<PAGE>
As filed pursuant to Rule 424 B5
Registration No. 333-87441
PROSPECTUS SUPPLEMENT
(To Prospectus dated September 27, 2000)
J.P. MORGAN COMMERCIAL MORTGAGE FINANCE CORP.
Depositor
$670,226,000 (Approximate)
Mortgage Pass-Through Certificates, Series 2000-C10
THE OFFERED CERTIFICATES:
o The trust fund will issue nineteen classes of certificates. Only the
following eight classes of "offered certificates" are offered hereby:
<TABLE>
<CAPTION>
APPROXIMATE INITIAL CLASS BALANCE INITIAL PASS-THROUGH RATE (1)
CLASS OR NOTIONAL BALANCE (MAY BE SUBJECT TO ADJUSTMENT)
---------- ----------------------------------- -------------------------------
<S> <C> <C>
Class A1 $ 95,500,000 7.10750%
Class A2 $ 471,331,000 7.37100%
Class X $ 738,541,419(2) 0.91096%
Class B $ 31,388,000 7.40957%
Class C $ 29,541,000 7.53657%
Class D $ 9,232,000 7.63657%
Class E $ 23,079,000 8.09557%
Class F $ 10,155,000 8.23657%
</TABLE>
----------
(1) For the period between September 1, 2000 and September 30, 2000.
(2) Notional amount.
YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS BEGINNING ON PAGE S-10 OF THIS
PROSPECTUS SUPPLEMENT AND PAGE 9 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 January 1, 2000.
o The offered certificates will represent beneficial ownership interests in the
trust fund only.
o Interest will be payable monthly, commencing in October 2000.
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 October 4, 2000.
J.P. Morgan Securities Inc. and Salomon Smith Barney Inc. are acting as co-lead
managers and underwriters for the offering. 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. The proceeds to the depositor from
the initial sale of the offered certificates will be approximately 107.1% of
the initial principal balance thereof, plus accrued interest from the cut-off
date.
J.P. MORGAN & CO. SALOMON SMITH BARNEY
Prospectus Supplement dated September 27, 2000
<PAGE>
J.P. MORGAN COMMERCIAL MORTGAGE FINANCE CORP. JPMorgan
Mortgage Pass-Through Certificates, Series 2000-C10
ALASKA PENNSYLVANIA GEORGIA
1 property 6 properties 2 properties
$4,855,437 $18,754,312 $4,412,902
0.7% of total 2.5% of total 0.6 Of total
WASHINGTON NEW YORK FLORIDA
2 properties 10 properties 18 properties
$6,060,150 $22,460,339 $37,863,163
0.8% of total 3.0% of total 5.1% of total
IDAHO MAINE MISSISSIPPI
1 property 9 properties 2 properties
$2,055,124 $2,505,214 $3,609,040
0.3% of total 0.3% of total 0.5% of total
MISSOURI VERMONT ARKANSAS
3 properties 1 property 1 property
$7,792,512 $7,388,975 $2,473,559
1.1% of total 1.0% of total 0.3% of total
IOWA MASSACHUSETTS LOUISIANA
2 properties 6 properties 4 properties
$18,991,967 $17,899,979 $10,287,571
2.6% of total 2.4% of total 1.4% of total
MINNESOTA RHODE ISLAND TEXAS
3 properties 1 property 19 properties
$3,632,110 $3,093,989 $62,513,635
0.5% of total 0.4% of total 8.5% of total
ILLINOIS CONNECTICUT COLORADO
10 properties 3 properties 3 properties
$40,119,893 $4,785,363 $10,428,196
5.4% of total 0.6% of total 1.4% of total
WISCONSIN NEW JERSEY ARIZONA
3 properties 5 properties 7 properties
$9,909,169 $43,946,544 $29,938,636
1.3% of total 6.0% of total 4.1% of total
INDIANA MARYLAND UTAH
7 properties 2 properties 1 property
$19,204,668 $28,754,336 $997,340
2.6% of total 3.9% of total 0.1% of total
MICHIGAN VIRGINIA CALIFORNIA
5 properties 6 properties 39 properties
$20,941,902 $35,207,497 $203,147,004
2.8% of total 4.8% of total 27.5% of total
OHIO NORTH CAROLINA NEVADA
6 properties 4 properties 2 properties
$26,245,922 $16,431,634 $11,833,334
3.6% of total 2.2% of total 1.6% of total
PROPERTY TYPE [ ] (LESS THAN OR EQUAL TO) 1.00%
OF INITIAL POOL BALANCE
MULTIFAMILY 30.9%
RETAIL 26.5% [ ] 1.01% - 5.00%
OFFICE 17.2% OF INITIAL POOL BALANCE
INDUSTRIAL 12.6%
HOTEL 7.2% [ ] 5.01% - 10.00%
SELF-STORAGE 3.0% OF INITIAL POOL BALANCE
MIXED USE 1.4%
SKILLED NURSING FACILITY 1.1% [ ] (GREATER THAN) 10.00%
CONGREGATE CARE 0.2% 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 your certificates
in the prospectus and in this prospectus supplement varies, 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-90 in this prospectus supplement.
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-10
Description of the Mortgage Pool .................................................... S-28
Description of the Certificates ..................................................... S-59
Certain Prepayment, Maturity and Yield Considerations ............................... S-71
Master Servicer and Special Servicer ................................................ S-75
Description of the Pooling and Servicing Agreement .................................. S-81
Use of Proceeds ..................................................................... S-83
Certain Federal Income Tax Consequences ............................................. S-83
State Tax Considerations ............................................................ S-84
ERISA Considerations ................................................................ S-85
Legal Investment .................................................................... S-87
Plan of Distribution ................................................................ S-88
Legal Matters ....................................................................... S-89
Rating .............................................................................. S-89
Index of Principal Terms ............................................................ S-90
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: Special Amortization Schedules ...................................... D-1
Annex E: Sales Memorandum .................................................... E-1
Annex F: Certificateholder Reports ........................................... F-1
Annex G: Global Clearance, Settlement and Tax Documentation Procedures ....... G-1
PROSPECTUS
Prospectus .......................................................................... 1
Important Notice About Information Presented in this Prospectus and the Accompanying
Prospectus Supplement .............................................................. 2
Additional Information .............................................................. 3
Incorporation of Certain Information by Reference ................................... 3
Summary of Prospectus ............................................................... 4
Risk Factors ........................................................................ 9
Description of the Trust Funds ...................................................... 19
Use of Proceeds ..................................................................... 24
Yield Considerations ................................................................ 24
The Depositor ....................................................................... 27
Description of the Certificates ..................................................... 28
Description of the Agreements ....................................................... 35
Description of Credit Support ....................................................... 50
Certain Legal Aspects of Mortgage Loans and the Leases .............................. 52
Federal Income Tax Consequences ..................................................... 68
ERISA Considerations ................................................................ 96
Legal Investment .................................................................... 98
Plan of Distribution ................................................................ 100
Legal Matters ....................................................................... 100
Financial Information ............................................................... 100
Rating .............................................................................. 101
Glossary of Terms ................................................................... 102
</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. The table does not describe the Class Q Certificates which
represent the subordinate component of one of the mortgage loans. See
"Description of the Mortgage Pool -- The Suburban Lodge Loan". The initial
principal amount of the Class Q Certificates will be $1,542,452 and the
pass-through rate will be 8.727% per annum. The Class Q Certificates are not
offered hereby. Unless otherwise indicated, references in this prospectus
supplement to the certificates or a class of certificates are not references to
the Class Q Certificates.
<TABLE>
<CAPTION>
INITIAL
AGGREGATE
CERTIFICATE
PRINCIPAL DESCRIPTION INITIAL WEIGHTED
AMOUNT OF THE PASS- AVERAGE PRINCIPAL
RATING BY OR NOTIONAL % OF % CREDIT PASS-THROUGH THROUGH LIFE(2) WINDOW(2)
CLASS FITCH/MOODY'S AMOUNT TOTAL SUPPORT RATE RATE(1) (YEARS) (MONTHS)
------- -------------- --------------------- ----------- ---------------- -------------- ------------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Offered Certificates
A1 AAA/Aaa $ 95,500,000 12.93% 23.250%(3) Fixed 7.10750% 5.47 1-105
A2 AAA/Aaa $ 471,331,000 63.82% 23.250%(3) Fixed 7.37100% 9.10 105-114
X AAA/Aaa $ 738,541,419(4) N/A N/A (5) 0.91096% 5.47(6) N/A
B AA/Aa2 $ 31,388,000 4.25% 19.000% (7) 7.40957% 9.49 114-115
C A/A2 $ 29,541,000 4.00% 15.000% (8) 7.53657% 9.55 115-116
D A-/A3 $ 9,232,000 1.25% 13.750% (9) 7.63657% 9.61 116-116
E BBB/Baa2 $ 23,079,000 3.12% 10.625% (10) 8.09557% 9.61 116-116
F BBB-/Baa3 $ 10,155,000 1.38% 9.250% (11) 8.23657% 9.61 116-116
Private Certificates(12)
G BB+/Ba1 $ 14,771,000 2.00% 7.250% Fixed 6.75 %
H BB/Ba2 $ 14,771,000 2.00% 5.250% Fixed 6.75 %
J BB-/Ba3 $ 7,385,000 1.00% 4.250% Fixed 6.75 %
K B+/B1 $ 5,539,000 0.75% 3.500% Fixed 6.75 %
L B/B2 $ 7,386,000 1.00% 2.500% Fixed 6.75 %
M B-/B3 $ 5,539,000 0.75% 1.750% Fixed 6.75 %
NR NR/NR $ 12,924,419 1.75% 0.000% Fixed 6.75 %
</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, defaults or early termination. See "Certain
Prepayment, Maturity and Yield Considerations -- Weighted Average Life of
Offered Certificates" herein.
(3) Represents the approximate credit support for the Class A-1 and Class A-2
Certificates in the aggregate.
(4) Notional amount.
(5) The pass-through rate for the Class X Certificates will be equal to the
weighted average of the remittance rates on the mortgage loans minus the
weighted average of the pass-through rates on all other classes of
certificates. The remittance rates on the mortgage loans will represent
accrued interest on the mortgage loans net of certain servicing and
trustee fees. The initial pass-through rate on the Class X Certificates
will be approximately 0.91096% per annum.
(6) Implied weighted average life.
(7) The pass-through rate for the Class B Certificates will be the weighted
average of the remittance rates on the mortgage loans minus 0.827%.
(8) The pass-through rate for the Class C Certificates will be the weighted
average of the remittance rates on the mortgage loans minus 0.700%.
(9) The pass-through rate for the Class D Certificates will be the weighted
average of the remittance rates on the mortgage loans minus 0.600%.
(10) The pass-through rate for the Class E Certificates will be the weighted
average of the remittance rates on the mortgage loans minus 0.141%.
(11) The pass-through rate for the Class F Certificates will be the weighted
average of the remittance rates on the mortgage loans.
(12) Not offered hereby.
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
2000-C10.
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 one of the
underwriters.
MASTER SERVICER Midland Loan Services, Inc., a Delaware
corporation. See "Master Servicer and Special
Servicer" herein.
SPECIAL SERVICER ORIX Real Estate Capital Markets, LLC, a
Delaware limited liability company. The
special servicer may be removed without cause
under certain circumstances described herein
under "Master Servicer and Special Servicer"
herein.
TRUSTEE State Street Bank and Trust Company, a
Massachusetts trust company. See "Description
of the Pooling and Servicing Agreement --
Trustee" herein.
DEAL INFORMATION/ANALYTICS It is anticipated that certain mortgage pool
and certificate information will be available
from the following services: Bloomberg, L.P.,
Intex Solutions, Inc., Conquest and The Trepp
Group, LLC.
SIGNIFICANT DATES
CUT-OFF DATE September 1, 2000 (except for one mortgage
loan which has a cut-off date of September 10,
2000 and two mortgage loans which have a
cut-off date of September 11, 2000).
DELIVERY DATE On or about October 4, 2000.
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 October
2000.
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 August 2032.
REMITTANCE PERIOD For any distribution date, the period
beginning on the day after a determination
date in the immediately preceding month (or
the related cut-off date, in the case of the
first remittance period) through and including
the related determination date; provided, that
with respect to mortgage loan numbers 9, 63,
and 66, that may have due dates after the
determination date and with respect to any
mortgage loan with a grace period expiring
after the determination date but prior to the
ensuing distribution date, the remittance
period will be deemed to end on such due dates
or at the end of those grace periods, as
applicable.
THE CERTIFICATES
REGISTRATION OF THE OFFERED The offered certificates initially
CERTIFICATES will be issued in book-entry form.
Certificateholders acquiring beneficial
ownership interests in the offered
certificates may elect to hold their
book-entry certificate interests either
through The Depository Trust Company, in the
United States, or through Cedelbank or the
Clearstream System, in Europe. See
"Description of the Certificates -- Book-Entry
Registration of the Offered 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 in excess thereof.
THE MORTGAGE LOANS
THE MORTGAGE POOL The trust fund will consist of a mortgage pool
of 168 fixed rate mortgage loans secured by
first liens on fee simple and/or leasehold
interests in multifamily, retail, office,
industrial, hotel, self storage, mixed use,
nursing home, and congregate care properties,
collectively the "mortgaged properties,"
located in 33 states. All the mortgage loans
were originated or purchased by Morgan
Guaranty Trust Company of New York. See
"Description of the Mortgage Pool -- General."
One mortgage loan (the Suburban Lodge loan),
with a balance as of the cut-off date of
$13,542,452, will have a senior component and
a subordinate component having cut-off date
balances of $12,000,000 and $1,542,452,
respectively. Unless otherwise indicated,
references to, and all amounts and
calculations with respect to, the mortgage
loans and the mortgage pool
S-3
<PAGE>
shall be references to, and shall be with
respect to, the mortgage loans, other than the
Suburban Lodge loan, and the senior component
of the Suburban Lodge loan. Holders of the
offered certificates will only be entitled to
distributions on the senior component. See
"Description of the Mortgage Pool -- The
Suburban Lodge Loan."
General Mortgage Loan Characteristics
(as of the Cut-off Date, unless otherwise indicated)
<TABLE>
<S> <C>
Initial Pool Balance ................... $738,541,419
Number of Mortgage Loans ............... 168
Number of Mortgaged Properties ......... 194
Average Mortgage Loan Balance .......... $ 4,396,080
Maximum Mortgage Loan Balance .......... $24,701,611
Minimum Mortgage Loan Balance .......... $ 220,965
Weighted Average Mortgage Rate ......... 8.33%
Range of Mortgage Rates ................ 7.47% - 9.88%
Weighted Average Remaining Term to the
Earlier of Maturity or Anticipated
Repayment Date ......................... 116 months
Range of Remaining Term to the Earlier
of Maturity or Anticipated Repayment
Date ................................... 100 - 235 months
Weighted Average UW DSCR(1)(2) ......... 1.33x
Weighted Average LTV(1)(2) ............. 68.9%
Percentage of Initial Pool Balance made
up of:
Balloon Loans .......................... 49.9%
ARD Loans .............................. 40.0%
Interest Only Loans .................... 6.5%
Fully Amortizing Loans (other than ARD
Loans) ................................. 3.7%
Multi-Property Loans ................... 13.3%
Crossed Loans .......................... 7.9%
For a further description of the mortgage
loans, see "Description of the Mortgage Pool"
herein.
</TABLE>
----------------
(1) Excludes 3 credit tenant lease mortgage loans representing 1.3% of the
initial pool balance.
(2) The underwritten debt service coverage ratio and the loan-to-value ratio for
the Suburban Lodge loan were calculated based on the original principal balance
of the loan; however, the weighted average value indicated was weighted for this
loan based on the senior component of this loan. See "Description of the
Mortgage Pool -- The Suburban Lodge Loan."
S-4
<PAGE>
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 Al
OFFERED CERTIFICATES Certificates will be 7.10750%. The
pass-through rate on the Class A2
Certificates will be 7.37100%. The
pass-through rate on the Class B Certificates
will be the weighted average of the remittance
rates of the mortgage loans minus 0.827%. The
pass-through rate on the Class C Certificates
will be the weighted average of the remittance
rates of the mortgage loans minus 0.700%. The
pass-through rate on the Class D Certificates
will be the weighted average of the remittance
rates of the mortgage loans minus 0.600%. The
pass-through rate on the Class E Certificates
will be the weighted average of the remittance
rates of the mortgage loans minus 0.141%. The
pass-through rate for the Class F Certificates
will be the weighted average of the remittance
rates of 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 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
offered certificates for the initial
distribution date is set forth above under
"Executive Summary."
DISTRIBUTIONS
INTEREST DISTRIBUTIONS ON THE In general, holders of each class of
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.
S-5
<PAGE>
CLASS A1
CLASS A2 AND CLASS X
CLASS B
CLASS C
CLASS D
CLASS E
PRIVATE CERTIFICATES
See "Description of the Certificates --
Distributions -- Interest Distributions on the
Certificates" herein. See "Description of the
"Mortgage Pool -- The Suburban Lodge Loan" for
a description of the allocation of collections
with respect to the Suburban Lodge loan.
PRINCIPAL DISTRIBUTIONS ON THE In general, holders of a class of certificates
CERTIFICATES will be entitled to receive on each
distribution date principal in the order set
forth in the chart below, until the related
class balance is reduced to zero, to the
extent available after the payment of interest
for such class of certificates.
CLASS A1
CLASS A2
CLASS B
CLASS C
CLASS D
CLASS E
CLASS F
PRIVATE CERTIFICATES
See "Description of the Certificates --
Distributions -- Principal Distributions on
the Offered Certificates" herein. The Class X
Certificates do not have a class balance and
are therefore not entitled to any principal
distributions.
S-6
<PAGE>
See "Description of the Mortgage Pool -- The
Suburban Lodge Loan" for a description of the
allocation of collections with respect to the
Suburban Lodge loan.
P&I ADVANCES Generally, the master servicer is 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 the master 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 the master servicer or the trustee
makes an advance it will be entitled to
reimbursement of and interest on such advance.
Such advance will facilitate in making regular
monthly distributions of principal and
interest on the certificates. See "Description
of the Certificates -- Advances" herein. See
"Description of the Mortgage Pool -- The
Suburban Lodge Loan" for a description of
advances on the Suburban Lodge loan.
OTHER CONSIDERATIONS
ALLOCATION OF REALIZED 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
Certificates 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. See
"Description of the Mortgage Pool -- The
Suburban Lodge Loan" for a description of the
allocation of realized losses on the Suburban
Lodge loan.
SPECIAL PRINCIPAL PREPAYMENT Certain of the mortgage loans have a
CONSIDERATIONS prepayment premium period. 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
(including voluntary prepayments and
prepayments resulting from defaults,
liquidations and purchases of mortgage loans
due to a breach of a representation or
warranty) would reduce the aggregate principal
balance of the mortgage loans more
S-7
<PAGE>
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
Certificates Yield Considerations" herein.
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 "Federal Income Tax
Consequences" 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 generally be eligible for
purchase by persons investing assets of
employee benefit plans or individual
retirement accounts. The Department of Labor
has proposed amendments to the applicable
exemption that, if finalized in current form,
may permit plans to also purchase the Class B,
Class C,
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<PAGE>
Class D, Class E and Class F Certificates. It
is not certain if and when these amendments
will be issued or whether they will contain
the same relief as is currently proposed.
RATING The offered certificates are required to
receive the ratings from Fitch, Inc. and
Moody's Investors Service, Inc., indicated
above under "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.
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<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
COMMERCIAL LENDING MAY BE generally thought to be riskier than
DIFFERENT THAN RESIDENTIAL single-family residential lending for a variety
LENDING of reasons, including the likelihood that
larger loans are made to single borrowers or
groups of related mortgagors.
The mortgage loans are secured by the
following income-producing property types:
o multifamily properties (including mobile
home parks);
o retail properties;
o office properties;
o industrial properties;
o hotel properties;
o self storage facilities;
o mixed use properties;
o nursing home properties; and
o congregate care properties.
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. Most of the mortgage loans were
originated within twelve months of the cut-off
date. Consequently, the mortgage loans
generally do not have a long-standing payment
history.
NET CASH FLOW PRODUCED BY A Payment on each mortgage loan is dependent
MORTGAGED PROPERTY MAY BE primarily on:
INADEQUATE TO REPAY THE
MORTGAGE LOAN o the net operating income of the related
mortgaged property; and
o at maturity (whether at scheduled maturity
or, in the event of a default under the
mortgage loan, upon the acceleration of
such maturity), the market value of the
related mortgaged property (taking into
account any adverse effect of a foreclosure
proceeding on such market 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
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<PAGE>
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
underwriters, the master servicer, the special
servicer, the trustee or any of their
respective affiliates.
NONRECOURSE LOANS LIMIT THE Each mortgage loan generally is a
REMEDIES AVAILABLE FOLLOWING A nonrecourse loan. If there is a default there
MORTGAGOR DEFAULT will generally only be recourse against
the specific properties and other assets that
have been pledged to secure such mortgage
loan. Even if a mortgage loan provides for
recourse to a mortgagor or its affiliates, it
is unlikely the trust fund ultimately could
recover any amounts not covered by the
mortgaged property.
FUTURE CASH FLOWS AND PROPERTY Commercial and multifamily property values and
VALUES ARE NOT PREDICTABLE cash flows are volatile and may be insufficient
to cover debt service on the related mortgage
loan at any given time. If the cash flow from
a mortgaged property is reduced (for example,
if leases are not obtained or renewed), the
mortgagor may not be able to repay the loan.
Cash flow will determine the mortgagor's
ability to cover debt service and property
values affect the ability to refinance the
property and the amount of the recovery of
proceeds upon foreclosure. Cash flow and
property value depend upon a number of
factors, including:
o national, regional and local economic
conditions;
o local real estate conditions, such as an
oversupply of space similar to the related
mortgaged property;
o changes or weakness in a specific industry
segment;
o the nature of expenses:
o as a percentage of revenue;
o whether expenses are fixed or vary with
revenue;
o the level of required capital expenditures
for proper maintenance and demanded by
tenants;
o demographic factors;
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;
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<PAGE>
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 OF project also depends on the performance and
THE RELATED MORTGAGED PROPERTY viability of the property manager.
Properties deriving revenues primarily from
short-term sources (such as hotels, nursing
homes and self-storage 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.
THE FAILURE OF A TENANT Thirty-two of the mortgaged properties
WILL HAVE A NEGATIVE IMPACT representing approximately 15.2% of the initial
ON SINGLE TENANT PROPERTIES pool balance are secured by mortgaged
properties leased to a single tenant. The
performance of mortgage loans secured by
single tenant properties will depend
principally on the payment by the related
tenant of monthly rental payments under a
lease. Therefore, mortgage loans secured by
single tenant properties (or a small number of
tenants) are more likely to experience
interruptions of cash flow because there would
be no (or significantly less) rental income if
the single tenant (or one of a small number of
tenants) failed to meet its obligations, or
otherwise terminated, the lease. Income from
and the market value of retail, office and
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<PAGE>
industrial mortgaged properties occupied by a
single tenant would be adversely affected
under the following circumstances:
o if vacated space in such mortgaged
properties could not be leased or relet on
terms comparable to the prior lease;
o if the tenant were unable to meet its
obligations;
o if the 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.
Mortgage loans secured by retail and office
properties may also be adversely affected if
one or more tenants represent a significant
percentage of rental income and rental
payments cannot be collected from such tenant.
THE FAILURE OF AN ANCHOR Twenty of the mortgaged properties
TENANT WILL HAVE A NEGATIVE representing approximately 16.5% of the initial
IMPACT ON RETAIL PROPERTIES pool balance are secured by anchored
retail properties. The success of its anchor
tenant is important to a shopping center
property. An anchor tenant attracts and
maintains other stores and 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. Under certain circumstances, the
failure of an anchor tenant to meet its
obligations under, or otherwise terminate, its
lease may result in risks to the holder of the
related mortgage note similar to those
associated with mortgage loans secured by
single tenant properties. See "The Failure of
a Tenant will have a Negative Impact on Single
Tenant Properties" above.
SPECIAL RISKS ASSOCIATED WITH Ten of the mortgage loans, representing
approximately HOSPITALITY 7.2% of the initial pool balance, are
PROPERTIES secured by extended stay, 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:
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<PAGE>
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
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 Four of the mortgage loans representing
WITH NURSING HOMES AND approximately 1.2% 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
S-14
<PAGE>
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 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 $4,396,080, which is equal
to approximately 0.6% 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
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<PAGE>
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 3.3% of the initial pool
balance and no group of mortgage loans with
related mortgagors represent in the aggregate
more than 4.7% of the initial pool balance
unless cross-collateralized and
cross-defaulted with another mortgage loan.
Mortgage loans with the same borrower or
related mortgagors pose certain risks. For
example, if an entity that owns or controls
several mortgaged properties 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 Twelve of the mortgage loans, representing
CROSS-COLLATERALIZED AND approximately 7.9% of the initial pool balance,
CROSS-DEFAULTED PROPERTIES are cross-collateralized and cross-defaulted
with other mortgage loans in the mortgage pool.
No group of cross-collateralized and
cross-defaulted mortgage loans represents in
the aggregate more than 6.5% of the initial
pool balance. 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
o at the time the lien was granted, the
mortgagor were: (A) insolvent, (B)
inadequately capitalized or (C) unable to
pay its debts.
TIMING OF PRINCIPAL PREPAYMENTS If principal payments, property releases,
MAY LEAD TO DIFFERENT ASSET or prepayments are made on a mortgage loan,
CONCENTRATIONS THAN IN THE the remaining mortgage pool may be subject to
INITIAL MORTGAGE POOL more concentrated risk with respect
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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/Anticipated Repayment Date" 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 "-- Adverse Consequences Associated with
Concentration of Mortgage Loans and Related
Borrowers" above than classes with a higher
sequential priority.
THE GEOGRAPHIC CONCENTRATION OF Except as indicated in the following table,
MORTGAGED PROPERTIES SUBJECTS less than 5.0% of the mortgage loans,
THE FUND TO A GREATER EXTENT TO by initial pool balance are secured by
STATE OR REGIONAL CONDITIONS mortgaged properties in any one state.
<TABLE>
<CAPTION>
PERCENTAGE
NUMBER OF OF INITIAL
STATE PROPERTIES POOL BALANCE
---------------------- ------------ -------------
<S> <C> <C>
California ......... 39 27.5%
Texas .............. 19 8.5%
New Jersey ......... 5 6.0%
Illinois ........... 10 5.4%
Florida ............ 18 5.1%
</TABLE>
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. Such clause permits the holder of the
DEFAULT ON A MORTGAGE LOAN mortgage loan to accelerate the maturity of
the mortgage loan if the related mortgagor
sells or otherwise transfers or conveys the
related mortgaged property or its interest in
the mortgaged property in violation of the
terms of the mortgage loan. The mortgage loans
may also include a debt-acceleration clause,
which permits the lender to accelerate the
debt upon specified monetary or non-monetary
defaults of the mortgagor. The courts of all
states will enforce clauses
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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
OF AND CASH FLOW FROM A regulations, a current or previous owner or
MORTGAGED PROPERTY operator of real property may be liable for
the costs of cleanup of environmental
contamination on, under, 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
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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.
Either an environmental site assessment of
each of the mortgaged properties was performed
(in some cases, prior assessments were
updated) or an environmental insurance policy
was obtained in lieu of an environmental site
assessment 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 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.
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<PAGE>
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 WITH One hundred and eight mortgage loans
BALLOON LOANS (including 2 interest-only mortgage
loans), representing approximately 56.4% 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;
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 Fifty-four mortgage loans, representing
ANTICIPATED REPAYMENT DATE approximately 40.0% 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
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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.
ONE ACTION JURISDICTION MAY Several states have laws that prohibit
LIMIT THE ABILITY OF THE more 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 An appraisal of the value for each of the
STUDIES OF MORTGAGED PROPERTIES mortgaged properties was made between
October 6, 1998 and June 28, 2000. 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
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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 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
ACTIONS WHICH ARE ADVERSE specially serviced mortgage loans, the special
TO YOU servicer 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 mortgaged properties, representing
MAY BE UNCERTAIN IN A approximately 5.4% of the initial pool balance
BANKRUPTCY PROCEEDING (calculated based on allocated value in the
case of multi-property loans), are secured 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
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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 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 Some of the tenant leases contain provisions
ATTORNMENT that require the tenant to attorn to (that is,
recognize as landlord under the lease) a
successor owner of the property following
foreclosure. Some of the leases may be either
subordinate to the liens created by the
mortgage loans or else contain a provision
that requires the tenant to subordinate the
lease if the mortgagee agrees to enter into a
non-disturbance agreement.
In some states, if tenant leases are
subordinate to the liens created by the
mortgage loans and such leases do not contain
attornment provisions, such leases may
terminate upon the transfer of the property to
a foreclosing lender or purchaser at
foreclosure. Accordingly, in the case of the
foreclosure of a mortgaged property located in
such a state and leased to one or more
desirable tenants under leases that do not
contain attornment provisions, such mortgaged
property could experience a further decline in
value if such tenants' leases were terminated
(e.g., if such tenants were paying
above-market rents).
If a mortgage is subordinate to a lease, the
lender will not (unless it has otherwise
agreed with the tenant) possess the right to
dispossess the tenant upon foreclosure of the
property, and if the lease contains provisions
inconsistent with the mortgage (e.g.,
provisions relating to application of
insurance proceeds or condemnation awards),
the provisions of the lease will take
precedence over the provisions of the
mortgage.
THE MORTGAGED PROPERTIES Due to changes in applicable building and
MAY 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
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<PAGE>
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.
LITIGATION CONCERNS There may be legal proceedings pending and,
from time to time, threatened against the
mortgagors or their affiliates relating to the
business of or arising out of the ordinary
course of business of the mortgagors and their
affiliates. There can be no assurance that
such litigation will not have a material
adverse effect on the distributions to
certificateholders.
THE OFFERED CERTIFICATES
ONLY TRUST FUND ASSETS ARE If the assets of the trust fund are
AVAILABLE TO PAY YOU insufficient to make payments on the
offered certificates, no other assets will be
available for payment of the deficiency. See
"Risk Factors -- The assets of the trust fund
may not be sufficient to pay your
certificates" in the prospectus.
PREPAYMENTS WILL AFFECT YOUR Prepayments. The yield to maturity on the
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
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<PAGE>
resulting from casualty or condemnation,
defaults, liquidations or repurchases for
breaches of representations or warranties) 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.
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,
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<PAGE>
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. Prepayment premiums are generally not
charged for prepayments resulting from
casualty or condemnation and would not be paid
in connection with repurchases of mortgage
loans for breaches of representations or
warranties.
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
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."
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<PAGE>
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,
SERVICER TO RECEIVE CERTAIN the servicers or the trustee, as applicable,
ADDITIONAL COMPENSATION will be entitled to receive interest on
WHICH TAKES PRECEDENCE unreimbursed advances and unreimbursed
OVER YOUR RIGHT TO RECEIVE servicing expenses. The right of the servicers
DISTRIBUTIONS 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 with respect to
each specially serviced mortgage loan and any
collections thereon, including specially
serviced mortgage loans which have been
returned to performing status. 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 approval of the holders of a specified
MAY ADVERSELY AFFECT YOUR percentage of the aggregate certificate
INTERESTS balance of all outstanding certificates will
be required to direct, and will be sufficient
to bind all certificateholders to, certain
actions, including directing the special
servicer or the master servicer with respect
to actions to be taken with respect to certain
mortgage loans and real estate owned
properties and amending the pooling and
servicing agreement in certain circumstances.
See "Description of the Pooling and Servicing
Agreement -- Voting Rights" herein.
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<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 and the Subordinate Component in the amount of $1,542,452 with
respect to one mortgage loan (See "-- The Suburban Lodge Loan"), of
approximately $738,541,419 (the "Initial Pool Balance"). Except as otherwise
indicated, all amounts and calculations presented in this Prospectus Supplement
with respect to the Mortgage Loans will exclude the Subordinate Component. 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
multifamily properties, retail properties, office properties, industrial
properties, hotel properties, mixed use properties, nursing home 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, except for one Mortgage Loan which has scheduled
payments due on the 10th day of each month and two Mortgage Loans which have
scheduled payments due on the 11th day of each month (each, a "Due Date").
All of the Mortgage Loans were originated or purchased by Morgan Guaranty
Trust Company of New York ("MGT"). Sixty-three of the Mortgage Loans,
representing 30.2% by Initial Principal Balance, were purchased by MGT from
Finova Realty Capital Inc. (the "Finova Loans"). 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 mortgage loan purchase agreement between the
Seller and the Depositor (the "Mortgage Loan Purchase 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, Annex D 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. J.P. Morgan & Co.
Incorporated and Chase Manhattan Corporation announced on September 13, 2000
that they have agreed to merge. The merger is subject to approval by
shareholders of both companies as well as by federal, state and foreign
regulatory authorities.
REPRESENTATIONS AND WARRANTIES
Under the Mortgage Loan Purchase Agreement, the Seller will make certain
representations and warranties to the Depositor. Pursuant to the terms of the
Mortgage Loan Purchase Agreement, the Seller will be obligated to cure any
breach of such representations and warranties or to repurchase any of the
Mortgage Loans it sold to 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
Mortgage Loan Purchase Agreement to the Trustee for the benefit of the
Certificateholders. The sole remedy available to the Trustee or the
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<PAGE>
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 will generally represent and warrant as of the Delivery Date
with respect to each of the Mortgage Loans it sold to, among other things,
subject to certain exceptions set forth in the related Mortgage Loan Purchase
Agreement, that: (i) the Mortgage Loan is not one month or more delinquent in
payment of principal and interest and has not been so delinquent in the
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) the 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) the
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 the Mortgage subject only to certain permitted
encumbrances; (iv) there is an assignment of leases and rents provision or
agreement 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) to the Seller's actual knowledge, 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 fee simple or leasehold title to the Mortgaged
Property; (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 the Mortgage Loan to the Depositor, the Seller had good title
to and was the sole owner of the Mortgage Loan free and clear of any pledge,
lien or encumbrance and such assignment validly transfers ownership of the
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 leases and rents 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 the 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 the 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 the 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 the 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 Mortgage
Loan and related Mortgage Loan documents have not been modified or waived in
any material respect except as set forth in the related Mortgage Loan file;
(xiv) the 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 material respects
with all applicable state or federal laws including usury to the extent
non-compliance would have a material adverse effect on the Mortgage Loan;
(xvii) to the Seller's knowledge, as of the date of origination of the Mortgage
Loan, based on inquiry customary in the industry, and to the Seller's actual
knowledge, as of the Delivery Date, 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 reviewed in connection with
the origination thereof reveals no known circumstances or conditions with
respect to the Mortgaged
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<PAGE>
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 the 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) as of the date of origination of the Mortgage
Loan, and to Seller's actual knowledge, as of the Delivery Date, after
consultation with the loan servicer, 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; and (xxii) to the Seller's knowledge, as of the date of origination
of the Mortgage Loan, and to Seller's actual knowledge, as of the Delivery
Date, there are no pending actions, suits or proceedings by or before any court
or other governmental authority against or affecting the related Mortgagor
under the Mortgage Loan or the Mortgaged Property which, if determined against
the 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 the Mortgage Loan.
THE SUBURBAN LODGE LOAN
One of the Mortgage Loans with a Cut-off Date Balance of $13,542,452 (the
"Suburban Lodge Loan") will have a senior component (the "Senior Component")
and a subordinate component (the "Subordinate Component") having a balance as
of the Cut-off Date of $12,000,000 and $1,542,452, respectively. The Senior
Component will represent 1.6% of the Initial Pool Balance. The Initial Pool
Balance was calculated without including the Subordinate Component. The Class Q
Certificates will represent the Subordinate Component of the Suburban Lodge
Loan.
Amounts payable with respect to the Subordinate Component will not be
included in the Available Distribution Amount. The pass-through rate on each
component will be 8.727% per annum. Scheduled interest payments in respect of
the Suburban Lodge Loan (including the Subordinate Component thereof) received
during any Remittance Period will be allocated between the Senior Component and
the Subordinate Component in proportion to the respective amounts of each
component prior to giving effect to any related collections of principal. Any
interest shortfalls will be allocated first to the Subordinate Component and
then to the Senior Component. The portion of the trustee and servicing fee
allocable to the Suburban Lodge Loan (including the Subordinate Component) will
be allocated to both components, pro rata, based on the amount of each
component. See "Description of the Certificates -- Distributions."
Principal collections with respect to the Suburban Lodge Loan will be
allocated solely to the Senior Component in reduction of the amount thereof
until reduced to zero. Thereafter, all principal collections on the Suburban
Lodge Loan will be payable to the Subordinate Component. This allocation of
principal collections will result in a remaining amortization term as of the
Cut-off Date of 274 months for the Senior Component, while the remaining
amortization term as of the Cut-off Date of the Suburban Lodge Loan is 286
months.
Advances with respect to delinquent Monthly Payments on the Suburban Lodge
Loan will only be made with respect to any excess of the portion of the Monthly
Payments (net of the Master Servicing Fee) due and payable on the Senior
Component over the amount actually received, subject to the limitations
described under "Description of the Certificates -- Advances." To the extent a
Collateral Value Adjustment is required to be made with respect to the Suburban
Lodge Loan, the interest portion of the P&I Advance in respect of the Suburban
Lodge Loan will be reduced to be equal to the product of (i) the amount of the
interest portion of the P&I Advance that would otherwise be required to be made
for the Distribution Date without regard to this sentence, multiplied by (ii) a
fraction, the numerator of which is equal to the balance of the Senior
Component, net of the excess, if any, of the Collateral Value Adjustment over
the balance of the Subordinate Component, and the denominator of which is equal
to the balance of the Senior Component. See "Description of the Certificates --
Collateral Value Adjustment" and "-- Advances."
Realized losses on the Suburban Lodge Loan will be allocated, first, to
the Subordinate Component and then to the Senior Component. See "Description of
the Certificates -- Subordination."
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Subject to the terms of the Pooling and Servicing Agreement, the Directing
Certificateholder will not be entitled to exercise any of the rights and powers
of the Directing Certificateholder described herein, with respect to the
Suburban Lodge Loan and instead the holders of the Class Q Certificates will be
entitled to appoint an operating advisor (an "Operating Advisor") to exercise
similar rights with respect to the Suburban Lodge Loan. If the Operating
Advisor replaces the Special Servicer, the replacement Special Servicer will
act as a Special Servicer only as to the Suburban Lodge Loan, and the replaced
Special Servicer will continue to act as Special Servicer for the remainder of
the Mortgage Loans.
The Special Servicer will be required (i) to consult with the related
Operating Advisor with respect to proposals to take any significant action with
respect to the Suburban Lodge Loan or the related Mortgage Property, and to
consider alternative actions recommended by the Operating Advisor and (ii)
prior to taking any of the following actions, to receive the written approval
of such Operating Advisor for (a) any modification of, or waiver with respect
to, the Suburban Lodge Loan that would result in the extension of the Maturity
Date thereof, a reduction in the Mortgage Interest Rate borne thereby or
Monthly Payment payable thereon or a forgiveness of interest on or principal of
the Suburban Lodge Loan, (b) any foreclosure upon or comparable conversion
(which may include acquisition of a foreclosed property) of the ownership of
the related Mortgaged Property or any acquisition of the related Mortgaged
Property by deed-in-lieu of foreclosure; (c) any sale of a related Mortgaged
Property; (d) any action to bring the related Mortgaged Property into
compliance with environmental laws; (e) any substitution or release of the
related Mortgaged Property (other than a substitution or release permitted to
be made by the terms of the Suburban Lodge Loan) without the consent of the
mortgagee; (f) any legal action to enforce the related Mortgage Loan Documents;
or (g) any waiver or release of a material claim, right or remedy with respect
to the Suburban Lodge Loan.
Following an event of default with respect to the Suburban Lodge Loan, the
holders of the Class Q Certificates may purchase the Suburban Lodge Loan at a
price equal to the outstanding principal balance of the Suburban Lodge Loan,
plus accrued interest thereon (together with unreimbursed advances and interest
thereon), due and unpaid servicing fees and related trust fund expenses.
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. Unless
otherwise indicated, reference to the Mortgage Loans will not include the
Subordinate Component of the Suburban Lodge Loan. See "-- The Suburban Lodge
Loan" above. Accordingly, the values indicated below under "Weighted Average UW
DSCR" and "Weighted Average LTV" were weighted for the Suburban Lodge Loan
based on the Senior Component thereof. However, the UW DSCR and Loan-to-Value
Ratio for the Suburban Lodge Loan set forth or factored in below were
calculated based on the original principal balance of the Suburban Lodge Loan.
In addition, the values indicated below under "Weighted Average UW DSCR" and
"Weighted Average LTV" exclude 3 credit tenant lease Mortgage Loans
representing 1.3% of the Initial Pool Balance. For a Mortgage Loan secured by
more than one Mortgaged Property the original principal balance of the 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 a Mortgage Loan is allocated to each related Mortgaged
Property based on the allocation of the original principal balance.
S-31
<PAGE>
MORTGAGE INTEREST RATES
<TABLE>
<CAPTION>
NUMBER PERCENT BY
OF AGGREGATE AGGREGATE WEIGHTED WEIGHTED
MORTGAGE PRINCIPAL PRINCIPAL AVERAGE AVERAGE
MORTGAGE INTEREST RATES LOANS BALANCE BALANCE UW DSCR LTV
---------------------------------- ---------- -------------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C>
7.2501% - 7.5000% ................ 2 $ 47,696,650 6.5% 1.70x 58.9%
7.5001% - 7.7500% ................ 4 38,212,995 5.2 1.30 72.7
7.7501% - 8.0000% ................ 17 111,676,454 15.1 1.30 71.8
8.0001% - 8.2500% ................ 37 155,499,004 21.1 1.29 71.7
8.2501% - 8.5000% ................ 29 107,251,690 14.5 1.29 68.3
8.5001% - 8.7500% ................ 35 139,341,719 18.9 1.31 69.3
8.7501% - 9.0000% ................ 27 107,935,833 14.6 1.32 67.7
9.0001% - 9.2500% ................ 11 25,474,319 3.4 1.44 59.2
9.2501% - 9.5000% ................ 4 4,666,210 0.6 1.43 61.4
9.5001% or more .................. 2 786,546 0.1 1.30 74.1
-- ------------ ---- ---- ----
Total/Weighted Average: ......... 168 $738,541,419 100.0% 1.33x 68.9%
=== ============ ===== ==== ====
</TABLE>
Weighted Average Mortgage Interest Rate: 8.33%
Minimum Mortgage Interest Rate: 7.470%
Maximum Mortgage Interest Rate: 9.875%
CURRENT PRINCIPAL BALANCE
<TABLE>
<CAPTION>
NUMBER PERCENT BY
OF AGGREGATE AGGREGATE WEIGHTED WEIGHTED
MORTGAGE PRINCIPAL PRINCIPAL AVERAGE AVERAGE
CURRENT PRINCIPAL BALANCE LOANS BALANCE BALANCE UW DSCR LTV
---------------------------------- ---------- --------------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C>
$0 - $500,000..................... 5 $ 1,714,244 0.2% 1.30x 71.1%
$500,001 - $750,000............... 13 7,898,383 1.1 1.29 69.6
$750,001 - $1,000,000............. 8 7,539,356 1.0 1.39 65.5
$1,000,001 - $1,500,000........... 28 34,972,053 4.7 1.34 70.0
$1,500,001 - $2,000,000........... 12 21,037,517 2.8 1.28 68.8
$2,000,001 - $2,500,000........... 16 35,810,151 4.8 1.43 65.9
$2,500,001 - $3,000,000........... 11 30,033,878 4.1 1.37 69.2
$3,000,001 - $3,500,000........... 9 29,679,926 4.0 1.30 75.1
$3,500,001 - $4,000,000........... 10 37,873,486 5.1 1.33 67.9
$4,000,001 - $4,500,000........... 8 33,997,386 4.6 1.25 69.6
$4,500,001 - $5,000,000........... 4 18,838,900 2.6 1.26 71.5
$5,000,001 - $6,000,000........... 8 44,278,128 6.0 1.28 72.7
$6,000,001 - $7,500,000........... 9 62,900,116 8.5 1.34 67.4
$7,500,001 - $10,000,000.......... 8 67,565,181 9.1 1.26 71.7
$10,000,001 - $12,500,000......... 6 66,549,982 9.0 1.32 68.1
$12,500,001 - $15,000,000......... 3 39,928,859 5.4 1.30 71.3
$15,000,001 - $17,500,000......... 3 49,548,357 6.7 1.30 73.3
$17,500,001 - $20,000,000......... 2 36,528,558 4.9 1.29 69.6
$20,000,001 - $25,000,000......... 5 111,846,955 15.1 1.45 62.8
-- ------------ ---- ---- ----
Total/Weighted Average: ......... 168 $738,541,419 100.0% 1.33x 68.9%
=== ============ ===== ==== ====
</TABLE>
Average Principal Balance per Mortgage Loan: $4,396,080
Average Principal Balance per Mortgaged Property: $3,806,915
Smallest Loan Balance: $220,965
Largest Loan Balance: $24,701,611
S-32
<PAGE>
ORIGINAL TERM TO MATURITY/ANTICIPATED REPAYMENT DATE IN MONTHS
<TABLE>
<CAPTION>
NUMBER PERCENT BY
OF AGGREGATE AGGREGATE WEIGHTED WEIGHTED
MORTGAGED PRINCIPAL PRINCIPAL AVERAGE AVERAGE
ORIGINAL TERM IN MONTHS PROPERTIES BALANCE BALANCE UW DSCR LTV
--------------------------------- ------------ --------------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Balloon
109 - 120 ...................... 104 $363,465,485 49.2% 1.32x 70.1%
217 - 228 ...................... 1 2,057,277 0.3 0.00 0.0
229 - 240 ...................... 1 2,974,994 0.4 0.00 0.0
--- ------------ ---- ---- ----
Subtotal: .................... 106 $368,497,756 49.9% 1.32x 70.1%
Anticipated Repayment Date
109 - 120 ...................... 53 $290,994,457 39.4% 1.30x 69.5%
169 - 180 ...................... 1 4,338,163 0.6 1.20 70.0
--- ------------ ---- ---- ----
Subtotal: .................... 54 $295,332,620 40.0% 1.30x 69.5%
Interest Only
109 - 120 ...................... 2 $ 47,696,650 6.5% 1.70x 58.9%
--- ------------ ---- ---- ----
Subtotal: .................... 2 $ 47,696,650 6.5% 1.70x 58.9%
Fully Amortizing
109 - 120 ...................... 1 $ 2,055,124 0.3% 1.29x 46.7%
169 - 180 ...................... 1 2,555,432 0.3 1.10 77.4
229 - 240 ...................... 4 22,403,837 3.0 1.31 63.3
--- ------------ ---- ---- ----
Subtotal: .................... 6 $ 27,014,393 3.7% 1.28x 63.4%
--- ------------ ---- ---- ----
Total/Weighted Average: ......... 168 $738,541,419 100.0% 1.33x 68.9%
=== ============ ===== ==== ====
</TABLE>
Weighted Average Original Term to Maturity/Anticipated Repayment Date in
Months: 125
S-33
<PAGE>
REMAINING TERM TO MATURITY/ANTICIPATED REPAYMENT DATE IN MONTHS
<TABLE>
<CAPTION>
NUMBER PERCENT BY
OF AGGREGATE AGGREGATE WEIGHTED WEIGHTED
REMAINING TERM TO MATURITY/ MORTGAGED PRINCIPAL PRINCIPAL AVERAGE AVERAGE
ANTICIPATED REPAYMENT DATE IN MONTHS PROPERTIES BALANCE BALANCE UW DSCR LTV
-------------------------------------- ------------ --------------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Balloon
97 - 108 ............................ 30 $123,272,291 16.7% 1.34x 68.1%
109 - 120 ........................... 74 240,193,194 32.5 1.31 71.1
217 - 228 ........................... 2 5,032,271 0.7 0.00 0.0
-- ------------ ---- ---- ----
Subtotal: ......................... 106 $368,497,756 49.9% 1.32x 70.1%
Anticipated Repayment Date
97 - 108 ............................ 3 $ 11,673,243 1.6% 1.36x 73.0%
109 - 120 ........................... 50 279,321,214 37.8 1.30 69.3
169 - 180 ........................... 1 4,338,163 0.6 1.20 70.0
--- ------------ ---- ---- ----
Subtotal: ......................... 54 $295,332,620 40.0% 1.30x 69.5%
Interest Only
97 - 108 ............................ 2 $ 47,696,650 6.5% 1.70x 58.9%
--- ------------ ---- ---- ----
Subtotal: ......................... 2 $ 47,696,650 6.5% 1.70x 58.9%
Fully Amortizing
109 - 120 ........................... 1 $ 2,055,124 0.3% 1.29x 46.7%
157 - 168 ........................... 1 2,555,432 0.3 1.10 77.4
229 - 240 ........................... 4 22,403,837 3.0 1.31 63.3
--- ------------ ---- ---- ----
Subtotal: ......................... 6 $ 27,014,393 3.7% 1.28x 63.4%
--- ------------ ---- ---- ----
Total/Weighted Average: .............. 168 $738,541,419 100.0% 1.33x 68.9%
=== ============ ===== ==== ====
</TABLE>
Weighted Average Remaining Term to Maturity/Anticipated Repayment Date in
Months: 116
S-34
<PAGE>
REMAINING AMORTIZATION TERM IN MONTHS (1)(2)
<TABLE>
<CAPTION>
PERCENT BY
NUMBER AGGREGATE AGGREGATE WEIGHTED WEIGHTED
OF PRINCIPAL PRINCIPAL AVERAGE AVERAGE
REMAINING TERM IN MONTHS MORTGAGE LOANS BALANCE BALANCE UW DSCR LTV
------------------------------------------ ---------------- --------------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Balloon Loans ............................
253-264 ................................. 1 $ 2,057,277 0.3% 0.00x 0.0%
265-276 ................................. 3 18,535,058 2.7 1.26 62.4
277-288 ................................. 19 33,211,752 4.8 1.52 65.9
289-300 ................................. 20 62,910,837 9.1 1.36 68.5
325-336 ................................. 5 5,617,825 0.8 1.25 72.2
337-348 ................................. 14 78,203,520 11.3 1.28 70.5
349-360 ................................. 44 167,961,488 24.3 1.29 72.0
-- ------------ ---- ---- ----
Subtotal .............................. 106 $368,497,756 53.3% 1.32x 70.1%
Anticipated Repayment Date Loans .........
229-240 ................................. 2 $ 4,500,919 0.7% 1.37x 63.6%
253-264 ................................. 1 4,338,163 0.6 1.20 70.0
265-276 ................................. 1 2,100,000 0.3 1.24 75.0
277-288 ................................. 3 4,178,410 0.6 1.64 67.4
289-300 ................................. 10 54,387,889 7.9 1.33 68.1
313-324 ................................. 1 6,820,989 1.0 1.32 60.4
337-348 ................................. 1 5,573,634 0.8 1.14 74.5
349-360 ................................. 35 213,432,617 30.9 1.29 70.1
--- ------------ ---- ---- ----
Subtotal .............................. 54 $295,332,620 42.7% 1.30x 69.5%
Fully Amortizing Loans ...................
109-120 ................................. 1 $ 2,055,124 0.3% 1.29x 46.7%
157-168 ................................. 1 2,555,432 0.4 1.10 77.4
217-228 ................................. 1 2,435,723 0.4 1.82 57.7
229-240 ................................. 3 19,968,114 2.9 1.23 64.2
--- ------------ ---- ---- ----
Subtotal .............................. 6 $ 27,014,393 3.9% 1.28x 63.4%
Total/Weighted Average: 166 $690,844,769 100.0% 1.31x 69.6%
=== ============ ===== ==== ====
</TABLE>
Weighted Average Remaining Amortization Term in Months: 328
----------
(1) Excludes the interest only loans (Loan Numbers 1 and 2).
(2) The remaining amortization term for the Suburban Lodge Loan, one of the
Balloon Loans, is 286 months. The table was prepared using the remaining
amortization term of the Senior Component thereof which is 274 months.
S-35
<PAGE>
MONTH AND YEAR OF ORIGINATION
<TABLE>
<CAPTION>
NUMBER PERCENT BY
OF AGGREGATE AGGREGATE WEIGHTED WEIGHTED
MORTGAGE PRINCIPAL PRINCIPAL AVERAGE AVERAGE
MONTH AND YEAR OF ORIGINATION LOANS BALANCE BALANCE UW DSCR LTV
---------------------------------- ---------- --------------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C>
December 1998 .................... 1 $ 3,912,996 0.5% 1.54x 69.3%
March 1999 ....................... 2 2,591,397 0.4 1.83 72.0
April 1999 ....................... 3 7,210,171 1.0 1.25 71.9
May 1999 ......................... 2 4,048,113 0.5 1.29 68.9
June 1999 ........................ 6 32,272,863 4.4 1.33 66.3
July 1999 ........................ 8 28,923,054 3.9 1.41 71.9
August 1999 ...................... 12 99,297,526 13.4 1.49 63.2
September 1999 ................... 17 72,541,633 9.8 1.27 70.0
October 1999 ..................... 11 33,443,427 4.5 1.31 71.8
November 1999 .................... 30 138,375,077 18.7 1.29 70.5
December 1999 .................... 23 111,027,249 15.0 1.33 69.7
January 2000 ..................... 6 10,730,902 1.5 1.30 66.6
February 2000 .................... 10 24,648,800 3.3 1.29 64.1
March 2000 ....................... 11 64,051,043 8.7 1.27 72.7
April 2000 ....................... 9 42,947,944 5.8 1.25 69.9
May 2000 ......................... 6 32,578,566 4.4 1.37 67.5
June 2000 ........................ 4 16,897,197 2.3 1.42 63.0
July 2000 ........................ 5 9,319,093 1.3 1.28 72.7
August 2000 ...................... 2 3,724,369 0.5 1.23 76.8
-- ------------ ---- ---- ----
Total/Weighted Average: ......... 168 $738,541,419 100.0% 1.33x 68.9%
=== ============ ===== ==== ====
</TABLE>
Weighted Average Months Since Origination: 9
YEAR OF MATURITY/ANTICIPATED REPAYMENT DATE
<TABLE>
<CAPTION>
NUMBER PERCENT BY
OF AGGREGATE AGGREGATE WEIGHTED WEIGHTED
YEAR OF MATURITY/ MORTGAGE PRINCIPAL PRINCIPAL AVERAGE AVERAGE
ANTICIPATED REPAYMENT DATE LOANS BALANCE BALANCE UW DSCR LTV
---------------------------------- ---------- --------------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C>
2009 ............................. 91 $426,262,980 57.7% 1.36x 68.6%
2010 ............................. 69 277,948,736 37.6 1.31 69.6
2014 ............................. 1 2,555,432 0.3 1.10 77.4
2015 ............................. 1 4,338,163 0.6 1.20 70.0
2018 ............................. 1 2,057,277 0.3 0.00 0.0
2019 ............................. 2 5,410,717 0.7 1.82 57.7
2020 ............................. 3 19,968,114 2.7 1.23 64.2
-- ------------ ---- ---- ----
Total/Weighted Average: ......... 168 $738,541,419 100.0% 1.33x 68.9%
=== ============ ===== ==== ====
</TABLE>
S-36
<PAGE>
The following two tables set forth the range of Cut-off Date LTV Ratios
and Maturity Date or 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 or 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, 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 6, 1998 and June 28, 2000. 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>
NUMBER PERCENT BY
OF AGGREGATE AGGREGATE WEIGHTED WEIGHTED
MORTGAGE PRINCIPAL PRINCIPAL AVERAGE AVERAGE
CUT-OFF DATE LTV RATIOS LOANS BALANCE BALANCE UW DSCR LTV
---------------------------------- ---------- --------------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C>
50.00% or less ................... 2 $ 3,683,318 0.5% 1.36x 44.2%
50.01% - 55.00% .................. 3 11,954,316 1.6 1.41 53.2
55.01% - 60.00% .................. 14 99,050,685 13.6 1.52 58.5
60.01% - 65.00% .................. 21 104,099,726 14.3 1.32 63.0
65.01% - 70.00% .................. 40 141,139,716 19.4 1.36 68.5
70.01% - 75.00% .................. 57 247,924,509 34.0 1.29 72.6
75.01% - 80.00% .................. 27 120,103,716 16.5 1.26 77.7
80.01% or more ................... 1 1,297,487 0.2 1.25 82.4
-- ------------ ---- ---- ----
Total/Weighted Average: ......... 165 $729,253,473 100.0% 1.33x 68.9%
=== ============ ===== ==== ====
</TABLE>
Weighted Average Cut-off Date LTV Ratio: 68.9%
S-37
<PAGE>
MATURITY DATE OR ANTICIPATED REPAYMENT DATE
LTV RATIOS (1)
<TABLE>
<CAPTION>
NUMBER PERCENT BY
OF AGGREGATE AGGREGATE WEIGHTED WEIGHTED
MATURITY DATE OR MORTGAGE PRINCIPAL PRINCIPAL AVERAGE AVERAGE
ANTICIPATED REPAYMENT DATE LTV RATIOS LOANS BALANCE BALANCE UW DSCR LTV
--------------------------------------- --------- -------------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C>
50.00% or less ........................ 12 $ 33,388,466 4.69% 1.36x 57.6%
50.01% - 55.00% ....................... 18 73,973,220 10.4 1.35 60.3
55.01% - 60.00% ....................... 36 184,212,014 25.89 1.45 64.5
60.01% - 65.00% ....................... 44 182,657,465 25.67 1.29 70.5
65.01% - 70.00% ....................... 39 170,261,471 23.93 1.28 74.4
70.01% - 75.00% ....................... 13 67,034,390 9.42 1.27 78.8
-- ------------ ----- ---- ----
Total/Weighted Average: .............. 162 $711,527,026 100.0% 1.34x 69.1%
=== ============ ===== ==== ====
</TABLE>
Weighted Average Maturity Date LTV Ratio: 61.4%
----------
(1) Excludes fully amortizing Mortgage Loans.
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 calculated for the related Mortgaged Property to the amounts of principal
and interest due under such Mortgage Loan during the 12-month period that
includes October 1, 2000 and September 1, 2001. "Underwritten Cash Flow" or "UW
Cash Flow" means the Underwritten NOI (as defined below) for the Mortgaged
Property decreased by an amount that the Seller 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. "Debt Service Coverage Ratio" for a period, on the
other hand, is the ratio of the NOI for the period to the amounts of principal
and interest due under the related Mortgage Loan for the same period.
"Underwritten NOI" or "UW NOI" means the NOI for the Mortgaged Property as
determined by the Seller 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 Flows 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
S-38
<PAGE>
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 DEBT SERVICE COVERAGE RATIOS
<TABLE>
<CAPTION>
NUMBER PERCENT BY
OF AGGREGATE AGGREGATE WEIGHTED WEIGHTED
MORTGAGE PRINCIPAL PRINCIPAL AVERAGE AVERAGE
UNDERWRITTEN DEBT SERVICE COVERAGE RATIOS LOANS BALANCE BALANCE UW DSCR LTV
------------------------------------------- ---------- -------------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C>
1.201 or less ............................. 7 $ 20,263,916 2.8% 1.13x 68.9%
1.201x - 1.250x ........................... 43 164,846,565 22.6 1.23 71.8
1.251x - 1.300x ........................... 48 235,116,880 32.2 1.27 70.5
1.301x - 1.400x ........................... 38 170,518,347 23.4 1.35 68.3
1.401x - 1.500x ........................... 13 61,297,228 8.4 1.43 66.5
1.501x - 1.600x ........................... 7 37,678,937 5.2 1.56 61.5
1.601x - 1.700x ........................... 1 997,340 0.1 1.60 57.0
1.701x - 1.800x ........................... 1 1,100,631 0.2 1.78 73.4
1.801x - 1.900x ........................... 5 33,967,564 4.7 1.82 60.8
1.901x - 2.000x ........................... 1 992,506 0.1 1.91 55.1
2.001x - 2.100x ........................... 1 2,473,559 0.3 2.06 64.2
-- ------------ ---- ---- ----
Total/Weighted Average: .................. 165 $729,253,473 100.0% 1.33x 68.9%
=== ============ ===== ==== ====
</TABLE>
Weighted Average UW DSCR: 1.33x
S-39
<PAGE>
GEOGRAPHIC DISTRIBUTION
<TABLE>
<CAPTION>
NUMBER PERCENT BY
OF AGGREGATE AGGREGATE WEIGHTED WEIGHTED
MORTGAGED PRINCIPAL PRINCIPAL AVERAGE AVERAGE
GEOGRAPHIC DISTRIBUTION PROPERTIES BALANCE BALANCE UW DSCR LTV
---------------------------------- ------------ --------------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C>
California ....................... 39 $203,147,004 27.5% 1.40x 67.8%
Texas ............................ 19 62,513,635 8.5 1.32 66.7
New Jersey ....................... 5 43,946,544 6.0 1.27 67.2
Illinois ......................... 10 40,119,893 5.4 1.34 69.6
Florida .......................... 18 37,863,163 5.1 1.31 72.8
Virginia ......................... 6 35,207,497 4.8 1.26 62.3
Arizona .......................... 7 29,938,636 4.1 1.31 65.1
Maryland ......................... 2 28,754,336 3.9 1.26 75.4
Ohio ............................. 6 26,245,922 3.6 1.34 71.0
New York ......................... 10 22,460,339 3.0 1.26 72.9
Michigan ......................... 5 20,941,902 2.8 1.28 75.3
Indiana .......................... 7 19,204,668 2.6 1.29 69.9
Iowa ............................. 2 18,991,967 2.6 1.26 69.8
Pennsylvania ..................... 6 18,754,312 2.5 1.26 70.1
Massachusetts .................... 6 17,899,979 2.4 1.34 71.7
North Carolina ................... 4 16,431,634 2.2 1.31 71.5
Nevada ........................... 2 11,833,334 1.6 1.29 74.2
Colorado ......................... 3 10,428,196 1.4 1.38 67.1
Louisiana ........................ 4 10,287,571 1.4 1.31 70.9
Wisconsin ........................ 3 9,909,169 1.3 1.29 72.2
Missouri ......................... 3 7,792,512 1.1 1.27 59.7
Vermont .......................... 1 7,388,975 1.0 1.31 68.4
Washington ....................... 2 6,060,150 0.8 1.21 75.1
Alaska ........................... 1 4,855,437 0.7 1.25 74.4
Connecticut ...................... 3 4,785,363 0.6 1.70 68.5
Georgia .......................... 2 4,412,902 0.6 1.49 54.8
Minnesota ........................ 3 3,632,110 0.5 1.42 67.5
Mississippi ...................... 2 3,609,040 0.5 1.25 65.8
Rhode Island ..................... 1 3,093,989 0.4 1.29 75.1
Maine ............................ 9 2,505,214 0.3 1.32 79.5
Arkansas ......................... 1 2,473,559 0.3 2.06 64.2
Idaho ............................ 1 2,055,124 0.3 1.29 46.7
Utah ............................. 1 997,340 0.1 1.60 57.0
-- ------------ ---- ---- ----
Total/Weighted Average: ......... 194 $738,541,419 100.0% 1.33x 68.9%
=== ============ ===== ==== ====
</TABLE>
S-40
<PAGE>
PROPERTY TYPE
<TABLE>
<CAPTION>
WEIGHTED
% OF WEIGHTED WEIGHTED AVERAGE
NUMBER OF PRINCIPAL PRINCIPAL AVERAGE AVERAGE OCC.
