------------------------------
50 NA NA NA
53 Captains Galley 7,005 8/31/02
54 AAA Travel Agency 4,200 8/31/99
56 Scotty's Hardware 10,000 9/10/99
58 NA NA NA
- --------------------------------------------------------------------------------------------------------------
59 Coalitions of America 525 12/31/99
60 American Express (A1/A+) 4,601 1/31/04
62 Honey Baked Ham 3,120 10/31/00
65 NA NA NA
66 NA NA NA
- --------------------------------------------------------------------------------------------------------------
69 Allee King Rowsen 4,209 12/31/02
70 NA NA NA
72 BIO Medical Applications 6,580 1/31/04
73 Shastar 4,800 1/31/06
75 NA NA NA
- --------------------------------------------------------------------------------------------------------------
76 Amer. Auto 4,734 7/14/03
77 Pro Care 2,400 5/31/00
78 Mega Wash Systems 3,500 7/5/06
81 San Francisco News Paper Agency 21,233 7/31/02
82 U.S. Post Office 3,695 1/31/01
- --------------------------------------------------------------------------------------------------------------
83 Walgreens (Aa3/A+) 13,500 12/31/14
84 NA NA NA
86 NA NA NA
87 Shabahang Rugs 2,531 12/31/06
88 NA NA NA
- --------------------------------------------------------------------------------------------------------------
91 Center Stage 2,800 12/31/01
93 Familia Mexicana 8,000 3/30/02
94 Euro Pine Furniture 2,483 7/15/01
95 Sigma Property Management 8,310 4/30/99
96 NA NA NA
- --------------------------------------------------------------------------------------------------------------
97 Walter, Koegler & Dilleingham 3,282 9/1/02
101.1 NA NA NA
101.2 NA NA NA
104 Parts America, Inc. 9,000 12/31/08
106 Great Clips 1,375 12/17/99
- --------------------------------------------------------------------------------------------------------------
107 Mattress for Less 2,500 10/14/01
108 NA NA NA
110 Westport Dental 1,640 7/31/99
111 Housecall Home 3,520 8/14/00
112 Mesquite Tavern 4,850 12/1/05
- --------------------------------------------------------------------------------------------------------------
113 1000 Friends 1,677 10/1/01
114 Brake Centers of SW, Inc. 4,820 3/31/03
116 Maxx Dougans 5,550 9/30/00
117 NA NA NA
118 Dr Stone 2,094 6/30/01
- --------------------------------------------------------------------------------------------------------------
119 Thomas Olsen 3,355 10/30/99
120 Stop N Drive 2,400 4/30/02
121 Sigforms 2,464 11/30/00
122 NA NA NA
123 United States Postal 2,475 4/30/02
- --------------------------------------------------------------------------------------------------------------
124 NA NA NA
125 Dairy Queen 1,200 4/2/03
126 Radio Shack (Baa1/A-) 2,450 1/31/04
127 Dr. John Watson, MD 2,184 5/31/04
128 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>
ANNEX D
F/X SCHEDULES
ANNEX D
<TABLE>
<CAPTION>
LOAN NUMBER 40: BLOOR STREET QUALITY HOTEL
- ---------------------------- ---------------------------------------------------------------------
TOTAL US$ PRINCIPAL US$ INTEREST US$
PAYMENT DATE PAYMENT PAYMENT 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
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LOAN NUMBER 66: HARBOURSIDE PRODUCTION STUDIO
- ---------------------------- ---------------------------------------------------------------------
TOTAL US$ PRINCIPAL US$ INTEREST US$
PAYMENT DATE PAYMENT PAYMENT 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
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LOAN NUMBER 74: ST. JOHN'S - QUALITY INN
- ---------------------------- ---------------------------------------------------------------------
TOTAL US$ PRINCIPAL US$ INTEREST US$
