Registration Statement No. 333-60749
Filed Pursuant to Rule 424(b)(5)
PROSPECTUS SUPPLEMENT
(To Prospectus dated September 9, 1998)
$658,587,000 (Approximate)
Commercial Mortgage Acceptance Corp.
as Depositor
Midland Loan Services, Inc.
Residential Funding Corporation
CIBC Inc.
as Mortgage Loan Sellers and
Midland Loan Services, Inc.
as Master Servicer
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1999-C1
-------------------------
Commercial Mortgage Acceptance Corp. is offering eight classes of its
1999-C1 commercial mortgage pass-through certificates, which represent
beneficial ownership interests in a trust. The trust's assets will primarily be
242 mortgage loans secured by first liens on 247 commercial and multi-family
residential properties. The series 1999-C1 certificates are not obligations of
Commercial Mortgage Acceptance Corp. or any of its affiliates. No governmental
agency or any other person will insure or guaranty the certificates or the
underlying mortgage loans.
Commercial Mortgage Acceptance Corp. will not list the certificates
on any national securities exchange or on any automated quotation system
of any registered securities association such as NASDAQ.
Investing in the certificates involves risks. See "Risk Factors"
beginning on page S-13 of this prospectus supplement and page 6 of the
prospectus.
The following classes of the series 1999-C1 certificates are being
offered by this prospectus supplement.
<TABLE>
<CAPTION>
Initial
Certificate Approximate Initial Description of
Balance or Pass-Through Pass-Through Scheduled Final Ratings
Class Notional Amount Rate Rate Distribution Date DCR/Moody's
----- --------------- ---- ---- ----------------- -----------
<S> <C> <C> <C> <C> <C>
Class A-1............ $ 133,500,000 6.790% Fixed August 15, 2008 AAA/Aaa
Class A-2............ $ 409,513,000 7.030% Fixed May 15, 2009 AAA/Aaa
Class X.............. $ 733,801,915 0.838% Variable May 15, 2019 AAA/Aaa
Class B.............. $ 33,021,000 7.200% Fixed June 15, 2009 AA/Aa2
Class C.............. $ 34,856,000 7.526% Variable June 15, 2009 A/A2
Class D.............. $ 11,007,000 7.626% Variable June 15, 2009 A-/A3
Class E ............. $ 23,848,000 7.886% Variable June 15, 2009 BBB/Baa2
Class F.............. $ 12,842,000 7.886% Variable June 15, 2009 BBB-/Baa3
</TABLE>
The Securities and Exchange Commission and state securities regulators
have not approved or disapproved the offered certificates or determined if this
prospectus supplement and the accompanying prospectus are truthful and complete.
It is unlawful to represent otherwise.
Morgan Stanley & Co. Incorporated, Deutsche Bank Securities Inc., CIBC
World Markets Corp., PNC Capital Markets, Inc. and Residential Funding
Securities Corporation, as underwriters, will purchase the offered certificates
from the depositor and will offer them to the public at negotiated prices
determined at the time of sale. The depositor will receive approximately
$688,419,153 in sale proceeds, plus accrued interest, before expenses. It is
expected that delivery of the offered certificates will be made in the United
States in book-entry form through the facilities of the Depository Trust Company
and may be made in Europe in book-entry form through Cedel Bank, S.A. and the
Euroclear System, against payment therefor on or about July 27, 1999.
---------------------------------
MORGAN STANLEY DEAN WITTER
DEUTSCHE BANC ALEX. BROWN
CIBC WORLD MARKETS CORP.
PNC CAPITAL MARKETS
RESIDENTIAL FUNDING SECURITIES CORPORATION
---------------------------------
The date of this Prospectus Supplement is July 15, 1999
<PAGE>
[Photographs of some of the major mortgaged properties and map showing
geographic concentrations of mortgage pool]
S-2
<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:
o the accompanying prospectus, which provides general information, some of
which may not apply to the offered certificates, and
o 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 descriptions of the offered
certificates in the prospectus and in this prospectus supplement vary, 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. Unless we tell you otherwise, all references to captions are to
sections of this prospectus supplement. The table of contents on page S-4
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
Definitions" on page S-96 in this prospectus supplement and under the caption
"Index of Definitions" beginning on page 89 in the prospectus.
Limitations on Offers or Solicitations
We do not intend this document to be an offer or solicitation:
o if used in a jurisdiction in which such offer or solicitation is not
authorized;
o if the person making such offer or solicitation is not qualified to do so;
or
o 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.
S-3
<PAGE>
TABLE OF CONTENTS
SUMMARY........................................................S-5
RISK FACTORS..................................................S-13
DESCRIPTION OF THE MORTGAGE POOL..............................S-28
General.................................................S-28
Security for the Mortgage Loans.........................S-29
Underwriting Standards..................................S-30
Certain Terms and Conditions of the Mortgage Loans......S-30
Certain Characteristics of the Mortgage Pool............S-34
Other Information.......................................S-36
The Sellers.............................................S-37
Changes in Mortgage Pool Characteristics................S-38
Representations and Warranties; Repurchase..............S-39
MASTER SERVICER...............................................S-44
SPECIAL SERVICER..............................................S-46
DESCRIPTION OF THE CERTIFICATES...............................S-47
General.................................................S-47
Certificate Balances and Notional Amounts...............S-47
Pass-Through Rates......................................S-48
Distributions...........................................S-49
Treatment of REO Properties.............................S-53
Appraisal Reductions of Loan Balances...................S-53
Application of Realized Losses and Expense
Losses to Certificate Balances..........................S-54
Prepayment Interest Excesses and Shortfalls.............S-56
Scheduled Final Distribution Date.......................S-56
Subordination...........................................S-57
Optional Termination....................................S-57
Voting Rights...........................................S-58
Delivery, Form and Denomination.........................S-58
Registration and Transfer of Definitive Certificates....S-61
YIELD AND MATURITY CONSIDERATIONS.............................S-61
Rate and Timing of Principal Payments...................S-61
Yield Sensitivity of the Interest Only Certificates.....S-64
Weighted Average Life...................................S-65
THE POOLING AND SERVICING AGREEMENT........................S-71
Assignment of the Mortgage Loans........................S-71
Servicing of the Mortgage Loans; Collection of Payments.S-72
Collection Activities...................................S-73
Advances................................................S-73
Accounts................................................S-74
Enforcement of "Due-on-Sale"Clauses.....................S-76
Enforcement of "Due-on-Encumbrance"Clauses..............S-76
Inspections.............................................S-77
Realization Upon Mortgage Loans.........................S-77
Amendments, Modifications and Waivers...................S-79
The Trustee.............................................S-80
The Fiscal Agent........................................S-81
Servicing Compensation and Payment of Expenses..........S-81
Special Servicing.......................................S-82
The Operating Adviser...................................S-84
Sub-Servicers...........................................S-84
Reports to Certificateholders; Where You can
Find More Information...................................S-85
MATERIAL FEDERAL INCOME TAX CONSEQUENCES......................S-87
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS LOCATED IN NEW YORK,
TEXAS AND CALIFORNIA..........................................S-88
New York................................................S-88
Texas...................................................S-89
California..............................................S-89
ERISA CONSIDERATIONS..........................................S-89
Plan Asset Regulation...................................S-90
Individual Exemption....................................S-90
Other Exemptions........................................S-92
Insurance Company Purchasers............................S-92
LEGAL INVESTMENT..............................................S-93
PLAN OF DISTRIBUTION..........................................S-93
USE OF PROCEEDS...............................................S-94
LEGAL MATTERS.................................................S-94
RATINGS.......................................................S-95
INDEX OF DEFINITIONS..........................................S-96
APPENDIX I -Mortgage Pool Information..........................I-1
APPENDIX II -Certain Characteristics of the Mortgage Loans....II-1
APPENDIX III -Significant Loan Summaries.....................III-1
APPENDIX IV -Additional Information Regarding
Multifamily Mortgage Loans....................................IV-1
APPENDIX V--Reserve Account Information........................V-1
FORM OF TRUSTEE REPORT
TERM SHEET.....................................................T-1
S-4
<PAGE>
SUMMARY
o This summary highlights selected information from this prospectus supplement
and does not contain all of the information that you need to consider in
making your investment decision. To understand the terms of the offered
certificates you must carefully read this entire document and the
accompanying prospectus.
o This summary provides an overview of certain calculations, cash flows and
other information to aid your understanding and is qualified by the full
description of these calculations, cash flows and other information in this
prospectus supplement and the accompanying prospectus.
o We provide information on the privately offered certificates in this
prospectus supplement only to enhance your understanding of the offered
certificates.
o All numerical information about the mortgage loans is provided on an
approximate basis.
o Unless we tell you otherwise, all percentages of the mortgage loans,
or any group of mortgage loans, referred to in this prospectus supplement
are based on the principal balances as of the cut-off date and
not the number of mortgage loans.
<TABLE>
<CAPTION>
Initial
Certificate Approximate
Balance or Weighted Principal Description of Initial
Notional Rating by Average Life Window Pass-Through Pass-Through
Class Amount DCR/Moody's (Years) (Months) Rate Rate
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Senior Certificates
---------------------------------------------------------------------------------------------------------
A-1 (1) $133,500,000 AAA/Aaa 5.69 1-109 Fixed Ratee 6.79%
---------------------------------------------------------------------------------------------------------
A-2 (1) $409,513,000 AAA/Aaa 9.59 109-118 Fixed Rate 7.03%
---------------------------------------------------------------------------------------------------------
X (1) $733,801,915 AAA/Aaa N/A N/A Variable Rate 0.838%
---------------------------------------------------------------------------------------------------------
Subordinate Certificates
---------------------------------------------------------------------------------------------------------
B (1) $ 33,021,000 AA/Aa2 9.82 118-119 Fixed Rate 7.20%
---------------------------------------------------------------------------------------------------------
C (1) $ 34,856,000 A/A2 9.88 119-119 Variable Rate 7.526%
---------------------------------------------------------------------------------------------------------
D (1) $ 11,007,000 A-/A3 9.88 119-119 Variable Rate 7.626%
---------------------------------------------------------------------------------------------------------
E (1) $ 23,848,000 BBB/Baa2 9.88 119-119 Variable Rate 7.886%
---------------------------------------------------------------------------------------------------------
F (1) $ 12,842,000 BBB-/Baa3 9.88 119-119 Variable Rate 7.886%
---------------------------------------------------------------------------------------------------------
G-P (2) $ 75,214,915 -- -- -- -- --
---------------------------------------------------------------------------------------------------------
(1) Offered certificates. (2) These certificates are not offered.
</TABLE>
The initial certificate balances and notional amounts for the certificates may
vary by up to 5%.
The column entitled "Principal Window" lists the months following the closing
during which certificateholders would receive distributions of principal. The
weighted average life and principal window figures are based on the maturity
assumptions described under "Yield and Maturity Considerations" assuming no
prepayments.
The notional amount for the class X certificates will generally be equal to the
stated principal balance of the mortgage loans.
For any distribution date, the pass-through rate for the fixed rate offered
certificates may not exceed the weighted average of the net mortgage rates.
For any distribution date, the pass-through rate for the class E and F
certificates will equal the weighted average of the net mortgage rates. For any
distribution date, the pass-through rate for the class C certificates will equal
the weighted average of the net mortgage rates minus 0.36% and the pass-through
rate for the class D certificates will equal the weighted average of the net
mortgage rates minus 0.26%. For each distribution date, the pass-through rate on
the class X certificates will generally be a per annum rate equal to the excess
of the weighted average of the net mortgage rates over the weighted average of
the pass-through rates for the classes of certificates with certificate
balances.
S-5
<PAGE>
Relevant Parties and Dates
Depositor
Commercial Mortgage Acceptance Corp., a wholly-owned subsidiary of
Midland Loan Services, Inc. See "The Depositor" in the prospectus.
Sellers
Midland Loan Services, Inc., a wholly owned subsidiary of PNC Bank,
N.A., is selling 114 loans (39.5%).
Residential Funding Corporation is selling 89 loans (34.1%).
CIBC Inc. is selling 39 loans (26.4%).
Underwriters
Morgan Stanley & Co. Incorporated, Deutsche Bank Securities, Inc.,
CIBC World Markets Corp., PNC Capital Markets, Inc. and Residential
Funding Securities Corporation.
Master Servicer
Midland Loan Services, Inc. or any successor master servicer.
See "Master Servicer".
Special Servicer
ORIX Real Estate Capital Markets, LLC, or any successor special
servicer.
Trustee
LaSalle Bank National Association. See "The Pooling and Servicing
Agreement--The Trustee".
Fiscal Agent
ABN AMRO Bank N.V., a Netherlands banking corporation which is the
indirect corporate parent of the trustee. See "The Pooling and Servicing
Agreement--The Fiscal Agent".
Controlling Class
The most subordinate class of principal balance certificates that has at
least 25% of its initial principal balance still outstanding.
Operating Adviser
The holder of a majority of the controlling class may appoint an
operating adviser as its representative. The master servicer and the special
servicer must notify the operating adviser before taking certain actions. The
operating adviser may replace the special servicer without cause. See "The
Pooling and Servicing Agreement--General" and "--The Operating Adviser".
Significant Dates
Cut-off Date
July 1, 1999.
Closing Date
On or about July 27, 1999.
Distribution Date
The 15th of each month, or if the 15th is not a business day, the next
business day, beginning in August, 1999.
Scheduled Final Distribution Date
The distribution date on which a class's certificate balance or notional
amount would become zero if there are:
o no defaults or delinquencies,
o no prepayments of any kind; and
o no modifications or extensions of any loans.
Please note that it is very unlikely that these assumptions will hold
true. See "Description of the Certificates--Scheduled Final Distribution Date".
S-6
<PAGE>
Rated Final Distribution Date
The distribution date in June 15, 2031.
Record Date
For each distribution date, the close of business on the last business
day of the prior calendar month.
Interest Accrual Period
For each distribution date, the prior calendar month. Interest is
calculated using a 360-day year consisting of twelve 30-day months.
Collection Period
For each distribution date, the period beginning the day after the
determination date in the preceding month and ending on the related
determination date. For the first distribution date, the collection period
begins the day after the cut-off date.
Determination Date
For each distribution date, the fifth business day before the
distribution date.
Due Date
The date scheduled payments come due under each mortgage loan
(disregarding grace periods). The due date for all the mortgage loans is the
first day of the month.
Information About the Certificates
Offered Certificates
We are offering the following classes of Commercial Mortgage
Acceptance Corp. Commercial Mortgage Pass-Through Certificates, Series 1999-C1.
class A-1
class A-2
class X
class B
class C
class D
class E
class F
We have not registered the other classes of certificates under the
Securities Act of 1933 and are not offering them to you.
The approximate initial class principal balance, initial pass-through
rate and interest type of each class of the offered certificates will be as
listed on the chart on page S-5.
Certificate Designations
In this prospectus supplement we will refer to the certificates or
particular groups of certificates by the following designations:
- ------------------------------ ---------------------------------------
Designation Related Classes
- ------------------------------ ---------------------------------------
Offered certificates Classes A-1, A-2, X, B, C, D, E and F
- ------------------------------ ---------------------------------------
Private certificates Classes G, H, J, K, L, M, N, O and P
- ------------------------------ ---------------------------------------
Senior certificates Classes A-1, A-2 and X
- ------------------------------ ---------------------------------------
Interest only certificates Class X
- ------------------------------ ---------------------------------------
Subordinate certificates Classes B, C, D, E, F, G, H, J, K, L,
M, N, O and P
- ------------------------------ ---------------------------------------
Residual certificates Classes R-I, R-II and R-III
- ------------------------------ ---------------------------------------
Distributions
Distributions to Senior Certificates
On each distribution date, funds available for distribution from the
mortgage loans, net of specified trust expenses, will be distributed to the
holders of the senior certificates in the following order:
Interest on Senior Certificates: to pay interest to the senior
certificates in an amount equal to their interest entitlement.
Principal on Class A Certificates: to pay principal from the funds
available for principal distributions to the class A-1 and class A-2
certificates, in that order, until reduced to zero. If the principal amount of
each class of certificates other than class A has been reduced to zero, funds
available for principal distributions will be distributed to class A-1 and class
A-2, pro rata, rather than sequentially.
S-7
<PAGE>
Reimbursement of Class A Losses: to reimburse the holders of the class A
certificates, pro rata, for any unreimbursed losses on the mortgage loans that
resulted in a reduction of the principal balance of such certificates, plus
interest on such amounts.
Distributions to Subordinate Certificates
On each distribution date, following the above distributions on the
senior certificates, the trustee will distribute the remaining portion of the
funds available for distribution to the subordinate certificates in alphabetical
order of class designation as follows:
o first, distributions of interest in an amount equal to the class' interest
entitlement;
o second, to pay principal from the funds available for principal
distributions, if the certificate balance of the class A certificates and
each other class of subordinate certificates, if any, with an earlier
alphabetical class designation has been reduced to zero; and
o third, to reimburse the class for any unreimbursed losses on the mortgage
loans that resulted in a reduction of the principal balance of such
certificates, plus interest on such amounts.
Each class of subordinate certificates will receive distributions only
after all required distributions have been made on the senior certificates and
each other class of subordinate certificates, if any, with an earlier
alphabetical class designation.
Distribution of Prepayment Premiums
Any prepayment premium collected on a mortgage loan during a collection
period will be distributed to the holders of the offered certificates on the
next distribution date as set forth in "Description of the
Certificates--Distributions--Distributions of Prepayment Premiums".
Subordination
The rights of the subordinate certificates to receive payments of
principal and interest will be subordinated to the rights of the senior
certificates. Each class of subordinate certificates is also subordinate to the
rights of holders of each other class of subordinate certificates with an
earlier alphabetical class designation.
Such subordination results from:
o applying the funds available from the mortgage loans in the order described
above; and
o allocating losses on the mortgage loans and certain default-related and
unanticipated expenses of the trust to the certificates in reverse order of
their alphabetical class designations.
Losses are allocated to the class A-1 and A-2 certificates in proportion
to their certificate balances.
The class X certificates receive no such allocations but do incur
reductions of their notional amount whenever any certificate balance is reduced
on another class.
The certificates have no other form of credit enhancement.
Prepayment Interest Shortfalls and Excesses
If a borrower prepays a mortgage loan before the determination date in
any calendar month and pays interest which accrued on the prepayment from the
beginning of the calendar month, then such interest is a "prepayment interest
excess".
If a borrower prepays a mortgage loan after the determination date in a
calendar month and does not pay interest on the prepayment through the end of
the calendar month, then this interest shortfall is a "prepayment interest
shortfall".
Prepayment interest excesses collected during a collection period will
first offset prepayment interest shortfalls during the collection period. The
master servicer retains any remaining amount as additional servicing
compensation. The master servicer must cover prepayment interest shortfalls not
offset by prepayment interest excesses from its own funds up to certain maximum
amounts.
If there are prepayment interest shortfalls not offset by prepayment
interest excesses or covered by the master servicer from its own funds, then the
net interest shortfall will be allocated among the certificates in proportion to
the interest accrued on each certificate for the distribution date. Such net
interest shortfalls allocated to a class will reduce the distributable
certificate interest on the class. See "The Pooling and Servicing
Agreement--Servicing Compensation and Payment of Expenses".
S-8
<PAGE>
Advances
The master servicer, the trustee and the fiscal agent must each make
advances for delinquent payments of principal (except for delinquent balloon
payments) and/or interest on the mortgage loans and to cover certain servicing
expenses.
If the master servicer fails to make a required advance, the trustee
must make it. If the trustee fails to make a required advance, the fiscal agent
must make it.
Advances are required only if the advancing party determines in its
reasonable discretion that they are ultimately recoverable from future
collections on the related mortgage loan or mortgaged property.
All advances will accrue interest at the "prime rate".
To the extent not offset by collected default interest, payments of
advance interest will reduce amounts payable to certificateholders. See "The
Pooling and Servicing Agreement--Advances".
Appraisal Reductions
If certain adverse events or circumstances occur or exist with respect
to a mortgage loan or the related mortgaged property, the special servicer must
obtain a new appraisal of the mortgaged property. If the principal balance of
the mortgage, plus certain other amounts due under the mortgage loan, is more
than 90% of the new appraised value, the amount of interest that the master
servicer is required to advance will be reduced. Due to the payment priorities ,
this reduction in advances will reduce the cash available to pay interest on the
most subordinate class of certificates then outstanding. See "Description of the
Certificates--Appraisal Reductions."
Information About the Mortgage Loans
The certificates will represent beneficial ownership interests in a
trust fund created by the depositor. The trust fund will consist primarily of a
pool of 242 fixed-rate loans with a total cut-off date principal balance of
approximately $733,801,916 (plus or minus 5%). In making this count, any loan
secured by mortgages over multiple separate properties was counted as 1 loan.
A first lien on a fee simple or leasehold estate in a mortgaged property
secures each loan.
o Fee -- 234 loans (96.1%).
o Leasehold - 8 loans (3.9%).
The mortgage pool includes 5 separate sets of cross-collateralized
loans. The largest of these sets constitutes 1.5% of the initial pool balance.
No person or entity insures or guarantees any of the loans. All of the
loans should be considered non-recourse loans.
229 loans (95.9%) are "balloon loans" expected to have more than 10% of
their original principal balance remaining unpaid at their maturity date. 26 of
these balloon loans (22.5%) are hyper-amortization loans and provide for an
increase in their interest rate and/or principal amortization prior to maturity.
The loans generally grant the related borrower a right to transfer its
loan under certain conditions, including the lender's prior consent. Some of the
loans may provide that the lender cannot unreasonably withhold its consent to
the proposed transferee.
Property types included in the mortgage pool include:
o multifamily -- 93 loans (32.5%).
o retail -- 57 loans (26.8%).
o office -- 43 loans (21.0%).
o industrial -- 25 loans (12.1%).
o hospitality -- 9 loans (3.5%).
o self storage -- 8 loans (2.6%).
o manufactured housing -- 6 loans (1.2%).
o mixed use -- 1 loan (0.2%).
Loans secured by properties located in New York, Texas and California
each represent more than 10% of the initial pool balance. Loans secured by
properties located in Pennsylvania, New Jersey, Florida and Illinois each
represent more than 5% of the initial pool balance. None of the remaining 34
jurisdictions has mortgaged properties securing loans representing more than 5%
of the initial pool balance.
No set of loans to a single borrower or to a single group of affiliated
borrowers constitutes more than 4.6% of the initial pool balance.
S-9
<PAGE>
53 loans (22.3%) are secured by properties at least 50% occupied by a
major tenant or the borrower.
146 loans (72.1%) permit the borrower to defease its loan, subject to
certain conditions.
Other than loans allowing defeasance, the loans generally permit
voluntary prepayments after any lock-out period if a prepayment premium is also
paid. Prepayment premiums are generally calculated based on a yield maintenance
formula or a specified percentage of the amount prepaid. The prepayment premium
percentage may remain constant or decline over time. The "Prepayment Restriction
Analysis" table included in Appendix I analyzes the percentage of the declining
balance of the mortgage pool that will be within a lock-out period or in which
principal prepayments must be accompanied by the indicated prepayment premium or
yield maintenance premium, for each of the time periods indicated.
As of the cut-off date, the loans have the following characteristics:
o mortgage rates range from 6.8% to 9.2% per annum, with a weighted average
mortgage rate of 7.7% per annum;
o remaining terms to stated maturity range from 41 months to 238 months, with
a weighted average remaining term to stated maturity of 120 months;
o cut-off date principal balances range from $361,411 to $ 32,184,648, with
an average cut-off date principal balance of $3,032,239;
o a weighted average debt service coverage ratio of 1.35x; and o a weighted
average loan to value ratio of 70.8%.
The characteristics of the loans are more fully described under
"Description of the Mortgage Pool" and in the Appendices.
Yield and Prepayment Considerations
The yield on each class of the offered certificates will depend on many
factors, including:
o the pass-through rate for the certificates in effect from time to time;
o whether the certificate is purchased at a discount or premium;
o the timing of principal distributions that reduce the certificate balance;
o appraisal reductions;
o expense losses; and
o realized losses.
See "Description of the Certificates--Distributions--Application of
Available Funds" and "--Distributions--Principal Distribution Amount".
We cannot predict the actual rate of principal prepayments. You should
independently estimate prepayment rates to use in evaluating an investment in
the offered certificates. See "Yield and Maturity Considerations".
A different rate of principal payments than you anticipate will cause
the actual yield to vary from your expected yield.
You may be unable to reinvest principal distributions in an alternative
investment with a comparable yield.
The class X certificates are interest-only certificates and receive no
distributions of principal. The yield to maturity of class X certificates will
be very sensitive to the prepayment, repurchase, extension, default and recovery
experience on the mortgage loans. These may fluctuate significantly from time to
time. A rate of principal payments, liquidations, unreimbursed expense or losses
on the mortgage loans that is more rapid than you expect will significantly
reduce your expected yield to maturity on these certificates. See "Yield and
Maturity Considerations--Yield Sensitivity of the Interest Only Certificates".
Additional Information About the Certificates
Tax Status of the Certificates
An election will be made to treat the trust as three separate Real
Estate Mortgage Investment Conduits - REMIC I, REMIC II and REMIC III -
S-10
<PAGE>
for federal income tax purposes. In the opinion of counsel, the trust will
qualify for this treatment.
Pertinent federal income tax consequences of an investment in the
offered certificates include:
o Each class of offered certificates will constitute a "regular interest"
in REMIC III.
o The regular interests will be treated as newly originated debt
instruments for federal income tax purposes.
o You will be required to report income on the offered certificates in
accordance with the accrual method of accounting.
o The class X and F certificates will be, and the other classes of the
offered certificates will not be, issued with original issue discount.
See "Material Federal Income Tax Consequences" in this prospectus
supplement and in the accompanying prospectus.
Optional Termination
If the total certificate balance of all outstanding principal balance
certificates is 1% or less of the initial pool balance on any distribution date,
then each of the following in this order has an option to purchase all loans and
property in the trust fund at a specified price:
o the majority holders of the controlling class,
o the depositor,
o the master servicer,
o the special servicer, and
o any holder of more than 50% of the class R-I certificates.
Such a purchase will terminate the trust fund and cause early retirement
of the then outstanding certificates. See "Description of the
Certificates--Optional Termination".
Denominations
You may purchase class A-l and A-2 certificates in minimum denominations
of $5,000 initial certificate balance and in any higher whole-dollar
denomination. You may purchase class X, class B, class C, class D, class E and
class F certificates in minimum denominations of $50,000 initial certificate
balance or notional amount, and in any higher whole-dollar denomination.
Clearance and Settlement
You must hold your certificates in book-entry form. In the United
States, we will deliver through the facilities of The Depository Trust Company.
In Europe, we may deliver through the facilities of Cedelbank or the Euroclear
System. DTC, Cedelbank or Euroclear rules and operating procedures govern
transfers within the system. Crossmarket transfers between persons holding
directly or indirectly through DTC, on the one hand, and counterparties holding
directly or indirectly through Cedelbank or Euroclear, on the other, will be
effected in DTC through Citibank, N.A., the depositary for Cedelbank, or the
Brussels, Belgium office of Morgan Guaranty Trust Company of New York, the
depositary for Euroclear.
ERISA Considerations
Subject to important considerations described under "ERISA
Considerations" in this prospectus supplement and in the accompanying
prospectus, the class A-1, class A-2 and class X certificates are eligible for
purchase by persons investing assets of employee benefit plans or individual
retirement accounts.
The class B, class C, class D, class E and class F certificates may not
be purchased by, or transferred to, any employee benefit plan or other
retirement arrangement subject to the Employee Retirement Income Security Act of
1974, as amended, or Section 4975 of the Internal Revenue Code, as amended, or
any person investing the assets of any such employee benefit plan or other
retirement arrangement. This prohibition does not apply to an insurance company
investing assets of its general account under circumstances that would qualify
for an exemption under Sections I and III of prohibited transaction class
exemption 95-60.
See "ERISA Considerations" in this prospectus supplement and in the prospectus.
Ratings
It is a condition of the issuance of the offered certificates that they
receive credit ratings no lower than the ratings indicated on the cover of this
prospectus supplement from Duff & Phelps Credit Rating Co. and Moody's Investors
Service, Inc.
A credit rating is not a recommendation to buy, sell or hold securities
and may be revised or
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withdrawn at any time by the assigning rating agency.
See "Ratings" in this prospectus supplement and in the prospectus for a
discussion of the basis upon which ratings are given, the limitations of and
restrictions on the ratings, and the conclusions that should not be drawn from a
rating.
Legal Investment
None of the classes of offered certificates will constitute "mortgage
related securities" for purposes of the Secondary Mortgage Market Enhancement
Act of 1984, as amended.
If your investment authority is restricted by law, then you should
consult your own legal advisors to determine whether and to what extent
the offered certificates constitute legal investments for you. See
"Legal Investment" in this prospectus supplement and in the prospectus.
Reports To Certificateholders
The trustee will make monthly reports to certificateholders of record.
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RISK FACTORS
You should carefully consider the risks before making an investment
decision. In particular, the timing and amount of distributions on your
certificates will depend on payments received on and other recoveries with
respect to the loans. Therefore, you should carefully consider the risk factors
relating to the loans and the mortgaged properties.
The risks and uncertainties described below are not the only ones
relating to the certificates. Additional risks and uncertainties not presently
known to us or that we currently deem immaterial may also impair your
investment.
If any of the following risks actually occur, your investment could be
materially and adversely affected.
This prospectus supplement also contains forward-looking statements that
involve risks and uncertainties. Actual results could differ materially from
those anticipated in these forward-looking statements as a result of a variety
of factors, including the risks described below and elsewhere in this prospectus
supplement.
Your Investment Is Not Insured or Guaranteed and Your Source for Repayment
Is Limited
Payments under the loans are not insured or guaranteed by any person or
entity.
Prospective investors should consider all of the loans to be nonrecourse
loans. If a default occurs, the lender's remedies generally are limited to
foreclosing against the specific properties and other assets pledged to secure
the loan. Such remedies may be insufficient to provide a full return on your
investment. Payment of amounts due under a loan prior to maturity is dependent
primarily on the sufficiency of the net operating income of the mortgaged
property. Payment of a loan at maturity is primarily dependent upon the
borrower's ability to sell or refinance the property for an amount sufficient to
repay the loan.
The certificates will represent interests solely in the assets of the
trust and will not represent an interest in or an obligation of any other
person. Distributions on any of the certificates will depend solely on the
amount and timing of payments on the loans.
All but 8 of the loans were originated after June 1, 1998. Consequently,
the loans do not have a long-standing payment history.
The Repayment of a Commercial Loan Is Dependent on the Cash Flow Produced
by the Property, Which Can Be Volatile and Insufficient to Allow Timely
Payment on Your Certificates
The loans are secured by various types of income-producing commercial
properties. Because, among other things, commercial lending typically involves
larger loans, it is generally thought to expose a lender to greater risk than
one-to-four family residential lending.
The repayment of a commercial loan is typically dependent upon the
ability of the applicable property to produce cash flow. Even the liquidation
value of a commercial property is determined, in substantial part, by the amount
of the property's cash flow or its potential to generate cash flow. However, net
operating income and cash flow can be volatile and may be insufficient to cover
debt service on the loan at any given time.
A large number of factors may adversely affect the net operating income,
cash flow and property value of the mortgaged properties. Some of these factors
relate to the property itself, such as:
o the age, design and construction quality of the property;
o perceptions regarding the safety, convenience and attractiveness of the
property;
o the proximity and attractiveness of competing properties;
o the adequacy of the property's management and maintenance;
o increases in operating expenses at the property and in relation to
competing properties;
o an increase in the capital expenditures needed to maintain the
property or make improvements;
o the dependence upon a single tenant, or a concentration of
tenants in a particular business or industry;
o a decline in the financial condition of a major tenant;
o an increase in vacancy rates; and
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o a decline in rental rates as leases are renewed or entered into with new
tenants.
Others factors are more general in nature, such as:
o national, regional or local economic conditions, including plant closings,
military base closings, industry slowdowns and unemployment rates;
o local real estate conditions, such as an oversupply of competing
properties, space or multi-family housing;
o demographic factors;
o decreases in consumer confidence;
o changes in consumer tastes and preferences; and
o retroactive changes in building codes.
The volatility of net operating income will be influenced by many of the
foregoing factors, as well as by:
o the length of tenant leases;
o the creditworthiness of tenants;
o tenant defaults;
o in the case of rental properties, the rate at which new rentals occur; and
o the property's "operating leverage" (i.e., the percentage of total property
expenses in relation to revenue, the ratio of fixed operating expenses to
those that vary with revenues, and the level of capital expenditures
required to maintain the property and to retain or replace tenants).
A decline in the real estate market or in the financial condition of a
major tenant will tend to have a more immediate effect on the net operating
income of properties with short-term revenue sources and may lead to higher
rates of delinquency or defaults under loans.
Converting Commercial Properties to Alternative Uses May Require Significant
Expenditures Which Could Reduce Payments on Your Certificates
Some of the mortgaged properties may not be readily convertible to
alternative uses if those properties were to become unprofitable for any reason.
Converting commercial properties to alternate uses generally requires
substantial capital expenditures. In addition, zoning or other restrictions also
may prevent alternative uses. The liquidation value of any such mortgaged
property consequently may be substantially less than the liquidation value of a
property that the owner could readily adapt to other uses.
Property Value May Be Adversely Affected Even When There Is No Change in
Current Operating Income
Various factors may adversely affect the value of the mortgaged
properties without affecting the properties' current net operating income. These
factors include, among others:
o changes in governmental regulations, fiscal policy, zoning or tax laws;
o potential environmental legislation or liabilities or other legal liabilities;
o the availability of refinancing; and
o changes in interest rate levels.
Tenant Concentration Increases the Risk That Cash Flow Will Be Interrupted,
Which May Have an Adverse Effect on the Payment of Your Certificates
A deterioration in the financial condition of a tenant can be
particularly significant if a mortgaged property is leased to a single tenant,
or a small number of tenants. Mortgaged properties leased to a single tenant, or
a small number of tenants, also are more susceptible to interruptions of cash
flow if a tenant fails to renew its lease or defaults under its lease. This is
so because the owner may:
o suffer severe financial effects from the absence of rental income;
o require more time to re-lease the space; and
o incur substantial capital costs to make the space appropriate for replacement
tenants.
In 53 loans (22.3%) a single tenant or the borrower occupies more than
50% of the related mortgaged property.
A concentration of particular tenants among the mortgaged properties or
of tenants in a particular business or industry may also adversely affect retail
and office properties.
Leasing Mortgaged Properties to Multiple Tenants May Result in Higher
Re-Leasing Expenditures, Which May Have an Adverse Effect on the Payment
of Your Certificates
If a mortgaged property has multiple tenants, re-leasing
expenditures may be more
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frequent than in the case of mortgaged properties with fewer tenants. These
additional expenses will reduce the cash flow available for debt service
payments. Mortgaged properties with multiple tenants also may experience higher
continuing vacancy rates and greater volatility in rental income and expenses.
The Concentration of Loans Among Related Borrowers or Property Types Increases
the Possibility of Loss on the Loans Which May Have an Adverse Effect on
Your Certificates
The effect of mortgage pool loan losses will be more severe if:
o the pool is comprised of a small number of loans, each with a relatively
large principal amount; or
o the losses relate to loans that account for a disproportionately large
percentage of the pool's aggregate principal balance.
The 10 largest loans, or groups of cross-collateralized loans, equal
20.0% of the mortgage pool. Losses on any of these loans may have a more adverse
effect on the certificates than losses on other loans. Each of the other loans
represents less than 1.1% of the initial mortgage pool.
A concentration of mortgaged property types or of loans with the same
borrower or related borrowers also can pose increased risks. The following
property types are included in the mortgage pool:
o multifamily -- 93 loans (32.5%).
o retail -- 57 loans (26.8%).
o office -- 43 loans (21.0%).
o industrial -- 25 loans (12.1%).
o hospitality -- 9 loans (3.5%).
o self storage -- 8 loans (2.6%).
o manufactured housing -- 6 loans (1.2%).
o mixed use -- 1 loan (0.2%).
Several groups of loans are made to the same borrower or to borrowers
related through common ownership and where, in general, the related mortgaged
properties are commonly managed. The three largest of these groups represent
4.6%, 3.9% and 2.8% of the initial pool balance.
The bankruptcy or insolvency of any borrower in any such group could
have an adverse effect on the operation of all of the related mortgaged
properties and on the ability of such related mortgaged properties to produce
sufficient cash flow to make required payments on the related loans. For
example, if a person that owns or controls several mortgaged properties
experiences financial difficulty at one such property, it could defer
maintenance at one or more other mortgaged properties in order to satisfy
current expenses with respect to the mortgaged property experiencing financial
difficulty, or 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 the related loans.
Large Geographic Concentrations of Mortgaged Properties May Have an Adverse
Effect on the Payment of Your Certificates
Concentrations of mortgaged properties in geographic areas may increase
the risk that adverse economic or other developments or a natural disaster
affecting a particular region of the country could increase the frequency and
severity of losses on loans secured by the properties. In recent periods,
several regions of the United States have experienced significant real estate
downturns. Regional economic declines or adverse conditions in regional real
estate markets could adversely affect the income from, and market value of, the
mortgaged properties located in such region. Other regional factors such as
earthquakes, floods or hurricanes or changes in governmental rules or fiscal
policies also may adversely affect the mortgaged properties located in such
region. For example, mortgaged properties located in California may be more
susceptible to certain hazards (such as earthquakes) than properties in other
parts of the country.
The mortgaged properties are located in 41 jurisdictions. Loans secured
by mortgaged properties located in New York, Texas and California represent
approximately 14.1%, 12.8% and 10.5% of the initial pool balance. Loans secured
by mortgaged properties located in Pennsylvania, New Jersey, Florida and
Illinois each represent more than 5% of the initial pool balance. None of the
remaining 34 jurisdictions has mortgaged properties securing loans representing
more than 5% of the initial pool balance. See "Description of the Mortgage
Pool".
Large Concentrations of Multi-family Properties Securing Loans Will Subject
Your Investment to the Special Risks of These Properties
Multi-family properties secure 93 of the loans (32.5%).
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A large number of factors may adversely affect the value and successful
operation of a multi-family property, including:
o the physical attributes of the apartment building, such as its age,
appearance and construction quality;
o the location of the property;
o the ability of management to provide adequate maintenance and insurance;
o the types of services and amenities provided at the property;
o the property's reputation;
o the level of mortgage interest rates, which may encourage tenants to
purchase rather than rent housing;
o the presence of competing properties;
o local or national economic conditions;
o state and local regulations; and
o government assistance/rent subsidy programs.
Large Concentrations of Retail Properties Securing Loans Will Subject Your
Investment to the Special Risks of These Properties
Retail properties secure 57 of the loans (26.8%). The quality and
success of a retail property's tenants significantly affect the property's
value. For example, if the sales of retail tenants were to decline, rents tied
to a percentage of gross sales may decline and those tenants may be unable to
pay their rent or other occupancy costs.
The presence or absence of an "anchor store" in a shopping center also
can be important. Anchors play a key role in generating customer traffic and
making a center desirable for other tenants. Consequently, the economic
performance of an anchored retail property will be adversely affected by:
o an anchor store's failure to renew its lease;
o termination of an anchor store's lease;
o the bankruptcy or economic decline of an anchor store or self-owned
anchor; or
o an anchor store closing its business, even if, as a tenant,
it continues to pay rent.
If anchor stores in a mortgaged property were to close, the related
borrower may be unable to replace those anchors in a timely manner or without
suffering adverse economic consequences. Furthermore, some anchor stores have
co-tenancy clauses in their leases that permit them to cease operating if
certain other stores are not operated at the mortgaged property or if certain
other covenants are breached. Some non-anchor tenants may also be permitted to
terminate their leases if certain other stores are not operated or if those
tenants fail to meet certain business objectives.
Retail properties also face competition from sources outside a given
real estate market. For example, all of the following compete with more
traditional retail properties for consumer dollars:
o factory outlet centers;
o discount shopping centers and clubs;
o catalogue retailers;
o home shopping networks;
o internet web sites; and
o telemarketing.
These alternative retail outlets often have lower operating costs than
traditional retail properties. Continued growth of these alternative retail
outlets could adversely affect the rents, income and market value of the retail
properties in the mortgage pool.
Moreover, additional competing retail properties may be built in the
areas where the retail properties are located.
Large Concentrations of Office Properties Securing Loans Will Subject Your
Investment to the Special Risks of These Properties
Office properties secure 43 of the loans (21.0%).
A large number of factors may adversely affect the value of office
properties, including:
o the quality of an office building's tenants;
o the diversity of an office building's tenants (or reliance on a single or
dominant tenant); o the physical attributes of the building in relation to
competing buildings (for example, age, condition, design, location,
access to transportation and ability to offer certain amenities, such as
sophisticated building systems);
o the desirability of the area as a business location; and
o the strength and nature of the local economy, including labor costs and
quality, tax environment and quality of life for employees.
Moreover, the cost of refitting office space for a new tenant is often
higher than the cost of refitting other types of property.
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Large Concentrations of Industrial Properties Securing Loans Will Subject Your
Investment to the Special Risks of Such Properties
Industrial properties secure 25 of the loans (12.1%). Various factors
may adversely affect the economic performance of an industrial property,
including:
o reduced demand for industrial space because of a decline in a particular
industry segment;
o a property becoming functionally obsolete;
o strikes or the unavailability of labor sources;
o changes in energy prices;
o relocation of highways and the construction of additional highways or
other changes in access;
o a change in the proximity of supply sources; and
o environmental hazards.
Large Concentrations of Hospitality Properties Securing Loans Will Subject
Your Investment to the Special Risks of Such Properties
Hospitality properties secure 9 of the loans (3.5%). Various factors may
adversely affect the economic performance of a hotel, including:
o adverse local, regional, national or international economic and social
conditions, which may limit the amount that can be charged for a room and
reduce occupancy levels;
o the construction of competing hotels or resorts;
o continuing expenditures for modernizing, refurbishing and maintaining
existing facilities prior to the expiration of their anticipated useful
lives;
o a deterioration in the financial strength or managerial capabilities
of the owner and operator of a hotel; and
o changes in travel patterns, changes in access, increases in energy prices,
strikes, relocation of highways or the construction of additional highways.
Because hotel rooms generally are rented for short periods of time, the
financial performance of hotels tends to be affected by adverse economic
conditions and competition more quickly than other types of commercial
properties.
Moreover, the hotel and lodging industry is generally seasonal in
nature. This seasonality can be expected to cause periodic fluctuations in a
hotel property's revenues, occupancy levels, room rates and operating expenses.
The Affiliation of Some of the Properties with a Franchise or Hotel Management
Company May Have an Adverse Effect on the Payment of Your Certificates
All of the hospitality properties are operated as franchises of national
hotel chains or managed by a hotel management company. The performance of a
hotel property operated as a franchise or by a hotel management company depends
in part on:
o the continued existence and financial strength of the franchisor or hotel
management company;
o the public perception of the franchise or hotel chain
service mark; and
o the duration of the franchise license or management agreements.
The transferability of a franchise license agreement may be restricted.
In the event of a foreclosure, the lender or its agent may not have the right to
use the franchise license without the franchisor's consent. Conversely, in some
instances, the lender may be unable to remove a franchisor or a hotel management
company that it desires to replace following a foreclosure.
Further, in the event of a foreclosure, the trustee or a purchaser of a
mortgaged property probably would not be entitled to the rights under any liquor
license for the mortgaged property. Such party would be required to apply for a
new license in its own name. We cannot assure you that a new license could be
obtained.
The adverse effect of an economic decline in a particular hotel chain
will be more significant if there is a concentration of hotels operated by that
chain among the properties securing a loan. In this regard, the largest
concentration in the mortgage pool consists of 3 loans (1.6%) secured by
mortgaged properties that are operated as Holiday Inns.
Certain Additional Risks Relating to Tenants
The income from, and market value of, the mortgaged properties leased to
various tenants would be adversely affected if:
o space in the mortgaged properties could not be leased or re-leased;
o tenants were unable to meet their lease obligations;
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o a significant tenant were to become a debtor in a bankruptcy case; or
o rental payments could not be collected for any other reason.
Repayment of the loans secured by retail and office properties will be
affected by the expiration of leases and the ability of the respective borrowers
to renew the leases or relet the space on comparable terms.
Even if vacated space is successfully relet, the costs associated with
reletting, including tenant improvements and leasing commissions, could be
substantial and could reduce cash flow from the mortgaged properties. Moreover,
if a tenant defaults in its obligations to a borrower, the borrower may incur
substantial costs and experience significant delays associated with enforcing
its rights and protecting its investment, including costs incurred in renovating
and reletting the property.
Tenant Bankruptcy May Adversely Affect the Income Produced by the Property
and May Have an Adverse Effect on the Payment of Your Certificates
The bankruptcy or insolvency of a major tenant, or a number of smaller
tenants, in retail and office properties may adversely affect the income
produced by a mortgaged property. Under federal bankruptcy law, a tenant/debtor
has the option of affirming or rejecting any unexpired lease. If the tenant
rejects the lease, the landlord's claim for breach of the lease would be a
general unsecured claim against the tenant (absent collateral securing the
claim). The claim would be limited to:
o the unpaid rent under the lease for the periods prior to the bankruptcy
petition or the earlier surrender of the leased premises, plus
o the rent under the lease for the greater of one year or 15% of
the remaining term of the lease.
Federal or State Environmental Laws May Affect the Value of a Mortgaged
Property or the Ability of a Borrower to Make Required Loan Payments and May
Have an Adverse Effect on the Payment of Your Certificates
Various environmental laws may make a current or previous owner or
operator of real property liable for the costs of removal or remediation of
hazardous or toxic substances on, under, adjacent to, or in the property. Those
laws often impose liability whether or not the owner or operator knew of, or was
responsible for, the presence of the hazardous or toxic substances. For example,
certain laws impose liability for release of asbestos-containing materials into
the air or require the removal or containment of these materials. In some
states, contamination of a property may give rise to a lien on the property to
assure payment of the costs of cleanup. In some states, this lien has priority
over the lien of a pre-existing mortgage. Additionally, third parties may seek
recovery from owners or operators of real properties for personal injury
associated with exposure to asbestos or other hazardous substances.
The owner's liability for any required remediation generally is not
limited by law and could exceed the value of the property and/or the aggregate
assets of the owner. The presence of hazardous or toxic substances also may
adversely affect the owner's ability to refinance the property or to sell the
property to a third party. The presence of, or strong potential for
contamination by, hazardous substances consequently can materially adversely
affect the value of the property and a borrower's ability to repay its loan.
In addition, under certain circumstances, a lender (such as the trust)
could be liable for the costs of responding to an environmental hazard. See
"Certain Legal Aspects of the Mortgage Loans" in the prospectus.
Environmental Issues Relating to Specific Properties May Have an Adverse Effect
on the Payment of Your Certificates
All of the mortgaged properties securing the loans have been subject to
environmental site assessments in connection with the origination or acquisition
of the loans. In certain cases, the assessment disclosed known or potential
adverse environmental conditions, such as asbestos, underground storage tanks
and soil contamination. We cannot assure you, however, that the environmental
assessments revealed all existing or potential environmental risks or that all
adverse environmental conditions have been completely remediated. Furthermore,
environmental assessments on properties securing all but 3 of the loans (0.4%)
were obtained after January 1, 1998.
With respect to 1 loan (2.1%) identified as Loan No. 3 in Appendix II
hereto, the environmental report indicated that the groundwater at 1 of the six
mortgaged properties securing the loan has been contaminated by the operations
of a prior owner of the property. A total of $1,322,500 has been
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escrowed by the prior owner and the borrower to provide funds for remediation.
This amount is approximately 3 times the amount estimated by the environmental
consultant as required for remediation. With respect to 2 loans (0.4% and 0.2%
respectively) identified as Loan Nos. 81 and 157 in Appendix II hereto, the
environmental report indicated that the groundwater at the related mortgaged
property contained levels of gasoline products slightly in excess of the
mandated state levels. In each case the environmental consultant opined that it
believed that the applicable state regulators would not require remediation. The
results of the reports have been reported to the applicable state regulatory
agencies.
Environmental consultants have detected asbestos at several mortgaged
properties by sampling. The environmental consultants suspect that asbestos is
located at other mortgaged properties. The asbestos found or suspected at these
mortgaged properties is not expected to present a significant risk as long as
the property continues to be properly managed. Nonetheless, the value of a
mortgaged property as collateral for the loan could be adversely affected.
The environmental assessments have not revealed any environmental
liability that the depositor believes would have a material adverse effect on
the borrowers' businesses, assets or results of operations taken as a whole.
Nevertheless, there may be material environmental liabilities of which the
depositor is unaware. Moreover, there is no assurance that:
o future laws, ordinances or regulations will not impose any material
environmental liability; or
o the current environmental condition of the mortgaged properties will
not be adversely affected by tenants or by the condition of land or
operations in the vicinity of the mortgaged properties, such as underground
storage tanks.
Before the special servicer acquires title to a property on behalf of
the trust or assumes operation of the property, it must obtain an environmental
assessment of the property. This requirement will decrease the likelihood that
the trust will become liable under any environmental law. However, this
requirement may effectively preclude foreclosure until a satisfactory
environmental assessment is obtained or any required remedial action is
completed. There is accordingly some risk that the mortgaged property will
decline in value while this assessment is being obtained or the remedial work
completed. Moreover, there is no assurance this requirement will protect the
trust from liability under environmental laws.
Borrower May Be Unable to Repay the Remaining Principal Balance on Its
Maturity Date, Which May Have an Adverse Effect on the Payment of
Your Certificates
229 of the loans (95.9%) are expected to have more than 10% of the
original principal balance remaining unpaid on their effective maturity date or
stated maturity date. We cannot assure you that each borrower will have the
ability to repay the remaining principal balance on the pertinent date. Loans
with substantial remaining principal balances at their stated maturity involve
greater risk than fully amortizing loans.
A borrower's ability to repay a loan on its effective maturity date or
stated maturity date typically will depend upon its ability either to refinance
the loan or to sell the mortgaged property at a price sufficient to permit
repayment. A borrower's ability to achieve either of these goals will be
affected by a number of factors, including:
o the availability of, and competition for, credit for commercial
real estate projects;
o prevailing interest rates;
o the fair market value of the related properties;
o the borrower's equity in the related properties;
o the borrower's financial condition;
o the operating history and occupancy level of the property;
o tax laws; and
o prevailing general and regional economic conditions.
The availability of funds in the credit markets fluctuates over time.
See "Description of the Mortgage Pool - Certain Terms and Conditions of
the Mortgage Loans".
Borrowers That Are Not Special-Purpose Entities May be More Likely to Pursue
a Bankruptcy
The organizational documents of some of the borrowers do not limit the
borrowers' business activities to owning their respective properties.
Most of the borrowers (and any special-purpose entity having an
interest in any of the borrowers) do not have an independent director whose
consent would be required to file a voluntary bankruptcy petition on behalf
of the borrower. One
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of the purposes of an independent director (or of a special-purpose entity
having an interest in the borrower) is to reduce the likelihood of a bankruptcy
petition filing intended solely to benefit an affiliate and not justified by the
borrower's own economic circumstances.
The Borrower's Ability to Effect Other Borrowings May Reduce the Cash Flow
Available to the Property, Which May Have an Adverse Effect on the Payment
of Your Certificates
The loans generally also permit the related borrower to incur limited
indebtedness only in the ordinary course of business. They do not permit the
borrower to incur additional indebtedness using the mortgaged property as
collateral. See "Description of the Mortgage Pool - Certain Characteristics of
the Mortgage Pool -Other Financing".
When a borrower (or its constituent members) also has one or more other
outstanding loans (even if subordinated or mezzanine loans), the trust is
subjected to additional risk. The borrower may have difficulty servicing and
repaying multiple loans. The existence of another loan generally will make it
more difficult for the borrower to obtain refinancing of the loan, which may
jeopardize repayment of the loan. Moreover, the need to service additional debt
may reduce the cash flow available to the borrower to operate and maintain the
mortgaged property.
Additionally, if the borrower (or its constituent members) defaults on
its loan and/or any other loan, actions taken by other lenders could impair the
security available to the trust. If a junior lender files an involuntary
petition for bankruptcy against the borrower or the borrower files a voluntary
petition to stay enforcement by a junior lender, the trust's ability to
foreclose on the property will be automatically stayed, and principal and
interest payments might not be made during the course of the bankruptcy case.
The bankruptcy of another lender also may operate to stay foreclosure by the
trust.
Further, if another loan secured by the mortgaged property is in
default, the other lender may foreclose on the mortgaged property, unless the
other lender has agreed not to foreclose. A foreclosure by the other lender may
cause a delay in payments and/or an involuntary repayment of the loan prior to
maturity. The trust may also be subject to the costs and administrative burdens
of involvement in foreclosure proceedings or related litigation.
Bankruptcy Proceedings Relating to a Borrower May Result in a Restructuring
of the Loan
Under federal bankruptcy law, the filing of a petition in bankruptcy by
or against a borrower will stay the sale of the real property that the borrower
owns, as well as the commencement or continuation of a foreclosure action. In
addition, if a court determines that the value of the mortgaged property is less
than the principal balance of the loan it secures, the court may prevent a
lender from foreclosing on the mortgaged property, subject to certain
protections available to the lender. As part of a restructuring plan, a court
also may reduce the amount of secured indebtedness to the current value of the
mortgaged property. Such an action would make the lender a general unsecured
creditor for the difference between the current value of the property and the
amount of its loan. A bankruptcy court also may:
o grant a debtor a reasonable time to cure a payment default on a loan;
o reduce monthly payments due under a loan;
o change the rate of interest due on a loan; or
o otherwise alter the loan's repayment schedule.
Moreover, the filing of a petition in bankruptcy by, or on behalf of, a
junior lienholder may stay the senior lienholder from taking action to foreclose
on the junior lien. Additionally, the borrower's trustee or the borrower, as
debtor-in-possession, has certain special powers to avoid, subordinate or
disallow debts. In certain circumstances, the claims of the trustee may be
subordinated to financing obtained by a debtor-in-possession subsequent to its
bankruptcy.
Under federal bankruptcy law, the lender will be stayed from enforcing a
borrower's assignment of rents and leases. Federal bankruptcy law also may
interfere with a lender's ability to enforce any lockbox requirements. The legal
proceedings necessary to resolve these issues can be time-consuming and may
significantly delay the lender's receipt of rents. Rents also may escape an
assignment if the borrower uses the rents to maintain the mortgaged property or
for other court authorized expenses.
Thus, the trustee's recovery from borrowers in bankruptcy proceedings
may be significantly delayed, and the total amount ultimately collected may be
substantially less than the amount owed.
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The Operation of Commercial Properties Is Dependent upon Successful Management
The successful operation of a real estate project depends upon the
property manager's performance and viability. The property manager is generally
responsible for:
o responding to changes in the local market;
o planning and implementing a rental structure for the property;
o operating the property and providing building services;
o managing operating expenses; and
o assuring that maintenance and capital improvements are completed in a
timely fashion.
Properties deriving revenues primarily from short-term sources are
generally more management intensive than properties leased to creditworthy
tenants under long-term leases.
A good property manager can improve cash flow, reduce vacancy, leasing
and repair costs and preserve building value if it:
o controls costs;
o provides appropriate service to tenants; and
o maintains the improvements.
On the other hand, management errors can, in some cases, impair
short-term cash flow and the long-term viability of an income-producing
property.
The depositor makes no representation or warranty as to the skills of
any present or future managers. Additionally, the depositor cannot assure you
that the property managers will be in a financial condition to fulfill their
management responsibilities throughout the terms of their respective management
agreements.
Property Inspections Performed on the Mortgaged Properties May Not Reflect
All Conditions That Require Repair on the Property
Licensed engineers or consultants inspected the mortgaged properties in
connection with the origination of the loans to assess items such as:
o structure;
o exterior walls;
o roofing;
o interior construction;
o mechanical and electrical systems; and
o general condition of the site, buildings and other improvements.
However, there is no assurance that the inspectors identified all
conditions requiring repair or replacement.
The Absence of or Inadequacy of Insurance Coverage on the Mortgaged Property
May Have an Adverse Effect on the Payment of Your Certificates
The mortgaged properties may suffer casualty losses due to risks that
insurance does not cover or for which insurance coverage is inadequate. Certain
of the mortgaged properties are located in California, Texas and along the
southeastern coastal areas of the United States. These areas have historically
been at greater risk regarding acts of nature (such as hurricanes, floods and
earthquakes) than other areas. The loans generally do not specifically require
the borrowers to maintain earthquake or hurricane insurance. Specific hurricane
insurance in addition to the normal coverage provided by property insurance
exists for 10 loans (3.8%). Earthquake insurance was not required in only 2
loans (0.9%), identified as Loan Nos. 65 and 99 in Appendix II, where the
probable maximum loss exceeded 20%. The respective loan-to-value ratios for such
loans were 65.3% and 74.8%. There is no assurance borrowers will be able to
maintain adequate insurance. Moreover, changes in laws may materially affect the
borrower's ability to reconstruct the property or make major repairs or may
materially increase the cost of such reconstruction or repairs.
As a result of any of the foregoing, the amount available to make
distributions on the certificates could be reduced.
Appraisals May Inaccurately Reflect the Value of the Mortgaged Property
The originators obtained an appraisal or other market analysis of each
mortgaged property in connection with the origination or acquisition of the
related loan. The resulting estimates of value were used to calculate the
Cut-off Date LTV Ratios referred to in this prospectus supplement. Those
estimates represent the analysis and opinion of the person performing the
appraisal or market analysis and are not guarantees of present or future values.
Moreover, the values of the mortgaged properties may have changed significantly
since the appraisal or market study was performed. In addition, appraisals seek
to establish the
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amount a typically motivated buyer would pay a typically motivated seller. Such
amount could be significantly higher than the amount obtained from the sale of a
mortgaged property under a distress or liquidation sale. Information regarding
the values of mortgaged properties available to the depositor is presented in
Appendix I, Appendix II and Appendix III for illustrative purposes only.
The Timing of Loan Amortization May Have an Adverse Effect on the Payment of
Your Certificates
As principal payments or prepayments are made on loans in the mortgage
pool, the remaining mortgage pool may be subject to more risk because of the
decreased diversity of:
o mortgaged properties;
o types of mortgaged properties;
o geographic location; and
o number of borrowers and affiliated borrowers.
Classes that have a later sequential designation or a lower payment
priority are more likely to be exposed to this concentration risk than are
classes with an earlier sequential designation or higher priority. This is so
because principal on the certificates is generally payable in sequential order,
and no class entitled to distribution of principal generally receives principal
until the principal amount of the preceding class or classes entitled to receive
principal has been reduced to zero.
Subordination of Subordinate Certificates Will Affect the Timing of Payments
and the Application of Losses on Your Certificates
As described in this prospectus supplement, unless your certificates are
class A-1, class A-2 or class X certificates, your rights to receive
distributions of amounts collected or advanced on or in respect of the loans
will be subordinated to those of the holders of the certificates with an earlier
alphabetical designation. See "Description of the Certificates - Distributions"
and "-Subordination; Allocation of Losses and Certain Expenses" in this
prospectus supplement and "Risk Factors - Risks to Subordinated
Certificateholders; Lower Payment Priority" in the prospectus.
The Operation of the Mortgaged Property upon Foreclosure of the Loan May
Affect the Tax Status of the Trust and May Have an Adverse Effect on the
Payment of Your Certificates
If the trust acquires a mortgaged property pursuant to a foreclosure or
deed in lieu of foreclosure, the special servicer will generally retain an
independent contractor to operate the property. Any net income from such
operation (other than qualifying "rents from real property"), or any rental
income based on the net profits of a tenant or sub-tenant or allocable to a
non-customary service, will subject the trust to a federal tax on such income at
the highest marginal corporate tax rate (currently 35%), and in addition,
possible state or local tax. In such event, the net proceeds available for
distribution to certificateholders will be reduced. The special servicer may
permit the trust to earn "net income from foreclosure property" that is subject
to tax if it determines that the net after-tax benefit to certificateholders is
greater than under another method of operating or leasing the mortgaged
property.
State Laws Applicable to the Enforcement of Lender Remedies May Affect the
Timing of Payments on Your Certificates and May Have an Adverse Effect on
the Payment of Your Certificates
All of the mortgages permit the lender to accelerate the debt upon
default by the borrower. The courts of all states will enforce acceleration
clauses in the event of a material payment default. State equity courts,
however, may refuse to permit foreclosure or acceleration if a default is deemed
immaterial or the exercise of those remedies would be unjust or unconscionable.
If a mortgaged property has tenants, the borrower assigns its income as
landlord to the lender as further security, while retaining a license to collect
rents as long as there is no default. If the borrower defaults, the license
terminates and the lender is entitled to collect rents. In certain
jurisdictions, such assignments may not be perfected as security interests until
the lender takes actual possession of the property's cash flow. In some
jurisdictions, the lender may not be entitled to collect rents until the lender
takes possession of the property, secures the appointment of a receiver or
otherwise acts to enforce its remedies. In addition, as previously discussed, a
bankruptcy or similar proceeding commenced by or
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for the borrower could adversely affect the lender's ability to collect the
rents.
The laws of some states, including California, prohibit more than one
"judicial action" to enforce a mortgage obligation. Some courts have construed
the term "judicial action" broadly. In the case of a loan secured by mortgaged
properties located in multiple states, the master servicer or special servicer
may be required to foreclose first on mortgaged 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. As a result, state laws
may limit the trust's ability to realize upon the loans. Foreclosure actions may
also, in certain circumstances, subject the trust to liability as a
"lender-in-possession" or result in the equitable subordination of the claims of
the trustee to the claims of other creditors of the borrower. The master
servicer or the special servicer may take these state laws into consideration in
deciding which remedy to choose following a default by a borrower.
Loans Secured by Mortgages on a Leasehold Interest Will Subject Your Investment
to a Risk of Loss Upon a Lease Default
8 of the loans (3.9%) are secured by mortgages on a borrower's leasehold
interest under ground leases. These loans include 1 loan (0.6%) secured by a
mortgage on both the borrower's leasehold interest in a portion of the related
mortgaged property and the borrower's fee simple interest in the remainder of
the related mortgaged property.
Leasehold loans are subject to risks not associated with loans secured
by a lien on the fee estate of the borrower. The most significant of these risks
is that if the landlord terminates the borrower's leasehold upon a lease
default, the leasehold mortgagee would lose its security. Generally, the related
ground lease:
o requires the landlord to give the leasehold mortgagee notice of tenant
defaults and an opportunity to cure them prior to enforcing its remedies;
o prohibits any amendment of the ground lease without the lender's prior
consent;
o permits the leasehold estate to be assigned to the leasehold mortgagee
or the purchaser at a foreclosure sale; and
o contains certain other protective provisions typically included in a
"mortgageable" ground lease.
Upon the bankruptcy of a landlord or tenant under a ground lease, the
debtor entity has the right to assume or reject the lease. If a debtor landlord
rejects the lease, the tenant has the right to remain in possession of its
leased premises for the term of the lease including renewals, at the same rent.
If a debtor tenant/borrower rejects any or all of its leases, the leasehold
lender could succeed to the tenant/ borrower's position under the lease only if
the landlord specifically grants the lender such right. As a result, the lender
may lose its security. If both the landlord and the tenant/borrower are involved
in bankruptcy proceedings, the trustee may be unable to enforce the bankrupt
tenant/borrower's obligation to not terminate a ground lease rejected by a
bankrupt landlord. In such circumstances, a ground lease could be terminated
notwithstanding lender protection agreements.
Ground leases securing the mortgaged properties may provide that the
ground rent payable under the lease increases during the lease term. These
increases may adversely affect the cash flow and net income of the borrower from
the mortgaged property.
Cross-Collateralization of Groups of Loans Could Have an Adverse Effect on the
Payment of Your Certificates
Cross-collateralization arrangements involving more than one borrower
could be challenged as fraudulent conveyances:
o by creditors of the related borrower in an action brought outside a
bankruptcy case; or
o if the borrower were to become a debtor in a bankruptcy case, by the
borrower or its representative.
A lien granted by a borrower for the benefit of another borrower in a
cross-collateralization arrangement could be avoided if a court were to
determine that:
1. such borrower was:
o insolvent when it granted the lien;
o rendered insolvent by the granting of the lien;
o left with inadequate capital by granting the lien; or
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o not able to pay its debts as they matured; and
2. such borrower did not receive fair consideration or reasonably equivalent
value when it allowed its mortgaged property or properties to be encumbered
by a lien securing the indebtedness of the other borrower.
Among other things, a legal challenge to the granting of the liens may
focus on the benefits realized by such borrower from the respective loan
proceeds, as well as the overall cross-collateralization. If a court were to
conclude that the granting of the liens was an avoidable fraudulent conveyance,
that court could subordinate all or part of the loan to existing or future
indebtedness of that borrower. The court also could recover payments made under
that loan or take other actions detrimental to the holders of the certificates,
including, under certain circumstances, invalidating the loan or the mortgages
securing the cross-collateralized loans.
Leases Which Are Subordinate to Liens on the Mortgaged Properties May Have an
Adverse Effect on the Payment of Your Certificates
In some jurisdictions, a lease may terminate upon the transfer of a
property to a foreclosing lender or purchaser at foreclosure if the tenant lease
is:
o subordinate to the lien created by the mortgage, and
o does not contain provisions requiring the tenant to recognize a successor
owner following foreclosure as landlord under the lease (also known as
attornment provisions).
The depositor has not reviewed all the leases to determine if they have
these provisions. Accordingly, if a mortgaged property is located in one of
these jurisdictions and is leased to one or more desirable tenants under leases
that are subordinate to the mortgage but do not contain attornment provisions,
the mortgaged property could experience a further decline in value if such
tenants' leases were terminated. This is particularly likely if the tenants were
paying above-market rents or could not be replaced.
If a lease is not subordinate to a mortgage, the trust will not have the
right to remove the tenant upon foreclosure of the mortgaged property, unless it
has otherwise agreed with the tenant. If a non-subordinate lease contains
provisions inconsistent with the mortgage or that could affect the enforcement
of the lender's rights, the provisions of the lease will take precedence over
the provisions of the mortgage. Many anchor tenant leases may not be
subordinate, or, if subordinate, may provide that the lease terms control in
certain matters, such as the application of insurance proceeds. Some non-anchor
leases may also not be subordinate to the related mortgage.
Litigation Arising Out of Ordinary Business May Have an Adverse Effect on Your
Certificates
There may be pending or threatened legal proceedings against the
borrowers and managers of the mortgaged properties and their affiliates arising
out of the ordinary business of the borrowers, managers and affiliates. We
cannot assure you that any such litigation would not have a material adverse
effect on the distributions on the certificates.
The Cash Flow From Mortgaged Properties Not in Compliance With the Americans
with Disabilities Act May be Affected, Which May Have an Adverse Effect on the
Payment of Your Certificates
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. Borrowers may incur costs complying with the
ADA. In addition, noncompliance could result in the imposition of fines by the
federal government or an award of damages to private litigants.
Various Conflicts of Interest May Have an Adverse Effect on Your Certificates
Conflicts Between Various Classes of Certificateholders. The special
servicer is given considerable latitude in determining when and how to liquidate
or modify defaulted loans. The operating adviser has the right to replace the
special servicer. At any given time, the most subordinate class of principal
balance certificates that has at least 25% of its initial principal balance
still outstanding will control the operating adviser. These holders may have
interests in conflict with those of the holders of the other certificates. For
instance, these holders might desire to mitigate the potential for loss to their
certificates from a troubled loan by deferring enforcement in the hope of
maximizing future proceeds. However, the interests of the trust may be better
served by prompt action, since delay followed by a market downturn could
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result in less proceeds to the trust than would have been realized if earlier
action had been taken.
The special servicer or an affiliate may acquire certain of the most
subordinated certificates, including those that have the right to appoint the
initial operating adviser. Under such circumstances, the special servicer may
have interests that conflict with the interests of the other holders of the
certificates.
Conflicts Between Trustee and Affiliates of the Sellers. Conflicts of
interest may arise between the trust and affiliates of each of the sellers that
engage in the acquisition, development, operation, financing and disposition of
real estate.
Those conflicts may arise because affiliates of each of the sellers
intend to continue to actively acquire, develop, operate, finance and dispose of
real estate-related assets in the ordinary course of their business. During the
course of their business activities, those affiliates may acquire or sell
properties, or finance loans secured by properties which may include the
mortgaged properties or properties that are in the same markets as the mortgaged
properties. In such case, the interests of those affiliates may differ from, and
compete with, the interests of the trust. Decisions made with respect to those
assets may adversely affect the amount and timing of distributions on the
certificates.
Conflicts Between Managers and the Mortgage Loan Borrowers.
Substantially all of the property managers for the mortgaged properties or their
affiliates manage additional properties, including properties that may compete
with the mortgaged properties. Affiliates of the managers, and certain of the
managers themselves, also may own other properties, including competing
properties. The managers of the mortgaged properties may accordingly experience
conflicts of interest in the management of the mortgaged properties.
Conflicts Between Sellers of Loans and Classes of Certificateholders.
Affiliates of the sellers could acquire the certificates entitled to appoint the
operating adviser. Decisions made by the operating adviser may favor the
interests of such certificateholders as sellers, which could adversely affect
the amount and timing of distributions on the other certificates.
Prepayments May Reduce the Yield on Your Certificates
The yield to maturity on your certificates will depend, in significant
part, upon the rate and timing of principal payments on the loans. For this
purpose, principal payments include:
o voluntary prepayments, if permitted, and
o involuntary prepayments resulting from:
1. casualty or condemnation of mortgaged properties,
2. defaults and liquidations by borrowers, or
3. repurchases upon a seller's breach of a representation or warranty.
Because the notional amount of the class X certificates is based upon
the principal balance of the certificates with principal amounts, the yield to
maturity on the class X certificates will be extremely sensitive to the rate and
timing of prepayments of principal.
The investment performance of your certificates may vary materially and
adversely from your expectations if the actual rate of prepayment is higher or
lower than you anticipate.
Voluntary prepayments under certain of the loans require payment of a
yield maintenance premium unless the loan is within a specified number of days
of the effective maturity date or stated maturity date, as the case may be. See
"Description of the Mortgage Pool - Certain Terms and Conditions of the Mortgage
Loans - Prepayment Provisions". Nevertheless, we cannot assure you that the
related borrowers will refrain from prepaying their loans due to the existence
of a prepayment premium. We also cannot assure you that involuntary prepayments
will not occur. The rate at which voluntary prepayments occur on the loans will
be affected by a variety of factors, including:
o the terms of the loans;
o the length of any prepayment lockout period;
o the level of prevailing interest rates;
o the availability of mortgage credit;
o the applicable yield maintenance charges or prepayment premiums;
o the master servicer's or special servicer's ability to enforce those
charges or premiums;
o the occurrence of casualties or natural disasters; and
o economic, demographic, tax, legal or other factors.
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Generally, the loan documents do not require the borrower to pay a yield
maintenance charge or prepayment premium for prepayments in connection with a
casualty or condemnation, unless an event of default has occurred and is
continuing. In addition, if a seller repurchases any mortgage from the trust due
to breaches of representations or warranties, the repurchase price paid will be
passed through to the holders of the certificates with the same effect as if the
loan had been prepaid, except that no prepayment premium or yield maintenance
charge would be payable. Such a repurchase may therefore adversely affect the
yield to maturity on your certificates.
The Effect of State Laws Upon the Enforceability of Prepayment Premiums May
Affect the Payment and Yield of Your Certificates
Provisions requiring yield maintenance charges, prepayment premiums and
lock-out periods may not be enforceable in some states and under federal
bankruptcy law. Those provisions for charges and premiums also may constitute
interest under applicable usury laws. Accordingly, we cannot assure you that the
obligation to pay a yield maintenance charge or prepayment premium or to
prohibit prepayments will be enforceable. We also cannot assure you that any
foreclosure proceeds will be sufficient to pay an enforceable yield maintenance
charge or prepayment premium. Additionally, although the collateral substitution
provisions related to defeasance do not have the same effect on the
certificateholders as prepayment, we cannot assure you that a court would not
interpret those provisions as requiring a yield maintenance charge or prepayment
premium. In certain jurisdictions, those collateral substitution provisions
might therefore be deemed unenforceable under applicable law, or usurious.
The Yield on Your Certificate Will Be Affected by the Price at Which the
Certificate Was Purchased and the Rate, Timing and Amount of Distributions on
the Certificate
The yield on any certificate will depend on (1) the price at which the
certificate is purchased by an investor and (2) the rate, timing and amount of
distributions on the certificate. The rate, timing and amount of distributions
on any certificate will, in turn, depend on, among other things:
o the interest rate for the certificate;
o the rate and timing of principal payments, including prepayments, and
other principal collections on or in respect of the loans;
o the extent to which principal collections are applied to or otherwise
result in a reduction of the balance or notional amount of the certificate;
o the rate, timing and severity of losses on or in respect of the loans or
unanticipated expenses of the trust;
o the timing and severity of any interest shortfalls resulting from
prepayments;
o the timing and severity of any reductions in advances as described under
"Description of the Certificates--Appraisal Reductions of Loan Balances";
and
o the extent to which prepayment premiums are collected and, in turn,
distributed on the certificate.
You Bear the Risk of Borrower Defaults
The rate and timing of delinquencies or defaults on the loans will
affect the following aspects of the certificates:
o the aggregate amount of distributions on them;
o their yield to maturity;
o their rates of principal payments; and
o their weighted average lives.
The rights of holders of each class of subordinate certificates to
receive certain payments of principal and interest otherwise payable on their
certificates will be subordinated to the rights of the holders of the more
senior certificates having an earlier alphabetical class designation. See
"Description of the Certificates - Distributions." Losses on the loans will be
allocated to the class P, class O, class N, class M, class L, class K, class J,
class H, class G, class F, class E, class D, class C and class B certificates,
in that order, reducing amounts otherwise payable to each class. Any remaining
losses would then be allocated to the class A certificates.
If losses on the loans exceed the aggregate principal amount of the
classes of certificates subordinated to a particular class, that class will
suffer a loss equal to the full amount of the excess (up to the outstanding
principal amount of the class).
If you calculate your anticipated yield based on assumed rates of
default and losses that are lower than the default rate and losses actually
experienced and such losses are allocable to your certificates, your actual
yield to maturity will be lower than your assumed yield. Under certain extreme
scenarios, your yield could be negative. In general, the earlier a loss
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borne by your certificates occurs, the greater the effect on your yield to
maturity.
Additionally, delinquencies and defaults on the loans may significantly
delay the receipt of distributions by you on your certificates, unless:
o the master servicer makes advances to cover delinquent payments, or
o the subordination of another class of certificates fully offsets the effects
of any such delinquency or default.
Also, if the related borrower does not repay a loan with a
hyperamortization feature by its anticipated repayment date, the effect will be
to increase the weighted average life of your certificates and may reduce your
yield to maturity.
Compensation to the Master Servicer, the Special Servicer and the Trustee May
Have an Adverse Effect on the Payment of Your Certificates
To the extent described in this prospectus supplement, the master
servicer, the special servicer, the trustee and the fiscal agent will each be
entitled to receive interest on unreimbursed advances made by it. This interest
will generally accrue from the date on which the related advance is made or the
related expense is incurred through the date of reimbursement. In addition,
under certain circumstances, including delinquencies in the payment of principal
and interest, a loan will be specially serviced, and the special servicer is
entitled to compensation for special servicing activities. The right to receive
interest on advances or special servicing compensation is senior to the rights
of certificateholders to receive distributions.
No Secondary Market for the Certificates Exists, Which May Have an Adverse
Effect on the Value of Your Certificates
Your certificates will not be listed on any securities exchange, and
there is currently no secondary market for the offered certificates. While each
of the underwriters currently intends to make a secondary market in the offered
certificates, it is not obligated to do so. Accordingly, you may not have an
active or liquid secondary market for your certificates. Lack of liquidity could
result in a substantial decrease in the market value of your certificates. The
market value of your certificates also may be affected by many other factors,
including the then prevailing interest rates. Furthermore, you should be aware
that the market for securities of the same type as the certificates has recently
been volatile and offered very limited liquidity. Finally, affiliates of the
sellers may acquire certain classes of offered certificates in which case the
market for those classes of offered certificates may not be as liquid as if
third parties had acquired such certificates.
Risk of Pass-Through Rate Variability
The interest rates of the class X, class C, class D, class E and class F
certificates are based on the weighted average interest rate of the loans. Loans
with relatively high interest rates are more likely to prepay than loans with
relatively low interest rates. Higher rates of principal payments on loans
having mortgage interest rates above the weighted average interest rate of the
loans will have the effect of reducing the interest rate of such certificates.
In addition, the pass-through rates on the class A and class B certificates may
not exceed the weighted average of the net mortgage rates of the loans.
Computer Programming Problems Related to the Year 2000 May Have Adverse Effects
on the Payment of Your Certificates
We are aware of the issues associated with the programming code in
existing computer systems as the year 2000 approaches. The "year 2000 problem"
is pervasive and complex; virtually every computer operation will be affected in
some way by the rollover of the two-digit year value to 00. The issue is whether
computer systems will properly recognize date-sensitive information when the
year changes to 2000. Systems that do not properly recognize such information
could generate erroneous data or otherwise fail.
We have been advised by each of the master servicer, the special
servicer and the trustee that they are committed either to:
o implement modifications to their respective existing systems to the extent
required to cause them to be year 2000 compliant, or
o acquire computer systems that are year 2000 compliant;
in each case prior to August 31, 1999.
However, we have not made any independent investigation of the computer
systems of the master servicer, the special servicer or the trustee. In the
event that computer problems arise out of a failure of
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such efforts to be completed on time, or in the event that the computer systems
of the master servicer, the special servicer or the trustee are not fully year
2000 compliant, the resulting disruptions in the collection or distribution of
receipts on the loans could materially adversely affect your investment.
Additionally, we have not made any independent investigation of the
computer systems of any borrower or any tenant of a mortgaged property. The
operation of a borrower or a tenant at a mortgaged property may be dependent
upon computer systems that are not fully year 2000 compliant. In such case,
disruptions could occur in the borrower's collection of rents and other income
from such mortgaged property, potentially resulting in disruptions in the
borrower's required payments due in connection with such loan.
Other Risks
See "Risk Factors" in the prospectus for a description of certain other
risks and special considerations that may be applicable to your certificates.
DESCRIPTION OF THE MORTGAGE POOL
General
The mortgage pool will consist of 242 multifamily and commercial "whole"
loans, with an aggregate Cut-off Date Principal Balance of $733,801,916 (the
"Initial Pool Balance"), subject to a variance of plus or minus 5%. In making
this count, each Multiple Property Loan was counted as 1 loan and the
information set forth herein is the aggregation of the information for all
properties securing such loan. The Multiple Property Loans and all other loans
in the mortgage pool are collectively referred to as the "Mortgage Loans". All
numerical information concerning the Mortgage Loans is approximate.
The "Cut-off Date Principal Balance" of each Mortgage Loan is its unpaid
principal balance as of July 1, 1999 (the "Cut-off Date"), after application of
all principal payments due on or before such date, whether or not received.
The description of the Mortgage Loans in this prospectus supplement is a
generalized description of the Mortgage Loans in the aggregate. Many of the
individual Mortgage Loans have special terms and provisions that are different
from the generalized, aggregated description.
A brief summary of some of the terms of the 10 largest Mortgage Loans,
or groups of Cross-Collateralized Loans, is set forth in Appendix III.
Additionally, certain information regarding Mortgage Loans secured by Mortgages
encumbering multifamily properties is set forth in Appendix IV.
Each Mortgage Loan is evidenced by a separate promissory note. Each
Mortgage Loan is secured by a mortgage, deed of trust, deed to secure debt or
other similar security instrument (all of the foregoing are individually a
"Mortgage" and collectively the "Mortgages"), secured by a lien on one or more
of a fee simple estate or a leasehold estate in one or more parcels of real
property (a "Mortgaged Property") improved for multifamily or commercial use.
See Appendix I for information as to the percentage of the Initial Pool Balance
represented by each type of Mortgaged Property.
None of the Mortgage Loans is insured or guaranteed by the United States
of America, any governmental agency or instrumentality, any private mortgage
insurer or by the depositor, the sellers, the master servicer, the special
servicer, the trustee, the fiscal agent, the underwriters, any of their
respective affiliates or any other person.
All of the Mortgage Loans should be considered non-recourse loans. This
means that if the loan is in default, the lender's remedies are limited to
foreclosing or acquiring the related Mortgaged Property and any other assets
pledged to secure the loan. For those Mortgage Loans that permit recourse
against any person or entity, the depositor has not evaluated the financial
condition of those persons or entities. In many cases, the only assets such
entities may have are those pledged to secure the loan.
The depositor will purchase the Mortgage Loans on or before the closing
date from the sellers, in each case pursuant to separate mortgage loan purchase
and sale agreements entered into between the depositor and the particular
seller. As described under "Description of the Mortgage Pool--Representations
and Warranties; Repurchase", each seller must repurchase a Mortgage Loan or
substitute a Qualified Substitute Mortgage Loan if a representation or warranty
made by the seller in its mortgage loan purchase agreement about the Mortgage
Loan was incorrect at the time it was made, if the breach materially and
adversely affects the
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interests of the certificateholders and is not cured. There can be no assurance
that any seller has or will have sufficient assets with which to fulfill any
repurchase or substitution obligations that may arise. The depositor will not
have any obligation to fulfill any repurchase obligation if a seller fails to do
so. The depositor will assign the Mortgage Loans, together with the depositor's
rights and remedies against the sellers in respect of breaches of
representations or warranties regarding the Mortgage Loans, to the trustee
pursuant to the pooling and servicing agreement.
Security for the Mortgage Loans
All of the Mortgage Loans are secured by a first lien encumbering one or
more of a fee simple estate or a leasehold estate in the related Mortgaged
Property, subject generally only to:
o liens for real estate and other taxes and special assessments not yet
delinquent or accruing
interest or penalties,
o rights of tenants, as tenants only, under third party leases which were
not required to be subordinated,
o covenants, conditions, restrictions, rights of way, easements and other
encumbrances of public record as of the date of recording of the Mortgage
or otherwise specified in the applicable lender's title insurance policy,
o purchase money security interests, and
o other exceptions and encumbrances on the Mortgaged Property that are
reflected in the related title insurance policies.
Ground Leases
8 Mortgage Loans (3.9%) are secured by a first lien encumbering the
related borrower's leasehold interest in the related Mortgaged Property. This
includes 1 Mortgage Loan (0.6%) secured by a Mortgage on both the borrower's
leasehold interest in a portion of the related Mortgaged Property and the
borrower's fee simple interest in the remainder of the related Mortgaged
Property. For each ground lease, the related ground lessors have agreed to
afford the mortgagee certain notices and rights, including without limitation,
cure rights with respect to breaches of the related ground lease by the related
borrower.
Cross-Collateralized Loans
The mortgage pool includes 5 separate sets of Mortgage Loans (the
"Cross-Collateralized Loans") that are cross-collateralized and cross-defaulted
with one or more related Cross-Collateralized Loans. None of the Mortgage Loans
are cross-collateralized or cross-defaulted with any mortgage loan not included
in the mortgage pool. No set of related Cross-Collateralized Loans constitutes
more than 1.5% of the Initial Pool Balance. See Appendix II for more information
regarding the Cross-Collateralized Loans.
Multiple Property Loans
For purposes of the statistical information contained in this prospectus
supplement and the Appendices, each Mortgage Loan where a single note is secured
by separate Mortgages encumbering separate Mortgaged Properties is considered
secured by one Mortgaged Property (collectively, the "Multiple Property Loans").
Purchase Options; Rights of First Refusal
With respect to 1 Mortgage Loan (0.2%) identified as Loan No. 169 in
Appendix II, the sole tenant of the Mortgaged Property possesses an option to
purchase between 10% and 50% of the related Mortgaged Property. This option is
not subordinate to the Mortgage, however, it provides that:
o the option price is the fair market value of the ownership interest
purchased at the time of the exercise of the option,
o the exercise of such option does not relieve the tenant from its
obligations under its lease, and
o the borrower remains in control of all leasing and management
matters related to the Mortgaged Property.
The tenant in the same Mortgage Loan also possesses a right of first refusal to
acquire the Mortgaged Property. No assurance can be made that the rights of
first refusal would not apply in the context of a foreclosure of the related
Mortgage. Consequently, there may be additional risks, delays and costs
associated with any such foreclosure
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Underwriting Standards
The following is a discussion of the customary underwriting policies and
procedures used to originate the Mortgage Loans. Such policies and procedures
involved an evaluation of both the prospective borrower and the proposed real
estate collateral.
Factors typically analyzed in connection with a Mortgaged Property
include:
Physical Characteristics:
o age and condition;
o appraised value;
o gross square footage, net rentable area and gross land area;
o number of units, rooms or beds; and
o property interest to be mortgaged (fee or leasehold).
Tenants:
o current tenants' size and identity;
o termination or purchase option rights;
o term, expiration and rental rates under current leases;
o leasing commissions; and
o tenant improvements and concessions.
Financial Information:
o historical cash flow;
o applicable market rentals for similar properties;
o historical vacancy rate and credit loss rate;
o debt service coverage ratio; and
o loan to value ratio.
A site inspection of the related Mortgaged Property was also typically
performed, and third party appraisals, engineering reports and Phase I
environmental site assessments were obtained.
Factors typically analyzed in connection with a prospective borrower
include:
o credit history;
o capitalization and overall financial resources; and
o management skill and experience in the applicable property type.
The above information has been provided by the sellers and has not been
independently verified by the depositor, the master servicer, the special
servicer, the underwriters, the trustee or the fiscal agent.
Certain Terms and Conditions of the Mortgage Loans
Due Dates
Monthly Payments are due on the first day of each month.
Mortgage Rates; Calculations of Interest
235 of the Mortgage Loans (98.1%) accrue interest on the basis of the
actual number of days elapsed each month in an assumed 360-day year. The
remainder of the Mortgage Loans accrue interest on the basis of an assumed
360-day year with twelve 30-day months. Except with respect to the
Hyper-Amortization Loans, each Mortgage Loan generally accrues interest at an
annualized rate that is fixed for the entire term of such Mortgage Loan and does
not permit any negative amortization or the deferral of fixed interest.
Amortization of Principal
Many of the Mortgage Loans provide for monthly payments of principal
based on amortization schedules substantially longer than their remaining terms.
229 Mortgage Loans (95.9%) are "balloon loans" expected to have more than 10% of
their original principal balance remaining unpaid at their maturity date. 26 of
such balloon loans (22.5%) are hyper-amortization loans that will have
substantial balloon payments on their Anticipated Repayment Date. Such
hyper-amortization loans also provide for an increase in their interest rate
and/or principal amortization prior to maturity. 13 Mortgage Loans (4.1%) have
remaining amortization terms that are substantially the same as their remaining
terms to maturity. However, if the Monthly Payment for any Mortgage Loan
(including any Hyper-Amortization Loan) is calculated on an assumed 30/360 basis
but interest accrues on an actual/360 basis, there will be a remaining balance
or a larger balloon payment due upon maturity.
The weighted average Balloon LTV Ratio of the mortgage pool is 58.5%.
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With respect to 3 Mortgage Loans (1.0%), the grace period for the
payment of Monthly Payments expires on the 15th of each month.
26 of the Mortgage Loans (22.5%) (the "Hyper-Amortization Loans") have
the following characteristics:
o each bears interest until its Anticipated Repayment Date at its Initial
Interest Rate;
o each bears interest on and after its Anticipated Repayment Date
at its Revised Interest Rate, and
o each requires that all gross revenue from the Mortgaged Property from
and after its Anticipated Repayment Date be deposited into a lockbox
account controlled by the lender and applied in the following order:
o to tax and insurance reserves;
o to interest at the Initial Interest Rate;
o to all other amounts owed the lender not set forth below;
o to all principal due under the original amortization;
o to all other reserves;
o to all approved operating or capital expenses;
o to all other principal then outstanding;
o to all outstanding Deferred Interest; and
o to the borrower.
To the extent not paid from gross revenues, the payment of interest
accrued at the excess of the Revised Interest Rate over the Initial Interest
Rate is deferred until the maturity date or when the principal is prepaid in
full. The deferred interest will also bear interest at the Revised Interest
Rate. The accrued and deferred interest, and interest thereon, is referred to as
"Deferred Interest").
"Anticipated Repayment Date" means for any Hyper-Amortization Loan the
date on and after which the Revised Interest Rate applies and the lockbox is
activated.
"Initial Interest Rate" means for any Hyper-Amortization Loan the rate
at which such Hyper-Amortization Loan accrues interest from its origination
until its Anticipated Repayment Date.
"Revised Interest Rate" means for any Hyper-Amortization Loan the
increased rate at which the Hyper-Amortization Loan bears interest from and
after its Anticipated Repayment Date, which is equal to the greater of:
o its Initial Interest Rate plus 2%, or
o the yield rate on the U.S. Treasury obligation that matures in the month in
which the original maturity date of the Hyper-Amortization Loan occurs plus
2%.
Prepayment Provisions
All but 5 Mortgage Loans (0.8%) are subject to specified periods
following origination during which no voluntary prepayments are allowed (a
"Lock-out Period").
The Mortgage Loans (other than the Defeasance Loans) generally permit
the borrower to voluntarily prepay the Mortgage Loan after the Lock-out Period
if it pays a prepayment premium. The Mortgage Loan documents generally provide
for a specified period prior to maturity during which a prepayment may be made
without a prepayment premium. Other than as described below or during any such
"open period", the Mortgage Loans prohibit any borrower from making a partial
prepayments. 1 Mortgage Loan (2.1%) allows the borrower to obtain a release of
any of the 6 separate Mortgaged Properties for such Mortgage Loan upon the
payment of 125% of the Mortgage Loan balance allocated to the Mortgaged Property
being released.
A borrower does not have to pay a prepayment premium if it prepays a
Hyper-Amortization Loan on or after its Anticipated Repayment Date.
The applicable prepayment premium is generally calculated:
o for a certain period (a "Yield Maintenance Period") after the origination of
the related Mortgage Loan or the expiration of the applicable Lock-out
Period, if any, on the basis of a yield maintenance formula or, for some
Mortgage Loans, a specified percentage of the amount prepaid if the
percentage is greater than the yield maintenance amount, and
o after the expiration of the applicable Yield Maintenance Period, a specified
percentage of the amount prepaid, which percentage may either remain
constant or decline over time.
Appendix II contains more specific information about the prepayment
premiums for each Mortgage Loan.
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The Mortgage Loans typically:
o provide that a borrower has to pay a prepayment premium in connection with
any involuntary prepayment resulting from a casualty or condemnation only if
the loan is in default;
o permit prepayment after an event of default (but prior to the sale by the
mortgagee of the Mortgaged Property through foreclosure or otherwise) if the
related borrower pays the applicable prepayment premium; and
o permit the borrower to transfer the Mortgaged Property to a third party
without prepaying the Mortgage Loan if certain conditions are satisfied,
including, without limitation, an assumption by the transferee of all of the
borrower's obligations under the Mortgage Loan.
The depositor makes no representation as to the enforceability of the
provisions of any Mortgage Loan requiring the payment of a prepayment premium or
as to the collectability of any prepayment premium.
The "Prepayment Restriction Analysis" table included in Appendix I sets
forth an analysis of the percentage of the declining balance of the mortgage
pool that, for each of the time periods indicated, will be within a Lock-out
Period or in which Principal Prepayments must be accompanied by the indicated
prepayment premium.
Defeasance
In 146 of the Mortgage Loans (72.1%) (the "Defeasance Loans"), even
though a voluntary prepayment may be generally prohibited, the borrower may,
after the expiration of a specified period during which defeasance is
prohibited, obtain a release of the related Mortgaged Property by pledging
certain substitute collateral to the holder of the Mortgage Loan. This
substitute collateral consists of direct, non-callable United States Treasury
obligations that provide for payments prior, but as close as possible, to all
dates on which a Monthly Payment or final balloon payment is due. Each of the
payments on the substitute collateral must be equal to or greater than the
Monthly Payment or final balloon payment due on such date.
Any excess amounts will be returned to the borrower.
A borrower's ability to obtain a release is in each case subject to
certain conditions specified in the related loan documents, including a
requirement that a written confirmation be obtained from the applicable Rating
Agency that the acceptance of the pledge of the substitute collateral in lieu of
a full prepayment will not result in a qualification, downgrade or withdrawal of
the rating then assigned by each Rating Agency to any class of the certificates.
The master servicer will use its reasonable efforts to have the cost, if any, of
obtaining such confirmation paid by the borrower. Any costs not paid by the
borrower will be advanced by the master servicer as a Servicing Advance, unless
such Advance would be nonrecoverable.
"Due-on-Encumbrance" and "Due-on-Sale" Provisions
The Mortgages generally contain "due-on-encumbrance" clauses that permit
the holder of the Mortgage to accelerate the maturity of the related Mortgage
Loan if the borrower encumbers the related Mortgaged Property without the
consent of the mortgagee. The special servicer will determine, in a manner
consistent with the servicing standard described under "The Pooling and
Servicing Agreement--Servicing of the Mortgage Loans; Collection of Payments",
whether to exercise any right the mortgagee may have under any such clause to
accelerate payment of a Mortgage Loan upon, or to withhold its consent to, any
additional encumbrance of the related Mortgaged Property.
The Mortgages generally prohibit the borrower from transferring any
material interest in the Mortgaged Property or allowing a material change in the
ownership or control of the related borrower, without the mortgagee's prior
consent. However, a transfer or change may be permitted if certain conditions
specified in the related Mortgage Loan documents are satisfied. These conditions
may include one or more of the following:
o no event of default exists;
o the proposed transferee meets the mortgagee's customary underwriting
criteria;
o the Mortgaged Property continues to meet the mortgagee's customary
underwriting criteria; and
o an acceptable assumption agreement is executed.
The related Mortgages may also allow changes in the ownership or control
of the related borrower between partners, members or shareholders as of the
closing of the Mortgage Loan, family members, affiliated companies and certain
specified individuals, or for estate planning purposes.
The special servicer will determine, in a manner consistent with the
servicing standard described under "The Pooling and Servicing
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Agreement--Servicing of the Mortgage Loans; Collection of Payments", whether to
exercise any right the mortgagee may have to accelerate payment of a Mortgage
Loan upon, or to withhold its consent to, any transfer or change in ownership or
control of the related borrower. The depositor makes no representation as to the
enforceability of any due-on-sale or due-on-encumbrance provision in any
Mortgage Loan that is the subject of a proceeding under federal bankruptcy law.
See "Certain Legal Aspects of Mortgage Loans--Enforceability of Certain
Provisions--Due-on-Sale Provisions" in the prospectus.
Hazard, Liability and Other Insurance
Generally, each Mortgage Loan requires that the Mortgaged Property be
insured against loss or damage by fire or other risks and hazards covered by a
standard extended coverage insurance policy. The minimum amount of such
insurance is usually the lesser of the full replacement cost of the Mortgaged
Property or the outstanding principal balance of the loan, but in any event in
an amount sufficient to ensure that the insurer would not deem the borrower a
co-insurer. Generally, each Mortgage Loan also requires that the related
borrower maintain the following insurance during the term of the Mortgage Loan:
o comprehensive public liability insurance, typically with a minimum limit
of $1,000,000 per occurrence;
o if any part of the Mortgaged Property upon which a material improvement is
located lies in a special flood hazard area and for which flood insurance
has been made available, a flood insurance policy in an amount equal to the
lesser of the outstanding principal balance of the loan or the maximum
limit of coverage available from governmental sources;
o if deemed advisable by the originator, rent loss and/or business
interruption insurance in an amount equal to all net operating income from
the operation of the Mortgaged Property for a period as required by the
Mortgage;
o if applicable, insurance against loss or damage from explosion of steam
boilers, air conditioning equipment, high pressure piping, machinery and
equipment, pressure vessels or similar apparatus; and
o any other insurance as may from time to time reasonably be required by the
mortgagee.
The Mortgage Loans generally do not require the borrower to maintain
earthquake insurance.
With respect to many of the Mortgage Loans, the borrower has satisfied
the applicable insurance requirements by obtaining blanket insurance policies.
The mortgagee generally has the right to review and approval the blanket
insurance policy, including the amount of insurance and the number of properties
covered by the policy.
Casualty and Condemnation
The Mortgage Loan documents typically provide that all insurance
proceeds or condemnation awards will be paid to the mortgagee if:
o the Mortgaged Property is damaged by fire or another casualty; or
o any taking or exercise of the power of eminent domain occurs with respect
to a Mortgaged Property.
The mortgagee then has the option to either apply the proceeds or awards to the
outstanding indebtedness of the Mortgage Loan, or allow the borrower to use the
proceeds to restore the Mortgaged Property. However, if certain specified
conditions are satisfied, the mortgagee may be required to pay the proceeds or
awards to the borrower for restoration of the Mortgaged Property. In certain of
the Mortgage Loans, the lease between the borrower and a tenant of all or part
of the Mortgaged Property may require the borrower or the tenant to restore the
Mortgaged Property if a casualty or condemnation occurs. In this case, the
Mortgage Loan documents may permit the application of all applicable proceeds or
awards to satisfy the requirement.
Financial Reporting
The Mortgages generally contain a covenant that requires the borrower to
provide the mortgagee with certain financial reports at least once a year about
the borrower's operations at the Mortgaged Property. Such reports typically
include information about income and expenses for the property for the period
covered by such reports, and/or current tenancy information. However, in the
case of owner-occupied properties, the borrower typically provides financial
information for itself instead of the Mortgaged Property.
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Delinquencies
No Mortgage Loan was more than 30 days delinquent in respect of any
Monthly Payment as of the Cut-off Date, or during the twelve months immediately
preceding the Cut-off Date.
Borrower Escrows and Reserve Accounts
In many of the Mortgage Loans, the borrower was required, or may under
certain circumstances in the future be required, to establish one or more
reserve or escrow accounts (such accounts, "Reserve Accounts") for those matters
and in such amounts deemed necessary by the originator of the loan. These
matters may include one or more of the following:
o necessary repairs and replacements,
o tenant improvements and leasing commissions,
o real estate taxes and assessments,
o water and sewer charges,
o insurance premiums,
o environmental remediation,
o improvements mandated under the Americans with Disabilities Act of 1990, or
o deferred maintenance and/or scheduled capital improvements.
Appendix V contains more specific information about the Reserve Accounts
for each Mortgage Loan.
Certain Characteristics of the Mortgage Pool
Concentration of Mortgage Loans and Borrowers
The largest single Mortgage Loan has a Cut-off Date Principal Balance
that represents 4.4% of the Initial Pool Balance. The 10 largest individual
Mortgage Loans (or sets of Cross-Collateralized Loans) represent in the
aggregate 20.0% of the Initial Pool Balance. No set of Mortgage Loans made to a
single borrower or to a single group of affiliated borrowers constitutes more
than 4.6% of the Initial Pool Balance. See Appendix II for further information
regarding these Mortgage Loans.
Environmental Risks
Except as discussed below environmental site assessments for the
Mortgaged Properties generally were obtained either by:
o the originator within 12 months of the origination date of the Mortgage
Loan, or
o the applicable seller within 12 months of the date the Mortgage Loan was
acquired by the seller.
All but 3 of the Mortgaged Properties have been subject to environmental
site assessments within 18 months before the Cut-off Date.
The environmental site assessments did not reveal the existence of
conditions or circumstances respecting any Mortgaged Property that would:
o constitute or result in a material violation of applicable environmental
law,
o impose a material constraint on the operation of the Mortgaged Property,
o require any material change in the use of the Mortgaged Property, or
o require any material clean-up, remedial action or other response with
respect to hazardous materials on or affecting the Mortgaged Property
under any applicable environmental law,
with the exception of those conditions or circumstances:
o that the assessments indicated could be cleaned up, remediated or brought
into compliance with applicable environmental law by the taking of certain
actions, and
o for which:
1. a hold-back or other escrow of funds has been created in an amount
estimated by the originator to be adequate to pay the cost of
completing the clean-up, remediation or compliance actions as
specified in the assessments;
2. an environmental insurance policy in an amount satisfactory to the
originator has been obtained by the borrower;
3. an indemnity for such costs has been obtained from a potentially
culpable party that the originator believed was solvent; or
4. prior to the closing of the Mortgage Loan, the clean up,
remediation or compliance actions have been completed in compliance
with applicable environmental law, or commenced by a responsible
party deemed solvent by the originator in accordance with a
remediation plan approved by applicable regulatory agencies, all in
compliance with applicable environmental law.
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Some of the Mortgaged Properties are in areas of known groundwater
contamination or in the vicinity of sites containing "leaking underground
storage tanks" or other potential sources of groundwater contamination. The
environmental site assessments mentioned above generally do not anticipate that
the borrower will have to undertake remedial investigations or actions at these
sites. Further, the federal Comprehensive Environmental Response, Compensation
and Liability Act of 1980 and certain state environmental laws provide for a
third-party defense that generally would preclude liability for a party whose
property is contaminated by off-site sources. In addition, in its final "Policy
Toward Owners of Property Containing Contaminated Aquifers," dated May 24, 1995,
the United States Environmental Protection Agency stated that it would not take
enforcement actions against the owner of such property to require the
performance of remediation actions or the payment of remediation costs. This
policy statement is subject to certain conditions and applies only if the
hazardous substances have come to be located on or in a property solely as a
result of subsurface migration in an aquifer from a source or sources outside
the property.
Even if the owners of these Mortgaged Properties and the trust fund are
not liable for such contamination, enforcement of the borrower's or the trust
fund's rights against third parties may result in additional transaction costs.
In addition, the presence of such contamination or potential contamination may
affect the borrower's ability to refinance the Mortgage Loan using the Mortgaged
Property as collateral or to sell the Mortgaged Property to a third party.
You should understand that the results of the environmental site
assessments do not constitute an assurance or guaranty by the underwriters, the
depositor, the originators, the sellers, the borrowers, any environmental
consultants or any other person as to the absence or extent of the existence of
any environmental condition on the Mortgaged Properties that could result in
environmental liability. Given the scope of the environmental site assessments,
an environmental condition that affects a Mortgaged Property may not be
discovered or its severity revealed during the course of the assessment.
Further, no assurance can be given that future changes in applicable
environmental laws, the development or discovery of presently unknown
environmental conditions at the Mortgaged Properties or the deterioration of
existing conditions will not require material expenses for remediation or other
material liabilities. There can be no assurance that any hold-back or other
escrow of funds to pay the cost of completing any clean-up, remediation or
compliance actions with respect to a Mortgaged Property will be sufficient to
complete such actions.
Geographic Concentration
Mortgage Loans secured by Mortgaged Properties located in New York,
Texas and California respectively represent approximately 14.1%, 12.8% and 10.5%
of the Initial Pool Balance. Mortgage Loans secured by Mortgaged Properties
located in Pennsylvania, New Jersey, Florida and Illinois each represent more
than 5% of the Initial Pool Balance. The occurrence of adverse economic
conditions in any such jurisdiction may affect repayments of such Mortgage Loans
or the value of the related Mortgaged Properties. Such Mortgaged Properties may
be more susceptible to certain special hazard losses than properties located in
other areas of the country. No more than 5% of the Initial Pool Balance is
secured by Mortgaged Properties located in any other jurisdiction. See "Risk
Factors--Increased Geographic Concentrations of Mortgaged Properties May Have an
Adverse Effect on the Payment of Your Certificates" and Appendix I.
Other Financing
The Mortgage Loan documents prohibit the borrower from incurring
additional indebtedness secured by the related Mortgaged Property.
Zoning Compliance
The originator for each Mortgage Loan generally received assurances that
all of the improvements located upon each respective Mortgaged Property complied
with all zoning laws in all respects material to the continued use of the
related Mortgaged Property, or that the improvements qualified as permitted
non-conforming uses. With respect to 1 Mortgage Loan (0.3%) identified as Loan
No. 137 in Appendix II, 12 of the 107 apartment units are not in compliance with
applicable zoning. However, such 12 units were not included in the underwriting
process for such Mortgage Loan.
Tenant Matters
Certain additional information regarding Mortgaged Properties that are
owner occupied or leased in whole or in large part to a single tenant is listed
in Appendix I. Generally, these owners or
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major tenants do not have investment-grade credit ratings. The major tenants
generally occupy their premises pursuant to leases which require them to pay all
applicable real property taxes, maintain insurance over the improvements thereon
and maintain the physical condition of such improvements. In 53 of the Mortgage
Loans (22.3%), the owner or major tenant occupies 50% or more of the Mortgaged
Property.
Other Information
Each of the tables in Appendix I lists certain characteristics of the
mortgage pool presented, where applicable, as of the Cut-Off Date. The sum in
any column of any of the tables in Appendix I may not add to 100% and may not
equal the indicated total due to rounding. For a detailed presentation of
certain of the characteristics of the Mortgage Loans and the Mortgaged
Properties, on an individual basis, see Appendix II. For a brief summary of
certain of the terms of the 10 largest Mortgage Loans, or groups of
Cross-Collateralized Loans, see Appendix III. Certain information regarding
Mortgage Loans secured by Mortgages encumbering multifamily properties is listed
in Appendix IV. Finally, certain information regarding the Reserve Accounts for
each Mortgage Loan is set forth in Appendix V.
For purposes of the tables in Appendix I and for the information
included in this prospectus supplement and in Appendix II, Appendix III,
Appendix IV and Appendix V the following definitions and assumptions apply:
Debt Service Coverage Ratio
In general, income property lenders use debt service coverage ratios
(DSCR) to measure the ratio of (a) cash currently generated by a property that
is available for debt service to (b) required debt service payments. However,
debt service coverage ratios only measure the current, or recent, ability of a
property to service mortgage debt. If a property does not possess a stable
operating expectancy (for instance, if it is subject to material leases that are
scheduled to expire during the loan term and that provide for above-market rents
and/or that may be difficult to replace), a debt service coverage ratio may not
be a reliable indicator of a property's ability to service the mortgage debt
over the entire remaining loan term.
For purposes of this prospectus supplement, including for the tables in
Appendix I and the information in Appendix II and Appendix III, the "Debt
Service Coverage Ratio" or "DSCR" for any Mortgage Loan (or group of
Cross-Collateralized Loans) is the ratio of "Underwritable Cash Flow" estimated
to be produced by the related Mortgaged Property or Properties to the annualized
amount of debt service payable under that Mortgage Loan (or that group of
Cross-Collateralized Loans).
"Underwritable Cash Flow" in each case is an estimate of stabilized cash
flow available for debt service. In general, it is the estimated stabilized
revenue derived from the use and operation of a Mortgaged Property (consisting
primarily of rental income) less the sum of:
o estimated stabilized operating expenses (such as utilities, administrative
expenses, repairs and maintenance, management fees and advertising),
o fixed expenses (such as insurance, real estate taxes and, if applicable,
ground lease payments) and
o recurring capital expenditures and reserves for capital expenditures,
including tenant improvement costs and leasing commissions.
Underwritable Cash Flow generally does not reflect interest expenses and
non-cash items such as depreciation and amortization.
In determining Underwritable Cash Flow for a Mortgaged Property, the
seller relied on rent rolls and other generally unaudited financial information
provided by the borrowers and calculated stabilized estimates of cash flow that
took into consideration historical financial statements, material changes in the
operating position of the Mortgaged Property of which the seller was aware
(e.g., new signed leases or end of "free rent" periods and market data), and
estimated recurring capital expenditures and reserves for leasing commission and
tenant improvements. The seller made certain changes to operating statements and
operating information obtained from the borrowers, resulting in either an
increase or decrease in the estimate of Underwritable Cash Flow derived
therefrom, based upon the seller's evaluation of such operating statements and
operating information and the assumptions applied by the borrowers in preparing
such statements and information. In certain cases, partial year operating income
data was annualized, with certain adjustments for items deemed not appropriate
to be annualized, or borrower supplied "trailing-12 months" income and/or
expense information was utilized. In certain instances, historical expenses were
inflated. For purposes of calculating Underwritable Cash Flow for Mortgage Loans
where leases have been executed by
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one or more affiliates of the borrower, the rents under some of such leases have
been adjusted to reflect market rents for similar properties. Several Mortgage
Loans are secured by Mortgaged Properties with newly constructed improvements
and, accordingly, there were no historical operating results or financial
statements available with respect to such Mortgaged Properties. In such cases,
items of revenue and expense used in calculating Underwritable Cash Flow were
generally derived from rent rolls, estimates set forth in the related appraisal
or from borrower-supplied information.
No assurance can be given with respect to the accuracy of the
information provided by any borrowers, or the adequacy of the procedures used by
the seller in determining the presented operating information.
The Debt Service Coverage Ratios are presented for illustrative purposes
only and, as discussed above, are limited in their usefulness in assessing the
current, or predicting the future, ability of a Mortgaged Property to generate
sufficient cash flow to repay the Mortgage Loan. Accordingly, no assurance can
be given, and no representation is made that the Debt Service Coverage Ratios
accurately reflect that ability.
Cut-off Date Loan-to-Value
References in the tables to "Cut-Off Date Loan-to-Value" or "Cut-Off
Date LTV" are references to the ratio, expressed as a percentage, of the Cut-Off
Date Balance of a Mortgage Loan (or the aggregate principal balance of a group
of Cross-Collateralized Loans) to the value of the related Mortgaged Property or
Properties as determined by the most recent appraisal or market valuation of
such Mortgaged Property, as described below.
References to "Balloon LTV" or "Balloon LTV Ratio" are references to the
ratio, expressed as a percentage of the principal balance of a balloon loan (or
the aggregate principal balance of a group of Cross-Collaterialized Loans)
anticipated to be outstanding at the date on which the related balloon
payment(s) are scheduled to be due (calculated based on the Maturity Assumptions
and a 0% CPR) to the value of the related Mortgaged Property or Properties as
determined by the most recent appraisal or market valuation of such Mortgaged
Property or Properties available to the depositor.
No representation is made that any such value would approximate either
the value that would be determined in a current appraisal of the related
Mortgaged Property or the amount that would be realized upon a sale.
Each Mortgaged Property was appraised at the request of the originator
of the Mortgage Loan by a state certified appraiser or an appraiser belonging to
the Appraisal Institute. The purpose of each appraisal was to provide an opinion
of the fair market value of the Mortgaged Property. None of the depositor, the
sellers, the master servicer, the special servicer, the underwriters, the
trustee or the fiscal agent or any other entity has prepared or obtained a
separate independent appraisal or reappraisal, unless such person was the
originator of the Mortgage Loan. There can be no assurance that another
appraiser would have arrived at the same opinion of value. No representation is
made that any appraised value would approximate either the value that would be
determined in a current appraisal of the Mortgaged Property or the amount that
would be realized upon a sale. Accordingly, you should not place undue reliance
on the loan to-value-ratios set forth in this prospectus supplement.
Year Built/Renovated
References to "years built/renovated" are references to the later of the
year in which a Mortgaged Property was originally constructed or the most recent
year in which the Mortgaged Property was substantially renovated.
Weighted Averages
References to "weighted averages" are references to averages weighted on
the basis of the Cut-Off Date Balances of the Mortgage Loans.
The Sellers
Midland Loan Services, Inc.
Midland Loan Services, L.P., was organized under the laws of the State
of Missouri in 1992 as a limited partnership. On April 3, 1998, Midland Loan
Services, Inc., a newly formed, wholly owned subsidiary of PNC Bank, National
Association, acquired substantially all of the assets of Midland Loan Services,
L.P. Since 1994, Midland has been originating commercial and multifamily
mortgage loans for the purpose of securitization. See "The Master Servicer".
54 of the Mortgage Loans (18.9%) were originated by Midland and sold
to the Midland
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Commercial Mortgage Loan Owner Trust 1998-1, a business trust organized under
the laws of the State of Delaware. The holders of the Midland Owner Trust
certificates sold their certificates to Morgan Stanley Mortgage Capital Inc. on
June 30, 1999. An additional 60 Mortgage Loans (20.6%) were also originated by
Midland. Midland sold 58 of these Mortgage Loans to Morgan Stanley Mortgage
Capital on June 30, 1999. The two remaining Mortgage Loans will be sold by
Midland to the depositor on the closing date. On or before the closing date,
Morgan Stanley Mortgage Capital intends to terminate the Midland Owner Trust and
transfer to the depositor the Mortgage Loans that were in the Midland Owner
Trust and the Mortgage Loans acquired directly from Midland. Since Midland will
be the only person responsible to the trust for breaches of the representations
and warranties that relate to these Mortgage Loans and for defects in
documentation related to these Mortgage Loans, it is referred to in this
prospectus supplement as the seller of these Mortgage Loans.
Residential Funding Corporation
Residential Funding Corporation is a direct wholly owned subsidiary of
GMAC Mortgage Group, Inc. and was formed as a Delaware corporation. RFC
Commercial is a division of RFC which originates and acquires loans secured by
mortgages on commercial and multifamily real estate. Prior to origination or
acquisition, RFC Commercial's staff underwrites all the loans. RFC maintains its
principal office at 8400 Normandale Lake Boulevard, Suite 600, Minneapolis,
Minnesota 55437. Its telephone number is (612) 832-7000. RFC Commercial's
offices are located at 4800 Montgomery Lane, Suite 300, Bethesda, Maryland 20814
and its telephone number is (301) 215-6200. Residential Funding Securities
Corporation is an affiliate of RFC.
RFC sold its Mortgage Loans to Morgan Stanley Mortgage Capital Inc. on
June 30, 1999. Morgan Stanley Mortgage Capital intends to sell the RFC Mortgage
Loans to the depositor on the closing date. Since RFC will be the only person
responsible to the trust for breaches of the representations and warranties that
relate to its Mortgage Loans and for defects in documentation related to its
Mortgage Loans, it is referred to in this prospectus supplement as the seller of
its Mortgage Loans.
CIBC Inc.
CIBC Inc. is a wholly-owned subsidiary of Canadian Imperial Holdings
Inc. and is incorporated under the laws of Delaware. Canadian Imperial Holdings
Inc. is a wholly-owned subsidiary of CIBC Delaware Holdings Inc., also a
Delaware corporation, which is a subsidiary of Canadian Imperial Bank of
Commerce. Canadian Imperial Bank of Commerce is a bank chartered under the Bank
Act of Canada having its head office in the City of Toronto, in the Province of
Ontario, Canada. It is licensed to do business in the United States through its
Agency located at 425 Lexington Avenue, New York, New York 10017. CIBC Inc. is a
commercial finance company that originates commercial and multi-family real
estate loans, purchases participations in loans from third-party lenders and
otherwise extends credit to Fortune 1000 companies. CIBC Inc. has offices in
Atlanta, Chicago, Houston, Dallas, San Francisco, Los Angeles and New York. The
principal office of CIBC Inc. is located at 425 Lexington Avenue, New York, New
York 10017.
CIBC Inc. is an affiliate of CIBC World Markets Corp., formerly known as
CIBC Oppenheimer Corp. Although CIBC World Markets is an indirect, wholly owned
subsidiary of Canadian Imperial Bank of Commerce, it is solely responsible for
its contractual obligations and commitments. Any securities products offered or
recommended or purchased or sold in any client accounts by CIBC World Markets:
o will not be insured by the Federal Deposit Insurance Corporation;
o will not be deposits or other obligations of Canadian Imperial Bank of
Commerce;
o will not be endorsed or guaranteed by Canadian Imperial Bank of Commerce;
and
o will be subject to investment risks, including possible loss of principal
invested.
Changes in Mortgage Pool Characteristics
The description in this prospectus supplement of the mortgage pool and
the Mortgaged Properties is based upon the mortgage pool as expected to be
constituted at the close of business on the Cut-off Date, as adjusted for
scheduled principal payments due on the Mortgage Loans on or before the Cut-off
Date. Prior to the issuance of the certificates, one or more Mortgage Loans may
be removed from the mortgage pool if:
o the depositor deems such removal necessary or appropriate, or
o the loan is prepaid.
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A limited number of other mortgage loans may be included in the mortgage
pool prior to the issuance of the certificates, unless including such mortgage
loans would materially alter the characteristics of the mortgage pool as
described in this prospectus supplement. Accordingly, the range of interest
rates and maturities, as well as the other characteristics of the Mortgage Loans
constituting the mortgage pool at the time the certificates are issued may vary
from those described in this prospectus supplement.
A Current Report on Form 8-K will be filed, together with the pooling
and servicing agreement, with the Securities and Exchange Commission within 15
days after the closing date. If Mortgage Loans are removed from or added to the
mortgage pool as set forth in the preceding paragraph, the removal or addition
will be noted in the Form 8-K.
Representations and Warranties; Repurchase
The following is a summary of certain of the representations and
warranties to be made by each seller with respect to each of its Mortgage Loans.
The representations will be made as of the closing date or as of another date
specifically stated in the representation or warranty. There may be exceptions
to some of the representations and warranties.
1. The information in the schedule of the Mortgage Loans attached to the
related mortgage loan purchase agreement (which contains certain of the
information set forth in Appendix II) is true and correct in all material
respects.
2. The seller owns such Mortgage Loan free and clear of any and all pledges,
liens and/or other encumbrances.
3. No scheduled payment of principal and interest under such Mortgage Loan was
30 days or more past due as of the Cut-off Date or during the 12-month
period before the Cut-off Date.
4. The related Mortgage, subject to certain creditors' rights exceptions and
general principles of equity, constitutes a valid and enforceable first
priority mortgage lien upon the related Mortgaged Property, subject to:
o the lien for current real property taxes and assessments not yet
delinquent or accruing interest or penalties,
o rights of tenants, as tenants only, under third party leases which
were not required to be subordinated,
o covenants, conditions and restrictions, rights-of-way, easements and
other matters of public record or referred to in the related lender's
title insurance policy,
o exceptions and exclusions specifically referred to in such lender's
title insurance policy,
o purchase money security interests, and
o other matters to which like properties are commonly subject.
5. The assignment of the related Mortgage in favor of the trustee constitutes a
legal, valid and binding assignment.
6. The related assignment of leases, subject to certain creditors' rights
exceptions and general principles of equity, establishes and creates a valid
and enforceable first priority lien in the related borrower's interest in
all leases of the related Mortgaged Property.
7. The related Mortgage has not been satisfied, cancelled, rescinded or
subordinated in whole or in material part, and the related Mortgaged
Property has not been released from the lien of such Mortgage in whole or in
material part, except for partial releases included in the related Mortgage
File, none of which materially and adversely affected the value of the
Mortgaged Property intended as security for the Mortgage Loan.
8. Except as set forth in a structural engineering report prepared as part of
the origination of the Mortgage Loan, the related Mortgaged Property is, to
the seller's knowledge, free and clear of any damage (normal wear and tear
excepted) or defective condition that would materially and adversely affect
its value as security for the Mortgage Loan. Except as specified in the
related mortgage loan purchase agreement, any required repairs identified in
such engineering report with an estimated cost of $10,000 or more have been
completed or funds have been escrowed to pay for the repairs.
9. To the seller's knowledge, there is no proceeding pending for the
condemnation of all or any material portion of the related Mortgaged
Property.
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10. The related Mortgaged Property is or will be covered by an American Land
Title Association (or an equivalent form or state-approved form) lender's
title insurance policy that insures that the related Mortgage is a valid,
first priority lien on such Mortgaged Property, subject only to the
exceptions stated in the policy.
11. The proceeds of the Mortgage Loan have been fully disbursed, and there is no
obligation for future advances with respect to such Mortgage Loan.
12. One or more environmental site assessments were performed with respect to
the Mortgaged Property in connection with the origination of the Mortgage
Loan and reviewed by the seller, a report of each such assessment has been
delivered to the depositor, and to the seller's knowledge, there is no
material and adverse environmental condition or circumstance affecting such
Mortgaged Property except as disclosed in the report. Except as specified in
the related mortgage loan purchase agreement, for any material and adverse
condition or circumstance identified in such environmental report:
o a party not related to the borrower was identified as the
responsible party;
o the borrower provided environmental insurance, other additional
security and/or an operations and maintenance plan; or
o the borrower provided evidence that the applicable authorities would
not take any action or require the taking of any action in respect of
such condition or circumstance.
13. Each note, Mortgage and other agreement that evidences or secures the
Mortgage Loan is the legal, valid and binding obligation of the borrower,
enforceable in accordance with its terms, subject to:
o the non-recourse provisions of the loan,
o certain creditors' rights exceptions, and
o general principles of equity,
and subject to such matters, there is no valid defense, counterclaim, or
right of offset or rescission available to the borrower with respect to the
note, Mortgage or other agreement.
14. The related Mortgaged Property is, and is required pursuant to the related
Mortgage to be, insured by casualty and liability insurance policies of a
type specified in the related mortgage loan purchase agreement.
15. There are no delinquent taxes, assessments or other outstanding charges
affecting the related Mortgaged Property that are or may become a lien of
priority equal to or higher than the lien of the related Mortgage.
16. The related borrower is not, to the seller's knowledge, a debtor in any
state or federal bankruptcy or insolvency proceeding.
17. The related Mortgaged Property consists of the related borrower's fee simple
estate in real estate; or, if the related Mortgage encumbers the interest of
a borrower as a lessee under a ground lease of the related Mortgaged
Property (but not the related fee interest):
o the ground lease or a memorandum of the lease has been or will be duly
recorded, and the ground lease or other agreement permits the interest
of the lessee to be encumbered by the Mortgage and does not restrict
the use of the Mortgaged Property in a manner that would materially
and adversely affect the security provided by the related Mortgage;
o the related borrower's interest in the ground lease is assignable to
the depositor and its successors and assigns upon notice to, but
without the further consent of, the lessor;
o the ground lease was in full force and effect as of the origination of
the Mortgage Loan, and the seller has received no notice that an event
of default has occurred under the lease;
o the ground lease or other related agreement:
o requires the lessor to give notice of any default by the lessee
to the holder of the Mortgage (provided any required notice of
such holder's mortgage lien is given to the lessor),
o provides that no notice of termination given under the ground
lease is effective against the holder of the Mortgage unless a
copy has been delivered to the holder, and
o provides that no modification of the ground lease will be
effective without the prior written consent of the holder of the
Mortgage;
o the holder of the Mortgage is permitted no less time than that
provided to the borrower
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under the ground lease to cure any default under the ground lease, which
is curable after the receipt of notice of any such default, before the
lessor may terminate the ground lease; and
o the ground lease has a current term (excluding any extension options
that are not binding on the lessor) that extends at least ten years
beyond the scheduled maturity date of the Mortgage Loan.
18. With respect to a related Mortgage that encumbers the interest of a borrower
as a lessee under a ground lease of the related Mortgaged Property and also
the related fee interest:
o the Mortgage does not by its terms provide that it will be subordinated
to the lien of any other encumbrance upon the fee interest, and
o upon the occurrence of a default under the Mortgage by the related
borrower, any right of the ground lessor to receive notice of, and cure,
such default under any agreement binding upon the seller would not be
considered commercially unreasonable in any material respect in
accordance with the seller's customary practices.
19. All escrow deposits and payments required under the Mortgage Loan (including
any applicable grace or cure period) have been so deposited or paid by the
related borrower and have been applied in accordance with their intended
purposes or are being transferred to the depositor.
20. Either:
(a) the Mortgage Loan is secured by an interest in real property having a
fair market value at least equal to 80% of the adjusted issue price of
the Mortgage Loan determined under United States Treasury Regulations
Section 1.860G-2(a)(1), or
(b) substantially all the proceeds of the Mortgage Loan were used to
acquire, improve or protect the real property which served as the only
security for the Mortgage Loan (other than a recourse feature or other
third party credit enhancement).
Any Mortgage Loan that was "significantly modified" so as to result in a
taxable exchange under Section 1001 of the Code either:
o was modified as a result of the default or reasonably foreseeable
default of the Mortgage Loan, or
o is covered under clause (a) of the immediately preceding
sentence.
21. No holder of the Mortgage Loan has advanced funds or induced, solicited or
knowingly received any advance of funds from a party other than the
borrower, directly or indirectly, for the payment of any amount required by
the Mortgage Loan.
22. Each Mortgaged Property was, as of the origination date of the related
Mortgage Loan, and, to the Seller's knowledge is, free and clear of any and
all mechanic's and materialmen's liens that are prior or equal to the lien
of the related Mortgage, except for liens insured against by the related
title insurance policy.
23. The Mortgage Loan is not cross-collateralized or cross-defaulted with any
loan other than one or more other Mortgage Loans.