PROPERTY TYPE PROPERTIES BALANCE ($) BALANCE UW DSCR LTV RATE
--------------------------------- ------------ --------------- ----------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Multifamily
Multifamily .................... 55 $157,826,081 21.4% 1.30x 74.0% 96.9%
Mobile Home Park ............... 18 70,189,579 9.5 1.31 71.2 93.7
--- ------------ ----- ---- ---- ----
Subtotal ..................... 73 $228,015,661 30.9% 1.30x 73.2% 95.9%
Retail
Anchored ....................... 20 $122,204,325 16.5% 1.27x 69.9% 96.4%
Unanchored ..................... 30 71,657,687 9.7 1.41 64.5 91.9
Shadow Anchored ................ 1 1,563,013 0.2 1.29 68.0 89.0
--- ------------ ----- ---- ---- ----
Subtotal ..................... 51 $195,425,024 26.5% 1.32x 67.8% 94.7%
Office
Suburban ....................... 21 $ 87,568,745 11.9% 1.33x 66.5% 96.3%
CBD ............................ 3 39,226,178 5.3 1.28 68.8 97.4
--- ------------ ----- ---- ---- ----
Subtotal ..................... 24 $126,794,922 17.2% 1.32x 67.2% 96.7%
Industrial
Flex Space ..................... 16 $ 87,439,269 11.8% 1.37x 66.1% 96.9%
Warehouse/Distribution ......... 3 5,564,382 0.8 1.31 67.7 100.0
--- ------------ ----- ---- ---- -----
Subtotal ..................... 19 $ 93,003,651 12.6% 1.37x 66.2% 97.1%
Hotel
Extended Stay .................. 7 $ 19,731,759 2.7% 1.34x 58.3% N/A
Limited Service ................ 2 16,929,209 2.3 1.40 67.8 N/A
Full Service ................... 1 16,523,281 2.2 1.40 69.7 N/A
--- ------------ ----- ---- ---- -----
Subtotal ..................... 10 $ 53,184,250 7.2% 1.38x 64.9% N/A
Self Storage .................... 10 $ 22,502,695 3.0% 1.42x 67.5% 89.6%
Mixed Use ....................... 3 $ 10,594,843 1.4% 1.37x 64.8% 98.1%
Nursing Home .................... 3 $ 7,813,023 1.1% 1.90x 67.0% 96.1%
Congregate Care ................. 1 $ 1,207,349 0.2% 1.50x 74.5% 90.0%
--- ------------ ----- ---- ---- -----
Total/Weighted Average: ......... 194 $738,541,419 100.0% 1.33x 68.9% 95.7%
=== ============ ===== ==== ==== =====
</TABLE>
S-41
<PAGE>
YEARS SINCE THE MORTGAGED PROPERTIES WERE BUILT
<TABLE>
<CAPTION>
NUMBER PERCENT BY
OF AGGREGATE AGGREGATE WEIGHTED WEIGHTED
MORTGAGED PRINCIPAL PRINCIPAL AVERAGE AVERAGE
YEARS SINCE THE MORTGAGED PROPERTIES WERE BUILT PROPERTIES BALANCE BALANCE UW DSCR LTV
------------------------------------------------- ------------ --------------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C>
5 or less ....................................... 51 $173,776,291 23.5% 1.32x 68.7%
6 - 10 .......................................... 10 43,094,156 5.8 1.44 65.0
11 - 15 ......................................... 36 150,689,479 20.4 1.36 66.3
16 - 20 ......................................... 12 58,924,594 8.0 1.36 66.5
21 - 25 ......................................... 9 31,484,650 4.3 1.27 66.8
26 - 30 ......................................... 16 76,045,990 10.3 1.28 74.0
31 or more ...................................... 60 204,526,258 27.7 1.33 70.9
--- ------------ ----- ---- ----
Total/Weighted Average: ........................ 194 $738,541,419 100.0% 1.33x 68.9%
=== ============ ===== ==== ====
</TABLE>
Weighted Average Property Age in years: 18.01
----------
(1) For Properties constructed in stages, the earliest date was used.
(2) Nineteen properties originally construcuted prior to 1930 were excluded
from the weighted average calculations due to significant renovations
that have occurred since then.
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 September 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-42
<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>
SEPT. SEPT. SEPT. SEPT.
CURRENT 2001 2002 2003 2004
----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Lock-Out/Defeasance(1) ......... 100.0% 100.0% 100.0% 100.0% 99.8%
YM(2) .......................... 0.0 0.0 0.0 0.0 0.2
----- ----- ----- ----- ----
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) .................... $ 738.5 $ 732.1 $ 725.0 $ 717.3 $ 709.1
Percentage of Balance
Outstanding ................... 100.0% 99.1% 98.2% 97.1% 96.0%
<CAPTION>
SEPT. SEPT. SEPT. SEPT. SEPT. SEPT.
2005 2006 2007 2008 2009 2010
---------- ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Lock-Out/Defeasance(1) ......... 99.4% 99.4% 99.4% 99.4% 55.8% 100.0%
YM(2) .......................... 0.6 0.6 0.6 0.6 0.3 0.0
---- ---- ---- ---- ---- -----
Total Lock-Out/ Defeasance
and YM ........................ 100.0 100.0 100.0 100.0 56.1 100.0
No Prepayment Premium .......... 0.0 0.0 0.0 0.0 43.9 0.0
----- ----- ----- ----- ---- -----
Total .......................... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
===== ===== ===== ===== ===== =====
Aggregate Mortgage Loan
Balance(3) .................... $ 700.0 $ 690.1 $ 679.3 $ 667.7 $ 489.0 $ 23.8
Percentage of Balance
Outstanding ................... 94.8% 93.4% 92.0% 90.4% 66.2% 3.2%
</TABLE>
----------
(1) Certain Mortgage Loans permit the applicable Mortgagor after a specified
period (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. 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
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" or "YM").
(3) Millions of dollars.
* See Annex A and the Diskette for additional, detailed information on the
Mortgage Loans' Prepayment Penalties.
S-43
<PAGE>
TEN LARGEST MORTGAGE LOANS
The following tables and summaries describe the ten largest Mortgage Loans
by Cut-off Date Principal Balance.
<TABLE>
<CAPTION>
NUMBER OF CUT-OFF DATE % OF POOL UW
PROPERTY NAME PROPERTIES BALANCE BALANCE DSCR LTV PROPERTY TYPE
--------------------------------- ------------ -------------- ----------- ---------- ------- -------------------------
<S> <C> <C> <C> <C> <C> <C>
Abbey Company Portfolio III...... 6 $ 24,701,611 3.3% 1.81x 58.9% Office/Industrial/Retail
Abbey Company Portfolio IV....... 6 22,995,039 3.1 1.58 58.9 Unanchored Retail
Atlantic Development
Portfolio ...................... 2 22,013,205 3.0 1.27 61.8 Industrial Flex
Covina Hills Mobile Home
Country Club ................... 1 21,587,115 2.9 1.27 71.9 Mobile Home Park
Liberty Fair Mall ............... 1 20,549,985 2.8 1.26 63.4 Regional Mall
Wilshire Financial .............. 1 18,576,294 2.5 1.32 68.8 CBD Office
Hub Tower ....................... 1 17,952,264 2.4 1.26 70.4 CBD Office
Gerry Buildings ................. 1 16,824,504 2.3 1.25 71.9 Industrial Flex
Embassy Suites -- Chicago ....... 1 16,523,281 2.2 1.40 69.7 Full Service Hotel
Fairgrounds Plaza ............... 1 16,200,572 2.2 1.27 78.3 Anchored Retail
--- ------------ ------ ---- ----
Total/Weighted Average .......... 21 $197,923,870 26.7% 1.37x 66.1%
=== ============ ======
Deal Total/Weighted Average ..... 194 $738,541,419 100.00% 1.33x 68.9%
</TABLE>
THE ABBEY COMPANY LOANS
<TABLE>
<CAPTION>
LOAN INFORMATION PROPERTY INFORMATION
---------------------------------------------- --------------------------------------------------
<S> <C> <C> <C>
Cut-off Date Balance $47,696,650 Property Type Office/Industrial/Retail
Origination Date August 31, 1999 Location Southern California
Maturity Date September 1, 2009 Square Footage 945,590
Mortgage Rate 7.47% Year Built/Renovated Various
Annual Debt Service $ 3,612,425 Appraised Value $81,040,000
UW DSCR 1.70x Occupancy 91.2%
Cut-off Date LTV 58.9% Occupancy Date June 1, 2000
Balloon LTV 58.9% UW NOI $ 7,222,349
Lockbox Yes UW NCF $ 6,141,767
</TABLE>
The Loans. Two of the Mortgage Loans (individually, the "Abbey Portfolio
III Loan" and the "Abbey Portfolio IV Loan" and collectively, the "Abbey
Company Loans"), were originated by MGT and are secured by first mortgages
encumbering twelve properties located in Southern California (collectively, the
"Abbey Company Properties"). The Abbey Company Loans are cross-defaulted and
cross-collateralized with each other. The Abbey Company Loans were made to
special purpose California limited liability companies (each, an "Abbey Company
Borrower" and collectively, the "Abbey Company Borrowers") which are
wholly-owned by Abbey Properties, LLC, the managing member. Abbey Properties,
LLC is owned by Donald G. Abbey and a wholly owned subsidiary of Rodamco North
America NV ("RNA"). RNA is a real estate investment company that is listed on
the Amsterdam stock exchange. RNA reported a market value for RNA's real estate
assets of $3.2 billion at February 29, 2000. RNA primarily owns super-regional
and regional shopping malls located in the United States. In addition, RNA has
investments in several private real estate companies, including The Abbey
Company, an affiliate of the Abbey Company Borrowers, and equity holdings in
public real estate companies. The Abbey Company owns or manages a portfolio of
properties totaling approximately 3.1 million square feet in Southern
California as of June 1, 2000.
The Abbey Company Loans are Balloon Mortgage Loans which require
interest-only payments through August 1, 2009 and mature on September 1, 2009.
The Abbey Company Loans may not be
S-44
<PAGE>
prepaid prior to June 1, 2009 and may be prepaid, in whole but not in part,
without payment of a Prepayment Premium, at any time thereafter. The Abbey
Company Loans are subject to Defeasance, in whole or in part, at any time after
the second anniversary of the Delivery Date.
The Properties. The Abbey Company Properties consists of twelve
industrial, office and retail properties:
ABBEY PORTFOLIO III
<TABLE>
<CAPTION>
LOAN SQUARE APPRAISED
NUMBER PROPERTY NAME LOCATION FOOTAGE PROPERTY TYPE OCCUPANCY (1) VALUE
-------- ------------------------- --------------------------- --------- -------------------- --------------- --------------
<S> <C> <C> <C> <C> <C> <C>
1.1 Long Beach Airport Long Beach, CA 205,257 Industrial -- Flex 100.0% $12,200,000
1.2 Sierra Gateway Business Palmdale, CA 130,838 Office 96.0 10,865,000
Center
1.3 Nevada Street Plaza Redlands, CA 126,292 Industrial -- Flex 93.0 6,000,000
1.4 Gardena Commerce Gardena, CA 39,405 Unanchored Retail 96.0 5,770,000
Center
1.5 Moreno Valley Commerce Moreno Valley, CA 111,060 Industrial -- Flex 86.0 4,850,000
Center
1.6 Mount Vernon Commerce Colton, CA 29,600 Office 91.0 2,285,000
------- ------ -----------
Center
Subtotal/Weighted Average 642,452 94.7%(2) $41,970,000
ABBEY PORTFOLIO IV
2.1 Aliso Viejo Commerce Aliso Viejo, CA 64,137 Unanchored Retail 95.0 $13,250,000
Center
2.2 Wimbledon Business Victorville, CA 123,225 Unanchored Retail 92.0 12,000,000
Center
2.3 Upland Commerce Center Upland, CA 44,957 Unanchored Retail 29.0 5,500,000
2.4 AP Rancho Carmel San Diego, CA 26,978 Unanchored Retail 92.0 3,775,000
2.5 Atlantic Plaza Long Beach, CA 31,281 Unanchored Retail 100.0 2,895,000
2.6 Garden Grove Commerce Garden Grove, CA 12,560 Unanchored Retail 81.0 1,650,000
------- -------- -----------
Center
Subtotal/Weighted Average 303,138 83.6%(2) $39,070,000
------- -------- -----------
Total/Weighted Average 945,590 91.2%(2) $81,040,000
</TABLE>
----------
(1) Occupancy percentages as of June 1, 2000.
(2) Based upon weighted average square footage.
Property Management. The Abbey Company Properties are managed by The Abbey
Company. The Abbey Company currently manages a portfolio of properties totaling
approximately 3.1 million square feet. The Abbey Company has offices in Los
Angeles, Orange, Riverside and San Bernardino counties.
Operating History.
<TABLE>
<CAPTION>
ORIGINATOR'S
1997 ACTUAL(1) 1998 ACTUAL(2) 1999 ACTUAL(2) UNDERWRITTEN
---------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Effective Gross Income ................... $ 6,807,508 $ 8,111,803 $ 8,897,451 $ 9,532,531
Expenses ................................. $ 2,008,947 $ 2,173,766 $ 2,248,252 $ 2,310,182
----------- ----------- ----------- -----------
NOI ...................................... $ 4,798,561 $ 5,938,037 $ 6,649,199 $ 7,222,349
=========== =========== =========== ===========
UW Cash Flow ............................. N/A N/A N/A $ 6,141,767
Debt Service Coverage Ratio based on
NOI(3) .................................. 1.33x 1.64x 1.84x 2.00x
UW DSCR based on UW Cash Flow(3) ......... N/A N/A N/A 1.70x
</TABLE>
----------
(1) 1997 actual operating history does not reflect the operations of the Long
Beach Airport and Aliso Viejo Commerce Center properties.
(2) 1998 and 1999 actual operating history does not reflect the operations of
the Long Beach Airport property.
(3) The Abbey Company Loans require interest-only payments until their
maturity date.
Lockbox and Reserves. All rents payable by the tenants of the Abbey
Company Properties are deposited by the property manager directly into a
lockbox account. Provided that no event of default has
S-45
<PAGE>
occurred, all deposits in the lockbox account are remitted back to the Abbey
Company Borrower. The Abbey Portfolio IV Loan documents provide for reserves
for taxes, insurance and on-going replacements.
Additional terms and escrows for the Abbey Portfolio IV Loan are set forth
on Annex A.
THE ATLANTIC DEVELOPMENT PORTFOLIO LOAN
<TABLE>
<CAPTION>
LOAN INFORMATION PROPERTY INFORMATION
--------------------------------------------------- -------------------------------------
<S> <C> <C> <C>
Cut-off Date Balance $22,013,205 Property Type Industrial -- Flex
Origination Date September 15, 1999 Location Warren, NJ
Anticipated Repayment Date October 1, 2009 Square Footage 273,061
Mortgage Rate 8.05% Year Built 1979 & 1985
Annual Debt Service $ 1,959,619 Appraised Value $35,615,000
UW DSCR 1.27x Occupancy 100.0%
Cut-off Date LTV 61.8% Occupancy Date August 7, 2000
Balloon LTV 55.7% UW NOI $ 2,790,516
Lockbox Yes UW NCF $ 2,493,559
</TABLE>
The Loan. The Atlantic Development Portfolio Loan was originated by MGT
and is secured by a first mortgage encumbering two industrial/office buildings
which are located at 7 Powderhorn Drive and 35 Technology Drive in Warren, New
Jersey (each, individually, an "Atlantic Portfolio Development Property" and
collectively, the "Atlantic Portfolio Development Properties"). The Atlantic
Development Portfolio Loan was made to MBCC East, LLC and MBCC 35, LLC, each a
special purpose New Jersey limited liability company (collectively, the
"Atlantic Development Borrowers"), which are owned by Atlantic Development and
Management Corporation ("ADMC"). ADMC owns and manages a portfolio of office
and industrial properties totaling approximately 1.0 million square feet.
The Atlantic Development Portfolio Loan has a remaining amortization term
of 349 months and matures on October 1, 2029. The Atlantic Development
Portfolio Loan is an ARD loan with an Anticipated Repayment Date of October 1,
2009. The Atlantic Development Portfolio Loan may not be prepaid prior to July
1, 2009. The Atlantic Development Portfolio Loan may be prepaid, in whole, but
not in part, without payment of a Prepayment Premium at any time thereafter,
and in whole or in part, without payment of a Prepayment Premium after the
Anticipated Repayment Date. The Atlantic Development Portfolio Loan is subject
to Defeasance, in whole, in whole or in part, at any time after the second
anniversary of the Delivery Date.
The Property. The Atlantic Development Portfolio Properties consist of two
Industrial-Flex buildings:
7 Powderhorn Drive is a two-story, 180,500 square foot office, lab and
warehouse facility located in Warren, New Jersey and was built in 1979. The
property is 100% leased to two tenants: Cordis Corporation ("Cordis") which
occupies 107,000 square feet and Celegene Corporation ("Celegene") which
occupies the remaining 73,500 square feet. Cordis, a developer and manufacturer
of products for interventional medicine, minimal invasive imaging, and
electrophysiology with approximately 3,500 employees worldwide, is a
wholly-owned subsidiary of Johnson & Johnson (NYSE: JNJ). Johnson & Johnson is
rated Aaa and AAA by Moody's and Standard & Poor's, respectively. Celegene
(NASDAQ: CLEG) develops and commercializes human pharmaceuticals and
agro-chemicals.
35 Technology Drive is a two-story, 92,561 square foot office, lab and
warehouse facility located in Warren, New Jersey and was built in 1985. The
property is 100% leased to Anadigics, Inc. (NASDAQ: ANAD) ("Anadigics").
Anadigics designs and manufactures radio frequency integrated circuit solutions
for the growing broadband and wireless communications markets.
Property Management. The Atlantic Development Properties is managed by
ADMC.
S-46
<PAGE>
Operating History.
<TABLE>
<CAPTION>
ORIGINATOR'S
1997 ACTUAL 1998 ACTUAL 1999 ACTUAL UNDERWRITTEN
-------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
Effective Gross Income ........... $ 3,886,173 $ 3,782,747 $ 3,726,032 $ 3,984,380
Expenses ......................... 1,064,287 1,008,804 829,323 1,193,865
----------- ----------- ----------- -----------
NOI .............................. $ 2,821,886 $ 2,773,943 $ 2,896,709 $ 2,790,515
=========== =========== =========== ===========
UW Cash Flow ..................... N/A N/A N/A $ 2,493,559
Debt Service Coverage Ratio based
on NOI .......................... 1.44x 1.42x 1.48x 1.42x
UW DSCR based on UW Cash Flow..... N/A N/A N/A 1.27x
</TABLE>
Release. Either Atlantic Development Portfolio Property may be released
from the lien of its mortgage provided (a) an amount equal to 125% of the
release amount of such Atlantic Development Portfolio Property is defeased and
(b) after giving effect to such release (i) the Debt Service Coverage Ratio for
the remaining Atlantic Development Portfolio Property is greater than or equal
to 1.25x and (ii) the loan to value ratio is less than or equal to 75%.
Lockbox and Reserves. All rents payable by the tenants of the Atlantic
Development Portfolio Properties are paid directly into a lockbox account which
is subject to the sole dominion, control and discretion of the Atlantic
Development Loan lender. Funds in the lockbox account are allocated monthly to
a tax and insurance account, a debt service account and a recurring replacement
reserve account. The Atlantic Development Portfolio Loan documents provided for
reserves for taxes, insurance and on-going replacements.
Additional terms and escrows for the Atlantic Development Portfolio Loan
are set forth on Annexes A and C.
THE COVINA HILLS MOBILE HOME COUNTRY CLUB LOAN
<TABLE>
<CAPTION>
LOAN INFORMATION PROPERTY INFORMATION
---------------------------------------------- -------------------------------------
<S> <C> <C> <C>
Cut-off Date Balance $21,587,115 Property Type Mobile Home Park
Origination Date August 4, 1999 Location La Puente, CA
Maturity Date September 1, 2009 Number of Pads 500
Mortgage Rate 7.73% Year Built 1972
Annual Debt Service $ 1,866,230 Appraised Value $30,030,000
UW DSCR 1.27x Occupancy 100.0%
Cut-off Date LTV 71.9% Occupancy Date April 1, 2000
Balloon LTV 64.4% UW NOI $ 2,399,584
Lockbox No UW NCF $ 2,374,584
</TABLE>
The Loan. The Covina Hills Loan was purchased by MGT and is secured by a
first mortgage encumbering the mobile home park located at 17350 East Temple
Avenue in La Puente, California (the "Covina Hills Property"). The Covina Hills
Loan was made to Juanita Springs Associates Limited Partnership, a special
purpose Washington limited partnership (the "Covina Hills Borrower") owned by
Morgan Partners Inc. and Covina Hills Equities Inc. Morgan Partners manages a
portfolio of five mobile home parks and four apartment communities totaling
1,500 units in three states.
The Covina Hills Loan has a remaining amortization term of 348 months and
matures on September 1, 2009. The Covina Hills Loan may not be prepaid prior to
June 1, 2009. The Covina Hills Loan may be prepaid, in whole, but not in part,
without payment of a Prepayment Premium at any time thereafter. The Covina
Hills 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 Covina Hills Property is a 500 pad mobile home park
located on a 73 acre site in La Puente, California. The total site density is
approximately 6.8 pads per acre. The Covina Hills
S-47
<PAGE>
Property was built in 1972 and contains 19 single-wide and 481 double-wide
mobile homes. Amenities include two clubhouses, two swimming pools, two laundry
room facilities, recreational facilities, and twenty-two spaces for RV storage.
As of April 1, 2000, the Covina Hills Property was 100% occupied.
Property Management. The Covina Hills Property is managed by Bessire &
Casenhiser, Inc.
Operating History.
<TABLE>
<CAPTION>
TRAILING
12 MOS. ENDED ORIGINATOR'S
1998 ACTUAL 1999 ACTUAL 3/31/00 UNDERWRITTEN
-------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
Effective Gross Income ........... $ 3,774,340 $ 3,849,560 $ 3,892,561 $ 3,892,561
Expenses ......................... 1,489,419 1,392,499 1,485,626 1,492,977
----------- ----------- ----------- -----------
NOI .............................. $ 2,284,921 $ 2,457,062 $ 2,406,936 $ 2,399,584
=========== =========== =========== ===========
UW Cash Flow ..................... N/A N/A N/A $ 2,374,584
Debt Service Coverage Ratio based
on NOI .......................... 1.22x 1.32x 1.29x 1.29x
UW DSCR based on UW Cash Flow..... N/A N/A N/A 1.27x
</TABLE>
Lockbox and Reserves. The Covina Hills Loan documents do not require the
establishment of a lockbox or cash collateral account. The Covina Hills Loan
documents provide for reserves for taxes, insurance and on-going replacements.
Additional terms and escrows for the Covina Hills Loan are set forth on
Annexes A and B.
THE LIBERTY FAIR MALL LOAN
<TABLE>
<CAPTION>
LOAN INFORMATION PROPERTY INFORMATION
---------------------------------------------------- ------------------------------------------
<S> <C> <C> <C>
Cut-off Date Balance $20,549,985 Property Type Regional Mall
Origination Date November 30, 1999 Location Martinsville, VA
Anticipated Repayment Date December 1, 2009 Square Footage 435,402
Mortgage Rate 8.46% Year Built/Renovated 1989/1997
Annual Debt Service $ 1,953,505 Appraised Value $32,400,000
UW DSCR 1.26x Occupancy 92.0%
Cut-off Date LTV 63.4% Occupancy Date April 26, 2000
Balloon LTV 55.2% UW NOI $ 2,700,271
Lockbox Yes UW NCF $ 2,469,357
</TABLE>
The Loan. The Liberty Fair Mall Loan was originated by MGT and is secured
by a first mortgage encumbering the regional mall located at 240 Commonwealth
Boulevard, in Martinsville, Virginia (the "Liberty Fair Mall Property"). The
Liberty Fair Mall Loan was made to Liberty Fair VA LP, a special purpose
Virginia limited partnership (the "Liberty Fair Mall Borrower") which is owned
50% by Developers Diversified Realty Corporation ("DDR"), as general partner,
and 50% by The Lester Group, as limited partner. DDR is a real estate
investment trust based in Cleveland, Ohio which owns and manages a portfolio of
206 retail shopping centers totaling approximately 49 million square feet of
gross leasable area in 40 states. DDR reported a total market capitalization of
$2.6 billion as of June 30, 2000.
The Liberty Fair Mall Loan has a remaining amortization term of 351 months
and matures on December 1, 2029. The Liberty Fair Mall Loan is an ARD loan with
an Anticipated Repayment Date of December 1, 2009. The Liberty Fair Mall Loan
may not be prepaid prior to September 1, 2009. The Liberty Fair Mall Loan may
be prepaid, in whole, but not in part, without payment of a Prepayment Premium
at any time thereafter. The Liberty Fair Mall 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 Liberty Fair Mall Property is an enclosed, single-story,
regional mall containing 435,402 square foot of gross leasable area ("GLA") and
was built in 1989 and renovated in 1997. Primary tenants include Sears (58,760
square feet; rated A3/A-), Kroger (55,969 square feet; rated Baa3/BBB-),
S-48
<PAGE>
JC Penney (50,232 square feet, rated Baa2/BBB) (each of such ratings by Moody's
and Standard & Poor's, respectively), Belks (85,000 square feet), Office Max
(23,523 square feet) and Goody's (29,687 square feet). Other tenants include
Footlocker, Bath & Body Works, Walden Books and Jo-Ann Fabrics.
Property Management. The Liberty Fair Mall Property is managed by
Developers Diversified Management, Inc., an affiliate of the Liberty Fair Mall
Borrower.
Operating History.
<TABLE>
<CAPTION>
TRALING
12 MOS. ENDED ORIGINATOR'S
1998 ACTUAL 1999 ACTUAL 3/31/00 UNDERWRITTEN
-------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
Effective Gross Income ........... $ 3,732,747 $ 3,837,314 $ 3,811,789 $ 3,673,059
Expenses ......................... 1,020,581 946,823 968,742 972,788
----------- ----------- ----------- -----------
NOI .............................. $ 2,712,166 $ 2,890,491 $ 2,843,047 $ 2,700,271
=========== =========== =========== ===========
UW Cash Flow ..................... N/A N/A N/A $ 2,469,357
Debt Service Coverage Ratio based
on NOI .......................... 1.39x 1.48x 1.46x 1.38x
UW DSCR based on UW Cash Flow..... N/A N/A N/A 1.26x
</TABLE>
Lockbox and Reserves. All rents payable by the tenants of the Liberty Fair
Mall Property are paid directly into a lockbox account. Provided that no event
of default has occurred, all deposits in excess of $2,000 in the lockbox
account are remitted back to the Liberty Fair Mall Borrower. The Liberty Fair
Mall Loan loan documents provide for reserves for taxes, insurance and on-going
replacements. Additionally, a reserve of $50,000 per year for the first five
years of the loan term and $75,000 per year from year six until the principal
balance is reduced to zero will be escrowed for tenant improvement/leasing
commissions.
Additional terms and escrows for the Liberty Fair Mall Loan are set forth
on Annexes A and C.
THE WILSHIRE FINANCIAL TOWER LOAN
<TABLE>
<CAPTION>
LOAN INFORMATION PROPERTY INFORMATION
---------------------------------------------- -----------------------------------------
<S> <C> <C> <C>
Cut-off Date Balance $18,576,294 Property Type CBD Office
Origination Date November 17, 1999 Location Los Angeles, CA
Maturity Date December 1, 2009 Square Footage 375,614
Mortgage Rate 8.86% Year Built/Renovated 1961/1992
Annual Debt Service $ 1,778,247 Appraised Value $27,000,000
UW DSCR 1.32x Occupancy 94.6%
Cut-off Date LTV 68.8% Occupancy Date August 1, 2000
Balloon LTV 63.0% UW NOI $ 2,751,158
Lockbox No UW NCF $ 2,349,908
</TABLE>
The Loan. The Wilshire Financial Tower Loan was originated by MGT and is
secured by a first mortgage encumbering the regional mall located at 3600
Wilshire Boulevard in Los Angeles, California (the "Wilshire Financial Tower
Property"). The Wilshire Financial Tower Loan was made to 3600 Wilshire LLC, a
special purpose California limited liability company (the "Wilshire Financial
Borrower").
The Wilshire Financial Tower Loan has a remaining amortization term of 351
months and matures on December 1, 2009. The Wilshire Financial Tower Loan may
not be prepaid prior to September 1, 2009. The Wilshire Financial Tower Loan
may be prepaid, in whole, or in part, without payment of a Prepayment Premium
at any time thereafter. The Wilshire Financial Tower 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 Wilshire Financial Tower Property is a 21-story office
building containing 375,614 square feet located in the Mid-Wilshire district of
Los Angeles and was built in 1961 and
S-49
<PAGE>
renovated in 1992. The Wilshire Financial Tower Property includes an adjoining
2-story parking garage containing 850 spaces which is leased and managed by a
third party operator. As of August 1, 2000, the Wilshire Financial Tower
Property was 94.6% occupied by more than 175 tenants. No single tenant accounts
for more than 5% of the square footage or gross potential rent.
Property Management. The Wilshire Financial Tower Property is managed by
Jamison Properties, Inc., an affiliate of the Wilshire Financial Tower
Borrower, which manages a portfolio of 14 office buildings totaling
approximately 4 million square feet.
Operating History.
<TABLE>
<CAPTION>
ORIGINATOR'S
1997 ACTUAL 1998 ACTUAL 1999 ACTUAL UNDERWRITTEN
-------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
Effective Gross Income ........... $ 4,543,848 $ 4,562,174 $ 4,492,992 $ 4,954,824
Expenses ......................... 2,108,806 2,549,478 2,062,383 2,203,666
----------- ----------- ----------- -----------
NOI .............................. $ 2,435,042 $ 2,012,696 $ 2,430,609 $ 2,751,158
=========== =========== =========== ===========
UW Cash Flow ..................... N/A N/A N/A $ 2,349,908
Debt Service Coverage Ratio based
on NOI .......................... 1.37x 1.13x 1.37x 1.55x
UW DSCR based on UW Cash Flow..... N/A N/A N/A 1.32x
</TABLE>
Lockbox and Reserves. The Wilshire Financial Tower Loan documents do not
require the establishment of a lockbox or cash collateral account. The Wilshire
Financial Tower Loan documents provide for reserves for taxes and insurance.
Additionally, the Wilshire Financial Tower Borrower is required to deposit
$30,000 monthly into a reserve account for tenants improvements/leasing
commissions for so long as there are any unpaid amounts under the Wilshire
Financial Tower Loan.
Additional terms and escrows for the Wilshire Financial Tower Loan are set
forth on Annexes A and C.
THE HUB TOWER LOAN
<TABLE>
<CAPTION>
LOAN INFORMATION PROPERTY INFORMATION
------------------------------------------------- ------------------------------------------
<S> <C> <C> <C>
Cut-off Date Balance $17,952,264 Property Type CBD Office
Origination Date March 17, 2000 Location Des Moines, IA
Anticipated Repayment Date April 1, 2010 Square Footage 281,028
Mortgage Rate 8.10% Year Built/Renovated 1985/1998
Annual Debt Service $ 1,600,015 Appraised Value $25,500,000
UW DSCR 1.26x Occupancy 100.0%
Cut-off Date LTV 70.4% Occupancy Date March 13, 2000
Balloon LTV 63.3% UW NOI $ 2,496,817
Lockbox Yes UW NCF $ 2,007,895
</TABLE>
The Loan. The Hub Tower Loan was originated by MGT and is secured by a
first mortgage encumbering the regional mall located at 699 Walnut Street in
Des Moines, Iowa (the "Hub Tower Property"). The Hub Tower Loan was made to MR
No. 17, LLC, a special purpose Iowa limited liability company (the "Hub Tower
Borrower") which is owned 90% by the Tetrad Corporation and 10% by MRI-Hub
Tower, Inc. The Tetrad Corporation consists of four family trusts, each formed
by Walter Scott, Jr.
The Hub Tower Loan has a remaining amortization term of 355 months and
matures on April 1, 2030. The Hub Tower Loan is an ARD loan with an Anticipated
Repayment Date of April 1, 2010. The Hub Tower Loan may not be prepaid prior to
January 1, 2010. The Hub Tower Loan may be prepaid, in whole, but not in part,
without payment of a Prepayment Premium at any time thereafter. The Hub Tower
Loan is subject to Defeasance, in whole, but not in part, at any time after the
second anniversary of the Delivery Date.
S-50
<PAGE>
The Property. The Hub Tower Property is a 20-story Class A office building
containing 281,028 square feet and seventy-four underground parking spaces
located in the Des Moines central business district. The building is connected
to the city's covered skywalk system and was developed in 1985 in conjunction
with the two-story retail pavilion, "The Kaleidoscope," which has a central
food court and additional parking, but does not serve as collateral for the Hub
Tower Loan. The primary tenants in the Hub Tower Property include Principal
Mutual Life Insurance, AmerUS Life Holdings and Invista Capital. As of March
13, 2000, the Hub Tower Property was 100.0% occupied.
Property Management. The Hub Tower Property is managed Magnum Resources,
Inc., an affiliate of the Hub Tower Borrower.
Operating History.
<TABLE>
<CAPTION>
TRAILING
12 MOS. ENDED ORIGINATOR'S
1998 ACTUAL 1999 ACTUAL 3/31/2000 UNDERWRITTEN
-------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
Effective Gross Income ........... $ 4,918,486 $ 5,352,449 $ 5,383,124 $ 5,043,586
Expenses ......................... 2,356,227 2,416,070 2,398,469 2,546,769
----------- ----------- ----------- -----------
NOI .............................. $ 2,562,259 $ 2,936,379 $ 2,984,655 $ 2,496,817
=========== =========== =========== ===========
UW Cash Flow ..................... N/A N/A N/A $ 2,007,895
Debt Service Coverage Ratio based
on NOI .......................... 1.60x 1.84x 1.87x 1.56x
UW DSCR based on UW Cash Flow..... N/A N/A N/A 1.25x
</TABLE>
Lockbox and Reserves. All rents payable by the tenants of the Hub Tower
Property are paid directly into a lockbox account. Provided that no event of
default has occurred, all deposits in excess of $2,000 in the lockbox account
are remitted back to the Hub Tower Borrower. The Hub Tower Loan documents
provide for reserves for taxes, insurance and on-going replacements.
Additionally, the Hub Tower Borrower is required to deposit $20,140 monthly
into a reserve account for tenants improvements/ leasing commissions for so
long as there are any unpaid amounts under the Hub Tower Loan.
Additional terms and escrows for the Hub Tower Loan are set forth on
Annexes A and C.
THE GERRY BUILDINGS LOAN
<TABLE>
<CAPTION>
LOAN INFORMATION PROPERTY INFORMATION
---------------------------------------------------- --------------------------------------------
<S> <C> <C> <C>
Cut-off Date Balance $16,824,504 Property Type Industrial -- Flex
Origination Date November 30, 1999 Location Los Angeles, CA
Anticipated Repayment Date December 1, 2009 Square Footage 707,125
Mortgage Rate 8.73% Year Built/Renovated 1912-46/1999
Annual Debt Service $ 1,669,477 Appraised Value $23,400,000
UW DSCR 1.25x Occupancy 90.0%
Cut-off Date LTV 71.9% Occupancy Date April 24, 2000
Balloon LTV 61.0% UW NOI $ 2,398,182
Lockbox Yes UW NCF $ 2,079,950
</TABLE>
The Loan. The Gerry Buildings Loan was originated by MGT and is secured by
a first mortgage encumbering nine buildings located in the Fashion District in
Los Angeles, California (collectively, the "Gerry Buildings Properties"). The
Gerry Buildings Loan was made to 714-910 S. Los Angeles, LLC, a special purpose
California limited liability company (the "Gerry Buildings Borrower").
The Gerry Buildings Loan has a remaining amortization term of 291 months
and matures on December 1, 2024. The Gerry Buildings Loan is an ARD loan with
an Anticipated Repayment Date of December 1, 2009. The Gerry Buildings Loan may
not be prepaid prior to November 1, 2009. The Gerry Buildings Loan may be
prepaid, in whole, but not in part, without payment of a Prepayment Premium at
any time thereafter. The Gerry Buildings Loan is subject to Defeasance, in
whole, but not in part, at any time after the second anniversary of the
Delivery Date.
S-51
<PAGE>
The Property. The Gerry Buildings Properties consist of nine industrial,
manufacturing and office buildings totaling 707,125 square feet. The Gerry
Buildings Properties are located in the "Fashion District" of Los Angeles,
which primarily caters to retailers and wholesalers of clothing. The Gerry
Building Properties were built between the years 1912 and 1946 with renovations
as recently as 1999. Each of the nine buildings is located within two square
blocks of each other and two of the buildings are contiguous.
Property Management. The Gerry Buildings Property is managed by MJW
Investments, Inc., an affiliate of the Gerry Buildings Borrower.
Operating History.
<TABLE>
<CAPTION>
ORIGINATOR'S
1997 ACTUAL 1998 ACTUAL 1999 ACTUAL UNDERWRITTEN
-------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
Effective Gross Income ........... $ 3,662,804 $ 3,913,326 $ 3,983,038 $ 4,075,890
Expenses ......................... 1,380,951 1,429,187 1,660,168 1,677,708
----------- ----------- ----------- -----------
NOI .............................. $ 2,281,853 $ 2,484,139 $ 2,322,870 $ 2,398,182
=========== =========== =========== ===========
UW Cash Flow ..................... N/A N/A N/A $ 2,079,950
Debt Service Coverage Ratio based
on NOI .......................... 1.37x 1.49x 1.39x 1.44x
UW DSCR based on UW Cash Flow..... N/A N/A N/A 1.25x
</TABLE>
Lockbox and Reserves. All rents payable by the tenants of the Gerry
Buildings Properties are deposited by the Gerry Buildings Borrower or the
property manager into a lockbox account. Provided that no event of default has
occurred, all deposits in excess of $2,000 in the lockbox account are remitted
back to the Gerry Buildings Borrower. The Gerry Buildings Loan documents
provide for reserves for taxes, insurance and on-going replacements.
Additionally, a reserve of $100,000 was required at closing and monthly
collections of $8,333 capped at a total reserve of $200,000 will be escrowed
for tenant improvement/leasing commissions.
Additional terms and escrows for the Gerry Buildings Loan are set forth on
Annexes A and C.
THE EMBASSY SUITES CHICAGO LOAN
<TABLE>
<CAPTION>
LOAN INFORMATION PROPERTY INFORMATION
----------------------------------------- -----------------------------------------------
<S> <C> <C> <C>
Cut-off Date Balance $16,523,281 Property Type Hotel -- full service
Origination Date May 2, 2000 Location Deerfield, IL
Maturity Date May 10, 2010 Number of Rooms 237
Mortgage Rate 8.615% Year Built/Renovated 1987/1997
Annual Debt Service $ 1,617,040 Appraised Value $23,700,000
UW DSCR 1.40x Occupancy 75.0%
Cut-off Date LTV 69.7% Occupancy Date February 29, 2000
Balloon LTV 58.7% UW NOI $ 2,677,957
Lockbox No UW NCF $ 2,263,542
</TABLE>
The Loan. The Embassy Suites Chicago Loan was purchased by MGT and is
secured by a first mortgage encumbering the hotel located at 1445 Lake Cook
Drive in Deerfield, Illinois (the "Embassy Suites Chicago Property"). The
Embassy Suites Chicago Loan was made to Felcor/CMB Deerfield Hotel, LLC, a
Delaware special purpose limited liability company (the "Embassy Suites Chicago
Borrower") which is owned by Felcor Lodging Trust, Inc. (NYSE: FCH) ("Felcor").
Felcor is one of the nation's largest hotel real estate investment trusts with
a reported total market capitalization of approximately $3.4 billion. Felcor
owns 188 hotels with nearly 50,000 rooms and suites in 35 states and Canada.
Felcor is the owner of the largest number of Embassy Suites, Crown Plaza,
Holiday Inn, and independently owned Doubletree branded hotels.
S-52
<PAGE>
The Embassy Suites Chicago Loan has a remaining amortization term of 296
months and matures on May 10, 2010. The Embassy Suites Chicago Loan may not be
prepaid prior to February 10, 2010. The Embassy Suites Chicago Loan may be
prepaid, in whole, but not in part, without payment of a Prepayment Premium at
any time thereafter. The Embassy Suites Chicago 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 Embassy Suites Chicago Property is a seven-story,
237-room full service hotel located in Deerfield, Illinois, a northern suburb
of Chicago and was built in 1987. Amenities include an indoor pool, sauna,
whirlpool, fitness center, gift shop, meeting/banquet space and restaurant. The
operating performance in terms of average daily rate, occupancy and revenue per
available room for the Embassy Suites Chicago Property is described in the
table below:
<TABLE>
<CAPTION>
1997 1998 1999 UW
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Average Daily Rate (ADR) ..................... $ 111.76 $ 122.53 $ 122.85 $ 122.69
Occupancy .................................... 74.4% 71.6% 74.3% 73.0%
Revenue Per Available Room (RevPAR) .......... $ 83.20 $ 87.75 $ 91.32 $ 89.56
</TABLE>
Property Management. The Embassy Suites Chicago Property is managed by
Coastal Hotel Group, Inc. ("Coastal"), a privately held Chicago based hotel
management company. Founded in 1987, Coastal manages approximately twenty-five
hotels totaling over 2,300 rooms. Coastal was named one of the top ten hotel
management companies in 1999 by Hotel Business.
Operating History.
<TABLE>
<CAPTION>
ORIGINATOR'S
1997 ACTUAL 1998 ACTUAL 1999 ACTUAL UNDERWRITTEN
-------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
Effective Gross Income ........... $ 7,811,375 $ 8,216,875 $ 8,472,105 $ 8,288,300
Expenses ......................... 5,008,278 5,052,595 5,555,059 5,610,343
----------- ----------- ----------- -----------
NOI .............................. $ 2,803,097 $ 3,164,280 $ 2,917,046 $ 2,677,957
=========== =========== =========== ===========
UW Cash Flow ..................... N/A N/A N/A $ 2,263,542
Debt Service Coverage Ratio based
on NOI .......................... 1.73x 1.96x 1.80x 1.66x
UW DSCR based on UW Cash Flow..... N/A N/A N/A 1.40x
</TABLE>
Lockbox and Reserves. The Embassy Suites Chicago Loan documents do not
require the establishment of a lockbox or cash collateral account. The Embassy
Suites Chicago Loan documents provide for reserves for taxes and insurance.
Additional terms and escrows for the Embassy Suites Chicago Loan are set
forth on Annexes A.
THE FAIRGROUNDS PLAZA LOAN
<TABLE>
<CAPTION>
LOAN INFORMATION PROPERTY INFORMATION
---------------------------------------------- ------------------------------------
<S> <C> <C> <C>
Cut-off Date Balance $16,200,572 Property Type Anchored Retail
Origination Date September 2, 1999 Location Timonium, MD
Maturity Date October 1, 2009 Square Footage 107,060
Mortgage Rate 7.99% Year Built 1999
Annual Debt Service $ 1,434,243 Appraised Value $20,700,000
UW DSCR 1.27x Occupancy 99.0%
Cut-off Date LTV 78.3% Occupancy Date March 6, 2000
Balloon LTV 70.4% UW NOI $ 1,867,163
Lockbox No UW NCF $ 1,814,696
</TABLE>
The Loan. The Fairgrounds Plaza Loan was originated by MGT and is secured
by a first mortgage encumbering the regional mall located at 37-63 West
Aylesbury Road in Timonium, Maryland (the "Fairgrounds Plaza Property"). The
Fairgrounds Plaza Loan was made to M.O.R. Aylesbury, Inc., a
S-53
<PAGE>
special purpose Maryland corporation (the "Fairgrounds Plaza Borrower") which
is controlled by Manekin, LLC ("Manekin"). Manekin is a full service real
estate company providing brokerage, development, construction, asset management
and investment services throughout the Baltimore and Washington D.C.
metropolitan regions.
The Fairgrounds Plaza Loan has a remaining amortization term of 349 months
and matures on October 1, 2009. The Fairgrounds Plaza Loan may not be prepaid
prior to July 1, 2009. The Fairgrounds Plaza Loan may be prepaid, in whole, but
not in part, without payment of a Prepayment Premium at any time thereafter.
The Fairgrounds Plaza 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 Fairgrounds Plaza Property is a 107,060 square foot
anchored shopping center located approximately 10 miles from downtown Baltimore
was built in 1999. The center is anchored by a SuperFresh supermarket with
reported sales per square foot of $492 in 1999. SuperFresh is owned by The
Great Atlantic & Pacific Tea Company (NYSE: GAP), currently rated Ba1 and BBB-
by Moody's and Standard & Poor's, respectively. The Great Atlantic & Pacific
Tea Company operates food chains in the United States and Canada under the
trade names A&P, Super Fresh, Sav-A-Center and Food Emporium, among others. The
Fairgrounds Plaza Property includes eight in-line tenants and one pad site and
was 99.0% occupied as of March 6, 2000.
Property Management. The Fairgrounds Plaza Property is managed by Manekin,
LLC an affiliate of the Fairgrounds Plaza Borrower.
Operating History.
<TABLE>
<CAPTION>
ORIGINATOR'S
1999 ACTUAL (1) APPRAISAL UNDERWRITTEN
----------------- --------------- ---------------
<S> <C> <C> <C>
Effective Gross Income ........................... $1,651,099 $ 2,323,515 $ 2,316,899
Expenses ......................................... 258,993 396,241 449,736
---------- ----------- -----------
NOI .............................................. $1,392,106 $ 1,927,274 $ 1,867,163
========== =========== ===========
UW Cash Flow ..................................... N/A N/A $ 1,814,696
Debt Service Coverage Ratio based on NOI ......... N/A 1.34x 1.30x
UW DSCR based on UW Cash Flow .................... N/A N/A 1.27x
</TABLE>
----------
(1) 1999 Actual operating history does not represent a full year because the
property was constructed in 1999.
Lockbox and Reserves. The Fairgrounds Plaza Loan documents do not require
the establishment of a lockbox or cash collateral account. The Fairgrounds
Plaza Loan documents provide for reserves for taxes, insurance and on-going
replacements.
Additional terms and escrows for the Fairgrounds Plaza Loan are set forth
on Annexes A and C.
CERTAIN TERMS AND CONDITIONS OF THE MORTGAGE LOANS
ARD Loans. Fifty-four of the Mortgage Loans representing approximately
40.0% 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."
S-54
<PAGE>
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
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) 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." Each ARD Loan
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.
Balloon Mortgage Loans. One hundred and eight of the Mortgage Loans
(including 2 interest-only mortgage loans) representing approximately 56.4% 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. Twelve Mortgage Loans representing approximately 7.9% of
the Initial Pool Balance are cross-defaulted and cross-collateralized with
another Mortgage Loan (the "Crossed Loans"). No group of Crossed Loans
represents in the aggregate more than 6.5% of the Initial Pool Balance. 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.
Additional Debt. Except with respect to 2 Mortgage Loans representing
approximately 2.2% of the Initial Pool Balance, the Mortgage Loans were made to
Mortgagors which are generally restricted under the related loan documents or
by its governing documents from incurring any indebtedness other than the
related Mortgage Loan, normal trade accounts payable and certain purchase
financing debt. The Mortgaged Properties for 3 Mortgage Loans representing
approximately 1.0% of the Initial Pool Balance are collateral for junior
indebtedness of the related Mortgagor. The Mortgagor for one Mortgage Loan
representing approximately 2.8% of the Initial Pool Balance has one outstanding
unsecured loan.
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The existence of such other debt could:
o adversely affect the financial viability of the Mortgagor;
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 Mortgaged Property.
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.
The owners of the Mortgaged Property with respect to one Mortgage Loan
representing 0.5% of the Initial Pool Balance have pledged their ownership
interest in such Mortgaged Property as collateral for "mezzanine debt." Such
"mezzanine debt" is separately secured by a lien on the corresponding ownership
interest in the borrower.
Escrows. One hundred and sixty-five Mortgage Loans which represent
approximately 98.3% of the Initial Pool Balance, provide for monthly escrows to
cover property taxes on the Mortgaged Properties and 164 of the Mortgage Loans,
which represent approximately 97.9% 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 and thirty-five of the Mortgage Loans, which represent
approximately 87.4% of the Initial Pool Balance, also require monthly escrows
to cover ongoing replacements of furniture, fixtures and equipment and/or
capital expenditures.
Fifty-six of the Mortgage Loans, which represent approximately 65.2% of
the Initial Pool Balance for office, retail, industrial and mixed use
properties, 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.
Thirty-one of the Mortgage Loans, which represent approximately 29.6% 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.
Related Borrowers. Thirty-six of the Mortgage Loans, representing 17.2% of
the Initial Pool Balance, have Mortgagors which are related to one or more
other Mortgagors but are not cross-collateralized or cross-defaulted with other
mortgage loans. There are 12 such groups of related Mortgagors. No group of
Mortgage Loans with related Mortgagors represents in the aggregate more than
4.7% of the Initial Pool Balance. See Annex A for a description of the related
loan groups.
Earthquake Analysis. Forty-four of the Mortgaged Properties are located in
seismic zones three and four. An architectural and engineering consultant
performed an analysis on all of such Mortgaged Properties, except for 6 mobile
home park properties, 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, four of the
Mortgage Loans are likely to suffer a PML in excess of 20% of the amount of the
estimated replacement cost of the improvements. Six of the Mortgaged Properties
described above, which represent 4.7% of the allocated Initial Pool Balance are
covered by earthquake insurance in an amount at least equal to the outstanding
principal balance of the related Mortgage Loan.
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UNDERWRITING GUIDELINES AND PROCESSES
The Seller has developed guidelines establishing certain procedures with
respect to underwriting the mortgage loans originated or purchased by it, 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. With respect to
the Finova Loans, the Mortgage Loans generally conformed to the underwriting
standards established by the Seller.
Property Analysis. The Seller performs a site inspection to evaluate the
location and quality of the related mortgaged properties. 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. The Seller assesses the submarket in which the property is located
to evaluate competitive or comparable properties as well as market trends. In
addition, the Seller evaluates the property's age, physical condition,
operating history, leases and tenant mix, and management.
Cash Flow Analysis. The Seller reviews operating statements provided by
the mortgagor and makes adjustments in order to determine a 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, the Seller
obtains a current full narrative appraisal conforming at least to the
requirements of FIRREA. The appraisal must be based on the highest and best use
of the mortgaged property and must include an estimate of the current market
value of the property in its current condition. The Seller 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. The Seller 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 will generally
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. The Seller
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. At origination, the Seller either (i)
obtains or updates an environmental site assessment ("ESA") for a Mortgaged
Property prepared by a qualified environmental firm or (ii) obtains an
environmental insurance policy for a Mortgaged Property. If an ESA is obtained
or updated, the Seller 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, the Seller 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.
In the case of 21 Mortgage Loans securing 3.1% of the Initial Pool
Balance, environmental insurance was obtained from an affiliate of American
International Group, Inc. and the underlying Mortgaged Property was not subject
to an environmental site assessment. Each environmental insurance policy
insures the trust fund against losses resulting from certain known and unknown
environmental conditions at the related Mortgaged Property during the
applicable policy period. Subject to certain conditions and exclusions, the
insurance policies generally provide coverage against (i) losses resulting from
default under the applicable Mortgage Loan, up to the outstanding balance of
the Mortgage Loan, if on-site environmental conditions are discovered at the
Mortgaged Property during the policy period and no
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foreclosure of the Mortgaged Property has taken place, (ii) losses from
third-party claims against the lender during the policy period for bodily
injury, property damage or clean-up costs resulting from environmental
conditions at or emanating from the Mortgaged Property and (iii) after
foreclosure, costs of clean-up of environmental conditions discovered during
the policy period to the extent required by applicable law, including any court
order or other governmental directive.
Physical Assessment Report. At origination, the Seller obtains a physical
assessment report ("PAR") for each mortgaged property prepared by a qualified
structural engineering firm. The Seller 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, the
Seller generally requires 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.
Title Insurance Policy. The mortgagor is required to provide, and the
Seller reviews, a title insurance policy for each mortgaged property. The title
insurance policy must meet the following requirements: (a) the policy must be
written by a title insurer licensed to do business in the jurisdiction where
the mortgaged property is located, (b) the policy must be in an amount equal to
the original principal balance of the mortgage loan, (c) the protection and
benefits must run to the mortgagee and its successors and assigns, (d) 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 (e) the legal description of the mortgaged
property in the title policy must conform to that shown on the survey of the
mortgaged property, where a survey has been required.
Property Insurance. The mortgagor is required to provide, and the Seller
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 the Seller may require based on
the specific characteristics of the mortgaged property.
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 15 days after the initial issuance of the Offered Certificates.
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DESCRIPTION OF THE CERTIFICATES
GENERAL
The Mortgage Pass-Through Certificates, Series 2000-C10 (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 L, Class M, Class
NR, Class R-I, Class R-II and Class R-III Certificates. Only the Offered
Certificates are offered hereby. The Class Q Certificates will represent the
Subordinate Component of the Suburban Lodge Loan. Unless otherwise indicated,
references in this Prospectus Supplement to the Certificates or a Class of
Certificates are not references to the Class Q Certificates. See the Executive
Summary for a description of some of the terms of the Offered Certificates. 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 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 in excess thereof.
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 the Clearstream system ("Clearstream"), 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
to investors through the book-entry facilities of DTC, Cedelbank or Clearstream
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 Clearstream will hold omnibus positions on behalf of their
participants through customers' securities accounts in Cedelbank's and
Clearstream'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.
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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 Clearstream
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
Clearstream Participant (each as defined below) as a result of a transaction
with a DTC Participant (other than a depository holding on behalf of Cedelbank
or Clearstream) will be credited during the securities settlement processing
day (which must be a business day for Cedelbank or Clearstream, 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 Clearstream Participant or Cedelbank Participant on such
business day. Cash received in Cedelbank or Clearstream as a result of sales of
securities by or through a Cedelbank Participant or Clearstream Participant to
a DTC Participant (other than the depository for Cedelbank or Clearstream) will
be received with value on the DTC settlement date, but will be available in the
relevant Cedelbank or Clearstream 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 Clearstream 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 Clearstream 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 Clearstream 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.
Clearstream was created to hold securities for participants of Clearstream
("Clearstream Participants") and to clear and settle transactions between
Clearstream 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. The "Clearstream Operator" is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. Clearstream
is under contract with Clearstream Clearance Systems S.C., a Belgian
co-operative corporation (the "Clearance Cooperative"). All operations are
conducted by the Clearstream Operator, and all Clearstream securities clearance
accounts and Clearstream cash accounts are accounts with the Clearstream
Operator, not the Clearance Cooperative. The Clearance Cooperative establishes
policies for Clearstream on behalf of Clearstream Participants. As such, it is
regulated and examined by the 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
Clearstream Operator are governed by the Terms and Conditions Governing Use of
Clearstream
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and the related Operating Procedures of the Clearstream System and applicable
Belgian law (collectively, the "Terms and Conditions"). The Terms and
Conditions govern transfers of securities and cash within Clearstream,
withdrawals of securities and cash from Clearstream, and receipts of payments
with respect to securities in Clearstream. All securities in Clearstream 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 Clearstream have agreed to the foregoing
procedures in order to facilitate transfers of the Offered Certificates among
Participants of DTC, Cedelbank and Clearstream, they are under no obligation to
perform or continue to perform such procedures and such procedures may be
discontinued at any time.
See Annex G for additional information regarding global clearance,
settlement and tax documentation procedures.
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 in October 2000 (each, a
"Distribution Date"). All distributions (other than the final distribution on
any
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Certificate), including distributions on the Class Q Certificates, 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"), except, that
with respect to the initial Distribution Date, the Record Date will be the
Delivery 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, (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) and (iii) for Distribution Dates occurring in March the Withheld
Amounts for the immediately preceding January, if applicable, and February 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,
(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
or (v) any amounts payable with respect to the Subordinate Component of the
Suburban Lodge Loan (see "The Mortgage Pool -- The Suburban Lodge Loan").
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 for each class of Certificates (except the Class X
Certificates) will be equal to either a fixed rate or a rate based on the
weighted average of the remittance rates on the Mortgage Loans. The
Pass-Through Rate on the Class X Certificates for the initial Distribution Date
will be approximately 0.91096% 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 to each such Mortgage Loan.
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.
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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 (a) the sum of (i)
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"), and (ii) any
unpaid Interest Distribution Amount shortfall for a prior Distribution Date
together with interest thereon, less (b) such class' pro rata share, based on
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 Private
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.
In addition, to the extent not necessary to reimburse the Master Servicer
for reductions in its compensation to cover Prepayment Interest Shortfalls,
each class of Certificates (other than the Class X Certificates) will receive
on each Distribution Date the product of (a) any Allocated Net Prepayment
Premium (as defined below) paid with respect to the Mortgage Loans if such
Allocated Net Prepayment Premium is calculated by reference to a U.S. Treasury
rate, (b) the related Class Prepayment Fraction and (c) the related Allocation
Fraction. On each Distribution Date, the Allocated 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, any Allocated 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 the Private 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, any Mortgage Loan 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 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 not necessary to reimburse the Master Servicer, as
described above, any Allocated Net Prepayment Premium paid with respect to a
Mortgage Loan which is not calculated by reference to a U.S. Treasury rate will
be distributed solely to the holders of the Class X Certificates.
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 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 paid in connection with such
prepayment will be included in the Available Distribution Amount for the
immediately following Distribution Date (the "Prepayment Interest Excess"). If
a Mortgage Loan is prepaid in full or in part
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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. See "Description of the Mortgage Pool -- the Suburban Lodge
Loan" for a description of the allocation of any Prepayment Interest Shortfalls
with respect thereto.
The "Net Prepayment Premium" with respect to any Distribution Date will
equal the excess of (a) all Prepayment Premiums received during the related
Remittance Period over (b) (i) all Prepayment Interest Shortfalls to the extent
not offset by all Prepayment Interest Excesses for such Remittance Period and
(ii) any amounts paid to the Master Servicer pursuant to the last sentence of
the preceding paragraph.
The "Allocated Net Prepayment Premium" with respect to any Distribution
Date and any Mortgage Loan, will equal the excess (but not less than zero) of
(a) any Prepayment Premium on such Mortgage Loan received prior to the business
day preceding the Distribution Date and not previously distributed over (b) the
pro rata portion, based on the Prepayment Premium collected on each of the
Mortgage Loans during the same period, of the sum of (i) the excess (but not
less than zero) of any Prepayment Interest Shortfall over any Prepayment
Interest Excess for such Distribution Date and (ii) any amounts required to
reimburse the Master Servicer on such Distribution Date for reductions in its
compensation.
The Pass-Through Rate on the 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 Balances 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, in each case to the extent not previously advanced, 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
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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) 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 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. For purposes of calculating the
Principal Distribution Amount for any Distribution Date, the Principal
Distribution Amount will not include amounts payable to the Subordinate
Component. See "Description of the Mortgage Pool -- The Suburban Lodge Loan."