PAYMENT DATE PAYMENT PAYMENT 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
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LOAN NUMBER 79: COMFORT INN - POINTE CLAIRE
- ---------------------------- ---------------------------------------------------------------------
TOTAL US$ PRINCIPAL US$ INTEREST US$
PAYMENT DATE PAYMENT PAYMENT 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
</TABLE>
D-1
<PAGE>
<TABLE>
<CAPTION>
LOAN NUMBER 99: COMFORT INN - WINNIPEG
- ---------------------------- ---------------------------------------------------------------------
TOTAL US$ PRINCIPAL US$ INTEREST US$
PAYMENT DATE PAYMENT PAYMENT 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
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LOAN NUMBER 100: QUALITY SUITES - LAVAL
- ---------------------------- ---------------------------------------------------------------------
TOTAL US$ PRINCIPAL US$ INTEREST US$
PAYMENT DATE PAYMENT PAYMENT 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
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LOAN NUMBER 102: COMFORT INN - REGINA
- ---------------------------- ---------------------------------------------------------------------
TOTAL US$ PRINCIPAL US$ INTEREST US$
PAYMENT DATE PAYMENT PAYMENT 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
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LOAN NUMBER 115: COMFORT INN - CAMBRIDGE
- ---------------------------- ---------------------------------------------------------------------
TOTAL US$ PRINCIPAL US$ INTEREST US$
PAYMENT DATE PAYMENT PAYMENT 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
$649,217,000
J.P. MORGAN & CO. DEUTSCHE BANC ALEX. BROWN
08/09/99 12:56 PM J.P. Morgan Commercial Mortgage Finance Corp.,
Series 1999-C8
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
$649,217,000
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) 469-5149
Scott Waynebern (212) 469-5149
08/09/99 12:56 PM J.P. Morgan Commercial Mortgage Finance Corp.,
Series 1999-C8
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
$649,217,000
TRANSACTION OVERVIEW
<TABLE>
<CAPTION>
LOAN
RATING CURRENT TO AVG. PRINCIPAL
(DCR/ SIZE % OF CREDIT VALUE (%) LIFE WINDOW COUPON
CLASS MDY/S&P) ($)(1) TOTAL SUPPORT (2) (YRS) (3) (MONTHS)(3) DESCRIPTION
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
A-1 AAA / Aaa / AAA $171,500,000 23.4% 27.75 49.5% 5.50 1 - 109 Fixed/WAC
A-2 AAA / Aaa / AAA 357,019,000 48.8 27.75 49.5 9.37 109 - 116 Fixed/WAC
X AAA / Aaa / AAAr 731,516,500(5) 6.55(6) WAC
B AA / Aa2 / AA 36,575,000 5.0 22.75 53.0 9.72 116 - 117 WAC
C A / A2 / A 32,918,000 4.5 18.25 56.0 9.82 117 - 118 WAC
D A- / A3 / A- 14,630,000 2.0 16.25 57.4 9.83 118 - 118 WAC
E BBB / Baa2 / BBB 25,603,000 3.5 12.75 59.8 9.85 118 - 119 WAC
F BBB- / Baa3 / BBB- 10,972,000 1.5 11.25 60.8 9.91 119 - 119 WAC
RETAINED CLASSES 82,299,500(7) Fixed
TOTAL $731,516,500 100.0% 68.6% 8.84
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
PRICE ERISA (4)/
PRICE ($) TALK SMMEA
- ----------------------------------
<C> <C> <C>
Yes/No
Yes/No
Yes/No
No/No
No/No
No/No
No/No
No/No
No/No
- ----------------------------------
</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, K and NR
MORTGAGE POOL CHARACTERISTICS
The mortgage pool consists of 128 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 Florida (11.0%), California (9.9%) and Wisconsin
(9.5%). The mortgage loans will have an initial pool balance of $731,516,500 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
$5,714,973. The mortgage pool has a weighted average loan-to-value of 69.61% and
a weighted average debt service coverage ratio of 1.40x.