24. Other than Mortgage Loans either allowing defeasance or identified in the
related mortgage loan purchase agreement, no Mortgage requires the holder of
the Mortgage to release all or any material portion of the related Mortgaged
Property from the lien of the Mortgage. Those Mortgage Loans identified in
the related mortgage loan purchase agreement as allowing releases require:
o payment in full of the Mortgage Loan, or
o for a partial release, the satisfaction of certain legal and
underwriting requirements and the payment of a release price and
prepayment consideration in connection with the payment.
25. No Mortgage Loan contains any equity participation by the lender or provides
for negative amortization or for any contingent or additional interest in
the form of participation in the cash flow of the related Mortgaged
Property.
26. To the seller's knowledge, there exists no material default, breach,
violation or event of acceleration (and no event which, with the passage of
time or the giving of notice, or both, would constitute any of the
foregoing) under the related note or Mortgage, in any such case to the
extent the same materially and adversely affects
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the value of the Mortgage Loan and the related Mortgaged Property.
27. Based on due diligence, the improvements located on or forming a part of
each Mortgaged Property comply with applicable zoning laws and ordinances or
constitute a legal nonconforming use or structure, except such noncompliance
as does not materially and adversely affect the value of such Mortgaged
Property. Except as identified in the related mortgage loan purchase
agreement, each Mortgaged Property that constitutes a legal nonconforming
use may be restored after any casualty to its full use at the time of the
casualty or the borrower has provided law and ordinance insurance coverage
as required by the Seller. To the seller's knowledge, the related borrower
was, as of the date of origination of the Mortgage Loan, in possession of
all material licenses, permits and franchises required by applicable law for
the ownership and operation of the Mortgaged Property.
28. No Mortgage Loan permits the related Mortgaged Property to be encumbered by
any lien junior to or of equal priority with the lien of the related
Mortgage without the prior written consent of the holder of the Mortgage or
the satisfaction of debt service coverage or similar criteria specified in
the loan documents.
29. With respect to each Hyper-Amortization Loan:
o the interest rate after the Anticipated Repayment Date will be equal
to the greater of (i) the then existing rate of United States Treasury
securities with maturities approximating the maturity of the Mortgage
Loan plus 2%, and (ii) the initial interest rate plus 2%;
o except as identified in the mortgage loan purchase agreement, each
Hyper-Amortization Loan begins amortizing no later than the Cut-off
Date;
o the Anticipated Repayment Date is not less than seven years from each
Hyper-Amortization Loan's origination date; and
o each Hyper-Amortization Loan provides that after the Anticipated
Repayment Date, all excess cash flow will be applied to repay
principal and interest.
30. Except as identified in the mortgage loan purchase agreement, each Mortgage
Loan is a non-recourse loan except that a principal or other borrower
affiliate with assets in addition to an interest in the borrower is liable
for losses incurred as a result of the borrower's fraud, misapplication of
funds or breach of environmental laws.
31. Each Mortgaged Property constitutes one or more complete separate tax lots
or is covered by an endorsement under the related title policy.
32. Each Mortgage Loan allowing defeasance of mortgage collateral either
o requires the lender's prior written consent to the defeasance and the
borrower's compliance with conditions required by the lender or
o requires that
o defeasance may not occur prior to the time permitted by
applicable provisions of the federal income tax law and related
regulations pertaining to real estate mortgage investment
conduits (if applicable),
o the replacement collateral consist of U.S. governmental
securities in an amount sufficient to make all scheduled Mortgage
Loan payments when due,
o the lender determines that the replacement collateral is
sufficient to make such payments,
o if the original borrower was a "single purpose entity", the
Mortgage Loan must be assumed by a "single purpose entity"
acceptable to the lender, and
o a legal opinion be delivered opining that the lender has a
first-priority perfected security interest in the replacement
collateral.
33. As of the origination of each Mortgage Loan with a Cut-off Date principal
balance in excess of $10,000,000, the borrower was a "single purpose
entity":
o whose organizational documents provide substantially that:
o it was formed solely for the purpose of owning and operating one
or more of the Mortgaged Properties, and
o it is prohibited from engaging in any business unrelated to such
Mortgaged Properties,
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o and whose organizational documents, or the related loan documents
provide substantially that:
o it does not have any assets other than those related to the
Mortgage Properties, or
o it does not have any indebtedness other than as permitted by
its loan documents,
o it maintains books, records and accounts separate from any other
person or entity, and
o it holds itself out as a legal entity, separate and apart from
any other person or entity.
The pooling and servicing agreement will require that the custodian, the
master servicer, the special servicer or the trustee notify the applicable
seller upon its becoming aware:
o of any breach of certain representations or warranties made by such
seller in its mortgage loan purchase agreement, or
o that any document required to be included in the mortgage file does
not conform to the requirements of the pooling and servicing
agreement,
which in the case of any such breach or defect materially and adversely affects
the interests of the trustee or the certificateholders. The applicable mortgage
loan purchase agreement provides that, if the breach or default is not cured
within 90 days after discovery of the breach or defect by the applicable seller,
the depositor, the custodian, the master servicer, the special servicer or the
trustee, the applicable seller will either:
1. repurchase such Mortgage Loan for a purchase price (the "Repurchase
Price") equal to the sum of:
o outstanding principal balance,
o unpaid accrued interest at the applicable rate (in absence of a
default) to, but not including, the date of repurchase,
o the amount of any unreimbursed Servicing Advances relating to such
Mortgage Loan,
o accrued interest on Advances (including P&I Advances) at the Advance
Rate,
o the amount of any unpaid servicing compensation (other than master
servicing fees) and trust fund expenses allocable to the Mortgage
Loan, and
o the amount of any expenses reasonably incurred by the master servicer,
the special servicer or the trustee in respect of the repurchase
obligation, including any expenses arising out of the enforcement of
the repurchase obligation, or
2. substitute a Qualified Substitute Mortgage Loan for the Mortgage Loan and
pay the trustee a shortfall amount equal to the difference between the
Repurchase Price of the deleted Mortgage Loan calculated as of the date of
substitution and the Stated Principal Balance of the Qualified Substitute
Mortgage Loan as of the date of substitution.
If the Mortgage Loan continues to be a "qualified mortgage" within the
meaning of the REMIC provisions of the Code, the 90-day period will not commence
until the seller receives notice of or discovers that the Mortgage Loan is a
defective Mortgage Loan. If the breach or defect cannot be cured within the
90-day period, then so long as the seller has commenced and is diligently
proceeding with the cure of the breach or defect, the 90-day period will be
extended for an additional 90 days. However, the seller will be entitled to an
extension only if it delivers to the depositor an officer's certificate:
o describing the measures being taken to cure the breach or defect,
o stating that it is possible to cure the breach or defect cured within the
90 day period, and
o stating that the breach or defect does not cause the Mortgage Loan to fail
to be a "qualified mortgage" within the meaning of the REMIC provisions of
the internal revenue code.
A "Qualified Substitute Mortgage Loan" is a mortgage loan which must, on
the date of substitution:
1. have an outstanding principal balance, after application of all scheduled
payments of principal and interest due during or prior to the month of
substitution, not in excess of the Stated Principal Balance of the deleted
Mortgage Loan as of the due date in the calendar month during which the
substitution occurs;
2. have a mortgage rate not less than the Mortgage Rate of the deleted
Mortgage Loan;
3. have the same due date as the deleted Mortgage Loan;
4. accrue interest on the same basis as the deleted Mortgage Loan (for
example, on the basis of a 360-day year consisting of twelve 30-day
months);
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5. have a remaining term to stated maturity not greater than, and not more
than two years less than, the remaining term to stated maturity of the
deleted Mortgage Loan;
6. have an original loan to-value-ratio not higher than that of the deleted
Mortgage Loan and a current loan-to-value ratio not higher than the then
current loan-to-value ratio of the deleted Mortgage Loan;
7. comply as of the date of substitution with all of the representations and
warranties listed in the applicable mortgage loan purchase agreement;
8. have an environmental report for the related Mortgaged Property, which will
be part of the related mortgage file;
9. have an original debt service coverage ratio not less than the original
debt service coverage ratio of the deleted Mortgage Loan;
10. be determined by an opinion of counsel to be a "qualified replacement
mortgage" within the meaning of Section 860G(a)(4) of the internal revenue
code;
11. not have a maturity date after the date three years prior to the Rated
Final Distribution Date;
12. not be substituted for a deleted Mortgage Loan unless the trustee has
received prior confirmation in writing by each Rating Agency that the
substitution will not result in the withdrawal, downgrade, or qualification
of the rating assigned by the Rating Agency to any class of the
certificates then rated by the Rating Agency. The seller will pay the cost,
if any, of obtaining the confirmation;
13. not be substituted for a deleted Mortgage Loan if it would result in the
termination of the REMIC status of REMIC I, REMIC II or REMIC III or the
imposition of tax on REMIC I, REMIC II or REMIC III other than a tax on
income expressly permitted or contemplated to be received by the terms of
the pooling and servicing agreement; and
14. not be substituted for a deleted Mortgage Loan unless the operating adviser
has approved the substitution based upon an engineering report and the
environmental report obtained for the Qualified Substitute Mortgage Loan.
If one or more mortgage loans are substituted for one or more deleted
Mortgage Loans, then the amounts described in clause (1) will be determined on
the basis of total principal balances and the rates described in clause (2)
above and the remaining term to stated maturity referred to in clause (5) above
will be determined on a weighted average basis. When a Qualified Substitute
Mortgage Loan is substituted for a deleted Mortgage Loan, the applicable seller
will certify that the Mortgage Loan meets all of the requirements of the above
definition and shall send the certification to the trustee.
The obligations of the sellers to substitute, repurchase or cure
constitute the sole remedies available to the trustee for the benefit of the
holders of certificates for:
o a breach of a representation or warranty with regard to a Mortgage Loan
by a seller, or
o missing or defective Mortgage Loan documentation.
If a seller defaults on its obligation to substitute, repurchase or
cure, no other person will have an obligation to fulfill the seller's
obligations. No assurance can be given that any seller will fulfill its
obligations. If such obligations are not met, as to a Mortgage Loan that is not
a "qualified mortgage" within the meaning of the REMIC provision of the internal
revenue code, REMIC I, REMIC II and REMIC III may be disqualified.
MASTER SERVICER
Background
Midland Loan Services, L.P., was organized under the laws of the State
of Missouri in 1992 as a limited partnership. On April 3, 1998, Midland Loan
Services, Inc., a newly-formed, wholly-owned subsidiary of PNC Bank, National
Association, acquired substantially all of the assets of Midland Loan Services,
L.P. Midland is a real estate financial services company that provides loan
servicing and asset management for large pools of commercial and multifamily
real estate assets and that originates commercial real estate loans. Midland's
address is:
210 West 10th Street
6th Floor
Kansas City, Missouri 64105.
Midland will serve as the master servicer for the trust fund. In
addition, Midland and its affiliates are the seller with respect to 114 of the
Mortgage
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Loans (39.5%). See "Description of the Mortgage Pool--The Sellers".
Standard & Poor's Ratings Services and Fitch IBCA, Inc. have approved
Midland as a master and special servicer for investment grade-rated commercial
and multifamily mortgage-backed securities. Midland is also a HUD/FHA-approved
mortgagee and a FannieMae-approved multifamily loan servicer.
Midland's Servicing Portfolio
As of May 31, 1999, Midland was servicing approximately 15,750
commercial and multifamily loans with a principal balance of approximately
$41.16 billion. The collateral for these loans is located in all 50 states,
Puerto Rico and the District of Columbia. Approximately 10,500 of the loans,
with a total principal balance of approximately $31.7 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:
o financial institutions,
o private investors, and
o issuers of commercial and multifamily mortgage-backed securities.
Delinquency Information
The following table lists the master servicer's delinquency experience
for commercial mortgage-backed securities transactions that it services. The
table includes loans that Midland Loan Services, L.P. serviced before April 3,
1998. The portfolio does not include Mortgage Loans included in distressed RTC
portfolios.
<TABLE>
<CAPTION>
As of December 31,
-----------------------------------------------------------------------------------------
1996 1997 1998
--------------------------- ------------------------------------------------------
By No. By Dollar By No. By Dollar By No. By Dollar
of Amount Of Amount of Amount
Loans of Loans Loans of Loans Loans of Loans
------ ----------- ------ ----------- ------ -----------
<S> <C> <C> <C> <C> <C> <C>
(Dollar amounts in thousands)
Total Portfolio.................. 2,782 $6,557,024 3,644 $13,129,936 6,493 $29,656,681
Period of delinquency<F1>
30-59 days.................. 198 $89,419 146 $281,143 48 $92,712
60 to 89 days............... 17 10,479 43 20,363 26 31,925
90 days or more<F2>......... 18 33,898 104 150,237 102 69,585
REO 8 19,005 14 32,094
------ ----------- ------ ----------- ------ -----------
Total delinquent loans........ 233 $133,795 301 $470,748 190 $226,316
------ ----------- ------ ----------- ------ -----------
------ ----------- ------ ----------- ------ -----------
Percent of portfolio.............. 8% 2% 8.3% 3.6% 2.9% 0.8%
------ ----------- ------ ----------- ------ -----------
------ ----------- ------ ----------- ------ -----------
<FN>
<F1> Number of days past due based on a 30-day month. No loan is considered delinquent until one month
beyond its due date. For example, a loan with a payment due January 1
would first be considered delinquent February 1, and would then be
considered 30 days delinquent.
<F2> Includes pending foreclosures.
</FN>
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
As of March 31,
--------------------------------------------------------------------
1998 1999
-------------------------------- --------------------------------
By No. By Dollar By No. By Dollar
of Amount Of Amount
Loans of Loans Loans of Loans
------ ------------ ------- -----------
(Dollar amounts in thousands)
<S> <C> <C> <C> <C>
Total Portfolio................. 5,022 $15,790,583 6,583 $29,826,434
Period of delinquency<F1>
30-59 days................. 34 $25,170 197 $70,357
60 to 89 days.............. 19 34,218 39 49,910
90 days or more<F2>........ 122 106,688 106 87,608
REO 0 0 14 31,721
------ ------------ ------- -----------
Total delinquent loans.......... 175 $166,076 356 $239,596
------ ------------ ------- -----------
------ ------------ ------- -----------
Percent of portfolio............ 3.5% 1.1% 5.4% 0.8%
------ ------------ ------- -----------
------ ------------ ------- -----------
<FN>
<F1> Number of days past due based on a 30-day month. No loan is considered
delinquent until one month beyond its due date. For example, a loan with
a payment due January 1 would first be considered delinquent February 1,
and would then be considered 30 days delinquent.
<F2> Includes pending foreclosures.
</FN>
</TABLE>
Because the delinquency rate for the portfolio is relatively low,
Midland's management believes that changes in delinquency levels from period to
period do not reflect overall market trends, but are primarily due to:
o the varying size of the portfolio,
o individual property-level economics, and
o circumstances unique to individual borrowers.
The master servicer's overall historical delinquency experience is based
on the servicing of mortgage loans that may not be comparable to the Mortgage
Loans. The delinquency experience on the Mortgage Loans may differ from
Midland's overall historical experience for several reasons, including:
o the underwriting standards and policies used to underwrite the Mortgage
Loans may differ substantially from those used to underwrite loans in the
portfolio;
o parties other than Midland are primary servicers or sub-servicers of some
loans included in the portfolio;
o the portfolio includes many loans outstanding too briefly to have seasoned
to a point where delinquencies would be fully reflected. If the average age
of the loans in the portfolio increases, the portfolio could experience
significantly higher delinquency percentages; and
o an overall decline in property values could increase delinquency rates
above those previously experienced by the master servicer overall and on
the Mortgage Loans.
The information concerning Midland set forth above has been provided
solely by Midland. The trustee, the fiscal agent, the sellers and the
underwriters make no representation or warranty as to its accuracy.
SPECIAL SERVICER
ORIX Real Estate Capital Markets, LLC will serve as the initial special
servicer. ORIX Real Estate Capital Markets was formerly known as Banc One
Mortgage Capital Markets, LLC. On July 12, 1999, ORIX USA Corporation bought
Banc One's remaining interest in Banc One Mortgage Capital and changed the name
to ORIX Real Estate Capital Markets, LLC. ORIX Real Estate Mortgage Capital is a
Delaware limited liability company. As of May 31, 1999, ORIX Real Estate
Mortgage Capital served as the named special servicer on 65 securitized
transactions encompassing 15,133 loans, with an aggregate principal balance of
approximately $42.8 billion. Additionally, ORIX Real Estate Mortgage
S-46
<PAGE>
Capital manages a master/primary/special servicing portfolio of commercial and
multifamily loans with an aggregate principal balance of approximately $28.5
billion, the collateral for which is located in 49 states, Puerto Rico, the
District of Columbia, Mexico and the Caribbean. ORIX Real Estate Mortgage
Capital's servicing operations are located at 1717 Main Street, Dallas, Texas
75201.
The information in this prospectus supplement concerning the special
servicer has been provided by ORIX Real Estate Mortgage Capital, and neither the
depositor nor the underwriters make any representation or warranty as to the
accuracy or completeness of such information.
DESCRIPTION OF THE CERTIFICATES
General
The certificates are issued under the pooling and servicing agreement
and will consist of 20 classes:
o Class A-1 Certificates
o Class A-2 Certificates
o Class X Certificates
o Class B Certificates
o Class C Certificates
o Class D Certificates
o Class E Certificates
o Class F Certificates
o Class G Certificates
o Class H Certificates
o Class J Certificates
o Class K Certificates
o Class L Certificates
o Class M Certificates
o Class N Certificates
o Class O Certificates
o Class P Certificates
o Class R-I Certificates
o Class R-II Certificates
o Class R-III Certificates
We are only offering the class A-1, A-2, X, B, C, D, E and F
certificates to you. See "The Pooling and Servicing Agreement" in this
prospectus supplement and "Description of the Certificates" and "Servicing of
the Mortgage Loans" in the prospectus for more important information regarding
the terms of the pooling and servicing agreement and the certificates. The
pooling and servicing agreement will be filed with the Securities and Exchange
Commission on Form 8-K within 15 days after the closing date.
The certificates represent the entire beneficial ownership interest in a
trust fund consisting primarily of:
o the Mortgage Loans and principal due after the Cut-off Date and all payments
under and proceeds of the Mortgage Loans received after the Cut-off Date
(exclusive of Principal Prepayments received prior to the Cut-off Date and
scheduled payments of principal and interest due on or before the Cut-off
Date),
o any Mortgaged Property acquired on behalf of the trust fund through
foreclosure, deed-in-lieu of foreclosure or otherwise (upon acquisition, an
"REO Property"),
o funds or assets from time to time deposited in the Collection Account, the
Distribution Account, the Interest Reserve Account and any account
established in connection with REO Properties (an "REO Account"),
o the rights of the mortgagee under all insurance policies with respect to the
Mortgage Loans,
o the depositor's rights and remedies under the applicable mortgage loan
purchase agreement, and all of the mortgagee's right, title and interest in
the Reserve Accounts.
Certificate Balances and Notional Amounts
Upon initial issuance, the class A-1, A-2, B, C, D, E, F, G, H, J, K, L,
M, N, O and P certificates (collectively, the "Principal Balance Certificates")
will have the following certificate balances, which may vary by up to 5%:
S-47
<PAGE>
Approximate Approximate
Initial Percent of Initial Percent of
Class Certificate Balance Pool Balance Credit Support
Class A-1 $133,500,000 74.00% 26.00%
Class A-2 409,513,000 74.00 26.00
Class B 33,021,000 4.50 21.50
Class C 34,856,000 4.75 16.75
Class D 11,007,000 1.50 15.25
Class E 23,848,000 3.25 12.00
Class F 12,842,000 1.75 10.25
Class G-P 75,214,915 10.25 --
The percentages indicated under the columns "Approximate Percent of
Credit Support" and "Approximate Percent of Initial Pool Balance" with respect
to the class A-1 and class A-2 certificates represent the approximate credit
support and percent of Initial Pool Balance, as applicable, for the class A-1
and class A-2 certificates in the aggregate.
The certificate balance of any class of Principal Balance Certificates
outstanding at any time represents the maximum amount that holders are entitled
to receive as distributions allocable to principal.
The certificate balance of each class will be reduced by:
o amounts distributed to the class as principal, and
o any Realized Losses and Expense Losses allocated to the class.
The class X certificates are interest-only certificates, have no
certificate balance and are not entitled to distributions of principal. The
total notional amount of the class X certificates as of any date is equal to
100% of the total Stated Principal Balance of the Mortgage Loans.
The "Stated Principal Balance" of each Mortgage Loan will generally
equal its unpaid principal balance as of the Cut-off Date (or in the case of a
Qualified Substitute Mortgage Loan as of the date of substitution), after
applying payments due on or before such date (whether or not received), reduced
(to not less than zero) on each subsequent distribution date by:
o any payments or other collections (or advances for such amounts) of
principal of such Mortgage Loan that have been distributed on the
certificates on such date or would have been distributed on such date if
they had not been applied to cover Additional Trust Fund Expenses, and
o the principal portion of any Realized Loss allocable to such Mortgage Loan
during the related Collection Period.
However, except as stated in the discussion under "--Distributions--
Treatment of REO Properties", if any Mortgage Loan is paid in
full, liquidated or otherwise removed from the trust fund, the Stated Principal
Balance of the Mortgage Loan will be zero beginning on the first distribution
date following the Collection Period during which the event occurred.
Pass-Through Rates
The rate per annum at which any class of offered certificates accrues
interest from time to time is its "pass-through rate".
The pass-through rates for the following classes of offered certificates
are fixed at the following per annum rates:
Class Pass-Through Rate
Class A-1 6.79%
Class A-2 7.03%
Class B 7.20%
These pass-through rates may not exceed the weighted average of the Net
Mortgage Rates for the related distribution date.
The pass-through rates for the class E and class F certificates for each
distribution date will equal the weighted average Net Mortgage Rate. The
pass-through rate for the class C certificates for each distribution date will
be equal to the weighted average Net Mortgage Rate minus 0.36%. The pass-through
rate for the class D certificates for each distribution date will be equal to
the weighted average Net Mortgage Rate minus 0.26%.
S-48
<PAGE>
The pass-through rate on the class X certificates for the initial
distribution date will equal approximately 0.838%. For each subsequent
distribution date, the pass-through rate on the class X certificates will
generally be a per annum rate equal to the excess of the weighted average of the
Net Mortgage Rates over the weighted average of the pass-through rates for the
Principal Balance Certificates.
The "Net Mortgage Rate" for each Mortgage Loan is the interest rate for
the Mortgage Loan minus the master servicer fee and the trustee fee. This
calculation is made without giving effect to any Revised Interest Rate or any
default rate. The Net Mortgage Rate for any Mortgage Loan will be determined
without regard to any post-closing date modification, waiver or amendment of the
Mortgage Loan's terms for purposes of calculating:
o pass-through rates,
o Prepayment Interest Excesses, and
o Prepayment Interest Shortfalls.
The certificates accrue interest on the basis of a 360-day year
consisting of twelve 30-day months. Therefore, when calculating the pass-through
rate for each class of certificates for a distribution date, the Net Mortgage
Rate of a Mortgage Loan that accrues interest other than on the basis of a
360-day year consisting of twelve 30-day months will be adjusted to reflect the
difference. However, with respect to each Mortgage Loan that does not accrue
interest on a 30/360 basis (the "Interest Reserve Loans"):
o the Net Mortgage Rate that would otherwise be in effect for purposes of the
Monthly Payment due in January of each year (other than a leap year) and
February of each year will be adjusted to take into account the applicable
Interest Reserve Amount; and
o the Net Mortgage Rate that would otherwise be in effect for purposes of the
Monthly Payment due in March of each year will be adjusted to take into
account the applicable Interest Reserve Amount for the preceding January
(if applicable) and February.
See "The Pooling and Servicing Agreement--Servicing Compensation and Payment of
Expenses".
Distributions
Method, Timing and Amount
Distributions on the certificates will be made on the 15th day of each
month or, if the 15th is not a business day, then on the next business day,
beginning in August, 1999.
The "Record Date" for each distribution date is the last business day of
the month preceding the month in which the distribution date occurs. Except for
the final distribution, all distributions will be made by the trustee to the
persons in whose names the certificates are registered at the close of business
on the Record Date.
The distributions will be made:
o by wire transfer of immediately available funds if the certificateholder
provides the trustee with wiring instructions at least five business days
before the Record Date, or
o otherwise by check mailed to the certificateholder.
The final distribution on a certificate will be made only upon
presentment or surrender of the certificate as specified in the notice of final
distribution.
The final distribution on any certificate will be determined without
regard to possible future reimbursement of any Realized Loss or Expense Loss
previously allocated to the certificate. Any distribution after the final
distribution to reimburse a previously-allocated Realized Loss or Expense Loss
will be made by check mailed to the certificateholder that surrendered the
certificate. Such a distribution is possible, but unlikely.
Distributions on a class of certificates are allocated among the
outstanding certificates of the class based on their percentage of the initial
certificate or notional balance of the class.
Determining Available Funds
The total distribution on the certificates will equal the Available
Funds. The "Available Funds" for a distribution date in general will equal:
o amounts on deposit in the Collection Account at close of business on the
Determination Date (including Deferred Interest), excluding:
<PAGE>
1. Monthly Payments collected but due on a due date after the related
Collection Period,
2. prepayment premiums (which are distributed separately),
3. amounts payable or reimbursable to any person other than the
certificateholders (including amounts payable to the master servicer,
the special servicer, the trustee or the fiscal agent as compensation
or to reimburse outstanding Advances, and amounts payable as
Additional Trust Fund Expenses),
4. amounts deposited in the Collection Account in error,
5. if the distribution date occurs during January of any year that is
not a leap year or February of any year, the Interest Reserve
Amounts for the Interest Reserve Loans to be deposited into the
Interest Reserve Account; plus
o any P&I Advances and Compensating Interest Payments made for the
distribution date and not already included; plus
o if the distribution date occurs during March of any year, the Interest
Reserve Amounts in the Interest Reserve Account.
"Principal Prepayments" are payments of principal on a Mortgage Loan
that:
o are received before the scheduled due date, and
o are not accompanied by interest representing the full amount of scheduled
interest due in any month after the month of payment.
The "Collection Period" for a distribution date:
o begins on the day after the Determination Date in the preceding month (or,
in the case of the August 1999 distribution date, on the day after the
Cut-off Date), and
o ends on the Determination Date in the month in which the distribution date
occurs.
The "Determination Date" for a distribution date is the fifth business
day before the distribution date.
Applying Available Funds
On each distribution date, the trustee will first apply Available Funds
to make distributions to the holders of the senior certificates in the following
order:
1. to pay interest to the holders of the classes of senior certificates, up to
an amount equal to, and pro rata as among such classes in accordance with,
the Distributable Certificate Interest for each such class for such
distribution date;
2. to pay principal from the Principal Distribution Amount for such
distribution date:
o first to the holders of the class A-1 certificates; and
o second to the holders of the class A-2 certificates;
in each case, up to an amount equal to the lesser of:
(a) the then-outstanding certificate balance of such class; and
(b) the remaining portion of the Principal Distribution Amount;
However, principal payments will be made to the class A-1 and class A-2
certificates pro rata based on their outstanding certificate balances:
o if the certificate balance of the subordinate certificates has been reduced
to zero; or
o on the final distribution date, if the trust fund is terminated as
discussed under "--Optional Termination" below; and
3. to reimburse the holders of the class A certificates, up to an amount equal
to, and pro rata as among the classes in accordance with:
(a) the amount of Realized Losses and Expense Losses, if any, previously
allocated to the class A certificates and for which no reimbursement
has previously been paid; plus
(b) all unpaid interest on such amounts (compounded monthly) at the pass-
through rates for the classes.
On each distribution date, the holders of each class of subordinate
certificates will be entitled to the following distributions, to the extent of
the Available Funds remaining after all required distributions have been made on
the senior certificates and each other class of subordinate certificates, if
any, with an earlier alphabetical class designation:
1. distributions of interest, up to an amount equal to the Distributable
Certificate Interest in respect of
S-50
<PAGE>
such class of certificates for such distribution date;
2. if the certificate balance of the class A certificates and each other class
of subordinate certificates, if any, with an earlier alphabetical class
designation has been reduced to zero, distributions of principal, up to an
amount equal to the lesser of:
(a) the then-outstanding certificate balance of such class, and
(b) the remaining Principal Distribution Amount (or, on the final
distribution date in connection with the termination of the trust
fund, up to an amount equal to the then-outstanding certificate
balance of such class); and
3. distributions for the purpose of reimbursement, up to an amount equal to:
o all Realized Losses and Expense Losses, if any, previously allocated
to such class and for which no reimbursement has previously been paid,
plus
o all unpaid interest on such amounts (compounded monthly) at the pass-
through rate for such class.
The trustee will pay any remaining Available Funds to the holders of the
class R-I certificates.
Reimbursement of previously allocated Realized Losses and Expense Losses
will not constitute distributions of principal for any purpose and will not
reduce the certificate balances of the reimbursed certificates.
Distributable Certificate Interest
The "Distributable Certificate Interest" for each class of certificates
will equal:
o the interest accrued for the prior calendar month, at the applicable
pass-through rate on the certificate balance or notional amount of the
class at the close of the preceding distribution date (or in the case of
the first distribution date, the Cut-off Date),
o reduced (to not less than zero) by the class's allocable share of any Net
Aggregate Prepayment Interest Shortfall for the distribution date, and
o increased by the class's share of any Class Interest Shortfall for the
distribution date.
See "--Prepayment Interest Shortfalls" below.
The "Class Interest Shortfall" for a class of certificates for a
distribution date equals:
o zero on the initial distribution date; and
o for subsequent distribution dates, the sum of:
1. the excess, if any, of:
o all Distributable Certificate Interest for the class on the
preceding distribution date,
over
o all distributions of interest made for the class on the preceding
distribution date, plus
2. to the extent permitted by law, one month's interest on such excess
at the pass-through rate for the class.
Principal Distribution Amount
The "Principal Distribution Amount " for any distribution date will, in
general, equal the following:
o the principal portions of all Monthly Payments (other than balloon
payments) and Assumed Monthly Payments due or deemed due, as the case may
be, on the Mortgage Loans on the due dates occurring during the related
Collection Period; plus
o all payments (including voluntary principal prepayments and balloon
payments) and other collections received on the Mortgage Loans during the
related Collection Period that were identified and applied by the master
servicer as recoveries of principal, in each case net of any portion of
such amounts that represents a payment or other recovery of the principal
portion of any Monthly Payment (other than a balloon payment) due, or the
principal portion of any Assumed Monthly Payment deemed due, on a Mortgage
Loan on a due date during or prior to the related Collection Period and not
previously paid or recovered.
If on any distribution date the aggregate amount of distributions of
principal made on the Principal Balance Certificates is less than the Principal
Distribution Amount, then the amount of the shortfall will be included in the
Principal Distribution Amount for the next distribution date. This provision
would generally result in a Class
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<PAGE>
Interest Shortfall to the then-most subordinate class or classes outstanding on
the next distribution date in an amount equal to the carried forward amount.
The "Monthly Payment" for any Mortgage Loan (other than any REO Mortgage
Loan) will, in general, be the scheduled payment of principal and/or interest
(excluding balloon payments, default interest and Deferred Interest) due from
time to time. The Monthly Payment will be adjusted for any waiver, modification
or amendment of the terms of the Mortgage Loan whether agreed to by the master
servicer or special servicer, or resulting from a bankruptcy or similar
proceeding.
The "Assumed Monthly Payment":
o for a balloon loan that is delinquent as to all or any portion of its
balloon payment beyond the end of the Collection Period in which its
original maturity date occurs, is an amount that is deemed due on its
original maturity date and on each successive due date that it remains or is
deemed to remain outstanding. This amount is equal to the Monthly Payment
that would have been due if the balloon payment had not become due, and the
loan had continued to amortize under the amortization schedule, if any, in
effect immediately prior to maturity and had continued to accrue interest in
accordance with its terms in effect immediately prior to maturity.
o for an REO Mortgage Loan, is an amount that is deemed due on each due date
while the REO Property remains part of the trust fund. This amount is equal
to the Monthly Payment (or, in the case of a balloon loan described in the
preceding bullet point, the Assumed Monthly Payment) due on the last due
date before acquisition of the REO Property.
Distributions of Prepayment Premiums
Any prepayment premium collected during a Collection Period will be
distributed on the next distribution date. Prepayment premiums distributed to
the holders of a class of certificates may be insufficient to compensate them
fully for any loss in yield attributable to the related Principal Prepayments.
Yield Maintenance Payments
Any prepayment premium that is calculated using a yield maintenance formula
will be distributed as follows. The holders of the class A, class B, class C,
class D, class E, class F and class G certificates receiving principal
distributions on such distribution date will be entitled to a total amount equal
to the lesser of:
o the yield maintenance payment, and
o the yield maintenance payment multiplied by a fraction:
1. the numerator of which equals the excess, if any, of:
o the pass-through rate applicable to the most senior class of the
outstanding class A, class B, class C, class D, class E, class F
and class G certificates (or, if both classes of class A
certificates are still outstanding, the class A-1 certificates),
over
o the Discount Rate, and
2. the denominator of which equals the excess, if any, of the interest
rate for the prepaid Mortgage Loan, over the Discount Rate.
If more than one of the class A, class B, class C, class D, class E,
class F and class G certificates is entitled to principal distributions on the
distribution date, the amount described in the preceding sentence will be
allocated among the classes in proportion to the principal distributions to
which they are entitled on the distribution date. Some certificates that receive
principal may not receive yield maintenance payments based on the above
fraction.
The "Discount Rate" is the rate which, when compounded monthly, is
equivalent to the Treasury Rate when compounded semi-annually.
The "Treasury Rate" is the yield calculated by the linear interpolation
of the yields of U.S. Treasury constant maturities with a maturity date (one
longer and one shorter) most nearly approximating the maturity date (or
Hyper-Amortization Date, if applicable) of the Mortgage Loan prepaid. The
trustee will use the yields reported in Federal Reserve Statistical Release H.15
- - Selected Interest Rates under the heading "U.S. government securities/Treasury
constant maturities" for the calendar week before the Principal Prepayment. If
Release H.15 is no longer published, the trustee will select a comparable
publication to determine the Treasury Rate.
Percentage Premiums
Twenty-five percent of any prepayment premium calculated on the basis
of a percentage of
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<PAGE>
the principal amount prepaid, which is collected with respect to a Mortgage Loan
during any particular Collection Period will be distributed on the following
distribution date to the holders of the class A, class B, class C, class D,
class E, class F and class G certificates then entitled to distributions of
principal on such distribution date, allocable among such classes, if more than
one, as described below. If there is more than one such class of Principal
Balance Certificates entitled to distributions of principal on such distribution
date, the aggregate amount described in the preceding sentence will be allocated
among such classes on a pro rata basis in accordance with the relative amounts
of entitlement to such distributions of principal.
Interest Only Certificates
All prepayment premiums not distributed to holders of Principal Balance
Certificates will be distributed to the holders of the interest only
certificates.
Treatment of REO Properties
If the trust fund acquires a Mortgaged Property through foreclosure,
deed in lieu of foreclosure or otherwise, then, until the REO Property is
liquidated, the related Mortgage Loan (an "REO Mortgage Loan") will be treated
as outstanding for several purposes, including:
o determining distributions on the certificates,
o allocations of Realized Losses and Expense Losses to the certificates,
o computing master servicing fees, special servicing fees and trustee fees,
and
o determining pass-through rates and the Principal Distribution Amount.
Net operating revenues and other net proceeds derived from such REO
Property will be "applied" by the master servicer as principal, interest and
other amounts "due" on the Mortgage Loan. With some exceptions, the master
servicer, the trustee and the fiscal agent are required to make P&I Advances on
the REO Mortgage Loan, if proceeds received from the REO Property are less than
the Assumed Monthly Payment for the REO Mortgage Loan. See "The Pooling and
Servicing Agreement--Advances".
Appraisal Reductions of Loan Balances
An Appraisal Reduction will be calculated for the first distribution
date following the earliest of any of the following "Appraisal Reduction Events"
affecting a Mortgage Loan:
o the third anniversary of the effective date of a modification agreed to by
the special servicer that extends a Mortgage Loan's maturity date without
changing the amount of the Monthly Payment,
o 90 days after an uncured delinquency occurs on a Mortgage Loan,
o 45 days after the effective date of a modification agreed to by the special
servicer that reduces the amount of the Monthly Payment, or changes any
other material economic term of the Mortgage Loan,
o 30 days after a receiver is appointed or an involuntary bankruptcy
proceeding commences,
o immediately after a borrower declares bankruptcy, and
o immediately after a Mortgage Loan becomes an REO Mortgage Loan.
The "Appraisal Reduction" for any Mortgage Loan as to which any
Appraisal Reduction Event has occurred will be an amount equal to:
o the outstanding Stated Principal Balance of such Mortgage Loan as of the
last day of the related Collection Period, less
o the excess of:
1. 90% of the appraised values of the related Mortgaged Properties as
determined by independent MAI appraisals (the costs of which shall be
paid by the master servicer as an Advance)
over
2. the sum of:
(a) all unpaid interest on the Mortgage Loan (without giving effect
to any default rates or Revised Interest Rates), but only if not
previously advanced by the master servicer, the trustee or the
fiscal agent,
(b) all unreimbursed Advances for the Mortgage Loan, plus interest
at the Advance Rate,
(c) all currently due and unpaid real estate taxes and assessments
and insurance premiums and all other amounts, including, if
applicable, ground rents, due and unpaid under the Mortgage Loan
(which taxes, premiums and other amounts have not been escrowed
or the subject of an Advance),
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<PAGE>
(d) unpaid special servicing compensation, and
(e) the special servicer's good faith estimate of the items in
clauses (b), (c) and (d) that will be incurred during the next
12 months.
Within 60 days after the special servicer becomes aware of an Appraisal
Reduction Event, the special servicer must obtain:
o a fair market value appraisal of the related Mortgaged Property or REO
Property from an independent appraiser who is a member of the Appraisal
Institute, with at least five years experience in the related property type
and in the jurisdiction in which the Mortgaged Property or REO Property is
located, or
o an internal property valuation performed by the special servicer at its
discretion in accordance with the servicing standard if the Mortgage Loan
has an outstanding principal balance equal to or less than $1,000,000.
Each of the above is referred to as an "Updated Appraisal". If the
special servicer has completed or obtained an appraisal or internal valuation
during the prior 12 months, the special servicer may use that appraisal or
valuation as the "Updated Appraisal" for purposes of calculating the Appraisal
Reduction, if using such appraisal or valuation is consistent with the servicing
standard. The master servicer will pay the cost of any such Updated Appraisal as
a Servicing Advance, unless the Updated Appraisal is an internal valuation
performed by the special servicer or if the Advance would be a nonrecoverable
Advance. The master servicer will verify the Appraisal Reduction calculated by
the special servicer.
If the special servicer is not using a previously obtained appraisal or
internal valuation to calculate the Appraisal Reduction, the special servicer
must estimate the value of the related Mortgaged Property or REO Property (the
"Appraisal Reduction Estimate"). This estimate will be used to calculate the
Appraisal Reduction until the Updated Appraisal is completed.
The special servicer will calculate the Appraisal Reduction based on the
Updated Appraisal or the special servicer's Appraisal Reduction Estimate. If the
Appraisal Reduction is calculated using the Appraisal Reduction Estimate, then
on the first distribution date after the delivery of the Updated Appraisal, the
special servicer will adjust the Appraisal Reduction to take into account the
Updated Appraisal.
The special servicer will obtain annual updates of the Updated Appraisal
during the continuance of an Appraisal Reduction Event. The master servicer will
pay the cost of such annual updates as a Servicing Advance, unless the Advance
would be nonrecoverable. In addition, the operating adviser may at any time
request the special servicer to obtain (at the operating adviser's expense) an
Updated Appraisal. The special servicer will recalculate the Appraisal Reduction
each time an Updated Appraisal is obtained. If the master servicer is required
to make a material Advance not anticipated at the time the special servicer last
calculated the Appraisal Reduction, the special servicer will recalculate the
Appraisal Reduction after the master servicer makes the Advance. The special
servicer will deliver a copy of each Updated Appraisal to the trustee within 15
days after it receives the Updated Appraisal. The Trustee will deliver each
Updated Appraisal to the holders of the privately offered certificates within 15
days after it receives the Updated Appraisal from the special servicer.
The Appraisal Reduction will be eliminated upon full payment or
liquidation of the Mortgage Loan.
An Appraisal Reduction:
o will reduce the master servicer's, the trustee's and the fiscal agent's
obligation to advance delinquent interest on the Mortgage Loan;
o may reduce current distributions to one or more of the then most subordinate
classes of Principal Balance Certificates; and
o may cause an Expense Loss to be allocated to one or more of the then most
subordinate classes of Principal Balance Certificates.
See "The Pooling and Servicing Agreement--Advances".
Application of Realized Losses and
Expense Losses to Certificate Balances
If immediately following distributions on any distribution date the
Stated Principal Balance of the Mortgage Pool is less than the total certificate
balance of the Principal Balance Certificates, then the certificate balances
will be reduced as follows:
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o First, the certificate balances of the subordinate certificates will be
reduced, sequentially in reverse alphabetical order beginning with the
class P certificates. The certificate balance of the lowest class will be
reduced until:
o such deficit is reduced to zero; or
o the certificate balance of the class is reduced to zero.
o Any deficit remaining after reducing the total certificate balance of the
most subordinate class to zero will be applied to reduce the certificate
balance of the next lowest class, and so forth until the deficit is
eliminated or until the certificate balances on all subordinated classes
are reduced to zero.
If any portion of the deficit remains after the total certificate
balance of all subordinate certificates is reduced to zero, then the certificate
balances of the class A-1 and class A-2 certificates will be reduced, in
proportion to their remaining certificate balances, until:
o such deficit is reduced to zero; or
o the certificate balance of the class A-1 and A-2 certificates is reduced
to zero.
In general, any such deficit will result from Realized Losses and/or
Expense Losses on the Mortgage Loans. Accordingly, these reductions in the
certificate balances allocate Realized Losses and Expense Losses among the
certificates.
Any reduction in the principal balance of any class of certificates also
reduces the notional amount of the interest only certificates.
Within a given class of certificates, Realized Losses and Expense Losses
will be allocated to holders in proportion to their percentage interests in the
class.
Realized Losses arise when the master servicer becomes unable to collect
all amounts due and owing under a Mortgage Loan for any reason, including:
o fraud;
o bankruptcy; or
o an uninsured casualty loss.
If the Mortgage Loan and any related REO Property have been fully
liquidated, the "Realized Loss" would equal:
o the sum of:
1. the outstanding principal balance;
2. accrued and unpaid interest on the loan to but not including the due
date in the Collection Period when the liquidation occurs;
3. all unreimbursed Servicing Advances (plus interest at the Advance
Rate); and
4. all outstanding liquidation expenses;
minus
o the total liquidation proceeds received, if any.
If any part of the debt due under a Mortgage Loan is forgiven, then the
amount forgiven would also be a Realized Loss.
The trust fund incurs "Expense Losses" when it pays Additional Trust
Fund Expenses that are not of the type typically subject to a Servicing Advance
or are of such type but were the subject of a determination that such Servicing
Advance, if made, would be nonrecoverable.
Generally, such expenses will cause an Expense Loss only if they are
large enough to cause the amount of principal distributions to be less than the
Principal Distribution Amount for a distribution date. Otherwise, the expenses
will cause a Class Interest Shortfall for the then-most subordinate classes of
certificates.
"Additional Trust Fund Expenses" include, among other things:
o special servicing fees, workout fees and disposition fees,
o interest on Advances not paid from default interest and late payment
charges,
o the cost of legal opinions obtained as part of servicing the loans and
administering the trust fund,
o certain unanticipated, non-Mortgage Loan specific expenses of the Trust
Fund, including:
1. indemnities and reimbursements to the trustee, the fiscal agent, the
master servicer, the special servicer and the depositor, and
2. certain federal, state and local taxes, and related expenses payable
out of the trust fund,
o expenses to remedy an environmental condition on a Mortgaged Property
securing a defaulted Mortgage Loan (see "The Pooling and Servicing
Agreement - Realization Upon Mortgage Loans - Standards for
Conduct Generally in Effecting
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Foreclosure or the Sale of Defaulted Loans"), and
o other trust fund expenses not included in the calculation of Realized Loss
for which there is no corresponding collection from a borrower.
Prepayment Interest Excesses and Shortfalls
If a borrower prepays all or part of a Mortgage Loan on or before the
Determination Date in any calendar month and pays interest which accrued on the
prepayment from the beginning of the calendar month through the day preceding
the prepayment date, then such interest is a "Prepayment Interest Excess".
If a borrower prepays all or part of a Mortgage Loan after the
Determination Date in a calendar month and does not pay interest on the
prepayment through the end of the calendar month, then this shortfall in a full
month's interest on the prepayment (less related master servicing fees and
trustee fees) is a "Prepayment Interest Shortfall".
Prepayment Interest Excesses collected during a Collection Period will
be used to offset Prepayment Interest Shortfalls during the Collection Period.
The master servicer will retain any remaining amount as additional servicing
compensation.
The master servicer must pay out of its own funds, without right of
reimbursement, any Prepayment Interest Shortfalls in respect of the Mortgage
Loans that are not offset by Prepayment Interest Excesses. However, the maximum
amount that the master servicer must pay is the Stated Principal Balance of the
Mortgage Loans on which it has received its master servicing fee for such
distribution date multiplied by 0.015% per annum. Any payment that the master
servicer makes to cover such shortfalls will be a "Compensating Interest
Payment."
The total of all Prepayment Interest Shortfalls remaining in a
Collection Period after offsetting Prepayment Interest Excesses and applying
Compensating Interest Payments, is the "Net Aggregate Prepayment Interest
Shortfall" for the distribution date.
The trustee will allocate any Net Aggregate Prepayment Interest
Shortfall among the certificates in proportion to the interest accrued on each
class for the distribution date. Such an allocation will reduce the
Distributable Certificate Interest for each class.
See "The Pooling and Servicing Agreement--Servicing Compensation and
Payment of Expenses".
Scheduled Final Distribution Date
The "Scheduled Final Distribution Date" for a class of certificates is
the distribution date on which its certificate balance or notional amount would
become zero if there is no:
o early termination of the trust,
o repurchase of any loan,
o default or delinquency on any loan,
o prepayment of any kind, or
o modification or extension of any loan.
It is very unlikely that these assumptions will hold true.
The Scheduled Final Distribution Dates listed below were calculated
without regard to any delays in the collection of balloon payments and without
regard to a reasonable liquidation time with respect to any Mortgage Loans that
may be delinquent. Accordingly, if there are defaults on the Mortgage Loans, the
actual final distribution date for one or more classes may be later, and could
be substantially later, than the related Scheduled Final Distribution Date(s).
Since the rate of payment (including prepayments) of the Mortgage Loans
can be expected to exceed the scheduled rate of payments, and could exceed such
scheduled rate by a substantial amount, the actual final distribution date for
one or more classes may be earlier, and could be substantially earlier, than the
related Scheduled Final Distribution Date(s). The rate of payments (including
prepayments) on the Mortgage Loans will depend on the characteristics of the
Mortgage Loans, as well as on the prevailing level of interest rates and other
economic factors. No assurance can be given as to actual payment experience.
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Class Designation Scheduled Final Distribution Date
Class A-1 August 15, 2008
Class A-2 May 15, 2009
Class X May 15, 2019
Class B June 15, 2009
Class C June 15, 2009
Class D June 15, 2009
Class E June 15, 2009
Class F June 15, 2009
Subordination
The right of each class of subordinate certificates to receive principal
and interest distributions is subordinated to the rights of:
o the senior certificates, and
o each other class of subordinate certificates with an earlier alphabetical
class designation.
This subordination is intended to:
o protect the senior certificates against losses associated with delinquent
and defaulted Mortgage Loans, and
o enhance the likelihood of timely receipt by senior certificateholders of
the full amount of Distributable Certificate Interest payable to them, and
the ultimate receipt by the class A certificateholders of principal equal
to the initial class A certificate balance.
Similarly, but to decreasing degrees, this subordination is also
intended to increase the likelihood that the holders of the other classes of
offered certificates will timely receive all of the Distributable Certificate
Interest payable on their certificates on each distribution date, and that they
will eventually be paid all of their principal.
The subordination will be accomplished by:
o applying Available Funds as described above under "--Distributions", and
o allocating Realized Losses and Expense Losses to the Principal Balance
Certificates in reverse alphabetical order.
Realized Losses and Expense Losses are allocated to the class A-1 and
class A-2 certificates in proportion to their certificate balances.
No losses are allocated to the class X certificates, but any reduction
in principal balance of another class of certificates will reduce the notional
amount of the class X certificates.
No other form of credit enhancement is provided.
Optional Termination
If on any distribution date the certificate balance of the
then-outstanding Principal Balance Certificates is less than 1% of the principal
balance of the Mortgage Loans on the Cut-off Date, then each of the following
(in this order) has an option to terminate the trust:
o the majority holders of the Controlling Class,
o the depositor,
o the master servicer,
o the special servicer, and
o the holder of the majority of the class R-I certificate interests.
The termination is effected by purchasing all the Mortgage Loans and all
property acquired in respect of any Mortgage Loan then remaining in the trust
fund. Termination would cause early retirement of all then-outstanding
certificates.
The option exercise price equals the sum of:
o 100% of the total unpaid principal balance of the remaining Mortgage Loans
other than:
1. loans on which the special servicer has determined all payments or
recoveries have been made, and
2. loans on which the Mortgaged Property has become an REO Property,
o accrued and unpaid interest on the loans to the due date in the
Collection Period when the termination occurs,
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o unreimbursed Servicing Advances plus interest at the Advance Rate, and
o the fair market value of any other property (including REO Property)
remaining in the trust fund.
The purchase price, net of amounts payable to persons other than
certificateholders, will constitute Available Funds for the final distribution
date.
Voting Rights
At all times during the term of the pooling and servicing agreement the
voting rights for the certificates will be allocated as follows:
o 97% to the holders of the classes of Principal Balance Certificates in
proportion to the certificate balances of the classes less any Appraisal
Reductions allocated to such class,
o 2% to the holders of the interest only certificates, and
o 1% allocated equally among the holders of the residual certificates.
Each certificateholder of a class will share in the voting rights of
that class in proportion to the certificateholder's percentage interest in the
class.
Delivery, Form and Denomination
Book-Entry Certificates
Initially, the offered certificates will be registered in the name of a
nominee of The Depository Trust Company. Investors will hold their beneficial
interests in the offered certificates through the book-entry facilities of DTC.
Investors will not receive physical certificates.
DTC has informed the depositor that its nominee will be Cede & Co.
Accordingly, Cede & Co. is expected to be the holder of record of the offered
certificates. Certificateholders may also hold certificates through Cedelbank or
Euroclear (in Europe), if they are participants in such systems or indirectly
through organizations that are participants in such systems. Cedelbank and
Euroclear will hold omnibus positions on behalf of their participants through
customers' certificates accounts in Cedelbank's and Euroclear's names on the
books of their respective depositaries, which in turn will hold such positions
in customers' certificates accounts in the depositaries' names on the books of
DTC. Citibank, N.A. will act as depositary for Cedelbank and the Brussels,
Belgium office of Morgan Guaranty Trust Company of New York will act as
depositary for Euroclear.
Transfers between DTC participants will occur in accordance with DTC
rules. Transfers between Cedelbank participants and Euroclear participants will
occur in accordance with their rules.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Cedelbank or
Euroclear, on the other, will be effected in DTC in accordance with DTC rules
through Cedelbank's or Euroclear's depositary. Cedelbank participants and
Euroclear participants may not deliver instructions directly to these
depositaries.
Because of time-zone differences, credits of certificates received in
Cedelbank or Euroclear as a result of a transaction with a DTC participant will
be made during subsequent certificates settlement processing and dated the
business day following the DTC settlement date. Such credits or any transactions
in such certificates settled during such processing will be reported to the
relevant Euroclear or Cedelbank participant on such business day. Cash received
in Cedelbank or Euroclear as a result of sales of certificates by or through a
Cedelbank participant or a Euroclear participant to a DTC participant will be
received with value on the DTC settlement date, but will be available in the
relevant CEDEL or Euroclear cash account only as of the business day following
settlement in DTC.
The trustee will not be responsible for monitoring or restricting
transfer of ownership interests in offered certificates through the book-entry
facilities of DTC.
In DTC's book-entry system, a purchaser purchases through, or as, a
direct participant. The direct participant receives credit for the certificates
on DTC's records. The ownership interest of each beneficial owner is ultimately
reflected on the records of one of DTC's direct or indirect participants.
Beneficial owners are expected to receive written confirmations detailing the
transaction and periodic statements of their holdings, from the direct or
indirect DTC participant with whom the beneficial owner dealt. Neither the
depositor, the trustee, the master servicer, the special servicer, the fiscal
agent nor any paying agent is responsible for records of ultimate beneficial
ownership or for payments to ultimate beneficial owners.
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So long as certificates are held in book-entry form:
o actions by certificateholders will be taken ultimately by DTC upon
instructions from its participants, who in turn receive instructions
directly or indirectly from the beneficial owners, and
o distributions, notices, reports and statements to certificateholders will
be sent to DTC or its nominee for ultimate distribution to beneficial
owners in accordance with DTC procedures and applicable law.
Neither DTC nor its nominee will consent or vote with respect to the
offered certificates. Instead, DTC and its nominee take steps to facilitate
consent or voting in accordance with instructions from participants, who in turn
are expected to follow instructions issued ultimately by the beneficial owners.
Because DTC can only act on behalf of its participants, who in turn act
on behalf of indirect participants and certain banks, a beneficial owner may be
able to pledge or otherwise deal in offered certificates only with persons that
participate in the DTC system.
Under a book-entry format, beneficial owners may experience delays in
their receipt of payments, since distributions by the trustee or a paying agent
on behalf of the trustee will be paid directly to DTC's nominee.
Definitive Certificates
The trustee will issue definitive physical certificates to
certificateholders only if:
o the depositor elects to terminate the book-entry system, or
o DTC is no longer willing or able to act as depositary and the depositor
cannot locate a qualified successor to DTC.
The trustee would then issue definitive physical certificates upon
surrender of the physical certificates held by DTC with instructions from DTC
for registering definitive physical certificates in the names of the
certificateholders. Certificate holders will then be entitled directly to:
o receive payments,
o exercise voting rights, and
o transfer and exchange their certificates.
Definitive certificates will be transferable and exchangeable at the
offices of the trustee, the certificate registrar or another transfer agent.
The Depository Trust Company
DTC is a limited purpose trust company organized under New York law,
which is:
o a member of the Federal Reserve System,
o a "clearing corporation" within the meaning of the New York Uniform
Commercial Code, and
o a "clearing agency" registered pursuant to Section 17A of the Securities
Exchange Act of 1934, as amended.
DTC was created to hold securities for its participants and to
facilitate the clearance and settlement of securities transactions among
participants through electronic computerized book-entry changes in participants'
securities and cash accounts. This greatly reduces the need for physical
movement of certificates and cash in securities transactions. Participants
include securities brokers, dealers, banks, trust companies, clearing
corporations and certain other organizations. The rules applicable to DTC and
its participants are on file with the Securities and Exchange Commission.
Indirect access to the DTC system is available to banks, brokers, dealers, trust
companies and other institutions who maintain a clearing or custodial
relationship with a direct participant. DTC is owned by a number of its
participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc. and the National Association of Securities Dealers, Inc.
To facilitate transfers, all offered certificates deposited with DTC are
registered in the name of DTC's nominee, Cede & Co. The deposit of offered
certificates with DTC and their registration in the name of Cede & Co. effect no
change in beneficial ownership.
DTC does not know who are the ultimate beneficial owners of the offered
certificates. DTC's records reflect only the identity of the direct participants
to which certificates are credited on DTC's records. The participants are
responsible for keeping account of the certificates that they hold for their
customers.
If DTC or a direct or indirect participant becomes insolvent, then the
ability of ultimate beneficial owners to obtain timely payment may be
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impaired. If an insolvency causes a loss that exceeds the limits of applicable
Securities Investor Protection Corporation insurance or if such coverage is
unavailable, the ultimate payment of amounts distributable on offered
certificates may be impaired.
DTC management is aware that some computer applications, systems, and
the like for processing data that are dependent upon calendar dates, including
dates before, on, and after January 1, 2000, may encounter "Year 2000 problems."
DTC has informed its participants and other members of the financial community
that it has developed and is implementing a program so that DTC's systems, as
the same relate to the timely payment of distributions (including principal and
income payments) to securityholders, book-entry deliveries, and settlement of
trades within DTC, continue to function appropriately. This program includes a
technical assessment and a remediation plan, each of which is complete.
Additionally, DTC's plan includes a testing phase, which is expected to be
completed within appropriate time frames.
However, DTC's ability to perform properly its services is also
dependent upon other parties, including but not limited to issuers and their
agents, as well as third party vendors from whom DTC licenses software and
hardware, and third party vendors on whom DTC relies for information or the
provision of services, including telecommunication and electrical utility
service providers, among others. DTC has informed its participants and other
members of the financial community that it is contacting (and will continue to
contact) third party vendors from whom DTC acquires services to:
o impress upon them the importance of such services being Year 2000
compliant; and
o determine the extent of their efforts for Year 2000 remediation (and, as
appropriate, testing) of their services.
In addition, DTC is in the process of developing such contingency plans
as it deems appropriate.
According to DTC, the foregoing information with respect to DTC has been
provided to its participants and other members of the financial community for
informational purposes only and is not intended to serve as a representation,
warranty, or contract modification of any kind.
Cedelbank
Cedelbank, societe anonyme, is incorporated under the laws of Luxembourg
as a professional depository. Cedelbank holds securities for its participants
and facilitates the clearance and settlement of securities through electronic
book-entry changes in their cash and securities accounts. Transactions can
settle in Cedelbank in any of 28 currencies, including United States dollars.
Cedelbank provides safekeeping, administration, clearance and settlement of
internationally traded securities and securities lending and borrowing to its
participants. Cedelbank interfaces with domestic markets in several countries.
The Luxembourg Monetary Institute regulates Cedelbank as a professional
depository. Cedelbank participants are recognized financial institutions around
the world, including underwriters, securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations. Indirect
access to Cedelbank is also available to others, such as banks, brokers,
dealers, and trust companies that maintain a clearing or custodial relationship
with a Cedelbank participant.
Euroclear
The Euroclear System was created in 1968 to hold securities for
participants and to clear and settle transactions between participants through
simultaneous electronic book-entry delivery against payment. Transactions may
now be settled in any of 27 currencies, including United States dollars. The
Euroclear System includes various other services, including securities lending
and borrowing, and interfaces with domestic markets in several countries. The
Euroclear System is operated by the Brussels, Belgium office of Morgan Guaranty
Trust Company of New York (the "Euroclear Operator"), under a contract with
Euroclear Clearance System S.C., a Belgian cooperative corporation. All
operations are conducted by the Euroclear Operator, and all Euroclear securities
clearance accounts and Euroclear cash accounts are accounts with the Euroclear
Operator. Euroclear participants include banks (including central banks),
securities brokers and dealers. Indirect access to Euroclear is also available
to other firms that maintain a clearing or custodial relationship with a
Euroclear participant.
The Euroclear Operator is the Belgian branch of a New York banking
corporation that is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the
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New York State Banking Department, as well as the Belgian Banking Commission.
The Euroclear Operator acts only on behalf of Euroclear participants,
and has no record of or relationship with persons holding through participants.
Denominations
The trust will issue class A certificates in minimum denominations of
$5,000 initial certificate balance (and any larger whole dollar amount). The
trust will issue the remaining classes of offered certificates in minimum
denominations of $50,000 initial certificate balance or notional amount (or any
larger whole dollar amount). However, the trust may issue one certificate for
each class in a lower denomination to make up the difference between certificate
interests sold and the total amount offered.
Registration and Transfer of Definitive Certificates
Subject to the restrictions in the pooling and servicing agreement,
holders may transfer or exchange any definitive physical certificate in whole or
in part. No transfer or exchange can be of an amount smaller than the
denominations specified under "--Delivery, Form and Denomination
- --Denominations" above. The registered holder or his attorney-in-fact must
surrender the definitive certificate at the corporate trust office of the
certificate registrar appointed under the pooling and servicing agreement or at
the office of any transfer agent. The certificate must be accompanied by:
o an executed instrument of assignment and transfer, in the case of transfer,
or
o a written request for exchange, in the case of exchange.
The certificate registrar will cancel the old certificate and execute
and deliver (or mail) a new definitive certificate to the appropriate person:
o within a reasonable time period, if the old certificate is presented for
transfer or exchange at the corporate trust office of the certificate
registrar, or
o within a reasonable time period, if the old certificate is presented for
transfer or exchange at the office of another transfer agent.
New certificates sent by first class mail will be sent at the risk of
the transferee or holder to the address specified by the person presenting the
old certificates for transfer or exchange and requesting such mailing.
The certificate registrar may decline to register an exchange or
transfer during the 15 days preceding any distribution date.
The certificate registrar will not charge a fee for registering a
transfer or exchange. However, the certificate registrar may require the
transferor of a privately offered certificate to reimburse it for any tax,
expense or other governmental charge it incurs in effecting the transfer.
For a discussion of certain transfer restrictions, see "ERISA
Considerations".
YIELD AND MATURITY CONSIDERATIONS
The yield on any offered certificate will depend on:
o the pass-through rate in effect from time to time for the certificate;
o the price paid for the certificate and, if the price was other than par,
the rate and timing of payments of principal on the certificate; and
o the aggregate amount of distributions on the certificate.
Rate and Timing of Principal Payments
The yield to holders of the class X certificates and any other offered
certificates purchased at a discount or premium will be affected by the rate and
timing of principal payments made in reduction of the certificate balance or
notional amount of the certificates. As described in this prospectus supplement,
the Principal Distribution Amount for each distribution date generally will be
distributed to the class A-1 certificates until their certificate balance is
reduced to zero, and then will be distributed to each remaining class of
Principal Balance Certificates, sequentially in order of class designation, in
each case until the certificate balance of each class of certificates is, in
turn, reduced to zero.
Consequently, the rate and timing of principal payments made in
reduction of the certificate balance of the offered certificates will be
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directly related to the rate and timing of principal payments on the Mortgage
Loans, which will in turn be affected by:
o the amortization schedules of the loans,
o the dates on which balloon payments are due, and
o the rate and timing of Principal Prepayments and other unscheduled
collections on the loans, including:
1. liquidations of Mortgage Loans due to defaults, casualties or
condemnations affecting the Mortgaged Properties, or
2. repurchases of Mortgage Loans out of the trust fund in the manner
described under "Description of the Mortgage Pool--Representations and
Warranties; Repurchase" and "Description of the Certificates--Optional
Termination".
Prepayments, liquidations and repurchases of the Mortgage Loans will
result in distributions on the Principal Balance Certificates of amounts that
would otherwise have been distributed over the remaining terms of the Mortgage
Loans. Conversely, defaults on the Mortgage Loans, particularly at or near their
stated maturity dates, may result in significant delays in payments of principal
on the Mortgage Loans (and, accordingly, on the Principal Balance Certificates)
while work-outs are negotiated, foreclosures are completed or bankruptcy
proceedings are resolved. The yield to investors in the subordinate certificates
will be very sensitive to the timing and magnitude of losses on the Mortgage
Loans due to liquidations following a default, and will also be very sensitive
to delinquencies in payment. In addition, the special servicer has the option,
subject to certain limitations, to extend the maturity of Mortgage Loans
following a default in the payment of a balloon payment. See "The Pooling and
Servicing Agreement--Servicing of the Mortgage Loans; Collection of Payments"
and "--Realization Upon Mortgage Loans" in this prospectus supplement and
"Certain Legal Aspects of the Mortgage Loans--Foreclosure" in the prospectus.
The rate and timing of principal payments and defaults and the severity
of losses on the Mortgage Loans may be affected by a number of factors,
including, without limitation:
o the terms of the Mortgage Loans (for example, the provisions requiring the
payment of prepayment premiums and amortization terms that require balloon
payments),
o prevailing interest rates,
o the market value of the Mortgaged Properties,
o the demographics and relative economic vitality of the areas in which the
Mortgaged Properties are located,
o the general supply and demand for such facilities (and their uses) in the
areas in which the Mortgaged Properties are located,
o the quality of management of the Mortgaged Properties,
o the servicing of the Mortgage Loans,
o federal and state tax laws (which are subject to change), and
o other opportunities for investment.
The rate of prepayment on the mortgage pool is likely to be affected by
the amount of any required prepayment premiums and the borrowers' ability to
refinance their related Mortgage Loans. If prevailing market interest rates for
mortgage loans of a comparable type, term and risk level have decreased enough
to offset any required prepayment premium, a borrower may have an increased
incentive to refinance its Mortgage Loan for purposes of either:
o converting to another fixed rate loan with a lower interest rate and
thereby "locking in" such rate, or
o taking advantage of an initial "teaser rate" on an adjustable rate mortgage
loan (that is, a mortgage interest rate below that which would otherwise
apply if the applicable index and gross margin were applied).
However, the ability of a borrower to refinance its Mortgage Loan will
be affected not only by prevailing market rates, but also by the current market
value of the Mortgaged Property. See "Risk Factors--Yield Considerations" in
this prospectus supplement and "Certain Legal Aspects of the Mortgage
Loans--Enforceability of Certain Provisions" in the prospectus.
You should consider the risk that rapid rates of prepayments on the
Mortgage Loans, and corresponding increased payments of principal on the
Principal Balance Certificates, may coincide with periods of low prevailing
interest rates. During these periods, the effective interest rates on securities
in which you may choose to reinvest amounts paid to you as principal may be
lower than the pass-through rate of your certificate. Conversely, slower rates
of prepayments on the Mortgage Loans, and corresponding decreased payments of
principal on the Principal Balance Certificates, may coincide with periods of
high prevailing interest rates. During these
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periods, the amount of principal payments available to you for reinvestment at
such high prevailing interest rates may be relatively small. In addition, some
borrowers may sell Mortgaged Properties in order to realize their equity
therein, to meet cash flow needs or to make other investments. Some borrowers
may also be motivated by federal and state tax laws (which are subject to
change) to sell Mortgaged Properties prior to the exhaustion of tax depreciation
benefits.
If the markets for commercial and multifamily real estate experience an
overall decline in property values, the outstanding balance of a Mortgage Loan
could exceed the value of the Mortgaged Property. A borrower under a
non-recourse loan would then have a decreased incentive to fund operating cash
flow deficits and, as a result, actual losses could be higher than you
originally anticipated.
Neither the depositor nor the sellers make any representation as to:
o the particular factors that will affect the rate and timing of prepayments
and defaults on the Mortgage Loans,
o the relative importance of such factors,
o the percentage of the Mortgage Loans that will default or be prepaid, or
o the overall rate of prepayment, default or principal payment on the
Mortgage Loans.
The extent to which the yield to maturity of any class of offered
certificates may vary from your anticipated yield will depend upon the degree to
which they are purchased at a discount or premium and when, and to what degree,
payments of principal on the Mortgage Loans are in turn distributed on or
otherwise result in the reduction of the certificate balance or notional amount
of your certificates. You should consider the risk that your actual yield may be
lower than anticipated if:
o in the case of any Principal Balance Certificate purchased at a discount,
principal payments on the Mortgage Loans are slower than you anticipated,
and
o in the case of any Principal Balance Certificate purchased at a premium (or
the interest only certificates, which have no certificate balances),
principal payments on the Mortgage Loans are faster than you anticipated.
In general, the earlier a payment of principal on the Mortgage Loans is
distributed in reduction of the certificate balance of any Principal Balance
Certificate purchased at a discount or premium (or, in the case of the interest
only certificates, applied in reduction of the notional amount), the greater
will be the effect on your yield to maturity. As a result, the effect on your
yield of principal payments on the Mortgage Loans occurring at a rate higher (or
lower) than the rate you anticipated during any particular period would not be
fully offset by a subsequent like reduction (or increase) in the rate of such
principal payments.
The yield to maturity of the interest only certificates will be highly
sensitive to the rate and timing of principal payments (including by reason of
prepayments, repurchases, extensions, defaults and liquidations) on the Mortgage
Loans. If you intend to purchase the interest only certificates, you should
fully consider the risk that if there is an extremely rapid rate of amortization
and prepayment on the Principal Balance Certificates, you may not recover your
initial investment. Because the rate of principal payments on the Mortgage Loans
will depend on future events and a variety of factors (as described more fully
below), the depositor can give you no assurance as to such rate or the rate of
Principal Prepayments in particular. The depositor is not aware of any relevant
publicly available or authoritative statistics with respect to the historical
prepayment experience of a large group of commercial and/or multifamily loans
comparable to the Mortgage Loans. See "Risk Factors--Yield Considerations".
Balloon Payments
Most of the Mortgage Loans are balloon loans that will have substantial
balloon payments due at their stated maturities. A borrower's ability to pay a
balloon payment may depend on its ability to sell or refinance the property.
Factors beyond the borrower's control may affect this ability, including:
o the level of interest rates and general economic conditions at the time,
and
o changes in federal, state or local laws, including tax, environmental
and safety laws.
A failure to make a balloon payment on time will lengthen the average
life of the certificates. See the Remaining Terms to Stated Maturity Table in
Appendix I for additional information regarding the maturity dates of the
Mortgage Loans.
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<PAGE>
Losses and Shortfalls
The yield to holders of the offered certificates will also depend on the
extent to which such holders are required to bear the effects of losses or
shortfalls on the Mortgage Loans.
Shortfalls in Available Funds may result from:
o shortfalls in collections of amounts payable on the Mortgage Loans
(unless advanced),
o additional master servicer or special servicer compensation,
o interest on Advances,
o Additional Trust Fund Expenses, or
o other similar items.
Shortfalls in Available Funds (other than Net Aggregate Prepayment
Interest Shortfalls) will generally be borne by holders of each class of
Principal Balance Certificates in reverse alphabetical order. Any such
shortfalls will be allocated to the holders of the class A-1 and class A-2
certificates on a pro rata basis.
Realized Losses and Expense Losses will be:
o allocated to certificates in reverse alphabetical order of their class
designation, and
o applied to reduce the certificate balance of each affected
class and the notional amount of the interest only certificates.
As a result, a loss on any one of the Mortgage Loans could cause a
significant loss, even a complete loss, of an investor's investment in any
class, but especially the subordinate certificates with the latest alphabetic
designations. You should make your own estimate of the expected timing and
severity of Realized Losses and Expense Losses before investing in any
subordinate certificate.
Pass-Through Rates
The pass-through rate for the class X certificates is sensitive to
changes in:
o the weighted average of the Net Mortgage Rates, and
o the weighted average of the pass-through rates for the certificates.
The pass-through rates for the class C, class D, class E and class F
certificates are sensitive to changes in the weighted average of the Net
Mortgage Rates.
The weighted average of the pass-through rates for the certificates will
fluctuate based on the relative sizes of the certificate balances of the
Principal Balance Certificates.
The weighted average of the Net Mortgage Rates will fluctuate over the
life of the class X, class C, class D, class E and class F certificates as a
result of scheduled amortization, voluntary prepayments, liquidations and
repurchases of loans.
If principal reductions occur on loans with higher than average Net
Mortgage Rates at a rate proportionally faster than principal reductions on the
mortgage pool as a whole, the pass-through rates for the class X, class C, class
D, class E and class F certificates will be adversely affected.
In addition, the pass-through rates for the class A and class B
certificates may not exceed the weighted average of the Net Mortgage Rates.
Delay in Payment of Distributions
Monthly distributions will be made on the 15th day of the month
following the month in which the interest accrued on the certificates. You
should take this delay into account in determining how much to pay for the
certificates.
Yield Sensitivity of the Interest Only Certificates
The yield to maturity of the interest only certificates will be
especially sensitive to the prepayment, repurchase, default and loss experience
on the Mortgage Loans, which may fluctuate significantly from time to time. A
rapid rate of principal payments (including prepayments resulting from
liquidations and repurchases) will have a material negative effect on the yield
to maturity of the interest only certificates. There can be no assurance that
the Mortgage Loans will prepay at any particular rate. If you intend to purchase
interest only certificates, you should fully consider the risk that a rapid rate
of prepayments on the Mortgage Loans could result in your receiving total
distributions that are less than the amount you paid for the interest only
certificates.
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<PAGE>
The following table indicates the sensitivity of the pre-tax yield to
maturity on the interest only certificates to various constant rates of
prepayment on the Mortgage Loans. The table projects the monthly total payments
of interest on the interest only certificates and computes the corresponding
pre-tax yields to maturity on a corporate bond equivalent basis, based on the
following assumptions:
o the Maturity Assumptions described under "- Weighted Average Life" below,
o that the total purchase prices of the interest only certificates are as
specified, and
o that the initial pass-through rate and the initial notional amount are as
set forth in this prospectus supplement.
Any differences between these assumptions and the actual characteristics
and performance of the Mortgage Loans and the interest only certificates will
likely result in yields differing from those shown in the table. Discrepancies
between assumed and actual characteristics and performance underscore the
hypothetical nature of the table. The depositor has provided the table to give
you a general sense of the sensitivity of yields in varying prepayment
scenarios.
The pre-tax yields in the following table were calculated by determining
the monthly discount rates that, when applied to the assumed stream of cash
flows to be paid on the interest only certificates, would cause the discounted
present value of such assumed stream of cash flows to equal the assumed purchase
price of the certificates, excluding accrued interest, expressed as a percentage
of the notional amount of the certificates. These monthly rates were then
converted to semi-annual corporate bond equivalent rates. Such calculation does
not take into account:
o shortfalls in collection of interest due to prepayments (or other
liquidations or repurchases) of the Mortgage Loans, or
o the interest rates at which you may be able to reinvest distributions on
the interest only certificates.
Accordingly, the table does not reflect the return on an investment in
the interest only certificates when such reinvestment rates are considered.
Notwithstanding the assumed prepayment rates reflected in the following
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 interest
only certificates is likely to differ from those shown in the table, even if all
of the Mortgage Loans prepay at the indicated CPRs over any given time period or
over the entire life of the certificates.
You should make your investment decision based on your assessment of the
anticipated rates of prepayment under a variety of scenarios.
<TABLE>
<CAPTION>
Pre-Tax Yield to Maturity (CBE)
of the Class X Certificates
Assumed Total
Purchase Price Prepayment Assumption (CPR)
(excluding accrued 0% 3% 5% 7% 10% 15%
interest)
- ---------------------------- ---------- ---------- ----------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
4.1250% 10.01% 10.00% 10.00% 10.00% 9.99% 9.98%
4.1875% 9.62% 9.62% 9.62% 9.61% 9.61% 9.60%
4.2500% 9.25% 9.24% 9.24% 9.24% 9.23% 9.22%
</TABLE>
Weighted Average Life
Weighted average life refers to the average amount of time that will
elapse from the date a security is issued to the date each dollar is distributed
in reduction of the principal balance of the security. The weighted average life
of each class of Principal Balance Certificates is determined by:
o multiplying the amount of each distribution in reduction of the
certificate balance of such class
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<PAGE>
by the number of years from the date of purchase to the related
distribution date,
o adding the results, and
o dividing the sum by the total distributions in reduction of the certificate
balance.
The weighted average life of any certificate will be influenced by,
among other things:
o the rate at which principal of the Mortgage Loans is paid or otherwise
collected or advanced, and
o the extent that payments, collections and/or advances of principal are
applied to reduce the certificate's certificate balance.
Prepayments on Mortgage Loans may be measured by a prepayment standard
or model. The model used in this prospectus supplement is the "Constant
Prepayment Rate" or "CPR" model. The CPR model represents an assumed constant
rate of prepayment each month, expressed as an annual rate, relative to the then
outstanding principal balance of a pool of Mortgage Loans for the life of the
loans. As used in each of the following tables, the column headed "0%" assumes
that none of the Mortgage Loans is prepaid before maturity. The columns headed
"3%", "5%", "7%", "10%" and "15%" assume that no prepayments are made on any
Mortgage Loan during the Mortgage Loan's Lock-out Period or Yield Maintenance
Period, if any, and are otherwise made on each of the Mortgage Loans at the
indicated CPRs. The tables and assumptions are intended to illustrate the
sensitivity of the weighted average life of the certificates to various
prepayment rates and are not intended to predict or to provide information that
will enable you to predict the actual weighted average life of the certificates.
Consequently, no assurance can be given and no representation is made that:
o prepayments of the Mortgage Loans (whether or not in a Lock-out Period or a
Yield Maintenance Period) will conform to any particular CPR,
o all the Mortgage Loans will prepay in accordance with the assumptions at
the same rate, or
o Mortgage Loans that are in a Lock-out Period or Yield Maintenance Period
will not prepay.
The tables have been prepared on the basis of the following assumptions
(collectively, the "Maturity Assumptions"):
o the Initial Pool Balance is approximately $733,801,916,
o the initial certificate balance or notional amount for each class of
offered certificates is the amount on the cover page,
o the approximate initial pass-through rate for each class of certificates
is as follows:
--------------- -------------------
Class Pass-through rate
--------------- -------------------
A-1 6.790%
--------------- -------------------
A-2 7.030%
--------------- -------------------
X 0.838%
--------------- -------------------
B 7.200%
--------------- -------------------
C 7.526%
--------------- -------------------
D 7.626%
--------------- -------------------
E-G 7.886%
--------------- -------------------
H-P 6.790%
--------------- -------------------
o the scheduled Monthly Payments for each Mortgage Loan are the amounts
listed in Appendix II,
o all Monthly Payments are due and timely received on the first day of each
month,
o there are no delinquencies or losses on the Mortgage Loans,
o there are no extensions of maturity of the Mortgage Loans,
o there are no Appraisal Reductions for the Mortgage Loans,
o there are no casualties or condemnations affecting the Mortgaged
Properties,
o prepayments are made on each of the Mortgage Loans at the indicated CPRs
(except that no prepayments are received for any Mortgage Loan during a
Lock-out Period or Yield Maintenance Period),
o Hyper-Amortization Loans are prepaid in full on their Anticipated
Repayment Dates,
o no one exercises its right to terminate the trust fund as described
under "Description of the Certificates--Optional Termination",
o no Mortgage Loan is required to be repurchased or replaced by a seller or
other party,
o no Prepayment Interest Shortfalls are incurred,
o there are no Additional Trust Fund Expenses,
o distributions on the certificates are made on the 15th day of each month,
commencing in August 1999,
o the certificates are issued on July 27, 1999, and
o the prepayment provisions for each Mortgage Loan are assumed to begin on
the first payment date of such Mortgage Loan and any resulting prepayment
premiums are allocated as described
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<PAGE>
under "Description of the Certificates--Distributions--Distributions of
Prepayment Premiums".
To the extent that the Mortgage Loans have characteristics that differ
from those assumed in preparing the tables set forth below, the offered
certificates (other than the interest only certificates) may mature earlier or
later than indicated by the tables.
It is highly unlikely that the Mortgage Loans will prepay in accordance
with the Maturity Assumptions at any constant rate until maturity or that all
the Mortgage Loans will prepay in accordance with the Maturity Assumptions at
the same rate. In addition, variations in the actual prepayment experience and
the balance of the Mortgage Loans that prepay may increase or decrease the
percentages of initial certificate balances (and weighted average lives) shown
in the following tables. These variations may occur even if the average
prepayment experience of the Mortgage Loans were to reflect the Maturity
Assumptions and any of the specified CPR percentages.
You should conduct your own analyses of the rates at which the Mortgage
Loans may be expected to prepay.
Subject to the above discussion and assumptions, the following tables
indicate:
o the weighted average life of each class of the offered certificates, and
o set forth the percentages of the initial certificate balance of each class
of the offered certificates (other than the interest only certificates)
that would be outstanding after each of the listed distribution dates at
various CPRs.
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<PAGE>
<TABLE>
<CAPTION>
Percentage of Initial Certificate Balance
of the Class A-1 Certificates
at the Specified CPRs
Prepayment Assumption (CPR)
Distribution Date 0% 3% 5% 7% 10% 15%
-- -- -- -- --- ---
<S> <C> <C> <C> <C> <C> <C>
Closing Date 100% 100% 100% 100% 100% 100%
July 15, 2000 94 94 94 94 94 94
July 15, 2001 88 88 87 87 87 87
July 15, 2002 80 80 80 80 80 80
July 15, 2003 71 71 71 71 71 71
July 15, 2004 59 59 59 59 59 59
July 15, 2005 49 49 49 49 49 49
July 15, 2006 39 39 39 39 39 39
July 15, 2007 29 29 29 29 29 29
July 15, 2008 2 2 2 2 2 1
July 15, 2009 0 0 0 0 0 0
Weighted average life
(years) 5.69 5.68 5.68 5.68 5.68 5.68
</TABLE>
<TABLE>
<CAPTION>
Percentage of Initial Certificate Balance
of the Class A-2 Certificates
at the Specified CPRs
Prepayment Assumption (CPR)
Distribution Date 0% 3% 5% 7% 10% 15%
-- -- -- -- --- ---
<S> <C> <C> <C> <C> <C> <C>
Closing Date 100% 100% 100% 100% 100% 100%
July 15, 2000 100 100 100 100 100 100
July 15, 2001 100 100 100 100 100 100
July 15, 2002 100 100 100 100 100 100
July 15, 2003 100 100 100 100 100 100
July 15, 2004 100 100 100 100 100 100
July 15, 2005 100 100 100 100 100 100
July 15, 2006 100 100 100 100 100 100
July 15, 2007 100 100 100 100 100 100
July 15, 2008 100 100 100 100 100 100
July 15, 2009 0 0 0 0 0 0
Weighted average life
(years) 9.59 9.58 9.58 9.58 9.58 9.57
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Percentage of Initial Certificate Balance
of the Class B Certificates
at the Specified CPRs
Prepayment Assumption (CPR)
Distribution Date 0% 3% 5% 7% 10% 15%
-- -- -- -- --- ---
<S> <C> <C> <C> <C> <C> <C>
Closing Date 100% 100% 100% 100% 100% 100%
July 15, 2000 100 100 100 100 100 100
July 15, 2001 100 100 100 100 100 100
July 15, 2002 100 100 100 100 100 100
July 15, 2003 100 100 100 100 100 100
July 15, 2004 100 100 100 100 100 100
July 15, 2005 100 100 100 100 100 100
July 15, 2006 100 100 100 100 100 100
July 15, 2007 100 100 100 100 100 100
July 15, 2008 100 100 100 100 100 100
July 15, 2009 0 0 0 0 0 0
Weighted average life
(years) 9.82 9.82 9.82 9.81 9.81 9.81
</TABLE>
<TABLE>
<CAPTION>
Percentage of Initial Certificate Balance
of the Class C Certificates
at the Specified CPRs
Prepayment Assumption (CPR)
Distribution Date 0% 3% 5% 7% 10% 15%
-- -- -- -- --- ---
<S> <C> <C> <C> <C> <C> <C>
Closing Date 100% 100% 100% 100% 100% 100%
July 15, 2000 100 100 100 100 100 100
July 15, 2001 100 100 100 100 100 100
July 15, 2002 100 100 100 100 100 100
July 15, 2003 100 100 100 100 100 100
July 15, 2004 100 100 100 100 100 100
July 15, 2005 100 100 100 100 100 100
July 15, 2006 100 100 100 100 100 100
July 15, 2007 100 100 100 100 100 100
July 15, 2008 100 100 100 100 100 100
July 15, 2009 0 0 0 0 0 0
Weighted average life
(years) 9.88 9.88 9.88 9.88 9.88 9.88
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Percentage of Initial Certificate Balance
of the Class D Certificates
at the Specified CPRs
Prepayment Assumption (CPR)
Distribution Date 0% 3% 5% 7% 10% 15%
-- -- -- -- --- ---
<S> <C> <C> <C> <C> <C> <C>
Closing Date 100% 100% 100% 100% 100% 100%
July 15, 2000 100 100 100 100 100 100
July 15, 2001 100 100 100 100 100 100
July 15, 2002 100 100 100 100 100 100
July 15, 2003 100 100 100 100 100 100
July 15, 2004 100 100 100 100 100 100
July 15, 2005 100 100 100 100 100 100
July 15, 2006 100 100 100 100 100 100
July 15, 2007 100 100 100 100 100 100
July 15, 2008 100 100 100 100 100 100
July 15, 2009 0 0 0 0 0 0
Weighted average life
(years) 9.88 9.88 9.88 9.88 9.88 9.88
</TABLE>
<TABLE>
<CAPTION>
Percentage of Initial Certificate Balance
of the Class E Certificates
at the Specified CPRs
Prepayment Assumption (CPR)
Distribution Date 0% 3% 5% 7% 10% 15%
-- -- -- -- --- ---
<S> <C> <C> <C> <C> <C> <C>
Closing Date 100% 100% 100% 100% 100% 100%
July 15, 2000 100 100 100 100 100 100
July 15, 2001 100 100 100 100 100 100
July 15, 2002 100 100 100 100 100 100
July 15, 2003 100 100 100 100 100 100
July 15, 2004 100 100 100 100 100 100
July 15, 2005 100 100 100 100 100 100
July 15, 2006 100 100 100 100 100 100
July 15, 2007 100 100 100 100 100 100
July 15, 2008 100 100 100 100 100 100
July 15, 2009 0 0 0 0 0 0
Weighted average life
(years) 9.88 9.88 9.88 9.88 9.88 9.88
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Percentage of Initial Certificate Balance
of the Class F Certificates
at the Specified CPRs
Prepayment Assumption (CPR)
Distribution Date 0% 3% 5% 7% 10% 15%
-- -- -- -- --- ---
<S> <C> <C> <C> <C> <C> <C>
Closing Date 100% 100% 100% 100% 100% 100%
July 15, 2000 100 100 100 100 100 100
July 15, 2001 100 100 100 100 100 100
July 15, 2002 100 100 100 100 100 100
July 15, 2003 100 100 100 100 100 100
July 15, 2004 100 100 100 100 100 100
July 15, 2005 100 100 100 100 100 100
July 15, 2006 100 100 100 100 100 100
July 15, 2007 100 100 100 100 100 100
July 15, 2008 100 100 100 100 100 100
July 15, 2009 0 0 0 0 0 0
Weighted average life
(years) 9.88 9.88 9.88 9.88 9.88 9.88
</TABLE>
THE POOLING AND SERVICING AGREEMENT
The certificates will be issued under a pooling and servicing agreement
to be dated as of July 1, 1999, among the depositor, the master servicer, the
special servicer, the trustee and the fiscal agent.
You may obtain a free copy of the pooling and servicing agreement
(without exhibits) by writing to:
Commercial Mortgage Acceptance Corp.
210 West 10th Street, 6th Floor
Kansas City, Missouri 64105
Attention: Scott Manning
You may also request a copy by telephone at (816) 435-5000.
Assignment of the Mortgage Loans
By the closing date, the sellers must assign the Mortgage Loans to the
trustee for the benefit of the certificateholders. The assignments will be
without recourse. The sellers must also deliver the following documents, among
others, for each Mortgage Loan:
o the original note, endorsed (without recourse) to the order of the trustee;
o the original or a copy of the related mortgage(s), together with originals
or copies of any intervening assignments of such document(s), in each case
(unless the particular document has not been returned from the applicable
recording office) with evidence of recording noted on the document;
o the original or a copy of any related assignment(s) of leases and rents (if
any such item is a document separate from the mortgage), together with
originals or copies of any intervening assignments of such document(s), in
each case (unless the particular document has not been returned from the
applicable recording office) with evidence of recording noted on the
document;
o an assignment of each related mortgage in favor of the trustee, in
recordable form (or a certified copy of such assignment as sent for
recording);
o an assignment of any related assignment(s) of leases and rents (if any such
item is a document separate from the mortgage) in favor of the trustee, in
recordable form (or a certified copy of such assignment as sent for
recording);
o an original or copy of the related lender's title insurance policy (or, if
a title insurance policy has not yet been issued, a commitment for title
insurance "marked-up" at the closing of such Mortgage Loan or other binding
commitment to issue title insurance);
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<PAGE>
o an assignment in favor of the trustee of each effective UCC financing
statement in the possession of the tranferor (or a certified copy of such
assignment as sent for filing); and
o in those cases where applicable, the original or a copy of the related
ground lease.
If the sellers cannot deliver any original or certified recorded
document described above on the closing date, the sellers will use their best
efforts to deliver it within 45 days after the closing date or promptly after
receipt from any recording office which delays sellers' receipt of the document
beyond the 45 days after the closing date.
The trustee is obligated to review the documents delivered to it for
each Mortgage Loan within 45 days after the later of delivery or the closing
date and report any missing documents or certain types of defects to the
depositor.
Servicing of the Mortgage Loans; Collection of Payments
The pooling and servicing agreement will require:
o the master servicer to service and administer the Mortgage Loans; and
o the special servicer to service and administer the Specially Serviced
Mortgage Loans and REO Mortgage Loans;
on behalf of the trust fund solely in the best interests of and for the benefit
of all of the certificateholders and the trustee in accordance with the mortgage
loan documents and the pooling and servicing agreement.
Unless the pooling and servicing agreement requires a contrary specific
course of action, the master servicer and the special servicer must each act in
accordance with the higher of the following standards:
o in the same manner, and with the same care, skill, prudence and diligence,
with which it services and administers similar mortgage loans for other
third-party portfolios, giving due consideration to customary and usual
standards of practice that prudent institutional commercial mortgage loan
servicers use for comparable mortgage loans, or
o in the same manner in which, and with the same care, skill, prudence and
diligence with which, it services and administers similar mortgage loans
that it owns.
In observing this standard, the master servicer and special servicer may
take into account their other obligations under the pooling and servicing
agreement. However, they must disregard:
o any other relationship that the master servicer, the special servicer, any
sub-servicer or any of their affiliates have with any borrower or its
affiliates;
o the ownership of any certificate by the master servicer, the special
servicer or their affiliates;
o their obligation to make Advances or incur servicing expenses;
o the master servicer's, the special servicer's or any sub-servicer's
right to receive compensation for its services;
o the ownership, servicing or management for others by the master servicer,
the special servicer or any sub-servicer of any other mortgage loans or
property; and
o any obligation of the master servicer, the special servicer, any
sub-servicer or any of their affiliates to replace or repurchase any
Mortgage Loan that it sold to the trust fund.
However, neither the master servicer nor the special servicer, nor any
of their directors, members, managers, officers, employees or agents, will have
any liability to the trust fund or the certificateholders for:
o taking any action or refraining from taking any action in good faith; or
o for errors in judgment.
The master servicer, the special servicer and such persons are not
protected against liability for:
o breaching their representations or warranties in the pooling and servicing
agreement,
o breaching the servicing standards in the pooling and servicing
agreement,
o willful misfeasance, misrepresentation, bad faith, fraud or
negligence in performing its duties under the pooling and servicing
agreement, or
o negligent disregard of its obligations or duties under the pooling and
servicing agreement.
The master servicer and the special servicer must make reasonable
efforts to collect amounts due under the Mortgage Loans, and must follow
collection procedures consistent with the servicing
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<PAGE>
standard under the pooling and servicing agreement. The special servicer may
waive late payment charges or penalty fees on delinquent Monthly Payments or
balloon payments on Specially Serviced Mortgage Loans. The master servicer may
waive such amounts on all other Mortgage Loans.
Collection Activities
The master servicer monitors the performance of all loans. It tracks the
status of outstanding payments due, grace periods and due dates. It calculates
and assesses late fees. The master servicer has created a customized collection
system that:
o downloads all current loan information from the servicing system on a daily
basis,
o prepares several regular delinquency reports,
o generates and mails a series of delinquency notice letters, including
payment-reminder letters to borrowers at 10 days past due, and more
strongly worded collection letters at 30 and 60 days past due, and
o flags higher-risk Mortgage Loans, such as those with a large principal
balance or chronic delinquency, so that the borrower receives a telephone
call rather than a letter.
A delinquent Mortgage Loan will be transferred to the special servicer
when the loan becomes a Specially Serviced Mortgage Loan. See "--Special
Servicing".
Advances
Except as noted below, if a loan is delinquent at the close of business
on the second business day before a distribution date, the master servicer will
advance an amount equal to the Monthly Payment or the Assumed Monthly Payment,
as applicable (each such amount, a "P&I Advance").
The master servicer must make the P&I Advance on the business day before
each distribution date.
The amount of interest to be advanced for a Mortgage Loan for which an
Appraisal Reduction has been calculated will equal the product of:
1. the amount of interest that would otherwise be required to be advanced, and
2. a fraction,
o whose numerator equals the Stated Principal Balance of the loan at the
close of the preceding distribution date less the Appraisal Reduction,
and
o whose denominator is such Stated Principal Balance.
In addition to P&I Advances, the master servicer will also be obligated
to make cash advances ("Servicing Advances," and together with P&I Advances,
"Advances") to pay:
o certain costs and expenses incurred in connection with defaulted Mortgage
Loans, acquiring or managing REO Property or selling defaulted Mortgage
Loans or REO Properties,
o delinquent real estate taxes, assessments and hazard insurance premiums,
and
o other similar costs and expenses necessary to protect and preserve the
security of a Mortgage.
However, the master servicer is not required to make any Advance that it
determines is a nonrecoverable Advance. If the master servicer makes a
nonrecoverability determination, it must deliver to the trustee an officer's
certificate explaining the procedures and basis for the determination and
supplying documentation which supports the determination, which will include a
copy of the Updated Appraisal and any other information or reports obtained by
the master servicer, the trustee or the fiscal agent, such as:
o property operating statements,
o rent rolls,
o property inspection reports, and
o engineering reports.
If the master servicer fails to make a required Advance, the trustee
must make the Advance subject to its good faith determination of recoverability.
If the trustee fails to make a required Advance, the fiscal agent must make it,
subject to its good faith determination of recoverability. Any Advance by the
fiscal agent will cure the trustee's failure to make an Advance. Both the
trustee and the fiscal agent will be entitled to rely conclusively on a
nonrecoverability determination by the master servicer.
Unless there is a nonrecoverability determination, the obligation to
make Advances on a Mortgage Loan continues until foreclosure and liquidation of
the loan and related properties. Advances are intended to provide a limited
amount of liquidity, not to guarantee or insure against losses.
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<PAGE>
Each of the master servicer, the trustee and the fiscal agent only has
to make an Advance if it determines that it will be recoverable from late
payments, insurance proceeds, liquidation proceeds or other collections on the
Mortgage Loan. If the special servicer agrees to a modification of a Mortgage
Loan that forgives loan payments or other amounts that the master servicer, the
trustee or the fiscal agent previously advanced, and the master servicer, the
trustee or the fiscal agent determines that no other source of payment or
reimbursement for such Advances is available to it, such Advances will be deemed
to be nonrecoverable.
If the master servicer, the trustee or the fiscal agent determines that
an Advance previously made will be nonrecoverable, the Advance, plus interest,
will be repaid from amounts on deposit in the Collection Account before further
distributions on the certificates.
Interest is payable on Advances at a floating rate (the "Advance Rate")
equal to the prime rate as published in The Wall Street Journal. Advance
interest will be paid first from default interest and late payment charges
collected on the related Mortgage Loan. If such collections are insufficient,
any remaining Advance interest will be paid from general collections on all
Mortgage Loans at the time that the Advance is repaid.
However, no interest will accrue for any P&I Advance on the loans
identified as Loan Nos. 56, 131 and 192 for the period beginning when the
Advance is made and ending when the grace period expires.
If interest on Advances is not offset by default interest or other
amounts, the shortfall will reduce amounts payable on the certificates. Hence,
it is possible that the making of Advances (and the charging of interest on
Advances while they are outstanding) could reduce total amounts payable to
certificateholders even if all amounts due from borrowers are eventually
received.
Accounts
Collection Account
The master servicer will establish and maintain a segregated account or
accounts (the "Collection Account") into which it must deposit the following
amounts relating to the Mortgage Loans:
o all principal payments;
o all payments of interest, default interest and prepayment premiums;
o any amounts required to be deposited by the master servicer for:
1. losses realized on permitted investments of funds in the Collection
Account, and
2. Prepayment Interest Shortfalls;
o all Net REO Proceeds transferred from an REO Account;
o all condemnation proceeds, insurance proceeds and net
liquidation proceeds not required to be
applied to restore or repair the Mortgaged Property;
o any amounts received from borrowers as recoveries of Servicing Advances;
o proceeds of any purchase or repurchase of a Mortgage Loan by the
applicable seller, and
o other amounts that the pooling and servicing agreement requires the master
servicer to deposit into the Collection Account.
The master servicer will deposit these amounts into the Collection
Account within one day after receipt. The Collection Account will be held by the
master servicer for the benefit of the trustee and the certificateholders.
See "Description of the Mortgage Pool--Representations and Warranties;
Repurchase", "The Pooling and Servicing Agreement--Realization Upon Mortgage
Loans" and "Description of the Certificates--Optional Termination".
"REO Proceeds" for any REO Property and the related Mortgage Loan are
all revenues received by the special servicer on the REO Property or REO
Mortgage Loan other than liquidation proceeds.
"Net REO Proceeds" for any REO Property and the related Mortgage Loan
are REO Proceeds less any insurance premiums, taxes, assessments and other costs
and expenses permitted to be paid from the related REO Account.
The master servicer need not deposit into the Collection Account any
payments in the nature of late payment charges, late fees, NSF check charges,
assumption fees, loan modification fees, loan service transaction fees,
extension fees, demand fees, beneficiary statement charges and similar fees. To
the extent permitted by applicable law and as provided in the pooling and
servicing agreement, the master servicer or the special servicer may retain such
amounts as additional servicing compensation. If the master servicer mistakenly
deposits any amount into
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the Collection Account, it may withdraw the mistaken deposit from the
Collection Account at any time.
Interest Reserve Account
The trustee will establish and maintain an "Interest Reserve Account"
for the benefit of the holders of the certificates. For the distribution date in
each January (other than a leap year) and each February, the trustee will
deposit into the Interest Reserve Account for each Mortgage Loan bearing
interest computed on an actual/360 basis (the "Interest Reserve Loans") an
amount equal to one day's interest at the related Net Mortgage Rate on its
stated Principal Balance as of the due date in the month in which the
distribution date occurs (the "Interest Reserve Amount"). The trustee will not
make the deposit if the applicable Monthly Payment has not been paid or
advanced. The trustee will calculate the Interest Reserve Amount without regard
to the adjustments to the Net Mortgage Rates for Interest Reserve Loans
described under "Description of the Certificates--Pass-Through Rates". For
distribution dates in March of each year, the trustee will deposit the Interest
Reserve Amounts into the Distribution Account and include these amounts as part
of the Available Funds for the distribution date.
Distribution Account
The trustee will establish a segregated account or accounts (the
"Distribution Account") into which the master servicer must deposit the
following amounts:
o a total amount equal to the Available Funds (to the extent included in the
Collection Account, which will be determined without regard to Interest
Reserve Amounts),
o any prepayment premiums received during the Collection Period, and
o all P&I Advances required for the distribution date and not already
included in the Available Funds.
The master servicer will deposit these amounts into the Distribution
Account on the business day before each distribution date. The Distribution
Account will be held by the trustee for the benefit of the certificateholders.
See "Description of the Certificates--Distributions".
Where Accounts May be Maintained
The Collection Account and the Distribution Account must each be either:
o a segregated account or accounts maintained with a federal- or
state-chartered depository institution or trust company:
1. whose short-term unsecured debt obligations are rated at least "P1" by
Moody's and whose long-term unsecured debt obligations (or whose
parent holding company's long-term unsecured debt obligations) are
rated at least "Aa2" by Moody's, and
2. whose short-term unsecured debt obligations are rated at least "D-1"
by DCR and whose long-term unsecured debt obligations (or whose parent
holding company's long-term unsecured debt obligations) are rated at
least "A" by DCR, or
o a segregated trust account or accounts maintained with a federal- or
state-chartered depository institution or trust company acting in its
fiduciary capacity:
1. having a combined capital and surplus of at least $50,000,000,
2. subject to supervision or examination by a federal or state authority,
and
3. subject to regulations regarding fiduciary funds or deposits
substantially similar to 12 CFR 9.10(b), or
o an account which each of the Rating Agencies confirms will not, in and of
itself, result in a downgrading, withdrawal or qualification of the rating
then assigned by such Rating Agency to any class of certificates.
Investment of Funds in the Accounts
Amounts on deposit in such accounts may be invested in United States
government securities and other investments specified in the pooling and
servicing agreement. See "Description of the Certificates--Accounts" in the
prospectus for a listing of permitted investments.
Withdrawals from the Collection Account
The master servicer may withdraw funds from the Collection Account for
the following purposes:
o to remit Available Funds and prepayment premiums to the Distribution
Account,
o to pay or reimburse itself, the trustee or the fiscal agent for Advances
and interest on Advances,
o to pay the unpaid portion of the master servicing fee and special
servicing fee (in the case of the
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master servicing fee, from interest received on the related Mortgage Loan),
o to pay the trustee fee to the trustee,
o to pay to itself any investment income earned on funds deposited in the
Collection Account,
o to pay Prepayment Interest Excess received in the preceding Collection
Period to itself as additional servicing compensation,
o to pay to itself or the special servicer other amounts constituting
additional servicing compensation,
o to pay to the depositor, the applicable seller or other purchaser with
respect to each Mortgage Loan or REO Property that has been purchased or
repurchased by it, all amounts received on such loan or property during the
related Collection Period and subsequent to the date as of which the amount
required to effect the purchase or repurchase was determined,
o to reimburse or pay itself, the special servicer, the trustee, the
depositor and/or the fiscal agent for other unreimbursed expenses that are
reimbursable under the pooling and servicing agreement,
o to satisfy any indemnification obligations of the trust fund under the
pooling and servicing agreement,
o to pay to the trustee amounts requested by it to pay taxes on certain net
income with respect to REO Properties,
o to withdraw any amount mistakenly deposited into the Collection Account,
and
o to clear and terminate the Collection Account upon termination and
liquidation of the trust fund.
Enforcement of "Due-on-Sale" Clauses
The special servicer will exercise or waive "due-on-sale" clauses in
Mortgage Loan documents in accordance with the servicing standard. However, if
the then-outstanding principal balance of a Mortgage Loan is at least 2% of the
then-outstanding principal balance of all Mortgage Loans in the trust fund, the
special servicer may waive a "due-on-sale" clause only if it first obtains
written confirmation from each Rating Agency that the waiver will not result in
a qualification, downgrade or withdrawal of the rating then assigned by the
Rating Agency to any class of certificates. The special servicer must use
reasonable efforts to require the new borrower to pay the cost of the Rating
Agency confirmation. The master servicer will advance any costs not paid by the
new borrower as a Servicing Advance (unless the Advance would be
nonrecoverable).
If the special servicer waives the "due-on-sale" clause it may either:
o release the original borrower from liability under the Mortgage Loan and
substitute the new owner as the borrower, or
o enter into an assumption agreement with the new owner of the Mortgaged
Property.
To the extent permitted by law, the special servicer will enter into an
assumption or substitution agreement only if the credit status of the
prospective new owner is in compliance with:
o the special servicer's regular commercial mortgage origination or servicing
standards and criteria,
o the terms of the Mortgage Loan, and
o any other standards set by the special servicer consistent with the
servicing standard.
If a Mortgage Loan is assumed, the only permitted modifications that may
be made as part of the assumption are those described below under "--Amendments,
Modifications and Waivers."
The master servicer and special servicer will each receive 50% of
assumption fees on non-Specially Serviced Mortgage Loans paid by the borrower or
the new owner as additional servicing compensation. The special servicer will
receive 100% of the assumption fees on Specially Serviced Mortgage Loans as
additional servicing compensation. See "Certain Legal Aspects of the Mortgage
Loans--Enforceability of Certain Provisions--Due-on-Sale Provisions" in the
prospectus.
In a bankruptcy or similar proceeding involving a Mortgaged Property, a
court may substitute a new owner or impose a junior or senior lien on the
Mortgaged Property, without the consent of the master servicer, the special
servicer or the trustee.
Enforcement of "Due-on-Encumbrance" Clauses
Most of the Mortgage Loans contain a "due-on-encumbrance" clause, which
generally either:
o provides that the Mortgage Loan will (or may at the related mortgagee's
option) become due and
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payable upon the creation of any lien or other encumbrance on the Mortgaged
Property, or
o requires the consent of the related mortgagee to the creation of any lien
or other encumbrance on the Mortgaged Property.
Such clauses usually permit the owner of the Mortgage Loan to either:
o accelerate the payments due on the Mortgage Loan, or
o withhold its consent to the creation of any such lien or other encumbrance.
The special servicer may in accordance with the servicing standard
either exercise or waive the trust fund's rights under the "due-on-encumbrance"
clause. However, the special servicer may not consent to the creation of any
lien or encumbrance, unless it has first obtained written confirmation from each
Rating Agency that such consent will not result in a qualification, downgrade or
withdrawal of the rating then assigned by the Rating Agencies to any class of
certificates.
The special servicer must use reasonable efforts to require the borrower
to pay the cost of such Rating Agency confirmation. The master servicer will
advance any costs not paid by the borrower as a Servicing Advance (unless the
Advance would be nonrecoverable).
The master servicer or the special servicer may forbear from enforcing
any "due-on-encumbrance" provision in connection with any junior or senior lien
on a Mortgaged Property imposed in a bankruptcy proceeding involving the
Mortgaged Property without obtaining a Rating Agency confirmation.
Inspections
The special servicer is responsible for inspecting the Mortgaged
Properties securing Specially Serviced Mortgage Loans and REO Properties. The
master servicer is responsible for inspecting the other Mortgaged Properties.
Each Mortgaged Property and REO Property will be inspected at least once every
two years and after it becomes a Specially Serviced Mortgage Loan. If a Mortgage
Loan has a then current principal balance of at least or is a Specially Serviced
Mortgaged Loan, the related Mortgaged Property will be inspected at least once
every year. The annual inspections will be done at the expense of the servicer
performing the inspection. The inspection done at the time a Mortgage Loan
becomes a Specially Serviced Mortgage Loan will be an expense of the trust. The
master servicer and the special servicer will cause a written inspection report
to be prepared as soon as reasonably possible after completing the inspection. A
copy of each inspection report must be delivered to the trustee and the
operating adviser within 15 days after its preparation.
Realization Upon Mortgage Loans
Standards for Conduct Generally in Effecting
Foreclosure or the Sale of Defaulted Loans
The master servicer will advance costs and expenses of a foreclosure or
other acquisition as a Servicing Advance, unless the Advance would be
nonrecoverable.
The special servicer may proceed with a non-judicial foreclosure under
the laws of the state where the property is located. The special servicer need
not pursue a deficiency judgment against the borrower or any other party if the
laws of the state do not permit a deficiency judgment after a non-judicial
foreclosure. The special servicer may also refrain from seeking a deficiency
judgment if it determines that the likely recovery would not warrant the cost,
time, expense and/or exposure of pursuing the deficiency judgment and delivers
an officer's certificate to the trustee to that effect.
The special servicer may not obtain title or possession or take any
other action regarding a Mortgaged Property on behalf of the trust fund, if as a
result the trustee or the trust fund would be considered to hold title, to be a
"mortgagee-in-possession", or to be an "owner" or "operator" within the meaning
of the Comprehensive Environmental Response, Compensation and Liability Act of
1980 or any comparable law. However, the special servicer may proceed with such
steps if it has determined, based on an updated environmental assessment report
prepared by an independent person who regularly conducts environmental audits,
that:
o the Mortgaged Property complies with applicable environmental laws or, if
not, after consultation with an environmental consultant, that it would be
in the trust fund's best economic interest to take necessary corrective
measures, and
o there are no circumstances present at the Mortgaged Property relating to
the use, management or disposal of hazardous materials for which
investigation, testing, monitoring,
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containment, clean-up or remediation could be required under current
federal, state or local law or regulation, or that, if any such hazardous
materials are present for which such action could be required, after
consultation with an environmental consultant, it would be in the trust
fund's best economic interest to take such actions.
If title to any Mortgaged Property is acquired in foreclosure or by
deed-in-lieu of foreclosure, the deed or certificate of sale will be issued to
the trustee, or to its nominee (which will not include the master servicer or
the special servicer) or to a separate trustee or co-trustee on behalf of the
trustee, as the holder of the REMIC I certificates and as trustee for the
holders of the certificates. Notwithstanding any such acquisition of title and
cancellation of the related Mortgage Loan, the Mortgage Loan will be considered
to be a Mortgage Loan held in the trust fund until the related REO Property is
sold by the trust fund. The principal balance of the loan will be reduced by Net
REO Proceeds allocated to it.
If the trust fund acquires a Mortgaged Property by foreclosure or
deed-in-lieu of foreclosure upon a default of a Mortgage Loan, the special
servicer must administer the Mortgaged Property so that it qualifies at all
times as "foreclosure property" within the meaning of section 860G(a)(8) of the
Internal Revenue Code. An "independent contractor," within the meaning of
applicable Treasury regulations, must manage and operate any Mortgaged Property,
unless the special servicer provides the trustee with an opinion of counsel that
the operation and management of the property other than through an independent
contractor will not cause the property to fail to qualify as "foreclosure
property". The legal opinion will be an expense of the trust fund. Generally,
REMIC I will not be taxed on income received on Mortgaged Property which
constitutes "rents from real property," under section 856(c)(3)(A) of the
Internal Revenue Code and the related Treasury regulations.
"Rents from real property" do not include the portion of any rental
based on the net income or gain of any tenant or sub-tenant. No determination
has been made whether rent on any of the Mortgaged Properties meets this
requirement.
"Rents from real property" include charges for services customarily
furnished or rendered in connection with the rental of real property, whether or
not the charges are separately stated. Services furnished to the tenants of a
particular building will be considered customary if, in the geographic market in
which the building is located, tenants in buildings that are of a similar class
are customarily provided with the service. The depositor has not determined
whether the services furnished to the tenants of the Mortgaged Properties are
"customary" within the meaning of applicable regulations. It is therefore
possible that a portion of the rental income from a Mortgaged Property owned by
the trust fund would not constitute "rents from real property."
Net income from a trade or business operated or managed by an
independent contractor on a Mortgaged Property owned by REMIC I does not
constitute "rents from real property."
Any of the foregoing types of income may instead constitute "net income
from foreclosure property," which would be taxable to REMIC I at the highest
marginal federal corporate rate, which is currently 35%. However, phase out
rates of 39% for taxable income between $100,000 and $335,000 and 38% for
taxable income between $15,000,000 and $18,333,333 apply. REMIC I may also be
subject to state or local taxes on such amounts.
Any such taxes would be chargeable against the related income for
purposes of determining the Net REO Proceeds available for distribution to
holders of certificates. The pooling and servicing agreement allows the special
servicer to cause the trust fund to earn "net income from foreclosure property"
that is subject to tax, if it determines that the net after-tax benefit to
certificateholders is greater than what would be realized under another method
of operating or leasing the Mortgaged Property. See "Material Federal Income Tax
Consequences--Federal Income Tax Consequences for REMIC Certificates--Taxation
of the REMIC", "--Federal Income Tax Consequences for REMIC
Certificates--Taxation of REMIC Regular Certificates" and "--Federal Income Tax
Consequences for REMIC Certificates--Taxation of Holders of Residual
Certificates" in the prospectus.
Sale of Specially Serviced Mortgage Loans and REO Properties
The special servicer may offer to sell a Specially Serviced Mortgage
Loan or an REO Property, if it determines that:
o no satisfactory arrangements can be made to collect delinquent payments,
and
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o the sale would be in the best economic interests of the trust fund.
The special servicer must give the trustee written notice that it is
contemplating a sale at least 10 business days before considering any further
action. The trustee must notify the operating adviser that it has received the
notice from the special servicer within five business days. The operating
adviser may purchase the loan or property, directly or through an affiliate, for
cash equal to the Repurchase Price.
If the operating adviser (or a designated affiliate) fails to purchase
the loan or property within 30 days after the operating advisor receives notice,
either the special servicer or the master servicer, in that order of priority,
may purchase the loan or property, directly or through an affiliate, for cash
equal to the Repurchase Price.
If none of the forgoing purchases the loan or property, the special
servicer may then offer to sell the loan or property if and when the special
servicer determines that the sale would be in the best economic interests of the
trust fund. The special servicer must sell the loan or property within the
period specified in the pooling and servicing agreement, including extensions.
The operating adviser, the master servicer and the special servicer may
offer to purchase any such loan or property. The special servicer will accept
any offer received from any person:
o that it determines to be a fair price, unless the highest offeror is the
special servicer or one of its affiliates, or
o that the trustee determines to be a fair price, if the highest offeror is
the special servicer or one of its affiliates.
In making such a fairness determination, the special servicer or trustee
may rely upon an updated independent appraisal. Any offer from the depositor,
the master servicer, the special servicer, any borrower, the manager of a
Mortgaged Property or any of their affiliates in the amount of the Repurchase
Price shall be deemed to be a fair price.
Neither the trustee (in its individual capacity) nor any of its
affiliates may purchase or offer to purchase the loan or property.
The special servicer may accept an offer other than the highest offer if
it determines that accepting the offer would be in the best interests of the
certificateholders. For example, the person making the lower offer could be more
likely to perform its obligations or the lower offer may have more favorable
terms.
Amendments, Modifications and Waivers
Subject to any restrictions applicable to REMICs, and to limitations
under the pooling and servicing agreement, the master servicer may amend any
term of any loan that is not a Specially Serviced Mortgage Loan except for the
following:
o the maturity date, interest rate, principal balance, amortization term or
payment frequency (each, a "Money Term"); and
o the events of default.
Subject to restrictions applicable to REMICs and to limitations in the
pooling and servicing agreement, the special servicer may agree to a
modification, waiver or amendment of the terms of any Specially Serviced
Mortgage Loan if, in the special servicer's reasonable judgment:
o the related borrower is in default or default is reasonably foreseeable,
and
o the modification, waiver or amendment would increase the recovery to
certificateholders on a net present value basis.
See "--The Operating Adviser".
Examples of the types of modifications, waivers or amendments to which
the special servicer may agree include:
o reducing the amounts owing under the loan by forgiving principal, accrued
interest and/or any prepayment premium,
o reducing the amount of the monthly payment on the loan, including a
reduction in the interest rate,
o not enforcing any right granted under any note or mortgage relating to
the loan,
o extending the maturity date of the loan, and/or
o accepting a principal prepayment during a Lock-out Period.
However, the special servicer may not permit a borrower to extend the
maturity date to a date later than:
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o two years before the Rated Final Distribution Date, or
o 10 years before any ground lease that secures the loan expires.
Modifications of a Mortgage Loan that forgive principal or interest will
cause Realized Losses on the loan. Such Realized Losses will be allocated among
the classes of certificates as described under "Description of the
Certificates--Realized Losses and Allocations of Certain Expenses".
The Trustee
LaSalle Bank National Association will act as trustee. The address of
the trustee's corporate trust office is:
135 South LaSalle Street
Suite 1625
Chicago, Illinois 60674
Attn: Asset-Backed Securities
Trust Service Group --
Commercial Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through
Certificates, 1999-C1
Resignation and Removal of Trustee
The trustee may resign at any time by notifying the depositor, the
master servicer, the special servicer and the Rating Agencies in writing. The
trustee's resignation will also remove the fiscal agent. The master servicer
will appoint the successor trustee and fiscal agent. Before appointing a
successor trustee, the master servicer must obtain confirmation from the Rating
Agencies that the successor trustee's appointment will not adversely affect the
rating then assigned by the Rating Agencies to any of the certificates. If any
successor fiscal agent is not rated by Moody's in one of its two highest
long-term unsecured debt rating categories and by Duff & Phelps in one of its
three highest long-term unsecured debt rating categories, written confirmation
will be obtained from each Rating Agency that the successor fiscal agent's
appointment will not adversely affect the rating then assigned by the Rating
Agency to any certificates. The resigning trustee must pay any cost of obtaining
the Rating Agency confirmations. If the successor trustee and successor fiscal
agent are not appointed within 30 days after the notice of resignation, the
resigning trustee and departing fiscal agent may petition a court of competent
jurisdiction to appoint a successor trustee and successor fiscal agent.
The depositor or the master servicer may remove the trustee and the
fiscal agent if, among other things:
o the trustee becomes ineligible to continue as such under the pooling and
servicing agreement,
o the trustee or the fiscal agent becomes incapable of acting,
o the trustee or the fiscal agent is adjudged bankrupt or insolvent,
o a receiver is appointed for the trustee, the fiscal agent or their
property, or
o any public officer takes charge or control of the trustee, the fiscal
agent or their property.
The holders of certificates evidencing a majority of the total voting
rights may remove the trustee and the fiscal agent upon written notice to the
master servicer, the special servicer, the depositor, the trustee and the fiscal
agent.
Resignation or removal of the trustee and the fiscal agent is effective
only when the successor trustee (and fiscal agent, if necessary) accepts the
appointment.
Trustee Fee
The pooling and servicing agreement entitles the trustee to a monthly
fee from amounts in the Collection Account. The fee is equal to .003% of the
then outstanding principal balance of each Mortgage Loan calculated on the basis
of a 360-day year consisting of twelve 30-day months.
Indemnification of Trustee
The trust fund will indemnify the trustee, the fiscal agent and their
directors, officers, employees, agents and affiliates against any and all
losses, liabilities, damages, claims or expenses (including reasonable
attorneys' fees) arising under the pooling and servicing agreement or the
certificates (but only to the extent that they are expressly reimbursable under
the pooling and servicing agreement or are unanticipated expenses incurred by
the REMIC). However, the indemnification will not apply to matters resulting
from the negligence, misrepresentation, fraud, bad faith or willful misconduct
of the indemnified person. The trustee need not expend or risk its own funds or
otherwise incur financial liability in performing its duties under the pooling
and servicing agreement, or in exercising its rights or powers, if in the
trustee's opinion the
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repayment of such funds or adequate indemnity against the risk of liability is
not reasonably assured.
The master servicer and the special servicer will each indemnify the
trustee, the fiscal agent and their directors, officers, employees, agents and
affiliates for similar losses related to the willful misconduct, fraud,
misrepresentation, bad faith and/or negligence in the performance or negligent
disregard of the master servicer's or the special servicer's duties under the
pooling and servicing agreement.
Duties of the Trustee
If no event of default has occurred of which the trustee has actual
knowledge and after the curing of all events of default that may have occurred,
the trustee must perform only those duties specifically imposed under the
pooling and servicing agreement. If an event of default has occurred and has not
been cured, the trustee will be required to use the same degree of skill and
care in exercising its rights and powers under the pooling and servicing
agreement that a prudent person would use in its own personal affairs under
similar circumstances. Upon receipt of the various certificates, reports or
other documents required to be furnished to it, the trustee must examine the
documents and determine whether they conform on their face to the requirements
of the pooling and servicing agreement.
If the master servicer fails to make a required Advance, the trustee
must make the Advance unless it deems the Advance nonrecoverable. See
"--Advances".
Except for funds held by the trustee, the trustee and the fiscal agent
will not be accountable for:
o the use or application by the depositor of any certificates or the proceeds
of the certificates,
o the use or application of funds paid to the depositor, the master servicer
or the special servicer relating to the Mortgage Loans, or
o the use or application of funds deposited in or withdrawn from the
Collection Account or the Distribution Account by the depositor, the master
servicer or the special servicer.
The trustee, the fiscal agent, the special servicer and master servicer
will make no representation as to:
o the validity or sufficiency of the pooling and servicing agreement, the
certificates, this prospectus supplement or the prospectus, or
o the validity, enforceability or sufficiency of the Mortgage Loans or
related documents.
The Fiscal Agent
ABN AMRO Bank N.V., a Netherlands banking corporation that is the
trustee's indirect parent, will act as fiscal agent for the trustee. The fiscal
agent must make any Advance the trustee is required to make but does not make.
However, the fiscal agent need not make any Advance that it deems
nonrecoverable.
See "--Advances".
If the trustee resigns or is removed, the fiscal agent will resign or
will be removed. The initial fiscal agent need not act in such capacity at any
time that LaSalle Bank National Association is not the trustee.
The fiscal agent that resigned or was removed will pay the cost, if any,
of obtaining such Rating Agency confirmation, unless the trustee or fiscal agent
was removed without cause by holders of a majority of the total voting rights,
in which case the costs will be an Additional Trust Fund Expense.
Servicing Compensation and Payment of Expenses
The master servicer will be entitled to a monthly servicing fee for each
Mortgage Loan. The fee is calculated at the per annum rate listed in Appendix II
based on the then outstanding principal balance of the loan. Any master
servicing fee rate calculated on an Actual/360 basis will be recomputed on a
30/360 basis for purposes of calculating the Net Mortgage Rate.
The master servicing fee for each loan will be retained by the master
servicer from payments and collections (including insurance proceeds and
liquidation proceeds) on the loan. The master servicer may also retain as
additional servicing compensation:
o all investment income earned on amounts in the Reserve Accounts (to the
extent consistent with applicable law and the related Mortgage Loan
documents) and the Collection Account,
o all amounts collected on the Mortgage Loans (except Specially Serviced
Mortgage Loans) in the nature of late payment charges, late fees, loan
service transaction fees, demand fees, beneficiary statement charges and
similar fees
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and charges (but excluding prepayment premiums or default interest),
o 50% of any extension fees, modification fees, consent fees (other than loan
service transaction fees) or assumption fees collected on the Mortgage
Loans (except Specially Serviced Mortgage Loans),
o all NSF check charges (including NSF check charges arising from Specially
Serviced Mortgage Loans), and
o any Prepayment Interest Excess (to the extent not offset against any
Prepayment Interest Shortfall).
If Midland resigns or is terminated as the master servicer and the
successor master servicer agrees to perform the services of the master servicer
for an amount less than the master servicing fee, the certificateholders will
not receive any portion of the excess master servicing fee.
The master servicer will pay all expenses incurred by it in connection
with its responsibilities under the pooling and servicing agreement (subject to
reimbursement as provided in the agreement), including all fees of any
sub-servicers retained by it.
Special Servicing
Ability of Operating Adviser to Remove Special Servicer
ORIX Real Estate Capital Markets, LLC will be the initial special
servicer. The operating advisor may at any time remove the special servicer
without cause and appoint a successor special servicer. The removal of the
special servicer and appointment of a successor special servicer will be
effective only when:
o the successor special servicer has assumed in writing all of the
responsibilities, duties and liabilities of the special servicer under the
pooling and servicing agreement, and
o each Rating Agency confirms to the trustee in writing that such appointment
and assumption will not result, in and of itself, in a downgrading,
withdrawal or qualification of the rating then assigned by the Rating
Agency to any class of certificates.
The operating adviser must pay the cost of obtaining such Rating Agency
confirmation. The removed special servicer may receive all amounts accrued and
owing to it on or prior to the effective date of the removal.
Duties of Special Servicer
The duties of the special servicer relate primarily to Specially
Serviced Mortgage Loans and to any REO Property. A "Specially Serviced Mortgage
Loan" is any Mortgage Loan for which at least one of the following conditions
exist:
Loans with Monetary Defaults
o The borrower is at least 60 days delinquent in paying principal and
interest or other obligation(regardless of whether P&I Advances have been
reimbursed), or
o the borrower has failed to make a balloon payment (except where the master
servicer and the special servicer agree in writing that the loan is likely
to be paid in full within 30 days after such default);
however, such loans cease to be Specially Serviced Mortgage Loans when:
o the borrower brings the loan current (under workout terms agreed to by the
special servicer for a balloon payment default),
o the borrower makes three consecutive full and timely monthly payments, and
o no other circumstances exist that would cause the loan to be characterized
as a Specially Serviced Mortgage Loan.
Loans that are likely to have Monetary Defaults
o The borrower has expressed to the master servicer an inability to pay or
a hardship in paying the loan in accordance with its terms,
o Three consecutive P&I Advances have been made on the loan (regardless of
whether reimbursed),
o the master servicer has received notice of a foreclosure or threatened
foreclosure of any lien on the property securing the loan,
o the master servicer or special servicer has received notice that the
borrower has become the subject of any bankruptcy, insolvency or similar
proceeding, admitted in writing the inability to pay its debts as they come
due or made an assignment for the benefit of creditors, or
o the master servicer proposes to commence foreclosure or other workout
arrangements;
however, such loans cease to be Specially Serviced Mortgage Loans when:
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o the above circumstances cease to exist in the good faith judgment of the
special servicer, and
o no other circumstances exist that would cause the
loan to be characterized as a Specially Serviced Mortgage Loan.