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;
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(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;
(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 L Certificates;
(w) to distribution of the Principal Distribution Amount (or the portion
thereof remaining after the distribution thereof to the Class K
Certificates in reduction of the Class Balance thereof to zero) for such
Distribution Date on the Class L Certificates, until the Class Balance
thereof is reduced to zero;
(x) to distributions of the Interest Distribution Amount for such
Distribution Date on the Class M Certificates;
(y) to distributions of the Principal Distribution Amount (or the portion
thereof remaining after the distribution thereof to the Class L
Certificates in reduction of the Class Balance thereof to zero) for such
Distribution Date on the Class M Certificates, until the Class Balance
thereof is reduced to zero;
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(z) to distributions of the Interest Distribution Amount for such
Distribution Date on the Class NR Certificates; and
(aa) to distributions of the Principal Distribution Amount (or the
portion thereof remaining after the distribution thereof to the Class M
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.
PRIVATE CERTIFICATES
The Class G, Class H, Class J, Class K, Class L, Class M, Class NR, Class
R-I, Class R-II and Class R-III Certificates (the "Private Certificates") are
not offered hereby. The Pass-Through Rate on each of the Class G, Class H,
Class J, Class K, Class L, Class M and Class NR Certificates for any
Distribution Date will equal 6.75% per annum. The Class Balances for the Class
G, Class H, Class J, Class K, Class L, Class M and Class NR Certificates will
equal the amounts set forth in "Executive Summary."
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.
The Class Q Certificates are not offered hereby. The Class Q Certificates
will receive any distribution on the Subordinate Component of the Suburban
Lodge Loan. See "Description of the Mortgage Pool -- The Suburban Lodge Loan."
An affiliate of the Depositor intends to purchase and make an investment
in the Private Certificates. The Private 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. Except as
described below, Realized Losses on the Mortgage Loans will be allocated,
first, to the Class NR, Class M, Class L, 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 Certificates 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. Realized Losses
will be allocated to a class of Certificate by reducing its Class Balance on
the Distribution Date in the month following the occurrence of the Realized
Loss by the excess of the aggregate Class Balance of the Certificates over the
aggregate Stated Principal Balance of the Mortgage Loans after giving effect to
all distributions on such Distribution Date.
In addition to Realized Losses, shortfalls will also occur as a result of
each 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. Except as
described below, 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.
No Realized Losses on the Suburban Lodge Loan will be allocated to the
amount of the Senior Component until the aggregate amount of these Realized
Losses exceeds the amount of the Subordinate
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Component. Therefore, Realized Losses on the Suburban Lodge Loan will be
allocated solely to the Class Q Certificate in reduction of the Class Balance
thereof until reduced to zero. Thereafter Realized Losses on the Suburban Lodge
Loan will be allocated as described above to the other Classes of Certificates.
On the other hand, no Realized Losses on any other Mortgage Loan will be
allocated to the Subordinate Component or the Class Q Certificates at any time.
In addition shortfalls with respect to the Suburban Lodge Loan will be
allocated first to the Class Q Certificates and then to the other Classes of
Certificates, as described above, and no shortfalls with respect to other
Mortgage Loans will be allocated to the Class Q Certificates.
A "Realized Loss," (a) in the case of any Mortgage Loan described in
clause (a) or clause (b) of the succeeding sentence, is equal to (i) the
outstanding principal balance of any Loss Mortgage Loan (or REO Mortgage Loan)
as of the beginning of the Collection Period, plus, (ii) all accrued and unpaid
interest without taking item (iii) into account, minus (iii) amounts recovered
thereon as of such time and (b), in the case of any Mortgage Loan described in
clause (b) of the succeeding sentence, is the amount determined to have been
permanently forgiven as described in such clause (b). A "Loss Mortgage Loan" is
any Mortgage Loan (a) which is finally liquidated, or (b) 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) 120 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, (except if an appraisal has been conducted within the twelve-month
period preceding such event) the cost of which shall be advanced by the Master
Servicer and reimbursed thereto from the Trust Fund provided, that if the
principal balance of the Mortgage Loan is less than $1,000,000, the Special
Servicer will be required, at its option, (A) to provide its good faith
estimate (an "Appraisal Estimate") of the value of the Mortgaged Properties
within the same time period as an appraisal would otherwise be required and
such Small Loan Appraisal Estimate will be used in lieu of an independent MAI
appraisal or (B) to obtain, with the consent of the Directing
Certificateholder, an appraisal. As a result of such appraisal or Appraisal
Estimate, 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. At any time that any Collateral Value Adjustment exists with respect to
any Mortgage Loan, the Directing Certificateholder may direct the Special
Servicer to obtain an appraisal at the Directing Certificateholder's expense.
Upon the written request of the Directing Certificateholder, the Special
Servicer shall recalculate the Collateral Value Adjustment on the new appraisal
and notify the Trustee, the Master Servicer and the Directing Certificateholder
of such recalculated Collateral Value Adjustment. In addition, in any case,
upon the occurrence of any event giving rise to a subsequent
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Collateral Value Adjustment (including the delinquency referred to in the
immediately preceding sentence) more than twelve months after an appraisal or
Appraisal Estimate was obtained with respect to a Collateral Value Adjustment,
the Special Servicer will order a new appraisal or Appraisal Estimate 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.
The "Collateral Value Adjustment" with respect to any Mortgage Loan will
be an amount equal to the excess of (a) the Stated 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 or, in the case of Mortgage Loans having a principal
balance under $1,000,000, 90% of the Appraisal Estimate 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 and (C) 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). 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 may result in a reduction of
the Interest Distribution Amount of one or more classes of Certificates, but
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.
The resulting Collateral Value Adjustment for a Mortgage Loan will be
netted from the related principal balance for purposes of calculating P & I
Advances. This will reduce any P&I Advance otherwise required for such Mortgage
Loan. This 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. 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
Master Servicer and 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.
See "Description of the Mortgage Pool -- The Suburban Lodge Loan" for a
discussion of the effect of a Collateral Value Adjustment on the Suburban Lodge
Loan.
ADVANCES
On the business day immediately preceding each Distribution Date, the
Master Servicer will be obligated to make advances out of its own funds or
funds held in the Collection Account (as defined herein) that are not required
to be part of the Available Distribution Amount for such Distribution Date
(each, a "P&I Advance"), in an amount equal to the excess of all Monthly
Payments (net of the Master Servicing Fee) due over the amount actually
received, subject to the limitations described herein. See "Description of the
Mortgage Pool -- The Suburban Lodge Loan" for a description of advances with
respect to the Suburban Lodge Loan.
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 the
P&I Advance that would otherwise be required to be made for the Distribution
Date without regard to this sentence, multiplied by (ii) a fraction, 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.
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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 (a "Property Protection Advance") for
one of several purposes specified in the Pooling and Servicing Agreement as
"Property Protection Expenses." All such advances with interest thereon will be
reimbursable to the Master 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, the Master 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. Neither the Master Servicer nor the Trustee will be required to advance
the full amount of any Balloon Payment not made by the related Mortgagor. To
the extent the Master Servicer or 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 the amount 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 the Master
Servicer to make a P&I Advance or to make a 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 Master Servicer.
The Master Servicer or the Trustee shall be entitled to interest on the
aggregate amount of all advances made by the Master Servicer or the Trustee,
respectively, at a per annum rate equal to the Prime Rate reported in The Wall
Street Journal. See "Risk Factors -- Delinquencies Will Entitle Servicer to
Receive Certain Additional Compensation Which Takes Precedence Over Your Right
to Receive Distributions" herein.
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CERTAIN PREPAYMENT, MATURITY AND YIELD CONSIDERATIONS
GENERAL
The yield to maturity on the Offered Certificates will be affected by the
rate of principal payments on the Mortgage Loans including, for this purpose,
prepayments, which may include amounts received by virtue of the curtailments,
voluntary repayment in full, repurchases by the Seller, condemnation or
casualty with respect to the Mortgaged Property or foreclosure pursuant to a
default on a Mortgage Loan ("Prepayment"). The rate of principal payments on
the Offered Certificates will correspond to the rate of principal payments
(including prepayments) on the related Mortgage Loans.
Each Mortgage Loan either prohibits voluntary prepayments during a certain
number of years following the origination thereof and/or allows the related
Mortgagor to prepay the principal balance thereof in whole or in part during a
certain number of years following the origination if accompanied by payment of
a Prepayment Premium. See Annex A hereto and the table entitled "Prepayment
Protection" under "Description of the Mortgage Pool -- Certain Characteristics
of the Mortgage Loans" 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 -- Prepayments Will Affect Your Yield"
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 Offered Certificates will be either a fixed
rate or a rate based on the weighted average of the Remittance Rates on the
Mortgage Loans. 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. 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 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 is not 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
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Certificates is purchased at a discount and principal distributions thereon
occur at a rate slower than that assumed at the time of purchase, the
investor's actual yield to maturity will be lower than that assumed at the time
of purchase.
If a Mortgage Loan becomes a Specially Serviced Mortgage Loan, the Special
Servicer may adopt a servicing strategy which affects the yield to maturity of
one or more classes of Offered Certificates.
The "Rated Final Distribution Date" for the Certificates will be the
Distribution Date in August 2032, which is the first Distribution Date
succeeding the second anniversary of the date at which all the Mortgage Loans
are scheduled to have zero balances, assuming no prepayments, defaults or
delinquencies, and that the Mortgage Loans which are Balloon Loans or ARD Loans
fully amortize according to their amortization schedule without a Balloon
Payment or final payment on the Anticipated Repayment Date, respectively.
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 October 2000; (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
October 4, 2000; (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; and (ix) any Prepayment Premium payable pursuant to a
Mortgage Loan and not calculated by reference to a U.S. rate is collected.
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
------------------------------ ------------------------------ -----------------------------
DISTRIBUTION DATE 0% 25% 50% 75% 100% 0% 25% 50% 75% 100% 0% 25% 50% 75% 100%
--------------------- ----- ----- ----- ----- ------ ----- ----- ----- ----- ------ ----- ----- ----- ----- -----
<S> <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
September 2001 ...... 93 93 93 93 93 100 100 100 100 100 100 100 100 100 100
September 2002 ...... 86 86 86 86 86 100 100 100 100 100 100 100 100 100 100
September 2003 ...... 78 78 78 78 78 100 100 100 100 100 100 100 100 100 100
September 2004 ...... 69 69 69 69 69 100 100 100 100 100 100 100 100 100 100
September 2005 ...... 60 60 60 60 60 100 100 100 100 100 100 100 100 100 100
September 2006 ...... 49 49 49 49 49 100 100 100 100 100 100 100 100 100 100
September 2007 ...... 38 38 38 38 38 100 100 100 100 100 100 100 100 100 100
September 2008 ...... 26 26 26 26 26 100 100 100 100 100 100 100 100 100 100
September 2009 ...... 0 0 0 0 0 67 65 62 58 22 100 100 100 100 100
September 2010 ...... 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 5.4 9.1 9.1 9.1 9.0 8.8 9.5 9.5 9.4 9.4 9.2
</TABLE>
<TABLE>
<CAPTION>
CLASS C CLASS D CLASS E
------------------------------ ------------------------------ -----------------------------
DISTRIBUTION DATE 0% 25% 50% 75% 100% 0% 25% 50% 75% 100% 0% 25% 50% 75% 100%
--------------------- ----- ----- ----- ----- ------ ----- ----- ----- ----- ------ ----- ----- ----- ----- -----
<S> <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
September 2001 ...... 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100
September 2002 ...... 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100
September 2003 ...... 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100
September 2004 ...... 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100
September 2005 ...... 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100
September 2006 ...... 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100
September 2007 ...... 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100
September 2008 ...... 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100
September 2009 ...... 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100
September 2010 ...... 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Weighted Average
Life in years (2) .. 9.5 9.5 9.5 9.5 9.3 9.6 9.6 9.5 9.5 9.4 9.6 9.6 9.6 9.6 9.4
</TABLE>
<TABLE>
<CAPTION>
CLASS F
-------------------------------------
DISTRIBUTION DATE 0% 25% 50% 75% 100%
-------------------------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Initial percentage ....... 100 100 100 100 100
September 2001 ........... 100 100 100 100 100
September 2002 ........... 100 100 100 100 100
September 2003 ........... 100 100 100 100 100
September 2004 ........... 100 100 100 100 100
September 2005 ........... 100 100 100 100 100
September 2006 ........... 100 100 100 100 100
September 2007 ........... 100 100 100 100 100
September 2008 ........... 100 100 100 100 100
September 2009 ........... 100 100 100 100 100
September 2010 ........... 0 0 0 0 0
Weighted Average
Life in years(2) ........ 9.6 9.6 9.6 9.6 9.4
</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 Offered Certificates.
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
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<PAGE>
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 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 is 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 CPR PREPAYMENT ASSUMPTION RATE (2)
AS A PERCENTAGE ASSUMED --------------------------------------------------------
OF THE NOTIONAL AMOUNT PASS-THROUGH RATE (1) 0% 25% 50% 75% 100%
------------------------ ---------------------- --------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
5.9000% ................ 0.91096% 9.7286% 9.7003% 9.6672% 9.6222% 9.3087%
</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, and by converting such monthly
rates to semi-annual corporate bond equivalent rates. 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 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
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<PAGE>
the yield 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 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. Midland's address is 210 West 10th Street, 6th Floor,
Kansas City, Missouri 64105.
As of August 31, 2000, Midland was servicing approximately 14,000
commercial and multifamily loans with a total principal balance of
approximately $48.8 billion. The collateral for these loans is located in all
50 states, the District of Columbia, Puerto Rico and Canada. Approximately
10,000 of the loans, with a total principal balance of approximately $39.3
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.
Fitch and Moody's have approved Midland as a master servicer and special
servicer for investment grade-rated commercial and multi-family mortgage-backed
securities. Midland is also a HUD/FHA-approved mortgagee and a Fannie
Mae-approved multifamily loan servicer.
Midland currently maintains an Internet-based investor reporting system,
CMBS Investor Insight(SM), that contains updated performance information at the
portfolio, loan and property levels on the various commercial mortgage-backed
securities transactions that it services. Certificateholders, prospective
transferees and other appropriate parties may obtain access to CMBS Investor
Insight(SM) through Midland's website, www.midlandls.com. Midland may require
registration and the execution of an access agreement in connection with
providing access to CMBS Investor InsightSM. Specific questions about
portfolio, loan and property performance may be sent to Midland via e-mail at
[email protected].
The information set forth above concerning the Master Servicer has been
provided by Midland. The Depositor, the Underwriters, the Trustee and the
Seller make no representations or warranties as to its accuracy.
ORIX Real Estate Capital Markets, LLC ("ORECM") will be acting as the
Special Servicer (together with Midland, the "Servicers") under the Pooling and
Servicing Agreement. ORECM is a Delaware limited liability company. ORECM
manages a servicing portfolio of commercial and multifamily loans encompassing
in excess of 11,000 assets with an aggregate principal balance, as of June 30,
2000, of approximately $38.5 billion, the collateral for which is located in 50
states, Puerto Rico, the District of
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<PAGE>
Columbia, Canada, the Dominican Republic and the Virgin Islands. As of June 30,
2000, ORECM served as the named special servicer on 86 securitized transactions
encompassing in excess of 17,000 loans, with an aggregate principal balance of
approximately $54.5 billion. ORECM's servicing operations are located at 1717
Main Street, Dallas, Texas 75201.
The information set forth above concerning the Special Servicer has been
provided by ORECM. 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 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
or its affiliates 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 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, with respect to a Balloon Payment, is delinquent in whole or in
part for more than 30 days (however, if the Master Servicer reasonably expects
that the related borrower will continue to make monthly payments and the Master
Servicer receives written evidence that the related borrower has obtained a
binding commitment from an institutional lender to refinance, such longer
period of time (not to exceed 60 days from the date of the delinquency) within
which such refinancing is expected to occur); (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
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<PAGE>
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.
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 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 or its Affiliates and any Mortgagor, (b) any ownership of the
Certificates, (c) any debt that it extended to any Mortgagor and (d) any
servicing compensation to which the Special 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
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<PAGE>
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 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 may purchase a
Defaulted Mortgage Loan at a purchase price equal to the outstanding principal
balance thereof together with accrued interest thereby, plus any amounts
payable to the Servicer or the Trustee in respect of the Mortgage Loan.
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 ten 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 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) 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 ten 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
ten 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
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since its receipt of the Asset Strategy Report, 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, other than the Mortgagor on the related Specially Serviced
Mortgage Loan, an affiliate thereof or a person acting on behalf of the
Mortgagor, 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, upon execution of a confidentiality agreement.
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 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 Workout 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, the Workout Fee and
the Liquidation 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
same principal balance 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. 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 0.03% per annum with respect to 2.2% 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 12.5% of the Mortgage
Loans by aggregate principal balance as of the Cut-off Date, (iii) a primary
servicing fee rate of 0.06% per annum with respect to 2.3% of the Mortgage
Loans by aggregate principal balance as of the Cut-off Date, (iv) a primary
servicing fee of 0.07% per annum with respect to 6.9% of the Mortgage Loans by
aggregate principal balance as of the Cut-off Date and (v) a primary servicing
fee of 0.10% per annum with respect to 3.5% 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.
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The principal compensation to be paid to the Special Servicer in respect
of its special servicing activities will be the Special Servicing Fee, the
Workout Fee and the Liquidation Fee. The "Special Servicing Fee" will equal
0.25% per annum. The Special Servicing Fee will be computed on the basis of the
same principal balance and for the same period respecting which any interest
payment on each Specially Serviced Mortgage Loan is computed. The "Workout Fee"
will equal 1.00% of all amounts collected with respect to any Mortgage Loan
that became a Specially Serviced Mortgage Loan and was subsequently returned
to, and remains in, a performing status. The "Liquidation Fee" will equal 1.00%
of the net payments or net proceeds obtained by the Special Servicer in
connection with payment in full, partial or discounted payoff from the borrower
or, except under circumstances described in the Pooling and Servicing
Agreement, 1.00% of the net proceeds in connection with any liquidation of the
Mortgage Loan.
The Master Servicer or, with respect to the Specially Serviced Mortgaged
Loans, the Special Servicer will be entitled to retain any other fees or
charges (other than late payment charges to the extent necessary to cover
interest on Advances on the related Mortgage Loan) actually paid by a Borrower.
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 or claim 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 Master Servicer, 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 September 1, 2000 (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 or
make available to a prospective or actual Certificateholder, upon written
request and at the expense of the requesting party, a copy (without exhibits)
of the Pooling and Servicing Agreement. Requests should be addressed to State
Street Bank and Trust Company, 2 Avenue de Lafayette, Boston, Massachusetts
02111, Attention: Corporate Trust Services -- J.P. Morgan Commercial Mortgage
Finance Corp., Series 2000-C10.
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 a custodian, acting
on behalf of the Trustee, 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, a Massachusetts Trust Company shall
serve as Trustee under the Pooling and Servicing Agreement pursuant to which
the Certificates are being issued. Except in
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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's fee will equal
the fee calculated at the Trustee Fee Rate as described in the Pooling and
Servicing Agreement. The "Trustee Fee Rate" will equal 0.0027% per annum of the
outstanding principal balance of the Mortgage Loans. The offices of the
Trustee's corporate trust department with respect to this trust are located at
2 Avenue de Lafayette, Boston, Massachusetts 02111, Attention: Corporate Trust
Service (CMBS) -- J.P. Morgan Commercial Mortgage Finance Corp. Mortgage
Pass-Through Certificates, Series 2000-C10.
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 its portion of the
fee calculated at the Trustee Fee Rate 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 --
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
or make available 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 or make
available 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 may provide access to the information available on 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 and at the expense
of the requesting party, 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,
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and will be sufficient to bind all Certificateholders to, certain actions,
including directing the Trustee, 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 Private Certificates, (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 0.331/3% 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 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 (i) the aggregate Stated
Principal Balance of the Mortgage Loans then in the Trust Fund is less than 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
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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.
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 Private
Certificates (other than the Class R-I, Class R-II and Class R-III
Certificates), the Class Q Certificates and each component of the Class X
Certificates will be "regular interests" of REMIC III and will be treated as
debt instruments of 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 "Federal Income Tax Consequences -- REMICs -- Taxation of
Owners of REMIC Regular Certificates" and "-- Original Issue Discount and
Premium" 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 "Federal Income Tax Consequences --
REMICs -- Taxation of Owners of REMIC Regular Certificates" and "-- Original
Issue Discount 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 "Federal Income Tax Consequences -- REMICs" in the Prospectus.
For further information regarding the federal income tax consequences of
investing in the Certificates, see "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,
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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
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, or of any collective
investment fund or separate account or other entity in which such plans are
invested (each, a "Plan"), 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 an individual exemption
(Prohibited Transaction Exemption 90-23 (May 17, 1990) to J.P. Morgan
Securities Inc., which was amended by Prohibited Transaction Exemption 97-34
(July 21, 1997) (collectively, the "Exemption")), 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 obligations covered by the Exemption include mortgage loans such as
the Mortgage Loans. If mortgage loans are secured by leasehold interests, each
lease term must be at least 10 years longer than the term of the relevant
Mortgage Loan. Under the Exemption, trust assets must generally be limited to
certain secured obligations. However, trust assets may also include cash or
investments made therewith which are credited to an account to provide payments
to certificateholders pursuant to a yield supplement agreement or similar yield
maintenance arrangement to supplement the interest rates otherwise payable on
obligations contained in the trust, provided that such arrangements do not
involve swap agreements or other notional principal contracts.
The Exemption sets forth six general conditions which must be satisfied,
among others, 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
Ratings Services, Moody's or Fitch. Fourth, the Trustee cannot be an affiliate
of any other member of the "Restricted Group" which consists of the Trustee,
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
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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.
The Exemption also applies to transactions in connection with the
servicing, management and operation of the Trust Fund, provided that, in
addition to the general requirements described above, (a) such transactions are
carried out in accordance with the terms of a binding pooling and servicing
agreement and (b) the pooling and servicing agreement is provided to, or
described in all material respects in the prospectus or private placement
memorandum provided to, investing Plans before their purchase of Offered
Certificates issued by the Trust Fund. The Pooling and Servicing Agreement is a
pooling and servicing agreement as defined in the Exemption. The Pooling and
Servicing Agreement provides that all transactions relating to the servicing,
management, and operations of the Trust Fund must be carried out in accordance
with the Pooling and Servicing Agreement.
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 likely to be satisfied with respect to such Offered
Certificates as of the initial closing date. It is a condition of the issuance
of the Class A1, Class A2 and Class X Certificates that they be rated "AAA" by
Fitch 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
all of the 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.
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 E
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 by such transferee is eligible for, and meets all of the
requirements of, relief 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.
The Department of Labor has proposed amendments to the Exemption that, if
finalized in current form, may permit Plans to also purchase the Class B, Class
C, Class D, Class E and Class F Certificates. It is not certain if and when
these amendments will be issued or whether they will contain the same relief as
is currently proposed.
S-86
<PAGE>
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 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 and the Underwriters make 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.
S-87
<PAGE>
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 Salomon Smith Barney, Inc. (the "Underwriting
Agreement"), the Depositor has agreed to sell to J.P. Morgan Securities Inc.
and Salomon Smith Barney Inc. (together with J.P. Morgan Securities Inc., the
"Underwriters") and each of the Underwriters has severally, but not jointly,
agreed to purchase from the Depositor, the portion of the Offered Certificates
of each class listed opposite its name in the table below.
J.P. Morgan Securities Inc. and Salomon Smith Barney Inc. are acting as
co-lead managers for the offering. J.P. Morgan Securities Inc. is the sole
bookrunner of all of the Offered Securities.
ALLOCATION TABLE
<TABLE>
<CAPTION>
UNDERWRITER CLASS A1 CLASS A2 CLASS X CLASS B CLASS C CLASS D CLASS E CLASS F
-------------------------- ---------- ---------- --------- --------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
J.P. Morgan
Securities Inc. ......... 100.0% 78.8% 93.1% 89.5% 90.3% 85.0% 79.1% 100.0%
Salomon Smith
Barney Inc. ............. 0.0% 21.2% 6.9% 10.5% 9.7% 15.0% 20.9% 0.0%
----- ---- ---- ---- ---- ---- ---- -----
Total .................... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
===== ===== ===== ===== ===== ===== ===== =====
</TABLE>
In the event of default by either Underwriter, the Underwriting Agreement
provides that, in certain circumstances, the underwriting commitment of the
nondefaulting Underwriter may be increased or the underwriting may be
terminated.
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 107.1% of the initial aggregate principal balance thereof,
plus accrued interest from the Cut-off Date.
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
Underwriters may effect the transactions by selling the Offered Certificates to
or through dealers, and the dealers may receive compensation in the form of
underwriting discounts, concessions or commissions from the Underwriters. In
connection with the purchase and sale of the Offered Certificates offered
hereby, the Underwriters may be deemed to have received compensation from the
Depositor in the form of underwriting discounts.
The Depositor and J.P. Morgan Securities Holdings Inc. have agreed to
indemnify the Underwriters against, or make contributions with respect to,
certain liabilities, including liabilities under the Securities Act of 1933.
The Underwriters have agreed severally, but not jointly, to indemnify the
Depositor against, or make contributions to the Depositor with respect to,
certain liabilities, including liabilities under the Securities Act of 1933,
under limited circumstances.
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. J.P. Morgan Securities Inc. is an affiliate of the Depositor and
the Seller.
S-88
<PAGE>
LEGAL MATTERS
Certain legal matters will be passed upon for the Depositor and the
Underwriters by Brown & Wood LLP, New York, New York.
RATING
It is a condition of the issuance of the Class A1, Class A2 and Class X
Certificates that they be rated "AAA" by Fitch, Inc. ("Fitch") and "Aaa" by
Moody's Investors Service, Inc. ("Moody's," and together with Fitch, the
"Rating Agencies"). It is a condition of the issuance of the Class B
Certificates that they be rated not lower than "AA" by Fitch 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 Fitch 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 Fitch 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 Fitch
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 Fitch 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 "Aaa" ratings received on the
Class X Certificates by Fitch and Moody's, respectively. 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 Fitch 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-89
<PAGE>
INDEX OF PRINCIPAL TERMS
<TABLE>
<S> <C>
30/360 basis ...................................... S-62
Abbey Company Borrower ............................ S-44
Abbey Company Borrowers ........................... S-44
Abbey Company Loans ............................... S-44
Abbey Company Properties .......................... S-44
Abbey Portfolio III Loan .......................... S-44
Abbey Portfolio IV Loan ........................... S-44
Additional Servicing Fee Rate ..................... S-79
Adjusted Available Distribution Amount ............ S-63
Adjusted Collateral Value ......................... S-69
ADMC .............................................. S-46
Allocated Net Prepayment Premium .................. S-64
Allocation Fraction ............................... S-63
Anadigics ......................................... S-46
Anticipated Repayment Date ........................ S-54
ARD Loans ......................................... S-54
Asset Strategy Report ............................. S-78
Atlantic Development Borrowers .................... S-46
Atlantic Portfolio Development Properties ......... S-46
Atlantic Portfolio Development Property ........... S-46
Available Distribution Amount ..................... S-62
Balloon Mortgage Loan ............................. S-55
Balloon Payment ................................... S-55
Basic Master Servicing Fee Rate ................... S-79
Beneficial Owner .................................. S-59
Cede .............................................. S-59
Cedelbank Participants ............................ S-60
Celegene .......................................... S-46
Certificate Account ............................... S-82
Certificateholders ................................ S-59
Certificates ...................................... S-59
Class A Certificates .............................. S-59
Class Balance ..................................... S-65
Class Prepayment Fraction ......................... S-63
Clearance Cooperative ............................. S-60
Clearstream ....................................... S-59
Clearstream Operator .............................. S-60
Clearstream Participants .......................... S-60
Coastal ........................................... S-53
Code .............................................. S-84
Collateral Value Adjustment ....................... S-69
Collection Account ................................ S-82
Cordis ............................................ S-46
Covina Hills Borrower ............................. S-47
Covina Hills Property ............................. S-47
CPR ............................................... S-72
Crossed Loans ..................................... S-55
Cut-off Date LTV Ratio ............................ S-37
DDR ............................................... S-48
</TABLE>
S-90
<PAGE>
<TABLE>
<S> <C>
Debt Service Coverage Ratio ................................... S-38
Defaulted Mortgage Loan ....................................... S-76
Defeasance .................................................... S-43
Definitive Certificates ....................................... S-61
Depositories .................................................. S-59
Directing Certificateholder ................................... S-78
Distribution Date ............................................. S-61
DTC ........................................................... S-59
DTC Participants .............................................. S-60
DTC Registered Certificates ................................... S-59
Due Date ...................................................... S-28
Effective Gross Income ........................................ S-38
Embassy Suites Chicago Borrower ............................... S-52
Embassy Suites Chicago Property ............................... S-52
ERISA ......................................................... S-85
ESA ........................................................... S-57
Excess Cash Flow .............................................. S-55
Excess Interest ............................................... S-55
Exemption ..................................................... S-85
Fairgrounds Plaza Borrower .................................... S-54
Fairgrounds Plaza Property .................................... S-53
Felcor ........................................................ S-52
Finova Loans .................................................. S-28
FIRREA ........................................................ S-37
Fitch ......................................................... S-89
Form 8-K ...................................................... S-58
Gerry Buildings Borrower ...................................... S-51
Gerry Buildings Properties .................................... S-51
GLA ........................................................... S-48
Global Securities ............................................. G-1
Hub Tower Borrower ............................................ S-50
Hub Tower Property ............................................ S-50
Indirect Participants ......................................... S-60
Initial Pool Balance .......................................... S-28
Interest Accrual Amount ....................................... S-63
Interest Distribution Amount .................................. S-63
Interest Reserve Account ...................................... S-64
Interest Reserve Loans ........................................ S-64
Liberty Fair Mall Borrower .................................... S-48
Liberty Fair Mall Property .................................... S-48
Lock-out Date ................................................. S-42
Lock-out Period ............................................... S-42
Loss Mortgage Loan ............................................ S-68
Manekin ....................................................... S-54
Master Servicing Fee .......................................... S-79
Maturity Date ................................................. S-64
Maturity Date or Anticipated Repayment Date LTV Ratio ......... S-37
MGT ........................................................... S-28
Midland ....................................................... S-75
Monitoring Certificateholders ................................. S-78
Monthly Payments .............................................. S-28
</TABLE>
S-91
<PAGE>
<TABLE>
<S> <C>
Moody's .................................. S-89
Mortgage ................................. S-28
Mortgage Interest Rate ................... S-54
Mortgage Loan File ....................... S-81
Mortgage Loan Purchase Agreement ......... S-28
Mortgage Loans ........................... S-28
Mortgage Note ............................ S-28
Mortgage Pool ............................ S-28
Mortgaged Property ....................... S-28
Mortgagor ................................ S-54
Net Operating Income ..................... S-38
Net Prepayment Premium ................... S-64
NOI ...................................... S-38
Notional Amount .......................... S-63
Offered Certificates ..................... S-59
Operating Advisor ........................ S-31
Operating Statements ..................... S-39
ORECM .................................... S-75
P&I Advance .............................. S-69
PAR ...................................... S-58
Participants ............................. S-60
Pass-Through Rate ........................ S-62
Percentage Interest ...................... S-62
Plan ..................................... S-85
PML ...................................... S-56
Pooling and Servicing Agreement .......... S-81
Prepayment ............................... S-71
Prepayment Interest Excess ............... S-63
Prepayment Interest Shortfall ............ S-63
Prepayment Premium ....................... S-42
Principal Distribution Amount ............ S-64
Priority of Distributions ................ S-64
Private Certificates ..................... S-67
PTCE 95-60 ............................... S-86
Rated Final Distribution Date ............ S-72
Rating Agencies .......................... S-89
Realized Loss ............................ S-68
Record Date .............................. S-62
REMIC .................................... S-84
REMIC Regulations ........................ S-83
Remittance Rate .......................... S-62
REO Account .............................. S-59
REO Property ............................. S-59
Replacement Special Servicer ............. S-79
Required Appraisal Date .................. S-68
Revised Rate ............................. S-55
Risk Factors ............................. S-10
RNA ...................................... S-44
Senior Component ......................... S-30
Servicers ................................ S-75
Servicing Standard ....................... S-76, S-77
</TABLE>
S-92
<PAGE>
<TABLE>
<S> <C>
Servicing Transfer Event ................................... S-76
SMMEA ...................................................... S-87
Special Servicing Fee ...................................... S-80
Specially Serviced Mortgage Loan ........................... S-77
Stated Principal Balance ................................... S-68
Subordinate Component ...................................... S-30
Suburban Lodge Loan ........................................ S-30
Terms and Conditions ....................................... S-61
The Kaleidoscope ........................................... S-51
The Suburban Lodge Loan .................................... S-28
Trustee Fee Rate ........................................... S-82
U.S. Person ................................................ G-4
Underwriters ............................................... S-88
Underwriting Agreement ..................................... S-88
Underwritten Cash Flow ..................................... S-38
Underwritten Cash Flow Debt Service Coverage Ratio ......... S-38
Underwritten NOI ........................................... S-38
UW Cash Flow ............................................... S-38
UW DSCR .................................................... S-38
UW NOI ..................................................... S-38
Voting Rights .............................................. S-82
Wilshire Financial Borrower ................................ S-49
Wilshire Financial Tower Property .......................... S-49
Withheld Amounts ........................................... S-64
Workout Fee ................................................ S-80
Yield Maintenance .......................................... S-43
YM ......................................................... S-43
</TABLE>
S-93
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE>
ANNEX A
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
<TABLE>
<CAPTION>
Loan No. Property Name Address
-------- ------------- -------
<S> <C> <C>
1 Abbey Portfolio III Various
1.1 Long Beach Airport 3205 Lakewood Blvd
1.2 Sierra Gateway Business Center 39959 & 40015 Sierra Highway
1.3 Nevada Street Plaza 1915 West Redlands Blvd & 721 Nevada St.
1.4 Gardena Commerce Center 15500 So Western Ave / 1741-1751 W. Redondo Beach
1.5 Moreno Valley Commerce Center 23880-23962 Alessandro Boulevard
1.6 Mount Vernon Commerce Center 851 South Mount Vernon Avenue
2 Abbey Portfolio IV Various
2.1 Aliso Viejo Commerce Center 27782-27832 Aliso Creek Road
2.2 Wimbledon Business Center 12276-12550 Hesperia Road
2.3 Upland Commerce Center 1379-1399 Foothill Boulevard
2.4 AP Rancho Carmel 12125-12165 Alta Carmel Court
2.5 Atlantic Plaza 5166-5190 Atlantic Avenue
2.6 Garden Grove Commerce Center 9918 W. Katella Ave. & 11201 Brookhurst St.
3 Atlantic Development II 35 Technology Drive
3.1 7 Powderhorn Drive 7 Powderhorn Drive
3.2 35 Technology Drive 35 Technology Drive
4 Covina Hills Mobile Home Country Club 17350 East Temple Avenue
5 Liberty Fair Mall 240 Commonwealth Boulevard
6 Wilshire Financial 3600 Wilshire Blvd.
7 Hub Tower 699 Walnut Street
8 Gerry Buildings S. Los Angeles,Santee, & E. 8th Streets
9 Embassy Suites - Chicago 1445 Lake Cook Drive
10 Fairgrounds Plaza 37-63 West Aylesbury Road
11 Comfort Inn & Suites 2485 Hotel Circle Place
12 Suburban Lodge Portfolio Various
12.1 Suburban Lodge - Hazelwood 9067 Dunn Road
12.2 Suburban Lodge - Jackson 5731 I-55 North Frontage Road
12.3 Suburban Lodge - East Indianapolis 2301 Post Road
12.4 Suburban Lodge - St. Charles 1769 Fairlane Drive
12.5 Suburban Lodge - Newport News 12015 Jefferson Street
13 Northrop Grumman Building 793 Elkridge Landing Road
14 One Riverview Drive One Riverview Drive
15 Willo Arms Apartments 27181 Euclid Avenue
16 Rincon Country West Resort 4555 S Mission Road
17 Pavillion East SEC Coit & Campbell
18 Royal Lane Village Apartments 11323 Newkirk Street
19 Heritage Square Apartments 451 Fulton Ave, 14& 34 Elk Street
20 West Acre Commons 5080 Corunna Road
21 Vista Del Valle 4051 West Viking Road
22 Henson Productions 1416 N. La Brea
23 Creekside Shopping Center 1715-1725 Hacienda Drive
24 Concourse Building 2044 Concourse Drive
25 Computer Learning Center Building 10021 Balls Ford Road
26 Whispering Pines Apartments 201 S. Kolb Road
27 Transbulk Industrial Center 400 North Highland (Office)/901 Plum Street (Industrial)
28 TeleService Office Building 7050 Fairgrounds Parkway
29 Highridge Plaza Route 7A
30 Campus Edge - Phase II 1200 Mallard Creek Church Road
31 Brookshire Partners 11500 Dolan St. (CONG) & 11525 Brookshire (MOB)
32 Mall de las Aguilas 455 S. Bibb Ave.
33 Hampshire Heights / University Park Apartments 3045 Ilger Ave. / 1517 Secor Road
33.1 Village of Hampshire Heights Apts 3045 Ilger Avenue
33.2 University Park Apartments 1517 Secor Rd.
34 Anderson Apartments 204 South Harris Road
35 Temecula Corporate Plaza 27450 Ynez Road
36 Sunny Dale Apartments 5875 N. Yermo Dr
37 Del Prado Mobile Home Park 1616 South Euclid Street
38 West Dixie Towers 13865 West Dixie Highway
39 McData Building 1722 Boxelder Street
40 Brookside Sr. Apartments 2605 Brookside Drive
41 The Meadows Apartments 3506 Meadowview Boulevard
42 The Vail Estates Apartments 2100 South Richland Creek Drive
43 Auburn Center 905 Auburn Way North
44 Barnegat Village Square 912 West Bay Avenue
45 Manoog's Isle Mobile Home Park 2611 Pago Pago Street
46 Pavilion West 7512 & 7632 Campbell Road
47 11th Street Plaza 3134 Eleventh Street
48 Rotunda Apartments 330 Julia Street
49 North Philadelphia Station 2900 North Broad Street
50 Attleboro Crossing Shopping Center 217 South Main Street
51 Thomas Jefferson II Apartments 72-78 Jefferson St
52 Eckerd - Media 510 East Baltimore Pike
53 Westward Ho Manor Mobile Home Park 12044 Royal Road
54 River Center Plaza & Apts. 400 King Street
55 Golden Hills Mobile Home Park 720 East Worth Avenue
56 El Dorado Square 1200 North El Dorado Place
57 Nextel Building , Elmhurst IL 400 West Grand Avenue
58 Glendale Townhomes 2620 S. Stoughton Road
59 Stor Gard Self Storage 500 Providence Highway
60 Suburban Lodge - South Raleigh 1491 US Highway 70
61 Village at Southpark 3550 Pinhook Road
62 Guest House Inn - Decatur 4649 Memorial Drive
63 U-Store - Buena Park 6812 Stanton Avenue
64 Silk Oak Lodge Mobile Home Park 28488 US Highway 19 North
65 University Office Park 5400 South University Drive
66 Industrial Self Storage 1820 Pacheco Way
67 Appleseed Square 48-54 Dodge Sreet (Route 1A)
68 Lake Eden Gardens Mobile Home Park 3499 Stirling Road
69 Meadow Brook Plaza 4221, 4225, 4229 South US Highway 41
70 Surfside Apartments 9-11, 16, 20, 24 and 30 Surfside Road
71 South Daytona Self Storage 2090 South Nova Road
72 The Fields Apartments Ph III 1333 Fenbrook Lane
73 Hidden Forest Mobile Home Park 6602 Holder-Inman Raod
74 300 Metro Center Warwick 300 Metro Center
75 King Portfolio Various
75.1 King Plaza Shopping Center 1346-1376 E. Court St. and 330-380 State Hwy. 123
75.2 King Square Shopping Center 1117 East Court Street and 110-128 Moss Street
76 Kachina Village Shopping Center 3110-3192 East Indian School Road
77 Eckerd's Drug Store - Belton 409 East North Avenue
78 300 East 96th Street 300 E. 96th Street
79 Belmont Shopping Center 1106-1204 Bonforte Boulevard
80 Vermont Care Center 22035 S. Vermont Avenue
81 Grand Avenue Office Building 3500 Grand Avenue
82 Rainbow Express Village 1750 South Rainbow Boulevard
83 Country Villa East Nursing Center 2415 South Western Boulevard
84 ROS Centre 770 Ponce de Leon Blvd
85 Rite Aid - Bronx 650 East Tremont Avenue
86 Elk Properties 3012 Mobile Drive
87 Arkansas Pediatric Facility 4100 Heritage Drive
88 Signal Hill Business Park 2800 & 2900 Orange Ave & 1200 East 29th Street
89 Safe N Sound Self Storage 451 Bridge Street
90 Amazing Savings 19 Star Industrial Park
91 Asylum Apartments 1021 Asylum Avenue; 950 Asylum Avenue
91.1 Asylum Apts. - Asylum 950 Asylum Avenue
91.2 Asylum Apts. - Executive House 1021 Asylum Avenue
92 International Shops 7670 International Drive
93 Mirror Lake Apartments 1751 South Clyde Morris Boulevard
94 Aldine Mail Crossing 5415 Aldine Mail Route
95 El Paso Linens N Things 801 Sunland Park Dr
96 Valley Oaks Apartments 198 Goodson Drive
97 Santa Fe Apartments 5211& 5231- Blanco- 119 Dresden- 1004 Allena
98 First Miller Tech Center 310-370 Miller Avenue / 307-313 North 1st Street
99 Holiday Inn Express - Clute 809 Hwy 332 W
100 Eckerd - Clayton, NC 11360 US Highway 70
101 Idaho Building 280 N 8th Street
102 1717 Precinct Line Road 1717 Precinct Line Road
103 Eckerd-Johnstown,PA 1501 Scalp Avenue
104 Office Max 1411 Center Aveune West
105 Layton Square 841-881 West Layton Avenue
106 Pacific Place 4880-4920 E. Pacific Place & 4950 E. Asbury Avenue
107 Cimino Lane & Pine Grove Apartments Various
107.1 Pine Grove Apartments 3107, 3109 Carman Road
107.2 Cimino Lane Apartments 2, 3, 5 Cimino Lane
108 4212 Technology Court 4212 Technology Court
109 Sixth Avenue Mobile Home Park 39345 6th Avenue
110 Crenshaw Self Storage 6725 Crenshaw Boulevard
111 Sierra Sorrento I 9535 Waples Street
112 Lorain Point Apartments 615 John Anderson Court
113 Target Center 1304 and 1410 Wible Road
114 Sheltering Palms 2545 West 8th Street
115 Westwood Apartments 2631 Bachman Drive
116 Lakehurst Plaza 942-50 Lakehurst Drive
117 NCCS Portfolio I Various
117.1 133 Grant Street 133 Grant Street
117.2 193 Congress Street 193 Congress Street
117.3 6-8 May Street 6-8 May Street
117.4 142 Grant Street 142 Grant Street
117.5 149 Brackett Street 149 Brackett Street
118 Southernaire Mobile Home Park 1700 Sanford Road
119 Gateway - Springfield 537 Baltimore Pike
120 Gateway - Mesa 1036 West Southern Avenue
121 Parker Hill Apartments 11 Parker Hill Avenue
122 Palm Shadows Apartments 125 South 10th Avenue
123 Carriage Square Apartments 1017 W. Pioneer Parkway
124 Lafayette Apartments 825 Lafayette Street
125 Westlake Office Center 805 Beachway Drive
126 Heritage Business Park 1200 Millbury Street
127 Downtown Plaza Apartments 1010 Newton Street
128 Gateway - Lakeland 3756 US Highway 98
129 276-284 Broadway 276-284 Broadway
130 Tampico Retirement Center ALF 100 East Base Avenue
131 Valley Self Storage 37221 East Richardson Lane
132 Williamsburg Square Apartments 2101 Eden Street
133 Crystal Lake Mobile Home Park 3499 Stirling Road
134 Suburban Villas 1003 Perry Court
135 Hallmark - Naperville 1995 West Jefferson Avenue
136 Hilltopper Apartments 1019 Hilltop Drive
137 Panorama Pointe Villas 14610 Plummer Street
138 NCCS Portfolio II Various
138.1 696 Congress Street 696 Congress St.
138.2 316 & 316A Congress Street 316 & 316A Congress St.
138.3 190-192 State Street 190-192 State St.
138.4 469 Cumberland 469 Cumberland Ave.