08/09/99 12:56 PM J.P. Morgan Commercial Mortgage Finance Corp., Series 1999-C8
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
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 96.6% of the mortgage
loans were originated by
Morgan Guaranty Trust
Company of New York and
3.4% 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 17, 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
08/09/99 12:56 PM J.P. Morgan Commercial Mortgage Finance Corp., Series 1999-C8
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, K and NR Certificates
o The Class A1, G, H, J, K 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, K 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 $731,516,500
NUMBER OF LOANS 128
NUMBER OF MORTGAGED PROPERTIES 139
AVG. PRINCIPAL BALANCE
PER LOAN $5,714,973
PER PROPERTY $5,262,709
W.A. MORTGAGE RATE 7.5424%
W.A. REMAINING TERM 117 months
W.A. UNDERWRITTEN DSCR 1.40x
W.A. CUT-OFF DATE LTV RATIO 69.61%
W.A. SEASONING 6 months
08/09/99 12:56 PM J.P. Morgan Commercial Mortgage Finance Corp., Series 1999-C8
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)
<TABLE>
<CAPTION>
AVERAGE LIFE (YEARS)
---------------- --------------- ---------------- --------------- ----------------
CLASS 0% 25% 50% 75% 100%
- ------------------ ---------------- --------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
A1 5.49 5.48 5.47 5.46 5.38
A2 9.37 9.36 9.34 9.31 9.11
B 9.72 9.70 9.68 9.66 9.46
C 9.82 9.80 9.78 9.73 9.56
D 9.83 9.83 9.83 9.83 9.58
E 9.85 9.84 9.83 9.83 9.59
F 9.91 9.91 9.89 9.83 9.66
X(2) 6.55 6.44 6.37 6.32 6.17
</TABLE>
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
- ------------------------------------ ----------- --------- ---------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Lockout/Defeasance 100.0 100.0 100.0 100.0 97.5 80.8 77.9 78.0
Yield Maintenance (1) 0.0 0.0 0.0 0.0 2.5 18.8 20.8 22.0
Total Lockout and YM 100.0 100.0 100.0 100.0 100.0 99.6 98.7 100.0
No Prepayment Premium 0.0 0.0 0.0 0.0 0.0 0.4 1.3 0.0
- ------------------------------------ ----------- --------- ---------- --------- --------- --------- --------- ---------
TOTAL 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
- ------------------------------------ ----------- --------- ---------- --------- --------- --------- --------- ---------
AGGREGATE MORTGAGE BALANCE ($) 731.5 723.1 713.7 703.6 692.7 659.1 639.5 600.0
% OF CUT-OFF DATE BALANCE 100.0 98.8 97.6 96.2 94.7 90.1 87.4 82.0
<CAPTION>
8/07 8/08 8/09
- --------- --------- ---------
<C> <C> <C>
76.8 63.0 60.9
23.2 11.1 27.9
100.0 74.1 88.8
0.0 25.9 11.2
- --------- --------- ---------
100.0 100.0 100.0
- --------- --------- ---------
586.7 564.1 48.4
80.2 77.1 6.6
</TABLE>
1 U.S. Treasury rate; 1% floor
08/09/99 12:56 PM J.P. Morgan Commercial Mortgage Finance Corp., Series 1999-C8
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
PROPERTY TYPE LOANS BALANCE ($) BALANCE BALANCE ($) WAC (%) (MOS) RATIO (%) DSCR
- ---------------------------- --------- --------------- ------------- -------------- ----------- ---------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OFFICE 26 $195,783,598 26.8% $7,530,138 7.744% 109 68.54% 1.36x
RETAIL 40 181,156,127 24.8 4,528,903 7.576 127 67.21 1.39
Anchored 20 120,834,408 16.5 6,041,720 7.340 124 68.02 1.39
Unanchored 17 36,534,343 5.0 2,149,079 7.781 140 70.96 1.30
Factory Outlet 3 23,787,376 3.3 7,929,125 8.460 120 57.39 1.52
MULTIFAMILY 21 165,373,665 22.6 7,874,936 7.052 119 77.40 1.31
Conventional 18 156,033,194 21.3 8,668,511 7.031 115 77.83 1.32
Mobile Home Park 3 9,340,472 1.3 3,113,491 7.392 179 70.16 1.22
HOTEL 14 87,680,787 12.0 6,262,913 7.625 103 61.88 1.60
Full Service 5 57,622,125 7.9 11,524,425 7.244 108 64.30 1.55
Limited Service 9 30,058,662 4.1 3,339,851 8.355 93 57.24 1.68
HEALTHCARE 9 37,146,080 5.1 4,127,342 8.185 133 67.94 1.73
Nursing Home 7 29,453,206 4.0 4,207,601 8.352 138 67.25 1.76
Congregate Care 2 7,692,874 1.1 3,846,437 7.546 113 70.58 1.61
INDUSTRIAL 8 35,955,207 4.9 4,494,401 7.469 117 71.69 1.36
OTHER (2) 10 28,421,035 3.9 2,842,103 7.793 128 70.32 1.28
- ---------------------------- --------- --------------- ------------- -------------- ----------- ---------- ------------ ---------
TOTAL/AVG/WA: 128 $731,516,500 100.0% $5,714,973 7.542% 117 69.61% 1.40x
- ---------------------------- --------- --------------- ------------- -------------- ----------- ---------- ------------ ---------
<CAPTION>
-------------- --------------
WA OCC.