Loans with Nonmonetary Defaults
o The master servicer or the special servicer has notice that a nonmonetary
default that materially and adversely affects the interests of the
certificateholders has occurred and the default remains uncured after the
specified grace period (or, if no grace period is specified, after 60
days);
however, such loans cease to be Specially Serviced Mortgage Loans when:
o the default is cured, and
o no other circumstances exist that would cause the loan to be characterized
as a Specially Serviced Mortgage Loan.
A default requiring a Servicing Advance will be deemed to materially and
adversely affect the interests of certificateholders.
The special servicer will prepare an asset status report within 30 days
after a loan becomes a Specially Serviced Mortgage Loan. The asset status report
will be delivered to the operating adviser and each Rating Agency.
Special Servicer Compensation
The special servicer is entitled to a monthly special servicing fee. The
special servicing fee is an amount equal to 1/12th of 0.25% of the Stated
Principal Balance of each Specially Serviced Mortgage Loan. The special servicer
will also receive a disposition fee on any Specially Serviced Mortgage Loan or
REO Property sold, transferred or otherwise liquidated equal to 1% of:
o the proceeds of the sale or liquidation of, or any partial or unscheduled
payment with respect to, any Specially Serviced Mortgage Loan or REO
Property
less
o any broker's commission and related brokerage referral fees.
No disposition fee will be paid in connection with the repurchase of a
Mortgage Loan as described under "Description of the Mortgage
Pool--Representations and Warranties; Repurchase".
The special servicer is also entitled to a workout fee equal to 1.0% of
the Net Collections received by the master servicer or the special servicer on
each Corrected Mortgage Loan. "Net Collections" means all payments of interest
and principal and all prepayment premiums.
A loan which has ceased to be a Specially Serviced Mortgage Loan by
virtue of a cure resulting from a written modification, restructuring or workout
negotiated by the special servicer is a "Corrected Mortgage Loan".
If any Corrected Mortgage Loan again becomes a Specially Serviced
Mortgage Loan, any right to the workout fee terminates for the initial
modification, restructuring or workout. However, the special servicer will
receive a new workout fee for the loan upon resolution or workout of a
subsequent event of default under the loan. If the special servicer is
terminated for any reason, it will retain the right to receive any workout fees
payable on Mortgage Loans that became Corrected Mortgage Loans while it acted as
special servicer. The successor special servicer will not be entitled to any
portion of such workout fees.
The special servicer may also retain as additional servicing
compensation:
o all investment income earned on amounts on deposit in any REO Account,
o if permitted under the Mortgage Loan, late payment charges, late fees,
assumption fees, loan modification fees, extension fees, loan service
transaction fees, beneficiary statement charges or similar items that are
collected on Specially Serviced Mortgage Loans, and
o if permitted under the Mortgage Loan, 50% of assumption fees, modification
fees, consent fees (other than loan service transaction fees) and extension
fees on Mortgage Loans that are not Specially Serviced Mortgage Loans.
Additional special servicing compensation does not include default
interest or prepayment premiums or any other amount required to be deposited or
retained in the Collection Account.
Each of these fees, plus certain special servicing expenses, will be
paid from funds that would otherwise be used to pay principal and interest on
the certificates.
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The Operating Adviser
Selection
Holders of more than 50% of the certificate balance of the Controlling
Class may appoint an operating adviser to represent their interests. The
"Controlling Class" is the most subordinate class of Principal Balance
Certificates that still has at least 25% of its original certificate balance
outstanding.
Rights and Powers
The operating adviser may advise the special servicer about the
following matters:
o foreclosure or similar conversion of the ownership of properties securing
Specially Serviced Mortgage Loans that are in default, including acquiring
an REO Property,
o amendment, waiver or modification of a Specially Serviced Mortgage Loan,
o proposed sale of a defaulted Mortgage Loan or REO Property, except upon
termination of the trust fund as described under "Description of the
Certificates--Optional Termination",
o acceptance of a discounted payoff,
o determination to bring an REO Property into compliance with environmental
laws or to address hazardous materials located at an REO Property,
o release of collateral, other than in accordance with the terms or upon
satisfaction of a loan,
o acceptance of substitute or additional collateral,
o any waiver of a "due-on-sale" or "due-on-encumbrance" clause,
o acceptance of an assumption agreement releasing a borrower from liability
under a loan, and
o adoption, amendment or modification of any asset status report.
The operating adviser may object to the above actions in writing within
10 business days after being notified of the proposed action and provided with
all reasonably requested information. The operating adviser will be considered
to have approved any such action if it does not object within 10 days. If the
operating adviser objects to any action, the special servicer will consider the
objection and proposed action based on the special servicer's servicing standard
under the pooling and servicing agreement.
The operating adviser also may advise the special servicer to take, or
to refrain from taking, such other actions as the operating adviser deems
advisable. However, the operating adviser may never require the special servicer
to violate the pooling and servicing agreement, including its obligation to act
in accordance with the servicing standard.
Limitation on Liability of Operating Adviser
The operating adviser and its officers, directors, employees and owners
will have no liability to certificateholders for any action taken, or for
refraining from the taking of any action, in good faith or for errors in
judgment. By accepting certificates, each certificateholder agrees that the
operating adviser:
o may have special relationships and interests that conflict with those of
holders of one or more classes of certificates,
o may act solely in the interests of the holders of the Controlling Class,
o has no duties to certificateholders, except for holders of the Controlling
Class,
o may act to favor the interests of the Controlling Class over the interests
of other classes, and
o will violate no duty and incur no liability by acting solely in the
interests of the Controlling Class.
No certificateholder may take legal action against the operating adviser
because it acted solely in the interests of the Controlling Class.
Sub-Servicers
The master servicer and special servicer may each delegate its servicing
obligations to one or more third-party sub-servicers. Despite any such
delegation, the master servicer or special servicer remains directly responsible
for the delegated duties and for the acts and omissions of any sub-servicer. The
master servicer or the special servicer must monitor the performance of any
sub-servicer that it uses. 10 Mortgage Loans (2.1%) are currently serviced by
third-party servicers that are expected to continue to service such loans as
sub-servicers. Each sub-servicing agreement must provide that if the master
servicer or the special servicer is no longer acting in such capacity under the
pooling and servicing agreement, the trustee or any successor to the master
servicer or special servicer may:
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o assume the master servicer's or special servicer's rights under the
sub-servicing agreement, and/or
o terminate the sub-servicer without payment of a termination fee.
The master servicer and special servicer are solely responsible for the
fees owed to any sub-servicer they retain, even if such fees are more than the
fees they are receiving under the pooling and servicing agreement. Generally,
each sub-servicer will be reimbursed for any expenses for which the master
servicer or special servicer would be reimbursed under the pooling and servicing
agreement. See "-- Servicing Compensation and Payment of Expenses".
Reports to Certificateholders; Where You Can Find More Information
Monthly Reports
On each distribution date, the trustee will issue a statement based on
information that the master servicer furnishes. The trustee will mail or make
available electronically the statement to the certificateholders, the depositor,
the paying agent, the underwriters, the master servicer, the operating adviser
and each Rating Agency. The trustee will use the form of monthly distribution
statement included as Appendix VI to this prospectus supplement. The information
will include the following:
o For each class of certificates and for each $1,000 of certificate balance
or notional amount of the class:
1. the Principal Distribution Amount and the amount of Available Funds
allocable thereto;
2. Distributable Certificate Interest and the amount of Available Funds
allocable thereto;
3. any Class Interest Shortfall allocable to the class;
4. the certificate balance after giving effect to the distribution of
amounts in respect of the Principal Distribution Amount on the
distribution date; and
5. the amount of any prepayment premiums received during the related
Collection Period and distributed to the class;
o The pass-through rate applicable to the interest only certificates and the
class E certificates for the distribution date;
o The amount of any P&I Advances by the master servicer, the trustee or the
fiscal agent included in the amounts distributed to the certificateholders;
o Realized Losses and Expense Losses and their allocation to the certificate
balance of any class of certificates;
o The Stated Principal Balance of the Mortgage Loans as of the due date
preceding the distribution date;
o The number and aggregate principal balance of Mortgage Loans:
1. delinquent 30-59 days,
2. delinquent 60-89 days,
3. delinquent 90 or more days,
4. as to which foreclosure proceedings have been commenced, and
5. that otherwise constitute Specially Serviced Mortgage Loans;
o For each Specially Serviced Mortgage Loan:
1. the amount of Servicing Advances made during the related Collection
Period,
2. the amount of the P&I Advances made on the Distribution Date; and
3. the aggregate amount of unreimbursed Servicing Advances and P&I
Advances for such loan;
o For any Mortgage Loan that became an REO Mortgage Loan during the preceding
calendar month, the principal balance of such Mortgage Loan as of the date
it became an REO Mortgage Loan;
o For any REO Property sold during the related Collection Period:
1. the date on which the special servicer determined that it has
collected all amounts that it expects to recover on the REO Property;
2. the amount of the proceeds of such sale deposited into the Collection
Account; and
3. the aggregate amount of REO Proceeds and Net REO Proceeds (in each
case other than liquidation proceeds) and other revenues collected by
the special servicer for each REO Property during the related
Collection Period and credited to the Collection Account;
o The outstanding principal balance of each REO Mortgage Loan as of the close
of business on the preceding due date;
o The appraised value of each REO Property as shown on the most recent
appraisal;
o The amount of the servicing compensation and additional servicing
compensation paid to the master servicer for the distribution date;
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o The amount of any special servicing fee, disposition fee or workout fee
paid to the special servicer for the distribution date;
o The amount of default interest received during the related Collection
Period;
o The amount of any Appraisal Reductions effected during the related
Collection Period on a loan-by-loan basis and the total Appraisal
Reductions as of the distribution date; and
o Any other information required under the pooling and servicing
agreement.
Within a reasonable period of time after the end of each calendar year,
the trustee will furnish to each person who at any time during the calendar year
owned an offered certificate a statement listing the amount of principal and
interest paid to the person during the year. The Trustee may satisfy this
obligation by delivering substantially comparable information pursuant to any
requirements of the Internal Revenue Code.
In addition, the trustee will forward to each certificateholder any
additional information regarding the Mortgage Loans that the master servicer or
the special servicer, in its sole discretion, delivers to the trustee for
distribution to the certificateholders.
Some of the information made available in the distribution date
statements referred to above may be obtained electronically from the trustee as
follows:
1. by facsimile through the trustee's ASAP System by calling (714) 282-5518
and requesting statement number 427;
2. on the Internet at www.lnbabs.com; or
3. on its electronic bulletin board service at (714) 282-3990.
Loan Portfolio Analysis System
The master servicer maintains a computerized database that has
information on the various commercial mortgage-backed securities transactions
that it services. The master servicer commonly refers to the database as the
"Loan Portfolio Analysis System". The master servicer will provide electronic,
on-line access to the database to certificateholders, prospective transferees
and other appropriate persons. You may contact Brad Hauger at (816) 435-5175 to
arrange access.
Other Available Information
The master servicer or special servicer will notify or report to the
trustee about:
o any notice from a borrower or insurance company of an upcoming full or
partial prepayment of a loan, or
o any other occurrences of which the master servicer or special servicer is
aware that it determines may materially affect a Mortgage Loan or REO
Property, including all loan extensions.
A request for quotation of the amount necessary to pay off a loan will
not be regarded as a prepayment notice. The trustee will forward the notice to
each certificateholder, each Rating Agency, the depositor, the underwriters, the
operating adviser and the applicable seller.
In addition to the other reports and information made available and
distributed under the pooling and servicing agreement by the trustee, the master
servicer and the special servicer will also make available any other information
relating to the Mortgage Loans, the Mortgaged Properties or the borrowers for
review by the depositor, the underwriters, the operating adviser, the trustee
and the Rating Agencies. The master servicer and the special servicer will also
make such information available to any person that the trustee at the request of
the master servicer or special servicer certifies is a certificateholder or
potential certificateholder. The trustee may base the certification on any
information from the certificateholder or the potential certificateholder that
it may require in its sole discretion. Such person will be required to pay any
expenses incurred by the trustee in making such certification. The master
servicer and the special servicer are not required to provide the information if
doing so is prohibited by applicable law or by any documents related to a
Mortgage Loan. The master servicer and the special servicer may adopt reasonable
rules and procedures governing access to the information, which may include a
requirement that the person requesting such information execute an agreement
governing the availability, use and disclosure of such information. The
agreement may provide for the indemnification of the master servicer or the
special servicer for any liability or damage that may arise from the use or
disclosure of the information.
The following are available for your review at the trustee's offices
during normal business hours:
o the pooling and servicing agreement,
o all monthly statements to certificateholders,
o annual compliance statements, and
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o annual accountants' reports.
Unless prohibited by applicable law or the Mortgage Loan documents, the
following will be available for your review at the trustee's offices during
normal business hours:
o the property inspection reports,
o all modifications, waivers and amendments of the Mortgage Loans, and
o officer's certificates and other evidence supporting a determination that
an Advance is nonrecoverable.
The master servicer, the special servicer and the trustee may impose a
reasonable charge for expenses of providing copies or access to the above
information. The Rating Agencies and the operating adviser will not have to pay
any such charge.
Filings with the SEC
The master servicer will, on behalf of the trust fund, prepare, sign and
file with the Securities and Exchange Commission all reports, statements and
information respecting the trust fund that the master servicer or the depositor
determines are required to be filed with the SEC. The master servicer will file
each report, statement and information on or prior to the required filing date.
However, the depositor will file with the SEC, within 15 days of the closing
date, a Form 8-K together with the pooling and servicing agreement.
The trustee, the fiscal agent, the master servicer and the special
servicer are not responsible for the accuracy or completeness of any information
supplied to it by a borrower or other third party for inclusion in any notice,
report or information furnished or provided by the master servicer, the special
servicer or the trustee under the pooling and servicing agreement. The trust
fund will indemnify and hold harmless the master servicer, the special servicer,
the trustee and the fiscal agent against any loss, liability or expense incurred
in connection with any legal action relating to any statement or omission or
alleged statement or omission in any information supplied by a borrower or other
third party, including any liability related to the inclusion of the information
in any report filed with the SEC.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
For federal income tax purposes, three separate "real estate mortgage
investment conduit" ("REMIC") elections will be made with respect to the trust
fund, creating three REMICs. Upon the issuance of the offered certificates,
Morrison & Hecker L.L.P. will deliver its opinion, generally to the effect that,
assuming compliance with all provisions of the pooling and servicing agreement:
o each pool of assets with respect to which a REMIC election is made will
qualify as a REMIC under the Internal Revenue Code;
o the class A-1, class A-2, class X, class B, class C, class D, class E,
class F, class G, class H, class J, class K, class L, class M, class N,
class O and class P certificates will be, or will represent ownership of,
REMIC "regular interests"; and
o the class R-I, class R-II and class R-III certificates, respectively, will
be the sole "residual interest" in the related REMIC.
Because they represent regular interests, the certificates generally
will be treated as newly originated debt instruments for federal income tax
purposes. Holders of the certificates will be required to include in income all
interest on the certificates in accordance with the accrual method of
accounting, regardless of a certificateholder's usual method of accounting. The
class A-1, class A-2, class B, class C, class D and class E certificates are not
expected to be treated for federal income tax reporting purposes as having been
issued with original issue discount. The class X and class F certificates are
expected to be deemed to have been issued with original issue discount.
The trustee intends to treat the class X certificates as having no
"qualified stated interest". Accordingly, the class X certificates will be
considered to be issued with original issue discount in an amount equal to the
excess of all distributions of interest expected to be received on the class X
certificates over their respective issue prices (including accrued interest, if
any, unless the holder elects on its federal income tax return to exclude such
amount from the issue price and to recover it on the first distribution date).
Certificateholders will not be able to deduct currently any "negative" amounts
of original issue discount on the class X certificates attributable to rapid
prepayments on the Mortgage Loans, but they may offset these amounts against
future positive accruals of original issue discount, if any. However, certain
holders of a class X certificate may be entitled to a loss deduction if it
becomes certain that such holder will not recover a portion of
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its basis in the certificate. No representation is made as to the timing, amount
or character of such loss, if any.
See "Material Federal Income Tax Consequences--Federal Income Tax
Consequences for REMIC Certificates--Taxation of REMIC Regular
Certificates--Interest and Acquisition Discount" and "--Federal Income Tax
Consequences for REMIC Certificates --Taxation of REMIC Regular
Certificates--Subordinate Certificates--Effects of Defaults, Delinquencies and
Losses" in the prospectus.
For the purposes of determining the rate of accrual of market discount,
original issue discount and premium for federal income tax purposes, it has been
assumed that the Mortgage Loans will prepay at the rate of 0% CPR. No
representation is made as to whether the Mortgage Loans will prepay at that rate
or any other rate. Although it is unclear whether the class X, class C, class D,
class E and class F certificates will qualify as "variable rate instruments"
under treasury regulations, it will be assumed for purposes of determining the
original issue discount for these certificates that the certificates so qualify.
See "Material Federal Income Tax Consequences--Federal Income Tax Consequences
for REMIC Certificates --Taxation of REMIC Regular Certificates--Interest and
Acquisition Discount" in the prospectus.
Certain classes of 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 the certificateholder's purchase price.
Holders of such classes of certificates should consult their own tax advisors
regarding the possibility of making an election to amortize any such premium.
See "Material Federal Income Tax Consequences--Federal Income Tax Consequences
for REMIC Certificates --Taxation of REMIC Regular Certificates" in the
prospectus.
Offered certificates held by a real estate investment trust will
constitute "real estate assets" within the meaning of Section 856(c)(5)(B) of
the Internal Revenue Code, and interest (including original issue discount, if
any) on the offered certificates will be considered "interest on obligations
secured by mortgages on real property or on interests in property" within the
meaning of Section 856(c)(3)(B) of the Internal Revenue Code to the extent that
the respective portions of the assets and income of the REMIC are so treated.
Offered certificates held by a domestic building and loan association will
generally constitute "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 Internal Revenue Code only to the extent of the 33.8%
of the underlying assets of the REMIC which are mortgages secured by residential
property or otherwise are described in Section 7701(a)(19)(c) of the Internal
Revenue Code. A Mortgage Loan that has been defeased with U.S. Treasury
securities will not qualify for any of the characterizations set forth in this
paragraph.
For more information regarding the federal income tax consequences of
investing in the offered certificates, see "Material Federal Income Tax
Consequences--Federal Income Tax Consequences for REMIC Certificates --Taxation
of the REMIC" in the prospectus.
Due to the complexity of these rules and the current uncertainty as to
the manner of their application to the trust fund and certificateholders, it is
particularly important that you consult your own tax advisors regarding the tax
treatment of your acquisition, ownership and disposition of the certificates.
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS
LOCATED IN NEW YORK, TEXAS AND CALIFORNIA
The following discussion summarizes certain legal aspects of Mortgage
Loans secured by real property in New York (14.1%), Texas (12.8%) and California
(10.5%) which are general in nature. These summaries do not purport to be
complete and are qualified in their entirety by reference to the applicable
federal and state laws governing the Mortgage Loans.
New York
Under New York law, while a foreclosure may be accomplished either
judicially or non-judicially, nonjudicial foreclosures are virtually unused
today. Upon a default, a mortgagee may either proceed in equity to foreclose
upon the mortgaged property or to proceed at law and sue on the note. New York
law does not require that the
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mortgagee must bring a foreclosure action before being entitled to sue on the
note. However, once having begun a foreclosure action or an action to sue on the
note or guaranty, a mortgagee is generally not permitted to initiate the other
without leave of court. New York does not restrict a mortgagee from seeking a
deficiency judgment. In order to obtain a deficiency judgment, a series of
procedural and substantive requirements must be satisfied.
Texas
Under Texas law, deed of trusts are customarily foreclosed by
non-judicial process; judicial process is generally not used. A mortgagee does
not preclude its ability to sue on a recourse note by instituting foreclosure
proceedings. Unless a longer period or other curative rights are provided by the
loan documents, at least 21 days notice prior to foreclosure is required and
foreclosure sales must be held on the first Tuesday of a calendar month. Absent
contrary provisions in the loan documents, deficiency judgments are obtainable
under Texas law. To determine the amount of any deficiency judgment, a borrower
is given credit for the greater of the actual sale price (excluding trustee's
and other allowable costs) or the fair market value of the property.
California
Under California law a foreclosure may be accomplished either judicially
or non-judicially. Generally, no deficiency judgment is permitted under
California law following a nonjudicial sale under a deed of trust. Other
California statutes, except in certain cases involving environmentally impaired
real property, require the lender to attempt to satisfy the full debt through a
foreclosure against the property before bringing a personal action (if otherwise
permitted) against the borrower for recovery of the debt. California case law
has held that acts such as an offset of an unpledged account or the application
of rents from secured property prior to foreclosure, under some circumstances,
constitute violations of such statutes. Violations of such statutes may result
in the loss of some or all of the security under the loan. Finally, other
statutory provisions in California limit any deficiency judgment (if otherwise
permitted) against the borrower, and possibly any guarantor, following a
judicial sale to the excess of the outstanding debt over the greater of (i) the
fair market value of the property at the time of the public sale or (ii) the
amount of the winning bid in the foreclosure. Borrowers also are allowed a
one-year period within which to redeem the property.
ERISA CONSIDERATIONS
A fiduciary of any employee benefit plan or other retirement plan or
arrangement that is subject to the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or Section 4975 of the Internal Revenue Code (each a
"Plan") and any entity whose assets include assets of a Plan should carefully
review with its legal advisers whether the purchase or holding of offered
certificates could give rise to a transaction that is prohibited or is not
otherwise permitted either under ERISA or Section 4975 of the Internal Revenue
Code or whether there exists any applicable statutory or administrative
exemption.
Examples of the types of Plans that are subject to these rules include:
o individual retirement accounts,
o annuity plans,
o Keogh plans, and
o collective investment funds, separate accounts and general accounts in
which such plans, accounts or arrangements are invested.
Certain employee benefit plans, such as governmental plans and church
plans (if no election has been made under section 410(d) of the Internal Revenue
Code), are not subject to the restrictions of ERISA, and assets of such plans
may be invested in the offered certificates without regard to the ERISA
considerations described below, subject to other applicable federal and state
law. However, any such governmental or church plan which is qualified under
section 401(a) of the Internal Revenue Code and exempt from taxation under
section 501(a) of the Internal Revenue Code is subject to the prohibited
transaction rules set forth in Section 503 of the Internal Revenue Code.
In accordance with ERISA's general fiduciary standards, before investing
in an offered certificate a Plan fiduciary should determine whether to do so is:
o permitted under the governing Plan instruments, and
o appropriate for the Plan in view of its overall investment policy and the
composition and diversification of its portfolio.
A Plan fiduciary should especially consider the ERISA requirement of
investment prudence and
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the sensitivity of the return on the certificates to the rate of principal
repayments (including voluntary prepayments by the borrowers and involuntary
liquidations) on the Mortgage Loans, as discussed in "Yield and Maturity
Considerations".
Plan Asset Regulation
The United States Department of Labor has issued a final regulation
determining when assets of an entity in which a Plan makes an equity investment
will be treated as assets of the investing Plan. If the certificates are treated
as debt with no substantial equity features under applicable local law, the
assets of the trust fund would not be treated as assets of the Plans that become
certificateholders. In the absence of treatment of the certificates as debt, and
unless the final regulation provides an exemption from this "plan asset"
treatment, an undivided portion of the assets of the trust fund will be treated,
for purposes of applying the fiduciary standards and prohibited transactions
rules of ERISA and Section 4975 of the Internal Revenue Code, as an asset of
each Plan that acquires and holds the offered certificates.
The final regulation provides an exemption from "plan asset" treatment
for securities issued by an entity if, immediately after the most recent
acquisition of any equity interest in the entity, less than 25% of the value of
each class of equity interests in the entity are held by "benefit plan
investors." Benefit plan investors could include Plans, governmental, foreign
and other plans not subject to ERISA and entities holding assets deemed to be
"plan assets". Interests held by any person who has discretionary authority or
control with respect to the assets of the entity (or any affiliate of such a
person) are excluded from the calculation. Because the availability of this
exemption to the trust fund depends upon the identity of the holders of the
offered certificates at any time, there can be no assurance that any class of
the offered certificates will qualify for this exemption.
Individual Exemption
The Department of Labor has issued to some of the underwriters an
individual prohibited transaction exemption (Prohibited Transaction Exemption
No. 90-24, as amended by Prohibited Transaction Exemption No. 97-34, to Morgan
Stanley & Co. Incorporated, Prohibited Transaction Exemption No. 97-34 to
Deutsche Bank Securities, Inc., Prohibited Transaction Exemption No. 98-07 to
PNC Capital Markets, Inc. and Prohibited Transaction Exemption No. 94-29, as
amended by Prohibited Transaction Exemption No. 97-34, to Residential Funding
Securities Corporation). These exemptions generally exempt from the application
of the prohibited transaction provisions of Section 406 of ERISA, and the excise
taxes imposed on such prohibited transactions pursuant to Section 4975(a) and
(b) of the Internal Revenue Code and Section 502(i) of ERISA, certain
transactions, among others, relating to:
o the servicing and operation of mortgage loans, such as the Mortgage Loans,
and
o the purchase, sale and holding of mortgage pass-through certificates, such
as the senior certificates, underwritten by an "underwriter".
For purposes of this discussion, the term "underwriter" includes:
1. Morgan Stanley & Co. Incorporated,
2. any person directly or indirectly, through one or more intermediaries,
controlling, controlled by or under common control with Morgan Stanley &
Co. Incorporated, and
3. any member of the underwriting syndicate or selling group of which a person
described in (1) or (2) is a manager or co-manager with respect to the
senior certificates, including any of the other underwriters.
Each of the individual prohibited transaction exemptions set forth six
general conditions that must be satisfied for a transaction involving the
purchase, sale and holding of senior certificates to be covered by the
exemption:
o First, the acquisition of the senior certificates by a Plan must be on
terms that are at least as favorable to the Plan as they would be in an
arm's-length transaction with an unrelated party.
o Second, the rights and interests evidenced by the senior certificates must
not be subordinated to the rights and interests evidenced by the other
certificates of the same trust.
o Third, the senior 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, Duff & Phelps Credit Rating Co., Moody's
Investors Service or Fitch IBCA.
o Fourth, the trustee cannot be an affiliate of any other member of the
"Restricted Group," which consists of:
o the underwriters,
o the depositor,
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o the master servicer,
o the special servicer,
o the trustee,
o any sub-servicer, and
o any mortgagor with respect to a Mortgage Loan constituting more than
5% of the aggregate unamortized principal balance of the Mortgage
Loans as of the date of initial issuance of the senior certificates.
o Fifth, the sum of all payments made to and retained by:
o the underwriters must represent not more than reasonable compensation
for underwriting the senior certificates;
o 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
o the master servicer, the special servicer or any sub-servicer must
represent not more than reasonable compensation for such person's
services under the pooling and servicing agreement and reimbursement
of such person's reasonable expenses in connection therewith.
o Sixth, the investing Plan must be an accredited investor as defined in
Rule 501(a)(1) of Regulation D under the Securities Act of 1933.
Because the senior certificates are not subordinate to any other class
of certificates, the second condition is satisfied for the senior certificates.
Since the senior certificates must be rated not lower than "Aaa" by Moody's and
"AAA" by DCR, on the closing date, the third condition will be satisfied for the
senior certificates on the closing date. The fourth condition will also be
satisfied on the closing date. A Plan fiduciary contemplating purchasing a
senior certificate in the secondary market must determine that the senior
certificates continue to satisfy the third and fourth conditions on the date of
purchase. A Plan fiduciary contemplating the purchase of a senior certificate
must decide for itself whether the first, fifth and sixth conditions will be
satisfied.
Each of the individual prohibited transaction exemptions also requires
that the trust fund meet the following requirements:
o the trust fund must consist solely of assets of the type that have been
included in other investment pools;
o certificates in such other investment pools must have been rated in one of
the three highest categories of Standard & Poor's, DCR, Moody's or Fitch
for at least one year prior to the Plan's acquisition of the senior
certificates; and
o certificates 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 senior certificates.
Moreover, the exemptions provide 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 senior
certificates, provided that, among other requirements:
o the person (or its affiliate) is an obligor with respect to 5% or less of
the fair market value of the obligations or receivables contained in the
trust;
o 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);
o in the case of an acquisition in connection with the initial issuance of
senior certificates, at least 50% of such class is acquired by persons
independent of the Restricted Group and at least 50% of the aggregate
interest in the trust fund is acquired by persons independent of the
Restricted Group;
o the Plan's investment in senior certificates does not exceed 25% of all of
the certificates of that class outstanding at the time of the acquisition;
and
o immediately after the acquisition, no more than 25% of the assets of the
Plan with respect to which the 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.
Finally, if certain specific conditions of the individual prohibited
transaction exemptions are satisfied, they may provide an exemption from the
restrictions imposed by Sections 406(a), 406(b) and 407(a) of ERISA, and the
taxes imposed by Sections 4975(a) and (b) of the Internal Revenue Code by reason
of Section 4975(c) of the Internal Revenue Code for transactions in connection
with the servicing, management and operation of the Mortgage Loans. The
depositor expects that the specific conditions of the exemptions required for
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this purpose will be satisfied with respect to the senior certificates.
You should be aware, however, that even if the conditions specified in
one or more parts of the exemptions are satisfied, they may not cover all acts
that may be considered prohibited transactions.
Before purchasing a senior certificate, a Plan fiduciary should itself
confirm that all of the conditions of the individual prohibited transaction
exemptions would be satisfied. The Plan fiduciary should also consider whether
any other prohibited transaction exemptions are available.
Other Exemptions
The characteristics of each class of the subordinate certificates do not
meet the requirements of the underwriters' individual prohibited transaction
exemptions. Accordingly, subordinate certificates may not be acquired by, on
behalf of or with assets of:
1. a Plan,
2. a governmental plan subject to any federal, state or local law that is, to a
material extent, similar to the provisions of ERISA or the Internal Revenue
Code ("Other Plans"),
3. a collective investment fund in which Plans or Other Plans are invested, or
4. other persons acting on behalf of any Plan or Other Plans or using the
assets of any Plan or Other Plans or any entity whose underlying assets
include plan assets by reason of a Plan's or Other Plan's investment in the
entity (within the meaning of the Department of Labor regulations Section
2510.3-101).
Each prospective transferee of a subordinate certificate must deliver to
the depositor, the certificate registrar and the trustee:
o a transferee representation letter, substantially in the form attached as an
exhibit to the pooling and servicing agreement, stating that the prospective
transferee is not a person referred to in clause 1, 2, 3, or 4 of the first
paragraph of this section, or
o an opinion of counsel which establishes to the satisfaction of the
depositor, the trustee and the certificate registrar that the purchase or
holding of the certificate will not:
o constitute or result in a prohibited transaction within the meaning of
Section 406 or 407 of ERISA, Section 4975 of the Internal Revenue Code
or any similar law, and
o subject the master servicer, the special servicer, the depositor, the
trustee or the certificate registrar to any obligation or liability,
including obligations or liabilities under ERISA or Section 4975 of the
Internal Revenue Code.
The opinion of counsel will not be an expense of the trustee, the trust
fund, the master servicer, the special servicer, the certificate registrar or
the depositor.
Insurance Company Purchasers
Purchasers that are insurance companies should consult their legal
advisers with respect to the applicability of PTCE 95-60, regarding transactions
by insurance company general accounts.
In addition, the Small Business Job Protection Act of 1996 added a new
Section 401(c) to ERISA, which provides certain exemptive relief from the
provisions of Part 4 of Title I of ERISA and Section 4975 of the Internal
Revenue Code, including the prohibited transaction restrictions imposed by ERISA
and the related excise taxes imposed by the Internal Revenue Code, for
transactions involving an insurance company general account.
Section 401(c) of ERISA required the Department of Labor to issue final
regulations no later than December 31, 1997. The Department of Labor issued
proposed regulations under Section 401(c) on December 22, 1997, but the required
final regulations have not been issued as of the date of this prospectus
supplement. The purpose of the 401(c) regulations is to provide guidance for the
purpose of determining which general account assets constitute plan assets, in
cases where insurance policies or annuity contracts supported by an insurer's
general account were issued to or for the benefit of a Plan on or before
December 31, 1998. Section 401(c) of ERISA generally provides that, until the
date that is 18 months after the 401(c) regulations become final, no person will
be subject to liability under Part 4 of Title I of ERISA and Section 4975 of the
Internal Revenue Code on the basis of a claim that the assets of an insurance
company general account constitute plan assets of any plan, unless:
o as otherwise provided by the Secretary of Labor in the 401(c) regulations
to prevent avoidance of the regulations, or
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<PAGE>
o an action is brought by the Secretary of Labor for certain breaches of
fiduciary duty which would also constitute a violation of federal or state
criminal law.
Any assets of an insurance company general account that support
insurance policies or annuity contracts issued to Plans:
o after December 31, 1998, or
o on or before December 31, 1998, for which the
insurance company does not comply with the 401(c) regulations,
may be treated as plan assets. In addition, because Section 401(c) does not
relate to insurance company separate accounts, separate account assets are still
treated as plan assets of any Plan invested in such separate account. Insurance
companies contemplating the investment of general account assets in the
certificates should consult their legal counsel with respect to the
applicability of Section 401(c) of ERISA, including the general account's
ability to continue to hold the certificates after the date which is 18 months
After the date the 401(c) regulations become final.
LEGAL INVESTMENT
The offered certificates will not constitute "mortgage related
securities" for purposes of the Secondary Mortgage Market Enhancement Act of
1984.
The appropriate characterization of the certificates under various legal
investment restrictions may be subject to significant interpretive
uncertainties. As a result, the depositor is unable to determine whether
investors subject to these restrictions may purchase the certificates. The
depositor makes no representations as to:
o the proper characterization of the offered certificates for legal investment
purposes, financial institution regulatory purposes or other purposes, or
o the ability of particular investors to purchase the offered certificates
under applicable legal investment restrictions.
These uncertainties (and any unfavorable future determinations
concerning legal investment or financial institution regulatory characteristics
of the offered certificates) may adversely affect the liquidity of the
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 their own legal
advisors in determining whether and to what extent the certificates constitute a
legal investment or are subject to investment, capital or other restrictions.
PLAN OF DISTRIBUTION
Subject to the underwriting agreement, each underwriter has agreed to
purchase the principal or notional amounts of offered certificates set forth
opposite its name below:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Underwriter Class A-1 Class A-2 Class X Class B
Morgan Stanley & Co. Incorporated $88,000,000 $292,013,000 $733,801,915 $33,021,000
Deutsche Bank Securities Inc. 13,000,000 40,000,000 -- --
CIBC World Markets Corp. 10,000,000 30,000,000 -- --
PNC Capital Markets, Inc. 10,000,000 10,000,000 -- --
Residential Funding Securities Corporation 12,500,000 37,500,000 -- --
Total $133,500,000 $409,513,000 $733,801,915 $33,021,000
============ ============ ============ ===========
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Underwriter Class C Class D Class E Class F
Morgan Stanley & Co. Incorporated $34,856,000 $11,007,000 $23,848,000 $12,842,000
Deutsche Bank Securities Inc. -- -- -- --
CIBC World Markets Corp. -- -- -- --
PNC Capital Markets, Inc. -- -- -- --
Residential Funding Securities Corporation -- -- -- --
Total $34,856,000 $11,007,000 $23,848,000 $12,842,000
=========== =========== =========== ===========
</TABLE>
The underwriting agreement imposes conditions on the obligations of the
underwriters. The underwriters must purchase all of the offered certificates if
they purchase any. However, it is not anticipated that Residential Funding
Securities Corporation will be obligated to purchase more than $50,000,000
aggregate principal amount of the offered certificates.
The underwriters have advised the depositor that they propose to offer
the offered certificates from time to time for sale in one or more negotiated
transactions or otherwise at prices to be determined at the time of sale. The
underwriters may effect such transactions by selling such classes of offered
certificates to or through dealers and such dealers may receive compensation in
the form of underwriting discounts, concessions or commissions from the
underwriters and/or from purchasers for whom they act as agent.
The offered certificates are offered by the underwriters when, as and if
issued by the depositor, delivered to and accepted by the underwriters and
subject to their right to reject orders in whole or in part.
It is expected that delivery of the offered certificates will be made in
book-entry form through the facilities of DTC against payment therefor on or
about July 27, 1999, which is the eighth business day following the date of
pricing of the certificates. Under Rule 15c6-1 adopted by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, trades in the
secondary market generally are required to settle in three business days, unless
the parties to any trade expressly agree otherwise. Accordingly, purchasers who
wish to trade offered certificates in the secondary market prior to such
delivery should specify a longer settlement cycle, or should refrain from
specifying a shorter settlement cycle, if failing to do so would result in a
settlement date that is earlier than the delivery date of the offered
certificates.
The underwriters and any dealers that participate with the underwriters
in the distribution of the offered certificates may be deemed to be
underwriters, and any discounts or commissions received by them and any profit
on the resale of such classes of offered certificates by them may be deemed to
be underwriting discounts or commissions, under the Securities Act of 1933.
The depositor has agreed to indemnify the underwriters against civil
liabilities, including liabilities under the Securities Act of 1933 or
contribute to payments the underwriters may be required to make in respect
thereof.
The underwriters intend to make a secondary market in the offered
certificates, but they are not obligated to do so.
USE OF PROCEEDS
The depositor will use the net proceeds from the sale of the offered
certificates to pay part of the purchase price for the Mortgage Loans and to pay
the costs of structuring, issuing and underwriting the offered certificates.
LEGAL MATTERS
The legality of the offered certificates and the material federal income
tax consequences of investing in the offered certificates will be passed upon
for the depositor by Morrison & Hecker, L.L.P., Kansas City, Missouri. Certain
legal matters with respect to the offered certificates will be passed upon for
the underwriters by Latham & Watkins, New York, New York.
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<PAGE>
RATINGS
It is a condition of the issuance of the offered certificates that they
receive the following credit ratings from Duff & Phelps Credit Rating Co. and
Moody's Investors Service, Inc. (the "Rating Agencies"):
Class DCR Moody's
Class A-1 AAA Aaa
Class A-2 AAA Aaa
ClassX AAA Aaa
Class B AA Aa2
Class C A A2
Class D A- A3
Class E BBB Baa2
Class F BBB- Baa3
The ratings of the offered certificates address the likelihood of the
timely receipt by the holders of all payments of interest to which they are
entitled and the ultimate receipt by the holders of all payments of principal to
which they are entitled, if any, by the distribution date in June 2031 (the
"Rated Final Distribution Date"). The ratings take into consideration:
o the credit quality of the Mortgage Loans in the Mortgage Pool,
o structural and legal aspects associated with the certificates, and
o the extent to which the payment stream from the Mortgage Pool is adequate
to make the required payments on the certificates.
The ratings on 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 revision or withdrawal at any time by the assigning rating agency.
The ratings of the certificates do not represent any assessment of:
o the likelihood or frequency of principal prepayments on the Mortgage Loans,
o the degree to which such prepayments might differ from those originally
anticipated,
o whether and to what extent prepayment premiums, Deferred Interest
and default interest will be received or Net Aggregate Prepayment Interest
Shortfalls will be realized,
o the yield to maturity that investors may experience, or
o the possibility that the holders of the interest only certificates might
fail to recover their investment if prepayments are rapid, including both
voluntary and involuntary prepayments.
The ratings thus address credit risk and not prepayment risk.
The amounts payable on the interest only certificates consist only of
interest. If all of the Mortgage Loans were to prepay in the initial month, then
the interest only certificateholders would receive only a single month's
interest and suffer a nearly complete loss of their investment despite having
received all amounts "due" under their certificates. This outcome is consistent
with the "Aaa/AAA" ratings received on the interest only certificates. The total
notional amounts used to calculate interest on interest only certificates are
reduced by allocations of Realized Losses, Expense Losses and voluntary or
involuntary principal prepayments. The ratings do not address the timing or
magnitude of reductions of such total notional amounts, but only the obligation
to pay interest timely on whatever the proper notional amounts may be from time
to time. Accordingly, potential purchasers of the interest only certificates
should evaluate the rating of the interest only certificates differently from
similar ratings on other types of securities.
It is possible that a rating agency other than DCR and Moody's could
issue an unsolicited rating for one or more of the classes of certificates.
These unsolicited ratings could be lower than the ratings issued by DCR and
Moody's.
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<PAGE>
INDEX OF DEFINITIONS
Additional Trust Fund Expenses.................S-55
Advance Rate...................................S-74
Advances.......................................S-73
Anticipated Repayment Date.....................S-31
Appraisal Reduction............................S-53
Appraisal Reduction Estimate...................S-54
Appraisal Reduction Events"....................S-53
Assumed Monthly Payment........................S-52
Available Funds................................S-49
Balloon LTV....................................S-37
Balloon LTV Ratio..............................S-37
Class Interest Shortfall.......................S-51
Collection Account.............................S-74
Collection Period..............................S-50
Compensating Interest Payment..................S-56
Constant Prepayment Rate.......................S-66
Controlling Class..............................S-84
CPR............................................S-66
Corrected Mortgage Loan........................S-83
Cross-Collateralized Loans.....................S-29
Cut-off Date...................................S-28
Cut-Off Date Loan-to-Value.....................S-37
Cut-Off Date LTV...............................S-37
Cut-off Date Principal Balance.................S-28
Debt Service Coverage Ratio....................S-36
Defeasance Loans...............................S-32
Deferred Interest..............................S-31
Determination Date.............................S-50
Discount Rate..................................S-52
Distributable Certificate Interest.............S-51
Distribution Account...........................S-75
DSCR...........................................S-36
ERISA..........................................S-89
Euroclear Operator.............................S-60
Expense Losses.................................S-55
Hyper-Amortization Loans.......................S-31
Initial Interest Rate..........................S-31
Initial Pool Balance...........................S-28
Interest Reserve Account.......................S-75
Interest Reserve Amount........................S-75
Interest Reserve Loans...................S-49, S-75
Lock-out Period................................S-31
Maturity Assumptions...........................S-66
Money Term.....................................S-79
Monthly Payment................................S-52
Mortgage.......................................S-28
Mortgage Loans.................................S-28
Mortgaged Property.............................S-28
Mortgages......................................S-28
Multiple Property Loans........................S-29
Net Aggregate Prepayment Interest Shortfall....S-56
Net Collections................................S-83
Net Mortgage Rate..............................S-49
Net REO Proceeds...............................S-74
Other Plans....................................S-92
P&I Advance....................................S-73
Plan...........................................S-89
Prepayment Interest Excess.....................S-56
Prepayment Interest Shortfall..................S-56
Principal Balance Certificates.................S-47
Principal Distribution Amount..................S-51
Principal Prepayments..........................S-50
Qualified Substitute Mortgage Loan.............S-43
Rated Final Distribution Date..................S-95
Rating Agencies................................S-95
Realized Loss..................................S-55
Record Date....................................S-49
REMIC..........................................S-87
REO Account....................................S-47
REO Mortgage Loan..............................S-53
REO Proceeds...................................S-74
REO Property...................................S-47
Repurchase Price...............................S-43
Reserve Accounts...............................S-34
Restricted Group...............................S-90
Revised Interest Rate..........................S-31
Scheduled Final Distribution Date..............S-56
Servicing Advances.............................S-73
Specially Serviced Mortgage Loan...............S-82
Stated Principal Balance.......................S-48
Treasury Rate..................................S-52
Underwritable Cash Flow........................S-36
Updated Appraisal..............................S-54
Yield Maintenance Period.......................S-31
S-96
<PAGE>
<TABLE>
<CAPTION>
APPENDIX I
MORTGAGE POOL INFORMATION
STATES
- ------------------------------------------------------------------------------------------------------------------------------------
Weighted
Percent by Weighted Average Weighted Weighted
Aggregate Aggregate Average Remaining Weighted Average Average
Number of Cut-off Date Cut-off Mortgage Term to Average Cut-off Balloon
State Mortgage Loans Balance ($) Date Balance (%) Rate (%) Maturity (mos) DSCR(x) Date LTV (%) LTV (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 New York 16 103,710,115 14.13 7.700 118 1.36 68.8 58.9
2 Texas 39 93,881,376 12.79 7.511 118 1.33 74.0 61.2
3 California 26 77,019,290 10.50 7.856 121 1.37 67.2 55.8
Southern (1) 18 47,534,213 6.48 7.835 120 1.36 69.6 56.8
Northern (1) 8 29,485,077 4.02 7.891 122 1.39 63.4 54.2
4 Pennsylvania 13 54,782,401 7.47 7.592 127 1.36 72.4 53.4
5 New Jersey 17 50,986,834 6.95 7.890 118 1.37 69.9 54.7
6 Florida 16 42,120,321 5.74 7.792 123 1.34 72.5 61.2
7 Illinois 9 39,438,169 5.37 7.775 113 1.31 76.5 66.1
8 Missouri 7 23,074,711 3.14 7.986 118 1.40 67.4 58.3
9 North Carolina 5 21,647,976 2.95 7.697 118 1.32 72.6 63.5
10 Washington 6 20,226,344 2.76 7.076 119 1.35 72.4 62.1
11 Minnesota 6 17,514,445 2.39 8.325 155 1.42 64.7 47.3
12 Massachusetts 5 17,366,545 2.37 7.618 114 1.32 69.2 61.2
13 Maryland 5 12,804,985 1.75 7.560 157 1.34 73.0 38.8
14 Ohio 6 11,859,325 1.62 7.645 113 1.39 73.6 63.8
15 Nevada 2 11,407,763 1.55 7.913 119 1.29 72.5 64.8
16 Colorado 6 10,692,426 1.46 7.563 116 1.28 72.9 60.3
17 West Virginia 4 10,671,969 1.45 7.730 113 1.38 71.4 63.7
18 Virginia 4 9,739,274 1.33 7.932 117 1.34 62.9 52.0
19 Oregon 3 8,711,015 1.19 8.158 118 1.27 71.4 62.3
20 Georgia 4 8,010,054 1.09 7.422 112 1.53 74.5 66.1
21 Oklahoma 4 7,930,966 1.08 7.733 116 1.31 74.2 62.6
22 Kentucky 2 7,793,066 1.06 9.020 119 1.50 65.8 55.8
I-1
<PAGE>
- ------------------------------------------------------------------------------------------------------------------------------------
Weighted
Percent by Weighted Average Weighted Weighted
Aggregate Aggregate Average Remaining Weighted Average Average
Number of Cut-off Date Cut-off Mortgage Term to Average Cut-off Balloon
State Mortgage Loans Balance ($) Date Balance (%) Rate (%) Maturity (mos) DSCR(x) Date LTV (%) LTV (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
23 Maine 3 7,790,911 1.06 7.754 116 1.35 74.0 61.0
24 New Mexico 3 7,199,403 0.98 7.813 118 1.30 60.1 48.8
25 Michigan 3 6,545,715 0.89 7.643 116 1.28 74.9 65.8
26 Virgin Islands 1 6,393,105 0.87 7.850 119 1.38 71.0 58.5
27 Connecticut 2 5,815,669 0.79 7.639 119 1.40 79.1 64.7
28 New Hampshire 3 5,324,950 0.73 7.839 118 1.33 59.4 47.9
29 Arizona 3 5,173,565 0.71 8.041 117 1.32 71.6 61.6
30 North Dakota 1 4,994,310 0.68 7.510 119 1.22 78.0 63.5
31 Louisiana 4 4,710,868 0.64 7.272 114 1.56 71.0 57.8
32 Kansas 2 2,787,225 0.38 9.050 116 1.56 71.5 61.0
33 Vermont 1 2,678,528 0.37 7.640 113 1.45 51.0 41.3
34 District of Columbia 4 2,128,256 0.29 7.420 115 1.29 71.7 60.9
35 Mississippi 1 1,981,544 0.27 7.430 115 1.33 66.1 46.3
36 South Carolina 1 1,797,224 0.24 8.990 118 1.71 63.6 54.0
37 Wisconsin 1 1,796,102 0.24 8.160 116 1.30 74.8 67.4
38 Tennessee 1 1,743,296 0.24 7.120 172 1.26 79.2 51.2
39 Idaho 1 1,496,648 0.20 7.110 118 1.49 68.0 54.8
40 Utah 1 1,232,592 0.17 7.830 118 1.28 71.5 58.9
41 Iowa 1 822,635 0.11 8.160 117 1.35 74.8 62.3
- ------------------------------------------------------------------------------------------------------------------------------------
Total or Weighted
Average: 242 $733,801,916 100.00% 7.737% 120 1.35x 70.8% 58.5%
====================================================================================================================================
</TABLE>
(1) Southern California consists of loans in California zip codes less than or
equal to 93600. Northern California consists of loans in California zip
codes greater than 93600.
I-2
<PAGE>
<TABLE>
<CAPTION>
APPENDIX I
MORTGAGE POOL INFORMATION
CUT-OFF DATE BALANCES
- ------------------------------------------------------------------------------------------------------------------------------------
Weighted
Percent by Weighted Average Weighted Weighted
Aggregate Aggregate Average Remaining Weighted Average Average
Cut-off Number of Cut-off Date Cut-off Mortgage Term to Average Cut-off Balloon
Date Balance ($) Mortgage Loans Balance ($) Date Balance (%) Rate (%) Maturity (mos) DSCR(x) Date LTV (%) LTV (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 to 1,000,000 41 30,407,708 4.14 7.908 122 1.38 66.5 51.4
1,000,001 to 2,000,000 77 115,893,499 15.79 7.865 123 1.38 69.0 54.6
2,000,001 to 3,000,000 43 105,819,729 14.42 7.767 121 1.38 68.5 57.2
3,000,001 to 4,000,000 24 85,377,959 11.64 7.841 117 1.36 70.8 60.5
4,000,001 to 5,000,000 25 113,754,201 15.50 7.826 126 1.34 70.9 55.3
5,000,001 to 6,000,000 10 54,632,432 7.45 7.888 118 1.31 70.8 56.3
6,000,001 to 7,000,000 6 38,774,984 5.28 7.802 128 1.34 71.6 58.7
7,000,001 to 8,000,000 5 37,234,910 5.07 7.663 118 1.35 72.9 64.4
8,000,001 to 9,000,000 3 25,232,843 3.44 7.310 118 1.31 75.9 66.9
9,000,001 to 10,000,000 1 9,459,453 1.29 7.550 114 1.32 78.8 70.0
10,000,001 to 20,000,000 5 62,104,544 8.46 7.514 115 1.35 74.4 65.4
20,000,001 to 30,000,000 1 22,925,004 3.12 7.450 117 1.35 76.4 62.2
30,000,001 to 40,000,000 1 32,184,648 4.39 7.200 111 1.36 68.2 60.2
- ------------------------------------------------------------------------------------------------------------------------------------
Total or Weighted
Average: 242 $733,801,916 100.00% 7.737% 120 1.35x 70.8% 58.5%
====================================================================================================================================
</TABLE>
Min: $361,411
Max: $32,184,648
Average: $3,032,239
I-3
<PAGE>
<TABLE>
<CAPTION>
APPENDIX I
MORTGAGE POOL INFORMATION
PROPERTY TYPES
- ------------------------------------------------------------------------------------------------------------------------------------
Weighted
Percent by Weighted Average Weighted Weighted
Aggregate Aggregate Average Remaining Weighted Average Average
Number of Cut-off Date Cut-off Mortgage Term to Average Cut-off Balloon
Property Type Mortgage Loans Balance ($) Date Balance (%) Rate (%) Maturity (mos) DSCR(x) Date LTV (%) LTV (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Retail
Anchored 24 99,815,101 13.60 7.772 121 1.33 71.8 58.7
Unanchored 29 85,393,203 11.64 7.974 129 1.33 68.1 50.1
Shadow Anchored 3 6,663,807 0.91 8.233 117 1.38 64.3 53.6
Big Box 1 4,890,000 0.67 8.230 120 1.25 77.2 69.4
- ------------------------------------------------------------------------------------------------------------------------------------
Subtotal: 57 $196,762,110 26.81% 7.886% 124 1.33x 70.1% 55.1%
Multifamily
Garden 85 204,859,514 27.92 7.471 117 1.36 74.1 63.5
High-Rise 3 28,481,520 3.88 7.482 117 1.35 76.3 62.2
Mid-Rise 5 5,449,622 0.74 7.872 117 1.44 73.1 63.1
- ------------------------------------------------------------------------------------------------------------------------------------
Subtotal: 93 $238,790,656 32.54% 7.481% 117 1.36x 74.4% 63.3%
Office
Urban 13 79,907,611 10.89 7.559 116 1.37 68.2 59.2
Suburban 27 69,726,326 9.50 7.760 118 1.33 68.0 57.9
Medical 3 4,531,273 0.62 8.318 117 1.27 72.2 55.0
- ------------------------------------------------------------------------------------------------------------------------------------
Subtotal: 43 $154,165,210 21.01% 7.672% 117 1.35x 68.2% 58.5%
Hospitality
Full Service 1 3,396,977 0.46 9.020 119 1.43 60.7 51.5
Limited Service 8 22,195,823 3.02 8.834 144 1.55 67.4 52.1
- ------------------------------------------------------------------------------------------------------------------------------------
Subtotal: 9 $25,592,801 3.49% 8.859% 141 1.54x 66.5% 52.0%
I-4
<PAGE>
- ------------------------------------------------------------------------------------------------------------------------------------
Weighted
Percent by Weighted Average Weighted Weighted
Aggregate Aggregate Average Remaining Weighted Average Average
Number of Cut-off Date Cut-off Mortgage Term to Average Cut-off Balloon
Property Type Mortgage Loans Balance ($) Date Balance (%) Rate (%) Maturity (mos) DSCR(x) Date LTV (%) LTV (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Industrial
Light 16 49,236,251 6.71 7.963 118 1.31 68.9 58.4
Flex 4 15,075,289 2.05 7.875 119 1.31 67.7 57.8
Warehouse 5 24,454,701 3.33 7.499 111 1.38 75.0 64.5
- ------------------------------------------------------------------------------------------------------------------------------------
Subtotal: 25 $88,766,241 12.10% 7.820% 116 1.33x 70.4% 60.0%
Mixed Use
Office/Multifamily 1 1,773,467 0.24 7.730 118 1.30 66.9 54.9
- ------------------------------------------------------------------------------------------------------------------------------------
Subtotal: 1 1,773,467 0.24 7.730 118 1.30 66.9 54.9
Self Storage 8 18,940,783 2.58 7.846 138 1.48 63.0 36.6
- ------------------------------------------------------------------------------------------------------------------------------------
Subtotal: 8 $18,940,783 2.58% 7.846% 138 1.48x 63.0% 36.6%
Manufactured Housing 6 9,010,648 1.23 8.108 128 1.32 72.1 57.3
- ------------------------------------------------------------------------------------------------------------------------------------
Subtotal: 6 $9,010,648 1.23% 8.108% 128 1.32x 72.1% 57.3%
- ------------------------------------------------------------------------------------------------------------------------------------
Total or Weighted
Average: 242 $733,801,916 100.00% 7.737% 120 1.35x 70.8% 58.5%
====================================================================================================================================
</TABLE>
I-5
<PAGE>
<TABLE>
<CAPTION>
APPENDIX I
MORTGAGE POOL INFORMATION
MORTGAGE RATES
- ------------------------------------------------------------------------------------------------------------------------------------
Weighted
Percent by Weighted Average Weighted Weighted
Aggregate Aggregate Average Remaining Weighted Average Average
Number of Cut-off Date Cut-off Mortgage Term to Average Cut-off Balloon
Mortgage Rate (%) Mortgage Loans Balance ($) Date Balance (%) Rate (%) Maturity (mos) DSCR(x) Date LTV (%) LTV (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
6.501 to 7.000 10 32,059,815 4.37 6.890 114 1.36 76.9 66.7
7.001 to 7.500 47 200,195,335 27.28 7.284 120 1.35 73.0 59.7
7.501 to 8.000 114 335,389,948 45.71 7.777 120 1.35 70.1 58.0
8.001 to 8.500 51 120,329,888 16.40 8.203 122 1.33 68.4 56.8
8.501 to 9.000 16 36,116,858 4.92 8.729 123 1.43 68.8 55.2
9.000 to 9.500 4 9,710,071 1.32 9.042 119 1.50 66.7 56.7
- ------------------------------------------------------------------------------------------------------------------------------------
Total or Weighted
Average: 242 $733,801,916 100.00% 7.737% 120 1.35x 70.8% 58.5%
====================================================================================================================================
</TABLE>
Min: 6.810%
Max: 9.170%
Weighted Average: 7.737%
I-6
<PAGE>
<TABLE>
<CAPTION>
APPENDIX I
MORTGAGE POOL INFORMATION
ORIGINAL TERMS TO STATED MATURITY
- ------------------------------------------------------------------------------------------------------------------------------------
Weighted
Percent by Weighted Average Weighted Weighted
Aggregate Aggregate Average Remaining Weighted Average Average
Original Term to Number of Cut-off Date Cut-off Mortgage Term to Average Cut-off Balloon
Stated Maturity Date Mortgage Loans Balance ($) Date Balance (%) Rate (%) Maturity (mos) DSCR(x) Date LTV (%) LTV (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 to 60 1 1,936,532 0.26 8.625 41 1.35 79.0 76.5
61 to 120 215 660,513,444 90.01 7.723 116 1.35 71.3 61.2
121 to 180 21 58,061,000 7.91 7.902 153 1.41 65.0 40.5
181 to 240 4 8,562,980 1.17 7.669 209 1.18 69.9 2.7
241 to 300 1 4,727,960 0.64 7.460 227 1.32 76.5 2.1
- ------------------------------------------------------------------------------------------------------------------------------------
Total or Weighted
Average: 242 $733,801,916 100.00% 7.737% 120 1.35x 70.8% 58.5%
====================================================================================================================================
</TABLE>
Min: 60
Max: 241
Weighted Average: 125
I-7
<PAGE>
<TABLE>
<CAPTION>
APPENDIX I
MORTGAGE POOL INFORMATION
REMAINING TERMS TO STATED MATURITY
- ------------------------------------------------------------------------------------------------------------------------------------
Weighted
Percent by Weighted Average Weighted Weighted
Aggregate Aggregate Average Remaining Weighted Average Average
Remaining Term to Number of Cut-off Date Cut-off Mortgage Term to Average Cut-off Balloon
Stated Maturity (mos) Mortgage Loans Balance ($) Date Balance (%) Rate (%) Maturity (mos) DSCR(x) Date LTV (%) LTV (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 to 60 2 7,355,138 1.00 8.776 55 1.28 76.6 73.1
61 to 120 216 671,205,480 91.47 7.712 116 1.35 71.4 61.2
121 to 180 19 41,950,357 5.72 7.994 168 1.45 59.8 30.1
181 to 240 5 13,290,940 1.81 7.594 215 1.23 72.2 2.5
- ------------------------------------------------------------------------------------------------------------------------------------
Total or Weighted
Average: 242 $733,801,916 100.00% 7.737% 120 1.35x 70.8% 58.5%
====================================================================================================================================
</TABLE>
Min: 41
Max: 238
Weighted Average: 120
I-8
<PAGE>
<TABLE>
<CAPTION>
APPENDIX I
MORTGAGE POOL INFORMATION
ORIGINAL AMORTIZATION TERMS
- ------------------------------------------------------------------------------------------------------------------------------------
Weighted
Percent by Weighted Average Weighted Weighted
Aggregate Aggregate Average Remaining Weighted Average Average
Original Amortization Number of Cut-off Date Cut-off Mortgage Term to Average Cut-off Balloon
Term (mos) Mortgage Loans Balance ($) Date Balance (%) Rate (%) Maturity (mos) DSCR(x) Date LTV (%) LTV (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balloon Loan 229 $703,581,634 95.88% 7.736% 117 1.35x 71.3% 60.9%
180 1 1,720,011 0.23 7.990 119 1.31 39.1 19.3
240 8 16,851,921 2.30 8.114 117 1.39 62.8 45.2
241-299 3 7,612,778 1.04 7.804 116 1.36 62.7 49.3
300 131 309,705,708 42.21 7.884 120 1.37 69.8 57.3
301-359 2 8,781,561 1.20 7.823 117 1.36 73.3 63.0
360 84 358,909,654 48.91 7.586 115 1.34 73.3 65.2
Fully-Amortizing Loan 13 $30,220,282 4.12% 7.759% 194 1.37x 59.7% 1.9%
180 8 16,929,342 2.31 7.888 176 1.48 49.8 1.4
181-239 1 5,086,076 0.69 7.415 191 1.17 67.8 1.6
240 4 8,204,864 1.12 7.706 231 1.26 75.0 3.0
- ------------------------------------------------------------------------------------------------------------------------------------
Total or Weighted
Average: 242 $733,801,916 100.00% 7.737% 120 1.35x 70.8% 58.5%
====================================================================================================================================
</TABLE>
Min: 180
Max: 360
Weighted Average: 324
I-9
<PAGE>
<TABLE>
<CAPTION>
APPENDIX I
MORTGAGE POOL INFORMATION
DEBT SERVICE COVERAGE RATIOS
- ------------------------------------------------------------------------------------------------------------------------------------
Weighted
Percent by Weighted Average Weighted Weighted
Aggregate Aggregate Average Remaining Weighted Average Average
Debt Service Coverage Number of Cut-off Date Cut-off Mortgage Term to Average Cut-off Balloon
Ratio (x) Mortgage Loans Balance ($) Date Balance (%) Rate (%) Maturity (mos) DSCR(x) Date LTV (%) LTV (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1.01 to 1.15 3 7,087,785 0.97 8.053 193 1.13 63.9 2.1
1.16 to 1.25 28 71,966,652 9.81 7.711 125 1.24 74.7 59.6
1.26 to 1.35 123 384,171,945 52.35 7.705 117 1.31 72.3 60.8
1.36 to 1.50 60 216,279,794 29.47 7.750 120 1.41 68.9 58.7
1.51 to 1.75 21 45,021,164 6.14 8.016 126 1.59 65.5 49.9
1.76 to 2.00 7 9,274,576 1.26 7.352 134 1.88 55.4 35.3
- ------------------------------------------------------------------------------------------------------------------------------------
Total or Weighted
Average: 242 $733,801,916 100.00% 7.737% 120 1.35x 70.8% 58.5%
====================================================================================================================================
</TABLE>
Min: 1.12x
Max: 1.96x
Weighted Average: 1.35x
I-10
<PAGE>
<TABLE>
<CAPTION>
APPENDIX I
MORTGAGE POOL INFORMATION
CUT-OFF DATE LOAN-TO-VALUE RATIOS
- ------------------------------------------------------------------------------------------------------------------------------------
Weighted
Percent by Weighted Average Weighted Weighted
Aggregate Aggregate Average Remaining Weighted Average Average
Cut-Off Date Loan-To- Number of Cut-off Date Cut-off Mortgage Term to Average Cut-off Balloon
Value Ratio (%) Mortgage Loans Balance ($) Date Balance (%) Rate (%) Maturity (mos) DSCR(x) Date LTV (%) LTV (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
20.1 to 30.0 1 975,617 0.13 7.450 172 1.94 26.4 0.8
30.1 to 40.0 1 1,720,011 0.23 7.990 119 1.31 39.1 19.3
40.1 to 50.0 5 7,281,413 0.99 7.771 166 1.71 44.4 6.7
50.1 to 60.0 19 47,398,294 6.46 7.931 127 1.41 55.6 40.6
60.1 to 70.0 76 231,546,356 31.55 7.820 123 1.38 66.5 53.6
70.1 to 80.0 139 443,206,913 60.40 7.670 117 1.33 75.3 64.0
80.1 to 90.0 1 1,673,312 0.23 8.260 119 1.33 83.7 69.7
- ------------------------------------------------------------------------------------------------------------------------------------
Total or Weighted
Average: 242 $733,801,916 100.00% 7.737% 120 1.35x 70.8% 58.5%
====================================================================================================================================
</TABLE>
Min: 26.4%
Max: 83.7%
Weighted Average: 70.8%
I-11
<PAGE>
<TABLE>
<CAPTION>
APPENDIX I
MORTGAGE POOL INFORMATION
BALLOON LOAN-TO-VALUE RATIOS
- ------------------------------------------------------------------------------------------------------------------------------------
Weighted
Percent by Weighted Average Weighted Weighted
Aggregate Aggregate Average Remaining Weighted Average Average
Balloon Loan-To-Value Number of Cut-off Date Cut-off Mortgage Term to Average Cut-off Balloon
Ratio (%) Mortgage Loans Balance ($) Date Balance (%) Rate (%) Maturity (mos) DSCR(x) Date LTV (%) LTV (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
0.1 to 10.0 13 30,220,282 4.12 7.759 194 1.37 59.7 1.9
10.1 to 20.0 1 1,720,011 0.23 7.990 119 1.31 39.1 19.3
30.1 to 40.0 3 3,606,110 0.49 7.314 139 1.63 52.2 35.3
40.1 to 50.0 25 66,660,010 9.08 8.031 130 1.39 59.7 46.6
50.1 to 60.0 87 167,243,183 22.79 7.915 118 1.40 67.3 56.1
60.1 to 70.0 103 414,639,765 56.51 7.643 116 1.33 74.1 64.4
70.1 to 80.0 10 49,712,555 6.77 7.536 104 1.30 79.0 70.8
- ------------------------------------------------------------------------------------------------------------------------------------
Total or Weighted
Average: 242 $733,801,916 100.00% 7.737% 120 1.35x 70.8% 58.5%
====================================================================================================================================
</TABLE>
Min: 0.8%
Max: 76.5%
Weighted Average: 58.5%
I-12
<PAGE>
<TABLE>
<CAPTION>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
LOAN INFORMATION - I
- ------------------------------------------------------------------------------------------------------------------------------------
Origi-
Maturity nal
Cut- Date or Term
Off Antici- to Remaining
Date pated Matur- Origi- Term to
Bal./ Repay- ity nal Remain- Matur-
Original Cut-Off Unit ment or Amort. ing ity or
Loan Property Principal Date or Note Date ARD Term Amort. ARD Security
No. Seller(1) Name(2) Balance Balance(3) NSF(4) Date (ARD)(5) (mos) (mos)(6) Term (mos) Type
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 RFC 21 Penn Plaza $32,400,000 $32,184,648 $94.16 9/9/98 10/1/08 120 360 351 111 Fee
2 RFC Park Drive Manor
Apts 23,000,000 22,925,004 40,078.68 3/17/99 4/1/09 120 300 297 117 Fee
3 CIBC Prime Portfolio 15,556,000.00 15,395,975.37 42.64 5/1/98 5/1/08 120 360 346 106 Fee
CIBC 1301 East Tower
Road (I) 4,165,000 4,122,155 42.64 5/1/98 5/1/08 120 360 346 106 Fee
CIBC 4300 Madison
Street (I) 4,062,000 4,020,214 42.64 5/1/98 5/1/08 120 360 346 106 Fee
CIBC 342-346 Carol
Lane (I) 2,336,000 2,311,970 42.64 5/1/98 5/1/08 120 360 346 106 Fee
CIBC 550 Kehoe Blvd.
(I) 2,263,000 2,239,721 42.64 5/1/98 5/1/08 120 360 346 106 Fee
CIBC 343 Carol Lane
(I) 1,385,000 1,370,753 42.64 5/1/98 5/1/08 120 360 346 106 Fee
CIBC 388 Carol Lane
(I) 1,345,000 1,331,164 42.64 5/1/98 5/1/08 120 360 346 106 Fee
4 CIBC 1414 Avenue of
the Americas 14,000,000 14,000,000 125.61 4/16/99 5/1/09 120 300 300 118 Fee
5 CIBC 70 West 36th
Street 12,200,000 12,200,000 80.75 4/16/99 5/1/09 120 300 300 118 Fee
6 RFC 7200 Leamington,
LLC (A) 4,850,000 4,850,000 17.42 6/24/99 7/1/09 120 360 360 120 Fee
7 RFC 2201 Lundt,
LLC (A) 4,000,000 4,000,000 17.42 6/24/99 7/1/09 120 360 360 120 Fee
8 RFC 1330 W. 43rd
St. (A) 2,190,000 2,190,000 17.42 6/24/99 7/1/09 120 360 360 120 Fee
9 CIBC University Club
Apartments 10,500,000 10,486,188 80,662.99 4/22/99 5/1/09 120 360 358 118 Fee
10 Midland The Patriot
Apartments 10,050,000 10,022,381 31,319.94 2/17/99 3/1/09 120 360 356 116 Fee
11 CIBC Acme Plaza
(Cape May Plaz a) 9,500,000 9,459,453 62.83 4/23/98 1/1/09 128 360 354 114 Fee
12 RFC The Place
Apartments 8,700,000 8,693,077 37,795.99 5/4/99 6/1/09 120 360 359 119 Fee
13 Midland The Phoenix
Apartments 8,424,000 8,399,390 24,998.18 2/18/99 3/1/09 120 360 356 116 Fee
14 RFC Glenwood Plaza 8,150,000 8,140,377 37.31 4/26/99 5/1/01 120 360 358 118 Fee
15 CIBC 633 Third Avenue 7,750,000 7,750,000 193.06 4/16/99 5/1/09 120 300 300 118 Fee
16 Midland 148 State Street 7,600,000 7,585,861 121.67 3/30/99 4/1/09 120 360 357 117 Fee
17 CIBC The Piers 7,500,000 7,494,669 73.70 5/7/99 6/1/09 120 360 359 119 Fee
18 CIBC North Point
Center 7,400,000 7,395,025 51.51 5/21/99 6/1/09 120 360 359 119 Fee
19 Midland Beau Rivage
Apartments,
Phases II & II 7,020,000 7,009,355 36,507.06 4/21/99 5/1/09 120 360 358 118 Fee
20 Midland Holiday Inn
Express & Suites 6,950,000 6,938,209 57,818.41 4/23/99 5/1/14 180 300 298 178 Fee
21 CIBC Regal Cinemas 6,700,000 6,651,190 91.59 3/31/98 12/1/08 128 300 293 113 Leasehold
22 Midland Drake's Passage 6,400,000 6,393,105 194.54 5/19/99 6/1/09 120 300 299 119 Fee
23 Midland Northcastle
Apartments 6,400,000 6,363,688 37,433.46 11/23/98 12/1/08 120 360 353 113 Fee
24 RFC Giro Building 6,300,000 6,300,000 69.98 6/14/99 7/1/09 120 300 300 120 Fee
25 Midland Longley Business
Park 6,133,000 6,128,792 58.70 5/27/99 6/1/09 120 360 359 119 Fee
26 CIBC Sharpstown Court 6,000,000 5,995,735 71.22 5/7/99 6/1/09 120 360 359 119 Fee
27 Midland Temescal Village
Plaza 5,596,000 5,590,125 95.82 5/12/99 6/1/09 120 300 299 119 Fee
28 CIBC Plantation
Properties 5,550,000 5,536,819 55.89 3/31/99 4/1/09 120 330 327 117 Fee
29 RFC Bernal Business
Center 5,500,000 5,500,000 113.05 6/3/99 7/1/09 120 360 360 120 Fee
30 Midland East 55TH Street 5,500,000 5,486,404 14.05 4/8/99 5/1/09 120 276 274 118 Fee
31 RFC Coriel Manor
Apartments 5,500,000 5,470,891 22,330.17 1/6/99 2/1/09 120 300 295 115 Fee
32 RFC Gibbstown Shoppi ng
Center 5,500,000 5,418,607 53.96 6/6/97 7/1/04 84 360 336 60 Fee
33 Midland Plaza De Colores 5,285,000 5,278,971 120.61 4/9/99 5/1/09 120 360 358 118 Fee
34 CIBC Lifeline Building 5,300,000 5,268,804 62.41 7/27/98 11/1/08 120 360 352 112 Fee
35 RFC Deon Square Shopping
Center 5,100,000 5,086,076 66.45 5/7/99 6/1/15 192 192 191 191 Leasehold
36 CIBC Regstad II -
Orchid Place 5,000,000 4,994,310 34,682.71 5/24/99 6/1/09 120 300 299 119 Fee
37 CIBC 6 Gramatan Avenue 5,000,000 4,989,495 72.04 2/4/99 3/1/09 120 360 356 116 Fee
38 CIBC Eisenhower Industrial
Complex 5,000,000 4,985,455 55.61 3/23/99 4/1/09 120 300 297 117 Fee
39 Midland Wood River
Apartments 5,000,000 4,979,200 24,896.00 2/2/99 2/1/09 120 360 355 115 Fee
40 RFC Old Navy -
Linens 'N Things 4,890,000 4,890,000 89.58 6/9/99 7/1/09 120 360 360 120 Fee
41 CIBC Avenue C Apartments 4,800,000 4,796,626 171,308.07 4/30/99 6/1/09 120 360 359 119 Fee
42 RFC Pine Plaza Shopping
Center 4,750,000 4,731,452 49.90 12/14/98 1/1/09 120 360 354 114 Fee
43 RFC Shopps On the Pike 4,850,000 4,727,960 228.37 4/20/98 6/1/18 241 240 226 227 Fee
44 Midland Shoppes of Kenwood 4,700,000 4,680,069 98.71 12/23/98 1/1/09 120 360 354 114 Fee
45 Midland Country Club Place
Shopping Cent 4,650,000 4,647,059 38.17 5/11/99 6/1/09 120 360 359 119 Fee
46 RFC Space City Retail
Center 4,650,000 4,636,491 89.06 5/28/99 6/1/14 180 180 179 179 Fee
47 RFC Glen Cove Shopping
Center 4,600,000 4,595,181 217.93 4/29/99 5/1/09 120 360 358 118 Fee &
Leasehold
48 RFC The Crossings 4,600,000 4,588,380 157.64 2/17/99 3/1/09 120 360 356 116 Fee
49 Midland The Glen Apartments 4,600,000 4,580,164 22,900.82 2/2/99 2/1/09 120 360 355 115 Fee
50 Midland Lackland Self
Storage 4,500,000 4,420,036 4,233.75 12/8/98 1/1/14 180 180 174 174 Fee
51 CIBC Fairfield Inn 4,400,000 4,396,088 43,960.88 5/24/99 6/1/09 120 300 299 119 Fee
52 CIBC Trolley Commons/
Willow Reed
Village 4,400,000 4,395,064 36,625.54 5/21/99 6/1/09 120 300 299 119 Fee
53 CIBC Monarch Beach Plaza 4,250,000 4,238,973 135.10 4/1/99 4/1/09 120 300 297 117 Leasehold
54 Midland 95 John Muir Drive 4,237,000 4,231,997 107.67 4/9/99 5/1/09 120 360 358 118 Fee
II-1
<PAGE>
<CAPTION>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
LOAN INFORMATION - I
- ------------------------------------------------------------------------------------------------------------------------------------
Origi-
Maturity nal
Cut- Date or Term
Off Antici- to Remaining
Date pated Matur- Origi- Term to
Bal./ Repay- ity nal Remain- Matur-
Original Cut-Off Unit ment or Amort. ing ity or
Loan Property Principal Date or Note Date ARD Term Amort. ARD Security
No. Seller(1) Name(2) Balance Balance(3) NSF(4) Date (ARD)(5) (mos) (mos)(6) Term (mos) Type
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
55 CIBC Northup West
Office Park 4,200,000 4,166,001 84.84 8/20/98 9/1/08 120 360 350 110 Fee
56 Midland MCI Building 4,117,000 4,108,863 68.48 4/21/99 5/1/09 120 300 298 118 Fee
57 Midland Springtown Shopping
Center 4,075,000 4,058,794 64.71 1/14/99 2/1/09 120 360 355 115 Fee
58 RFC Crosswinds Apartment
Homes 4,050,000 4,033,445 16,806.02 12/28/98 1/1/09 120 360 354 114 Fee
59 Midland Forrest Machinery
Building 4,050,000 4,033,098 47.28 2/3/99 3/1/09 120 300 296 116 Fee
60 Midland Canal House
Apartments 4,000,000 3,984,092 53,121.23 1/13/99 2/1/09 120 360 355 115 Fee
61 CIBC Warner Center 4,000,000 3,983,930 32.75 2/12/99 3/1/09 120 300 296 116 Fee
62 Midland Woodside at the
Office Center 4,000,000 3,977,217 72.31 1/15/99 2/1/09 120 300 295 115 Fee
63 RFC Mountain Country
Estates 4,000,000 3,971,899 26,479.33 12/17/98 1/1/09 120 300 294 114 Fee
64 CIBC One Dodge Drive 3,900,000 3,897,436 41.95 5/11/99 6/1/09 120 360 359 119 Fee
65 CIBC Kolonaki -
Industrial (80 8) 3,850,000 3,839,288 69.63 3/15/99 4/1/09 120 300 297 117 Fee
66 Midland Rockford Ambulatory
Surgery Center (B) 2,981,000 2,972,102 124.80 4/6/99 5/1/09 120 240 238 118 Fee
67 Midland Rockford Medical
Office Building (B) 832,000 830,565 124.80 4/6/99 5/1/09 120 300 298 118 Fee
68 CIBC White's Crossing
Plaza 3,740,000 3,735,688 40.00 4/16/99 5/1/09 120 360 358 118 Fee
69 CIBC Access Self Storage 3,750,000 3,735,221 57.34 2/8/99 3/1/09 120 300 296 116 Fee
70 Midland South Park Office
Complex 3,713,000 3,705,925 117.40 3/30/99 4/1/09 120 360 357 117 Fee
71 Midland Georgetown
Apartments 3,600,000 3,582,593 39,369.15 11/11/98 12/1/08 120 360 353 113 Fee
72 Midland Heritage Park
Apartments 3,510,000 3,505,487 39,835.08 4/29/99 5/1/09 120 360 358 118 Fee
73 Midland Northland Aluminum
Products, Inc. 3,500,000 3,483,408 18.91 3/12/99 4/1/09 120 240 237 117 Fee
74 RFC Coach & Four East
Apartments 3,460,000 3,453,120 21,184.78 3/3/99 4/1/09 120 360 357 117 Fee
75 CIBC Courtyard by
Marriott 3,400,000 3,396,977 36,526.64 5/24/99 6/1/09 120 300 299 119 Fee
76 RFC Brook Run Apartments 3,350,000 3,345,638 40,800.46 4/21/99 5/1/09 120 360 358 118 Fee
77 RFC Green Meadows
Apartments 3,340,000 3,326,198 21,882.88 12/29/98 1/1/09 120 360 354 114 Fee
78 RFC Grand Plaza
Properties, Inc. 3,289,000 3,286,789 81.60 5/28/99 6/1/09 120 360 359 119 Fee
79 RFC Fairmont and
Monticello
Apartments 3,280,000 3,269,700 24,584.21 3/26/99 4/1/09 120 300 297 117 Fee
80 CIBC Palmetto Gardens
Industrial Park 3,250,000 3,244,743 20.05 4/21/99 5/1/09 120 324 322 118 Fee
81 Midland Lower Falls Landing 3,225,000 3,215,268 69.36 3/6/99 4/1/09 120 300 297 117 Fee
82 RFC PML Office Building 3,200,000 3,196,722 94.37 5/5/99 6/1/09 120 300 299 119 Fee
83 Midland Concord Business
Center 3,200,000 3,193,845 19.56 4/7/99 5/1/09 120 300 298 118 Fee
84 Midland Middlebrook
Business Park 3,050,000 3,046,777 60.97 5/14/99 6/1/09 120 300 299 119 Fee
85 Midland Vintage Faire
Apartments 3,000,000 2,994,035 26,732.45 3/9/99 4/1/11 144 360 357 141 Fee
86 CIBC 140 Gould Street 3,000,000 2,977,216 74.56 7/7/98 8/1/08 120 360 349 109 Fee
87 Midland Woodbridge
Apartments 2,950,000 2,936,349 41,947.84 12/17/98 1/1/09 120 360 354 114 Fee
88 RFC Pier One Imports 2,940,000 2,928,112 249.41 12/23/98 1/1/09 120 360 354 114 Fee
89 Midland Deerwood at the
Park Apartments 2,900,000 2,888,215 13,371.37 1/28/99 2/1/09 120 360 355 115 Fee
90 Midland Tukwila Estates 2,890,000 2,884,294 35,608.57 3/31/99 4/1/09 120 360 357 117 Fee
91 Midland Orchard Park
Apartments 2,800,000 2,791,223 21,145.63 3/3/99 4/1/09 120 300 297 117 Fee
92 Midland Airport Business
Center 2,775,000 2,772,010 32.45 5/5/99 6/1/09 120 300 299 119 Fee
93 Midland Holiday Inn,
New Ulm 2,765,000 2,762,471 21,924.38 5/1/99 6/1/14 180 300 299 179 Fee
94 RFC Monsey Mall 2,750,000 2,745,503 85.86 5/7/99 6/1/09 120 240 239 119 Fee
95 Midland Silverdale Office
Building 2,730,000 2,714,026 67.48 1/28/99 2/1/09 120 300 295 115 Fee
96 RFC Habersham Shopping
Center 2,710,000 2,700,198 42.92 1/6/99 2/1/09 120 360 355 115 Fee
97 Midland Brattleboro North
Shopping Plaza 2,700,000 2,678,528 19.69 11/30/98 12/1/08 120 300 293 113 Fee
98 Midland Crossroads Shopping
Center 2,630,000 2,626,687 109.45 4/21/99 5/1/09 120 360 358 118 Fee
99 RFC Paloma Apartments 2,625,000 2,619,260 45,159.65 3/15/99 4/1/09 120 360 357 117 Fee
100 Midland Mullica Woods 2,550,000 2,541,566 28,239.62 3/23/99 4/1/09 120 300 297 117 Fee
101 Midland Windsong Apartments 2,500,000 2,495,068 27,722.98 4/22/99 5/1/09 120 300 298 118 Fee
102 Midland Magnolia Park
Shopping Center 2,500,000 2,480,261 32.43 11/23/98 12/1/08 120 300 293 113 leasehold
103 Midland Vollstedt Building 2,475,000 2,467,599 106.92 3/31/99 4/1/09 120 300 297 117 Fee
104 Midland Lackland Self
Storage 2,500,000 2,455,576 3,903.94 12/8/98 1/1/14 180 180 174 174 Fee
105 Midland Cinnamon Square
Apartments 2,460,000 2,455,128 12,787.13 4/27/99 5/1/09 120 300 298 118 Fee
106 Midland Bordeaux XI
Apartments 2,437,500 2,435,861 20,298.84 5/11/99 6/1/09 120 360 359 119 Fee
107 Midland 5397 North Commerce
(C) 1,388,000 1,378,119 45.39 11/9/98 12/1/08 120 300 293 113 Fee
108 Midland Gabbert Building
(C) 917,000 910,472 45.39 11/9/98 12/1/08 120 300 293 113 Fee
109 RFC The Kingsbury
Apartments 2,300,000 2,286,816 43,147.48 1/29/99 2/1/09 120 300 295 115 Fee
110 Midland Crestwood
Apartments 2,264,000 2,259,421 14,864.61 4/29/99 5/1/09 120 300 298 118 Fee
111 CIBC Dicks Clothing and
Sporting Good 2,250,000 2,247,859 48.47 5/21/99 3/1/09 117 300 299 116 Leasehold
112 Midland Roseland Manor
Duplexes 2,250,000 2,247,623 16,287.12 4/30/99 6/1/09 120 300 299 119 Fee
113 Midland Mount View Office
Building 2,250,000 2,240,783 127.44 12/4/98 1/1/12 156 360 354 150 Fee
114 Midland The Port Apartments 2,247,000 2,237,118 17,477.48 12/30/98 1/1/09 120 360 354 114 Fee
II-2
<PAGE>
<CAPTION>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
LOAN INFORMATION - I
- ------------------------------------------------------------------------------------------------------------------------------------
Origi-
Maturity nal
Cut- Date or Term
Off Antici- to Remaining
Date pated Matur- Origi- Term to
Bal./ Repay- ity nal Remain- Matur-
Original Cut-Off Unit ment or Amort. ing ity or
Loan Property Principal Date or Note Date ARD Term Amort. ARD Security
No. Seller(1) Name(2) Balance Balance(3) NSF(4) Date (ARD)(5) (mos) (mos)(6) Term (mos) Type
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
115 RFC Forman Mills 2,250,000 2,235,948 46.68 12/11/98 1/1/09 120 300 294 114 Fee
116 RFC 7900 Beech Daly &
6810 Metroplex 2,225,000 2,213,153 31.79 11/23/98 12/1/08 120 360 353 113 Fee
117 RFC Arrowhead Fountain
Center 2,200,000 2,198,556 160.31 5/4/99 6/1/09 120 360 359 119 Fee
118 Midland Ridgmar Crossroads
Apartments 2,200,000 2,194,161 36,569.35 2/23/99 3/1/09 120 360 356 116 Fee
119 RFC Renaissance West
Shopping Center 2,180,000 2,180,000 41.38 6/3/99 7/1/09 120 300 300 120 Fee
120 CIBC Lexington Center 2,175,000 2,173,602 26.46 5/12/99 10/1/09 124 360 359 123 Fee
121 Midland State of Oregon Job
Council Buildings 2,154,240 2,140,809 77.46 12/30/98 1/1/09 120 300 294 114 Fee
122 CIBC Hayes Community 2,130,000 2,127,818 11,691.31 5/21/99 6/1/09 120 300 299 119 Fee
123 RFC Today's Man -
Deptford 2,125,000 2,121,085 82.85 4/15/99 5/1/09 120 300 298 118 Fee
124 Midland Devon Park
Apartments 2,100,000 2,085,706 33,106.45 12/21/98 1/1/09 120 300 294 114 Fee
125 RFC Cross Keys
Apartments 2,100,000 2,080,791 32,512.37 6/30/98 7/1/08 120 360 348 108 Fee
126 CIBC White Oak
Professional
Building 2,025,000 2,022,739 92.28 4/30/99 5/1/09 120 360 358 118 Fee
127 RFC Scripps Mesa
Shopping Center 2,025,000 2,014,454 79.04 1/8/99 2/1/09 120 300 295 115 Fee
128 Midland Pacific Place 2,000,000 1,997,859 321.56 5/17/99 6/1/09 120 300 299 119 Fee
129 CIBC Timberfalls
Apartments 2,000,000 1,995,308 19,953.08 2/26/99 3/1/09 120 360 356 116 Fee
130 Midland 110 American
Boulevard 2,000,000 1,986,477 62.27 12/16/98 1/1/09 120 300 294 114 Fee
131 Midland Handy Lock Mini
Storage 2,000,000 1,981,544 3,222.02 1/27/99 2/1/09 120 240 235 115 Fee
132 RFC Carpenter Crest
Apartments 1,980,000 1,966,690 18,730.38 9/30/98 10/1/08 120 360 351 111 Fee
133 RFC Stanford Court 1,960,000 1,936,532 26,896.27 11/25/97 12/1/02 60 360 341 41 Fee
134 Midland Commons at Valdosta
Apartments 1,920,000 1,910,589 19,901.97 11/30/98 12/1/08 120 360 353 113 Fee
135 CIBC Kolonaki - Sausalito
(579) 1,900,000 1,894,714 305.99 3/15/99 4/1/09 120 300 297 117 Fee
136 Midland Quail Court
Apartments 1,900,000 1,881,692 17,423.07 10/27/98 11/1/08 120 300 292 112 Fee
137 Midland Pacific Palms
Apartments 1,875,000 1,869,524 17,472.18 5/6/99 6/1/14 180 180 179 179 Fee
138 Midland Village at
Cambridge Self
Storage 1,850,000 1,848,139 2,563.30 5/6/99 6/1/09 120 300 299 119 Fee
139 CIBC Kolonaki - San
Francisco (1723) 1,850,000 1,844,853 181.05 3/15/99 4/1/09 120 300 297 117 Fee
140 Midland Providence Office
Building 1,840,000 1,836,398 39.37 4/30/99 5/1/09 120 300 298 118 Fee
141 Midland Westlake Village
Apartments 1,802,000 1,798,357 12,845.41 3/25/99 4/1/09 120 360 357 117 Fee
142 CIBC Days Inn - Anderson 1,800,000 1,797,224 33,909.89 4/13/99 5/1/09 120 300 298 118 Leasehold
143 RFC Hollywood Video
Portfolio 1,800,000 1,796,102 128.70 2/18/99 3/1/09 120 360 356 116 Fee
144 CIBC Hampton Inn -
Mary Esther 1,800,000 1,794,954 34,518.35 4/6/99 5/1/09 120 240 238 118 Fee
145 RFC The Pinons
Apartments 1,805,000 1,792,319 19,481.73 12/17/98 1/1/09 120 300 294 114 Fee
146 Midland Foreside Place 1,800,000 1,784,420 54.87 10/27/98 11/1/08 120 300 292 112 Fee
147 Midland 21036 Triple
Seven Road 1,787,200 1,781,648 124.96 3/29/99 4/1/09 120 300 297 117 Fee
148 RFC Central Park
Southwest 1,777,000 1,773,467 73.04 4/16/99 5/1/09 120 300 298 118 Fee
149 Midland Best Storage 1,760,000 1,754,278 3,066.92 4/29/99 5/1/09 120 240 238 118 Fee
150 Midland Forest Hills
Shopping Center 1,760,000 1,743,296 48.42 10/26/98 11/1/13 180 300 292 172 Fee
151 Midland Ashton Oaks
Apartments 1,750,000 1,737,850 12,068.40 11/30/98 12/1/08 120 300 293 113 Fee
152 Midland Siesta Hills
Shopping Center 1,725,000 1,720,011 19.71 5/4/99 6/1/09 120 180 179 119 Fee
153 Midland Holiday Inn Express 1,725,000 1,719,651 26,456.16 2/25/99 3/1/09 120 300 296 116 Fee
154 Midland Waterside Apartments 1,702,000 1,700,890 14,293.19 5/11/99 6/1/09 120 360 359 119 Fee
155 Midland Village Square
Shopping Center 1,685,000 1,680,206 26.06 3/22/99 4/1/09 120 300 297 117 leasehold
156 Midland Century Mobile Home
Park 1,675,000 1,673,312 17,074.61 5/12/99 6/1/09 120 300 299 119 Fee
157 Midland Rite Aid Pharmacy 1,656,500 1,651,294 149.44 4/5/99 5/1/19 240 240 238 238 Fee
158 RFC Hobe Village Mobile
Home Park 1,640,000 1,640,000 12,913.39 6/11/99 7/1/14 180 300 300 180 Fee
159 Midland Via Linda Plaza 1,639,000 1,627,621 101.64 11/17/98 12/1/08 120 300 293 113 Fee
160 Midland Pleasant Valley
Apartments 1,600,000 1,596,651 33,263.56 3/30/99 4/1/11 144 360 357 141 Fee
161 Midland West Wind Apart-
ments Phase III 1,600,000 1,593,967 59,035.80 1/19/99 2/1/09 120 360 355 115 Fee
162 RFC S&R Shopping Center 1,600,000 1,589,989 63.25 10/15/98 11/1/08 120 360 352 112 Fee
163 Midland Edwards Village
Center 1,559,214 1,555,847 146.53 2/12/99 3/1/09 120 360 356 116 Fee
164 Midland Comfort Inn 1,535,000 1,530,240 24,289.52 2/25/99 3/1/09 120 300 296 116 Fee
165 RFC Laudonniere
Apartments 1,530,000 1,528,966 117,612.78 5/27/99 6/1/09 120 360 359 119 Fee
166 RFC Whaley's Shopping
Center 1,530,000 1,528,217 74.68 4/20/99 5/1/09 120 360 358 118 Fee
167 Midland Maybrook Apartments 1,522,000 1,509,131 25,152.18 11/2/98 12/1/08 120 300 293 113 Fee
168 RFC Staples 1,500,000 1,496,648 62.36 4/20/99 5/1/09 120 300 298 118 Fee
169 RFC The Retail Group 1,500,000 1,485,978 72.26 10/19/98 11/1/13 180 300 292 172 Fee
170 Midland Tucker Industries
Building 1,486,000 1,484,417 34.82 5/6/99 6/1/09 120 300 299 119 Fee
171 Midland Airborne Express 1,425,000 1,420,605 57.22 3/23/99 4/1/09 120 300 297 117 Fee
172 Midland Parkway Gardens
Apartments (D) 972,590 970,697 13,671.79 4/5/99 5/1/09 120 300 298 118 Fee
173 Midland Norvell Gardens
Apartments (D) 450,000 449,124 17,274.01 4/5/99 5/1/09 120 300 298 118 Fee
174 RFC Smith Retail
Portfolio 1,431,500 1,417,520 85.30 10/27/98 11/1/08 120 300 292 112 Fee
II-3
<PAGE>
<CAPTION>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
LOAN INFORMATION - I
- ------------------------------------------------------------------------------------------------------------------------------------
Origi-
Maturity nal
Cut- Date or Term
Off Antici- to Remaining
Date pated Matur- Origi- Term to
Bal./ Repay- ity nal Remain- Matur-
Original Cut-Off Unit ment or Amort. ing ity or
Loan Property Principal Date or Note Date ARD Term Amort. ARD Security
No. Seller(1) Name(2) Balance Balance(3) NSF(4) Date (ARD)(5) (mos) (mos)(6) Term (mos) Type