139 Madison Community Bank Tower 33 West Tenth St
140 Gateway - Davenport 3260 East 53rd Street
141 Legacy Drive 6901 Avenue K
142 3 Pennsylvania Self Storage Various
143 Silver Creek Flex Building 6427 N. Business Park Loop Road
144 Bahia Harbor Beach Apartments 3019 Harbor Drive
145 Acorn Mini Storage 4652 Lyndale Avenue North
146 Masonic Arms Apartments 31681-31745 Hoover Road
147 Tobias Garden Apartments 8938 Tobias Avenue
148 Sunrise Villa 200 S. Union
149 9662-9684 NW 25th Street 9662-9684 NW 25th Street
150 Blockbuster - Chicago 3951 North Kimball Avenue
151 Blockbuster - Fairborn 1171 East Dayton-Yellow Springs Road
152 Blockbuster - Miamisburg 120 Heincke Road
153 3200 - 3204 Collinsworth Street 3200-3204 Collinsworth Street
154 Blockbuster - Waukegan 2728 W. Belvidere Rd.
155 Allstate Self Storage 5900 Esperanza Avenue
156 Tapestry Apartments 395 NE 8th Street
157 Mattress Giant - Berwyn 7044-7050 Cermak Road
158 Buckner Warehouse 10300 Airline Highway
159 4610 Peachtree Industrial Blvd 4610 Peachtree Industrial Blvd
160 Health South - Port Richey 11425 US 19 North
161 Country Club MHP 10125 Rt 16 & Martin Road
162 Gold Hill Mobile Home Park 771 Gold Hill Road
163 Pleasure Point Mobile Manor 720 26th Avenue
164 Kintner Estates Mobile Home Park 2942 NY Route 26 South
165 Health South - Bradenton 1300 E. Manatee Avenue
166 Blue Ridge Mobile Home Park New York State Route 7
167 M & M Apartments 564 Jose Marti Street
168 4029 29th Street 4029 49th Street
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Loan No. City State ZIP Code County Property Type
-------- ---- ----- -------- ------ -------------
<S> <C> <C> <C> <C> <C>
1 Various CA Various Various Various
1.1 Long Beach CA 90808 Los Angeles Industrial
1.2 Palmdale CA 93550 Los Angeles Office
1.3 Redlands CA 92373 San Bernardino Industrial
1.4 Gardena CA 90249 Los Angeles Retail
1.5 Moreno Valley CA 92553 Riverside Industrial
1.6 Colton CA 92324 San Bernardino Office
2 Various CA Various Various Various
2.1 Aliso Viejo CA 92656 Orange Retail
2.2 Victorville CA 92392 San Bernardino Retail
2.3 Upland CA 91786 San Bernardino Retail
2.4 San Diego CA 92128 San Diego Retail
2.5 Long Beach CA 90805 Los Angeles Retail
2.6 Garden Grove CA 92840 Orange Retail
3 Warren NJ 07059 Somerset Industrial
3.1 Warren NJ 07059 Somerset Industrial
3.2 Warren NJ 07959 Somerset Industrial
4 La Puente CA 91744 Los Angeles Multifamily
5 Martinsville VA 24112 Martinsville Retail
6 Los Angeles CA 90010 Los Angeles Office
7 Des Moines IA 50309 Polk Office
8 Los Angeles CA 90014 Los Angeles Industrial
9 Deerfield IL 60015 Cook Hotel
10 Timonium MD 21093 Baltimore Retail
11 San Diego CA 92108 San Diego Hotel
12 Various Various Various Various Hotel
12.1 Hazelwood MO 63042 St. Louis Hotel
12.2 Jackson MS 39213 Hinds Hotel
12.3 Indianapolis IN 46219 Marion Hotel
12.4 St. Charles MO 63301 St. Charles Hotel
12.5 Newport News VA 23602 Newport News Hotel
13 Linthicum MD 21075 Anne Arundel Office
14 Franklin Township NJ 08873 Somerset Industrial
15 Euclid OH 44132 Cuyahoga Multifamily
16 Tucson AZ 85746 Pima Multifamily
17 Richardson TX 75080 Dallas Retail
18 Dallas TX 75229 Dallas Multifamily
19 Hempstead NY 11550 Nassau Multifamily
20 Flint MI 48532 Genesee Retail
21 Las Vegas NV 89103 Clark Multifamily
22 Los Angeles CA 90028 Los Angeles Office
23 Vista CA 92083 San Diego Retail
24 San Jose CA 95131 Santa Clara Office
25 Manassas VA 20109 Prince William Office
26 Tucson AZ 85710 Pima Multifamily
27 Aurora IL 60506 Kane Industrial
28 San Antonio TX 78238 Bexar Office
29 Manchester VT 05255 Bennington Retail
30 Charlotte NC 28262 Mecklenburg Multifamily
31 Downey CA 90241 Los Angeles Mixed Use
32 Eagle Pass TX 78853 Maverick Retail
33 Toledo OH 43602 Lucas Multifamily
33.1 Toledo OH 43606 Lucas Multifamily
33.2 Toledo OH 43602 Lucas Multifamily
34 Ypsilanti MI 48198 Washtenaw Multifamily
35 Temecula CA 92591 Riverside Office
36 Toledo OH 43613 Lucas Multifamily
37 Anaheim CA 92802 Orange Multifamily
38 North Miami FL 33161 Dade Multifamily
39 Louisville CO 80027 Boulder Industrial
40 Bakersfield CA 93311 Kern Multifamily
41 New Castle PA 16105 Lawrence Multifamily
42 Princeton IN 47670 Gibson Multifamily
43 Auburn WA 98002 Kings Retail
44 Barnegat NJ 08005 Ocean Retail
45 Anchorage AK 99507 Anchorage Multifamily
46 Dallas TX 75248 Dallas Retail
47 Rockford IL 61109 Winnebago Retail
48 New Orleans LA 70130 Orleans Multifamily
49 Philadelphia PA 19132 Philadelphia Retail
50 Attleboro MA 02703 Bristol Retail
51 Hoboken NJ 07030 Hudson Multifamily
52 Media Borough PA 19063 Delaware Retail
53 El Cajon CA 92021 San Diego Multifamily
54 La Crosse WI 54601 La Crosse Multifamily
55 Porterville CA 93257 Tulare Multifamily
56 Tucson AZ 85715 Pima Office
57 Elmhurst IL 60126 DuPage Office
58 Madison WI 53716 Dane Multifamily
59 Walpole MA 02081 Norfolk Self Storage
60 Garner NC 27529 Wake Hotel
61 Lafayette LA 71360 Lafayette Retail
62 Decatur GA 30032 Dekalb Hotel
63 Buena Park CA 90621 Orange Self Storage
64 Clearwater FL 33761 Pinellas Multifamily
65 Davie FL 33328 Broward Office
66 Hayward CA 94544 Aleneda Self Storage
67 Beverly MA 01915 Essex Retail
68 Hollywood FL 33312 Broward Multifamily
69 Terra Haute IN 47802 Vigo Retail
70 Lynn MA 01902 Essex Multifamily
71 South Daytona FL 32019 Volusia Self Storage
72 Bloomington IN 47401 Monroe Multifamily
73 Randolph NC 27317 Randolph Multifamily
74 Warwick RI 02886 Kent Office
75 Seguin TX 78122 Guadalupe Retail
75.1 Seguin TX 78155 Guadalupe Retail
75.2 Seguin TX 78155 Guadalupe Retail
76 Phoenix AZ 85016 Maricopa Retail
77 Belton MO 64012 Cass Retail
78 New York NY 10128 New York Multifamily
79 Pueblo CO 81001 Pueblo Retail
80 Torrance CA 60502 Los Angeles Nursing Home
81 Chicago IL 60651 Cook Office
82 Las Vegas NV 89146 Clark Retail
83 Los Angeles CA 90018 Los Angeles Nursing Home
84 Coral Gables FL 33134 Miami Dade Office
85 Bronx NY 10457 Bronx Retail
86 Elkhart IN 46514 Elkhart Industrial
87 North Little Rock AR 72117 Pulaski Nursing Home
88 Signal Hill CA 90806 Los Angeles Office
89 Groton CT 06340 New London Self Storage
90 Mountainville NY 10953 Orange Industrial
91 Hartford CT 06105 Hartford Multifamily
91.1 Hartford CT 06105 Hartford Multifamily
91.2 Hartford CT 06105 Hartford Multifamily
92 Orlando FL 32819 Orange Retail
93 Daytona Beach FL 32119 Volusia Multifamily
94 Houston TX 77039 Harris Retail
95 El Paso TX 79912 El Paso Retail
96 Houston TX 77050 Harris Multifamily
97 San Antonio TX 78216 Bexar Multifamily
98 Ann Arbor MI 48103 Washtenaw Office
99 Clute TX 77531 Brazoria Hotel
100 Clayton NC 27520 Johnson Retail
101 Boise ID 83702 Ada Mixed Use
102 Hurst TX 76054 Tarrant Office
103 Richland Township PA 15904 Cambria Retail
104 Dilworth MN 56529 Clay Retail
105 Milwaukee WI 53321 Milwaukee Retail
106 Denver CO 80222 Denver Industrial
107 Rotterdam NY 12306 Schenectady Multifamily
107.1 Rotterdam NY 12306 Schenectady Multifamily
107.2 Rotterdam NY 12306 Schenectady Multifamily
108 Chantilly VA 22021 Fairfax Industrial
109 Zephyrhills FL 33540 Pasco Multifamily
110 Los Angeles CA 90043 Los Angeles Self Storage
111 San Diego CA 92121 San Diego Industrial
112 Monroe MI 48162 Monroe Multifamily
113 Bakersfield CA 93304 Kern Retail
114 Yuma AZ 85364 Yuma Multifamily
115 Dallas TX 75220 Dallas Multifamily
116 Waukegan IL 60085 Lake Retail
117 Portland ME Various Cumberland Multifamily
117.1 Portland ME 04101 Cumberland Multifamily
117.2 Portland ME 04101 Cumberland Multifamily
117.3 Portland ME 04102 Cumberland Multifamily
117.4 Portland ME 04101 Cumberland Multifamily
117.5 Portland ME 04102 Cumberland Multifamily
118 Mt. Dora FL 34757 Lake Multifamily
119 Springfield PA 19064 Delaware Retail
120 Mesa AZ 85210 Maricopa Retail
121 Boston MA 02120 Suffolk Multifamily
122 Yuma AZ 85364 Yuma Multifamily
123 Arlington TX 76013 Tarrant Multifamily
124 New Orleans LA 70113 Orleans Multifamily
125 Indianapolis IN 46224 Marion Office
126 Worcester MA 01607 Worcester Industrial
127 Bristol VA 24201 Bristol Multifamily
128 Lakeland FL 33809 Polk Retail
129 Brooklyn NY 11211 Kings Mixed Use
130 Venice FL 34285 Sarasota Congregate Care
131 Purcellville VA 20132 Loudoun Self Storage
132 Pascagoula MS 39581 Jackson Multifamily
133 Hollywood FL 33312 Broward Multifamily
134 Brandon FL 33511 Hillsborough Multifamily
135 Naperville IL 60540 Dupage Retail
136 Irving TX 75060 Dallas Multifamily
137 Panorama City CA 91402 Los Angeles Multifamily
138 Portland ME Various Cumberland Multifamily
138.1 Portland ME 04102 Cumberland Multifamily
138.2 Portland ME 04101 Cumberland Multifamily
138.3 Portland ME 04101 Cumberland Multifamily
138.4 Portland ME 04101 Cumberland Multifamily
139 Anderson IN 46016 Madison Office
140 Davenport IA 52807 Scott Retail
141 Plano TX 75074 Collin Industrial
142 Various PA Various Westmoreland/Fayette Self Storage
143 Park City UT 84098 Summit Industrial
144 Fort Lauderdale FL 33316 Broward Multifamily
145 Minneapolis MN 55412 Henresin Self Storage
146 Warren MI 48093 Macomb Multifamily
147 Panorama City CA 91402 Los Angeles Multifamily
148 Kennewick WA 99336 Benton Multifamily
149 Miami FL 33172 Miami Dade Retail
150 Chicago IL 60618 Cook Retail
151 Fairborn OH 45324 Greene Retail
152 Miamisburg OH 45342 Montgomery Retail
153 Fort Worth TX 76107 Tarrant Office
154 Waukegan IL 60085 Lake Retail
155 Whittier CA 90606 Los Angeles Self Storage
156 Milaca MN 56353 Mille Lacs Multifamily
157 Berwyn IL 60402 Cook Retail
158 St. Rose LA 70087 St. Charles Industrial
159 Norcross GA 30071 Gwinnett Industrial
160 Port Richey FL 33568 Pasco Office
161 Machias NY 14042 Cattaraugus Multifamily
162 Newcastle CA 95658 Placer Multifamily
163 Santa Cruz CA 95062 Santa Cruz Multifamily
164 Vestal NY 13850 Broome Multifamily
165 Bradenton FL 34205 Manatee Office
166 Conklin NY 13748 Broome Multifamily
167 Brownsville TX 78521 Cameron Multifamily
168 San Diego CA 92105 San Diego Multifamily
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Number of Occupancy
Loan No. Sub Property Type Year Built Year Renovated Units/Sq. Ft. Rate (1)
-------- ----------------- ---------- -------------- ------------- --------
<S> <C> <C> <C> <C> <C>
1 Various 642,452 94.7
1.1 Flex Space 1998 205,257 100.0
1.2 Suburban 1990 130,838 96.0
1.3 Flex Space 1989 126,292 93.0
1.4 Unanchored 1985 1995 39,405 96.0
1.5 Flex Space 1986 111,060 86.0
1.6 Suburban 1989 29,600 91.0
2 Various 303,138 83.7
2.1 Unanchored 1993 64,137 95.0
2.2 Unanchored 1988 1999 123,225 92.0
2.3 Unanchored 1959 1987 44,957 29.0
2.4 Unanchored 1988 26,978 92.0
2.5 Unanchored 1944 1958 31,281 100.0
2.6 Unanchored 1987 1995 12,560 81.0
3 Flex Space 273,061 100.0
3.1 Flex Space 1979 180,500 100.0
3.2 Flex Space 1985 92,561 100.0
4 Mobile Home Park 1972 500 100.0
5 Anchored 1989 1997 435,402 92.0
6 CBD 1961 1992 375,614 94.6
7 CBD 1985 1998 281,028 100.0
8 Flex Space 1912-1946 1999 707,125 90.0
9 Full Service 1987 1997 237 75.0
10 Anchored 1999 107,060 99.0
11 Limited Service 1969 1988-1996 200 78.1
12 Extended Stay 667 77.4
12.1 Extended Stay 1997 136 79.4
12.2 Extended Stay 1997 132 76.5
12.3 Extended Stay 1998 135 68.4
12.4 Extended Stay 1997 130 80.0
12.5 Extended Stay 1997 134 82.6
13 Suburban 1974 1999 194,457 100.0
14 Flex Space 1985 136,000 100.0
15 Multifamily 1962-1967 1998 736 91.0
16 Mobile Home Park 1984 1999 1,101 77.0
17 Anchored 1987 1998 171,157 98.0
18 Multifamily 1970 1999 320 97.5
19 Multifamily 1963 1997 346 97.0
20 Anchored 1998 95089 92.0
21 Multifamily 1983 261 98.0
22 Suburban 1918-1971 2000 83,000 100.0
23 Anchored 1992 135,949 100.0
24 Suburban 1980 1999 57,244 100.0
25 Suburban 1999 95,210 75.2
26 Multifamily 1973 1999 272 98.0
27 Flex Space 1951-1957 1997 408,842 95.0
28 Suburban 1991 86,000 100.0
29 Unanchored 1997 46,200 86.7
30 Multifamily 1999 84 100.0
31 Medical Office/Assisted Living Facility 1983 38,359 / 252 100.0
32 Anchored 1982 1996 347,254 91.0
33 Multifamily 1951 1999 403 95.2
33.1 Multifamily 1951 1999 304 94.0
33.2 Multifamily 1966 1999 99 99.0
34 Multifamily 1972 302 100.0
35 Suburban 1990 82,645 99.0
36 Multifamily 1969-1971 1998 266 97.0
37 Mobile Home Park 1968 130 96.9
38 Multifamily 1969 1997 199 96.0
39 Flex Space 2000 91,497 100.0
40 Multifamily 1998 120 100.0
41 Multifamily 1998 120 96.0
42 Multifamily 1999 144 97.0
43 Anchored 1998 46,260 96.1
44 Anchored 1999 70,491 96.0
45 Mobile Home Park 1976 365 87.4
46 Unanchored 1979 84,250 98.0
47 Anchored 1960 1998 109,401 100.0
48 Multifamily 1905 1989 68 100.0
49 Anchored 1999 70,057 100.0
50 Anchored 1969 1987 98,013 97.0
51 Multifamily 1999-2000 23 100.0
52 Anchored 2000 12,739 100.0
53 Mobile Home Park 1964 1969 129 98.0
54 Multifamily 1999 62 98.0
55 Mobile Home Park 1972 223 97.0
56 Suburban 1981 69,955 88.5
57 Suburban 1979 58,076 100.0
58 Multifamily 1969 1995 93 91.0
59 Self Storage 1997 75,415 85.6
60 Extended Stay 1998 140 88.3
61 Anchored 1985 1998 68,348 90.5
62 Extended Stay 1997 172 95.4
63 Self Storage 1986 1998-1999 62,182 91.0
64 Mobile Home Park 1960 182 93.5
65 Suburban 1999 45,468 100.0
66 Self Storage 1997 66,715 88.2
67 Unanchored 1800/1960 1985 25,185 88.0
68 Mobile Home Park 1961 140 97.2
69 Anchored 1999 36,024 100.0
70 Multifamily 1920 1999 68 96.0
71 Self Storage 1985 102,586 91.0
72 Multifamily 1999 48 96.0
73 Mobile Home Park 1988 1997 194 95.0
74 Suburban 1984 1989 36,614 100.0
75 Unanchored 45,333 100.0
75.1 Unanchored 1978-1979 1995-1999 28,169 100.0
75.2 Unanchored 1950s 1995 17,164 100.0
76 Unanchored 1960 1999 47,601 93.0
77 Anchored 1999 11,200 100.0
78 Multifamily 1926 1986 25 100.0
79 Anchored 1967 1974 81,289 99.0
80 Skilled Nursing Facility 1965 1997 200 96.3
81 CBD 1953 1999 34888 100.0
82 Unanchored 1985 30,665 94.5
83 Skilled Nursing Facility 1969 98 93.0
84 Suburban 1996 28,506 100.0
85 Unanchored 1931 1999 11,250 100.0
86 Warehouse/Distribution 1967 1999 138,833 100.0
87 Skilled Nursing Facility 1983 1988 53 99.1
88 Suburban 1991 42,610 90.0
89 Self Storage 1986 1997 68,120 83.0
90 Warehouse/Distribution 1965 1997 123,000 100.0
91 Multifamily 1970 1993 152 94.3
91.1 Multifamily 1965 1993 70 90.0
91.2 Multifamily 1970 1993 82 98.0
92 Unanchored 1996 10,430 100.0
93 Multifamily 1986 92 100.0
94 Anchored 1982 1998 78,452 100.0
95 Unanchored 1999 33,000 100.0
96 Multifamily 1970 2000 147 93.0
97 Multifamily 1968 1999 110 97.0
98 Suburban 1925 1981 21,976 100.0
99 Limited Service 1995 60 71.0
100 Anchored 1998 10,908 100.0
101 Multifamily/Office/Retail 1910 1989 57,809 90.0
102 Suburban 1985 31,269 100.0
103 Anchored 1999 10,908 100.0
104 Anchored 1999 23,500 100.0
105 Unanchored 1986 27,382 91.2
106 Flex Space 1965 and 1972 65,939 100.0
107 Multifamily 83 97.6
107.1 Multifamily 1987 40 95.0
107.2 Multifamily 1985 43 100.0
108 Flex Space 1988 2000 30,830 100.0
109 Mobile Home Park 1976 140 96.0
110 Self Storage 1987 35,180 99.0
111 Flex Space 1986 43,100 100.0
112 Multifamily 1969 1998 56 93.0
113 Shadow Anchored 1984 21,955 89.0
114 Mobile Home Park 1940-1980 162 90.0
115 Multifamily 1964 1998 103 94.2
116 Unanchored 1989 27,007 100.0
117 Multifamily 1910 1996 49 98.1
117.1 Multifamily 1900 1999 19 95.0
117.2 Multifamily 1900 1996 12 100.0
117.3 Multifamily 1910 1992 6 100.0
117.4 Multifamily 1910 1998 6 100.0
117.5 Multifamily 1900 1998 6 100.0
118 Mobile Home Park 1970 115 95.7
119 Unanchored 1998 1999 8,000 100.0
120 Unanchored 1983 1999 7,983 100.0
121 Multifamily 1964 1994 24 100.0
122 Multifamily 1986 1999 76 98.0
123 Multifamily 1970 1998 71 99.0
124 Multifamily 1906 1999 12 100.0
125 Suburban 1984 1995 29,259 100.0
126 Flex Space 1990 32,400 98.3
127 Multifamily 1973 1999 76 91.0
128 Unanchored 1999 8,000 100.0
129 Multifamily/Retail 1920 15,400 100.0
130 Assisted Living Facility 1970 34 90.0
131 Self Storage 1994 1994-1997 31,055 98.0
132 Multifamily 1970 60 87.0
133 Mobile Home Park 1961 51 98.0
134 Multifamily 1973 36 100.0
135 Unanchored 1999 7,000 100.0
136 Multifamily 1969 65 100.0
137 Multifamily 1991 43 100.0
138 Multifamily 32 96.9
138.1 Multifamily 1916 1997 5 80.0
138.2 Multifamily 1900 1999 7 100.0
138.3 Multifamily 1915 1999 14 100.0
138.4 Multifamily 1910 1997 6 100.0
139 Suburban 1970 1989 70,724 90.0
140 Unanchored 1999 8,000 100.0
141 Flex Space 1999 20,000 100.0
142 Self Storage 1989 61,071 81.0
143 Flex Space 1999 13,382 100.0
144 Multifamily 1950 1994 14 100.0
145 Self Storage 1988 44,175 97.6
146 Multifamily 1975 Various Dates 34 100.0
147 Multifamily 1988 52 100.0
148 Multifamily 1976 1993 32 100.0
149 Unanchored 1997 9,000 100.0
150 Unanchored 1999 1999 4,800 100.0
151 Unanchored 1999 5,000 100.0
152 Unanchored 1999 5,005 100.0
153 Suburban 1970 1998 12,650 100.0
154 Unanchored 1999 3,900 100.0
155 Self Storage 1987 1997 20,240 93.0
156 Multifamily 1998 18 100.0
157 Unanchored 1951 9,500 100.0
158 Warehouse/Distribution 1998 9,145 100.0
159 Flex Space 1986 2000 14,632 100.0
160 Suburban 1997 6,000 100.0
161 Mobile Home Park 1985 1998 60 100.0
162 Mobile Home Park 1965 32 100.0
163 Mobile Home Park 1966 33 100.0
164 Mobile Home Park 1975 58 93.1
165 Suburban 1999 4,200 100.0
166 Mobile Home Park 1985 1993 70 84.3
167 Multifamily 1992 1999 10 100.0
168 Multifamily 1955 1998 8 100.0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Original
Principal
Appraisal Appraisal Current Balance ($)
Loan No. Occupancy Date Value ($) (2) Date LTV (2)
------- -------------- ------------- ---- --- ---
<S> <C> <C> <C> <C> <C>
1 6/1/00 41,970,000 Various 58.9 24,701,611
1.1 6/1/00 12,200,000 7/2/99 7,180,180
1.2 6/1/00 10,865,000 6/17/99 6,394,704
1.3 6/1/00 6,000,000 6/23/99 3,531,360
1.4 6/1/00 5,770,000 7/14/99 3,395,991
1.5 6/1/00 4,850,000 7/16/99 2,854,516
1.6 6/1/00 2,285,000 7/16/99 1,344,860
2 6/1/00 39,070,000 Various 58.9 22,995,039
2.1 6/1/00 13,250,000 7/21/99 7,798,420
2.2 6/1/00 12,000,000 6/22/99 7,062,720
2.3 6/1/00 5,500,000 7/19/99 3,237,080
2.4 6/1/00 3,775,000 7/9/99 2,221,814
2.5 6/1/00 2,895,000 7/20/99 1,703,881
2.6 6/1/00 1,650,000 7/28/99 971,124
3 4/1/00 35,615,000 6/8/99 61.8 22,150,000
3.1 8/7/00 22,140,000 6/8/99 11,500,000
3.2 8/7/00 13,475,000 6/8/99 10,650,000
4 4/1/00 30,030,000 6/8/99 71.9 21,750,000
5 4/26/00 32,400,000 9/23/99 63.4 21,250,000
6 8/1/00 27,000,000 10/1/99 68.8 18,650,000
7 3/13/00 25,500,000 3/28/00 70.4 18,000,000
8 4/24/00 23,400,000 10/26/99 71.9 16,950,000
9 2/29/00 23,700,000 4/1/00 69.7 16,575,000
10 3/6/00 20,700,000 4/21/99 78.3 15,300,000
11 12/31/99 21,700,000 8/31/99 68.5 14,950,000
12 3/31/00 22,675,000 Various 52.9 13,700,000
12.1 3/31/00 4,550,000 4/29/99 2,800,000
12.2 3/31/00 4,775,000 4/27/99 2,800,000
12.3 3/31/00 4,750,000 4/28/99 2,700,000
12.4 3/31/00 4,200,000 4/29/99 2,700,000
12.5 3/31/00 4,400,000 4/14/99 2,700,000
13 7/1/00 17,500,000 12/2/99 71.7 12,600,000
14 8/17/00 16,900,000 6/8/99 74.1 12,600,000
15 7/1/00 16,000,000 11/19/99 74.6 12,000,000
16 6/30/00 19,000,000 4/12/00 57.8 11,000,000
17 6/1/00 16,900,000 9/7/99 64.9 11,100,000
18 6/19/00 13,200,000 12/10/99 79.2 10,500,000
19 2/1/00 13,850,000 11/12/99 73.6 10,225,000
20 3/29/00 12,000,000 1/17/00 79.0 9,500,000
21 12/31/99 11,960,000 5/12/99 76.5 9,230,000
22 5/25/00 13,900,000 2/22/00 64.9 9,050,000
23 1/1/00 12,200,000 4/26/99 69.9 8,600,000
24 3/3/00 10,750,000 7/8/99 76.8 8,300,000
25 4/6/00 14,200,000 3/1/00 56.2 8,000,000
26 2/21/00 9,950,000 3/13/00 76.2 7,600,000
27 11/2/99 10,400,000 11/8/99 72.6 7,600,000
28 10/7/99 12,055,000 11/1/99 62.0 7,500,000
29 1/1/00 10,800,000 10/1/99 68.4 7,425,000
30 4/1/00 9,850,000 4/14/00 74.5 7,350,000
31 11/18/99 10,500,000 10/11/99 69.2 7,310,000
32 2/11/00 13,225,000 12/27/99 53.5 7,100,000
33 12/31/99 11,290,000 11/18/99 60.4 6,863,000
33.1 11/10/99 8,650,000 11/18/99 5,460,000
33.2 11/10/99 2,640,000 11/18/99 1,403,000
34 11/18/99 9,300,000 11/12/99 72.8 6,800,000
35 6/23/00 9,400,000 6/1/99 70.7 6,700,000
36 1/12/00 8,000,000 2/15/00 76.7 6,155,000
37 12/31/99 8,170,000 9/21/99 73.1 6,000,000
38 1/31/00 7,300,000 1/29/00 79.8 5,840,000
39 3/15/00 9,300,000 4/1/00 62.2 5,800,000
40 2/1/00 7,570,000 2/23/00 75.7 5,740,000
41 7/23/99 7,480,000 7/31/99 74.5 5,900,000
42 12/14/99 7,400,000 1/1/00 70.6 5,250,000
43 1/31/00 6,850,000 8/13/99 74.4 5,120,000
44 2/28/00 7,100,000 11/1/99 71.5 5,100,000
45 2/29/00 6,525,000 3/4/99 74.4 4,900,000
46 6/1/00 7,600,000 9/7/99 62.4 4,800,000
47 3/16/00 6,200,000 7/20/99 76.2 4,750,000
48 8/23/00 6,200,000 2/23/99 72.8 4,545,000
49 12/31/99 6,500,000 5/1/99 68.7 4,500,000
50 11/30/99 6,200,000 8/4/99 71.1 4,430,000
51 3/10/00 6,200,000 12/27/99 70.0 4,365,000
52 3/29/00 4,900,000 1/20/00 86.9 4,286,000
53 2/25/00 5,650,000 8/4/99 74.0 4,200,000
54 3/1/00 6,050,000 3/1/00 68.4 4,150,000
55 1/31/00 5,360,000 9/29/99 77.1 4,152,000
56 3/31/00 7,070,000 6/16/99 57.6 4,100,000
57 1/12/00 6,000,000 2/1/00 66.5 4,000,000
58 6/8/00 5,200,000 5/11/00 75.7 3,938,000
59 3/16/00 5,650,000 11/17/98 69.3 4,000,000
60 10/31/99 6,550,000 6/15/99 59.4 3,930,000
61 12/31/99 5,500,000 5/3/99 70.0 3,875,000
62 1/31/00 7,250,000 7/6/99 52.9 3,875,000
63 3/1/00 5,100,000 12/17/99 71.8 3,745,000
64 4/1/00 5,060,000 8/5/99 72.3 3,675,000
65 12/31/99 5,035,000 6/28/99 71.1 3,600,000
66 2/29/00 5,000,000 6/16/99 71.2 3,601,415
67 11/1/99 4,700,000 11/1/99 74.4 3,510,000
68 1/24/00 4,320,000 8/27/99 79.6 3,455,000
69 10/14/99 4,750,000 10/21/99 72.1 3,442,000
70 8/1/99 4,600,000 2/7/00 73.5 3,400,000
71 8/10/99 4,750,000 7/6/99 71.0 3,400,000
72 9/21/99 4,200,000 10/8/99 78.2 3,300,000
73 4/20/00 3,950,000 11/5/99 79.6 3,160,000
74 3/8/00 4,120,000 2/24/00 75.1 3,100,000
75 12/31/99 4,200,000 6/11/99 72.4 3,070,000
75.1 12/31/99 3,120,000 6/11/99 2,330,000
75.2 12/31/99 1,080,000 6/11/99 740,000
76 4/1/00 4,300,000 12/28/99 69.4 2,990,000
77 8/24/99 3,400,000 8/9/99 87.5 3,016,000
78 10/14/99 3,900,000 9/15/99 72.7 2,850,000
79 3/1/00 3,800,000 5/13/99 74.1 2,840,000
80 12/31/99 3,925,000 5/18/99 69.3 2,750,000
81 12/31/99 4,600,000 10/1/99 58.6 3,000,000
82 4/30/00 4,050,000 2/19/99 66.2 2,700,000
83 12/31/99 3,900,000 3/26/99 67.2 2,650,000
84 7/18/00 3,900,000 5/10/00 66.6 2,600,000
85 8/16/99 3,300,000 7/6/99 77.4 2,625,000
86 7/25/00 3,650,000 6/7/00 69.8 2,550,000
87 3/31/00 3,850,000 5/12/99 64.2 2,500,000
88 3/16/00 3,400,000 12/18/99 71.9 2,450,000
89 1/27/00 4,220,000 10/6/98 57.7 2,468,866
90 1/31/00 3,800,000 11/1/99 63.9 2,450,000
91 10/1/99 2,950,000 8/10/99 79.6 2,360,000
91.1 4/1/00 1,100,000 8/10/99 880,000
91.2 4/30/00 1,850,000 8/10/99 1,480,000
92 1/31/00 3,500,000 6/9/99 66.4 2,350,000
93 3/24/00 3,100,000 7/1/99 74.2 2,325,000
94 1/1/00 3,500,000 5/22/99 65.0 2,300,000
95 4/25/00 3,950,000 4/10/00 56.8 2,250,000
96 6/30/00 2,800,000 6/22/00 77.1 2,160,000
97 7/28/00 2,800,000 6/7/00 75.0 2,100,000
98 3/1/00 3,200,000 9/15/99 65.1 2,100,000
99 10/7/99 3,280,000 10/8/99 63.2 2,100,000
100 2/17/00 2,540,000 1/20/00 81.0 2,073,000
101 6/2/00 4,400,000 12/1/99 46.7 2,122,000
102 1/13/00 3,400,000 7/8/99 58.9 2,015,000
103 1/14/00 2,845,000 12/10/99 70.1 2,000,000
104 12/31/99 2,700,000 8/12/99 73.5 1,995,000
105 12/6/99 2,500,000 3/8/99 73.4 1,846,000
106 3/15/00 2,550,000 9/24/99 71.7 1,837,500
107 4/15/00 2,440,000 5/7/00 74.7 1,825,000
107.1 4/6/00 1,260,000 4/15/00 940,000
107.2 4/1/00 1,180,000 5/15/00 885,000
108 5/19/00 2,900,000 3/7/00 62.8 1,825,000
109 4/1/00 2,370,000 8/4/99 73.0 1,740,000
110 1/31/00 2,510,000 3/8/99 67.5 1,720,000
111 12/31/99 3,960,000 5/11/99 41.1 1,637,500
112 6/1/00 2,050,000 5/24/00 79.2 1,625,000
113 3/1/00 2,300,000 5/5/99 68.0 1,575,000
114 1/13/00 2,200,000 6/3/99 68.7 1,520,000
115 2/29/00 2,100,000 3/2/99 71.0 1,517,000
116 9/16/99 2,045,000 9/3/99 71.7 1,475,000
117 5/1/00 1,835,000 8/11/99 79.3 1,468,000
117.1 5/1/00 760,000 8/11/99 608,000
117.2 5/1/00 390,000 8/11/99 312,000
117.3 5/1/00 275,000 8/11/99 220,000
117.4 5/1/00 205,000 8/11/99 164,000
117.5 5/1/00 205,000 8/11/99 164,000
118 4/1/00 2,160,000 8/6/99 67.2 1,460,000
119 6/1/00 2,250,000 10/28/99 63.9 1,443,000
120 6/1/00 2,150,000 10/25/99 65.1 1,405,000
121 6/3/00 2,100,000 5/12/00 66.6 1,400,000
122 3/1/00 2,000,000 10/8/99 69.7 1,400,000
123 7/20/00 1,840,000 3/31/99 74.3 1,380,000
124 3/8/00 2,040,000 6/1/99 65.6 1,345,000
125 4/10/00 1,785,000 9/8/99 73.4 1,317,000
126 7/1/00 1,750,000 5/27/99 74.4 1,312,500
127 3/19/00 1,575,000 3/13/00 82.4 1,300,000
128 12/9/99 1,975,000 10/22/99 65.3 1,295,000
129 5/8/00 1,850,000 9/23/99 69.0 1,285,000
130 5/3/00 1,620,000 10/14/99 74.5 1,215,000
131 8/10/00 1,830,000 4/21/99 64.9 1,200,000
132 3/1/00 1,470,000 1/25/00 78.7 1,160,000
133 1/25/00 1,450,000 8/27/99 78.6 1,145,000
134 3/1/00 1,600,000 10/6/99 71.1 1,140,000
135 11/29/99 1,670,000 11/21/99 66.2 1,110,000
136 12/1/99 1,500,000 3/2/99 73.4 1,120,000
137 12/31/99 1,600,000 6/16/99 66.9 1,075,000
138 6/1/00 1,315,000 5/10/00 79.8 1,050,000
138.1 6/1/00 300,000 2/21/00 430,000
138.2 5/19/00 245,000 2/21/00 240,000
138.3 6/1/00 540,000 2/21/00 196,000
138.4 6/1/00 230,000 2/21/00 184,000
139 3/8/00 2,000,000 1/13/00 52.3 1,050,000
140 12/21/99 1,750,000 11/22/99 59.4 1,042,000
141 1/1/00 1,450,000 8/5/99 71.1 1,035,000
142 5/4/00 1,700,000 12/3/99 60.3 1,031,000
143 6/15/00 1,750,000 2/23/00 57.0 1,000,000
144 2/28/00 1,600,000 8/30/99 62.1 1,000,000
145 1/31/00 1,800,000 6/14/99 55.1 1,000,000
146 2/29/00 1,380,000 9/27/99 71.9 1,000,000
147 2/29/00 1,500,000 7/10/99 64.7 975,000
148 8/22/00 1,225,000 6/28/00 78.6 964,000
149 3/1/00 1,150,000 1/7/00 71.1 820,000
150 11/17/99 1,250,000 11/21/99 64.9 815,000
151 11/17/99 1,040,000 10/21/99 65.3 682,000
152 11/17/99 1,020,000 10/28/99 65.7 673,000
153 2/20/00 900,000 5/20/99 74.1 675,000
154 12/6/99 1,010,000 10/22/99 65.4 663,000
155 1/30/00 1,020,000 3/3/99 64.8 670,000
156 3/31/00 962,000 3/12/00 68.2 659,000
157 6/1/00 960,000 10/21/99 61.5 594,000
158 2/29/00 790,000 6/1/99 74.6 595,000
159 5/26/00 850,000 3/3/00 67.6 575,000
160 7/14/99 755,000 7/30/99 74.2 566,000
161 1/1/00 675,000 1/6/00 79.6 540,000
162 2/23/00 680,000 10/5/99 79.0 540,000
163 2/29/00 760,000 9/22/99 67.8 518,000
164 3/2/00 640,000 6/4/99 74.3 480,000
165 9/1/99 600,000 7/8/99 72.4 439,000
166 6/2/00 450,000 6/4/99 74.3 337,500
167 2/15/00 400,000 12/1/99 62.2 250,000
168 10/1/99 330,000 12/20/99 67.0 222,300
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Crossed Net Mortgage
Current Principal Loan Group Related Loan Current Mortgage Interest Rate
Loan No. Balance ($)(2) (3) Group (4) Interest Rate % (%) (5)
-------- -------------- ---------- ------------ ---------------- ---------------
<S> <C> <C> <C> <C> <C>
1 24,701,611 1 7.470 7.3973
1.1
1.2
1.3
1.4
1.5
1.6
2 22,995,039 1 7.470 7.3973
2.1
2.2
2.3
2.4
2.5
2.6
3 22,013,205 A 8.050 7.9773
3.1
3.2
4 21,587,115 7.730 7.6573
5 20,549,985 8.460 8.3373
6 18,576,294 8.860 8.7173
7 17,952,264 8.100 7.9573
8 16,824,504 8.730 8.5973
9 16,523,281 8.615 8.5123
10 16,200,572 7.990 7.8673
11 14,855,262 8.980 8.9073
12 12,000,000 8.800 8.7273
12.1
12.2
12.3
12.4
12.5
13 12,553,764 B 8.810 8.6373
14 12,519,833 A 7.940 7.8673
15 11,938,863 7.980 7.8573
16 10,989,210 7.760 7.6873
17 10,967,877 C 8.630 8.5573
18 10,458,138 8.520 8.4473
19 10,195,894 8.380 8.3073
20 9,475,093 8.140 8.0173
21 9,152,820 7.570 7.4973
22 9,028,031 8.550 8.4773
23 8,531,358 7.990 7.9173
24 8,259,155 8.590 8.5173
25 7,985,364 B 8.340 8.2673
26 7,584,167 7.930 7.8073
27 7,549,192 8.720 8.6473
28 7,468,980 8.710 8.6373
29 7,388,975 8.640 8.5673
30 7,335,521 8.110 8.0373
31 7,263,580 8.970 8.8973
32 7,069,557 9.150 9.0773
33 6,820,989 E 7.880 7.8073
33.1
33.2
34 6,766,663 8.120 8.0473
35 6,649,142 7.940 7.8673
36 6,136,709 E 8.240 8.1673
37 5,971,635 8.250 8.1773
38 5,825,724 8.380 8.2373
39 5,781,674 8.560 8.4873
40 5,727,747 7.850 7.6773
41 5,573,634 7.960 7.8373
42 5,225,565 7.950 7.8273
43 5,096,807 8.400 8.3273
44 5,075,343 8.170 8.0273
45 4,855,437 8.040 7.9673
46 4,744,562 C 8.840 8.7673
47 4,727,035 8.170 8.0973
48 4,511,866 8.090 8.0173
49 4,468,178 8.420 8.3473
50 4,408,522 8.160 8.0873
51 4,338,163 8.240 8.1673
52 4,255,675 8.780 8.7073
53 4,180,032 8.230 8.1573
54 4,139,705 8.330 8.1573
55 4,132,261 I 8.230 8.1573
56 4,074,851 8.480 8.4073
57 3,987,300 8.980 8.8573
58 3,934,821 8.290 8.2173
59 3,912,996 7.630 7.5573
60 3,893,084 9.110 9.0373
61 3,848,995 8.150 8.0773
62 3,838,676 9.120 9.0473
63 3,660,430 7.980 7.9073
64 3,657,232 F 8.170 8.0973
65 3,579,888 8.410 8.3373
66 3,560,064 7.690 7.6173
67 3,496,085 8.540 8.4673
68 3,438,389 2 H 8.190 8.1173
69 3,426,941 D 8.520 8.4473
70 3,381,433 8.420 8.3473
71 3,373,327 G 8.450 8.3773
72 3,283,141 7.970 7.8973
73 3,145,752 8.070 7.9973
74 3,093,989 8.160 8.0873
75 3,040,869 8.550 8.4773
75.1
75.2
76 2,985,510 8.910 8.7873
77 2,974,994 8.350 8.2773
78 2,835,616 8.500 8.4273
79 2,817,394 8.000 7.9273
80 2,718,176 8.440 8.3673
81 2,697,619 8.820 8.7473
82 2,680,513 8.670 8.5973
83 2,621,288 9.080 9.0073
84 2,599,128 8.730 8.6573
85 2,555,432 8.460 8.3873
86 2,548,207 8.660 8.5873
87 2,473,559 8.880 8.8073
88 2,443,669 8.190 8.1173
89 2,435,723 8.170 8.0973
90 2,426,972 9.410 9.2373
91 2,349,641 8.170 8.0973
91.1
91.2
92 2,325,649 8.630 8.5573
93 2,301,562 G 8.250 8.1773
94 2,275,247 8.440 8.3673
95 2,244,478 8.500 8.3773
96 2,159,188 8.460 8.3373
97 2,100,000 8.240 8.1173
98 2,083,960 8.580 8.5073
99 2,073,947 9.110 8.9873
100 2,057,277 8.820 8.7473
101 2,055,124 8.500 8.4273
102 2,004,156 8.540 8.4673
103 1,993,524 8.910 8.8373
104 1,983,951 8.190 8.1173
105 1,834,644 8.885 8.8123
106 1,829,128 8.380 8.2373
107 1,822,814 8.880 8.7373
107.1
107.2
108 1,822,547 8.530 8.4573
109 1,729,802 F 8.240 8.1673
110 1,694,198 K 8.200 8.1273
111 1,628,194 8.750 8.6773
112 1,624,369 8.380 8.3073
113 1,563,013 7.930 7.8573
114 1,511,333 8.940 8.8673
115 1,490,766 3 7.840 7.7673
116 1,467,116 9.000 8.9273
117 1,455,987 J 8.750 8.6773
117.1
117.2
117.3
117.4
117.5
118 1,451,443 F 8.240 8.1673
119 1,437,534 D 8.700 8.6273
120 1,399,844 D 8.810 8.7373
121 1,398,940 8.450 8.3773
122 1,393,721 8.090 8.0173
123 1,367,600 8.500 8.4273
124 1,337,507 4 8.420 8.3473
125 1,309,767 8.875 8.8023
126 1,302,003 8.970 8.8973
127 1,297,487 8.170 8.0973
128 1,290,344 D 8.880 8.8073
129 1,276,139 9.125 9.0523
130 1,207,349 9.010 8.9373
131 1,187,149 8.820 8.7473
132 1,156,485 8.750 8.6773
133 1,139,495 2 H 8.190 8.1173
134 1,137,414 8.875 8.8023
135 1,105,395 D 8.700 8.6273
136 1,100,631 3 7.840 7.7673
137 1,069,788 L 8.160 8.0873
138 1,049,227 J 8.480 8.4073
138.1
138.2
138.3
138.4
139 1,046,084 9.050 8.8773
140 1,039,703 D 9.150 9.0773
141 1,031,366 8.960 8.8873
142 1,025,767 9.500 9.4273
143 997,340 8.090 8.0173
144 994,106 H 8.220 8.1473
145 992,506 9.280 9.2073
146 991,817 8.750 8.6773
147 970,947 L 8.370 8.2973
148 963,343 8.780 8.7073
149 817,688 9.125 9.0523
150 811,609 D 8.690 8.6173
151 679,162 D 8.690 8.6173
152 670,200 D 8.690 8.6173
153 667,329 8.530 8.4573
154 660,539 D 8.770 8.6973
155 660,536 K 8.500 8.4273
156 655,654 8.625 8.5523
157 590,806 D 9.230 9.1573
158 589,203 4 8.420 8.3473
159 574,226 8.840 8.7673
160 560,155 5 8.625 8.5523
161 537,603 9.625 9.5523
162 537,433 I 8.230 8.1573
163 515,537 I 8.230 8.1573
164 475,519 6 8.630 8.5573
165 434,467 5 8.625 8.5523
166 334,350 6 8.630 8.5573
167 248,943 9.875 9.8023
168 220,965 9.375 9.3023
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Remaining Remaining
Mortgage Interest Rate Annual Debt Remaining Interest Only Term Amortization Term
Loan No. Accrual Basis (6) Service ($) (7) Period (months) (months) (months)
-------- ----------------------- --------------- ------------------------ --------- -----------------
<S> <C> <C> <C> <C> <C>
1 Actual/360 1,870,838.26 108 108
1.1
1.2
1.3
1.4
1.5
1.6
2 Actual/360 1,741,586.77 108 108
2.1
2.2
2.3
2.4
2.5
2.6
3 Actual/360 1,959,618.84 109 349
3.1
3.2
4 Actual/360 1,866,230.04 108 348
5 Actual/360 1,953,505.20 111 351
6 Actual/360 1,778,247.24 111 351
7 Actual/360 1,600,014.96 115 355
8 Actual/360 1,669,477.20 111 291
9 Actual/360 1,617,040.32 116 296
10 Actual/360 1,434,242.52 109 349
11 Actual/360 1,503,061.92 112 292
12 Actual/360 1,357,193.40 106 274
12.1
12.2
12.3
12.4
12.5
13 Actual/360 1,195,976.28 112 352
14 Actual/360 1,103,134.32 109 349
15 Actual/360 1,054,614.00 111 351
16 Actual/360 946,576.44 118 358
17 Actual/360 1,166,923.44 232 232
18 Actual/360 970,617.48 112 352
19 Actual/360 933,041.76 114 354
20 Actual/360 847,644.24 115 355
21 Actual/360 779,765.88 107 347
22 Actual/360 878,138.88 117 297
23 Actual/360 756,525.72 106 346
24 Actual/360 772,199.64 110 350
25 Actual/360 727,298.88 116 356
26 Actual/360 664,748.28 116 356
27 Actual/360 747,937.08 112 292
28 Actual/360 705,460.80 111 351
29 Actual/360 693,961.80 110 350
30 Actual/360 653,956.56 116 356
31 Actual/360 734,341.80 112 292
32 Actual/360 723,767.16 114 294
33 Actual/360 611,309.64 112 322
33.1
33.2
34 Actual/360 605,592.12 111 351
35 Actual/360 586,587.24 107 347
36 Actual/360 554,366.40 114 354
37 Actual/360 540,912.00 111 351
38 Actual/360 532,908.00 115 355
39 Actual/360 563,255.04 116 296
40 Actual/360 498,233.04 116 356
41 Actual/360 517,532.40 108 348
42 Actual/360 460,077.60 112 352
43 Actual/360 468,073.08 111 351
44 30/360 456,337.80 111 351
45 Actual/360 433,094.28 104 344
46 Actual/360 512,329.92 232 232
47 Actual/360 425,020.44 111 351
48 Actual/360 403,622.40 107 347
49 Actual/360 412,155.60 106 346
50 Actual/360 396,014.88 111 351
51 Actual/360 430,342.92 175 259
52 30/360 455,495.04 235 235
53 Actual/360 377,929.92 111 351
54 Actual/360 376,935.24 115 355
55 Actual/360 373,610.76 111 351
56 Actual/360 377,608.32 108 348
57 Actual/360 385,528.32 113 353
58 Actual/360 356,348.28 118 358
59 Actual/360 358,784.52 100 280
60 Actual/360 399,323.40 108 288
61 Actual/360 346,075.44 108 348
62 Actual/360 394,054.56 108 288
63 Actual/360 348,085.44 113 289
64 Actual/360 328,831.68 111 351
65 Actual/360 329,419.08 109 349
66 Actual/360 330,964.92 107 275
67 30/360 325,061.16 112 352
68 Actual/360 309,728.04 111 351
69 Actual/360 318,177.60 111 351
70 Actual/360 311,882.16 108 355
71 Actual/360 327,159.00 111 291
72 Actual/360 289,743.00 111 351
73 Actual/360 280,096.20 112 352
74 Actual/360 277,121.04 116 356
75 Actual/360 297,888.00 109 289
75.1
75.2
76 Actual/360 286,378.08 116 356
77 30/360 295,035.00 226 267
78 Actual/360 262,968.36 110 350
79 Actual/360 250,066.92 106 346
80 Actual/360 264,391.92 107 287
81 Actual/360 285,013.92 112 352
82 Actual/360 253,041.96 105 345
83 Actual/360 268,608.72 106 286
84 Actual/360 245,004.96 119 359
85 30/360 288,986.64 167 166
86 Actual/360 249,707.52 119 299
87 Actual/360 249,298.32 107 287
88 Actual/360 219,633.48 115 355
89 Actual/360 253,562.28 231 226
90 Actual/360 272,321.04 113 233
91 Actual/360 211,168.08 112 352
91.1
91.2
92 Actual/360 229,549.80 108 288
93 Actual/360 219,977.64 109 289
94 Actual/360 221,127.84 108 288
95 Actual/360 217,411.32 117 297
96 Actual/360 198,568.08 119 359
97 Actual/360 205,414.32 120 270
98 Actual/360 204,277.56 111 291
99 Actual/360 228,516.72 111 231
100 30/360 213,711.48 217 258
101 Actual/360 315,717.12 114 114
102 Actual/360 186,609.12 109 349
103 Actual/360 191,557.32 113 353
104 Actual/360 178,844.40 110 350
105 Actual/360 176,410.08 106 346
106 Actual/360 167,673.72 111 351
107 Actual/360 174,324.72 117 357
107.1
107.2
108 Actual/360 168,857.88 117 357
109 Actual/360 156,717.72 109 349
110 Actual/360 162,047.04 104 284
111 Actual/360 154,586.64 108 348
112 Actual/360 148,282.92 119 359
113 Actual/360 137,760.36 107 347
114 Actual/360 152,320.68 113 293
115 Actual/360 138,577.44 103 283
116 Actual/360 144,086.40 110 330
117 Actual/360 146,368.20 111 280
117.1
117.2
117.3
117.4
117.5
118 Actual/360 131,498.76 109 349
119 Actual/360 135,607.20 112 352
120 Actual/360 133,360.80 112 352
121 Actual/360 128,582.64 118 358
122 Actual/360 124,328.16 112 352
123 Actual/360 128,808.24 105 327
124 Actual/360 123,188.76 109 349
125 Actual/360 127,207.20 110 331
126 Actual/360 131,850.00 110 290
127 Actual/360 116,321.40 116 356
128 Actual/360 123,698.88 112 352
129 Actual/360 132,129.72 112 280
130 Actual/360 122,454.72 112 292
131 Actual/360 119,074.32 107 287
132 Actual/360 114,461.88 116 296
133 Actual/360 102,645.00 111 351
134 Actual/360 113,679.96 117 297
135 Actual/360 104,313.24 111 351
136 Actual/360 102,311.64 103 283
137 Actual/360 96,098.40 111 351
138 Actual/360 101,288.88 119 299
138.1
138.2
138.3
138.4
139 Actual/360 106,170.48 115 295
140 Actual/360 101,962.44 114 354
141 Actual/360 99,576.84 112 352
142 Actual/360 109,262.52 114 282
143 Actual/360 88,805.76 115 355
144 Actual/360 89,899.08 109 349
145 Actual/360 103,014.36 110 290
146 Actual/360 99,705.84 111 280
147 Actual/360 88,887.12 112 352
148 Actual/360 95,341.44 119 299
149 Actual/360 81,020.28 114 334
150 Actual/360 76,520.64 111 351
151 Actual/360 64,033.20 111 351
152 Actual/360 63,188.16 111 351
153 Actual/360 65,387.28 107 287
154 Actual/360 62,703.60 112 352
155 Actual/360 64,740.24 104 284
156 Actual/360 62,220.48 111 332
157 Actual/360 60,944.52 113 293
158 Actual/360 57,108.84 109 289
159 Actual/360 57,150.48 118 298
160 Actual/360 55,848.60 109 278
161 Actual/360 57,824.16 114 281
162 Actual/360 48,591.00 111 351
163 Actual/360 46,611.36 111 351
164 Actual/360 46,886.76 109 289
165 Actual/360 43,317.24 109 278
166 Actual/360 32,967.24 109 289
167 Actual/360 27,305.40 114 280
168 30/360 23,075.40 113 293
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Maturity
Date/Anticipated
Repayment Date ARD Final Balloon
Loan No. Origination Date (8) Maturity Date Balance ($) (9) Ending LTV
-------- ---------------- ----------------- ------------- --------------- ----------
<S> <C> <C> <C> <C> <C>
1 8/31/99 9/1/09 24,701,611.00 58.9
1.1
1.2
1.3
1.4
1.5
1.6
2 8/31/99 9/1/09 22,995,039.00 58.9
2.1
2.2
2.3
2.4
2.5
2.6
3 9/15/99 10/1/09 10/1/29 19,838,226.61 55.7
3.1
3.2
4 8/4/99 9/1/09 19,327,184.07 64.4
5 11/30/99 12/1/09 12/1/29 17,878,482.76 55.2
6 11/17/99 12/1/09 17,014,019.39 63.0
7 3/17/00 4/1/10 4/1/30 16,134,821.57 63.3
8 11/30/99 12/1/09 12/1/24 14,263,444.23 61.0
9 5/2/00 5/10/10 13,901,887.53 58.7
10 9/2/99 10/1/09 14,579,090.08 70.4
11 12/7/99 1/1/10 12,662,167.18 58.4
12 6/7/99 7/1/09 10,012,244.00 51.0
12.1
12.2
12.3
12.4
12.5
13 12/30/99 1/1/10 1/1/30 11,479,520.86 65.6
14 9/13/99 10/1/09 10/1/29 11,255,307.12 66.6
15 11/30/99 12/1/09 12/1/29 10,729,211.94 67.1
16 6/2/00 7/1/10 9,780,928.28 51.5
17 12/23/99 1/1/20 571,485.77 3.4
18 12/23/99 1/1/10 1/1/30 9,504,775.36 72.0
19 3/1/00 3/1/10 3/1/30 9,227,238.71 66.6
20 3/31/00 4/1/10 4/1/30 8,523,622.10 71.0
21 7/14/99 8/1/09 8,170,777.10 68.3
22 5/31/00 6/1/10 6/1/25 7,575,041.21 54.5
23 6/1/99 7/1/09 7,693,135.69 63.1
24 10/20/99 11/1/09 7,525,485.90 70.0
25 4/10/00 5/1/10 5/1/30 7,212,383.85 50.8
26 4/12/00 5/1/10 6,785,942.58 68.2
27 12/16/99 1/1/10 1/1/25 6,392,049.47 61.5
28 11/2/99 12/1/09 12/1/29 6,819,540.90 56.6
29 10/18/99 11/1/09 6,739,667.42 62.4
30 4/18/00 5/1/10 5/1/30 6,590,927.56 66.9
31 12/8/99 1/1/10 1/1/25 6,189,682.77 59.0
32 2/16/00 3/1/10 6,041,682.66 45.7
33 12/20/99 1/1/10 7/1/27 5,908,685.47 52.3
33.1
33.2
34 12/1/99 12/1/09 12/1/29 6,100,147.40 65.6
35 7/15/99 8/1/09 5,985,196.20 63.7
36 2/29/00 3/1/10 3/1/30 5,536,436.54 69.2
37 11/1/99 12/1/09 5,398,902.53 66.1
38 3/10/00 4/1/10 5,269,007.25 72.2
39 4/14/00 5/1/10 5/1/25 4,857,251.46 52.2
40 4/4/00 5/1/10 5,115,279.79 67.6
41 8/9/99 9/1/09 9/1/29 4,684,590.13 62.6
42 12/22/99 1/1/10 1/1/30 4,689,788.52 63.4
43 11/1/99 12/1/09 4,623,048.35 67.5
44 11/22/99 12/1/09 4,502,041.08 63.4
45 4/12/99 5/1/09 4,388,703.51 67.3
46 12/23/99 1/1/20 261,809.21 3.4
47 11/5/99 12/1/09 4,266,149.16 68.8
48 7/28/99 8/1/09 4,074,669.48 65.7
49 6/23/99 7/1/09 4,066,277.78 62.6
50 11/30/99 12/1/09 12/1/29 3,977,810.37 64.2
51 3/10/00 4/1/15 4/1/22 2,416,697.16 39.0
52 3/30/00 4/1/20 17,497.83 0.4
53 11/4/99 12/1/09 3,777,472.56 66.9
54 3/13/00 4/1/10 4/1/30 3,739,968.17 61.8
55 11/17/99 12/1/09 3,734,300.86 69.7
56 8/12/99 9/1/09 3,708,362.26 52.5
57 1/18/00 2/1/10 2/1/30 3,656,891.35 61.0
58 6/29/00 7/1/10 7/1/30 3,546,033.21 68.2
59 12/8/98 1/1/09 3,261,313.81 57.7
60 8/3/99 9/1/09 3,340,467.30 51.0
61 8/20/99 9/1/09 3,478,253.21 63.2
62 8/25/99 9/1/09 3,294,585.61 45.4
63 2/22/00 2/11/10 2,932,975.60 57.5
64 11/3/99 12/1/09 3,300,651.06 65.2
65 9/7/99 10/1/09 3,251,468.66 64.6
66 10/20/99 8/11/09 2,876,534.95 57.5
67 12/10/99 1/1/10 3,119,821.24 66.4
68 11/1/99 12/1/09 3,104,517.23 71.9
69 11/24/99 12/1/09 12/1/29 3,116,420.81 65.6
70 3/30/00 9/1/09 9/1/29 3,070,292.37 66.8
71 10/25/99 12/1/09 2,839,129.16 59.8
72 11/18/99 12/1/09 2,949,827.13 70.2
73 12/6/99 1/1/10 1/1/30 2,830,884.19 71.7
74 4/3/00 5/1/10 2,783,120.67 67.6
75 9/2/99 10/1/09 2,570,817.21 61.2
75.1
75.2
76 4/10/00 5/1/10 2,730,230.32 63.5
77 9/10/99 7/1/19 857,188.73 25.2
78 10/20/99 11/1/09 11/1/29 2,578,819.20 66.1
79 6/10/99 7/1/09 2,541,133.45 66.9
80 7/15/99 8/1/09 8/1/24 2,295,943.62 58.5
81 12/22/99 1/1/10 2,064,127.13 44.9
82 5/27/99 6/1/09 2,453,184.57 60.6
83 6/8/99 7/1/09 2,251,916.28 57.7
84 7/28/00 8/1/10 2,364,105.40 60.6
85 8/31/99 8/1/14 0.00 0.0
86 7/31/00 8/1/10 8/1/25 2,140,733.67 58.7
87 7/27/99 8/1/09 2,112,546.92 54.9
88 3/28/00 4/1/10 2,200,774.27 64.7
89 12/14/99 12/1/19 0 0.0
90 1/31/00 2/1/10 2/1/20 1,810,231.46 47.6
91 12/15/99 1/1/10 1/1/30 2,119,187.81 71.8
91.1
91.2
92 8/18/99 9/1/09 1,971,846.68 56.3
93 9/9/99 10/1/09 1,930,689.58 62.3
94 8/19/99 9/1/09 1,919,789.22 54.9
95 5/8/00 6/1/10 6/1/25 1,880,699.12 47.6
96 7/20/00 8/1/10 8/1/30 1,952,194.33 69.7
97 8/1/00 9/1/10 3/1/23 1,634,880.70 58.4
98 11/17/99 12/1/09 1,759,905.54 55.0
99 11/15/99 12/1/09 12/1/19 1,537,758.44 46.9
100 2/24/00 10/1/18 631,042.11 24.8
101 2/15/00 3/1/10 27,383.44 0.6
102 9/14/99 10/1/09 1,825,308.91 53.7
103 1/26/00 2/1/10 2/1/30 1,825,689.81 64.2
104 10/22/99 11/1/09 1,792,159.52 66.4
105 6/23/99 7/1/09 1,685,540.18 67.4
106 11/19/99 12/1/09 1,658,390.54 65.0
107 5/25/00 6/1/10 1,664,967.70 68.2
107.1
107.2
108 5/23/00 6/1/10 1,652,118.20 57.0
109 9/20/99 10/1/09 1,565,383.00 66.1
110 4/5/99 5/1/09 1,426,717.71 56.8
111 8/16/99 9/1/09 1,490,058.76 37.6
112 8/1/00 8/1/10 1,465,989.78 71.5
113 7/12/99 8/1/09 1,406,628.42 61.2
114 1/31/00 2/1/10 2/1/25 1,285,672.70 58.4
115 3/19/99 4/1/09 1,245,112.00 59.3
116 10/29/99 11/1/09 1,322,344.75 64.7
117 11/22/99 12/1/09 1,211,341.74 66.0
117.1
117.2
117.3
117.4
117.5
118 9/20/99 10/1/09 1,313,482.54 60.8
119 12/15/99 1/1/10 1/1/30 1,311,495.71 58.3
120 12/20/99 1/1/10 1/1/30 1,280,058.46 59.5
121 6/28/00 7/1/10 1,265,291.20 60.3
122 12/16/99 1/1/10 1,254,781.81 62.7
123 5/28/99 6/1/09 1,225,756.99 66.6
124 9/21/99 10/1/09 1,215,062.00 59.6
125 10/21/99 11/1/09 1,178,036.64 66.0
126 10/18/99 11/1/09 1,111,412.35 63.5
127 4/17/00 5/1/10 1,167,389.18 74.1
128 12/27/99 1/1/10 1/1/30 1,181,644.26 59.8
129 12/22/99 1/1/10 1,069,578.16 57.8
130 12/3/99 1/1/10 1,029,887.22 63.6
131 7/12/99 8/1/09 1,012,380.52 55.3
132 4/17/00 5/1/10 976,206.75 66.4
133 11/1/99 12/1/09 1,028,849.27 71.0
134 5/1/00 6/1/10 961,927.69 60.1
135 11/30/99 12/1/09 12/1/29 1,009,067.36 60.4
136 3/19/99 4/1/09 919,265.01 61.3
137 11/2/99 12/1/09 965,270.32 60.3
138 7/24/00 8/1/10 877,124.87 66.7
138.1
138.2
138.3
138.4
139 3/22/00 4/1/10 4/1/25 890,883.00 44.5
140 2/1/00 3/1/10 3/1/30 956,438.41 54.7
141 12/9/99 1/1/10 946,040.52 65.2
142 2/25/00 3/1/10 3/1/25 864,397.63 50.9
143 3/29/00 4/1/10 896,167.97 51.2
144 9/30/99 10/1/09 899,225.15 56.2
145 10/6/99 11/1/09 853,738.91 47.4
146 11/15/99 12/1/09 825,164.97 59.8
147 10/20/99 1/1/10 879,579.83 58.6
148 7/12/00 8/1/10 811,925.22 66.3
149 2/24/00 3/1/10 736,582.42 64.1
150 11/23/99 12/1/09 12/1/29 740,726.85 59.3
151 11/23/99 12/1/09 12/1/29 619,847.84 59.6
152 11/23/99 12/1/09 12/1/29 611,668.47 60.0
153 7/22/99 8/1/09 564,960.06 62.8
154 12/7/99 1/1/10 1/1/30 603,510.80 59.8
155 4/5/99 5/1/09 560,469.05 55.0
156 11/9/99 12/1/09 586,740.68 61.0
157 1/18/00 2/1/10 2/1/25 506,285.10 52.7
158 9/21/99 10/1/09 496,456.31 62.8
159 6/15/00 7/1/10 485,202.28 57.1
160 9/20/99 10/1/09 465,658.21 61.7
161 2/17/00 3/1/10 454,341.44 67.3
162 11/17/99 12/1/09 485,674.86 71.4
163 11/17/99 12/1/09 465,888.24 61.3
164 9/1/99 10/1/09 402,838.92 62.9
165 9/20/99 10/1/09 11/1/29 361,172.45 60.2
166 9/1/99 10/1/09 283,246.36 62.9
167 2/16/00 3/1/10 211,461.13 52.9
168 1/13/00 2/1/10 185,487.52 56.2
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Yield
Lock-out End Defeasance Maintenance Most Recent
Loan No. Date (10) End Date End Date NOI 99 ($) NOI
-------- ------------ ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
1 9/30/02 5/31/09 3,001,120
1.1
1.2 1,034,361
1.3 630,990
1.4 542,858
1.5 538,435
1.6 254,476
2 9/30/02 5/31/09 3,648,079
2.1 1,110,480
2.2 1,163,955
2.3 531,022
2.4 342,591
2.5 327,673
2.6 172,358
3 9/30/02 6/30/09 2,896,709
3.1 1,565,398
3.2 1,331,311
4 9/30/02 5/31/09 2,457,062 2,406,936
5 9/30/02 8/31/09 2,890,491 2,843,047
6 9/30/02 8/31/09 2,430,609
7 9/30/02 12/31/09 2,936,379 2,984,655
8 9/30/02 10/31/09 2,322,870
9 9/30/02 1/31/10 2,917,046
10 9/30/02 6/30/09 1,392,106
11 9/30/02 9/30/09 2,721,865
12 9/30/02 2/28/09
12.1 449,436 463,007
12.2 431,534 408,956
12.3 327,205 296,361
12.4 391,708 367,575
12.5 407,325 418,047
13 9/30/02 9/30/09 1,408,600 1,502,554
14 9/30/02 6/30/09 1,534,322
15 9/30/02 8/31/09 1,639,335
16 9/30/02 3/31/10 1,451,690 1,441,445
17 9/30/02 1/31/17 1,258,583
18 9/30/02 9/30/09 1,173,753 1,239,397
19 9/30/02 11/30/09 1,451,395
20 9/30/02 12/31/09 931,188 963,667
21 9/30/02 1/31/09 1,064,112
22 9/30/02 2/28/10
23 9/30/02 5/31/09 1,035,478
24 9/30/02 7/31/09 856,014
25 9/30/02 1/31/10
26 9/30/02 1/31/10 805,039 813,395
27 9/30/02 9/30/09 1,280,004
28 9/30/02 8/31/09
29 9/30/02 7/31/09 790,499
30 9/30/02 1/31/10 833,791
31 9/30/02 9/30/09 1,234,792 1,388,617
32 9/30/02 11/30/09 1,112,677 1,641,018
33 9/30/02 9/30/09 961,020 921,437
33.1 754,047 716,911
33.2 206,973 204,526
34 9/30/02 8/31/09 747,707 821,400
35 9/30/02 1/31/09 777,835
36 9/30/02 11/30/09 769,529
37 9/30/02 5/31/09 664,000
38 9/30/02 12/31/09 810,589
39 9/30/02 1/31/09
40 9/30/02 1/31/10 731,661
41 9/30/02 5/30/09 538,453 591,618
42 9/30/02 9/30/09 184,474
43 9/30/02 8/31/09 481,474 581,236
44 9/30/02 8/31/09
45 9/30/02 2/28/09 624,853
46 9/30/02 1/31/17 596,584
47 9/30/02 8/31/09 621,841
48 9/30/02 4/30/09 586,166
49 9/30/02 3/31/09 654,592
50 9/30/02 8/31/09 552,794 564,729
51 9/30/02 12/31/14 606,000
52 9/30/02 12/31/19
53 9/30/02 8/31/09 536,258 531,869
54 9/30/02 12/31/09 406,920 560,606
55 9/30/02 8/31/09 473,439 474,351
56 9/30/02 5/31/09 616,372
57 9/30/02 10/31/09
58 9/30/02 3/31/10 481,639 519,296
59 9/30/02 9/30/08 625,290
60 9/30/02 5/31/09 706,946
61 9/30/02 5/31/09 576,212
62 9/30/02 5/31/09 1,092,073
63 9/30/02 7/31/09 399,733
64 9/30/02 8/31/09 436,378
65 9/30/02 6/30/09 421,328
66 9/30/02 4/30/09 440,309 444,565
67 9/30/02 9/30/09 404,144 416,304
68 9/30/02 8/31/09 332,304
69 9/30/02 8/31/09 262,104
70 9/30/02 5/31/09 372,120 411,647
71 9/30/02 8/31/09 546,253
72 9/30/02 8/31/09 185,621
73 9/30/02 9/30/09 387,119
74 9/30/02 1/31/09 414,884
75 9/30/02 5/31/09
75.1 329,610
75.2 120,312
76 9/30/02 1/31/10 428,516 441,534
77 9/30/02 3/31/19
78 9/30/02 7/31/09 339,531
79 9/30/02 3/31/09 419,111
80 9/30/02 4/30/09 963,751
81 9/30/02 9/30/09 367,287
82 9/30/02 2/28/09 317,643
83 9/30/02 3/31/09 806,324
84 9/30/02 4/30/10 279,486 354,069
85 9/30/02 4/30/14 296,361
86 9/30/02 4/30/10
87 9/30/02 4/30/09 836,079 955,848
88 9/30/02 12/31/09 335,877 341,495
89 9/30/02 8/31/19 541,273
90 9/30/02 12/31/09
91 9/30/02 9/30/09 336,618
91.1 127,055
91.2 209,563
92 9/30/02 5/31/09 381,598
93 9/30/02 6/30/09 291,580 291,269
94 9/30/02 5/31/09 362,021
95 9/30/02 2/28/10
96 9/30/02 4/30/10 239,811 310,541
97 9/30/02 5/31/10 286,560 284,577
98 9/30/02 8/31/09 259,995
99 9/30/02 8/31/09 372,430
100 9/30/02 6/30/18
101 9/30/02 11/30/09 436,895 381,301
102 9/30/02 6/30/09 343,051
103 9/30/02 10/31/09
104 9/30/02 7/31/09 241,514
105 9/30/02 3/31/09 257,617
106 9/30/02 8/31/09 249,513 313,737
107 9/30/02 2/28/10 279,961 280,293
107.1 156,659 132,957
107.2 123,302 147,336
108 9/30/02 2/28/10 209,030 9,634
109 9/30/02 6/30/09 212,377
110 9/30/02 10/31/08 231,310
111 9/30/02 5/31/09 261,401
112 9/30/02 4/30/10 205,096
113 9/30/02 4/30/09 222,007
114 9/30/02 10/31/09 234,423
115 9/30/02 12/31/08 297,635
116 10/31/04 7/31/09 216,614 216,348
117 11/30/03 8/31/09 219,910 251,736
117.1 97,899 109,649
117.2 37,464 46,811
117.3 35,612 39,607
117.4 24,028 28,417
117.5 24,907 27,252
118 9/30/02 6/30/09 203,246
119 9/30/02 9/30/09 77,394
120 9/30/02 9/30/09 202,403 202,403
121 9/30/02 3/31/10 147,761 199,392
122 9/30/02 9/30/09 201,319
123 5/31/03 2/28/09 184,964 197,488
124 9/30/02 6/30/09 148,416
125 10/31/03 7/31/09 236,988 231,481
126 9/30/02 7/31/09 179,136
127 9/30/02 1/31/10 143,022
128 9/30/02 9/30/09 70,538
129 12/31/03 9/30/09 228,218 221,007
130 9/30/02 9/30/09 245,986
131 9/30/02 4/30/09 206,370
132 4/30/04 1/31/10
133 9/30/02 8/31/09 98,087
134 5/31/04 2/28/10 175,548 177,397
135 9/30/02 8/31/09 167,945
136 9/30/02 12/31/08 208,600
137 9/30/02 8/31/09 157,442
138 9/30/02 4/30/10 119,669 153,152
138.1 22,483 38,799
138.2 21,024 29,714
138.3 50,058 53,884
138.4 26,104 30,755
139 9/30/02 12/31/09 50,875
140 9/30/02 11/30/09
141 9/30/02 9/30/09 161,845
142 2/29/04 11/30/09 156,884 177,525
143 9/30/02 12/31/09
144 9/30/02 6/30/09 122,420
145 9/30/02 7/31/09 216,932
146 11/30/03 8/31/09 160,152 174,198
147 9/30/02 9/30/09 81,600
148 9/30/02 4/30/10 134,930 147,058
149 2/28/05 11/30/09 130,479
150 9/30/02 8/31/09
151 9/30/02 8/31/09
152 9/30/02 8/31/09 95,678
153 9/30/02 4/30/09 119,166
154 9/30/02 9/30/09
155 9/30/02 10/31/08 91,272
156 11/30/03 8/31/09 104,722 87,973
157 9/30/02 10/31/09 99,982 99,982
158 9/30/02 6/30/09 75,261
159 9/30/02 3/31/10
160 9/30/03 6/30/09 75,142 76,997
161 2/28/05 11/30/09 91,568 95,228
162 9/30/02 8/31/09 61,794
163 9/30/02 8/31/09 67,400
164 9/30/02 6/30/09 69,966
165 9/30/03 6/30/09 64,638 79,667
166 9/30/02 6/30/09 33,164
167 2/29/04 11/30/09 51,072
168 10/31/09 20,677
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Type of Most
Date of Most Recent NOI UW UW Underwritten
Loan No. Recent NOI (11) NOI ($) Cash Flow ($) DSCR (12)
-------- ------------ ------------ ------- ------------- ------------
<S> <C> <C> <C> <C> <C>
1 4,140,895 3,389,589 1.81
1.1 1,173,991 1,049,116
1.2 967,088 723,913
1.3 611,037 454,487
1.4 533,085 485,728
1.5 613,409 491,814
1.6 242,285 184,531
2 3,081,454 2,752,178 1.58
2.1 1,199,614 1,112,903
2.2 1,130,576 977,081
2.3 67,762 45,387
2.4 361,617 328,615
2.5 270,365 244,472
2.6 51,520 43,720
3 2,790,516 2,493,559 1.27
3.1 1,500,782 1,274,448
3.2 1,289,734 1,219,111
4 3/31/00 Trailing 12 2,399,584 2,374,584 1.27
5 3/31/00 Trailing 12 2,700,271 2,469,357 1.26
6 2,751,158 2,349,908 1.32
7 3/1/00 Trailing 12 2,496,817 2,007,895 1.26
8 2,398,182 2,079,950 1.25
9 2,677,957 2,263,542 1.40
10 1,867,163 1,814,696 1.27
11 2,353,398 2,093,887 1.39
12 1,935,139 1,725,540 1.27
12.1 2/29/00 Trailing 12 486,887 441,668
12.2 2/29/00 Trailing 12 401,920 361,173
12.3 2/29/00 Trailing 12 294,938 254,234
12.4 2/29/00 Trailing 12 363,875 322,244
12.5 2/29/00 Trailing 12 387,519 346,221
13 3/31/00 Annualized 1,724,294 1,493,015 1.25
14 1,523,517 1,384,289 1.26
15 1,703,134 1,478,999 1.40
16 3/31/00 Trailing 12 1,458,668 1,403,618 1.48
17 1,555,969 1,437,302 1.23
18 3/31/00 Trailing 12 1,308,495 1,228,495 1.27
19 1,266,547 1,180,047 1.27
20 4/30/00 Trailing 12 1,055,389 1,022,110 1.21
21 1,060,283 995,033 1.28
22 1,255,702 1,195,969 1.36
23 978,338 917,146 1.21
24 1,040,519 974,688 1.26
25 1,007,329 895,487 1.23
26 1/31/00 Trailing 12 870,200 802,200 1.21
27 1,211,490 1,010,472 1.35
28 1,057,556 998,056 1.42
29 964,877 912,293 1.32
30 3/30/00 Annualized 841,922 816,722 1.25
31 3/31/00 Trailing 12 1,150,456 1,031,288 1.40
32 1/1/99 Trailing 12 1,216,784 993,841 1.37
33 3/31/00 Trailing 12 931,695 806,736 1.32
33.1 3/31/00 Trailing 12 720,400 629,200
33.2 3/31/00 Trailing 12 211,295 177,536
34 3/31/00 Trailing 12 938,090 860,174 1.42
35 884,998 767,974 1.31
36 769,609 703,109 1.27
37 722,507 715,221 1.32
38 754,201 692,726 1.30
39 893,578 785,246 1.39
40 628,099 598,099 1.20
41 3/31/00 Trailing 12 621,437 591,437 1.14
42 677,256 641,256 1.39
43 6/30/00 Trailing 12 591,885 564,452 1.21
44 633,472 601,495 1.32
45 560,582 539,867 1.25
46 715,353 623,267 1.22
47 622,808 554,056 1.30
48 551,604 521,326 1.29
49 613,212 583,302 1.42
50 1/31/00 Trailing 12 537,434 482,985 1.22
51 2/1/00 Annualized 522,146 517,546 1.20
52 473,055 470,667 1.03
53 1/31/00 Trailing 12 486,964 480,414 1.27
54 2/29/00 Annualized 535,472 503,356 1.34
55 1/31/00 Trailing 12 463,211 452,061 1.21
56 2/29/00 Trailing 12 541,201 422,060 1.12
57 546,629 519,975 1.35
58 4/30/00 Trailing 12 468,219 444,969 1.25
59 563,117 551,805 1.54
60 593,817 545,107 1.37
61 521,161 468,083 1.35
62 657,239 598,559 1.52
63 399,733 390,406 1.12
64 425,828 416,728 1.27
65 497,492 438,123 1.33
66 2/27/00 Trailing 12 414,708 404,440 1.22
67 3/31/00 Trailing 12 422,680 399,551 1.23
68 380,540 373,290 1.21
69 418,129 396,591 1.25
70 3/31/00 Annualized 446,511 421,623 1.35
71 499,347 483,937 1.48
72 364,121 352,121 1.22
73 398,813 389,113 1.39
74 415,105 357,626 1.29
75 417,907 375,701 1.26
75.1 309,311 279,680
75.2 108,596 96,021
76 2/29/00 Annualized 402,024 360,298 1.26
77 303,856 303,856 1.03
78 344,778 338,233 1.29
79 395,835 342,524 1.37
80 529,906 479,906 1.82
81 386,444 322,734 1.13
82 370,431 337,070 1.33
83 521,235 496,985 1.85
84 5/31/00 Trailing 12 344,331 307,238 1.25
85 3/31/00 Annualized 320,983 318,639 1.10
86 387,150 327,367 1.31
87 3/31/00 Annualized 536,571 512,700 2.06
88 5/31/00 Trailing 12 318,204 279,243 1.27
89 470,400 462,064 1.82
90 409,139 353,591 1.30
91 371,258 333,258 1.58
91.1 148,799 131,299 1.67
91.2 222,459 201,959 1.53
92 369,804 355,003 1.55
93 2/29/00 Trailing 12 299,840 274,891 1.25
94 1/31/00 Trailing 12 317,050 277,779 1.26
95 321,932 304,952 1.40
96 6/30/00 Annualized 290,614 253,614 1.28
97 5/21/00 Trailing 12 281,994 254,494 1.24
98 288,840 256,818 1.26
99 382,238 332,671 1.46
100 220,123 220,123 1.03
101 3/31/00 Trailing 12 435,735 406,584 1.29
102 295,741 248,837 1.33
103 231,555 229,919 1.20
104 228,726 221,206 1.24
105 254,341 228,847 1.30
106 3/15/00 Annualized 269,934 223,139 1.33
107 3/31/00 Annualized 243,592 222,842 1.28
107.1 3/31/00 Annualized 136,039 126,039
107.2 3/31/00 Annualized 107,553 96,803
108 2/29/00 Annualized 231,856 210,313 1.25
109 201,982 194,982 1.24
110 207,509 202,232 1.25
111 259,878 226,065 1.46
112 196,830 180,684 1.22
113 199,369 177,688 1.29
114 206,225 198,125 1.30
115 2/29/00 Trailing 12 284,090 258,340 1.86
116 3/31/00 Annualized 199,613 179,236 1.24
117 4/30/00 Annualized 210,496 196,868 1.35
117.1 4/30/00 Annualized 89,465 84,175
117.2 4/30/00 Annualized 35,490 32,490
117.3 4/30/00 Annualized 37,433 35,245
117.4 4/30/00 Annualized 24,759 23,109
117.5 4/30/00 Annualized 23,349 21,849
118 171,970 166,220 1.26
119 185,489 176,033 1.30
120 12/31/99 Annualized 181,417 173,161 1.30
121 4/30/00 Annualized 186,948 180,948 1.41
122 185,651 162,326 1.31
123 3/28/00 Annualized 171,726 153,976 1.20
124 1/31/00 Trailing 12 157,514 154,814 1.26
125 3/25/00 Annualized 196,542 157,827 1.24
126 188,941 168,685 1.28
127 163,928 144,928 1.25
128 168,760 160,745 1.30
129 4/28/00 Annualized 185,616 173,020 1.31
130 193,500 183,300 1.50
131 183,278 178,620 1.50
132 151,576 138,076 1.21
133 127,505 124,904 1.22
134 2/29/00 Trailing 12 150,314 141,314 1.24
135 140,246 135,108 1.30
136 198,151 181,901 1.78
137 159,232 147,057 1.53
138 5/31/00 Trailing 12 139,358 131,358 1.30
138.1 5/31/00 Trailing 12 26,042 24,792
138.2 5/31/00 Trailing 12 25,861 24,111
138.3 5/31/00 Trailing 12 61,247 57,747
138.4 5/31/00 Trailing 12 26,208 24,708
139 193,513 130,145 1.23
140 142,548 134,359 1.32
141 2/29/00 Trailing 12 137,152 129,152 1.30
142 2/28/00 Trailing 12 152,491 143,234 1.31
143 162,305 142,355 1.60
144 2/28/00 Trailing 12 111,425 108,081 1.20
145 202,884 196,261 1.91
146 2/29/00 Annualized 134,559 127,759 1.28
147 117,806 107,406 1.21
148 4/30/00 Annualized 125,210 117,210 1.23
149 122,539 111,175 1.37
150 103,950 99,164 1.30
151 88,040 83,028 1.30
152 86,884 81,879 1.30
153 107,671 87,767 1.34
154 85,126 81,231 1.30
155 83,100 80,064 1.24
156 2/29/00 Annualized 81,288 77,688 1.25
157 11/16/99 Annualized 86,123 79,726 1.31
158 2/29/00 Trailing 12 84,433 76,934 1.35
159 80,242 74,023 1.30
160 4/30/00 Annualized 71,658 67,770 1.21
161 3/31/00 Annualized 79,350 76,350 1.32
162 61,500 59,950 1.23
163 63,774 62,041 1.33
164 73,651 70,151 1.50
165 3/31/00 Annualized 58,319 55,206 1.27
166 4/30/00 Trailing 12 39,618 36,118 1.10
167 36,944 34,194 1.25
168 31,517 29,517 1.28
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Upfront Escrows ($)
-------------------------------------------------------------------------------------------
Repairs & Remediation Environmental Other Upfront
Loan No. Deposit TI/LC Deposit Deposit Deposit
-------- --------------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
1 10,250 2,000 96,369
1.1 30,789
1.2 19,626
1.3 2,500 18,944
1.4 1,000 5,911
1.5 6,750 2,000 16,659
1.6 4,440
2 11,250 45,472
2.1 9,621
2.2 18,484
2.3 6,744
2.4 11,250 4,047
2.5 375 4,692
2.6 1,884
3 37,500
3.1 37,500
3.2
4
5
6 64,290 4,000
7
8 31,125 100,000
9 438,949
10 50,000
11 300,000
12
12.1
12.2
12.3
12.4
12.5
13
14
15
16 200,000
17
18 45,750
19 100,000
20 10,875 30,000
21
22 565,597 800,000
23 1,313 150,000
24 875,000
25 310,000 363,649
26 3,938
27 125,000 38,458
28 500,000 17,000
29
30
31 1,688 3,000
32 37,875
33 20,156
33.1 20,156
33.2
34 2,500
35 1,377 6,824
36
37 5,938
38 53,675
39 5,000
40
41 275,000
42
43 15,500
44 215,000
45 7,031
46
47 1,000
48 18,245
49 1,000
50 3,094 7,990
51
52
53
54
55 3,889 10,875
56 10,909 50,000
57 201,716
58 17,500
59 20,890
60
61 16,250 150,000
62 59,490
63
64
65
66
67 2,688 2,688
68 1,063
69
70 64,000 1,800 25,990
71
72
73
74
75 40,000 20,000 100,000
75.1 40,000 20,000 100,000
75.2
76 5,000 21,410
77 5,600
78 66,125
79 82,875 200,000
80 1,625
81 350,000
82 3,125 50,000
83
84
85 8,500 2,344
86 12,500
87 23,871
88 5,601
89
90 10,700
91 6,000
91.1 6,000
91.2
92 25,000
93
94 50,000
95
96 5,069
97 6,571
98
99
100
101 4,750 8,680
102 25,000
103
104
105 5,000
106 7,188
107 2,500
107.1 2,500
107.2
108 3,125
109
110
111 3,125 600 3,808
112
113 22,500
114 160,500
115 2,000
116 2,000
117
117.1
117.2
117.3
117.4
117.5
118 5,350
119
120
121 1,035
122 28,750
123 13,375 17,750
124
125
126 10,000
127 1,563
128
129 56,906
130 3,750
131
132
133 6,820
134
135
136 22,213
137
138 25,938
138.1
138.2
138.3
138.4
139
140
141
142
143
144
145 1,250
146
147 1,625
148 16,525
149
150
151
152
153
154
155
156
157 50,000
158
159
160
161 66,000
162
163 1,100
164
165
166
167
168
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Monthly Escrows
------------------------------------------------------------------------------------------------------------
Capital
Loan No. Expenses ($) TI/LC ($) Other Monthly Tax Insurance
-------- ------------ --------- ------------- --- ----------
<S> <C> <C> <C> <C> <C>
1 8,031 1/12 of annual 1/12 of annual
1.1 2,566
1.2 1,635
1.3 1,579
1.4 493
1.5 1,388
1.6 370
2 3,789 1/12 of annual 1/12 of annual
2.1 802
2.2 1,540
2.3 562
2.4 337
2.5 391
2.6 157
3 1/12 of annual 1/12 of annual 1/12 of annual
3.1 1/12 of annual
3.2 1/12 of annual
4 2,083 1/12 of annual 1/12 of annual
5 3,626 4,167 1/12 of annual 1/12 of annual
6 30,000 1/12 of annual 1/12 of annual
7 3,165 20,140 1/12 of annual 1/12 of annual
8 9,473 8,333 1/12 of annual 1/12 of annual
9 1/12 of annual 1/12 of annual
10 450 1/12 of annual 1/12 of annual
11 21,683 1/12 of annual 1/12 of annual
12 16,688 1/12 of annual 1/12 of annual
12.1 3,466
12.2 3,259
12.3 3,392
12.4 3,353
12.5 3,218
13 3,241 10,000 1/12 of annual 1/12 of annual
14 1/12 of annual 23,333 1/12 of annual 1/12 of annual
15 18,678 1/12 of annual 1/12 of annual
16 4,588 1/12 of annual 1/12 of annual
17 1,360 1/12 of annual 1/12 of annual
18 6,666 1/12 of annual 1/12 of annual
19 8,333 1/12 of annual 1/12 of annual
20 504 4,934 1/12 of annual 1/12 of annual
21 5,438 1/12 of annual 1/12 of annual
22 1,392 1/12 of annual 1/12 of annual
23 1,700 3,400 1/12 of annual 1/12 of annual
24 716 4,770 1/12 of annual 1/12 of annual
25 282 2,778 1/12 of annual 1/12 of annual
26 5,100 1/12 of annual 1/12 of annual
27 6,667 14,167 1/12 of annual 1/12 of annual
28
29 641 5,209 1/12 of annual 1/12 of annual
30 2,100 1/12 of annual 1/12 of annual
31 5,733 4,173 13,334 1/12 of annual 1/12 of annual
32 8,133 1/12 of annual 1/12 of annual
33 10,413 1/12 of annual 1/12 of annual
33.1
33.2
34 6,493 1/12 of annual 1/12 of annual
35 1,377 6,824 1/12 of annual 1/12 of annual
36 5,497 1/12 of annual 1/12 of annual
37 607 1/12 of annual 1/12 of annual
38 5,123 1/12 of annual 1/12 of annual
39 1,525 7,625 1/12 of annual 1/12 of annual
40 2,500 1/12 of annual 1/12 of annual
41 2,500 1/12 of annual 1/12 of annual
42 1/12 of annual 1/12 of annual
43 284 1,912 1/12 of annual 1/12 of annual
44 395 1/12 of annual 1/12 of annual
45 1,726 1/12 of annual 1/12 of annual
46 1,050 1/12 of annual 1/12 of annual
47 1,395 4,362 1/12 of annual 1/12 of annual
48 1,625 900 1/12 of annual 1/12 of annual
49 872 1,621 1/12 of annual 1/12 of annual
50 1,354 2,450 1/12 of annual 1/12 of annual
51 441 1/12 of annual 1/12 of annual
52 199 1/12 of annual 1/12 of annual
53 546 1/12 of annual 1/12 of annual
54 889 625 1/12 of annual 1/12 of annual
55 929 1/12 of annual 1/12 of annual
56 2,040 5,830 1/12 of annual 1/12 of annual
57 358 726 1/12 of annual 1/12 of annual
58 1,907 1/12 of annual 1/12 of annual
59 1/12 of annual 1/12 of annual
60 4,000 1/12 of annual 1/12 of annual
61 854 3,304 1/12 of annual 1/12 of annual
62 1/12 of annual 1/12 of annual
63 777 1/12 of annual 1/12 of annual
64 379 1/12 of annual 1/12 of annual
65 763 3,788 1/12 of annual 1/12 of annual
66 1/12 of annual 1/12 of annual
67 307 1/12 of annual 1/12 of annual
68 604 1/12 of annual 1/12 of annual
69 226 7,205 1/12 of annual 1/12 of annual
70 2,074 1/12 of annual 1/12 of annual
71 1,284 1/12 of annual 1/12 of annual
72 600 1/12 of annual 1/12 of annual
73 672 1/12 of annual 1/12 of annual
74 650 3,702 1/12 of annual 1/12 of annual
75 1,418 2,007 1/12 of annual 1/12 of annual
75.1 1,204 1,174
75.2 215 833
76 793 2,000 1/12 of annual 1/12 of annual
77
78 545 1/12 of annual 1/12 of annual
79 1,016 3,350 1/12 of annual 1/12 of annual
80 1/12 of annual
81 1,908 3,402 1/12 of annual 1/12 of annual
82 425 2,355 1/12 of annual 1/12 of annual
83 2,020 1/12 of annual 1/12 of annual
84 1/12 of annual 1/12 of annual
85 195 1/12 of annual 1/12 of annual
86 2,055 5,366 1/12 of annual 1/12 of annual
87 1/12 of annual 1/12 of annual
88 658 1/12 of annual 1/12 of annual
89 642 1/12 of annual 1/12 of annual
90 1,966 2,052 1/12 of annual 1/12 of annual
91 3,167 1/12 of annual 1/12 of annual
91.1 1,458
91.2 1,708
92 124 1,102 1/12 of annual 1/12 of annual
93 2,079 1/12 of annual 1/12 of annual
94 981 1,217 1/12 of annual 1/12 of annual
95 253 1/12 of annual 1/12 of annual
96 3,083 1/12 of annual 1/12 of annual
97 2,292 1/12 of annual 1/12 of annual
98 366 2,302 1/12 of annual 1/12 of annual
99 4,130 1/12 of annual 1/12 of annual
100 1/12 of annual 1/12 of annual
101 1,423 1/12 of annual 1/12 of annual
102 521 3,387 1/12 of annual 1/12 of annual
103 136
104 235 1/12 of annual 1/12 of annual
105 537 1,588 1/12 of annual 1/12 of annual
106 1,410 1,631 1/12 of annual 1/12 of annual
107 1/12 of annual 1/12 of annual
107.1
107.2
108 476 1,281 1/12 of annual 1/12 of annual
109 292 1/12 of annual 1/12 of annual
110 439 1/12 of annual 1/12 of annual
111 718 2,622 1/12 of annual 1/12 of annual
112 1/12 of annual 1/12 of annual
113 540 1,225 1/12 of annual 1/12 of annual
114 457 1/12 of annual 1/12 of annual
115 2,146 1/12 of annual 1/12 of annual
116 400 2,119 1/12 of annual 1/12 of annual
117 1/12 of annual 1/12 of annual
117.1
117.2
117.3
117.4
117.5
118 240 1/12 of annual 1/12 of annual
119 49 1/12 of annual 1/12 of annual
120 54 1/12 of annual 1/12 of annual
121 1/12 of annual 1/12 of annual
122 1,944 1/12 of annual 1/12 of annual
123 1/12 of annual 1/12 of annual
124 250 1/12 of annual 1/12 of annual
125 1/12 of annual 1/12 of annual
126 540 1,148 1/12 of annual 1/12 of annual
127 1,305 1/12 of annual 1/12 of annual
128 36 1,600 1/12 of annual 1/12 of annual
129 1/12 of annual 1/12 of annual
130 1,175 1/12 of annual 1/12 of annual
131 388 1/12 of annual 1/12 of annual
132 1/12 of annual 1/12 of annual
133 213 1/12 of annual 1/12 of annual
134 479 1/12 of annual 1/12 of annual
135 30 1,400 1/12 of annual 1/12 of annual
136 1,354 1/12 of annual 1/12 of annual
137 1,015 1/12 of annual 1/12 of annual
138 1/12 of annual 1/12 of annual
138.1
138.2
138.3
138.4
139 1,179 4,025 1/12 of annual 1/12 of annual
140 65 1,600 1/12 of annual 1/12 of annual
141 167 500 1/12 of annual 1/12 of annual
142 1/12 of annual 1/12 of annual
143 1/12 of annual 1/12 of annual
144 307 1/12 of annual 1/12 of annual
145 552 1/12 of annual 1/12 of annual
146 1/12 of annual 1/12 of annual
147 1,083 1/12 of annual 1/12 of annual
148 644 1/12 of annual 1/12 of annual
149 1/12 of annual 1/12 of annual
150 38 1/12 of annual 1/12 of annual
151 23 1/12 of annual 1/12 of annual
152 42 1/12 of annual 1/12 of annual
153 211 1,651 1/12 of annual 1/12 of annual
154 25 1/12 of annual 1/12 of annual
155 253 1/12 of annual 1/12 of annual
156 1/12 of annual 1/12 of annual
157 78 360 1/12 of annual 1/12 of annual
158 152 473 1/12 of annual 1/12 of annual
159 1/12 of annual 1/12 of annual
160 117 1/12 of annual 1/12 of annual
161 1/12 of annual 1/12 of annual
162 129 1/12 of annual 1/12 of annual
163 144 1/12 of annual 1/12 of annual
164 292 1/12 of annual 1/12 of annual
165 163 1/12 of annual 1/12 of annual
166 292 1/12 of annual 1/12 of annual
167 1/12 of annual 1/12 of annual
168 1/12 of annual 1/12 of annual 1/12 of annual
</TABLE>
<PAGE>
FOOTNOTES TO ANNEX A
(1) 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 square footage or number of units
thereof.