RATE (%) (1) % BALLOON
-------------- --------------
<C> <C>
96.21% 98.47%
93.90 90.46
94.19 93.52
96.46 74.12
88.51 100.00
95.32 94.38
95.38 98.95
94.48 18.08
NA 100.00
NA 100.00
NA 100.00
94.97 85.84
94.83 82.15
95.51 100.00
98.67 100.00
97.49 87.22
-------------- --------------
95.46% 94.74%
-------------- --------------
</TABLE>
1 Excludes Hotels
2 Includes Mixed Use and Self Storage
RESERVES
- ---------------------- ------------------- ------------------- ----------------
% OF LOANS WITH
ANNUAL ESCROWS CURRENT BALANCE(1) ANNUAL DEPOSIT
- ---------------------- ------------------- ------------------- ----------------
Replacement Reserves 95.3% $4,774,014 $4,406,407
Taxes 94.5 6,487,627 14,692,671
Insurance 71.1 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
08/09/99 12:56 PM J.P. Morgan Commercial Mortgage Finance Corp., Series 1999-C8
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
<TABLE>
<CAPTION>
% OF PRINCIPAL
Property Type NO. OF PROPERTIES PRINCIPAL BALANCE ($) BALANCE
- ----------------------- --------------------- ---------------------------- --------------------
<S> <C> <C> <C>
Office 26 $195,783,598 26.8%
Multifamily 21 156,033,194 21.3
Anchored Retail 24 120,834,408 16.5
Hotel 14 87,680,787 12.0
Unanchored Retail 17 36,534,343 5.0
Industrial 10 35,955,207 4.9
Nursing Home 7 29,453,206 4.0
Mixed Use 9 24,320,571 3.3
Factory Outlet 3 23,787,376 3.3
Mobile Home Park 3 9,340,472 1.3
Congregate Care 3 7,692,874 1.1
Self Storage 2 4,100,464 0.6
- ----------------------- --------------------- ---------------------------- --------------------
TOTAL 139 $731,516,500 100.0%
- ----------------------- --------------------- ---------------------------- --------------------
</TABLE>
GEOGRAPHIC DISTRIBUTION
<TABLE>
<CAPTION>
% OF PRINCIPAL
Property State NO. OF PROPERTIES PRINCIPAL BALANCE ($) BALANCE
- ------------- ----------------- --------------------- --------------
<S> <C> <C> <C>
Florida 23 80,595,465 11.0%
California 17 72,596,674 9.9
Wisconsin 6 69,131,849 9.5
Ohio 10 63,277,913 8.7
Illinois 3 53,253,394 7.3
Washington 4 42,398,723 5.8
Georgia 4 31,906,632 4.4
Michigan 4 26,798,005 3.7
North Carolina 8 25,747,947 3.5
Missouri 4 24,149,080 3.3
Texas 9 24,004,556 3.3
Pennsylvania 3 23,975,321 3.3
New York 3 23,196,589 3.2
Massachusetts 1 22,961,612 3.1
Nebraska 3 22,646,035 3.1
Other 37 124,876,704 17.1
- ----------------------- --------------------- ---------------------------- --------------------
TOTAL 139 $731,516,500 100.0%
- ----------------------- --------------------- ---------------------------- --------------------
</TABLE>
08/09/99 12:56 PM J.P. Morgan Commercial Mortgage Finance Corp., Series 1999-C8
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 6.6