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
175 RFC Stor-A-Lot Self
Storage 1,400,000 1,398,601 19.80 5/6/99 6/1/09 120 300 299 119 Fee
176 CIBC CVS Smithtown 1,400,000 1,395,416 137.82 4/8/99 1/31/19 237 240 238 235 Fee
177 Midland Ashwood Apartments 1,400,000 1,390,582 8,857.21 12/30/98 1/1/09 120 300 294 114 Fee
178 Midland Stonehurst
Apartments 1,390,000 1,381,304 18,666.27 12/2/98 1/1/09 120 300 294 114 Fee
179 Midland Storage Max-Yuma 1,350,000 1,347,388 2,935.49 4/28/99 5/1/09 120 300 298 118 Fee
180 Midland Georgetown/Melrose
Plaza Apartments 1,350,000 1,345,859 7,046.38 3/26/99 4/1/09 120 300 297 117 Fee
181 RFC Greenwood/St.
Charles 1,325,000 1,318,476 32,961.90 11/6/98 11/1/08 119 360 353 112 Fee
182 Midland South Ogden Plaza 1,289,000 1,281,820 11.58 4/16/99 5/1/14 180 180 178 178 Fee
183 Midland Cedarstone
Apartments 1,269,000 1,262,864 35,079.55 11/11/98 12/1/08 120 360 353 113 Fee
184 Midland Southwest Manor
Duplexes 1,263,000 1,261,392 63,069.62 4/28/99 5/1/09 120 360 358 118 Fee
185 Midland Super 8 Motel 1,260,000 1,256,985 19,640.40 3/12/99 4/1/09 120 300 297 117 Fee
186 RFC Andover Apartments 1,251,000 1,233,629 18,691.35 6/30/98 7/1/08 120 300 288 108 Fee
187 Midland Southwood Plaza
Office Building 1,235,000 1,232,592 48.62 4/7/99 5/1/09 120 300 298 118 Fee
188 Midland The Trade Center 1,200,000 1,195,188 57.19 2/9/99 3/1/09 120 300 296 116 Fee
189 RFC Regency Mobile Home
Park 1,200,000 1,189,498 21,627.24 11/10/98 12/1/08 120 264 257 113 Fee
190 RFC Village Green
Shopping Center 1,200,000 1,184,215 49.02 11/23/98 12/1/08 120 240 233 113 Fee
191 RFC Center on Memorial 1,150,000 1,147,841 110.31 4/16/99 5/1/09 120 300 298 118 Fee
192 RFC River Road Mobile
Home Park 1,150,000 1,143,636 14,118.96 12/18/98 1/1/09 120 300 294 114 Fee
193 RFC First View 1,150,000 1,138,956 18,370.26 10/14/98 11/1/08 120 300 292 112 Fee
194 Midland Payne Office
Building 1,138,000 1,135,772 46.41 4/30/99 5/1/09 120 300 298 118 Fee
195 RFC Woodlane Apartments 1,136,000 1,135,313 17,466.36 5/11/99 6/1/09 120 360 359 119 Fee
196 Midland 507 Capital Court
(E) 380,000 376,264 106.55 10/28/98 11/1/08 120 300 292 112 Fee
197 Midland 513 Capitol Court
(E) 380,000 376,264 106.55 10/28/98 11/1/08 120 300 292 112 Fee
198 Midland 501 Capital Ct. NE
(E) 365,000 361,411 106.55 10/28/98 11/1/08 120 300 292 112 Fee
199 CIBC Town House South
Apartments and
Danville Duplexes 1,100,000 1,098,796 10,987.96 5/21/99 6/1/09 120 300 299 119 Fee
200 RFC Red Deer Apartments 1,105,000 1,095,060 16,591.82 6/30/98 7/1/08 120 360 348 108 Fee
201 Midland Crown Plaza Office
Building 1,100,000 1,091,472 45.79 11/6/98 12/1/08 120 300 293 113 Fee
202 RFC 535 Manufacturers
Drive 1,050,000 1,045,774 26.14 2/12/99 3/1/09 120 300 296 116 Fee
203 RFC Old Colony
Apartments 1,050,000 1,039,739 30,580.55 9/10/98 10/1/08 120 300 291 111 Fee
204 RFC Franklin Avenue
Building 1,039,000 1,033,498 22.81 12/31/98 1/1/09 120 300 294 114 Fee
205 RFC Rivercrest
Apartments 1,046,000 1,031,476 14,948.92 6/30/98 7/1/08 120 300 288 108 Fee
206 Midland View Pointe
Apartments 1,025,000 1,022,887 12,033.96 4/8/99 5/1/09 120 300 298 118 Fee
207 RFC 1340 21st Street NW 1,015,000 1,014,316 101,431.62 5/27/99 6/1/09 120 360 359 119 Fee
208 RFC Rollingwood
Apartments 1,012,500 1,009,641 15,775.63 3/29/99 4/1/14 180 300 297 177 Fee
209 Midland Greenbrier
Apartments 1,000,000 998,103 22,180.06 4/20/99 5/1/09 120 300 298 118 Fee
210 Midland Lantana Apartments 1,000,000 997,950 23,760.72 4/16/99 5/1/09 120 300 298 118 Fee
211 RFC Pine Meadow
Apartments 1,000,000 996,051 17,786.63 2/12/99 3/1/09 120 300 296 116 Fee
212 Midland Commerce II
Business Park 1,000,000 975,617 9.00 10/23/98 11/1/13 180 180 172 172 Fee
213 Midland Office Park at
Erindale 961,000 959,104 61.91 4/27/99 5/1/09 120 300 298 118 Fee
214 Midland Fletcher Auto Mall 950,000 948,260 34.70 4/16/99 5/1/09 120 300 298 118 Fee
215 RFC Spurwood Office 950,000 947,362 41.58 3/16/99 4/1/09 120 300 297 117 Fee
216 RFC Colonial-Excelsior 946,250 936,876 16,436.42 9/10/98 10/1/08 120 291 282 111 Fee
217 Midland 170 South River
Road 939,000 935,917 54.69 4/12/99 5/1/09 120 240 238 118 Fee
218 RFC Centennial Place
Apartments 941,900 935,829 21,268.84 12/1/98 12/1/08 120 300 293 113 Fee
219 RFC Charmony Place
Apartments 930,700 928,839 17,200.72 4/21/99 5/1/09 120 300 298 118 Fee
220 RFC Wooded Acres
Apartments 925,000 921,178 15,352.96 12/8/98 1/1/09 120 360 354 114 Fee
221 RFC Greenwood Villa
Apartments 895,000 887,674 14,794.56 11/20/98 12/1/08 120 300 293 113 Fee
222 RFC Lincolnwood Office
Building 882,000 875,024 53.21 11/13/98 12/1/08 120 300 293 113 Fee
223 RFC Brighton Court
Apartments 875,000 872,316 12,642.26 3/17/99 4/1/09 120 300 297 117 Fee
224 Midland Bell Oaks Village
Apartments 833,000 832,120 10,948.95 4/30/99 6/1/09 120 300 299 119 Fee
225 RFC 61-71 Long Lane 830,000 824,401 35.39 11/3/98 12/1/08 120 300 293 113 Fee
226 Midland Prairie Village
Mobile Home Park 825,000 822,635 10,282.94 3/25/99 4/1/09 120 300 297 117 Fee
227 RFC 20 Green of
Panorama 827,500 822,548 51,409.28 12/31/98 1/1/09 120 300 294 114 Fee
228 RFC Cedargate Apartments 818,250 806,888 16,810.17 6/30/98 7/1/08 120 300 288 108 Fee
229 RFC Copperfield Landing,
LP 800,000 800,000 88.14 6/18/99 7/1/14 180 180 180 180 Fee
230 Midland ICCA Building 735,000 728,605 124.98 10/26/98 11/1/08 120 300 292 112 Fee
231 RFC Oak Glen Apartments 680,000 674,205 12,039.38 10/5/98 11/1/08 120 300 292 112 Fee
232 RFC North Miami
Industrial 662,000 660,020 29.33 2/26/99 3/1/09 120 300 296 116 Fee
233 RFC Quail Creek
Apartments 656,400 654,143 23,362.25 2/19/99 3/1/09 120 300 296 116 Fee
234 RFC University
Apartments 600,000 595,643 13,852.17 12/8/98 1/1/09 120 300 294 114 Fee
II-4
<PAGE>
<CAPTION>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
LOAN INFORMATION - I
- ------------------------------------------------------------------------------------------------------------------------------------
Origi-
Maturity nal
Cut- Date or Term
Off Antici- to Remaining
Date pated Matur- Origi- Term to
Bal./ Repay- ity nal Remain- Matur-
Original Cut-Off Unit ment or Amort. ing ity or
Loan Property Principal Date or Note Date ARD Term Amort. ARD Security
No. Seller(1) Name(2) Balance Balance(3) NSF(4) Date (ARD)(5) (mos) (mos)(6) Term (mos) Type
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
235 Midland Irving Court
Townhomes 545,000 543,935 16,997.98 4/14/99 5/1/09 120 300 298 118 Fee
236 RFC Grahamcrest Manor
Apartments 525,000 515,700 10,524.49 1/27/98 2/1/08 120 300 283 103 Fee
237 RFC The Gorelick
Apartments 500,000 494,925 41,243.77 8/25/98 9/1/08 120 300 290 110 Fee
238 Midland 325-339 North Dr 500,000 490,278 28.85 11/11/98 12/1/13 180 180 173 173 Fee
239 RFC 519 Central Avenue 474,000 468,887 29,305.44 7/7/98 8/1/08 120 300 289 109 Fee
240 RFC Klingerman
Apartments 442,000 436,351 33,565.44 6/9/98 7/1/13 180 300 288 168 Fee
241 RFC 901 SW 8th Avenue
Apartments 439,000 430,193 17,924.71 5/18/98 6/1/18 240 240 227 227 Fee
242 RFC Meadow Pines
Apartments 420,000 415,331 17,305.47 6/4/98 7/1/08 120 300 288 108 Fee
Total/Weighted Average $736,522,244 $733,801,916 125 324 320 120
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
LOAN INFORMATION - II
- -----------------------------------------------------------------------------------------------------------------------------
Related Borrower Scheduled
Loan Interest Interest Loan Groups Balloon Balloon
No. Seller(1) Property Name(2) Rate Accrual Method (by Loan No.) Balance LTV(4)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 RFC 21 Penn Plaza 7.200% Actual/360 $28,409,182 60.2%
2 RFC Park Drive Manor Apts 7.450% Actual/360 31 18,660,352 62.2%
3 CIBC Prime Portfolio 7.170% Actual/360 13,655,857 70.4%
CIBC 1301 East Tower Road (I) 7.170% Actual/360 3 3,656,251 70.4%
CIBC 4300 Madison Street (I) 7.170% Actual/360 3 3,565,833 70.4%
CIBC 342-346 Carol Lane (I) 7.170% Actual/360 3 2,050,661 70.4%
CIBC 550 Kehoe Blvd. (I) 7.170% Actual/360 3 1,986,578 70.4%
CIBC 343 Carol Lane (I) 7.170% Actual/360 3 1,215,824 70.4%
CIBC 388 Carol Lane (I) 7.170% Actual/360 3 1,180,710 70.4%
4 CIBC 1414 Avenue of the Americas 7.870% Actual/360 5, 15 12,169,841 60.8%
5 CIBC 70 West 36th Street 7.870% Actual/360 4, 15 10,605,147 58.9%
6 RFC 7200 Leamington, LLC (A) 8.320% Actual/360 7, 8 4,372,452 65.5%
7 RFC 2201 Lundt, LLC (A) 8.320% Actual/360 6, 8 3,606,147 65.5%
8 RFC 1330 W. 43rd St. (A) 8.320% Actual/360 6, 7 1,974,366 65.5%
9 CIBC University Club Apartments 7.390% Actual/360 9,254,639 67.0%
10 Midland The Patriot Apartments 7.240% Actual/360 13 8,842,833 70.2%
11 CIBC Acme Plaza (Cape May Plaza) 7.550% Actual/360 8,402,811 70.0%
12 RFC The Place Apartments 7.150% Actual/360 7,619,550 70.0%
13 Midland The Phoenix Apartments 6.990% Actual/360 10 7,363,965 69.8%
14 RFC Glenwood Plaza 7.810% Actual/360 7,259,141 60.5%
15 CIBC 633 Third Avenue 7.870% Actual/360 4, 5 6,736,876 61.2%
16 Midland 148 State Street 7.870% Actual/360 6,787,267 61.7%
17 CIBC The Piers 7.715% Actual/360 18, 26 6,663,473 66.6%
18 CIBC North Point Center 7.990% Actual/360 17, 26 6,618,690 63.6%
19 Midland Beau Rivage Apartments,
Phases II & III 6.810% Actual/360 6,104,782 69.4%
20 Midland Holiday Inn Express & Suites 8.530% Actual/360 93 4,784,295 47.6%
21 CIBC Regal Cinemas 7.820% Actual/360 5,494,429 64.6%
22 Midland Drake's Passage 7.850% Actual/360 5,267,429 58.5%
23 Midland Northcastle Apartments 6.810% Actual/360 39, 49 5,563,985 68.1%
24 RFC Giro Building 7.850% Actual/360 5,173,024 50.8%
25 Midland Longley Business Park 7.890% Actual/360 5,479,579 63.7%
26 CIBC Sharpstown Court 7.715% Actual/360 17, 18 5,330,778 64.2%
27 Midland Temescal Village Plaza 8.010% Actual/360 4,626,911 65.9%
28 CIBC Plantation Properties 7.860% Actual/360 4,777,378 64.6%
29 RFC Bernal Business Center 8.090% Actual/360 4,931,779 62.8%
30 Midland East 55TH Street 7.630% Actual/360 4,282,014 48.7%
31 RFC Coriel Manor Apartments 8.050% Actual/360 2 4,538,520 51.6%
32 RFC Gibbstown Shopping Center 8.830% 30/360 5,139,872 71.9%
33 Midland Plaza De Colores 7.940% Actual/360 4,729,453 66.1%
34 CIBC Lifeline Building 7.310% Actual/360 4,666,664 61.4%
35 RFC Deon Square Shopping Center 7.415% Actual/360 119,793 1.6%
36 CIBC Regstad II - Orchid Place 7.510% Actual/360 4,063,780 63.5%
37 CIBC 6 Gramatan Avenue 8.270% Actual/360 4,502,795 67.2%
38 CIBC Eisenhower Industrial Complex 8.080% Actual/360 4,132,500 48.1%
39 Midland Wood River Apartments 7.250% Actual/360 23, 49 4,394,977 70.1%
40 RFC Old Navy - Linens 'N Things 8.230% Actual/360 4,399,287 69.4%
41 CIBC Avenue C Apartments 7.770% Actual/360 4,270,390 66.2%
42 RFC Pine Plaza Shopping Center 7.960% Actual/360 4,243,719 63.6%
43 RFC Shopps On the Pike 7.460% Actual/360 146,569 2.1%
44 Midland Shoppes of Kenwood 7.580% Actual/360 4,166,219 67.2%
45 Midland Country Club Place Shopping
Center 8.290% Actual/360 106, 154 4,193,684 49.3%
II-6
<PAGE>
<CAPTION>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
LOAN INFORMATION - II
- -----------------------------------------------------------------------------------------------------------------------------
Related Borrower Scheduled
Loan Interest Interest Loan Groups Balloon Balloon
No. Seller(1) Property Name(2) Rate Accrual Method (by Loan No.) Balance LTV(4)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
46 RFC Space City Retail Center 7.940% Actual/360 110,193 1.4%
47 RFC Glen Cove Shopping Center 8.255% Actual/360 4,140,966 61.3%
48 RFC The Crossings 7.575% Actual/360 4,073,559 58.2%
49 Midland The Glen Apartments 7.050% Actual/360 23, 39 4,022,623 69.4%
50 Midland Lackland Self Storage 7.770% Actual/360 104 139,924 1.6%
51 CIBC Fairfield Inn 9.020% Actual/360 75 3,732,253 59.2%
52 CIBC Trolley Commons/Willow Reed
Village 7.600% Actual/360 3,585,765 65.2%
53 CIBC Monarch Beach Plaza 8.690% Actual/360 3,573,200 54.8%
54 Midland 95 John Muir Drive 7.810% Actual/360 3,779,793 66.3%
55 CIBC Northup West Office Park 6.840% Actual/360 3,647,347 62.3%
56 Midland MCI Building 7.760% Actual/360 3,381,001 54.3%
57 Midland Springtown Shopping Center 7.220% Actual/360 3,579,167 70.2%
58 RFC Crosswinds Apartment Homes 7.750% Actual/360 3,600,006 66.7%
59 Midland Forrest Machinery Building 7.510% Actual/360 3,303,062 61.2%
60 Midland Canal House Apartments 7.220% Actual/360 3,513,292 54.9%
61 CIBC Warner Center 7.710% Actual/360 3,271,211 57.4%
62 Midland Woodside at the Office Center 7.590% Actual/360 3,265,261 60.5%
63 RFC Mountain Country Estates 7.250% Actual/360 145 3,224,253 63.2%
64 CIBC One Dodge Drive 8.100% Actual/360 129 3,497,375 68.6%
65 CIBC Kolonaki - Industrial (808) 8.320% Actual/360 135, 139 3,203,815 54.5%
66 Midland Rockford Ambulatory Surgery
Center (B) 8.450% Actual/360 67 2,147,243 54.2%
67 Midland Rockford Medical Office
Building (B) 8.450% Actual/360 66 696,781 54.2%
68 CIBC White's Crossing Plaza 7.900% Actual/360 3,338,491 64.8%
69 CIBC Access Self Storage 7.810% Actual/360 3,075,815 61.5%
70 Midland South Park Office Complex 7.770% Actual/360 3,307,955 59.5%
71 Midland Georgetown Apartments 7.530% Actual/360 3,188,399 65.1%
72 Midland Heritage Park Apartments 7.480% Actual/360 3,105,913 65.4%
73 Midland Northland Aluminum Products, Inc. 8.250% Actual/360 2,503,008 40.9%
74 RFC Coach & Four East Apartments 7.590% Actual/360 3,064,664 65.2%
75 CIBC Courtyard by Marriott 9.020% Actual/360 51 2,884,013 51.5%
76 RFC Brook Run Apartments 7.430% Actual/360 2,955,682 65.7%
77 RFC Green Meadows Apartments 7.700% Actual/360 2,965,252 70.6%
78 RFC Grand Plaza Properties, Inc. 7.990% Actual/360 2,941,739 66.1%
79 RFC Fairmont and Monticello Apartments 7.660% Actual/360 2,677,897 60.6%
80 CIBC Palmetto Gardens Industrial Park 7.760% Actual/360 2,767,253 60.4%
81 Midland Lower Falls Landing 7.880% Actual/360 2,656,694 61.8%
82 RFC PML Office Building 8.160% Actual/360 2,650,749 58.9%
83 Midland Concord Business Center 7.900% Actual/360 2,638,629 47.1%
84 Midland Middlebrook Business Park 7.970% Actual/360 2,518,935 61.4%
85 Midland Vintage Faire Apartments 7.590% Actual/360 2,555,177 48.2%
86 CIBC 140 Gould Street 7.480% Actual/360 2,649,490 58.9%
87 Midland Woodbridge Apartments 7.170% Actual/360 2,588,129 69.9%
88 RFC Pier One Imports 7.800% Actual/360 2,616,523 68.9%
89 Midland Deerwood at the Park Apartments 7.110% Actual/360 2,539,949 58.4%
90 Midland Tukwila Estates 7.620% Actual/360 2,565,321 64.9%
91 Midland Orchard Park Apartments 7.670% Actual/360 2,292,549 65.5%
92 Midland Airport Business Center 7.850% Actual/360 2,283,924 46.6%
93 Midland Holiday Inn, New Ulm 8.850% Actual/360 20 1,931,928 44.9%
94 RFC Monsey Mall 8.300% Actual/360 1,960,427 44.6%
95 Midland Silverdale Office Building 7.420% Actual/360 2,217,378 49.3%
96 RFC Habersham Shopping Center 7.700% Actual/360 2,405,515 60.9%
II-7
<PAGE>
<CAPTION>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
LOAN INFORMATION - II
- -----------------------------------------------------------------------------------------------------------------------------
Related Borrower Scheduled
Loan Interest Interest Loan Groups Balloon Balloon
No. Seller(1) Property Name(2) Rate Accrual Method (by Loan No.) Balance LTV(4)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
97 Midland Brattleboro North Shopping Plaza 7.640% 30/360 2,166,788 41.3%
98 Midland Crossroads Shopping Center 7.560% Actual/360 2,331,869 65.7%
99 RFC Paloma Apartments 7.180% Actual/360 2,300,871 65.7%
100 Midland Mullica Woods 7.370% Actual/360 2,069,359 57.5%
101 Midland Windsong Apartments 7.770% Actual/360 2,053,671 47.2%
102 Midland Magnolia Park Shopping Center 7.360% Actual/360 2,028,088 45.1%
103 Midland Vollstedt Building 7.930% Actual/360 2,041,794 60.1%
104 Midland Lackland Self Storage 7.770% Actual/360 50 77,737 1.3%
105 Midland Cinnamon Square Apartments 7.750% Actual/360 2,019,634 61.6%
106 Midland Bordeaux XI Apartments 7.990% Actual/360 45, 154 2,182,992 67.2%
107 Midland 5397 North Commerce (C) 7.950% Actual/360 108 1,145,636 59.0%
108 Midland Gabbert Building (C) 7.950% Actual/360 107 756,880 58.2%
109 RFC The Kingsbury Apartments 7.550% Actual/360 1,870,440 64.1%
110 Midland Crestwood Apartments 7.640% Actual/360 1,852,736 61.8%
111 CIBC Dicks Clothing and Sporting Goods 8.610% Actual/360 1,900,586 60.3%
112 Midland Roseland Manor Duplexes 7.970% Actual/360 224 1,858,231 61.9%
113 Midland Mount View Office Building 7.740% Actual/360 1,880,519 56.1%
114 Midland The Port Apartments 7.410% Actual/360 177 1,983,413 68.4%
115 RFC Forman Mills 7.950% Actual/360 1,851,739 55.3%
116 RFC 7900 Beech Daly &
6810 Metroplex Drive 7.100% Actual/360 1,945,789 68.8%
117 RFC Arrowhead Fountain Center 8.110% Actual/360 1,973,345 65.8%
118 Midland Ridgmar Crossroads Apartments 7.380% Actual/360 235 1,942,682 68.9%
119 RFC Renaissance West Shopping Center 8.135% Actual/360 1,804,852 45.1%
120 CIBC Lexington Center 8.210% Actual/360 1,944,694 64.8%
121 Midland State of Oregon Job Council
Buildings 7.960% Actual/360 1,777,825 52.3%
122 CIBC Hayes Community 8.160% Actual/360 1,764,406 47.7%
123 RFC Today's Man - Deptford 8.120% Actual/360 1,758,635 55.0%
124 Midland Devon Park Apartments 7.440% Actual/360 1,707,007 64.4%
125 RFC Cross Keys Apartments 7.000% Actual/360 1,832,014 69.1%
126 CIBC White Oak Professional Building 8.020% Actual/360 1,812,832 64.7%
127 RFC Scripps Mesa Shopping Center 8.150% Actual/360 1,675,767 58.4%
128 Midland Pacific Place 7.890% Actual/360 1,647,972 53.2%
129 CIBC Timberfalls Apartments 7.860% Actual/360 64 1,783,619 66.7%
130 Midland 110 American Boulevard 7.480% Actual/360 1,627,653 60.5%
131 Midland Handy Lock Mini Storage 7.430% Actual/360 1,389,213 46.3%
132 RFC Carpenter Crest Apartments 7.150% Actual/360 1,733,858 69.4%
133 RFC Stanford Court 8.625% 30/360 1,873,574 76.5%
134 Midland Commons at Valdosta Apartments 7.470% Actual/360 1,697,942 70.7%
135 CIBC Kolonaki - Sausalito (579) 8.320% Actual/360 65, 139 1,581,104 51.0%
136 Midland Quail Court Apartments 7.030% Actual/360 1,525,463 62.9%
137 Midland Pacific Palms Apartments 7.880% Actual/360 61,149 1.5%
138 Midland Village at Cambridge Self Storage 8.270% Actual/360 1,540,898 58.5%
139 CIBC Kolonaki - San Francisco (1723) 8.320% Actual/360 65, 135 1,539,495 51.0%
140 Midland Providence Office Building 7.810% Actual/360 194 1,513,263 48.8%
141 Midland Westlake Village Apartments 7.520% Actual/360 1,595,601 57.1%
142 CIBC Days Inn - Anderson 8.990% Actual/360 1,526,013 54.0%
143 RFC Hollywood Video Portfolio 8.160% Actual/360 1,616,831 67.4%
144 CIBC Hampton Inn - Mary Esther 8.880% Actual/360 1,308,848 42.8%
145 RFC The Pinons Apartments 7.250% Actual/360 63 1,454,945 58.2%
146 Midland Foreside Place 7.660% Actual/360 1,472,733 52.6%
147 Midland 21036 Triple Seven Road 7.720% Actual/360 1,465,444 65.1%
II-8
<PAGE>
<CAPTION>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
LOAN INFORMATION - II
- -----------------------------------------------------------------------------------------------------------------------------
Related Borrower Scheduled
Loan Interest Interest Loan Groups Balloon Balloon
No. Seller(1) Property Name(2) Rate Accrual Method (by Loan No.) Balance LTV(4)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
148 RFC Central Park Southwest 7.730% Actual/360 1,454,039 54.9%
149 Midland Best Storage 7.850% Actual/360 1,242,091 52.0%
150 Midland Forest Hills Shopping Center 7.120% Actual/360 1,125,606 51.2%
151 Midland Ashton Oaks Apartments 8.090% Actual/360 1,450,195 61.1%
152 Midland Siesta Hills Shopping Center 7.990% Actual/360 848,734 19.3%
153 Midland Holiday Inn Express 9.000% Actual/360 164, 185 1,467,101 56.4%
154 Midland Waterside Apartments 8.140% Actual/360 45, 106 1,529,666 65.1%
155 Midland Village Square Shopping Center 8.200% Actual/360 1,400,774 54.5%
156 Midland Century Mobile Home Park 8.260% Actual/360 1,394,746 69.7%
157 Midland Rite Aid Pharmacy 8.090% Actual/360 89,449 4.3%
158 RFC Hobe Village Mobile Home Park 8.370% Actual/360 1,114,643 48.5%
159 Midland Via Linda Plaza 8.090% Actual/360 1,358,212 58.4%
160 Midland Pleasant Valley Apartments 7.370% Actual/360 1,353,262 53.3%
161 Midland West Wind Apartments Phase III 7.490% Actual/360 1,414,900 68.4%
162 RFC S&R Shopping Center 7.030% Actual/360 1,396,482 55.9%
163 Midland Edwards Village Center 8.170% Actual/360 1,403,585 58.5%
164 Midland Comfort Inn 9.000% Actual/360 153, 185 1,305,508 62.2%
165 RFC Laudonniere Apartments 7.965% Actual/360 1,367,639 70.1%
166 RFC Whaley's Shopping Center 7.860% Actual/360 1,364,420 64.2%
167 Midland Maybrook Apartments 6.960% Actual/360 1,219,734 58.1%
168 RFC Staples 7.110% Actual/360 1,204,561 54.8%
169 RFC The Retail Group 7.210% Actual/360 959,056 34.9%
170 Midland Tucker Industries Building 7.920% Actual/360 1,225,500 59.1%
171 Midland Airborne Express 7.760% Actual/360 1,169,815 63.2%
172 Midland Parkway Gardens Apartments (D) 7.840% Actual/360 173 800,580 57.3%
173 Midland Norvell Gardens Apartments (D) 7.840% Actual/360 172 370,414 58.8%
174 RFC Smith Retail Portfolio 6.950% Actual/360 1,143,273 56.5%
175 RFC Stor-A-Lot Self Storage 8.310% Actual/360 1,164,645 59.1%
176 CIBC CVS Smithtown 7.800% Actual/360 92,215 4.6%
177 Midland Ashwood Apartments 7.510% Actual/360 114 1,140,371 60.3%
178 Midland Stonehurst Apartments 7.940% Actual/360 1,146,467 60.3%
179 Midland Storage Max-Yuma 7.870% Actual/360 1,112,207 58.5%
180 Midland Georgetown/Melrose Plaza Apartments 7.790% Actual/360 1,109,212 56.9%
181 RFC Greenwood/St. Charles 7.450% Actual/360 1,171,171 65.1%
182 Midland South Ogden Plaza 8.010% Actual/360 43,645 1.4%
183 Midland Cedarstone Apartments 7.530% Actual/360 1,123,910 66.1%
184 Midland Southwest Manor Duplexes 7.520% Actual/360 1,118,716 67.8%
185 Midland Super 8 Motel 9.110% Actual/360 153, 164 1,073,642 59.6%
186 RFC Andover Apartments 7.625% 30/360 200, 205, 228 1,000,583 58.5%
187 Midland Southwood Plaza Office Building 7.830% Actual/360 1,016,285 58.9%
188 Midland The Trade Center 7.720% Actual/360 984,781 58.3%
189 RFC Regency Mobile Home Park 8.550% Actual/360 929,309 48.9%
190 RFC Village Green Shopping Center 7.075% Actual/360 819,108 34.1%
191 RFC Center on Memorial 8.025% Actual/360 949,135 57.0%
192 RFC River Road Mobile Home Park 8.650% Actual/360 965,240 56.8%
193 RFC First View 7.050% Actual/360 921,318 54.2%
194 Midland Payne Office Building 7.810% Actual/360 140 935,920 53.5%
195 RFC Woodlane Apartments 8.510% Actual/360 1,028,446 72.4%
196 Midland 507 Capital Court (E) 6.910% Actual/360 197, 198 303,964 55.7%
197 Midland 513 Capitol Court (E) 6.910% Actual/360 196, 199 303,964 55.7%
198 Midland 501 Capital Ct. NE (E) 6.910% Actual/360 196, 197 291,964 55.7%
II-9
<PAGE>
<CAPTION>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
LOAN INFORMATION - II
- -----------------------------------------------------------------------------------------------------------------------------
Related Borrower Scheduled
Loan Interest Interest Loan Groups Balloon Balloon
No. Seller(1) Property Name(2) Rate Accrual Method (by Loan No.) Balance LTV(4)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
199 CIBC Town House South Apartments
and Danville Duplexes 7.750% Actual/360 900,432 60.0%
200 RFC Red Deer Apartments 7.625% 30/360 186, 205, 228 961,708 56.6%
201 Midland Crown Plaza Office Building 7.465% Actual/360 895,162 43.0%
202 RFC 535 Manufacturers Drive 7.700% Actual/360 858,438 58.2%
203 RFC Old Colony Apartments 7.560% Actual/360 854,518 63.3%
204 RFC Franklin Avenue Building 8.900% Actual/360 877,990 59.5%
205 RFC Rivercrest Apartments 7.625% 30/360 186, 200, 228 836,617 57.7%
206 Midland View Pointe Apartments 7.540% Actual/360 836,328 61.7%
207 RFC 1340 21st Street NW 7.980% Actual/360 907,617 66.7%
208 RFC Rollingwood Apartments 8.240% Actual/360 683,442 44.1%
209 Midland Greenbrier Apartments 7.970% Actual/360 826,234 59.0%
210 Midland Lantana Apartments 7.570% Actual/360 816,657 60.0%
211 RFC Pine Meadow Apartments 7.800% Actual/360 819,977 42.1%
212 Midland Commerce II Business Park 7.450% Actual/360 29,317 0.8%
213 Midland Office Park at Erindale 7.770% Actual/360 789,432 56.4%
214 Midland Fletcher Auto Mall 8.150% Actual/360 788,958 52.6%
215 RFC Spurwood Office 8.330% Actual/360 790,775 52.7%
216 RFC Colonial-Excelsior 7.875% Actual/360 764,761 53.1%
217 Midland 170 South River Road 7.780% Actual/360 661,076 37.6%
218 RFC Centennial Place Apartments 8.500% Actual/360 787,511 60.6%
219 RFC Charmony Place Apartments 7.700% Actual/360 760,875 60.4%
220 RFC Wooded Acres Apartments 7.700% Actual/360 821,214 66.5%
221 RFC Greenwood Villa Apartments 7.150% Actual/360 234 719,344 53.3%
222 RFC Lincolnwood Office Building 7.350% Actual/360 713,242 53.8%
223 RFC Brighton Court Apartments 7.790% Actual/360 717,125 57.4%
224 Midland Bell Oaks Village Apartments 7.970% Actual/360 112 687,959 58.8%
225 RFC 61-71 Long Lane 8.250% Actual/360 689,115 51.0%
226 Midland Prairie Village Mobile Home Park 8.160% Actual/360 685,067 62.3%
227 RFC 20 Green of Panorama 8.200% Actual/360 685,914 64.7%
228 RFC Cedargate Apartments 7.625% 30/360 200, 205 654,458 57.9%
229 RFC Copperfield Landing, LP 8.630% Actual/360 22,721 1.6%
230 Midland ICCA Building 7.630% Actual/360 600,838 58.9%
231 RFC Oak Glen Apartments 7.750% Actual/360 556,412 56.8%
232 RFC North Miami Industrial 9.170% Actual/360 563,956 61.0%
233 RFC Quail Creek Apartments 8.500% Actual/360 549,117 59.0%
234 RFC University Apartments 7.050% Actual/360 221 480,670 50.6%
235 Midland Irving Court Townhomes 7.820% Actual/360 118 448,352 59.8%
236 RFC Grahamcrest Manor Apartments 8.000% Actual/360 432,458 57.7%
237 RFC The Gorelick Apartments 8.000% Actual/360 412,130 61.1%
238 Midland 325-339 North Dr 8.410% Actual/360 17,794 1.8%
239 RFC 519 Central Avenue 8.125% Actual/360 392,186 57.8%
240 RFC Klingerman Apartments 7.625% Actual/360 289,105 49.0%
241 RFC 901 SW 8th Avenue Apartments 8.625% Actual/360 22,958 3.3%
242 RFC Meadow Pines Apartments 8.375% Actual/360 350,053 62.5%
Total/Weighted Average 7.737% $601,011,350 58.5%
</TABLE>
II-10
<PAGE>
<TABLE>
<CAPTION>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
PROPERTY OPERATING INFORMATION
- ------------------------------------------------------------------------------------------------------------------------------------
Cut-
Value Off Percent
Loan Underwritable Monthly DSCR Appraised as of Date Leased
No. Seller(1) Property Name(2) Cash Flow Payment (4) Value Date LTV(4) (7)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 RFC 21 Penn Plaza $3,583,883 $219,927 1.36 $47,200,000 4/1/99 68.2% 100%
2 RFC Park Drive Manor Apts 2,741,135 169,221 1.35 30,000,000 2/9/99 76.4% 98%
3 CIBC Prime Portfolio 1,709,765 105,277 1.35 19,400,000 5/1/99 79.4% 100%
CIBC 1301 East Tower Road (I) 451,181 28,187 1.35 4,700,000 4/27/99 79.4% 100%
CIBC 4300 Madison Street (I) 414,401 27,490 1.35 4,800,000 4/27/99 79.4% 100%
CIBC 342-346 Carol Lane (I) 272,492 15,809 1.35 3,200,000 4/26/99 79.4% 100%
CIBC 550 Kehoe Blvd. (I) 252,721 15,315 1.35 3,000,000 4/27/99 79.4% 100%
CIBC 343 Carol Lane (I) 150,615 9,373 1.35 1,900,000 4/26/99 79.4% 100%
CIBC 388 Carol Lane (I) 168,354 9,102 1.35 1,800,000 4/26/99 79.4% 100%
4 CIBC 1414 Avenue of the Americas 1,795,434 106,851 1.40 20,000,000 2/11/99 70.0% 100%
5 CIBC 70 West 36th Street 1,559,453 93,113 1.40 18,000,000 2/11/99 67.8% 100%
6 RFC 7200 Leamington, LLC (A) 586,171 36,675 1.30 6,800,000 4/1/99 72.6% 100%
7 RFC 2201 Lundt, LLC (A) 461,495 30,248 1.30 5,600,000 4/1/99 72.6% 100%
8 RFC 1330 W. 43rd St. (A) 254,390 16,561 1.30 2,800,000 4/1/99 72.6% 100%
9 CIBC University Club Apartments 1,130,378 72,628 1.30 13,820,000 2/23/99 75.9% 98%
10 Midland The Patriot Apartments 1,029,379 68,491 1.25 12,600,000 2/1/99 79.5% 100%
11 CIBC Acme Plaza (Cape May Plaza) 1,058,317 66,751 1.32 12,000,000 12/21/98 78.8% 100%
12 RFC The Place Apartments 887,965 58,760 1.26 10,887,000 3/5/99 79.8% 99%
13 Midland The Phoenix Apartments 924,911 55,989 1.38 10,550,000 2/1/99 79.6% 90%
14 RFC Glenwood Plaza 917,894 58,726 1.30 12,000,000 1/6/99 67.8% 83%
15 CIBC 633 Third Avenue 961,504 59,150 1.35 11,000,000 2/16/99 70.5% 100%
16 Midland 148 State Street 865,914 55,079 1.31 11,000,000 2/10/99 69.0% 100%
17 CIBC The Piers 879,812 53,550 1.37 10,000,000 3/30/99 74.9% 100%
18 CIBC North Point Center 890,495 54,247 1.37 10,400,000 3/31/99 71.1% 98%
19 Midland Beau Rivage Apartments,
Phases II & III 740,348 45,812 1.35 8,800,000 3/8/99 79.7% 97%
20 Midland Holiday Inn Express
& Suites 982,176 56,104 1.46 10,050,000 4/1/99 69.0% 74%
21 CIBC Regal Cinemas 774,379 50,915 1.27 8,500,000 12/1/98 78.2% 100%
22 Midland Drake's Passage 806,401 48,762 1.38 9,000,000 3/12/99 71.0% 80%
23 Midland Northcastle Apartments 637,128 41,766 1.27 8,175,000 11/9/98 77.8% 96%
24 RFC Giro Building 802,250 48,000 1.39 10,180,000 3/10/99 61.9% 100%
25 Midland Longley Business Park 667,991 44,532 1.25 8,600,000 2/15/99 71.3% 96%
26 CIBC Sharpstown Court 721,497 42,840 1.40 8,300,000 3/25/99 72.2% 100%
27 Midland Temescal Village Plaza 648,457 43,228 1.25 7,020,000 2/22/99 79.6% 98%
28 CIBC Plantation Properties 637,904 41,121 1.29 7,400,000 2/15/99 74.8% 100%
29 RFC Bernal Business Center 614,423 40,703 1.26 7,850,000 4/19/99 70.1% 99%
30 Midland East 55TH Street 685,361 42,332 1.35 8,800,000 9/28/98 62.3% 100%
31 RFC Coriel Manor Apartments 754,503 42,632 1.47 8,800,000 10/7/98 62.2% 96%
32 RFC Gibbstown Shopping Center 657,579 43,584 1.26 7,150,000 10/6/98 75.8% 93%
33 Midland Plaza De Colores 617,229 38,559 1.33 7,150,000 1/7/99 73.8% 93%
34 CIBC Lifeline Building 568,137 36,371 1.30 7,600,000 3/10/99 69.3% 100%
35 RFC Deon Square Shopping Center 636,034 45,437 1.17 7,500,000 2/10/99 67.8% 97%
36 CIBC Regstad II - Orchid Place 542,943 36,982 1.22 6,400,000 3/10/99 78.0% 97%
37 CIBC 6 Gramatan Avenue 685,591 37,634 1.52 6,700,000 12/30/98 74.5% 98%
38 CIBC Eisenhower Industrial Complex 643,740 38,856 1.38 8,600,000 3/8/99 58.0% 100%
39 Midland Wood River Apartments 517,201 34,109 1.26 6,270,000 1/19/99 79.4% 94%
40 RFC Old Navy - Linens 'N Things 549,978 36,668 1.25 6,335,000 3/25/99 77.2% 100%
41 CIBC Avenue C Apartments 523,150 34,454 1.27 6,450,000 4/28/99 74.4% 100%
42 RFC Pine Plaza Shopping Center 540,678 34,721 1.30 6,670,000 8/17/98 70.9% 100%
43 RFC Shopps On the Pike 573,598 38,953 1.32 7,000,000 3/3/98 76.5% 100%
44 Midland Shoppes of Kenwood 527,650 33,121 1.33 6,200,000 10/7/98 75.5% 100%
45 Midland Country Club Place Shopping
Center 566,627 35,065 1.35 8,500,000 2/1/99 54.7% 100%
46 RFC Space City Retail Center 595,427 44,277 1.12 7,700,000 2/15/99 60.2% 89%
47 RFC Glen Cove Shopping Center 543,870 34,574 1.31 6,750,000 1/1/99 68.1% 100%
48 RFC The Crossings 573,114 32,400 1.47 7,000,000 10/7/98 65.6% 100%
49 Midland The Glen Apartments 480,251 30,759 1.30 5,800,000 1/22/99 79.0% 91%
50 Midland Lackland Self Storage 789,299 42,409 1.55 8,500,000 7/17/98 52.0% 90%
51 CIBC Fairfield Inn 690,590 36,985 1.56 6,300,000 5/7/99 69.8% 83%
52 CIBC Trolley Commons/Willow Reed
Village 531,043 32,802 1.35 5,500,000 3/31/99 79.9% 95%
53 CIBC Monarch Beach Plaza 594,902 34,768 1.43 6,525,000 2/19/99 65.0% 98%
54 Midland 95 John Muir Drive 476,287 30,530 1.30 5,700,000 1/27/99 74.2% 94%
55 CIBC Northup West Office Park 442,707 27,493 1.34 5,850,000 7/27/98 71.2% 100%
II-11
<PAGE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Percent Square
Leased Footage
Loan as of Largest
No. Seller(1) Property Name(2) Date(7) Largest Tenant (8) Tenant
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> C> <C> <C>
1 RFC 21 Penn Plaza 3/8/99 Saks & Company 63,159
2 RFC Park Drive Manor Apts 1/28/99 N/A N/A
3 CIBC Prime Portfolio 6/1/99 Householde Credit Services 260,044
CIBC 1301 East Tower Road (I) 6/1/99 Householde Credit Services 50,400
CIBC 4300 Madison Street (I) 6/1/99 Oak Brook Business Center 50,940
CIBC 342-346 Carol Lane (I) 6/1/99 Semblex 47,861
CIBC 550 Kehoe Blvd. (I) 6/1/99 Associated Material 44,575
CIBC 343 Carol Lane (I) 6/1/99 Matsushita Industrial 30,084
CIBC 388 Carol Lane (I) 6/1/99 Ameritech Illinois 36,184
4 CIBC 1414 Avenue of the Americas 2/20/99 Leisure Concepts 6,300
5 CIBC 70 West 36th Street 2/19/99 SOO Fee Fashion 16,222
6 RFC 7200 Leamington, LLC (A) 5/11/99 Form House 310,752
7 RFC 2201 Lundt, LLC (A) 5/11/99 Prime Source 152,850
8 RFC 1330 W. 43rd St. (A) 5/11/99 SM Acquisitions 109,728
9 CIBC University Club Apartments 1/31/99 N/A N/A
10 Midland The Patriot Apartments 3/22/99 N/A N/A
11 CIBC Acme Plaza (Cape May Plaza) 4/1/99 Acme 62,040
12 RFC The Place Apartments 3/24/99 N/A N/A
13 Midland The Phoenix Apartments 3/22/99 N/A N/A
14 RFC Glenwood Plaza 3/19/99 Price Chopper 40,700
15 CIBC 633 Third Avenue 2/17/99 TSI east 41, Inc. 23,657
16 Midland 148 State Street 3/29/99 Modern Continental 22,200
17 CIBC The Piers 4/19/99 Circuit City 32,300
18 CIBC North Point Center 5/1/99 Goody's 36,412
19 Midland Beau Rivage Apartments,
Phases II & III 4/21/99 N/A N/A
20 Midland Holiday Inn Express
& Suites 4/30/99 N/A N/A
21 CIBC Regal Cinemas 1/13/98 Regal Cinemas 72,621
22 Midland Drake's Passage 5/6/99 Jones, Stryker, Duensin & Casner 5,243
23 Midland Northcastle Apartments 2/31/98 N/A N/A
24 RFC Giro Building 3/9/99 Giro Sport Design I 41,267
25 Midland Longley Business Park 4/21/99 Sierra Dynamics 4,500
26 CIBC Sharpstown Court 1/12/99 Office Depot 31,058
27 Midland Temescal Village Plaza 5/4/99 Sav-On Drugs 22,040
28 CIBC Plantation Properties 3/1/98 First American RE Solutions 57,566
29 RFC Bernal Business Center 2/25/99 ComUnity Lending 15,676
30 Midland East 55TH Street 3/31/99 Tempo Industries 92,890
31 RFC Coriel Manor Apartments 4/21/99 N/A N/A
32 RFC Gibbstown Shopping Center 3/1/99 Funari's Thriftway 42,414
33 Midland Plaza De Colores 4/8/99 Thomasville Furniture 12,000
34 CIBC Lifeline Building 9/1/98 Lifeline Systems 84,420
35 RFC Deon Square Shopping Center 4/30/99 Sears Hardware 21,005
36 CIBC Regstad II - Orchid Place 4/16/99 N/A N/A
37 CIBC 6 Gramatan Avenue 2/4/99 AFL- CIO 17,095
38 CIBC Eisenhower Industrial Complex 3/26/99 Alpine Transfer 51,794
39 Midland Wood River Apartments 3/31/99 N/A N/A
40 RFC Old Navy - Linens 'N Things 4/15/99 Linens N Things 34,588
41 CIBC Avenue C Apartments 4/15/99 N/A N/A
42 RFC Pine Plaza Shopping Center 2/28/99 Kroger 59,600
43 RFC Shopps On the Pike 2/1/99 Eatzi's 15,326
44 Midland Shoppes of Kenwood 12/2/98 Drug Emporium, Inc. 26,379
45 Midland Country Club Place Shopping
Center 5/11/99 Heilig-Meyers 40,000
46 RFC Space City Retail Center 5/1/99 Clear Creek Children 7,420
47 RFC Glen Cove Shopping Center 4/23/99 Kinko's Copies 5,707
48 RFC The Crossings 2/3/99 Petco 18,369
49 Midland The Glen Apartments 1/5/99 N/A N/A
50 Midland Lackland Self Storage 12/1/98 N/A N/A
51 CIBC Fairfield Inn 3/31/99 N/A N/A
52 CIBC Trolley Commons/Willow Reed
Village 5/1/99 N/A N/A
53 CIBC Monarch Beach Plaza 3/10/99 Blockbuster 5,017
54 Midland 95 John Muir Drive 3/31/99 Wendel Engineering 18,635
55 CIBC Northup West Office Park 6/8/98 Eastside Mental Health 18,068
II-11
<PAGE>
<CAPTION>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
PROPERTY OPERATING INFORMATION
- ------------------------------------------------------------------------------------------------------------------------------------
Cut-
Value Off Percent
Loan Underwritable Monthly DSCR Appraised as of Date Leased
No. Seller(1) Property Name(2) Cash Flow Payment (4) Value Date LTV(4) (7)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
56 Midland MCI Building 487,774 31,124 1.31 6,230,000 2/26/99 66.0% 100%
57 Midland Springtown Shopping Center 429,262 27,716 1.29 5,100,000 10/14/98 79.6% 100%
58 RFC Crosswinds Apartment Homes 450,342 29,015 1.29 5,400,000 10/9/98 74.7% 92%
59 Midland Forrest Machinery Building 471,698 29,955 1.31 5,400,000 12/30/98 74.7% 100%
60 Midland Canal House Apartments 532,725 27,206 1.63 6,400,000 9/2/98 62.3% 93%
61 CIBC Warner Center 486,397 30,108 1.35 5,700,000 1/26/99 69.9% 95%
62 Midland Woodside at the Office Center 465,743 29,794 1.30 5,400,000 7/20/98 73.7% 100%
63 RFC Mountain Country Estates 440,135 28,912 1.27 5,100,000 8/13/98 77.9% 93%
64 CIBC One Dodge Drive 433,049 28,889 1.25 5,100,000 4/19/99 76.4% 100%
65 CIBC Kolonaki - Industrial (808) 531,467 30,536 1.45 5,880,000 11/10/98 65.3% 100%
66 Midland Rockford Ambulatory Surgery
Center (B) 387,023 25,776 1.26 4,100,000 11/19/98 72.4% 100%
67 Midland Rockford Medical Office
Building (B) 104,180 6,671 1.26 1,150,000 8/12/98 72.4% 100%
68 CIBC White's Crossing Plaza 435,481 27,183 1.34 5,150,000 4/6/99 72.5% 100%
69 CIBC Access Self Storage 478,106 28,473 1.40 5,000,000 1/26/99 74.7% 89%
70 Midland South Park Office Complex 415,838 26,652 1.30 5,561,000 11/10/98 66.6% 96%
71 Midland Georgetown Apartments 417,342 25,246 1.38 4,900,000 8/18/98 73.1% 99%
72 Midland Heritage Park Apartments 368,825 24,494 1.25 4,750,000 3/22/99 73.8% 97%
73 Midland Northland Aluminum Products, Inc. 474,509 29,822 1.33 6,120,000 5/15/98 56.9% 100%
74 RFC Coach & Four East Apartments 427,022 24,406 1.46 4,700,000 12/2/98 73.5% 98%
75 CIBC Courtyard by Marriott 490,036 28,579 1.43 5,600,000 5/6/99 60.7% 65%
76 RFC Brook Run Apartments 392,420 23,263 1.41 4,500,000 1/12/99 74.3% 99%
77 RFC Green Meadows Apartments 371,023 23,813 1.30 4,200,000 10/31/98 79.2% 95%
78 RFC Grand Plaza Properties, Inc. 376,175 24,111 1.30 4,450,000 3/31/99 73.9% 96%
79 RFC Fairmont and Monticello Apartments 407,055 24,581 1.38 4,420,000 1/5/99 74.0% 97%
80 CIBC Palmetto Gardens Industrial Park 425,729 23,988 1.48 4,580,000 3/12/99 70.8% 89%
81 Midland Lower Falls Landing 411,860 24,635 1.39 4,300,000 9/30/98 74.8% 98%
82 RFC PML Office Building 385,719 25,038 1.28 4,500,000 1/7/99 71.0% 100%
83 Midland Concord Business Center 388,612 24,487 1.32 5,600,000 9/1/98 57.0% 92%
84 Midland Middlebrook Business Park 376,177 23,480 1.34 4,100,000 9/8/98 74.3% 100%
85 Midland Vintage Faire Apartments 371,981 21,162 1.46 5,300,000 1/21/99 56.5% 95%
86 CIBC 140 Gould Street 337,941 20,935 1.35 4,500,000 4/28/99 66.2% 100%
87 Midland Woodbridge Apartments 332,997 19,964 1.39 3,700,000 10/15/98 79.4% 94%
88 RFC Pier One Imports 317,506 21,164 1.25 3,800,000 12/1/98 77.1% 100%
89 Midland Deerwood at the Park Apartments 382,355 19,508 1.63 4,350,000 12/8/98 66.4% 98%
90 Midland Tukwila Estates 316,507 20,445 1.29 3,950,000 2/12/99 73.0% 95%
91 Midland Orchard Park Apartments 335,450 21,002 1.33 3,500,000 1/6/99 79.7% 89%
92 Midland Airport Business Center 332,232 21,143 1.31 4,900,000 2/8/99 56.6% 100%
93 Midland Holiday Inn, New Ulm 413,858 22,920 1.50 4,300,000 4/2/99 64.2% 56%
94 RFC Monsey Mall 367,387 23,518 1.30 4,400,000 1/21/99 62.4% 100%
95 Midland Silverdale Office Building 313,977 20,033 1.31 4,500,000 9/9/98 60.3% 100%
96 RFC Habersham Shopping Center 347,747 19,321 1.50 3,950,000 9/20/98 68.4% 98%
97 Midland Brattleboro North Shopping Plaza 351,825 20,199 1.45 5,250,000 9/1/98 51.0% 99%
98 Midland Crossroads Shopping Center 292,127 18,498 1.32 3,550,000 3/29/99 74.0% 100%
99 RFC Paloma Apartments 350,768 17,783 1.64 3,500,000 8/20/98 74.8% 98%
100 Midland Mullica Woods 289,999 18,629 1.30 3,600,000 8/6/98 70.6% 100%
101 Midland Windsong Apartments 359,714 18,916 1.58 4,350,000 12/18/98 57.4% 96%
102 Midland Magnolia Park Shopping Center 291,500 18,248 1.33 4,500,000 9/16/98 55.1% 100%
103 Midland Vollstedt Building 298,464 18,988 1.31 3,400,000 1/29/99 72.6% 100%
104 Midland Lackland Self Storage 550,034 23,561 1.95 6,000,000 7/17/98 40.9% 91%
105 Midland Cinnamon Square Apartments 289,052 18,581 1.30 3,280,000 12/1/98 74.9% 96%
106 Midland Bordeaux XI Apartments 282,658 17,869 1.32 3,250,000 1/26/99 74.9% 90%
107 Midland 5397 North Commerce (C) 160,104 10,667 1.25 1,925,000 9/16/98 71.0% 100%
108 Midland Gabbert Building (C) 105,804 7,047 1.25 1,300,000 9/16/98 71.0% 100%
109 RFC The Kingsbury Apartments 265,433 17,072 1.30 2,920,000 12/15/98 78.3% 96%
110 Midland Crestwood Apartments 254,068 16,937 1.25 3,000,000 3/11/99 75.3% 89%
111 CIBC Dicks Clothing and Sporting Goods 295,390 18,285 1.35 3,150,000 4/21/99 71.4% 100%
112 Midland Roseland Manor Duplexes 300,658 17,321 1.45 3,000,000 1/12/99 74.9% 94%
113 Midland Mount View Office Building 265,366 16,104 1.37 3,350,000 11/1/98 66.9% 100%
114 Midland The Port Apartments 243,253 15,573 1.30 2,900,000 11/3/98 77.1% 95%
115 RFC Forman Mills 291,023 17,291 1.40 3,350,000 8/25/98 66.7% 100%
116 RFC 7900 Beech Daly &
6810 Metroplex Drive 226,744 14,953 1.26 2,830,000 9/24/98 78.2% 100%
II-12
<PAGE>
<CAPTION>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
PROPERTY OPERATING INFORMATION
- -----------------------------------------------------------------------------------------------------
Percent Square
Leased Footage
Loan as of Largest
No. Seller(1) Property Name(2) Date(7) Largest Tenant (8) Tenant
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
56 Midland MCI Building 4/13/99 MCI Telecom Corp. 60,000
57 Midland Springtown Shopping Center 1/5/99 Winn Dixie 47,718
58 RFC Crosswinds Apartment Homes 4/23/99 N/A N/A
59 Midland Forrest Machinery Building 1/20/99 Forrest Machining, Inc. 85,302
60 Midland Canal House Apartments 3/31/99 N/A N/A
61 CIBC Warner Center 1/25/99 Alpern Rosenthal 34,955
62 Midland Woodside at the Office Center 4/1/99 Biotrace 5,436
63 RFC Mountain Country Estates 3/29/99 N/A N/A
64 CIBC One Dodge Drive 5/12/99 Monarch Electric 92,913
65 CIBC Kolonaki - Industrial (808) 2/22/99 Kolonaki 55,140
66 Midland Rockford Ambulatory Surgery
Center (B) 1/1/99 Featherstone Partners 17,895
67 Midland Rockford Medical Office
Building (B) 1/1/99 Rockford Anesth. Assoc. 12,574
68 CIBC White's Crossing Plaza 12/24/98 Belk Enterprise 50,527
69 CIBC Access Self Storage 1/6/99 N/A N/A
70 Midland South Park Office Complex 3/1/99 New Mexico Reg. & Lic. 10,485
71 Midland Georgetown Apartments 3/26/99 N/A N/A
72 Midland Heritage Park Apartments 4/19/99 N/A N/A
73 Midland Northland Aluminum Products, Inc. 3/17/99 Northland Aluminum 184,190
74 RFC Coach & Four East Apartments 2/18/99 N/A N/A
75 CIBC Courtyard by Marriott 3/31/99 N/A N/A
76 RFC Brook Run Apartments 2/17/99 N/A N/A
77 RFC Green Meadows Apartments 3/12/99 N/A N/A
78 RFC Grand Plaza Properties, Inc. 4/12/99 TAG Performance Marine 8,200
79 RFC Fairmont and Monticello Apartments 3/19/99 N/A N/A
80 CIBC Palmetto Gardens Industrial Park 3/1/99 N/A N/A
81 Midland Lower Falls Landing 2/23/99 United Publications 11,867
82 RFC PML Office Building 3/1/99 Miami Mortgage Lenders 4,000
83 Midland Concord Business Center 4/2/99 Concord Public Storage 10,000
84 Midland Middlebrook Business Park 3/17/99 AeroComm, Inc. 10,968
85 Midland Vintage Faire Apartments 1/1/99 N/A N/A
86 CIBC 140 Gould Street 4/1/99 Physical Computer Networks 21,401
87 Midland Woodbridge Apartments 3/25/99 N/A N/A
88 RFC Pier One Imports 12/21/98 Pier One Imports 10,000
89 Midland Deerwood at the Park Apartments 12/30/98 N/A N/A
90 Midland Tukwila Estates 3/31/99 N/A N/A
91 Midland Orchard Park Apartments 2/25/99 N/A N/A
92 Midland Airport Business Center 1/19/99 Precision Die 21,600
93 Midland Holiday Inn, New Ulm 12/31/98 N/A N/A
94 RFC Monsey Mall 3/4/99 Amazing Savings 9,100
95 Midland Silverdale Office Building 4/13/99 U.S. Navy 34,056
96 RFC Habersham Shopping Center 12/1/98 Red & White 15,974
97 Midland Brattleboro North Shopping Plaza 12/31/98 Ames 226 60,000
98 Midland Crossroads Shopping Center 4/9/99 Staples 24,000
99 RFC Paloma Apartments 3/11/99 N/A N/A
100 Midland Mullica Woods 3/8/99 N/A N/A
101 Midland Windsong Apartments 4/19/99 N/A N/A
102 Midland Magnolia Park Shopping Center 3/1/99 Winn Dixie 45,056
103 Midland Vollstedt Building 3/22/99 Toluca Lake Dental 4,885
104 Midland Lackland Self Storage 3/28/99 N/A N/A
105 Midland Cinnamon Square Apartments 4/19/99 N/A N/A
106 Midland Bordeaux XI Apartments 4/7/99 N/A N/A
107 Midland 5397 North Commerce (C) 12/31/98 Durotech Co., Inc. 29,622
108 Midland Gabbert Building (C) 4/8/99 Durotech Co., Inc. 20,803
109 RFC The Kingsbury Apartments 1/22/99 N/A N/A
110 Midland Crestwood Apartments 4/21/99 N/A N/A
111 CIBC Dicks Clothing and Sporting Goods 5/1/99 Dick's 46,378
112 Midland Roseland Manor Duplexes 4/7/99 N/A N/A
113 Midland Mount View Office Building 2/25/99 American Summit Mortgage, Co. 9,401
114 Midland The Port Apartments 12/18/98 N/A N/A
115 RFC Forman Mills 11/24/98 Forman Mills 47,900
116 RFC 7900 Beech Daly &
6810 Metroplex Drive 5/3/99 TCL Enterprises, Inc. 17,215
II-12
<PAGE>
<CAPTION>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
PROPERTY OPERATING INFORMATION
- ------------------------------------------------------------------------------------------------------------------------------------
Cut-
Value Off Percent
Loan Underwritable Monthly DSCR Appraised as of Date Leased
No. Seller(1) Property Name(2) Cash Flow Payment (4) Value Date LTV(4) (7)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
117 RFC Arrowhead Fountain Center 249,287 16,312 1.27 3,000,000 4/1/99 73.3% 100%
118 Midland Ridgmar Crossroads Apartments 228,052 15,202 1.25 2,820,000 1/21/99 77.8% 97%
119 RFC Renaissance West Shopping Center 281,057 17,021 1.38 4,000,000 2/4/99 54.5% 97%
120 CIBC Lexington Center 267,696 16,279 1.37 3,000,000 3/1/99 72.5% 98%
121 Midland State of Oregon Job Council
Buildings 248,546 16,570 1.25 3,400,000 9/17/98 63.0% 100%
122 CIBC Hayes Community 266,163 16,666 1.33 3,700,000 2/25/99 57.5% 100%
123 RFC Today's Man - Deptford 258,410 16,570 1.30 3,200,000 3/2/99 66.3% 100%
124 Midland Devon Park Apartments 251,175 15,437 1.36 2,650,000 9/8/98 78.7% 100%
125 RFC Cross Keys Apartments 295,226 13,971 1.76 2,650,000 6/24/98 78.5% 100%
126 CIBC White Oak Professional Building 228,466 14,887 1.28 2,800,000 3/4/99 72.2% 100%
127 RFC Scripps Mesa Shopping Center 256,964 15,831 1.35 2,870,000 9/3/98 70.2% 97%
128 Midland Pacific Place 238,555 15,291 1.30 3,100,000 3/17/99 64.4% 100%
129 CIBC Timberfalls Apartments 264,120 14,481 1.52 2,675,000 12/21/98 74.6% 90%
130 Midland 110 American Boulevard 223,407 14,754 1.26 2,690,000 10/19/98 73.8% 100%
131 Midland Handy Lock Mini Storage 255,495 16,026 1.33 3,000,000 9/14/98 66.1% 97%
132 RFC Carpenter Crest Apartments 201,179 13,373 1.25 2,500,000 7/28/98 78.7% 99%
133 RFC Stanford Court 246,212 15,245 1.35 2,450,000 10/8/97 79.0% 100%
134 Midland Commons at Valdosta Apartments 227,781 13,386 1.42 2,400,000 7/15/98 79.6% 95%
135 CIBC Kolonaki - Sausalito (579) 261,459 15,070 1.45 3,100,000 11/11/98 61.1% 100%
136 Midland Quail Court Apartments 232,213 13,465 1.44 2,425,000 9/18/98 77.6% 99%
137 Midland Pacific Palms Apartments 359,853 17,789 1.69 4,000,000 3/16/99 46.7% 97%
138 Midland Village at Cambridge Self Storage 234,159 14,611 1.34 2,635,000 1/26/99 70.1% 100%
139 CIBC Kolonaki - San Francisco (1723) 256,860 14,673 1.46 3,020,000 12/2/98 61.1% 100%
140 Midland Providence Office Building 218,007 13,971 1.30 3,100,000 1/25/99 59.2% 100%
141 Midland Westlake Village Apartments 189,414 12,625 1.25 2,795,000 1/20/99 64.3% 97%
142 CIBC Days Inn - Anderson 309,081 15,093 1.71 2,825,000 1/22/99 63.6% 81%
143 RFC Hollywood Video Portfolio 208,438 13,409 1.30 2,400,000 10/1/98 74.8% 100%
144 CIBC Hampton Inn - Mary Esther 332,535 16,056 1.73 3,060,000 3/23/99 58.7% 66%
145 RFC The Pinons Apartments 203,376 13,047 1.30 2,500,000 8/13/98 71.7% 95%
146 Midland Foreside Place 211,151 13,490 1.30 2,800,000 7/20/98 63.7% 100%
147 Midland 21036 Triple Seven Road 210,045 13,464 1.30 2,250,000 1/26/99 79.2% 99%
148 RFC Central Park Southwest 209,186 13,399 1.30 2,650,000 9/16/98 66.9% 100%
149 Midland Best Storage 231,742 14,557 1.33 2,390,000 2/1/99 73.4% 84%
150 Midland Forest Hills Shopping Center 190,579 12,574 1.26 2,200,000 8/31/98 79.2% 100%
151 Midland Ashton Oaks Apartments 204,208 13,611 1.25 2,375,000 11/2/98 73.2% 96%
152 Midland Siesta Hills Shopping Center 259,515 16,475 1.31 4,400,000 3/1/99 39.1% 91%
153 Midland Holiday Inn Express 284,491 14,476 1.64 2,600,000 10/6/98 66.1% 70%
154 Midland Waterside Apartments 208,755 12,655 1.37 2,350,000 1/27/99 72.4% 96%
155 Midland Village Square Shopping Center 215,784 13,229 1.36 2,570,000 9/16/98 65.4% 91%
156 Midland Century Mobile Home Park 211,101 13,218 1.33 2,000,000 9/4/98 83.7% 98%
157 Midland Rite Aid Pharmacy 190,845 13,949 1.14 2,100,000 2/1/99 78.6% 100%
158 RFC Hobe Village Mobile Home Park 210,055 13,062 1.34 2,300,000 3/9/99 71.3% 98%
159 Midland Via Linda Plaza 199,055 12,748 1.30 2,325,000 7/11/98 70.0% 100%
160 Midland Pleasant Valley Apartments 197,970 11,045 1.49 2,540,000 1/22/99 62.9% 98%
161 Midland West Wind Apartments Phase III 178,698 11,176 1.33 2,070,000 10/6/98 77.0% 100%
162 RFC S&R Shopping Center 186,309 10,677 1.45 2,500,000 6/12/98 63.6% 94%
163 Midland Edwards Village Center 181,370 11,626 1.30 2,400,000 1/15/99 64.8% 100%
164 Midland Comfort Inn 241,176 12,882 1.56 2,100,000 9/29/98 72.9% 62%
165 RFC Laudonniere Apartments 168,492 11,189 1.25 1,950,000 3/24/99 78.4% 100%
166 RFC Whaley's Shopping Center 174,919 11,078 1.32 2,125,000 2/15/99 71.9% 100%
167 Midland Maybrook Apartments 163,007 10,718 1.27 2,100,000 8/27/98 71.9% 98%
168 RFC Staples 192,049 10,707 1.49 2,200,000 3/1/99 68.0% 100%
169 RFC The Retail Group 215,396 10,803 1.66 2,750,000 8/5/98 54.0% 100%
170 Midland Tucker Industries Building 177,738 11,391 1.30 2,074,000 3/17/99 71.6% 100%
171 Midland Airborne Express 201,805 10,773 1.56 1,850,000 2/8/99 76.8% 100%
172 Midland Parkway Gardens Apartments (D) 111,058 7,404 1.25 1,415,000 2/24/99 69.4% 97%
173 Midland Norvell Gardens Apartments (D) 51,980 3,426 1.25 630,000 2/24/99 69.4% 100%
174 RFC Smith Retail Portfolio 161,960 10,072 1.34 2,025,000 6/8/98 70.0% 100%
175 RFC Stor-A-Lot Self Storage 172,568 11,094 1.30 1,970,000 3/9/99 71.0% 93%
176 CIBC CVS Smithtown 167,063 11,537 1.21 2,000,000 2/1/99 69.8% 100%
177 Midland Ashwood Apartments 160,679 10,355 1.29 1,890,000 10/30/98 73.6% 87%
II-13
<PAGE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Percent Square
Leased Footage
Loan as of Largest
No. Seller(1) Property Name(2) Date(7) Largest Tenant (8) Tenant
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
117 RFC Arrowhead Fountain Center 4/15/99 Kinko's Copies 6,729
118 Midland Ridgmar Crossroads Apartments 2/12/99 N/A N/A
119 RFC Renaissance West Shopping Center 5/1/99 Value Department Thrift 12,000
120 CIBC Lexington Center 2/28/99 Variety Wholesale/Maxway 21,000
121 Midland State of Oregon Job Council
Buildings 12/7/98 Job Council 27,639
122 CIBC Hayes Community 5/1/99 N/A N/A
123 RFC Today's Man - Deptford 3/15/99 Today's Man 19,600
124 Midland Devon Park Apartments 3/31/99 N/A N/A
125 RFC Cross Keys Apartments 3/24/99 N/A N/A
126 CIBC White Oak Professional Building 3/31/99 Steve Horowitz 3,026
127 RFC Scripps Mesa Shopping Center 3/24/99 Brick Road 5,264
128 Midland Pacific Place 4/28/99 Fingerhut Gallery 3,594
129 CIBC Timberfalls Apartments 5/5/99 N/A N/A
130 Midland 110 American Boulevard 2/1/99 IBM 17,900
131 Midland Handy Lock Mini Storage 1/16/99 N/A N/A
132 RFC Carpenter Crest Apartments 2/23/99 N/A N/A
133 RFC Stanford Court 12/2/98 N/A N/A
134 Midland Commons at Valdosta Apartments 11/10/98 N/A N/A
135 CIBC Kolonaki - Sausalito (579) 2/22/99 Kolonaki 6,192
136 Midland Quail Court Apartments 12/31/98 N/A N/A
137 Midland Pacific Palms Apartments 4/20/99 N/A N/A
138 Midland Village at Cambridge Self Storage 5/4/99 N/A N/A
139 CIBC Kolonaki - San Francisco (1723) 2/22/99 Kolonaki 10,190
140 Midland Providence Office Building 4/21/99 Custima International Corp. 9,440
141 Midland Westlake Village Apartments 3/25/99 N/A N/A
142 CIBC Days Inn - Anderson 11/30/98 N/A N/A
143 RFC Hollywood Video Portfolio 1/25/99 Pewaukee, WI 7,300
144 CIBC Hampton Inn - Mary Esther 12/31/98 N/A N/A
145 RFC The Pinons Apartments 3/29/99 N/A N/A
146 Midland Foreside Place 3/31/99 PMC Medical Management 9,229
147 Midland 21036 Triple Seven Road 3/22/99 Nova Medical Group 6,688
148 RFC Central Park Southwest 12/31/98 State Farm Ins 3,686
149 Midland Best Storage 4/14/99 N/A N/A
150 Midland Forest Hills Shopping Center 12/31/98 Food Lion/Superpetz 29,000
151 Midland Ashton Oaks Apartments 2/28/99 N/A N/A
152 Midland Siesta Hills Shopping Center 4/19/99 No Nest/Birds 11,800
153 Midland Holiday Inn Express 2/19/99 N/A N/A
154 Midland Waterside Apartments 5/11/99 N/A N/A
155 Midland Village Square Shopping Center 3/17/99 Safeway Stores 38,836
156 Midland Century Mobile Home Park 4/26/99 N/A N/A
157 Midland Rite Aid Pharmacy 3/19/99 Rite Aid 11,050
158 RFC Hobe Village Mobile Home Park 6/3/99 N/A N/A
159 Midland Via Linda Plaza 1/4/99 Play & Learn Schools, Inc. 3,600
160 Midland Pleasant Valley Apartments 3/22/99 N/A N/A
161 Midland West Wind Apartments Phase III 3/10/99 N/A N/A
162 RFC S&R Shopping Center 5/1/99 S & M Auto Supply 4,000
163 Midland Edwards Village Center 1/5/99 Antiques & Interiors 3,747
164 Midland Comfort Inn 2/19/99 N/A N/A
165 RFC Laudonniere Apartments 5/25/99 N/A N/A
166 RFC Whaley's Shopping Center 1/11/99 Whaley's Market 9,256
167 Midland Maybrook Apartments 2/28/99 N/A N/A
168 RFC Staples 4/13/99 Staples 24,000
169 RFC The Retail Group 3/1/99 Retail Group 20,565
170 Midland Tucker Industries Building 4/28/99 Tucker Industries 18,636
171 Midland Airborne Express 2/8/99 Airborne Freight Corporation 24,828
172 Midland Parkway Gardens Apartments (D) 3/30/99 N/A N/A
173 Midland Norvell Gardens Apartments (D) 3/30/99 N/A N/A
174 RFC Smith Retail Portfolio 3/24/99 Liquor Store- Prop. A 4,718
175 RFC Stor-A-Lot Self Storage 2/28/99 N/A N/A
176 CIBC CVS Smithtown 3/1/98 CVS 10,125
177 Midland Ashwood Apartments 12/31/98 N/A N/A
II-13
<PAGE>
<CAPTION>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
PROPERTY OPERATING INFORMATION
- ------------------------------------------------------------------------------------------------------------------------------------
Cut-
Value Off Percent
Loan Underwritable Monthly DSCR Appraised as of Date Leased
No. Seller(1) Property Name(2) Cash Flow Payment (4) Value Date LTV(4) (7)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
178 Midland Stonehurst Apartments 168,992 10,673 1.32 1,900,000 9/14/98 72.7% 90%
179 Midland Storage Max-Yuma 174,068 10,304 1.41 1,900,000 3/15/99 70.9% 91%
180 Midland Georgetown/Melrose Plaza Apartments 169,299 10,232 1.38 1,950,000 2/23/99 69.0% 95%
181 RFC Greenwood/St. Charles 156,401 9,219 1.41 1,800,000 9/14/98 73.2% 100%
182 Midland South Ogden Plaza 192,784 12,326 1.30 3,095,000 2/1/99 41.4% 81%
183 Midland Cedarstone Apartments 135,018 8,899 1.26 1,700,000 8/18/98 74.3% 100%
184 Midland Southwest Manor Duplexes 132,745 8,848 1.25 1,650,000 2/8/99 76.4% 100%
185 Midland Super 8 Motel 198,002 10,669 1.55 1,800,000 9/30/98 69.8% 61%
186 RFC Andover Apartments 159,857 9,347 1.43 1,710,000 4/15/98 72.1% 88%
187 Midland Southwood Plaza Office Building 144,333 9,393 1.28 1,725,000 2/3/99 71.5% 95%
188 Midland The Trade Center 152,485 9,040 1.41 1,690,000 9/24/98 70.7% 95%
189 RFC Regency Mobile Home Park 158,673 10,100 1.31 1,900,000 5/22/98 62.6% 84%
190 RFC Village Green Shopping Center 210,861 9,358 1.88 2,400,000 9/9/98 49.3% 100%
191 RFC Center on Memorial 143,334 8,895 1.34 1,665,000 12/29/98 68.9% 100%
192 RFC River Road Mobile Home Park 145,464 9,377 1.29 1,700,000 9/17/98 67.3% 100%
193 RFC First View 148,104 8,165 1.51 1,700,000 7/22/98 67.0% 97%
194 Midland Payne Office Building 134,802 8,641 1.30 1,750,000 1/25/99 64.9% 93%
195 RFC Woodlane Apartments 139,940 8,743 1.33 1,420,000 3/24/99 80.0% 97%
196 Midland 507 Capital Court (E) 42,058 2,664 1.32 540,000 7/16/98 69.0% 100%
197 Midland 513 Capitol Court (E) 42,254 2,664 1.32 550,000 7/16/98 69.0% 100%
198 Midland 501 Capital Ct. NE (E) 40,456 2,559 1.32 525,000 7/16/98 69.0% 100%
199 CIBC Town House South Apartments
and Danville Duplelxes 149,964 8,309 1.50 1,500,000 4/24/99 73.3% 98%
200 RFC Red Deer Apartments 178,379 7,821 1.90 1,700,000 4/8/98 64.4% 92%
201 Midland Crown Plaza Office Building 130,094 8,104 1.34 2,080,000 6/3/98 52.5% 100%
202 RFC 535 Manufacturers Drive 122,084 7,897 1.29 1,475,000 2/11/99 70.9% 100%
203 RFC Old Colony Apartments 128,352 7,800 1.37 1,350,000 7/1/98 77.0% 100%
204 RFC Franklin Avenue Building 130,303 8,648 1.26 1,475,000 7/3/98 70.1% 100%
205 RFC Rivercrest Apartments 144,268 7,815 1.54 1,450,000 4/8/98 71.1% 94%
206 Midland View Pointe Apartments 122,672 7,601 1.34 1,355,000 2/23/99 75.5% 99%
207 RFC 1340 21st Street NW 111,652 7,434 1.25 1,360,000 3/4/99 74.6% 100%
208 RFC Rollingwood Apartments 121,256 7,976 1.27 1,550,000 2/9/99 65.1% 95%
209 Midland Greenbrier Apartments 140,151 7,698 1.52 1,400,000 1/4/99 71.3% 100%
210 Midland Lantana Apartments 112,673 7,436 1.26 1,360,000 3/10/99 73.4% 100%
211 RFC Pine Meadow Apartments 118,383 7,586 1.30 1,950,000 10/6/98 51.1% 89%
212 Midland Commerce II Business Park 214,765 9,242 1.94 3,700,000 7/28/98 26.4% 94%
213 Midland Office Park at Erindale 109,058 7,271 1.25 1,400,000 4/1/99 68.5% 100%
214 Midland Fletcher Auto Mall 129,217 7,427 1.45 1,500,000 3/2/99 63.2% 100%
215 RFC Spurwood Office 124,661 7,541 1.38 1,500,000 1/10/99 63.2% 96%
216 RFC Colonial-Excelsior 130,253 7,294 1.49 1,440,000 7/9/98 65.1% 98%
217 Midland 170 South River Road 116,716 7,726 1.26 1,760,000 11/11/98 53.2% 100%
218 RFC Centennial Place Apartments 119,255 7,584 1.31 1,300,000 10/7/98 72.0% 100%
219 RFC Charmony Place Apartments 105,315 6,999 1.25 1,260,000 4/8/99 73.7% 89%
220 RFC Wooded Acres Apartments 104,287 6,595 1.32 1,235,000 9/23/98 74.6% 98%
221 RFC Greenwood Villa Apartments 138,210 6,412 1.80 1,350,000 9/3/98 65.8% 88%
222 RFC Lincolnwood Office Building 108,670 6,432 1.41 1,325,000 8/8/98 66.0% 91%
223 RFC Brighton Court Apartments 112,481 6,632 1.41 1,250,000 2/1/99 69.8% 94%
224 Midland Bell Oaks Village Apartments 96,291 6,413 1.25 1,170,000 1/5/99 71.1% 92%
225 RFC 61-71 Long Lane 99,542 6,544 1.27 1,350,000 6/23/98 61.1% 87%
226 Midland Prairie Village Mobile Home Park 104,346 6,455 1.35 1,100,000 1/12/99 74.8% 100%
227 RFC 20 Green of Panorama 99,430 6,497 1.28 1,060,000 12/2/98 77.6% 100%
228 RFC Cedargate Apartments 102,711 6,113 1.40 1,130,000 4/15/98 71.4% 88%
229 RFC Copperfield Landing, LP 108,347 7,939 1.13 1,450,000 3/3/99 55.2% 100%
230 Midland ICCA Building 86,095 5,494 1.31 1,020,000 4/28/98 71.4% 100%
231 RFC Oak Glen Apartments 93,525 5,136 1.52 980,000 6/26/98 68.8% 98%
232 RFC North Miami Industrial 87,609 5,633 1.30 925,000 1/6/99 71.4% 100%
233 RFC Quail Creek Apartments 77,036 5,286 1.21 930,000 7/14/98 70.3% 93%
234 RFC University Apartments 100,145 4,260 1.96 950,000 9/3/98 62.7% 98%
235 Midland Irving Court Townhomes 62,124 4,142 1.25 750,000 2/23/99 72.5% 94%
236 RFC Grahamcrest Manor Apartments 77,351 4,052 1.59 750,000 11/3/97 68.8% 100%
237 RFC The Gorelick Apartments 67,038 3,859 1.45 675,000 5/5/98 73.3% 100%
238 Midland 325-339 North Dr 77,151 4,897 1.31 1,000,000 5/28/98 49.0% 100%
II-14
<PAGE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Percent Square
Leased Footage
Loan as of Largest
No. Seller(1) Property Name(2) Date(7) Largest Tenant (8) Tenant
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
178 Midland Stonehurst Apartments 3/25/99 N/A N/A
179 Midland Storage Max-Yuma 4/16/99 N/A N/A
180 Midland Georgetown/Melrose Plaza Apartment 3/17/99 N/A N/A
181 RFC Greenwood/St. Charles 2/10/99 N/A N/A
182 Midland South Ogden Plaza 2/18/99 Fleming 60,000
183 Midland Cedarstone Apartments 2/2/99 N/A N/A
184 Midland Southwest Manor Duplexes 4/19/99 N/A N/A
185 Midland Super 8 Motel 3/9/99 N/A N/A
186 RFC Andover Apartments 2/1/99 N/A N/A
187 Midland Southwood Plaza Office Building 3/29/99 Primary Children's Medical Center 6,240
188 Midland The Trade Center 2/1/99 Franklin Pierce College 5,740
189 RFC Regency Mobile Home Park 3/1/99 N/A N/A
190 RFC Village Green Shopping Center 3/31/99 Monarch Dental Corp. 5,090
191 RFC Center on Memorial 4/12/99 Martha Turner 2,032
192 RFC River Road Mobile Home Park 9/1/98 N/A N/A
193 RFC First View 2/28/99 N/A N/A
194 Midland Payne Office Building 4/21/99 Chaparral Meat Market, Inc. 4,935
195 RFC Woodlane Apartments 2/1/99 N/A N/A
196 Midland 507 Capital Court (E) 4/19/99 Transmanagement, Inc. 1,170
197 Midland 513 Capitol Court (E) 4/19/99 Congressional Management Foundation 1,185
198 Midland 501 Capital Ct. NE (E) 4/19/99 Ripon Society 1,170
199 CIBC Town House South Apartments
and Danville Duplelxes 5/1/99 N/A N/A
200 RFC Red Deer Apartments 2/1/99 N/A N/A
201 Midland Crown Plaza Office Building 1/31/99 Market Share, Inc. 11,244
202 RFC 535 Manufacturers Drive 2/3/99 Plastipak Packaging, Inc. 40,000
203 RFC Old Colony Apartments 8/17/98 N/A N/A
204 RFC Franklin Avenue Building 12/30/98 Soft Things, Inc. 32,300
205 RFC Rivercrest Apartments 3/10/99 N/A N/A
206 Midland View Pointe Apartments 3/16/99 N/A N/A
207 RFC 1340 21st Street NW 4/30/99 N/A N/A
208 RFC Rollingwood Apartments 3/23/99 N/A N/A
209 Midland Greenbrier Apartments 4/14/99 N/A N/A
210 Midland Lantana Apartments 4/14/99 N/A N/A
211 RFC Pine Meadow Apartments 2/5/99 N/A N/A
212 Midland Commerce II Business Park 12/4/98 Department of Human Services 21,000
213 Midland Office Park at Erindale 4/19/99 Peak Performers, Inc. 7,040
214 Midland Fletcher Auto Mall 3/25/99 Tire Kingdom 6,450
215 RFC Spurwood Office 3/15/99 Jonathan David 2,731
216 RFC Colonial-Excelsior 1/12/99 N/A N/A
217 Midland 170 South River Road 3/30/99 CREA 2,960
218 RFC Centennial Place Apartments 11/9/98 N/A N/A
219 RFC Charmony Place Apartments 4/8/99 N/A N/A
220 RFC Wooded Acres Apartments 3/19/99 N/A N/A
221 RFC Greenwood Villa Apartments 3/31/99 N/A N/A
222 RFC Lincolnwood Office Building 12/31/98 SIR Management 6,100
223 RFC Brighton Court Apartments 1/22/99 N/A N/A
224 Midland Bell Oaks Village Apartments 4/7/99 N/A N/A
225 RFC 61-71 Long Lane 3/31/99 Consolidated Billing Svcs 8,000
226 Midland Prairie Village Mobile Home Park 3/23/99 N/A N/A
227 RFC 20 Green of Panorama 12/11/98 N/A N/A
228 RFC Cedargate Apartments 2/1/99 N/A N/A
229 RFC Copperfield Landing, LP 2/23/99 Today's Vision 2,406
230 Midland ICCA Building 1/27/99 ICCA, Inc. 5,830
231 RFC Oak Glen Apartments 12/31/98 N/A N/A
232 RFC North Miami Industrial 2/18/99 Most Enterprises, Inc. 11,300
233 RFC Quail Creek Apartments 11/30/98 N/A N/A
234 RFC University Apartments 2/28/99 N/A N/A
235 Midland Irving Court Townhomes 1/20/99 N/A N/A
236 RFC Grahamcrest Manor Apartments 4/13/99 N/A N/A
237 RFC The Gorelick Apartments 4/14/99 N/A N/A
238 Midland 325-339 North Dr 5/12/99 Sears Roebuck & Co 16,994
II-14
<PAGE>
<CAPTION>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
PROPERTY OPERATING INFORMATION
- ------------------------------------------------------------------------------------------------------------------------------------
Cut-
Value Off Percent
Loan Underwritable Monthly DSCR Appraised as of Date Leased
No. Seller(1) Property Name(2) Cash Flow Payment (4) Value Date LTV(4) (7)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
239 RFC 519 Central Avenue 60,642 3,698 1.37 678,000 1/6/98 69.2% 94%
240 RFC Klingerman Apartments 59,621 3,302 1.50 590,000 3/13/98 74.0% 100%
241 RFC 901 SW 8th Avenue Apartments 59,358 3,845 1.29 700,000 12/1/97 61.5% 100%
242 RFC Meadow Pines Apartments 58,813 3,347 1.46 560,000 3/13/98 74.2% 100%
Total/Weighted Average $88,998,544 $5,475,370 1.35 $1,051,155,000 70.8%
II-15
<PAGE>
<CAPTION>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
PROPERTY OPERATING INFORMATION
- -----------------------------------------------------------------------------------------------------
Percent Square
Leased Footage
Loan as of Largest
No. Seller(1) Property Name(2) Date(7) Largest Tenant (8) Tenant
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
239 RFC 519 Central Avenue 12/31/98 N/A N/A
240 RFC Klingerman Apartments 3/31/99 N/A N/A
241 RFC 901 SW 8th Avenue Apartments 1/20/99 N/A N/A
242 RFC Meadow Pines Apartments 4/9/99 N/A N/A
Total/Weighted Average
II-15
</TABLE>
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
PREPAYMENT AND SERVICING INFORMATION
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Prepayment Code(10)
Total Admin YM
Loan Property Cut-Off Date Season- Def/ Cost (bps) Code
No. Seller(1) Name (2) Balance (1) ing(9) LO YMS YM2 YM1 YM YM Def 5 4.5 4 3.5 3 2.5 2 1 Open (11) (12)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> >C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 RFC 21 Penn Plaza $32,184,648 9 60 N/A N/A N/A N/A N/A 56 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
2 RFC Park Drive Manor 22,925,004 3 27 N/A N/A N/A N/A N/A 89 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
Apts
3 CIBC Prime Portfolio 15,395,975 14 38 N/A N/A N/A N/A N/A 75 N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 N/A
CIBC 1301 East Tower 4,122,155 14 38 N/A N/A N/A N/A N/A 75 N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 N/A
Road (I)
CIBC 4300 Madison 4,020,214 14 38 N/A N/A N/A N/A N/A 75 N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 N/A
Street(I)
CIBC 342-346 Carol 2,311,970 14 38 N/A N/A N/A N/A N/A 75 N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 N/A
Lane (I)
CIBC 550 Kehoe Blvd.(I) 2,239,721 14 38 N/A N/A N/A N/A N/A 75 N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 N/A
CIBC 343 Carol Lane (I) 1,370,753 14 38 N/A N/A N/A N/A N/A 75 N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 N/A
CIBC 388 Carol Lane (I) 1,331,164 14 38 N/A N/A N/A N/A N/A 75 N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 N/A
4 CIBC 1414 Avenue of the 14,000,000 2 26 N/A N/A N/A N/A N/A 87 N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 N/A
Americas
5 CIBC 70 West 36th Street 12,200,000 2 26 N/A N/A N/A N/A N/A 87 N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 N/A
6 RFC 7200 Leamington, 4,850,000 N/A 24 N/A N/A N/A N/A N/A 92 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
LLC (A)
7 RFC 2201 Lundt,LLC (A) 4,000,000 N/A 24 N/A N/A N/A N/A N/A 92 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
8 RFC 1330 W. 43rd St.(A) 2,190,000 N/A 24 N/A N/A N/A N/A N/A 92 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
9 CIBC University Club 10,486,188 2 26 N/A N/A N/A N/A N/A 87 N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 N/A
Apartments
10 Midland The Patriot 10,022,381 4 60 N/A N/A 56 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 F
Apartments
11 CIBC Acme Plaza (Cape 9,459,453 14 38 N/A N/A N/A N/A N/A 83 N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 N/A
May Plaza)
12 RFC The Place Apartments 8,693,077 1 25 N/A N/A N/A N/A N/A 91 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
13 Midland The Phoenix 8,399,390 4 60 N/A N/A 56 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 F
Apartments
14 RFC Glenwood Plaza 8,140,377 2 26 N/A N/A N/A N/A N/A 90 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
15 CIBC 633 Third Avenue 7,750,000 2 26 N/A N/A N/A N/A N/A 87 N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 N/A
16 Midland 148 State Street 7,585,861 3 36 N/A N/A N/A N/A N/A 80 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
17 CIBC The Piers 7,494,669 1 25 N/A N/A N/A N/A N/A 88 N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 N/A
18 CIBC North Point Center 7,395,025 1 25 N/A N/A N/A N/A N/A 88 N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 N/A
19 Midland Beau Rivage 7,009,355 2 60 N/A N/A 56 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 14.70 F
Apartments, Phases I
20 Midland Holiday Inn Express 6,938,209 2 36 N/A N/A N/A N/A N/A 140 N/A N/A N/A N/A N/A N/A N/A N/A 4 14.80 N/A
& Suites
21 CIBC Regal Cinemas 6,651,190 15 68 N/A N/A 53 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 F
22 Midland Drake's Passage 6,393,105 1 36 N/A N/A N/A N/A N/A 80 N/A N/A N/A N/A N/A N/A N/A N/A 4 15.30 N/A
23 Midland Northcastle 6,363,688 7 36 N/A N/A 80 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 18.30 F
Apartments
24 RFC Giro Building 6,300,000 N/A 36 N/A N/A N/A N/A N/A 80 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
25 Midland Longley Business 6,128,792 1 36 N/A N/A N/A N/A N/A 80 N/A N/A N/A N/A N/A N/A N/A N/A 4 15.60 N/A
Park
26 CIBC Sharpstown Court 5,995,735 1 25 N/A N/A N/A N/A N/A 88 N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 N/A
27 Midland Temescal Village 5,590,125 1 36 N/A N/A N/A N/A N/A 80 N/A N/A N/A N/A N/A N/A N/A N/A 4 16.30 N/A
Plaza
28 CIBC Plantation 5,536,819 3 27 N/A N/A N/A N/A N/A 86 N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 N/A
Properties
29 RFC Bernal Business 5,500,000 N/A 24 N/A N/A N/A N/A N/A 92 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
Center
30 Midland East 55TH Street 5,486,404 2 60 N/A N/A 56 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 16.50 F
31 RFC Coriel Manor 5,470,891 5 29 N/A N/A N/A N/A N/A 87 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
Apartments
32 RFC Gibbstown Shopping 5,418,607 24 36 N/A N/A 44 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 G
Center
33 Midland Plaza De Colores 5,278,971 2 60 N/A N/A N/A N/A N/A 56 N/A N/A N/A N/A N/A N/A N/A N/A 4 16.80 N/A
34 CIBC Lifeline Building 5,268,804 8 31 N/A N/A N/A N/A N/A 82 N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 N/A
35 RFC Deon Square Shopping 5,086,076 1 25 N/A N/A N/A N/A N/A 163 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
Center
36 CIBC Regstad II - 4,994,310 1 49 N/A N/A N/A N/A N/A 64 N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 N/A
Orchid Place
37 CIBC 6 Gramatan Avenue 4,989,495 4 28 N/A N/A N/A N/A N/A 85 N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 N/A
38 CIBC Eisenhower Industrial 4,985,455 3 27 N/A N/A N/A N/A N/A 86 N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 N/A
Complex
39 Midland Wood River Apartments 4,979,200 5 36 N/A N/A 80 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 18.30 F
40 RFC Old Navy - 4,890,000 N/A 24 N/A N/A N/A N/A N/A 92 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
Linens 'N Things
41 CIBC Avenue C Apartments 4,796,626 1 25 N/A N/A N/A N/A N/A 88 N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 N/A
42 RFC Pine Plaza Shopping 4,731,452 6 30 N/A N/A N/A N/A N/A 86 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
Center
43 RFC Shopps On the Pike 4,727,960 14 132 N/A N/A 102 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 F
44 Midland Shoppes of Kenwood 4,680,069 6 60 N/A N/A 56 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 B
45 Midland Country Club Place 4,647,059 1 36 N/A N/A N/A N/A N/A 80 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
Shopping Center
46 RFC Space City Retail 4,636,491 1 25 N/A N/A N/A N/A N/A 151 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
Center
47 RFC Glen Cove Shopping 4,595,181 2 36 N/A N/A 80 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 G
Center
48 RFC The Crossings 4,588,380 4 28 N/A N/A N/A N/A N/A 88 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
49 Midland The Glen Apartments 4,580,164 5 36 N/A N/A 80 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 18.30 F
50 Midland Lackland Self Storage 4,420,036 6 84 N/A N/A 92 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 B
51 CIBC Fairfield Inn 4,396,088 1 25 N/A N/A N/A N/A N/A 88 N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 N/A
52 CIBC Trolley Commons/ 4,395,064 1 25 N/A N/A N/A N/A N/A 88 N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 N/A
Willow Reed Village
53 CIBC Monarch Beach Plaza 4,238,973 3 27 N/A N/A N/A N/A N/A 86 N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 N/A
II-16
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<CAPTION>
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Prepayment Code(10)
Total Admin YM
Loan Property Cut-Off Date Season- Def/ Cost (bps) Code
No. Seller(1) Name (2) Balance (1) ing(9) LO YMS YM2 YM1 YM YM Def 5 4.5 4 3.5 3 2.5 2 1 Open (11) (12)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> >C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
54 Midland 95 John Muir Drive 4,231,997 2 36 N/A N/A N/A N/A N/A 80 N/A N/A N/A N/A N/A N/A N/A N/A 4 18.30 N/A
55 CIBC Northup West Office 4,166,001 10 11 N/A N/A N/A N/A N/A 102 N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 N/A
Park
56 Midland MCI Building 4,108,863 2 36 N/A N/A N/A N/A N/A 80 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
57 Midland Springtown Shopping 4,058,794 5 60 N/A N/A N/A N/A N/A 52 N/A N/A N/A N/A N/A N/A N/A N/A 8 8.30 N/A
Center
58 RFC Crosswinds Apartment 4,033,445 6 30 N/A N/A N/A N/A N/A 86 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
Homes
59 Midland Forrest Machinery 4,033,098 4 60 N/A N/A N/A N/A N/A 56 N/A N/A N/A N/A N/A N/A N/A N/A 4 18.30 N/A
Building
60 Midland Canal House 3,984,092 5 60 N/A N/A N/A N/A N/A 59 N/A N/A N/A N/A N/A N/A N/A N/A 1 8.30 N/A
Apartments
61 CIBC Warner Center 3,983,930 4 28 N/A N/A N/A N/A N/A 85 N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 N/A
62 Midland Woodside at the 3,977,217 5 60 N/A N/A N/A N/A N/A 59 N/A N/A N/A N/A N/A N/A N/A N/A 1 16.30 N/A
Office Center
63 RFC Mountain Country 3,971,899 6 30 N/A N/A N/A N/A N/A 86 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
Estates
64 CIBC One Dodge Drive 3,897,436 1 25 N/A N/A N/A N/A N/A 88 N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 N/A
65 CIBC Kolonaki - 3,839,288 3 48 N/A N/A 65 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 F
Industrial (808)
66 Midland Rockford Ambulatory 2,972,102 2 60 N/A N/A N/A N/A N/A 56 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
Surgery Center (B)
67 Midland Rockford Medical 830,565 2 60 N/A N/A N/A N/A N/A 56 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
Office Building (B)
68 CIBC White's Crossing 3,735,688 2 26 N/A N/A N/A N/A N/A 87 N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 N/A
Plaza
69 CIBC Access Self Storage 3,735,221 4 28 N/A N/A N/A N/A N/A 88 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
70 Midland South Park Office 3,705,925 3 60 N/A N/A 56 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 F
Complex
71 Midland Georgetown 3,582,593 7 60 N/A N/A 56 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 F
Apartments
72 Midland Heritage Park 3,505,487 2 36 N/A N/A N/A N/A N/A 80 N/A N/A N/A N/A N/A N/A N/A N/A 4 18.30 N/A
Apartments
73 Midland Northland Aluminum 3,483,408 3 60 N/A N/A 53 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 7 18.30 F
Products, Inc
74 RFC Coach & Four East 3,453,120 3 48 N/A N/A 68 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 G
Apartments
75 CIBC Courtyard by 3,396,977 1 25 N/A N/A N/A N/A N/A 88 N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 N/A
Marriott
76 RFC Brook Run Apartments 3,345,638 2 26 N/A N/A N/A N/A N/A 89 N/A N/A N/A N/A N/A N/A N/A N/A 5 8.30 N/A
77 RFC Green Meadows 3,326,198 6 30 N/A N/A N/A N/A N/A 86 N/A N/A N/A N/A N/A N/A N/A N/A 4 13.30 N/A
Apartments
78 RFC Grand Plaza 3,286,789 1 25 N/A N/A N/A N/A N/A 91 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
Properties, Inc.
79 RFC Fairmont and 3,269,700 3 27 N/A N/A N/A N/A N/A 89 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
Monticello Apartments
80 CIBC Palmetto Gardens 3,244,743 2 26 N/A N/A N/A N/A N/A 87 N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 N/A
Industrial Park
81 Midland Lower Falls Landing 3,215,268 3 36 N/A N/A N/A N/A N/A 80 N/A N/A N/A N/A N/A N/A N/A N/A 4 10.80 N/A
82 RFC PML Office Building 3,196,722 1 25 N/A N/A N/A N/A N/A 91 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
83 Midland Concord Business 3,193,845 2 60 56 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 15.80 F
Center
84 Midland Middlebrook Business 3,046,777 1 36 N/A N/A N/A N/A N/A 80 N/A N/A N/A N/A N/A N/A N/A N/A 4 18.30 N/A
Park
85 Midland Vintage Faire 2,994,035 3 60 N/A N/A N/A N/A N/A 80 N/A N/A N/A N/A N/A N/A N/A N/A 4 18.30 N/A
Apartments
86 CIBC 140 Gould Street 2,977,216 11 35 N/A N/A N/A N/A N/A 78 N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 N/A
87 Midland Woodbridge Apartments 2,936,349 6 60 N/A N/A 57 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 3 18.30 F
88 RFC Pier One Imports 2,928,112 6 30 N/A N/A N/A N/A N/A 86 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
89 Midland Deerwood at the 2,888,215 5 48 N/A N/A 68 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 18.30 F
Park Apartments
90 Midland Tukwila Estates 2,884,294 3 36 N/A N/A N/A N/A N/A 80 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
91 Midland Orchard Park 2,791,223 3 36 N/A N/A N/A N/A N/A 77 N/A N/A N/A N/A N/A N/A N/A N/A 7 15.80 N/A
Apartments
92 Midland Airport Business 2,772,010 1 36 N/A N/A N/A N/A N/A 80 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
Center
93 Midland Holiday Inn, New Ulm 2,762,471 1 36 N/A N/A N/A N/A N/A 140 N/A N/A N/A N/A N/A N/A N/A N/A 4 18.30 N/A
94 RFC Monsey Mall 2,745,503 1 25 N/A N/A N/A N/A N/A 91 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
95 Midland Silverdale Office 2,714,026 5 36 N/A N/A 80 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 F
Building
96 RFC Habersham Shopping 2,700,198 5 48 N/A N/A 68 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 13.30 F
Center
97 Midland Brattleboro North 2,678,528 7 48 N/A N/A 65 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 A
Shopping Plaza
98 Midland Crossroads Shopping 2,626,687 2 36 N/A N/A N/A N/A N/A 80 N/A N/A N/A N/A N/A N/A N/A N/A 4 18.30 N/A
Center
99 RFC Paloma Apartments 2,619,260 3 27 N/A N/A N/A N/A N/A 89 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
100 Midland Mullica Woods 2,541,566 3 60 N/A N/A N/A N/A N/A 56 N/A N/A N/A N/A N/A N/A N/A N/A 4 15.80 N/A
101 Midland Windsong Apartments 2,495,068 2 60 N/A N/A N/A N/A N/A 56 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
102 Midland Magnolia Park 2,480,261 7 60 N/A N/A 56 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 F
Shopping Center
103 Midland Vollstedt Building 2,467,599 3 60 N/A N/A N/A N/A N/A 56 N/A N/A N/A N/A N/A N/A N/A N/A 4 18.30 N/A
104 Midland Lackland Self Storage 2,455,576 6 84 N/A N/A 92 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 B
105 Midland Cinnamon Square 2,455,128 2 60 N/A N/A 56 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 18.30 F
Apartments
106 Midland Bordeaux XI 2,435,861 1 36 N/A N/A N/A N/A N/A 80 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
Apartments
107 Midland 5397 North 1,378,119 7 60 56 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 F
Commerce (C)
108 Midland Gabbert Building (C) 910,472 7 60 56 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 F
109 RFC The Kingsbury 2,286,816 5 29 N/A N/A N/A N/A N/A 87 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
Apartments
110 Midland Crestwood Apartments 2,259,421 2 36 N/A N/A N/A N/A N/A 80 N/A N/A N/A N/A N/A N/A N/A N/A 4 11.30 N/A
111 CIBC Dicks Clothing and 2,247,859 1 25 N/A N/A N/A N/A N/A 85 N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 N/A
Sporting Good
112 Midland Roseland Manor 2,247,623 1 60 N/A N/A N/A N/A N/A 56 N/A N/A N/A N/A N/A N/A N/A N/A 4 18.30 N/A
Duplexes
II-17
<PAGE>
<CAPTION>
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Prepayment Code(10)
Total Admin YM
Loan Property Cut-Off Date Season- Def/ Cost (bps) Code
No. Seller(1) Name (2) Balance (1) ing(9) LO YMS YM2 YM1 YM YM Def 5 4.5 4 3.5 3 2.5 2 1 Open (11) (12)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> >C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
113 Midland Mount View Office 2,240,783 6 78 N/A N/A 74 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 18.30 F
Building
114 Midland The Port Apartments 2,237,118 6 60 N/A N/A 56 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 18.30 F
115 RFC Forman Mills 2,235,948 6 30 N/A N/A N/A N/A N/A 86 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
116 RFC 7900 Beech Daly 2,213,153 7 31 N/A N/A N/A N/A N/A 85 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
& 6810 Metroplex Drive
117 RFC Arrowhead Fountain 2,198,556 1 25 N/A N/A N/A N/A N/A 91 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
Center
118 Midland Ridgmar Crossroads 2,194,161 4 60 N/A N/A N/A N/A N/A 56 N/A N/A N/A N/A N/A N/A N/A N/A 4 18.30 N/A
Apartments
119 RFC Renaissance West 2,180,000 N/A 24 N/A N/A N/A N/A N/A 92 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
Shopping Center
120 CIBC Lexington Center 2,173,602 1 25 N/A N/A N/A N/A N/A 92 N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 N/A
121 Midland State of Oregon Job 2,140,809 6 60 N/A N/A 56 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 18.30 F
Council Buildings
122 CIBC Hayes Community 2,127,818 1 25 N/A N/A N/A N/A N/A 88 N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 N/A
123 RFC Today's Man - 2,121,085 2 26 N/A N/A N/A N/A N/A 90 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
Deptford
124 Midland Devon Park Apartments 2,085,706 6 48 N/A N/A 68 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 B
125 RFC Cross Keys Apartments 2,080,791 12 36 N/A N/A N/A N/A N/A 77 N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 N/A
126 CIBC White Oak Profession- 2,022,739 2 26 N/A N/A N/A N/A N/A 87 N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 N/A
al Building
127 RFC Scripps Mesa 2,014,454 5 29 N/A N/A N/A N/A N/A 87 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
Shopping Center
128 Midland Pacific Place 1,997,859 1 36 N/A N/A N/A N/A N/A 80 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
129 CIBC Timberfalls 1,995,308 4 28 N/A N/A N/A N/A N/A 85 N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 N/A
Apartments
130 Midland 110 American 1,986,477 6 60 N/A N/A 56 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 B
Boulevard
131 Midland Handy Lock Mini 1,981,544 5 60 N/A N/A 56 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 F
Storage
132 RFC Carpenter Crest 1,966,690 9 33 N/A N/A N/A N/A N/A 83 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
Apartments
133 RFC Stanford Court 1,936,532 19 N/A N/A N/A N/A 35 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 25 8.30 C
134 Midland Commons at Valdosta 1,910,589 7 60 56 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 F
Apartments
135 CIBC Kolonaki - Sausalito 1,894,714 3 48 N/A N/A 65 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 F
136 Midland Quail Court 1,881,692 8 60 N/A N/A 56 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 18.30 F
Apartments
137 Midland Pacific Palms 1,869,524 1 36 N/A N/A N/A N/A N/A 140 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
Apartments
138 Midland Village at Cambridge 1,848,139 1 36 N/A N/A N/A N/A N/A 80 N/A N/A N/A N/A N/A N/A N/A N/A 4 18.30 N/A
Self Storag
139 CIBC Kolonaki - San 1,844,853 3 48 N/A N/A 65 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 F
Francisco (1723)
140 Midland Providence Office 1,836,398 2 36 N/A N/A N/A N/A N/A 80 N/A N/A N/A N/A N/A N/A N/A N/A 4 13.30 N/A
Building
141 Midland Westlake Village 1,798,357 3 36 N/A N/A N/A N/A N/A 80 N/A N/A N/A N/A N/A N/A N/A N/A 4 18.30 N/A
Apartments
142 CIBC Days Inn - Anderson 1,797,224 2 26 N/A N/A N/A N/A N/A 87 N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 N/A
143 RFC Hollywood Video 1,796,102 4 28 N/A N/A N/A N/A N/A 88 N/A N/A N/A N/A N/A N/A N/A N/A 4 13.30 N/A
Portfolio
144 CIBC Hampton Inn - 1,794,954 2 26 N/A N/A N/A N/A N/A 87 N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 N/A
Mary Esther
145 RFC The Pinons Apartments 1,792,319 6 30 N/A N/A N/A N/A N/A 86 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
146 Midland Foreside Place 1,784,420 8 48 68 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 F
147 Midland 21036 Triple Seven 1,781,648 3 60 N/A N/A N/A N/A N/A 56 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
Road
148 RFC Central Park 1,773,467 2 48 N/A N/A 65 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 G
Southwest
149 Midland Best Storage 1,754,278 2 60 N/A N/A 53 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 F
150 Midland Forest Hills Shopping 1,743,296 8 60 N/A N/A 107 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 13 8.30 F
Center
151 Midland Ashton Oaks 1,737,850 7 60 N/A N/A 56 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 F
Apartments
152 Midlanf Siesta Hills Shopping 1,720,011 1 60 N/A N/A 56 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 F
Center
153 Midland Holiday Inn Express 1,719,651 4 48 N/A N/A 68 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 F
154 Midland Waterside Apartments 1,700,890 1 36 N/A N/A N/A N/A N/A 80 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
155 Midland Village Square 1,680,206 3 60 N/A N/A 56 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 F
Shopping Center
156 Midland Century Mobile Home 1,673,312 1 36 N/A N/A N/A N/A N/A 80 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
Park
157 Midland Rite Aid Pharmacy 1,651,294 2 36 N/A N/A N/A N/A N/A 197 N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 N/A
158 RFC Hobe Village Mobile 1,640,000 N/A 24 N/A N/A N/A N/A N/A 152 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
Home Park
159 Midland Via Linda Plaza 1,627,621 7 60 N/A N/A 53 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 7 18.30 F
160 Midland Pleasant Valley 1,596,651 3 36 N/A N/A N/A N/A N/A 104 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
Apartments
161 Midland West Wind Apartments 1,593,967 5 60 N/A N/A 56 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 F
Phase III
162 RFC S&R Shopping Center 1,589,989 8 32 N/A N/A N/A N/A N/A 81 N/A N/A N/A N/A N/A N/A N/A N/A 7 15.80 N/A
163 Midland Edwards Village 1,555,847 4 60 N/A N/A 56 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 F
164 Midland Comfort Inn 1,530,240 4 48 N/A N/A 68 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 F
165 RFC Laudonniere 1,528,966 1 25 N/A N/A N/A N/A N/A 91 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
Apartments
166 RFC Whaley's Shopping 1,528,217 2 26 N/A N/A N/A N/A N/A 90 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
Center
167 Midland Maybrook Apartments 1,509,131 7 60 N/A N/A 56 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 F
168 RFC Staples 1,496,648 2 26 N/A N/A N/A N/A N/A 90 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
169 RFC The Retail Group 1,485,978 8 80 N/A N/A N/A N/A N/A 96 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
170 Midland Tucker Industries 1,484,417 1 36 N/A N/A N/A N/A N/A 80 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
Building
171 Midland Airborne Express 1,420,605 3 60 N/A N/A 56 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 F
II-18
<PAGE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Prepayment Code(10)
Total Admin YM
Loan Property Cut-Off Date Season- Def/ Cost (bps) Code
No. Seller(1) Name (2) Balance (1) ing(9) LO YMS YM2 YM1 YM YM Def 5 4.5 4 3.5 3 2.5 2 1 Open (11) (12)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> >C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
172 Midland Parkway Gardens 970,697 2 36 N/A N/A N/A N/A N/A 80 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
Apartments (D)
173 Midland Norvell Gardens 449,124 2 36 N/A N/A N/A N/A N/A 80 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
Apartments (D)
174 RFC Smith Retail 1,417,520 8 36 N/A N/A 80 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 F
Portfolio
175 RFC Stor-A-Lot Self 1,398,601 1 25 N/A N/A N/A N/A N/A 91 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
Storage
176 CIBC CVS Smithtown 1,395,416 2 25 N/A N/A N/A N/A N/A 208 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
177 Midland Ashwood Apartments 1,390,582 6 60 N/A N/A 56 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 18.30 F
178 Midland Stonehurst Apartments 1,381,304 6 60 N/A N/A 56 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 F
179 Midland Storage Max-Yuma 1,347,388 2 36 N/A N/A N/A N/A N/A 80 N/A N/A N/A N/A N/A N/A N/A N/A 4 16.30 N/A
180 Midland Georgetown/Melrose 1,345,859 3 36 N/A N/A N/A N/A N/A 80 N/A N/A N/A N/A N/A N/A N/A N/A 4 18.30 N/A
Plaza Apartments
181 RFC Greenwood/St. Charles 1,318,476 7 31 N/A N/A N/A N/A N/A 84 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
182 Midland South Ogden Plaza 1,281,820 2 60 N/A N/A N/A N/A N/A 116 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
183 Midland Cedarstone Apartments 1,262,864 7 36 N/A N/A N/A N/A N/A 80 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
184 Midland Southwest Manor 1,261,392 2 36 N/A N/A N/A N/A N/A 80 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
Duplexes
185 Midland Super 8 Motel 1,256,985 3 48 N/A N/A 68 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 F
186 RFC Andover Apartments 1,233,629 12 N/A N/A N/A 113 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 3 4 8.30 D
187 Midland Southwood Plaza 1,232,592 2 60 N/A N/A 56 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 F
Office Building
188 Midland The Trade Center 1,195,188 4 60 N/A N/A 56 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 F
189 RFC Regency Mobile 1,189,498 7 48 N/A N/A 68 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 F
Home Park
190 RFC Village Green 1,184,215 7 31 N/A N/A N/A N/A N/A 85 N/A N/A N/A N/A N/A N/A N/A N/A 4 13.30 N/A
191 RFC Center on Memorial 1,147,841 2 48 N/A N/A 68 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 G
192 RFC River Road Mobile 1,143,636 6 48 N/A N/A 65 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 G
Home Park
193 RFC First View 1,138,956 8 32 N/A N/A N/A N/A N/A 84 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
194 Midland Payne Office Building 1,135,772 2 36 N/A N/A N/A N/A N/A 80 N/A N/A N/A N/A N/A N/A N/A N/A 4 13.30 N/A
195 RFC Woodlane Apartments 1,135,313 1 48 N/A N/A 65 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 G
196 Midland 507 Capital Court (E) 376,264 8 60 N/A N/A 56 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 F
197 Midland 513 Capitol Court (E) 376,264 8 60 N/A N/A 56 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 F
198 Midland 501 Capital Ct.NE (E) 361,411 8 60 N/A N/A 56 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 F
199 CIBC Town House South 1,098,796 1 25 N/A N/A N/A N/A N/A 88 N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 N/A
Apartments and Danville Duplexes
200 RFC Red Deer Apartments 1,095,060 12 N/A N/A N/A 113 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 3 4 8.30 D
201 Midland Crown Plaza Office 1,091,472 7 60 N/A N/A 56 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 18.30 F
Building
202 RFC 535 Manufacturers 1,045,774 4 28 N/A N/A N/A N/A N/A 88 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
Drive
203 RFC Old Colony Apartments 1,039,739 9 48 N/A N/A 65 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 F
204 RFC Franklin Avenue 1,033,498 6 47 N/A N/A 70 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 3 8.30 G
Building
205 RFC Rivercrest Apartments 1,031,476 12 N/A N/A N/A 113 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 3 4 8.30 F
206 Midland View Pointe 1,022,887 2 36 N/A N/A N/A N/A N/A 80 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
Apartments
207 RFC 1340 21st Street NW 1,014,316 1 48 N/A N/A 65 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 G
208 RFC Rollingwood 1,009,641 3 83 N/A N/A 90 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 G
Apartments
209 Midland Greenbrier Apartments 998,103 2 60 N/A N/A 56 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 F
210 Midland Lantana Apartments 997,950 2 36 N/A N/A N/A N/A N/A 80 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
211 RFC Pine Meadow Apartments 996,051 4 46 N/A N/A 67 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 G
212 Midland Commerce II Business 975,617 8 90 N/A N/A 86 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 F
Park
213 Midland Office Park at Erindale 959,104 2 36 N/A N/A N/A N/A N/A 80 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
214 Midland Fletcher Auto Mall 948,260 2 36 N/A N/A N/A N/A N/A 80 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
215 RFC Spurwood Office 947,362 3 27 N/A N/A N/A N/A N/A 89 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
216 RFC Colonial-Excelsior 936,876 9 60 N/A N/A 56 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 E
217 Midland 170 South River Road 935,917 2 60 N/A N/A N/A N/A N/A 56 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
218 RFC Centennial Place 935,829 7 48 N/A N/A 65 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 G
Apartments
219 RFC Charmony Place 928,839 2 48 N/A N/A 65 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 G
Apartments
220 RFC Wooded Acres Apartments 921,178 6 30 N/A N/A N/A N/A N/A 86 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
221 RFC Greenwood Villa 887,674 7 31 N/A N/A N/A N/A N/A 85 N/A N/A N/A N/A N/A N/A N/A N/A 4 13.30 N/A
Apartments
222 RFC Lincolnwood Office 875,024 7 31 N/A N/A N/A N/A N/A 85 N/A N/A N/A N/A N/A N/A N/A N/A 4 13.30 N/A
Building
223 RFC Brighton Court 872,316 3 47 N/A N/A 66 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 G
Apartments
224 Midland Bell Oaks Village 832,120 1 60 N/A N/A N/A N/A N/A 56 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
Apartments
225 RFC 61-71 Long Lane 824,401 7 31 N/A N/A N/A N/A N/A 85 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
226 Midland Prairie Village Mobile 822,635 3 60 N/A N/A 56 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 F
Home Park
227 RFC 20 Green of Panorama 822,548 6 48 N/A N/A 65 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 G
228 RFC Cedargate Apartments 806,888 12 N/A N/A N/A 113 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 3 4 8.30 D
229 RFC Copperfield Landing, LP 800,000 N/A 24 N/A N/A N/A N/A N/A 152 N/A N/A N/A N/A N/A N/A N/A N/A 4 10.80 N/A
230 Midland ICCA Building 728,605 8 60 N/A N/A 53 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 F
II-19
<PAGE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Prepayment Code(10)
Total Admin YM
Loan Property Cut-Off Date Season- Def/ Cost (bps) Code
No. Seller(1) Name (2) Balance (1) ing(9) LO YMS YM2 YM1 YM YM Def 5 4.5 4 3.5 3 2.5 2 1 Open (11) (12)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> >C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
231 RFC Oak Glen Apartments 674,205 8 48 N/A N/A 65 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 F
232 RFC North Miami Industrial 660,020 4 49 N/A N/A 64 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 G
233 RFC Quail Creek Apartments 654,143 4 47 N/A N/A 66 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 G
234 RFC University Apartments 595,643 6 30 N/A N/A N/A N/A N/A 86 N/A N/A N/A N/A N/A N/A N/A N/A 4 13.30 N/A
235 Midland Irving Court Townhomes 543,935 2 36 N/A N/A N/A N/A N/A 80 N/A N/A N/A N/A N/A N/A N/A N/A 4 8.30 N/A
236 RFC Grahamcrest Manor 515,700 17 48 N/A N/A 65 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 F
Apartments
237 RFC The Gorelick Apartments 494,925 10 48 N/A N/A 65 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 F
238 Midland 325-339 North Dr 490,278 7 90 N/A N/A 83 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 F
239 RFC 519 Central Avenue 468,887 11 48 N/A N/A 65 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 F
240 RFC Klingerman Apartments 436,351 12 120 N/A N/A 53 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 F
241 RFC 901 SW 8th Avenue 430,193 13 180 N/A N/A 53 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 F
Apartments
242 RFC Meadow Pines Apartments 415,331 12 48 N/A N/A 65 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 7 8.30 F
Total/Weighted
Average $733,801,916 4 9.95
</TABLE>
II-20
<PAGE>
<TABLE>
<CAPTION>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
PROPERTY INFORMATION
- -----------------------------------------------------------------------------------------------------------------------
Loan Seller
No. (1) Property Name(2) Address City State Zipcode
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 RFC 21 Penn Plaza 362 - 370 9th Avenue New York NY 10001
2 RFC Park Drive Manor Apts 633 W. Rittenhouse Street Philadelphia PA 19144
3 CIBC Prime Portfolio Various Chicago IL Various
CIBC 1301 East Tower Road (I) 1301 East Tower Road Schaumburg IL 60173
CIBC 4300 Madison Street (I) 4300 Madison Street Hillside IL 60162
CIBC 342-346 Carol Lane (I) 342-346 Carol Lane Elmhurst IL 60126
CIBC 550 Kehoe Blvd. (I) 550 Kehoe Blvd. Carol Stream IL 60188
CIBC 343 Carol Lane (I) 343 Carol Lane Elmhurst IL 60126
CIBC 388 Carol Lane (I) 388 Carol Lane Elmhurst IL 60126
4 CIBC 1414 Avenue of the Americas 1414 Avenue of the Americas New York NY 10019
5 CIBC 70 West 36th Street 70 West 36th Street New York NY 10018
6 RFC 7200 Leamington, LLC (A) 7200 S. Leamington Bedford Park IL 60638
7 RFC 2201 Lundt, LLC (A) 2201 W. Lunt Ave Elk Grove Village IL 60007
8 RFC 1330 W. 43rd St. (A) 1330 W. 43rd St. Chicago IL 60609
9 CIBC University Club Apartments 10035 Dabney Drive Charlotte NC 28262
10 Midland The Patriot Apartments 4600 FAIRBANKS DR El Paso TX 79924
11 CIBC Acme Plaza (Cape May Plaza) South Dennis Road Cape May NJ 08210
12 RFC The Place Apartments 4757 Barkley Circle Fort Myers FL 33907
13 Midland The Phoenix Apartments 7401 PHOENIX AVE El Paso TX 79915
14 RFC Glenwood Plaza Routes 5 & 46 Oneida NY 13421
15 CIBC 633 Third Avenue 633 3rd Avenue New York NY 10017
16 Midland 148 State Street 148 STATE ST Boston MA 02109
17 CIBC The Piers 6341 Tacoma Drive Port Richey FL 34668
18 CIBC North Point Center East 7th St. and Range Line Rd. Joplin MO 64801
19 Midland Beau Rivage Apartments,
Phases II & III 4700 E.IUPRIVER DRIVE Spokane WA 99217
20 Midland Holiday Inn Express & Suites 1950 RAHNCLIFF CT Eagan MN 55122
21 CIBC Regal Cinemas 550 Rollins Road Round Lake Beach IL 60073
22 Midland Drake's Passage 31 DRONNINGEN'S GADE Charlotte Amal VI 00801
23 Midland Northcastle Apartments 8100 MOPAC EXPRESSWAY Austin TX 78750
24 RFC Giro Building 370 - 380 Encinal Street Santa Cruz CA 95060
25 Midland Longley Business Park 3515- 3595 AIRWAY DR Reno NV 89511
26 CIBC Sharpstown Court 6900 Southwest Freeway Houston TX 77025
27 Midland Temescal Village Plaza 1181- 1199 MAGNOLIA AVE Corona CA 91719
28 CIBC Plantation Properties 1700 & 1800 Northwest 66th Avenue Plantation FL 33313
29 RFC Bernal Business Center 175 Bernal Road San Jose CA 95119
30 Midland East 55TH Street 1901- 2137 E 55TH ST Vernon CA 90058
31 RFC Coriel Manor Apartments 7200 Marion Avenue Levittown PA 19055
32 RFC Gibbstown Shopping Center Harmony Road and I-295 / US 130 Gibbstown NJ 8027
33 Midland Plaza De Colores 1950 -2050 S RAINBOW BLVD Las Vegas NV 89102
34 CIBC Lifeline Building 108 Clark Street Framingham MA 01701
35 RFC Deon Square Shopping Center 500 Oxford Valley Road Bristol PA 19030
36 CIBC Regstad II - Orchid Place 1750,1810,1830 and 1850 49th Street SW Fargo ND 58103
37 CIBC 6 Gramatan Avenue 6 Gramatan Avenue Mt. Vernon NY 10550
38 CIBC Eisenhower Industrial
Complex 4600, 4602, 4604 Eisenhower Avenue Alexandria VA 22304
39 Midland Wood River Apartments 4021 WOOD RIVER DR Corpus Christi TX 78410
40 RFC Old Navy - Linens 'N Things 2600 NE Highway 20 Bend OR 97701
41 CIBC Avenue C Apartments 60 East 1st Street and 18-22 Avenue C New York NY 10009
42 RFC Pine Plaza Shopping Center 1213-71 Stafford Drive Princeton WV 24740
43 RFC Shopps On the Pike 11501-11503 Rockville Pike Rockville MD 20852
44 Midland Shoppes of Kenwood 7700 MONTGOMERY RD Cincinnati OH 45236
45 Midland Country Club Place Shopping
Center 1552- 1696 COUNTRY CLUB PLAZA DRIVE St Charles MO 63303
46 RFC Space City Retail Center 1001 - 1051 Pineloch Drive Houston TX 77062
47 RFC Glen Cove Shopping Center 40, 44, & 50 Glen Cove Road Greenvale NY 11548
48 RFC The Crossings 200-220 Nut Tree Parkway Vacaville CA 95687
49 Midland The Glen Apartments 2602 SOUTH 39TH STREET Temple TX 76504
50 Midland Lackland Self Storage 3540 QUAKERBRIDGE RD Hamilton NJ 08619
51 CIBC Fairfield Inn 800 Salem Drive Owensboro KY 42303
52 CIBC Trolley Commons/
Willow Reed Village 99l Hemingway Avenue East Haven CT 06512
53 CIBC Monarch Beach Plaza 24004-24060 Camino Del Avion Dana Point CA 92677
54 Midland 95 John Muir Drive 95 JOHN MUIR DR Amherst NY 14228
55 CIBC Northup West Office Park 2800-2840 Northup Way Bellevue WA 98004
56 Midland MCI Building 4408 SILICON DR Durham NC 22703
57 Midland Springtown Shopping Center STATE HWY 199 Springtown TX 76082
58 RFC Crosswinds Apartment Homes 14810 Crosswinds Boulevard Houston TX 77032
59 Midland Forrest Machinery Building 27756 AVENUE MENTRY Santa Clarita CA 91355
60 Midland Canal House Apartments 4250- 4312 MAIN STREET Philadelphia PA 19127
61 CIBC Warner Center 332 Fifth Avenue Pittsburgh PA 15222
62 Midland Woodside at the Office
Center 1000,1100,1200,1300,2000 CENTER DRIVE Plainsboro NJ 08536
63 RFC Mountain Country Estates 115 South Academy Blvd. Colorado Springs CO 80910
64 CIBC One Dodge Drive One Dodge Drive West Caldwell NJ 07006
65 CIBC Kolonaki - Industrial (808) 808 Brannan Street San Francisco CA 94103
66 Midland Rockford Ambulatory Surgery
Center 1016 FEATHERSTONE RD Rockford IL 61107
67 Midland Rockford Medical Office
Building (B) 2202 HARLEM RD Loves Park IL 61111
68 CIBC White's Crossing Plaza 1820 S. Madison Street Whiteville NC 28474
69 CIBC Access Self Storage 217 Belmont Avenue Haledon NJ 7508
70 Midland South Park Office Complex 2055 SOUTH PACHECO STREET Santa Fe NM 87502
71 Midland Georgetown Apartments 975, 982 , 990 IRWIN ST Morgantown WV 26505
72 Midland Heritage Park Apartments 850 S VINCENT AVE Azusa CA 91702
73 Midland Northland Aluminum
Products, Inc. 5005 COUNTY RD 25 St Louis Park MN 55416
74 RFC Coach & Four East Apartments 5250 Burkhardt Drive Riverside OH 45431
75 CIBC Courtyard by Marriott 1010 Wilkinson Trace Bowling Green KY 42104
II-21
<PAGE>
<CAPTION>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
PROPERTY INFORMATION
- -----------------------------------------------------------------------------------------------------------------------
Loan Seller Units or Year Year
No. (1) Property Name(2) Property Type SubType NSF Built Renovated
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 RFC 21 Penn Plaza Office Urban 344,091 1931 1997
2 RFC Park Drive Manor Apts Multifamily High-Rise 572 1950 1998
3 CIBC Prime Portfolio Industrial/Warehouse Warehouse 361,043 Various Various
CIBC 1301 East Tower Road (I) Office Office/Warehouse 50,400 1992 N/A
CIBC 4300 Madison Street (I) Industrial/Warehouse Warehouse 127,129 1980 1994
CIBC 342-346 Carol Lane (I) Industrial/Warehouse Warehouse 67,935 1989 N/A
CIBC 550 Kehoe Blvd. (I) Industrial/Warehouse Warehouse 44,575 1996 N/A
CIBC 343 Carol Lane (I) Industrial/Warehouse Warehouse 30,084 1989 N/A
CIBC 388 Carol Lane (I) Industrial/Warehouse Warehouse 40,920 1979 1982
4 CIBC 1414 Avenue of the Americas Office Urban 111,455 1924 1997
5 CIBC 70 West 36th Street Office Urban 151,077 1923 1995
6 RFC 7200 Leamington, LLC (A) Industrial/Warehouse Light 310,752 1952 1992
7 RFC 2201 Lundt, LLC (A) Industrial/Warehouse Light 213,390 1963 1998
8 RFC 1330 W. 43rd St. (A) Industrial/Warehouse Light 109,728 1977 1997
9 CIBC University Club Apartments Multifamily Garden 130 1998 N/A
10 Midland The Patriot Apartments Multifamily Garden 320 1996 N/A
11 CIBC Acme Plaza (Cape May Plaza) Retail Anchored 150,548 1971 1998
12 RFC The Place Apartments Multifamily Garden 230 1985/1987 1999
13 Midland The Phoenix Apartments Multifamily Garden 336 1993 N/A
14 RFC Glenwood Plaza Retail Anchored 218,166 1989 N/A
15 CIBC 633 Third Avenue Retail Unanchored 40,144 1962 1998
16 Midland 148 State Street Office Urban 62,347 1916 1997
17 CIBC The Piers Retail Anchored 101,696 1990 N/A
18 CIBC North Point Center Retail Anchored 143,559 1992 1997
19 Midland Beau Rivage Apartments,
Phases II & III Multifamily Garden 192 1998 N/A
20 Midland Holiday Inn Express & Suites Hospitality Limited Service 120 1994 1996
21 CIBC Regal Cinemas Retail Unanchored 72,621 1998 N/A
22 Midland Drake's Passage Retail Unanchored 32,863 1850 1998
23 Midland Northcastle Apartments Multifamily Garden 170 1970 N/A
24 RFC Giro Building Industrial/Warehouse Flex 90,026 1994/1997/1998/1999 N/A
25 Midland Longley Business Park Industrial/Warehouse Flex 104,400 1996 N/A
26 CIBC Sharpstown Court Retail Anchored 84,189 1974 1998
27 Midland Temescal Village Plaza Retail Anchored 58,342 1985 N/A
28 CIBC Plantation Properties Industrial/Warehouse Light 99,072 1979 1997
29 RFC Bernal Business Center Office Suburban 48,653 1983 N/A
30 Midland East 55TH Street Industrial/Warehouse Light 390,382 1938 N/A
31 RFC Coriel Manor Apartments Multifamily Garden 245 1968 1998
32 RFC Gibbstown Shopping Center Retail Anchored 100,694 1987/1988 N/A
33 Midland Plaza De Colores Retail Unanchored 43,770 1998 N/A
34 CIBC Lifeline Building Office Suburban 84,420 1969 1998
35 RFC Deon Square Shopping Center Retail Anchored 76,545 1983 1995
36 CIBC Regstad II - Orchid Place Multifamily Garden 144 1998 N/A
37 CIBC 6 Gramatan Avenue Office Suburban 69,259 1912 1996
38 CIBC Eisenhower Industrial
Complex Industrial/Warehouse Light 89,654 1964 N/A
39 Midland Wood River Apartments Multifamily Garden 200 1983 N/A
40 RFC Old Navy - Linens 'N Things Retail Big Box 54,588 1995 1999
41 CIBC Avenue C Apartments Multifamily Garden 28 1997-98 N/A
42 RFC Pine Plaza Shopping Center Retail Anchored 94,810 1983 1998
43 RFC Shopps On the Pike Retail Unanchored 20,703 1991 1998
44 Midland Shoppes of Kenwood Retail Anchored 47,411 1991 N/A
45 Midland Country Club Place Shopping
Center Retail Unanchored 121,757 1985 N/A
46 RFC Space City Retail Center Retail Unanchored 52,061 1990 N/A
47 RFC Glen Cove Shopping Center Retail Unanchored 21,086 1952 1998
48 RFC The Crossings Retail Anchored 29,060 1998 N/A
49 Midland The Glen Apartments Multifamily Garden 200 1983 N/A
50 Midland Lackland Self Storage Self Storage Self Storage 1,044 1980 N/A
51 CIBC Fairfield Inn Hospitality Limited Service 100 1997 N/A
52 CIBC Trolley Commons/
Willow Reed Village Multifamily Garden 120 1962 1998
53 CIBC Monarch Beach Plaza Retail Unanchored 31,377 1991 N/A
54 Midland 95 John Muir Drive Office Suburban 39,304 1992 1995
55 CIBC Northup West Office Park Office Suburban 49,105 1980 N/A
56 Midland MCI Building Office Urban 60,000 1987 N/A
57 Midland Springtown Shopping Center Retail Anchored 62,718 1997 N/A
58 RFC Crosswinds Apartment Homes Multifamily Garden 240 1984 N/A
59 Midland Forrest Machinery Building Industrial/Warehouse Light 85,302 1988 N/A
60 Midland Canal House Apartments Multifamily Garden 75 1840 1988
61 CIBC Warner Center Office Suburban 121,650 1918 1984
62 Midland Woodside at the Office
Center Office Suburban 55,000 1984 1997
63 RFC Mountain Country Estates Multifamily Garden 150 1972 N/A
64 CIBC One Dodge Drive Industrial/Warehouse Light 92,913 1985 N/A
65 CIBC Kolonaki - Industrial (808) Industrial/Warehouse Warehouse 55,140 1930 1985
66 Midland Rockford Ambulatory Surgery
Center Office Medical 17,895 1994 N/A
67 Midland Rockford Medical Office
Building (B) Office Medical 12,574 1973 1991
68 CIBC White's Crossing Plaza Retail Anchored 90,131 1994 N/A
69 CIBC Access Self Storage Self Storage Self Storage 65,138 1950 & 1990 1996
70 Midland South Park Office Complex Office Suburban 31,567 1997 N/A
71 Midland Georgetown Apartments Multifamily Garden 91 1988 N/A
72 Midland Heritage Park Apartments Multifamily Garden 88 1989 N/A
73 Midland Northland Aluminum
Products, Inc. Industrial/Warehouse Light 184,190 1968 N/A
74 RFC Coach & Four East Apartments Multifamily Garden 163 1961/1964 N/A
75 CIBC Courtyard by Marriott Hospitality Full Service 93 1997 N/A
II-21
<PAGE>
<CAPTION>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
PROPERTY INFORMATION
- -----------------------------------------------------------------------------------------------------------------------
Loan Seller
No. (1) Property Name(2) Address City State Zipcode
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
76 RFC Brook Run Apartments 1-5 Washington Avenue Victory Gardens NJ 7801
77 RFC Green Meadows Apartments 3501 25th Avenue North Texas City TX 77590
78 RFC Grand Plaza Properties, Inc. 620 Beacon Boulevard Grand Haven MI 49417
79 RFC Fairmont and Monticello
Apartments 1-13 Maryland Plaza and 4535 Lindell St. Louis MO 63108
80 CIBC Palmetto Gardens Industrial
Park 9500-9695 NW 79th Avenue Hialeah Gardens FL 33016
81 Midland Lower Falls Landing 106 LAYAYETTE Yarmouth ME 04096
82 RFC PML Office Building 11890 SW 8th Street Miami FL 33184
83 Midland Concord Business Center 124-130 & 134 HALL ST Concord NH 03301
84 Midland Middlebrook Business Park 19500- 19546 AMARANTH DR Germantown MD 20874
85 Midland Vintage Faire Apartments 11070 HIRSCHFELD WAY Rancho Cordova CA 95670
86 CIBC 140 Gould Street 140 Gould Street Needham MA 02194
87 Midland Woodbridge Apartments 43920, 43950 & 43840 BOBBY JONES DRIVE Lancaster CA 93536
88 RFC Pier One Imports 325 W. Lancaster Avenue Ardmore PA 19003
89 Midland Deerwood at the Park
Apartments 335 E SAN AUGUSTINE Deer Park TX 77536
90 Midland Tukwila Estates 15510 MACADAM RD SOUTH Tukwila WA 98188
91 Midland Orchard Park Apartments 12-21 CRESTWOOD DR Waterville ME 04901
92 Midland Airport Business Center 130-150 DOOLITTLE DR San Leandro CA 94577
93 Midland Holiday Inn, New Ulm 2101 S BROADWAY New Ulm MN 56073
94 RFC Monsey Mall 82-104 Route 59 Monsey NY 10952
95 Midland Silverdale Office Building 3230 RANDALL WAY NW Silverdale WA 98383
96 RFC Habersham Shopping Center 4607 Habersham Street Savannah GA 31406
97 Midland Brattleboro North
Shopping Plaza PUTNEY ROAD Brattleboro VT 05301
98 Midland Crossroads Shopping Center SWQ BETTERAVIA RD & HWY101 Santa Maria CA 93454
99 RFC Paloma Apartments 15 Paloma Avenue Venice CA 90291
100 Midland Mullica Woods 1201 HEIDELBERG AVE Mullica Township NJ 08215
101 Midland Windsong Apartments 114 W 103RD ST Kansas City MO 64114
102 Midland Magnolia Park Shopping
Center 111 MAGNOLIA DRIVE Tallahassee FL 32301
103 Midland Vollstedt Building 4405 RIVERSIDE DR Burbank CA 91505
104 Midland Lackland Self Storage 130 RTE 206 Hillsborough Township NJ 08876
105 Midland Cinnamon Square Apartments 6624 S MAY AVE Oklahoma City OK 73159
106 Midland Bordeaux XI Apartments 2901 S BRAHMA BLVD Kingsville TX 78363
107 Midland 5397 North Commerce (C) 5397 N COMMERCE AVE Moorpark CA 93021
108 Midland Gabbert Building (C) 5380 - 5390 GABBERT AVENUE Moorpark CA 93021
109 RFC The Kingsbury Apartments 501-525 Clara Avenue St. Louis MO 63112
110 Midland Crestwood Apartments 5909 ROYALGATE DR San Antonio TX 78242
111 CIBC Dicks Clothing and Sporting
Goods 2703 Route 541 Burlington NJ 08016
112 Midland Roseland Manor Duplexes 18 STACEY LN Baytown TX 77520
113 Midland Mount View Office Building 100 PRAIRIE CENTER DR Eden Prairie MN 55344
114 Midland The Port Apartments 3231 CONESTOGA DR Norman OK 73072
115 RFC Forman Mills 585 Main Street East Orange NJ 7018
116 RFC 7900 Beech Daly & 48180/
6810 Metroplex Drive 7900 Beech Daly & 6810 Metroplex Drive Taylor & Romulus MI 48174
117 RFC Arrowhead Fountain Center 8325-8337 West Bell Road Peoria AZ 85382
118 Midland Ridgmar Crossroads
Apartments 2100 ADEN RD Fort Worth TX 76116
119 RFC Renaissance West Shopping
Center 1304,1346,1374,1424-1438 Foothill Blvd. Rialto CA 92376
120 CIBC Lexington Center 1100 U.S. Highway 64 Lexington NC 27292
121 Midland State of Oregon Job Council
Buildings 673 & 688 MARKET ST Medford OR 97504
122 CIBC Hayes Community West Plaza Drive Vestal NY 13850
123 RFC Today's Man - Deptford 1460 Almonesson Road Deptford NJ 8096
124 Midland Devon Park Apartments 30 WATERLOO RD Devon PA 19087
125 RFC Cross Keys Apartments 3120 Buford Highway Atlanta GA 30329
126 CIBC White Oak Professional
Building 11161 New Hampshire Avenue Silver Spring MD 20904
127 RFC Scripps Mesa Shopping Center 9801-9847 Mira Mesa Blvd. San Diego CA 92120
128 Midland Pacific Place 210 FOREST AVE Laguna Beach CA 92651
129 CIBC Timberfalls Apartments U.S. Route 6 Blakely PA 18447
130 Midland 110 American Boulevard 110 AMERICAN BLVD Washington Township NJ 08012
131 Midland Handy Lock Mini Storage 5915 N WASHINGTON AVE Ocean Springs MS 39564
132 RFC Carpenter Crest Apartments 201 & 205 Carpenter Road SE Lacey WA 98503
133 RFC Stanford Court 11855 Dashwood Road Houston TX 77072
134 Midland Commons at Valdosta
Apartment 1415 N SAINT AUGUSTINE RD Valdosta GA 31602
135 CIBC Kolonaki - Sausalito (579) 579 Bridgeway Boulevard Sausalito CA 94965
136 Midland Quail Court Apartments 375 WESTSIDE BLVD Houma LA 70364
137 Midland Pacific Palms Apartments 15341 - 15351 WOODRUFF PLACE Bellflower CA 90706
138 Midland Village at Cambridge Self
Storage 4801 W. MAIN ST. Norman OK 73072
139 CIBC Kolonaki - San Francisco
(1723) 1723-27 Union Street San Francisco CA 93401
140 Midland Providence Office Building 6521 ARLINGTON BLVD Falls Church VA 22042
141 Midland Westlake Village Apartments 1800 W WASHINGTON ST Sherman TX 75092
142 CIBC Days Inn - Anderson 1007 Smith Mill Road Anderson SC 29625
143 RFC Hollywood Video Portfolio 1242 Capital Dr. & 3415 80th Street Pewaukee & Kenosha WI 53072
144 CIBC Hampton Inn - Mary Esther 480 East Miracle Strip Parkway Mary Esther FL 32569
145 RFC The Pinons Apartments 3603 Airport Road Colorado Springs CO 80910
146 Midland Foreside Place 202 US ROUTE #1 Falmouth ME 04105
147 Midland 21036 Triple Seven Road 21036 TRIPLE SEVEN ROAD Sterling VA 20165
148 RFC Central Park Southwest 924 Park Avenue Southwest Albuquerque NM 87102
149 Midland Best Storage 1414 S. COLORADO ST Lockhart TX 78644
150 Midland Forest Hills Shopping Center KINGSTON PIKE AT COURT DRIVE Knoxville TN 37919
151 Midland Ashton Oaks Apartments 5100 HAWTHORNE DR Waco TX 76710
152 Midland Siesta Hills Shopping Center 5301 -5455 GIBSON BLVD. SE Albuquerque NM 87108
153 Midland Holiday Inn Express 801 KEENE ST Columbia MO 65201
154 Midland Waterside Apartments 4200 BOCA CHICA BLVD Brownsville TX 78521
155 Midland Village Square Shopping
Center 5400 MAIN ST Springfield OR 97478
156 Midland Century Mobile Home Park 12357 S ASHLAND AVE Calumet Park IL 60643
II-22
<PAGE>
<CAPTION>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
PROPERTY INFORMATION
- -----------------------------------------------------------------------------------------------------------------------
Loan Seller Units or Year Year
No. (1) Property Name(2) Property Type SubType NSF Built Renovated
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
76 RFC Brook Run Apartments Multifamily Garden 82 1975 N/A
77 RFC Green Meadows Apartments Multifamily Garden 152 1981 N/A
78 RFC Grand Plaza Properties, Inc. Retail Unanchored 40,280 1997 N/A
79 RFC Fairmont and Monticello
Apartments Multifamily High-Rise 133 1921 1985
80 CIBC Palmetto Gardens Industrial
Park Industrial/Warehouse Warehouse 161,800 1978 N/A
81 Midland Lower Falls Landing Retail Unanchored 46,355 1900 1987
82 RFC PML Office Building Office Suburban 33,875 1990 N/A
83 Midland Concord Business Center Office Suburban 163,324 1980 N/A
84 Midland Middlebrook Business Park Office Suburban 49,971 1990 N/A
85 Midland Vintage Faire Apartments Multifamily Garden 112 1979 N/A
86 CIBC 140 Gould Street Office Urban 39,928 1959 1979
87 Midland Woodbridge Apartments Multifamily Garden 70 1990 N/A
88 RFC Pier One Imports Retail Anchored 11,740 1998 N/A
89 Midland Deerwood at the Park
Apartments Multifamily Garden 216 1973 N/A
90 Midland Tukwila Estates Multifamily Garden 81 1978 1998
91 Midland Orchard Park Apartments Multifamily Garden 132 1973 N/A
92 Midland Airport Business Center Industrial/Warehouse Light 85,416 1957 1986
93 Midland Holiday Inn, New Ulm Hospitality Limited Service 126 1981 1996
94 RFC Monsey Mall Retail Unanchored 31,975 1955 1995
95 Midland Silverdale Office Building Office Suburban 40,218 1993 1997
96 RFC Habersham Shopping Center Retail Anchored 62,913 1958 1993
97 Midland Brattleboro North
Shopping Plaza Retail Anchored 136,003 1972 1996
98 Midland Crossroads Shopping Center Retail Anchored 24,000 1999 N/A
99 RFC Paloma Apartments Multifamily Garden 58 1913 1993
100 Midland Mullica Woods Manufactured Housing Manufactured Housing 90 1986 N/A
101 Midland Windsong Apartments Multifamily Garden 90 1972 N/A
102 Midland Magnolia Park Shopping
Center Retail Anchored 76,476 1987 1998
103 Midland Vollstedt Building Office Urban 23,078 1971 1999
104 Midland Lackland Self Storage Self Storage Self Storage 629 1980 N/A
105 Midland Cinnamon Square Apartments Multifamily Garden 192 1971 N/A
106 Midland Bordeaux XI Apartments Multifamily Garden 120 1985 N/A
107 Midland 5397 North Commerce (C) Industrial/Warehouse Light 29,622 1985 N/A
108 Midland Gabbert Building (C) Industrial/Warehouse Light 20,803 1988 N/A
109 RFC The Kingsbury Apartments Multifamily High-Rise 53 1908 1984
110 Midland Crestwood Apartments Multifamily Garden 152 1963 1998
111 CIBC Dicks Clothing and Sporting
Goods Retail Shadow Anchored 46,378 1999 N/A
112 Midland Roseland Manor Duplexes Multifamily Garden 138 1984 N/A
113 Midland Mount View Office Building Office Suburban 17,583 1998 N/A
114 Midland The Port Apartments Multifamily Garden 128 1983 N/A
115 RFC Forman Mills Retail Shadow Anchored 47,900 1988 1998
116 RFC 7900 Beech Daly & N/A/
6810 Metroplex Drive Industrial/Warehouse Light 69,615 1997/1978 1998
117 RFC Arrowhead Fountain Center Retail Unanchored 13,714 1998 N/A
118 Midland Ridgmar Crossroads
Apartments Multifamily Garden 60 1985 N/A
119 RFC Renaissance West Shopping
Center Retail Shadow Anchored 52,684 1989 NAV
120 CIBC Lexington Center Retail Anchored 82,155 1969 1996
121 Midland State of Oregon Job Council
Buildings Office Suburban 27,639 1965 1995
122 CIBC Hayes Community Multifamily Garden 182 1968 1997
123 RFC Today's Man - Deptford Retail Unanchored 25,600 1984 N/A
124 Midland Devon Park Apartments Multifamily Garden 63 1850 N/A
125 RFC Cross Keys Apartments Multifamily Garden 64 1965 1998
126 CIBC White Oak Professional
Building Office Suburban 21,919 1966 1990
127 RFC Scripps Mesa Shopping Center Retail Unanchored 25,485 1980 N/A
128 Midland Pacific Place Retail Unanchored 6,213 1937 1986
129 CIBC Timberfalls Apartments Multifamily Mid-Rise 100 1977 1997
130 Midland 110 American Boulevard Industrial/Warehouse Flex 31,900 1998 N/A
131 Midland Handy Lock Mini Storage Self Storage Self Storage 615 1994 N/A
132 RFC Carpenter Crest Apartments Multifamily Garden 105 1983 N/A
133 RFC Stanford Court Multifamily Garden 72 1985 1997
134 Midland Commons at Valdosta
Apartment Multifamily Garden 96 1985 N/A
135 CIBC Kolonaki - Sausalito (579) Retail Unanchored 6,192 1925 1985
136 Midland Quail Court Apartments Multifamily Garden 108 1973 N/A
137 Midland Pacific Palms Apartments Multifamily Garden 107 1962 N/A
138 Midland Village at Cambridge Self
Storage Self Storage Self Storage 721 1995 N/A
139 CIBC Kolonaki - San Francisco
(1723) Retail Unanchored 10,190 1927 1988
140 Midland Providence Office Building Office Suburban 46,641 1964 N/A
141 Midland Westlake Village Apartments Multifamily Garden 140 1977 N/A
142 CIBC Days Inn - Anderson Hospitality Limited Service 53 1992 N/A
143 RFC Hollywood Video Portfolio Retail Unanchored 13,956 1997/1998 N/A
144 CIBC Hampton Inn - Mary Esther Hospitality Limited Service 52 1997 N/A
145 RFC The Pinons Apartments Multifamily Garden 92 1968 N/A
146 Midland Foreside Place Office Suburban 32,520 1975 N/A
147 Midland 21036 Triple Seven Road Office Suburban 14,258 1990 N/A
148 RFC Central Park Southwest Mixed Use Office/Multifamily 24,280 1947 1996
149 Midland Best Storage Self Storage Self Storage 572 1986 N/A
150 Midland Forest Hills Shopping Center Retail Anchored 36,000 1990 N/A
151 Midland Ashton Oaks Apartments Multifamily Garden 144 1974 N/A
152 Midland Siesta Hills Shopping Center Retail Unanchored 87,272 1962 1992
153 Midland Holiday Inn Express Hospitality Limited Service 65 1986 1996
154 Midland Waterside Apartments Multifamily Garden 119 1984 N/A
155 Midland Village Square Shopping
Center Retail Anchored 64,486 1980 1992
156 Midland Century Mobile Home Park Manufactured Housing Manufactured Housing 98 1950 N/A
II-22
<PAGE>
<CAPTION>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
PROPERTY INFORMATION
- ------------------------------------------------------------------------------------------------------------------------
Loan Seller
No. (1) Property Name(2) Address City State Zipcode
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
157 Midland Rite Aid Pharmacy AIRPORT & SCHOENERSVILLEROADS Hanover PA 18002
158 RFC Hobe Village Mobile Home
Park 11411 U.S. Highway One Hobe Sound FL 33455
159 Midland Via Linda Plaza 108TH STREET AND VIA LINDA Scottsdale AZ 85259
160 Midland Pleasant Valley Apartments 6100 PLEASANT VALLEY ROAD El Dorado CA 95623
161 Midland West Wind Apartments
Phase III 5200 BLOCK OLD ZUCK RD Millcreek PA 16506
162 RFC S&R Shopping Center 4301 Kenilworth Avenue Bladensburg MD 20710
163 Midland Edwards Village Center 105 EDWARDS VILLAGE BLVD Edwards CO 81632
164 Midland Comfort Inn 1621 SUPER PLAZA Hutchinson KS 67501
165 RFC Laudonniere Apartments 15 Isle of Venice Drive Ft. Lauderdale FL 33301
166 RFC Whaley's Shopping Center 533 South Howard Avenue Tampa FL 33606
167 Midland Maybrook Apartments BROADWAY & OAK ST Maybrook NY 12543
168 RFC Staples 618 North 2nd St. East Rexburg ID 83440
169 RFC The Retail Group 2607 Second Avenue Seattle WA 98121
170 Midland Tucker Industries Building 2835 - 2865 JANITELL ROAD Colorado Springs CO 80906
171 Midland Airborne Express 51 PENT HWY Wallingford CT 06492
172 Midland Parkway Gardens
Apartments (D) 8008 MILITARY PRKWY Dallas TX 75227
173 Midland Norvell Gardens
Apartments (D) 8008 NORVELL ROAD Dallas TX 75227
174 RFC Smith Retail Portfolio 193 Thomas Johnson Dr, 200 Amber Dr, &
6915 Baltimore National Pike Frederick MD 21702
175 RFC Stor-A-Lot Self Storage 17108 Main Street Hesperia CA 92345
176 CIBC CVS Smithtown 45 Terry Road Smithtown NY 11787
177 Midland Ashwood Apartments 3451 SE 44TH ST Del City OK 73135
178 Midland Stonehurst Apartments 2 COPLEY RD Upper Darby PA 19082
179 Midland Storage Max-Yuma 2251 W 24TH ST Yuma AZ 85364
180 Midland Georgetown/Melrose Plaza 6636-6750 HARRY DRIVE, 6751 TITIAN AVE,
Apartments & 683-791 NORTH CARROLLTON DRIVE Baton Rouge LA 70806
181 RFC Greenwood/St. Charles 890-896 Greenwood/944-954 St. Charles Atlanta GA 30306
182 Midland South Ogden Plaza 652-700 S OGDEN ST Buffalo NY 14206
183 Midland Cedarstone Apartments 940 STEWART ST Morgantown WV 26505
184 Midland Southwest Manor Duplexes ARLENE DRIVE AND CALEB COURT Columbia MO 65203
185 Midland Super 8 Motel 1708 W WYATT EARP Dodge City KS 67801
186 RFC Andover Apartments 429 Andover Court Columbus OH 43229
187 Midland Southwood Plaza Office
Building 870 E 9400 SOUTH Sandy UT 84094
188 Midland The Trade Center 814 ELM STREET Manchester NH 03784
189 RFC Regency Mobile Home Park 3260 US Highway 22 West Somerville NJ 8876
190 RFC Village Green Shopping
Center 2321 Bay Area Boulevard Houston TX 77059
191 RFC Center on Memorial 12645 Memorial Drive Houston TX 77024
192 RFC River Road Mobile Home Park 1328 River Road Selma NC 27576
193 RFC First View 3508 South 1st Street Austin TX 78704
194 Midland Payne Office Building 7202 ARLINGTON BLVD Falls Church VA 22042
195 RFC Woodlane Apartments 215 Wood Street Athens TX 75751
196 Midland 507 Capital Court (E) 507 CAPITAL CT NE Washington DC 20002
197 Midland 513 Capitol Court (E) 513 CAPITAL CT NE Washington DC 20002
198 Midland 501 Capital Ct. NE (E) 501 CAPITAL CT NE Washington DC 20002
199 CIBC Town House South Apartments 75603 &
and Danville Duplexes 329 FM 1845 & 1811 Danville Road Longview & Kilgore TX 75662
200 RFC Red Deer Apartments 101 Red Deer Drive Teays Valley WV 25526
201 Midland Crown Plaza Office Building 100 PORTLAND AVE SOUTH Minneapolis MN 55401
202 RFC 535 Manufacturers Drive 535 Manufacturers Drive Westland MI 48186
203 RFC Old Colony Apartments 788 North Main Street Fall River MA 2720
204 RFC Franklin Avenue Building 55 Franklin Avenue Brooklyn NY 11205
205 RFC Rivercrest Apartments 1204 Country House Lane Marrietta OH 45740
206 Midland View Pointe Apartments 2700 E GRAUWYLER Irving TX 75061
207 RFC 1340 21st Street NW 1340 21st Street NW Washington DC 20036
208 RFC Rollingwood Apartments 2860 Red Bug Lake Rd Casselberry FL 32707
209 Midland Greenbrier Apartments 14843,45 ,47 N 60TH ST Oak Park Heights MN 55082
210 Midland Lantana Apartments 525 S. BROADWAY, 203 E. LANTANA AND
315 N. LAKE DRIVE Lantana FL 33462
211 RFC Pine Meadow Apartments 191-198 West Hampton Road Pemberton NJ 8068
212 Midland Commerce II Business Park 4410 DILLON LN Corpus Christi TX 78468
213 Midland Office Park at Erindale 6020 & 6025 ERIN PARK DR Colorado Springs CO 80918
214 Midland Fletcher Auto Mall 1130 E FLETCHER AVE Tampa FL 33612
215 RFC Spurwood Office 10655 Six Pines Drive The Woodlands TX 77380
216 RFC Colonial-Excelsior 325 Church Street/402 Post Office St. Galveston TX 77550
217 Midland 170 South River Road 170 S RIVER RD Bedford NH 03110
218 RFC Centennial Place Apartments 305 W. Grant St. Plant City FL 33549
219 RFC Charmony Place Apartments 525 Charmony Frontage Road Sterling CO 80751
220 RFC Wooded Acres Apartments 1514 & 1519 Copeland Avenue Lufkin TX 75904
221 RFC Greenwood Villa Apartments 915 South College Lafayette LA 70503
222 RFC Lincolnwood Office Building 6820-6840 North Lincoln Avenue Lincolnwood IL 60646
223 RFC Brighton Court Apartments 6212-30 Chestnut Street Philadelphia PA 19188
224 Midland Bell Oaks Village Apartments 890 HIGH OAKS DR Bellville TX 77418
225 RFC 61-71 Long Lane 61-71 Long Lane Upper Darby PA 19082
226 Midland Prairie Village Mobile Home
Park 2867 ROUTE 90 Van Meter IA 50038
227 RFC 20 Green of Panorama 200 Panorama Drive Panorama TX 77304
228 RFC Cedargate Apartments 860 Hunter Road Enon OH 45323
229 RFC Copperfield Landing, LP 8100 Highway 6 North Houston TX 77095
230 Midland ICCA Building 114 COLUMBIA ST Corning NY 14830
231 RFC Oak Glen Apartments 615 Freeport Street Houston TX 77015
232 RFC North Miami Industrial 13730 & 13810 NW 6th Court North Miami FL 33168
233 RFC Quail Creek Apartments 100-724 Quail Creek Drive Clyde OH 43055
234 RFC University Apartments 506 Harding, 513 Wilson,
600 E. University, 327 G. Mouton Lafayette LA 70503
235 Midland Irving Court Townhomes 301-319 ROLSTON RD Irving TX 75061
236 RFC Grahamcrest Manor Apartments 7615-7622 Grahamcrest Drive Houston TX 77061
237 RFC The Gorelick Apartments 187 & 193 Florence Street Roslindale MA 2131
II-23
<PAGE>
<CAPTION>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
PROPERTY INFORMATION
- -----------------------------------------------------------------------------------------------------------------------
Loan Seller Units or Year Year
No. (1) Property Name(2) Property Type SubType NSF Built Renovated
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
157 Midland Rite Aid Pharmacy Retail Anchored 11,050 1998 N/A
158 RFC Hobe Village Mobile Home
Park Manufactured Housing Manufactured Housing 127 1955 1973
159 Midland Via Linda Plaza Retail Unanchored 16,014 1987 N/A
160 Midland Pleasant Valley Apartments Multifamily Garden 48 1988 N/A
161 Midland West Wind Apartments
Phase III Multifamily Garden 27 1997 N/A
162 RFC S&R Shopping Center Retail Unanchored 25,137 1990 N/A
163 Midland Edwards Village Center Office Suburban 10,618 1997 N/A
164 Midland Comfort Inn Hospitality Limited Service 63 1980 N/A
165 RFC Laudonniere Apartments Multifamily Garden 13 1960 1998
166 RFC Whaley's Shopping Center Retail Unanchored 20,464 1987 N/A
167 Midland Maybrook Apartments Multifamily Garden 60 1971 N/A
168 RFC Staples Retail Anchored 24,000 1999 N/A
169 RFC The Retail Group Office Urban 20,565 1925 1998
170 Midland Tucker Industries Building Industrial/Warehouse Warehouse 42,636 1996 N/A
171 Midland Airborne Express Industrial/Warehouse Light 24,828 1991 N/A
172 Midland Parkway Gardens
Apartments (D) Multifamily Garden 71 1984 N/A
173 Midland Norvell Gardens
Apartments (D) Multifamily Garden 26 1984 N/A
174 RFC Smith Retail Portfolio
Retail Unanchored 16,618 1950/1981/1984 N/A
175 RFC Stor-A-Lot Self Storage Self Storage Self Storage 70,629 1989 N/A
176 CIBC CVS Smithtown Retail Unanchored 10,125 1998 N/A
177 Midland Ashwood Apartments Multifamily Garden 157 1969 N/A
178 Midland Stonehurst Apartments Multifamily Garden 74 1935 1998
179 Midland Storage Max-Yuma Self Storage Self Storage 459 1985 N/A
180 Midland Georgetown/Melrose Plaza
Apartments Multifamily Garden 191 1970 N/A
181 RFC Greenwood/St. Charles Multifamily Garden 40 1965 1998
182 Midland South Ogden Plaza Retail Anchored 110,680 1974 N/A
183 Midland Cedarstone Apartments Multifamily Garden 36 1990 N/A
184 Midland Southwest Manor Duplexes Multifamily Garden 20 1996 N/A
185 Midland Super 8 Motel Hospitality Limited Service 64 1980 N/A
186 RFC Andover Apartments Multifamily Garden 66 1982 N/A
187 Midland Southwood Plaza Office
Building Office Suburban 25,351 1978 N/A
188 Midland The Trade Center Office Suburban 20,898 1989 N/A
189 RFC Regency Mobile Home Park Manufactured Housing Manufactured Housing 55 1950 1997
190 RFC Village Green Shopping
Center Retail Unanchored 24,159 1980 N/A
191 RFC Center on Memorial Retail Unanchored 10,406 1985 N/A
192 RFC River Road Mobile Home Park Manufactured Housing Manufactured Housing 81 1995 1996
193 RFC First View Multifamily Garden 62 1983 1997
194 Midland Payne Office Building Office Suburban 24,473 1967 N/A
195 RFC Woodlane Apartments Multifamily Garden 65 1984 N/A
196 Midland 507 Capital Court (E) Office Urban 3,490 1986 N/A
197 Midland 513 Capitol Court (E) Office Urban 3,475 1987 N/A
198 Midland 501 Capital Ct. NE (E) Office Urban 3,490 1986 N/A
199 CIBC Town House South Apartments
and Danville Duplexes Multifamily Mid-Rise 100 1966/1983 N/A
200 RFC Red Deer Apartments Multifamily Garden 66 1984 N/A
201 Midland Crown Plaza Office Building Office Suburban 23,838 1908 1988
202 RFC 535 Manufacturers Drive Industrial/Warehouse Light 40,000 1980 N/A
203 RFC Old Colony Apartments Multifamily Garden 34 1985 N/A
204 RFC Franklin Avenue Building Industrial/Warehouse Light 45,300 1948 N/A
205 RFC Rivercrest Apartments Multifamily Garden 69 1981 N/A
206 Midland View Pointe Apartments Multifamily Garden 85 1971 N/A
207 RFC 1340 21st Street NW Multifamily Mid-Rise 10 1910 1998
208 RFC Rollingwood Apartments Multifamily Garden 64 1979 N/A
209 Midland Greenbrier Apartments Multifamily Garden 45 1964 N/A
210 Midland Lantana Apartments
Multifamily Garden 42 1969 N/A
211 RFC Pine Meadow Apartments Multifamily Garden 56 1964 1997
212 Midland Commerce II Business Park Office Suburban 108,380 1973 N/A
213 Midland Office Park at Erindale Office Urban 15,491 1982 N/A
214 Midland Fletcher Auto Mall Retail Unanchored 27,330 1989 N/A
215 RFC Spurwood Office Office Suburban 22,783 1985 1997
216 RFC Colonial-Excelsior Multifamily Garden 57 1973 N/A
217 Midland 170 South River Road Office Suburban 17,113 1966 1998
218 RFC Centennial Place Apartments Multifamily Garden 44 1986 N/A
219 RFC Charmony Place Apartments Multifamily Garden 54 1965 1996
220 RFC Wooded Acres Apartments Multifamily Garden 60 1978/1980 N/A
221 RFC Greenwood Villa Apartments Multifamily Garden 60 1965 N/A
222 RFC Lincolnwood Office Building Office Suburban 16,445 1978 1993
223 RFC Brighton Court Apartments Multifamily Mid-Rise 69 1925 N/A
224 Midland Bell Oaks Village Apartments Multifamily Garden 76 1982 N/A
225 RFC 61-71 Long Lane Office Urban 23,298 1958 1989
226 Midland Prairie Village Mobile Home
Park Manufactured Housing Manufactured Housing 80 1963 N/A
227 RFC 20 Green of Panorama Multifamily Garden 16 1987 N/A
228 RFC Cedargate Apartments Multifamily Garden 48 1982 N/A
229 RFC Copperfield Landing, LP Retail Unanchored 9,076 1995 N/A
230 Midland ICCA Building Office Medical 5,830 1979 1998
231 RFC Oak Glen Apartments Multifamily Garden 56 1970 1995
232 RFC North Miami Industrial Industrial/Warehouse Flex 22,500 1949/1976 1997
233 RFC Quail Creek Apartments Multifamily Garden 28 1995 N/A
234 RFC University Apartments
Multifamily Garden 43 1972 N/A
235 Midland Irving Court Townhomes Multifamily Garden 32 1966 N/A
236 RFC Grahamcrest Manor Apartments Multifamily Garden 49 1970 1990
237 RFC The Gorelick Apartments Multifamily Garden 12 1900 1997
II-23
<PAGE>
<CAPTION>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
PROPERTY INFORMATION
- -----------------------------------------------------------------------------------------------------------------------
Loan Seller
No. (1) Property Name(2) Address City State Zipcode
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
238 Midland 325-339 North Dr 325-339 NORTH DR North Plainfield NJ 07060
239 RFC 519 Central Avenue 519 Central Avenue Jersey City NJ 7307
240 RFC Klingerman Apartments 12426-12434 Klingerman Street El Monte CA 91732
241 RFC 901 SW 8th Avenue Apartments 901 SW 8th Avenue Apartments Miami FL 33130
242 RFC Meadow Pines Apartments 11502-11515 Meadow Pines Court Houston TX 77099
II-24
<PAGE>
<CAPTION>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
PROPERTY INFORMATION
- -----------------------------------------------------------------------------------------------------------------------
Loan Seller Units or Year Year
No. (1) Property Name(2) Property Type SubType NSF Built Renovated
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
238 Midland 325-339 North Dr Industrial/Warehouse Warehouse 16,994 1954 N/A
239 RFC 519 Central Avenue Multifamily Mid-Rise 16 1940 1987
240 RFC Klingerman Apartments Multifamily Garden 13 1961 1998
241 RFC 901 SW 8th Avenue Apartments Multifamily Garden 24 1954 N/A
242 RFC Meadow Pines Apartments Multifamily Garden 24 1983 1998
</TABLE>
II-24
<PAGE>
Footnotes to Appendix II
1 "Midland", "RFC" and "CIBC" denote Midland Loan Services, Inc., Residential
Funding Corporation and CIBC Inc., respectively, as Sellers.