(2) For Mortgage Loans secured by multiple Mortgaged Properties, the Mortgage
Loan's principal balance is allocated to the respective Mortgaged
Properties based on the Mortgage Loan documentation or the Seller's
determination of the appropriate allocation.
(3) Each number identifies one of six groups of Crossed Loans.
(4) Each letter identifies one of twelve groups of related Mortgagors with
respect to Mortgage Loans that are not Crossed Loans.
(5) For each Mortgage Loan, the excess of the related Mortgage Interest Rate
over the related Master Servicing Fee Rate and the Trustee Fee Rate.
(6) "ACT/360" means interest accrues on the basis of the actual number of
days elapsed and a 360-day year.
(7) For Loan Numbers 1 and 2, calculated as the aggregate of the 12 Monthly
Payments beginning on September 1, 2000 and ending on August 1, 2001; for
all other Mortgage Loans, calculated as 12 times the Monthly Payment in
effect as of the Cut-off Date.
(8) For ARD Loans, the related Anticipated Repayment Date.
(9) For ARD Loans, calculated as of the related Anticipated Repayment Date.
(10) Certain of the Mortgage Loans allow for Defeasance from and after the
second anniversary of the Delivery Date.
(11) "Trailing 12" indicates Most Recent NOI is based on NOI for the twelve
months preceding the Date of Most Recent NOI. "Annualized" indicates Most
Recent NOI has been annualized based on NOI for the number of months from
January 1, 2000 to Date of Most Recent NOI.
(12) Calculated as the ratio of UW Cash Flow to the Annual Debt Service.
A-3
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE>
ANNEX B
<TABLE>
<CAPTION>
LOAN NO. PROPERTY NAME CITY STATE ZIP CODE COUNTY DETAILED PROPERTY TYPE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
4 Covina Hills Mobile Home Country Club La Puente CA 91744 Los Angeles Mobile Home Park
15 Willo Arms Apartments Euclid OH 44132 Cuyahoga Multifamily
16 Rincon Country West Resort Tucson AZ 85746 Pima Mobile Home Park
18 Royal Lane Village Apartments Dallas TX 75229 Dallas Multifamily
19 Heritage Square Apartments Hempstead NY 11550 Nassau Multifamily
21 Vista Del Valle Las Vegas NV 89103 Clark Multifamily
26 Whispering Pines Apartments Tucson AZ 85710 Pima Multifamily
30 Campus Edge - Phase II Charlotte NC 28262 Mecklenburg Multifamily
33.1 Village of Hampshire Heights Apts Toledo OH 43606 Lucas Multifamily
33.2 University Park Apartments Toledo OH 43602 Lucas Multifamily
34 Anderson Apartments Ypsilanti MI 48198 Washtenaw Multifamily
36 Sunny Dale Apartments Toledo OH 43613 Lucas Multifamily
37 Del Prado Mobile Home Park Anaheim CA 92802 Orange Mobile Home Park
38 West Dixie Towers North Miami FL 33161 Dade Multifamily
40 Brookside Sr. Apartments Bakersfield CA 93311 Kern Multifamily
41 The Meadows Apartments New Castle PA 16105 Lawrence Multifamily
42 The Vail Estates Apartments Princeton IN 47670 Gibson Multifamily
45 Manoog's Isle Mobile Home Park Anchorage AK 99507 Anchorage Mobile Home Park
48 Rotunda Apartments New Orleans LA 70130 Orleans Multifamily
51 Thomas Jefferson II Apartments Hoboken NJ 07030 Hudson Multifamily
53 Westward Ho Manor Mobile Home Park El Cajon CA 92021 San Diego Mobile Home Park
54 River Center Plaza & Apts. La Crosse WI 54601 La Crosse Multifamily
55 Golden Hills Mobile Home Park Porterville CA 93257 Tulare Mobile Home Park
58 Glendale Townhomes Madison WI 53716 Dane Multifamily
64 Silk Oak Lodge Mobile Home Park Clearwater FL 33761 Pinellas Mobile Home Park
68 Lake Eden Gardens Mobile Home Park Hollywood FL 33312 Broward Mobile Home Park
70 Surfside Apartments Lynn MA 01902 Essex Multifamily
72 The Fields Apartments Ph III Bloomington IN 47401 Monroe Multifamily
73 Hidden Forest Mobile Home Park Randolph NC 27317 Randolph Mobile Home Park
78 300 East 96th Street New York NY 10128 New York Multifamily
80 Vermont Care Center Torrance CA 60502 Los Angeles Skilled Nursing Facility
91.1 Asylum Apts. - Asylum Hartford CT 06105 Hartford Multifamily
91.2 Asylum Apts. - Executive House Hartford CT 06105 Hartford Multifamily
93 Mirror Lake Apartments Daytona Beach FL 32119 Volusia Multifamily
96 Valley Oaks Apartments Houston TX 77050 Harris Multifamily
97 Santa Fe Apartments San Antonio TX 78216 Bexar Multifamily
107.1 Pine Grove Apartments Rotterdam NY 12306 Schenectady Multifamily
107.2 Cimino Lane Apartments Rotterdam NY 12306 Schenectady Multifamily
109 Sixth Avenue Mobile Home Park Zephyrhills FL 33540 Pasco Mobile Home Park
112 Lorain Point Apartments Monroe MI 48162 Monroe Multifamily
114 Sheltering Palms Yuma AZ 85364 Yuma Mobile Home Park
115 Westwood Apartments Dallas TX 75220 Dallas Multifamily
117.1 133 Grant Street Portland ME 04101 Cumberland Multifamily
117.2 193 Congress Street Portland ME 04101 Cumberland Multifamily
117.3 6-8 May Street Portland ME 04102 Cumberland Multifamily
117.4 142 Grant Street Portland ME 04101 Cumberland Multifamily
117.5 149 Brackett Street Portland ME 04102 Cumberland Multifamily
118 Southernaire Mobile Home Park Mt. Dora FL 34757 Lake Mobile Home Park
121 Parker Hill Apartments Boston MA 02120 Suffolk Multifamily
122 Palm Shadows Apartments Yuma AZ 85364 Yuma Multifamily
123 Carriage Square Apartments Arlington TX 76013 Tarrant Multifamily
124 Lafayette Apartments New Orleans LA 70113 Orleans Multifamily
127 Downtown Plaza Apartments Bristol VA 24201 Bristol Multifamily
130 Tampico Retirement Center ALF Venice FL 34285 Sarasota Assisted Living Facility
132 Williamsburg Square Apartments Pascagoula MS 39581 Jackson Multifamily
133 Crystal Lake Mobile Home Park Hollywood FL 33312 Broward Mobile Home Park
134 Suburban Villas Brandon FL 33511 Hillsborough Multifamily
136 Hilltopper Apartments Irving TX 75060 Dallas Multifamily
137 Panorama Pointe Villas Panorama City CA 91402 Los Angeles Multifamily
138.1 696 Congress Street Portland ME 04102 Cumberland Multifamily
138.2 316 & 316A Congress Street Portland ME 04101 Cumberland Multifamily
138.3 190-192 State Street Portland ME 04101 Cumberland Multifamily
138.4 469 Cumberland Portland ME 04101 Cumberland Multifamily
144 Bahia Harbor Beach Apartments Fort Lauderdale FL 33316 Broward Multifamily
146 Masonic Arms Apartments Warren MI 48093 Macomb Multifamily
147 Tobias Garden Apartments Panorama City CA 91402 Los Angeles Multifamily
148 Sunrise Villa Kennewick WA 99336 Benton Multifamily
156 Tapestry Apartments Milaca MN 56353 Mille Lacs Multifamily
161 Country Club MHP Machias NY 14042 Cattaraugus Mobile Home Park
162 Gold Hill Mobile Home Park Newcastle CA 95658 Placer Mobile Home Park
163 Pleasure Point Mobile Manor Santa Cruz CA 95062 Santa Cruz Mobile Home Park
164 Kintner Estates Mobile Home Park Vestal NY 13850 Broome Mobile Home Park
166 Blue Ridge Mobile Home Park Conklin NY 13748 Broome Mobile Home Park
167 M & M Apartments Brownsville TX 78521 Cameron Multifamily
168 4029 29th Street San Diego CA 92105 San Diego Multifamily
</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 the Mortgage Loan documentation or the Seller's
determination of the appropriate allocation.
(3) Average rents were determined based on an average of the current asking
rents set forth in the appraisal for the related Mortgaged Property.
<PAGE>
<TABLE>
<CAPTION>
STUDIOS/BEDS/PADS (1)
---------------------------------------------------
CUT-OFF DATE/
CUT-OFF DATE/ ALLOCATED UTILITIES AVG RENT
ALLOCATED LOAN BALANCE LOAN PAID BY # OF PER MO. ($) MIN. RENT MAX. RENT
LOAN NO. BALANCE (2) PER UNIT PURPOSE TENANT UNITS (3) PER MO. ($) PER MO. ($)
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
4 21,587,115 43,174 Aquisition E, G, W 500 576 550 610
15 11,938,863 16,221 Refinance W
16 10,989,210 9,981 Refinance E 1,101 208 204 212
18 10,458,138 32,682 Refinance E, G
19 10,195,894 29,468 Aquisition E 106 750 505 792
21 9,152,820 35,068 Refinance
26 7,584,167 27,883 Refinance E
30 7,335,521 87,328 Refinance E, W
33.1 5,426,577 17,851 Aquisition E, G
33.2 1,394,412 14,085 Aquisition E
34 6,766,663 22,406 Aquisition E, G
36 6,136,709 23,070 Aquisition E 13 322 320 325
37 5,971,635 45,936 Refinance E, G 130 673 513 1,037
38 5,825,724 29,275 Refinance E 13 410 395 425
40 5,727,747 47,731 Refinance E
41 5,573,634 46,447 Refinance E, G
42 5,225,565 36,289 Refinance E
45 4,855,437 13,303 Aquisition E, G, W
48 4,511,866 66,351 Refinance
51 4,338,163 188,616 Refinance E, G
53 4,180,032 32,403 Refinance E, G, W 129 442 375 459
54 4,139,705 66,769 Refinance E, G
55 4,132,261 18,530 Refinance E, G 223 241 241 241
58 3,934,821 42,310 Refinance E, G
64 3,657,232 20,095 Aquisition E, G 182 323 322 327
68 3,438,389 24,560 Aquisition E, G, W 140 370 361 392
70 3,381,433 49,727 Refinance E, G 4 631 575 650
72 3,283,141 68,399 Refinance E, G, W
73 3,145,752 16,215 Refinance E, G 194 227 230 250
78 2,835,616 113,425 Refinance E, G
80 2,718,176 13,591 Refinance 200 175
91.1 876,137 12,516 Refinance E
91.2 1,473,503 17,970 Refinance E, G 3 385 365 405
93 2,301,562 25,017 Refinance
96 2,159,188 14,688 Aquisition E
97 2,100,000 19,091 Refinance E, G
107.1 938,874 23,472 Aquisition W
107.2 883,940 20,557 Refinance W
109 1,729,802 12,356 Aquisition E, G, W 140 173 173 173
112 1,624,369 29,007 Aquisition E 1 400 400 400
114 1,511,333 9,329 Refinance E 162 169 125 180
115 1,490,766 14,473 Aquisition E 4 400 400 400
117.1 603,025 31,738 Refinance E
117.2 309,447 25,787 Refinance
117.3 218,200 36,367 Refinance W
117.4 162,658 27,110 Refinance E, G
117.5 162,658 27,110 Refinance E, G
118 1,451,443 12,621 Aquisition E, G 115 239 239 239
121 1,398,940 58,289 Aquisition E, W 8 700 650 700
122 1,393,721 18,338 Aquisition E
123 1,367,600 19,262 Refinance 8 375 375 375
124 1,337,507 111,459 Refinance
127 1,297,487 17,072 Refinance E, G, W
130 1,207,349 35,510 Refinance 34 1,816 1,350 1,995
132 1,156,485 19,275 Refinance G
133 1,139,495 22,343 Aquisition E, G, W 51 365 342 388
134 1,137,414 31,595 Refinance E
136 1,100,631 16,933 Refinance
137 1,069,788 24,879 Refinance E, G
138.1 429,683 85,937 Refinance E, G
138.2 239,823 34,260 Refinance E, G 1 300
138.3 195,856 13,990 Refinance E, G 8 558 440 900
138.4 183,864 30,644 Refinance E, G
144 994,106 71,008 Aquisition G 3 865 865 865
146 991,817 29,171 Refinance E, G
147 970,947 18,672 Refinance E
148 963,343 30,104 Aquisition E, G
156 655,654 36,425 Aquisition
161 537,603 8,960 Refinance E, G 78 193 187 207
162 537,433 16,795 Refinance E, G 31 247 242 266
163 515,537 15,622 Refinance E, G, W 33 234 234 234
164 475,519 8,199 Refinance E, G 55 216 214 254
166 334,350 4,776 Refinance E, G 70 201 197 205
167 248,943 24,894 Refinance E, G
168 220,965 27,621 Refinance E, G
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1 BEDROOM 2 BEDROOM
------------------------------------------------------- -------------------------------------------------------
AVG RENT AVG RENT
# OF PER MO. ($) MIN. RENT MAX. RENT # OF PER MO. ($) MIN. RENT MAX. RENT
LOAN NO. UNITS (3) PER MO. ($) PER MO. ($) UNITS (3) PER MO. ($) PER MO. ($)
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
4
15 175 391 380 400 391 484 475 515
16
18 72 475 508 168 600 642
19 204 900 546 1,041 20 1,000 958 1,238
21 100 568 565 850 161 647 610 995
26 176 426 410 445 96 579 574 589
30
33.1 88 434 390 440 216 463 440 465
33.2 78 440 419 454 21 617 584 634
34 3 375 365 375 299 410 400 410
36 55 409 406 412 198 485 471 506
37
38 116 508 465 550 70 700 650 750
40 40 585 585 585 80 719 675 745
41 120 666 605 757
42 4 595 595 595 140 658 650 675
45 313 290 290 290 52 300 300 300
48 45 758 840 19 1,000 1,089
51 15 2,503 2,200 2,800
53
54 25 740 595 900 31 942 850 1,125
55
58 16 499 470 525 59 708 655 745
64
68
70 18 735 600 850 24 826 750 925
72 12 720 720 720 30 936 875 995
73
78 25 1,425 1,121 1,887
80
91.1 70 485 400 575
91.2 60 498 410 650 19 658 650 683
93 92 550 550 550
96 53 335 260 425 84 430 360 525
97 48 413 389 450 59 535 214 605
107.1 25 478 450 510 15 523 500 555
107.2 43 416 370 488
109
112 55 517 490 530
114
115 24 450 450 450 71 588 550 625
117.1 7 496 482 498 3 585 625 650
117.2 12 480 375 525
117.3 6 828 795 900
117.4 3 516 487 537 3 625 600 634
117.5 4 500 425 575 2 610 595 625
118
121 8 895 850 895 8 1,100 1,000 1,200
122 12 362 340 390 64 442 440 460
123 27 489 400 500 36 650 650 650
124 12 1,488 1,350 1,575
127 36 280 280 280 32 346 320 350
130
132 44 499 455 525
133
134 8 475 400 475 10 575 530 575
136 12 500 500 500 32 575 550 600
137 27 535 535 535 14 675 675 675
138.1 3 545 450 595 1 725 725 725
138.2 6 542 537 550
138.3 6 588 500 650
138.4 4 541 495 595 2 695 695 695
144 9 873 830 1,025 1 1,600 1,600 1,600
146 34 535 530 585
147 44 475 465 485 8 650 650 650
148 32 530 525 600
156 4 465 435 475 12 568 560 585
161
162
163
164 3 325 325 325
166
167 8 500 500 500 2 600 600 600
168 1 410 410 410 7 509 500 525
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
3 BEDROOM 4 BEDROOM
------------------------------------------------------- -------------------------------------------------
AVG RENT AVG RENT
# OF PER MO. ($) MIN. RENT MAX. RENT # OF PER MO. ($) MIN. RENT MAX. RENT ELEVATOR
LOAN NO. UNITS (3) PER MO. ($) PER MO. ($) UNITS (3) PER MO. ($) PER MO. ($) (YES/NO)
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
4 No
15 170 554 550 565 No
16 No
18 80 675 722 No
19 16 1,200 871 1,352 Yes
21 No
26 No
30 84 1,280 1,240 1,320 No
33.1 No
33.2 No
34 No
36 No
37 No
38 Yes
40 No
41 No
42 No
45 No
48 4 1,686 1,686 Yes
51 8 3,325 3,200 3,400 Yes
53 No
54 4 1,200 1,100 1,250 2 3,000 3,000 3,000 Yes
55 No
58 18 785 760 825 No
64 No
68 No
70 22 915 800 975 No
72 6 1,085 1,085 1,085 No
73 No
78 Yes
80 No
91.1 Yes
91.2 Yes
93 No
96 10 550 500 565 No
97 3 708 700 715 No
107.1 No
107.2 No
109 No
112 No
114 No
115 4 675 675 675 No
117.1 9 736 650 802 No
117.2 No
117.3 No
117.4 No
117.5 No
118 No
121 No
122 No
123 No
124 Yes
127 8 410 410 410 No
130 No
132 16 576 545 595 No
133 No
134 18 675 600 675 No
136 21 650 650 650 No
137 2 800 800 800 No
138.1 No
138.2 No
138.3 No
138.4 No
144 1 2,000 2,000 2,000 No
146 No
147 Yes
148 No
156 2 625 625 625 No
161 No
162 No
163 No
164 No
166 No
167 No
168 No
</TABLE>
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE>
ANNEX C
<TABLE>
<CAPTION>
Loan No. Property Name City State
-------- ------------- ---- -----
<S> <C> <C> <C>
1.1 Long Beach Airport Long Beach CA
1.2 Sierra Gateway Business Center Palmdale CA
1.3 Nevada Street Plaza Redlands CA
1.4 Gardena Commerce Center Gardena CA
1.5 Moreno Valley Commerce Center Moreno Valley CA
1.6 Mount Vernon Commerce Center Colton CA
2.1 Aliso Viejo Commerce Center Aliso Viejo CA
2.2 Wimbledon Business Center Victorville CA
2.3 Upland Commerce Center Upland CA
2.4 AP Rancho Carmel San Diego CA
2.5 Atlantic Plaza Long Beach CA
2.6 Garden Grove Commerce Center Garden Grove CA
3.1 7 Powderhorn Drive Warren NJ
3.2 35 Technology Drive Warren NJ
5 Liberty Fair Mall Martinsville VA
6 Wilshire Financial Los Angeles CA
7 Hub Tower Des Moines IA
8 Gerry Buildings Los Angeles CA
10 Fairgrounds Plaza Timonium MD
13 Northrop Grumman Building Linthicum MD
14 One Riverview Drive Franklin Township NJ
17 Pavillion East Richardson TX
20 West Acre Commons Flint MI
22 Henson Productions Los Angeles CA
23 Creekside Shopping Center Vista CA
24 Concourse Building San Jose CA
25 Computer Learning Center Building Manassas VA
27 Transbulk Industrial Center Aurora IL
28 TeleService Office Building San Antonio TX
29 Highridge Plaza Manchester VT
31 Brookshire Partners Downey CA
32 Mall de las Aguilas Eagle Pass TX
35 Temecula Corporate Plaza Temecula CA
39 McData Building Louisville CO
43 Auburn Center Auburn WA
44 Barnegat Village Square Barnegat NJ
46 Pavilion West Dallas TX
47 11th Street Plaza Rockford IL
49 North Philadelphia Station Philadelphia PA
50 Attleboro Crossing Shopping Center Attleboro MA
52 Eckerd - Media Media Borough PA
56 El Dorado Square Tucson AZ
57 Nextel Building , Elmhurst IL Elmhurst IL
61 Village at Southpark Lafayette LA
65 University Office Park Davie FL
67 Appleseed Square Beverly MA
69 Meadow Brook Plaza Terra Haute IN
74 300 Metro Center Warwick Warwick RI
75.1 King Plaza Shopping Center Seguin TX
75.2 King Square Shopping Center Seguin TX
76 Kachina Village Shopping Center Phoenix AZ
77 Eckerd's Drug Store - Belton Belton MO
79 Belmont Shopping Center Pueblo CO
81 Grand Avenue Office Building Chicago IL
82 Rainbow Express Village Las Vegas NV
84 ROS Centre Coral Gables FL
85 Rite Aid - Bronx Bronx NY
86 Elk Properties Elkhart IN
88 Signal Hill Business Park Signal Hill CA
90 Amazing Savings Mountainville NY
92 International Shops Orlando FL
94 Aldine Mail Crossing Houston TX
95 El Paso Linens N Things El Paso TX
98 First Miller Tech Center Ann Arbor MI
100 Eckerd - Clayton, NC Clayton NC
101 Idaho Building Boise ID
102 1717 Precinct Line Road Hurst TX
103 Eckerd-Johnstown,PA Richland Township PA
104 Office Max Dilworth MN
105 Layton Square Milwaukee WI
106 Pacific Place Denver CO
108 4212 Technology Court Chantilly VA
111 Sierra Sorrento I San Diego CA
113 Target Center Bakersfield CA
116 Lakehurst Plaza Waukegan IL
119 Gateway - Springfield Springfield PA
120 Gateway - Mesa Mesa AZ
125 Westlake Office Center Indianapolis IN
126 Heritage Business Park Worcester MA
128 Gateway - Lakeland Lakeland FL
129 276-284 Broadway Brooklyn NY
135 Hallmark - Naperville Naperville IL
139 Madison Community Bank Tower Anderson IN
140 Gateway - Davenport Davenport IA
141 Legacy Drive Plano TX
143 Silver Creek Flex Building Park City UT
149 9662-9684 NW 25th Street Miami FL
150 Blockbuster - Chicago Chicago IL
151 Blockbuster - Fairborn Fairborn OH
152 Blockbuster - Miamisburg Miamisburg OH
153 3200 - 3204 Collinsworth Street Fort Worth TX
154 Blockbuster - Waukegan Waukegan IL
157 Mattress Giant - Berwyn Berwyn IL
158 Buckner Warehouse St. Rose LA
159 4610 Peachtree Industrial Blvd Norcross GA
160 Health South - Port Richey Port Richey FL
165 Health South - Bradenton Bradenton FL
</TABLE>
(1) For Mortgage Loans secured by multiple Mortgaged Properties, the Mortgage
Loan's principal balance is allocated to the respective Mortgaged
Properties based on the Mortgage Loan documentation or the Seller's
determination of the appropriate allocation.
<PAGE>
<TABLE>
<CAPTION>
Cut-off Date/
Detailed Cut-off Date/ Allocated
Property Allocated Loan Balance per
Loan No. ZIP Code County Type Balance ($)(1) Sq. Ft. ($)
-------- -------- ------ -------- -------------- -------------
<S> <C> <C> <C> <C> <C>
1.1 90808 Los Angeles Flex Space 7,180,180.00 34.98
1.2 93550 Los Angeles Suburban 6,394,704.00 48.87
1.3 92373 San Bernardino Flex Space 3,531,360.00 27.96
1.4 90249 Los Angeles Unanchored 3,395,991.00 86.18
1.5 92553 Riverside Flex Space 2,854,516.00 25.70
1.6 92324 San Bernardino Suburban 1,344,860.00 45.43
2.1 92656 Orange Unanchored 7,798,420.00 121.59
2.2 92392 San Bernardino Unanchored 7,062,720.00 57.32
2.3 91786 San Bernardino Unanchored 3,237,080.00 72.00
2.4 92128 San Diego Unanchored 2,221,814.00 82.36
2.5 90805 Los Angeles Unanchored 1,703,881.00 54.47
2.6 92840 Orange Unanchored 971,124.00 77.32
3.1 07059 Sumerset Flex Space 11,428,977.90 63.32
3.2 07959 Somerset Flex Space 10,584,227.35 114.35
5 24112 Martinsville Anchored 20,549,985.33 47.20
6 90010 Los Angeles CBD 18,576,294.47 49.46
7 50309 Polk CBD 17,952,263.94 63.88
8 90014 Los Angeles Flex Space 16,824,503.93 23.79
10 21093 Baltimore Anchored 16,200,571.93 151.32
13 21075 Anne Arundel Suburban 12,553,763.91 64.56
14 08873 Somerset Flex Space 12,519,833.02 92.06
17 75080 Dallas Anchored 10,967,876.90 64.08
20 48532 Genesee Anchored 9,475,093.00 99.64
22 90028 Los Angeles Suburban 9,028,031.04 108.77
23 92083 San Diego Anchored 8,531,358.46 62.75
24 95131 Santa Clara Suburban 8,259,155.10 144.28
25 20109 Prince William Suburban 7,985,364.46 83.87
27 60506 Kane Flex Space 7,549,192.21 18.46
28 78238 Bexar Suburban 7,468,980.28 86.85
29 05255 Bennington Unanchored 7,388,975.01 159.93
31 90241 Los Angeles Mixed Use 7,263,580.43 28,823.73
32 78853 Maverick Anchored 7,069,556.52 20.36
35 92591 Riverside Suburban 6,649,141.85 80.45
39 80027 Boulder Flex Space 5,781,673.57 63.19
43 98002 Kings Anchored 5,096,806.64 110.18
44 08005 Ocean Anchored 5,075,342.86 72.00
46 75248 Dallas Unanchored 4,744,562.33 56.32
47 61109 Winnebago Anchored 4,727,035.06 43.21
49 19132 Philadelphia Anchored 4,468,177.71 63.78
50 02703 Bristol Anchored 4,408,522.32 44.98
52 19063 Delaware Anchored 4,255,674.62 334.07
56 85715 Pima Suburban 4,074,850.88 58.25
57 60126 DuPage Suburban 3,987,300.40 68.66
61 71360 Lafayette Anchored 3,848,995.02 56.31
65 33328 Broward Suburban 3,579,888.40 78.73
67 01915 Essex Unanchored 3,496,084.72 138.82
69 47802 Vigo Anchored 3,426,940.68 95.13
74 02886 Kent Suburban 3,093,989.20 84.50
75.1 78155 Guadalupe Unanchored 2,307,890.74 81.93
75.2 78155 Guadalupe Unanchored 732,978.18 42.70
76 85016 Maricopa Unanchored 2,985,509.79 62.72
77 64012 Cass Anchored 2,974,994.02 265.62
79 81001 Pueblo Anchored 2,817,394.38 34.66
81 60651 Cook CBD 2,697,619.41 77.32
82 89146 Clark Unanchored 2,680,513.42 87.41
84 33134 Miami Dade Suburban 2,599,128.42 91.18
85 10457 Bronx Unanchored 2,555,431.92 227.15
86 46514 Elkhart Warehouse/Distribution 2,548,206.96 18.35
88 90806 Los Angeles Suburban 2,443,668.51 57.35
90 10953 Orange Warehouse/Distribution 2,426,972.34 19.73
92 32819 Orange Unanchored 2,325,648.53 222.98
94 77039 Harris Anchored 2,275,247.41 29.00
95 79912 El Paso Unanchored 2,244,478.07 68.01
98 48103 Washtenaw Suburban 2,083,959.60 94.83
100 27520 Johnson Anchored 2,057,277.11 188.60
101 83702 Ada Mixed Use 2,055,123.97 35.55
102 76054 Tarrant Suburban 2,004,156.05 64.09
103 15904 Cambria Anchored 1,993,524.49 182.76
104 56529 Clay Anchored 1,983,950.55 84.42
105 53321 Milwaukee Unanchored 1,834,643.75 67.00
106 80222 Denver Flex Space 1,829,128.34 27.74
108 22021 Fairfax Flex Space 1,822,547.41 59.12
111 92121 San Diego Flex Space 1,628,193.59 37.78
113 93304 Kern Shadow Anchored 1,563,012.53 71.19
116 60085 Lake Unanchored 1,467,116.48 54.32
119 19064 Delaware Unanchored 1,437,533.63 179.69
120 85210 Maricopa Unanchored 1,399,844.35 175.35
125 46224 Marion Suburban 1,309,767.36 44.76
126 01607 Worcester Flex Space 1,302,003.20 40.19
128 33809 Polk Unanchored 1,290,344.36 161.29
129 11211 Kings Mixed Use 1,276,138.99 82.87
135 60540 Dupage Unanchored 1,105,395.28 157.91
139 46016 Madison Suburban 1,046,083.67 14.79
140 52807 Scott Unanchored 1,039,703.12 129.96
141 75074 Collin Flex Space 1,031,366.07 51.57
143 84098 Summit Flex Space 997,340.43 74.53
149 33172 Miami Dade Unanchored 817,687.50 90.85
150 60618 Cook Unanchored 811,608.91 169.09
151 45324 Greene Unanchored 679,162.31 135.83
152 45342 Montgomery Unanchored 670,199.78 133.91
153 76107 Tarrant Suburban 667,329.02 52.75
154 60085 Lake Unanchored 660,538.63 169.37
157 60402 Cook Unanchored 590,806.00 62.19
158 70087 St. Charles Warehouse/Distribution 589,202.96 64.43
159 30071 Gwinnett Flex Space 574,226.04 39.24
160 33568 Pasco Suburban 560,155.49 93.36
165 34205 Manatee Suburban 434,466.86 103.44
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Largest Tenant
---------------------------------------------------------------------------------------------------
Lease Exp.
Loan No. Name Sq. Ft. Date
-------- ------------------------------------------------- ------- ----------
<S> <C> <C> <C>
1.1 AASI,Inc. 205,257 5/20/17
1.2 Lockheed Corp 51,856 6/30/00
1.3 Primecare Medical 22,464 12/31/99
1.4 Marie Callenders 4,500 1/14/07
1.5 Exper Tire&Service Cntr 6,467 5/31/03
1.6 County of San Bernardino 15,600 1/31/02
2.1 Aliso Foreign Car 5,280 10/11/00
2.2 U.S. Family Care 13,610 10/31/04
2.3 The Salvation Army 9,862 12/31/07
2.4 ABC Children's Center 4,600 12/31/02
2.5 Value Village 10,757 4/30/05
2.6 CSK Auto 5,400 10/31/02
3.1 Cordis (Johnson & Johnson) 107,000 12/31/06
3.2 Anadigics, Inc. 92,561 5/1/05
5 Belks 85,000 8/29/09
6 California Family Health 17,872 9/30/02
7 Principal Mutual Life Ins. 139,662 12/31/04
8 PAK Trading 28,001 12/31/02
10 SuperFresh 56,795 1/31/19
13 Northrop Grumman 194,457 10/31/04
14 Union Carbide 136,000 11/30/05
17 Albertsons Inc. 58,629 10/11/11
20 Farmer Jack 59,889 8/31/18
22 Jim Henson Co. 83,000 4/30/15
23 Home Base 103,904 10/31/12
24 Computer Associates 36,532 1/31/04
25 Computer Learning Center 71,563 2/24/20
27 Dynaweld 143,520 5/31/01
28 TeleService Resources 86,000 10/31/19
29 Liz Clairborne - Vermont, Inc. 8,000 5/31/02
31 Kaiser Foundation 14,339 7/31/04
32 J C Penny 67,578 11/30/02
35 Brookstone Telecom 19,207 5/31/04
39 McData 91,497 3/7/03
43 Office Max 23,500 12/31/13
44 Genuardi's 50,008 10/31/19
46 24 Hour Fitness 25,600 12/31/03
47 Eagle Foods 42,500 11/1/06
49 Pathmark 50,388 5/31/19
50 Ro-Jacks Supermarket 34,571 8/31/04
52 Eckerd 12,739 3/21/20
56 Girvin, DeVeies, & Assoc. 4,000 1/31/04
57 Nextel West 58,076 12/1/14
61 Adriens (Fleming) 31,292 8/31/05
65 Kaleidoscope 8,180 12/31/09
67 Hunneman 5,200 1/31/05
69 Petco 15,000 1/31/10
74 US Coast Guard 10,980 4/20/02
75.1 Davila's BBQ 6,480 2/28/09
75.2 Bio-Medical App. 6,500 11/26/02
76 Maroney's 6,600 6/30/00
77 Eckerd's 11,200 6/29/19
79 Sav-A-Lot/Leevers Supermarket 24,510 3/31/05
81 Employment Security 13,200 3/31/03
82 Danny's II 5,140 3/31/01
84 ROS Alternative STS 10,279 2/1/15
85 Rite Aid 11,250 8/15/14
86 Elk Automotive 80,865 6/30/15
88 Headstart 10,193 11/30/03
90 Amazing Savings 123,000 1/31/15
92 Nagina Enterprises 4,218 2/28/03
94 Ace Hardware 63,853 12/31/18
95 Linens 'N Things 33,000 1/31/20
98 Career Site.Com (form. Virt. Res.) 4,000 12/1/00
100 Eckerd 10,908 10/26/18
101 Claudia Goltry Toycrafters 4,272 3/31/02
102 Southwest Surgery 7,625 12/31/03
103 Eckerd 10,908 10/12/19
104 Office Max 23,500 9/30/14
105 Andrew Seter, MD 6,210 11/30/03
106 Premier Floors 14,948 2/28/05
108 Aardvark 19,300 2/28/10
111 Cubic Corporation 43,100 4/30/03
113 Rusty's Pizza Parlor 4,029 2/14/04
116 LA-Z-Boy Showroom 14,907 12/31/03
119 Gateway Companies 8,000 8/31/04
120 Gateway 7,983 6/30/04
125 Dept of Workforce Development 11,700 3/22/03
126 Roads 6,081 12/31/00
128 Gateway 8,000 7/31/04
129 Kim Farmers Market 2,200 3/1/04
135 Hallmark 7,000 2/28/10
139 Payless Supermarkets 15,829 6/30/02
140 Gateway 8,000 11/30/04
141 Premier Aftermarket 4,000 12/31/02
143 Familian Northwest 9,981 9/6/04
149 Becca Inv., Inc. 2,250 3/31/17
150 Blockbuster 4,800 8/31/04
151 Blockbuster 5,000 7/31/04
152 Blockbuster 5,005 5/31/04
153 Employee Res. Network 6,549 2/28/02
154 Blockbuster 3,900 9/30/04
157 Mattress Giant 7,700 9/30/14
158 Neff Rental, Inc. dba Buckner Rental Service 9,145 10/31/08
159 Tree Sound Studios 14,632
160 Health South 6,000 10/31/04
165 Health South 4,200 8/29/06
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
2nd Largest Tenant
----------------------------------------------------------------------------------
Lease Exp.
Loan No. Name Sq. Ft. Date
-------- ------------------------------------------------- ------- ----------
<S> <C> <C> <C>
1.2 Pacific Bell 14,845 4/14/02
1.3 Loma Linda Cherrco 7,728 9/30/00
1.4 Hee Kyeong Chung Song 2,433 8/31/05
1.5 Manuel Rocha 6,175 6/30/03
1.6 County of San Bernardino 5,800 3/31/99
2.1 La Paz Service Center 5,097 6/30/02
2.2 Eyes Online 10,548 4/30/05
2.3 Jiffy Lube 2,100 12/31/07
2.4 Graziano's Pizza 4,000 9/30/00
2.5 Medimanager Inc. 7,940 11/14/01
2.6 Video Giant 4,800 4/30/02
3.1 Celgene Corp 73,500 7/31/10
3.2
5 Sears 58,760 11/10/09
6 Philippine Consulate 12,824 9/30/04
7 AmerUs Life Holdings 68,592 12/31/07
8 Sook Kim Sowuri Gar 14,500 1/31/02
10 BGE Home Products 11,549 1/31/04
13
14
17 Richardson Bike 25,000 12/31/12
20 Hollywood Video 6,000 3/31/09
22
23 Circuit City 32,045 1/19/09
24 Computer Associates 20,712 7/31/06
25
27 Shamrock 67,265 5/31/05
28
29 Tommy Hilfiger 6,000 12/31/04
31 Family Planning Assoc. 5,712 2/1/97
32 Beall's 29,837 1/31/07
35 Pickford Realty 6,244 10/31/03
39
43 Paper Warehouse 8,500 10/31/08
44 Burger King 3,143 11/30/20
46 Salons by JC 8,400 9/30/08
47 State of Illinois 28,920 8/31/02
49 Lot Stores 7,500 4/30/09
50 Big Value Outlet 30,000 3/31/01
52
56 Tour Connection 3,765 4/30/02
57
61 Eckerd Drugs 8,640 9/16/05
65 Accu-Med 3,202 7/31/01
67 River's Edge 3,400 7/31/03
69 Shoe Carnival 12,015 1/31/10
74 CableRep Advertising 7,333 12/31/04
75.1 EZ Pawn 4,437 5/7/06
75.2 Touch of Elegance 2,500 4/30/03
76 Purcell Tire Company 5,870 11/14/03
77
79 Pueblo Goodwill Industries 13,533 8/31/03
81 Department of Corrections 8,488 4/30/08
82 Bear's Spas 3,780 1/31/02
84 Auxis Inc. 7,422 4/1/03
85
86 Elkhart Truck & Body 48,720 6/30/15
88 APS 4,863 3/31/01
90
92 Awad's Son 2,836 12/31/01
94 Godfather's Pizza 3,166 12/17/01
95
98 Sheffield Pharmaceuticals (St.5) 2,421 4/30/01
100
101 Sandra Evans Idaho State Board 3,183 6/30/03
102 Health Images TX 5,526 3/31/03
103
104
105 Lutz's Sports Bar and Night Club 5,786 4/30/01
106 Office Liquidators 10,353 2/28/02
108 Baptist Church 6,740 2/28/05
111
113 The Clothestime 3,890 7/31/02
116 Power House Gym 12,100 4/30/01
119
120
125 Indiana State-Animal Health 11,517 5/31/01
126 Worm's Way 6,000
128
129 Marcy Inc. 1,600 3/1/08
135
139 Madison Community Bank 7,348 4/30/09
140
141 Borna, Inc. 2,000 7/14/02
143 Dr. Randy Barbe 2,038 11/30/04
149 Donato Dry Cleaners 2,250 2/28/12
150
151
152
153 DVI/ Ft. Worth Imaging 6,101 4/30/03
154
157 Title Loans Express 1,800 10/31/01
158
159
160
165
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
3rd Largest Tenant
---------------------------------------------------------------------------------------------------
Lease Exp.