2,000,001 - 3,000,000 24 61,008,867 8.3
3,000,001 - 4,000,000 18 64,102,169 8.8
4,000,001 - 5,000,000 11 48,205,688 6.6
5,000,001 - 7,500,000 19 115,266,266 15.8
7,500,001 - 10,000,000 5 41,102,574 5.6
10,000,001 - 12,500,000 5 55,162,166 7.5
12,500,001 - 15,000,000 5 68,440,416 9.4
15,000,001 - 17,500,000 2 34,405,843 4.7
17,500,001 - 20.000,000 2 35,671,983 4.9
20,000,001 - 25,000,000 3 69,128,658 9.5
30,000,001 - 35,000,000 1 30,948,385 4.2
55,000,001 - 60,000,000 1 58,136,667 7.9
- ------------------------- -------------- ---------------------- ----------------
TOTAL: 128 $731,516,500 100.0%
- ------------------------- -------------- ---------------------- ----------------
AVERAGE PER LOAN: $5,714,973
AVERAGE PER PROPERTY: $5,262,709
MORTGAGE INTEREST RATES
% OF PRINCIPAL
Mortgage Interest Rate (%) NO. OF LOANS PRINCIPAL BALANCE ($) BALANCE
- -------------------------- ------------ ---------------------- ---------------
6.5000 - 6.7500 11 $98,633,442 13.5%
6.7501 - 7.0000 12 58,825,136 8.0
7.0001 - 7.2500 12 63,206,801 8.6
7.2501 - 7.5000 13 154,318,501 21.1
7.5001 - 7.7500 14 80,502,312 11.0
7.7501 - 8.0000 22 99,376,667 13.6
8.0001 - 8.2500 15 72,421,855 9.9
8.2501 - 8.5000 20 80,065,893 10.9
8.5001 - 8.8000 9 24,165,894 3.3
- -------------------------- -------- ------------------------ -----------------
TOTAL 128 $731,516,500 100.0%
- -------------------------- -------- ------------------------ -----------------
WEIGHTED AVERAGE: 7.5424%
08/09/99 12:56 PM J.P. Morgan Commercial Mortgage Finance Corp., Series 1999-C8
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 2.6%
1.151 - 1.200 6 19,030,652 2.6
1.201 - 1.250 12 47,672,776 6.5
1.251 - 1.300 25 152,055,844 20.8
1.301 - 1.400 37 198,097,229 27.1
1.401 - 1.500 17 163,035,704 22.3
1.501 - 1.600 10 48,165,693 6.6
1.601 - 1.700 8 52,522,581 7.2
1.701 - 1.800 2 4,761,246 0.7
1.801 - 1.900 2 3,762,383 0.5
1.901 - 2.000 3 12,810,775 1.8
2.001 - 2.100 3 10,624,543 1.5
- ------------------------ -------------- ----------------------- ----------------
TOTAL 128 $731,516,500 100.0%
- ------------------------ -------------- ----------------------- ----------------
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 1.9%
50.01% - 55.00% 8 29,876,212 4.1
55.01% - 60.00% 10 37,073,016 5.1
60.01% - 65.00% 8 104,124,309 14.2
65.01% - 70.00% 30 137,947,591 18.9
70.01% - 75.00% 43 234,514,501 32.1
75.01% - 80.00% 23 157,631,244 21.5
80.01% - 85.00%(1) 2 16,463,116 2.3
- ----------------------------- ------------- ---------------------- -------------
TOTAL 128 $731,516,500 100.0%
- ----------------------------- ------------- ---------------------- -------------
WEIGHTED AVERAGE: 69.61%
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%.