2 Sets of Mortgage Loans that have identical alphabetical coding designate
multiple loans that are cross-collateralized and cross-defaulted, while
Mortgage Loans that have identical Roman Numeral coding indicate multiple
properties securing one note. Loan No. 3, Prime Portfolio, is secured by
six properties: 1301 East Tower Road, 4300 Madison Street, 342-346 Carol
Lane, 550 Kehoe Blvd, 343 Carol Lane and 388 Carol Lane. These properties
are described in the six rows immediately below the dancofpLo
3 Loan No. 60, Canal House Apartments, is known to have additional, unsecured
subordinate debt totaling approximately $1,503,655, at loan origination.
Loan No. 81, Lower Falls Landing, is known to have additional, unsecured
subordinate debt totaling approximately $88,000, at loan origination.
Loan No. 191, Center on Memorial, is known to have additional, unsecured
subordinate debt totaling approximately $25,000, at loan origination.
4 Certain ratios including Cut-Off Date Balance / Unit or SF, DSCR, Cut-Off
Date LTV and Balloon LTV are calculated on a combined basis for Mortgage
Loans that are secured by multiple properties or are cross-collateralized
and cross-defaulted. For the purposes of the statistical information set
forth in this Prospectus Supplement, as to such multiple property loans, a
portion of the aggregate Cut-Off Date Balance has been allocated to each
property, based on the allocation assigned in the noespurpos
5 "ARD" indicates the Anticipated Repayment Date for hyper-amortizing
Mortgage Loans. Twenty-six of the Mortgage Loans in the Mortgage Pool are
hyper-amortization loans. See "Description of the Mortgage Loans".
6 The Amortization Term shown is the basis for determining the fixed monthly
principal and interest payment as set forth in the related note. Due to the
actual/360 interest calculation methodology applied to most Mortgage Loans,
the actual amortization to a zero balance will be longer.
7 In general for each property, "Percent Leased" was determined based on a
rent roll provided by the borrower. In certain cases, "Percent Leased" was
determined based on an appraisal, executed lease, operating statement or
occupancy report. "Percent Leased as of Date" indicates the date as of
which "Percent Leased" was determined based on such information. For
hospitality properties, the data shown is the average daily occupancy rate,
generally for the immediately preceeding twelve month period.
8 "Largest Tenant" refers to the tenant that represents the greatest
percentage of the total square footage at the subject property.
9 "Seasoning" represents the number of payments elapsed from the date of the
first regularly scheduled payment or due date to and including the Cut-Off
Date.
10 Indicates prepayment provisions from the first Due Date as stated in the
Mortgage Loan. "YM" represents yield maintenance, "YM5" represents the
greater of yield maintenance or five percent, and "YM1" represents the
greater of yield maintenance or one percent, of the outstanding principal
balance at such time, respectively. The stated percentages represent
Percentage Premiums. "Open" represents a period during which Principal
Prepayments are permitted without payment of a Prepayment PremiumMoForcha
11 The "Administrative Cost Rate" indicated for each Mortgage Loan will be
calculated based on the same interest calculation methodology applicable to
each Mortgage Loan.
II-25
<PAGE>
Footnotes to Appendix II (continued)
<TABLE>
<CAPTION>
12
Yield
Yield Maintenance Maintenance
Yield Maintenance Discount Rate (Prsent Value Loans) Interest
Code Calculations Basis or Yield Rate (Interest Differential Loans) Accrual Method
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
A Interest Differential The yield on the 4.75% U.S. Treasury Security due November, 2008 30/360
B Interest Differential The yield on the 4.75% U.S. Treasury Security due November, 2008 Actual/360
C Interest Differential Treasury 30/360
D Interest Differential Treasury 5.625% due 5/2008 30/360
E Interest Differential Treasury 8.75% due 11/3/2008 30/360
F PV Treasury Actual/360
G PV Treasury 30/360
</TABLE>
II-26
<PAGE>
APPENDIX III
Significant Loan Summaries
Loan No. 1 - 21 Penn Plaza
<TABLE>
<CAPTION>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------
Cut-off Date Balance: $32,184,648 Balloon Balance: $28,409,182
- ------------------------------------------------------------------------------------------------
Loan Type: Principal & Interest Property Type: Office
- ------------------------------------------------------------------------------------------------
Origination Date: September 9, 1998 Location: New York, NY
- ------------------------------------------------------------------------------------------------
Maturity Date: October 1, 2008 Year Renovated: 1997
- ------------------------------------------------------------------------------------------------
Initial Mortgage Rate: 7.200% Appraised Value: $47,200,000
- ------------------------------------------------------------------------------------------------
Annual Debt Service: $2,639,129 Current LTV: 68.2%
- ------------------------------------------------------------------------------------------------
DSCR: 1.36x Balloon LTV: 60.2%
- ------------------------------------------------------------------------------------------------
Underwritable Net Cash Flow: $3,583,883 Occupancy: 99.9%
- ------------------------------------------------------------------------------------------------
Occupancy Date: March 8, 1999
- ------------------------------------------------------------------------------------------------
</TABLE>
The Loan
The 21 Penn Plaza Loan (the "Penn Plaza Loan") is secured by a first
mortgage on a 17-story, 344,091 square foot office building located at 360 West
31st Street, New York, New York (the "Penn Plaza Property"). RFC originated the
Penn Plaza Loan on September 9, 1998.
The Borrower. The borrower is G-H-G Realty Company, L.L.C., a New York
limited liability company (the "Penn Plaza Borrower"). The managing member of
the Penn Plaza Borrower is G-H-G Realty Management Company, Inc., a New York
corporation. The Penn Plaza Borrower is a special purpose entity.
Security. The Penn Plaza Loan is secured by a Mortgage and Security
Agreement, an Assignment of Leases and Rents, UCC Financing Statements and
certain additional security documents. Such Mortgage is a first lien on the fee
interest in the Penn Plaza Property. The Penn Plaza Loan is non-recourse,
subject to certain limited exceptions.
Payment Terms. The Penn Plaza Loan has a fixed 7.200% Mortgage Rate, an
original term of 120 months and an original amortization of 360 months. The Penn
Plaza Loan requires monthly principal and interest payments of $219,927.38 until
maturity, at which time all unpaid principal and accrued but unpaid interest is
due. The Penn Plaza Loan accrues interest computed on the basis of the actual
number of days elapsed each month in a 360-day year.
Prepayment/Defeasance. No prepayment or defeasance is permitted before
September 9, 2003. Thereafter, until July 1, 2008, any prepayment must be in the
form of a defeasance. Any such defeasance will include release of the Penn Plaza
Property and the pledge of substitute collateral in the form of direct,
non-callable United States Treasury obligations providing for payments prior,
but as close as possible, to all scheduled Monthly Payment dates, and on the
Maturity Date. Each such payment must be equal to or greater than each scheduled
Monthly Payment during the loan term, and greater than the anticipated balloon
balance due on the Maturity Date. Additionally, a written confirmation must be
obtained from each applicable rating agency specifying that the defeasance would
not result in a downgrade, qualification or withdrawal of the then current
ratings assigned to any class of certificates. From and after July 1, 2008, the
Penn Plaza Loan may be prepaid without the payment of any prepayment
consideration.
Transfer of Properties or Interest in Borrower. Except as described
below, the lender will have the option to declare the Penn Plaza Loan
immediately due and payable upon the transfer of the Penn Plaza Property or any
ownership interest in the Penn Plaza Borrower. The Penn Plaza Borrower has a
right to transfer the Penn Plaza Property to a qualifying single asset
transferee approved by the lender if (i) the proposed transferee reasonably
satisfies the lender that it possesses the ownership and managerial experience
and financial resources customarily required by the lender for properties such
as the Penn Plaza Property, (ii) the proposed transferee assumes the
III-1
<PAGE>
obligations of the Penn Plaza Borrower and an acceptable person or entity
assumes all guaranties or indemnities, and (iii) a 1% assumption fee has been
received by the lender. The Penn Plaza Loan documents also allow transfers of
membership interest in the Penn Plaza Borrower which: (a) do not amount, in the
aggregate, to a transfer of 49% or more of the non-managing member interests to
a third party; or (b) are the result of devise or descent or by operation of
law upon the death of a member.
Escrow/Reserves. There is a tax reserve which requires deposits in an
amount sufficient to pay real estate taxes when due. There is a capital
improvement reserve funded at on a monthly basis at the rate of $4,289.42 per
month.
Subordination/Other Debt. Secured subordinate indebtedness and
encumbrances are prohibited.
Prior Loan. Based on information obtained by RFC, as a result of a
tenant occupying approximately 50% of the Penn Plaza Property vacating its
premises in 1995, the prior loan was restructured into two notes of equal
principal balances: an A note which was paid on an interest-only basis and a B
note which was paid on the basis of the achievement of certain cash flow
hurdles. The sum of the original balances of the A and B notes approximated the
then outstanding balance of the prior loan. In September of 1998 when the Penn
Plaza Loan was originated, the A note was retired in full and the B note was
retired at a discount. As reported by the prior lender and the Borrower, no
payment default occurred prior to, during, or after the restructure. As
described in "Property", the Penn Plaza Property was 99.9% leased as of March 8,
1999.
The Property
The Penn Plaza Property consists of a 17-story office building located
on the southwest corner of Ninth Avenue and West 31st Street, one block west of
the Penn Station rail terminal. The Penn Plaza Property was originally
constructed in 1931 and substantially renovated in 1997. It contains 344,091
rentable square feet, with office uses on the 2nd through 17th floors, retail
uses on the 1st floor and storage uses in the basement. Certain tenant occupy an
entire floor while other floors are subdivided for multi-tenant use.
The Penn Plaza Property was 99.9% leased as of March 8, 1999.
Thirty-eight tenants currently occupy space in the Penn Plaza Property. Major
tenants include Saks & Company (63,159 square feet), Eastman Kodak (28,446
square feet), Amtrak (24,506 square feet), Equitable Life Assurance Company of
America (22,230 square feet), and Central Parking Systems, Inc. (21,250 square
feet). Contractual lease expirations during the loan term are as follows: 1999
(14,289 square feet/4% of total), 2000 (25,568/7%), 2001 (8,027/2%), 2002
(8,289/2%), 2003 (2,922/1%), 2004 (3,435/1%), 2005 (30,885/9%), 2006
(31,163/9%), 2007 (7,340/2%), and 2008 (130,192/38%).
Management
The Penn Plaza Property is managed by S. L. Green Realty Corp., a fully
integrated, self-administered and self-managed real estate investment trust
engaged in owning, managing, leasing, acquiring and repositioning Class B office
property in Manhattan. The company currently owns interests in 15 Class B
properties totaling approximately 5 million square feet and leases 27 properties
totaling an additional 8.2 million square feet.
III-2
<PAGE>
Loan No. 2 - Park Drive Manor Apartments
<TABLE>
<CAPTION>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------
Cut-off Date Balance: $22,925,004 Balloon Balance: $18,660,352
- ------------------------------------------------------------------------------------------------
Loan Type: Principal & Interest Property Type: Multifamily
- ------------------------------------------------------------------------------------------------
Origination Date: March 17, 1999 Location: Philadelphia, PA
- ------------------------------------------------------------------------------------------------
Maturity Date: April 1, 2009 Year Renovated: 1998
- ------------------------------------------------------------------------------------------------
Initial Mortgage Rate: 7.450% Appraised Value: $30,000,000
- ------------------------------------------------------------------------------------------------
Annual Debt Service: $2,030,648 Current LTV: 76.4%
- ------------------------------------------------------------------------------------------------
DSCR: 1.35x Balloon LTV: 62.2%
- ------------------------------------------------------------------------------------------------
Underwritable Net Cash Flow: $2,741,135 Occupancy: 97.8%
- ------------------------------------------------------------------------------------------------
Occupancy Date: January 28, 1999
- ------------------------------------------------------------------------------------------------
</TABLE>
The Loan
The Park Drive Manor Apartments Loan (the "Park Drive Loan") is secured
by a first mortgage on a 572-unit, 2 building garden apartment complex located
at 633 West Rittenhouse Street, Philadelphia, Pennsylvania (the "Park Drive
Property"). RFC originated the Park Drive Loan on March 17, 1999.
The Borrower. The borrower is Park Drive Group, LP, a Pennsylvania
limited partnership (the "Park Drive Borrower"). The corporate general partner
of the Park Drive Borrower is Empire/Rittenhouse Group, a Pennsylvania
corporation. Ezra Beyman is the sole limited partner of the Park Drive Borrower,
and is the President, Treasurer, and Secretary of the Empire/Rittenhouse Group.
The Park Drive Borrower is a special purpose entity.
Security. The Park Drive Loan is secured by a Mortgage and Security
Agreement, an Assignment of Leases and Rents, UCC Financing Statements and
certain additional security documents. Such Mortgage is a first lien on the fee
interest in the Park Drive Property. The Park Drive Loan is non-recourse,
subject to certain limited exceptions.
Payment Terms. The Park Drive Loan has a fixed 7.450% Mortgage Rate, an
original term of 120 months and an original amortization of 300 months. The Park
Drive Loan requires monthly principal and interest payments of $169,220.65 until
maturity, at which time all unpaid principal and accrued but unpaid interest is
due. The Park Drive Loan accrues interest computed on the basis of the actual
number of days elapsed each month in a 360-day year.
Prepayment/Defeasance. No prepayment or defeasance is permitted prior to
the earlier of (a) May 1, 2003, or (b) two years following the date of the
assignment of the Park Drive Loan to a REMIC in connection with a
securitization. Thereafter, until January 1, 2009, any prepayment must be in the
form of a defeasance. Any such defeasance will include release of the Park Drive
Property and the pledge of substitute collateral in the form of direct,
non-callable United States Treasury obligations providing for payments prior,
but as close as possible, to all scheduled Monthly Payment dates, and on the
Maturity Date. Each such payment must be equal to or greater than each scheduled
Monthly Payment during the loan term, and greater than the anticipated balloon
balance due on the Maturity Date. Additionally, a written confirmation must be
obtained from each applicable rating agency specifying that the defeasance would
not result in a downgrade, qualification or withdrawal of the then current
ratings assigned to any Class of Certificates. From and after January 1, 2009,
the Park Drive Loan may be prepaid without the payment of any prepayment
consideration.
Transfer of Properties or Interest in Borrower. Except as described
below, the lender will have the option to declare the Park Drive Loan
immediately due and payable upon the transfer of the Park Drive Property or any
ownership interest in the Park Drive Borrower. The Park Drive Borrower has a one
time right to transfer the Park Drive Property to a qualifying single asset
transferee approved by the lender if (i) the proposed transferee reasonably
satisfies the lender that it possesses the ownership and managerial experience
and financial resources customarily required by the lender for properties such
as the Park Drive Property, (ii) the proposed transferee assumes the obligations
of the Park Drive Borrower, (iii) no event of default then exists, and (iv) a 1%
assumption fee has been received by the lender. The Park Drive Loan documents
also allow transfers of membership interest in the Park
III-3
<PAGE>
Drive Borrower which: (a) do not amount, in the aggregate, to a transfer of
49% or more of such membership interests to a third party; (b) are the result of
a death or physical or mental disability, or (c) are to an immediate family
member or trust for such a family member.
Escrow/Reserves. There is a tax reserve which requires deposits in an
amount sufficient to pay real estate taxes when due. A $56,525 reserve was
established at closing to provide funds for repairs recommended in the
engineering report. Additionally, there is a replacement reserve funded monthly
at the rate of $5,267 per month.
Subordination/Other Debt. Secured subordinate indebtedness and
encumbrances are prohibited.
The Property
The Park Drive Property is located at 633 West Rittenhouse Street in the
Germantown-Chestnut Hill district of Philadelphia, Pennsylvania, approximately 5
miles north of the central business district. It was built in 1950 and renovated
in 1998. It consists of 572 units contained in 2 twelve-story residential
buildings connected by a clubhouse/leasing center with 14,800 square feet of
commercial space. The Park Drive Property contains 48 efficiency units, 288
one-bedroom units, 232 two-bedroom units and four four-bedroom units. Amenities
include elevators, gated, security code controlled entry, a laundry facility,
fitness center, outdoor swimming pool including locker/shower and cabana
buildings, two outdoor tennis courts, walking/jogging trails, covered parking
(220), uncovered parking (405) and an appliance package including stove,
refrigerator, central a/c and other standard appliances.
Management
The Park Drive Property is managed by Empire/Rittenhouse Group.
Empire/Rittenhouse Group has been involved in the management of apartment
complexes for approximately 14 years, and currently manages approximately 1,500
owned residential units in the Philadelphia market.
III-4
<PAGE>
Loan No. 3 - Prime Portfolio
<TABLE>
<CAPTION>
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
Cut-off Date Balance: $15,395,975 Location:
- ---------------------------------------------------------------------------------------------------
342 Carol Lane $2,311,970 342 Carol Lane Elmhurst, IL
- ---------------------------------------------------------------------------------------------------
343 Carol Lane $1,370,753 343 Carol Lane Elmhurst, IL
- ---------------------------------------------------------------------------------------------------
388 Carol Lane $1,331,164 388 Carol Lane Elmhurst, IL
- ---------------------------------------------------------------------------------------------------
550 Kehoe $2,239,721 550 Kehoe Carol Stream, IL
- ---------------------------------------------------------------------------------------------------
4300 Madison $4,020,214 4300 Madison Hillside, IL
- ---------------------------------------------------------------------------------------------------
1301 East Tower $4,122,155 1301 East Tower Schaumburg, IL
- ---------------------------------------------------------------------------------------------------
Loan Type: Principal & Interest Year Built:
- ---------------------------------------------------------------------------------------------------
Origination Date: May 1, 1998 342 Carol Lane 1989
- ---------------------------------------------------------------------------------------------------
Maturity Date*: May 1, 2008 343 Carol Lane 1989
- ---------------------------------------------------------------------------------------------------
Initial Mortgage Rate: 7.170% 388 Carol Lane 1979
- ---------------------------------------------------------------------------------------------------
Annual Debt Service: $1,263,319 550 Kehoe 1996
- ---------------------------------------------------------------------------------------------------
342 Carol Lane $189,709 4300 Madison 1980
- ---------------------------------------------------------------------------------------------------
343 Carol Lane $112,477 1301 East Tower 1992
- ---------------------------------------------------------------------------------------------------
388 Carol Lane $109,229 Appraised Value: $19,400,000
- ---------------------------------------------------------------------------------------------------
550 Kehoe $183,781 342 Carol Lane $3,200,000
- ---------------------------------------------------------------------------------------------------
4300 Madison $329,879 343 Carol Lane $1,900,000
- ---------------------------------------------------------------------------------------------------
1301 East Tower $338,244 388 Carol Lane $1,800,000
- ---------------------------------------------------------------------------------------------------
Combined DSCR: 1.35x 550 Kehoe $3,000,000
- ---------------------------------------------------------------------------------------------------
Balloon Balance: $13,655,857 4300 Madison $4,800,000
- ---------------------------------------------------------------------------------------------------
342 Carol Lane $2,050,661 1301 East Tower $4,700,000
- ---------------------------------------------------------------------------------------------------
343 Carol Lane $1,215,824 Combined Current LTV: 79.4%
- ---------------------------------------------------------------------------------------------------
388 Carol Lane $1,180,710 Combined Balloon LTV: 70.4%
- ---------------------------------------------------------------------------------------------------
550 Kehoe $1,986,578 Occupancy (All Properties): 100%
- ---------------------------------------------------------------------------------------------------
4300 Madison $3,565,833 Occupancy Date: June 1, 1999
- ---------------------------------------------------------------------------------------------------
1301 East Tower $3,656,251
- ---------------------------------------------------------------------------------------------------
Underwritable Net Cash Flow: $1,709,765
- ---------------------------------------------------------------------------------------------------
Property Type:
- ---------------------------------------------------------------------------------------------------
342 Carol Lane Industrial
- ---------------------------------------------------------------------------------------------------
343 Carol Lane Industrial
- ---------------------------------------------------------------------------------------------------
388 Carol Lane Industrial
- ---------------------------------------------------------------------------------------------------
550 Kehoe Industrial
- ---------------------------------------------------------------------------------------------------
4300 Madison Industrial
- ---------------------------------------------------------------------------------------------------
1301 East Tower Office
- ---------------------------------------------------------------------------------------------------
</TABLE>
*For purposes hereof, the Anticipated Repayment Date described below is assumed
to be the maturity date of the Prime Loan.
**Information described herein with respect to the individual properties
securing the Prime Loan is an allocated portion of such information based upon
the ratio of the appraised value or underwritable cash flow of the individual
properties to the aggregate appraised value or underwritable cash flow of all
such properties.
The Loan
The Prime Portfolio Loan (the "Prime Loan") consists of one loan
secured by first mortgages on 5 industrial and 1 office properties located in
the suburbs of Chicago (each, a "Prime Property"). CIBC originated the Prime
Loan on May 1, 1998.
III-5
<PAGE>
The Borrower. Six separate Delaware limited liability companies are the
co-borrowers for the Prime Loan (each a "Prime Borrower"). The managing member
of each Prime Borrower is Prime Group Realty, L.P., a Delaware limited
partnership. The managing partner Prime Group Realty, L.P. is Prime Group Realty
Trust, a Maryland real estate investment trust. Each Prime Borrower is a
single-purpose bankruptcy-remote entity.
Security. The Prime Loan is secured by separate Mortgages, Assignments
of Leases and Rents, UCC Financing Statements and certain additional security
documents executed by each Prime Borrower over the separate Prime Property owned
by it. Each Mortgage is a first lien on the related Prime Borrower's fee
interest in its Prime Property. The Prime Loan is non-recourse, subject to
certain limited exceptions.
Payment Terms. The Mortgage Rate is fixed at 7.170% until May 1, 2008
(the "Anticipated Repayment Date"), at which time the Mortgage Rate will adjust
to the greater of (i) 9.170% or (ii) the then applicable yield rate on U.S.
Treasury obligations maturing during the month in which the maturity date of the
Prime Loan occurs, plus 2%. Although the Prime Loan has a stated term of 360
months, it is assumed for purposes hereof that it has a term of 120 months with
a maturity date of the Anticipated Repayment Date. The Prime Loan has an
original amortization term of 360 months. The Prime Loan requires monthly
payments of principal and interest equal to $105,276.56 until the Anticipated
Repayment Date. If the Prime Loan is not prepaid on such date, all of the cash
flow from the Prime Property is to be applied as described in "Lockbox" below.
If not sooner satisfied, all unpaid principal and accrued but unpaid interest is
due on May 1, 2028. The Prime Loan accrues interest computed on the basis of the
actual number of days elapsed each month in a 360-day year.
Lockbox. Upon any default or upon the occurrence of the Anticipated
Repayment Date, the lender may require all gross income from each Prime Property
to be deposited into a lockbox account controlled by the lender. Prior to the
Anticipated Repayment Date, disbursements from such account are made as follows:
(a) to fund required reserves for the payment of real estate taxes, insurance
and other impounds; (b) to pay all principal and interest then due; (c) to fund
other reserves required under the related security documents; (d) to pay all
other amounts owed the lender with respect to the Prime Loan; and (e) to the
Prime Borrowers.
Subsequent to the Anticipated Repayment Date, disbursements from such
account are made as follows: (a) to fund required reserves for the payment of
real estate taxes, insurance and other impounds; (b) to pay all principal and
interest (at the initial Mortgage Rate) then due; (c) to fund other reserves
required under the related security documents; (d) to pay budgeted operating
expenses (less management fees payable to affiliates of any Prime Borrower)
approved by the lender; (e) to pay budgeted capital expenses approved by the
lender; (f) to pay other extraordinary expenses approved by the lender; (g) to
pay all remaining outstanding principal; (h) to pay all outstanding interest;
(i) to pay all other amounts owed the lender with respect to the Prime Loan; and
(j) to the Prime Borrowers.
Prepayment/Defeasance. No prepayment or defeasance is permitted prior to
the earlier of (a) May 1, 2002 or (b) two years following the date of the
assignment of the Prime Loan to a REMIC in connection with a securitization.
Thereafter, until November 1, 2007, any prepayment must be in the form of a
defeasance. Any such defeasance will include release of the related Prime
Property and the pledge of substitute collateral in the form of direct,
non-callable United States Treasury obligations providing for payments prior,
but as close as possible, to all scheduled Monthly Payment dates, and on the
Anticipated Repayment Date. Each such payment must be equal to or greater than
125% of the portion of the scheduled Monthly Payment allocated to the released
Prime Property, and on the Anticipated Repayment Date, must be sufficient to
fully prepay at least 125% of the portion of the Prime Loan allocated to the
released Prime Property. Additionally, a written confirmation must be obtained
from each applicable rating agency specifying that the defeasance would not
result in a downgrade, qualification or withdrawal of the then current ratings
assigned to any Class of Certificates. From and after November 1, 2007, the
Prime Loan may be prepaid without the payment of any prepayment consideration
Transfer of Property or Interest in Borrower. Except as described below,
the lender will have the option to declare the Prime Loan immediately due and
payable upon the transfer of any Prime Property or any ownership interest in any
Prime Borrower. Each Prime Borrower has a one-time right to transfer its Prime
Property, after the first 12 months of the loan term, to a transferee approved
by the lender if (i) no event of default then exists, (ii) the proposed
transferee reasonably satisfies the lender that it possesses the ownership and
managerial experience and financial resources necessary to operate the Prime
Property, (iii) the proposed transferee assumes the obligations of
III-6
<PAGE>
the Prime Borrower and an acceptable person or entity assumes all guaranties or
indemnities, and (iv) a 1% assumption fee, all reasonably required documents, a
title policy endorsement and reimbursement for all of its costs and expenses has
been received by the lender. The Prime Loan documents allow transfers of
beneficial interests in the Prime Borrower so long as Prime Group Realty Trust
continues to have the same degree of management control over each Prime Borrower
and directly or indirectly own 30% or more of the total equity interests in each
Prime Borrower.
Escrow/Reserves. There is a tax escrow which requires deposits in an
amount sufficient to pay real estate taxes when due.
Subordination/Other Debt. Secured subordinate indebtedness and
encumbrances are prohibited.
The Property
The 342 Carol Lane property is located at 342-346 Carol Lane, Elmhurst,
Illinois. It was built in 1989, and is a 67,935 square foot 1-story,
multi-tenant warehouse/distribution building improved with 2 loading docks and
approximately 41.6% office finish. It is 100% leased as of June 1, 1999. Its
largest tenant is Semblex (47,861 square feet/70.45% of total), whose lease
expires May 31, 2004.
The 343 Carol Lane property is located at 343 Carol Lane, Elmhurst,
Illinois. It was built in 1989, and is a 30,084 square foot 1-story
warehouse/distribution building improved with 1 loading dock and approximately
33.0% office finish. As of June 1, 1999, it is 100% leased to Matsushita
Industrial, whose lease expires March 31, 2007.
The 388 Carol Lane property is located at 388 Carol Lane, Elmhurst,
Illinois. It was built in 1979, and is a 40,920 square foot 1 and 1/2-story,
multi-tenant warehouse/distribution building improved with 1 loading dock and
approximately 22.9% office finish. It is 100% leased as of June 1, 1999. Its
largest tenant is Ameritech Illinois (36,184 square feet/88.43% of total), whose
lease expires September 30, 2000.
The 550 Kehoe property is located at 550 Kehoe Blvd., Carol Stream,
Illinois. It was built in 1996, and is a 44,575 square foot 1-story
warehouse/distribution building improved with 1 loading dock and approximately
27.3% office finish. As of June 1, 1999, it is 100% leased to Associated
Material, whose lease expires August 31, 2006.
The 4300 Madison property is located at 4300 Madison Street, Hillside,
Illinois. It was built in 1980, and is a 127,129 square foot 1-story,
multi-tenant warehouse/distribution building. It is 100% leased as of June 1,
1999. Its largest tenant is Oak Brook Business Center (50,940 square feet/40.07%
of total), whose lease expires May 31, 2000.
The 1301 East Tower property is located at 1301 East Tower Road,
Schaumburg, Illinois. It was built in 1992, and is a 50,400 square foot 1-story,
class B office building with 223 surface parking spaces. As of June 1, 1999, it
is 100% leased to Householde Credit Services, whose lease expires December 31,
2001.
Management
The Prime Properties are managed by Prime Group Realty Trust, the
general partner of the managing member of each Prime Borrower.
III-7
<PAGE>
Loan No. 4 - 1414 Avenue of the Americas
<TABLE>
<CAPTION>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------
Cut-off Date Balance: $14,000,000 Balloon Balance: $12,169,841
- ------------------------------------------------------------------------------------------------
Loan Type: 2 years Interest-Only, Property Type: Office
then Principal &
Interest
- ------------------------------------------------------------------------------------------------
Origination Date: April 16, 1999 Location: New York, NY
- ------------------------------------------------------------------------------------------------
Maturity Date:* May 1, 2009 Year Renovated: 1997
- ------------------------------------------------------------------------------------------------
Initial Mortgage Rate: 7.870% Appraised Value: $20,000,000
- ------------------------------------------------------------------------------------------------
Annual Debt Service: $1,282,217 Current LTV: 70.0%
- ------------------------------------------------------------------------------------------------
DSCR: 1.40x Balloon LTV: 60.8%
- ------------------------------------------------------------------------------------------------
Underwritable Net Cash Flow: $1,795,434 Occupancy: 100%
- ------------------------------------------------------------------------------------------------
Occupancy Date: February 20, 1999
- ------------------------------------------------------------------------------------------------
</TABLE>
*For purposes hereof, the Anticipated Repayment Date described below is assumed
to be the maturity date of the 1414 Loan.
The Loan
The 1414 Avenue of the Americas Loan (the "1414 Loan") is secured by a
first mortgage on a 19-story, 111,455 square foot office building located at
1414 Avenue of the Americas, New York, New York (the "1414 Property"). CIBC
originated the 1414 Loan on April 16, 1999.
The Borrower. The borrower is Green 1414 Property L.L.C., a New York
limited liability company (the "1414 Borrower"). Green 1414 Manager L.L.C., a
Delaware limited liability company, is the managing member of the 1414 Borrower.
It is a wholly owned subsidiary of SL Green Realty Corp. SL Green Operating
Partnership, L.P., a Delaware limited partnership, is the sole remaining member
of the 1414 Borrower. SL Green Realty Corp. is the general partner of the
limited partnership. The 1414 Borrower is a special purpose entity.
Security. The 1414 Loan is secured by a Mortgage, an Assignment of
Leases and Rents, UCC Financing Statements and certain additional security
documents. The Mortgage is a first lien on the fee interest in the 1414
Property. The 1414 Loan is non-recourse, subject to certain limited exceptions.
Payment Terms. The Mortgage Rate is fixed at 7.870% until May 1, 2009
(the "Anticipated Repayment Date"), at which time the Mortgage Rate will adjust
to the greater of (i) 9.87% or (ii) the then applicable yield rate on U.S.
Treasury obligations maturing during the month in which the maturity date of the
1414 Loan occurs, plus 2%. Although the 1414 Loan has a stated term of 324
months, it is assumed for purposes hereof that it has a term of 120 months with
a maturity date of the Anticipated Repayment Date. The 1414 Loan has an original
amortization term of 300 months. The 1414 Loan requires monthly payments of
interest only until June 1, 2001. Thereafter, monthly payments of principal and
interest equal to $106,851.39 are required until the Anticipated Repayment Date.
If the 1414 Loan is not prepaid on such date, all of the cash flow from the 1414
Property is to be applied as described in "Lockbox" below. If not sooner
satisfied, all unpaid principal and accrued but unpaid interest is due on May 1,
2026. The 1414 Loan accrues interest computed on the basis of the actual number
of days elapsed each month in a 360-day year.
Lockbox. Upon a default by the 1414 Borrower, or upon the occurrence of
the Anticipated Repayment Date, the lender may require all gross income from the
1414 Property to be deposited into a lockbox account controlled by the lender.
Prior to the Anticipated Repayment Date, disbursements from such account are
made as follows: (a) to fund required reserves for the payment of real estate
taxes, insurance and other impounds; (b) to pay all principal and interest then
due; (c) to fund other reserves required under the related security documents;
(d) to pay all other amounts owed the lender with respect to the 1414 Loan; and
(e) to the 1414 Borrower.
Subsequent to the Anticipated Repayment Date, disbursements from such
account are made as follows: (a) to fund required reserves for the payment of
real estate taxes, insurance and other impounds; (b) to pay all principal and
interest (at the initial Mortgage Rate) then due; (c) to fund other reserves
required under the related security documents; (d) to pay budgeted operating
expenses (less management fees payable to 1414 Borrower affiliates)
III-8
<PAGE>
approved by the lender; (e) to pay budgeted capital expenses approved by the
lender; (f) to pay other extraordinary expenses approved by the lender; (g) to
pay all remaining outstanding principal; (h) to pay all outstanding interest;
(i) to pay all other amounts owed the lender with respect to the 1414 Loan; and
(j) to the 1414 Borrower.
Prepayment/Defeasance. No prepayment or defeasance is permitted prior to
the earlier of (a) April 16, 2002, or (b) two years following the date of the
assignment of the 1414 Loan to a REMIC in connection with a securitization.
Thereafter, until November 1, 2008, any prepayment must be in the form of a
defeasance. Any such defeasance will include release of the related 1414
Property and the pledge of substitute collateral in the form of direct,
non-callable United States Treasury obligations providing for payments prior,
but as close as possible, to all scheduled Monthly Payment dates, and on the
Anticipated Repayment Date. Each such payment must be equal to or greater than
the scheduled Monthly Payment, and on the Anticipated Repayment Date, must be
sufficient to fully prepay the 1414 Loan on such date. Additionally, a written
confirmation must be obtained from each applicable rating agency specifying that
the defeasance would not result in a downgrade, qualification or withdrawal of
the then current ratings assigned to any class of certificates. From and after
November 1, 2008, the 1414 Loan may be prepaid without the payment of any
prepayment consideration
Transfer of Property or Interest in Borrower. Except as described below,
the lender will have the option to declare the 1414 Loan immediately due and
payable upon the transfer of the 1414 Property or any ownership interest in the
1414 Borrower. The 1414 Borrower has a one-time right to transfer the 1414
Property to a transferee approved by the lender if (i) no event of default then
exists, (ii) the proposed transferee reasonably satisfies the lender that it
possesses the ownership and managerial experience and financial resources
necessary to operate the 1414 Property, (iii) the proposed transferee assumes
the obligations of the 1414 Borrower and an acceptable person or entity assumes
all guaranties or indemnities, and (iv) a 1% assumption fee, all reasonably
required documents, a title policy endorsement and reimbursement for all of its
costs and expenses has been received by the lender. The 1414 Loan documents
allow transfers of beneficial interests in the 1414 Borrower so long as, among
other things, Green 1414 Manager L.L.C. remains the managing member of the 1414
Borrower and SL Green Realty Corp. continues to directly or indirectly own 100%
of Green 1414 Manager L.L.C. and at least 1/3 of the total equity interests in
the 1414 Borrower. Additionally, so long as lender approves the management of
the 1414 Borrower, transfers of non-managing member interests (up to an
aggregate of 25% of the beneficial ownership interests), involuntary transfers
from death or disability and transfers for estate planning purposes will not be
a default. Finally, transfers of limited partnership interests in SL Green
Operating Partnership, L.P. are allowed so long as SL Green Realty Corp. retains
control of such limited partnership.
Escrows/Reserves. There is a tax escrow, which requires deposits in an
amount sufficient to pay real estate taxes when due. There is an escrow for
capital expenditures, which is funded monthly at the monthly rate of $929, and a
tenant improvement/leasing commission escrow, which is funded at the monthly
rate of $16,667. There is also an insurance reserve in the amount of $10,628.
Subordinate/Other Debt. Secured subordinate indebtedness and
encumbrances are prohibited.
The Property
The 1414 Property consists of a 19-story office building located on the
southeast corner of West 58th Street, one block from Central Park, at the
northern edge of Midtown Manhattan. The 1414 Property, originally constructed in
1924, contains 111,455 rentable square feet. Major capital improvements totaling
approximately $580,000 were completed during 1991 (new roof) and 1997. Such
improvements during 1998 included upgrades to the lobby, corridors and
elevators, as well as the installation of a new fire alarm system. The 1414
Property was 100% leased as of February 20, 1999. Contractual lease expirations
during the loan term are as follows: 1999 (8,943 square feet/8% of total), 2000
(12,280/11%), 2001 (17,619/15.8%), 2002 (5,200/4.7%), 2003 (33,665/30.2%), 2004
(13,975/2%), 2005 (2,187/2.8%), 2006 (3,100/2.8%), 2007 (none), 2008
(3,625/3.3%), and 2009 (2,515/2.3%). No single tenant accounts for more than
5.7% of the 1414 Property's total square footage. The typical tenant at the 1414
Property possesses a lease with a 5 or 10 year term, occupies approximately
3,000 square feet and is in the garment industry. Many have also been tenants
for a number of years.
III-9
<PAGE>
Management
The 1414 Property is managed by SL Green Management L.L.C., an affiliate
of the 1414 Borrower.
III-10
<PAGE>
Loan No. 5 - 70 West 36th Street
<TABLE>
<CAPTION>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------
Cut-off Date Balance: $12,200,000 Balloon Balance: $10,605,147
- ------------------------------------------------------------------------------------------------
Loan Type: 2 Years Property Type: Office
Interest-Only, then
Principal & Interest
- ------------------------------------------------------------------------------------------------
Origination Date: April 16, 1999 Location: New York, NY
- ------------------------------------------------------------------------------------------------
Maturity Date:* May 1, 2009 Year Renovated: 1995
- ------------------------------------------------------------------------------------------------
Initial Mortgage Rate: 7.870% Appraised Value: $18,000,000
- ------------------------------------------------------------------------------------------------
Annual Debt Service: $1,117,360 Current LTV: 67.8%
- ------------------------------------------------------------------------------------------------
DSCR: 1.40x Balloon LTV: 58.9%
- ------------------------------------------------------------------------------------------------
Underwritable Net Cash Flow: $1,559,453 Occupancy: 100%
- ------------------------------------------------------------------------------------------------
Occupancy Date: February 19, 1999
- ------------------------------------------------------------------------------------------------
</TABLE>
*For purposes hereof, the Anticipated Repayment Date described below is assumed
to be the maturity date of the West 36th Loan.
The Loan
The 70 West 36th Street Loan (the "West 36th Loan") is secured by a
first mortgage on a 16-story, 151,077 square foot office building located at 70
West 36th Street, New York, New York (the "West 36th Property"). CIBC originated
the West 36th Loan on April 16, 1999.
The Borrower. The borrower is Green 70W36 Property L.L.C., a New York
limited liability company (the "West 36th Borrower"). Green 70W36 Manager
L.L.C., a Delaware limited liability company, is the managing member of the West
36th Borrower. It is a wholly owned subsidiary of SL Green Realty Corp. SL Green
Operating Partnership, L.P., a Delaware limited partnership, is the sole
remaining member of the West 36th Borrower. SL Green Realty Corp. is the general
partner of the limited partnership. The West 36th Borrower is a special purpose
entity.
Security. The West 36th Loan is secured by a Mortgage, an Assignment of
Leases and Rents, UCC Financing Statements and certain additional security
documents. The Mortgage is a first lien on the fee interest in the West 36th
Property. The West 36th Loan is non-recourse, subject to certain limited
exceptions.
Payment Terms. The Mortgage Rate is fixed at 7.870% until May 1, 2009
(the "Anticipated Repayment Date"), at which time the Mortgage Rate will adjust
to the greater of (i) 9.87% or (ii) the then applicable yield rate on U.S.
Treasury obligations maturing during the month in which the maturity date of the
West 36th Loan occurs, plus 2%. Although the West 36th Loan has a stated term of
324 months, it is assumed for purposes hereof that it has a term of 120 months
with a maturity date of the Anticipated Repayment Date. The West 36th Loan has
an original amortization term of 300 months. The West 36th Loan requires monthly
payments of interest only until June 1, 2001. Thereafter, monthly payments of
principal and interest equal to $93,113.36 are required until the Anticipated
Repayment Date. If the West 36th Loan is not prepaid on such date, all of the
cash flow from the West 36th Property is to be applied as described in "Lockbox"
below. If not sooner satisfied, all unpaid principal and accrued but unpaid
interest is due on May 1, 2026. The West 36th Loan accrues interest computed on
the basis of the actual number of days elapsed each month in a 360-day year.
Lockbox. Upon a default by the West 36th Borrower, or upon the
occurrence of the Anticipated Repayment Date, the lender may require all gross
income from the West 36th Property to be deposited into a lockbox account
controlled by the lender. Prior to the Anticipated Repayment Date, disbursements
from such account are made as follows: (a) to fund required reserves for the
payment of real estate taxes, insurance and other impounds; (b) to pay all
principal and interest then due; (c) to fund other reserves required under the
related security documents; (d) to pay all other amounts owed the lender with
respect to the West 36th Loan; and (e) to the West 36th Borrower.
Subsequent to the Anticipated Repayment Date, disbursements from such
account are made as follows: (a) to fund required reserves for the payment of
real estate taxes, insurance and other impounds; (b) to pay all principal
III-11
<PAGE>
and interest (at the initial Mortgage Rate) then due; (c) to fund other reserves
required under the related security documents; (d) to pay budgeted operating
expenses (less management fees payable to West 36th Borrower affiliates)
approved by the lender; (e) to pay budgeted capital expenses approved by the
lender; (f) to pay other extraordinary expenses approved by the lender; (g) to
pay all remaining outstanding principal; (h) to pay all outstanding interest;
(i) to pay all other amounts owed the lender with respect to the West 36th Loan;
and (j) to the West 36th Borrower.
Prepayment/Defeasance. No prepayment or defeasance is permitted prior to
the earlier of (a) April 16, 2002, or (b) two years following the date of the
assignment of the West 36th Loan to a REMIC in connection with a securitization.
Thereafter, until November 1, 2008, any prepayment must be in the form of a
defeasance. Any such defeasance will include release of the related West 36th
Property and the pledge of substitute collateral in the form of direct,
non-callable United States Treasury obligations providing for payments prior,
but as close as possible, to all scheduled Monthly Payment dates, and on the
Anticipated Repayment Date. Each such payment must be equal to or greater than
the scheduled Monthly Payment, and on the Anticipated Repayment Date, must be
sufficient to fully prepay the West 36th Loan on such date. Additionally, a
written confirmation must be obtained from each applicable rating agency
specifying that the defeasance would not result in a downgrade, qualification or
withdrawal of the then current ratings assigned to any class of Certificates.
From and after November 1, 2008, the West 36th Loan may be prepaid without the
payment of any prepayment consideration
Transfer of Property or Interest in Borrower. Except as described below,
the lender will have the option to declare the West 36th Loan immediately due
and payable upon the transfer of the West 36th Property or any ownership
interest in the West 36th Borrower. The West 36th Borrower has a one-time right
to transfer the West 36th Property to a transferee approved by the lender if (i)
no event of default then exists, (ii) the proposed transferee reasonably
satisfies the lender that it possesses the ownership and managerial experience
and financial resources necessary to operate the West 36th Property, (iii) the
proposed transferee assumes the obligations of the West 36th Borrower and an
acceptable person or entity assumes all guaranties or indemnities, and (iv) a 1%
assumption fee, all reasonably required documents, a title policy endorsement
and reimbursement for all of its costs and expenses has been received by the
lender. The West 36th Loan documents allow transfers of beneficial interests in
the West 36th Borrower so long as, among other things, Green 70W36 Manager
L.L.C. remains the managing member of the West 36th Borrower and SL Green Realty
Corp. continues to directly or indirectly own 100% of Green 70 W36 Manager
L.L.C. of the West 36th Borrower and at least 1/3 of the total equity interests
in the West 36th Borrower. Additionally, so long as lender approves the
management of the West 36th Borrower, transfers of non-managing member interests
(up to an aggregate of 25% of the beneficial ownership interests), involuntary
transfers from death or disability and transfers for estate planning purposes
will not be a default. Finally, transfers of limited partnership interests in SL
Green Operating Partnership, L.P. are allowed so long as SL Green Realty Corp.
retains control of such limited partnership.
Escrows/Reserves. There is a tax escrow which requires deposits in an
amount sufficient to pay real estate taxes when due. There is an escrow for
capital expenditures, which is funded monthly at the monthly rate of $1,762, and
a tenant improvement/leasing commission escrow, which is funded at the monthly
rate of $12,500. There is also an insurance reserve in the amount of $8,862.
Subordinate/Other Debt. Secured subordinate indebtedness and
encumbrances are prohibited.
The Property
The West 36th Property consists of a 16-story building centrally located
on 36th Street between Fifth and Sixth Avenues, in the heart of the Midtown
West District of Manhattan. The West 36th Property, originally constructed in
1923, contains 151,703 rentable square feet, including 26,522 square feet of
retail space on the ground floor. Major capital improvements totaling
approximately $4,000,000 were completed through 1995. Such improvements included
modernization of the three passenger elevators, installation of a new domestic
water tank and renovations to the lobby and public corridors on each floor.
Historical occupancy of the West 36th Property for the last five years has been:
1995 - 94%, 1996 - 95%, 1997 - 100%, 1998 - 100%, and 1999 - 100%. Tenant
rollover is staggered with no more than 29% expiring in any one year. The
typical tenant at the West 36th Property possesses a lease with a 5 or 10 year
term, occupies approximately 3,000 square feet and is in the garment industry.
Many have also been tenants for a number of years.
III-12
<PAGE>
Management
The West 36th Property is managed by SL Green Management L.L.C., an
affiliate of the West 36th Borrower.
III-13
<PAGE>
Loan Nos. 6, 7 and 8 - 2201 Lundt, 7200 Leamington and 1330 West 43rd Street
<TABLE>
<CAPTION>
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
Cut-off Date Balances: Property Type: Industrial
- -------------------------------------------------------------------------------------------------
Leamington $4,850,000 Location: Chicago, IL
- -------------------------------------------------------------------------------------------------
Lundt $4,000,000 Year Built:
- -------------------------------------------------------------------------------------------------
West 43rd $2,190,000 Leamington 1952
- -------------------------------------------------------------------------------------------------
Loan Type: Principal & Interest Lundt 1963
- -------------------------------------------------------------------------------------------------
Origination Date: June 24, 1999 West 43rd 1977
- -------------------------------------------------------------------------------------------------
Maturity Date: July 1, 2009 Appraised Value: $15,200,000
- -------------------------------------------------------------------------------------------------
Initial Mortgage Rate: 8.320% Leamington $ 6,800,000
- -------------------------------------------------------------------------------------------------
Annual Debt Service: Lundt $ 5,600,000
- -------------------------------------------------------------------------------------------------
Leamington $440,105 West 43rd $ 2,800,000
- -------------------------------------------------------------------------------------------------
Lundt $362,973 Current Combined LTV: 72.6%
- -------------------------------------------------------------------------------------------------
West 43rd $198,728 Combined Balloon LTV: 65.5%
- -------------------------------------------------------------------------------------------------
DSCR: 1.30x Occupancy:
- -------------------------------------------------------------------------------------------------
Balloon Balance: Leamington 100.0%
- -------------------------------------------------------------------------------------------------
Leamington $4,372,452 Lundt 100.0%
- -------------------------------------------------------------------------------------------------
Lundt $3,606,147 West 43rd 100.0%
- -------------------------------------------------------------------------------------------------
West 43rd $1,974,366 Occupancy Date: May 11, 1999
- -------------------------------------------------------------------------------------------------
Aggregate Underwritable Net $1,302,056
Cash Flow:
- -------------------------------------------------------------------------------------------------
</TABLE>
The Loans
The 2201 Lundt, 7200 Leamington and 1330 West 43rd Street Loans (the
"Chicago Industrial Loans") consist of three separate loans secured by first
mortgages on three Chicago-area industrial properties (the "Chicago Industrial
Properties"). RFC originated each of the Chicago Industrial Loans was originated
on June 24, 1999, and each has a maturity date of July 1, 2009.
The Borrowers. Separate Illinois limited liability companies were
established as borrowing entities for each of the Chicago Industrial Loans (each
a "Chicago Industrial Borrower"). Each Chicago Industrial Borrower is a single
purpose entity established to own and manage only its Chicago Industrial
Property. The primary sponsors Chicago Industrial Borrowers are John Daley and
Guy Ackerman.
Security. The Chicago Industrial Loans are secured by separate
Mortgages, Assignments of Leases and Rents, UCC Financing Statements and certain
additional security documents. Each Mortgage is a first lien on the fee interest
in the related Chicago Industrial Property. The Chicago Industrial Loans are
non-recourse, subject to certain limited exceptions. All of the Chicago
Industrial Loans are cross-defaulted and cross-collateralized with each other.
Payment Terms. Each Chicago Industrial Loan has a fixed 8.320% Mortgage
Rate, an original term of 120 months and an original amortization of 360 months.
The Chicago Industrial Loans require an aggregate monthly principal and interest
payment of $83,483.74 until maturity, at which time all unpaid principal and
accrued but unpaid interest is due. Each Chicago Industrial Loan accrues
interest computed on the basis of the actual number of days elapsed each month
in a 360-day year.
Prepayment/Defeasance. No prepayment or defeasance is permitted for any
of the Chicago Industrial Loans prior to the earlier of (a) August 1, 2003, or
(b) two years following the date of the assignment of the related Chicago
Industrial Loan to a REMIC in connection with a securitization. Thereafter,
until April 1, 2009, any prepayment must be in the form of a defeasance. Any
such defeasance will include release of the related Chicago Industrial Property
and the pledge of substitute collateral in the form of direct, non-callable
United States Treasury obligations providing for payments prior, but as close as
possible, to all scheduled Monthly Payment dates, and on
III-14
<PAGE>
the Maturity Date. Each such payment must be equal to or greater than each
scheduled Monthly Payment during the loan term, and greater than the anticipated
balloon balance due on the Maturity Date. Additionally, a written confirmation
must be obtained from each applicable rating agency specifying that the
defeasance would not result in a downgrade, qualification or withdrawal of the
then current ratings assigned to any class of certificates. From and after
April 1, 2009, each Chicago Industrial Loan may be prepaid without the payment
of any prepayment consideration.
Transfer of Properties or Interest in Borrower. Except as described
below, the lender will have the option to declare any Chicago Industrial Loan
immediately due and payable upon the transfer of the related Chicago Industrial
Property or any ownership interest in the related Chicago Industrial Borrower.
Each Chicago Industrial Borrower has a one time right to transfer its Chicago
Industrial Property to a qualifying single asset transferee approved by the
lender if (i) the proposed transferee reasonably satisfies the lender that it
possesses the ownership and managerial experience and financial resources
customarily required by the lender for properties such as the related Chicago
Industrial Property, (ii) the proposed transferee assumes the obligations of the
related Chicago Industrial Borrower, (iii) no event of default then exists, and
(iv) a 1% assumption fee has been received by the lender. The documents for each
Chicago Industrial Loan also allow transfers of membership interest in the
related Chicago Industrial Borrower which: (a) do not amount, in the aggregate,
to a transfer of 49% or more of such membership interests to a third party; (b)
are the result of a death or physical or mental disability, or (c) are to an
immediate family member or trust for such a family member.
Escrow/Reserves. Each Chicago Industrial Loan has a tax and insurance
reserve which requires deposits in an amount sufficient to pay real estate taxes
and insurance premiums when due. There is a capital improvements escrow for each
Chicago Industrial Property funded monthly at the aggregate rate $5,282 (Lundt -
$1,778, Leamington - $2,590 and West 43rd - $914). There is a tenant
improvement/leasing commission escrow for each Chicago Industrial Property
funded monthly at the aggregate rate $13,233 (Lundt - $4,446, Leamington -
$6,474 and West 43rd - $2,313).
Subordination/Other Debt. Secured subordinate indebtedness and
encumbrances are prohibited.
The Property
The Lunt property is located at 2201 W. Lunt Avenue, Elk Grove Village,
Illinois, approximately 1 mile east of O'Hare Airport. This property is a
213,390 square foot single-story, multi-tenant warehouse/distribution building
improved with 16 loading docks and approximately 6% office finish. It is 71.63%
leased to Prime Source and World Wide Inc.
The Leamington property is located at 7200 S. Leamington, Bedford Park,
Illinois, on the south side of Chicago near Midway Airport. This property is a
310,752 square foot single-story manufacturing building improved with 13 loading
docks and approximately 4% office finish. It is 100% net leased to The Form
House, Inc., through March 20, 2004.
The West 43rd Street property is located at 1330 West 43rd Street,
McKinley Park, Illinois, in the old stock yard district. This property is a
109,728 square foot single-story, single-tenant warehouse/distribution building
improved with 9 loading docks and approximately 6% office finish. It is 100%
occupied by SM Acquisitions through May, 2002.
Management
The Chicago Industrial Properties are currently managed by Hawthorne
Realty Management. Hawthorne has managed over 12,000,000 square feet of
industrial space in the Chicago metro area and midwest. Hawthorne alos manages
4,000,000 square feet of office space and 1,000,000 square feet of residential
and hospitality properties. Hawthorne is affiliated with the Chicago Industrial
Borrowers.
III-15
<PAGE>
Loan No. 9 - University Club Apartments
<TABLE>
<CAPTION>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------
Cut-off Date Balance: $10,486,188 Balloon Balance: $9,254,639
- ------------------------------------------------------------------------------------------------
Loan Type: Principal and Interest Property Type: Multifamily
- ------------------------------------------------------------------------------------------------
Origination Date: April 22, 1999 Location: Charlotte, NC
- -----------------------------------------------------------------------------------------------
Maturity Date:* May 1, 2009 Year Built 1998
- ------------------------------------------------------------------------------------------------
Initial Mortgage Rate: 7.390% Appraised Value: $13,820,000
- ------------------------------------------------------------------------------------------------
Annual Debt Service: $871,539 Current LTV: 75.9%
- ------------------------------------------------------------------------------------------------
DSCR: 1.30x Balloon LTV: 67.0%
- ------------------------------------------------------------------------------------------------
Underwritable Net Cash Flow: $1,130,378 Occupancy: 97.5%
- ------------------------------------------------------------------------------------------------
Occupancy Date: January 31, 1999
- ------------------------------------------------------------------------------------------------
</TABLE>
*For purposes hereof, the Anticipated Repayment Date described below is assumed
to be the maturity date of the University Club Loan.
The Loan
The University Club Apartments Loan (the "University Club Loan") is
secured by a first mortgage on the University Club Apartments (the "University
Club Property"), a 130-unit, 17 building, student housing apartment complex
located in Charlotte, North Carolina. CIBC originated the University Club Loan
on April 22, 1999.
The Borrower. The borrower is University Club Apartments of Charlotte,
L.C., a Florida limited liability company (the "University Club Borrower").
The University Club Borrower's managing member is Thomas C. Proctor. The
University Club Borrower is a special purpose entity.
Security. The University Club Loan is secured by a Deed of Trust and
Security Agreement, an Assignment of Leases and Rents, UCC Financing Statements
and certain additional security documents. Such Deed of Trust is a first lien on
the fee interest in the University Club Property. The University Club Loan is
non-recourse, subject to certain limited exceptions.
Payment Terms. The Mortgage Rate is fixed at 7.390% until May 1, 2009
(the "Anticipated Repayment Date"), at which time the Mortgage Rate will adjust
to the greater of (i) 9.39% or (ii) the then applicable yield rate on U.S.
Treasury obligations maturing during the month in which the maturity date of the
University Club Loan occurs, plus 2%. Although the University Club Loan has a
stated term of 360 months, it is assumed for purposes hereof that it has a term
of 120 months with a maturity date of the Anticipated Repayment Date. The
University Club Loan has an original amortization term of 360 months. The
University Club Loan requires monthly payments of principal and interest of
$72,628.26 until the Anticipated Repayment Date. If the University Club Loan is
not prepaid on such date, all of the cash flow from the University Club Property
is to be applied as described in "Lockbox" below. If not sooner satisfied, all
unpaid principal and accrued but unpaid interest is due on May 1, 2029. The
University Club Loan accrues interest computed on the basis of the actual number
of days elapsed each month in a 360-day year.
Lockbox. Upon a default by the University Club Borrower, or upon the
occurrence of the Anticipated Repayment Date, the lender may require all gross
income from the University Club Property to be deposited into a lockbox account
controlled by the lender. Prior to the Anticipated Repayment Date, disbursements
from such account are made as follows: (a) to fund required reserves for the
payment of real estate taxes, insurance and other impounds; (b) to pay all
principal and interest then due; (c) to fund other reserves required under the
related security documents; (d) to pay all other amounts owed the lender with
respect to the University Club Loan; and (e) to the University Club Borrower.
Subsequent to the Anticipated Repayment Date, disbursements from such
account are made as follows: (a) to fund required reserves for the payment of
real estate taxes, insurance and other impounds; (b) to pay all principal and
interest (at the initial Mortgage Rate) then due; (c) to fund other reserves
required under the related security documents; (d) to pay budgeted operating
expenses (less management fees payable to University Club Borrower affiliates)
approved by the lender; (e) to pay budgeted capital expenses approved by the
lender; (f) to pay other
III-16
<PAGE>
extraordinary expenses approved by the lender; (g) to pay all remaining
outstanding principal; (h) to pay all outstanding interest; (i) to pay all
other amounts owed the lender with respect to the University Club Loan; and
(j) to the University Club Borrower.
Prepayment/Defeasance. No prepayment or defeasance is permitted prior to
the earlier of (a) April 22, 2002, or (b) two years following the date of the
assignment of the University Club Loan to a REMIC in connection with a
securitization. Thereafter, until November 1, 2008, any prepayment must be in
the form of a defeasance. Any such defeasance will include release of the
related University Club Property and the pledge of substitute collateral in the
form of direct, non-callable United States Treasury obligations providing for
payments prior, but as close as possible, to all scheduled Monthly Payment
dates, and on the Anticipated Repayment Date. Each such payment must be equal to
or greater than the scheduled Monthly Payment, and on the Anticipated Repayment
Date, must be sufficient to fully prepay the University Club Loan on such date.
Additionally, a written confirmation must be obtained from each applicable
rating agency specifying that the defeasance would not result in a downgrade,
qualification or withdrawal of the then current ratings assigned to any class of
certificates. From and after November 1, 2008, the University Club Loan may be
prepaid without the payment of any prepayment consideration
Transfer of Property or Interest in Borrower. Except as described below,
the lender will have the option to declare the University Club Loan immediately
due and payable upon the transfer of the University Club Property or any
ownership interest in the University Club Borrower. The University Club Borrower
has a one-time right to transfer the University Club Property, after the first
12 months of the loan term, to a transferee approved by the lender if (i) no
event of default then exists, (ii) the proposed transferee reasonably satisfies
the lender that it possesses the ownership and managerial experience and
financial resources necessary to operate the University Club Property, (iii) the
proposed transferee assumes the obligations of the University Club Borrower and
an acceptable person or entity assumes all guaranties or indemnities, and (iv) a
1% assumption fee, all reasonably required documents, a title policy endorsement
and reimbursement for all of its costs and expenses has been received by the
lender. The University Club Loan documents also prohibit, without the lender's
prior consent, any transfer of any managing membership interest in the
University Club Borrower. Transfers of non managing member interests are allowed
without lender consent. Additionally, so long as lender approves the management
of the University Club Borrower, involuntary transfers from death or disability
and transfers for estate planning purposes will not be a default.
Escrows/Reserves. There is a tax and insurance escrow which requires
deposits in an amount sufficient to pay real estate taxes and insurance premiums
when due. There is also an escrow for capital expenditures which is funded
monthly in the amount of $29,250/year for the first twelve months of the loan
term and $39,000/year for the remainder of the loan term.
Subordinate/Other Debt. Secured subordinate indebtedness and
encumbrances are prohibited.
The Property
The University Club Property consists of 130 townhouse style apartment
units (1,470 square feet per unit) in seventeen buildings located in Charlotte,
North Carolina, approximately 1/2 mile east University of North Carolina -
Charlotte. Each unit contains four bedrooms and four baths with cable
television, telephone lines and an interior alarm system available in each
bedroom. Site amenities include a basketball court, beach volleyball court,
fitness center, computer center, and two swimming pools. The University Club
Property's tenant base is primarily comprised of students from the University of
North Carolina - Charlotte. The University Club Property commenced operations in
August 1998. According to a January 31, 1999 rent roll, occupancy during the
1998-1999 school year was 97.5%.
Management
The University Club Property is managed by Coastal Property Services,
Inc., a full services management company focused specifically on residential
property management. The company manages over 2,500 rental units in the
southeastern United States and over 3,000 beds for students at nine colleges and
universities.
III-17
<PAGE>
Loan No. 10 - Patriot Apartments
<TABLE>
<CAPTION>
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------
Cut-off Date Balance: $10,022,381 Balloon Balance: $8,842,833
- -------------------------------------------------------------------------------------------
Loan Type: Principal and Interest Property Type: Multifamily
- -------------------------------------------------------------------------------------------
Origination Date: February 17, 1999 Location: El Paso, TX
- -------------------------------------------------------------------------------------------
Maturity Date: March 1, 2009 Year Built 1996
- -------------------------------------------------------------------------------------------
Mortgage Rate: 7.24% Appraised Value: $12,600,000
- -------------------------------------------------------------------------------------------
Annual Debt Service: $821,887 Current LTV: 79.5%
- -------------------------------------------------------------------------------------------
DSCR: 1.25x Balloon LTV: 70.2%
- -------------------------------------------------------------------------------------------
Underwritable Net Cash Flow: $1,029,379 Occupancy: 99.7%
- -------------------------------------------------------------------------------------------
Occupancy Date: March 22, 1999
- -------------------------------------------------------------------------------------------
</TABLE>
The Loan
The Patriot Apartment Loan (the "Patriot Loan") is secured by a first
mortgage on the Patriot Apartments (the "Patriot Property"), a 320 unit, 20
building, Class A garden apartment complex located in El Paso, Texas. Midland
originated the Patriot Loan on February 17,1999.
The Borrower. The Borrower is Patriot Apartments, L.L.C., a Delaware
limited liability company (the "Patriot Borrower"). The Patriot Borrower is a
single purpose entity with D.R.R. Asset Management, Inc., owning 1% and D.R.R.
Properties, a California corporation owning the remaining 99%. Both D.R.R. Asset
Management, Inc, and D.R.R. Properties are owned 100% by Mr. Duane R. Roberts of
Riverside, California.
Security. The Patriot Loan is secured by a Deed of Trust, an Assignment
of Leases and Rents, UCC Financing Statements and certain additional security
documents. Such Deed of Trust is a first lien on a fee interest in the Patriot
Property. The Patriot Loan is non-recourse, subject to certain limited
exceptions.
Payment Terms. The Patriot Loan has a fixed 7.24% Mortgage Rate, an
original term of 120 months and an original amortization of 360 months. The
Patriot Loan requires monthly principal and interest payments of $68,490.56
until maturity, at which time all unpaid principal and accrued but unpaid
interest is due. The Patriot Loan accrues interest computed on the basis of the
actual number of days elapsed each month in a 360-day year.
Prepayment. No prepayment is permitted during the first 60 months of the
term of the Patriot Loan. Thereafter, prior to December 1, 2008, prepayments may
be made upon the payment of a prepayment premium equal to the greater of a yield
maintenance amount or 1% of the principal prepaid. No prepayment premium is
required for any prepayment on or after December 1, 2008.
Transfer of Properties or Interest in Borrower. Except as described
below, the lender will have the option to declare the Patriot Loan immediately
due and payable upon the transfer of the Patriot Property or any ownership
interest in the Patriot Borrower. The Patriot Loan documents contemplate a
potential waiver of such prohibition by the lender if (i) the lender has
expressly approved the proposed transfer in writing, (ii) no event of default
then exists, (iii) the proposed transferee and the Patriot Property reasonably
satisfy the lender's underwriting standards, and (iv) the lender receives a 1%
assumption fee and reimbursement for all of costs and expenses. The Patriot Loan
documents allow transfers of membership interest in the Patriot Borrower which:
(a) do not amount, in the aggregate, to a transfer of 49% or more of such
membership interests to a third party; or (b) are the result of a death or
physical or mental disability.
Escrow/Reserves. There is a tax and insurance reserve which requires
deposits in an amount sufficient to pay real estate taxes and insurance premiums
when due. There is a capital improvement reserve funded at closing in the amount
of $32,750 to provide funds for carpet replacement and other specified upgrades
to the clubhouse at the Patriot Property. There is also a reserve for future
repairs and replacements to the Patriot Property, which was
III-18
<PAGE>
funded at closing in the amount of $67,250. If any funds are withdrawn from
this reserve, monthly deposits will be required until the reserve balance again
reaches $67,250.
Subordination/Other Debt. Secured subordinate indebtedness and
encumbrances are prohibited with out the prior consent of the lender.
The Property
The Patriot Property is located at 4600 Fairbanks, in the northeastern
portion of El Paso, Texas, approximately 10 minutes north of the El Paso central
business district and 6 miles from Fort Bliss. It was built in 1996 and consists
of 320 units contained in 20 two-story garden style apartment buildings.
Amenities include a community resource center/computer room, fitness center,
playground, basketball court, sand volleyball court, picnic benches & barbecue
grills, clubhouse, RV and boat parking, covered parking (30 spaces),
mini-storage units (136 units), three laundry facilities, a jogging path and a
wading and swimming pool.
Management
Case & Associates Properties, Inc. is the manager of the Patriot
Property. Case & Associates manages over 18,000 apartment units, including both
owned and third party assets, in the southwest region including Tulsa, Oklahoma
City, Wichita, and the Dallas-Ft. Worth metroplex. There is an on-site staff of
management, leasing, and maintenance personnel, all of which are overseen by a
regional and home office supervisor.
III-19
<PAGE>
Loan No. 11 - Acme (Cape May) Plaza
<TABLE>
<CAPTION>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------
Cut-off Date Balance: $9,459,453 Balloon Balance: $8,402,811
- ------------------------------------------------------------------------------------------------
Loan Type: Principal and Interest Property Type: Retail
- ------------------------------------------------------------------------------------------------
Origination Date: April 23, 1998 Location: Cape May, NJ
- ------------------------------------------------------------------------------------------------
Maturity Date:* January 1, 2009 Year Renovated 1998
- ------------------------------------------------------------------------------------------------
Initial Mortgage Rate: 7.550% Appraised Value: $12,000,000
- ------------------------------------------------------------------------------------------------
Annual Debt Service: $801,011 Current LTV: 78.8%
- ------------------------------------------------------------------------------------------------
DSCR: 1.32x Balloon LTV: 70.0%
- ------------------------------------------------------------------------------------------------
Underwritable Net Cash Flow: $1,058,317 Occupancy: 100%
- ------------------------------------------------------------------------------------------------
Occupancy Date: April 1, 1999
- ------------------------------------------------------------------------------------------------
</TABLE>
*For purposes hereof, the Anticipated Repayment Date described below is assumed
to be the maturity date of the Acme Plaza Loan.
The Loan
The Acme (Cape May) Plaza Loan (the "Acme Plaza Loan") is secured by a
first mortgage on the Acme Plaza Shopping Center (the "Acme Plaza Property"), a
150,548 square foot anchored retail center located in Cape May, New Jersey. CIBC
originated the Acme Plaza Loan on April 23, 1998.
The Borrower. The borrower is Shelvin Two, a New Jersey general
partnership (the "Acme Plaza Borrower"). Equity Associates, LP and an Intervivos
Q-Tip Trust of Vincent Polemini are the only partners in the Acme Plaza
Borrower. The Acme Plaza Borrower is a special purpose entity.
Security. The Acme Plaza Loan is secured by a Mortgage, an Assignment of
Leases and Rents, UCC Financing Statements and certain additional security
documents. The Mortgage is a first lien on the fee interest in the Acme Plaza
Property. The Acme Plaza Loan is non-recourse, subject to certain limited
exceptions.
Payment Terms. The Mortgage Rate is fixed at 7.550% until January 1,
2009 (the "Anticipated Repayment Date"), at which time the Mortgage Rate will
adjust to the greater of (i) 9.55% or (ii) the then applicable yield rate on
U.S. Treasury obligations maturing during the month in which the maturity date
of the Acme Plaza Loan occurs, plus 2%. Although the Acme Plaza Loan has a
stated term of 368 months, it is assumed for purposes hereof that it has a term
of 128 months with a maturity date of the Anticipated Repayment Date. The Acme
Plaza Loan has an original amortization term of 360 months. The Acme Plaza Loan
requires monthly payments of principal and interest of $66,750.95 until the
Anticipated Repayment Date. If the Acme Plaza Loan is not prepaid on such date,
all of the cash flow from the Acme Plaza Property is to be applied as described
in "Lockbox" below. If not sooner satisfied, all unpaid principal and accrued
but unpaid interest is due on January 1, 2029. The Acme Plaza Loan accrues
interest computed on the basis of the actual number of days elapsed each month
in a 360-day year.
Lockbox. Upon a default by the Acme Plaza Borrower, or upon the
occurrence of the Anticipated Repayment Date, the lender may require all gross
income from the Acme Plaza Property to be deposited into a lockbox account
controlled by the lender. Prior to the Anticipated Repayment Date, disbursements
from such account are made as follows: (a) to fund required reserves for the
payment of real estate taxes, insurance and other impounds; (b) to pay all
principal and interest then due; (c) to fund other reserves required under the
related security documents; (d) to pay all other amounts owed the lender with
respect to the Acme Plaza Loan; and (e) to the Acme Plaza Borrower.
Subsequent to the Anticipated Repayment Date, disbursements from such
account are made as follows: (a) to fund required reserves for the payment of
real estate taxes, insurance and other impounds; (b) to pay all principal and
interest (at the initial Mortgage Rate) then due; (c) to fund other reserves
required under the related security documents; (d) to pay budgeted operating
expenses (less management fees payable to Acme Plaza Borrower affiliates)
approved by the lender; (e) to pay budgeted capital expenses approved by the
lender; (f) to pay other extraordinary expenses approved by the lender; (g) to
pay all remaining outstanding principal; (h) to pay all
III-20
<PAGE>
outstanding interest; (i) to pay all other amounts owed the lender with respect
to the Acme Plaza Loan; and (j) to the Acme Plaza Borrower.
Prepayment/Defeasance. No prepayment or defeasance is permitted prior to
the earlier of (a) April 23, 2003, or (b) two years following the date of the
assignment of the Acme Plaza Loan to a REMIC in connection with a
securitization. Thereafter, until July 1, 2008, any prepayment must be in the
form of a defeasance. Any such defeasance will include release of the related
Acme Plaza Property and the pledge of substitute collateral in the form of
direct, non-callable United States Treasury obligations providing for payments
prior, but as close as possible, to all scheduled Monthly Payment dates, and on
the Anticipated Repayment Date. Each such payment must be equal to or greater
than the scheduled Monthly Payment, and on the Anticipated Repayment Date, must
be sufficient to fully prepay the Acme Plaza Loan on such date. Additionally, a
written confirmation must be obtained from each applicable rating agency
specifying that the defeasance would not result in a downgrade, qualification or
withdrawal of the then current ratings assigned to any class of certificates.
From and after July 1, 2008, the Acme Plaza Loan may be prepaid without the
payment of any prepayment consideration
Transfer of Property or Interest in Borrower. Except as described below,
the lender will have the option to declare the Acme Plaza Loan immediately due
and payable upon the transfer of the Acme Plaza Property or any ownership
interest in the Acme Plaza Borrower. The Acme Plaza Borrower has a one-time
right to transfer the Acme Plaza Property, after the first 12 months of the loan
term, to a transferee approved by the lender if (i) no event of default then
exists, (ii) the proposed transferee reasonably satisfies the lender that it
possesses the ownership and managerial experience and financial resources
necessary to operate the Acme Plaza Property, (iii) the proposed transferee
assumes the obligations of the Acme Plaza Borrower and an acceptable person or
entity assumes all guaranties or indemnities, and (iv) a 1% assumption fee, all
reasonably required documents, a title policy endorsement and reimbursement for
all of its costs and expenses has been received by the lender.
Escrows/Reserves. There is a tax and insurance escrow which requires
deposits in an amount sufficient to pay real estate taxes and insurance premiums
when due. There is an escrow for capital expenditures which is funded monthly in
the amount of $1,910. There is also a $10,000 tenant improvement/leasing
commission escrow, which is to be replenished at the monthly rate of $833.33,
when the balance falls below $10,000.
Subordinate/Other Debt. Secured subordinate indebtedness and
encumbrances are prohibited.
The Property
The Acme Plaza Property is a 150,548 square foot retail shopping center
situated on 18.62 acres of land located in Cape May, New Jersey. The Acme Plaza
Property was built in 1971 and renovated in 1998. According to an April 1, 1999
rent roll, the Acme Plaza Property was 100% leased to 13 tenants, with an
average base rental was $8.51per square foot. Acme Stores (Acme Supermarket) is
the anchor store for the Acme Plaza Property, with a lease covering
approximately 41.2% of available space. Its lease expires on June 29, 2016.
Other lease expirations during the loan term are as follows: 1999 (2,000 square
feet/1.3% of total), 2000 (9,220/6.1%), 2001 (none), 2002 (3,150/2.1%), 2003
(5,500/3.7%), 2004 (none), 2005 (10,000/6.6%), 2006 (none), 2007 (none), and
2008 (35.113/23.3%).
Management
The Acme Plaza Property is managed by Skyline Management, a full-service
property management company. The company manages over 2,000,000 square feet in
its current portfolio primarily in the northeastern United States.
III-21
<PAGE>
Loan No. 12 - The Place Apartments
<TABLE>
<CAPTION>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------
Cut-off Date Balance: $8,693,077 Balloon Balance: $7,619,550
- ------------------------------------------------------------------------------------------------
Loan Type: Principal & Interest Property Type: Multifamily
- ------------------------------------------------------------------------------------------------
Origination Date: May 4, 1999 Location: Ft. Myers, FL
- ------------------------------------------------------------------------------------------------
Maturity Date: June 1, 2009 Year Renovated: 1999
- ------------------------------------------------------------------------------------------------
Initial Mortgage Rate: 7.150% Appraised Value: $10,887,000
- ------------------------------------------------------------------------------------------------
Annual Debt Service: $705,125 Current LTV: 79.8%
- ------------------------------------------------------------------------------------------------
DSCR: 1.26x Balloon LTV: 70.0%
- ------------------------------------------------------------------------------------------------
Underwritable Net Cash Flow: $887,965 Occupancy: 99.1%
- ------------------------------------------------------------------------------------------------
Occupancy Date: March 24, 1999
- ------------------------------------------------------------------------------------------------
</TABLE>
The Loan
The Place Apartments Loan (the "Place Apartments Loan") is secured by a
first mortgage on a 230-unit garden apartment complex located at 4757 Barkley
Circle, Ft. Myers, Florida (the "Place Apartments Property"). RFC originated the
Place Apartments Loan on May 4, 1999.
The Borrower. The borrower is The Place Apartments, Ltd., a Florida
limited partnership (the "Place Apartments Borrower"). The corporate general
partner of the Place Apartments Borrower is A&M Business Properties, Inc., an
Ohio corporation. The Place Apartments Borrower is a special purpose entity.
Security. The Place Apartments Loan is secured by a Mortgage, an
Assignment of Leases and Rents, UCC Financing Statements and certain additional
security documents. The Mortgage is a first lien on the fee interest in the
Place Apartments Property. The Place Apartments Loan is non-recourse, subject to
certain limited exceptions.
Payment Terms. The Place Apartments Loan has a fixed 7.150% Mortgage
Rate, an original term of 120 months and an original amortization of 360 months.
The Place Apartments Loan requires monthly principal and interest payments of
$58,760.39 until maturity, at which time all unpaid principal and accrued but
unpaid interest is due. The Place Apartments Loan accrues interest computed on
the basis of the actual number of days elapsed each month in a 360-day year.
Prepayment/Defeasance. No prepayment or defeasance is permitted prior to
the earlier of (a) July1, 2003, or (b) two years following the date of the
assignment of the Place Apartments Loan to a REMIC in connection with a
securitization. Thereafter, until March 1, 2009, any prepayment must be in the
form of a defeasance. Any such defeasance will include release of the Place
Apartments Property and the pledge of substitute collateral in the form of
direct, non-callable United States Treasury obligations providing for payments
prior, but as close as possible, to all scheduled Monthly Payment dates, and on
the Maturity Date. Each such payment must be equal to or greater than each
scheduled Monthly Payment during the loan term, and greater than the anticipated
balloon balance due on the Maturity Date. Additionally, a written confirmation
must be obtained from each applicable rating agency specifying that the
defeasance would not result in a downgrade, qualification or withdrawal of the
then current ratings assigned to any class of certificates. From and after March
1, 2009, the Place Apartments Loan may be prepaid without the payment of any
prepayment consideration.
Transfer of Properties or Interest in Borrower. Except as described
below, the lender will have the option to declare the Place Apartments Loan
immediately due and payable upon the transfer of the Place Apartments Property
or any ownership interest in the Place Apartments Borrower. The Place Apartments
Borrower has a one time right to transfer the Place Apartments Property to a
qualifying single asset transferee approved by the lender if (i) the proposed
transferee reasonably satisfies the lender that it possesses the ownership and
managerial experience and financial resources customarily required by the lender
for properties such as the Place Apartments Property, (ii) the proposed
transferee assumes the obligations of the Place Apartments Borrower, (iii) no
event of default then exists, and (iv) a 1% assumption fee has been received by
the lender. The Place Apartments Loan documents also allow transfers of
membership interest in the Place Apartments Borrower which: (a) do not amount,
in the aggregate, to a
III-22
<PAGE>
transfer of 49% or more of such membership interests to a third party;
(b) are the result of a death or physical or mental disability, or (c) are to
an immediate family member or trust for such a family member.
Escrow/Reserves. There is a tax reserve which requires deposits in an
amount sufficient to pay real estate taxes when due. Additionally, there is a
replacement reserve funded monthly at the rate of $4,485 per month.
Subordination/Other Debt. Secured subordinate indebtedness and
encumbrances are prohibited.
The Property
The Place Apartments Property is located at 4757 Barkley Circle, Ft.
Myers, Florida. It was constructed in two phases, beginning in 1985 and
concluding in 1987. It is a garden-style apartment complex consisting of 230
units contained in fifteen 2-story and two 5-story, walk-up/elevator serviced
buildings. The Place Apartments Property contains 64 one-bedroom units and 166
two-bedroom units. Amenities include laundry facilities, temperature controlled
swimming pools, spas, tennis, handball and basketball courts, vaulted ceilings,
water views, washer/dryer hookups and screened-in balconies.
Management
The Place Apartments is managed by A&M Properties, a borrower-related
entity that is 50% owned by one of the sponsors, Lawrence Maxwell. A&M
Properties currently manages 8,300 multifamily and mobile home units.
III-23
<PAGE>
<TABLE>
<CAPTION>
APPENDIX IV
ADDITIONAL INFORMATION REGARDING MULTIFAMILY PROPERTIES - I
- ------------------------------------------------------------------------------------------------------------------------------------
Studios 1 BR 2 BR 3 BR 4 BR
Loan # Avg Mo Avg Mo Avg Mo Avg Mo Avg Mo
No. Seller(1) Property Name(2) Studios Rent #1 BR Rent #2 BR Rent #3BR Rent #4 BR Rent
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2 RFC Park Drive Manor Apts 48 $465 288 $612 232 $740 N/A N/A 4 $1331
9 CIBC University Club Apartments N/A N/A N/A N/A N/A N/A N/A N/A 130 1200
10 Midland The Patriot Apartments N/A N/A 104 436 160 525 56 641 N/A N/A
12 RFC The Place Apartments N/A N/A 64 514 166 626 N/A N/A N/A N/A
13 Midland The Phoenix Apartments N/A N/A 72 417 176 494 88 589 N/A N/A
19 Midland Beau Rivage Apartments,
Phases II & III N/A N/A 64 495 100 577 28 663 N/A N/A
23 Midland Northcastle Apartments N/A N/A 74 537 84 719 12 953 N/A N/A
31 RFC Coriel Manor Apartments 39 424 134 510 71 661 1 800 N/A N/A
36 CIBC Regstad II - Orchid Place N/A 330 13 420 126 518 1 330 N/A N/A
39 Midland Wood River Apartments 16 398 48 434 112 529 24 639 N/A N/A
41 CIBC Avenue C Apartments 2 1137 15 1842 7 2752 3 3000 1 2133
49 Midland The Glen Apartments N/A N/A 64 374 112 454 24 591 N/A N/A
52 CIBC Trolley Commons/Willow Reed Village N/A N/A 24 675 96 831 N/A N/A N/A N/A
58 RFC Crosswinds Apartment Homes N/A N/A 183 378 57 536 N/A N/A N/A N/A
60 Midland Canal House Apartments 3 668 50 816 18 1096 N/A N/A N/A N/A
63 RFC Mountain Country Estates N/A N/A 5 445 145 511 N/A N/A N/A N/A
71 Midland Georgetown Apartments N/A N/A 2 463 73 568 16 740 N/A N/A
72 Midland Heritage Park Apartments N/A N/A N/A N/A 88 676 N/A N/A N/A N/A
74 RFC Coach & Four East Apartments N/A N/A 86 426 76 543 1 670 N/A N/A
76 RFC Brook Run Apartments N/A N/A 69 704 13 783 N/A N/A N/A N/A
77 RFC Green Meadows Apartments N/A N/A 76 409 76 503 N/A N/A N/A N/A
79 RFC Fairmont and Monticello Apartments 55 331 78 424 N/A N/A N/A N/A N/A N/A
85 Midland Vintage Faire Apartments N/A N/A 32 518 80 578 N/A N/A N/A N/A
87 Midland Woodbridge Apartments N/A N/A N/A N/A 70 672 N/A N/A N/A N/A
89 Midland Deerwood at the Park Apartments N/A N/A 60 444 96 546 40 654 N/A N/A
90 Midland Tukwila Estates N/A N/A 46 550 35 650 N/A N/A N/A N/A
91 Midland Orchard Park Apartments N/A N/A 36 478 96 541 N/A N/A N/A N/A
99 RFC Paloma Apartments 58 800 N/A N/A N/A N/A N/A N/A N/A N/A
101 Midland Windsong Apartments 2 750 22 833 56 1022 10 1131 N/A N/A
105 Midland Cinnamon Square Apartments N/A N/A 96 353 96 436 N/A N/A N/A N/A
106 Midland Bordeaux XI Apartments N/A N/A 40 384 63 496 16 584 N/A N/A
109 RFC The Kingsbury Apartments 2 422 9 554 42 762 N/A N/A N/A N/A
110 Midland Crestwood Apartments N/A N/A 112 350 40 497 N/A N/A N/A N/A
112 Midland Roseland Manor Duplexes N/A N/A N/A N/A 118 454 20 543 N/A N/A
114 Midland The Port Apartments 32 317 80 316 16 436 N/A N/A N/A N/A
118 Midland Ridgmar Crossroads Apartments N/A N/A 28 588 32 699 N/A N/A N/A N/A
122 CIBC Hayes Community N/A N/A 144 505 37 891 1 N/A N/A N/A
124 Midland Devon Park Apartments N/A N/A 21 642 42 752 N/A N/A N/A N/A
125 RFC Cross Keys Apartments N/A N/A 8 550 36 661 20 758 N/A N/A
129 CIBC Timberfalls Apartments N/A N/A N/A N/A 64 575 36 675 N/A N/A
132 RFC Carpenter Crest Apartments N/A N/A 88 406 16 500 N/A N/A N/A N/A
133 RFC Stanford Court N/A N/A N/A N/A 49 659 23 732 N/A N/A
134 Midland Commons at Valdosta Apartments N/A N/A N/A N/A N/A N/A 96 399 N/A N/A
136 Midland Quail Court Apartments N/A N/A 68 333 32 418 8 504 N/A N/A
137 Midland Pacific Palms Apartments 12 409 40 554 52 708 3 850 N/A N/A
141 Midland Westlake Village Apartments N/A N/A 68 348 60 431 12 569 N/A N/A
145 RFC The Pinons Apartments 7 365 52 408 33 516 N/A N/A N/A N/A
151 Midland Ashton Oaks Apartments N/A N/A 22 395 100 485 22 625 N/A N/A
154 Midland Waterside Apartments N/A N/A 42 337 75 401 N/A N/A N/A N/A
160 Midland Pleasant Valley Apartments N/A N/A N/A N/A 48 613 N/A N/A N/A N/A
161 Midland West Wind Apartments Phase III N/A N/A N/A N/A 27 844 N/A N/A N/A N/A
165 RFC Laudonniere Apartments N/A N/A 6 1200 7 1461 N/A N/A N/A N/A
167 Midland Maybrook Apartments 1 590 20 560 39 639 N/A N/A N/A N/A
172 Midland Parkway Gardens Apartments (D) N/A N/A 54 377 17 505 N/A N/A N/A N/A
173 Midland Norvell Gardens Apartments (D) N/A N/A 10 380 16 520 N/A N/A N/A N/A
177 Midland Ashwood Apartments 22 247 8 330 115 318 12 471 N/A N/A
IV-1
<PAGE>
<CAPTION>
APPENDIX IV
ADDITIONAL INFORMATION REGARDING MULTIFAMILY PROPERTIES - I
- ------------------------------------------------------------------------------------------------------------------------------------
Studios 1 BR 2 BR 3 BR 4 BR
Loan # Avg Mo Avg Mo Avg Mo Avg Mo Avg Mo
No. Seller(1) Property Name(2) Studios Rent #1 BR Rent #2 BR Rent #3BR Rent #4 BR Rent
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
178 Midland Stonehurst Apartments 33 344 23 404 6 460 N/A N/A N/A N/A
180 Midland Georgetown/Melrose Plaza Apartments N/A N/A 99 235 76 284 16 366 N/A N/A
181 RFC Greenwood/St. Charles N/A N/A 40 601 N/A N/A N/A N/A N/A N/A
183 Midland Cedarstone Apartments N/A N/A 13 478 23 535 N/A N/A N/A N/A
184 Midland Southwest Manor Duplexes N/A N/A N/A N/A N/A N/A 20 808 N/A N/A
186 RFC Andover Apartments 12 328 46 418 8 557 N/A N/A N/A N/A
193 RFC First View N/A N/A 49 431 13 570 N/A N/A N/A N/A
195 RFC Woodlane Apartments N/A N/A 32 375 33 485 N/A N/A N/A N/A
199 CIBC Town House South Apartments and
Danville Duplexes 2 250 13 323 64 365 21 391 N/A N/A
200 RFC Red Deer Apartments 7 313 46 432 13 581 N/A N/A N/A N/A
203 RFC Old Colony Apartments N/A N/A 7 449 27 486 N/A N/A N/A N/A
205 RFC Rivercrest Apartments 20 328 43 363 6 486 N/A N/A N/A N/A
206 Midland View Pointe Apartments 28 382 40 462 17 556 N/A N/A N/A N/A
207 RFC 1340 21st Street NW 4 825 3 1300 3 1675 N/A N/A N/A N/A
208 RFC Rollingwood Apartments 17 337 33 445 14 530 N/A N/A N/A N/A
209 Midland Greenbrier Apartments N/A N/A 21 517 24 605 N/A N/A N/A N/A
210 Midland Lantana Apartments N/A N/A 38 458 4 591 N/A N/A N/A N/A
211 RFC Pine Meadow Apartments N/A N/A 24 565 32 615 N/A N/A N/A N/A
216 RFC Colonial-Excelsior 8 460 20 460 17 546 12 565 N/A N/A
218 RFC Centennial Place Apartments N/A N/A 16 384 17 503 11 654 N/A N/A
219 RFC Charmony Place Apartments 16 250 12 385 26 463 N/A N/A N/A N/A
220 RFC Wooded Acres Apartments N/A N/A 44 334 16 472 N/A N/A N/A N/A
221 RFC Greenwood Villa Apartments N/A N/A 28 355 32 443 N/A N/A N/A N/A
223 RFC Brighton Court Apartments 12 320 52 399 5 459 N/A N/A N/A N/A
224 Midland Bell Oaks Village Apartments N/A N/A 24 288 44 369 8 443 N/A N/A
227 RFC 20 Green of Panorama N/A N/A N/A N/A 16 785 N/A N/A N/A N/A
228 RFC Cedargate Apartments 13 314 30 420 5 549 N/A N/A N/A N/A
231 RFC Oak Glen Apartments N/A N/A 32 377 24 432 N/A N/A N/A N/A
233 RFC Quail Creek Apartments N/A N/A 20 395 8 437 N/A N/A N/A N/A
234 RFC University Apartments N/A N/A 39 370 4 550 N/A N/A N/A N/A
235 Midland Irving Court Townhomes N/A N/A N/A N/A 32 535 N/A N/A N/A N/A
236 RFC Grahamcrest Manor Apartments 1 300 34 429 14 549 N/A N/A N/A N/A
237 RFC The Gorelick Apartments N/A N/A N/A N/A 12 675 N/A N/A N/A N/A
239 RFC 519 Central Avenue N/A N/A 16 562 N/A N/A N/A N/A N/A N/A
240 RFC Klingerman Apartments N/A N/A N/A N/A 12 662 1 780 N/A N/A
241 RFC 901 SW 8th Avenue Apartments N/A N/A 24 432 N/A N/A N/A N/A N/A N/A
242 RFC Meadow Pines Apartments N/A N/A N/A N/A 24 492 N/A N/A N/A N/A
</TABLE>
IV-2
<PAGE>
<TABLE>
<CAPTION>
APPENDIX IV
ADDITIONAL INFORMATION REGARDING MULTIFAMILY PROPERTIES - II
- ------------------------------------------------------------------------------------------------------------------------------------
Sub Utilities
Loan Cut-Off Date Property Property Tenants
No. Seller(1) Property Name(2) Balance Type Type Elevator Units Pay
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
2 RFC Park Drive Manor Apts $22,925,004 Multifamily High-Rise $8 572 Electric, Gas, Water
9 CIBC University Club Apartments 10,486,188 Multifamily Garden N/A 130 Electric, Gas, Water
10 Midland The Patriot Apartments 10,022,381 Multifamily Garden N/A 320 Electric
12 RFC The Place Apartments 8,693,077 Multifamily Garden 2 230 Electric, Water
13 Midland The Phoenix Apartments 8,399,390 Multifamily Garden N/A 336 Electric
19 Midland Beau Rivage Apartments,
Phases II & III 7,009,355 Multifamily Garden N/A 192 Electric
23 Midland Northcastle Apartments 6,363,688 Multifamily Garden N/A 170 None
31 RFC Coriel Manor Apartments 5,470,891 Multifamily Garden N/A 245 Electric
36 CIBC Regstad II - Orchid Place 4,994,310 Multifamily Garden N/A 144 Electric
39 Midland Wood River Apartments 4,979,200 Multifamily Garden N/A 200 Electric
41 CIBC Avenue C Apartments 4,796,626 Multifamily Garden N/A 28 None
49 Midland The Glen Apartments 4,580,164 Multifamily Garden N/A 200 Electric
52 CIBC Trolley Commons/Willow Reed Village 4,395,064 Multifamily Garden N/A 120 Electric
58 RFC Crosswinds Apartment Homes 4,033,445 Multifamily Garden N/A 240 Electric, Gas
60 Midland Canal House Apartments 3,984,092 Multifamily Garden Yes 75 Electric, Gas, Cable
63 RFC Mountain Country Estates 3,971,899 Multifamily Garden N/A 150 Electric
71 Midland Georgetown Apartments 3,582,593 Multifamily Garden N/A 91 Electric, Water, Cable,
Sewer, Gas
72 Midland Heritage Park Apartments 3,505,487 Multifamily Garden N/A 88 Electric, Gas, Cable
74 RFC Coach & Four East Apartments 3,453,120 Multifamily Garden N/A 163 Electric
76 RFC Brook Run Apartments 3,345,638 Multifamily Garden N/A 82 Electric, Gas
77 RFC Green Meadows Apartments 3,326,198 Multifamily Garden N/A 152 Electric
79 RFC Fairmont and Monticello Apartments 3,269,700 Multifamily High-Rise 4 133 Electric
85 Midland Vintage Faire Apartments 2,994,035 Multifamily Garden N/A 112 None
87 Midland Woodbridge Apartments 2,936,349 Multifamily Garden N/A 70 Electric, Gas
89 Midland Deerwood at the Park Apartments 2,888,215 Multifamily Garden N/A 216 Electric
90 Midland Tukwila Estates 2,884,294 Multifamily Garden N/A 81 Electric, Gas, Cable
91 Midland Orchard Park Apartments 2,791,223 Multifamily Garden N/A 132 Trash, Cable
99 RFC Paloma Apartments 2,619,260 Multifamily Garden 2 58 None
101 Midland Windsong Apartments 2,495,068 Multifamily Garden N/A 90 None
105 Midland Cinnamon Square Apartments 2,455,128 Multifamily Garden N/A 192 Electric, Cable
106 Midland Bordeaux XI Apartments 2,435,861 Multifamily Garden N/A 120 Electric, Gas, Cable
109 RFC The Kingsbury Apartments 2,286,816 Multifamily High-Rise 1 53 Electric, Gas
110 Midland Crestwood Apartments 2,259,421 Multifamily Garden N/A 152 Electric, Cable
112 Midland Roseland Manor Duplexes 2,247,623 Multifamily Garden N/A 138 Electric, Water,
Sewer, Trash
114 Midland The Port Apartments 2,237,118 Multifamily Garden N/A 128 Electric, Water,
Sewer, Trash
118 Midland Ridgmar Crossroads Apartments 2,194,161 Multifamily Garden N/A 60 Electric, Gas
122 CIBC Hayes Community 2,127,818 Multifamily Garden N/A 182 None
124 Midland Devon Park Apartments 2,085,706 Multifamily Garden N/A 63 Electric
125 RFC Cross Keys Apartments 2,080,791 Multifamily Garden N/A 64 Electric
129 CIBC Timberfalls Apartments 1,995,308 Multifamily Mid-Rise N/A 100 Electric, Gas
132 RFC Carpenter Crest Apartments 1,966,690 Multifamily Garden N/A 105 Electric, Water
133 RFC Stanford Court 1,936,532 Multifamily Garden N/A 72 Electric
134 Midland Commons at Valdosta Apartments 1,910,589 Multifamily Garden N/A 96 Electric
136 Midland Quail Court Apartments 1,881,692 Multifamily Garden N/A 108 Electric, Gas, Cable
137 Midland Pacific Palms Apartments 1,869,524 Multifamily Garden N/A 107 All
141 Midland Westlake Village Apartments 1,798,357 Multifamily Garden N/A 140 Electric
145 RFC The Pinons Apartments 1,792,319 Multifamily Garden N/A 92 None
151 Midland Ashton Oaks Apartments 1,737,850 Multifamily Garden N/A 144 Electric
154 Midland Waterside Apartments 1,700,890 Multifamily Garden N/A 119 Electric
160 Midland Pleasant Valley Apartments 1,596,651 Multifamily Garden N/A 48 None
161 Midland West Wind Apartments Phase III 1,593,967 Multifamily Garden N/A 27 Electric, Water,
Sewer, Trash
165 RFC Laudonniere Apartments 1,528,966 Multifamily Garden N/A 13 Electric, Water, Gas
167 Midland Maybrook Apartments 1,509,131 Multifamily Garden N/A 60 Electric
172 Midland Parkway Gardens Apartments (D) 970,697 Multifamily Garden N/A 71 Electric
173 Midland Norvell Gardens Apartments (D) 449,124 Multifamily Garden N/A 26 Electric
177 Midland Ashwood Apartments 1,390,582 Multifamily Garden N/A 157 Electric
178 Midland Stonehurst Apartments 1,381,304 Multifamily Garden Yes 74 Electric, Cable
180 Midland Georgetown/Melrose Plaza Apartments 1,345,859 Multifamily Garden N/A 191 Electric
181 RFC Greenwood/St. Charles 1,318,476 Multifamily Garden N/A 40 Electric, Gas
183 Midland Cedarstone Apartments 1,262,864 Multifamily Garden N/A 36 Electricity, Water,
Sewer, Gas, Cable
184 Midland Southwest Manor Duplexes 1,261,392 Multifamily Garden N/A 20 All
186 RFC Andover Apartments 1,233,629 Multifamily Garden N/A 66 Electric, Water
193 RFC First View 1,138,956 Multifamily Garden N/A 62 Electric
195 RFC Woodlane Apartments 1,135,313 Multifamily Garden N/A 65 Electric
199 CIBC Town House South Apartments and
Danville Duplexes 1,098,796 Multifamily Mid-Rise N/A 100 Electric
IV-3
<PAGE>
<CAPTION>
APPENDIX IV
ADDITIONAL INFORMATION REGARDING MULTIFAMILY PROPERTIES - II
- ------------------------------------------------------------------------------------------------------------------------------------
Sub Utilities
Loan Cut-Off Date Property Property Tenants
No. Seller(1) Property Name(2) Balance Type Type Elevator Units Pay
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
200 RFC Red Deer Apartments 1,095,060 Multifamily Garden N/A 66 Electric
203 RFC Old Colony Apartments 1,039,739 Multifamily Garden N/A 34 Electric
205 RFC Rivercrest Apartments 1,031,476 Multifamily Garden N/A 69 Electric
206 Midland View Pointe Apartments 1,022,887 Multifamily Garden N/A 85 Electric
207 RFC 1340 21st Street NW 1,014,316 Multifamily Mid-Rise N/A 10 Water
208 RFC Rollingwood Apartments 1,009,641 Multifamily Garden N/A 64 Electric, Gas
209 Midland Greenbrier Apartments 998,103 Multifamily Garden N/A 45 Electric
210 Midland Lantana Apartments 997,950 Multifamily Garden N/A 42 Electric
211 RFC Pine Meadow Apartments 996,051 Multifamily Garden N/A 56 Electric
216 RFC Colonial-Excelsior 936,876 Multifamily Garden N/A 57 None
218 RFC Centennial Place Apartments 935,829 Multifamily Garden N/A 44 Electric, Water, Gas
219 RFC Charmony Place Apartments 928,839 Multifamily Garden N/A 54 None
220 RFC Wooded Acres Apartments 921,178 Multifamily Garden N/A 60 Electric
221 RFC Greenwood Villa Apartments 887,674 Multifamily Garden N/A 60 Electric
223 RFC Brighton Court Apartments 872,316 Multifamily Mid-Rise N/A 69 Water, Gas
224 Midland Bell Oaks Village Apartments 832,120 Multifamily Garden N/A 76 Electric
227 RFC 20 Green of Panorama 822,548 Multifamily Garden 1 16 Electric, Gas
228 RFC Cedargate Apartments 806,888 Multifamily Garden N/A 48 Electric
231 RFC Oak Glen Apartments 674,205 Multifamily Garden N/A 56 Electric, Gas
233 RFC Quail Creek Apartments 654,143 Multifamily Garden N/A 28 Electric
234 RFC University Apartments 595,643 Multifamily Garden N/A 43 Electric
235 Midland Irving Court Townhomes 543,935 Multifamily Garden N/A 32 Electric
236 RFC Grahamcrest Manor Apartments 515,700 Multifamily Garden N/A 49 None
237 RFC The Gorelick Apartments 494,925 Multifamily Garden N/A 12 Electric
239 RFC 519 Central Avenue 468,887 Multifamily Mid-Rise 1 16 Electric, Water, Gas
240 RFC Klingerman Apartments 436,351 Multifamily Garden N/A 13 Electric
241 RFC 901 SW 8th Avenue Apartments 430,193 Multifamily Garden N/A 24 Electric, Gas
242 RFC Meadow Pines Apartments 415,331 Multifamily Garden N/A 24 Electric
Total/Weighted Average $238,790,656 9,363
</TABLE>
IV-4
<PAGE>
Footnotes to Appendix IV
1 "Midland", "RFC" and "CIBC" denote Midland Loan Services, Inc.,
Residential Funding Corporation and CIBC Inc., respectively, as
Sellers.
2 Sets of Mortgage Loans that have identical alphabetical coding
designate multiple loans that are cross-collateralized and
cross-defaulted, while Mortgage Loans that have identical Roman
Numeral coding indicate multiple properties securing one note. Loan
No. 3, Prime Portfolio, is secured by six properties: 1301 East Tower
Road, 4300 Madison Street, 342-346 Carol Lane, 550 Kehoe Blvd, 343
Carol Lane and 388 Carol Lane. These properties are described in the
six rows immediately below the description of Loan No. 3, Prime
Portfolio.
IV-5
<PAGE>
<TABLE>
<CAPTION>
APPENDIX V
RESERVE ACCOUNT (ALL MORTGAGE LOANS)
- -----------------------------------------------------------------------------------------------------------
Initial Capital Annual
Insurance Tax Capital Expense Capital Initial Current
Escrow Escrow Expense Reserve Expense TI/LC TI/LC
Loan Seller Required Required Deposit Balance Deposit Deposit Balance
No. (1) Property Name(2) (12) (12) (13) (14) (15) (16) (17)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 RFC 21 Penn Plaza No Yes N/A N/A $4,289 $600,000 N/A
2 RFC Park Drive Manor Apts Yes Yes 11,917 N/A 11,917 N/A N/A
3 CIBC Prime Portfolio No No 56,644 $415,348 N/A N/A $476,203
CIBC 1301 East Tower Road (I) No No 0 N/A N/A N/A N/A
CIBC 4300 Madison Street (I) No No 0 N/A N/A N/A N/A
CIBC 342-346 Carol Lane (I) No No 0 N/A N/A N/A N/A
CIBC 550 Kehoe Blvd. (I) No No 0 N/A N/A N/A N/A
CIBC 343 Carol Lane (I) No No 0 N/A N/A N/A N/A
CIBC 388 Carol Lane (I) No No 0 N/A N/A N/A N/A
4 CIBC 1414 Avenue of the
Americas No Yes 929 929 11,148 N/A 16,667
5 CIBC 70 West 36th Street No Yes 1,763 1,762 21,144 N/A 12,500
6 RFC 7200 Leamington, LLC (A) Yes Yes 2,590 N/A 2,590 6,474 N/A
7 RFC 2201 Lundt, LLC (A) Yes Yes 1,778 N/A 1,778 4,446 N/A
8 RFC 1330 W. 43rd St. (A) Yes Yes 914 N/A 914 2,313 N/A
9 CIBC University Club
Apartments Yes Yes 2,438 2,438 39,000 N/A N/A
10 Midland The Patriot Apartments Yes Yes N/A N/A N/A N/A N/A
11 CIBC Acme Plaza (Cape May
Plaza) No No N/A 9,550 22,920 10,000 3,333
12 RFC The Place Apartments Yes Yes N/A N/A 4,485 N/A N/A
13 Midland The Phoenix Apartments Yes Yes N/A N/A N/A N/A N/A
14 RFC Glenwood Plaza No Yes N/A N/A 2,727 N/A N/A
15 CIBC 633 Third Avenue No Yes N/A N/A N/A N/A 3,333
16 Midland 148 State Street No Yes N/A 2,080 1,040 N/A 8,340
17 CIBC The Piers No Yes 932 932 11,186 N/A 2,750
18 CIBC North Point Center No Yes 1,196 1,196 1,196 N/A 3,167
19 Midland Beau Rivage Apartments,
Phases II & III Yes Yes N/A 1,400 1,400 N/A N/A
20 Midland Holiday Inn Express
& Suites Yes Yes N/A 8,995 N/A N/A N/A
21 CIBC Regal Cinemas No No N/A 5,447 10,893 N/A N/A
22 Midland Drake's Passage No Yes N/A N/A 547 N/A N/A
23 Midland Northcastle Apartments Yes Yes N/A 12,486 3,188 N/A N/A
24 RFC Giro Building Yes Yes 1,500 N/A 1,500 N/A N/A
25 Midland Longley Business Park Yes Yes N/A N/A 876 315,000 315,000
26 CIBC Sharpstown Court No Yes 1,057 491 12,684 1,000 N/A
27 Midland Temescal Village Plaza Yes Yes N/A N/A 882 N/A N/A
28 CIBC Plantation Properties No Yes 1,238 1,238 14,861 N/A 1,667
29 RFC Bernal Business Center No Yes N/A N/A 892 N/A N/A
30 Midland East 55TH Street Yes Yes N/A N/A N/A N/A N/A
31 RFC Coriel Manor Apartments Yes Yes N/A N/A 5,194 N/A N/A
32 RFC Gibbstown Shopping
Center Yes Yes N/A N/A 488 N/A N/A
33 Midland Plaza De Colores Yes Yes N/A 547 547 49,165 51,665
34 CIBC Lifeline Building Yes Yes N/A 9,849 16,884 70,000 105,000
35 RFC Deon Square Shopping Center Yes Yes N/A N/A 1,316 N/A N/A
36 CIBC Regstad II - Orchid Place Yes Yes 6,000 6,000 36,000 N/A N/A
37 CIBC 6 Gramatan Avenue Yes Yes 1,168 0 14,012 N/A 12,795
38 CIBC Eisenhower Industrial
Complex Yes Yes 743 800 9,600 1,333 1,333
39 Midland Wood River Apartments Yes Yes N/A 16,714 4,167 N/A N/A
40 RFC Old Navy - Linens 'N Things Yes Yes N/A N/A 682 N/A N/A
41 CIBC Avenue C Apartments No Yes 583 5,879 7,000 N/A N/A
42 RFC Pine Plaza Shopping Center Yes Yes N/A N/A 1,242 N/A N/A
43 RFC Shopps On the Pike Yes Yes N/A N/A 296 N/A N/A
44 Midland Shoppes of Kenwood Yes Yes N/A 683 136 150,000 151,921
45 Midland Country Club Place Shopping
Center Yes Yes N/A N/A 2,018 N/A N/A
V-I
<PAGE>
<CAPTION>
APPENDIX V
RESERVE ACCOUNT (ALL MORTGAGE LOANS)
- -----------------------------------------------------------------------------------------------------------
Initial Capital Annual
Insurance Tax Capital Expense Capital Initial Current
Escrow Escrow Expense Reserve Expense TI/LC TI/LC
Loan Seller Required Required Deposit Balance Deposit Deposit Balance
No. (1) Property Name(2) (12) (12) (13) (14) (15) (16) (17)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
46 RFC Space City Retail Center No Yes N/A N/A 651 N/A N/A
47 RFC Glen Cove Shopping Center Yes Yes N/A N/A 265 N/A N/A
48 RFC The Crossings No No N/A N/A 242 N/A N/A
49 Midland The Glen Apartments Yes Yes N/A 16,713 4,167 N/A N/A
50 Midland Lackland Self Storage No Yes N/A 7,582 1,510 N/A N/A
51 CIBC Fairfield Inn Yes Yes 5,357 5,357 64,289 N/A N/A
52 CIBC Trolley Commons/Willow Reed
Village Yes Yes 2,750 2,750 33,000 N/A N/A
53 CIBC Monarch Beach Plaza Yes Yes 392 392 4,707 50,000 2,772
54 Midland 95 John Muir Drive Yes Yes N/A 655 655 N/A 1,831
55 CIBC Northup West Office Park No No N/A 7,734 13,258 N/A 28,000
56 Midland MCI Building Yes Yes N/A 1,000 1,000 580,000 581,619
57 Midland Springtown Shopping Center Yes Yes N/A 3,145 784 N/A N/A
58 RFC Crosswinds Apartment Homes No No N/A N/A 4,500 N/A N/A
59 Midland Forrest Machinery Building Yes Yes N/A 3,060 1,018 N/A N/A
60 Midland Canal House Apartments Yes Yes N/A 6,361 1,586 N/A N/A
61 CIBC Warner Center Yes Yes 2,028 4,066 24,330 N/A N/A
62 Midland Woodside at the Office
Center Yes Yes N/A 2,423 604 30,000 48,762
63 RFC Mountain Country Estates Yes Yes N/A N/A 3,331 N/A N/A
64 CIBC One Dodge Drive No Yes 1,161 1,161 13,937 N/A 1,250
65 CIBC Kolonaki - Industrial (808) Yes Yes 919 919 5,514 N/A 10,513
66 Midland Rockford Ambulatory Surgery
Center (B) Yes Yes N/A 375 375 N/A N/A
67 Midland Rockford Medical Office
Building (B) Yes Yes N/A 215 215 N/A N/A
68 CIBC White's Crossing Plaza Yes Yes 2,341 N/A 14,044 22,500 36
69 CIBC Access Self Storage Yes Yes 625 1,253 7,500 N/A N/A
70 Midland South Park Office Complex Yes Yes N/A 1,053 526 100,000 103,717
71 Midland Georgetown Apartments Yes Yes N/A 11,435 1,896 N/A N/A
72 Midland Heritage Park Apartments Yes Yes N/A N/A 1,833 N/A N/A
73 Midland Northland Aluminum
Products, Inc. Yes Yes N/A N/A N/A N/A N/A
74 RFC Coach & Four East
Apartments No Yes N/A N/A 3,002 N/A N/A
75 CIBC Courtyard by Marriott Yes Yes 4,861 4,861 58,336 N/A N/A
76 RFC Brook Run Apartments Yes Yes 55,000 N/A N/A N/A N/A
77 RFC Green Meadows Apartments Yes Yes N/A N/A 3,167 N/A N/A
78 RFC Grand Plaza Properties,
Inc. Yes Yes N/A N/A 504 N/A N/A
79 RFC Fairmont and Monticello
Apartments Yes Yes N/A N/A 3,115 N/A N/A
80 CIBC Palmetto Gardens
Industrial Park Yes Yes 2,023 2,023 24,270 N/A N/A
81 Midland Lower Falls Landing Yes Yes N/A 2,318 1,159 N/A 2,000
82 RFC PML Office Building Yes Yes N/A N/A 423 25,000 N/A
83 Midland Concord Business Center Yes Yes N/A 1,502 1,502 N/A 3,000
84 Midland Middlebrook Business Park Yes Yes N/A N/A 832 N/A N/A
85 Midland Vintage Faire Apartments Yes Yes N/A 5,138 2,567 N/A N/A
86 CIBC 140 Gould Street No Yes N/A 5,975 7,967 170,000 N/A
87 Midland Woodbridge Apartments Yes Yes N/A 4,946 1,458 N/A N/A
88 RFC Pier One Imports Yes Yes N/A N/A 147 N/A N/A
89 Midland Deerwood at the Park
Apartments Yes Yes N/A 8,516 4,833 N/A N/A
90 Midland Tukwila Estates Yes Yes N/A 3,378 1,688 N/A N/A
91 Midland Orchard Park Apartments Yes Yes N/A 5,500 2,750 N/A N/A
92 Midland Airport Business Center Yes Yes N/A N/A 2,438 N/A N/A
93 Midland Holiday Inn, New Ulm Yes Yes N/A N/A N/A N/A N/A
94 RFC Monsey Mall Yes Yes N/A N/A 906 N/A N/A
95 Midland Silverdale Office Building Yes Yes N/A 2,708 675 N/A 21,731
96 RFC Habersham Shopping Center Yes Yes N/A N/A 806 N/A N/A
V-2
<PAGE>
<CAPTION>
APPENDIX V
RESERVE ACCOUNT (ALL MORTGAGE LOANS)
- -----------------------------------------------------------------------------------------------------------
Initial Capital Annual
Insurance Tax Capital Expense Capital Initial Current
Escrow Escrow Expense Reserve Expense TI/LC TI/LC
Loan Seller Required Required Deposit Balance Deposit Deposit Balance
No. (1) Property Name(2) (12) (12) (13) (14) (15) (16) (17)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
97 Midland Brattleboro North Shopping
Plaza No Yes N/A 8,186 1,357 N/A 44,579
98 Midland Crossroads Shopping Center No Yes N/A 200 200 N/A N/A
99 RFC Paloma Apartments No Yes 1,208 N/A 1,208 N/A N/A
100 Midland Mullica Woods Yes Yes N/A 750 375 N/A N/A
101 Midland Windsong Apartments Yes Yes N/A 2,325 2,325 N/A N/A
102 Midland Magnolia Park Shopping
Center Yes Yes N/A N/A N/A N/A 203,161
103 Midland Vollstedt Building Yes Yes N/A 771 385 N/A N/A
104 Midland Lackland Self Storage No Yes N/A 5,121 1,020 N/A N/A
105 Midland Cinnamon Square Apartments Yes Yes N/A N/A N/A N/A N/A
106 Midland Bordeaux XI Apartments Yes Yes N/A N/A 2,479 N/A N/A
107 Midland 5397 North Commerce (C) Yes Yes N/A 2,276 377 N/A N/A
108 Midland Gabbert Building (C) Yes Yes N/A 1,608 267 N/A N/A
109 RFC The Kingsbury Apartments Yes Yes N/A N/A 1,104 N/A N/A
110 Midland Crestwood Apartments Yes Yes N/A 3,167 3,167 N/A N/A
111 CIBC Dicks Clothing and
Sporting Goods No No 580 563 6,957 N/A N/A
112 Midland Roseland Manor Duplexes Yes Yes N/A N/A 2,875 N/A N/A
113 Midland Mount View Office Building Yes Yes N/A 1,105 220 N/A 8,369
114 Midland The Port Apartments Yes Yes N/A 16,069 3,200 N/A N/A
115 RFC Forman Mills No Yes N/A N/A 598 50,000 N/A
116 RFC 7900 Beech Daly &
6810 Metroplex Drive Yes Yes N/A N/A 870 1,414 N/A
117 RFC Arrowhead Fountain Center No Yes N/A N/A 172 N/A N/A
118 Midland Ridgmar Crossroads
Apartments Yes Yes N/A 4,245 1,415 N/A N/A
119 RFC Renaissance West Shopping
Center Yes No N/A N/A N/A 21,000 N/A
120 CIBC Lexington Center Yes Yes 1,027 1,027 12,323 30,000 3,649
121 Midland State of Oregon Job
Council Buildings No No N/A 2,378 461 N/A 9,203
122 CIBC Hayes Community Yes Yes 5,308 5,396 64,752 N/A N/A
123 RFC Today's Man - Deptford No Yes N/A N/A 320 100,000 N/A
124 Midland Devon Park Apartments Yes Yes N/A 1,117 976 N/A N/A
125 RFC Cross Keys Apartments Yes Yes N/A N/A 1,443 N/A N/A
126 CIBC White Oak Professional
Building No Yes 365 365 4,384 833 833
127 RFC Scripps Mesa Shopping
Center Yes Yes N/A N/A 871 N/A N/A
128 Midland Pacific Place No Yes N/A N/A 78 N/A N/A
129 CIBC Timberfalls Apartments No Yes 2,083 4,167 25,000 N/A N/A
130 Midland 110 American Boulevard Yes Yes N/A 329 66 N/A 12,859
131 Midland Handy Lock Mini Storage Yes Yes N/A 3,337 832 N/A N/A
132 RFC Carpenter Crest Apartments Yes Yes 2,327 N/A 2,327 N/A N/A
133 RFC Stanford Court Yes Yes 32,000 N/A 1,596 N/A N/A
134 Midland Commons at Valdosta
Apartments Yes Yes N/A 10,040 2,000 N/A N/A
135 CIBC Kolonaki - Sausalito (579) Yes Yes 165 165 991 2,284 2,284
136 Midland Quail Court Apartments Yes Yes N/A 15,856 2,250 N/A N/A
137 Midland Pacific Palms Apartments Yes Yes N/A 36,625 2,809 N/A N/A
138 Midland Village at Cambridge Self
Storage Yes Yes N/A N/A 1,013 N/A N/A
139 CIBC Kolonaki - San Francisco
(1723) Yes Yes 442 442 2,649 N/A 2,698
140 Midland Providence Office Building Yes Yes N/A 777 777 N/A 2,083
141 Midland Westlake Village Apartments Yes Yes N/A 5,838 2,917 N/A N/A
142 CIBC Days Inn - Anderson Yes Yes 2,723 N/A 32,671 N/A N/A
143 RFC Hollywood Video Portfolio Yes Yes N/A N/A 174 N/A N/A
144 CIBC Hampton Inn - Mary Esther Yes Yes 3,439 N/A 41,262 N/A N/A
145 RFC The Pinons Apartments Yes Yes N/A N/A 1,938 N/A N/A
146 Midland Foreside Place Yes Yes N/A 4,009 569 N/A 20,553
147 Midland 21036 Triple Seven Road Yes Yes N/A 350 175 N/A 3,703
V-3
<PAGE>
<CAPTION>
APPENDIX V
RESERVE ACCOUNT (ALL MORTGAGE LOANS)
- -----------------------------------------------------------------------------------------------------------
Initial Capital Annual
Insurance Tax Capital Expense Capital Initial Current
Escrow Escrow Expense Reserve Expense TI/LC TI/LC
Loan Seller Required Required Deposit Balance Deposit Deposit Balance
No. (1) Property Name(2) (12) (12) (13) (14) (15) (16) (17)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
148 RFC Central Park Southwest Yes Yes N/A N/A N/A N/A N/A
149 Midland Best Storage Yes Yes N/A 893 893 N/A N/A
150 Midland Forest Hills Shopping
Center Yes Yes N/A 5,374 761 N/A 7,342
151 Midland Ashton Oaks Apartments Yes Yes N/A 18,095 3,000 N/A N/A
152 Midland Siesta Hills Shopping
Center Yes Yes N/A N/A 1,117 N/A N/A
153 Midland Holiday Inn Express Yes Yes N/A 9,495 N/A N/A N/A
154 Midland Waterside Apartments Yes Yes N/A N/A 2,876 N/A N/A
155 Midland Village Square Shopping
Center Yes Yes N/A 1,538 768 N/A 1,001
156 Midland Century Mobile Home Park Yes Yes N/A N/A N/A N/A N/A
157 Midland Rite Aid Pharmacy Yes No N/A 138 138 N/A N/A
158 RFC Hobe Village Mobile Home
Park Yes Yes 0 N/A 517 N/A N/A
159 Midland Via Linda Plaza Yes Yes N/A 2,256 374 N/A 3,018
160 Midland Pleasant Valley Apartments Yes Yes N/A 2,362 1,180 N/A N/A
161 Midland West Wind Apartments
Phase III Yes Yes N/A 812 203 N/A N/A
162 RFC S&R Shopping Center Yes Yes N/A N/A 308 N/A N/A
163 Midland Edwards Village Center No Yes N/A 399 133 N/A 4,008
164 Midland Comfort Inn Yes Yes N/A 7,573 N/A N/A N/A
165 RFC Laudonniere Apartments Yes Yes N/A N/A 271 N/A N/A
166 RFC Whaley's Shopping Center Yes Yes N/A N/A 358 N/A N/A
167 Midland Maybrook Apartments Yes Yes N/A 3,671 1,229 N/A N/A
168 RFC Staples No No N/A N/A 300 N/A N/A
169 RFC The Retail Group Yes Yes N/A N/A 154 100,000 N/A
170 Midland Tucker Industries Building Yes Yes N/A N/A 355 N/A N/A
171 Midland Airborne Express No No N/A 209 208 N/A 1,002
172 Midland Parkway Gardens
Apartments (D) Yes Yes N/A 1,479 1,479 N/A N/A
173 Midland Norvell Gardens
Apartments (D) Yes Yes N/A 542 542 N/A N/A
174 RFC Smith Retail Portfolio Yes Yes N/A N/A 277 N/A N/A
175 RFC Stor-A-Lot Self Storage Yes Yes 10,572 N/A 881 N/A N/A
176 CIBC CVS Smithtown No No N/A N/A N/A N/A N/A
177 Midland Ashwood Apartments Yes Yes N/A 11,143 3,660 N/A N/A
178 Midland Stonehurst Apartments Yes Yes N/A 2,751 548 N/A 2,907
179 Midland Storage Max-Yuma Yes Yes N/A 605 605 N/A N/A
180 Midland Georgetown/Melrose
Plaza Apartments Yes Yes N/A 8,150 4,075 N/A N/A
181 RFC Greenwood/St. Charles Yes Yes N/A N/A 697 N/A N/A
182 Midland South Ogden Plaza Yes Yes N/A 1,476 1,476 N/A 2,084
183 Midland Cedarstone Apartments Yes Yes N/A 4,522 750 N/A N/A
184 Midland Southwest Manor Duplexes Yes Yes N/A 500 500 N/A N/A
185 Midland Super 8 Motel Yes Yes N/A N/A N/A N/A N/A
186 RFC Andover Apartments Yes Yes N/A N/A N/A N/A N/A
187 Midland Southwood Plaza Office
Building Yes Yes N/A 423 423 24,000 26,088
188 Midland The Trade Center Yes Yes N/A 1,047 348 N/A 5,011
189 RFC Regency Mobile Home Park Yes Yes N/A N/A 1,054 N/A N/A
190 RFC Village Green Shopping
Center No Yes N/A N/A N/A N/A N/A
191 RFC Center on Memorial Yes Yes N/A N/A 130 N/A N/A
192 RFC River Road Mobile Home
Park Yes Yes N/A N/A N/A N/A N/A
193 RFC First View Yes Yes N/A N/A 1,437 N/A N/A
194 Midland Payne Office Building Yes Yes N/A 447 447 N/A 583
195 RFC Woodlane Apartments Yes Yes N/A N/A N/A N/A N/A
196 Midland 507 Capital Court (E) Yes Yes N/A 308 44 N/A 3,541
197 Midland 513 Capitol Court (E) Yes Yes N/A 308 44 N/A 6,242
198 Midland 501 Capital Ct. NE (E) Yes Yes N/A 308 44 N/A 10,928
V-4
<PAGE>
<CAPTION>
APPENDIX V
RESERVE ACCOUNT (ALL MORTGAGE LOANS)
- -----------------------------------------------------------------------------------------------------------
Initial Capital Annual
Insurance Tax Capital Expense Capital Initial Current
Escrow Escrow Expense Reserve Expense TI/LC TI/LC
Loan Seller Required Required Deposit Balance Deposit Deposit Balance
No. (1) Property Name(2) (12) (12) (13) (14) (15) (16) (17)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
199 CIBC Town House South Apartments
and Danville Duplexes Yes Yes 2,500 2,500 30,000 N/A N/A
200 RFC Red Deer Apartments Yes Yes N/A N/A N/A N/A N/A
201 Midland Crown Plaza Office Building Yes Yes N/A 2,401 398 N/A 10,055
202 RFC 535 Manufacturers Drive Yes Yes N/A N/A 833 60,000 N/A
203 RFC Old Colony Apartments Yes Yes 567 N/A 567 N/A N/A
204 RFC Franklin Avenue Building Yes Yes N/A N/A N/A N/A N/A
205 RFC Rivercrest Apartments Yes Yes N/A N/A N/A N/A N/A
206 Midland View Pointe Apartments Yes Yes N/A 1,913 1,913 N/A N/A
207 RFC 1340 21st Street NW Yes Yes 0 N/A 0 N/A N/A
208 RFC Rollingwood Apartments Yes Yes N/A N/A N/A N/A N/A
209 Midland Greenbrier Apartments Yes Yes N/A 938 938 N/A N/A
210 Midland Lantana Apartments Yes Yes N/A 875 875 N/A N/A
211 RFC Pine Meadow Apartments Yes Yes N/A N/A N/A N/A N/A
212 Midland Commerce II Business Park Yes Yes N/A N/A N/A N/A N/A
213 Midland Office Park at Erindale Yes Yes N/A 321 321 N/A 833
214 Midland Fletcher Auto Mall Yes Yes N/A 342 342 35,000 35,110
215 RFC Spurwood Office Yes Yes N/A N/A 380 N/A N/A
216 RFC Colonial-Excelsior Yes Yes N/A N/A N/A N/A N/A
217 Midland 170 South River Road Yes Yes N/A 360 360 N/A 667
218 RFC Centennial Place
Apartments Yes Yes 1,269 N/A 1,269 N/A N/A
219 RFC Charmony Place Apartments Yes Yes N/A N/A N/A N/A N/A
220 RFC Wooded Acres Apartments Yes Yes N/A N/A 1,250 N/A N/A
221 RFC Greenwood Villa Apartments Yes Yes N/A N/A 1,500 N/A N/A
222 RFC Lincolnwood Office Building Yes Yes N/A N/A 290 N/A N/A
223 RFC Brighton Court Apartments Yes Yes N/A N/A 244 N/A N/A
224 Midland Bell Oaks Village Apartments Yes Yes N/A N/A 1,583 N/A N/A
225 RFC 61-71 Long Lane Yes Yes N/A N/A 388 40,000 N/A
226 Midland Prairie Village Mobile Home
Park Yes Yes N/A 333 167 N/A N/A
227 RFC 20 Green of Panorama Yes Yes N/A N/A N/A N/A N/A
228 RFC Cedargate Apartments Yes Yes N/A N/A N/A N/A N/A
229 RFC Copperfield Landing, LP No Yes N/A N/A N/A N/A N/A
230 Midland ICCA Building Yes Yes N/A 685 97 N/A 2,643
231 RFC Oak Glen Apartments Yes Yes 12,133 N/A 1,213 N/A N/A
232 RFC North Miami Industrial Yes Yes N/A N/A N/A N/A N/A
233 RFC Quail Creek Apartments Yes Yes N/A N/A N/A N/A N/A
234 RFC University Apartments Yes Yes N/A N/A 1,075 N/A N/A
235 Midland Irving Court Townhomes Yes Yes N/A 667 667 N/A N/A
236 RFC Grahamcrest Manor
Apartments Yes Yes 9,208 N/A 1,633 N/A N/A
237 RFC The Gorelick Apartments Yes Yes 381 N/A 381 N/A N/A
238 Midland 325-339 North Dr Yes Yes N/A N/A N/A N/A 4,524
239 RFC 519 Central Avenue Yes Yes 388 N/A 388 N/A N/A
240 RFC Klingerman Apartments Yes Yes 336 N/A 336 N/A N/A
241 RFC 901 SW 8th Avenue
Apartments Yes Yes 482 N/A 482 N/A N/A
242 RFC Meadow Pines Apartments Yes Yes 552 N/A 552 N/A N/A
V-5
</TABLE>
<PAGE>
Footnotes to Appendix V
1 "Midland", "RFC" and "CIBC" denote Midland Loan Services, Inc., Residential
Funding Corporation and CIBC Inc., respectively, as Sellers.