Loan No. Name Sq. Ft. Date
-------- ------------------------------------------------- ------- ----------
<S> <C> <C> <C>
1.1
1.2 International Church 14,497 8/31/01
1.3 Apostolic 6,912 8/14/00
1.4 Young Suk Woo 2,300 2/28/05
1.5 Certified Tire & Service 4,830 6/30/02
1.6 County of San Bernardino 2,000 5/31/00
2.1 Sports Tavern 5,028 9/14/02
2.2 Citizens Business Bank 5,120 3/31/05
2.3 Pro-Cut Barber 1,257 2/28/04
2.4 My Gym 2,600 7/31/01
2.5 Quality Food Market 4,189 12/31/01
2.6
3.1
3.2
5 Kroger 55,969 7/12/17
6 Southwestern Pacific Land Gro 12,160 6/6/04
7 Invista Capital 31,272 9/14/02
8 Man Jae Hong 14,500 7/31/00
10 Gateway Companies 10,272 1/31/04
13
14
17 Dress Barn 9,123 6/30/04
20 Hallmark 5,000 2/28/03
22
23
24
25
27 Excel Container 63,811 4/30/03
28
29 Pisces Corp. (Jasper's Cafe) 4,000 1/31/09
31 Downey Community 4,344 12/31/01
32 Weiner's 25,099 11/30/04
35 RSP Microfilming 5,160 4/14/03
39
43 UW Physicians 8,000 11/20/08
44 Joey's Pizza 2,400 10/31/04
46 Cindi's 3,860 6/30/03
47 Osco Drug 16,853 4/30/04
49 Blockbuster Video 4,669 3/31/04
50 Family Dollar 13,750 12/31/03
52
56 Interline Design Group 3,328 12/31/02
57
61 Louisiana Health 4,160 4/30/01
65 Stephanos 2,500 4/30/04
67 Symes Associates 3,017 11/30/04
69 Pier 1 Imports 9,009 5/31/09
74 Eastern Telecom 6,427 10/31/04
75.1 Texas State Optical 3,000 10/31/07
75.2 Lil Caesar's 2,000 9/2/03
76 Jiffy Copy 5,400 9/30/03
77
79 Auto Zone 7,200 9/30/01
81 Department of Rehabilitation 7,200 8/31/08
82 Rainbow Chinese 3,441 4/30/01
84 Adobe 2,736 8/1/01
85
86 Image Truck & Accessory 9,248 7/31/03
88 Payroll 1 4,548 11/30/02
90
92 Inca Beachwear 1,443 2/28/02
94 Jed's Feed and Pet 2,973 12/31/18
95
98 DV Technology (340 Miller) 2,348 11/1/00
100
101 Geoengineers, Inc. 2,800 3/30/03
102 Med-Tex 5,279 4/30/03
103
104
105 Radio Shack 2,400 6/30/00
106 Efficiency Garage 6,321 6/30/02
108 Sennett Security Products 4,790 5/31/01
111
113 Paradise Valley Holdings 3,725 8/23/02
116
119
120
125 Renal Care Group 5,265 9/30/04
126 Meister Grinding 2,400 11/30/00
128
129 Amvet, Inc. 1,500 3/1/07
135
139 R.W. Baird 3,849 12/31/07
140
141 Computer Outlet, Inc. 2,000 1/31/03
143 Stein Eriksen 1,363 8/31/04
149 Twinkle Twinkle 750 10/1/00
150
151
152
153
154
157
158
159
160
165
</TABLE>
<PAGE>
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<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE>
ANNEX D
<TABLE>
<CAPTION>
Loan No. 12: Suburban Lodge Portfolio
--------------------------------------------------------------
Period Date Total P&I Payment Interest Principal
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
0 09/01/00
1 10/01/00 101,788.14 88,000.00 13,788.14
2 11/01/00 101,411.10 90,828.85 10,582.25
3 12/01/00 101,788.13 87,821.28 13,966.85
4 01/01/01 101,411.09 90,642.82 10,768.27
5 02/01/01 101,411.09 90,561.22 10,849.87
6 03/01/01 102,542.22 81,722.97 20,819.25
7 04/01/01 101,411.09 90,321.24 11,089.85
8 05/01/01 101,788.14 87,326.33 14,461.81
9 06/01/01 101,411.10 90,127.62 11,283.48
10 07/01/01 101,788.14 87,137.53 14,650.61
11 08/01/01 101,411.09 89,931.09 11,480.00
12 09/01/01 101,411.09 89,844.10 11,566.99
13 10/01/01 101,788.14 86,861.08 14,927.06
14 11/01/01 101,411.09 89,643.33 11,767.76
15 12/01/01 101,788.14 86,665.32 15,122.82
16 01/01/02 101,411.09 89,439.56 11,971.53
17 02/01/02 101,411.10 89,348.85 12,062.25
18 03/01/02 102,542.22 80,619.62 21,922.60
19 04/01/02 101,411.10 89,091.32 12,319.78
20 05/01/02 101,788.14 86,127.06 15,661.08
21 06/01/02 101,411.09 88,879.28 12,531.81
22 07/01/02 101,788.14 85,920.31 15,867.83
23 08/01/02 101,411.10 88,664.08 12,747.02
24 09/01/02 101,411.09 88,567.48 12,843.61
25 10/01/02 101,788.14 85,616.28 16,171.86
26 11/01/02 101,411.09 88,347.61 13,063.48
27 12/01/02 101,788.14 85,401.89 16,386.25
28 01/01/03 101,411.10 88,124.45 13,286.65
29 02/01/03 101,411.09 88,023.76 13,387.33
30 03/01/03 102,542.23 79,413.71 23,128.52
31 04/01/03 101,411.10 87,747.06 13,664.04
32 05/01/03 101,788.14 84,816.30 16,971.84
33 06/01/03 101,411.09 87,514.90 13,896.19
34 07/01/03 101,788.14 84,589.94 17,198.20
35 08/01/03 101,411.10 87,279.28 14,131.82
36 09/01/03 101,411.10 87,172.19 14,238.91
37 10/01/03 101,788.13 84,255.76 17,532.37
38 11/01/03 101,411.09 86,931.43 14,479.66
39 12/01/03 101,788.14 84,021.01 17,767.13
40 01/01/04 101,411.09 86,687.07 14,724.02
41 02/01/04 101,411.10 86,575.50 14,835.60
42 03/01/04 102,165.18 80,884.81 21,280.37
43 04/01/04 101,411.09 86,301.82 15,109.27
44 05/01/04 101,788.14 83,407.09 18,381.05
45 06/01/04 101,411.10 86,048.04 15,363.06
46 07/01/04 101,788.14 83,159.63 18,628.51
47 08/01/04 101,411.10 85,790.46 15,620.64
48 09/01/04 101,411.10 85,672.09 15,739.01
49 10/01/04 101,788.14 82,793.05 18,995.09
50 11/01/04 101,411.09 85,408.88 16,002.21
51 12/01/04 101,788.14 82,536.41 19,251.73
52 01/01/05 101,411.09 85,141.73 16,269.36
53 02/01/05 101,411.10 85,018.45 16,392.65
54 03/01/05 102,542.23 76,678.66 25,863.57
55 04/01/05 101,411.09 84,698.24 16,712.85
56 05/01/05 101,788.14 81,843.48 19,944.66
57 06/01/05 101,411.10 84,420.46 16,990.64
58 07/01/05 101,788.14 81,572.62 20,215.52
59 08/01/05 101,411.10 84,138.52 17,272.58
60 09/01/05 101,411.10 84,007.63 17,403.47
61 10/01/05 101,788.14 81,170.08 20,618.06
62 11/01/05 101,411.09 83,719.51 17,691.58
63 12/01/05 101,788.14 80,889.14 20,899.00
64 01/01/06 101,411.09 83,427.08 17,984.01
65 02/01/06 101,411.09 83,290.80 18,120.29
66 03/01/06 102,542.23 75,106.38 27,435.85
67 04/01/06 101,411.10 82,945.59 18,465.51
68 05/01/06 101,788.14 80,134.51 21,653.63
69 06/01/06 101,411.09 82,641.57 18,769.52
70 07/01/06 101,788.14 79,838.07 21,950.07
71 08/01/06 101,411.10 82,333.01 19,078.09
72 09/01/06 101,411.10 82,188.44 19,222.66
73 10/01/06 101,788.14 79,396.23 22,391.91
74 11/01/06 101,411.09 81,873.09 19,538.00
75 12/01/06 101,788.14 79,088.75 22,699.39
76 01/01/07 101,411.10 81,553.03 19,858.07
77 02/01/07 101,411.10 81,402.55 20,008.55
78 03/01/07 102,542.22 73,387.93 29,154.29
79 04/01/07 101,411.09 81,030.00 20,381.09
80 05/01/07 101,788.14 78,266.67 23,521.47
81 06/01/07 101,411.10 80,697.32 20,713.78
82 07/01/07 101,788.14 77,942.28 23,845.86
83 08/01/07 101,411.10 80,359.66 21,051.44
84 09/01/07 101,411.09 80,200.13 21,210.96
85 10/01/07 101,788.13 77,457.48 24,330.65
86 11/01/07 101,411.10 79,855.03 21,556.07
87 12/01/07 101,788.14 77,120.98 24,667.16
88 01/01/08 101,411.10 79,504.76 21,906.34
89 02/01/08 101,411.10 79,338.76 22,072.34
90 03/01/08 102,165.18 74,063.66 28,101.52
91 04/01/08 101,411.09 78,958.55 22,452.54
92 05/01/08 101,788.14 76,246.85 25,541.29
93 06/01/08 101,411.10 78,594.87 22,816.23
94 07/01/08 101,788.14 75,892.23 25,895.91
95 08/01/08 101,411.10 78,225.74 23,185.36
96 09/01/08 101,411.09 78,050.04 23,361.05
97 10/01/08 101,788.13 75,360.98 26,427.15
98 11/01/08 101,411.10 77,672.76 23,738.34
99 12/01/08 101,788.13 74,993.10 26,795.03
100 01/01/09 101,411.10 77,289.83 24,121.27
101 02/01/09 101,411.09 77,107.04 24,304.05
102 03/01/09 102,542.22 69,478.72 33,063.50
103 04/01/09 101,411.09 76,672.32 24,738.77
104 05/01/09 101,788.13 74,017.60 27,770.53
105 06/01/09 101,411.10 76,274.42 25,136.68
106 07/01/09 10,114,032.13 73,629.62 10,040,402.51
107 08/01/09
108 09/01/09
109 10/01/09
110 11/01/09
111 12/01/09
112 01/01/10
113 02/01/10
114 03/01/10
115 04/01/10
116 05/01/10
117 06/01/10
118 07/01/10
119 08/01/10
120 09/01/10
121 10/01/10
122 11/01/10
123 12/01/10
124 01/01/11
125 02/01/11
126 03/01/11
127 04/01/11
128 05/01/11
129 06/01/11
130 07/01/11
131 08/01/11
132 09/01/11
133 10/01/11
134 11/01/11
135 12/01/11
136 01/01/12
137 02/01/12
138 03/01/12
139 04/01/12
140 05/01/12
141 06/01/12
142 07/01/12
143 08/01/12
144 09/01/12
145 10/01/12
146 11/01/12
147 12/01/12
148 01/01/13
149 02/01/13
150 03/01/13
151 04/01/13
152 05/01/13
153 06/01/13
154 07/01/13
155 08/01/13
156 09/01/13
157 10/01/13
158 11/01/13
159 12/01/13
160 01/01/14
161 02/01/14
162 03/01/14
163 04/01/14
164 05/01/14
165 06/01/14
166 07/01/14
167 08/01/14
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Loan No. 85: Rite Aid - Bronx
------------------------------------------------------------------
Period Total P&I Payment Interest Principal
----------------------------------------------------------------------------------
<S> <C> <C> <C>
0
1 24,082.22 18,015.80 6,066.42
2 24,082.22 17,973.03 6,109.19
3 24,082.22 17,929.96 6,152.26
4 24,082.22 17,886.58 6,195.64
5 24,082.22 17,842.90 6,239.32
6 24,082.22 17,798.92 6,283.30
7 24,082.22 17,754.62 6,327.60
8 24,082.22 17,710.01 6,372.21
9 24,082.22 17,665.09 6,417.13
10 24,082.22 17,619.85 6,462.37
11 24,082.22 17,574.29 6,507.93
12 24,082.22 17,528.40 6,553.82
13 24,082.22 17,482.20 6,600.02
14 24,082.22 17,435.67 6,646.55
15 24,082.22 17,388.81 6,693.41
16 24,082.22 17,341.62 6,740.60
17 24,082.22 17,294.10 6,788.12
18 24,082.22 17,246.25 6,835.97
19 24,082.22 17,198.05 6,884.17
20 24,082.22 17,149.52 6,932.70
21 24,082.22 17,100.64 6,981.58
22 24,082.22 17,051.42 7,030.80
23 24,082.22 17,001.86 7,080.36
24 24,082.22 16,951.94 7,130.28
25 24,082.22 16,901.67 7,180.55
26 24,082.22 16,851.05 7,231.17
27 24,082.22 16,800.07 7,282.15
28 24,082.22 16,748.73 7,333.49
29 24,082.22 16,697.03 7,385.19
30 24,082.22 16,644.96 7,437.26
31 24,082.22 16,592.53 7,489.69
32 24,082.22 16,539.73 7,542.49
33 24,082.22 16,486.55 7,595.67
34 24,082.22 16,433.00 7,649.22
35 24,082.22 16,379.08 7,703.14
36 24,082.22 16,324.77 7,757.45
37 24,082.22 16,270.08 7,812.14
38 24,082.22 16,215.00 7,867.22
39 24,082.22 16,159.54 7,922.68
40 24,082.22 16,103.69 7,978.53
41 24,082.22 16,047.44 8,034.78
42 24,082.22 15,990.79 8,091.43
43 24,082.22 15,933.75 8,148.47
44 24,082.22 15,876.30 8,205.92
45 24,082.22 15,818.45 8,263.77
46 24,082.22 15,760.19 8,322.03
47 26,509.41 15,701.52 10,807.89
48 26,509.41 15,625.32 10,884.09
49 26,509.41 15,548.59 10,960.82
50 26,509.41 15,471.32 11,038.09
51 26,509.41 15,393.50 11,115.91
52 26,509.41 15,315.13 11,194.28
53 26,509.41 15,236.21 11,273.20
54 26,509.41 15,156.73 11,352.68
55 26,509.41 15,076.70 11,432.71
56 26,509.41 14,996.10 11,513.31
57 26,509.41 14,914.93 11,594.48
58 26,509.41 14,833.19 11,676.22
59 26,509.41 14,750.87 11,758.54
60 26,509.41 14,667.97 11,841.44
61 26,509.41 14,584.49 11,924.92
62 26,509.41 14,500.42 12,008.99
63 26,509.41 14,415.76 12,093.65
64 26,509.41 14,330.50 12,178.91
65 26,509.41 14,244.63 12,264.78
66 26,509.41 14,158.17 12,351.24
67 26,509.41 14,071.09 12,438.32
68 26,509.41 13,983.40 12,526.01
69 26,509.41 13,895.09 12,614.32
70 26,509.41 13,806.16 12,703.25
71 26,509.41 13,716.60 12,792.81
72 26,509.41 13,626.42 12,882.99
73 26,509.41 13,535.59 12,973.82
74 26,509.41 13,444.12 13,065.29
75 26,509.41 13,352.01 13,157.40
76 26,509.41 13,259.25 13,250.16
77 26,509.41 13,165.84 13,343.57
78 26,509.41 13,071.77 13,437.64
79 26,509.41 12,977.03 13,532.38
80 26,509.41 12,881.63 13,627.78
81 26,509.41 12,785.55 13,723.86
82 26,509.41 12,688.80 13,820.61
83 26,509.41 12,591.37 13,918.04
84 26,509.41 12,493.24 14,016.17
85 26,509.41 12,394.43 14,114.98
86 26,509.41 12,294.92 14,214.49
87 26,509.41 12,194.71 14,314.70
88 26,509.41 12,093.79 14,415.62
89 26,509.41 11,992.16 14,517.25
90 26,509.41 11,889.81 14,619.60
91 26,509.41 11,786.74 14,722.67
92 26,509.41 11,682.95 14,826.46
93 26,509.41 11,578.42 14,930.99
94 26,509.41 11,473.16 15,036.25
95 26,509.41 11,367.15 15,142.26
96 26,509.41 11,260.40 15,249.01
97 26,509.41 11,152.89 15,356.52
98 26,509.41 11,044.63 15,464.78
99 26,509.41 10,935.60 15,573.81
100 26,509.41 10,825.81 15,683.60
101 26,509.41 10,715.24 15,794.17
102 26,509.41 10,603.89 15,905.52
103 26,509.41 10,491.76 16,017.65
104 26,509.41 10,378.83 16,130.58
105 26,509.41 10,265.11 16,244.30
106 26,509.41 10,150.59 16,358.82
107 29,179.31 10,035.26 19,144.05
108 29,179.31 9,900.29 19,279.02
109 29,179.31 9,764.38 19,414.93
110 29,179.31 9,627.50 19,551.81
111 29,179.31 9,489.66 19,689.65
112 29,179.31 9,350.85 19,828.46
113 29,179.31 9,211.06 19,968.25
114 29,179.31 9,070.28 20,109.03
115 29,179.31 8,928.51 20,250.80
116 29,179.31 8,785.75 20,393.56
117 29,179.31 8,641.97 20,537.34
118 29,179.31 8,497.18 20,682.13
119 29,179.31 8,351.37 20,827.94
120 29,179.31 8,204.54 20,974.77
121 29,179.31 8,056.67 21,122.64
122 29,179.31 7,907.75 21,271.56
123 29,179.31 7,757.79 21,421.52
124 29,179.31 7,606.76 21,572.55
125 29,179.31 7,454.68 21,724.63
126 29,179.31 7,301.52 21,877.79
127 29,179.31 7,147.28 22,032.03
128 29,179.31 6,991.96 22,187.35
129 29,179.31 6,835.53 22,343.78
130 29,179.31 6,678.01 22,501.30
131 29,179.31 6,519.38 22,659.93
132 29,179.31 6,359.62 22,819.69
133 29,179.31 6,198.75 22,980.56
134 29,179.31 6,036.73 23,142.58
135 29,179.31 5,873.58 23,305.73
136 29,179.31 5,709.27 23,470.04
137 29,179.31 5,543.81 23,635.50
138 29,179.31 5,377.18 23,802.13
139 29,179.31 5,209.37 23,969.94
140 29,179.31 5,040.38 24,138.93
141 29,179.31 4,870.20 24,309.11
142 29,179.31 4,698.83 24,480.48
143 29,179.31 4,526.24 24,653.07
144 29,179.31 4,352.43 24,826.88
145 29,179.31 4,177.40 25,001.91
146 29,179.31 4,001.14 25,178.17
147 29,179.31 3,823.64 25,355.67
148 29,179.31 3,644.88 25,534.43
149 29,179.31 3,464.86 25,714.45
150 29,179.31 3,283.57 25,895.74
151 29,179.31 3,101.01 26,078.30
152 29,179.31 2,917.16 26,262.15
153 29,179.31 2,732.01 26,447.30
154 29,179.31 2,545.55 26,633.76
155 29,179.31 2,357.79 26,821.52
156 29,179.31 2,168.69 27,010.62
157 29,179.31 1,978.27 27,201.04
158 29,179.31 1,786.50 27,392.81
159 29,179.31 1,593.38 27,585.93
160 29,179.31 1,398.90 27,780.41
161 29,179.31 1,203.05 27,976.26
162 29,179.31 1,005.82 28,173.49
163 29,179.31 807.19 28,372.12
164 29,179.31 607.17 28,572.14
165 29,179.31 405.74 28,773.57
166 28,980.76 202.88 28,777.88
167
</TABLE>
D-1
<PAGE>
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<PAGE>
ANNEX E
J.P. MORGAN COMMERCIAL MORTGAGE FINANCE CORP.
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2000-C10
$670,226,000
J.P. MORGAN & CO. SALOMON SMITH BARNEY
J.P. Morgan Commercial Mortgage Finance Corp., Series 2000-C10 Page 1
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan and Salomon Smith Barney Inc. do 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 Salomon Smith Barney Inc. and/or their
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.
and Salomon Smith Barney Inc. are members of SIPC. Copyright 2000 J.P. Morgan &
Co. Incorporated. Clients should contact analysts at and execute transactions
through a J.P. Morgan or Salomon Smith Barney Inc. entity in their home
jurisdiction unless governing law permits otherwise.
<PAGE>
J.P. MORGAN COMMERCIAL MORTGAGE FINANCE CORP.
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2000-C10
$670,226,000
<TABLE>
<CAPTION>
J.P. MORGAN:
<S> <C> <C>
TRADING Brian Baker (212) 648-1413; [email protected]
Andrew Taylor (212) 648-1413; [email protected]
Leland Bunch (212) 648-1413; [email protected]
STRUCTURING Thomas Doherty (212) 648-1414; [email protected]
Theresa Dooley (212) 648-0651; [email protected]
BANKING Clive Bull (212) 648-9496; [email protected]
Dennis Schuh (212) 648-3060; [email protected]
RESEARCH Patrick Corcoran (212) 648-6130; [email protected]
SALOMON SMITH BARNEY:
TRADING Paul Vanderslice (212) 723-6156; [email protected]
Jeff Lewis (212) 723-6156; [email protected]
Jeff Sturdevant (212) 723-6156; [email protected]
STRUCTURING Nancy Wilt (212) 816-7808; [email protected]
BANKING Angela Hutzel (212) 816-8087; [email protected]
Joseph Siragusa (212) 816-7973; [email protected]
RESEARCH Darrell Wheeler (212) 816-8432; [email protected]
</TABLE>
J.P. Morgan Commercial Mortgage Finance Corp., Series 2000-C10 Page 2
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan and Salomon Smith Barney Inc. do 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 Salomon Smith Barney Inc. and/or their
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.
and Salomon Smith Barney Inc. are members of SIPC. Copyright 2000 J.P. Morgan &
Co. Incorporated. Clients should contact analysts at and execute transactions
through a J.P. Morgan or Salomon Smith Barney Inc. entity in their home
jurisdiction unless governing law permits otherwise.
<PAGE>
J.P. MORGAN COMMERCIAL MORTGAGE FINANCE CORP.
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2000-C10
$670,226,000
TRANSACTION OVERVIEW
<TABLE>
<CAPTION>
INITIAL
CLASS CERTIFICATE AVG.
BALANCE OR TO LIFE PRINCIPAL
RATING NOTIONAL % OF % CREDIT VALUE (%) (YEARS) WINDOW COUPON ERISA
CLASS (FITCH/MOODY'S) AMOUNT TOTAL SUPPORT (1) (2) (MONTHS)(2) DESCRIPTION ELIGIBLE(3)
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
A-1 AAA / Aaa $95,500,000 12.93% 23.250%(4) 52.3% 5.47 1 - 105 Fixed Yes
A-2 AAA / Aaa 471,331,000 63.82 23.250(4) 52.3 9.10 105 - 114 Fixed Yes
x AAA / Aaa 738,541,419(5) NA NA NA 5.47(6) NA WAC(7) Yes
B AA / Aa2 31,388,000 4.25 19.000 55.2 9.49 114 - 116 WAC - 0.827% No
C A / A2 29,541,000 4.00 15.000 58.0 9.55 115 - 116 WAC - 0.700% No
D A- / A3 9,232,000 1.25 13.750 58.8 9.61 116 - 116 WAC - 0.600% No
E BBB / Baa(2) 23,079,000 3.12 10.625 60.9 9.61 116 - 116 WAC - 0.141% No
F BBB- / Baa(3) 10,115,000 1.38 9.250 61.9 9.61 116 - 116 WAC No
Private Certificates (8) 68,315,419(8)
TOTAL $738,541,419 100.0% 68.2% 8.98
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The sum of the principal balance of the related class and classes senior to
it, divided by the aggregate appraised value of the properties
collateralizing the mortgage pool
(2) Assumes no prepayments, defaults, early termination, and a closing date of
October 4, 2000
(3) See "Certain ERISA Considerations" in the prospectus supplement for certain
ERISA eligibility limitations and proposed changes effecting eligibility
for the classes B, C, D, and E
(4) Represents the credit support for the Class A-1 and Class A-2 Certificates
in the aggregate
(5) Notional balance
(6) Implied average life
(7) The Class X Certificates will receive the net interest on the mortgage
loans less the interest paid on the other certificates
(8) Not offered hereby
MORTGAGE POOL CHARACTERISTICS
The mortgage pool consists of 168 fixed rate mortgage loans secured by one or
more first liens on fee simple and/or leasehold interests in 194 multifamily,
retail, office, hotel and other commercial properties located in 33 states. The
information set forth herein with respect to the mortgage loans does not
generally include the subordinate component of the Suburban Lodge Loan. See
"Description of the Mortgage Pool - The Suburban Lodge Loan" in the prospectus
supplement. The three largest geographic concentrations are California (27.5%),
Texas (8.5%) and New Jersey (6.0%). The mortgage loans will have an initial pool
balance of $738,541,419 and individual principal balances as of the Cut-off Date
of at least $220,965 but not more than $24,701,611 with an average principal
balance of approximately $4,396,080. The values indicated under "WA UW DSCR" and
"WA LTV Ratio" herein exclude 3 credit tenant lease mortgage loans representing
1.3% of the initial pool balance. The mortgage pool has a weighted average
loan-to-value of 68.9% and a weighted average debt service coverage ratio of
1.33x.
J.P. Morgan Commercial Mortgage Finance Corp., Series 2000-C10 Page 3
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan and Salomon Smith Barney Inc. do 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 Salomon Smith Barney Inc. and/or their
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.
and Salomon Smith Barney Inc. are members of SIPC. Copyright 2000 J.P. Morgan &
Co. Incorporated. Clients should contact analysts at and execute transactions
through a J.P. Morgan or Salomon Smith Barney Inc. entity in their home
jurisdiction unless governing law permits otherwise.
<PAGE>
DEAL SUMMARY
CO-LEAD MANAGERS J.P. Morgan Securities Inc. (Bookrunner)
Salomon Smith Barney 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
SELLER Morgan Guaranty Trust Company of New York
MASTER SERVICER Midland Loan Services, Inc.
SPECIAL SERVICER ORIX Real Estate Capital Markets, LLC
TRUSTEE State Street Bank and Trust Company
RATING AGENCIES Fitch, Inc.
Moody's Investors Service, Inc.
----------------------------------------
LEGAL STATUS All offered certificates are public
CUT-OFF DATE September 1, 2000
SETTLEMENT DATE October 4, 2000
DELIVERY DTC, Clearstream System and Cedel
RATED FINAL MATURITY DATE The distribution date in August 2032
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 October 15, 2000, 14 day delay
OPTIONAL REDEMPTION When pool pays down to 1% of original pool
balance
DEAL INFORMATION / ANALYTICS Bloomberg, L.P., Conquest, Intex Solutions,
Inc. and The Trepp Group
ERISA ELIGIBLE(1) Classes A1, A2 and X (other classes TBD)
(1) ERISA eligibility is subject to certain limitations described in the
prospectus supplement under "Certain ERISA Considerations"
J.P. Morgan Commercial Mortgage Finance Corp., Series 2000-C10 Page 4
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan and Salomon Smith Barney Inc. do 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 Salomon Smith Barney Inc. and/or their
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.
and Salomon Smith Barney Inc. are members of SIPC. Copyright 2000 J.P. Morgan &
Co. Incorporated. Clients should contact analysts at and execute transactions
through a J.P. Morgan or Salomon Smith Barney Inc. 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, after payment of the principal distribution amount, interest will
be paid sequentially to the Class B, C, D, E, F, G, H, J, K, L, M and NR
Certificates.
o The pass-through rate for the Class A1, A2, B, C, D, E, F, G, H, J, K, L, M
and NR Certificates will be equal to either a fixed rate or a rate based on
the weighted average of the remittance rates on the mortgage loans. 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, L, M 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 Net prepayment premiums calculated by reference to a U.S. Treasury rate to
the extent 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 Net prepayment premiums not calculated by reference to a U.S. Treasury rate
to the extent received will be allocated solely to the Class X
Certificates.
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 $738,541,419
NUMBER OF LOANS 168
NUMBER OF MORTGAGED PROPERTIES 194
AVG. PRINCIPAL BALANCE
PER LOAN $4,396,080
PER PROPERTY $3,806,915
WA MORTGAGE RATE 8.33%
WA REMAINING TERM 116 months
WA REMAINING AMORTIZATION TERM 328 months
WA UNDERWRITTEN DSCR 1.33x
WA CUT-OFF DATE LTV RATIO 68.9%
WA SEASONING 9 months
J.P. Morgan Commercial Mortgage Finance Corp., Series 2000-C10 Page 5
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan and Salomon Smith Barney Inc. do 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 Salomon Smith Barney Inc. and/or their
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.
and Salomon Smith Barney Inc. are members of SIPC. Copyright 2000 J.P. Morgan &
Co. Incorporated. Clients should contact analysts at and execute transactions
through a J.P. Morgan or Salomon Smith Barney Inc. entity in their home
jurisdiction unless governing law permits otherwise.
<PAGE>
AVERAGE LIFE SENSITIVITIES
PREPAYMENT SPEEDS (CPR)(1)
AVERAGE LIFE (YEARS)(2)
------------- ------------- ------------- ------------- -------------
CLASS 0% 25% 50% 75% 100%
-------- ------------- ------------- ------------- ------------- -------------
A1 5.47 5.46 5.46 5.45 5.42
A2 9.10 9.08 9.06 9.03 8.83
B 9.49 9.47 9.43 9.40 9.22
C 9.55 9.53 9.53 9.49 9.28
D 9.61 9.61 9.54 9.53 9.36
E 9.61 9.61 9.61 9.58 9.36
F 9.61 9.61 9.61 9.61 9.36
X(3) 5.47 5.45 5.43 5.41 5.28
(1) Assumes no prepayment during the lockout and yield maintenance periods and
optional redemption is not exercised
(2) Assumes a closing date of October 4, 2000
(3) 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 9/01 9/02 9/03 9/04 9/05 9/06 9/07 9/08 9/09 9/10
------------------------------- ---------- ------- -------- ------- -------- ------- -------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Lockout/Defeasance 100.0 100.0 100.0 100.0 99.8 99.4 99.4 99.4 99.4 55.8 100.0
Yield Maintenance(1) 0.0 0.0 0.0 0.0 0.2 0.6 0.6 0.6 0.6 0.3 0.0
Total Lockout and YM 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 56.1 100.0
No Prepayment Premium 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 43.9 0.0
------------------------------- ---------- ------- -------- ------- -------- ------- -------- -------- ------- -------- -------
TOTAL 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
------------------------------- ---------- ------- -------- ------- -------- ------- -------- -------- ------- -------- -------
AGGREGATE MORTGAGE BALANCE ($) 738.5 732.1 725.0 717.3 709.1 700.0 690.1 679.3 667.7 489.0 23.8
% OF CUT-OFF DATE BALANCE 100.0 99.1 98.2 97.1 96.0 94.8 93.4 92.0 90.4 66.2 3.2
</TABLE>
(1) U.S. Treasury rate; 1% floor
J.P. Morgan Commercial Mortgage Finance Corp., Series 2000-C10 Page 6
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan and Salomon Smith Barney Inc. do 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 Salomon Smith Barney Inc. and/or their
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.
and Salomon Smith Barney Inc. are members of SIPC. Copyright 2000 J.P. Morgan &
Co. Incorporated. Clients should contact analysts at and execute transactions
through a J.P. Morgan or Salomon Smith Barney Inc. entity in their home
jurisdiction unless governing law permits otherwise.
<PAGE>
DEAL SUMMARY BY PROPERTY TYPE
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
% OF GROSS REM. WA WA
NO. OF PRINCIPAL PRINCIPAL AVERAGE WAC WAM WA LTV OCC. RATE
PROPERTY TYPE PROPERTIES BALANCE ($) BALANCE BALANCE ($) (%) (MONTHS) UW DSCR RATIO (%) (%) % BALLOON(1)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MULTIFAMILY 73 $228,015,661 30.9% $3,123,502 8.12% 113 1.30x 73.2% 95.9% 100.0%
Multifamily 55 157,826,081 21.4 2,869,565 8.18 114 1.30 74.0 96.9 100.0
MHP(2) 18 70,189,579 9.5 3,899,421 8.01 111 1.31 71.2 93.7 100.0
RETAIL 51 $195,425,024 26.5% $3,831,863 8.32% 126 1.32x 67.8% 94.7% 88.5%
Anchored 20 122,204,325 16.5 6,110,216 8.36 130 1.27 69.9 96.4 87.5
Unanchored 30 71,657,687 9.7 2,388,590 8.26 120 1.41 64.5 91.9 89.8
Shadow anchored 1 1,563,013 0.2 1,563,013 7.93 107 1.29 68.0 89.0 100.0
OFFICE 24 $126,794,922 17.2% $5,283,122 8.47% 112 1.32x 67.2% 96.7% 100.0%
Suburban 21 87,568,745 11.9 4,169,940 8.45 112 1.33 66.5 96.3 100.0
CBD(2) 3 39,226,178 5.3 13,075,393 8.51 113 1.28 68.8 97.4 100.0
INDUSTRIAL 19 $93,003,651 12.6% $4,894,929 8.27% 111 1.37x 66.2% 97.1% 100.0%
Flex Space 16 87,439,269 11.8 5,464,954 8.23 110 1.37 66.1 96.9 100.0
Warehouse/Distribution 3 5,564,382 0.8 1,854,794 8.96 115 1.31 67.7 100.0 100.0
HOTEL 10 $53,184,250 7.2% $5,318,425 8.85% 111 1.38x 64.9% NA 100.0%
Extended Stay 7 19,731,759 2.7 2,818,823 8.92 107 1.34 58.3 NA 100.0
Limited Service 2 16,929,209 2.3 8,464,605 9.00 112 1.40 67.8 NA 100.0
Full Service 1 16,523,281 2.2 16,523,281 8.62 116 1.40 69.7 NA 100.0
MIXED USE 3 $10,594,843 1.4% $3,531,614 8.90% 112 1.37x 64.8% 98.1% 80.6%
NURSING HOME 3 $7,813,023 1.1% $2,604,341 8.79% 107 1.90x 67.0% 96.1% 100.0%
CONGREGATE CARE 1 $1,207,349 0.2% $1,207,349 9.01% 112 1.50x 74.5% 90.0% 100.0%
SELF-STORAGE 10 $22,502,695 3.0% $2,250,269 8.17% 121 1.42x 67.5% 89.6% 89.2%
------------------------------------------------------------------------------------------------------------------------------------
194 $738,541,419 100.0% $3,806,915 8.33% 116 1.33x 68.9% 95.7% 96.3%
TOTAL/AVG./WA:
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Balloon loans deemed to be any loans which are not fully amortizing
(2) "MHP" means mobile home park and "CBD" means central business district
(3) Weighted average deal occupancy excludes hotel properties
RESERVES
<TABLE>
<CAPTION>
-------------------------------------------------- ------------------------------- ------------------- ------------------
% OF LOANS BY PRINCIPAL
BALANCE WITH ANNUAL ESCROWS CURRENT BALANCE(1) ANNUAL DEPOSIT
-------------------------------------------------- ------------------------------- ------------------- ------------------
<S> <C> <C> <C>
Replacement Reserves 87.4% $3,040,771 $3,253,748
Tenant Improvement /Leasing Commissions(2) 60.2 3,941,317 2,820,885
Taxes 98.3 7,238,730 10,062,975
Insurance 97.9 1,249,271 1,290,592
-------------------------------------------------- ------------------------------- ------------------- ------------------
</TABLE>
(1) Current balance as of September 12, 2000 may include any balance associated
with up-front deposits that have not been completely disbursed
(2) Balances and percentages are for commercial properties only
J.P. Morgan Commercial Mortgage Finance Corp., Series 2000-C10 Page 7
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan and Salomon Smith Barney Inc. do 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 Salomon Smith Barney Inc. and/or their
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.
and Salomon Smith Barney Inc. are members of SIPC. Copyright 2000 J.P. Morgan &
Co. Incorporated. Clients should contact analysts at and execute transactions
through a J.P. Morgan or Salomon Smith Barney Inc. 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
GEOGRAPHIC DISTRIBUTION
<TABLE>
<CAPTION>
% OF PRINCIPAL WA
PROPERTY STATE NO. OF PROPERTIES PRINCIPAL BALANCE ($) BALANCE WA UW DSCR LTV
--------------------- ------------------ ------------------------ ---------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
California 39 $203,147,004 27.5% 1.40x 67.8%
Southern 35 190,274,815 25.8 1.41 67.3
Northern 4 12,872,189 1.7 1.25 75.0
Texas 19 62,513,635 8.5 1.32 66.7
New Jersey 5 43,946,544 6.0 1.27 68.6
Illinois 10 40,119,893 5.4 1.34 69.6
Florida 18 37,863,163 5.1 1.31 72.8
Virginia 6 35,207,497 4.8 1.26 62.3
Arizona 7 29,938,636 4.1 1.31 65.1
Maryland 2 28,754,336 3.9 1.26 75.4
Ohio 6 26,245,922 3.6 1.34 71.0
New York 10 22,460,339 3.0 1.26 72.9
Michigan 5 20,941,902 2.8 1.28 75.3
Indiana 7 19,204,668 2.6 1.29 69.9
Iowa 2 18,991,967 2.6 1.26 69.8
Pennsylvania 6 18,754,312 2.5 1.26 70.1
Massachusetts 6 17,899,979 2.4 1.34 71.7
North Carolina 4 16,431,634 2.2 1.31 71.5
Nevada 2 11,833,334 1.6 1.29 74.2
Colorado 3 10,428,196 1.4 1.38 67.1
Louisiana 4 10,287,571 1.4 1.31 70.9
Wisconsin 3 9,909,169 1.3 1.29 72.2
Missouri 3 7,792,512 1.1 1.27 59.7
Vermont 1 7,388,975 1.0 1.31 68.4
Washington 2 6,060,150 0.8 1.21 75.1
Alaska 1 4,855,437 0.7 1.25 74.4
Connecticut 3 4,785,363 0.6 1.70 68.5
Georgia 2 4,412,902 0.6 1.49 54.8
Minnesota 3 3,632,110 0.5 1.42 67.5
Mississippi 2 3,609,040 0.5 1.25 65.8
Rhode Island 1 3,093,989 0.4 1.29 75.1
Maine 9 2,505,214 0.3 1.32 79.5
Arkansas 1 2,473,559 0.3 2.06 64.2
Idaho 1 2,055,124 0.3 1.29 46.7
Utah 1 997,340 0.1 1.60 57.0
--------------------- ------------------ ------------------------ ---------------- ------------ ------------
TOTAL: 194 $738,541,419 100.0% 1.33x 68.9%
--------------------- ------------------ ------------------------ ---------------- ------------ ------------
</TABLE>
J.P. Morgan Commercial Mortgage Finance Corp., Series 2000-C10 Page 8
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan and Salomon Smith Barney Inc. do 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 Salomon Smith Barney Inc. and/or their
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.
and Salomon Smith Barney Inc. are members of SIPC. Copyright 2000 J.P. Morgan &
Co. Incorporated. Clients should contact analysts at and execute transactions
through a J.P. Morgan or Salomon Smith Barney Inc. entity in their home
jurisdiction unless governing law permits otherwise.
<PAGE>
CUT-OFF BALANCES
<TABLE>
<CAPTION>
% OF PRINCIPAL WA
PRINCIPAL BALANCE ($) NO. OF LOANS PRINCIPAL BALANCE ($) BALANCE WA UW DSCR LTV
------------------------------------ ------------------- ----------------------- ----------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
$200,000 - $500,000 5 $1,714,244 0.2% 1.30x 71.1%
$500,001 - $750,000 13 7,898,383 1.1 1.29 69.6
$750,001 - $1,000,000 8 7,539,356 1.0 1.39 65.5
$1,000,001 - $1,500,000 28 34,972,053 4.7 1.34 70.0
$1,500,001 - $2,000,000 12 21,037,517 2.8 1.28 68.8
$2,000,001 - $2,500,000 16 35,810,151 4.8 1.43 65.9
$2,500,001 - $3,000,000 11 30,033,878 4.1 1.37 69.2
$3,000,001 - $3,500,000 9 29,679,926 4.0 1.30 75.1
$3,500,001 - $4,000,000 10 37,873,486 5.1 1.33 67.9
$4,000,001 - $4,500,000 8 33,997,386 4.6 1.25 69.6
$4,500,001 - $5,000,000 4 18,838,900 2.6 1.26 71.5
$5,000,001 - $6,000,000 8 44,278,128 6.0 1.28 72.7
$6,000,001 - $7,500,000 9 62,900,116 8.5 1.34 67.4
$7,500,001 - $10,000,000 8 67,565,181 9.1 1.26 71.7
$10,000,001 - $12,500,000 6 66,549,982 9.0 1.32 68.1
$12,500,001 - $15,000,000 3 39,928,859 5.4 1.30 71.3
$15,000,001 - $17,500,000 3 49,548,357 6.7 1.30 73.3
$17,500,001 - $20,000,000 2 36,528,558 4.9 1.29 69.6
$20,000,001 - $25,000,000 5 111,846,955 15.1 1.45 62.8
------------------------------------ ------------------- ----------------------- ----------------- ------------ ------------
TOTAL: 168 $738,541,419 100.0% 1.33x 68.9%
------------------------------------ ------------------- ----------------------- ----------------- ------------ ------------
AVERAGE PER LOAN: $4,396,080
AVERAGE PER PROPERTY: $3,806,915
</TABLE>
MORTGAGE INTEREST RATES
<TABLE>
<CAPTION>
% OF PRINCIPAL WA
MORTGAGE INTEREST RATE (%) NO. OF LOANS PRINCIPAL BALANCE ($) BALANCE WA UW DSCR LTV
------------------------------------- ------------------ ------------------------ ---------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
7.2501% - 7.5000% 2 $47,696,650 6.5% 1.70x 58.9%
7.5001% - 7.7500% 4 38,212,995 5.2 1.30 72.7
7.7501% - 8.0000% 17 111,676,454 15.1 1.30 71.8
8.0001% - 8.2500% 37 155,499,004 21.1 1.29 71.7
8.2501% - 8.5000% 29 107,251,690 14.5 1.29 68.3
8.5001% - 8.7500% 35 139,341,719 18.9 1.31 69.3
8.7501% - 9.0000% 27 107,935,833 14.6 1.32 67.7
9.0001% - 9.2500% 11 25,474,319 3.4 1.44 59.2
9.2501% - 9.5000% 4 4,666,210 0.6 1.43 61.4
9.5001% or more 2 786,546 0.1 1.30 74.1
------------------------------------- ------------------ ------------------------ ---------------- ------------ ------------
TOTAL: 168 $738,541,419 100.0% 1.33x 68.9%
------------------------------------- ------------------ ------------------------ ---------------- ------------ ------------
WEIGHTED AVERAGE: 8.33%
</TABLE>
J.P. Morgan Commercial Mortgage Finance Corp., Series 2000-C10 Page 9
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan and Salomon Smith Barney Inc. do 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 Salomon Smith Barney Inc. and/or their
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.
and Salomon Smith Barney Inc. are members of SIPC. Copyright 2000 J.P. Morgan &
Co. Incorporated. Clients should contact analysts at and execute transactions
through a J.P. Morgan or Salomon Smith Barney Inc. entity in their home
jurisdiction unless governing law permits otherwise.
<PAGE>
UNDERWRITTEN DEBT SERVICE COVERAGE RATIOS
<TABLE>
<CAPTION>
% OF PRINCIPAL WA
UW DSCR (x) NO. OF LOANS PRINCIPAL BALANCE ($) BALANCE WA UW DSCR LTV
------------------------------------- ------------------ ------------------------ ---------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
1.201 or less(1) 7 $20,263,916 2.8% 1.13x 68.9%
1.201x - 1.250x 43 164,846,565 22.6 1.23 71.8
1.251x - 1.300x 48 235,116,880 32.2 1.27 70.5
1.301x - 1.400x 38 170,518,347 23.4 1.35 68.3
1.401x - 1.500x 13 61,297,228 8.4 1.43 66.5
1.501x - 1.600x 7 37,678,937 5.2 1.56 61.5
1.601x - 1.700x 1 997,340 0.1 1.60 57.0
1.701x - 1.800x 1 1,100,631 0.2 1.78 73.4
1.801x - 1.900x 5 33,967,564 4.7 1.82 60.8
1.901x - 2.000x 1 992,506 0.1 1.91 55.1
2.001x - 2.100x 1 2,473,559 0.3 2.06 64.2
------------------------------------- ------------------ ------------------------ ---------------- ------------ ------------
TOTAL: 165 $729,253,473 100.0% 1.33x 68.9%
------------------------------------- ------------------ ------------------------ ---------------- ------------ ------------
WEIGHTED AVERAGE: 1.33X
</TABLE>
(1) The Meadows Apartment ($5,573,634), El Dorado Square ($4,074,851 ), U-store
($3,660,430), Grand Avenue ($2,697,619), Rite Aid ($2,555,432 ), Carriage
Square Apartments ($1,367,600), and Blue Ridge MHP ($334,350).
LOAN-TO-VALUE RATIOS
<TABLE>
<CAPTION>
% OF PRINCIPAL WA
LTV (%) NO. OF LOANS PRINCIPAL BALANCE ($) BALANCE WA UW DSCR LTV
------------------------------------- ------------------ ------------------------ ---------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
50.00% or less 2 $3,683,318 0.5% 1.36x 44.2%
50.01% - 55.00% 3 11,954,316 1.6 1.41 53.2
55.01% - 60.00% 14 99,050,685 13.6 1.52 58.5
60.01% - 65.00% 21 104,099,726 14.3 1.32 63.0
65.01% - 70.00% 40 141,139,716 19.4 1.36 68.5
70.01% - 75.00% 57 247,924,509 34.0 1.29 72.6
75.01% - 80.00% 27 120,103,716 16.5 1.26 77.7
80.01% or more1 1 1,297,487 0.2 1.25 82.4
------------------------------------- ------------------ ------------------------ ---------------- ------------ ------------
TOTAL: 165 $729,253,473 100.0% 1.33x 68.9%
------------------------------------- ------------------ ------------------------ ---------------- ------------ ------------
WEIGHTED AVERAGE: 68.9%
</TABLE>
(1) Downtown Plaza Apartments ($1,297,487).
J.P. Morgan Commercial Mortgage Finance Corp., Series 2000-C10 Page 10
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan and Salomon Smith Barney Inc. do 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 Salomon Smith Barney Inc. and/or their
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.
and Salomon Smith Barney Inc. are members of SIPC. Copyright 2000 J.P. Morgan &
Co. Incorporated. Clients should contact analysts at and execute transactions
through a J.P. Morgan or Salomon Smith Barney Inc. entity in their home
jurisdiction unless governing law permits otherwise.
<PAGE>
REMAINING TERM TO MATURITY/ARD (MONTHS)
<TABLE>
<CAPTION>
REMAINING TERM TO % OF PRINCIPAL WA
MATURITY/ARD (MONTHS) NO. OF LOANS PRINCIPAL BALANCE ($) BALANCE WA UW DSCR LTV
------------------------------------- ------------------ ------------------------ ---------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
BALLOON
97 - 108 30 $123,272,291 16.7% 1.34x 68.1%
109 - 120 74 $240,193,194 32.5 1.31 71.1
217 - 228 2 $5,032,271(1) 0.7 0.00 0.0
TOTAL: 106 $368,497,756 49.9% 1.32x 70.1%
FULLY AMORTIZING
109 - 120 1 $2,055,124 0.3% 1.29x 46.7%
157 - 168 1 $2,555,432 0.3 1.10 77.4
229 - 240 4 $22,403,837(1) 3.0 1.31 63.3
TOTAL: 6 $27,014,393 3.7% 1.28x 63.4%
ARD
97 - 108 3 $11,673,243 1.6% 1.36x 73.0%
109 - 120 50 $279,321,214 37.8 1.30 69.3
169 - 180 1 $4,338,163 0.6 1.20 70.0
TOTAL: 54 $295,332,620 40.0% 1.30x 69.5%
INTEREST ONLY
97- 180 2 $47,696,650 6.5% 1.70x 58.9%
TOTAL: 2 $47,696,650 6.5% 1.70x 58.9%
------------------------------------- ------------------ ------------------------ ---------------- ------------ ------------
TOTAL: 168 $738,541,419 100.0% 1.33x 68.9%
------------------------------------- ------------------ ------------------------ ---------------- ------------ ------------
WEIGHTED AVERAGE: 116 MONTHS
</TABLE>
(1) Includes credit tenant leases.
J.P. Morgan Commercial Mortgage Finance Corp., Series 2000-C10 Page 11
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan and Salomon Smith Barney Inc. do 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 Salomon Smith Barney Inc. and/or their
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.
and Salomon Smith Barney Inc. are members of SIPC. Copyright 2000 J.P. Morgan &
Co. Incorporated. Clients should contact analysts at and execute transactions
through a J.P. Morgan or Salomon Smith Barney Inc. entity in their home
jurisdiction unless governing law permits otherwise.
<PAGE>
REMAINING AMORTIZATION TERM (MONTHS)(1)
<TABLE>
<CAPTION>
REMAINING AMORTIZATION TERM % OF PRINCIPAL WA
(MONTHS) NO. OF LOANS PRINCIPAL BALANCE ($) BALANCE WA UW DSCR LTV
------------------------------------- ------------------ ------------------------ ----------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
BALLOON
253 - 264 1 $2,057,277(2) 0.3% 0.00x 0.0%
265 - 276 3 $18,535,058(2) 2.7 1.26 62.4
277 - 288 19 $33,211,752 4.8 1.52 65.9
289 - 300 20 $62,910,837 9.1 1.36 68.5
325 - 336 5 $5,617,825 0.8 1.25 72.2
337 - 348 14 $78,203,520 11.3 1.28 70.5
349 - 360 44 $167,961,488 24.3 1.29 72.0
TOTAL: 106 $368,497,756 53.3% 1.32x 70.1%
FULLY AMORTIZING
109 - 120 1 $2,055,124 0.3% 1.29x 46.7%
157 - 168 1 $2,555,432 0.4 1.10 77.4
217 - 228 1 $2,435,723 0.4 1.82 57.7
229 - 240 3 $19,968,114 2.9 1.23 64.2
TOTAL: 6 $27,014,393 3.9% 1.28x 63.4%
ARD
229 - 240 2 $4,500,919 0.7% 1.37x 63.6%
253 - 264 1 $4,338,163 0.6 1.20 70.0
265 - 276 1 $2,100,000 0.3 1.24 75.0
277 - 288 3 $4,178,410 0.6 1.64 67.4
289 - 300 10 $54,387,889 7.9 1.33 68.1
313 - 324 1 $6,820,989 1.0 1.32 60.4
337 - 348 1 $5,573,634 0.8 1.14 74.5
349 - 360 35 $213,432,617 30.9 1.29 70.1
TOTAL: 54 $295,332,620 42.7% 1.30x 69.5%
------------------------------------- ------------------ ----------------------- ----------------- ----------- -------------
TOTAL: 166 $690,844,769 100.0% 1.31x 69.6%
------------------------------------- ------------------ ----------------------- ----------------- ----------- -------------
WEIGHTED AVERAGE: 328 MONTHS
</TABLE>
(1) Two loans, Abbey Portfolio III ($24,701,611) and Abbey Portfolio IV
($22,995,039) are interest only loans and have been excluded from this
table.
J.P. Morgan Commercial Mortgage Finance Corp., Series 2000-C10 Page 12
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan and Salomon Smith Barney Inc. do 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 Salomon Smith Barney Inc. and/or their
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.
and Salomon Smith Barney Inc. are members of SIPC. Copyright 2000 J.P. Morgan &
Co. Incorporated. Clients should contact analysts at and execute transactions
through a J.P. Morgan or Salomon Smith Barney Inc. entity in their home
jurisdiction unless governing law permits otherwise.
<PAGE>
MONTH AND YEAR OF ORIGINATION
<TABLE>
<CAPTION>
% OF PRINCIPAL WA
MONTH AND YEAR OF ORIGINATION NO. OF LOANS PRINCIPAL BALANCE ($) BALANCE WA UW DSCR LTV
------------------------------------- ------------------ ------------------------ ---------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
December 1998 1 $3,912,996 0.5% 1.54x 69.3%
March 1999 2 2,591,397 0.4 1.83 72.0
April 1999 3 7,210,171 1.0 1.25 71.9
May 1999 2 4,048,113 0.5 1.29 68.9
June 1999 6 32,272,863 4.4 1.33 66.3
July 1999 8 28,923,054 3.9 1.41 71.9
August 1999 12 99,297,526 13.4 1.49 63.2
September 1999 17 72,541,633 9.8 1.27 70.0
October 1999 11 33,443,427 4.5 1.31 71.8
November 1999 30 138,375,077 18.7 1.29 70.5
December 1999 23 111,027,249 15.0 1.33 69.7
January 2000 6 10,730,902 1.5 1.30 66.6
February 2000 10 24,648,800 3.3 1.29 64.1
March 2000 11 64,051,043 8.7 1.27 72.7
April 2000 9 42,947,944 5.8 1.25 69.9
May 2000 6 32,578,566 4.4 1.37 67.5
June 2000 4 16,897,197 2.3 1.42 63.0
July 2000 5 9,319,093 1.3 1.28 72.7
August 2000 2 3,724,369 0.5 1.23 76.8
------------------------------------- ------------------ ------------------------ ---------------- ------------ ------------
TOTAL: 168 $738,541,419 100.0% 1.33x 68.9%
------------------------------------- ------------------ ------------------------ ---------------- ------------ ------------
WEIGHTED AVERAGE SEASONING: 9 MONTHS
</TABLE>
YEAR OF SCHEDULED MATURITY/ARD
<TABLE>
<CAPTION>
% OF PRINCIPAL WA
Year of Scheduled Maturity/ARD NO. OF LOANS PRINCIPAL BALANCE ($) BALANCE WA UW DSCR LTV
------------------------------------- ------------------ ------------------------ ---------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
2009 91 $426,262,980 57.7% 1.36x 68.6%
2010 69 277,948,736 37.6 1.31 69.6
2014 1 2,555,432 0.3 1.10 77.4
2015 1 4,338,163 0.6 1.20 70.0
2018 1 2,057,277 0.3 0.00 0.0
2019 2 5,410,717 0.7 1.82 57.7
2020 3 19,968,114 2.7 1.23 64.2
------------------------------------- ------------------ ------------------------ ---------------- ------------ ------------
TOTAL: 168 $738,541,419 100.0% 1.33x 68.9%
------------------------------------- ------------------ ------------------------ ---------------- ------------ ------------
</TABLE>
J.P. Morgan Commercial Mortgage Finance Corp., Series 2000-C10 Page 13
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan and Salomon Smith Barney Inc. do 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 Salomon Smith Barney Inc. and/or their
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.
and Salomon Smith Barney Inc. are members of SIPC. Copyright 2000 J.P. Morgan &
Co. Incorporated. Clients should contact analysts at and execute transactions
through a J.P. Morgan or Salomon Smith Barney Inc. entity in their home
jurisdiction unless governing law permits otherwise.
<PAGE>
TEN LARGEST INDIVIDUAL LOANS
<TABLE>
<CAPTION>
--------------------------------------- ----------------- ------------------ -------------- ------------ ----------------------
CUT-OFF DATE % OF UW
LOAN BALANCE ($) POOL BALANCE DSCR LTV PROPERTY TYPE
--------------------------------------- ----------------- ------------------ -------------- ------------ ----------------------
<S> <C> <C> <C> <C>
The Abbey Company Portfolio III $24,701,611 3.3% 1.81x 58.9% Office/Industrial/Retail
The Abbey Company Portfolio IV 22,995,039 3.1 1.58 58.9 Unanchored Retail
Atlantic Development Portfolio 22,013,205 3.0 1.27 61.8 Industrial Flex
Covina Hills Mobile Home Country Club 21,587,115 2.9 1.27 71.9 Mobile Home Park
Liberty Fair Mall 20,549,985 2.8 1.26 63.4 Regional Mall
Wilshire Financial 18,576,294 2.5 1.32 68.8 CBD Office
Hub Tower 17,952,264 2.4 1.26 70.4 CBD Office
Gerry Buildings 16,824,504 2.3 1.25 71.9 Industrial Flex
Embassy Suites Chicago 16,523,281 2.2 1.40 69.7 Full Service Hotel
Fairgrounds Plaza 16,200,572 2.2 1.27 78.3 Anchored Retail
--------------------------------------- ----------------- ------------------ -------------- ------------ ----------------------
TOTAL / WEIGHTED AVERAGE $197,923,870 26.7% 1.37x 66.1%
--------------------------------------- ----------------- ------------------ -------------- ------------ ----------------------
DEAL TOTAL / WEIGHTED AVERAGE $738,541,419 100.0% 1.33x 68.9%
--------------------------------------- ----------------- ------------------ -------------- ------------ ----------------------
</TABLE>
Note: any credit ratings referenced included in the following loan descriptions
for any tenant at a mortgaged property are those reported by Moody's Investors
Service, Inc. and, if two ratings are shown, by Standard & Poor's Ratings
Services, a division of The McGraw-Hill Companies, Inc., in that order, as
listed by Bloomberg, L.P.
J.P. Morgan Commercial Mortgage Finance Corp., Series 2000-C10 Page 14
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan and Salomon Smith Barney Inc. do 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 Salomon Smith Barney Inc. and/or their
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.
and Salomon Smith Barney Inc. are members of SIPC. Copyright 2000 J.P. Morgan &
Co. Incorporated. Clients should contact analysts at and execute transactions
through a J.P. Morgan or Salomon Smith Barney Inc. entity in their home
jurisdiction unless governing law permits otherwise.
<PAGE>
ABBEY PORTFOLIO III
--------------------------------------------------------------------------------
LOAN INFORMATION
--------------------------------------------------------------------------------
PRINCIPAL BALANCE
ORIGINAL $24,701,611
CUT-OFF DATE $24,701,611
ORIGINATION DATE August 31, 1999
INTEREST RATE 7.47%
MATURITY DATE September 1, 2009
AMORTIZATION Interest only
REMAINING AMORTIZATION N/A
BORROWER/SPONSOR(1) Six individual special
purpose borrowers, each a
special purpose limited
liability company wholly
owned by Abbey Properties,
LLC. Abbey Properties, LLC
is owned by Donald G. Abbey
and a wholly owned
subsidiary of Rodamco North
America NV.
CALL PROTECTION Prepayment locked out until
on or after June 1, 2009.
U.S. Treasury defeasance
allowed, in whole or in
part, on any payment date
on or after the second
anniversary of
securitization.
COLLECTION ACCOUNT All rents payable by the
tenants of the Abbey
Company properties are
deposited by the property
manager into a lockbox
account. Provided no event
of default has occurred,
all deposits in the lockbox
account are remitted back
to the Abbey Company
Borrower.
MEZZANINE LOANS/PREFERRED None
EQUITY
MONTHLY ESCROWS
Taxes 1/12th of Annual
Insurance 1/12th of Annual
Replacement Reserves $8,031 ($96,372 per year)
--------------------------------------------------------------------------------
PROPERTY INFORMATION
--------------------------------------------------------------------------------
SINGLE ASSET/PORTFOLIO Portfolio of six assets
PROPERTY TYPE Office/Industrial/Retail
LOCATION Various Southern California
YEARS BUILT 1985 - 1998
THE COLLATERAL
Abbey Portfolio III consists of six office/industrial/retail
properties containing 642,452 square feet:
PROPERTY NAME
(City, State) SQUARE FOOTAGE OCCUPANCY
------------- -------------- ---------
LONG BEACH AIRPORT 205,257 100.0%
(Long Beach, CA)
SIERRA GATEWAY 130,838 96.0
BUSINESS CENTER
(Palmdale, CA)
NEVADA STREET PLAZA 126,292 93.0
(Redlands, CA)
GARDENA COMMERCE 39,405 96.0
CENTER
(Gardena, CA)
MORENO VALLEY COMMERCE 111,060 86.0
CENTER (Moreno Valley,
CA)
MOUNT VERNON COMMERCE 29,600 91.0
CENTER
(Colton, CA)
PROPERTY MANAGEMENT The Abbey Company
OCCUPANCY(2) 94.7%
OCCUPANCY DATE June 1, 2000
BORROWER 1999 NOI(3) $3,001,120
UNDERWRITTEN
NOI $4,140,895
NCF $3,389,589
APPRAISED VALUE $41,970,000
APPRAISAL DATE June 17 - July 16, 1999
CUT-OFF DATE
LOAN PER SQUARE FOOT $38.45
LTV 58.9%
UW DSCR 1.81x
(1) This loan is secured by six cross-collateralized and cross-defaulted
mortgages, deeds of trust or deeds encumbering the properties.
(2) Weighted average occupancy based on square footage.
(3) Does not include the actual operating history of the Long Beach Airport
property.
J.P. Morgan Commercial Mortgage Finance Corp., Series 2000-C10 Page 15
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan and Salomon Smith Barney Inc. do 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 Salomon Smith Barney Inc. and/or their
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.
and Salomon Smith Barney Inc. are members of SIPC. Copyright 2000 J.P. Morgan &
Co. Incorporated. Clients should contact analysts at and execute transactions
through a J.P. Morgan or Salomon Smith Barney Inc. entity in their home
jurisdiction unless governing law permits otherwise.
<PAGE>
ABBEY PORTFOLIO IV
--------------------------------------------------------------------------------
LOAN INFORMATION
--------------------------------------------------------------------------------
PRINCIPAL BALANCE
ORIGINAL $22,995,039
CUT-OFF DATE $22,995,039
ORIGINATION DATE August 31, 1999
INTEREST RATE 7.47%
MATURITY DATE September 1, 2009
ORIGINAL AMORTIZATION Interest Only
REMAINING AMORTIZATION N/A
BORROWER/SPONSOR(1) Six individual special
purpose borrowers, each a
special purpose limited
liability company wholly
owned by Abbey Properties,
LLC. Abbey Properties, LLC
is owned by Donald G. Abbey
and by a wholly owned
subsidiary of Rodamco North
America NV.
CALL PROTECTION Prepayment locked out until
on or after June 1, 2009.
U.S. Treasury defeasance
allowed, in whole or in
part, on any payment date
on or after the second
anniversary of
securitization.
COLLECTION ACCOUNT All rents payable by the
tenants of the Abbey
Company properties are
deposited by the property
manager into a lockbox
account. Provided no event
of default has occurred,
all deposits in the lockbox
account are remitted back
to the Abbey Company
Borrower.
MEZZANINE LOANS/PREFERRED None
EQUITY
MONTHLY ESCROWS
Taxes 1/12th of Annual
Insurance 1/12th of Annual
Replacement Reserves $3,789 ($45,468 per year)
--------------------------------------------------------------------------------
PROPERTY INFORMATION
--------------------------------------------------------------------------------
SINGLE ASSET/PORTFOLIO Portfolio of six assets
PROPERTY TYPE Unanchored Retail
LOCATION Southern California
YEARS BUILT 1944 - 1993
THE COLLATERAL
Abbey Portfolio IV consists of six unanchored retail
properties containing 303,138 square feet:
PROPERTY NAME
(City, State) SQUARE FOOTAGE OCCUPANCY
------------- -------------- ---------
ALISO VIEJO COMMERCE 64,137 95.0%
CENTER
(Aliso Viejo, CA)
WIMBLEDON BUSINESS 123,225 92.0
CENTER
(Victorville, CA)
UPLAND COMMERCE CENTER 44,957 29.0
(Upland, CA)
AP RANCHO CARMEL 26,978 92.0
(San Diego, CA)
ATLANTIC PLAZA 31,281 100.0
(Long Beach, CA)
GARDEN GROVE COMMERCE 12,560 81.0
CENTER
(Garden Grove, CA)
PROPERTY MANAGEMENT The Abbey Company
OCCUPANCY(2) 83.6%
OCCUPANCY DATE June 1, 2000
BORROWER 1999 NOI $3,648,079
UNDERWRITTEN
NOI $3,081,454
NCF $2,752,178
APPRAISED VALUE $39,070,000
APPRAISAL DATE June 22 - July 28, 1999
CUT-OFF DATE
LOAN PER SQUARE FOOT $75.86
LTV 58.9%
UW DSCR 1.58x
(1) This loan is secured by six collateralized and cross-defaulted mortgages,
deeds of trust or deeds to secure debt encumbering the six retail centers.
(2) Weighted average occupancy based on square footage.
J.P. Morgan Commercial Mortgage Finance Corp., Series 2000-C10 Page 16
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan and Salomon Smith Barney Inc. do 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 Salomon Smith Barney Inc. and/or their
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.
and Salomon Smith Barney Inc. are members of SIPC. Copyright 2000 J.P. Morgan &
Co. Incorporated. Clients should contact analysts at and execute transactions
through a J.P. Morgan or Salomon Smith Barney Inc. entity in their home
jurisdiction unless governing law permits otherwise.
<PAGE>
ATLANTIC DEVELOPMENT PORTFOLIO
--------------------------------------------------------------------------------
LOAN INFORMATION
--------------------------------------------------------------------------------
PRINCIPAL BALANCE
ORIGINAL $22,150,000
CUT-OFF DATE $22,013,205
ORIGINATION DATE September 15, 1999
INTEREST RATE 8.05%
ANTICIPATED REPAYMENT DATE October 1, 2009
MATURITY DATE October 1, 2029
ORIGINAL AMORTIZATION 360 months
REMAINING AMORTIZATION 349 months
BORROWER/SPONSOR MBCC East, LLC and MBCC 35,
LLC, each a special purpose
New Jersey limited
liability company, which
are owned by Atlantic
Development and Management
Corp. (ADMC). ADMC owns
and manages a portfolio of
office and industrial
properties totaling
approximately 1.0 million
square feet.
CALL PROTECTION Prepayment locked out until
on or after July 1, 2009.
U.S. Treasury defeasance
allowed, in whole or in
part, on any payment date
on or after the second
anniversary of
securitization.
COLLECTION ACCOUNT Hard Lockbox. All rents
payable by tenants are
deposited into a lockbox
account and allocated
monthly to a tax and
insurance account, a debt
service account, and a
recurring replacement
reserve account.