08/09/99 12:56 PM J.P. Morgan Commercial Mortgage Finance Corp., Series 1999-C8
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
<TABLE>
<CAPTION>
% OF PRINCIPAL
Mortgage Loan Type NO. OF LOANS PRINCIPAL BALANCE ($) BALANCE
- ------------------------------ --------------------- ---------------------------- --------------------
<S> <C> <C> <C>
Balloon 85 $397,332,664 54.3%
Hyper-Amortizing 28 295,706,315 40.4
Fully-Amortizing 15 38,477,521 5.3
- ------------------------------ --------------------- ---------------------------- --------------------
TOTAL 128 $731,516,500 100.0%
- ------------------------------ --------------------- ---------------------------- --------------------
</TABLE>
REMAINING TERM TO MATURITY/ARD (MONTHS)
<TABLE>
<CAPTION>
Remaining Term to % OF PRINCIPAL
Maturity/ARD (months) NO. OF LOANS PRINCIPAL BALANCE ($) BALANCE
- ------------------------------ --------------------- ---------------------------- --------------------
<S> <C> <C> <C>
Less than 60 1 $22,961,612 3.1%
61 - 84 9 39,269,007 5.4
85 - 120 99 600,336,040 82.1
121 - 180 8 38,423,556 5.3
181 - 240 11 30,526,216 4.2
- ------------------------------ --------------------- ---------------------------- --------------------
TOTAL 128 $731,516,500 100.0%
- ------------------------------ --------------------- ---------------------------- --------------------
WEIGHTED AVERAGE: 117 MONTHS
</TABLE>
REMAINING AMORTIZATION TERM (MONTHS)
<TABLE>
<CAPTION>
Remaining Amortization Term % OF PRINCIPAL
(months) NO. OF LOANS PRINCIPAL BALANCE ($) BALANCE
- ------------------------------ --------------------- ---------------------------- --------------------
<S> <C> <C> <C>
121 - 180 6 $15,436,682 2.1%
181 - 240 20 58,275,954 8.0
Greater than 240 102 657,803,865 89.9
- ------------------------------ --------------------- ---------------------------- --------------------
TOTAL 128 $731,516,500 100.0%
- ------------------------------ --------------------- ---------------------------- --------------------
WEIGHTED AVERAGE: 322 MONTHS
</TABLE>
08/09/99 12:56 PM J.P. Morgan Commercial Mortgage Finance Corp., Series 1999-C8
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
<TABLE>
<CAPTION>
% OF PRINCIPAL
Month and Year of Origination NO. OF LOANS PRINCIPAL BALANCE ($) BALANCE
- ------------------------------- --------------- ---------------------- --------------------
<S> <C> <C> <C>
December 1997 1 $2,990,258 0.4%
March 1998 1 7,503,550 1.0
May 1998 1 6,331,137 0.9
June 1998 2 7,547,120 1.0
July 1998 1 7,724,507 1.1
August 1998 11 68,777,984 9.4
September 1998 11 92,792,377 12.7
October 1998 10 31,827,306 4.4
November 1998 7 29,843,422 4.1
December 1998 8 53,290,607 7.3
January 1999 8 97,035,715 13.3
February 1999 10 35,422,578 4.8
March 1999 15 61,689,961 8.4
April 1999 17 68,644,051 9.4
May 1999 18 100,103,161 13.7
June 1999 4 36,205,390 4.9
July 1999 3 23,787,376 3.3
- ------------------------------- --------------- ---------------------------- --------------------
TOTAL 128 $731,516,500 100.0%
- ------------------------------- --------------- ---------------------------- --------------------
</TABLE>
YEAR OF SCHEDULED MATURITY/ARD
<TABLE>
<CAPTION>
% OF PRINCIPAL
Year of Scheduled Maturity/ARD NO. OF LOANS PRINCIPAL BALANCE ($) BALANCE
- -------------------------------- -------------- ---------------------------- ----------------
<S> <C> <C> <C>
2004 1 $22,961,612 3.1%
2005 7 18,425,960 2.5
2006 2 20,843,117 2.8
2008 31 203,549,677 27.8
2009 68 396,786,363 54.2
2010 1 12,295,037 1.7
2011 1 7,724,507 1.1
2013 3 9,621,617 1.3
2014 3 8,782,394 1.2
2017 1 4,121,569 0.6
2018 2 6,712,611 0.9
2019 8 19,692,036 2.7
- -------------------------------- -------------- ---------------------------- ----------------
TOTAL 128 $731,516,500 100.0%
- -------------------------------- -------------- ---------------------------- ----------------
</TABLE>
08/09/99 12:56 PM J.P. Morgan Commercial Mortgage Finance Corp., Series 1999-C8
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 7.9% 63.92% 1.49x Anchored Retail
Ridgewood Country Club 30,948,385 4.2 78.35 1.30 Multifamily
Woodfield Garden 24,186,478 3.3 78.27 1.31 Multifamily
51 Sleeper Street 22,961,612 3.1 74.31 1.35 Office
Madison Concourse 21,980,569 3.0 65.61 1.70 Hotel
Vartan Building 17,898,122 2.4 62.80 1.36 Office
Hyatt Regency Rochester 17,773,861 2.4 67.07 1.44 Hotel
Northfield Office Park I & II 17,479,309 2.4 71.34 1.30 Office
Merrill Place 16,926,533 2.3 60.02 1.44 Office
Becker Office Building 14,632,298 2.0 71.03 1.34 Office
- ------------------------------ --------------------------- -------------------- -------------- ----------------- ------------------
TOTAL $242,923,834 33.2% 69.16% 1.41x
- ------------------------------ --------------------------- -------------------- -------------- ----------------- ------------------
DEAL TOTAL $731,516,500 100.0% 69.61% 1.40x
- ------------------------------ --------------------------- -------------------- -------------- ----------------- ------------------
</TABLE>
08/09/99 12:56 PM J.P. Morgan Commercial Mortgage Finance Corp., Series 1999-C8
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 EQUITY None