2 Sets of Mortgage Loans that have identical alphabetical coding designate
multiple loans that are cross-collateralized and cross-defaulted, while
Mortgage Loans that have identical Roman Numeral coding indicate multiple
properties securing one note. Loan No. 3, Prime Portfolio, is secured by
six properties: 1301 East Tower Road, 4300 Madison Street, 342-346 Carol
Lane, 550 Kehoe Blvd, 343 Carol Lane and 388 Carol Lane. These properties
are described in the six rows immediately below the description of Loan No.
3, Prime Portfolio.
3 For "Insurance Escrow Required" and "Tax Escrow Required", a "yes"
indicates that the lender requires on-going property hazard insurance
escrows and real estate tax escrows, respectively, in amounts adequate to
pay real estate tax bills and property hazard insurance bills, when due.
4 Initial Capital Expense Deposit indicates the amount the lender collected
(or, in certain cases, a letter of credit received), for deposit into the
related property's Capital Expense account at loan closing to fully or
partially fund estimated, property-related deferred maintenance costs
and/or on-going estimated capital expenses.
5 Capital Expense Reserve Balance indicates the balance of the related
property's Capital Expense account (or, in certain cases, a letter of
credit balance), as of June 1, 1999. In certain cases, balances will not be
replenished upon a release of funds.
6 Annual Capital Expense Deposit indicates the amount the lender currently
collects annually, on a monthly basis, for deposit into the related
property's Capital Expense account. In certain cases, the related deposits
will end upon certain events (for example, certain tenant renewals), or
upon certain dates, or are capped at certain amounts. In certain cases,
annual collection amounts may change, such as in the case of Hospitality
Mortgage Loans which generally base collections on related-property
revenues.
7 Initial TI/LC Deposit indicates the amount the lender collected (or, in
certain cases, a letter of credit received), for deposit into the related
property's Tenant Improvement/Leasing Commission Capital Expense account at
loan closing.
8 Current TI/LC Balance indicates the balance of the related property's
Tenant Improvement/Leasing Commission Capital Expense account (or, in
certain cases, a letter of credit balance), as of June 1, 1999. In certain
cases, balances will not be replenished upon a release of funds.
V-6
<PAGE>
ABN AMRO Statement Date: 08/15/99
LaSalle Bank N.A. Payment Date: 08/15/99
Prior Payment: N/A
Record Date: 07/30/99
Commercial Mortgage Acceptance Corp.
Midland Loan Services Inc. as Master Servicer
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
Administrator:
Kori Titon (800) 246-5761
135 S. LaSalle Street Suite 1625 ABN AMRO Acct: 99-9999-99-9 WAC:
Chicago, IL 60603 WAMM:
Number of Pages
---------------
Table of Contents 1
REMIC Certificate Report 1
Other Related Information 2
Asset Backed Facts Sheets 1
Delinquency Loan Detail 1
Mortgage Loan Characteristics 2
Loan Level Listing 1
---
Total Pages Included In This Package 9
---
Specially Serviced Loan Detail Appendix A
Modified Loan Detail Appendix B
Realized Loss Detail Appendix C
Page 1 of 9
<PAGE>
ABN AMRO Statement Date: 08/15/99
LaSalle Bank N. A. Payment Date: 08/15/99
Prior Payment: N/A
Record Date: 07/30/99
Commercial Mortgage Acceptance Corp.
Midland Loan Services Inc. as Master Servicer
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
Administrator:
Kori Titon (800) 246-5761
135 S. LaSalle Street Suite 1625 ABN AMRO Acct: 99-9999-99-9 WAC:
Chicago, IL 60603 WAMM:
<TABLE>
<CAPTION>
Original Opening Principal Principal Negative Closing Interest Interest Pass-Through
Class Face Value(1) Balance Payment Adj. Or Loss Amortization Balance Payment Adjustment Rate (2)
CUSIP Per $1,000 Per $1,000 Per $1,000 Per $1,000 Per $1,000 Per $1,000 Per $1,000 Per $1,000 Next Rate (3)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total P&I Payment 0.00
</TABLE>
Notes: (1) N denotes notional balance not included in total
(2) Interest Paid minus Interest Adjustment minus Deferred Interest
equals Accrual
(3) Estimated
Page 2 of 9
<PAGE>
ABN AMRO Statement Date: 08/15/99
LaSalle Bank N.A. Payment Date: 08/15/99
Prior Payment: N/A
Record Date: 07/30/99
Commercial Mortgage Acceptance Corp.
Midland Loan Services Inc. as Master Servicer
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
Administrator:
Kori Titon (800) 246-5761
135 S. LaSalle Street Suite 1625 ABN AMRO Acct: 99-9999-99-9
Chicago, IL 60603
Other Related Information
Page 3 of 9
<PAGE>
ABN AMRO Statement Date: 08/15/99
LaSalle Bank N.A. Payment Date: 08/15/99
Prior Payment: N/A
Record Date: 07/30/99
Commercial Mortgage Acceptance Corp.
Midland Loan Services Inc. as Master Servicer
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
Administrator:
Kori Titon (800) 246-5761
135 S. LaSalle Street Suite 1625 ABN AMRO Acct: 99-9999-99-9
Chicago, IL 60603
Other Related Information
Page 4 of 9
<PAGE>
ABN AMRO Statement Date: 08/15/99
LaSalle Bank N.A. Payment Date: 08/15/99
Prior Payment: N/A
Record Date: 07/30/99
Commercial Mortgage Acceptance Corp.
Midland Loan Services Inc. as Master Servicer
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
Administrator:
Kori Titon (800) 246-5761
135 S. LaSalle Street Suite 1625 ABN AMRO Acct: 99-9999-99-9
Chicago, IL 60603
<TABLE>
<CAPTION>
Curr
Delinq Delinq Delinq Foreclosure/ Weighted
Distribution 1 Month 2 months 3+ Months Bankruptcy REO Modifications Prepayments Average
Date # Balance # Balance # Balance # Balance # Balance # Balance # Balance Coupon Remit
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
08/15/98 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0.00% 0.000% 0.00% 0.000% 0.00% 0.000% 0.00% 0.000% 0.00% 0.000% 0.00% 0.000% 0.000% 0.000%
</TABLE>
Note: Foreclosure and REO Totals are Included in the
Appropriate Delinquency Aging Category
Page 5 of 9
<PAGE>
ABN AMRO Statement Date: 08/15/99
LaSalle Bank N.A. Payment Date: 08/15/99
Prior Payment: N/A
Record Date: 07/30/99
Commercial Mortgage Acceptance Corp.
Midland Loan Services Inc. as Master Servicer
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
Administrator:
Kori Titon (800) 246-5761
135 S. LaSalle Street Suite 1625 ABN AMRO Acct: 99-9999-99-9
Chicago, IL 60603
Delinquent Loan Detail
<TABLE>
<CAPTION>
Paid Outstanding Out. Property Special
Disclosure Doc Thru Current P&I P&I Protection Advance Servicer Foreclosure Bankruptcy REO
Control # Date Advance Advances** Advances Description (1) Transfer Date Date Date Date
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
A. P&I Advance - Loan in Grace Period 1. P&I Advance - Loan delinquent 1 month
2. P&I Advance - Loan delinquent 2 months
B. P&I Advance - Late Payment but 3. P&I Advance - Loan delinquent 3 months or more
< one month delinq 4. Matured Balloon/Assumed Scheduled Payment
</TABLE>
** Outstanding P&I Advances include the current period P&I Advance
Page 6 of 9
<PAGE>
ABN AMRO Statement Date: 08/15/99
LaSalle Bank N.A. Payment Date: 08/15/99
Prior Payment: N/A
Record Date: 07/30/99
Commercial Mortgage Acceptance Corp.
Midland Loan Services Inc. as Master Servicer
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
Administrator:
Kori Titon (800) 246-5761
135 S. LaSalle Street Suite 1625 ABN AMRO Acct: 99-9999-99-9
Chicago, IL 60603
Pool Total
Distribution of Principal Balances
<TABLE>
<CAPTION>
- ------------------------------------------- ----------------------------------------------------------------------------------------
(2) Current Scheduled Number of (2) Scheduled Based on
Balances Loans Balance Balance
- ------------------------------------------- ----------------------------------------------------------------------------------------
<S> <C> <C>
$0 to $500,000
$500,000 to $1,000,000
$1,000,000 to $1,500,000
$1,500,000 to $2,000,000
$2,000,000 to $2,500,000
$2,500,000 to $3,000,000
$3,000,000 to $3,500,000
$3,500,000 to $4,000,000
$4,000,000 to $5,000,000
$5,000,000 to $6,000,000
$6,000,000 to $7,000,000
$7,000,000 to $8,000,000
$8,000,000 to $9,000,000
$9,000,000 to $10,000,000
$10,000,000 to $11,000,000
$11,000,000 to $12,000,000
$12,000,000 to $13,000,000
$13,000,000 to $14,000,000
$14,000,000 to $15,000,000
$15,000,000 & Above
- ------------------------------------------- --------------------------- ------------------------------------- ----------------------
Total 0 0 0.00%
- ------------------------------------------- --------------------------- ------------------------------------- ----------------------
Average Scheduled Balance is 0
Maximum Scheduled Balance is 0
Minimum Scheduled Balance is 0
</TABLE>
<TABLE>
Distribution of Property Types
<CAPTION>
- ------------------------------------ ---------------------------------- ---------------------------------- -------------------------
Property Types Number of Loans (2) Scheduled Balance Based on Balance
- ------------------------------------ ---------------------------------- ---------------------------------- -------------------------
<S> <C> <C> <C>
- ------------------------------------ ---------------------------------- ---------------------------------- -------------------------
Total 0 0 0.00%
- ------------------------------------ ---------------------------------- ---------------------------------- -------------------------
</TABLE>
<TABLE>
Distribution of Mortgage Interest Rates
<CAPTION>
- ------------------------------------ ---------------------------------- ---------------------------------- -------------------------
Current Mortgage Number of Loans (2)Scheduled Balance Based on Balance
Interest Rate
- ------------------------------------ ---------------------------------- ---------------------------------- -------------------------
<S> <C>
7.000% or less
7.000% to 7.125%
7.125% to 7.375%
7.375% to 7.625%
7.625% to 7.875%
7.875% to 8.125%
8.125% to 8.375%
8.375% to 8.625%
8.625% to 8.875%
8.875% to 9.125%
9.125% to 9.375%
9.375% to 9.625%
9.625% to 9.875%
9.875% to 10.125%
10.125% & Above
- ------------------------------------ ---------------------------------- ---------------------------------- -------------------------
Total 0 0 0.00%
- ------------------------------------ ---------------------------------- ---------------------------------- -------------------------
W/Avg Mortgage Interest Rate is 0.0000%
Minimum Mortgage Interest Rate is 0.0000%
Maximum Mortgage Interest Rate is 0.0000%
</TABLE>
<TABLE>
Geographic Distribution
<CAPTION>
- ------------------------------------ ---------------------------------- ---------------------------------- -------------------------
Geographic Location Number of Loans (2) Scheduled Balance Based on Balance
- ------------------------------------ ---------------------------------- ---------------------------------- -------------------------
<S> <C> <C> <C> <C>
California
Maryland
Virginia
Georgia
Florida
New Jersey
Arizona
Pennsylvania
Texas
Rhode Island
North Carolina
New York
Kentucky
Utah
Connecticut
- ------------------------------------ ---------------------------------- ---------------------------------- -------------------------
Total 0 0 0.00%
- ------------------------------------ ---------------------------------- ---------------------------------- -------------------------
Page 7 of 9
</TABLE>
<PAGE>
ABN AMRO Statement Date: 08/15/99
LaSalle Bank N.A. Payment Date: 08/15/99
Prior Payment: N/A
Record Date: 07/30/99
Commercial Mortgage Acceptance Corp.
Midland Loan Services Inc. as Master Servicer
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
Administrator:
Kori Titon (800) 246-5761
135 S. LaSalle Street Suite 1625 ABN AMRO Pool Total Acct: 99-9999-99-9
Chicago, IL 60603
Loan Seasoning
<TABLE>
<CAPTION>
- ------------------------------------ ---------------------------------- ---------------------------------- -------------------------
Number of Years Number of Loans (2) Scheduled Balance Based on Balance
- ------------------------------------ ---------------------------------- ---------------------------------- -------------------------
<S> <C> <C> <C> <C>
- ------------------------------------ ---------------------------------- ---------------------------------- -------------------------
Weighted Average Seasoning is 0.0
</TABLE>
<TABLE>
Distribution of Remaining Term
Fully Amortizing
<CAPTION>
- ------------------------------------ ---------------------------------- ---------------------------------- -------------------------
Fully Amortizing Number of Loans (2) Scheduled Balance Based on Balance
Mortgage Loans
- ------------------------------------ ---------------------------------- ---------------------------------- -------------------------
<S> <C>
60 months or less
61 to 120 months
121 to 180 months
181 to 240 months
240 to 360 months
- ------------------------------------ ---------------------------------- ---------------------------------- -------------------------
Total 0 0 0.00%
- ------------------------------------ ---------------------------------- ---------------------------------- -------------------------
Weighted Average Months to Maturity is 0
</TABLE>
<TABLE>
Distribution of DSCR
<CAPTION>
- ------------------------------------ ---------------------------------- ---------------------------------- -------------------------
Debt Service Number of Loans (2) Scheduled Balance Based on Balance
Coverage Ratio (1)
- ------------------------------------ ---------------------------------- ---------------------------------- -------------------------
<S> <C>
0.500 or less
0.500 or 0.l625
0.625 to 0.750
0.750 to 0.875
0.875 to 1.000
1.000 to 1.125
1.125 to 1.250
1.250 to 1.375
1.375 to 1.500
1.500 to 1.625
1.625 to 1.750
1.750 to 1.875
1.875 to 2.000
2.000 to 2.125
2.125 & above
Unknown
- ------------------------------------ ---------------------------------- ---------------------------------- -------------------------
Total 0 0 0.00%
- ------------------------------------ ---------------------------------- ---------------------------------- -------------------------
Weighted Average Debt Service Coverage Rate is 0.000
</TABLE>
<TABLE>
Distribution of Amortization Type
<CAPTION>
- ------------------------------------ ---------------------------------- ---------------------------------- -------------------------
Amortization Type Number of Loans (2) Scheduled Balance Based on Balance
- ------------------------------------ ---------------------------------- ---------------------------------- -------------------------
<S> <C> <C> <C> <C>
- ------------------------------------ ---------------------------------- ---------------------------------- -------------------------
Total 0 0 0.00%
- ------------------------------------ ---------------------------------- ---------------------------------- -------------------------
</TABLE>
<TABLE>
Distribution of Remaining Term Balloon Loans
<CAPTION>
- ------------------------------------ ---------------------------------- ---------------------------------- -------------------------
Balloon
Mortgage Loans Number of Loans (2) Scheduled Balance Based on Balance
- ------------------------------------ ---------------------------------- ---------------------------------- -------------------------
<S> <C>
12 months or less
13 to 14 months
25 to 36 months
37 to 48 months
49 to 60 months
61 to 120 months
121 to 180 months
181 to 240 months
- ------------------------------------ ---------------------------------- ---------------------------------- -------------------------
Total 0 0 0.00%
- ------------------------------------ ---------------------------------- ---------------------------------- -------------------------
Weighted Average Months to Maturity is 0
</TABLE>
<TABLE>
NOI Aging
<CAPTION>
- ------------------------------------ ---------------------------------- ---------------------------------- -------------------------
NOI Date Number of Loans (2) Scheduled Balance Based on Balance
- ------------------------------------ ---------------------------------- ---------------------------------- -------------------------
<S> <C>
1 year or less
1 to 2 years
2 Years or More
Unknown
- ------------------------------------ ---------------------------------- ---------------------------------- -------------------------
Total 0 0 0.00%
- ------------------------------------ ---------------------------------- ---------------------------------- -------------------------
</TABLE>
(1) Debt Service Coverage Ratios are calculated as described in the
prospectus, values are updated periodically as new NOI figures became
available from borrowers on an asset level.
Neither the Trustee, Servicer, Special Servicer or Underwriter makes
any representation as to the accuracy of the data provided by the
borrower for this calculation.
Page 8 of 9
<PAGE>
ABN AMRO Statement Date: 08/15/99
LaSalle Bank N.A. Payment Date: 08/15/99
Prior Payment: N/A
Record Date: 07/30/99
Commercial Mortgage Acceptance Corp.
Midland Loan Services Inc. as Master Servicer
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
Administrator:
Kori Titon (800) 246-5761
135 S. LaSalle Street Suite 1625 ABN AMRO Acct: 99-9999-99-9
Chicago, IL 60603
<TABLE>
Loan Level Detail
<CAPTION>
- ------------ ------------- ----------- ---------- ------- ------ --------- -------- ------- ------ ---------- ----------- --------
Appraisal Property Operating Ending Loan
Disclosure Reduction Type Maturity Statement Principal Note Scheduled Prepayment Status
Control # Amounts Code Date DSCR NOI Date Balance Rate P&I Prepayment Date Code (1)
- ------------ ------------- ----------- ---------- ------- ------ -------- ---------- ------- ------ ---------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
*NOI and DSCR, if available and reportable under the terms of the trust
agreement, are based on information obtained from the related borrower, and no
other party to the agreement shall be held liable for the accuracy or
methodology used to determine such figures.
- ------------------------------------------------------------------------------------------------------------------------------------
(1) Legend: A. P&I Adv. - in Grace Period 1. P&I Adv - delinquent 1 month
2. P&I Adv - delinquent 2 months
3. P&I Adv. - delinquent 3+ months
4. Mat. Balloon/Assumed P&I
B. P&I Adv. - < one month delinq 5. Prepaid in Full
6. Specially Serviced
7. Foreclosure
8. Bankruptcy
9. REO
10. DPO
11. Modification
- ------------------------------------------------------------------------------------------------------------------------------------
Page 9 of 9
</TABLE>
<PAGE>
ABN AMRO Statement Date: 08/15/99
LaSalle Bank N.A. Payment Date: 08/15/99
Prior Payment: N/A
Record Date: 07/31/99
Commercial Mortgage Acceptance Corp.
Midland Loan Services Inc. as Master Servicer
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
Administrator:
Kori Titon (800) 246-5761
135 S. LaSalle Street Suite 1625 ABN AMRO Acct: 99-9999-99-9
Chicago, IL 60603
Specially Serviced Loan Detail
<TABLE>
<CAPTION>
- -------------------- -------------------- ----------- ------------ --------------- ---------------- --------------------------------
Beginning Specially Comments
Disclosure Scheduled Interest Maturity Property Serviced
Control # Balance Rate Date Type Status Code (1)
- -------------------- -------------------- ----------- ------------ --------------- ---------------- --------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -------------------- -------------------- ----------- ------------ --------------- ---------------- --------------------------------
- -------------------- -------------------- ----------- ------------ --------------- ---------------- --------------------------------
(1) Legend:
1) Request for wavier of Prepayment Penalty 4) Loan with Borrower Bankruptcy 7) Loans Paid Off
2) Payment Default 5) Loan in Process of Foreclosure 8) Loans Returned to Master Servicer
3) Request for Loan Modification or Workout 6) Loan now REO Property
Appendix A
</TABLE>
<PAGE>
ABN AMRO Statement Date: 08/15/99
LaSalle Bank N.A. Payment Date: 08/15/99
Prior Payment: N/A
Record Date: 07/31/99
Commercial Mortgage Acceptance Corp.
Midland Loan Services Inc. as Master Servicer
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
Administrator:
Kori Titon (800) 246-5761
135 S. LaSalle Street Suite 1625 ABN AMRO Acct: 99-9999-99-9
Chicago, IL 60603
<TABLE>
<CAPTION>
Modified Loan Detail
<S> <C> <C> <C>
- --------------------- ---------------------- ---------------------------------------------------------------------------------------
Disclosure Control # Modification Date Modification Description
- --------------------- ---------------------- ---------------------------------------------------------------------------------------
- --------------------- ---------------------- ---------------------------------------------------------------------------------------
Appendix B
</TABLE>
<PAGE>
ABN AMRO Statement Date: 08/15/99
LaSalle National Bank Payment Date: 08/15/99
Prior Payment: N/A
Record Date: 07/31/99
Commercial Mortgage Acceptance Corp.
Midland Loan Services Inc. as Master Servicer
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
Administrator:
Kori Titon (800) 246-5761
135 S. LaSalle Street Suite 1625 ABN AMRO Acct: 99-9999-99-9
Chicago, IL 60603
<TABLE>
Realized Loss Detail
<CAPTION>
- ------- ----------- ------------- --------- ------------ ----------- --------------- ----------- ----------- -------------- --------
Beginning Gross Aggregate Net Net Proceeds
Dist. Disclosure Appraisal Appraisal Scheduled Gross Proceeds as a Liquidation Liquidation as a % of Realized
Date Control # Date Value Balance Proceeds % of Sched Expenses* Proceeds Sched. Balance Loss
Principal
- --------- ------------ ------------ --------- ------------ ---------- --------------- ---------- ----------- -------------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- --------- ------------ ------------ --------- ------------ ---------- --------------- ----------- --------- --------------- --------
Current Total 0.00 0.00 0.00 0.00 0.00
Cumulative 0.00 0.00 0.00 0.00 0.00
- --------- ------------ ------------ --------- ------------ ---------- --------------- ----------- --------- --------------- --------
*Aggregate liquidation expenses also include outstanding P&I advances and unpaid servicing fees, unpaid trustee fees, etc.
Appendix C
</TABLE>
<PAGE>
Morgan Stanley July 15, 1999
Real Estate Debt Capital Markets
Mortgage Capital Markets Morgan Stanley Dean Witter
- ---------------------------------- -------------------------- ----------------
CMBS New Issue
Term Sheet
-----------------------------------
Pricing Date: July 15, 1999
-----------------------------------
$658,587,000
(Approximate)
Commercial Mortgage Acceptance Corp.
as Depositor
Midland Loan Services, Inc.
Residential Funding Corporation
CIBC Inc.
as Sellers
Midland Loan Services, Inc.
as Master Servicer
ORIX Real Estate Capital Markets LLC
as Special Servicer
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
-----------------------------------
MORGAN STANLEY DEAN WITTER
DEUTSCHE BANC ALEX. BROWN
CIBC WORLD MARKETS CORP.
PNC CAPITAL MARKETS
RESIDENTIAL FUNDING SECURITIES CORPORATION
- -------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Midland Loan
Services, Inc., Residential Funding Corporation and CIBC Inc. (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transaction in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availability are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the "SEC")
and incorporated by reference into an effective registration statement
previously filed with the SEC under Rule 415 of the Securities Act of 1933,
including in cases where the material does not pertain to securities that are
ultimately offered for sale pursuant to such registration statement. To Morgan
Stanley's readers worldwide: In addition, please note that this publication has
been issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, and by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED BY THE
U.K. SECURITIES AND FUTURES AUTHORITY
- -------------------------------------------------------------------------------
<PAGE>
$658,587,000 (Approximate)
Commercial Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
Transaction Highlights
- ----------------------
>> Contributors:
- ------------------------------------------------------
Sellers Cut-Off Date % of
No. of Loans Balance Pool
- ------------------------------------------------------
- ------------------------------------------------------
Midland 114 $289,854,254 39.50%
RFC 89 250,148,011 34.09
CIBC 39 193,799,650 26.41
- ------------------------------------------------------
Total: 242 $733,801,916 100.00%
- ------------------------------------------------------
>> Loan Pool:
o Average Loan Balance: $3.0 million (0.4% of Pool)
o Largest Loan Balance: 4.4% of Pool
o Five Largest Loans/Loan Groups: 13.2% of Pool
o Ten Largest Loans/Loan Groups: 20.0% of Pool
>> Property Types:
Graph Omitted
>> Call Protection:
o Lockout period followed by defeasance: 72.1% of Pool
o Lockout period followed by yield maintenance or the greater of yield
maintenance and 1% of the principal amount prepaid: 27.1% of Pool
>> Credit Statistics:
o Weighted average debt service coverage ratio of 1.35x o Weighted
average cut-off date loan-to-value ratio of 70.8%
>> Collateral Terms: The Pool has a WAC of 7.737% and a WAM of 120 months
>> Collateral Information: Updated loan information will be part of the monthly
remittance report available from the Trustee in addition to detailed payment
and delinquency information. Updated property operating and occupancy
information, to the extent delivered by borrowers, will be available to
Certificateholders from the Master Servicer
>> Bond Information: Cash flows will be modeled by TREPP, CONQUEST and
INTEX and will be available on BLOOMBERG
>> It is expected that this transaction will be included as a part of the
Lehman Aggregate Bond Index
T-1
- --------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for informational purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Deutsche Banc
Alex. Brown, CIBC World Markets Corp. and PNC Capital Markets (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transactions in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availability are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the "SEC")
and incorporated by reference into an effective registration statement
previously filed with the SEC under Rule 415 of the Securities Act of 1933,
including in cases where the material does not pertain to securities that are
ultimately offered for sale pursuant to such registration statement. To Morgan
Stanley's readers worldwide: In addition, please note that this publication has
been issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, and by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED BY THE U.K. SECURITIES
AND FUTURES AUTHORITY
- --------------------------------------------------------------------------------
<PAGE>
$658,587,000 (Approximate)
Commercial Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
<TABLE>
<CAPTION>
Offered Certificates
- --------------------
- ----------- --------------- ------------ ------------ ---------- ----------- -------------- -----------------
Rating Expected Initial
Subordination (Moody's/ Average Principal Final Pass-Through
Class Amount(1) Levels DCR) Life(2) Window(3) Distribution Rate(4)
Date(3)
<S> <C> <C> <C> <C> <C> <C> <C>
- ----------- --------------- ------------ ------------ ---------- ----------- -------------- -----------------
A-1 $133,500,000 26.00% Aaa/AAA 5.69 1-109 08/15/08 6.79%
- ----------- --------------- ------------ ------------ ---------- ----------- -------------- -----------------
A-2 409,513,000 26.00 Aaa/AAA 9.59 109-118 05/15/09 7.03%
- ----------- --------------- ------------ ------------ ---------- ----------- -------------- -----------------
X 733,801,915 -- Aaa /AAA -- -- 05/15/19 Variable Rate
- ----------- --------------- ------------ ------------ ---------- ----------- -------------- -----------------
B 33,021,000 21.50 Aa2/AA 9.82 118-119 06/15/09 7.20%
- ----------- --------------- ------------ ------------ ---------- ----------- -------------- -----------------
C 34,856,000 16.75 A2/A 9.88 119-119 06/15/09 NWAC - 36bp
- ----------- --------------- ------------ ------------ ---------- ----------- -------------- -----------------
D 11,007,000 15.25 A3/A- 9.88 119-119 06/15/09 NWAC - 26bp
- ----------- --------------- ------------ ------------ ---------- ----------- -------------- -----------------
E 23,848,000 12.00 Baa2/BBB 9.88 119-119 06/15/09 NWAC
- ----------- --------------- ------------ ------------ ---------- ----------- -------------- -----------------
F 12,842,000 10.25 Baa3/BBB- 9.88 119-119 06/15/09 NWAC
- ----------- --------------- ------------ ------------ ---------- ----------- -------------- -----------------
Private Certificates
- --------------------
- ----------- --------------- ------------ ------------ ---------- ----------- -------------- -----------------
Rating Expected Initial
Amount(1) Subordination (DCR/ Average Principal Final Pass-Through
Class Levels Moody's) Life(2) Window(3) Distribution Rate(4)
Date(3)
- ----------- --------------- ------------ ------------ ---------- ----------- -------------- -----------------
G-P $75,214,915 -- -- -- -- -- --
- ----------- --------------- ------------ ------------ ---------- ----------- -------------- -----------------
</TABLE>
Notes: (1) In the case of each such Class, subject to a permitted variance
of plus or minus 5%. The Class X Notional Amount is equal to the
sum of all Certificate Balances outstanding from time to time.
(2) In years, based on Maturity Assumptions and a 0% CPR as described
in the Prospectus Supplement.
(3) Principal Window is the period (expressed in terms of months and
commencing with the month of the first Distribution Date) during
which distributions of principal are expected to be made to the
holders of each designated Class in accordance with the Maturity
Assumptions and a 0% CPR as described in the Prospectus
Supplement.
(4) Other than the Class X, Class C, Class D, Class E and Class F
Certificates of the offered certificates and Class G of the
private certificates, each Class of Certificates will accrue
interest generally at a fixed rate of interest except in limited
circumstances as described in the Prospectus Supplement.
T-2
- --------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for informational purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Deutsche Banc
Alex. Brown, CIBC World Markets Corp. and PNC Capital Markets (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transactions in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availability are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the "SEC")
and incorporated by reference into an effective registration statement
previously filed with the SEC under Rule 415 of the Securities Act of 1933,
including in cases where the material does not pertain to securities that are
ultimately offered for sale pursuant to such registration statement. To Morgan
Stanley's readers worldwide: In addition, please note that this publication has
been issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, and by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED BY THE U.K. SECURITIES
AND FUTURES AUTHORITY
- --------------------------------------------------------------------------------
<PAGE>
$658,587,000 (Approximate)
Commercial Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
I. Issue Characteristics
---------------------
Issue Type: Public: Class A-1, A-2, X, B, C, D, E and F (the
"Offered Certificates")
Securities Offered: Private (Rule 144A): Class G, H, J, K, L, M, N, O
and P $658,587,000 monthly pay, multi-class
sequential pay commercial mortgage REMIC
Pass-Through Certificates, including 3 fixed-rate
principal and interest classes (A-1, A-2 and B), 4
weighted average coupon based principal and
interest classes (C, D, E and F) and one variable
rate interest only class (X).
Collateral: The collateral consists of a $733,801,916 pool of
fixed-rate commercial and multifamily Mortgage
Loans
Sellers: Midland Loan Services, Inc., Residential Funding
Corporation and CIBC Inc.
Lead Manager: Morgan Stanley & Co. Incorporated
Co-Managers: Deutsche Banc Alex. Brown, CIBC World Markets
Corp., PNC Capital Markets Inc. and Residential
Funding Securities Corporation
Master Servicer: Midland Loan Services, Inc.
Special Servicer: ORIX Real Estate Capital Markets LLC
Trustee/Fiscal Agent: LaSalle Bank National Association
Pricing Date: On or about July 15, 1999
Closing Date: On or about July 27, 1999
Distribution Dates: The 15th of each month, or if the 15th is not a
business day, the next business day commencing
August 16, 1999
Cut-Off Date: July 1, 1999
Minimum Denominations: $5,000 for Class A Certificates; $50,000 for Class
X, B, C, D, E and F; $100,000 for all other
Certificates (other than the Class R Certificates)
Settlement Terms: DTC, Euroclear and Cedel, same day funds, with
accrued interest
Legal/Regulatory Status: Class A-1, A-2 and X Certificates are expected to
be eligible for exemptive relief under ERISA. No
Class of Certificates is SMMEA eligible
Risk Factors: THE CERTIFICATES INVOLVE A DEGREE OF RISK AND MAY
NOT BE SUITABLE FOR ALL INVESTORS. SEE THE "RISK
FACTORS" SECTION OF THE PROSPECTUS SUPPLEMENT AND
THE PROSPECTUS
T-3
- --------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for informational purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Deutsche Banc
Alex. Brown, CIBC World Markets Corp. and PNC Capital Markets (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transactions in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availability are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the "SEC")
and incorporated by reference into an effective registration statement
previously filed with the SEC under Rule 415 of the Securities Act of 1933,
including in cases where the material does not pertain to securities that are
ultimately offered for sale pursuant to such registration statement. To Morgan
Stanley's readers worldwide: In addition, please note that this publication has
been issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, and by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED BY THE U.K. SECURITIES
AND FUTURES AUTHORITY
- --------------------------------------------------------------------------------
<PAGE>
$658,587,000 (Approximate)
Commercial Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
II. Structure Characteristics
-------------------------
Class A-1, A-2 and B certificates are fixed-rate, monthly pay, multi-class,
sequential pay REMIC Pass-Through Certificates. The Class C, D, E and F
Certificates are weighted average coupon REMIC Pass-Through Certificates. The
Class X Certificates are variable rate interest only REMIC Pass-Through
Certificates. All Classes of Certificates derive their cash flows from the
entire pool of Mortgage Loans.
Graphic omitted
Note: (1) Class X is entitled to interest (on a notional amount equal to
the aggregate pool balance) at the weighted average Class X Strip
Rates for the respective classes of Principal Balance Certificates.
The Class X Strip Rate for each such class for any Distribution Date
is equal to the NWAC minus the Pass-Through Rate for such class and
such Distribution Date.
T-4
- --------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for informational purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Deutsche Banc
Alex. Brown, CIBC World Markets Corp. and PNC Capital Markets (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transactions in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availability are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the "SEC")
and incorporated by reference into an effective registration statement
previously filed with the SEC under Rule 415 of the Securities Act of 1933,
including in cases where the material does not pertain to securities that are
ultimately offered for sale pursuant to such registration statement. To Morgan
Stanley's readers worldwide: In addition, please note that this publication has
been issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, and by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED BY THE U.K. SECURITIES
AND FUTURES AUTHORITY
- --------------------------------------------------------------------------------
<PAGE>
$658,587,000 (Approximate)
Commercial Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
Interest Distributions: Each Class of Certificates (other than the Class R
Certificates) will be entitled on each
Distribution Date to interest accrued at its
Pass-Through Rate on the outstanding Certificate
Balance or Notional Amount of such Class, as
applicable.
Pass-Through Rates: Class A-1: 6.79%
Class A-2: 7.03%
Class B: 7.20%
Class C: NWAC - 36bp
Class D: NWAC - 26bp
Class E: NWAC
Class F: NWAC
Classes G-P: --
Class X: See Note on page T-3
The Pass-Through Rate for each class of Principal
Balance Certificates for any Distribution Date
will not exceed the Weighted Average Net Mortgage
Rate ("NWAC") for such Distribution Date.
Principal Distributions: Principal will be distributed on each Distribution
Date to the most senior Class (i.e., the Class
wit the earliest alphabetical/numerical Class
designation) of the Principal Balance Certificates
outstanding, until its Certificate Balance is
reduced to zero (sequential order). If, due to
losses, the Certificate Balances of the Class B
through Class P Certificates are reduced to zero,
payments of principal to the Class A-1 and A-2
Certificates will be made on a pro rata basis.
T-5
- --------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for informational purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Deutsche Banc
Alex. Brown, CIBC World Markets Corp. and PNC Capital Markets (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transactions in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availability are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the "SEC")
and incorporated by reference into an effective registration statement
previously filed with the SEC under Rule 415 of the Securities Act of 1933,
including in cases where the material does not pertain to securities that are
ultimately offered for sale pursuant to such registration statement. To Morgan
Stanley's readers worldwide: In addition, please note that this publication has
been issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, and by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED BY THE U.K. SECURITIES
AND FUTURES AUTHORITY
- --------------------------------------------------------------------------------
<PAGE>
$658,587,000 (Approximate)
Commercial Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
Prepayment Premium Mortgage Loan during any particular Collection
Allocation: Period will be distributed to the holders of each
Class of Principal Certificates (other than an
excluded class as defined below) then entitled to
distributions of principal on such distribution
date will be entitled to an aggregate amount
(allocable on a pro rata basis based on principal
payments if there is more than one Class of
Principal Balance Certificates entitled to a
distribution of principal) equal to the lesser of
(a) such Yield Maintenance Payment and (b) such
Yield Maintenance Payment multiplied by a
fraction, the numerator of which is equal to the
excess, if any, of the Pass-Through Rate
applicable to the most senior of such Classes of
Principal Balance Certificates then outstanding
(or, in the case of two Classes of Class A
Certificates, the one with the earlier payment
priority), over the relevant Discount Rate (as
defined in the Prospectus Supplement), and the
denominator of which is equal to the excess, if
any, of the Mortgage Rate of the Mortgage Loan
that prepaid, over the relevant Discount Rate.
Any Percentage Premium collected with respect to a
Mortgage Loan during any particular Collection
Period will be distributed to the holders of each
Class of Principal Certificates (other than an
excluded class as defined below) then entitled to
distributions of principal on such distribution
date will be entitled to an aggregate amount
(allocable on a pro rata basis based on principal
payments if there is more than one Class of
Principal Balance Certificates entitled to a
distributions of principal) equal to the product
of (a) such Percentage Premium and (b) 25%.
The portion, if any, of the Prepayment Premium
remaining after such payments to the holders of
the Principal Balance Certificates will be
distributed to the holders of the Class X
Certificates. For the purposes of the foregoing,
the classes H, J, K, L, M, N, O and P are the
excluded classes.
Credit Enhancement: Each Class of Certificates (other than Classes
A-1, A-2 and X) will be subordinate to all other
Classes with an earlier alphabetical Class
designation.
Advancing: The Master Servicer, the Trustee and the Fiscal
Agent (in that order) will each be obligated to
make P&I Advances and Servicing Advances,
including delinquent property taxes and insurance,
but only to the extent that such Advances are
deemed recoverable.
Realized Losses and Realized Losses and Expense Losses, if any, will
Expense Losses: be allocated to the Class P, Class O, Class N,
Class M, Class L, Class K, Class J, Class H, Class
G, Class F, Class E, Class D, Class C and Class B
Certificates, in that order, and then to Classes
A-1 and A-2, pro rata, in each case reducing
amounts payable thereto. Any interest shortfall of
any Class of Certificates will result in unpaid
interest for such Class which, together with
interest thereon compounded monthly at one-twelfth
the applicable Pass-Through Rate for such Class,
will be payable in subsequent periods, subject to
available funds.
T-6
- --------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for informational purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Deutsche Banc
Alex. Brown, CIBC World Markets Corp. and PNC Capital Markets (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transactions in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availability are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the "SEC")
and incorporated by reference into an effective registration statement
previously filed with the SEC under Rule 415 of the Securities Act of 1933,
including in cases where the material does not pertain to securities that are
ultimately offered for sale pursuant to such registration statement. To Morgan
Stanley's readers worldwide: In addition, please note that this publication has
been issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, and by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED BY THE U.K. SECURITIES
AND FUTURES AUTHORITY
- --------------------------------------------------------------------------------
<PAGE>
$658,587,000 (Approximate)
Commercial Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
Prepayment Interest For any Distribution Date, any Net Aggregate
Shortfalls: Prepayment Interest Shortfall not offset by the
Servicing Fee (but not to exceed 0.015% per loan),
will generally be allocated pro rata to each Class
of Certificates in proportion to its entitlement
to interest.
Appraisal Reductions: An appraisal reduction generally will be created
in the amount, if any, by which the Principal
Balance of a Specially Serviced Mortgage Loan
(plus other amounts overdue in connection with
such loan and the Special Servicer's estimate of
certain amounts to be incurred during the next 12
months) exceeds 90% of the appraised value of the
related Mortgaged Property. The Appraisal
Reduction Amount will reduce proportionately the
amount of delinquent interest advanced for such
loan, which reduction will result, in general, in
a reduction of interest distributable to the most
subordinate Class of Principal Balance Certificate
outstanding.
An Appraisal Reduction will be reduced to zero as
of the date the related Mortgage Loan has been
brought current for at least three consecutive
months, paid in full, liquidated, repurchased or
otherwise disposed of.
Operating Adviser: The Operating Adviser, which may be appointed by
the Controlling Class, will have the right to
advise the Special Servicer with respect to
certain actions regarding Specially Serviced
Mortgage Loans. Examples include the right to make
certain modifications, foreclose, sell, bring an
REO Property into environmental compliance or
accept substitute or additional collateral. In
addition, subject to the satisfaction of certain
conditions, the Operating Adviser will have the
right to direct the Trustee to remove the Special
Servicer and appoint a Successor Special Servicer
that must be acceptable to each Rating Agency.
Controlling Class: The Controlling Class will generally be the most
subordinate Class of Certificates outstanding at
any time or, if the Certificate Balance of such
Class is less than 25% of the initial Certificate
Balance of such Class, the next most subordinate
Class of Principal Balance Certificates.
Special Servicer: In general, the Special Servicer has the right to
modify the terms of a Specially Serviced Mortgage
Loan if it determines that the related borrower is
in default or default is reasonably foreseeable
and such modification would increase the net
present value of the proceeds to the Trust,
provided that the Special Servicer generally may
not extend the maturity date of a Mortgage Loan
beyond two years prior to the Final Rated
Distribution Date.
T-7
- --------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for informational purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Deutsche Banc
Alex. Brown, CIBC World Markets Corp. and PNC Capital Markets (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transactions in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availability are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the "SEC")
and incorporated by reference into an effective registration statement
previously filed with the SEC under Rule 415 of the Securities Act of 1933,
including in cases where the material does not pertain to securities that are
ultimately offered for sale pursuant to such registration statement. To Morgan
Stanley's readers worldwide: In addition, please note that this publication has
been issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, and by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED BY THE U.K. SECURITIES
AND FUTURES AUTHORITY
- --------------------------------------------------------------------------------
<PAGE>
$658,587,000 (Approximate)
Commercial Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
Optional Termination: The majority holders or the Controlling Class,
then the Depositor, then the Master Servicer, then
the Special Servicer and then the holder of a
majority of the R-I Certificates will have the
option to purchase, in whole but not in part, the
remaining assets of the Trust on or after the
Distribution Date on which the aggregate
Certificate Balance of all Classes of Certificates
then outstanding is less than or equal to 1% of
the Initial Pool Balance. Such purchase price will
generally be at a price equal to the unpaid
aggregate Scheduled Principal Balance of the
Mortgage Loans, plus accrued and unpaid interest
and unreimbursed Advances.
Reports to The Trustee will prepare and deliver monthly
Certificateholders: Certificateholder Reports. The Special Servicer
will prepare and deliver to the Trustee a monthly
Special Servicer Report summarizing the status of
each Specially Serviced Mortgage Loan. The Master
Servicer and the Special Servicer will prepare and
deliver to the Trustee an annual report setting
forth, among other things, the debt service
coverage ratios for each Mortgage Loan, as
available. Each of the reports will be available
to the Certificateholders. A report containing
information regarding the Mortgage Loans will be
available electronically.
T-8
- --------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for informational purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Deutsche Banc
Alex. Brown, CIBC World Markets Corp. and PNC Capital Markets (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transactions in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availability are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the "SEC")
and incorporated by reference into an effective registration statement
previously filed with the SEC under Rule 415 of the Securities Act of 1933,
including in cases where the material does not pertain to securities that are
ultimately offered for sale pursuant to such registration statement. To Morgan
Stanley's readers worldwide: In addition, please note that this publication has
been issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, and by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED BY THE U.K. SECURITIES
AND FUTURES AUTHORITY
- --------------------------------------------------------------------------------
<PAGE>
$658,587,000 (Approximate)
Commercial Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
III. Originators Midland Loan Services, Inc.
----------- ---------------------------
The Mortgage Pool includes 114 Mortgage Loans,
representing approximately 39.50% of the Initial Pool
Balance, which were originated by or on behalf of
Midland Loan Services, Inc. ("MLS").
MLS is a wholly owned subsidiary of PNC Bank, National
Association. Midland Commercial Funding is a division of
MLS which originates and acquires mortgage loans secured
by mortgages on commercial and multifamily real estate.
PNC Capital Markets is an affiliate of MLS.
Residential Funding Corporation
-------------------------------
The Mortgage Pool includes 89 Mortgage Loans,
representing approximately 34.09% of the Initial Pool
Balance, which were either acquired or originated by or
on behalf of Residential Funding Corporation ("RFC").
RFC is an indirect wholly owned subsidiary of GMAC
Mortgage Group, Inc. RFC Commercial is a division of RFC
which originates and acquires mortgage loans secured by
mortgages on commercial and multifamily real estate.
Residential Funding Securities Corporation is an
affiliate of RFC.
CIBC Inc.
---------
The Mortgage Pool includes 39 Mortgage Loans,
representing approximately 26.41% of the Initial Pool
Balance, which were either acquired or originated by or
on behalf of CIBC Inc.
CIBC Inc. is a wholly owned subsidiary of Canadian
Imperial Holdings Inc. and is incorporated under the
laws of Delaware. Canadian Imperial Holdings Inc. is a
wholly owned subsidiary of CIBC Delaware Holdings Inc.,
also a Delaware corporation, which is a subsidiary of
Canadian Imperial Bank of Commerce, a bank chartered
under the Bank Act of Canada. CIBC Inc. is a commercial
finance company that originates commercial and
multi-family real estate loans, purchases participations
in loans from third-party lenders and otherwise extends
credit to Fortune 1000 companies. CIBC Inc. has offices
in Atlanta, Chicago, Houston, Dallas, San Francisco, Los
Angeles and New York. The principal office of CIBC Inc.
is located at 425 Lexington Avenue, New York, New York
10017. CIBC Inc. is an affiliate of CIBC World Markets
Corp., formerly known as CIBC Oppenheimer Corp.
T-9
- --------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for informational purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Deutsche Banc
Alex. Brown, CIBC World Markets Corp. and PNC Capital Markets (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transactions in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availability are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the "SEC")
and incorporated by reference into an effective registration statement
previously filed with the SEC under Rule 415 of the Securities Act of 1933,
including in cases where the material does not pertain to securities that are
ultimately offered for sale pursuant to such registration statement. To Morgan
Stanley's readers worldwide: In addition, please note that this publication has
been issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, and by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED BY THE U.K. SECURITIES
AND FUTURES AUTHORITY
- --------------------------------------------------------------------------------
<PAGE>
$658,587,000 (Approximate)
Commercial Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
IV. Collateral Description
----------------------
Summary: The Mortgage Pool consists of a $733,801,916 pool
of 242 fixed-rate, first lien mortgage loans
secured by first liens on commercial and
multifamily properties located throughout 39
states, the District of Columbia and the Virgin
Islands. As of the Cut-Off Date, the Mortgage
Loans have a weighted average mortgage rate of
7.737% and a weighted average remaining term to
maturity of 120 months. See the Appendices to the
Prospectus Supplement for more detailed collateral
information.
Seismic Review For loans originated by Midland, RFC or CIBC, all
Process: loan requests secured by properties in California
are subject to a third party seismic report.
Generally, any proposed loan originated by
Midland, RFC or CIBC as to which the property was
estimated to have a PML in excess of 20% of the
estimated replacement cost would either be subject
to a lower loan-to-value limit at origination, be
conditioned on seismic upgrading, be conditioned
on satisfactory earthquake insurance or be
declined.
T-10
- --------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Midland Loan
Services, Inc., Residential Funding Corporation and CIBC Inc.(collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transaction in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availability are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the "SEC")
and incorporated by reference into an effective registration statement
previously filed with the SEC under Rule 415 of the Securities Act of 1933,
including in cases where the material does not pertain to securities that are
ultimately offered for sale pursuant to such registration statement. To Morgan
Stanley's readers worldwide: In addition, please note that this publication has
been issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, and by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd.
representative about the investments concerned.
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED BY THE
U.K. SECURITIES AND FUTURES AUTHORITY
- -------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
$658,587,000 (Approximate)
Commercial Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
Top Ten Loans
-------------
Percent Units/ Loan Balloon
Property Current of Square to Loan to
Property Name Pool City State Type Balance Balance Feet DSCR Value Value
- ------------------------- ---- ------------- ----- ----------- -------- ------- -------- ---- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
21 Penn Plaza RFC New York NY Office $32,184,648 4.4% 344,091 1.36 68.2% 60.2%
Park Drive Manor RFC Philadelphia PA Multifamily $22,925,004 3.1% 572 1.35 76.4% 62.2%
Apartments
Prime Portfolio CIBC Chicago IL Industrial $15,395,975 2.1% 361,043 1.35 79.4% 70.4%
1414 Avenue of the CIBC New York NY Office $14,000,000 1.9% 111,455 1.40 70.0% 60.8%
Americas
70 West 36th Street CIBC New York NY Office $12,200,000 1.7% 151,077 1.40 67.8% 58.9%
7200 Leamington (1) RFC Bedford Park IL Industrial $4,850,000 0.7% 310,752 1.30 72.6% 65.5%
2201 Lundt (1) RFC Elk Grove IL Industrial $4,000,000 0.5% 213,390 1.30 72.6% 65.5%
Village
1330 West 43rd Street RFC Chicago IL Industrial $2,190,000 0.3% 109,728 1.30 72.6% 65.5%
(1)
University Club CIBC Charlotte NC Multifamily $10,486,188 1.4% 130 1.30 75.9% 67.0%
Apartments
The Patriot Apartments Midland El Paso TX Multifamily $10,022,381 1.4% 320 1.25 79.5% 70.2%
Acme Plaza (Cape May CIBC Cape May NJ Retail $9,459,453 1.3% 150,548 1.32 78.8% 70.0%
Plaza)
The Place Apartments RFC Fort Myers FL Multifamily $8,693,077 1.2% 230 1.26 79.8% 70.0%
</TABLE>
Notes: (1) The 7200 Leamington, 2201 Lundt and 1330 West 43rd Street loans are
cross-collateralized and cross-defaulted with each other.
T-11
- --------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Midland Loan
Services, Inc., Residential Funding Corporation and CIBC Inc.(collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transaction in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availability are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the "SEC")
and incorporated by reference into an effective registration statement
previously filed with the SEC under Rule 415 of the Securities Act of 1933,
including in cases where the material does not pertain to securities that are
ultimately offered for sale pursuant to such registration statement. To Morgan
Stanley's readers worldwide: In addition, please note that this publication has
been issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, and by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED BY THE U.K. SECURITIES
AND FUTURES AUTHORITY
- -------------------------------------------------------------------------------
<PAGE>
$658,587,000 (Approximate)
Commercial Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
GEOGRAPHIC DISTRIBUTION
-----------------------
Graphic Omitted
T-12
- -------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Midland Loan
Services, Inc., Residential Funding Corporation and CIBC Inc.(collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transaction in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availability are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the "SEC")
and incorporated by reference into an effective registration statement
previously filed with the SEC under Rule 415 of the Securities Act of 1933,
including in cases where the material does not pertain to securities that are
ultimately offered for sale pursuant to such registration statement. To Morgan
Stanley's readers worldwide: In addition, please note that this publication has
been issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, and by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED BY
THE U.K. SECURITIES AND FUTURES AUTHORITY
- -------------------------------------------------------------------------------
<PAGE>
$658,587,000 (Approximate)
Commercial Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
Sellers
- -----------------------------------------------------
No. Cut-Off Date %
of Principal of
Loans Balance Pool
- -----------------------------------------------------
Midland 114 289,854,254 39.50
RFC 89 250,148,011 34.09
CIBC 39 193,799,650 26.41
- -----------------------------------------------------
Total: 242 733,801,916 100.00
- -----------------------------------------------------
Cut-Off Date Balances
- -------------------------------------------------------------------
No. Cut-Off Date %
of Principal of
Loans Balance Pool
- -------------------------------------------------------------------
1 to 1,000,000 41 30,407,708 4.14
1,000,001 - 2,000,000 77 115,893,499 15.79
2,000,001 - 3,000,000 43 105,819,729 14.42
3,000,001 - 4,000,000 24 85,377,959 11.64
4,000,001 - 5,000,000 25 113,754,201 15.50
5,000,001 - 6,000,000 10 54,632,432 7.45
6,000,001 - 7,000,000 6 38,774,984 5.28
7,000,001 - 8,000,000 5 37,234,910 5.07
8,000,001 - 9,000,000 3 25,232,843 3.44
9,000,001 - 10,000,000 1 9,459,453 1.29
10,000,001 - 20,000,000 5 62,104,544 8.46
20,000,001 - 30,000,000 1 22,925,004 3.12
30,000,001 - 40,000,000 1 32,184,648 4.39
- -------------------------------------------------------------------
Total: 242 733,801,916 100.00
- -------------------------------------------------------------------
Min: 361,411 Max: 32,184,648 Average: 3,032,239
- -------------------------------------------------------------------
States
- -----------------------------------------------------
No. Cut-Off Date %
of Principal of
Loans Balance Pool
- -----------------------------------------------------
New York 16 103,710,115 14.13
Texas 39 93,881,376 12.79
California 26 77,019,290 10.50
Pennsylvania 13 54,782,401 7.47
New Jersey 17 50,986,834 6.95
Other 131 353,421,900 48.16
- -----------------------------------------------------
Total: 242 733,801,916 100.00
- -----------------------------------------------------
Property Type
- -----------------------------------------------------
No. Cut-Off Date %
of Principal of
Loans Balance Pool
- -----------------------------------------------------
Multifamily 93 238,790,656 32.54
Retail 57 196,762,110 26.81
Office 43 154,165,210 21.01
Industrial 25 88,766,241 12.10
Hospitality 9 25,592,801 3.49
Self Storage 8 18,940,783 2.58
Manufactured Housing 6 9,010,648 1.23
Mixed Use 1 1,773,467 0.24
- -----------------------------------------------------
Total: 242 733,801,916 100.00
- -----------------------------------------------------
Mortgage Rates (%)
- -----------------------------------------------------
No. Cut-Off Date %
of Principal of
Loans Balance Pool
- -----------------------------------------------------
6.501 - 7.000 10 32,059,815 4.37
7.001 - 7.500 47 200,195,335 27.28
7.501 - 8.000 114 335,389,948 45.71
8.001 - 8.500 51 120,329,888 16.40
8.501 - 9.000 16 36,116,858 4.92
9.001 - 9.500 4 9,710,071 1.32
- -----------------------------------------------------
Total: 242 733,801,916 100.00
- -----------------------------------------------------
Min: 6.810 Max: 9.170 WAC: 7.737
- -----------------------------------------------------
Original Terms to Stated Maturity (mos.)
- ------------------------------------------------------
No. Cut-Off Date %
of Principal of
Loans Balance Pool
- ------------------------------------------------------
1 - 60 1 1,936,532 0.26
61 - 120 215 660,513,444 90.01
121 - 180 21 58,061,000 7.91
181 - 240 4 8,562,980 1.17
241 - 300 1 4,727,960 0.64
- ------------------------------------------------------
Total: 242 733,801,916 100.00
- ------------------------------------------------------
Min: 60 Max: 241 Wtd. Avg.: 125
- ------------------------------------------------------
Remaining Terms to Stated Maturity (mos.)
- ------------------------------------------------------
No. Cut-Off Date %
of Principal of
Loans Balance Pool
- ------------------------------------------------------
1 - 60 2 7,355,138 1.00
61 - 120 216 671,205,480 91.47
121 - 180 19 41,950,357 5.72
181 - 240 5 13,290,940 1.81
- ------------------------------------------------------
Total: 242 733,801,916 100.00
- ------------------------------------------------------
Min: 41 Max: 238 Wtd. Avg.: 120
- ------------------------------------------------------
Balloon Loans
- ------------------------------------------------------
No. Cut-Off Date %
of Principal of
Loans Balance Pool
- ------------------------------------------------------
Yes 229 703,581,634 95.88
No 13 30,220,282 4.12
- ------------------------------------------------------
Total: 242 733,801,916 100.00
- ------------------------------------------------------
Debt Service Coverage Ratios (x)
- -------------------------------------------------
No. Cut-Off Date %
of Principal of
Loans Balance Pool
- -------------------------------------------------
1.01 - 1.15 3 7,087,785 0.97
1.16 - 1.25 28 71,966,652 9.81
1.26 - 1.35 123 384,171,945 52.35
1.36 - 1.50 60 216,279,794 29.47
1.51 - 1.75 21 45,021,164 6.14
1.76 - 2.00 7 9,274,576 1.26
- -------------------------------------------------
Total: 242 733,801,916 100.00
- -------------------------------------------------
Min: 1.12 Max: 1.96 Wtd. Avg.: 1.35
- -------------------------------------------------
Cut-Off Date Loan-to-Value Ratios (%)
- -------------------------------------------------
No. Cut-Off Date %
of Principal of
Loans Balance Pool
- -------------------------------------------------
20.1 - 30.0 1 975,617 0.13
30.1 - 40.0 1 1,720,011 0.23
40.1 - 50.0 5 7,281,413 0.99
50.1 - 60.0 19 47,398,294 6.46
60.1 - 70.0 76 231,546,356 31.55
70.1 - 80.0 139 443,206,913 60.40
80.1 - 90.0 1 1,673,312 0.23
- -------------------------------------------------
Total: 242 733,801,916 100.00
- -------------------------------------------------
Min: 26.4 Max: 83.7 Wtd. Avg.: 70.8
- -------------------------------------------------
Balloon Loan-to-Value Ratios (%)
- -------------------------------------------------
No. Cut-Off Date %
of Principal of
Loans Balance Pool
- -------------------------------------------------
0.1 - 10.0 13 30,220,282 4.12
10.1 - 20.0 1 1,720,011 0.23
30.1 - 40.0 3 3,606,110 0.49
40.1 - 50.0 25 66,660,010 9.08
50.1 - 60.0 87 167,243,183 22.79
60.1 - 70.0 103 414,639,765 56.51
70.1 - 80.0 10 49,712,555 6.77
- -------------------------------------------------
Total: 242 733,801,916 100.00
- -------------------------------------------------
Min: 0.8 Max: 76.5 Wtd. Avg.: 58.5
- -------------------------------------------------
T-13
- -------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Midland Loan
Services, Inc., Residential Funding Corporation and CIBC Inc. (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transaction in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availability are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the "SEC")
and incorporated by reference into an effective registration statement
previously filed with the SEC under Rule 415 of the Securities Act of 1933,
including in cases where the material does not pertain to securities that are
ultimately offered for sale pursuant to such registration statement. To Morgan
Stanley's readers worldwide: In addition, please note that this publication has
been issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, and by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd.
representative about the investments concerned.
- -------------------------------------------------------------------------------
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED BY THE
U.K. SECURITIES AND FUTURES AUTHORITY
- ------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
Percentage of Mortgage Pool Balance by Prepayment Restriction (%) (1)
- ------------------------------- ------------------- --------------------- ----------------- -------------------- -------------------
Prepayment Restrictions July 1999 July 2000 July 2001 July 2002 July 2003
- ------------------------------- ------------------- --------------------- ----------------- -------------------- -------------------
<S> <C> <C> <C> <C> <C>
Locked Out 99.17% 98.43% 98.43% 94.93% 89.07%
Yield Maintenance Total 0.83% 1.57% 1.31% 4.81% 10.93%
Penalty Points:
5.00% and greater 0.00% 0.00% 0.00% 0.00%
0.00%
4.00% to 4.99% 0.00 0.00 0.00 0.00 0.00
3.00% to 3.99% 0.00 0.00 0.00 0.00 0.00
2.00% to 2.99% 0.00 0.00 0.00 0.00 0.00
1.00% to 1.99% 0.00 0.00 0.00 0.00 0.00
Open 0.00 0.00 0.27 0.27 0.00
- ------------------------------- ------------------- --------------------- ----------------- -------------------- -------------------
TOTAL 100.00% 100.00% 100.00% 100.00% 100.00%
- ------------------------------- ------------------- --------------------- ----------------- -------------------- -------------------
Pool Balance Outstanding $733,801,915.73 $725,918,200.51 $717,178,262.91 $707,378,714.84 $694,921,031.64
% of initial Pool Balance 100.00% 98.93% 97.73% 96.40% 94.70%
- ------------------------------- ------------------- --------------------- ----------------- -------------------- -------------------
</TABLE>
<TABLE>
<CAPTION>
Percentage of Mortgage Pool Balance by Prepayment Restriction (%) - continued (1)
- ------------------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------
Prepayment Restrictions July 2004 July 2005 July 2006 July 2007 July 2008 July 2009
- ------------------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Locked Out 75.26% 74.95% 73.97% 74.05% 64.51% 64.22%
Yield Maintenance Total 24.74% 25.05% 26.03% 25.88% 22.70% 30.54%
Penalty Points:
5.00% and greater 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
4.00% to 4.99% 0.00 0.00 0.00 0.00 0.00 0.00
3.00% to 3.99% 0.00 0.00 0.00 0.00 0.00 0.00
2.00% to 2.99% 0.00 0.00 0.00 0.00 0.00 0.00
1.00% to 1.99% 0.00 0.00 0.00 0.00 0.00 0.00
Open 0.00 0.00 0.00 0.07 12.79 5.24
- ------------------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------
TOTAL 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ------------------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------
Pool Balance Outstanding $678,494,499.89 $666,212,113.74 $652,930,615.10 $638,568,446.82 $603,525,706.10 $37,283,451.11
% of Initial Pool Balance 92.46% 90.79% 88.98% 87.02% 82.25% 5.08%
- ------------------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------
</TABLE>
Notes: (1) The above analysis is based on Maturity Assumptions and
a 0% CPR as discussed in the Prospectus Supplement.
T-14
- -------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Midland Loan
Services, Inc., Residential Funding Corporation and CIBC Inc. (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transaction in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availability are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the "SEC")
and incorporated by reference into an effective registration statement
previously filed with the SEC under Rule 415 of the Securities Act of 1933,
including in cases where the material does not pertain to securities that are
ultimately offered for sale pursuant to such registration statement. To Morgan
Stanley's readers worldwide: In addition, please note that this publication has
been issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, and by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
- -------------------------------------------------------------------------------
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED BY THE
U.K. SECURITIES AND FUTURES AUTHORITY
- -------------------------------------------------------------------------------
<PAGE>
$658,587,000 (Approximate)
Commercial Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
<TABLE>
<CAPTION>
Significant Loan Summaries
Loan No. 1 - 21 Penn Plaza
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cut-off Date Balance: $32,184,648 Balloon Balance: $28,409,182
- ------------------------------------------------------------------------------------------------
Loan Type: Principal & Interest Property Type: Office
- ------------------------------------------------------------------------------------------------
Origination Date: September 9, 1998 Location: New York, NY
- ------------------------------------------------------------------------------------------------
Maturity Date: October 1, 2008 Year Renovated: 1997
- ------------------------------------------------------------------------------------------------
Initial Mortgage Rate: 7.200% Appraised Value: $47,200,000
- ------------------------------------------------------------------------------------------------
Annual Debt Service: $2,639,129 Current LTV: 68.2%
- ------------------------------------------------------------------------------------------------
DSCR: 1.36x Balloon LTV: 60.2%
- ------------------------------------------------------------------------------------------------
Underwritable Net Cash Flow: $3,583,883 Occupancy: 99.9%
- ------------------------------------------------------------------------------------------------
Occupancy Date: March 8, 1999
- ------------------------------------------------------------------------------------------------
</TABLE>
The Loan. The 21 Penn Plaza Loan (the "Penn Plaza Loan") is secured by a first
mortgage on a 17-story, 344,091 square foot office building located at 360 West
31st Street, New York, New York (the "Penn Plaza Property"). RFC originated the
Penn Plaza Loan on September 9, 1998.
The Borrower. The borrower is G-H-G Realty Company, L.L.C., a New York limited
liability company (the "Penn Plaza Borrower"). The managing member of the Penn
Plaza Borrower is G-H-G Realty Management Company, Inc., a New York corporation.
The Penn Plaza Borrower is a special purpose entity.
Security. The Penn Plaza Loan is secured by a Mortgage and Security Agreement,
an Assignment of Leases and Rents, UCC Financing Statements and certain
additional security documents. Such Mortgage is a first lien on the fee interest
in the Penn Plaza Property. The Penn Plaza Loan is non-recourse, subject to
certain limited exceptions.
Payment Terms. The Penn Plaza Loan has a fixed 7.200% Mortgage Rate, an original
term of 120 months and an original amortization of 360 months. The Penn Plaza
Loan requires monthly principal and interest payments of $219,927.38 until
maturity, at which time all unpaid principal and accrued but unpaid interest is
due. The Penn Plaza Loan accrues interest computed on the basis of the actual
number of days elapsed each month in a 360-day year.
Prepayment/Defeasance. No prepayment or defeasance is permitted before September
9, 2003. Thereafter, until July 1, 2008, any prepayment must be in the form of a
defeasance. Any such defeasance will include release of the Penn Plaza Property
and the pledge of substitute collateral in the form of direct, non-callable
United States Treasury obligations providing for payments prior, but as close as
possible, to all scheduled Monthly Payment dates, and on the Maturity Date. Each
such payment must be equal to or greater than each scheduled Monthly Payment
during the loan term, and greater than the anticipated balloon balance due on
the Maturity Date. Additionally, a written confirmation must be obtained from
each applicable rating agency specifying that the defeasance would not result in
a downgrade, qualification or withdrawal of the then current ratings assigned to
any class of certificates. From and after July 1, 2008, the Penn Plaza Loan may
be prepaid without the payment of any prepayment consideration.
T-15
- -------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Midland Loan
Services, Inc., Residential Funding Corporation and CIBC Inc. (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transaction in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availability are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the "SEC")
and incorporated by reference into an effective registration statement
previously filed with the SEC under Rule 415 of the Securities Act of 1933,
including in cases where the material does not pertain to securities that are
ultimately offered for sale pursuant to such registration statement. To Morgan
Stanley's readers worldwide: In addition, please note that this publication has
been issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, and by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
- -------------------------------------------------------------------------------
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED BY THE
U.K. SECURITIES AND FUTURES AUTHORITY
- -------------------------------------------------------------------------------
<PAGE>
$658,587,000 (Approximate)
Commercial Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
Transfer of Properties or Interest in Borrower. Except as described below, the
lender will have the option to declare the Penn Plaza Loan immediately due and
payable upon the transfer of the Penn Plaza Property or any ownership interest
in the Penn Plaza Borrower. The Penn Plaza Borrower has a right to transfer the
Penn Plaza Property to a qualifying single asset transferee approved by the
lender if (i) the proposed transferee reasonably satisfies the lender that it
possesses the ownership and managerial experience and financial resources
customarily required by the lender for properties such as the Penn Plaza
Property, (ii) the proposed transferee assumes the obligations of the Penn Plaza
Borrower and an acceptable person or entity assumes all guaranties or
indemnities, and (iii) a 1% assumption fee has been received by the lender. The
Penn Plaza Loan documents also allow transfers of membership interest in the
Penn Plaza Borrower which: (a) do not amount, in the aggregate, to a transfer of
49% or more of the non-managing member interests to a third party; or (b) are
the result of devise or descent or by operation of law upon the death of a
member.
Escrow/Reserves. There is a tax reserve which requires deposits in an amount
sufficient to pay real estate taxes when due. There is a capital improvement
reserve funded at on a monthly basis at the rate of $4,289.42 per month.
Subordination/Other Debt. Secured subordinate indebtedness and encumbrances are
prohibited.
Prior Loan. Based on information obtained by RFC, as a result of a tenant
occupying approximately 50% of the Penn Plaza Property vacating its premises in
1995, the prior loan was restructured into two notes of equal principal
balances: an A note which was paid on an interest-only basis and a B note which
was paid on the basis of the achievement of certain cash flow hurdles. The sum
of the original balances of the A and B notes approximated the then outstanding
balance of the prior loan. In September of 1998 when the Penn Plaza Loan was
originated, the A note was retired in full and the B note was retired at a
discount. As reported by the prior lender and the Borrower, no payment default
occurred prior to, during, or after the restructure. As described in "Property",
the Penn Plaza Property was 99.9% leased as of March 8, 1999.
The Property. The Penn Plaza Property consists of a 17-story office building
located on the southwest corner of Ninth Avenue and West 31st Street, one block
west of the Penn Station rail terminal. The Penn Plaza Property was originally
constructed in 1931 and substantially renovated in 1997. It contains 344,091
rentable square feet, with office uses on the 2nd through 17th floors, retail
uses on the 1st floor and storage uses in the basement. Certain tenant occupy an
entire floor while other floors are subdivided for multi-tenant use. The Penn
Plaza Property was 99.9% leased as of March 8, 1999. Thirty-eight tenants
currently occupy space in the Penn Plaza Property. Major tenants include Saks &
Company (63,159 square feet), Eastman Kodak (28,446 square feet), Amtrak (24,506
square feet), Equitable Life Assurance Company of America (22,230 square feet),
and Central Parking Systems, Inc. (21,250 square feet). Contractual lease
expirations during the loan term are as follows: 1999 (14,289 square feet/4% of
total), 2000 (25,568/7%), 2001 (8,027/2%), 2002 (8,289/2%), 2003 (2,922/1%),
2004 (3,435/1%), 2005 (30,885/9%), 2006 (31,163/9%), 2007 (7,340/2%), and 2008
(130,192/38%).
Management. The Penn Plaza Property is managed by S. L. Green Realty Corp., a
fully integrated, self-administered and self-managed real estate investment
trust engaged in owning, managing, leasing, acquiring and repositioning Class B
office property in Manhattan. The company currently owns interests in 15 Class B
properties totaling approximately 5 million square feet and leases 27 properties
totaling an additional 8.2 million square feet.
T-16
- -------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Midland Loan
Services, Inc., Residential Funding Corporation and CIBC Inc. (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transaction in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availability are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the "SEC")
and incorporated by reference into an effective registration statement
previously filed with the SEC under Rule 415 of the Securities Act of 1933,
including in cases where the material does not pertain to securities that are
ultimately offered for sale pursuant to such registration statement. To Morgan
Stanley's readers worldwide: In addition, please note that this publication has
been issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, and by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
- -------------------------------------------------------------------------------
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED BY THE
U.K. SECURITIES AND FUTURES AUTHORITY
- -------------------------------------------------------------------------------
<PAGE>
$658,587,000 (Approximate)
Commercial Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
<TABLE>
<CAPTION>
Loan No. 2 - Park Drive Manor Apartments
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cut-off Date Balance: $22,925,004 Balloon Balance: $18,660,352
- ------------------------------------------------------------------------------------------------
Loan Type: Principal & Interest Property Type: Multifamily
- ------------------------------------------------------------------------------------------------
Origination Date: March 17, 1999 Location: Philadelphia, PA
- ------------------------------------------------------------------------------------------------
Maturity Date: April 1, 2009 Year Renovated: 1998
- ------------------------------------------------------------------------------------------------
Initial Mortgage Rate: 7.450% Appraised Value: $30,000,000
- ------------------------------------------------------------------------------------------------
Annual Debt Service: $2,030,648 Current LTV: 76.4%
- ------------------------------------------------------------------------------------------------
DSCR: 1.35x Balloon LTV: 62.2%
- ------------------------------------------------------------------------------------------------
Underwritable Net Cash Flow: $2,741,135 Occupancy: 97.8%
- ------------------------------------------------------------------------------------------------
Occupancy Date: January 28, 1999
- ------------------------------------------------------------------------------------------------
</TABLE>
The Loan. The Park Drive Manor Apartments Loan (the "Park Drive Loan") is
secured by a first mortgage on a 572-unit, 2 building garden apartment complex
located at 633 West Rittenhouse Street, Philadelphia, Pennsylvania (the "Park
Drive Property"). RFC originated the Park Drive Loan on March 17, 1999.
The Borrower. The borrower is Park Drive Group, LP, a Pennsylvania limited
partnership (the "Park Drive Borrower"). The corporate general partner of the
Park Drive Borrower is Empire/Rittenhouse Group, a Pennsylvania corporation.
Ezra Beyman is the sole limited partner of the Park Drive Borrower, and is the
President, Treasurer, and Secretary of the Empire/Rittenhouse Group. The Park
Drive Borrower is a special purpose entity.
Security. The Park Drive Loan is secured by a Mortgage and Security Agreement,
an Assignment of Leases and Rents, UCC Financing Statements and certain
additional security documents. Such Mortgage is a first lien on the fee interest
in the Park Drive Property. The Park Drive Loan is non-recourse, subject to
certain limited exceptions.
Payment Terms. The Park Drive Loan has a fixed 7.450% Mortgage Rate, an original
term of 120 months and an original amortization of 300 months. The Park Drive
Loan requires monthly principal and interest payments of $169,220.65 until
maturity, at which time all unpaid principal and accrued but unpaid interest is
due. The Park Drive Loan accrues interest computed on the basis of the actual
number of days elapsed each month in a 360-day year.
Prepayment/Defeasance. No prepayment or defeasance is permitted prior to the
earlier of (a) May 1, 2003, or (b) two years following the date of the
assignment of the Park Drive Loan to a REMIC in connection with a
securitization. Thereafter, until January 1, 2009, any prepayment must be in the
form of a defeasance. Any such defeasance will include release of the Park Drive
Property and the pledge of substitute collateral in the form of direct,
non-callable United States Treasury obligations providing for payments prior,
but as close as possible, to all scheduled Monthly Payment dates, and on the
Maturity Date. Each such payment must be equal to or greater than each scheduled
Monthly Payment during the loan term, and greater than the anticipated balloon
balance due on the
T-17
- -------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Midland Loan
Services, Inc., Residential Funding Corporation and CIBC Inc. (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transaction in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availability are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the "SEC")
and incorporated by reference into an effective registration statement
previously filed with the SEC under Rule 415 of the Securities Act of 1933,
including in cases where the material does not pertain to securities that are
ultimately offered for sale pursuant to such registration statement. To Morgan
Stanley's readers worldwide: In addition, please note that this publication has
been issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, and by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
- -------------------------------------------------------------------------------
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED BY THE
U.K. SECURITIES AND FUTURES AUTHORITY
- -------------------------------------------------------------------------------
<PAGE>
$658,587,000 (Approximate)
Commercial Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
Maturity Date. Additionally, a written confirmation must be obtained from each
applicable rating agency specifying that the defeasance would not result in a
downgrade, qualification or withdrawal of the then current ratings assigned to
any Class of Certificates. From and after January 1, 2009, the Park Drive Loan
may be prepaid without the payment of any prepayment consideration.
Transfer of Properties or Interest in Borrower. Except as described below, the
lender will have the option to declare the Park Drive Loan immediately due and
payable upon the transfer of the Park Drive Property or any ownership interest
in the Park Drive Borrower. The Park Drive Borrower has a one time right to
transfer the Park Drive Property to a qualifying single asset transferee
approved by the lender if (i) the proposed transferee reasonably satisfies the
lender that it possesses the ownership and managerial experience and financial
resources customarily required by the lender for properties such as the Park
Drive Property, (ii) the proposed transferee assumes the obligations of the Park
Drive Borrower, (iii) no event of default then exists, and (iv) a 1% assumption
fee has been received by the lender. The Park Drive Loan documents also allow
transfers of membership interest in the Park Drive Borrower which: (a) do not
amount, in the aggregate, to a transfer of 49% or more of such membership
interests to a third party; (b) are the result of a death or physical or mental
disability, or (c) are to an immediate family member or trust for such a family
member.
Escrow/Reserves. There is a tax reserve which requires deposits in an amount
sufficient to pay real estate taxes when due. A $56,525 reserve was established
at closing to provide funds for repairs recommended in the engineering report.
Additionally, there is a replacement reserve funded monthly at the rate of
$5,267 per month.
Subordination/Other Debt. Secured subordinate indebtedness and encumbrances are
prohibited.
The Property. The Park Drive Property is located at 633 West Rittenhouse Street
in the Germantown-Chestnut Hill district of Philadelphia, Pennsylvania,
approximately 5 miles north of the central business district. It was built in
1950 and renovated in 1998. It consists of 572 units contained in 2 twelve-story
residential buildings connected by a clubhouse/leasing center with 14,800 square
feet of commercial space. The Park Drive Property contains 48 efficiency units,
288 one-bedroom units, 232 two-bedroom units and four four-bedroom units.
Amenities include elevators, gated, security code controlled entry, a laundry
facility, fitness center, outdoor swimming pool including locker/shower and
cabana buildings, two outdoor tennis courts, walking/jogging trails, covered
parking (220), uncovered parking (405) and an appliance package including stove,
refrigerator, central a/c and other standard appliances.
Management. The Park Drive Property is managed by Empire/Rittenhouse Group.
Empire/Rittenhouse Group has been involved in the management of apartment
complexes for approximately 14 years, and currently manages approximately 1,500
owned residential units in the Philadelphia market.
T-18
- -------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Midland Loan
Services, Inc., Residential Funding Corporation and CIBC Inc. (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transaction in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availability are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the "SEC")
and incorporated by reference into an effective registration statement
previously filed with the SEC under Rule 415 of the Securities Act of 1933,
including in cases where the material does not pertain to securities that are
ultimately offered for sale pursuant to such registration statement. To Morgan
Stanley's readers worldwide: In addition, please note that this publication has
been issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, and by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
- -------------------------------------------------------------------------------
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED BY THE
U.K. SECURITIES AND FUTURES AUTHORITY
- -------------------------------------------------------------------------------
<PAGE>
$658,587,000 (Approximate)
Commercial Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
<TABLE>
<CAPTION>
Loan No. 3 - Prime Portfolio
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cut-off Date Balance: $15,395,975 Location: Various
---------------------------------------------------------------------------------------------------------------------
342 Carol Lane $2,311,970 342 Carol Lane Elmhurst, IL
---------------------------------------------------------------------------------------------------------------------
343 Carol Lane $1,370,753 343 Carol Lane Elmhurst, IL
---------------------------------------------------------------------------------------------------------------------
388 Carol Lane $1,331,164 388 Carol Lane Elmhurst, IL
---------------------------------------------------------------------------------------------------------------------
550 Kehoe $2,239,721 550 Kehoe Carol Stream, IL
---------------------------------------------------------------------------------------------------------------------
4300 Madison $4,020,214 4300 Madison Hillside, IL
---------------------------------------------------------------------------------------------------------------------
1301 East Tower $4,122,155 1301 East Tower Schaumburg, IL
---------------------------------------------------------------------------------------------------------------------
Loan Type: Principal & Interest: Year Built: Various
---------------------------------------------------------------------------------------------------------------------
Origination Date: May 1, 1998 342 Carol Lane 1989
---------------------------------------------------------------------------------------------------------------------
Maturity Date*: May 1, 2008 343 Carol Lane 1989
---------------------------------------------------------------------------------------------------------------------
Initial Mortgage Rate: 7.170% 388 Carol Lane 1979
---------------------------------------------------------------------------------------------------------------------
Annual Debt Service: $1,263,319 550 Kehoe 1996
---------------------------------------------------------------------------------------------------------------------
342 Carol Lane $189,709 4300 Madison 1980
---------------------------------------------------------------------------------------------------------------------
343 Carol Lane $112,477 1301 East Tower 1992
---------------------------------------------------------------------------------------------------------------------
388 Carol Lane $109,229 Appraised Value: $19,400,000
---------------------------------------------------------------------------------------------------------------------
550 Kehoe $183,781 342 Carol Lane $3,200,000
---------------------------------------------------------------------------------------------------------------------
4300 Madison $329,879 343 Carol Lane $1,900,000
---------------------------------------------------------------------------------------------------------------------
1301 East Tower $338,244 388 Carol Lane $1,800,000
---------------------------------------------------------------------------------------------------------------------
Combined DSCR: 1.35x 550 Kehoe $3,000,000
---------------------------------------------------------------------------------------------------------------------
Balloon Balance: $13,655,857 4300 Madison $4,800,000
---------------------------------------------------------------------------------------------------------------------
342 Carol Lane $2,050,661 1301 East Tower $4,700,000
---------------------------------------------------------------------------------------------------------------------
343 Carol Lane $1,215,824 Combined Current LTV: 79.4%
---------------------------------------------------------------------------------------------------------------------
388 Carol Lane $1,180,710 Combined Balloon LTV: 70.4%
---------------------------------------------------------------------------------------------------------------------
550 Kehoe $1,986,578 Occupancy (All Properties): 100%
---------------------------------------------------------------------------------------------------------------------
4300 Madison $3,565,833 Occupancy Date: June 1, 1999
---------------------------------------------------------------------------------------------------------------------
1301 East Tower $3,656,251
---------------------------------------------------------------------------------------------------------------------
Underwritable Net Cash Flow: $1,709,765
---------------------------------------------------------------------------------------------------------------------
Property Type:
---------------------------------------------------------------------------------------------------------------------
342 Carol Lane Industrial
---------------------------------------------------------------------------------------------------------------------
343 Carol Lane Industrial
---------------------------------------------------------------------------------------------------------------------
388 Carol Lane Industrial
---------------------------------------------------------------------------------------------------------------------
550 Kehoe Industrial
---------------------------------------------------------------------------------------------------------------------
4300 Madison Industrial
---------------------------------------------------------------------------------------------------------------------
1301 East Tower Office
---------------------------------------------------------------------------------------------------------------------
</TABLE>
*For purposes hereof, the Anticipated Repayment Date described below is assumed
to be the maturity date of the Prime Loan. ** Information described herein with
respect to the individual properties securing the Prime Loan is an allocated
portion of such information based upon the ratio of the appraised value or
underwritable cash flow of the individual properties to the aggregate appraised
value or underwritable cash flow of all such properties.
T-19
- -------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Midland Loan
Services, Inc., Residential Funding Corporation and CIBC Inc. (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transaction in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availability are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the "SEC")
and incorporated by reference into an effective registration statement
previously filed with the SEC under Rule 415 of the Securities Act of 1933,
including in cases where the material does not pertain to securities that are
ultimately offered for sale pursuant to such registration statement. To Morgan
Stanley's readers worldwide: In addition, please note that this publication has
been issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, and by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
- -------------------------------------------------------------------------------
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED BY THE
U.K. SECURITIES AND FUTURES AUTHORITY
- -------------------------------------------------------------------------------
<PAGE>
$658,587,000 (Approximate)
Commercial Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
The Loan. The Prime Portfolio Loan (the "Prime Loan") consists of one loan
secured by first mortgages on 5 industrial and 1 office properties located in
the suburbs of Chicago (each, a "Prime Property"). CIBC originated the Prime
Loan on May 1, 1998.
The Borrower. Six separate Delaware limited liability companies are the
co-borrowers for the Prime Loan (each a "Prime Borrower"). The managing member
of each Prime Borrower is Prime Group Realty, L.P., a Delaware limited
partnership. The managing partner Prime Group Realty, L.P. is Prime Group Realty
Trust, a Maryland real estate investment trust. The primary sponsors of each
Prime Borrower are John Daley and Guy Ackerman. Each Prime Borrower is a
single-purpose bankruptcy-remote entity.
Security. The Prime Loan is secured by separate Mortgages, Assignments of Leases
and Rents, UCC Financing Statements and certain additional security documents
executed by each Prime Borrower over the separate Prime Property owned by it.
Each Mortgage is a first lien on the related Prime Borrower's fee interest in
its Prime Property. The Prime Loan is non-recourse, subject to certain limited
exceptions.
Payment Terms. The Mortgage Rate is fixed at 7.170% until May 1, 2008 (the
"Anticipated Repayment Date"), at which time the Mortgage Rate will adjust to
the greater of (i) 9.170% or (ii) the then applicable yield rate on U.S.
Treasury obligations maturing during the month in which the maturity date of the
Prime Loan occurs, plus 2%. Although the Prime Loan has a stated term of 360
months, it is assumed for purposes hereof that it has a term of 120 months with
a maturity date of the Anticipated Repayment Date. The Prime Loan has an
original amortization term of 360 months. The Prime Loan requires monthly
payments of principal and interest equal to $105,276.56 until the Anticipated
Repayment Date. If the Prime Loan is not prepaid on such date, all of the cash
flow from the Prime Property is to be applied as described in "Lockbox" below.
If not sooner satisfied, all unpaid principal and accrued but unpaid interest is
due on May 1, 2028. The Prime Loan accrues interest computed on the basis of the
actual number of days elapsed each month in a 360-day year.
Lockbox. Upon any default or upon the occurrence of the Anticipated Repayment
Date, the lender may require all gross income from each Prime Property to be
deposited into a lockbox account controlled by the lender. Prior to the
Anticipated Repayment Date, disbursements from such account are made as follows:
(a) to fund required reserves for the payment of real estate taxes, insurance
and other impounds; (b) to pay all principal and interest then due; (c) to fund
other reserves required under the related security documents; (d) to pay all
other amounts owed the lender with respect to the Prime Loan; and (e) to the
Prime Borrowers.
Subsequent to the Anticipated Repayment Date, disbursements from such account
are made as follows: (a) to fund required reserves for the payment of real
estate taxes, insurance and other impounds; (b) to pay all principal and
interest (at the initial Mortgage Rate) then due; (c) to fund other reserves
required under the related security documents; (d) to pay budgeted operating
expenses (less management fees payable to affiliates of any Prime Borrower)
approved by the lender; (e) to pay budgeted capital expenses approved by the
lender; (f) to pay other extraordinary expenses approved by the lender; (g) to
pay all remaining outstanding principal; (h) to pay all outstanding interest;
(i) to pay all other amounts owed the lender with respect to the Prime Loan; and
(j) to the Prime Borrowers.
T-20
- -------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Midland Loan
Services, Inc., Residential Funding Corporation and CIBC Inc. (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transaction in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availability are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the "SEC")
and incorporated by reference into an effective registration statement
previously filed with the SEC under Rule 415 of the Securities Act of 1933,
including in cases where the material does not pertain to securities that are
ultimately offered for sale pursuant to such registration statement. To Morgan
Stanley's readers worldwide: In addition, please note that this publication has
been issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, and by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
- -------------------------------------------------------------------------------
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED BY THE
U.K. SECURITIES AND FUTURES AUTHORITY
- -------------------------------------------------------------------------------
<PAGE>
$658,587,000 (Approximate)
Commercial Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
Prepayment/Defeasance. No prepayment or defeasance is permitted prior to the
earlier of (a) May 1, 2002 or (b) two years following the date of the assignment
of the Prime Loan to a REMIC in connection with a securitization. Thereafter,
until November 1, 2007, any prepayment must be in the form of a defeasance. Any
such defeasance will include release of the related Prime Property and the
pledge of substitute collateral in the form of direct, non-callable United
States Treasury obligations providing for payments prior, but as close as
possible, to all scheduled Monthly Payment dates, and on the Anticipated
Repayment Date. Each such payment must be equal to or greater than the portion
of the scheduled Monthly Payment allocated to the released Prime Property, and
on the Anticipated Repayment Date, must be sufficient to fully prepay the
portion of the Prime Loan allocated to the released Prime Property.
Additionally, a written confirmation must be obtained from each applicable
rating agency specifying that the defeasance would not result in a downgrade,
qualification or withdrawal of the then current ratings assigned to any Class of
Certificates. From and after November 1, 2007, the Prime Loan may be prepaid
without the payment of any prepayment consideration.
Transfer of Property or Interest in Borrower. Except as described below, the
lender will have the option to declare the Prime Loan immediately due and
payable upon the transfer of any Prime Property or any ownership interest in any
Prime Borrower. Each Prime Borrower has a one-time right to transfer its Prime
Property, after the first 12 months of the loan term, to a transferee approved
by the lender if (i) no event of default then exists, (ii) the proposed
transferee reasonably satisfies the lender that it possesses the ownership and
managerial experience and financial resources necessary to operate the Prime
Property, (iii) the proposed transferee assumes the obligations of the Prime
Borrower and an acceptable person or entity assumes all guaranties or
indemnities, and (iv) a 1% assumption fee, all reasonably required documents, a
title policy endorsement and reimbursement for all of its costs and expenses has
been received by the lender. The Prime Loan documents allow transfers of
beneficial interests in the Prime Borrower so long as Prime Group Realty Trust
continues to have the same degree of management control over each Prime Borrower
and directly or indirectly own 30% or more of the total equity interests in each
Prime Borrower.
Escrow/Reserves. There is a tax escrow which requires deposits in an amount
sufficient to pay real estate taxes when due.
Subordination/Other Debt. Secured subordinate indebtedness and encumbrances are
prohibited.
The Property. The 342 Carol Lane property is located at 342-346 Carol Lane,
Elmhurst, Illinois. It was built in 1989, and is a 67,935 square foot 1-story,
multi-tenant warehouse/distribution building improved with 2 loading docks and
approximately 41.6% office finish. It is 100% leased as of June 1, 1999. Its
largest tenant is Semblex (47,861 square feet/70.45% of total), whose lease
expires May 31, 2004.
The 343 Carol Lane property is located at 343 Carol Lane, Elmhurst, Illinois. It
was built in 1989, and is a 30,084 square foot 1-story warehouse/distribution
building improved with 1 loading dock and approximately 33.0% office finish. As
of June 1, 1999, it is 100% leased to Matsushita Industrial, whose lease expires
March 31, 2007.
The 388 Carol Lane property is located at 388 Carol Lane, Elmhurst, Illinois. It
was built in 1979, and is a 40,920 square foot 1 and 1/2-story, multi-tenant
warehouse/distribution building improved with 1 loading dock and
T-21
- -------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Midland Loan
Services, Inc., Residential Funding Corporation and CIBC Inc. (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transaction in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availability are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the "SEC")
and incorporated by reference into an effective registration statement
previously filed with the SEC under Rule 415 of the Securities Act of 1933,
including in cases where the material does not pertain to securities that are
ultimately offered for sale pursuant to such registration statement. To Morgan
Stanley's readers worldwide: In addition, please note that this publication has
been issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, and by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
- -------------------------------------------------------------------------------
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED BY THE
U.K. SECURITIES AND FUTURES AUTHORITY
- -------------------------------------------------------------------------------
<PAGE>
$658,587,000 (Approximate)
Commercial Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
approximately 22.9% office finish. It is 100% leased as of June 1, 1999. Its
largest tenant is Ameritech Illinois (36,184 square feet/88.43% of total), whose
lease expires September 30, 2000.
The 550 Kehoe property is located at 550 Kehoe Blvd., Carol Stream, Illinois. It
was built in 1996, and is a 44,575 square foot 1-story warehouse/distribution
building improved with 1 loading dock and approximately 27.3% office finish. As
of June 1, 1999, it is 100% leased to Associated Material, whose lease expires
August 31, 2006.
The 4300 Madison property is located at 4300 Madison Street, Hillside, Illinois.
It was built in 1980, and is a 127,129 square foot 1-story, multi-tenant
warehouse/distribution building. It is 100% leased as of June 1, 1999. Its
largest tenant is Oak Brook Business Center (50,940 square feet/40.07% of
total), whose lease expires May 31, 2000.
The 1301 East Tower property is located at 1301 East Tower Road, Schaumburg,
Illinois. It was built in 1992, and is a 50,400 square foot 1-story, class B
office building with 223 surface parking spaces. As of June 1, 1999, it is 100%
leased to Household Credit Services, whose lease expires December 31, 2001.
Management. The Prime Properties are managed by Prime Group Realty Trust, the
general partner of the managing member of each Prime Borrower.
T-22
- -------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Midland Loan
Services, Inc., Residential Funding Corporation and CIBC Inc. (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transaction in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availability are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the "SEC")
and incorporated by reference into an effective registration statement
previously filed with the SEC under Rule 415 of the Securities Act of 1933,
including in cases where the material does not pertain to securities that are
ultimately offered for sale pursuant to such registration statement. To Morgan
Stanley's readers worldwide: In addition, please note that this publication has
been issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, and by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
- -------------------------------------------------------------------------------
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED BY THE
U.K. SECURITIES AND FUTURES AUTHORITY
- -------------------------------------------------------------------------------
<PAGE>
$658,587,000 (Approximate)
Commercial Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
Loan No. 4 - 1414 Avenue of the Americas
- --------------------------------------------------------------------------------
Cut-off Date Balance: $14,000,000 Balloon Balance: $12,169,841
- --------------------------------------------------------------------------------
Loan Type: 2 years Interest- Property Type: Office
Only, then Principal
& Interest
- --------------------------------------------------------------------------------
Origination Date: April 16, 1999 Location: New York, NY
- --------------------------------------------------------------------------------
Maturity Date:* May 1, 2009 Year Renovated: 1997
- --------------------------------------------------------------------------------
Initial Mortgage Rate: 7.870% Appraised Value: $20,000,000
- --------------------------------------------------------------------------------
Annual Debt Service: $1,282,217 Current LTV: 70.0%
- --------------------------------------------------------------------------------
DSCR: 1.40x Balloon LTV: 60.8%
- --------------------------------------------------------------------------------
Underwritable Net Cash
Flow: $1,795,434 Occupancy: 100%
- --------------------------------------------------------------------------------
Occupancy Date: February 20, 1999
- --------------------------------------------------------------------------------
*For purposes hereof, the Anticipated Repayment Date described below is assumed
to be the maturity date of the 1414 Loan.
The Loan. The 1414 Avenue of the Americas Loan (the "1414 Loan") is secured by a
first mortgage on a 19-story, 111,455 square foot office building located at
1414 Avenue of the Americas, New York, New York (the "1414 Property"). CIBC
originated the 1414 Loan on April 16, 1999.
The Borrower. The borrower is Green 1414 Property L.L.C., a New York limited
liability company (the "1414 Borrower"). Green 1414 Manager L.L.C., a Delaware
limited liability company, is the managing member of the 1414 Borrower. It is a
wholly owned subsidiary of SL Green Realty Corp. SL Green Operating Partnership,
L.P., a Delaware limited partnership, is the sole remaining member of the 1414
Borrower. SL Green Realty Corp. is the general partner of the limited
partnership. The 1414 Borrower is a special purpose entity.
Security. The 1414 Loan is secured by a Mortgage, an Assignment of Leases and
Rents, UCC Financing Statements and certain additional security documents. The
Mortgage is a first lien on the fee interest in the 1414 Property. The 1414 Loan
is non-recourse, subject to certain limited exceptions.
Payment Terms. The Mortgage Rate is fixed at 7.870% until May 1, 2009 (the
"Anticipated Repayment Date"), at which time the Mortgage Rate will adjust to
the greater of (i) 9.87% or (ii) the then applicable yield rate on U.S. Treasury
obligations maturing during the month in which the maturity date of the 1414
Loan occurs, plus 2%. Although the 1414 Loan has a stated term of 324 months, it
is assumed for purposes hereof that it has a term of 120 months with a maturity
date of the Anticipated Repayment Date. The 1414 Loan has an original
amortization term of 300 months. The 1414 Loan requires monthly payments of
interest only until June 1, 2001. Thereafter, monthly payments of principal and
interest equal to $106,851.39 are required until the Anticipated Repayment Date.
If the 1414 Loan is not prepaid on such date, all of the cash flow from the 1414
Property is to be applied as described in "Lockbox" below. If not sooner
satisfied, all unpaid principal and accrued but unpaid interest is due on May 1,
2026. The 1414 Loan accrues interest computed on the basis of the actual number
of days elapsed each month in a 360-day year.
T-23
- --------------------------------------------------------------------------------
This information is being delivered to a specific number or prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer or securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any retuns detailed. Morgan Stanley & Co. Incorporated, Midland Loan
Services, Inc., Residential Funding Corporation and CIBC Inc. (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transaction in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availablity are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the"SEC") and
incorporated by reference into an effective registration statement previously
filed with the SEC under Rule 415 of the Securities Act of 1933, including in
cases where the material does not pertain to securities that are ultimately
offered for sale pursuant to such registration statement. To Morgan Stanley's
readers worldwide: In addition, please note that this publication has been
issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, and by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED
BY THE U.K. SECURITIES AND FUTURES AUTHORITY
- --------------------------------------------------------------------------------
<PAGE>
$658,587,000 (Approximate)
Commercial Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
Lockbox. Upon a default by the 1414 Borrower, or upon the occurrence of the
Anticipated Repayment Date, the lender may require all gross income from the
1414 Property to be deposited into a lockbox account controlled by the lender.
Prior to the Anticipated Repayment Date, disbursements from such account are
made as follows: (a) to fund required reserves for the payment of real estate
taxes, insurance and other impounds; (b) to pay all principal and interest then
due; (c) to fund other reserves required under the related security documents;
(d) to pay all other amounts owed the lender with respect to the 1414 Loan; and
(e) to the 1414 Borrower.
Subsequent to the Anticipated Repayment Date, disbursements from such account
are made as follows: (a) to fund required reserves for the payment of real
estate taxes, insurance and other impounds; (b) to pay all principal and
interest (at the initial Mortgage Rate) then due; (c) to fund other reserves
required under the related security documents; (d) to pay budgeted operating
expenses (less management fees payable to 1414 Borrower affiliates) approved by
the lender; (e) to pay budgeted capital expenses approved by the lender; (f) to
pay other extraordinary expenses approved by the lender; (g) to pay all
remaining outstanding principal; (h) to pay all outstanding interest; (i) to pay
all other amounts owed the lender with respect to the 1414 Loan; and (j) to the
1414 Borrower.
Prepayment/Defeasance. No prepayment or defeasance is permitted prior to the
earlier of (a) April 16, 2002, or (b) two years following the date of the
assignment of the 1414 Loan to a REMIC in connection with a securitization.
Thereafter, until November 1, 2008, any prepayment must be in the form of a
defeasance. Any such defeasance will include release of the related 1414
Property and the pledge of substitute collateral in the form of direct,
non-callable United States Treasury obligations providing for payments prior,
but as close as possible, to all scheduled Monthly Payment dates, and on the
Anticipated Repayment Date. Each such payment must be equal to or greater than
the scheduled Monthly Payment, and on the Anticipated Repayment Date, must be
sufficient to fully prepay the 1414 Loan on such date. Additionally, a written
confirmation must be obtained from each applicable rating agency specifying that
the defeasance would not result in a downgrade, qualification or withdrawal of
the then current ratings assigned to any class of certificates. From and after
November 1, 2008, the 1414 Loan may be prepaid without the payment of any
prepayment consideration
Transfer of Property or Interest in Borrower. Except as described below, the
lender will have the option to declare the 1414 Loan immediately due and payable
upon the transfer of the 1414 Property or any ownership interest in the 1414
Borrower. The 1414 Borrower has a one-time right to transfer the 1414 Property
to a transferee approved by the lender if (i) no event of default then exists,
(ii) the proposed transferee reasonably satisfies the lender that it possesses
the ownership and managerial experience and financial resources necessary to
operate the 1414 Property, (iii) the proposed transferee assumes the obligations
of the 1414 Borrower and an acceptable person or entity assumes all guaranties
or indemnities, and (iv) a 1% assumption fee, all reasonably required documents,
a title policy endorsement and reimbursement for all of its costs and expenses
has been received by the lender. The 1414 Loan documents allow transfers of
beneficial interests in the 1414 Borrower so long as, among other things, Green
1414 Manager L.L.C. remains the managing member of the 1414 Borrower and SL
Green Realty Corp. continues to directly or indirectly own 100% of Green 1414
Manager L.L.C. and at least 1/3 of the total equity interests in the 1414
Borrower. Additionally, so long as lender approves the management of the 1414
Borrower, transfers of non-managing member interests (up to an aggregate of 25%
of the beneficial ownership interests), involuntary transfers from death or
disability and transfers for estate planning purposes will not be a default.
Finally, transfers of limited
T-24
- --------------------------------------------------------------------------------
This information is being delivered to a specific number or prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer or securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any retuns detailed. Morgan Stanley & Co. Incorporated, Midland Loan
Services, Inc., Residential Funding Corporation and CIBC Inc. (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transaction in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availablity are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the"SEC") and
incorporated by reference into an effective registration statement previously
filed with the SEC under Rule 415 of the Securities Act of 1933, including in
cases where the material does not pertain to securities that are ultimately
offered for sale pursuant to such registration statement. To Morgan Stanley's
readers worldwide: In addition, please note that this publication has been
issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, and by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED
BY THE U.K. SECURITIES AND FUTURES AUTHORITY
- --------------------------------------------------------------------------------
<PAGE>
$658,587,000 (Approximate)
Commercial Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
partnership interests in SL Green Operating Partnership, L.P. are allowed so
long as SL Green Realty Corp. retains control of such limited partnership.
Escrows/Reserves. There is a tax escrow, which requires deposits in an amount
sufficient to pay real estate taxes when due. There is an escrow for capital
expenditures, which is funded monthly at the monthly rate of $929, and a tenant
improvement/leasing commission escrow, which is funded at the monthly rate of
$16,667. There is also an insurance reserve in the amount of $10,628.
Subordinate/Other Debt. Secured subordinate indebtedness and encumbrances are
prohibited.
The Property. The 1414 Property consists of a 19-story office building located
on the southeast corner of West 58th Street, one block from Central Park, at the
northern edge of Midtown Manhattan. The 1414 Property, originally constructed in
1924, contains 111,455 rentable square feet. Major capital improvements totaling
approximately $580,000 were completed during 1991 (new roof) and 1997. Such
improvements during 1998 included upgrades to the lobby, corridors and
elevators, as well as the installation of a new fire alarm system. The 1414
Property was 100% leased as of February 20, 1999. Contractual lease expirations
during the loan term are as follows: 1999 (8,943 square feet/8% of total), 2000
(12,280/11%), 2001 (17,619/15.8%), 2002 (5,200/4.7%), 2003 (33,665/30.2%), 2004
(13,975/2%), 2005 (2,187/2.8%), 2006 (3,100/2.8%), 2007 (none), 2008
(3,625/3.3%), and 2009 (2,515/2.3%). No single tenant accounts for more than
5.7% of the 1414 Property's total square footage. The typical tenant at the 1414
Property possesses a lease with a 5 or 10 year term, occupies approximately
3,000 square feet and is in the garment industry. Many have also been tenants
for a number of years.
Management. The 1414 Property is managed by SL Green Management L.L.C., an
affiliate of the 1414 Borrower.
T-25
- --------------------------------------------------------------------------------
This information is being delivered to a specific number or prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer or securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any retuns detailed. Morgan Stanley & Co. Incorporated, Midland Loan
Services, Inc., Residential Funding Corporation and CIBC Inc. (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transaction in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availablity are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the"SEC") and
incorporated by reference into an effective registration statement previously
filed with the SEC under Rule 415 of the Securities Act of 1933, including in
cases where the material does not pertain to securities that are ultimately
offered for sale pursuant to such registration statement. To Morgan Stanley's
readers worldwide: In addition, please note that this publication has been
issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, and by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED
BY THE U.K. SECURITIES AND FUTURES AUTHORITY
- --------------------------------------------------------------------------------
<PAGE>
$658,587,000 (Approximate)
Commercial Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
Loan No. 5 - 70 West 36th Street
- --------------------------------------------------------------------------------
Cut-off Date Balance: $12,200,000 Balloon Balance: $10,605,147
- --------------------------------------------------------------------------------
Loan Type: 2 Years Interest- Property Type: Office
Only, then Principal
& Interest
- --------------------------------------------------------------------------------
Origination Date: April 16, 1999 Location: New York, NY
- --------------------------------------------------------------------------------
Maturity Date:* May 1, 2009 Year Renovated: 1995
- --------------------------------------------------------------------------------
Initial Mortgage Rate: 7.870% Appraised Value: $18,000,000
- --------------------------------------------------------------------------------
Annual Debt Service: $1,117,360 Current LTV: 67.8%
- --------------------------------------------------------------------------------
DSCR: 1.40x Balloon LTV: 58.9%
- --------------------------------------------------------------------------------
Underwritable Net Cash
Flow: $1,559,453 Occupancy: 100%
- --------------------------------------------------------------------------------
Occupancy Date: February 19, 1999
- --------------------------------------------------------------------------------
*For purposes hereof, the Anticipated Repayment Date described below is assumed
to be the maturity date of the West 36th Loan.
The Loan. The 70 West 36th Street Loan (the "West 36th Loan") is secured by a
first mortgage on a 16-story, 151,077 square foot office building located at 70
West 36th Street, New York, New York (the "West 36th Property"). CIBC originated
the West 36th Loan on April 16, 1999.
The Borrower. The borrower is Green 70W36 Property L.L.C., a New York limited
liability company (the "West 36th Borrower"). Green 70W36 Manager L.L.C., a
Delaware limited liability company, is the managing member of the West 36th
Borrower. It is a wholly owned subsidiary of SL Green Realty Corp. SL Green
Operating Partnership, L.P., a Delaware limited partnership, is the sole
remaining member of the West 36th Borrower. SL Green Realty Corp. is the general
partner of the limited partnership. The West 36th Borrower is a special purpose
entity.
Security. The West 36th Loan is secured by a Mortgage, an Assignment of Leases
and Rents, UCC Financing Statements and certain additional security documents.
The Mortgage is a first lien on the fee interest in the West 36th Property. The
West 36th Loan is non-recourse, subject to certain limited exceptions.
Payment Terms. The Mortgage Rate is fixed at 7.870% until May 1, 2009 (the
"Anticipated Repayment Date"), at which time the Mortgage Rate will adjust to
the greater of (i) 9.87% or (ii) the then applicable yield rate on U.S. Treasury
obligations maturing during the month in which the maturity date of the West
36th Loan occurs, plus 2%. Although the West 36th Loan has a stated term of 324
months, it is assumed for purposes hereof that it has a term of 120 months with
a maturity date of the Anticipated Repayment Date. The West 36th Loan has an
original amortization term of 300 months. The West 36th Loan requires monthly
payments of interest only until June 1, 2001. Thereafter, monthly payments of
principal and interest equal to $93,113.36 are required until the Anticipated
Repayment Date. If the West 36th Loan is not prepaid on such date, all of the
cash flow from the West 36th Property is to be applied as described in "Lockbox"
below. If not sooner satisfied, all unpaid principal and accrued but unpaid
interest is due on May 1, 2026. The West 36th Loan accrues interest computed on
the basis of the actual number of days elapsed each month in a 360-day year.
T-26
- --------------------------------------------------------------------------------
This information is being delivered to a specific number or prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer or securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any retuns detailed. Morgan Stanley & Co. Incorporated, Midland Loan
Services, Inc., Residential Funding Corporation and CIBC Inc. (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transaction in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availablity are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the"SEC") and
incorporated by reference into an effective registration statement previously
filed with the SEC under Rule 415 of the Securities Act of 1933, including in
cases where the material does not pertain to securities that are ultimately
offered for sale pursuant to such registration statement. To Morgan Stanley's
readers worldwide: In addition, please note that this publication has been
issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, and by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED
BY THE U.K. SECURITIES AND FUTURES AUTHORITY
- --------------------------------------------------------------------------------
<PAGE>
$658,587,000 (Approximate)
Commercial Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
Lockbox. Upon a default by the West 36th Borrower, or upon the occurrence of the
Anticipated Repayment Date, the lender may require all gross income from the
West 36th Property to be deposited into a lockbox account controlled by the
lender. Prior to the Anticipated Repayment Date, disbursements from such account
are made as follows: (a) to fund required reserves for the payment of real
estate taxes, insurance and other impounds; (b) to pay all principal and
interest then due; (c) to fund other reserves required under the related
security documents; (d) to pay all other amounts owed the lender with respect to
the West 36th Loan; and (e) to the West 36th Borrower.
Subsequent to the Anticipated Repayment Date, disbursements from such account
are made as follows: (a) to fund required reserves for the payment of real
estate taxes, insurance and other impounds; (b) to pay all principal and
interest (at the initial Mortgage Rate) then due; (c) to fund other reserves
required under the related security documents; (d) to pay budgeted operating
expenses (less management fees payable to West 36th Borrower affiliates)
approved by the lender; (e) to pay budgeted capital expenses approved by the
lender; (f) to pay other extraordinary expenses approved by the lender; (g) to
pay all remaining outstanding principal; (h) to pay all outstanding interest;
(i) to pay all other amounts owed the lender with respect to the West 36th Loan;
and (j) to the West 36th Borrower.
Prepayment/Defeasance. No prepayment or defeasance is permitted prior to the
earlier of (a) April 16, 2002, or (b) two years following the date of the
assignment of the West 36th Loan to a REMIC in connection with a securitization.
Thereafter, until November 1, 2008, any prepayment must be in the form of a
defeasance. Any such defeasance will include release of the related West 36th
Property and the pledge of substitute collateral in the form of direct,
non-callable United States Treasury obligations providing for payments prior,
but as close as possible, to all scheduled Monthly Payment dates, and on the
Anticipated Repayment Date. Each such payment must be equal to or greater than
the scheduled Monthly Payment, and on the Anticipated Repayment Date, must be
sufficient to fully prepay the West 36th Loan on such date. Additionally, a
written confirmation must be obtained from each applicable rating agency
specifying that the defeasance would not result in a downgrade, qualification or
withdrawal of the then current ratings assigned to any class of Certificates.
From and after November 1, 2008, the West 36th Loan may be prepaid without the
payment of any prepayment consideration
Transfer of Property or Interest in Borrower. Except as described below, the
lender will have the option to declare the West 36th Loan immediately due and
payable upon the transfer of the West 36th Property or any ownership interest in
the West 36th Borrower. The West 36th Borrower has a one-time right to transfer
the West 36th Property to a transferee approved by the lender if (i) no event of
default then exists, (ii) the proposed transferee reasonably satisfies the
lender that it possesses the ownership and managerial experience and financial
resources necessary to operate the West 36th Property, (iii) the proposed
transferee assumes the obligations of the West 36th Borrower and an acceptable
person or entity assumes all guaranties or indemnities, and (iv) a 1% assumption
fee, all reasonably required documents, a title policy endorsement and
reimbursement for all of its costs and expenses has been received by the lender.
The West 36th Loan documents allow transfers of beneficial interests in the West
36th Borrower so long as, among other things, Green 70W36 Manager L.L.C. remains
the managing member of the West 36th Borrower and SL Green Realty Corp.
continues to directly or indirectly own 100% of Green 70 W36 Manager L.L.C. of
the West 36th Borrower and at least 1/3 of the total equity interests in the
West 36th Borrower. Additionally, so long as lender approves the management of
the West 36th Borrower, transfers of non-managing member interests (up to an
aggregate of 25% of the beneficial ownership interests), involuntary transfers
from death or disability and transfers for estate planning purposes will not be
a default. Finally, transfers of limited partnership
T-27
- --------------------------------------------------------------------------------
This information is being delivered to a specific number or prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer or securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any retuns detailed. Morgan Stanley & Co. Incorporated, Midland Loan
Services, Inc., Residential Funding Corporation and CIBC Inc. (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transaction in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availablity are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the"SEC") and
incorporated by reference into an effective registration statement previously
filed with the SEC under Rule 415 of the Securities Act of 1933, including in
cases where the material does not pertain to securities that are ultimately
offered for sale pursuant to such registration statement. To Morgan Stanley's
readers worldwide: In addition, please note that this publication has been
issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, and by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED
BY THE U.K. SECURITIES AND FUTURES AUTHORITY
- --------------------------------------------------------------------------------
<PAGE>
$658,587,000 (Approximate)
Commercial Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
interests in SL Green Operating Partnership, L.P. are allowed so long as SL
Green Realty Corp. retains control of such limited partnership.
Escrows/Reserves. There is a tax escrow which requires deposits in an amount
sufficient to pay real estate taxes when due. There is an escrow for capital
expenditures, which is funded monthly at the monthly rate of $1,762, and a
tenant improvement/leasing commission escrow, which is funded at the monthly
rate of $12,500. There is also an insurance reserve in the amount of $8,862.
Subordinate/Other Debt. Secured subordinate indebtedness and encumbrances are
prohibited.
The Property. The West 36th Property consists of a 16-story building centrally
located on 36th Street between Fifth and Sixth Avenues, in the heart of the
Midtown West District of Manhattan. The West 36th Property, originally
constructed in 1923, contains 151,703 rentable square feet, including 26,522
square feet of retail space on the ground floor. Major capital improvements
totaling approximately $4,000,000 were completed through 1995. Such improvements
included modernization of the three passenger elevators, installation of a new
domestic water tank and renovations to the lobby and public corridors on each
floor. Historical occupancy of the West 36th Property for the last five years
has been: 1995 - 94%, 1996 - 95%, 1997 - 100%, 1998 - 100%, and 1999 - 100%.
Tenant rollover is staggered with no more than 29% expiring in any one year. The
typical tenant at the West 36th Property possesses a lease with a 5 or 10 year
term, occupies approximately 3,000 square feet and is in the garment industry.
Many have also been tenants for a number of years.
Management. The West 36th Property is managed by SL Green Management L.L.C., an
affiliate of the West 36th Borrower.
T-28
- --------------------------------------------------------------------------------
This information is being delivered to a specific number or prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer or securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any retuns detailed. Morgan Stanley & Co. Incorporated, Midland Loan
Services, Inc., Residential Funding Corporation and CIBC Inc. (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transaction in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availablity are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the"SEC") and
incorporated by reference into an effective registration statement previously
filed with the SEC under Rule 415 of the Securities Act of 1933, including in
cases where the material does not pertain to securities that are ultimately
offered for sale pursuant to such registration statement. To Morgan Stanley's
readers worldwide: In addition, please note that this publication has been
issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, and by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED
BY THE U.K. SECURITIES AND FUTURES AUTHORITY
- --------------------------------------------------------------------------------
<PAGE>
$658,587,000 (Approximate)
Commercial Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
<TABLE>
<CAPTION>
Loan Nos. 6, 7 and 8 - 2201 Lundt, 7200 Leamington and 1330 West 43rd Street
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cut-off Date Balances: Property Type: Industrial
- --------------------------------------------------------------------------------------
Leamington $4,850,000 Location: Chicago, IL
- --------------------------------------------------------------------------------------
Lundt $4,000,000 Year Built:
- --------------------------------------------------------------------------------------
West 43rd $2,190,000 Leamington 1952
- --------------------------------------------------------------------------------------
Loan Type: Principal & Interest Lundt 1963
- --------------------------------------------------------------------------------------
Origination Date: June 24, 1999 West 43rd 1977
- --------------------------------------------------------------------------------------
Maturity Date: July 1, 2009 Appraised Value: $15,200,000
- --------------------------------------------------------------------------------------
Initial Mortgage Rate: 8.320% Leamington $ 6,800,000
- --------------------------------------------------------------------------------------
Annual Debt Service: Lundt $ 5,600,000
- --------------------------------------------------------------------------------------
Leamington $440,105 West 43rd $ 2,800,000
- --------------------------------------------------------------------------------------
Lundt $362,973 Current Combined LTV: 72.6%
- --------------------------------------------------------------------------------------
West 43rd $198,728 Combined Balloon LTV: 65.5%
- --------------------------------------------------------------------------------------
DSCR: 1.30x Occupancy:
- --------------------------------------------------------------------------------------
Balloon Balance: Leamington 100.0%
- --------------------------------------------------------------------------------------
Leamington $4,372,452 Lundt 100.0%
- --------------------------------------------------------------------------------------
Lundt $3,606,147 West 43rd 100.0%
- --------------------------------------------------------------------------------------
West 43rd $1,974,366 Occupancy Date: May 11, 1999
- --------------------------------------------------------------------------------------
Aggregate Underwritable $1,302,056
Net Cash Flow:
- --------------------------------------------------------------------------------------
</TABLE>
The Loans. The 2201 Lundt, 7200 Leamington and 1330 West 43rd Street Loans (the
"Chicago Industrial Loans") consist of three separate loans secured by first
mortgages on three Chicago-area industrial properties (the "Chicago Industrial
Properties"). RFC originated each of the Chicago Industrial Loans was originated
on June 24, 1999, and each has a maturity date of July 1, 2009.
The Borrowers. Separate Illinois limited liability companies were established as
borrowing entities for each of the Chicago Industrial Loans (each a "Chicago
Industrial Borrower"). Each Chicago Industrial Borrower is a single purpose
entity established to own and manage only its Chicago Industrial Property. The
primary sponsors Chicago Industrial Borrowers are John Daley and Guy Ackerman.