MEZZANINE LOANS/PREFERRED None
EQUITY
MONTHLY ESCROWS
Taxes 1/12th of Annual
Insurance 1/12th of Annual
Replacement Reserves 1/12th of Annual
--------------------------------------------------------------------------------
PROPERTY INFORMATION
--------------------------------------------------------------------------------
SINGLE ASSET/PORTFOLIO Portfolio of two assets
PROPERTY TYPE Industrial - Flex
LOCATION Warren, New Jersey
Somerset County
YEARS BUILT 1979 & 1985
THE COLLATERAL
Atlantic Development Portfolio consists of two Industrial Flex buildings
totaling 273,061 square feet:
7 Powderhorn Drive is a two-story 180,500 square foot facility built in
1979 and leased to two tenants: Cordis Corp (107,000 square feet), a wholly
owned subsidiary of Johnson & Johnson (NYSE: JNJ) rated Aaa/AAA and Celegene
Corporation (NASDAQ: CLEG), 73,000 square feet..
35 Technology Drive is a two-story 92,561 square foot facility built in
1985 and 100% leased to Anadigics, Inc.
(NASDAQ: ANAD).
PROPERTY MANAGEMENT Atlantic Development
Management Company
OCCUPANCY 100.0%
OCCUPANCY DATE August 7, 2000
BORROWER 1999 NOI $2,896,709
UNDERWRITTEN
NOI $2,790,515
NCF $2,493,558
APPRAISED VALUE 35,615,000
APPRAISAL DATE June 8, 1999
CUT-OFF DATE
LOAN PER SQUARE FOOT $80.61
LTV 61.8%
UW DSCR 1.27x
J.P. Morgan Commercial Mortgage Finance Corp., Series 1000-C10 Page 17
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan and Salomon Smith Barney Inc. do 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 Salomon Smith Barney Inc. and/or their
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.
and Salomon Smith Barney Inc. are members of SIPC. Copyright 2000 J.P. Morgan &
Co. Incorporated. Clients should contact analysts at and execute transactions
through a J.P. Morgan or Salomon Smith Barney Inc. entity in their home
jurisdiction unless governing law permits otherwise.
<PAGE>
COVINA HILLS MOBILE HOME COUNTRY CLUB
--------------------------------------------------------------------------------
LOAN INFORMATION
--------------------------------------------------------------------------------
PRINCIPAL BALANCE
ORIGINAL $21,750,000
CUT-OFF DATE $21,587,115
ORIGINATION DATE August 4, 1999
INTEREST RATE 7.73%
MATURITY DATE September 1, 2009
ORIGINAL AMORTIZATION 360 months
REMAINING AMORTIZATION 348 months
BORROWER/SPONSOR Juanita Springs Associates
LP, a special purpose
Washington limited
partnership owned by Morgan
Partners Inc. and Covina
Hills Equities Inc. Morgan
Partners manages a
portfolio of five mobile
home parks and four
apartment communities
totaling 1,500 units in
three states.
CALL PROTECTION Prepayment locked out until
on or after June 1, 2009.
U.S. Treasury defeasance
allowed, in whole but not
in part, on any payment
date on or after the second
anniversary of
securitization.
COLLECTION ACCOUNT None
MEZZANINE LOANS/PREFERRED None
EQUITY
MONTHLY ESCROWS
Taxes 1/12th of Annual
Insurance 1/12th of Annual
Replacement Reserves $2,083 ($24,996 per year)
--------------------------------------------------------------------------------
PROPERTY INFORMATION
--------------------------------------------------------------------------------
SINGLE ASSET/PORTFOLIO Single Asset
PROPERTY TYPE Mobile Home Park
LOCATION La Puente, California
YEARS BUILT 1972
THE COLLATERAL
The Covina Hills property is a 500-pad mobile home park located on a 73 acre
site and contains 19 single-wide and 481 double-wide mobile homes. The total
site density is approximately 6.8 pads per acre. Property amenities include two
clubhouses, two swimming pools, two laundry room facilities, recreational
facilities, and twenty-two spaces for RV storage.
PROPERTY MANAGEMENT Bessire & Casenhiser, Inc.
OCCUPANCY 100.0%
OCCUPANCY DATE April 1, 2000
BORROWER TRAILING 12 NOI AS OF $2,406,936
3/31/00
UNDERWRITTEN
NOI $2,399,584
NCF $2,374,584
APPRAISED VALUE $30,030,000
APPRAISAL DATE June 8, 1999
CUT-OFF DATE
LOAN PER PAD $43,174
LTV 71.9%
UW DSCR 1.27x
J.P. Morgan Commercial Mortgage Finance Corp., Series 1000-C10 Page 18
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan and Salomon Smith Barney Inc. do 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 Salomon Smith Barney Inc. and/or their
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.
and Salomon Smith Barney Inc. are members of SIPC. Copyright 2000 J.P. Morgan &
Co. Incorporated. Clients should contact analysts at and execute transactions
through a J.P. Morgan or Salomon Smith Barney Inc. entity in their home
jurisdiction unless governing law permits otherwise.
<PAGE>
LIBERTY FAIR MALL
--------------------------------------------------------------------------------
LOAN INFORMATION
--------------------------------------------------------------------------------
PRINCIPAL BALANCE
ORIGINAL $21,250,000
CUT-OFF DATE $20,549,985
ORIGINATION DATE November 30, 1999
INTEREST RATE 8.46%
ANTICIPATED REPAYMENT DATE December 1, 2009
MATURITY DATE December 1, 2029
ORIGINAL AMORTIZATION 360 months
REMAINING AMORTIZATION 351 months
BORROWER/SPONSOR Liberty Fair VA LP, a
special purpose Virginia
limited partnership owned
50% by Developers
Diversified Realty
Corporation (DDR), as
general partner and 50% by
the Lester Group, as
limited partner. DDR owns
and manages a portfolio of
206 shopping centers
totaling 49 million square
feet in 40 states.
CALL PROTECTION Prepayment locked out until
on or after September 1,
2009. U.S. Treasury
defeasance allowed, in
whole, but not in part, on
any payment date on or
after the second
anniversary of
securitization.
COLLECTION ACCOUNT All rents payable by the
tenants of the Liberty Fair
Mall are deposited directly
into a lockbox account.
Provided no event of
default has occurred, all
deposits in the lockbox
account are remitted back
to the Liberty Fair Mall
Borrower.
MEZZANINE LOANS/PREFERRED
EQUITY
MONTHLY ESCROWS
Taxes 1/12th of Annual
Insurance 1/12th of Annual
Replacement Reserves $3,626 ($43,512 per year)
TI/LC $4,167 ($50,000 per year)
--------------------------------------------------------------------------------
PROPERTY INFORMATION
--------------------------------------------------------------------------------
SINGLE ASSET/PORTFOLIO Single Asset
PROPERTY TYPE Regional Mall
LOCATION Martinsville, Virginia
YEARS BUILT/RENOVATED 1989/1997
THE COLLATERAL
The Liberty Fair Mall Property is an enclosed, single-story,
regional mall containing 435,402 square feet. Primary
tenants include:
TENANT (Rating) SQUARE FOOTAGE
--------------- --------------
KROGER (Baa3/BBB-) 55,969
SEARS (A3/A) 58,760
JC PENNEY (Baa2/BBB) 50,232
BELKS 85,000
OFFICE MAX 23,523
GOODY'S 29,687
PROPERTY MANAGEMENT Developers Diversified
Management, Inc.
OCCUPANCY 92.0%
OCCUPANCY DATE April 26, 2000
BORROWER TRAILING 12 NOI AS OF $2,843,047
3/31/00
UNDERWRITTEN
NOI $2,700,271
NCF $2,469,357
APPRAISED VALUE 32,400,000
APPRAISAL DATE September 23, 1999
CUT-OFF DATE
LOAN PER SQUARE FOOT $47.20
LTV 63.4%
UW DSCR 1.26x
J.P. Morgan Commercial Mortgage Finance Corp., Series 1000-C10 Page 19
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan and Salomon Smith Barney Inc. do 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 Salomon Smith Barney Inc. and/or their
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.
and Salomon Smith Barney Inc. are members of SIPC. Copyright 2000 J.P. Morgan &
Co. Incorporated. Clients should contact analysts at and execute transactions
through a J.P. Morgan or Salomon Smith Barney Inc. entity in their home
jurisdiction unless governing law permits otherwise.
<PAGE>
WILSHIRE FINANCIAL TOWER
--------------------------------------------------------------------------------
LOAN INFORMATION
--------------------------------------------------------------------------------
PRINCIPAL BALANCE
ORIGINAL $18,650,000
CUT-OFF DATE $18,576,294
ORIGINATION DATE November 17, 1999
INTEREST RATE 8.86%
MATURITY DATE December 1, 2009
ORIGINAL AMORTIZATION 360 months
REMAINING AMORTIZATION 351 months
BORROWER/SPONSOR 3600 Wilshire LLC, a special purpose California
limited liability company.
CALL PROTECTION Prepayment locked out until
on or after September 1,
2009. U.S. Treasury
defeasance allowed, in
whole but not in part, on
any payment date on or
after the second
anniversary of
securitization.
COLLECTION ACCOUNT None
MEZZANINE LOANS/PREFERRED None
EQUITY
MONTHLY ESCROWS
Taxes 1/12th of Annual
Insurance 1/12th of Annual
Replacement Reserves None
TI/LC $30,000 ($360,000 per year)
--------------------------------------------------------------------------------
PROPERTY INFORMATION
--------------------------------------------------------------------------------
SINGLE ASSET/PORTFOLIO Single Asset
PROPERTY TYPE CBD Office
LOCATION Los Angeles, California
YEARS BUILT/RENOVATED 1961/1992
THE COLLATERAL
The Wilshire Financial Tower property is a 21-story office building containing
375,614 square feet located in the Mid-Wilshire district of Los Angeles. The
property included an adjoining 2-story parking garage containing 850 spaces.
PROPERTY MANAGEMENT Jamison Properties, Inc.
OCCUPANCY 94.6%
OCCUPANCY DATE August 1, 2000
BORROWER 1999 NOI $2,430,609
UNDERWRITTEN
NOI $2,751,158
NCF $2,349,908
APPRAISED VALUE $27,000,000
APPRAISAL DATE October 1, 1999
CUT-OFF DATE
LOAN PER SQUARE FOOT $49.46
LTV 68.8%
UW DSCR 1.32x
J.P. Morgan Commercial Mortgage Finance Corp., Series 1000-C10 Page 20
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan and Salomon Smith Barney Inc. do 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 Salomon Smith Barney Inc. and/or their
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.
and Salomon Smith Barney Inc. are members of SIPC. Copyright 2000 J.P. Morgan &
Co. Incorporated. Clients should contact analysts at and execute transactions
through a J.P. Morgan or Salomon Smith Barney Inc. entity in their home
jurisdiction unless governing law permits otherwise.
<PAGE>
HUB TOWER
--------------------------------------------------------------------------------
LOAN INFORMATION
--------------------------------------------------------------------------------
PRINCIPAL BALANCE
ORIGINAL $18,000,000
CUT-OFF DATE $17,952,264
ORIGINATION DATE March 17, 2000
INTEREST RATE 8.10%
ANTICIPATED REPAYMENT DATE April 1, 2010
MATURITY DATE April 1, 2030
ORIGINAL AMORTIZATION 360 months
REMAINING AMORTIZATION 355 months
BORROWER/SPONSOR MR No. 17, LLC, a special
purpose Iowa limited
liability company that is
owned 90% by the Tetrad
Corp. and 10% by MRI-Hub
Tower, Inc. The Tetrad
Corp. consists of four
family trust, each formed
by Walter Scott, Jr.
CALL PROTECTION Prepayment locked out until
on or after January 1,
2010. U.S. Treasury
defeasance allowed, in
whole but not in part, on
any payment date on or
after the second
anniversary of
securitization.
COLLECTION ACCOUNT All rents payable by the
tenants of the Hub Tower
property are deposited
directly into a lockbox
account. Provided no event
of default has occurred,
all deposits in the lockbox
account are remitted back
to the Hub Tower Borrower.
MEZZANINE LOANS/PREFERRED None
EQUITY
MONTHLY ESCROWS
Taxes 1/12th of Annual
Insurance 1/12th of Annual
Replacement Reserves $3,165 ($37,980 per year)
TI/LC $20,140 ($241,680 per
year)
--------------------------------------------------------------------------------
PROPERTY INFORMATION
--------------------------------------------------------------------------------
SINGLE ASSET/PORTFOLIO Single Asset
PROPERTY TYPE CBD Office
LOCATION Des Moines, Iowa
YEARS BUILT/RENOVATED 1985/1998
THE COLLATERAL
The Hub Tower property is a 20-story Class A office building containing 281,028
square feet and 74 underground parking spaces. The building is connected to the
city's covered skywalk system. The primary tenants include Principal Mutual Life
Insurance, AmerUS Life Holdings and Invista Capital.
PROPERTY MANAGEMENT Magnum Resources, Inc.
OCCUPANCY 100.0%
OCCUPANCY DATE March 13, 2000
BORROWER TAILING 12 NOI AS OF $2,984,655
3/31/00
UNDERWRITTEN
NOI $2,496,817
NCF $2,007,895
APPRAISED VALUE $25,500,000
APPRAISAL DATE March 28, 2000
CUT-OFF DATE
LOAN PER SQUARE FOOT $63.88
LTV 70.4%
UW DSCR 1.26x
J.P. Morgan Commercial Mortgage Finance Corp., Series 1000-C10 Page 21
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan and Salomon Smith Barney Inc. do 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 Salomon Smith Barney Inc. and/or their
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.
and Salomon Smith Barney Inc. are members of SIPC. Copyright 2000 J.P. Morgan &
Co. Incorporated. Clients should contact analysts at and execute transactions
through a J.P. Morgan or Salomon Smith Barney Inc. entity in their home
jurisdiction unless governing law permits otherwise.
<PAGE>
GERRY BUILDINGS
--------------------------------------------------------------------------------
LOAN INFORMATION
--------------------------------------------------------------------------------
PRINCIPAL BALANCE
ORIGINAL $16,950,000
CUT-OFF DATE $16,824,504
ORIGINATION DATE November 30, 1999
INTEREST RATE 8.73%
ANTICIPATED REPAYMENT DATE December 1, 2009
MATURITY DATE December 1, 2024
ORIGINAL AMORTIZATION 300 months
REMAINING AMORTIZATION 291 months
BORROWER/SPONSOR 714-910 S. Los Angeles, LLC, a special purpose
California limited liability company.
CALL PROTECTION Prepayment locked out until
on or after November 1,
2009. U.S. Treasury
defeasance allowed, in
whole but not in part, on
any payment date on or
after the second
anniversary of
securitization.
COLLECTION ACCOUNT All rents payable by the
tenants of the Gerry
Buildings are deposited
directly into a lockbox
account. Provided no event
of default has occurred,
all deposits in the lockbox
account are remitted back
to the Gerry Buildings
Borrower.
MEZZANINE LOANS/PREFERRED None
EQUITY
MONTHLY ESCROWS
Taxes 1/12th of Annual
Insurance 1/12th of Annual
Replacement Reserves $9,473 ($113,676 per year)
TI/LC $8,333 ($100,000 at
closing; capped at $200,000)
--------------------------------------------------------------------------------
PROPERTY INFORMATION
--------------------------------------------------------------------------------
SINGLE ASSET/PORTFOLIO Single Asset
PROPERTY TYPE Industrial Flex
LOCATION Los Angeles, California
YEARS BUILT/RENOVATED 1912-46/1999
THE COLLATERAL
The Gerry Buildings consist of nine industrial, manufacturing, and office
properties totaling 707,125 square feet. The properties are located in the
Fashion District of Los Angeles, which primarily caters to retailers and
wholesalers of clothing. Each of the nine buildings is located within two square
blocks of each other and two of the buildings are contiguous.
PROPERTY MANAGEMENT MJW Investments, Inc.
OCCUPANCY 90.0%
OCCUPANCY DATE April 24, 2000
BORROWER 1999 NOI $2,322,870
UNDERWRITTEN
NOI $2,398,182
NCF $2,079,950
APPRAISED VALUE $23,400,000
APPRAISAL DATE October 26, 1999
CUT-OFF DATE
LOAN PER SQUARE FOOT $23.79
LTV 71.9%
UW DSCR 1.25x
J.P. Morgan Commercial Mortgage Finance Corp., Series 1000-C10 Page 22
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan and Salomon Smith Barney Inc. do 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 Salomon Smith Barney Inc. and/or their
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.
and Salomon Smith Barney Inc. are members of SIPC. Copyright 2000 J.P. Morgan &
Co. Incorporated. Clients should contact analysts at and execute transactions
through a J.P. Morgan or Salomon Smith Barney Inc. entity in their home
jurisdiction unless governing law permits otherwise.
<PAGE>
EMBASSY SUITES CHICAGO
--------------------------------------------------------------------------------
LOAN INFORMATION
--------------------------------------------------------------------------------
PRINCIPAL BALANCE
ORIGINAL $16,575,000
CUT-OFF DATE $16,523,281
ORIGINATION DATE May 2, 2000
INTEREST RATE 8.615%
MATURITY DATE May 10, 2010
ORIGINAL AMORTIZATION 300 months
REMAINING AMORTIZATION 296 months
BORROWER/SPONSOR Felcor/CMB Deerfield Hotel,
LLC, a Delaware special
purpose limited liability
company which is owned by
Felcor Lodging Trust, Inc.
Felcor owns 188 hotels with
nearly 50,000 rooms and
suites in 35 states and
Canada. Felcor is the
owner of the largest number
of Embassy Suites, Crown
Plaza, Holiday Inn, and
independently owned
Doubletree branded hotels.
CALL PROTECTION Prepayment locked out until
on or after February 10,
2010. U.S. Treasury
defeasance allowed, in
whole but not in part, on
any payment date on or
after the second
anniversary of
securitization.
COLLECTION ACCOUNT None
MEZZANINE LOANS/PREFERRED None
EQUITY
MONTHLY ESCROWS
Taxes 1/12th of Annual
Insurance 1/12th of Annual
--------------------------------------------------------------------------------
PROPERTY INFORMATION
--------------------------------------------------------------------------------
SINGLE ASSET/PORTFOLIO Single Asset
PROPERTY TYPE Full Service Hotel
LOCATION Deerfield, Illinois
YEARS BUILT/RENOVATED 1987/1997
THE COLLATERAL
The Embassy Suites Chicago property is a 7-story, 237-room full service hotel
located in Deerfield, Illinois, a northern suburb of Chicago. Amenities include
an indoor pool, sauna, whirlpool, fitness center, gift shop, meeting/banquet
space and restaurant.
PROPERTY MANAGEMENT Coastal Hotel Group, Inc.
OCCUPANCY 75.0%
OCCUPANCY DATE February 29, 2000
BORROWER 1999 NOI $2,917,046
UNDERWRITTEN
NOI $2,677,957
NCF $2,263,542
APPRAISED VALUE $23,700,000
APPRAISAL DATE April 1, 2000
CUT-OFF DATE
LOAN PER ROOM $69,718
LTV 69.7%
UW DSCR 1.40x
J.P. Morgan Commercial Mortgage Finance Corp., Series 1000-C10 Page 23
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan and Salomon Smith Barney Inc. do 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 Salomon Smith Barney Inc. and/or their
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.
and Salomon Smith Barney Inc. are members of SIPC. Copyright 2000 J.P. Morgan &
Co. Incorporated. Clients should contact analysts at and execute transactions
through a J.P. Morgan or Salomon Smith Barney Inc. entity in their home
jurisdiction unless governing law permits otherwise.
<PAGE>
FAIRGROUNDS PLAZA
--------------------------------------------------------------------------------
LOAN INFORMATION
--------------------------------------------------------------------------------
PRINCIPAL BALANCE
ORIGINAL $15,300,000
CUT-OFF DATE $16,200,572
ORIGINATION DATE September 2, 1999
INTEREST RATE 7.99%
MATURITY DATE October 1, 2009
ORIGINAL AMORTIZATION 360 months
REMAINING AMORTIZATION 349 months
BORROWER/SPONSOR M.O.R Aylesbury, Inc., a
special purpose Maryland
corporation which is
controlled by Manekin, LLC
a full service real estate
company providing
brokerage, development,
asset management, and
investment services
throughout the Baltimore
and Washington DC
metropolitan areas.
CALL PROTECTION Prepayment locked out until
on or after July 1, 2009.
U.S. Treasury defeasance
allowed, in whole but not
in part, on any payment
date on or after the second
anniversary of
securitization.
COLLECTION ACCOUNT None
MEZZANINE LOANS/PREFERRED None
EQUITY
MONTHLY ESCROWS
Taxes 1/12th of Annual
Insurance 1/12th of Annual
Replacement Reserves $450 ($5,400 per year)
--------------------------------------------------------------------------------
PROPERTY INFORMATION
--------------------------------------------------------------------------------
SINGLE ASSET/PORTFOLIO Single Asset
PROPERTY TYPE Anchored Retail
LOCATION Timonium, Maryland
Baltimore County
YEAR BUILT 1999
THE COLLATERAL
The Fairgrounds Plaza property is a 107,060 square foot anchored shopping center
located approximately 10 miles from downtown Baltimore. The center is anchored
by a SuperFresh supermarket with reported sales per square foot of $492 in 1999
and includes eight in-line tenants and one pad site. SuperFresh is owned by The
Great Atlantic & Pacific Tea Company (NYSE: GAP; Ba1/BB).
PROPERTY MANAGEMENT Manekin, LLC
OCCUPANCY 99.0%
OCCUPANCY DATE March 6, 2000
BORROWER 1999 NOI $1,392,106
UNDERWRITTEN
NOI $1,867,163
NCF $1,814,696
APPRAISED VALUE $20,700,00
APPRAISAL DATE April 21, 2000
CUT-OFF DATE
LOAN PER SQUARE FOOT $151.32
LTV 78.3%
UW DSCR 1.27x
J.P. Morgan Commercial Mortgage Finance Corp., Series 1000-C10 Page 24
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan and Salomon Smith Barney Inc. do 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 Salomon Smith Barney Inc. and/or their
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.
and Salomon Smith Barney Inc. are members of SIPC. Copyright 2000 J.P. Morgan &
Co. Incorporated. Clients should contact analysts at and execute transactions
through a J.P. Morgan or Salomon Smith Barney Inc. entity in their home
jurisdiction unless governing law permits otherwise.
<PAGE>
COLLATERAL PERFORMANCE OF PREVIOUS JP MORGAN FIXED-RATE CONDUIT 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
------- -------------- --------------- ---------------- ---------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
C1 Jul-95 36 $ 172,165 $12,797(2) 7.43% 1 $ 0
C2 Jan-96 91 304,650 0 0.00 1 0
C3 Jun-96 124 400,936 0 0.00 0 0
C4 Jan-97 127 406,985 0 0.00 1 0
C5 Sep-97 93(3) 401,244(3) 0 0.00 1 1,860(4)
C6 Mar-98 91 796,414 14,410(5) 1.81 0 0
MC2(6) Jun-98 25(3) 138,896(3) 0 0.00 0 0
C7 Apr-99 145 801,352 0 0.00 0 0
C8 Aug-99 128 731,517 0 0.00 0 0
C9 Jan-00 140 814,388 4,550(7) 0.56 0 0
------- -------------- --------------- ---------------- ---------- ------------ ------------ -------------
TOTAL 1,000 $4,968,546 $31,757 0.64% 4 $1,860
------- -------------- --------------- ---------------- ---------- ------------ ------------ -------------
</TABLE>
(1) As of September 2000 remittances
(2) A retail outlet mall in Martinsburg, VA secures this delinquent loan.
Tenant occupancy has dropped due to competing outlet centers in nearby
Baltimore, MD and Washington, DC
(3) Represents J.P. Morgan's contribution to the total pool
(4) Quality Inn and Suites, located in Jacksonville, NC. The property went into
default due to the proximate construction of several other limited service
hotels that severely impacted net operating income. We anticipate that
there will be a loss on this loan in the amount of approximately $846,000
(5) Burns Medical Center, located in Petosky, Michigan, was originally
master-leased to PhyCor of Northern Michigan, Inc. (NYSE: PHY), a public
physician practice management company. Due to severe financial
difficulties, PhyCor terminated its lease payments in April 1999. The owner
is working on several options for infusing capital into the property
including selling the property. Partial payments have been made on the loan
each month since February 2000 and the loan is current through the June
payment.
(6) Mortgage Capital Funding, Inc., Multifamily/Commercial Mortgage
Pass-Through Certificates, Series 1998-MC2
(7) Howard Johnson -- Cutler Ridge is presently delinquent by two payments
(approximately 45 days). The servicer does not believe there has been any
deterioration in property conditions, however, the borrower has not been
cooperative in making timely debt service payments or forwarding updated
financial statements
J.P. Morgan Commercial Mortgage Finance Corp., Series 1000-C10 Page 25
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan and Salomon Smith Barney Inc. do 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 Salomon Smith Barney Inc. and/or their
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.
and Salomon Smith Barney Inc. are members of SIPC. Copyright 2000 J.P. Morgan &
Co. Incorporated. Clients should contact analysts at and execute transactions
through a J.P. Morgan or Salomon Smith Barney Inc. entity in their home
jurisdiction unless governing law permits otherwise.
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE>
ANNEX F
J.P. MORGAN COMMERCIAL MORTGAGE FINANCE CORP.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-C10
[STATE STREET LOGO] PAYMENT DATE:
RECORD DATE:
STATE STREET CORPORATION
CORPORATE TRUST
2 AVENUE DE LAFAYETTE
BOSTON, MA 02111-1724
TRUSTEE'S REPORT TO CERTIFICATEHOLDERS
TABLE OF CONTENT
<TABLE>
<CAPTION>
REPORT SECTIONS PREPARER PAGE NUMBER
--------------- -------- -----------
<S> <C> <C>
Distribution Date Statement Trustee 1-5
Loan Schedule Trustee 6-8
Loan Portfolio Stratifications Trustee 9-11
REO Status Report Servicer 12-13
Watch List Servicer 14
Historical Loan Modification Report Servicer 15
Deliquent Loan Status Servicer 16-17
Historical Loss Estimate Report Servicer 18
Specially Serviced Loan Detail Servicer 19
Comparative Financial Report Servicer 20-22
ADDITIONAL REPORT/FILE
----------------------
CSSA Periodic Loan Update File Servicer Delivery Through Web Site
Operating Statement Analysis Servicer Upon Reqest
NOI Adjustment Worksheet Servicer Upon Reqest
STATE STREET INFORMATION DELIVERY VEHICLES
------------------------------------------
Web Site: http://corporatetrust.statestreet.com
For other information delivery requests: [email protected]
DEAL-SPECIFIC CONTACTS
----------------------
Account Officer (trustee and paying agent questions):
Account Administrator (analytics and collateral questions):
Servicer
Special Servicer
RATING AGENCY CONTACTS
----------------------
</TABLE>
This report has been prepared by, or is based on information furnished to State
Street Bank and Trust Company ("State Street") by, one or more third parties
(e.g. Servicers, Master Servicer, etc.), and State Street has not independently
verified information received from or prepared by any such third party. State
Street shall not and does not undertake responsibility for the accuracy,
completeness, or sufficiency of this report or the information contained herein
for any purpose, and State Street makes no representations or warranties with
respect thereto. The information in this report is presented here with the
approval of the Issuer soley as a convience for the user, and should not be
reiled upon without further investigation by any user contemplating an
investment decision with respect to the related securities.
Page 1 of 5
F-1
<PAGE>
J.P. MORGAN COMMERCIAL MORTGAGE FINANCE CORP.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-C10
[STATE STREET LOGO] PAYMENT DATE:
RECORD DATE:
TRUSTEE'S REPORT TO CERTIFICATEHOLDERS
PAYMENT SUMMARY
<TABLE>
<CAPTION>
Pass-Through Interest Original Beginning Principal Interest Total Ending
Class CUSIP Rate Type Balance Balance Paid Paid Paid Balance
----- ----- ------------ -------- -------- --------- --------- -------- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
TOTALS:
</TABLE>
*Based on a Notional Balance
DISTRIBUTIONS PER CERTIFICATE
<TABLE>
<CAPTION>
Beginning Principal Interest Ending
Class Certificate Factor Distribution(1) Distribution(1) Certificate Factor
----- ------------------ --------------- --------------- ------------------
<S> <C> <C> <C> <C>
</TABLE>
(1) represents net payment per cerficiate
Page 2 of 5
F-2
<PAGE>
J.P. MORGAN COMMERCIAL MORTGAGE FINANCE CORP.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-C10
[STATE STREET LOGO] PAYMENT DATE:
RECORD DATE:
TRUSTEE'S REPORT TO CERTIFICATEHOLDERS
PRINCIPAL DETAIL
<TABLE>
<CAPTION>
Beginning Scheduled Unscheduled Other Principal/ Total Principal Realized Losses/ Appraisal
Class Balance Principal Principal Cash Adjustments Distribution Amount Balance Adj. Reduction Amount
----- --------- --------- ----------- ---------------- ------------------- ---------------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
TOTALS:
<CAPTION>
Ending Cumulative Cumulative
Class Balance Realized Losses Appraisal Red.
----- ------- --------------- --------------
<S> <C> <C> <C>
</TABLE>
INTEREST DETAIL
<TABLE>
<CAPTION>
Accrued Beginning Unpaid Prepayment Current Interest Yield Main. Prepayment Payments to
Class Certificate Interest Interest Int. Shortfall Shortfalls Charge Premiums Interest Shortfall
----- -------------------- ---------------- -------------- ---------------- ----------- ---------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
TOTALS:
<CAPTION>
Interest on Total Interest Cumulative Unpaid
Class Unpaid Interest Distr. Amount Interest Shortfall
----- --------------- -------------- ------------------
<S> <C> <C> <C>
</TABLE>
Page 3 of 5
F-3
<PAGE>
J.P. MORGAN COMMERCIAL MORTGAGE FINANCE CORP.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-C10
[STATE STREET LOGO] PAYMENT DATE:
RECORD DATE:
REPORT TO CERTIFICATEHOLDERS:
ADDITIONAL REPORTING INFORMATION
MORTGAGE LOAN ACTIVITY FOR RELATED PAYMENT DATE:
<TABLE>
<CAPTION>
# of Mortgage Weighted Average Beginning Agg Stated Ending Agg Stated Ending Actual Unpaid Available
Loans Note Mortgage Rate Principal Balance Principal Balance Principal Balance Distribution Amt
------------- ------------------ -------------------- ----------------- -------------------- ----------------
<S> <C> <C> <C> <C> <C>
</TABLE>
<TABLE>
Current Current Additional Principal
Realized Losses Trust Fund Exp # of Payoffs Prepayments
--------------- ------------------ ------------ -----------
<S> <C> <C> <C>
</TABLE>
APPRAISAL REDUCTION INFORMATION:
<TABLE>
Loan # SPB of Apr Red Loan All Unpd Int & Fees Appraised Value P&I Advance on Loan ASER Date
------ ------------------- ------------------- --------------- ------------------- ---------
<S> <C> <C> <C> <C> <C>
</TABLE>
AGGREGATE DELINQUENCY INFORMATION FOR RELATED PAYMENT DATE:
<TABLE>
<CAPTION>
One Month Two Months 3 Months + Foreclosures Sp. Serviced
--------- ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
# of Loans
Agg Prin Balance
</TABLE>
REO PROPERTY WITH FINAL RECOVERY DETERMINATION:
<TABLE>
<CAPTION>
Mortgage Basis for Final All Proceeds Portion Proceeds Amount of
Loan # Recovery Determination Received to Certificates Realized Loss
-------- ---------------------- ------------ ---------------- -------------
<S> <C> <C> <C> <C>
</TABLE>
SUBORDINATION LEVELS
<TABLE>
<CAPTION>
Class Current Original
----- ------- --------
<S> <C> <C>
</TABLE>
P&I ADVANCE & FEE INFORMATION:
------------------------------
Advances:
- Outstanding P&I
- Servicing
- Nonrecoverable P&I
Interest on:
- P&I Advances
- Servicing Advances
Servicing Compensation:
- to Master Servicer
- to Special Servicer
<TABLE>
<CAPTION>
Class Maturity Date @0% CPR
----- ---------------------
<S> <C>
</TABLE>
PREPAYMENT SPEED HISTORY
------------------------
<TABLE>
<CAPTION>
CPR*
%
----
<S> <C>
1 MONTH
3 MONTH
6 MONTH
12 MONTH
LIFE
</TABLE>
* Principal received within 1 month of maturity is not considered prepayment
in the calculation of CPR.
Page 4 of 5
F-4
<PAGE>
J.P. MORGAN COMMERCIAL MORTGAGE FINANCE CORP.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-C10
[STATE STREET LOGO] PAYMENT DATE:
RECORD DATE:
REPORT TO CERTIFICATEHOLDERS:
HISTORICAL INFORMATION ROLLING 24 MONTHS
<TABLE>
<CAPTION>
One Month Del. Two Months Del. Three Plus Del. Pre-Payments Mod./REO/Workouts Liquidations
Date Count Balance Count Balance Count Balance Count Balance Count Balance Count Balance
---- ----- ------- ----- ------- ----- ------- ----- ------- ----- ------- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<TABLE>
<CAPTION>
ORIGINAL/CURRENT RATINGS
Class Original Current Original Current Original Current Original Current
----- -------- ------- -------- ------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
Page 5 of 5
F-5
<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
2000-C10, Class A1, Class A2, Class B, Class C, Class D, Class E and Class F
(the "Global Securities") will be available only in book-entry form. Investors
in the Global Securities may hold interests in such Global Securities through
any of DTC, Cedelbank or Euroclear. Initial settlement and all secondary trades
will settle in same day funds. Capitalized terms used but not defined in this
Annex G have the meanings assigned to them in the Prospectus Supplement and the
Prospectus.
Secondary market trading between investors holding interests in Global
Securities through Cedelbank and Euroclear will be conducted in accordance with
their normal rules and operating procedures and in accordance with conventional
eurobond practice. Secondary market trading between investors holding interests
in 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 investors holding interests in
Global Securities through Cedelbank or Euroclear and investors holding
interests in Global Securities through DTC Participants will be effected on a
delivery-against-payment basis through the respective depositories of Cedelbank
and Euroclear (in such capacity) and other DTC Participants.
Although DTC, Euroclear and Cedelbank are expected to follow the
procedures described below in order to facilitate transfers of interests in the
Global Securities among participants of DTC, Euroclear and Cedelbank, they are
under no obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time. Neither the Issuer nor the Trustee
will have any responsibility for the performance by DTC, Euroclear and
Cedelbank or their respective participants or indirect participants of their
respective obligations under the rules and procedures governing their
obligations.
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
The Global Securities will be registered 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. Cedelbank and Euroclear will hold positions on
behalf of their participants through their respective depositories, which in
turn will hold such positions in accounts as DTC Participants.
Investors electing to hold interests in Global Securities through DTC
Participants, rather than through Cedelbank or Euroclear accounts, will be
subject to 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 interests in 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. Interests in Global
Securities will be credited to the securities custody accounts on the
settlement date against payment 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.
G-1
<PAGE>
Transfers between DTC Participants. Secondary market trading between DTC
Participants will be settled using the DTC procedures applicable to similar
issues of pass-through certificates in same-day funds.
Transfers between Cedelbank and/or Euroclear Participants. Secondary
market trading between Cedelbank Participants or Euroclear Participants and/or
investors holding interests in Global Securities through them will be settled
using the procedures applicable to conventional eurobonds in same-day funds.
Transfers between DTC seller and Cedelbank or Euroclear purchaser. When
interests in Global Securities are to be transferred on behalf of a seller from
the account of a DTC Participant to the account of a Cedelbank Participant or a
Euroclear Participant for a purchaser, the purchaser will send instructions to
Cedelbank or Euroclear through a Cedelbank Participant or Euroclear Participant
at least one business day prior to settlement. Cedelbank or the Euroclear
Operator will instruct its respective depository to receive an interest in the
Global Securities against payment. Payment will include interest accrued on the
Global Securities from and including the last distribution date to but
excluding the settlement date. Payment will then be made by the respective
depository to the DTC Participant's account against delivery of an interest in
the Global Securities. After such settlement has been completed, such interest
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 credit of such interest will appear on the
next business day 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 through DTC 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 system the funds necessary to process
same-day funds settlement. The most direct means of doing so is to pre-position
funds for settlement from cash on hand, in which case such Cedelbank
Participants or Euroclear Participants will take on credit exposure to
Cedelbank or the Euroclear Operator until interests in the Global Securities
are credited to their accounts one day later.
As an alternative, if Cedelbank or the Euroclear Operator 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.
Under this procedure, Cedelbank Participants or Euroclear Participants
receiving interests in Global Securities for purchasers would incur overdraft
charges for one day, to the extent they cleared the overdraft when interests in
the Global Securities were credited to their accounts. However, interest on the
Global Securities would accrue from the value date. Therefore, the investment
income on the interest in the Global Securities earned during that one-day
period would tend to 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 through DTC will take place during New York business
hours, DTC Participants are subject to DTC procedures for transferring
interests in Global Securities to the respective depository of Cedelbank or
Euroclear 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 seller settling the sale through a DTC Participant, a cross-market
transaction will settle no differently than a sale to a purchaser settling
through a DTC Participant.
Finally, intra-day traders that use Cedelbank Participants or Euroclear
Participants to purchase interests in Global Securities from DTC Participants
or sellers settling through them for delivery to Cedelbank Participants or
Euroclear Participants should note that these trades will automatically fail on
the sale side unless affirmative action is taken. At least three techniques
should be available to eliminate this potential condition:
(a) borrowing interests in Global Securities through Cedelbank or
Euroclear for one day (until the purchase side of the intra-day trade is
reflected in the relevant Cedelbank or Euroclear accounts) in accordance
with the clearing system's customary procedures;
G-2
<PAGE>
(b) borrowing interests in Global Securities in the United States from a
DTC Participant no later than one day prior to settlement, which would give
sufficient time for such interests to be reflected in the relevant
Cedelbank or Euroclear accounts 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.
Transfers 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
interests in Global Securities are to be transferred by the respective clearing
system, through the respective depository, to a DTC Participant. The seller
will send instructions to Cedelbank or the Euroclear Operator through a
Cedelbank Participant or Euroclear Participant at least one business day prior
to settlement. Cedelbank or Euroclear will instruct its respective depository,
to credit an interest in the Global Securities to the DTC Participant's account
against payment. Payment will include interest accrued on the Global Securities
from and including the last distribution date to but excluding the settlement
date. The payment will then be reflected in the account of the Cedelbank
Participant or Euroclear Participant the following business 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 through DTC in New York). 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.
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
United States) 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-8BEN). 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-8BEN (Certificate of Foreign Status).
If the information shown on Form W-8BEN changes, a new Form W-8BEN must be
filed within 30 days of such change.
Exemption for non-U.S. Persons with effectively connected income (Form
W-8ECI). 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 W-8ECI (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 W-8BEN). 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
W-8BEN (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-8BEN. Form W-8BEN 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).
G-3
<PAGE>
U.S. Federal Income Tax Reporting Procedure. The Beneficial Owner of a
Global Security or, in the case of a Form W-8BEN or a Form W-8ECI 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-8BEN is effective for three calendar
years and Form W-8ECI 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 or other entity treated as a
corporation or partnership for federal income tax purposes created or organized
in or under the laws of the United States, any State thereof or the District of
Columbia or (iii) an estate the income of which is includable in gross income
for United States tax purposes, regardless of its source or (iv) 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-4
<PAGE>
PROSPECTUS
Mortgage Pass-Through Certificates
(Issuable in Series)
J.P. MORGAN COMMERCIAL MORTGAGE FINANCE CORP.
DEPOSITOR
J.P. Morgan Commercial Mortgage Finance Corp. will periodically offer
certificates in one or more series. Each series of certificates will represent
the entire beneficial ownership interest in a trust fund. 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 the
depositor, any servicer or any of their respective affiliates. 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 prospectus supplement.
The primary asset of the trust fund may include:
o multifamily and commercial mortgage loans, including participations
therein;
o mortgage-backed securities evidencing interest in or secured by
multifamily and commercial mortgage loans, including participations
therein, and other mortgage-backed securities;
o direct obligations of the United States or other government agencies; or
o a combination of the assets described above
INVESTING IN THE OFFERED CERTIFICATES INVOLVES RISKS. YOU SHOULD REVIEW THE
INFORMATION APPEARING UNDER THE CAPTION "RISK FACTORS" ON PAGE 9 AND IN THE
RELATED PROSPECTUS SUPPLEMENT BEFORE PURCHASING ANY OFFERED CERTIFICATE.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE CERTIFICATES OR DETERMINED THAT
THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
September 27, 2000
<PAGE>
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS
AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT
We provide information to you about the certificates in two separate
documents that provide progressively more detail:
o this prospectus, which provides general information, some of which may
not apply to your series of certificates; and
o the accompanying prospectus supplement, which describes the specific
terms of your series of certificates.
IF THE DESCRIPTION OF YOUR CERTIFICATES IN THE ACCOMPANYING PROSPECTUS
SUPPLEMENT DIFFERS FROM THE RELATED DESCRIPTION IN THIS PROSPECTUS, YOU SHOULD
RELY ON THE INFORMATION IN THAT PROSPECTUS SUPPLEMENT.
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.
Some capitalized terms used in this prospectus are defined in the Glossary
attached hereto.
---------------------
Until 90 days after the date of each prospectus supplement, all dealers
effecting transactions in the offered certificates covered by such prospectus
supplement 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.
You should rely only on any information or representations contained or
incorporated by reference in this prospectus and the related prospectus
supplement. This prospectus and any prospectus supplement do not constitute an
offer to sell or a solicitation of an offer to buy any securities in any state
or other jurisdiction in which such offer would be unlawful.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus ......................................................................... 1
Important Notice about Information Presented in this Prospectus and the Accompanying
Prospectus Supplement ............................................................. 2
Additional Information ............................................................. 3
Incorporation of Certain Information by Reference .................................. 3
Summary of Prospectus .............................................................. 4
Risk Factors ....................................................................... 9
Description of the Trust Funds ..................................................... 19
Use of Proceeds .................................................................... 24
Yield Considerations ............................................................... 24
The Depositor ...................................................................... 27
Description of the Certificates .................................................... 28
Description of the Agreements ...................................................... 35
Description of Credit Support ...................................................... 50
Certain Legal Aspects of the Mortgage Loans and the Leases ......................... 52
Federal Income Tax Consequences .................................................... 68
ERISA Considerations ............................................................... 96
Legal Investment ................................................................... 98
Plan of Distribution ............................................................... 100
Legal Matters ...................................................................... 100
Financial Information .............................................................. 100
Rating ............................................................................. 101
Glossary of Terms .................................................................. 102
</TABLE>
2
<PAGE>
ADDITIONAL INFORMATION
The depositor has filed with the Securities and Exchange 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 do not contain all of the
information set forth in the registration statement. For further information,
you should refer to the registration statement and the exhibits attached
thereto. Such registration statement and exhibits can be inspected and copied
at prescribed rates at the public reference facilities maintained by the
Securities and Exchange 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 Securities and Exchange 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 Securities and Exchange Commission.
The depositor will file or cause to be filed with the Securities and
Exchange Commission such periodic reports with respect to each trust fund as
are required under the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Securities and Exchange Commission thereunder.
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.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
We are incorporating herein by reference all documents and reports 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. You may obtain, without charge, a copy of any
or all documents or reports incorporated herein by reference, to the extent
such documents or reports relate to an offered certificate. Exhibits to those
documents will be provided to you only if such exhibits were specifically
incorporated by reference in those 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.
3
<PAGE>
SUMMARY OF PROSPECTUS
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
accompanying prospectus supplement.
The Trust Assets............ Each series of certificates will represent in
the entire beneficial ownership interest in a
trust fund consisting primarily of any of the
following:
o mortgage assets;
o collection accounts;
o forms of credit support; and
o cash flow agreements.
The Mortgage Assets......... The mortgage assets with respect to each series
of certificates may consist of any of the
following:
o multifamily and commercial mortgage loans,
including participations therein;
o direct obligations of the United States or
other government agencies; and
o mortgage-backed securities.
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 person. The
mortgage loans will be primarily secured by
first or junior liens on, or security interests
in fee simple, leasehold or a similar interest
in any of the following types of properties:
o residential properties consisting of five or
more rental or cooperatively owned dwelling
units;
o office buildings;
o retail buildings or centers;
o hotels and motels;
o nursing homes;
o congregate care facilities;
o assisted living facilities;
o industrial properties;
o mini-warehouse facilities or self-storage
facilities;
o mobile home parks; and
o mixed use and other types of commercial
properties.
4
<PAGE>
The mortgage loans may also be secured by
additional collateral.
Some or all of the mortgage loans may also be
secured by an assignment of one or more leases
of one or more lessees of all or a portion of
the related mortgaged properties. A significant
or the sole source of payments on certain
commercial loans will be the rental payments due
under the related leases.
A mortgage loan may have an interest rate that
has any of the following features:
o is fixed over its term,
o adjusts from time to time,
o is partially fixed and partially floating,
o is floating based on one or more indices,
o may be converted from a floating to a fixed
interest rate,
o may be converted from a fixed to a floating
interest rate, or o interest is not paid
currently but is accrued and added to the
principal balance.
A mortgage loan may provide for any of the
following:
o scheduled payments to maturity,
o payments that adjust from time to time,
o negative amortization or accelerated
amortization,
o full amortization or require a balloon
payment due on its stated maturity date,
o prohibitions on prepayment,
o releases or substitutions of collateral,
including defeasance thereof with direct
obligation of the United States, and
o payment of a premium or a yield maintenance
penalty in connection with a principal
prepayment.
The mortgaged properties may be located anywhere
in the world. 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.
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 mortgage-backed securities will evidence
ownership interests in or be secured by mortgage
loans similar to those described above and other
mortgage-backed securities. Some mortgage-backed
securities 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 prospectus supplement.
5
<PAGE>
Collection Accounts......... Each trust fund will include one or more
accounts established and maintained on behalf of
the certificateholders. All payments and
collections received or advanced with respect to
the mortgage assets and other assets in the trust
fund will be deposited into those accounts. The
accounts may be maintained as an interest bearing
or a non-interest bearing account, and funds may
be held as cash or reinvested.
Credit Support.............. The following types of credit support may be
used to enhance the likelihood of distributions
on certain classes of certificates:
o subordination of junior certificates,
o letters of credit,
o insurance policies,
o guarantees,
o reserve funds, or
o other types of credit support described in
the prospectus supplement and a combination of
any of the above.
Cash Flow Agreements........ Cash flow agreements are used to reduce the
effects of interest rate or currency exchange
rate fluctuations on the underlying mortgage
assets and increase the likelihood of timely
distributions on the certificates. The trust fund
may include any of the following types of cash
flow agreements:
o guaranteed investment contracts,
o interest rate swap or exchange agreements,
o interest rate cap or floor agreements,
o currency exchange agreements,
o yield supplement agreements.
Description of
Certificates................ Each series of certificates will include one or
more classes. Each series of certificates will
represent in the aggregate the entire beneficial
ownership interest in the trust fund. The offered
certificates are the classes of certificates
being offered to you pursuant to the prospectus
supplement. The non-offered certificates are the
classes of certificates not being offered to you
pursuant to the prospectus supplement.
Information on the non-offered certificates is
being provided solely to assist you in your
understanding of the offered certificates.
Distributions on
Certificates................ The certificates may provide for different
methods of distributions to specific classes.
Any class of certificates may:
o provide for the accrual of interest thereon
based on fixed, variable or floating rates;
6
<PAGE>
o be senior or subordinate to one or more
other classes of certificates with respect to
interest or principal distribution and the
allocation of losses on the assets of the
trust fund;
o be entitled to principal distributions, with
disproportionately low, nominal or no interest
distributions;
o be entitled to interest distributions, with
disproportionately low, nominal or no
principal distributions;
o provide for distributions of accrued
interest only after the occurrence of certain
events, such as the retirement of one or more
other classes of certificates;
o provide for distributions of principal
sequentially, based on specified payment
schedules or other methodologies; and
o provide for distributions based on a
combination of any of the above features.
Interest on each class of offered certificates
of each series will accrue at the applicable
pass-through rate on the outstanding certificate
balance or notional balance. 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
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. Distributions of principal will be
made on each distribution date to the class or
classes of certificates entitled thereto until
the certificate balance of such certificates is
reduced to zero. Distributions of principal to
any class of certificates will be made on a pro
rata basis among all of the certificates of such
class.
Advances.................... A servicer may be obligated as part of its
servicing responsibilities to make certain
advances with respect to delinquent scheduled
payments and property related expenses which it
deems recoverable. The trust fund may be charged
interest for any advance. Neither the depositor
nor any of its affiliates will have any
responsibility to make such advances.
Termination................. A series of certificates may be subject to
optional early termination through the repurchase
of the mortgage assets in the related trust fund.
Registration of
Certificates................ One or more classes of the offered certificates
may initially be represented by one or more
certificates registered in the name of Cede &
Co., as the nominee of The Depository Trust
Company. If your offered certificates is so
registered, you will not be entitled to receive a
definitive certificate representing your interest
except in the event that physical certificates
are issued under the limited circumstances.
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Tax Status of
the Certificates............ The certificates of each series will constitute
either:
o "regular interests" or "residual interests"
in a trust fund treated as a "real estate
mortgage investment conduit" under the
Internal Revenue Code of 1986, or
o interests in a trust fund treated as a
grantor trust under applicable provisions of
the Internal Revenue Code of 1986.
ERISA Considerations........ If you are a fiduciary of an employee benefit
plan or other retirement plan or arrangement that
is subject to the Employee Retirement Income
Security Act of 1974, as amended, or Section 4975
of the Internal Revenue Code of 1986, as amended,
or any person which proposes to use "plan assets"
of any of these plans to acquire any offered
certificates, you should carefully review with
your legal counsel whether the purchase or
holding of any offered certificates could give
rise to transactions not permitted under these
laws. The prospectus supplement will specify if
investment in some certificates may require a
representation that the investor is not a plan or
similar arrangement or investing on behalf of a
plan or similar arrangement.
Legal Investment............ The prospectus supplement will specify whether
the offered certificates will constitute
"mortgage related securities" for purposes of the
Secondary Mortgage Market Enhancement Act of
1984. If your investment authority is subject to
legal restrictions you should consult your legal
counsel to determine whether and to what extent
the offered certificates constitute legal
investments for you.
Rating...................... At the date of issuance, as to each series,
each class of offered certificates will not be
rated lower than investment grade by one or more
nationally recognized statistical rating
agencies. A security rating is not a
recommendation to buy, sell or hold securities
and may be subject to revision or withdrawal at
any time by the assigning rating organization.
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RISK FACTORS
YOU SHOULD CONSIDER THE FOLLOWING RISK FACTORS, IN ADDITION TO THE RISK
FACTORS IN THE PROSPECTUS SUPPLEMENT, IN DECIDING TO PURCHASE ANY OF THE
OFFERED CERTIFICATES. THE RISKS AND UNCERTAINTIES DESCRIBED BELOW, TOGETHER
WITH THOSE DESCRIBED IN THE PROSPECTUS SUPPLEMENT UNDER "RISK FACTORS,"
SUMMARIZE THE MATERIAL RISKS RELATING TO YOUR CERTIFICATES.
Your ability to resell
certificates may be limited
because of their
characteristics ............ You may not be able to resell your certificates
and the value of your certificates may be less
than you anticipated for a variety of reasons
including:
o A secondary market for your certificates
does not develop;
o Interest rate fluctuations;
o The absence of redemption rights;
o The availability of other mortgage-backed
securities including those backed by loans on
single family residential properties; and
o The request for information in addition to
that provided in the prospectus, the
prospectus supplement and the monthly report
to certificateholders.
The assets of the trust fund
may not be sufficient to pay
your certificates........... 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 of the depositor
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. 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. 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 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 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
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accounts may be withdrawn under certain
conditions. 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
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 the
prospectus supplement.
Prepayments and repurchases
of the mortgage assets will
affect the timing of your
cash flow and may affect
your yield.................. Prepayments (including those caused by defaults
on the mortgage loans and repurchases for breach
of representation or warranty) 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
voluntary prepayments on the mortgage assets in
any trust fund will conform to any model
described herein or in any prospectus
supplement.
The rate of voluntary prepayments will also be
affected by:
o the voluntary prepayment terms of the
mortgage loan including prepayment lock-out
periods and prepayment premiums
o the ability of a servicer to collect
prepayment premiums
o then-current interest rates being charged on
similar mortgage loans
o the availability of mortgage credit.
If a mortgage loan is in default it may not be
possible to collect a prepayment premium. No
person will be required to pay any premium if a
mortgage loan is repurchased for a breach of
representation or warranty.
The yield on your certificates may be less than
anticipated because the prepayment premium or
yield maintenance required under certain
prepayment scenarios may not be enforceable in
some states or under federal bankruptcy laws.
o Some courts may consider the prepayment
premium to be usurious.
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o Even if the prepayment premium is
enforceable, we cannot assure you that
foreclosure proceeds will be sufficient to pay
the prepayment premium.
o Although the collateral substitution
provisions related to defeasance are not
suppose to be treated as a prepayment and
should not affect your certificates, we cannot
assure you that a court will not interpret the
defeasance provisions as requiring a
prepayment premium; nor can we assure you that
if it is treated as a prepayment premium, the
court will find the defeasance income stream
enforceable.
As a result, the actual maturity of your
certificates could occur significantly earlier
than expected and additional cash flow may not
be available to offset any effect this may have
on your yield. 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, a holder might, in some
prepayment scenarios, fail to recoup its
original investment.
Ratings do not guarantee
payment and do not address
prepayment risks............ 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. Ratings
do not address:
o the likelihood that principal prepayment
(including those caused by defaults) on the
related mortgage assets will be made,
o the degree to which the rate of such
prepayments might differ from that originally
anticipated,
o the likelihood of early optional termination
of the series of certificates,
o 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
o that an investor purchasing a certificate at
a significant premium might fail to recoup its
initial investment under certain prepayment
scenarios.
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
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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 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 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.
Net cash flow produced by a
mortgaged property may be
inadequate to repay the
mortgage loan............... Payment on each mortgage loan is dependent
primarily on:
o the net operating income of the related
mortgaged property; and
o at maturity (whether at scheduled maturity
or, in the event of a default under the
mortgage loan, upon the acceleration of such
maturity), the market value of the related
mortgaged property (taking into account any
adverse effect of a foreclosure proceeding on
such market 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 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.
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Nonrecourse loans limit
the remedies available
following a mortgagor
default..................... The mortgage loans will not be an obligation
of, or be insured or guaranteed by, any
governmental entity, by any private mortgage
insurer, or by the depositor, the originators,
the Servicers, the Trustee or any of their
respective affiliates.
Each mortgage loan generally is a nonrecourse
loan. If there is a default (other than a
default resulting from voluntary bankruptcy,
fraud or willful misconduct) there will
generally only be recourse against the specific
properties and other assets that have been
pledged to secure such mortgage loan. Even if a
mortgage loan provides for recourse to a
mortgagor or its affiliates, it is unlikely the
trust fund ultimately could recover any amounts
not covered by the mortgaged property.
Future cash flows and
property values are not
predictable................. Commercial and multifamily property values and
cash flows are volatile and may be insufficient
to cover debt service on the related mortgage
loan at any given time. If the cash flow from a
mortgaged property is reduced (for example, if
leases are not obtained or renewed), the
mortgagor may not be able to repay the loan. Cash
flow will determine the mortgagor's ability to
cover debt service and property values affect the
ability to refinance the property and the amount
of the recovery of proceeds upon foreclosure.
Cash flow and property value depend upon a number
of factors, including:
o national, regional and local economic
conditions;
o local real estate conditions, such as an
oversupply of space similar to the related
mortgaged property;
o changes or weakness in a specific industry
segment;
o the nature of expenses:
o as a percentage of revenue;
o whether expenses are fixed or vary with
revenue; and
o the level of required capital expenditures
for proper maintenance and demanded by
tenants;
o demographic factors;
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.
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<PAGE>
Poor property management
will adversely affect the
performance of the related
mortgaged property.......... The successful operation of a real estate project
also depends on the performance and viability of
the property manager. Properties deriving
revenues primarily from short-term sources
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.
The servicer will have
discretion to handle or
avoid obligor defaults in
a manner which may be
adverse to your interests... In order to maximize recoveries on defaulted
mortgage loans, a servicer will be permitted
(within prescribed parameters) to extend and
modify mortgage loans that are in default or as
to which a payment default is imminent. In
addition, a servicer may receive a workout fee
based on receipts from or proceeds of such
mortgage loans. While the servicer will be
required to follow accepted servicing standards,
there can be no assurance that such flexibility
will increase the present value of receipts from
or proceeds of mortgage loans that are in default
or as to which a payment default is imminent.
Mortgagors of commercial
mortgage loans are
sophisticated and may take
actions adverse to
your interests ............. 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.
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<PAGE>
Credit support may not cover
losses or risks which could
adversely affect payment on
your certificates........... The prospectus supplement for a series of
certificates will describe any credit support in
the related trust fund. Any credit support
will be limited in amount and coverage and will
not cover all potential risks. Use of credit
support will be subject to the conditions and
limitations described herein and in the
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, if so
provided in the 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, holders of certificates
evidencing an interest in one covered trust will
be subject to the risk that the 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.
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 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
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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.
Some actions allowed by the
mortgage may be limited
by law...................... The 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. The 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.
Some of 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 the rents.
Such assignments are typically not perfected as
security interests prior to actual possession of
the cash flow. 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.
One action jurisdiction may
limit the ability of the
servicer to foreclose on
a mortgaged property......... Several states (including California) have laws
that prohibit more than one "judicial action" to
enforce a mortgage obligation, and some courts
have 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.
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Rights against tenants may
be limited if leases are
not subordinate to mortgage
or do not contain
attornment provisions....... Some of the tenant leases contain provisions
that require the tenant to attorn to (that is,
recognize as landlord under the lease) a
successor owner of the property following
foreclosure. Some of the leases may be either
subordinate to the liens created by the mortgage
loans or else contain a provision that requires
the tenant to subordinate the lease if the
mortgagee agrees to enter into a non-disturbance
agreement.
In some states, if tenant leases are subordinate
to the liens created by the mortgage loans and
such leases do not contain attornment
provisions, such leases may terminate upon the
transfer of the property to a foreclosing lender
or purchaser at foreclosure. Accordingly, in the
case of the foreclosure of a mortgaged property
located in such a state and leased to one or
more desirable tenants under leases that do not
contain attornment provisions, such mortgaged
property could experience a further decline in
value if such tenants' leases were terminated
(e.g., if such tenants were paying above-market
rents).
If a mortgage is subordinate to a lease, the
lender will not (unless it has otherwise agreed
with the tenant) possess the right to dispossess
the tenant upon foreclosure of the property, and
if the lease contains provisions inconsistent
with the mortgage (e.g., provisions relating to
application of insurance proceeds or
condemnation awards), the provisions of the
lease will take precedence over the provisions
of the mortgage.
If mortgaged properties are
not in compliance with
current zoning laws you may
not be able to restore it
following a casualty loss ... Due to changes in applicable building and zoning
ordinances and codes which have come 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 of the mortgaged
properties were limited..... The mortgaged properties were inspected by
licensed engineers at the time the mortgage loans
were originated to assess the structure, exterior
walls, roofing interior construction, mechanical
and electrical systems and general condition of
the site,
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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 Disabilities Act may
result in additional losses... Under the Americans with Disabilities Act of
1990, all public accommodations are required to
meet certain federal requirements related to
access and use by disabled persons. To the extent
the mortgaged properties do not comply with the
act, the mortgagors may be required to incur
costs to comply with the act. In addition,
noncompliance could result in the imposition of
fines by the federal government or an award of
damages to private litigants.
Litigation Concerns......... There may be legal proceedings pending and,
from time to time, threatened against the
mortgagors or their affiliates relating to the
business of or arising out of the ordinary course
of business of the mortgagors and their
affiliates. There can be no assurance that such
litigation will not have a material adverse
effect on the distributions to
certificateholders.
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DESCRIPTION OF THE TRUST FUNDS
ASSETS
The primary assets of each trust fund are mortgage assets which include
(i) one or more multifamily and/or commercial mortgage loans and participations
therein, (ii) CMBS, or (iii) a combination of mortgage loans and CMBS. Mortgage
loans refers to both whole mortgage loans, participations therein and mortgage
loans underlying CMBS. 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 have been registered under the Securities Act of 1933, as
amended. The mortgage assets 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 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, which may be an affiliate of the depositor and may or may
not be the originator of the mortgage loan or the issuer of the CMBS.
Unless otherwise specified in the 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 on the assets of any other trust fund
established by the depositor. If specified in the 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 mortgaged properties
consisting of (i) multifamily properties which are residential properties
consisting of five or more rental or cooperatively owned dwelling units in
high-rise, mid-rise or garden apartment buildings or (ii) commercial properties
which are 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 located in any one of the fifty states, the District of
Columbia or the Commonwealth of Puerto Rico and, if so specified in the related
prospectus supplement, anywhere else in the world. To the extent specified in
the 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 the mortgaged property. A multifamily property may include mixed
commercial and residential structures and may include apartment buildings owned
by Cooperatives. The mortgaged properties may include leasehold interests in
properties, the title to which is held by third party lessors. Each mortgage
loan will be originated by an originator who is a person other than the
depositor. The prospectus supplement will indicate if any originator is an
affiliate of the depositor. The mortgage loans will be evidenced by mortgage
notes secured by 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.
Leases
To the extent specified in the prospectus supplement, the commercial
properties may be leased to lessees that occupy all or a portion of these
properties. Pursuant to a lease assignment, a mortgagor may assign its rights,
title and interest as lessor along with the income derived under each lease to
the 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 lessee 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 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 prospectus supplement, the
mortgagor and the mortgagee may agree that payments under leases are to be made
directly to a servicer.