- ------------------------------------- ----------------------------------
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
08/09/99 12:56 PM J.P. Morgan Commercial Mortgage Finance Corp., Series 1999-C8
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 EQUITY None
- ------------------------------------- ----------------------------------
PROPERTY INFORMAGTION
- ------------------------------------------------------------------------
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
- -------------------------------------- ---------------------------------
08/09/99 12:56 PM J.P. Morgan Commercial Mortgage Finance Corp., Series 1999-C8
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>
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 EQUITY None
- ------------------------------------- ----------------------------------
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
- -------------------------------------- ---------------------------------
08/09/99 12:56 PM J.P. Morgan Commercial Mortgage Finance Corp., Series 1999-C8
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>
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 EQUITY None
- ------------------------------------- ----------------------------------
- ------------------------------------------------------------------------
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
- -------------------------------------- ---------------------------------
08/09/99 12:56 PM J.P. Morgan Commercial Mortgage Finance Corp., Series 1999-C8
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>
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 EQUITY None
- ------------------------------------- ----------------------------------
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 than 3/4 of 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
- -------------------------------------- ---------------------------------
08/09/99 12:56 PM J.P. Morgan Commercial Mortgage Finance Corp., Series 1999-C8
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>
VARTAN BUILDING
LOAN INFORMATION
- ------------------------------------------------------------------------
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 EQUITY None
- ------------------------------------- ----------------------------------
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
- -------------------------------------- ---------------------------------
08/09/99 12:56 PM J.P. Morgan Commercial Mortgage Finance Corp., Series 1999-C8
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>
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 EQUITY 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 Morgan Guaranty Trust
Company of New York to Rochester
Hotel Holding, Inc., the sole
shareholder of the Borrower, and
is secured solely by such
shareholder's interest in the
Borrower
- ------------------------------------- -----------------------------------
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
- -------------------------------------- ---------------------------------
08/09/99 12:56 PM J.P. Morgan Commercial Mortgage Finance Corp., Series 1999-C8
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>
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 EQUITY None
- ------------------------------------- ----------------------------------
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
- -------------------------------------- ---------------------------------
08/09/99 12:56 PM J.P. Morgan Commercial Mortgage Finance Corp., Series 1999-C8
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>
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 EQUITY None
- ------------------------------------- ----------------------------------
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
- -------------------------------------- ---------------------------------
08/09/99 12:56 PM J.P. Morgan Commercial Mortgage Finance Corp., Series 1999-C8
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>
BECKER OFFICE BUILDING
LOAN INFORMATION
- ------------------------------------------------------------------------
PRINCIPAL BALANCE
ORIGINAL $14,700,000
CUT-OFF DATE $14,632,298
ORIGINATION DATE December 11, 1998
INTEREST RATE 7.7500%
AMORTIZATION 360
HYPERAMORTIZATION NA
ANTICIPATED REPAYMENT DATE NA
MATURITY DATE January 1, 2009
BORROWER/SPONSOR Main Street Associates, GP
CALL PROTECTION Prepayment locked out for seven
years. On or after February 1,
2005, 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 EQUITY None
- ------------------------------------- ----------------------------------
PROPERTY INFORMATION
- ------------------------------------------------------------------------
SINGLE ASSET/PORTFOLIO Single asset
PROPERTY TYPE Office
LOCATION 401 Main Street
Peoria, Illinois
YEARS BUILT/RENOVATED 1992 / NA
THE COLLATERAL The subject property is
situated on a 1.104 acre tract
located in the heart of
Peoria's central business
district. Originally developed
in 1992, this Class A building
has 163,521 square feet of net
leasable area. Level 1
contains retail and bank space,
levels 2 though 5 are parking
decks, and levels 6 through 16
contain office space.