Security. The Chicago Industrial Loans are secured by separate Mortgages,
Assignments of Leases and Rents, UCC Financing Statements and certain additional
security documents. Each Mortgage is a first lien on the fee interest in the
related Chicago Industrial Property. The Chicago Industrial Loans are
non-recourse, subject to certain limited exceptions. All of the Chicago
Industrial Loans are cross-defaulted and cross-collateralized with each other.
Payment Terms. Each Chicago Industrial Loan has a fixed 8.320% Mortgage Rate, an
original term of 120 months and an original amortization of 360 months. The
Chicago Industrial Loans require an aggregate monthly principal and interest
payment of $83,483.74 until maturity, at which time all unpaid principal and
accrued but unpaid interest is due. Each Chicago Industrial Loan accrues
interest computed on the basis of the actual number of days elapsed each month
in a 360-day year.
T-29
- --------------------------------------------------------------------------------
This information is being delivered to a specific number or prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer or securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any retuns detailed. Morgan Stanley & Co. Incorporated, Midland Loan
Services, Inc., Residential Funding Corporation and CIBC Inc. (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transaction in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availablity are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the"SEC") and
incorporated by reference into an effective registration statement previously
filed with the SEC under Rule 415 of the Securities Act of 1933, including in
cases where the material does not pertain to securities that are ultimately
offered for sale pursuant to such registration statement. To Morgan Stanley's
readers worldwide: In addition, please note that this publication has been
issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, and by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED
BY THE U.K. SECURITIES AND FUTURES AUTHORITY
- --------------------------------------------------------------------------------
<PAGE>
$658,587,000 (Approximate)
Commercial Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
Prepayment/Defeasance. No prepayment or defeasance is permitted for any of the
Chicago Industrial Loans prior to the earlier of (a) August 1, 2003, or (b) two
years following the date of the assignment of the related Chicago Industrial
Loan to a REMIC in connection with a securitization. Thereafter, until April 1,
2009, any prepayment must be in the form of a defeasance. Any such defeasance
will include release of the related Chicago Industrial Property and the pledge
of substitute collateral in the form of direct, non-callable United States
Treasury obligations providing for payments prior, but as close as possible, to
all scheduled Monthly Payment dates, and on the Maturity Date. Each such payment
must be equal to or greater than each scheduled Monthly Payment during the loan
term, and greater than the anticipated balloon balance due on the Maturity Date.
Additionally, a written confirmation must be obtained from each applicable
rating agency specifying that the defeasance would not result in a downgrade,
qualification or withdrawal of the then current ratings assigned to any class of
certificates. From and after April 1, 2009, each Chicago Industrial Loan may be
prepaid without the payment of any prepayment consideration.
Transfer of Properties or Interest in Borrower. Except as described below, the
lender will have the option to declare any Chicago Industrial Loan immediately
due and payable upon the transfer of the related Chicago Industrial Property or
any ownership interest in the related Chicago Industrial Borrower. Each Chicago
Industrial Borrower has a one time right to transfer its Chicago Industrial
Property to a qualifying single asset transferee approved by the lender if (i)
the proposed transferee reasonably satisfies the lender that it possesses the
ownership and managerial experience and financial resources customarily required
by the lender for properties such as the related Chicago Industrial Property,
(ii) the proposed transferee assumes the obligations of the related Chicago
Industrial Borrower, (iii) no event of default then exists, and (iv) a 1%
assumption fee has been received by the lender. The documents for each Chicago
Industrial Loan also allow transfers of membership interest in the related
Chicago Industrial Borrower which: (a) do not amount, in the aggregate, to a
transfer of 49% or more of such membership interests to a third party; (b) are
the result of a death or physical or mental disability, or (c) are to an
immediate family member or trust for such a family member.
Escrow/Reserves. Each Chicago Industrial Loan has a tax and insurance reserve
which requires deposits in an amount sufficient to pay real estate taxes and
insurance premiums when due. There is a capital improvements escrow for each
Chicago Industrial Property funded monthly at the aggregate rate $5,282 (Lundt -
$1,778, Leamington - $2,590 and West 43rd - $914). There is a tenant
improvement/leasing commission escrow for each Chicago Industrial Property
funded monthly at the aggregate rate $13,233 (Lundt - $4,446, Leamington -
$6,474 and West 43rd - $2,313).
Subordination/Other Debt. Secured subordinate indebtedness and encumbrances are
prohibited.
The Property. The Lunt property is located at 2201 W. Lunt Avenue, Elk Grove
Village, Illinois, approximately 1 mile east of O'Hare Airport. This property is
a 213,390 square foot single-story, multi-tenant warehouse/distribution building
improved with 16 loading docks and approximately 6% office finish. It is 71.63%
leased to Prime Source and World Wide Inc.
The Leamington property is located at 7200 S. Leamington, Bedford Park,
Illinois, on the south side of Chicago near Midway Airport. This property is a
310,752 square foot single-story manufacturing building improved with 13
T-30
- --------------------------------------------------------------------------------
This information is being delivered to a specific number or prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer or securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any retuns detailed. Morgan Stanley & Co. Incorporated, Midland Loan
Services, Inc., Residential Funding Corporation and CIBC Inc. (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transaction in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availablity are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the"SEC") and
incorporated by reference into an effective registration statement previously
filed with the SEC under Rule 415 of the Securities Act of 1933, including in
cases where the material does not pertain to securities that are ultimately
offered for sale pursuant to such registration statement. To Morgan Stanley's
readers worldwide: In addition, please note that this publication has been
issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, and by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED
BY THE U.K. SECURITIES AND FUTURES AUTHORITY
- --------------------------------------------------------------------------------
<PAGE>
$658,587,000 (Approximate)
Commercial Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
loading docks and approximately 4% office finish. It is 100% net leased to The
Form House, Inc., through March 20, 2004.
The West 43rd Street property is located at 1330 West 43rd Street, McKinley
Park, Illinois, in the old stock yard district. This property is a 109,728
square foot single-story, single-tenant warehouse/distribution building improved
with 9 loading docks and approximately 6% office finish. It is 100% occupied by
SM Acquisitions through May, 2002.
Management. The Chicago Industrial Properties are currently managed by Hawthorne
Realty Management. Hawthorne has managed over 12,000,000 square feet of
industrial space in the Chicago metro area and midwest. Hawthorne alos manages
4,000,000 square feet of office space and 1,000,000 square feet of residential
and hospitality properties. Hawthorne is affiliated with the Chicago Industrial
Borrowers.
T-31
- --------------------------------------------------------------------------------
This information is being delivered to a specific number or prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer or securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any retuns detailed. Morgan Stanley & Co. Incorporated, Midland Loan
Services, Inc., Residential Funding Corporation and CIBC Inc. (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transaction in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availablity are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the"SEC") and
incorporated by reference into an effective registration statement previously
filed with the SEC under Rule 415 of the Securities Act of 1933, including in
cases where the material does not pertain to securities that are ultimately
offered for sale pursuant to such registration statement. To Morgan Stanley's
readers worldwide: In addition, please note that this publication has been
issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, and by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED
BY THE U.K. SECURITIES AND FUTURES AUTHORITY
- --------------------------------------------------------------------------------
<PAGE>
$658,587,000 (Approximate)
Commercial Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
<TABLE>
<CAPTION>
Loan No. 9 - University Club Apartments
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cut-off Date Balance: $10,486,188 Balloon Balance: $9,254,639
- ------------------------------------------------------------------------------------------------
Loan Type: Principal and Property Type: Multifamily
Interest
- ------------------------------------------------------------------------------------------------
Origination Date: April 22, 1999 Location: Charlotte, NC
- ------------------------------------------------------------------------------------------------
Maturity Date:* May 1, 2009 Year Built 1998
- ------------------------------------------------------------------------------------------------
Initial Mortgage Rate: 7.390% Appraised Value: $13,820,000
- ------------------------------------------------------------------------------------------------
Annual Debt Service: $871,539 Current LTV: 75.9%
- ------------------------------------------------------------------------------------------------
DSCR: 1.30x Balloon LTV: 67.0%
- ------------------------------------------------------------------------------------------------
Underwritable Net Cash Flow: $1,130,378 Occupancy: 97.5%
- ------------------------------------------------------------------------------------------------
Occupancy Date: January 31, 1999
- ------------------------------------------------------------------------------------------------
</TABLE>
*For purposes hereof, the Anticipated Repayment Date described below is assumed
to be the maturity date of the University Club Loan.
The Loan. The University Club Apartments Loan (the "University Club Loan") is
secured by a first mortgage on the University Club Apartments (the "University
Club Property"), a 130-unit, 17 building, student housing apartment complex
located in Charlotte, North Carolina. CIBC originated the University Club Loan
on April 22, 1999.
The Borrower. The borrower is University Club Apartments of Charlotte, L.C., a
Florida limited liability company (the "University Club Borrower"). The
University Club Borrower's managing member is Thomas C. Proctor. The University
Club Borrower is a special purpose entity.
Security. The University Club Loan is secured by a Deed of Trust and Security
Agreement, an Assignment of Leases and Rents, UCC Financing Statements and
certain additional security documents. Such Deed of Trust is a first lien on the
fee interest in the University Club Property. The University Club Loan is
non-recourse, subject to certain limited exceptions.
Payment Terms. The Mortgage Rate is fixed at 7.390% until May 1, 2009 (the
"Anticipated Repayment Date"), at which time the Mortgage Rate will adjust to
the greater of (i) 9.39% or (ii) the then applicable yield rate on U.S. Treasury
obligations maturing during the month in which the maturity date of the
University Club Loan occurs, plus 2%. Although the University Club Loan has a
stated term of 360 months, it is assumed for purposes hereof that it has a term
of 120 months with a maturity date of the Anticipated Repayment Date. The
University Club Loan has an original amortization term of 360 months. The
University Club Loan requires monthly payments of principal and interest of
$72,628.26 until the Anticipated Repayment Date. If the University Club Loan is
not prepaid on such date, all of the cash flow from the University Club Property
is to be applied as described in "Lockbox" below. If not sooner satisfied, all
unpaid principal and accrued but unpaid interest is due on May 1, 2029. The
University Club Loan accrues interest computed on the basis of the actual number
of days elapsed each month in a 360-day year.
Lockbox. Upon a default by the University Club Borrower, or upon the occurrence
of the Anticipated Repayment Date, the lender may require all gross income from
the University Club Property to be deposited into a lockbox account controlled
by the lender. Prior to the Anticipated Repayment Date, disbursements from such
account are
T-32
- -------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Midland Loan
Services, Inc., Residential Funding Corporation and CIBC Inc. (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transaction in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availability are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the "SEC")
and incorporated by reference into an effective registration statement
previously filed with the SEC under Rule 415 of the Securities Act of 1933,
including in cases where the material does not pertain to securities that are
ultimately offered for sale pursuant to such registration statement. To Morgan
Stanley's readers worldwide: In addition, please note that this publication has
been issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, and by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED BY THE
U.K. SECURITIES AND FUTURES AUTHORITY
- -------------------------------------------------------------------------------
<PAGE>
$658,587,000 (Approximate)
Commercial Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
made as follows: (a) to fund required reserves for the payment of real estate
taxes, insurance and other impounds; (b) to pay all principal and interest then
due; (c) to fund other reserves required under the related security documents;
(d) to pay all other amounts owed the lender with respect to the University Club
Loan; and (e) to the University Club Borrower.
Subsequent to the Anticipated Repayment Date, disbursements from such account
are made as follows: (a) to fund required reserves for the payment of real
estate taxes, insurance and other impounds; (b) to pay all principal and
interest (at the initial Mortgage Rate) then due; (c) to fund other reserves
required under the related security documents; (d) to pay budgeted operating
expenses (less management fees payable to University Club Borrower affiliates)
approved by the lender; (e) to pay budgeted capital expenses approved by the
lender; (f) to pay other extraordinary expenses approved by the lender; (g) to
pay all remaining outstanding principal; (h) to pay all outstanding interest;
(i) to pay all other amounts owed the lender with respect to the University Club
Loan; and (j) to the University Club Borrower.
Prepayment/Defeasance. No prepayment or defeasance is permitted prior to the
earlier of (a) April 22, 2002, or (b) two years following the date of the
assignment of the University Club Loan to a REMIC in connection with a
securitization. Thereafter, until November 1, 2008, any prepayment must be in
the form of a defeasance. Any such defeasance will include release of the
related University Club Property and the pledge of substitute collateral in the
form of direct, non-callable United States Treasury obligations providing for
payments prior, but as close as possible, to all scheduled Monthly Payment
dates, and on the Anticipated Repayment Date. Each such payment must be equal to
or greater than the scheduled Monthly Payment, and on the Anticipated Repayment
Date, must be sufficient to fully prepay the University Club Loan on such date.
Additionally, a written confirmation must be obtained from each applicable
rating agency specifying that the defeasance would not result in a downgrade,
qualification or withdrawal of the then current ratings assigned to any class of
certificates. From and after November 1, 2008, the University Club Loan may be
prepaid without the payment of any prepayment consideration
Transfer of Property or Interest in Borrower. Except as described below, the
lender will have the option to declare the University Club Loan immediately due
and payable upon the transfer of the University Club Property or any ownership
interest in the University Club Borrower. The University Club Borrower has a
one-time right to transfer the University Club Property, after the first 12
months of the loan term, to a transferee approved by the lender if (i) no event
of default then exists, (ii) the proposed transferee reasonably satisfies the
lender that it possesses the ownership and managerial experience and financial
resources necessary to operate the University Club Property, (iii) the proposed
transferee assumes the obligations of the University Club Borrower and an
acceptable person or entity assumes all guaranties or indemnities, and (iv) a 1%
assumption fee, all reasonably required documents, a title policy endorsement
and reimbursement for all of its costs and expenses has been received by the
lender. The University Club Loan documents also prohibit, without the lender's
prior consent, any transfer of any managing membership interest in the
University Club Borrower. Transfers of non managing member interests are allowed
without lender consent. Additionally, so long as lender approves the management
of the University Club Borrower, involuntary transfers from death or disability
and transfers for estate planning purposes will not be a default.
Escrows/Reserves. There is a tax and insurance escrow which requires deposits in
an amount sufficient to pay real estate taxes and insurance premiums when due.
There is also an escrow for capital expenditures which is funded
T-33
- -------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Midland Loan
Services, Inc., Residential Funding Corporation and CIBC Inc. (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transaction in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availability are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the "SEC")
and incorporated by reference into an effective registration statement
previously filed with the SEC under Rule 415 of the Securities Act of 1933,
including in cases where the material does not pertain to securities that are
ultimately offered for sale pursuant to such registration statement. To Morgan
Stanley's readers worldwide: In addition, please note that this publication has
been issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, and by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED BY THE
U.K. SECURITIES AND FUTURES AUTHORITY
- -------------------------------------------------------------------------------
<PAGE>
$658,587,000 (Approximate)
Commercial Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
monthly in the amount of $29,250/year for the first twelve months of the loan
term and $39,000/year for the remainder of the loan term.
Subordinate/Other Debt. Secured subordinate indebtedness and encumbrances are
prohibited.
The Property. The University Club Property consists of 130 townhouse style
apartment units (1,470 square feet per unit) in seventeen buildings located in
Charlotte, North Carolina, approximately 1/2 mile east University of North
Carolina - Charlotte. Each unit contains four bedrooms and four baths with cable
television, telephone lines and an interior alarm system available in each
bedroom. Site amenities include a basketball court, beach volleyball court,
fitness center, computer center, and two swimming pools. The University Club
Property's tenant base is primarily comprised of students from the University of
North Carolina - Charlotte. The University Club Property commenced operations in
August 1998. According to a January 31, 1999 rent roll, occupancy during the
1998-1999 school year was 97.5%.
Management. The University Club Property is managed by Coastal Property
Services, Inc., a full services management company focused specifically on
residential property management. The company manages over 2,500 rental units in
the southeastern United States and over 3,000 beds for students at nine colleges
and universities.
T-34
- -------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Midland Loan
Services, Inc., Residential Funding Corporation and CIBC Inc. (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transaction in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availability are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the "SEC")
and incorporated by reference into an effective registration statement
previously filed with the SEC under Rule 415 of the Securities Act of 1933,
including in cases where the material does not pertain to securities that are
ultimately offered for sale pursuant to such registration statement. To Morgan
Stanley's readers worldwide: In addition, please note that this publication has
been issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, and by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED BY THE
U.K. SECURITIES AND FUTURES AUTHORITY
- -------------------------------------------------------------------------------
<PAGE>
$658,587,000 (Approximate)
Commercial Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
<TABLE>
<CAPTION>
Loan No. 10 - Patriot Apartments
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cut-off Date Balance: $10,022,381 Balloon Balance: $8,842,833
- -------------------------------------------------------------------------------------------
Loan Type: Principal and Property Type: Multifamily
Interest
- -------------------------------------------------------------------------------------------
Origination Date: February 17, 1999 Location: El Paso, TX
- -------------------------------------------------------------------------------------------
Maturity Date: March 1, 2009 Year Built 1996
- -------------------------------------------------------------------------------------------
Mortgage Rate: 7.24% Appraised Value: $12,600,000
- -------------------------------------------------------------------------------------------
Annual Debt Service: $821,887 Current LTV: 79.5%
- -------------------------------------------------------------------------------------------
DSCR: 1.25x Balloon LTV: 70.2%
- -------------------------------------------------------------------------------------------
Underwritable Net Cash Flow: $1,029,379 Occupancy: 99.7%
- -------------------------------------------------------------------------------------------
Occupancy Date: March 22, 1999
- -------------------------------------------------------------------------------------------
</TABLE>
The Loan. The Patriot Apartment Loan (the "Patriot Loan") is secured by a first
mortgage on the Patriot Apartments (the "Patriot Property"), a 320 unit, 20
building, Class A garden apartment complex located in El Paso, Texas. Midland
originated the Patriot Loan on February 17,1999.
The Borrower. The Borrower is Patriot Apartments, L.L.C., a Delaware limited
liability company (the "Patriot Borrower"). The Patriot Borrower is a single
purpose entity with D.R.R. Asset Management, Inc., owning 1% and D.R.R.
Properties, a California corporation owning the remaining 99%. Both D.R.R. Asset
Management, Inc, and D.R.R. Properties are owned 100% by Mr. Duane R. Roberts of
Riverside, California.
Security. The Patriot Loan is secured by a Deed of Trust, an Assignment of
Leases and Rents, UCC Financing Statements and certain additional security
documents. Such Deed of Trust is a first lien on a fee interest in the Patriot
Property. The Patriot Loan is non-recourse, subject to certain limited
exceptions.
Payment Terms. The Patriot Loan has a fixed 7.24% Mortgage Rate, an original
term of 120 months and an original amortization of 360 months. The Patriot Loan
requires monthly principal and interest payments of $68,490.56 until maturity,
at which time all unpaid principal and accrued but unpaid interest is due. The
Patriot Loan accrues interest computed on the basis of the actual number of days
elapsed each month in a 360-day year.
Prepayment. No prepayment is permitted during the first 60 months of the term of
the Patriot Loan. Thereafter, prior to December 1, 2008, prepayments may be made
upon the payment of a prepayment premium equal to the greater of a yield
maintenance amount or 1% of the principal prepaid. No prepayment premium is
required for any prepayment on or after December 1, 2008.
Transfer of Properties or Interest in Borrower. Except as described below, the
lender will have the option to declare the Patriot Loan immediately due and
payable upon the transfer of the Patriot Property or any ownership interest in
the Patriot Borrower. The Patriot Loan documents contemplate a potential waiver
of such prohibition by
T-35
- -------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Midland Loan
Services, Inc., Residential Funding Corporation and CIBC Inc. (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transaction in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availability are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the "SEC")
and incorporated by reference into an effective registration statement
previously filed with the SEC under Rule 415 of the Securities Act of 1933,
including in cases where the material does not pertain to securities that are
ultimately offered for sale pursuant to such registration statement. To Morgan
Stanley's readers worldwide: In addition, please note that this publication has
been issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, and by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED BY THE
U.K. SECURITIES AND FUTURES AUTHORITY
- -------------------------------------------------------------------------------
<PAGE>
$658,587,000 (Approximate)
Commercial Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
the lender if (i) the lender has expressly approved the proposed transfer in
writing, (ii) no event of default then exists, (iii) the proposed transferee and
the Patriot Property reasonably satisfy the lender's underwriting standards, and
(iv) the lender receives a 1% assumption fee and reimbursement for all of costs
and expenses. The Patriot Loan documents allow transfers of membership interest
in the Patriot Borrower which: (a) do not amount, in the aggregate, to a
transfer of 49% or more of such membership interests to a third party; or (b)
are the result of a death or physical or mental disability.
Escrow/Reserves. There is a tax and insurance reserve which requires deposits in
an amount sufficient to pay real estate taxes and insurance premiums when due.
There is a capital improvement reserve funded at closing in the amount of
$32,750 to provide funds for carpet replacement and other specified upgrades to
the clubhouse at the Patriot Property. There is also a reserve for future
repairs and replacements to the Patriot Property, which was funded at closing in
the amount of $67,250. If any funds are withdrawn from this reserve, monthly
deposits will be required until the reserve balance again reaches $67,250.
Subordination/Other Debt. Secured subordinate indebtedness and encumbrances are
prohibited with out the prior consent of the lender.
The Property. The Patriot Property is located at 4600 Fairbanks, in the
northeastern portion of El Paso, Texas, approximately 10 minutes north of the El
Paso central business district and 6 miles from Fort Bliss. It was built in 1996
and consists of 320 units contained in 20 two-story garden style apartment
buildings. Amenities include a community resource center/computer room, fitness
center, playground, basketball court, sand volleyball court, picnic benches &
barbecue grills, clubhouse, RV and boat parking, covered parking (30 spaces),
mini-storage units (136 units), three laundry facilities, a jogging path and a
wading and swimming pool.
Management. Case & Associates Properties, Inc. is the manager of the Patriot
Property. Case & Associates manages over 18,000 apartment units, including both
owned and third party assets, in the southwest region including Tulsa, Oklahoma
City, Wichita, and the Dallas-Ft. Worth metroplex. There is an on-site staff of
management, leasing, and maintenance personnel, all of which are overseen by a
regional and home office supervisor.
T-36
- -------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Midland Loan
Services, Inc., Residential Funding Corporation and CIBC Inc. (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transaction in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availability are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the "SEC")
and incorporated by reference into an effective registration statement
previously filed with the SEC under Rule 415 of the Securities Act of 1933,
including in cases where the material does not pertain to securities that are
ultimately offered for sale pursuant to such registration statement. To Morgan
Stanley's readers worldwide: In addition, please note that this publication has
been issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, and by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED BY THE
U.K. SECURITIES AND FUTURES AUTHORITY
- -------------------------------------------------------------------------------
<PAGE>
$658,587,000 (Approximate)
Commercial Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
<TABLE>
<CAPTION>
Loan No. 11 - Acme (Cape May) Plaza
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cut-off Date Balance: $9,459,453 Balloon Balance: $8,402,811
- ------------------------------------------------------------------------------------------------
Loan Type: Principal and Property Type: Retail
Interest
- ------------------------------------------------------------------------------------------------
Origination Date: April 23, 1998 Location: Cape May, NJ
- ------------------------------------------------------------------------------------------------
Maturity Date:* January 1, 2009 Year Renovated 1998
- ------------------------------------------------------------------------------------------------
Initial Mortgage Rate: 7.550% Appraised Value: $12,000,000
- ------------------------------------------------------------------------------------------------
Annual Debt Service: $801,011 Current LTV: 78.8%
- ------------------------------------------------------------------------------------------------
DSCR: 1.32x Balloon LTV: 70.0%
- ------------------------------------------------------------------------------------------------
Underwritable Net Cash Flow: $1,058,317 Occupancy: 100%
- ------------------------------------------------------------------------------------------------
Occupancy Date: April 1, 1999
- ------------------------------------------------------------------------------------------------
</TABLE>
*For purposes hereof, the Anticipated Repayment Date described below is assumed
to be the maturity date of the Acme Plaza Loan.
The Loan. The Acme (Cape May) Plaza Loan (the "Acme Plaza Loan") is secured by a
first mortgage on the Acme Plaza Shopping Center (the "Acme Plaza Property"), a
150,548 square foot anchored retail center located in Cape May, New Jersey. CIBC
originated the Acme Plaza Loan on April 23, 1998.
The Borrower. The borrower is Shelvin Two, a New Jersey general partnership (the
"Acme Plaza Borrower"). Equity Associates, LP and an Intervivos Q-Tip Trust of
Vincent Polemini are the only partners in the Acme Plaza Borrower. The Acme
Plaza Borrower is a special purpose entity.
Security. The Acme Plaza Loan is secured by a Mortgage, an Assignment of Leases
and Rents, UCC Financing Statements and certain additional security documents.
The Mortgage is a first lien on the fee interest in the Acme Plaza Property. The
Acme Plaza Loan is non-recourse, subject to certain limited exceptions.
Payment Terms. The Mortgage Rate is fixed at 7.550% until January 1, 2009 (the
"Anticipated Repayment Date"), at which time the Mortgage Rate will adjust to
the greater of (i) 9.55% or (ii) the then applicable yield rate on U.S. Treasury
obligations maturing during the month in which the maturity date of the Acme
Plaza Loan occurs, plus 2%. Although the Acme Plaza Loan has a stated term of
368 months, it is assumed for purposes hereof that it has a term of 128 months
with a maturity date of the Anticipated Repayment Date. The Acme Plaza Loan has
an original amortization term of 360 months. The Acme Plaza Loan requires
monthly payments of principal and interest of $66,750.95 until the Anticipated
Repayment Date. If the Acme Plaza Loan is not prepaid on such date, all of the
cash flow from the Acme Plaza Property is to be applied as described in
"Lockbox" below. If not sooner satisfied, all unpaid principal and accrued but
unpaid interest is due on January 1, 2029. The Acme Plaza Loan accrues interest
computed on the basis of the actual number of days elapsed each month in a
360-day year.
Lockbox. Upon a default by the Acme Plaza Borrower, or upon the occurrence of
the Anticipated Repayment Date, the lender may require all gross income from the
Acme Plaza Property to be deposited into a lockbox account controlled by the
lender. Prior to the Anticipated Repayment Date, disbursements from such account
are made as follows: (a) to fund required reserves for the payment of real
estate taxes, insurance and other impounds; (b) to pay
T-37
- -------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Midland Loan
Services, Inc., Residential Funding Corporation and CIBC Inc. (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transaction in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availability are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the "SEC")
and incorporated by reference into an effective registration statement
previously filed with the SEC under Rule 415 of the Securities Act of 1933,
including in cases where the material does not pertain to securities that are
ultimately offered for sale pursuant to such registration statement. To Morgan
Stanley's readers worldwide: In addition, please note that this publication has
been issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, and by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED BY THE
U.K. SECURITIES AND FUTURES AUTHORITY
- -------------------------------------------------------------------------------
<PAGE>
$658,587,000 (Approximate)
Commercial Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
all principal and interest then due; (c) to fund other reserves required under
the related security documents; (d) to pay all other amounts owed the lender
with respect to the Acme Plaza Loan; and (e) to the Acme Plaza Borrower.
Subsequent to the Anticipated Repayment Date, disbursements from such account
are made as follows: (a) to fund required reserves for the payment of real
estate taxes, insurance and other impounds; (b) to pay all principal and
interest (at the initial Mortgage Rate) then due; (c) to fund other reserves
required under the related security documents; (d) to pay budgeted operating
expenses (less management fees payable to Acme Plaza Borrower affiliates)
approved by the lender; (e) to pay budgeted capital expenses approved by the
lender; (f) to pay other extraordinary expenses approved by the lender; (g) to
pay all remaining outstanding principal; (h) to pay all outstanding interest;
(i) to pay all other amounts owed the lender with respect to the Acme Plaza
Loan; and (j) to the Acme Plaza Borrower.
Prepayment/Defeasance. No prepayment or defeasance is permitted prior to the
earlier of (a) April 23, 2003, or (b) two years following the date of the
assignment of the Acme Plaza Loan to a REMIC in connection with a
securitization. Thereafter, until July 1, 2008, any prepayment must be in the
form of a defeasance. Any such defeasance will include release of the related
Acme Plaza Property and the pledge of substitute collateral in the form of
direct, non-callable United States Treasury obligations providing for payments
prior, but as close as possible, to all scheduled Monthly Payment dates, and on
the Anticipated Repayment Date. Each such payment must be equal to or greater
than the scheduled Monthly Payment, and on the Anticipated Repayment Date, must
be sufficient to fully prepay the Acme Plaza Loan on such date. Additionally, a
written confirmation must be obtained from each applicable rating agency
specifying that the defeasance would not result in a downgrade, qualification or
withdrawal of the then current ratings assigned to any class of certificates.
From and after July 1, 2008, the Acme Plaza Loan may be prepaid without the
payment of any prepayment consideration
Transfer of Property or Interest in Borrower. Except as described below, the
lender will have the option to declare the Acme Plaza Loan immediately due and
payable upon the transfer of the Acme Plaza Property or any ownership interest
in the Acme Plaza Borrower. The Acme Plaza Borrower has a one-time right to
transfer the Acme Plaza Property, after the first 12 months of the loan term, to
a transferee approved by the lender if (i) no event of default then exists, (ii)
the proposed transferee reasonably satisfies the lender that it possesses the
ownership and managerial experience and financial resources necessary to operate
the Acme Plaza Property, (iii) the proposed transferee assumes the obligations
of the Acme Plaza Borrower and an acceptable person or entity assumes all
guaranties or indemnities, and (iv) a 1% assumption fee, all reasonably required
documents, a title policy endorsement and reimbursement for all of its costs and
expenses has been received by the lender.
Escrows/Reserves. There is a tax and insurance escrow which requires deposits in
an amount sufficient to pay real estate taxes and insurance premiums when due.
There is an escrow for capital expenditures which is funded monthly in the
amount of $1,910. There is also a $10,000 tenant improvement/leasing commission
escrow, which is to be replenished at the monthly rate of $833.33, when the
balance falls below $10,000.
Subordinate/Other Debt. Secured subordinate indebtedness and encumbrances are
prohibited.
T-38
- -------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Midland Loan
Services, Inc., Residential Funding Corporation and CIBC Inc. (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transaction in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availability are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the "SEC")
and incorporated by reference into an effective registration statement
previously filed with the SEC under Rule 415 of the Securities Act of 1933,
including in cases where the material does not pertain to securities that are
ultimately offered for sale pursuant to such registration statement. To Morgan
Stanley's readers worldwide: In addition, please note that this publication has
been issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, and by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED BY THE
U.K. SECURITIES AND FUTURES AUTHORITY
- -------------------------------------------------------------------------------
<PAGE>
$658,587,000 (Approximate)
Commercial Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
The Property. The Acme Plaza Property is a 150,548 square foot retail shopping
center situated on 18.62 acres of land located in Cape May, New Jersey. The Acme
Plaza Property was built in 1971 and renovated in 1998. According to an April 1,
1999 rent roll, the Acme Plaza Property was 100% leased to 13 tenants, with an
average base rental was $8.51per square foot. Acme Stores (Acme Supermarket) is
the anchor store for the Acme Plaza Property, with a lease covering
approximately 41.2% of available space. Its lease expires on June 29, 2016.
Other lease expirations during the loan term are as follows: 1999 (2,000 square
feet/1.3% of total), 2000 (9,220/6.1%), 2001 (none), 2002 (3,150/2.1%), 2003
(5,500/3.7%), 2004 (none), 2005 (10,000/6.6%), 2006 (none), 2007 (none), and
2008 (35.113/23.3%).
Management. The Acme Plaza Property is managed by Skyline Management, a
full-service property management company. The company manages over 2,000,000
square feet in its current portfolio primarily in the northeastern United
States.
T-39
- -------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Midland Loan
Services, Inc., Residential Funding Corporation and CIBC Inc. (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transaction in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availability are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the "SEC")
and incorporated by reference into an effective registration statement
previously filed with the SEC under Rule 415 of the Securities Act of 1933,
including in cases where the material does not pertain to securities that are
ultimately offered for sale pursuant to such registration statement. To Morgan
Stanley's readers worldwide: In addition, please note that this publication has
been issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, and by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED BY THE
U.K. SECURITIES AND FUTURES AUTHORITY
- -------------------------------------------------------------------------------
<PAGE>
$658,587,000 (Approximate)
Commercial Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
<TABLE>
<CAPTION>
Loan No. 12 - The Place Apartments
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cut-off Date Balance: $8,693,077 Balloon Balance: $7,619,550
- ------------------------------------------------------------------------------------------------
Loan Type: Principal & Interest Property Type: Multifamily
- ------------------------------------------------------------------------------------------------
Origination Date: May 4, 1999 Location: Ft. Myers, FL
- ------------------------------------------------------------------------------------------------
Maturity Date: June 1, 2009 Year Renovated: 1999
- ------------------------------------------------------------------------------------------------
Initial Mortgage Rate: 7.150% Appraised Value: $10,887,000
- ------------------------------------------------------------------------------------------------
Annual Debt Service: $705,125 Current LTV: 79.8%
- ------------------------------------------------------------------------------------------------
DSCR: 1.26x Balloon LTV: 70.0%
- ------------------------------------------------------------------------------------------------
Underwritable Net Cash Flow: $887,965 Occupancy: 99.1%
- ------------------------------------------------------------------------------------------------
Occupancy Date: March 24, 1999
- ------------------------------------------------------------------------------------------------
</TABLE>
The Loan. The Place Apartments Loan (the "Place Apartments Loan") is secured by
a first mortgage on a 230-unit garden apartment complex located at 4757 Barkley
Circle, Ft. Myers, Florida (the "Place Apartments Property"). RFC originated the
Place Apartments Loan on May 4, 1999.
The Borrower. The borrower is The Place Apartments, Ltd., a Florida limited
partnership (the "Place Apartments Borrower"). The corporate general partner of
the Place Apartments Borrower is A&M Business Properties, Inc., an Ohio
corporation. The Place Apartments Borrower is a special purpose entity.
Security. The Place Apartments Loan is secured by a Mortgage, an Assignment of
Leases and Rents, UCC Financing Statements and certain additional security
documents. The Mortgage is a first lien on the fee interest in the Place
Apartments Property. The Place Apartments Loan is non-recourse, subject to
certain limited exceptions.
Payment Terms. The Place Apartments Loan has a fixed 7.150% Mortgage Rate, an
original term of 120 months and an original amortization of 360 months. The
Place Apartments Loan requires monthly principal and interest payments of
$58,760.39 until maturity, at which time all unpaid principal and accrued but
unpaid interest is due. The Place Apartments Loan accrues interest computed on
the basis of the actual number of days elapsed each month in a 360-day year.
Prepayment/Defeasance. No prepayment or defeasance is permitted prior to the
earlier of (a) July1, 2003, or (b) two years following the date of the
assignment of the Place Apartments Loan to a REMIC in connection with a
securitization. Thereafter, until March 1, 2009, any prepayment must be in the
form of a defeasance. Any such defeasance will include release of the Place
Apartments Property and the pledge of substitute collateral in the form of
direct, non-callable United States Treasury obligations providing for payments
prior, but as close as possible, to all scheduled Monthly Payment dates, and on
the Maturity Date. Each such payment must be equal to or greater than each
scheduled Monthly Payment during the loan term, and greater than the anticipated
balloon balance due on the Maturity Date. Additionally, a written confirmation
must be obtained from each applicable rating agency specifying that the
defeasance would not result in a downgrade, qualification or withdrawal of the
then current ratings assigned
T-40
- -------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Midland Loan
Services, Inc., Residential Funding Corporation and CIBC Inc. (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transaction in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availability are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the "SEC")
and incorporated by reference into an effective registration statement
previously filed with the SEC under Rule 415 of the Securities Act of 1933,
including in cases where the material does not pertain to securities that are
ultimately offered for sale pursuant to such registration statement. To Morgan
Stanley's readers worldwide: In addition, please note that this publication has
been issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, and by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED BY THE
U.K. SECURITIES AND FUTURES AUTHORITY
- -------------------------------------------------------------------------------
<PAGE>
$658,587,000 (Approximate)
Commercial Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-C1
to any class of certificates. From and after March 1, 2009, the Place Apartments
Loan may be prepaid without the payment of any prepayment consideration.
Transfer of Properties or Interest in Borrower. Except as described below, the
lender will have the option to declare the Place Apartments Loan immediately due
and payable upon the transfer of the Place Apartments Property or any ownership
interest in the Place Apartments Borrower. The Place Apartments Borrower has a
one time right to transfer the Place Apartments Property to a qualifying single
asset transferee approved by the lender if (i) the proposed transferee
reasonably satisfies the lender that it possesses the ownership and managerial
experience and financial resources customarily required by the lender for
properties such as the Place Apartments Property, (ii) the proposed transferee
assumes the obligations of the Place Apartments Borrower, (iii) no event of
default then exists, and (iv) a 1% assumption fee has been received by the
lender. The Place Apartments Loan documents also allow transfers of membership
interest in the Place Apartments Borrower which: (a) do not amount, in the
aggregate, to a transfer of 49% or more of such membership interests to a third
party; (b) are the result of a death or physical or mental disability, or (c)
are to an immediate family member or trust for such a family member.
Escrow/Reserves. There is a tax reserve which requires deposits in an amount
sufficient to pay real estate taxes when due. Additionally, there is a
replacement reserve funded monthly at the rate of $4,485 per month.
Subordination/Other Debt. Secured subordinate indebtedness and encumbrances are
prohibited.
The Property. The Place Apartments Property is located at 4757 Barkley Circle,
Ft. Myers, Florida. It was constructed in two phases, beginning in 1985 and
concluding in 1987. It is a garden-style apartment complex consisting of 230
units contained in fifteen 2-story and two 5-story, walk-up/elevator serviced
buildings. The Place Apartments Property contains 64 one-bedroom units and 166
two-bedroom units. Amenities include laundry facilities, temperature controlled
swimming pools, spas, tennis, handball and basketball courts, vaulted ceilings,
water views, washer/dryer hookups and screened-in balconies.
Management. The Place Apartments is managed by A&M Properties, a
borrower-related entity that is 50% owned by one of the sponsors, Lawrence
Maxwell. A&M Properties currently manages 8,300 multifamily and mobile home
units.
T-41
- -------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Midland Loan
Services, Inc., Residential Funding Corporation and CIBC Inc. (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transaction in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availability are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the "SEC")
and incorporated by reference into an effective registration statement
previously filed with the SEC under Rule 415 of the Securities Act of 1933,
including in cases where the material does not pertain to securities that are
ultimately offered for sale pursuant to such registration statement. To Morgan
Stanley's readers worldwide: In addition, please note that this publication has
been issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, and by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED BY THE
U.K. SECURITIES AND FUTURES AUTHORITY
- -------------------------------------------------------------------------------
<PAGE>
Commercial Mortgage Acceptance Corp.
Depositor
Commercial Mortgage Pass-Through Certificates
(Issuable in Series)
Commercial Mortgage Acceptance Corp. (the "Depositor") from time to time
will offer Commercial Mortgage Pass-Through Certificates (the "Offered
Certificates") in "Series" by means of this Prospectus and a separate Prospectus
Supplement for each Series. The Offered Certificates, together with any other
Commercial Mortgage Pass-Through Certificates of such Series, are collectively
referred to herein as the "Certificates." The Certificates of each Series will
evidence beneficial ownership interests in a trust fund (the "Trust Fund") to be
established by the Depositor. The Certificates of a Series may be divided into
two or more "Classes", which may have different interest rates and which may
receive principal payments in differing proportions and at different times.
(continued on next page)
The Certificates do not represent an obligation of or an interest in the
Depositor or any affiliate thereof. Unless so specified in the related
Prospectus Supplement, neither the Certificates nor the Mortgage Loans are
insured or guaranteed by any governmental agency or instrumentality or by any
other person or entity. See "RISK FACTORS."
Prospective Investors should consider the material risks discussed herein
under "RISK FACTORS" at page 6 and such information as may be set forth under
the caption "RISK FACTORS" in the related Prospectus Supplement before
purchasing any of the Offered Certificates.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Offers of the Certificates may be made through one or more different
methods, including offerings through underwriters, as more fully described under
"PLAN OF DISTRIBUTION" herein and in the related Prospectus Supplement. Certain
offerings of the Certificates, as specified in the related Prospectus
Supplement, may be made in one or more transactions exempt from the registration
requirements of the Securities Act of 1933, as amended. Such offerings are not
being made pursuant to the Registration Statement of which this Prospectus forms
a part.
Retain this Prospectus for future reference. This Prospectus may not be
used to consummate sales of the Certificates offered hereby unless accompanied
by a Prospectus Supplement.
The date of this Prospectus is September 9, 1998.
<PAGE>
(cover page continued) In addition, rights of the holders of certain Classes to
receive principal and interest may be subordinated to those of other Classes.
Each Trust Fund will consist of a pool (the "Mortgage Pool") of one or more
mortgage loans secured by first or junior liens on fee simple or leasehold
interests in commercial real estate properties, multifamily residential
properties and/or mixed-use properties and related property and interests,
conveyed to such Trust Fund by the Depositor, and other assets, including any
Credit Enhancement described in the related Prospectus Supplement. See
"DESCRIPTION OF THE CERTIFICATES--General" herein. The percentage of any
mixed-use property used for commercial purposes will be set forth in the
Prospectus Supplement. Multifamily properties (consisting of apartments,
congregate care facilities and/or mobile home parks) and general commercial
properties (consisting of retail properties, including shopping centers, office
buildings, mini-warehouses, warehouses, industrial properties and/or other
similar types of properties) will represent security for a material
concentration of the Mortgage Loans in any Trust Fund, based on principal
balance at the time such Trust Fund is formed. See "DESCRIPTION OF THE MORTGAGE
POOL" in the Prospectus Supplement. If so specified in the related Prospectus
Supplement, the Mortgage Pool may also include installment contracts for the
sale of such types of properties. Such mortgage loans and installment contracts
are hereinafter referred to as the "Mortgage Loans." The Mortgage Loans will
have fixed or adjustable interest rates. Some Mortgage Loans will fully amortize
over their remaining terms to maturity and others will provide for balloon
payments at maturity. The Mortgage Loans will provide for recourse against only
the Mortgaged Properties or provide for recourse against the other assets of the
obligors thereunder. The Mortgage Loans will be newly originated or seasoned,
and will be acquired by the Depositor either directly or through one or more
affiliates. The Mortgage Loans may be originated by affiliated entities,
including Midland Loan Services, Inc. and/or unaffiliated entities. See "RISK
FACTORS." Information regarding each Series of Certificates, including interest
and principal payment provisions for each Class, as well as information
regarding the size, composition and other characteristics of the Mortgage Pool
relating to such Series, will be furnished in the related Prospectus Supplement.
The Mortgage Loans will be master serviced by Midland Loan Services, Inc.
The Depositor, as specified in the related Prospectus Supplement, may elect
to treat all or a specified portion of the collateral securing any Series of
Certificates as a "real estate mortgage investment conduit" (a "REMIC"), or an
election may be made to treat the arrangement by which a Series of Certificates
is issued as a REMIC. If such election is made, each Class of Certificates of a
Series will be either Regular Certificates or Residual Certificates, as
specified in the related Prospectus Supplement. If no such election is made, the
Trust Fund, as specified in the related Prospectus Supplement, will be
classified as a grantor trust for federal income tax purposes. See "MATERIAL
FEDERAL INCOME TAX CONSEQUENCES" herein.
With respect to each Series, all of the Offered Certificates will be rated
in one of the four highest ratings categories by one or more nationally
recognized statistical rating organizations. There will have been no public
market for the Certificates of any Series prior to the offering thereof. No
assurance can be given that such a secondary market will develop as a result of
such offering or, if it does develop, that it will continue. The Depositor does
not intend to make an application to list any Series of Certificates on a
national securities exchange or quote any Series of Certificates in an automated
quotation system of a registered securities association.
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PROSPECTUS SUPPLEMENT
The Prospectus Supplement relating to each Series of Certificates will,
among other things, set forth with respect to such Series of Certificates: (i)
the identity of each Class within such Series; (ii) the initial aggregate
principal amount, the interest rate (the "Pass-Through Rate") (or the method for
determining it) and the authorized denominations of each Class of Certificates
of such Series; (iii) certain information concerning the Mortgage Loans relating
to such Series, including the principal amount, type and characteristics of such
Mortgage Loans on the date of issue of such Series of Certificates; (iv) the
circumstances, if any, under which the Certificates of such Series are subject
to redemption prior to maturity; (v) the final scheduled distribution date of
each Class of Certificates of such Series; (vi) the method used to calculate the
aggregate amount of principal available and required to be applied to the
Certificates of such Series on each Distribution Date; (vii) the order of the
application of principal and interest payments to each Class of Certificates of
such Series and the allocation of principal to be so applied; (viii) the extent
of subordination of any Subordinate Certificates; (ix) the principal amount of
each Class of Certificates of such Series that would be outstanding on specified
Distribution Dates, if the Mortgage Loans relating to such Series were prepaid
at various assumed rates; (x) the Distribution Dates for each Class of
Certificates of such Series; (xi) relevant financial information with respect to
the mortgagor(s) and the Mortgaged Properties underlying the Mortgage Loans
relating to such Series, if applicable; (xii) information with respect to the
terms of the Subordinate Certificates or Residual Certificates, if any, of such
Series; (xiii) additional information with respect to the Credit Enhancement, if
any, relating to such Series; (xiv) additional information with respect to the
plan of distribution of such Series; and (xv) whether the Certificates of such
Series will be registered in the name of the nominee of The Depository Trust
Company or another depository.
ADDITIONAL INFORMATION
This Prospectus contains, and the Prospectus Supplement for each Series of
Certificates will contain, a summary of the material terms of the documents
referred to herein and therein, but neither contains nor will contain all of the
information set forth in the Registration Statement (the "Registration
Statement") of which this Prospectus and the related Prospectus Supplement is a
part. For further information, reference is made to such Registration Statement
and the exhibits thereto which the Depositor has filed with the Securities and
Exchange Commission (the "Commission"), under the Securities Act of 1933, as
amended (the "1933 Act"). Statements contained in this Prospectus and any
Prospectus Supplement as to the contents of any contract or other document
referred to are summaries and in each instance reference is made to the copy of
the contract or other document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such
reference. Copies of the Registration Statement may be obtained from the
Commission, upon payment of the prescribed charges, or may be examined free of
charge at the Commission's offices. Reports and other information filed with the
Commission can be inspected and copied at prescribed rates at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Regional Offices of the Commission at Seven
World Trade Center, 13th Floor, New York, New York 10048; and Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of the Agreement pursuant to which a Series of Certificates is issued
will be provided to each person to whom a Prospectus and the related Prospectus
Supplement are delivered, upon written or oral request directed to: Commercial
Mortgage Acceptance Corp., 201 West 10th Street, 6th Floor, Kansas City,
Missouri 64105, Attention: Clarence Krantz, telephone number (816) 435-5000. The
Commission maintains an Internet Web site that contains reports, proxy
information statements and other information regarding registrants that file
electronically with the Commission. The address of such Internet Web site is
http://www.sec.gov.
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INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
With respect to the Trust Fund for each Series, there are incorporated
herein by reference all documents and reports filed or caused to be filed by the
Depositor with respect to such Trust Fund pursuant to Section 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934, as amended (the "1934 Act"),
after the date of this Prospectus and prior to the termination of the offering
of the Offered Certificates evidencing an interest in such Trust Fund. The
Depositor will provide or cause to be provided without charge to each person to
whom this Prospectus is delivered in connection with the offering of one or more
Classes of Certificates, upon request, a copy of any or all such documents or
reports incorporated herein by reference, in each case to the extent such
documents or reports relate to one or more of such Classes of such Certificates,
other than the exhibits to such documents (unless such exhibits are specifically
incorporated by reference in such documents). The Depositor has determined that
its financial statements are not material to the offering of any of the Offered
Certificates. See "FINANCIAL INFORMATION." Requests to the Depositor should be
directed to: Commercial Mortgage Acceptance Corp., 210 West 10th Street, 6th
Floor, Kansas City, Missouri 64105, Attention: Clarence Krantz, telephone number
(816) 435-5000.
REPORTS
In connection with each distribution and annually, Certificateholders will
be furnished with statements containing information with respect to principal
and interest payments and the related Trust Fund, as described herein and in the
applicable Prospectus Supplement for such Series. Any financial information
contained in such reports most likely will not have been examined or reported
upon by an independent public accountant. See "DESCRIPTION OF THE
CERTIFICATES--Reports to Certificateholders." The Master Servicer for each
Series will furnish periodic statements setting forth certain specified
information relating to the Mortgage Loans to the related Trustee, and, in
addition, annually will furnish such Trustee with a statement from a firm of
independent public accountants with respect to the examination of certain
documents and records relating to the servicing of the Mortgage Loans in the
related Trust Fund. See "SERVICING OF THE MORTGAGE LOANS--Evidence of
Compliance." Copies of the monthly and annual statements provided by the Master
Servicer to the Trustee will be furnished to Certificateholders of each Series
upon request addressed to the Trustee for the related Trust Fund.
The Depositor intends to apply for relief from the reporting requirements
of Sections 13, 15(d) and 16(a) of the 1934 Act. In lieu of filing the periodic
reports required by those sections, the Master Servicer, on behalf of the
related Trust Fund, will file with the Commission on Form 8-K the monthly
reports and information set forth in the related Prospectus Supplement. See "THE
POOLING AND SERVICING AGREEMENT--Reports to Certificateholders; Available
Information" in the related Prospectus Supplement. The Depositor does not intend
to file periodic reports under the 1934 Act with respect to the related Trust
Fund for any Series of Certificates following the completion of the reporting
period required by Rule 15d-1 under the 1934 Act.
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TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT........................................................iii
ADDITIONAL INFORMATION.......................................................iii
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE.............................iv
REPORTS.......................................................................iv
SUMMARY OF PROSPECTUS..........................................................1
RISK FACTORS...................................................................6
Limited Liquidity; Lack of Market for Resale................................6
Limited Assets as Security for Investment in Certificates; No Personal
Liability.................................................................6
Effects of Prepayments on Average Life of Certificates and Yields...........6
Risks Associated with Lending on Income Producing Properties................7
Potential Conflicts of Interest.............................................8
Certain Tax Considerations of Variable Rate Certificates....................9
Limited Nature of Credit Ratings............................................9
Potential Inability to Verify Underwriting Standards.......................10
Nonrecourse Mortgage Loans; Limited Recovery...............................10
Inclusion of Delinquent and Non-Performing Mortgage Loans May
Adversely Affect Yields..................................................10
Junior Mortgage Loans......................................................10
Balloon Payments...........................................................10
Extensions and Modifications of Defaulted Mortgage Loans;
Additional Servicing Fees................................................11
Risks Related to the Mortgagor's Form of Entity and Sophistication.........11
Credit Enhancement Limitations.............................................11
Risks to Subordinated Certificateholders; Lower Payment Priority...........12
Taxable Income in Excess of Distributions Received.........................13
Due-on-Sale Clauses and Assignments of Leases and Rents....................13
Environmental Risks........................................................13
Certain Federal Tax Considerations Regarding Residual Certificates.........14
ERISA Considerations.......................................................14
Special Hazard Losses......................................................15
Control; Decisions by Certificateholders...................................15
Book-Entry Registration....................................................15
THE DEPOSITOR.................................................................15
THE MASTER SERVICER...........................................................16
USE OF PROCEEDS...............................................................16
DESCRIPTION OF THE CERTIFICATES...............................................16
General....................................................................17
Distributions on Certificates..............................................18
Accounts...................................................................18
Amendment..................................................................20
Termination................................................................21
Reports to Certificateholders..............................................22
The Trustee................................................................22
THE MORTGAGE POOLS............................................................22
General....................................................................22
Assignment of Mortgage Loans...............................................24
Mortgage Underwriting Standards and Procedures.............................25
Representations and Warranties.............................................26
SERVICING OF THE MORTGAGE LOANS...............................................27
General....................................................................27
Collections and Other Servicing Procedures.................................27
Insurance..................................................................28
Fidelity Bonds and Errors and Omissions Insurance..........................30
Servicing Compensation and Payment of Expenses.............................30
Advances...................................................................31
Modifications, Waivers and Amendments......................................31
Evidence of Compliance.....................................................31
Certain Matters With Respect to the Master Servicer, the Special
Servicer, the Trustee and the Depositor..................................32
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Events of Default..........................................................33
Rights Upon Event of Default...............................................34
CREDIT ENHANCEMENT............................................................35
General....................................................................35
Subordinate Certificates...................................................35
Reserve Funds..............................................................36
Cross-Support Features.....................................................37
Certificate Guarantee Insurance............................................37
Limited Guarantee..........................................................37
Letter of Credit...........................................................37
Pool Insurance Policies; Special Hazard Insurance Policies.................37
Surety Bonds...............................................................38
Fraud Coverage.............................................................38
Mortgagor Bankruptcy Bond..................................................38
CERTAIN LEGAL ASPECTS OF THE MORTGAGE LOANS...................................38
General....................................................................39
Types of Mortgage Instruments..............................................39
Personalty.................................................................40
Installment Contracts......................................................40
Junior Mortgages; Rights of Senior
Mortgagees or Beneficiaries..............................................40
Foreclosure................................................................42
Environmental Risks........................................................48
Enforceability of Certain Provisions.......................................51
Soldiers' and Sailors' Relief Act..........................................53
Applicability of Usury Laws................................................53
Alternative Mortgage Instruments...........................................54
Leases and Rents...........................................................54
Secondary Financing; Due-on-Encumbrance Provisions.........................55
Certain Laws and Regulations...............................................55
Type of Mortgaged Property.................................................56
Criminal Forfeitures.......................................................56
Americans With Disabilities Act............................................56
MATERIAL FEDERAL INCOME TAX CONSEQUENCES......................................57
General....................................................................57
Federal Income Tax Consequences For REMIC Certificates.......................58
General....................................................................58
Qualification as a REMIC...................................................58
Taxation of REMIC Regular Certificates.....................................61
Taxation of the REMIC......................................................68
Taxation of Holders of Residual Certificates...............................70
Reporting Requirements and Backup Withholding..............................75
Tax Treatment of Foreign Investors.........................................76
Administrative Matters.....................................................77
Federal Income Tax Consequences For Certificates As To Which No REMIC
Election Is Made............................................................78
Tax Status as a Grantor Trust..............................................78
Tax Status of Certificates.................................................79
Pass-Through Certificates..................................................79
Stripped Certificates......................................................80
Sale of Certificates.......................................................82
Reporting Requirements and Backup
Withholding..............................................................82
Treatment of Foreign Investors.............................................83
STATE TAX CONSIDERATIONS......................................................83
ERISA CONSIDERATIONS..........................................................83
Prohibited Transactions....................................................84
Unrelated Business Taxable Income-Residual Interests.......................85
LEGAL INVESTMENT..............................................................86
PLAN OF DISTRIBUTION..........................................................86
LEGAL MATTERS.................................................................87
FINANCIAL INFORMATION.........................................................87
RATINGS.......................................................................87
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SUMMARY OF PROSPECTUS
The following summary of certain pertinent information is qualified in its
entirety by reference to the more detailed information appearing elsewhere in
this Prospectus and by reference to the information with respect to each Series
of Certificates contained in the Prospectus Supplement to be prepared and
delivered in connection with the offering of such Series. An Index of
Definitions is included at the end of this Prospectus.
Title of Certificates........Commercial Mortgage Pass-Through Certificates,
issuable in Series Certificates (the "Certifi-
cates").
Depositor....................Commercial Mortgage Acceptance Corp., a wholly-
owned subsidiary of Midland Loan Services, Inc. See
"THE DEPOSITOR."
Master Servicer..............Midland Loan Services, Inc., a wholly-owned
subsidiary of PNC Bank, National Association. See
"SERVICING OF THE MORTGAGE LOANS--General."
Special Servicer.............The special servicer (the "Special Servicer"),
if any, for each Series of Certificates, which
may be an affiliate of the Depositor, will be
named, or the circumstances in accordance with
which a Special Servicer will be appointed, will
be described in the related Prospectus Supplement.
See "SERVICING OF THE MORTGAGE LOANS--General."
Trustee......................The trustee (the "Trustee") for each Series of
Certificates will be named in the related
Prospectus Supplement. See "DESCRIPTION OF THE
CERTIFICATES--The Trustee."
The Trust Fund...............Each Series of Certificates will represent in the
aggregate the entire beneficial ownership interest
in a Trust Fund consisting primarily of the
following:
A. Mortgage Pool.........The primary assets of each Trust Fund will consist
of a pool of mortgage loans (the "Mortgage Pool")
secured by first or junior mortgages, deeds of
trust or similar security instruments (each, a
"Mortgage") on, or installment contracts ("Install-
ment Contracts") for the sale of, fee simple or
leasehold interests in commercial property and/or
mixed-use property, and related property and
interests (each such interest or property, as
the case may be, a "Mortgaged Property").
Multifamily properties (consisting of apartments,
congregate care facilities and/or mobile home
parks) and general commercial properties (consist-
ing of retail properties, including shopping
centers, office buildings, mini-warehouses, ware-
houses, industrial properties and/or other similar
types of properties) will represent security for
a material concentration of the Mortgage Loans in
any Trust Fund, based on principal balance at the
time such Trust Fund is formed. Each such mortgage
loan or Installment Contract is herein referred
to as a "Mortgage Loan." The Mortgage Loans will
not be guaranteed or insured by the Depositor or
any of its affiliates. The Prospectus Supplement
will indicate whether the Mortgage Loans will be
guaranteed or insured by any governmental agency or
instrumentality or
1
<PAGE>
other person. The Mortgage Loans will have the
additional characteristics described under "THE
MORTGAGE POOLS" herein and "DESCRIPTION OF THE
MORTGAGE POOL" in the related Prospectus
Supplement. All Mortgage Loans will have been
purchased by the Depositor on or before the date
of initial issuance of the related Series of
Certificates.
All Mortgage Loans will be of one or more of the
following types: Mortgage Loans with fixed
interest rates; Mortgage Loans with adjustable
interest rates; Mortgage Loans whose principal
balances fully amortize over their remaining terms
to maturity; Mortgage Loans whose principal
balances do not fully amortize, but instead
provide for a substantial principal payment at the
stated maturity of the loan; Mortgage Loans that
provide for recourse against only the Mortgaged
Properties; and Mortgage Loans that provide for
recourse against the other assets of the related
mortgagors.
Certain Mortgage Loans may provide that scheduled
interest and principal payments thereon are
applied first to interest accrued from the last
date to which interest has been paid to the date
such payment is received and the balance thereof
is applied to principal, and other Mortgage Loans
may provide for payment of interest in advance
rather than in arrears. Each Mortgage Loan may
contain prohibitions on prepayment or require
payment of a premium or a yield maintenance
penalty in connection with a prepayment, in each
case as described in the related Prospectus
Supplement. The Mortgage Loans may provide for
payments of principal, interest or both, on due
dates that occur monthly, quarterly, semi-annually
or at such other interval as is specified in the
related Prospectus Supplement. See "DESCRIPTION OF
THE MORTGAGE POOL" in the related Prospectus
Supplement.
The Depositor will not originate any Mortgage
Loan, unless provided in the Prospectus
Supplement; however, some or all of the Mortgage
Loans may be originated by affiliates of the
Depositor.
B. Accounts................The Master Servicer generally will be required
to establish and maintain one or more accounts
(the "Collection Account") in the name of the
Trustee on behalf of the Certificateholders into
which the Master Servicer will, to the extent
described herein and in the related Prospectus
Supplement, deposit all payments and collections
received or advanced with respect to the Mortgage
Loans. The Trustee generally will be required to
establish an account (the "Distribution Account")
into which the Master Servicer will deposit
amounts held in the Collection Account from which
distributions of principal and interest will be
made. Such distributions will be made to the
Certificateholders in the manner described in the
related Prospectus Supplement. Funds held in the
Collection Account and Distribution Account may be
invested in certain short-term, investment grade
obligations.
C. Credit Enhancement.....If so provided in the related Prospectus
Supplement, protection against certain defaults
and losses with respect to one or more Classes of
2
<PAGE>
Certificates of a Series or the related Mortgage
Loans ("Credit Enhancement"). Credit Enhancement
may be in the form of a letter of credit, the
subordination of one or more Classes of the
Certificates of such Series, the establishment of
one or more reserve funds, surety bonds,
certificate guarantee insurance, limited
guarantees, or another type of credit support, or
a combination thereof. It is unlikely that Credit
Enhancement will protect against all risks of loss
or guarantee repayment of the entire principal
balance of the Certificates and interest thereon.
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 Enhancement,
if any, will be described in the applicable
Prospectus Supplement for a Series of
Certificates. See "RISK FACTORS--Credit
Enhancement Limitations" and "CREDIT
ENHANCEMENT--General."
Description of Certificates...The Certificates of each Series will be issued
pursuant to a Pooling and Servicing Agreement (the
"Agreement") and will represent in the aggregate
the entire beneficial ownership interest in the
related Trust Fund. If so specified in the
applicable Prospectus Supplement, Certificates of
a given Series may be issued in several Classes,
which may pay interest at different rates, may
represent different allocations of the right to
receive principal and interest payments, and
certain of which may be subordinated to other
Classes in the event of shortfalls in available
cash flow from the underlying Mortgage Loans.
Alternatively, or in addition, Classes may be
structured to receive principal payments in
sequence. Each Class in a group of sequential pay
Classes would be entitled to be paid in full
before the next Class in the group is entitled to
receive any principal payments. A Class of
Certificates may also provide for payments of
principal only or interest only or for
disproportionate payments of principal and
interest. Each Series of Certificates (including
any Class or Classes of Certificates of such
Series not offered hereby) will represent in the
aggregate the entire beneficial ownership interest
in the Trust Fund. See "PROSPECTUS SUPPLEMENT" for
a listing of additional characteristics of the
Certificates that will be included in the
Prospectus Supplement for each Series.
The Certificates will not be guaranteed or insured
by the Depositor or any of its affiliates. Unless
so specified in the related Prospectus Supplement,
neither the Certificates nor the Mortgage Loans
are insured or guaranteed by any governmental
agency or instrumentality or by any other person
or entity. See "RISK FACTORS--Limited Assets as
Security for Investment in Certificates; No
Personal Liability" and "DESCRIPTION OF THE
CERTIFICATES."
Distributions on
Certificates...............Distributions of principal and interest on the
Certificates of each Series will be made to the
registered holders thereof on the day (the
"Distribution Date") specified in the related
Prospectus Supplement, beginning in the period
specified in the related Prospectus Supplement
following the establishment of the related Trust
Fund.
3
<PAGE>
With respect to each Series of Certificates on
each Distribution Date, the Trustee (or such other
paying agent as may be identified in the
applicable Prospectus Supplement) will distribute
to the Certificateholders the amounts described in
the related Prospectus Supplement that are due to
be paid on such Distribution Date. In general,
such amounts will include previously undistributed
payments of principal (including principal
prepayments, if any) and interest on the Mortgage
Loans received by the Master Servicer or the
Special Servicer, if any, after a date specified
in the related Prospectus Supplement (the "Cut-off
Date") and prior to the day preceding each
Distribution Date specified in the related
Prospectus Supplement.
Advances......................With respect to each Series of Certificates, the
related Prospectus Supplement will set forth the
obligations of the Master Servicer and the Special
Servicer, if any, as part of their servicing
responsibilities, to make certain advances with
respect to delinquent payments on the Mortgage
Loans, payments of taxes, assessments, insurance
premiums and other required payments. See
"SERVICING OF THE MORTGAGE LOANS--Advances."
Termination...................The obligations of the parties to the Agreement
for each Series will terminate upon: (i) the
purchase of all of the assets of the related Trust
Fund, as described in the related Prospectus
Supplement; (ii) the later of (a) the distribution
to Certificateholders of that Series of final
payment with respect to the last outstanding
Mortgage Loan or (b) the disposition of all
property acquired upon foreclosure or deed-in-lieu
of foreclosure with respect to the last
outstanding Mortgage Loan and the remittance to
the Certificateholders of all funds due under the
Agreement; (iii) the sale of the assets of the
related Trust Fund after the principal amounts of
all Certificates have been reduced to zero under
circumstances set forth in the Agreement; or (iv)
mutual consent of the parties and all
Certificateholders. With respect to each Series,
the Trustee will give or cause to be given written
notice of termination of the Agreement to each
Certificateholder and, unless otherwise specified
in the applicable Prospectus Supplement, the final
distribution under the Agreement will be made only
upon surrender and cancellation of the related
Certificates at an office or agency specified in
the notice of termination. See "DESCRIPTION OF THE
CERTIFICATES--Termination."
Risk Factors..................There are material risks associated with an invest
-ment in the Certificates. See "RISK FACTORS."
Listing of Certificates......The Depositor does not currently intend to make an
application to list any Series of Certificates on
a national securities exchange or quote any Series
of Certificates in the automated quotation system
of a registered securities association. See "RISK
FACTORS--Limited Liquidity; Lack of Market for
Resale."
4
<PAGE>
Material Federal Income
Tax Consequences..............The Certificates of each Series will constitute
either (i) "Regular Interests" ("Regular
Certificates") and "Residual Interests" ("Residual
Certificates") in a Trust Fund treated as a REMIC
under Sections 860A through 860G of the Internal
Revenue Code of 1986 (the "Code"), or (ii)
interests in a Trust Fund treated as a grantor
trust under applicable provisions of the Code. For
the treatment of Regular Certificates, Residual
Certificates or grantor trust certificates under
the Code, see "MATERIAL FEDERAL INCOME TAX
CONSEQUENCES" herein and in the related Prospectus
Supplement. The information contained in these
sections is supported by the opinion of Morrison &
Hecker L.L.P., counsel to the Depositor. Potential
purchasers of Certificates, however, are advised
to consult their own tax advisers regarding the
purchase of Certificates.
ERISA Considerations..........A fiduciary of an employee benefit plan and
certain other retirement plans and arrangements
that is subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or
Section 4975 of the Code (each, a "Plan") should
carefully review with its legal advisors whether
the purchase or holding of Senior Certificates may
give rise to a transaction that is prohibited or
is not otherwise permissible either under ERISA or
Section 4975 of the Code. Subordinate Certificates
may not be purchased by or transferred to a Plan.
See "ERISA CONSIDERATIONS" herein and in the
related Prospectus Supplement.
Legal Investment..............The related Prospectus Supplement will indicate
whether the Offered Certificates will constitute
"mortgage related securities" for purposes of the
Secondary Mortgage Market Enhancement Act of 1984.
Accordingly, investors whose investment authority
is subject to legal restrictions should consult
their own legal advisors to determine whether and
to what extent the Certificates constitute legal
investments for them. See "LEGAL INVESTMENT"
herein and in the related Prospectus Supplement.
Rating........................At the date of issuance, as to each Series, each
Class of Offered Certificates will be rated not
lower than investment grade by one or more
nationally recognized statistical rating agencies
(each, a "Rating Agency"). See "RATING" herein and
"RATINGS" in the related Prospectus Supplement.
5
<PAGE>
RISK FACTORS
Investors should consider, in connection with the purchase of Offered
Certificates, among other things, the following factors and certain other
factors as may be set forth in "RISK FACTORS" in the related Prospectus
Supplement.
Limited Liquidity; Lack of Market for Resale
There can be no assurance that a secondary market for the Certificates of
any Series will develop or, if it does develop, that it will provide holders
with liquidity of investment or will continue while Certificates of such Series
remain outstanding. The Depositor does not currently intend to make an
application to list any Series of Certificates on a national securities exchange
or quote any Series of Certificates on an automated quotation system of a
Registered Securities Association. The market value of Certificates will
fluctuate with changes in prevailing rates of interest. Consequently, any sale
of Certificates by a holder in any secondary market that may develop may be at a
discount from 100% of their original principal balance or from their purchase
price. Furthermore, secondary market purchasers may look only hereto, to the
related Prospectus Supplement and to the reports to Certificateholders delivered
pursuant to the Agreement as described herein under the heading "DESCRIPTION OF
THE CERTIFICATES--Reports to Certificateholders" and "SERVICING OF THE MORTGAGE
LOANS--Evidence of Compliance" for information concerning the Certificates.
Certificateholders will have only those redemption rights and the Certificates
will be subject to early retirement only under the circumstances described
herein or in the related Prospectus Supplement. See "DESCRIPTION OF THE
CERTIFICATES--Termination."
Limited Assets as Security for Investment in Certificates; No Personal Liability
A Series of Certificates will have a claim against or security interest in
the Trust Funds for another Series only if so specified in the related
Prospectus Supplement. If the related Prospectus Supplement does not specify
that a Series of Certificates will have a claim against or security interest in
the Trust Funds for another Series and the related Trust Fund is insufficient to
make payments on such Certificates, no other assets will be available for
payment of the deficiency. Additionally, certain amounts remaining in certain
funds or accounts, including the Distribution Account, the Collection Account
and any accounts maintained as Credit Enhancement, may be withdrawn under
certain conditions, as described in the related Prospectus Supplement. In the
event of such withdrawal, such amounts will not be available for future payment
of principal of or interest on the Certificates. If so provided in the
Prospectus Supplement for a Series of Certificates consisting of one or more
Classes of Subordinate Certificates, on any Distribution Date in respect of
which losses or shortfalls in collections on the Mortgaged Properties have been
realized, 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 such Prospectus Supplement.
In general, neither the Depositor, nor any partner, director, officer,
employee or agent of the Depositor, will be liable to the related Trust Fund or
the Certificateholders for any action taken, or for refraining from the taking
of any action in good faith pursuant to the Agreement. As a result, if the
assets of the related Trust Fund are depleted, the Certificateholders will not
be able to recover any amounts from such persons, provided the applicable
standard of care has been met.
Effects of Prepayments on Average Life of Certificates and Yields
Prepayments on the Mortgage Loans 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
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Loans were made as scheduled. Thus, the prepayment experience on the Mortgage
Loans 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, as well as Acts of God.
Accordingly, there can be no assurance as to the rate of prepayment on the
Mortgage Loans in any Trust Fund or that the rate of payments will conform to
any model described in any Prospectus Supplement. If prevailing interest rates
fall significantly below the applicable rates borne by the Mortgage Loans
included in a Trust Fund, principal prepayments are likely to be higher than if
prevailing rates remain at or above the rates borne by those Mortgage Loans. As
a result, the actual maturity of any Class of Certificates could occur
significantly earlier than expected. Alternatively, the actual maturity of any
Class of Certificates could occur significantly later than expected as a result
of prepayment premiums or the existence of defaults on the Mortgage Loans,
particularly at or near their maturity dates. In addition, the Master Servicer
or the Special Servicer, if any, may have the option under the Agreement for
such Series to extend the maturity of the Mortgage Loans following a default in
the payment of a balloon payment, which would also have the effect of extending
the average life of each Class of related Certificates. A Series of Certificates
may include one or more Classes of Certificates with priorities of payment over
other Classes of Certificates, including Classes of Offered Certificates, and,
as a result, yields on such Series may be more sensitive to prepayments on the
Mortgage Loans in the related Trust Fund. 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 Loans. With respect to interest only or
disproportionately interest weighted Classes purchased at a premium, such
Classes may not return their purchase prices under rapid repayment scenarios.
See "YIELD AND MATURITY CONSIDERATIONS" in the related Prospectus Supplement.
When considering the effects of prepayments on the average life and yield
of a Certificate, an investor should also consider provisions of the related
Agreement that permit the optional early termination of the Class of
Certificates to which such Certificate belongs. If so specified in the related
Prospectus Supplement, a Series of Certificates may be subject to optional early
termination through the repurchase of the Mortgage Properties in the related
Trust Fund by the party or parties specified therein, under the circumstances
and in the manner set forth therein. See "DESCRIPTION OF THE
CERTIFICATES--Termination."
Risks Associated with Lending on Income Producing Properties
Mortgage loans made with respect to multifamily or commercial properties
may entail risks of delinquency and foreclosure, and risks of loss in the event
thereof, that are greater than similar risks associated with single-family
properties. For example, the ability of a mortgagor to repay a loan secured by
an income-producing property typically is dependent primarily upon the
successful operation of such property rather than any independent income or
assets of the mortgagor; thus, the value of an income-producing property is
directly related to the net operating income derived from such property. In
contrast, the ability of a mortgagor to repay a single-family loan typically is
dependent primarily upon the mortgagor's household income, rather than the
capacity of the property to produce income; thus, other than in geographical
areas where employment is dependent upon a particular employer or an industry,
the mortgagor's income tends not to reflect directly the value of such property.
A decline in the net operating income of an income-producing property will
likely affect both the performance of the related loan as well as the
liquidation value of such property, whereas a decline in the income of a
mortgagor on a single-family property will likely affect the performance of the
related loan but may not affect the liquidation value of such property.
Further, the concentration of default, foreclosure and loss risks for
Mortgage Loans in a particular Trust Fund or the related Mortgaged Properties
will generally be greater than for pools of single-family
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loans both because the Mortgage Loans in a Trust Fund will generally consist of
a smaller number of loans than would a single-family pool of comparable
aggregate unpaid principal balance and because of the higher principal balance
of individual Mortgage Loans.
The performance of a mortgage loan secured by an income-producing property
leased by the mortgagor to tenants as well as the liquidation value of such
property may be dependent upon the businesses operated by such tenants in
connection with such property, the creditworthiness of such tenants or both; the
risks associated with such loans may be offset by the number of tenants or, if
applicable, a diversity of types of businesses operated by such tenants. A
number of the Mortgage Loans may be secured by liens on owner-occupied Mortgaged
Properties or on Mortgaged Properties leased to a single tenant. Accordingly, a
decline in the financial condition of the borrower or single tenant, as
applicable, may have a disproportionately greater effect on the net operating
income from such Mortgaged Properties than would be the case with respect to
Mortgaged Properties with multiple tenants. Furthermore, the value of any
mortgaged property may be adversely affected by risks generally incident to
interests in real property, including changes in general or local economic
conditions and/or specific industry segments; declines in real estate values;
declines in rental or occupancy rates; increases in interest rates, real estate
tax rates and other operating expenses; changes in governmental rules,
regulations and fiscal policies, including environmental legislation; natural
disasters; and other factors beyond the control of the Master Servicer or the
Special Servicer, if any.
Additional risk may be presented by the type and use of a particular
mortgaged property. For instance, mortgaged properties that operate as
hospitals, nursing homes or convalescent homes may present special risks to
mortgagees due to the significant governmental regulation of the ownership,
operation, maintenance, control and financing of health care institutions.
Mortgages encumbering mortgaged properties that 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. Hotel and motel
properties are often operated pursuant to franchise, management or operating
agreements that may be terminable by the franchiser or operator. Moreover, the
transferability of a hotel's operating, liquor and other licenses upon a
transfer of the hotel, whether through purchase or foreclosure, is subject to
local law requirements. In addition, mortgaged properties that are multifamily
residential properties or cooperatively owned multifamily properties may be
subject to rent control laws, which could impact the future cash flows of such
properties. Any such risks will be more fully described in the related
Prospectus Supplement under the captions "RISK FACTORS" and "DESCRIPTION OF THE
MORTGAGE POOL."
If applicable, certain legal aspects of the Mortgage Loans for a Series of
Certificates may be described in the related Prospectus Supplement. See also
"CERTAIN LEGAL ASPECTS OF THE MORTGAGE LOANS."
Potential Conflicts of Interest
The Special Servicer, if any, for a Series of Certificates, will have
considerable latitude in determining whether to liquidate or modify defaulted
Mortgage Loans. See "SERVICING OF THE MORTGAGE LOANS--Modifications, Waivers and
Amendments". If the Special Servicer or anyone else who purchases Mortgage Loans
and has the power to appoint the Special Servicer, investors in the Offered
Certificates should consider that, although the Special Servicer will be
obligated to act in accordance with the terms of the related Agreement and will
be governed by the servicing standards described herein, it may have interests
when dealing with defaulted Mortgage Loans that are in conflict with those of
holders of the Offered Certificates.
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Certain Tax Considerations of Variable Rate Certificates
There are certain tax matters as to which counsel to the Depositor is
unable to opine at the time of the issuance of the Prospectus due to uncertainty
in the law. Specifically, the treatment of Interest Weighted Certificates and
variable rate regular Certificates are subject to unsettled law which creates
uncertainty as to the exact method of income accrual which should control. The
REMIC will accrue income using a method which is consistent with certain
regulations; however, there can be no assurance that such method would be
controlling if the IRS were to assert a different method for accruing income.
See "MATERIAL FEDERAL INCOME TAX CONSEQUENCES--Federal Income Tax Consequences
For REMIC Certificates--Taxation of REMIC Regular Certificates--Interest
Weighted Certificates" and "--Taxation of REMIC Regular Certificates--Variable
Rate Regular Certificates."
Limited Nature of Credit Ratings
Any rating assigned by a Rating Agency to a Class of Certificates will
reflect only its assessment of the likelihood that holders of such Certificates
will receive payments to which such Certificateholders are entitled under the
related Agreement. Such rating will not constitute an assessment of the
likelihood that principal prepayments on the related Mortgage Loans will be
made, the degree to which the rate of such prepayments might differ from that
originally anticipated or the likelihood of early optional termination of the
related Trust Fund. Furthermore, such rating will not address the possibility
that prepayment of the related Mortgage Loans at a higher or lower rate than
anticipated by an investor may cause such investor to experience a lower than
anticipated yield or that an investor that purchases a Certificate at a
significant premium, or a Certificate that is entitled to disproportionately
low, nominal or no principal distributions, might fail to recoup its initial
investment under certain prepayment scenarios. Each Prospectus Supplement will
identify any payment to which holders of Offered Certificates of the related
Series are entitled that is not covered by the applicable rating. See "--Credit
Enhancement Limitations."
The amount, type and nature of Credit Enhancement, if any, provided with
respect to a Series of Certificates will be determined on the basis of criteria
established by each Rating Agency rating Classes of the Certificates of such
Series. Those criteria are sometimes based upon an actuarial analysis of the
behavior of mortgage loans in a larger group. However, there can be no assurance
that the historical data supporting any such actuarial analysis will accurately
reflect future experience, or that the data derived from a large pool of
mortgage loans will accurately predict the delinquency, foreclosure of loss
experience of any particular pool of Mortgage Loans. In other cases, such
criteria may be based upon determinations of the values of the Mortgaged
Properties that provide security for the Mortgage Loans. However, no assurance
can be given that those values will not decline in the future. 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 in a particular Trust Fund and any secondary financing on the
related Mortgaged Properties become equal to a 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 Credit Enhancement, such losses may
be borne, at least in part, by the holders of one or more Classes of
Certificates of the related Series. See "RATING".
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Potential Inability to Verify Underwriting Standards
The Mortgage Loans included in a Trust Fund may be originated by entities
affiliated with the Depositor or by unaffiliated entities. Unaffiliated
originators may use underwriting criteria that are different from that used by
affiliates of the Depositor. The Prospectus Supplement relating to each Series
will, to the extent verifiable, specify the originator or originators relating
to the Mortgage Loans, which may include, among others, commercial banks,
savings and loan associations, other financial institutions, mortgage banks,
credit companies, insurance companies, real estate developers or other HUD
approved lenders, and the underwriting criteria to the extent available in
connection with originating the Mortgage Loans. In certain cases, the Depositor
may not be able to verify the underwriting standards used to originate a
Mortgage Loan (e.g., if the Mortgage Loans being purchased from a Seller were
acquired by the Seller in the open market or were originated over a long period
of time pursuant to varying underwriting standards which cannot now be
confirmed). In general, the Depositor will not engage in the reunderwriting of
Mortgage Loans that it acquires. Instead, the Depositor will rely on the
representations and warranties made by the Seller, and the Seller's obligation
to repurchase a Mortgage Loan in the event that a representation or warranty was
not true when made.
Nonrecourse Mortgage Loans; Limited Recovery
It is anticipated that a substantial portion of the Mortgage Loans included
in any Trust Fund will be nonrecourse loans or loans for which recourse may be
restricted or unenforceable. As to such Mortgage Loans, in the event of
mortgagor default, recourse may be had only against the specific multifamily or
commercial property and such other assets, if any, as have been pledged to
secure the Mortgage Loan. With respect to those Mortgage Loans that provide for
recourse against the mortgagor and its assets generally, there can be no
assurance that such recourse will ensure a recovery in respect of a defaulted
Mortgage Loan greater than the liquidation value of the related Mortgaged
Property.
Inclusion of Delinquent and Non-Performing Mortgage Loans May Adversely Affect
Yields
If so provided in the related Prospectus Supplement, the Trust Fund for a
particular Series of Certificates may include Mortgage Loans that are past due
or are non-performing. If so specified in the related Prospectus Supplement, the
servicing of such Mortgage Loans will be performed by a Special Servicer. Credit
Enhancement, if provided with respect to a particular Series of Certificates,
may not cover all losses related to such delinquent or non-performing Mortgage
Loans, and investors should consider the risk that the inclusion of such
Mortgage Loans in the Trust Fund may adversely affect the rate of defaults and
prepayments on Mortgaged Properties and the yield on the Certificates of such
Series.
Junior Mortgage Loans
Certain of the Mortgage Loans may be junior mortgage loans. The primary
risk to holders of mortgage loans secured by junior liens is the possibility
that a foreclosure of a related senior lien would extinguish the junior lien and
that adequate funds will not be received in connection with such foreclosure to
pay the debt held by the holder of such junior mortgage loan after satisfaction
of all related senior liens. See "CERTAIN LEGAL ASPECTS OF THE MORTGAGE
LOANS--Junior Mortgages; Rights of Senior Mortgagees or Beneficiaries" and
"--Foreclosure" for a discussion of additional risks to holders of mortgage
loans secured by junior liens.
Balloon Payments
Certain of the Mortgage Loans as of the Cut-off Date may not be fully
amortizing over their terms to maturity and, thus, will require substantial
principal payments (i.e., balloon payments) at their
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stated maturity. Mortgage loans with balloon payments involve a greater degree
of risk because the ability of a mortgagor to make a balloon payment typically
will depend upon its ability either to refinance the loan or to sell the related
mortgaged property in a timely manner. The ability of a mortgagor to accomplish
either of these goals will be affected by a number of factors, including the
level of available mortgage rates at the time of sale or refinancing, the
mortgagor's equity in the related mortgaged property, the financial condition
and operating history of the mortgagor and the related mortgaged property, tax
laws, rent control laws (with respect to certain multifamily properties and
mobile home parks), reimbursement rates (with respect to certain hospitals,
nursing homes and congregate care facilities), renewability of operating
licenses, prevailing general economic conditions and the availability of credit
for commercial or multifamily, as the case may be, real properties generally.
Neither the Depositor or any affiliate will be required to refinance any
Mortgage Loan.
Extensions and Modifications of Defaulted Mortgage Loans; Additional Servicing
Fees
In order to maximize recoveries on defaulted Mortgage Loans, a Master
Servicer or Special Servicer, if any, will be permitted (within the parameters
specified in the related Prospectus Supplement) to extend and modify Mortgage
Loans that are in default or as to which a payment default is reasonably
foreseeable, including in particular with respect to balloon payments. In
addition, a Master Servicer or a Special Servicer, if any, may receive workout
fees, management fees, liquidation fees or other similar fees based on receipts
from or proceeds of such Mortgage Loans. Although a Master Servicer or Special
Servicer, if any, generally will be required to determine that any such
extension or modification is reasonably likely to produce a greater recovery
amount than liquidation, there can be no assurance that such flexibility with
respect to extensions or modifications or payment of a workout fee will increase
the amount of receipts from or proceeds of Mortgage Loans that are in default or
as to which a payment default is reasonably foreseeable.
Risks Related to the Mortgagor's Form of Entity and Sophistication
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. For example, an entity, as opposed
to an individual, may be more inclined to seek legal protection from its
creditors, such as a mortgagee, under the bankruptcy laws. Unlike individuals
involved in bankruptcies, various types of entities generally do not have
personal assets and creditworthiness at stake. The bankruptcy of a mortgagor may
impair the ability of the mortgagee to enforce its rights and remedies under the
related mortgage. See "CERTAIN LEGAL ASPECTS OF THE MORTGAGE
LOANS--Foreclosure--Bankruptcy Laws." The mortgagor's sophistication may
increase the likelihood of protracted litigation or bankruptcy in default
situations. The more sophisticated a mortgagor is, the more likely it will be
aware of its rights, remedies and defenses against its mortgagee and the more
likely it will have the resources to make effective use of all of its rights,
remedies and defenses.
Credit Enhancement Limitations
The Prospectus Supplement for a Series of Certificates will describe any
Credit Enhancement in the related Trust Fund, which may include letters of
credit, insurance policies, surety bonds, limited guarantees, reserve funds or
other types of credit support, or combinations thereof. Use of Credit
Enhancement will be subject to the conditions and limitations described herein
and in the related Prospectus Supplement and is not expected to cover all
potential losses or risks or guarantee repayment of the entire principal balance
of the Certificates and interest thereon.
A Series of Certificates may include one or more Classes of Subordinate
Certificates (which may include Offered Certificates), if so provided in the
related Prospectus Supplement. Although
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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 or be reduced to zero 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 Enhancement 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 Mortgaged Properties may fall primarily upon those Classes of
Certificates having a lower priority of payment. Moreover, if a form of Credit
Enhancement covers more than one Series of Certificates, holders of Certificates
of one Series will be subject to the risk that such Credit Enhancement will be
exhausted by the claims of the holders of Certificates of one or more other
Series.
The amount, type and nature of Credit Enhancement, 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 the Certificates of such
Series. Such criteria are sometimes based upon an actuarial analysis of the
behavior of mortgage loans in a larger group. Such analysis is often the basis
upon which each Rating Agency determines the amount of Credit Enhancement
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 Loans. No assurance can be given
with respect to any Mortgage Loan that the appraised value of the related
Mortgaged Property has remained or will remain at its level as of the
origination date of such Mortgage Loan. Moreover, there is no assurance that
appreciation of real estate values generally will limit loss experiences on
commercial or multifamily 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 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 for similar
mortgage loans. 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 Credit
Enhancement, such losses will be borne, at least in part, by the holders of one
or more Classes of the Certificates of the related Series. See "--Limited Nature
of Credit Ratings," "DESCRIPTION OF THE CERTIFICATES" and "CREDIT ENHANCEMENT."
Risks to Subordinated Certificateholders; Lower Payment Priority
If so provided in the related Prospectus Supplement, a Series of
Certificates may include one or more Classes of Subordinate Certificates (which
may include Offered Certificates). If losses or shortfalls in collections on
Mortgaged Properties are realized, the amount of such losses or shortfalls will
be borne first by one or more Classes of the Subordinate Certificates. The
remaining amount of such losses or shortfalls, if any, will be borne by the
remaining Classes of Certificates in the priority and subject to the limitations
specified in such Prospectus Supplement. In addition to the foregoing, any
Credit Enhancement, if applicable, may be used by the Certificates of a higher
priority of payment before the principal of the lower priority Classes of
Certificates of such Series has been repaid. Therefore, the impact of
significant losses and shortfalls on the mortgaged properties may fall primarily
upon those Classes of Certificates with a lower payment priority.
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Taxable Income in Excess of Distributions Received
A holder of a certificate in a Class of Subordinate Certificates could be
allocated taxable income attributable to accruals of interest and original issue
discount in excess of cash distributed to such holder if mortgage loans were in
default giving rise to delays in distributions. See "MATERIAL FEDERAL INCOME TAX
CONSEQUENCES--Federal Income Tax Consequences For REMIC Certificates--Taxation
of REMIC Regular Certificates--Subordinate Certificates--Effects of Defaults,
Delinquencies and Losses" herein.
Due-on-Sale Clauses and Assignments of Leases and Rents
Mortgages may contain a due-on-sale clause, which permits the mortgagee to
accelerate the maturity of the mortgage loan if the mortgagor sells, transfers
or conveys the related mortgaged property or its interest in the mortgaged
property. Mortgages may also include a debt-acceleration clause, which permits
the mortgagee 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.
The related Prospectus Supplement will describe whether and to what extent
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 mortgagee 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
mortgagee is entitled to collect rents. Such assignments are typically not
perfected as security interests prior to the mortgagee's taking possession of
the related mortgaged property and/or appointment of a receiver. Some state laws
may require that the mortgagee 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 mortgagee's ability to collect the rents may be
adversely affected. See "CERTAIN LEGAL ASPECTS OF THE MORTGAGE LOANS--Leases and
Rents."
Environmental Risks
Real property pledged as security for a mortgage loan may be subject to
certain environmental risks. Under the laws of certain states, contamination of
a property may give rise to a lien on the property to assure the costs of
cleanup. In several states, such a lien has priority over the lien of an
existing mortgage against such property. In addition, under the laws of some
states and under the federal Comprehensive Environmental Response, Compensation
and Liability Act of 1980 ("CERCLA"), a mortgagee may be liable as an "owner" or
"operator" for costs of addressing releases or threatened releases of hazardous
substances that require remedy at a property, if agents or employees of the
mortgagee have become sufficiently involved in the operations of the mortgagor,
regardless of whether the environmental damage or threat was caused by a prior
owner. A mortgagee also risks such liability on foreclosure of the mortgage.
Each Agreement will generally provide that the Master Servicer or the Special
Servicer, if any, acting on behalf of the Trust Fund, may not acquire title to a
Mortgaged Property securing a Mortgage Loan or take over its operation unless
the Master Servicer or Special Servicer, as applicable, has previously
determined, based upon a report prepared by a person who regularly conducts
environmental audits, that: (i) the Mortgaged Property is in compliance with
applicable environmental laws, and there are no circumstances present at the
Mortgaged Property relating to the use, management
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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 (ii) if the Mortgaged Property is not so in
compliance or such circumstances are so present, then it would be in the best
economic interest of the Trust Fund to acquire title to the Mortgaged Property
and further to take such actions as would be necessary and appropriate to effect
such compliance and/or respond to such circumstances, which may include
obtaining an environmental insurance policy. The related Prospectus Supplement
may impose additional restrictions on the ability of the Master Servicer or the
Special Servicer, if any, to take any of the foregoing actions. See "CERTAIN
LEGAL ASPECTS OF THE MORTGAGE LOANS--Environmental Risks."
Certain Federal Tax Considerations Regarding Residual Certificates
Holders of Residual Certificates will be required to report on their
federal income tax returns as ordinary income their pro rata share of the
taxable income of the REMIC, regardless of the amount or timing of their receipt
of cash payments, as described in "MATERIAL FEDERAL INCOME TAX
CONSEQUENCES--Federal Income Tax Consequences For REMIC Certificates--Taxation
of Holders of Residual Certificates." Accordingly, under certain circumstances,
holders of Offered Certificates that constitute Residual Certificates may have
taxable income and tax liabilities arising from such investment during a taxable
year in excess of the cash received during such period. The requirement that
holders of Residual Certificates report their pro rata share of the taxable
income and net loss of the REMIC will continue until the Certificate balances of
all Classes of Certificates of the related Series have been reduced to zero,
even though holders of Residual Certificates have received full payment of their
stated interest and principal. A portion (or, in certain circumstances, all) of
such Certificateholder's share of the REMIC taxable income may be treated as
"excess inclusion" income to such holder that (i) generally, will not be subject
to offset by losses from other activities, (ii) for a tax-exempt holder, will be
treated as unrelated business taxable income and (iii) for a foreign holder,
will not qualify for exemption from withholding tax. Individual holders of
Residual Certificates may be limited in their ability to deduct servicing fees
and other expenses of the REMIC. In addition, Residual Certificates are subject
to certain restrictions on transfer. In particular, the transfer of a Residual
Interest to certain "Disqualified Organizations" is prohibited. If transfer
occurs in violation of such prohibition, a tax is imposed on the transfer. In
addition, the transfer of a "noneconomic residuary interest" by a Residual
Certificateholder will be disregarded under certain circumstances with the
transferor remaining liable for any taxable income derived from the Residual
Interest by the transferee Residual Certificateholder. See "MATERIAL FEDERAL
INCOME TAX CONSEQUENCES--Federal Income Tax Consequences For REMIC
Certificates--Taxation of Holders of Residual Certificates--Restrictions on
Ownership and Transfer of Residual Certificates." Because of the special tax
treatment of Residual Certificates, the taxable income arising in a given year
on Residual Certificates will not be equal to the taxable income associated with
investment in a corporate bond or stripped instrument having similar cash flow
characteristics and pre-tax yield. Therefore, the after-tax yield on the
Residual Certificates may be significantly less than that of a corporate bond or
stripped instrument having similar cash flow characteristics.
ERISA Considerations
Generally, ERISA applies to investments made by employee benefit plans and
transactions involving the assets of such plans. Due to the complexity of
regulations that govern such plans, prospective investors that are subject to
ERISA are urged to consult their own counsel regarding consequences under ERISA
of acquisition, ownership and disposition of the Offered Certificates of any
Series. See "ERISA CONSIDERATIONS."
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Special Hazard Losses
Unless otherwise specified in the related Prospectus Supplement, the Master
Servicer and Special Servicer, if any, for any Trust Fund will each be required
to use its best efforts in accordance with the servicing standard to cause the
borrower on each Mortgage Loan serviced by it to maintain such insurance
coverage in respect of the related Mortgaged Property as is required under the
related Mortgage, including hazard insurance; provided that, as and to the
extent described herein and in the related Prospectus Supplement, each of the
Master Servicer and the Special Servicer, if any, may satisfy its obligation to
cause hazard insurance to be maintained with respect to any Mortgaged Property
through the acquisition of a blanket policy or master force placed policy. 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 covering the Mortgaged Properties 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, 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 other kinds of risks not specified in the preceding
sentence. Unless the related Mortgage specifically requires the mortgagor to
insure against physical damage arising from such causes, then, to the extent any
consequent losses are not covered by Credit Enhancement, such losses may be
borne, at least in part, by the holders of one or more Classes of Certificates
of the related Series. See "SERVICING OF THE MORTGAGE LOANS--Insurance."
Control; Decisions by Certificateholders
Under certain circumstances, the consent or approval of the holders of a
specified percentage of the aggregate Certificate balance of all outstanding
Certificates of a Series or a similar means of allocating decision-making under
the related Agreement, which will be specified in the related Prospectus
Supplement ("Voting Rights", will be required to direct, and will be sufficient
to bind all Certificateholders of such Series to, certain actions, including
amending the related Agreement in certain circumstances. See "SERVICING OF THE
MORTGAGE LOANS--Events of Default," "--Rights Upon Event of Default" and
"DESCRIPTION OF THE CERTIFICATES--Amendment."
Book-Entry Registration
The related Prospectus Supplement may provide that one or more Classes of
the Certificates initially will be represented by one or more certificates
registered in the name of the nominee for The Depository Trust Company, and will
not be registered in the names of the Certificateholders or their nominees.
Because of this, unless and until definitive certificates are issued, beneficial
owners of the Certificates of such Class or Classes will not be recognized by
the Trustee as "Certificateholders" (as that term is to be used in the related
Agreement). Hence, until such time as definitive certificates are issued, the
beneficial owners will be able to exercise the rights of Certificateholders only
indirectly through The Depository Trust Company and its participating
organizations. See "DESCRIPTION OF THE CERTIFICATES--General."
THE DEPOSITOR
Commercial Mortgage Acceptance Corp. was incorporated in the State of
Missouri on September 17, 1996. The Depositor is a wholly owned, limited purpose
finance subsidiary of Midland Loan Services, Inc. The principal executive
offices of the Depositor are located at 210 West 10th Street, 6th Floor, Kansas
City, Missouri 64105. Its telephone number is (816) 435-5000.
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The Depositor will have no servicing obligations or responsibilities with
respect to any Series of Certificates, Mortgage Pool or Trust Fund. The
Depositor does not have, nor is it expected in the future to have, any
significant assets.
The Depositor was organized, among other things, for the purposes of
establishing trusts, selling beneficial interests therein and acquiring and
selling mortgage assets to such trusts. Neither the Depositor, its parent nor
any of the Depositor's affiliates will insure or guarantee distributions on the
Certificates of any Series.
The assets of the Trust Funds will be acquired by the Depositor directly or
through one or more affiliates.
THE MASTER SERVICER
Midland Loan Services, L.P., was organized under the laws of the State of
Missouri in 1992 as a limited partnership. On April 3, 1998, substantially all
of the assets of Midland Loan Services, L.P., were acquired by Midland Loan
Services, Inc. ("Midland"), a newly formed, wholly-owned subsidiary of PNC Bank,
National Association. Midland is a real estate financial services company which
provides loan servicing and asset management for large pools of commercial and
multifamily real estate assets and which originates commercial real estate
loans. Midland's address is 210 West 10th Street, 6th Floor, Kansas City,
Missouri 64105.
The size of the loan portfolio which the Master Servicer was servicing as
of the end of the most recent calendar quarter will be set forth in each
Prospectus Supplement. The delinquency experience of the Master Servicer (and
for periods prior to April 3, 1998, of the Master Servicer's predecessor in
interest) as of the end of its three most recent fiscal years and the most
recent calendar quarter for which such information is available on the portfolio
of loans relating to commercial mortgage pass-through certificates master
serviced by it will be summarized in each Prospectus Supplement. There can be no
assurance that such experience will be representative of the results that may be
experienced with respect to any particular Mortgage Pool.
USE OF PROCEEDS
The Depositor will apply all or substantially all of the net proceeds from
the sale of each Series of Offered Certificates to purchase the Mortgage Loans
relating to such Series, to repay any indebtedness that has been incurred to
obtain funds to acquire Mortgage Loans, to obtain Credit Enhancement, if any,
for the Series and to pay costs of structuring, issuing and underwriting the
Certificates. The maturity and interest rate of such indebtedness, if any, will
be set forth in "USE OF PROCEEDS" in the related Prospectus Supplement.
DESCRIPTION OF THE CERTIFICATES*
The Certificates of each Series will be issued pursuant to a separate
Pooling and Servicing Agreement (the "Agreement") to be entered into among the
Depositor, the Master Servicer, the Special Servicer, if any, and the Trustee
for that Series and any other parties described in the applicable Prospectus
Supplement, substantially in the form filed as an exhibit to the Registration
Statement of
________________
* Whenever in this Prospectus the terms "Certificates," "Trust Fund" and
"Mortgage Pool" are used, such terms will be deemed to apply unless the context
indicates otherwise, to a specific Series of Certificates, the Trust Fund
underlying the related Series and the related Mortgage Pool.
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which this Prospectus is a part or in such other form as may be described in the
applicable Prospectus Supplement. The following summaries describe the material
provisions expected to be common to each Series and the Agreement with respect
to the underlying Trust Fund. However, the Prospectus Supplement for each Series
will describe more fully the Certificates and the provisions of the related
Agreement, which may be different from the summaries set forth below.
At the time of issuance, the Offered Certificates of each Series will be
rated "investment grade," typically one of the four highest generic rating
categories, by at least one nationally recognized statistical rating
organization. Each of such rating organizations specified in the applicable
Prospectus Supplement as rating the Offered Certificates of the related Series
is hereinafter referred to as a "Rating Agency." 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 Agency.
General
The Certificates of each Series will be issued in registered or book-entry
form and will represent beneficial ownership interests in the trust fund (the
"Trust Fund") created pursuant to the Agreement for such Series. The Trust Fund
for each Series will primarily comprise, to the extent provided in the
Agreement: (i) the Mortgage Loans conveyed to the Trustee pursuant to the
Agreement; (ii) all payments on or collections in respect of the Mortgage Loans
due after the Cut-off Date; (iii) any Mortgaged Property acquired on behalf of
the Trust Fund through foreclosure or deed-in-lien of foreclosure (upon
acquisition, any "REO Property"); (iv) all revenue received in respect of REO
Property; (v) insurance policies with respect to such Mortgage Loans; (vi) any
assignments of leases, rents and profits, security agreements and pledges; (vii)
any indemnities or guaranties given as additional security for such Mortgage
Loans; (viii) the Trustee's right, title and interest in and to any reserve or
escrow accounts established pursuant to any of the Mortgage Loan documents
(each, a "Reserve Account"); (ix) the Collection Account; (x) the Distribution
Account and the REO Account; (xi) any environmental indemnity agreements
relating to such Mortgaged Properties; (xii) the rights and remedies under each
related Mortgage Loan Purchase and Sale Agreement; and (xiii) the proceeds of
any of the foregoing (excluding interest earned on deposits in any Reserve
Account, to the extent such interest belongs to the related mortgagor). In
addition, the Trust Fund for a Series may include various forms of Credit
Enhancement. See "CREDIT ENHANCEMENT." Such other assets will be described more
fully in the related Prospectus Supplement.
If so specified in the applicable Prospectus Supplement, Certificates of a
given Series may be issued in several Classes, which may pay interest at
different rates, may represent different allocations of the right to receive
principal and interest payments, and certain of which may be subordinated to
other Classes in the event of shortfalls in available cash flow from the
underlying Mortgage Loans. Alternatively, or in addition, Classes may be
structured to receive principal payments in sequence. Each Class in a group of
sequential pay Classes would be entitled to be paid in full before the next
Class in the group is entitled to receive any principal payments. A Class of
Certificates may also provide for payments of principal only or interest only or
for disproportionate payments of principal and interest. Subordinate
Certificates of a given Series of Certificates may be offered in the same
Prospectus Supplement as the Senior Certificates of such Series or may be
offered in a separate offering document. Each Class of Certificates of a Series
will be issued in the minimum denominations specified in the related Prospectus
Supplement.
The Prospectus Supplement for any Series including Classes similar to any
of those described above will contain a complete description of their material
characteristics and risk factors, including, as applicable, (i) mortgage
principal prepayment effects on the weighted average lives of Classes; (ii) the
risk that interest only, or disproportionately interest weighted, Classes
purchased at a premium may not
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return their purchase prices under rapid prepayment scenarios; and (iii) the
degree to which an investor's yield is sensitive to principal prepayments.
The Offered Certificates of each Series will be freely transferable and
exchangeable at the office specified in the related Agreement and Prospectus
Supplement; provided, however, that certain Classes of Certificates may be
subject to transfer restrictions described in the related Prospectus Supplement.
If specified in the related Prospectus Supplement, the Certificates may be
transferable only on the books of The Depository Trust Company or another
depository identified in such Prospectus Supplement.
Distributions on Certificates
Distributions of principal and interest on the Certificates of each Series
will be made to the registered holders thereof ("Certificateholders") by the
Trustee (or such other paying agent as may be identified in the related
Prospectus Supplement) on the day (the "Distribution Date") specified in the
related Prospectus Supplement, beginning in the period specified in the related
Prospectus Supplement following the establishment of the related Trust Fund.
Distributions for each Series will be made by check mailed to the address of the
person entitled thereto as it appears on the certificate register for such
Series maintained by the Trustee or by wire transfer if so specified in the
related Prospectus Supplement. The final distribution in retirement of the
Certificates of each Series will be made only upon presentation and surrender of
the Certificates at the office or agency specified in the notice to the
Certificateholders of such final distribution. In addition, the Prospectus
Supplement relating to each Series will set forth the applicable due period,
prepayment period, record date, Cut-off Date and determination date in respect
of each Series of Certificates.
With respect to each Series of Certificates on each Distribution Date, the
Trustee (or such other paying agent as may be identified in the applicable
Prospectus Supplement) will distribute to the Certificateholders the amounts
described in the related Prospectus Supplement that are due to be paid on such
Distribution Date. In general, such amounts will include previously
undistributed payments of principal (including principal prepayments, if any)
and interest on the Mortgage Loans received by the Master Servicer or the
Special Servicer, if any, after a date specified in the related Prospectus
Supplement (the "Cut-off Date") and prior to the day preceding each Distribution
Date specified in the related Prospectus Supplement.
Accounts
It is expected that the Agreement for each Series of Certificates will
provide that the Trustee establish an account (the "Distribution Account") into
which the Master Servicer will deposit amounts held in the Collection Account
from which Certificateholder distributions will be made with respect to a given
Distribution Date. On each Distribution Date, the Trustee will apply amounts on
deposit in the Distribution Account generally to make distributions of interest
and principal to the Certificateholders in the manner and in the amounts
described in the related Prospectus Supplement.
It is also expected that the Agreement for each Series of Certificates will
provide that the Master Servicer establish and maintain one or more accounts
(the "Collection Account") in the name of the Trustee for the benefit of
Certificateholders. The Master Servicer will generally be required to deposit
into the Collection Account all amounts received on or in respect of the
Mortgage Loans. The Master Servicer will be entitled to make certain withdrawals
from the Collection Account to, among other things: (i) remit certain amounts
for the related Distribution Date into the Distribution Account; (ii) pay
Property Protection Expenses, taxes, assessments and insurance premiums and
certain third-party expenses in accordance with the Agreement; (iii) pay accrued
and unpaid servicing fees and other servicing compensation to the Master
Servicer and the Special Servicer, if any; and (iv) reimburse the Master
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Servicer, the Special Servicer, if any, the Trustee and the Depositor for
certain expenses and provide indemnification to the Depositor, the Master
Servicer and the Special Servicer, if any, as described in the Agreement.
"Property Protection Expenses" comprise certain costs and expenses incurred in
connection with defaulted Mortgage Loans, acquiring title to, or management of,
REO Property or the sale of defaulted Mortgage Loans or REO Properties, as more
fully described in the related Agreement. The applicable Prospectus Supplement
may provide for additional circumstances in which the Master Servicer will be
entitled to make withdrawals from the Collection Account.
The amount at any time credited to the Collection Account or the
Distribution Account may be invested in Permitted Investments that are payable
on demand or in general mature or are subject to withdrawal or redemption on or
before the business day preceding the next succeeding Master Servicer Remittance
Date, in the case of the Collection Account, or the business day preceding the
next succeeding Distribution Date, in the case of the Distribution Account. The
Master Servicer will be required to remit amounts on deposit in the Collection
Account that are required for distribution to Certificateholders to the
Distribution Account on or before the business day preceding the related
Distribution Date (the "Master Servicer Remittance Date"). The income from the
investment of funds in the Collection Account and the Distribution Account in
Permitted Investments will constitute additional servicing compensation for the
Master Servicer, and the risk of loss of funds in the Collection Account and the
Distribution Account resulting from such investments will be borne by the Master
Servicer. The amount of each such loss will be required to be deposited by the
Master Servicer in the Collection Account or the Distribution Account, as the
case may be, promptly as realized.
It is expected that the Agreement for each Series of Certificates will
provide that an account (the "REO Account") will be established and maintained
in order to be used in connection with REO Properties and, if specified in the
related Prospectus Supplement, certain other Mortgaged Properties. To the extent
set forth in the Agreement, certain withdrawals from the REO Account will be
made to, among other things, (i) make remittances to the Collection Account as
required by the Agreement; (ii) pay taxes, assessments, insurance premiums,
other amounts necessary for the proper operation, management and maintenance of
the REO Properties and such other Mortgaged Properties and certain third-party
expenses in accordance with the Agreement; and (iii) provide for the
reimbursement of certain expenses in respect of the REO Properties and such
other Mortgaged Properties.
The amount at any time credited to the REO Account may be invested in
Permitted Investments that are payable on demand or mature, or are subject to
withdrawal or redemption, on or before the business day preceding the day on
which such amounts are required to be remitted to the Master Servicer for
deposit in the Collection Account. The income from the investment of funds in
the REO Account in Permitted Investments will be for the benefit of the Master
Servicer, or the Special Servicer, if applicable, and the risk of loss of funds
in the REO Account resulting from such investments will be borne by the Master
Servicer, or the Special Servicer, if applicable.
"Permitted Investments" will generally consist of one or more of the
following, unless the Rating Agencies rating Certificates of a Series require
other or additional investments:
(i) direct obligations of, or obligations guaranteed as to full and timely
payment of principal and interest by, the United States or any agency or
instrumentality thereof, provided that such obligations are backed by the full
faith and credit of the United States of America;
(ii) direct obligations of the Federal Home Loan Mortgage Corporation
("FHLMC") (debt obligations only), the Federal National Mortgage Association
("Fannie Mae") (debt obligations only), the Federal Farm Credit System
(consolidated systemwide bonds and notes only), the Federal Home Loan Banks
(consolidated debt obligations only), the Student Loan Marketing Association
(debt obligations
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only), the Financing Corp. (consolidated debt obligations only) and the
Resolution Funding Corp. (debt obligations only);
(iii) federal funds, time deposits in, or certificates of deposit of, or
bankers' acceptances, or repurchase obligations, all having maturities of not
more than 365 days, issued by any bank or trust company, savings and loan
association or savings bank, depositing institution or trust company having the
highest short-term rating available from each Rating Agency rating the
Certificates of a Series;
(iv) commercial paper having a maturity of 365 days or less (including both
non-interest-bearing discount obligations and interest-bearing obligations
payable on demand or on a specified date not more than one year after the date
of issuance thereof and demand notes that constitute vehicles for investment in
commercial paper) that is rated by each Rating Agency rating the Certificates of
a Series in its highest short-term unsecured rating category;
(v) shares of taxable money market funds or mutual funds that seek to
maintain a constant net asset value and have been rated by each Rating Agency
rating the Certificates of a Series as Permitted Investments with respect to
this definition;
(vi) if previously confirmed in writing to the Trustee, any other demand,
money market or time deposit, or any other obligation, security or investment,
as may be acceptable to each Rating Agency rating the Certificates of a Series
as a permitted investment of funds backing securities having ratings equivalent
to each such Rating Agency's highest initial rating of the Certificates; and
(vii) such other obligations as are acceptable as Permitted Investments to
each Rating Agency rating the Certificates of a Series;
provided, however, that (a) if Standard and Poor's Rating Service, a division of
the McGraw-Hill Companies, Inc. ("S&P") is a Rating Agency for such Series, none
of such obligations or securities listed above may have an "r" highlighter
affixed to its rating if rated by S&P; (b) except with respect to units of money
market funds pursuant to clause (v) above, each such obligation or security will
have a fixed dollar amount of principal due at maturity which cannot vary or
change; and (c) except with respect to units of money market funds pursuant to
clause (v) above, if any such obligation or security provides for a variable
rate of interest, interest will be tied to a single interest rate index plus a
single fixed spread (if any) and move proportionately with that index; and
provided, further, that such instrument continues to qualify as a "cash flow
investment" pursuant to Code Section 860G(a)(6) earning a passive return in the
nature of interest and that no instrument or security will be a Permitted
Investment if (i) such instrument or security evidences a right to receive only
interest payments or (ii) the right to receive principal and interest payments
derived from the underlying investment provides a yield to maturity in excess of
120% of the yield to maturity at par of such underlying investment as of the
date of its acquisition.
Amendment
Generally, the Agreement for each Series will provide that it may be
amended from time to time by the parties thereto, without the consent of any of
the Certificateholders, (i) to cure any ambiguity, (ii) to correct or supplement
any provisions therein that may be inconsistent with any other provisions
therein or this Prospectus or the related Prospectus Supplement, (iii) to amend
any provision thereof to the extent necessary or desirable to maintain the
rating or ratings assigned to each of the Classes of Certificates by each Rating
Agency or (iv) to make any other provisions with respect to matters or questions
arising under the Agreement that will not (a) be inconsistent with the
provisions of the Agreement or this Prospectus or the related Prospectus
Supplement, (b) result in the downgrading,
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withdrawal or qualification of the rating or ratings then assigned to any
outstanding Class of Certificates and (c) adversely affect in any material
respect the interests of any Certificateholder.
Each Agreement will also provide that it may be amended from time to time
by the parties thereto with the consent of the holders of each of the Classes of
Regular Certificates representing not less than a percentage specified in the
related Agreement of all Classes of Certificates affected by the amendment for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of the Agreement or of modifying in any manner the rights
of the Certificateholders; provided, however, that no such amendment shall: (i)
reduce in any manner the amount of, or delay the timing of, payments received on
Mortgage Loans that are required to be distributed on any Certificate without
the consent of each affected Certificateholder; (ii) change the percentage of
Certificates the holders of which are required to consent to any action or
inaction under the Agreement, without the consent of the holders of all
Certificates then outstanding; or (iii) alter the obligations of the Master
Servicer or the Trustee, without the consent of the holders of all Certificates
representing all of the Voting Rights of the Class or Classes affected thereby
(unless such amendment is permitted pursuant to the preceding paragraph) to make
an advance.
Further, the Agreement for each Series may provide that the parties
thereto, at any time and from time to time, without the consent of the
Certificateholders, may amend the Agreement to modify, eliminate or add to any
of its provisions to such extent as shall be necessary to maintain the
qualification of any REMIC related to such Series or to prevent the imposition
of any additional material state or local taxes, at all times that any of the
Certificates are outstanding, provided, however, that such action, as evidenced
by an opinion of counsel (paid for as an expense of the Trust Fund), is
necessary or helpful to maintain such qualification or to prevent the imposition
of any such taxes, and would not adversely affect in any material respect the
interest of any Certificateholder.
The related Prospectus Supplement will specify the method for allocating
Voting Rights among holders of Certificates of a Class.
The Agreement relating to each Series may provide that no amendment to such
Agreement will be made unless there has been delivered in accordance with such
Agreement an opinion of counsel to the effect that such amendment will not cause
such Series to fail to qualify as a REMIC at any time that any of the
Certificates are outstanding.
The Prospectus Supplement for a Series may describe other or different
provisions concerning the amendment of the related Agreement required by the
Rating Agencies rating the Certificates of such Series.
Termination
The obligations of the parties to the Agreement for each Series will
terminate upon: (i) the purchase of all of the assets of the related Trust Fund,
as described in the related Prospectus Supplement; (ii) the later of (a) the
distribution to Certificateholders of that Series of final payment with respect
to the last outstanding Mortgage Loan or (b) the disposition of all property
acquired upon foreclosure or deed-in-lieu of foreclosure with respect to the
last outstanding Mortgage Loan and the remittance to the Certificateholders of
all funds due under the Agreement; (iii) the sale of the assets of the related
Trust Fund after the principal amounts of all Certificates have been reduced to
zero under circumstances set forth in the Agreement; or (iv) mutual consent of
the parties and all Certificateholders. With respect to each Series, the Trustee
will give or cause to be given written notice of termination of the Agreement to
each Certificateholder and the final distribution under the Agreement will be
made only upon surrender and cancellation of the related Certificates at an
office or agency specified in the notice of termination.
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Reports to Certificateholders
Concurrently with each distribution for each Series, the Trustee (or such
other paying agent as may be identified in the applicable Prospectus Supplement)
will forward to each Certificateholder a statement setting forth such
information relating to such distribution as is specified in the Agreement and
described in the applicable Prospectus Supplement.
The Trustee
The Depositor will select a bank or trust company to act as trustee (the
"Trustee") under the Agreement for each Series and the Trustee will be
identified, and its obligations under that Agreement will be described, in the
applicable Prospectus Supplement. The Rating Agencies rating Certificates of a
Series may require the appointment of a fiscal agent to guarantee certain
obligations of the Trustee. Such fiscal agent will be a party to the Agreement.
In such event, the fiscal agent will be identified, and its obligations under
the Agreement will be described, in the applicable Prospectus Supplement. See
"SERVICING OF THE MORTGAGE LOANS--Certain Matters with Respect to the Master
Servicer, the Special Servicer, the Trustee and the Depositor."
THE MORTGAGE POOLS
General
Each Mortgage Pool will consist of mortgage loans secured by first or
junior mortgages, deeds of trust or similar security instruments (each, a
"Mortgage") on, or installment contracts ("Installment Contracts") for the sale
of, fee simple or leasehold interests in commercial real estate property,
multifamily residential property, and/or mixed-use property, and related
property and interests (each such interest or property, as the case may be, a
"Mortgaged Property"). Multifamily properties (consisting of apartments,
congregate care facilities and/or mobile home parks) and general commercial
properties (consisting of retail properties, including shopping centers, office
buildings, mini-warehouses, warehouses, industrial properties and/or other
similar types of properties) will represent security for a material
concentration of the Mortgage Loans in any Trust Fund, based on principal
balance at the time such Trust Fund is formed. See "CERTAIN LEGAL ASPECTS OF THE
MORTGAGE LOANS--General," "--Types of Mortgage Instruments," "--Installment
Contracts" and "--Junior Mortgages; Rights of Senior Mortgagees or
Beneficiaries" for more detailed information regarding the characteristics of
such types of mortgage loans. A Mortgage Pool will not include securities of the
type listed in the definition of Permitted Investments. Each such mortgage loan
or Installment Contract is herein referred to as a "Mortgage Loan."
All Mortgage Loans will be of one or more of the following types:
1. Mortgage Loans with fixed interest rates;
2. Mortgage Loans with adjustable interest rates;
3. Mortgage Loans whose principal balances fully amortize over their
remaining terms to maturity;
4. Mortgage Loans whose principal balances do not fully amortize, but
instead provide for a substantial principal payment at the stated
maturity of the loan;
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5. Mortgage Loans that provide for recourse against only the Mortgaged
Properties; and
6. Mortgage Loans that provide for recourse against the other assets of the
related mortgagors.
Certain Mortgage Loans ("Simple Interest Loans") may provide that scheduled
interest and principal payments thereon are applied first to interest accrued
from the last date on which interest has been paid to the date such payment is
received and the balance thereof is applied to principal, and other Mortgage
Loans may provide for payment of interest in advance rather than in arrears.
Mortgage Loans may also be secured by one or more assignments of leases and
rents, management agreements or operating agreements relating to the Mortgaged
Property and in some cases by certain letters of credit, cash collateral
deposits, personal guarantees or combinations thereof. Pursuant to an assignment
of leases and rents, the obligor on the related promissory note, bond, mortgage
consolidation agreement, installment contract or other similar instrument (each,
a "Note") assigns its right, title and interest as landlord under each lease and
the income derived therefrom to the related mortgagee, while retaining a license
to collect the rents for so long as there is no default. If the obligor
defaults, the license terminates and the related mortgagee is entitled to
collect the rents from tenants to be applied to the monetary obligations of the
obligor. State law may limit or restrict the enforcement of the assignment of
leases and rents by a mortgagee until the mortgagee takes possession of the
related mortgaged property and/or a receiver is appointed. See "CERTAIN LEGAL
ASPECTS OF THE MORTGAGE LOANS--Leases and Rents."
If so specified in the related Prospectus Supplement, a Trust Fund may
include a number of Mortgage Loans with a single obligor or related obligors
thereunder. In the event that the Mortgage Pool securing Certificates for any
Series includes a Mortgage Loan or a group of Mortgage Loans of a single obligor
or group of affiliated obligors representing 10% or more of the principal amount
of such Certificates, the Prospectus Supplement will contain information,
including financial information, regarding the credit quality of the obligors.
The Mortgage Loans will be newly originated or seasoned, and will be acquired by
the Depositor either directly or through one or more affiliates.
Unless otherwise specified in the Prospectus Supplement for a Series, the
Mortgage Loans will not be insured or guaranteed by the United States, any
governmental agency, any private mortgage insurer or any other person or entity.
The Prospectus Supplement relating to each Series will, to the extent
verifiable, specify the originator or originators relating to the Mortgage
Loans, which may include, among others, commercial banks, savings and loan
associations, other financial institutions, mortgage banks, credit companies,
insurance companies, real estate developers or other HUD approved lenders, and
the underwriting criteria to the extent available in connection with originating
the Mortgage Loans. See "RISK FACTORS--Potential Inability to Verify
Underwriting Standards" herein. The criteria applied by the Depositor in
selecting the Mortgage Loans to be included in a Mortgage Pool will vary from
Series to Series. The Prospectus Supplement relating to each Series also will
provide specific information regarding the characteristics of the Mortgage
Loans, as of the Cut-off Date, including, among other things: (i) the aggregate
principal balance of the Mortgage Loans; (ii) the types of properties securing
the Mortgage Loans and the aggregate principal balance of the Mortgage Loans
secured by each type of property; (iii) the interest rate or range of interest
rates of the Mortgage Loans; (iv) the origination dates and the original and,
with respect to seasoned Mortgage Loans, remaining terms to stated maturity of
the Mortgage Loans; (v) the loan-to-value ratios at origination and, with
respect to seasoned Mortgage Loans, current loan balance-to-original value
ratios of the Mortgage Loans; (vi) the geographic distribution of the Mortgaged
Properties underlying the Mortgage Loans; (vii) the minimum interest rates,
margins, adjustment caps, adjustment frequencies, indices and other similar
information applicable to adjustable
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rate Mortgage Loans; (viii) the debt service coverage ratios relating to the
Mortgage Loans; and (ix) payment delinquencies, if any, relating to the Mortgage
Loans. The applicable Prospectus Supplement will also specify any materially
inadequate, incomplete or obsolete documentation relating to the Mortgage Loans
and other characteristics of the Mortgage Loans relating to each Series. If
specified in the applicable Prospectus Supplement, the Depositor may segregate
the Mortgage Loans in a Mortgage Pool into separate "Mortgage Loan Groups" (as
described in the related Prospectus Supplement) as part of the structure of the
payments of principal and interest on the Certificates of a Series. In such
case, the Depositor will disclose the above-specified information by Mortgage
Loan Group.
The Depositor will file a current report on Form 8-K (the "Form 8-K") with
the Commission within 15 days after the initial issuance of each Series of
Certificates (each, a "Closing Date"), as specified in the related Prospectus
Supplement, which will set forth information with respect to the Mortgage Loans
included in the Trust Fund for a Series as of the related Closing Date. The Form
8-K will be available to the Certificateholders of the related Series promptly
after its filing.
Assignment of Mortgage Loans
At the time of issuance of the Certificates of each Series, the Depositor
will cause the Mortgage Loans to be assigned to the Trustee, together with all
scheduled payments of interest and principal due after the Cut-off Date (whether
received) and all payments of interest and principal received by the Depositor
or the Master Servicer on or with respect to the Mortgage Loans after the
Cut-off Date (other than payments of principal and interest due on or prior to
the Cut-off Date). The Trustee, concurrently with such assignment, will execute
and deliver Certificates evidencing the beneficial ownership interests in the
related Trust Fund to the Depositor in exchange for the Mortgage Loans. Each
Mortgage Loan will be identified in a schedule appearing as an exhibit to the
Agreement for the related Series (the "Mortgage Loan Schedule"). The Mortgage
Loan Schedule will include, among other things, as to each Mortgage Loan,
information as to its outstanding principal balance as of the close of business
on the Cut-off Date, as well as information respecting the interest rate, the
scheduled monthly (or other periodic) payment of principal and interest as of
the Cut-off Date, the maturity date of each Note and the address of each
property securing the Note.
In addition, the Depositor will, as to each Mortgage Loan, deliver to the
Trustee: (i) the Note, endorsed to the order of the Trustee without recourse;
(ii) the Mortgage and an executed assignment thereof in favor of the Trustee or
otherwise as required by the Agreement; (iii) any assumption, modification or
substitution agreements relating to the Mortgage Loan; (iv) a mortgagee's title
insurance policy (or owner's policy in the case of an Installment Contract),
together with its endorsements, or an attorney's opinion of title issued as of
the date of origination of the Mortgage Loan; (v) if the security agreement
and/or assignment of leases, rents and profits is separate from the Mortgage, an
executed assignment of such security agreement and/or re-assignment of such
assignment of leases, rents and profits to the Trustee; and (vi) such other
documents as may be described in the Agreement (such documents collectively, the
"Mortgage Loan File"). Unless otherwise expressly permitted by the Agreement,
all documents included in the Mortgage Loan File are to be original executed
documents, provided, however, that in instances in which the original recorded
Mortgage, mortgage assignment or any document necessary to assign the
Depositor's interest in Installment Contracts to the Trustee, as described in
the Agreement, has been retained by the applicable jurisdiction or has not yet
been returned from recordation, the Depositor may deliver a photocopy thereof
certified to be the true and complete copy of the original thereof submitted for
recording.
The Trustee will hold the Mortgage Loan File for each Mortgage Loan in
trust for the benefit of all Certificateholders. Pursuant to the Agreement, the
Trustee is obligated to review the Mortgage Loan File for each Mortgage Loan
within a specified number of days after the execution and delivery of the
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Agreement. If any document in the Mortgage Loan File is found to be defective in
any material respect, the Trustee will promptly notify the Depositor, the Master
Servicer and the Seller.
Mortgage Underwriting Standards and Procedures
The underwriting procedures and standards for Mortgage Loans included in a
Mortgage Pool will be specified in the related Prospectus Supplement to the
extent such procedures and standards are known or available. Such Mortgage Loans
may be originated by an affiliate of the Depositor or third parties in
contemplation of the transactions contemplated by this Prospectus and the
related Prospectus Supplement or may have been originated by third-parties and
acquired by the Depositor directly or through its affiliates in negotiated
transactions.