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To the extent described in the 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 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. Some
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 prospectus supplement, 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 by the mortgagors) are
insufficient to pay all of the scheduled principal and interest on the mortgage
loans, the mortgagors must rely on other income including security deposits
generated by the mortgaged property to make payments on the mortgage loan. To
the extent specified in the 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 prospectus
supplement, some leases may expire prior to the stated maturity of the 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 the mortgage loans unless
the lease is renewed. As specified in the prospectus supplement, some 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. Some leases may provide that it is the
lessor's responsibility to restore the mortgaged property after a casualty to
its original condition. Some leases may provide a right of termination to the
lessee if a taking of a material or specified percentage of the leased space in
the mortgaged property occurs, or if the access to the leased space is
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 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.
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 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 in the case of 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
mortgage loan. 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;
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however, because leases are also subject to default risks 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 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 the 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 the date of appraisal), the income capitalization method (a projection of
value based upon the property's projected net cash flow), or upon an
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 be considered by the Originators of the multifamily and
commercial loans, or that, for any of the mortgage loans, they are complete or
relevant. See "Risk Factors." Net cash flow produced by a mortgaged property
may be inadequate to repay the mortgage loan," "Nonrecourse loans limit the
remedies available following a mortgagor default. Prepayments and repurchases
of the mortgage assets will affect the timing of your cashflow and may affect
your yield. The assets of the trust fund may not be sufficient to pay your
certificates. The servicer will have discretion to handle or avoid obligor
defaults in a manner which may be adverse to your interests. Mortgagors of
commercial loans are sophisticated and may take actions adverse to your
interests.
Mortgage Loan Information in Prospectus Supplements
Each prospectus supplement will contain information 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
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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 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 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 Depositor at the time the 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 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 prospectus supplement. Each mortgage loan may provide
for no accrual of interest or for accrual of interest thereon at an 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 interest rate, or from a fixed to a floating 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 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 prospectus supplement. Each mortgage loan may
contain a Lock-out Period and a Lock-out Date, or require a Prepayment Premium
in connection with a prepayment, in each case as described in the prospectus
supplement. In the event that holders of any class or classes of certificates
will be entitled to all or a portion of any Prepayment Premiums collected in
respect of the mortgage loans, the 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 Equity Participations,
as described in the prospectus supplement. In the event that holders of any
class or classes of certificates will be entitled to all or a portion of an
Equity Participation, the 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
Distributions of any principal or interest, as applicable, will be made on
CMBS on the dates specified in the prospectus supplement. The CMBS may be
issued in one or more classes with characteristics similar to the classes of
certificates described in this prospectus.
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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 will be a function of
certain characteristics of the mortgage loans or underlying CMBS and other
factors and generally will be 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 related
issuer, servicer and 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 underlying mortgage
loans, the underlying CMBS or directly to such CMBS, (viii) the terms on which
the underlying mortgage loans or underlying 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 related servicing
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 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 prospectus supplement will 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 reinvested. See "Description of the Agreement--Distribution account
and Other Collection Accounts."
CREDIT SUPPORT
If so provided in the prospectus supplement, partial or full protection
against some types of 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 the 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. 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 each series
of certificates. See "Risk Factors--Credit support may not cover losses or
risks which could adversely affect payment on your certificates" 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
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fluctuations on the mortgage assets or on one or more classes of certificates.
The principal terms of any such 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 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
a distribution date. In addition, if so specified in the 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 the
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 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 the 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, the mortgage loans
are likely to be the subject of higher principal prepayments than if prevailing
rates remain at or above the rates borne by the mortgage loans. In this regard,
it should be noted that some mortgage assets may consist of mortgage loans with
different mortgage interest rates and the stated pass-through or pay-through
interest rate of some 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
the mortgage assets, and by the extent to which the servicer of any mortgage
loan is able to enforce these 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 the rate actually experienced on the mortgage
assets, the actual yield to maturity will be lower than the rate thus
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 the rate actually experienced on
the mortgage assets, the actual yield to maturity will be higher 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
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 these classes.
When a full prepayment is made on a mortgage loan, the mortgagor is
charged interest on the principal amount of the mortgage loan prepaid for the
number of days in the month actually elapsed up to the date of the prepayment.
Unless otherwise specified in the 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 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
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 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.
PREPAYMENTS--MATURITY AND WEIGHTED AVERAGE LIFE
The rates at which principal payments are received on the mortgage assets
included in a trust fund and the rate at which payments are made from any
credit support or cash flow agreement for a series of
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certificates may affect the ultimate maturity and the weighted average life of
each class of such certificates. 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.
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 the Series.
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.
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 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
the mortgage assets. See "Description of the Trust Funds."
Prepayments on loans are also commonly measured relative to a prepayment
standard or model such as CPR, a constant prepayment rate model. 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 the 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 the 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
the 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.
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 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
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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 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
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 the 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 mortgaged property. With respect to any whole loans,
unless otherwise provided in the prospectus supplement, the master servicer, on
behalf of the trust fund, will be required to exercise (or waive its right to
exercise) any 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 based on fixed, variable or floating rates;
(ii) include senior certificates or subordinate certificates; (iii) Stripped
Principal Certificates; (iv) Stripped Interest Certificates; (v) Accrual
Certificates; (vi) provide for payments of principal sequentially, based on
specified payment schedules, from only a portion of the trust assets in the
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 the registration of a 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 as physical
certificates or as book-entry certificates, as provided in the related
prospectus supplement. See "Description of the Certificates--Book-Entry
Registration and Physical Certificates." Physical 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--Your ability to resell
certificates may be limited because of their characteristics" and "The assets
of the trust fund may not be sufficient to pay your certificates."
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 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 a record date specified in the prospectus supplement, and the
amount of each distribution will be determined as of the close of business on
the determination date specified in the prospectus supplement. All
distributions with respect to each class of certificates on each distribution
date will be allocated pro rata among the outstanding certificates in the class
or by random selection, as described in the prospectus supplement or otherwise
established by the 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 prospectus supplement (and, if so provided
in the prospectus supplement, holds certificates in the requisite amount
specified therein), or by check mailed to the address of the person entitled to
such payments as it appears on the certificate register; provided, however,
that the final distribution in retirement of the certificates (whether physical
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.
AVAILABLE DISTRIBUTION AMOUNT
All distributions on the certificates of each series on each distribution
date will be made from the Available Distribution Amount, in accordance with
the terms described in the prospectus supplement. Unless provided otherwise in
the prospectus supplement, the Available Distribution Amount for each
distribution date equals the sum of the following amounts:
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(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 the
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 the 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 may have a different Pass-Through Rate. The
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 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 that class and distribution date, subject
to the sufficiency of the portion of the available distribution amount
allocable to the class on the distribution date. Prior to the time interest is
distributable on any class of Accrual Certificates, the amount of Accrued
Certificate Interest otherwise distributable on the 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), the 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, the 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 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 the accrual
period on the mortgage loans comprising or underlying the mortgage assets in
the trust fund for the 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 prospectus supplement.
The 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 trust fund. Unless otherwise provided in the prospectus
supplement, any reduction in the amount of the Accrued Certificate Interest
otherwise distributable on a class of certificates by reason of the allocation
to that class of a portion of any deferred
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interest on the mortgage loans comprising or underlying the mortgage assets in
the trust fund will result in a corresponding increase in the certificate
balance of the class. See "Risk Factors--Prepayments and repurchases of the
mortgage assets will affect the timing of your cash flow and may affect your
yield."
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 prospectus supplement, by the amount of losses incurred in respect of the
related mortgage assets. The certificate balance may be increased in respect of
deferred interest on the mortgage loans to the extent provided in the
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 Accrued Certificate Interest. Unless otherwise
provided in the 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 prospectus supplement.
Unless otherwise provided in the 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
the prospectus supplement until the certificate balance of that 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 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 that 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 those
sections to certificate balance and Pass-Through Rate refer to the principal
balance, if any, of any of the components and the Pass-Through Rate, if any, on
any component, respectively.
DISTRIBUTIONS ON THE CERTIFICATES OF PREPAYMENT PREMIUMS OR IN RESPECT OF
EQUITY PARTICIPATIONS
If so provided in the prospectus supplement, Prepayment Premiums or
payments in respect of Equity Participations that are collected on the mortgage
assets in the 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 the 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 the 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 the
trust fund.
ADVANCES IN RESPECT OF DELINQUENCIES
With respect to any series of certificates evidencing an interest in a
trust fund, unless otherwise provided in the 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
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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 the trust fund and
were delinquent on the related determination date, subject to the servicer's
(or another entity's) good faith determination that such advances will be
reimbursable from the loan proceeds. In the case of a series of certificates
that includes one or more classes of subordinate certificates and if so
provided in the 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 the servicer's (or another entity's) good
faith determination that such advances will be reimbursable not only from the
loan proceeds but also from collections on other trust assets otherwise
distributable on one or more classes of 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 prospectus supplement, advances of a servicer's (or another
entity's) funds will be reimbursable only out of recoveries on the mortgage
loans (including amounts received under any form of credit support) respecting
which advances were made 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 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 is not
ultimately recoverable from the Related Proceeds or, if applicable, from
collections on other trust assets otherwise distributable on the Subordinate
Certificates. If advances have been made by a servicer from excess funds in the
Distribution account, the 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 that distribution date are less than payments
required to be made to certificateholders on such date. If so specified in the
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 prospectus supplement.
If and to the extent so provided in the 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 the 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 prospectus supplement, will forward
or make available to each certificateholder, 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:
(i) the amount of the distribution to holders of certificates of such
class applied to reduce the certificate balance thereof;
(ii) the amount of the distribution to holders of certificates of such
class allocable to Accrued Certificate Interest;
(iii) the amount of the distribution allocable to (a) Prepayment Premiums
and (b) payments on account of Equity Participations;
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(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 the distribution, and
the aggregate amount of any unreimbursed advances at the close of business
on the distribution date;
(vi) the aggregate principal balance of the mortgage assets at the close
of business on the 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, (b) the unpaid balance, (c) whether the
delinquency is in respect of any balloon payment, (d) the aggregate amount
of unreimbursed servicing expenses and unreimbursed advances, (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, (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 the
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 a reporting 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 a reporting 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 and (d) if applicable, the aggregate amount of interest accrued
and payable on related servicing expenses and related advances;
(xiii) with respect to any REO Property sold during a reporting period
(a) the loan number of the related mortgage loan, (b) the aggregate amount
of sale proceeds, (c) the portion of the 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;
(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 the distribution date,
separately identifying any reduction in the 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 a
reporting period;
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(xvi) the aggregate Accrued Certificate Interest and unpaid Accrued
Certificate Interest, if any, on each class of certificates at the close of
business on the distribution date;
(xvii) in the case of certificates with a variable Pass-Through Rate, the
Pass-Through Rate applicable to the distribution date, and, if available,
the immediately succeeding distribution date, as calculated in accordance
with the method specified in the 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 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 prospectus supplement, will
forward to each holder and to the depositor, 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 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. This
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 Internal Revenue Code as are from time to time in force.
Unless and until physical certificates are issued, or unless otherwise
provided in the prospectus supplement, such statements or reports will be
forwarded by the master servicer or the trustee to Cede & Co 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 who
requests a copy and certifies to the trustee or the master servicer, as
applicable, that he or she is the beneficial owner of a certificate. See
"Description of the Certificates--Book-Entry Registration and Physical
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 those agreements following
the earlier of (i) the final payment or other liquidation of the last mortgage
asset subject thereto or the 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 prospectus
supplement. In no event, however, will the trust created by the agreements
continue beyond the date specified in the 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.
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If so specified in the 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
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
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 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 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 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.
Unless otherwise provided in the 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 as beneficial owners, that is, through participants and indirect
participants. In addition, such 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, as nominee for DTC, on each such date DTC will forward payments to its
participants which thereafter will be required to forward them to indirect
participants or beneficial owners. Unless otherwise provided in the prospectus
supplement, the only certificateholder will be Cede & Co., 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.
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
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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 those beneficial ownership interests.
Unless otherwise specified in the prospectus supplement, physical
certificates that are initially issued in book-entry form will be issued in
fully registered, certificated form to beneficial owners or their nominees,
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 physical 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 to the beneficial owners identified in the instructions the
physical certificates to which they are entitled, and thereafter the trustee
will recognize the holders of such physical 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
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, if 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 the 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 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 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.
ASSIGNMENT OF ASSETS; REPURCHASES
At the time of issuance of any series of certificates, the depositor will
assign to the designated trustee the trust assets to be included in the related
trust fund, together with all principal and interest to be
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received on or with respect to such trust assets after the cut-off date
specified in the prospectus supplement, 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 that 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 Loan-to-Value
Ratio as of the date indicated and prepayment provisions, if applicable, and
(ii) in respect of each CMBS included in the related trust fund, including
without limitation, the names of the issuer, servicer and 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 mortgage loan, the Depositor will deliver 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 depositor 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 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 mortgage loan against the claim of 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 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
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.
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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" 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 trust 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 prospectus supplement the depositor, or
another party specified therein, will, with respect to each mortgage loan, make
as of a specified date covering, by way of example, the following types of
matters: (i) the accuracy of the information set forth for such mortgage 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
mortgage loan; (iv) the payment status of the mortgage 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.
Representations and warranties made in respect of a mortgage 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 the
mortgage loan.
Unless otherwise specified in the prospectus supplement, in the event of a
breach of any representation or warranty, the warranting party will be
obligated to reimburse the trust fund for losses caused by any such breach or
either cure the 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 reimbursement, 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.
The warranting 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 the whole loan or the interests
therein of the certificateholders. If the warranting party cannot cure such
breach within a specified period following the date on which the party was
notified of the breach, then the warranting party will be obligated to
repurchase the 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 mortgage 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 period specified in the agreement 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 mortgage loan as to which a breach has occurred, will
have the option, within a specified period after initial issuance of the series
of certificates, to cause the removal of that mortgage loan from the trust fund
and substitute in its place one or more other mortgage loans,
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in accordance with the standards described in the related prospectus
supplement. If so provided in the prospectus supplement for a series, a
warranting party, rather than repurchase or substitute a whole loan as to which
a breach has occurred, will have the option to reimburse the trust fund or the
certificateholders for any losses caused by the breach. Unless otherwise
specified in the related prospectus supplement, this reimbursement, 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 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 mortgage 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 the 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 a
breach to the servicer by the trustee or the depositor, or to the 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 the pooling
and servicing agreement. See "Events of Default" and "Rights Upon Event of
Default."
ACCOUNTS
General
Each servicer and/or the trustee will, as to each trust fund, establish
and maintain one or more separate accounts for the collection of payments on
the related mortgage assets, 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 so that the certificateholders have a
claim with respect to the funds on account or a perfected first priority
security interest against any collateral securing these funds that is superior
to the claims of any other depositors or general creditors of the institution
with which the account is maintained or (ii) otherwise maintained with a bank
or trust company, and in a manner, satisfactory to the rating agency or
agencies rating any class of certificates of that series. The collateral
eligible to secure amounts in an account is limited to United States government
securities and other investment grade obligations specified in the agreement as
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 permitted investments under the agreement.
Unless otherwise provided in the 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 agency or agencies. If permitted by
the rating agency or 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.
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Deposits
Unless otherwise provided in the related prospectus supplement, the
primary servicer will deposit 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 primary 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 insurance 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 and
all other liquidation proceeds received and retained in connection with the
liquidation of defaulted mortgage loans in the trust fund, by foreclosure,
condemnation or otherwise, 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
proceeds from REO Properties and penalties or modification fees which may
be retained by the primary servicer. Proceeds shall be maintained in an
account by the special servicer.
Once a month the special servicer remits funds on deposit in the account
each maintains together with any 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 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," such reimbursement to be made out of amounts received which
were identified and applied by the servicer as late collections of interest
on and principal of the particular whole loans with respect to which the
advances were made;
(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 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;
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(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 these
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 "real estate mortgage
investment conduit", 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 that
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 distribution accounts. The trustee will
also deposit or cause to be deposited in a distribution account the following
amounts:
(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 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 prospectus supplement, any amounts which could
be withdrawn from the Distribution
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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 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
The master servicer or if so specified in the property supplement, a
primary servicer is required to make reasonable efforts to collect all
scheduled payments under the mortgage loans and will follow 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 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.
The 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
If so 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.
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 all reasonable steps 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 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. 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 that 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 prospectus supplement,
upon the occurrence of any of the following servicing transfer events with
respect to a mortgage loan, servicing for such mortgage loan will be
transferred from the primary servicer to the special servicer and the loan will
thereafter be designated as a specially serviced mortgage loan:
(a) the mortgage loan becomes a defaulted mortgage loan,
(b) the occurrence of certain events indicating the possible insolvency
of the mortgagor,
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(c) the receipt by the primary servicer of a notice of foreclosure of any
other lien on the related mortgaged property,
(d) the master servicer or the primary 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 the 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 any other actions 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
number of scheduled payments thereunder are delinquent. Any such right granted
to the holder of an offered certificate will be described in the prospectus
supplement. The 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 the 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"
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of the 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.
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 the 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 the mortgaged property. Unless
otherwise specified in the related prospectus supplement, any 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 that 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 the 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.
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HAZARD INSURANCE POLICIES
Unless otherwise specified in the related prospectus supplement, each
agreement for a trust fund that includes whole loans will require the primary
servicer to cause the mortgagor on each whole loan to maintain a hazard
insurance policy providing for the coverage required under the related
mortgage. Unless otherwise specified in the prospectus supplement, the 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 primary 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 primary
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 primary 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
property in order to recover the full amount of any partial loss. If the
insured's coverage falls below this specified percentage, the co-insurance
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 the improvements.
The Agreements for a trust fund that includes whole loans will require the
primary servicer to cause the mortgagor on each whole loan, or, in certain
cases, the related lessee, to maintain all other insurance coverage with
respect to the related mortgaged property as is consistent with the terms of
the mortgage, which insurance may typically include flood insurance (if the
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 primary
servicer may require the mortgagor or 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 master 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 primary 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 lease due
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to a casualty event, such losses will be reimbursed to the insured. If so
specified in the related prospectus supplement, the primary 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 the rental interruption policy is canceled or terminated for any
reason (other than the exhaustion of total policy coverage), the primary
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 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 prospectus supplement, the cost of the rental interruption policy that was
replaced. Any amounts collected by the primary 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 the
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 mortgaged property. 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 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. 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.
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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 prospectus supplement. Certain other expenses,
including 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 pooling and 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 pooling and 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 the 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 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
prospectus supplement; provided that such beneficial owner shall have certified
to the master servicer that he or she is the beneficial owner of a certificate.
CERTAIN MATTERS REGARDING EACH SERVICER AND THE DEPOSITOR
The master 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 prospectus supplement, the related
agreement will provide that any servicer may resign from its obligations and
duties thereunder only with the consent of the trustee, which may not be
unreasonably withheld or upon a determination that its duties under the
agreement are no longer permissible under applicable law. No such resignation
will become effective until a successor servicer has assumed that servicer's
obligations and duties under the related pooling and servicing agreement.
Unless otherwise specified in the prospectus supplement, the master servicer
shall assume the obligations of any other servicer which resigns.
Unless otherwise specified in the related prospectus supplement, each
pooling and 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 pooling and servicing agreement, in good
faith pursuant to the related pooling and servicing agreement; provided,
however, that no servicer nor any of its officers, employees or agents will be
protected against any breach of a representation or warranty made in the
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 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 prospectus supplement, each
pooling and servicing agreement
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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 pooling and servicing
agreement or the mortgage loans; provided, however, that such indemnification
will not extend to any loss, liability or expense incurred by reason of
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 pooling and 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 pooling
and 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 prospectus supplement for a trust fund
that includes whole loans, events of default with respect to a servicer under
the related agreements will include (i) any failure by the servicer to
distribute to the trustee, another servicer or the certificateholders, any
required payment within one business day of the date due; (ii) any failure by
the servicer to timely deliver a report that continues unremedied for two days
after receipt of notice of such failure has been given to the servicer by the
trustee or another servicer; (iii) any failure by the 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 the servicer; (iv) any breach of a
representation or warranty made by the 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 has
been given to the 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 the servicer indicating its insolvency or inability
to pay its obligations; and (vi) any failure by the 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 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 the default is 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 the 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
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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 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 the agreement, unless those 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 Physical certificates," unless and until Physical certificates
are issued, beneficial owners may only exercise their rights as owners of
certificates indirectly through DTC, or their respective participants and
indirect participants.
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 an 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 certificates are
outstanding.
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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 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 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 its 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 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 the 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 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 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 more than one trust is covered by the same credit support holders
of certificates evidencing interests in the trusts will be subject to the risk
that that credit support will be exhausted by the claims of other trusts prior
to receiving any of its intended share of 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 the 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 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 may
not cover losses or risks which could adversely affect payment on your
certificates."
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 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 MORTGAGE LOANS
If so provided in the prospectus supplement for a series of certificates,
the mortgage loans in the related trust fund will be covered for various
default risks by insurance policies or guarantees.
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LETTER OF CREDIT
If so provided in the prospectus supplement for a series of certificates,
deficiencies in amounts otherwise payable on the certificates or certain
classes thereof will be covered by one or more letters of credit, issued by a
bank or financial institution specified in the prospectus supplement. Under a
letter of credit, the letter of credit issuer 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 prospectus
supplement. The obligations of the letter of credit issuer under the letter of
credit for each series of certificates will expire at the earlier of the date
specified in the 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 the 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 the 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 the 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 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
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 prospectus supplement, any
reinvestment income or other gain from such investments will be credited to the
reserve fund for the series, and any loss resulting from such investments will
be charged to the reserve fund. However, such income may be payable to any
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 prospectus supplement.
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
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the reserve fund, the manner in which such required balance will decrease over
time, the manner of funding the 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, 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 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.
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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 asset 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 Uniform Commercial Code; 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 Uniform
Commercial Code, 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 Uniform Commercial Code. In order to perfect its security interest therein,
the lender generally must file Uniform Commercial Code 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
certificates, the mortgage loans may also consist of cooperative apartment
loans secured by security interests in shares issued by 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. In some cases payment to
the holders of junior mortgages 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.
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 exercising 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 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 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
and must be exercised prior to foreclosure sale. Equity of redemption is
different 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. As a result, the lender is
forced 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
pooling and servicing 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. 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. Other states give the lender 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 such as:
o the right of the leasehold mortgagee to receive notices from the ground
lessor of any defaults by the mortgagor;
o the right to cure such defaults, with adequate cure periods; if a
default is not susceptible of cure by the leasehold mortgagee;
o 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
o 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 enforceability of such clause has not been
established.
Without the protections described above, a leasehold mortgagee may lose
the collateral securing its leasehold mortgage. The ground leases and the
mortgage that secures the mortgage loan may not contain some of these
provisions. 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
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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.
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. This is subject 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 Uniform Commercial
Code and the security agreement relating to those shares. Article 9 of the
Uniform Commercial Code 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 Uniform Commercial Code 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,
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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.
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. This leaves the lender unsecured
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 in the form of 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 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. This 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
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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% of the
remaining term of the lease, but not more than three years.
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 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 any damages occurring after such date caused by the
nonperformance of any obligation of the lessor under the lease after such date
against rents reserved under the lease. 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.
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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 substantive consolidation or piercing the
corporate veil. In such a case, the mortgaged property could 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
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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 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 pooling and servicing 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
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 pooling and servicing 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. In any event, it
is likely that if any environmental assessments was conducted, with respect to
any of the mortgaged properties, it 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, the seller of the mortgage loan or
another person identified therein will represent and warrant that based on an
environmental audit, as of the date of the origination of a mortgage loan, the
related mortgaged property
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is not affected by 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.
No such person will however, be responsible for any such condition which
may arise on a mortgaged property after the date of origination of the related
mortgage loan, whether due to actions of the mortgagor, a servicer, or any
other person. It may not always be possible to determine whether such a
condition arose prior or subsequent to the date of the origination of the
related mortgage loan.
"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) the mortgage loan provides for such
interest rate, discount points and charges as are permitted in such state or
(ii) the 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 mortgaged 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 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 Disabilities Act, 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
Disabilities Act 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
Disabilities Act 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, 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.
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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 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
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 the trust fund will be classified as a grantor trust under
subpart E, Part I of subchapter J of Chapter 1 of Subtitle A 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 in this
section of the prospectus.
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 loans and/or MBS in the pool. Any amounts
received by a grantor trust certificateholder in lieu of amounts due with
respect to any mortgage loan and/or MBS 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 the grantor trust
certificateholder's method of accounting its pro rata share of the entire
income from the mortgage loans in the trust fund represented by grantor trust
certificates, including interest, 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 the
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 these 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 under Code Section
68(b)--which amount will be adjusted for inflation--will be reduced by the
lesser of
o 3% of the excess of adjusted gross income over the applicable amount and
o 80% of the amount of itemized deductions otherwise allowable for such
taxable year.
In general, a grantor trust certificateholder using the CASH METHOD OF
ACCOUNTING must take into account its pro rata share of income as and
deductions as and when collected by or paid to the master
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servicer or, with respect to original issue discount or certain other income
items for which the certificateholder has made an election, as the amounts are
accrued by the trust fund on a constant interest basis, and will entitled to
claim its pro rata share of deductions, subject to the foregoing limitations,
when the amounts are paid or the certificateholder would otherwise be entitled
to claim the deductions had it held the mortgage loans and/or MBS directly. A
grantor trust certificateholder using an ACCRUAL METHOD OF ACCOUNTING must take
into account its pro rata share of income as payment becomes due or is made to
the master servicer, whichever is earlier and may deduct its pro rata share of
expense items, subject to the foregoing limitations, when the amounts are paid
or the certificateholder otherwise would be entitled to claim the deductions
had it held the mortgage loans and/or MBS directly. If the servicing fees paid
to the master servicer are deemed to exceed reasonable servicing compensation,
the amount of the 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 loans and/or MBS. The mortgage loans and/or MBS would
then be subject to the "coupon stripping" rules of the Code discussed below
under "--Stripped Bonds and Coupons."
Unless otherwise specified in the related prospectus supplement or
otherwise provided below in this section of the prospectus, as to each series
of certificates, counsel to depositor will have advised depositor that:
o 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 loans and/or MBS 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 loans and/or
MBS represented by that grantor trust certificate are of a type described
in that Code section;
o a grantor trust certificate owned by a real estate investment trust
representing an interest in mortgage loans and/or MBS will be considered
to represent "real estate assets" within the meaning of Code Section
856(c)(4)(A), and interest income on the mortgage loan and/or MBS 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 loans and/or MBS represented by that grantor trust
certificate are of a type described in that Code section; and
o 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 that constitute "stripped bonds" or "stripped coupons" as those
terms are defined in Section 1286 of the Code, and, as a result, these assets
would be subject to the stripped bond provisions of the Code. Under these
rules, these 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.
Premium. The price paid for a grantor trust certificate by a holder will
be allocated to the holder's undivided interest in each mortgage loan and/or
MBS based on each asset's relative fair market value, so that the holder's
undivided interest in each asset will have its own tax basis. A grantor trust
certificateholder that acquires an interest in mortgage loans and/or MBS at a
premium may elect to amortize the premium under a constant interest method,
provided that the underlying mortgage loans with respect to the mortgage loans
and/or MBS were originated after September 27, 1985. Premium
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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 mortgage loan or MBS or any
other debt instrument 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 representing an interest
in a mortgage loan or MBS acquired at a premium should recognize a loss if a
mortgage loan or an underlying mortgage loan with respect to an 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 the 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.
The Internal Revenue Service has issued Amortizable Bond Premium
Regulations. The Amortizable Bond Premium Regulations specifically do not apply
to prepayable debt instruments or any pool of debt instruments the yield on
which may be affected by prepayments, such as the trust fund, which are subject
to Section 1272(a)(6) of the Code. Absent further guidance from the IRS and to
the extent set forth in the related prospectus supplement, the trustee will
account for amortizable bond premium in the manner described in this section.
Prospective purchasers should consult their tax advisors regarding amortizable
bond premium and the Amortizable Bond Premium Regulations.
Original Issue Discount. The IRS has stated in published rulings that, in
circumstances similar to those described in this prospectus, the OID
Regulations will be applicable to a grantor trust certificateholder's interest
in those mortgage loans and/or MBS 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 borrowers 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 loans or MBS may be subject to the market
discount rules of Code Sections 1276 through 1278 to the extent an undivided
interest in the 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 the mortgage loan or MBS allocable to
the holder's undivided interest over the 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 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
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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
o the total remaining market discount and
o 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
o the total remaining market discount and
o 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 the grantor trust 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
than the year in which the 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 this 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 "--Premium" in this prospectus. The
election to accrue interest, discount and premium on a constant yield method
with respect to a certificate is irrevocable without consent of the IRS.
Anti-Abuse Rule. The IRS can apply or depart from the rules contained in
the OID Regulations as necessary or appropriate to achieve a reasonable result
where a principal purpose in structuring a
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mortgage loan, MBS, or grantor trust certificate or applying the otherwise
applicable rules is to achieve a result that is unreasonable in light of the
purposes of the applicable statues, which generally are intended to achieve the
clear reflection of income for both issuers and holders of debt instruments.
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 Section 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.
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
principal balance of the assets in the trust fund, 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 an asset by asset basis, which
could result in some mortgage loans and/or MBS 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".
Although not entirely clear, a stripped bond certificate generally should
be treated as an interest in mortgage loans and/or MBS issued on the day the
certificate is purchased for purposes of calculating any OID. Generally, if the
discount on a mortgage loan or MBS 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". However, a purchaser of a stripped bond
certificate will be required to account for any discount on the mortgage loans
and/or MBS as market discount rather than OID if either
o the amount of OID with respect to the mortgage loans and/or MBS is
treated as zero under the OID de minimis rule when the certificate was
stripped or
o no more than 100 basis points, including any excess servicing, is
stripped off of the trust fund's mortgage loans and/or MBS.
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 loan or MBS. Unless otherwise
specified in the related prospectus supplement, all payments from a mortgage
loan or MBS underlying a stripped coupon certificate will be treated as a
single installment obligation subject to the OID rules of the Code, in which
case, all payments from the mortgage loan or MBS would be included in the
stated redemption price at maturity for the mortgage loan and/or MBS for
purposes of calculating income on the certificate under the OID rules of the
Code.
It is unclear under what circumstances, if any, the prepayment of mortgage
loans and/or MBS will give rise to a loss to the holder of a stripped bond
certificate purchased at a premium or a stripped coupon certificate. If the
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 the grantor trust certificate, it appears that
no loss will be available as a result of any particular prepayment unless
prepayments occur at a rate sufficiently faster than the assumed prepayment
rate so that the certificateholder will not recover its investment. However, if
the certificate is treated as an interest in discrete
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mortgage loans or MBS, or if no prepayment assumption is used, then when a
mortgage loan or MBS is prepaid, the holder of the certificate should be able
to recognize a loss equal to the portion of the adjusted issue price of the
certificate that is allocable to the mortgage loan or MBS.
Holders of stripped bond certificates and striped 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 loans and/or MBS 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 loans and/or MBS. 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, each class of grantor trust certificates, to the extent set forth
in the related prospectus supplement, should be considered to represent "real
estate assets" within the meaning of Code Section 856(c)(4)(A) 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 loans and/or MBS and interest on such mortgage loans and/or
MBS 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 by an interest in real
property" within the meaning of Code Section 860G(a)(3)(A) and "permitted
assets" within the meaning of Code Section 860L(c).
2. Grantor Trust Certificates Representing Interests in Loans Other Than
Adjustable Rate Loans
The original issue discount rules of Code Sections 1271 through 1275 will
be applicable to a certificateholder's interest in those mortgage loans and/or
MBS 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 borrowers--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 loans
and/or MBS. 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 loans and/or MBS other than adjustable rate 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 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 loans and/or MBS 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 issued relevant to
prepayable securities.
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Under the Code, the mortgage loans and/or MBS 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 loans and/or MBS is generally the amount lent to the lender, which may
be adjusted to take into account certain loans origination fees. The stated
redemption price at maturity of a mortgage loans and/or MBS is the sum of all
payments to be made on these assets 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, to the extent set forth in
the related prospectus supplement, utilize the Prepayment Assumption on the
issue date of such grantor trust certificate 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. In the absence of such regulations, the Prepayment Assumption used will
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.
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 in this section, of the OID on the grantor trust certificate
for each day on which it owns the certificate, including the date of purchase
but excluding the date of disposition. In the case of the 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 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
o adding (1) 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 (2) any payments included in the stated
redemption price at maturity received during such accrual period, and
o subtracting from that total the "adjusted issued 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 the mortgage loans and/or MBS acquired by a certificateholder
are purchased at a price equal to the then unpaid principal amount of the
asset, no original issue discount attributable to the difference between the
issue price and the original principal amount of the asset--i.e., points--will
be includible by the holder. Other original issue discount on the mortgage
loans and/or MBS--e.g., that arising from a "teaser" rate--would still need to
be accrued.
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3. Grantor Trust Certificates Representing Interests in Adjustable Rate
Loans
The OID Regulations do not address the treatment of instruments, such as
the grantor trust certificates, which represent interests in adjustable rate
loans. Additionally, the IRS has not issued guidance under the Code's coupon
stripping rules with respect to such instruments. In the absence of any
authority, the master servicer will report 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 Adjustable Rate 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 deferred interest to the principal balance of an
adjustable rate loan may require the inclusion of the amount in the income of
the grantor trust certificateholder when the 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,
except to the extent described above with respect to market discount and will
generally be long-term capital gain if the grantor trust certificate has been
owned for more than one year. Long-term capital gains of individuals are
subject to reduced maximum tax rates while capital gains recognized by
individuals on capital assets held less than twelve months are generally
subject to ordinary income tax rates. The use of capital losses is limited.
It is possible that capital gain realized by holders of one or more
classes of grantor trust certificates could be considered gain realized upon
the disposition of property that was part of a "conversion transaction." A sale
of a grantor trust certificate will be part of a conversion transaction if
substantially all of the holder's expected return is attributable to the time
value of the holder's net investment, and:
o the holder entered the contract to sell the grantor trust certificate
substantially contemporaneously with acquiring the grantor trust
certificate;
o the grantor trust certificate is part of a straddle;
o the grantor trust certificate is marketed or sold as producing capital
gain; or
o other transactions to be specified in Treasury regulations that have not
yet been issued. If the sale or other disposition of a grantor trust
certificate is part of a conversion transaction, all or any portion of
the gain realized upon the sale or other disposition would be treated as
ordinary income instead of capital gain.
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
The term "U.S. Person" means
o a citizen or resident of the United States;
o a corporation (or entity treated as a corporation for tax purposes)
created or organized in the United States or under the laws of the United
States or of any state;
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o a partnership (or entity treated as a partnership for tax purposes)
organized in the United States or under the laws of the United States or
of any state (unless provided otherwise by future Treasury regulations);
o an estate whose income is includible in gross income for United States
income tax purposes regardless of its source; or,
o a trust, if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more U.S.
Persons have authority to control all substantial decisions of the trust.
Notwithstanding the last clause of the preceding sentence, to the extent
provided in Treasury regulations, certain trusts in existence on August
20, 1996, and treated as U.S. Persons prior to such date, may elect to
continue to be U.S. Persons.
Generally, to the extent that a grantor trust certificate evidences
ownership in underlying mortgage loans and/or MBS 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
o an owner that is not a U.S. Person or
o 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, unless such income is effectively
connected with a U.S. trade or business of such owner or beneficial
owner.
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 loans and/or MBS
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 the grantor trust certificateholder is
not a U.S. Person and providing the name and address of the grantor trust
certificateholder. To the extent payments to grantor trust certificateholders
that are not U.S. Persons are payments of "contingent interest" on the
underlying mortgage loans and/or MBS, or the grantor trust certificateholder is
ineligible for the exemption described in the preceding sentence, the 30%
withholding tax will apply unless such withholding taxes are reduced or
eliminated by an applicable tax treaty and such holder meets the eligibility
and certification requirements necessary to obtain the benefits of such treaty.
Additional restrictions apply to mortgage loans and/or MBS where the borrower
is not a natural person in order to qualify for the exemption from withholding.
If capital gain derived from the sale, retirement or other disposition of a
grantor trust certificate is effectively connected with a U.S. trade or
business of a grantor trust certificateholder that is not a U.S. Person,
certificateholder will be taxed on the net gain under the graduated U.S.
federal income tax rates applicable to U.S. Persons and, with respect to
grantor trust certificates held by or on behalf of corporations, also may be
subject to branch profits tax. In addition, if the trust fund acquires a United
States real property interest through foreclosure, deed in lieu of foreclosure
or otherwise on a mortgage loan or MBS secured by such an interest, which for
this purpose includes real property located in the United States and the Virgin
Islands, a grantor trust certificateholder that is not a U.S. person will
potentially be subject to federal income tax on any gain attributable to such
real property interest that is allocable to such holder. Non-U.S. Persons
should consult their tax advisors regarding the application to them of the
foregoing rules.
E. INFORMATION REPORTING AND BACKUP WITHHOLDING
The master servicer 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, the information as may be
deemed necessary or desirable to assist certificateholders in preparing their
federal income tax returns, or to enable holders to make the 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
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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 to registered owners who are not "exempt recipients."
In addition, upon the sale of a grantor trust certificate to, or through, a
broker, the broker must withhold 31% of the entire purchase price, unless
either
o the broker determines that the seller is a corporation or other exempt
recipient, or
o the seller provides, in the required manner, certain identifying
information and, in the case of a non-U.S. person, certifies that the
seller is a Non-U.S. Person, and other conditions are met.
Such a sale must also be reported by the broker to the IRS, unless either
o the broker determines that the seller is an exempt recipient or
o the seller certifies its non-U.S. Person status and other conditions are
met.
Certification of the registered owner's non-U.S. Person status normally would
be made on IRS Form W-8 under penalties of perjury, although in some cases it
may be possible to submit other documentary evidence. Any amounts deducted and
withheld from a distribution to a recipient would be allowed as a credit
against the recipient's federal income tax liability.
On October 6, 1997, the Treasury Department issued 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 and Other Taxes" 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 the year and thereafter. In that event, the
entity may be taxable as a separate corporation, and the REMIC Certificates may
not be accorded the status or given the tax treatment described below in this
section. 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 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 Agreement, the trust fund will qualify as a
REMIC, and the related certificates will be considered to be REMIC Regular
Certificates or a sole class of REMIC Residual Certificates. 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 includes any obligation,
including certificates of participation in such an obligation and any "regular
interest" in another REMIC, 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,
o 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);
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o certificates held by a real estate investment trust will constitute
"real estate assets" within the meaning of Code Section 856(c)(4)(A); and
o interest on certificates held by a real estate investment trust will be
considered "interest on obligations secured by 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.
Tiered REMIC Structures. For certain series of certificates, two or more
separate elections may be made to treat designated portions of the related
trust fund as REMICs 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 or REMICs, respectively, will be
considered REMIC Regular Certificates or REMIC Residual Certificates in the
related REMIC within the meaning of the REMIC Provisions.
Other than the residual interest in a Subsidiary REMIC, only REMIC
Certificates issued by the Master REMIC will be offered hereunder. The
Subsidiary REMIC or REMICs and the Master REMIC will be treated as one REMIC
solely for purposes of determining whether the REMIC Certificates will be:
o "real estate assets" within the meaning of Section 856(c)(4)(A) of the
Code;
o "loans secured by an interest in real property" under Section
7701(a)(19)(C) of the Code; and
o whether the income on the certificates is interest described in Section
856(c)(3)(B) of the Code.
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, the 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 the 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 Tax Reform Act of 1986. The
REMIC Regular Certificates 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 the 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 closing date, the issue price for that class will
be treated as the fair market value of that 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 the distributions constitute "qualified stated
interest." Qualified stated interest generally means interest payable at a
single fixed rate or qualified variable rate provided that the 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 the 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 certificates exceeds its issue price for purposes of the de minimis rule
described below in this section. 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
certificate's 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 the 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 the 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 the 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
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
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
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when prepayments on the mortgage loans and/or MBS exceed those estimated under
the Prepayment Assumption. The IRS might contend, however, that certain
contingent payment rules contained in final regulations issued on June 11,
1996, with respect to original issue discount, should apply to such
certificates. Although such rules are not applicable to instruments governed by
Code Section 1272(a)(6), they represent the only guidance regarding the current
views of the IRS with respect to contingent payment instruments. These proposed
regulations, if applicable, generally would require holders of Regular Interest
Certificates to take the payments considered contingent interest payments into
income on a yield to maturity basis in accordance with a schedule of projected
payments provided by the depositor and to make annual adjustments to income to
account for the difference between actual payments received and projected
payment amounts accrued. 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 "--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. 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 "--Premium" should apply. However, it is possible that
holders or 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" 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
o adding (1) 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 (2) any
payments included in the stated redemption price at maturity received
during such accrual period, and
o 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 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
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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:
(1) 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
(2) 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:
o the interest is unconditionally payable at least annually;
o the issue price of the debt instrument does not exceed the total
noncontingent principal payments; and
o 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 the REMIC
Regular Certificates.
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 at the rate applicable on the date they are issued. 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. No guidance is currently available as to how OID would be
determined for debt instruments subject to Code Section 1272(a)(6) that provide
for contingent interest. The treatment of REMIC Regular Certificates as
contingent payment debt instruments may affect the timing of income accruals on
the 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 discount or original issue discount) and
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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 "--Premium" below. The election to accrue interest,
discount and premium on a constant yield method with respect to a certificate
is irrevocable without the consent of the IRS.
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 (1) 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 (2) 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, the election will apply to all market discount bonds acquired by the
certificateholder on or after the first day of the first taxable year to which
the 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 the REMIC Regular Certificate's stated redemption price
at maturity multiplied by the 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 the 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
the 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
1) the total remaining market discount and
2) 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.
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For REMIC Regular Certificates issued without OID, the amount of market
discount that accrues during a period is equal to the product of
1) the total remaining market discount and
2) 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 the 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 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 the 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 the interest payment. The
Amortizable Bond Premium Regulations do not apply to prepayable securities
described in Section 1272(a)(6) of the Code, such as the REMIC Regular
Certificates. Certificateholders should consult their tax advisors regarding
the possibility of making an election to amortize any such bond premium.
Deferred Interest. Certain classes of REMIC Regular Certificates may
provide for the accrual of deferred interest with respect to one or more
adjustable rate loans. Any deferred interest that accrues with respect to a
class of REMIC Regular Certificates will constitute income to the holders of
certificates prior to the time distributions of cash with respect to the
deferred interest are made. It is unclear, under the OID Regulations, whether
any of the interest on 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.
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 seller, increased by any OID and market discount included in
the seller's gross income with respect to the
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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 an allocable portion of 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.
Such capital gain or loss will generally be long-term capital gain or loss
if the REMIC Regular Certificate was held for more than one year. Long-term
capital gains of individuals are subject to reduced maximum tax rates while
capital gains recognized by individuals on capital assets held less than twelve
months are generally subject to ordinary income tax rates. The use of capital
losses is limited.
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 the gain does not exceed the excess, if any, of
o the amount that would have been includible in the 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
o the amount actually includible in such holder's income.
Gain from the sale or other disposition of a REMIC Regular Certificate that
might otherwise be capital gain will be treated as ordinary income if the REMIC
Regular Certificate is held as part of a "conversion transaction" as defined in
Code Section 1258(c), up to the amount of interest that would have accrued on
the REMIC Regular certificateholder's net investment in the conversion
transaction at 120% of the appropriate applicable federal rate under Code
Section 1274(d) in effect at the time the taxpayer entered into the transaction
minus any amount previously treated as ordinary income with respect to any
prior disposition of property that was held as part of such transaction, or if
the REMIC Regular Certificate is held as part of a straddle. Potential
investors should consult their tax advisors with respect to tax consequences of
ownership and disposition of an investment in REMIC Regular Certificates in
their particular circumstances.
It is possible that capital gain realized by holders of one or more
classes of REMIC Regular Certificates could be considered gain realized upon
the disposition of property that was part of a "conversion transaction." A sale
of a REMIC Regular Certificate will be part of a "conversion transaction" if
substantially all of the holder's expected return is attributable to the time
value of the holder's net investment, and:
o the holder entered the contract to sell the REMIC Regular Certificate
substantially contemporaneously with acquiring the REMIC Regular
Certificate;
o the REMIC Regular Certificate is part of a straddle;
o the REMIC Regular Certificate is marketed or sold as producing capital
gains; or
o other transactions to be specified in Treasury regulations that have not
yet been issued. If the sale or other disposition of a REMIC Regular
Certificate is part of a conversion transaction, all or a portion of the
gain realized upon the sale or other disposition of the REMIC Regular
Certificate would be treated as ordinary income instead of capital gain.
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 this
section applies will be ordinary income or loss.
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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 provide information
pertaining to the appropriate proportionate method of accruing market discount.
Accrued Interest Certificates. 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 distribution date. The period
between the closing date for payment lag certificates and their first
distribution date may or may not exceed the interval. Purchasers of payment lag
certificates for which the period between the closing date and the first
distribution date does not exceed the 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
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 Certificate's 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 the 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 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.
Effects of Defaults, Delinquencies and Losses. 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 loans and/or
MBS, 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 the subordinated certificates
attributable to defaults and delinquencies on the mortgage loans and/or MBS,
except to the extent that it can be established that the 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 the 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 loans and/or
MBS.
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. Potential investors
and holders of the certificates are urged to consult their own tax advisors
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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. These taxpayers are advised to consult their
tax advisors regarding the treatment of losses on certificates.
Non-U.S. Persons. Generally, payments of interest on the REMIC Regular
Certificates, including any payment with respect to accrued OID, to a REMIC
Regular certificateholder who is not a U.S. Person as defined in "-- Grantor
Trust Funds; Non-U.S. Persons and is not engaged in a trade or business within
the United States will not be subject to federal withholding tax if:
o the 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;
o the REMIC Regular certificateholder is not a controlled foreign
corporation, within the meaning of Code Section 957, related to the
issuer; and
o the REMIC Regular certificateholder complies with identification
requirements, including delivery of a statement, signed by the REMIC
Regular certificateholder under penalties of perjury, certifying that the
REMIC Regular certificateholder is a foreign person and providing the
name and address of the REMIC Regular certificateholder.
If a REMIC Regular certificateholder is not exempt from withholding,
distributions of interest to the holder, including distributions in respect of
accrued OID, may be subject to a 30% withholding tax, subject to reduction
under any applicable tax treaty. If the interest on a REMIC Regular Certificate
is effectively connected with the conduct by the Non-U.S. REMIC Regular
Certificateholder of a trade or business within the United States, then the
Non-U.S. REMIC Regular Certificateholder will be subject to U.S. income tax at
regular graduated rates. Such a Non-U.S. REMIC Regular Certificateholder also
may be subject to the branch profits tax.
Further, a REMIC Regular Certificate will not be included in the estate of
a non-resident alien individual that does not actually or constructively own
10% or more of the combined voting power of all classes of equity in the Issuer
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,
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. In addition, the IRS may assert that non-U.S. Persons that own
directly or indirectly, a greater than 10% interest in any borrower, and
foreign corporations that are "controlled foreign corporations" as to the
United States of which such a borrower is a "United States shareholder" within
the meaning of Section 951(b) of the Code, are subject to United States
withholding tax on interest distributed to them to the extent of interest
concurrently paid by the related borrower.
Information Reporting and Backup Withholding. The master servicer 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 that year, the 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 the information available to
beneficial owners or financial intermediaries that hold the 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 to
registered owners who are not "exempt recipients." In addition, upon the sale
of a REMIC Regular Certificate to, or through, a broker, the broker must
withhold 31% of the entire purchase price, unless either:
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o the broker determines that the seller is a corporation or other exempt
recipient, or
o the seller provides, in the required manner, identifying information
and, in the case of a non-U.S. Person, certifies that such seller is a
non-U.S. Person, and other conditions are met.
o A sale of a REMIC Regular Certificate to, or through, a broker must also
be reported by the broker to the IRS, unless either:
o the broker determines that the seller is an exempt recipient, or
o the seller certifies its non-U.S. Person status and other conditions are
met.
Certification of the registered owner's non-U.S. Person status normally would
be made on IRS Form W-8 under penalties of perjury, although in certain cases
it may be possible to submit other documentary evidence. 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.
On October 6, 1997, the Treasury Department issued 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.
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 the 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 the 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
loans and/or MBS 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 or cause the REMIC Residual Certificate to have negative
"value." Investors should consult their own tax advisors concerning the federal
income tax treatment of a REMIC Residual Certificate and the impact of the 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 the REMIC Residual Certificateholder owns
the 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
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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 the REMIC
Residual Certificate at a price greater than or less than the adjusted basis
the 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 the 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
o the income from the mortgage loans and/or MBS and the REMIC's other
assets and
o 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:
o the limitations on deductibility of investment interest expense and
expenses for the production of income do not apply;
o all bad loans will be deductible as business bad debts; and
o 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 loans
and/or MBS may differ from the time of the actual loss on the assets. 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. The
aggregate basis will be allocated among the mortgage loans and/or MBS and other
assets of the REMIC in proportion to their respective fair market value. A
mortgage loan or MBS 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 the income, under a method
similar to the method described above for accruing OID on the REMIC Regular
Certificates. The REMIC may elect under Code Section 171 to amortize any
premium on the mortgage loans and/or MBS. Premium on any mortgage loan or MBS
to which the election applies would be amortized under a constant yield method.
It is not clear whether the yield of a mortgage loan or MBS 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.
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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 Regular Certificate to reflect any difference
between the actual cost of the REMIC Residual Certificate to the holder and the
adjusted basis the 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. The 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 the net
loss exceeds the holder's adjusted basis in the REMIC Residual Certificate. Any
net loss that is not currently deductible by reason of this limitation may only
be used by the 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.
Mark-to-Market Rules. Prospective purchasers of a REMIC Residual
Certificate should be aware that the IRS has finalized Mark-to-Market
Regulations which provide that a REMIC Residual Certificate acquired after
January 3, 1995 cannot be marked to market. The Mark-to-Market Regulations
replaced the temporary regulations which allowed a Residual Certificate to be
marked to market provided that it was not a "negative value" residual interest
and did not have the same economic effect as a "negative value" residual
interest.
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:
o 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
o 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 applicable amount
will be reduced by the lesser of
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o 3% of the excess of the individual's adjusted gross income over the
applicable amount or
o 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. Accordingly, investment in REMIC
Residual Certificates will in general not be suitable for individuals or for
certain pass-through entities, such as partnerships and S corporations, that
have individuals as partners or shareholders.
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:
o may not, except as described below, be offset by any unrelated losses,
deductions or loss carryovers of a REMIC Residual Certificateholder;
o 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, as discussed under "--Tax-Exempt
Investors" below; and
o 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, as
discussed under "--Residual Certificate Payments--Non-U.S. Persons"
below.
Except as discussed in the following paragraph, with respect to any REMIC
Residual Certificateholder, the excess inclusions for any calendar quarter is
the excess, if any, of (1) the income of such REMIC Residual Certificateholder
for that calendar quarter from its REMIC Residual Certificate over (2) the sum
of the "daily accruals" for all days during the calendar quarter on which the
REMIC Residual Certificateholder holds a 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" 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 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 the
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 the 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 the 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 the
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.
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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 the residual holder is determined without regard to the special rule
that taxable income cannot be less than excess inclusions. Second, the amount
of any alternative minimum tax net operating loss deductions must be computed
without regard to any excess inclusions. Third, a residual holder's alternative
minimum taxable income for a tax year cannot be less than excess inclusions for
the year. The effect of this last statutory amendment is to prevent the use of
nonrefundable tax credits to reduce a taxpayer's income tax below its tentative
minimum tax computed only on 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 the REMIC Residual Certificate. To the extent a distribution
exceeds the 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 in
the next paragraph. A holder's adjusted basis in a REMIC Residual Certificate
generally equals the cost of the REMIC Residual Certificate to the REMIC
Residual Certificateholder, increased by the taxable income of the REMIC that
was included in the income of the REMIC Residual Certificateholder with respect
to the REMIC Residual Certificate, and decreased--but not below zero--by the
net losses that have been allowed as deductions to the REMIC Residual
Certificateholder with respect to the REMIC Residual Certificate and by the
distributions received thereon by the REMIC Residual Certificateholder. In
general, the gain or loss will be capital gain or loss provided the REMIC
Residual Certificate is held as a capital asset. The capital gain or loss will
generally be long-term capital gain or loss if the REMIC Regular Certificate
was held for more than one year. Long-term capital gains of individuals are
subject to reduced maximum tax rates while capital gains recognized by
individuals on capital assets held less than twelve months are generally
subject to ordinary income tax rates. The use of capital losses is limited.
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. In addition, a transfer
of a REMIC Residual Certificate that is a "noneconomic residual interest" may
be subject to different rules. See "--Tax Related Restrictions on Transfers of
REMIC Residual Certificates--Noneconomic REMIC Residual Certificates" below.
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.
PROHIBITED TRANSACTIONS AND OTHER TAXES
The Code imposes a tax on REMICs equal to 100% of the net income derived
from "prohibited transactions". In general, subject to certain specified
exceptions, a prohibited transaction means:
o the disposition of a mortgage loan or MBS,
o the receipt of income from a source other than a mortgage loan or MBS or
certain other permitted investments,
o the receipt of compensation for services, or
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o gain from the disposition of an asset purchased with the payments on the
mortgage loans and/or MBS 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 the trust fund as a REMIC made after the day on which
the trust fund issues all of its interests could result in the imposition of
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
the 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 certificate arises out of
or results from
o a breach of the servicer's, trustee's or depositor's obligations, as the
case may be, under the related Agreement for such series, such tax will
be borne by the servicer, trustee or depositor, as the case may be, out
of its own funds or
o J.P. Morgan Commercial Mortgage Finance Corp.'s obligation to repurchase
a mortgage loan,
such tax will be borne by J.P. Morgan Commercial Mortgage Finance Corp. In the
event that the servicer, trustee or depositor, as the case may be, fails to pay
or is not required to pay any prohibited transactions tax, contributions tax,
tax on net income from foreclosure property or state or local income or
franchise tax, the tax will be payable out of the trust fund for the series and
will result in a reduction in amounts available to be distributed to the
certificateholders of the 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. 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
the entity are not held by "disqualified organizations". 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 transfer unless the transfer is through
an agent, including a broker or other middleman, for a disqualified
organization, in which event the tax is imposed
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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 government 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" 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,
provided that all partners of an "electing large partnership" as defined in
Section 775 of the Code, are deemed to be disqualified organizations. 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:
o a regulated investment company, real estate investment trust or common
trust fund;
o a partnership, trust or estate; and
o 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. Electing
large partnerships--generally, non-service partnerships with 100 or more
members electing to be subject to simplified IRS reporting provisions under
Code sections 771 through 777--will be taxable on excess inclusion income as if
all partners were disqualified organizations.
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 consent
to a proposed transfer only if it receives the following:
o 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
o 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 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,
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o 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
o 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:
o the transferor conducted a reasonable investigation of the transferee,
and
o 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 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.
The IRS has issued proposed Treasury regulations that would add to the
conditions necessary to ensure that a transfer of a Noneconomic Residual
Certificate would be respected for federal income tax purposes. The proposed
additional condition provides that the transfer of a Noneconomic Residual
Certificate will not qualify under this safe harbor unless the present value of
the anticipated tax liabilities associated with holding the Residual
Certificate does not exceed the present value of the sum of: (i) any
consideration given to the transferee to acquire the Certificate (the
inducement payment), (ii) future distributions on the Certificate, and (iii)
any anticipated tax savings associated with holding the Certificate as the
REMIC generates losses. For purposes of this calculation, the present value is
calculated using a discount rate equal to the lesser of the applicable federal
rate and the transferee's cost of borrowing. The proposed effective date for
the changes is February 4, 2000.
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 the 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 or beneficial ownership interest in a REMIC Residual
Certificate may be transferred, directly or indirectly, to a non-U.S. Person
unless the person provides the trustee with a duly completed IRS Form W-8EC1 or
applicable successor form adopted by the IRS for such purpose and the trustee
consents to the 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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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 these 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 governmental or
church plan that is not subject to ERISA but 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 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 exception
applies.
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 this 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 the plan 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 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" include Plans
and employee benefit plans not subject to ERISA (e.g., governmental and foreign
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.
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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 these 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
(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 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, instead of requiring that all such receivables be either
identified or transferred on or before the closing date. The relief is
available when certain conditions are met.
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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, or another
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 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. Alaska, Arkansas, Colorado, Connecticut, Delaware, Florida, Georgia,
Illinois, Kansas, Maryland, Michigan, Missouri, Nebraska, New Hampshire, New
York, North Carolina, Ohio, South Dakota, Utah, Virginia and West Virginia
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 the legislation. Accordingly, investors whose investment
authority is subject
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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.
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.
The Federal Financial Institutions Examination Council, for example, has issued
a Supervisory Policy Statement on Securities Activities effective February 10,
1992 (the "Policy Statement"). The Policy Statement has been adopted by the
Comptroller of the Currency, the Federal Reserve Board, the FDIC, the OTS and
the NCUA (with certain modifications), with respect to the depository
institutions that they regulate. The Policy Statement prohibits depository
institutions from investing in certain "high-risk mortgage securities"
(including securities such as certain classes of offered certificates), except
under limited circumstances, and sets forth certain investment practices deemed
to be unsuitable for regulated institutions. 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.
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 them.
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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 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 the 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 the 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.
The offered certificates will be sold primarily to institutional
investors. Purchasers of the 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.
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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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GLOSSARY OF TERMS
"Accrual Certificates" means certificates which 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
"Accrued Certificate Interest" means, with respect to each class of
certificates and each distribution date, other than certain classes of Stripped
Interest Certificates, the amount equal to the interest accrued for a specified
period on the outstanding certificate balance immediately prior to the
distribution date, at the applicable pass-through rate, as described in
"Distributions of Interest on the Certificates" in this prospectus.
"ARM Loans" means mortgage loans with floating mortgage interest rates.
"Available Distribution Amount" means 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.
"Cede" means Cede & Company.
"CMBS" means pass-through certificates or other mortgage-backed securities
evidencing interests in or secured by one or more mortgage loans, certificates
or securities.
"CMBS Trustee" means a trustee or a custodian under the CMBS Agreement.
"Constant Prepayment Rate" or "CPR" means a rate that represents an
assumed constant rate of prepayment each month (which is expressed on a per
annum bases) relative to the then outstanding principal balance of a pool of
mortgage loans for the life of such mortgage loans. CPR does not purport to be
either a historical description of the prepayment experience of any pool of
mortgage loans or a prediction of the anticipated rate of prepayment of any
mortgage loans.
"Cooperative" means a private cooperative housing corporation.
"Covered Trust" means a form of credit support that covers more than one
series of certificates.
"Debt Service Coverage Ratio" means, with respect to a mortgage loan at
any given time, the ratio of the Net Operating Income for a twelve-month period
to the annualized scheduled payments on the mortgage loan.
"DTC" means The Depository Trust Company.
"Equity Participations" means provisions entitling the lender to a share
of profits realized from the operation or disposition of a mortgaged property.
"Loan-to-Value Ratio" means, with respect to a mortgage loan at any given
time, 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.
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"Lock-out Date" means the date of expiration of the Lockout Period.
"Lock-out Period" means a period during which prepayments on a mortgage
loan are prohibited.
"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 that period, minus the total operating
expenses incurred in respect of the mortgaged property during that 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.
"Pass-Through Rate" means the fixed, variable or floating rate per annum
at which any class of certificates accrues interest.
"REMIC" means a "real estate mortgage investment conduit" under the
Internal Revenue Code of 1986.
"REMIC certificates" means a certificate issued by a trust fund relating
to a series of certificate where an election is made to treat the trust fund as
a REMIC.
"RED Property" means any mortgaged property acquired on behalf of the
trust fund in respect of a defaulted mortgage loan through foreclosure, deed in
lieu of foreclosure or otherwise.
"Retained Interest" means an interest in an asset which represents a
specified portion of the interest payable. the Retained Interest will be
deducted from borrower payments as received and will not be part of the related
trust fund.
"Senior Certificates" means certificates which are senior to one or more
other classes of certificates in respect of certain distributions on the
certificates.
"Stripped Interest Certificates" means certificates which are entitled to
interest distributions with disproportionately low, nominal or no principal
distributions.
"Stripped Principal Certificates" means certificates which are entitled to
principal distributions with disproportionately low, nominal or no interest
distributions.
"Subordinate Certificates" means certificates which are subordinate to one
or more other classes of certificates in respect of certain distributions on
the certificates.
"Warranting Party" means the person making or assigning representations
and warranties.
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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 "2000C10.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. To the extent that the
information in electronic format contained in the attached diskette is
different from 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, the
information in electronic format is superseded by the related information in
print format. Prospective investors are strongly urged to read the Prospectus
Supplement in its entirety prior to accessing the Spreadsheet File.
Open the file as you would normally open any spreadsheet in Microsoft
Excel. Before the file is displayed, a message will appear notifying you that
the file is Read Only. Click the "READ ONLY" button, and after the file is
opened, a securities law legend will be displayed. READ THE LEGEND CAREFULLY.
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(1) Microsoft Excel is a registered trademark of Microsoft Corporation.