Aditionally, there are two
underground parking levels
owned and operated by the city
of Peoria. Major tenants
include Illinois Department of
Transportation (58,600 square
feet), Magna Bank/Union Bank
(18,211 square feet) and Hedoc
Law (15, 090 square feet)
PROPERTY MANAGEMENT Becker Brothers, Inc.
OCCUPANCY AS OF 5/4/99 93.0%
NET OPERATING INCOME $1,777,144
YEAR ENDING 12/31/98
UNDERWRITTEN NET CASH FLOW $1,694,951
APPRAISED VALUE $20,600,000
APPRAISAL DATE August 14, 1998
CUT-OFF DATE
LOAN PER SQUARE FOOT $89.48
LTV 71.03%
UW DSCR 1.34x
- -------------------------------------- ---------------------------------
08/09/99 12:56 PM J.P. Morgan Commercial Mortgage Finance Corp., Series 1999-C8
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)
--------------------------------
# OF LOANS AT SECURITIZED LOAN BALANCE % OF TOTAL
DEAL PRICING DATE ISSUANCE BALANCE ($000) ($000) BALANCE # OF LOANS FORECLOSURE LOSSES
- ---- ------------ -------- -------------- ------ ------- ---------- ----------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
C1 Jul-95 36 $ 172,165 $12,860(2) 7.47% 1 $0 $0
C2 Jan-96 91 304,650 7,537(3) 2.47 1 0 0
C3 Jun-96 124 400,936 0 0.00 0 0 0
C4 Jan-97 127 406,985 1,540 0.38 1 0 0
C5 Sep-97 93(4) 401,244(4) 4,812(5) 1.20 2 0 0
C6 Mar-98 91 796,414 0 0.00 0 0 0
MC2(6) Jun-98 25(4) 138,896(4) 0 0.00 0 0 0
C7 Apr-99 145 801,352 0 0.00 0 0 0
- --------------------------------------------------------------------------------------------------------------------------------
Total 732 $3,422,642 $26,749 0.78% 5 $0 $0
</TABLE>
1 As of July 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 One 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.
The second delinquent loan is 30 days delinquent.
6 Mortgage Capital Funding, Inc., Multifamily/Commercial Mortgage
Pass-Through Certificates, Series 1998-MC2
08/09/99 12:56 PM J.P. Morgan Commercial Mortgage Finance Corp., Series 1999-C8
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 COMMERCIAL 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>
<TABLE>
<CAPTION>
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
- -----------------------------------------------------------------------------------------------------------------------------------
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 descending balance order.
- ------------------------------------------------------------------------------------------------------------------------------------
Total: $
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*LTM - Last 12 months either trailing or last annual
<PAGE>
<TABLE>
<CAPTION>
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
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>
<TABLE>
<CAPTION>
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
- ------------------------------------------------------------------------------------------------------------------------
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>
<TABLE>
<CAPTION>
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
- -----------------------------------------------------------------------------------------------------------------------------------
OTHER
SHORT NAME TOTAL P&I TOTAL ADVANCES
PROSPECTUS (WHEN PAID THRU 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 abbreviated words in
place of a code number such as (FCL - In Foreclosure, MOD - Modification, DPO -
Discount Payoff, NS - Note Sale, BK - Bankruptcy, 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>
[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,
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"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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<PAGE>
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
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
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
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
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
</TABLE>
105
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
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.