The originator of a Mortgage Loan generally will have applied underwriting
procedures intended to evaluate, among other things, the income derived from the
Mortgaged Property, the capabilities of the management of the project, including
a review of management's past performance record, its management reporting and
control procedures (to determine its ability to recognize and respond to
problems) and its accounting procedures to determine cash management ability,
the obligor's credit standing and repayment ability and the value and adequacy
of the Mortgaged Property as collateral. With respect to certain Mortgage Loans,
the Depositor may be unable to verify the underwriting standards and procedures
used by a particular originator, in which case, such fact will be disclosed in
the related Prospectus Supplement. Mortgage Loans insured by the Federal Housing
Administration ("FHA"), a division of the United States Department of Housing
and Urban Development ("HUD"), will have been originated by mortgage lenders
that were at the time of origination approved by HUD as FHA mortgagees in the
ordinary course of their real estate lending activities and will comply with the
underwriting policies of FHA. In general, the Depositor will not engage in the
reunderwriting of Mortgage Loans that it acquires. Instead, the Depositor will
rely on the representations and warranties made by the Seller, and the Seller's
obligation to repurchase a Mortgage Loan in the event that a representation or
warranty was not true when made. See "RISK FACTORS--Potential Inability to
Verify Underwriting Standards."
If so specified in the related Prospectus Supplement, the adequacy of a
Mortgaged Property as security for repayment will generally have been determined
by appraisal by appraisers selected in accordance with preestablished guidelines
for appraisers established by or acceptable to the loan originator. In general,
originators of commercial and multifamily mortgage loans require each mortgaged
property to be appraised by an independent appraiser in accordance with MAI
Standards. Furthermore, if so specified in the related Prospectus Supplement,
the appraiser must have personally inspected the property and verified that it
was in good condition and that construction, if new, has been completed.
Generally, the appraisal will have been based upon a cash flow analysis and/or a
market data analysis of recent sales of comparable properties and, when deemed
applicable, a replacement cost analysis based on the current cost of
constructing or purchasing a similar property.
No assurance can be given that values of the Mortgaged Properties have
remained or will remain at their levels on the dates of origination of the
related Mortgage Loans. Further, there is no assurance that appreciation of real
estate values generally will limit loss experiences on commercial properties or
multifamily residential properties. If the commercial real estate market should
experience an overall decline in property values such that the outstanding
balances of the Mortgage Loans and any additional financing on the Mortgaged
Properties in a particular Mortgage Pool become equal to or greater than the
value of the Mortgaged Properties, the actual rates of delinquencies,
foreclosures and losses could be higher than those now generally experienced in
the mortgage lending industry. To the extent that such losses are not covered by
the methods of Credit Enhancement or the insurance policies described herein
and/or in the related Prospectus Supplement, the ability of the Trust Fund to
pay principal of and interest on the Certificates may be adversely affected.
Even if credit support covers all losses resulting from
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defaults and foreclosure, the effect of defaults and foreclosures may be to
increase prepayment experience on the Mortgage Loans, thus shortening weighted
average life and affecting yield to maturity.
Representations and Warranties
The seller of a Mortgage Loan to the Depositor (the "Seller"), which may be
an affiliate of the Depositor, will have made representations and warranties in
respect of the Mortgage Loans sold by such Seller to the Depositor. Such
representations and warranties will generally include, among other things: (i)
with respect to each Mortgaged Property, that title insurance (or if not yet
issued, a pro forma or specimen policy or a "marked-up" commitment for title
insurance furnished by the related title insurance company for purposes of
closing) and any required hazard insurance was effective at the origination of
each Mortgage Loan, and that each policy (or pro forma or specimen policy or
"marked-up" commitment for title insurance) remained in effect on the date of
purchase of the Mortgage Loan from the Seller; (ii) that the Seller was the sole
owner and holder of such Mortgage Loan and had full right and authority to sell
and assign such Mortgage Loan; (iii) with respect to each Mortgaged Property,
that each Mortgage constituted a valid first lien on the Mortgaged Property
(subject only to permissible title insurance exceptions); (iv) that there were
no delinquent tax or assessment liens against the Mortgaged Property; and (v)
that no scheduled payment of principal and interest under any Mortgage Loan was
30 days or more past due as of the related Cut-off Date. The Prospectus
Supplement for a Series will identify each Seller and specify the
representations and warranties being made by the Seller.
All of the representations and warranties of a Seller in respect of a
Mortgage Loan generally will have been made as of the date on which such Seller
sold the Mortgage Loan to the Depositor. The related Prospectus Supplement will
indicate if a different date is applicable. A substantial period of time may
have elapsed between such date and the date of the initial issuance of the
Series of Certificates evidencing an interest in such Mortgage Loan. Since the
representations and warranties of the Seller do not address events that may
occur following the sale of a Mortgage Loan by the Seller, the repurchase
obligation of the Seller described below will not arise if, on or after the date
of the sale of a Mortgage Loan by the Seller to the Depositor, the relevant
event occurs that would have given rise to such an obligation. However, the
Depositor will not include any Mortgage Loan in the Trust Fund for any Series of
Certificates if anything has come to the Depositor's attention that would cause
it to believe that the representations and warranties of the Seller will not be
accurate and complete in all material respects in respect of such Mortgage Loan
as of the date of sale of the Mortgage Loans or such other date specified in the
applicable Prospectus Supplement. If so specified in the related Prospectus
Supplement, the Depositor will make certain representations and warranties for
the benefit of Certificateholders of a Series in respect of a Mortgage Loan that
relate to the period commencing on the date of sale of such Mortgage Loan to the
Depositor.
Upon the discovery of the breach of any representation or warranty made by
the Seller in respect of a Mortgage Loan that materially and adversely affects
the interests of the Certificateholders of the related Series, if the Seller
cannot cure such breach within 85 days following discovery of the breach or the
Seller's receipt of notice of such breach, such Seller generally will be
obligated to substitute a similar replacement mortgage loan for such Mortgage
Loan, if so provided in the related Prospectus Supplement, or repurchase such
Mortgage Loan at a purchase price equal to 100% of the unpaid principal balance
thereof at the date of repurchase, plus (a) unpaid accrued interest at the
applicable rate (in the absence of a default) to, but not including, the date of
repurchase, (b) the amount of any unreimbursed advances made with respect to
Property Protection Expenses, (c) interest on all advances made with respect to
such Mortgage Loan at the rate specified in the related Agreement, (d) the
amount of any unpaid servicing compensation (other than servicing fees) and
Trust Fund expenses allocable to such Mortgage Loan, and (e) the amount of any
expenses reasonably incurred by the Master Servicer, the Special Servicer, if
any, or the Trustee in respect of such repurchase obligation. The Master
Servicer will be required to enforce
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such obligation of the Seller for the benefit of the Trustee and the
Certificateholders in accordance with servicing standards for the applicable
Agreement. This repurchase obligation, and substitution obligation, if
applicable, will generally constitute the sole remedy or remedies available to
the Trustee for the benefit of the Certificateholders of such Series for a
breach of a representation or warranty by a Seller, and the Depositor and the
Master Servicer will have no liability to the Trust Fund for any such breach.
The applicable Prospectus Supplement will indicate whether any additional
remedies will be available to the Trustee or the Certificateholders. No
assurance can be given that a Seller will carry out its repurchase obligation
with respect to the Mortgage Loans.
If specified in the related Prospectus Supplement, the Seller may deliver
to the Trustee, within a specified number of days following the issuance of a
Series of Certificates, Mortgage Loans in substitution for any one or more of
the Mortgage Loans initially included in the Trust Fund (i) which do not conform
in one or more respects to the description thereof contained in the related
Prospectus Supplement, (ii) as to which a breach of a representation or warranty
is discovered, which breach materially and adversely affects the interests of
the Certificateholders, or (iii) as to which a document in the related Mortgage
Loan File is defective in any material respect. The related Prospectus
Supplement will describe any required characteristics of any such substituted
Mortgage Loans.
SERVICING OF THE MORTGAGE LOANS
General
The servicer of the Mortgage Loans (the "Master Servicer") will be Midland
Loan Services, Inc., the parent of the Depositor and a wholly-owned subsidiary
of PNC Bank, National Association. The Prospectus Supplement for the related
Series will set forth certain information concerning the Master Servicer. The
Master Servicer will be responsible for servicing the Mortgage Loans pursuant to
the Agreement for the related Series. The Master Servicer's collection
procedures will be described under "THE POOLING AND SERVICING
AGREEMENT--Servicing of the Mortgage Loans; Collection of Payments" and
"--Collection Activities" in the related Prospectus Supplement. To the extent so
specified in the related Prospectus Supplement, one or more Special Servicers
may be a party to the related Agreement or may be appointed by holders of
certain Classes of Certificates representing a certain percentage specified in
the related Agreement of such Class or Classes of Certificates or by another
specified party. Certain information with respect to the Special Servicer will
be set forth in such Prospectus Supplement. A Special Servicer for any Series of
Certificates may be the Master Servicer or an affiliate of the Depositor or the
Master Servicer and may hold, or be affiliated with the holder of, Subordinate
Certificates of such Series. A Special Servicer may be entitled to any of the
rights, and subject to any of the obligations, described herein in respect of a
Master Servicer. In general, a Special Servicer's duties will relate to
defaulted Mortgage Loans or those Mortgage Loans that otherwise require special
servicing ("Specially Serviced Mortgage Loans"), including instituting
foreclosures and negotiating work-outs and will also include asset management
activities with respect to any REO Property. The related Prospectus Supplement
will describe the rights, obligations and compensation of any Special Servicer
for a particular Series of Certificates. The Master Servicer or Special Servicer
generally may subcontract the servicing of all or a portion of the Mortgage
Loans to one or more sub-servicers provided certain conditions are met. Such
sub-servicer may be an affiliate of the Depositor and may have other business
relationships with the Depositor and its affiliates.
Collections and Other Servicing Procedures
The Master Servicer and the Special Servicer, if any, will make reasonable
efforts to collect all payments called for under the Mortgage Loans and will,
consistent with the related Agreement, follow such collection procedures as it
deems necessary or desirable. Consistent with the above and unless
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otherwise specified in the related Prospectus Supplement, the Master Servicer or
the Special Servicer, if applicable, may, in its discretion, waive any late
payment charge or penalty fees in connection with a late payment of a Mortgage
Loan and, if so specified in the related Prospectus Supplement, may extend the
due dates for payments due on a Note.
It is expected that the Agreement for each Series will provide that the
Master Servicer establish and maintain one or more escrow accounts (each, an
"Escrow Account") in which the Master Servicer will be required to deposit
amounts received from each mortgagor, if required by the terms of the related
Mortgage Loan documents, for the payment of taxes, assessments, certain mortgage
and hazard insurance premiums and other comparable items ("Escrow Payments").
The Special Servicer, if any, will be required to remit amounts received for
such purposes on Mortgage Loans serviced by it to the Master Servicer for
deposit into the Escrow Account, and will be entitled to direct the Master
Servicer to make withdrawals from the Escrow Account as may be required for
servicing of such Mortgage Loans. Withdrawals from the Escrow Account generally
may be made (i) to effect timely payment of taxes, assessments, mortgage and
hazard insurance premiums and other comparable items, (ii) to transfer funds to
the Collection Account to reimburse the Master Servicer or the Trustee, as
applicable, for any advance with interest thereon relating to Escrow Payments,
(iii) to restore or repair the Mortgaged Properties, (iv) to clear and terminate
such account, (v) to pay interest to mortgagors on balances in the Escrow
Account, if required by the terms of the related Mortgage Loan documents or by
applicable law and (vi) to remove amounts not required to be deposited therein.
The related Prospectus Supplement may provide for other permitted withdrawals
from the Escrow Account. The Master Servicer will be entitled to all income on
the funds in the Escrow Account invested in Permitted Investments not required
to be paid to mortgagors by the terms of the related Mortgage Loan documents or
by applicable law. The Master Servicer will be responsible for the
administration of the Escrow Account.
Insurance
The Agreement for each Series will require that the Master Servicer use its
best efforts to cause each mortgagor to maintain insurance in accordance with
the related Mortgage Loan documents, which generally will include a standard
fire and hazard insurance policy with extended coverage. To the extent required
by the related Mortgage Loan, the coverage of each such standard hazard
insurance policy will be in an amount that is at least equal to the lesser of
(i) the full replacement cost of the improvements and equipment securing such
Mortgage Loan or (ii) the outstanding principal balance owing on such Mortgage
Loan or such amount as is necessary to prevent any reduction in such policy by
reason of the application of co-insurance and to prevent the Trustee thereunder
from being deemed to be a co-insurer, in each case with a replacement cost
rider. The Master Servicer will also use its reasonable efforts to cause each
mortgagor to maintain (i) insurance providing coverage against 12 months of rent
interruptions and (ii) such other insurance as provided in the related Mortgage
Loan. Subject to the requirements for modification, waiver or amendment of a
Mortgage Loan (See "--Modifications, Waivers and Amendments"), the Master
Servicer may in its reasonable discretion consistent with the servicing standard
set forth in the related Agreement waive the requirement of a Mortgage Loan that
the related mortgagor maintain earthquake insurance on the related Mortgaged
Property. If a Mortgaged Property is located at the time of origination of the
related Mortgage Loan in a federally designated special flood hazard area, the
Master Servicer will also use its best efforts to cause the related mortgagor to
maintain flood insurance in an amount equal to the lesser of the unpaid
principal balance of the related Mortgage Loan and the maximum amount obtainable
with respect to the Mortgage Loan. The related Agreement will provide that the
Master Servicer will be required to maintain the foregoing insurance if the
related mortgagor fails to maintain such insurance to the extent such insurance
is available at commercially reasonable rates and to the extent the Trustee, as
mortgagee, has an insurable interest. The cost of any such insurance maintained
by the Master Servicer will be advanced by the Master Servicer. The Master
Servicer or the Special Servicer, if any, will cause to be maintained fire and
hazard insurance with
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extended coverage on each REO Property in an amount that is at least equal to
the full replacement cost of the improvements and equipment. The cost of any
such insurance with respect to an REO Property will be payable out of amounts on
deposit in the related REO Account or will be advanced by the Master Servicer.
The Special Servicer will maintain flood insurance providing substantially the
same coverage as described above on any REO Property that was located in a
federally designated special flood hazard area at the time the related mortgage
loan was originated. The Special Servicer will maintain with respect to each REO
Property (i) public liability insurance, (ii) loss of rent endorsements and
(iii) such other insurance as provided in the related Mortgage Loan. Any such
insurance that is required to be maintained with respect to any REO Property
will only be so required to the extent such insurance is available at
commercially reasonable rates. The related Agreement will provide that the
Master Servicer or Special Servicer, as applicable, may satisfy its obligation
to cause hazard insurance policies to be maintained by maintaining a master
force placed insurance policy insuring against losses on the Mortgage Loans or
REO Properties, as the case may be. The incremental cost of such insurance
allocable to any particular Mortgage Loan or REO Property, if not borne by the
related mortgagor, will be advanced by the Master Servicer. Alternatively, the
Master Servicer or Special Servicer, as applicable, may satisfy its obligation
by maintaining, at its expense, a blanket policy (i.e., not a master force
placed policy) insuring against losses on the Mortgage Loans or REO Properties,
as the case may be. If such a blanket or master force placed policy contains a
deductible clause, the Master Servicer or the Special Servicer, as applicable,
will be obligated to deposit in the Collection Account all sums that would have
been deposited therein but for such clause to the extent any such deductible
exceeds the deductible limitation that pertained to the related Mortgage Loan,
or in the absence of any such deductible limitation, the deductible limitation
that is consistent with the servicing standard under the related Agreement.
In general, the standard form of fire and hazard extended coverage
insurance policy will cover physical damage to, or destruction of, the
improvements on the Mortgaged Property caused by fire, lightning, explosion,
smoke, windstorm, hail, riot, strike and civil commotion, subject to the
conditions and exclusions particularized in each policy. Since the standard
hazard insurance policies relating to the Mortgage Loans will be underwritten by
different insurers and will cover Mortgaged Properties located in various
states, such policies will not contain identical terms and conditions. The most
significant terms thereof, however, generally will be determined by state law
and conditions. Most such policies typically will not cover any physical damage
resulting from war, revolution, governmental actions, floods and other
water-related causes, earth movement (including earthquakes, landslides and
mudflows), nuclear reaction, wet or dry rot, vermin, rodents, insects or
domestic animals, theft and, in certain cases, vandalism. The foregoing list is
merely indicative of certain kinds of uninsured risks and is not intended to be
all-inclusive. Any losses incurred with respect to Mortgage Loans due to
uninsured risks (including earthquakes, mudflows and floods) or insufficient
hazard insurance proceeds could affect distributions to the Certificateholders.
The standard hazard insurance policies covering Mortgaged Properties
securing Mortgage Loans typically will contain a "coinsurance" clause which, in
effect, will require the insured at all times to carry insurance of a specified
percentage (generally 80% to 90%) of the full replacement value of the
dwellings, structures and other improvements on the Mortgaged Property in order
to recover the full amount of any partial loss. If the insured's coverage falls
below this specified percentage, such clause will provide that the insurer's
liability in the event of partial loss will not exceed the greater of (i) the
actual cash value (the replacement cost less physical depreciation) of the
structures and other improvements damaged or destroyed and (ii) such proportion
of the loss, without deduction for depreciation, as the amount of insurance
carried bears to the specified percentage of the full replacement cost of such
dwellings, structures and other improvements.
The Prospectus Supplement may describe other provisions concerning the
insurance policies required to be maintained under the related Agreement.
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Unless otherwise specified in the applicable Prospectus Supplement, no pool
insurance policy, special hazard insurance policy, bankruptcy bond, repurchase
bond or guarantee insurance will be maintained with respect to the Mortgage
Loans nor will any Mortgage Loan be subject to FHA insurance.
The FHA is responsible for administering various federal programs,
including mortgage insurance, authorized under the National Housing Act of 1934,
as amended, and the United States Housing Act of 1937, as amended. To the extent
specified in the related Prospectus Supplement, all or a portion of the Mortgage
Loans may be insured by the FHA. The Master Servicer will be required to take
such steps as are reasonably necessary to keep such insurance in full force and
effect.
Fidelity Bonds and Errors and Omissions Insurance
The Agreement for each Series will generally require that the Master
Servicer and the Special Servicer, if applicable, 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
Master Servicer and the Special Servicer, if applicable. The related Agreement
will allow the Master Servicer and the Special Servicer, if applicable, to
self-insure against loss occasioned by the errors and omissions of the officers
and employees of the Master Servicer and the Special Servicer, if applicable, so
long as certain criteria set forth in the Agreement are met.
Servicing Compensation and Payment of Expenses
The Master Servicer's principal compensation for its activities under the
Agreement for each Series will come from the payment to it or retention by it,
with respect to each Mortgage Loan, of a "Servicing Fee" (as defined in the
related Prospectus Supplement). The exact amount and calculation of such
Servicing Fee will be established in the Prospectus Supplement and Agreement for
the related Series. Since the aggregate unpaid principal balance of the Mortgage
Loans will generally decline over time, the Master Servicer's servicing
compensation will ordinarily decrease as the Mortgage Loans amortize.
In addition, the Agreement for a Series may provide that the Master
Servicer is entitled to receive, as additional compensation, (i) Prepayment
Premiums, late fees and certain other fees collected from mortgagors and (ii)
any interest or other income earned on funds deposited in the Collection Account
and Distribution Account (as described under "DESCRIPTION OF THE
CERTIFICATES--Accounts") and, except to the extent such income is required to be
paid to the related mortgagors, the Escrow Account.
The Master Servicer will generally pay the fees of the Trustee.
The amount and calculation of the fee for the servicing of Specially
Serviced Mortgage Loans (the "Special Servicing Fee") will be described in the
Prospectus Supplement and the Agreement for the related Series.
In addition to the compensation described above, the Master Servicer and
the Special Servicer, if applicable, (or any other party specified in the
applicable Prospectus Supplement) may retain, or be entitled to the
reimbursement of, such other amounts and expenses as are described in the
applicable Prospectus Supplement.
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Advances
The applicable Prospectus Supplement will set forth the obligations, if
any, of the Master Servicer and the Special Servicer, if applicable, to make any
advances with respect to delinquent payments on Mortgage Loans, payments of
taxes, assessments, insurance premiums and Property Protection Expenses or
otherwise. Any such advances will be made in the form and manner described in
the Prospectus Supplement and Agreement for the related Series. In general, the
Master Servicer or the Special Servicer, if any, will be entitled to
reimbursement for any advance equal to the amount of such advance, plus interest
thereon at the rate specified in the related Agreement, from (i) any collections
on or in respect of the particular Mortgage Loan or REO Property with respect to
which each such advance was made or (ii) upon determining that such advance is
not recoverable in the manner described in the preceding clause, from any other
amounts from time to time on deposit in the Collection Account, which amounts
may include funds that would otherwise be applied to the reduction of the
principal balance of the Certificates for such Series. The monthly statements to
Certificateholders will disclose the amount of any advances made during the
prior month. See "THE POOLING AND SERVICING AGREEMENT--Advances" in the related
Prospectus Supplement.
Modifications, Waivers and Amendments
The Agreement for each Series will provide the Master Servicer or the
Special Servicer, if any, with the discretion to modify, waive or amend certain
of the terms of any Mortgage Loan without the consent of the Trustee or any
Certificateholder subject to certain conditions set forth therein, including the
condition that such modification, waiver or amendment will not result in such
Mortgage Loan ceasing to be a "qualified mortgage" under the REMIC Regulations.
Evidence of Compliance
The Agreement for each Series will generally provide that on or before a
specified date in each year, with the first such date being a specified number
of months after the Cut-off Date, there will be furnished to the related Trustee
a statement of a firm of independent certified public accountants to the effect
that such firm has examined certain documents and records relating to the
servicing of the Mortgage Loans under the related Agreement or the servicing of
mortgage loans similar to the Mortgage Loans under substantially similar
agreements for the preceding twelve (12) months and that the assertion of
management of the Master Servicer or Special Servicer, as applicable, that it
maintained an effective internal control system over the servicing of such
mortgage loans is fairly stated in all material respects, based upon established
criteria, which statement meets the standards applicable to accountant's reports
intended for general distribution. The Prospectus Supplement may provide that
additional reports of independent certified public accountants relating to the
servicing of mortgage loans may be required to be delivered to the Trustee.
In addition, the Agreement for each Series will generally provide that the
Master Servicer and the Special Servicer, if any, will each deliver to the
Trustee, the Depositor and each Rating Agency, annually on or before a date
specified in the Agreement, a statement signed by an officer of the Master
Servicer or the Special Servicer, as applicable, to the effect that, based on a
review of its activities during the preceding calendar year, to the best of such
officer's knowledge, the Master Servicer or the Special Servicer, as applicable,
has fulfilled in all material respects its obligations under the Agreement
throughout such year or, if there has been a default in the fulfillment of any
such obligation, specifying each default known to such officer.
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Certain Matters With Respect to the Master Servicer, the Special Servicer, the
Trustee and the Depositor
The Agreement for each Series will also provide that none of the Depositor,
the Master Servicer, the Special Servicer, if any, or any director, officer,
employee or agent of the Depositor, the Master Servicer or the Special Servicer,
if any, will be under any liability to the Trust Fund or the Certificateholders
for any action taken, or for refraining from the taking of any action, in good
faith pursuant to the Agreement, or for errors in judgment; provided, however,
that neither the Depositor, the Master Servicer, the Special Servicer, if any,
nor any such person will be protected against any liability for a breach of any
representations or warranties under the Agreement or that would otherwise be
imposed by reason of willful misfeasance, misrepresentations, bad faith, fraud
or negligence or, in the case of the Master Servicer or Special Servicer, if
any, a breach of the servicing standards set forth in the Agreement in the
performance of its duties or by reason of negligent disregard of its obligations
and duties thereunder. The Agreement will further provide that the Depositor,
the Master Servicer, the Special Servicer, if any, and any director, officer,
employee or agent of the Depositor, the Master Servicer, the Special Servicer,
if any, will be entitled to indemnification by the Trust Fund for any loss,
liability or expense incurred in connection with any legal action relating to
the Agreement or the Certificates, other than any loss, liability or expense
incurred by reason of its respective willful misfeasance, misrepresentation, bad
faith, fraud or negligence or, in the case of the Master Servicer or the Special
Servicer, if any, a breach of the servicing standard set forth in the Agreement
in the performance of duties thereunder or by reason of negligent disregard of
its respective obligations and duties thereunder. Any loss resulting from such
indemnification will reduce amounts distributable to Certificateholders. The
Prospectus Supplement will specify any variations to the foregoing required by
the Rating Agencies rating Certificates of a Series.
In addition, the Agreement will generally provide that none of the
Depositor, the Master Servicer or the Special Servicer, if any, will be under
any obligation to appear in, prosecute or defend any legal action unless such
action is related to its duties under the Agreement and which in its opinion
does not involve it in any expense or liability. The Master Servicer or the
Special Servicer, if any, may, however, in its discretion undertake any such
action that is related to its respective obligations under the related Agreement
and that 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 holders of
Certificates thereunder. In such event, the legal expenses and costs of such
action and any liability resulting therefrom (except any liability related to
the Master Servicer's or the Special Servicer's, if any, obligations to service
the Mortgage Loans in accordance with the servicing standard under the
Agreement) will be expenses, costs and liabilities of the Trust Fund, and the
Master Servicer or Special Servicer, if applicable, will be entitled to be
reimbursed therefor and to charge the Collection Account.
Any person into which the Master Servicer or the Special Servicer, if any,
may be merged or consolidated, or any person resulting from any merger or
consolidation to which the Master Servicer or the Special Servicer, if any, is a
party, or any person succeeding to the business of the Master Servicer or the
Special Servicer, if any, will be the successor of the Master Servicer or the
Special Servicer, as applicable, under the Agreement, and will be deemed to have
assumed all of the liabilities and obligations of the Master Servicer or the
Special Servicer, as applicable, under the Agreement, if each of the Rating
Agencies has confirmed in writing that such merger or consolidation or
succession will not result in a downgrading, withdrawal or qualification of the
rating then assigned by such Rating Agency to any Class of the Certificates. The
related Prospectus Supplement will describe any additional restrictions on such
a merger or consolidation.
Generally, and in addition to the transactions permitted pursuant to the
preceding paragraph, the Master Servicer or the Special Servicer, if any, may
assign its rights and delegate its duties and
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obligations under the Agreement in connection with the sale or transfer of a
substantial portion of its mortgage servicing or asset management portfolio;
provided that certain conditions are met, including the written consent of the
Trustee and written confirmation by each of the Rating Agencies that such
assignment and delegation by the Master Servicer or the Special Servicer, as
applicable, will not, in and of itself, result in a downgrading, withdrawal or
qualification of the rating then assigned by such Rating Agency to any Class of
Certificates. The related Prospectus Supplement will describe any additional
restrictions on such assignment.
The Agreement will also provide that the Master Servicer or the Special
Servicer, if any, may not otherwise resign from its obligations and duties as
Master Servicer or Special Servicer thereunder, except upon the determination
that performance of its duties is no longer permissible under applicable law and
provided that such determination is evidenced by an opinion of counsel delivered
to the Trustee. No such resignation or removal may become effective until the
Trustee or a successor Master Servicer or Special Servicer, as the case may be,
has assumed the obligations of the Master Servicer or the Special Servicer, as
applicable, under the Agreement.
The Trustee under each Agreement will be named in the applicable Prospectus
Supplement. The commercial bank or trust company serving as Trustee may have
normal banking relationships with the Depositor, the Master Servicer, the
Special Servicer, if any, and/or any of their respective affiliates.
The Trustee may resign from its obligations under the Agreement at any
time, in which event a successor Trustee will be appointed. In addition, the
Depositor may remove the Trustee if the Trustee ceases to be eligible to act as
Trustee under the Agreement or if the Trustee becomes insolvent, at which time
the Depositor will become obligated to appoint a successor Trustee. The Trustee
may also be removed at any time by the holders of Certificates evidencing the
percentage of Voting Rights specified in the applicable Prospectus Supplement.
Any resignation and removal of the Trustee, and the appointment of a successor
Trustee, will not become effective until acceptance of such appointment by the
successor Trustee.
The Depositor is not obligated to monitor or supervise the performance of
the Master Servicer, Special Servicer, if any, or the Trustee under the
Agreement.
Events of Default
Events of default with respect to the Master Servicer or the Special
Servicer, if any, as applicable (each, an "Event of Default") under the
Agreement for each Series will consist of, in summary form, (i) any failure by
the Master Servicer or the Special Servicer, if any, to remit to the Collection
Account or any failure by the Master Servicer to remit to the Trustee for
deposit into the Distribution Account any amount required to be so remitted
pursuant to the Agreement; (ii) any failure by the Master Servicer or Special
Servicer, as applicable, duly to observe or perform in any material respect any
of its other covenants or agreements or the breach of its representations or
warranties (which breach materially and adversely affects the interests of the
Certificateholders, the Trustee, the Master Servicer or the Special Servicer, if
any, with respect to any Mortgage Loan) under the Agreement, which in each case
continues unremedied for 30 days after the giving of written notice of such
failure to the Master Servicer or the Special Servicer, as applicable, by the
Depositor or the Trustee, or to the Master Servicer or Special Servicer, if any,
the Depositor and the Trustee by the holders of Certificates evidencing Voting
Rights of at least 25% of any affected Class; (iii) confirmation in writing by
any of the Rating Agencies that the then current rating assigned to any Class of
Certificates would be withdrawn, downgraded or qualified unless the Master
Servicer or Special Servicer, as applicable, is removed; (iv) certain events of
insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings and certain actions by, on behalf of or against the Master
Servicer or Special Servicer, as applicable, indicating its
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insolvency or inability to pay its obligations; or (v) any failure by the Master
Servicer or the Special Servicer, as applicable, to make a required advance. The
related Prospectus Supplement may provide for other Events of Default to the
extent required by the Rating Agencies rating Certificates of a Series.
Rights Upon Event of Default
As long as an Event of Default remains unremedied, the Trustee may, and at
the written direction of the holders of Certificates entitled to 25% of the
aggregate Voting Rights of all Certificates will, terminate all of the rights
and obligations of the Master Servicer or Special Servicer, as the case may be.
Notwithstanding the foregoing, upon any termination of the Master Servicer or
the Special Servicer, as applicable, under the Agreement the Master Servicer or
the Special Servicer, as applicable, will continue to be entitled to receive all
accrued and unpaid servicing compensation through the date of termination plus,
in the case of the Master Servicer, all advances and interest thereon as
provided in the Agreement. The Agreement for the applicable Series may specify
that the Special Servicer is entitled under certain circumstances to continue to
receive workout fees and other similar fees after it is terminated.
The holders of Certificates evidencing not less than 66 2/3% of the
aggregate Voting Rights of the Certificates may, on behalf of all holders of
Certificates, waive any default by the Master Servicer or Special Servicer, if
any, in the performance of its obligations under the Agreement and its
consequences, except a default in making any required deposits to (including
advances) or payments from the Collection Account or the Distribution Account or
in remitting payments as received, in each case in accordance with the
Agreement. Upon any such waiver of a past default, such default will cease to
exist, and any Event of Default arising therefrom will be deemed to have been
remedied for every purpose of the Agreement. No such waiver will extend to any
subsequent or other default or impair any right consequent thereon.
On and after the date of termination, the Trustee will succeed to all
authority and power of the Master Servicer or the Special Servicer, as
applicable, under the Agreement and will be entitled to similar compensation
arrangements to which the Master Servicer or the Special Servicer, as
applicable, would have been entitled. If the Trustee is unwilling or unable so
to act, or if the holders of Certificates evidencing a majority of the aggregate
Voting Rights so request or if the Trustee is not rated in one of its two
highest long-term unsecured debt rating categories by each of the Rating
Agencies rating the Certificates of such Series, the Trustee must appoint, or
petition a court of competent jurisdiction for the appointment of, an
established mortgage loan servicing institution, the appointment of which will
not result in the downgrading, withdrawal or qualification of the rating or
ratings then assigned to any Class of Certificates as evidenced in writing by
each Rating Agency rating the Certificates of such Series, to act as successor
to the Master Servicer or the Special Servicer, as applicable, under the
Agreement. Pending such appointment, the Trustee will be 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 or the Special Servicer, as the case may be,
under the Agreement.
No Certificateholder will have any right under the Agreement to institute
any proceeding with respect to the Agreement or the Mortgage Loans, unless, with
respect to the Agreement, such holder previously shall have given to the Trustee
a written notice of a default under the Agreement and of the continuance
thereof, and unless also the holders of Certificates representing a majority of
the aggregate Voting Rights allocated to each affected Class have made written
request of the Trustee to institute such proceeding in its own name as Trustee
under the Agreement and have offered to the Trustee such reasonable indemnity as
it may require against the costs, expenses and liabilities to be incurred
therein or thereby, and the Trustee, for 30 days after its receipt of such
notice, request and offer of indemnity, has neglected or refused to institute
such proceeding.
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The Trustee will have no obligation to institute, conduct or defend any
litigation under the Agreement or in relation thereto at the request, order or
direction of any of the holders of Certificates, unless such holders of
Certificates have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which may be incurred therein or
thereby.
CREDIT ENHANCEMENT
General
If specified in the related Prospectus Supplement for any Series, credit
enhancement may be provided with respect to one or more Classes thereof or the
related Mortgage Loans ("Credit Enhancement"). Credit Enhancement may be in the
form of a letter of credit, the subordination of one or more Classes of the
Certificates of such Series, the establishment of one or more reserve funds,
surety bonds, certificate guarantee insurance, the use of cross-support
features, limited guarantees or another method of Credit Enhancement described
in the related Prospectus Supplement, or any combination of the foregoing.
It is unlikely that Credit Enhancement will provide protection against all
risks of loss or guarantee repayment of the entire principal balance of the
Certificates and interest thereon. If losses occur that exceed the amount
covered by Credit Enhancement or that are not covered by Credit Enhancement,
Certificateholders will bear their allocable share of deficiencies. See "RISK
FACTORS--Credit Enhancement Limitations."
If Credit Enhancement is provided with respect to a Series, or the related
Mortgage Loans, the applicable Prospectus Supplement will include a description
of (a) the amount payable under such Credit Enhancement, (b) any conditions to
payment thereunder not otherwise described herein, (c) the conditions (if any)
under which the amount payable under such Credit Enhancement may be reduced and
under which such Credit Enhancement may be terminated or replaced and (d) the
material provisions of any agreement relating to such Credit Enhancement.
Additionally, the applicable Prospectus Supplement will set forth certain
information with respect to the issuer of any third-party Credit Enhancement,
including (i) a brief description of its principal business activities, (ii) its
principal place of business, the jurisdiction of organization and the
jurisdictions 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 such Prospectus Supplement. If the holders of any Certificates of any Series
will be materially dependent upon the issuer of any third party Credit
Enhancement for timely payment of interest and/or principal on their
Certificates, the Depositor will file a current report on Form 8-K within 15
days after the initial issuance of such Certificates, which will include any
material information regarding such issuer, including audited financial
statements to the extent required.
Subordinate Certificates
If so specified in the related Prospectus Supplement, one or more Classes
of a Series may be Subordinate Certificates. If so specified in the related
Prospectus Supplement, the rights of the holders of subordinate Certificates
(the "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 (the "Senior
Certificates") to the extent specified in the related Prospectus Supplement. In
addition, subordination may be effected by the allocation of losses first to
Subordinate Certificates in reduction of the principal balance of such
Certificates until the principal balance thereof is
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reduced to zero before any losses are allocated to Senior Certificates. The
Agreement may require a trustee that is not the Trustee to be appointed to act
on behalf of holders of Subordinate Certificates.
A Series may include one or more Classes of Subordinate Certificates
entitled to receive cash flows remaining after distributions are made to all
other Classes designated as being senior thereto. Such right to receive payments
will effectively be subordinate to the rights of holders of such senior
designated Classes of Certificates. A Series may also include one or more
Classes of Subordinate Certificates that will be allocated losses prior to any
losses being allocated to Classes of Subordinate Certificates designated as
being senior thereto. If so specified 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 not covered by insurance policies or other Credit
Enhancement, such as losses arising from damage to property securing a Mortgage
Loan not covered by standard hazard insurance policies.
The related Prospectus Supplement will describe any such subordination in
greater detail and set forth information concerning, among other things, to the
extent applicable, (i) the amount of subordination of a Class or Classes of
Subordinate Certificates in a Series, (ii) the circumstances in which such
subordination will be applicable, (iii) the manner, if any, in which the amount
of subordination will decrease over time, (iv) the manner of funding any related
reserve fund, (v) the conditions under which amounts in any applicable reserve
fund will be used to make distributions to holders of Senior Certificates and/or
to holders of Subordinate Certificates or be released from the applicable Trust
Fund and (vi) if one or more Classes of Subordinate Certificates of a Series are
Offered Certificates, the sensitivity of distributions on such Certificates
based on certain prepayment assumptions. See "RISK FACTORS--Risks to
Subordinated Certificateholders; Lower Payment Priority" herein.
Reserve Funds
If specified in the related Prospectus Supplement, one or more reserve
funds (each, a "Reserve Fund") may be established with respect to one or more
Classes of the Certificates of a Series, in which cash, a letter of credit,
Permitted Investments or a combination thereof, in the amounts, if any, so
specified in the related Prospectus Supplement will be deposited. Such Reserve
Funds may also be funded over time by depositing therein a specified amount of
the distributions received on the applicable Mortgage Loans if specified in the
related Prospectus Supplement. The Depositor may pledge the Reserve Funds to a
separate collateral agent specified in the related Prospectus Supplement.
Amounts on deposit in any Reserve Fund for one or more Classes of
Certificates of a Series will be applied by the Trustee 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 payments of
principal of and interest on the Certificates, if required as a condition to the
rating of such Series by any Rating Agency. If so specified in the related
Prospectus Supplement, Reserve Funds may be established to provide limited
protection, in an amount satisfactory to a Rating Agency, against certain types
of losses not covered by insurance policies or other Credit Enhancement. Reserve
Funds may also be established for other purposes and in such amounts as will be
specified in the related Prospectus Supplement. Following each Distribution Date
amounts in any 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 by the Trustee.
Moneys deposited in any Reserve Fund generally will be permitted to be
invested in Permitted Investments. Generally, any reinvestment income or other
gain from such investments will be credited to the related Reserve Fund for such
Series, and any loss resulting from such investments will be charged to such
Reserve Fund. If specified in the related Prospectus Supplement, such income or
other gain may be
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payable to the Master Servicer as additional servicing compensation, and any
loss resulting from such investment will be borne by the Master Servicer. The
Reserve Fund, if any, for a Series will be a part of the Trust Fund only if the
related Prospectus Supplement so specifies. If the Reserve Fund is not a part of
the Trust Fund, the right of the Trustee to make draws on the Reserve Fund will
be an asset of the Trust Fund.
Additional information concerning any Reserve Fund will be set forth in the
related Prospectus Supplement, including the initial balance of such Reserve
Fund, the balance required to be maintained in the Reserve Fund, the manner in
which such required balance will decrease over time, the manner of funding such
Reserve Fund, the purpose for which funds in the Reserve Fund may be applied to
make distributions to Certificateholders and use of investment earnings, if any,
from the Reserve Fund.
Cross-Support Features
If the Mortgage Pool for a Series is divided into separate Mortgage Loan
Groups, each securing a separate Class or Classes of a Series, Credit
Enhancement may be provided by a cross-support feature that requires that
distributions be made on Senior Certificates secured by one Mortgage Loan Group
prior to distributions on Subordinate Certificates secured by another Mortgage
Loan Group within the Trust Fund. The related Prospectus Supplement for a Series
that includes a cross-support feature will describe the manner and conditions
for applying such cross-support feature.
Certificate Guarantee Insurance
If so specified in the related Prospectus Supplement, certificate guarantee
insurance, if any, with respect to a Series of Certificates will be provided by
one or more insurance companies. Such certificate guarantee insurance will
guarantee, with respect to one or more Classes of Certificates of the applicable
Series, timely distributions of interest and 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. If so specified in
the related Prospectus Supplement, the certificate guarantee insurance will also
guarantee against any payment made to a Certificateholder that is subsequently
recovered as a "voidable preference" payment under the Bankruptcy Code. A copy
of the certificate guarantee insurance for a Series, if any, will be filed with
the Commission as an exhibit to the Form 8-K to be filed with the Commission
within 15 days of issuance of the Certificates of the applicable Series.
Limited Guarantee
If so specified in the Prospectus Supplement with respect to a Series of
Certificates, Credit Enhancement may be provided in the form of a limited
guarantee issued by a guarantor named therein.
Letter of Credit
Alternative Credit Enhancement with respect to one or more Classes of
Certificates of a Series of Certificates may be provided by the issuance of a
letter of credit by the bank or financial institution specified in the
applicable Prospectus Supplement. The coverage, amount and frequency of any
reduction in coverage provided by a letter of credit issued with respect to one
or more Classes of Certificates of a Series will be set forth in the Prospectus
Supplement relating to such Series.
Pool Insurance Policies; Special Hazard Insurance Policies
If so specified in the Prospectus Supplement relating to a Series of
Certificates, the Depositor will obtain a pool insurance policy for the Mortgage
Loans in the related Trust Fund. The pool insurance
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policy will cover any loss (subject to the limitations described in a related
Prospectus Supplement) by reason of default to the extent a related Mortgage
Loan is not covered by any primary mortgage insurance policy. The amount and
terms of any such coverage will be set forth in the Prospectus Supplement.
If so specified in the applicable Prospectus Supplement, for each Series of
Certificates as to which a pool insurance policy is provided, the Depositor will
also obtain a special hazard insurance policy for the related Trust Fund in the
amount set forth in such Prospectus Supplement. The special hazard insurance
policy will, subject to the limitations described in the applicable Prospectus
Supplement, protect against loss by reason of damage to Mortgaged Properties
caused by certain hazards not insured against under the standard form of hazard
insurance policy for the respective states in which the Mortgaged Properties are
located. The amount and terms of any such coverage will be set forth in the
Prospectus Supplement.
Surety Bonds
If so specified in the Prospectus Supplement relating to a Series of
Certificates, Credit Enhancement with respect to one or more Classes of
Certificates of a Series may be provided by the issuance of a surety bond issued
by a financial guarantee insurance company specified in the applicable
Prospectus Supplement. The coverage, amount and frequency or any reduction in
coverage provided by a surety bond will be set forth in the Prospectus
Supplement relating to such Series.
Fraud Coverage
If so specified in the applicable Prospectus Supplement, losses resulting
from fraud, dishonesty or misrepresentation in connection with the origination
or sale of the Mortgage Loans may be covered to a limited extent by (i)
representations and warranties to the effect that no such fraud, dishonesty or
misrepresentation had occurred, (ii) a Reserve Fund, (iii) a letter of credit or
(iv) some other method. The amount and terms of any such coverage will be set
forth in the Prospectus Supplement.
Mortgagor Bankruptcy Bond
If so specified in the applicable Prospectus Supplement, losses resulting
from a bankruptcy proceeding relating to a mortgagor or obligor affecting the
Mortgage Loans in a Trust Fund with respect to a Series of Certificates will be
covered under a mortgagor bankruptcy bond (or any other instrument that will not
result in a withdrawal, downgrading or qualification of the rating of the
Certificates of a Series by any of the Rating Agencies that rated any
Certificates of such Series). Any mortgagor bankruptcy bond or such other
instrument will provide for coverage in an amount and with such terms meeting
the criteria of the Rating Agencies rating any Certificates of the related
Series, which amount and terms will be set forth in the related Prospectus
Supplement.
CERTAIN LEGAL ASPECTS OF THE MORTGAGE LOANS
The following discussion contains a general summary of the material legal
aspects of mortgage loans. Because many of the legal aspects of mortgage loans
are governed by applicable state laws (which may vary substantially), the
following summaries do not purport to be complete, to reflect the laws of any
particular state, to reflect all the laws applicable to any particular Mortgage
Loan or to encompass the laws of all states in which the properties securing the
Mortgage Loans are situated. The summaries are qualified in their entirety by
reference to the applicable federal and state laws governing the Mortgage Loans.
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General
All of the Mortgage Loans are loans evidenced by a note or bond that is
secured by a lien and security interest in property created under related
security instruments, which may be mortgages, deeds of trust or deeds to secure
debt, depending upon the prevailing practice and law in the state in which the
Mortgaged Property is located. As used herein, unless the context otherwise
requires, the term "mortgage" includes mortgages, deeds of trust and deeds to
secure debt. Any of the foregoing mortgages will create a lien upon, or grant a
title interest in, the mortgaged property, the priority of which will depend on
the terms of the mortgage, the existence of any separate contractual
arrangements with others holding interests in the mortgaged property, the order
of recordation of the mortgage in the appropriate public recording office and
the actual or constructive knowledge of the mortgagee as to any unrecorded
liens, leases or other interests affecting the mortgaged property. Mortgages
typically do not possess priority over governmental claims for real estate
taxes, assessments and, in some states, for reimbursement of remediation costs
of certain environmental conditions. See "--Environmental Risks" below. In
addition, the Code provides priority to certain tax liens over the lien of the
mortgage. The mortgagor is generally responsible for maintaining the property in
good condition and for paying real estate taxes, assessments and hazard
insurance premiums associated with the property.
Types of Mortgage Instruments
A mortgage either creates a lien against or constitutes a conveyance of an
interest in real property between two parties -- a mortgagor (the borrower and
usually the owner of the subject property) and a mortgagee (the lender). A deed
of trust is a three-party instrument, wherein a trustor (the equivalent of a
mortgagor), grants the property to a trustee, in trust with a power of sale, for
the benefit of a beneficiary (the lender) as security for the payment of the
secured indebtedness. A deed to secure debt is a two party instrument wherein
the grantor (the equivalent of a mortgagor) conveys title to, as opposed to
merely creating a lien upon, the subject property to the grantee (the lender)
until such time as the underlying debt is repaid, generally with a power of sale
as security for the indebtedness evidenced by the related note. In a case where
the borrower 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 borrower. At origination of a mortgage loan involving a land
trust, the borrower may execute a separate undertaking to make payments on the
mortgage note. In no event is the land trustee personally liable for the
mortgage note obligation. As used herein, unless the context otherwise requires,
the term "mortgagor" includes a mortgagor under a mortgage, a trustor under a
deed of trust and a grantor under a deed to secure debt, and the term
"mortgagee" includes a mortgagee under a mortgage, a beneficiary under a deed of
trust and a grantee under a deed to secure debt. 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 and, in some cases, in deed of trust transactions, the
directions of the beneficiary. The Mortgage Loans (other than Installment
Contracts) will consist of loans secured by mortgages.
The real property covered by a mortgage is most often the fee estate in
land and improvements. However, a mortgage may encumber other interests in real
property such as a tenant's interest in a lease of land, leasehold improvements
or both, and the leasehold estate created by such lease. A mortgage covering an
interest in real property other than the fee estate requires special provisions
in the instrument creating such interest, in the mortgage or in a separate
agreement with the landlord or other party to such instrument, to protect the
mortgagee against termination of such interest before the mortgage is paid.
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Personalty
Certain types of mortgaged properties, such as nursing homes, hotels,
motels and industrial plants, are likely to derive a significant part of their
value from personal property that 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
mortgagee under the Uniform Commercial Code ("UCC"). In order to perfect its
security interest therein, the mortgagee generally must file UCC financing
statements and, to maintain perfection of such security interest, file
continuation statements generally every five years. In certain cases, Mortgage
Loans secured in part by personal property may be included in a Trust Fund even
if the security interest in such personal property was not perfected or the
requisite UCC filings were allowed to lapse.
Installment Contracts
The Mortgage Loans may also consist of Installment Contracts (also
sometimes called contracts for deed). Under an Installment Contract, the seller
(referred to in this section as the "mortgagee") retains legal title to the
property and enters into an agreement with the purchaser (referred to in this
section as the "mortgagor") for the payment of the purchase price, plus
interest, over the term of such Installment Contract. Only after full
performance by the mortgagor of the Installment Contract is the mortgagee
obligated to convey title to the property to the mortgagor. As with mortgage or
deed of trust financing, during the effective period of the Installment
Contract, the mortgagor is generally responsible for maintaining the property in
good condition and for paying real estate taxes, assessments and hazard
insurance premiums associated with the property.
The method of enforcing the rights of the mortgagee under an Installment
Contract varies on a state-by-state basis depending upon the extent to which
state courts are willing or able to enforce the Installment Contract strictly
according to its terms. The terms of Installment Contracts generally provide
that upon a default by the mortgagor, the mortgagor loses his or her right to
occupy the property, the entire indebtedness is accelerated and the mortgagor's
equitable interest in the property is forfeited. The mortgagee in such a
situation does not have to foreclose in order to obtain title to the property,
although in some cases both a quiet title action to clear title to the property
(if the mortgagor has recorded notice of the Installment Contract) and an
ejectment action to recover possession may be necessary. In a few states,
particularly in cases of a default during the early years of an Installment
Contract, ejectment of the mortgagor and a forfeiture of his or her interest in
the property will be permitted. However, in most states, laws (analogous to
mortgage laws) have been enacted to protect mortgagors under Installment
Contracts from the harsh consequences of forfeiture. These laws may require the
mortgagee to pursue a judicial or nonjudicial foreclosure with respect to the
property, give the mortgagor a notice of default and some grace period during
which the Installment Contract may be reinstated upon full payment of the
default amount. Additionally, the mortgagor may have a post-foreclosure
statutory redemption right, and, in some states, a mortgagor with a significant
equity investment in the property may be permitted to share in the proceeds of
any sale of the property after the indebtedness is repaid or may otherwise be
entitled to a prohibition of the enforcement of the forfeiture clause.
Junior Mortgages; Rights of Senior Mortgagees or Beneficiaries
Some of the Mortgage Loans may be secured by junior mortgages that are
subordinate to senior mortgages held by other lenders or institutional
investors. In such cases, the rights of the Trust Fund (and therefore the
Certificateholders), as mortgagee under a junior mortgage, will be subordinate
to those of the mortgagee under the senior mortgage, including the prior rights
of the senior mortgagee to: (i) receive rents, hazard insurance proceeds and
condemnation proceeds; and (ii) cause the property securing the Mortgage Loan to
be sold upon the occurrence of a default under the senior mortgage, thereby
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extinguishing the lien of the junior mortgage, unless the Master Servicer or
Special Servicer, if applicable, either asserts such subordinate interest in the
related property in the foreclosure of the senior mortgage or satisfies the
defaulted senior loan. As discussed more fully below, in many states a junior
mortgagee may satisfy a defaulted senior loan in full, or may cure such default
and bring the senior loan current, in either event adding the amounts expended
to the balance due on the junior loan. Absent a provision in the senior mortgage
or the existence of a recorded request for notice in compliance with applicable
state law (if any), no notice of default is typically required to be given to
the junior mortgagee.
The form of the mortgage used by many institutional lenders confers on the
mortgagee the right both to receive all proceeds collected under any hazard
insurance policy and all awards made in connection with any condemnation
proceedings, and to apply such proceeds and awards to any indebtedness secured
by such mortgage in such order as the mortgagee may determine. Thus, in the
event improvements on the property are damaged or destroyed by fire or other
casualty, or in the event the property (or any part thereof) is taken by
condemnation, the mortgagee under the senior mortgage will have the prior right
to collect any applicable insurance proceeds and condemnation awards and to
apply the same to the indebtedness secured by the senior mortgage. However, the
laws of certain states may provide that, unless the security of the mortgagee
has been impaired, the mortgagor must be allowed to use any applicable insurance
proceeds or partial condemnation awards to restore the property.
The form of mortgage used by many institutional lenders also typically
contains a "future advance" clause that provides that additional amounts
advanced to or on behalf of the mortgagor by the mortgagee are to be secured by
the mortgage. Such a clause is valid under the laws of most states. In some
states, however, the priority of any advance made under the clause depends upon
whether the advance was an "obligatory" or "optional" advance. If the mortgagee
is obligated to advance the additional amounts, the advance may be entitled to
receive the same priority as amounts initially made under the mortgage,
notwithstanding that other junior mortgages or other liens may have encumbered
the property between the date of recording of the senior mortgage and the date
of the future advance, and that the mortgagee had actual knowledge of such
intervening junior mortgages or other liens at the time of the advance. If the
mortgagee is not obligated to advance the additional amounts and has actual
knowledge of any such intervening junior mortgages or other liens, the advance
may be subordinate to such intervening junior mortgages or other liens. In many
other states, all advances under a "future advance" clause are given the same
priority as amounts initially made under the mortgage so long as such advances
do not exceed a specified "credit limit" amount stated in the recorded mortgage.
Another provision typically found in the form of the mortgage used by many
institutional lenders obligates the mortgagor: (i) to pay all taxes and
assessments affecting the property prior to delinquency; (ii) to pay, when due,
all other encumbrances, charges and liens affecting the property that may be
prior to the lien of the mortgage; (iii) to provide and maintain hazard
insurance on the property; (iv) to maintain and repair the property and not to
commit or permit any waste thereof; and (v) to appear in and defend any action
or proceeding purporting to affect the property or the rights of the mortgagee
under the mortgage. Upon a failure of the mortgagor to perform any of these
obligations, the mortgage typically provides the mortgagee the option to perform
the obligation itself, with the mortgagor agreeing to reimburse the mortgagee
for any sums expended by the mortgagee in connection therewith. All sums so
expended by the mortgagee also typically become part of the indebtedness secured
by the mortgage. The form of mortgage used by many institutional lenders also
typically requires the mortgagor to obtain the consent of the mortgagee as to
all actions affecting the mortgaged property, including, without limitation, all
leasing activities (including new leases and termination or modification of
existing leases), any alterations, modifications or improvements to the
buildings and other improvements forming a part of the mortgaged property and
all property management activities affecting the mortgaged property (including
new management or leasing agreements or any termination or modification of
existing management or leasing agreements). Tenants will often refuse to execute
a lease unless the mortgagee executes a written
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agreement with the tenant not to disturb the tenant's possession of its premises
in the event of a foreclosure. A senior mortgagee may refuse to consent to
matters approved by a junior mortgagee with the result that the value of the
security for the junior mortgage is diminished. For example, a senior mortgagee
may decide not to approve a lease or refuse to grant to a tenant such a
non-disturbance agreement. If, as a result, the lease is not executed, the value
of the mortgaged property may be diminished.
Foreclosure
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 and, by reason thereof, the indebtedness has been
accelerated, 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. Although there are other foreclosure procedures available in
some states that are either infrequently used or available only in certain
limited circumstances, the two primary methods of foreclosing a mortgage are
judicial foreclosure and non-judicial foreclosure pursuant to a power of sale
granted in the mortgage. In either case, the actual foreclosure of the mortgage
will be accomplished pursuant to a public sale of the mortgaged property by a
designated official or by the trustee under a deed of trust. The purchaser at
any such sale acquires only the estate or interest in the mortgaged property
encumbered by the mortgage. For example, if the mortgage only encumbered a
tenant's leasehold interest in the property, such purchaser will only acquire
such leasehold interest, subject to the tenant's obligations under the lease to
pay rent and perform other covenants contained therein.
Judicial Foreclosure. A judicial foreclosure of a mortgage is a judicial
action conducted in a court having jurisdiction over a Mortgaged Property
initiated by the service of legal pleadings upon all necessary parties having an
interest in the real property. Delays in completion of foreclosure may
occasionally result from difficulties in locating the necessary parties to the
action. As a judicial foreclosure is a lawsuit, it is subject to all of
procedures, delays and expenses attendant to litigation, sometimes requiring up
to several years to complete if contested. At the completion of a judicial
foreclosure, if the mortgagee prevails, the court ordinarily issues a judgment
of foreclosure and appoints a referee or other designated official to conduct a
public sale of the property. Such sales are made in accordance with procedures
that vary from state to state. If the mortgage covered the tenant's interest in
a lease and leasehold estate, the purchaser will acquire such tenant's interest
subject to the tenant's obligations under the lease to pay rent and perform
other covenants contained therein.
Non-Judicial Foreclosure. In the majority of cases, foreclosure of a deed
of trust (and in some instances, other types of mortgage instruments) is
accomplished by a non-judicial trustee's sale pursuant to a provision in the
deed of trust that authorizes the trustee, generally following a request from
the beneficiary, to sell the mortgaged property at public sale upon any default
by the mortgagor under the terms of the note or deed of trust. In addition to
the specific contractual requirements set forth in the deed of trust, a
non-judicial trustee's sale is also typically subject to any applicable judicial
or statutory requirements imposed in the state where the mortgaged property is
located. The specific requirements that must be satisfied by a trustee prior to
the trustee's sale vary from state to state. Examples of the varied requirements
imposed by certain states are: (i) that notices of both the mortgagor's default
and the mortgagee's acceleration of the debt be provided to the mortgagor; (ii)
that the trustee record a notice of default and a notice of sale and send a copy
of such notice to the mortgagor, any other person having an interest in the real
property, including any junior lienholders, any person who has recorded a
request for a copy of a notice of default and notice of sale, any successor in
interest to the mortgagor and to certain other persons; (iii) that the
mortgagor, or any other person having a junior encumbrance on the real estate,
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may, during a reinstatement period, cure the default by paying the entire amount
in arrears, plus, in certain states, certain allowed costs and expenses incurred
by the mortgagee in connection with the default; and (iv) the method
(publication, posting, recording, etc.), timing, content, location and other
particulars as to any required public notices of the trustee's sale. 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 regard to the acceleration of the indebtedness), plus the lender's
costs and expenses (in some states, limited to reasonable costs and expenses)
incurred in enforcing the obligation. Generally, state law controls the amount
of foreclosure expenses and costs, including attorneys' fees which may be
recovered by a mortgagee. 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. 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 mortgagee 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.
Limitations on Mortgagee's Rights. In case of foreclosure under a mortgage
or a deed of trust, the sale by the referee or other designated official or the
trustee is often a public sale. Because of the difficulty a potential buyer at
any foreclosure sale might have in determining the exact status of title to the
mortgaged property, the potential existence of redemption rights (see "--Rights
of Redemption" below) and because the physical condition and financial
performance of the mortgaged property may have deteriorated during the
foreclosure proceedings and/or for a variety of other reasons, a third party may
be unwilling to purchase the property at the foreclosure sale. Some states
require that the mortgagee disclose all known facts materially affecting the
value of the mortgaged property to potential bidders at a trustee's sale. Such
disclosure may have an adverse affect on the trustee's ability to sell the
mortgaged property or the sale price thereof. Potential buyers may be reluctant
to purchase property at a foreclosure sale as a result of the 1980 decision of
the United States Court of Appeals for the Fifth Circuit in Durrett v.
Washington National Insurance Company and other decisions that have followed its
reasoning. The court in Durrett held that even a non-collusive, regularly
conducted foreclosure sale was a fraudulent transfer under the federal
Bankruptcy Code, as amended from time to time (11 U.S.C.) (the "Bankruptcy
Code"), and, therefore, could be rescinded in favor of the bankrupt's estate,
if: (i) the foreclosure sale was held while the debtor was insolvent and not
more than one year prior to the filing of the bankruptcy petition; and (ii) the
price paid for the foreclosed property did not represent "fair consideration"
("reasonably equivalent value" under the Bankruptcy Code). Although the
reasoning and result of Durrett in respect of the Bankruptcy Code was rejected
by the United States Supreme Court in May 1994, the case could nonetheless be
persuasive to a court applying a state fraudulent conveyance law that has
provisions similar to those construed in Durrett. Furthermore, a bankruptcy
trustee or debtor in possession could possibly avoid a foreclosure sale by
electing to proceed under state fraudulent conveyance law, and the period of
time for which a foreclosure sale could be subject to avoidance under such law
is often greater than one year. For these reasons, it is common for the
mortgagee to purchase the property from the trustee, referee or other designated
official for an amount equal to the outstanding principal amount of the secured
indebtedness, together with accrued and unpaid interest and the expenses of
foreclosure, in which event, if the amount bid by the mortgagee equals the full
amount of such debt, interest and expenses, the secured debt would be
extinguished, or for a lesser amount in order to preserve its right to seek a
deficiency judgment if such is available under state law and under the terms of
the Mortgage Loan documents. Thereafter, the mortgagee assumes the burdens of
ownership and management of the property (frequently, through the employment of
a third party management company), including third party liability, paying
operating expenses and real estate taxes and making repairs, until a sale of the
property to a third party can be arranged. The costs of operating and
maintaining commercial 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 that are hotels, motels or nursing or convalescent
homes or
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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 that 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 mortgagee 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
mortgagee's investment in the property. Moreover, a mortgagee commonly incurs
substantial legal fees and court costs in acquiring a mortgaged property through
contested foreclosure and/or bankruptcy proceedings. In addition, a mortgagee
may be responsible under federal or state law for the cost of cleaning up a
mortgaged property that is environmentally contaminated. See "--Environmental
Risks" below. There may also be state transfer taxes due and payable upon
obtaining such properties at foreclosure and such taxes could be substantial. As
a result, a mortgagee could realize an overall loss on a mortgage loan even if
the related mortgaged property is sold at foreclosure or resold after it is
acquired through foreclosure for an amount equal to the full outstanding
principal amount of the mortgage loan, plus accrued interest.
The holder of a junior mortgage that forecloses on a mortgaged property
does so subject to senior mortgages and any other prior liens, and may be
obliged to keep senior mortgage loans current in order to avoid foreclosure of
its interest in the property. In addition, if the foreclosure of a junior
mortgage triggers the enforcement of a "due-on-sale" clause contained in a
senior mortgage, the junior mortgagee could be required to pay the full amount
of the senior mortgage indebtedness or face foreclosure.
Courts may also apply general equitable principles in connection with
foreclosure proceedings to limit a mortgagee's remedies. These equitable
principles are generally designed to relieve the mortgagor from the legal effect
of his defaults under the loan documents to the extent such effect is determined
to be harsh or unfair. Examples of judicial remedies that have been fashioned
include requiring mortgagees to undertake affirmative and expensive actions to
determine the causes of the mortgagor's default and the likelihood that the
mortgagor will be able to reinstate the loan, requiring the mortgagees to
reinstate loans or recast payment schedules in order to accommodate mortgagors
who are suffering from temporary financial disability, and limiting the rights
of mortgagees to foreclose if the default under the mortgage instrument is not
monetary, such as the mortgagor's failing to maintain the property adequately or
executing a second mortgage affecting the property. 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 mortgagors
under deeds of trust or mortgages receive notices in addition to the statutorily
prescribed minimum. For the most part, these cases have upheld the notice
provisions as being reasonable or have found that the sale by a trustee under a
deed of trust, or under a mortgage having a power of sale, does not involve
sufficient state action to afford constitutional protections to the mortgagor.
In addition, some states may have statutory protection such as the right of the
borrower to reinstate mortgage loans after commencement of foreclosure
proceedings but prior to a foreclosure sale.
Under the REMIC Regulations and the related Agreement, the Master Servicer
or Special Servicer, if any, may be permitted (and in some cases may be
required) to hire an independent contractor to operate any REO Property. The
costs of such operation may be significantly greater than the costs of direct
operation by the Master Servicer or Special Servicer, if any. See "SERVICING OF
THE MORTGAGE LOANS--Collections and Other Servicing Procedures."
Rights of Redemption. The purposes of a foreclosure 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 that is subordinate to the mortgage being
foreclosed, from any exercise of their "equity of redemption." The doctrine of
equity of redemption provides that, until the property covered by a mortgage has
been sold in accordance with a properly conducted foreclosure sale, those having
an interest that is subordinate to that
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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 cut off and
terminated. Equity of redemption is generally a common-law (non-statutory) right
that only exists prior to completion of the foreclosure sale, is not waivable by
the mortgagor and must be exercised prior to foreclosure sale.
In contrast to the doctrine of equity of redemption, in some states, the
mortgagor and foreclosed junior lienors are given a statutory period after the
completion of a foreclosure in which to redeem the property from the foreclosure
sale by payment of a redemption price. Some states require the payment of the
entire principal balance of the loan, accrued interest and expenses of
foreclosure, others require the payment of the foreclosure sale price, while
other states require the payment of only a portion of the sums due. The effect
of a statutory right of redemption is to diminish the ability of the mortgagee
to sell the foreclosed property. The exercise of a statutory right of redemption
may defeat the title of any purchaser at a foreclosure sale or any purchaser
from the mortgagee subsequent to a foreclosure sale. Consequently, the practical
effect of the redemption right is often to force the mortgagee to retain the
property and pay the expenses of ownership until the redemption period has run.
Whether the mortgagee has any rights to recover these expenses from a mortgagor
who redeems the property depends on the applicable state statute. Certain states
permit a mortgagee to invalidate an attempted exercise of a statutory redemption
right by waiving its right to any deficiency judgment. In some states, there is
no right to redeem property after a trustee's sale under a deed of trust.
Under the REMIC Regulations currently in effect, property acquired by
foreclosure generally must not be held for more than three years following the
year in which the property is acquired. With respect to a Series of Certificates
for which an election is made to qualify the Trust Fund or a part thereof as a
REMIC, the Agreement will permit foreclosed property to be held for more than
three years if the Trustee receives (i) an extension from the IRS or (ii) an
opinion of counsel to the effect that holding such property for such period is
permissible under the REMIC Regulations.
Mortgagors under Installment Contracts generally do not have the benefits
of redemption periods such as those that exist in the same jurisdiction for
mortgage loans. If redemption statutes do exist under state laws for Installment
Contracts, the redemption period may be shorter than for mortgages.
Anti-Deficiency Legislation. Some of the Mortgage Loans will be nonrecourse
loans as to which, in the event of default by a mortgagor, recourse may be had
only against the specific property pledged to secure the related Mortgage Loan
and not against the mortgagor's other assets. Even if a mortgage by its terms
provides for recourse against the mortgagor, certain states have imposed
prohibitions against or limitations upon such recourse. For example, some state
statutes limit the right of the mortgagee to obtain a deficiency judgment
against the mortgagor following foreclosure or sale under a deed of trust. A
deficiency judgment is a personal judgment against the former mortgagor equal in
most cases to the difference between the net amount realized upon the public
sale of the real property and the amount due to the mortgagee. Other statutes
require the mortgagee to exhaust the security afforded under a mortgage by
foreclosure in an attempt to satisfy the full debt before bringing a personal
action against the mortgagor. In certain states, the mortgagee has the option of
bringing a personal action against the mortgagor on the debt without first
exhausting its security; however, in some of these states, a mortgagee choosing
to pursue such an action may be deemed to have elected its remedy and may be
precluded from exercising any remedies with respect to the security.
Consequently, the practical effect of the election requirement, when applicable,
is that mortgagees will usually proceed first against the security rather than
bringing personal action against the mortgagor. 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
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prevent a mortgagee from obtaining a large deficiency judgment against the
former mortgagor as a result of low bids, or the absence of bids, at the
judicial sale.
Cross-Collateralization. Certain of the Mortgage Loans may be secured by
more than one mortgage covering properties located in more than one state.
Because of various state laws governing foreclosure or the exercise of a power
of sale and because, in general, foreclosure actions are brought in state court
and the courts of one state cannot exercise jurisdiction over property in
another state, it may be necessary upon a default under such a loan to foreclose
on the related mortgages in a particular order rather than simultaneously in
order to ensure that the lien of the mortgages is not impaired or released.
Leasehold Risks. Certain of the Mortgage Loans may be secured by a mortgage
encumbering the mortgagor's leasehold interest under a ground lease. Leasehold
mortgages are subject to certain risks not associated with mortgages encumbering
a fee ownership interest in the mortgaged property. The most significant of
these risks is that the ground lease creating the leasehold estate could
terminate, thereby depriving the leasehold mortgagee of 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. Examples of protective provisions that
may be included in the related ground lease, or a separate agreement between the
ground lessee, the ground lessor and the mortgagee, in order to minimize such
risk are the right of the mortgagee to receive notices from the ground lessor of
any defaults by the mortgagor; the right to cure such defaults, with adequate
cure periods; if a default is not susceptible of cure by the mortgagee, the
right to acquire the leasehold estate through foreclosure or otherwise prior to
any termination of the ground lease; the ability of the ground lease to be
assigned to and by the mortgagee or a purchaser at a foreclosure sale and for a
release of the assigning ground lessee's liabilities thereunder; the right of
the mortgagee to enter into a ground lease with the ground lessor on the same
terms and conditions as the old ground lease in the event of a termination
thereof; and provisions for disposition of any insurance proceeds or
condemnation awards payable upon a casualty to, or condemnation of, the
mortgaged property. In addition to the foregoing protections, the leasehold
mortgage may 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, and may assign to the
mortgagee the debtor-ground lessee's right to reject a lease pursuant to Section
365 of the Bankruptcy Code, although the enforceability of such assignment has
not been established. An additional manner in which to obtain protection against
the termination of the ground lease is to have the ground lessor enter into a
mortgage encumbering the fee estate in addition to the mortgage encumbering the
leasehold interest under the ground lease. Additional protection is afforded to
the mortgagee, because if the ground lease is terminated, the mortgagee may
nonetheless possess rights contained in the fee mortgage. Without the
protections described in this paragraph, a leasehold mortgagee may be more
likely to lose the collateral securing its leasehold mortgage. No assurance can
be given that any or all of the above described provisions will be obtained in
connection with any particular Mortgage Loan.
Bankruptcy Laws. Mortgagors often file bankruptcy to delay or prevent
exercise of remedies under loan documents. Numerous statutory and common law
provisions, including the Bankruptcy Code and state laws affording relief to
debtors, may interfere with and delay the ability of a mortgagee to obtain
payment of the loan, to realize upon collateral and/or to enforce a deficiency
judgment. For example, under the Bankruptcy Code virtually all actions
(including foreclosure actions and deficiency judgment proceedings) related to
the "bankrupt" borrower are automatically stayed upon the filing of the
bankruptcy petition and often no interest or principal payments are made during
the course of the bankruptcy proceeding (although "adequate protection" payments
for anticipated diminution, if any, in the value of the mortgaged property may
be made). The delay and consequences thereof caused by such automatic stay can
be significant. A particular mortgagor may become subject to the Bankruptcy Code
either by a voluntary or involuntary petition with respect to such mortgagor or,
by virtue of the doctrine of
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"substantive consolidation" by an affiliate of such mortgagor becoming a debtor
under the Bankruptcy Code. Additionally, the filing of a petition in bankruptcy
by or on behalf of a junior lienor or junior mortgagee may stay the senior
mortgagee from taking action to foreclose out such junior lien.
Under the Bankruptcy Code, provided certain substantive and procedural
safeguards for the mortgagee are met, the amount and terms of a mortgage or deed
of trust secured by property of the debtor may be modified under certain
circumstances. 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 the mortgagee's security interest), thus
leaving the mortgagee a general unsecured creditor for the difference between
such value and the outstanding balance of the loan. Other modifications may
include the reduction in the amount of each scheduled payment, which reduction
may result from a reduction in the rate of interest and/or the alteration of the
repayment schedule (with or without affecting the unpaid principal balance of
the loan) and/or an extension (or acceleration) of the final maturity date. Some
bankruptcy courts have approved plans, based on the particular facts of the
reorganization case before them, that effected the curing of a mortgage loan
default by paying arrearages over a number of years. A bankruptcy court may also
permit a debtor to de-accelerate a secured loan and to reinstate the loan even
though the mortgagee had accelerated such 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, even if the full amount
due under the original loan is never repaid. Other types of significant
modifications to the terms of the mortgage may be acceptable to the bankruptcy
court, often depending on the particular facts and circumstances of the specific
case.
Federal bankruptcy law may also interfere with or affect the ability of a
mortgagee to enforce an assignment of rents and leases or a security interest in
hotel or nursing home revenues related to the mortgaged property. In connection
with a bankruptcy proceeding involving a mortgagor, Section 362 of the
Bankruptcy Code automatically stays any attempts by the mortgagee to enforce any
such assignment or security interest. The legal proceedings necessary to resolve
such a situation can be time-consuming and may result in significant delays in
the receipt of the rents or hotel or nursing home revenues. Rents or hotel or
nursing home revenues may also be lost (i) if the assignment or security
interest is not fully documented or perfected under state law prior to
commencement of the bankruptcy proceeding; (ii) to the extent such rents or
hotel or nursing home revenues are used by the mortgagor to maintain the
mortgaged property or for other court authorized expenses; (iii) to the extent
other collateral may be substituted therefor; and (iv) if the bankruptcy court
determines that it is necessary or appropriate "based on the equities of the
case."
To the extent a mortgagor's ability to make payment on a mortgage loan is
dependent on payments under a lease of the related property, such ability may be
impaired by the commencement of a bankruptcy proceeding relating to the lessee
under such lease. Under the Bankruptcy Code, the filing of a petition in
bankruptcy by or on behalf of a lessee results in an automatic stay barring 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.
In addition, the Bankruptcy Code generally provides that a bankruptcy
trustee or debtor in possession may, subject to approval of the bankruptcy
court, either (i) assume the lease and retain it or assign it to a third party
or (ii) reject the lease. If the lease is assumed, the bankruptcy trustee or
debtor in possession (or 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.
Furthermore, there may be a significant period of time between the date that a
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lessee files a bankruptcy petition and the date that the lease is assumed or
rejected. Although the lessee is obligated to make all lease payments currently
with respect to the post-petition period, there is a risk that such payments
will not be made due to the lessee's poor financial condition. If the lease is
rejected, the lessor will be treated as an unsecured creditor with respect to
its claim for damages for termination of the lease, and the lessor must relet
the mortgaged property before the flow of lease payments will recommence. In
addition, pursuant to Section 502(b)(6) of the Bankruptcy Code, a lessor's
damages for lease rejection are limited.
In a bankruptcy or similar proceeding, action may be taken seeking the
recovery, as a preferential transfer, of certain payments made by the mortgagor
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. If a Mortgage Loan includes any
guaranty, and the guaranty waives any rights of subrogation or contribution,
then certain payments by the mortgagor to the Trust Fund also may be avoided and
recovered as fraudulent conveyances.
A trustee in bankruptcy or a debtor in possession or various creditors who
extend credit after a case is filed, in some cases, may be entitled to collect
costs and expenses in preserving or selling the mortgaged property ahead of
payment to the mortgagee. In certain circumstances, a trustee in bankruptcy or
debtor in possession may have the power to grant liens senior to or pari passu
with 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 enforce a restructuring of a mortgage loan on terms a
mortgagee would not otherwise accept.
A trustee in bankruptcy or a debtor in possession, in some cases, also may
be entitled to subordinate the lien created by the mortgage loan to other liens
or the claims of general unsecured creditors. Generally, this requires proof of
"unequitable conduct" by the mortgagee. However, various courts have expanded
the grounds for equitable subordination to apply to various non-pecuniary claims
for such items as penalties and fines. A court may find that any prepayment
charge, various late payment charges and other claims by mortgagees may be
subject to equitable subordination on these grounds.
A trustee in bankruptcy or a debtor in possession, in some cases, also may
be entitled to avoid all or part of any claim or lien by the mortgagee if and to
the extent a judgment creditor, or a bona fide purchaser of real estate, could
have done so outside of bankruptcy. Generally, this involves some defect in the
language, execution or recording of the mortgage loan documents.
Environmental Risks
Real property pledged as security to a mortgagee may be subject to
environmental risks arising from the presence of hazardous or toxic substances
on, under, adjacent to, or in such property. The environmental condition of
mortgaged properties may be affected by the actions and operations of tenants
and occupants of such properties. Of particular concern may be those mortgaged
properties that are, or have been, the site of manufacturing, industrial or
disposal activity or have been built with or contain asbestos-containing
material or other indoor pollutants. In addition, current and future
environmental laws, ordinances or regulations, including new requirements
developed by federal agencies pursuant to the mandates of the Clean Air Act
Amendments of 1990, may impose additional compliance obligations on business
operations that can be met only by significant capital expenditures.
A mortgagee may be exposed to risks related to environmental conditions
such as the following: (i) a diminution in the value of a mortgaged property;
(ii) the potential that the mortgagor may default on
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a mortgage loan due to the mortgagor's inability to pay high remediation costs
or difficulty in bringing its operations into compliance with environmental
laws; (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 such mortgaged property or the unpaid balance of the related mortgage
loan; or (iv) the inability to sell the related Mortgage Loan in the secondary
market or lease the property to potential tenants. In certain circumstances, a
mortgagee may choose not to foreclose on contaminated property rather than risk
incurring liability for remedial actions.
In addition, a mortgagee may be obligated to disclose environmental
conditions on a property to government entities and/or to prospective buyers
(including prospective buyers at a foreclosure sale or following foreclosure).
Such disclosure may decrease the amount that prospective buyers are willing to
pay for the affected property, sometimes substantially, and thereby decrease the
ability of the mortgagee to recoup its investment in a loan upon foreclosure.
In certain states, transfers of some types of properties are conditioned
upon cleanup of contamination prior to transfer. In these cases, a mortgagee
that becomes the owner of a property through foreclosure, deed in lieu of
foreclosure or otherwise, may be required to clean up the contamination before
selling or otherwise transferring the property.
Under federal and certain states' laws, the owner's failure to perform
remedial actions required under environmental laws may in certain circumstances
give rise to a lien on the mortgaged property to ensure the reimbursement of
remedial costs incurred by federal and state regulatory agencies. In several
states such lien has priority over the lien of an existing mortgage against such
property. Since the costs of remedial action could be substantial, the value of
a mortgaged property as collateral for a mortgage loan could be adversely
affected by the existence of an environmental condition giving rise to a lien.
Under certain circumstances, it is possible that environmental cleanup
costs, or the obligation to take remedial actions, can be imposed on a mortgagee
such as the Trust Fund with respect to each Series. Under the laws of some
states and under the federal Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended ("CERCLA"), strict liability may be
imposed on present and past "owners" and "operators" of contaminated real
property for the costs of clean-up. 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 is known as the "secured creditor exemption." Judicial decisions
interpreting the secured creditor exemption had varied widely, and one decision,
United States v. Fleet Factors Corp., 901 F.2d 1550 (11th Cir. 1990), cert.
denied, 498 U.S. 1046 (1991), had indicated that a lender's mere power to affect
and influence a borrower's operations might be sufficient to lead to liability
on the part of the lender. However, on September 30, 1996, the Asset
Conservation, Lender Liability, and Deposit Insurance Protection Act of 1996
(the "Lender Liability Act") became law. The Lender Liability Act clarifies the
secured creditor exemption to impose liability only on a secured lender who
exercises control over operational aspects of the facility and thus is
"participating in management." A number of environmentally related activities
before the loan is made and during its pendency, as well as "workout" steps to
protect a security interest, are identified as permissible to protect a security
interest without triggering liability. The Lender Liability Act also identifies
the circumstances in which foreclosure and post-foreclosure activities will not
trigger CERCLA liability.
The Lender Liability Act also amends the Solid Waste Disposal Act to limit
the liability of lenders holding a security interest for costs of cleaning up
contamination from underground storage tanks. However, the Lender Liability Act
has no effect on state environmental laws similar to CERCLA that may impose
liability on mortgagees and other persons, and not all of those laws provide for
a secured creditor exemption. Liability under many of these federal and state
laws may exist even if the mortgagee
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did not cause or contribute to the contamination and regardless of whether the
mortgagee has actually taken possession of a mortgaged property through
foreclosure, deed in lieu of foreclosure or otherwise. Moreover, such liability
is not limited to the original or unamortized principal balance of a loan or to
the value of the property securing a loan.
CERCLA's "innocent landowner" defense to strict liability may be available
to a mortgagee that has taken title to a mortgaged property and has performed an
appropriate environmental site assessment that does not disclose existing
contamination and that meets other requirements of the defense. However, it is
unclear whether the environmental site assessment must be conducted upon loan
origination, prior to foreclosure or both, and uncertainty exists as to what
kind of environmental site assessment must be performed in order to qualify for
the defense.
Beyond statute-based environmental liability, there exist common law causes
of action that can be asserted to redress hazardous environmental conditions on
a property (e.g., actions based on nuisance for so called toxic torts resulting
in death, personal injury or damage to property). Although it may be more
difficult to hold a mortgagee liable in such cases, unanticipated or uninsured
liabilities of the mortgagor may jeopardize the mortgagor's ability to meet its
loan obligations.
At the time the Mortgage Loans were originated, it is possible that no
environmental assessment or a very limited environmental assessment of the
Mortgaged Properties was conducted.
The related Agreement will provide that the Master Servicer or the Special
Servicer, if any, acting on behalf of the Trust Fund, may not acquire title to
any Mortgaged Property or take over its operation unless the Master Servicer or
the Special Servicer, if any, has previously determined, based upon a phase I or
other specified environmental assessment prepared by a person who regularly
conducts such environmental assessments, that (a) the Mortgaged Property is in
compliance with applicable environmental laws or that it would be in the best
economic interest of the Trust Fund to take the actions necessary to comply with
such laws and (b) there are no circumstances or conditions present at the
Mortgaged Property relating to Hazardous Materials for which some investigation,
remediation or clean-up action could be required or that it would be in the best
economic interest of the Trust Fund to take such actions with respect to such
Mortgaged Property. This requirement effectively precludes enforcement of the
security for the related Note until a satisfactory environmental assessment is
obtained and/or any required remedial action is taken. This requirement will
reduce the likelihood that a given Trust Fund will become liable for any
environmental conditions affecting a Mortgaged Property, but will make it more
difficult to realize on the security for the Mortgage Loan. There can be no
assurance that any environmental assessment obtained by the Master Servicer or
the Special Servicer, if any, will detect all possible environmental conditions
or that the other requirements of the Agreement, even if fully observed by the
Master Servicer or the Special Servicer, if any, will in fact insulate a given
Trust Fund from liability for environmental conditions.
"Hazardous Materials" are generally defined as any dangerous, toxic or
hazardous pollutants, chemicals, wastes or substances, including, without
limitation, those so identified pursuant to CERCLA or any other environmental
laws now existing, and specifically including, without limitation, asbestos and
asbestos-containing materials, polychlorinated biphenyls, radon gas, petroleum
and petroleum products, urea formaldehyde and any substances classified as being
"in inventory," "usable work in process" or similar classification that would,
if classified as unusable, be included in the foregoing definition.
If a mortgagee is or becomes liable for clean-up costs, it may bring an
action for contribution against the current owners or operators, the owners or
operators at the time of on-site disposal activity or any other party who
contributed to the environmental hazard, but such persons or entities may be
without substantial assets, bankrupt or otherwise judgment proof. Furthermore,
such action against the mortgagor
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may be adversely affected by the limitations on recourse in the loan documents.
Similarly, in some states anti-deficiency legislation and other statutes
requiring the mortgagee to exhaust its security before bringing a personal
action against the mortgagor (see "--Anti-Deficiency Legislation" above) may
curtail the mortgagee's ability to recover from its mortgagor the environmental
clean-up and other related costs and liabilities incurred by the mortgagee.
Accordingly, it is possible that such costs could become a liability of the
Trust Fund and occasion a loss to the Certificateholders. Shortfalls occurring
as the result of imposition of any clean-up costs will be addressed in the
Prospectus Supplement and Agreement for the related Series.
Other environmental laws that may affect the value of a mortgaged property,
or impose cleanup costs or liabilities, including those related to asbestos,
radon, lead paint and underground storage tanks.
Certain federal, state and local laws, regulations and ordinances govern
the removal, encapsulation or disturbance of asbestos-containing materials
("ACMs") in the event of the remodeling, renovation or demolition of a building.
Such laws, as well as common law standards, may impose liability for releases of
ACMs and may allow third parties to seek recovery from owners or operators of
real properties for personal injuries associated with such releases. In
addition, federal law requires that building owners inspect their facilities for
ACMs and presumed ACMs (consisting of thermal system insulation, surfacing
materials and asphalt and vinyl flooring in buildings constructed prior to 1981)
and transfer all information regarding ACMs and presumed ACMs in their
facilities to successive owners.
The United States Environmental Protection Agency (the "EPA") has concluded
that radon gas, a naturally occurring substance, is linked to increased risks of
lung cancer. Although there are no current federal or state requirements
mandating radon gas testing, the EPA and the United States Surgeon General
recommend testing residences for the presence of radon and that abatement
measures be undertaken if radon concentrations in indoor air meet or exceed four
picocuries per liter.
Under the Residential Lead-Based Paint Hazard Reduction Act of 1992 (the
"Lead Paint Act"), owners of residential housing constructed prior to 1978 are
required to disclose to potential residents or purchasers any known lead-paint
hazards. The Lead Paint Act creates a private right of action with treble
damages available for any failure to so notify. In addition, the ingestion of
lead-based paint chips or dust particles by children can result in lead
poisoning, and the owner of a property where such circumstances exist may be
held liable for such injuries. Finally, federal law mandates that detailed
worker safety standards must be complied with where construction, alteration,
repair or renovation of structures that contain lead, or materials that contain
lead, is contemplated.
Underground storage tanks ("USTs") are, and in the past have been,
frequently located at properties used for industrial, retail and other business
purposes. Federal law, as well as the laws of most states, currently require
USTs used for the storage of fuel or hazardous substances and waste to meet
certain standards designed to prevent releases from the USTs into the
environment. USTs installed prior to the implementation of these standards, or
that otherwise do not meet these standards, are potential sources of
contamination to the soil and groundwater. Land owners may be liable for the
costs of investigating and remediating soil and groundwater contamination that
may emanate from leaking USTs.
Enforceability of Certain Provisions
Default Interest; Late Charges; and Prepayment Fees. Some of the Mortgage
Loans may contain provisions requiring the mortgagor to pay late charges or
additional interest if required payments are not timely made, and in some
circumstances, may prohibit payments for a specified period and/or condition
prepayments upon the mortgagor's payment of prepayment fees or yield maintenance
penalties. In certain states there may be limitations upon the enforceability of
such provisions, and no assurance can be given
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that any of such provisions related to any Mortgage Loan will be enforceable.
Some of the Mortgage Loans may also contain provisions prohibiting any
prepayment of the loan prior to maturity or requiring the payment of a
prepayment fee in connection with any such prepayment. Even if enforceable, a
requirement for such prepayment fees may not deter mortgagors from prepaying
their mortgage loans. Although certain states will allow the enforcement of such
provisions upon a voluntary prepayment of a mortgage loan, in other states such
provisions may be unenforceable after a mortgage loan has been outstanding for a
certain number of years or if enforcement would be unconscionable, or the
allowed amount of any prepayment fee may be limited (i.e., to a specified
percentage of the original principal amount of the mortgage loan, to a specified
percentage of the outstanding principal balance of a mortgage loan or to a fixed
number of months' interest on the prepaid amount). In certain states there may
be limitations upon the enforceability of prepayment fee provisions applicable
in connection with a default by the mortgagor or an involuntary acceleration of
the secured indebtedness, and no assurance can be given that any of such
provisions related to any mortgage loan will be enforceable under such
circumstances. The applicable laws of certain states may also treat certain
prepayment fees as usurious if in excess of statutory limits. See
"--Applicability of Usury Laws" below.
Due-on-Sale Provisions. The enforceability of due-on-sale and
due-on-encumbrance provisions has been the subject of legislation or litigation
in many states, and in some cases, typically involving single family residential
mortgage transactions, their enforceability has been limited or denied under
applicable state law. However, the Garn-St. Germain Depository Institutions Act
of 1982 (the "Garn-St. Germain Act"), which generally preempts state
constitutional, statutory and case law that prohibits the enforcement of
due-on-sale clauses and permits mortgagees to enforce these clauses in
accordance with their terms, subject to certain exceptions. As a result,
due-on-sale clauses have become generally enforceable except in those states
whose legislatures have exercised their authority to regulate the enforceability
of such clauses with respect to mortgage loans that were: (i) originated or
assumed during the "window period" under the Garn-St. Germain Act, which ended
in all cases not later than October 15, 1982; and (ii) originated by lenders
other than national banks, federal savings institutions or federal credit
unions. The Federal Home Loan Mortgage Corporation has taken the position in its
published mortgage servicing standards that, out of a total of eleven "window
period states," five states (Arizona, Michigan, Minnesota, New Mexico and Utah)
have enacted statutes extending, on various terms and for varying periods, the
prohibition on enforcement of due-on-sale clauses with respect to certain
categories of loans that were originated or assumed during the "window period"
applicable to such state. Also, the Garn-St. Germain Act does "encourage"
lenders to permit assumption of loans at the original rate of interest or at
some other rate less than the average of the original rate and the market rates.
The Agreement for each Series generally will provide that if any Mortgage
Loan contains a provision in the nature of a "due-on-sale" clause, which by its
terms provides that: (i) such Mortgage Loan shall (or may at the mortgagee's
option) become due and payable upon the sale or other transfer of an interest in
the related Mortgaged Property or (ii) such Mortgage Loan may not be assumed
without the consent of the related mortgagee in connection with any such sale or
other transfer, then, for so long as such Mortgage Loan is included in the Trust
Fund, the Master Servicer or the Special Servicer, if any, on behalf of the
Trustee, shall take such actions as it deems to be in the best interest of the
Trust Fund in accordance with the servicing standard set forth in the Agreement,
and may waive or enforce any due-on-sale clause contained in the related Note or
Mortgage.
In addition, under the federal Bankruptcy Code, 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.
Acceleration on Default. It is expected that the Mortgage Loans will
include a "debt-acceleration" clause, which permits the mortgagee to accelerate
the full debt upon a monetary or
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nonmonetary default of the mortgagor. The courts of all states will enforce such
acceleration clauses in the event of a material payment default if appropriate
notices of default have been effectively given. However, the equity courts of
any state may refuse to foreclose a mortgage 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, in certain states, the costs and attorneys' fees incurred by the
mortgagee in collecting such defaulted payments.
State courts also are known to apply various legal and equitable principles
to avoid enforcement of the forfeiture provisions of Installment Contracts. For
example, a mortgagee's practice of accepting late payments from the mortgagor
may be deemed a waiver of the forfeiture clause. State courts also may impose
equitable grace periods for payment of arrearages or otherwise permit
reinstatement of the Installment Contract following a default. Not infrequently,
if a mortgagor under an Installment Contract has significant equity in the
property, equitable principles will be applied to reform or reinstate the
Installment Contract or to permit the mortgagor to share the proceeds upon a
foreclosure sale of the property if the sale price exceeds the debt.
Soldiers' and Sailors' Relief Act
Under the terms of the Soldiers' and Sailors' Civil Relief Act of 1940, as
amended (the "Relief Act"), a mortgagor who enters military service (including
the Army, Navy, Air Force, Marines, Coast Guard, members of the National Guard
or any Reserves who are called to active duty status after the origination of
their mortgage loan and officers of the U.S. Public Health Service assigned to
duty with the military) after the origination of such mortgagor's 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 mortgagee. Any shortfall in interest
collections resulting from the application of the Relief Act, to the extent not
covered by any applicable Credit Enhancement, could result in losses to the
holders of the Certificates. In addition, the Relief Act imposes limitations
that would impair the ability of the Master Servicer or the Special Servicer, if
any, to foreclose on an affected Mortgage Loan during the mortgagor's period of
active duty status and, under certain circumstances, during an additional three
months thereafter. Thus, in the event that such a Mortgage Loan goes into
default, there may be delays and losses occasioned by the inability to realize
upon the Mortgaged Property in a timely fashion. Because the Relief Act applies
to mortgagors who enter military service (including reservists who are later
called to active duty) after origination of the related mortgage loan, no
information can be provided as to the number of Mortgage Loans that may be
affected by the Relief Act. The Relief Act may also be applicable if the
mortgagor is an entity owned or controlled by a person in a military service.
Applicability of Usury Laws
State and federal usury laws limit the interest that mortgagees are
entitled to receive on a mortgage loan. In determining whether a given
transaction is usurious, courts may include charges in the form of "points" and
"fees" in the determination of the "interest" charged in connection with a loan,
but may exclude payments in the form of "reimbursement of foreclosure expenses"
or other charges found to be distinct from "interest". If, however, the amount
charged for the use of the money loaned is found to exceed a statutorily
established maximum rate, the form employed and the degree of overcharge are
both immaterial. Statutes differ in their provision as to the consequences of a
usurious loan. One type of statute requires the mortgagee to forfeit the
interest above the applicable limit or imposes a specified penalty. Under this
statutory scheme, the mortgagor may have the recorded mortgage or deed of trust
cancelled upon paying its debt with lawful interest, or the mortgagee may
foreclose, but only for the debt plus lawful interest, in either case, subject
to any applicable credit for excessive interest collected from the
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mortgagor and any penalty owed by the mortgagee. A second type of statute is
more severe. A violation of this type of usury law results in the invalidation
of the transaction, thereby permitting the mortgagor to have the recorded
mortgage or deed of trust cancelled without any payment and prohibiting the
mortgagee from foreclosing.
Title V of the Depository Institutions Deregulation and Monetary Control
Act of 1980, as amended ("Title V"), provides that state usury limitations do
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
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.
Alternative Mortgage Instruments
Alternative mortgage instruments, including adjustable rate mortgage loans,
originated by non-federally chartered lenders have historically been subjected
to a variety of restrictions. Such restrictions differed from state to state,
resulting in difficulties in determining whether a particular alternative
mortgage instrument originated by a state-chartered lender was in compliance
with applicable law. These difficulties were alleviated substantially with
respect to residential (including multifamily, but not other commercial)
mortgage loans as a result of the enactment of Title VIII of the Garn-St.
Germain Act ("Title VIII"). Title VIII provides that, notwithstanding any state
law to the contrary: (i) state-chartered banks may originate alternative
mortgage instruments in accordance with regulations promulgated by the
Comptroller of the Currency with respect to origination of alternative mortgage
instruments by national banks; (ii) state-chartered credit unions may originate
alternative mortgage instruments in accordance with regulations promulgated by
the National Credit Union Administration (the "NCUA") with respect to
origination of alternative mortgage instruments by federal credit unions; and
(iii) all other non-federally chartered housing creditors, including
state-chartered savings and loan associations, state-chartered savings banks and
mortgage banking companies, may originate alternative mortgage instruments in
accordance with the regulations promulgated by the Federal Home Loan Bank Board
(now the Office of Thrift Supervision) with respect to origination of
alternative mortgage instruments by federal savings and loan associations. Title
VIII authorized any state to reject applicability of the provisions of Title
VIII by adopting, prior to October 15, 1985, a law or constitutional provision
expressly rejecting the applicability of such provisions. Certain states have
taken such action. A mortgagee's failure to comply with the applicable federal
regulations in connection with the origination of an alternative mortgage
instrument could subject such mortgage loan to state restrictions that would not
otherwise be applicable.
Leases and Rents
Some of the Mortgage Loans may be secured by an assignment of leases and
rents, either through assignment provisions incorporated in the mortgage,
through a separate assignment document or both. Under an assignment of leases
and rents, the mortgagor typically assigns to the mortgagee the mortgagor's
right, title and interest as landlord under each lease and the income derived
therefrom, while retaining a revocable license to collect the rents for so long
as there is no default under the mortgage loan documentation. In the event of
such a default, the license terminates and the mortgagee may be entitled to
collect rents. A mortgagee's failure to perfect properly its interest in rents
may result in the loss of a substantial pool of funds that could otherwise serve
as a source of repayment for the loan. Some state laws may require that in
addition to recording properly the assignment of leases and rents, the mortgagee
must also take possession of the property and/or obtain judicial appointment of
a receiver before such
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mortgagee is entitled to collect rents. Although mortgagees actually taking
possession of the property may become entitled to collect the rents therefrom,
such mortgagees may also incur potentially substantial risks attendant to such
possession, including liability for environmental clean-up costs and other risks
inherent to property ownership and operation. In addition, if a bankruptcy or
similar proceeding is commenced by or in respect of the mortgagor, the
mortgagee's ability to collect the rents may also be adversely affected.
Secondary Financing; Due-on-Encumbrance Provisions
Some of the Mortgage Loans may not restrict secondary financing, thereby
permitting the mortgagor to use the Mortgaged Property as security for one or
more additional loans. Some of the Mortgage Loans may preclude secondary
financing (often by permitting the senior mortgagee to accelerate the maturity
of its loan if the mortgagor further encumbers the Mortgaged Property) or may
require the consent of the senior mortgagee; however, such provisions may be
unenforceable in certain jurisdictions under certain circumstances. The
Agreement for each Series will generally provide that if any Mortgage Loan
contains a provision in the nature of a "due-on-encumbrance" clause, which by
its terms: (i) provides that such Mortgage Loan will (or may at the mortgagee's
option) become due and payable upon the creation of any lien or other
encumbrance on the related Mortgaged Property; or (ii) requires the consent of
the related mortgagee to the creation of any such lien or other encumbrance on
the related Mortgaged Property; then for so long as such Mortgage Loan is
included in a given Trust Fund, the Master Servicer or, if such Mortgage Loan is
a Specially Serviced Mortgage Loan, the Special Servicer, if any, on behalf of
such Trust Fund, will exercise (or decline to exercise) any right it may have as
the mortgagee of record with respect to such Mortgage Loan to (x) accelerate the
payments thereon or (y) withhold its consent to the creation of any such lien or
other encumbrance, in a manner consistent with the servicing standard set forth
in the Agreement.
If a mortgagor encumbers a mortgaged property with one or more junior
liens, the senior mortgagee is subjected to additional risk, such as the
following. First, the mortgagor may have difficulty servicing and repaying
multiple loans. In addition, if the junior loan permits recourse to the
mortgagor and the senior loan does not, a mortgagor may be more likely to repay
sums due on the junior loan than those due on the senior loan. Second, acts of
the senior mortgagee that prejudice the junior mortgagee or impair the junior
mortgagee's security may create a superior equity in favor of the junior
mortgagee. For example, if the mortgagor and the senior mortgagee agree to an
increase in the principal amount of, or the interest rate payable on, the senior
loan, the senior mortgagee may lose its priority to the extent an existing
junior mortgagee is prejudiced 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 mortgagees can impair
the security available to the senior mortgagee and can interfere with, delay and
in certain circumstances even prevent the taking of action by the senior
mortgagee. Fourth, the bankruptcy of a junior mortgagee may operate to stay
foreclosure or similar proceedings by the senior mortgagee.
Certain Laws and Regulations
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 and interest on the related Mortgage Loan.
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The Internal Revenue Code of 1986, as amended, provides priority to certain
tax liens over the lien of a mortgage. In addition, substantive requirements are
imposed on mortgagees in connection with the origination and servicing of
mortgage loans by numerous federal and some state consumer protection laws.
These laws include the federal Truth-in-Lending Act, Real Estate Settlement
Procedures Act, Equal Credit Opportunity Act, Fair Credit Billing Act, Fair
Credit Reporting Act, and related statutes. These federal laws impose specific
statutory liabilities upon lenders who originate mortgage loans and who fail to
comply with the provisions of the law. In some cases, this liability may affect
assignees of the mortgage loans.
Type of Mortgaged Property
A mortgagee may be subject to additional risk depending upon the type and
use of the mortgaged property in question. For instance, mortgaged properties
that are hospitals, nursing homes or convalescent homes may present special
risks to mortgagees in large part due to significant governmental regulation of
the ownership, operation, maintenance, control and financing of health care
institutions. Mortgages encumbering mortgaged properties that 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 that are hotels or motels may present additional risks to
mortgagees in that: (i) such properties are typically operated pursuant to
franchise, management and operating agreements that may be terminable by the
franchisor, manager or operator; and (ii) the transferability of operating,
liquor and other licenses to the entity acquiring such properties either through
purchase or foreclosure is subject to the vagaries of local law requirements. In
addition, mortgaged properties that are multifamily residential properties or
cooperatively owned multifamily properties may be subject to rent control laws,
which could impact the future cash flows of such properties. See "RISK
FACTORS--Risks Associated with Lending on Income Producing Properties."
Criminal Forfeitures
Various federal and state laws (collectively, the "Forfeiture Laws")
provide for the civil or criminal forfeiture of certain property (including real
estate) used or intended to be used to commit or facilitate the commission of a
violation of certain laws (typically criminal laws), or purchased with the
proceeds of such violations. Even though the Forfeiture Laws were originally
intended as tools to fight organized crime and drug related crimes, the current
climate appears to be to expand the scope of such laws. Certain of the
Forfeiture Laws (i.e., the Racketeer Influenced and Corrupt Organizations law
and the Comprehensive Crime Control Act of 1984) provide for notice, opportunity
to be heard and for certain defenses for "innocent lienholders." However, given
the uncertain scope of the Forfeiture Laws and their relationship to existing
constitutional protections afforded property owners, no assurance can be made
that enforcement of a Forfeiture Law with respect to any Mortgaged Property
would not deprive the Trust Fund of its security for the related Mortgage Loan.
Americans With Disabilities Act
Under Title III of the Americans with Disabilities Act of 1990 and rules
promulgated thereunder (collectively, the "ADA"), in order to protect
individuals with disabilities, public accommodations (such as hotels,
restaurants, shopping centers, hospitals, schools and social service center
establishments) must remove structural, architectural and communication barriers
from existing places of public accommodation to the extent "readily achievable."
In addition, under the ADA, alterations to a place of public accommodation or a
commercial facility are to be made so that, to the maximum extent feasible, such
altered portions are readily accessible to and usable by disabled individuals.
The "readily achievable" standard takes into account, among other factors, the
financial resources of the affected site, owner, landlord or other applicable
person. In addition to imposing a possible financial burden on the
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mortgagor in its capacity as owner or landlord, the ADA may also impose such
requirements on a foreclosing mortgagee who succeeds to the interest of the
mortgagor as owner or landlord. Furthermore, since the "readily achievable"
standard may vary depending on the financial condition of the owner or landlord,
a foreclosing mortgagee who is financially more capable than the mortgagor of
complying with the requirements of the ADA may be subject to more stringent
requirements than those to which the mortgagor is subject.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
General
The following is a general discussion of the anticipated material federal
income tax consequences of the purchase, ownership and disposition of the
Certificates. This discussion was prepared by Morrison & Hecker L.L.P., counsel
to the Depositor ("Counsel") and, to the extent it expresses opinions or
conclusions as to federal income tax law, represents the opinion of Counsel as
to such matters. The discussion below is based upon the Internal Revenue Code of
1986, as amended (the "Code"), the regulations promulgated thereunder,
including, where applicable, proposed regulations, and the administrative
rulings and court decisions all as in effect and existing on the date hereof
and, all of which are subject to change, possibly on a retroactive basis, or
possible differing interpretations. This discussion is directed primarily to
investors who will hold Certificates as "capital assets" (generally, property
held for investment) within the meaning of Section 1221 of the Code. The
discussion below does not purport to address all federal income tax consequences
that may be applicable to particular categories or classes of investors some of
which (such as banks, insurance companies and foreign investors) may be subject
to special rules under the federal income tax laws. In addition to the federal
income tax consequences described herein, potential investors should consider
the state and local tax consequences, if any, of the purchase, ownership and
disposition of the Certificates. See "STATE TAX CONSIDERATIONS."
Certificateholders are advised to consult their own tax advisors concerning the
federal, state, local or other tax consequences to them of the purchase,
ownership and disposition of the Certificates offered hereunder.
Taxpayers and preparers of tax returns (including those filed by any REMIC
or other issuer) should be aware that under applicable Treasury regulations a
provider of advice on specific issues of law is not considered an income tax
return preparer unless the advice (i) is given with respect to events that have
occurred at the time the advice is rendered and is not given with respect to the
consequences of contemplated actions, and (ii) is directly relevant to the
determination of an entry on a tax return. Accordingly, taxpayers should consult
their own tax advisors and tax return preparers regarding the preparation of any
item on a tax return, even where the anticipated tax treatment has been
discussed herein.
The Prospectus Supplement for each series of Certificates will indicate
whether a REMIC election (or elections) will be made for the related Trust and,
if such an election is to be made, will identify all "regular interests" and
"residual interests" in the REMIC. The applicable Prospectus Supplement will
also specify if a REMIC election will not be made for a portion of the Trust
Fund. If so specified, such portion may be treated as a grantor trust for
federal income tax purposes. See "--Federal Income Tax Consequences For
Certificates As To Which No REMIC Election Is Made." For purposes of this tax
discussion, references to a "Certificateholder" or a "holder" are to the
beneficial owner of a Certificate.
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Federal Income Tax Consequences
For REMIC Certificates
General
The following discussion addresses securities ("REMIC Certificates")
representing interests in a Trust, or a portion thereof, which the Trustee will
covenant to elect to have treated as a REMIC under Sections 860A through 860G
(the "REMIC Provisions") of the Code.
An election to be treated as a REMIC for federal income tax purposes may be
made for a Trust Fund relating to a Series of Certificates. Such an election
will generally be made if the related Trust Fund would not qualify as a grantor
trust under subpart E, Part I of Subchapter J of the Code. In such a case,
Morrison & Hecker L.L.P., counsel to the Depositor, will deliver its opinion to
the effect that the Trust Fund issuing Certificates of that Series will be
treated as one or more REMICs for federal income tax purposes provided that the
provisions of the applicable Agreement are complied with and the statutory and
regulatory requirements concerning REMICs are satisfied, and the Certificates
offered thereby will be considered to be "Regular Interests" or "Residual
Interests" in the REMICs, as specified in the related Prospectus Supplement.
The following discussion is based in part upon the rules governing original
issue discount that are set forth in Sections 1271-1273 and 1275 of the Code and
in the Treasury regulations issued thereunder (the "OID Regulations"), and in
part upon the REMIC Provisions and the Treasury regulations issued thereunder
(the "REMIC Regulations"). The OID Regulations, which are effective with respect
to debt instruments issued on or after April 4, 1994, do not adequately address
certain issues relevant to, and in some instances provide that they are not
applicable to, securities such as the Certificates.
Qualification as a REMIC
In order for the Trust Fund to qualify as a REMIC, there must be ongoing
compliance on the part of the Trust Fund with the requirements set forth in the
Code. The Trust Fund must fulfill an asset test, which requires that no more
than a de minimus portion of its assets, as of the close of the third calendar
month beginning after the "Startup Day" (which for purposes of this discussion
is the date of issuance of the Certificates) and at all times thereafter, may
consist of assets other than "qualified mortgages" and "permitted investments."
The REMIC Regulations provide a "safe harbor" pursuant to which the de minimus
requirement is met if at all times the aggregate adjusted basis of the
nonqualified assets is less than one percent of the aggregate adjusted basis of
all the REMIC's assets. An entity that fails to meet the safe harbor may
nevertheless demonstrate that it holds no more than a de minimus amount of
nonqualified assets. A REMIC also must provide "reasonable arrangements" to
prevent its residual interest from being held by "disqualified organizations"
and applicable tax information to transferors or agents that violate this
requirement. Accordingly, the Agreement for each Series will contain provisions
to assure that the asset and reasonable arrangements tests will be met at all
times that the Certificates are outstanding. See "--Taxation of Holders of
Residual Certificates--Restrictions on Ownership and Transfer of Residual
Certificates."
A qualified mortgage is any obligation that is principally secured by an
interest in real property and that is either transferred to the REMIC on the
Startup Day or is purchased by the REMIC within a three-month period thereafter
pursuant to a fixed-price contract in effect on the Startup Day. Qualified
mortgages include whole mortgage loans, such as the Mortgage Loans, provided, in
general, (i) the fair market value of the real property security (including
buildings and structural components thereof) is at least 80% of the principal
balance of the Mortgage Loan either at origination or as of the Startup Day (an
original loan-to-value ratio of not more than 125% with respect to the real
property security); or
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(ii) substantially all the proceeds of the Mortgage Loan or the underlying
mortgage loan were used to acquire, improve or protect an interest in real
property that, at the origination date, was the only security for the Mortgage
Loan or underlying mortgage loan. If the Mortgage Loan has been substantially
modified other than in connection with a default or reasonably foreseeable
default, it must meet the loan-to-value test in (i) of the preceding sentence as
of the date of the last such modification or at closing. A qualified mortgage
includes a qualified replacement mortgage, which is any property that would have
been treated as a qualified mortgage if it were transferred to the REMIC pool on
the Startup Day and that is received either (i) in exchange for any qualified
mortgage within a three-month period thereafter or (ii) in exchange for a
"defective obligation" within a two-year period thereafter. A "defective
obligation" includes (i) a mortgage in default or as to which default is
reasonably foreseeable, (ii) a mortgage as to which a customary representation
or warranty made at the time of transfer to the REMIC pool has been breached,
(iii) a mortgage that was fraudulently procured by the mortgagor, and (iv) a
mortgage that was not in fact principally secured by real property (but only if
such mortgage is disposed of within 90 days of discovery). A Mortgage Loan that
is "defective" as described in clause (iv) that is not sold or, if within two
years of the Startup Day, exchanged, within 90 days of discovery, ceases to be a
qualified mortgage after such 90-day period. For purposes of this opinion, where
the applicable Prospectus Supplement provides for a fixed retained yield with
respect to the Mortgaged Properties underlying a Series of Certificates,
references to the Mortgaged Properties will be deemed to refer to that portion
of the Mortgaged Properties held by the Trust Fund which does not include the
fixed retained yield.
Permitted investments include cash flow investments, qualified reserve
assets and foreclosure property. A cash flow investment is any investment,
earning a return in the nature of interest, of amounts received on or with
respect to qualified mortgages for a temporary period, not exceed 13 months,
until the next scheduled distribution to holders of interests in the REMIC.
Foreclosure property is real property acquired by the REMIC in connection with
default or imminent default of a qualified mortgage and generally held for not
more than three years after the year in which such property is acquired, with
extensions granted by the Internal Revenue Service ("IRS").
In addition to the foregoing requirements, the various interests in a REMIC
also must meet certain requirements. All of the interests in a REMIC must be
either of the following: (i) one or more Classes of regular interests or (ii) a
single Class of residual interests on which distributions, if any, are made pro
rata. A regular interest is an interest in a REMIC that is issued on the Startup
Day with fixed terms, is designated as a regular interest, and unconditionally
entitles the holder to receive a specified principal amount (or other similar
amount), and provides that interest payments (or other similar amounts), if any,
at or before maturity either are payable based on a fixed rate or a qualified
variable rate or consist of a specified, nonvarying portion of the interest
payments on some or all of the qualified mortgages. A qualified variable rate
includes a rate based on a weighted average of rates on some or all of the
REMIC's qualified mortgages, which in turn bear a fixed rate or qualified
variable rate. A residual interest is an interest in a REMIC other than a
regular interest that is issued on the Startup Day and is designated as a
residual interest.
Unless otherwise stated in the related Prospectus Supplement, and to the
extent permitted by then applicable laws, 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 the REMIC will be borne by
the related Master Servicer, Special Servicer or Trustee in any case out of its
own funds, provided that such person has sufficient assets to do so, and
provided further that such tax arises out of a breach of such person's
obligations under the related Agreement and in respect of compliance with
applicable laws and regulations. Any such tax not borne by a Master Servicer,
Special Servicer or Trustee will be charged against the related Trust Fund
resulting in a reduction in amounts payable to holders of the related REMIC
Certificates.
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If an entity electing to be treated as a REMIC fails to comply with one or
more of the ongoing requirements of the Code for such status during any taxable
year, the Code provides that the entity will not be treated as a REMIC for such
year and thereafter. In that event, such entity may be taxable as a corporation
under Treasury regulations, and the related Certificates may not be accorded the
status or given the tax treatment described below. Section 860D(b)(2) of the
Code provides that if (i) an entity ceases to be a REMIC, (ii) the Secretary of
the Treasury determines that such cessation was inadvertent, (iii) no later than
a reasonable time after the discovery of the event resulting in such cessation,
steps are taken so that such entity is once more a REMIC, and (iv) such entity,
and each person holding an interest in such entity at any time during a period
specified, agrees to make such adjustments as may be required by the Secretary
of the Treasury with respect to such period, then, notwithstanding such
terminating event, the entity will be treated as continuing to be a REMIC or
such cessation will be disregarded, whichever the Secretary of the Treasury
determines to be appropriate. Although the Code authorizes the Treasury
Department to issue regulations providing relief in the event of an inadvertent
termination of REMIC status, no such regulations have been issued. Any such
relief, moreover, may be accompanied by sanctions, such as the imposition of a
corporate tax on all or a portion of the Trust Fund's income for the period in
which the requirements for such status are not satisfied.
Status of REMIC Certificates. If a REMIC election is made with respect to a
Series of Certificates, (i) Certificates held by a domestic building and loan
association will constitute "a regular or a residual interest in a REMIC" within
the meaning of Code Section 7701(a)(19)(C)(xi) (assuming that at least 95% of
the REMIC's assets consist of cash, government securities, "loans secured by an
interest in real property" and other types of assets described in Code Section
7701(a)(19)(C)(i)-(x) (except that if the underlying mortgage loans are not
residential mortgage loans, the Certificates will not so qualify)); and (ii)
Certificates held by a real estate investment trust will constitute "real estate
assets" within the meaning of Code Section 856(c)(4)(A), and income with respect
to the Certificates will be considered "interest on obligations secured by
mortgages on real property or on interests in real property" within the meaning
of Code Section 856(c)(3)(B) (assuming, for both purposes, that at least 95% of
the REMIC's assets are qualifying assets). If less than 95% of the REMIC's
assets consist of assets described in (i) or (ii) above, then a Certificate will
qualify for the corresponding tax treatment in (i) or (ii) in the proportion
that such REMIC assets are qualifying assets. The determination as to the
percentage of the REMIC's assets that constitute assets described in the
foregoing sections of the Code will be made with respect to each calendar
quarter based on the average adjusted basis of each category of the assets held
by the REMIC during such calendar quarter. The Trustee will report those
determinations to Certificateholders in the manner and at the times required by
applicable Treasury regulations.
Holders of Certificates should be aware that (i) Certificates held by a
regulated investment company will not constitute "government securities" within
the meaning of Code Section 851(b)(4)(A)(i); and Certificates held by a real
estate investment trust will not constitute "Government Securities" within the
meaning of Code Section 856(c)(4)(A). REMIC Certificates held by certain
financial institutions will constitute an "evidence of indebtedness" within the
meaning of Code Section 582(c)(i).
It is possible that various reserves or funds will reduce the proportion of
REMIC assets that qualify under the standards described above.
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 ("Tiered REMICs") for federal income tax purposes. Upon the
issuance of any such Series of Certificates, counsel to the Depositor will
deliver its opinion generally to the effect that, assuming compliance with all
provisions of the related Agreement, the Tiered REMICs will each qualify as a
REMIC and the Certificates issued by the Tiered REMICs will be considered to
evidence ownership of Regular Certificates or Residual Certificates in the
related REMIC within the meaning of the REMIC Regulations of the Code.
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The Tiered REMICs will be treated as one REMIC solely for purposes of
determining whether the Certificates will be "real estate assets" within the
meaning of Section 856(c)(4)(A) of the Code and "loans secured by an interest in
real property" under Section 7701(a)(19)(C) of the Code, and whether the income
on such Certificates is interest described in Section 856(c)(3)(B) of the Code.
Taxation of REMIC Regular Certificates
Interest and Acquisition Discount. Certificates representing Regular
Interests in a REMIC ("Regular Certificates") are generally taxable to
Certificateholders in the same manner as evidences of indebtedness issued by the
REMIC. Stated interest on the Regular Certificates will be taxable as ordinary
income and taken into account using the accrual method of accounting, regardless
of the Certificateholder's normal accounting method. Reports will be made
annually to the IRS and to holders of Regular Certificates that are not excepted
from the reporting requirements regarding amounts treated as interest (including
accrual of original issue discount) on Regular Certificates.
Certificates on which interest is not paid currently ("Compound Interest
Certificates") will, and certain of the other Certificates constituting Regular
Interests may be issued with original issue discount ("OID") within the meaning
of Code Section 1273. Rules governing OID are set forth in Sections 1271-1275 of
the Code and the OID Regulations. Although Section 1272(a)(6) of the Code
contains specific provisions governing the calculation of OID on securities,
such as the Certificates, on which principal is required to be prepaid based on
prepayments of the underlying assets, regulations interpreting those provisions
have not yet been issued. Further, the application of the OID Regulations to the
Regular Certificates remains unclear in other respects because the OID
Regulations either do not address, or are subject to varying interpretations
with regard to, several relevant issues.
In general, OID, if any, will equal the difference between the stated
redemption price at maturity of a Regular Certificate and its issue price. The
issue price of a Regular Certificate of a Class will generally be the initial
offering price at which a substantial amount of the Certificates in the Class is
sold to the public, and will be treated by the Depositor as including, in
addition, the amount paid by the Certificateholder for accrued interest that
relates to a period prior to the issue date of such Regular Certificate. The
stated redemption price at maturity is the sum of all payments on the
Certificate other than any "qualified stated interest payments."
A holder of a Regular Certificate must include OID in gross income as
ordinary income as it accrues under a method taking into account an economic
accrual of the discount. In general, OID must be included in income in advance
of the receipt of the cash representing that income. The amount of OID on a
Regular Certificate will be considered to be zero if it is less than a de
minimus amount determined under the Code.
Under this de minimus rule, OID on a Regular Certificate will be considered
to be zero if such OID is less than .25% of the stated redemption price at
maturity of the Regular Certificate multiplied by the weighted average maturity
of the Regular Certificate. Although not specifically addressed by regulations,
it is assumed that the schedule of distributions used in determining weighted
average maturity should be based on the assumed rate of prepayment of the
Mortgage Loans and the anticipated reinvestment rate, if any relating to the
Regular Certificates (the "Prepayment Assumption"). The Prepayment Assumption
with respect to a Series of Regular Certificates will be set forth in the
related Prospectus Supplement. The holder of a Regular Certificate includes any
de minimus OID in income pro rata as stated principal payments are received.
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If the interval between the issue date and the first Distribution Date on a
Regular Certificate is longer than the interval between subsequent Distribution
Dates (and interest paid on the first Distribution Date is less than would have
been earned if the stated interest rate were applied to outstanding principal
during each day in such interval), the stated interest distributions on such
Regular Certificate technically do not constitute qualified stated interest. In
such case a special rule, applying solely for the purpose of determining whether
OID is de minimus, provides that the interest shortfall for the long first
period (i.e., the interest that would have been earned if interest had been paid
on the first Distribution Date for each day the Regular Certificate was
outstanding) is treated as made at a fixed rate if the value of the rate on
which the payment is based is adjusted in a reasonable manner to take into
account the length of the interval. Regular Certificate holders should consult
their own tax advisors to determine the issue price and stated redemption price
at maturity of a Regular Certificate.
Qualified stated interest is interest that is unconditionally payable at
least annually during the entire term of the Certificate at either (a) a single
fixed rate that appropriately takes into account the length of the interval
between payments or (b) the current values of (i) a single "qualified floating
rate" or (ii) a single "objective rate" (each a "Single Variable Rate"). A
"current value" is the value of a variable rate on any day that is no earlier
than three months prior to the first day on which that value is in effect and no
later than one year following that day. A qualified floating rate is a rate the
variations in which reasonably can be expected to measure contemporaneous
variations in the cost of newly borrowed funds in the currency in which the
Regular Certificate is denominated (e.g., LIBOR). Such a rate remains qualified
even though it is multiplied by a fixed, positive multiple not exceeding 1.35,
increased or decreased by a fixed rate, or both. Certain combinations of rates
constitute a single qualified floating rate, including (a) interest stated at a
fixed rate for an initial period of less than one year followed by a qualified
floating rate, if the value of the qualified floating rate on the issue date is
intended to approximate the fixed rate, and (b) two or more qualified floating
rates that can reasonably be expected to have approximately the same values
throughout the term of the Regular Certificate. A combination of such rates is
conclusively presumed to be a single qualified floating rate if the values of
all rates on the issue date are within .25 percentage points of each other. A
variable rate that is subject to an interest rate cap, floor, "governor" or
similar restriction on rate adjustment may be a qualified floating rate only if
such restriction is fixed throughout the term of the instrument, or is not
reasonably expected as of the issue date to cause the yield on the debt
instrument to differ significantly from the expected yield absent the
restriction. An objective rate is a rate, other than a qualified floating rate,
determined by a single formula that is fixed throughout the term of the Regular
Certificate and is based on (i) one or more qualified floating rates (including
a multiple or inverse of a qualified floating rate); (ii) one or more rates each
of which would be a qualified floating rate for a debt instrument denominated in
a foreign currency; (iii) the yield or the changes in the price of one or more
items of "actively traded" personal property other than stock or debt of the
issuer or a related party, (iv) a combination of rates described in (i), (ii) or
(iii); or (v) other rates designated by the IRS in the Internal Revenue
Bulletin. Each rate described in (i) through (v) above will not be considered an
objective rate, however, if it is reasonably expected that the average value of
the rate during the first half of the Regular Certificate's term will differ
significantly from the average value of the rate during the final half of its
term. The rules for determining the qualified stated interest payable with
respect to certain variable rate Regular Certificates not bearing interest at a
Single Variable Rate are discussed below under "--Variable Rate Regular
Certificates." In the case of the Compound Interest Certificates, Interest
Weighted Certificates (as defined below) and certain of the other Regular
Certificates, none of the payments under the instrument will be considered
qualified stated interest, and thus the aggregate amount of all payments will be
included in the stated redemption price at maturity. Because Certificateholders
are entitled to receive interest only to the extent that payments are made on
the Mortgage Loans, interest might not be considered to be "unconditionally
payable."
The holder of a Regular Certificate issued with OID must include in gross
income, for all days during its taxable year on which it holds such Regular
Certificate, the sum of the "daily portions" of such
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OID. Under Code Section 1272(a)(6), the amount of OID to be included in income
by a holder of a debt instrument, such as a Regular Certificate, that is subject
to acceleration due to prepayments on other debt obligations securing such
instrument, is computed by taking into account the anticipated rate of
prepayments assumed in pricing the debt instrument (the "Prepayment
Assumption"). The IRS has not yet issued regulations that address Prepayment
Assumptions; however, the Conference Committee Report to the Tax Reform Act of
1986 indicates that the assumed rate of prepayments used in pricing can be used
for purposes of OID calculations if such assumption is reasonable for comparable
transactions. The amount of OID includible in income by a Certificateholder will
be computed by allocating to each day during a taxable year a pro-rata portion
of the OID that accrued during the relevant accrual period. The amount of OID
that will accrue during an accrual period (generally the period between interest
payments or compounding dates) is the excess (if any) of (i) the sum of (a) the
present value of all payments remaining to be made on the Regular Certificate as
of the close of the accrual period and (b) the payments during the accrual
period of amounts included in the stated redemption price of the Regular
Certificate, over (ii) the "adjusted issue price" of the Regular Certificate at
the beginning of the accrual period. The adjusted issue price of a Regular
Certificate is the sum of its issue price plus prior accruals of OID, if any,
reduced by the total payments, other than qualified stated interest payments,
made with respect to such Regular Certificate in all prior periods. Code Section
1272(a)(6) requires the present value of the remaining payments to be determined
on the basis of three factors: (i) the original yield to maturity of the Regular
Certificate (determined on the basis of compounding at the end of each accrual
period and properly adjusted for the length of the accrual period); (ii) events
(including actual prepayments) that have occurred before the end of the accrual
period; and (iii) the assumption that the remaining payments (including actual
prepayments) will be made in accordance with the original Prepayment Assumption.
The effect of this method will be to increase (or decrease) the portion of OID
required to be included in income by a Certificateholder taking into account
whether prepayments with respect to the Mortgage Loans are accruing faster
(slower) than the Prepayment Assumption. Although OID will be reported to
Certificateholders based on the Prepayment Assumption, there is no assurance
that Mortgage Loans will be prepaid at that rate and no representation is made
to Certificateholders that Mortgage Loans will be prepaid at that rate or at any
other rate.
A subsequent holder of a Regular Certificate will also be required to
include OID in gross income. If such a holder purchases a Regular Certificate
for an amount that exceeds its adjusted issue price the holder will be entitled
(as will an initial holder who pays more than a Regular Certificate's issue
price) to offset such OID by comparable economic accruals of portions of such
excess.
Certain Classes of Certificates may represent more than one Class of
Regular Interests. The Trustee intends, based on the OID Regulations, to
calculate OID on such Certificates as if, solely for the purposes of computing
OID, the separate Regular Interests were a single debt instrument.
Interest Weighted Certificates. It is not clear how income should be
accrued with respect to Regular Certificates the payments on which consist
solely or primarily of a specified portion of the interest payments on qualified
mortgages held by the REMIC ("Interest Weighted Certificate"). The Depositor
intends to take the position that all of the income derived from an Interest
Weighted Certificate should be treated as OID and that the amount and rate of
accrual of such OID should be calculated by treating the Interest Weighted
Certificate as a Compound Interest Certificate. However, the IRS could assert
that income derived from an Interest Weighted Certificate should be calculated
as if the Interest Weighted Certificate were a Certificate purchased at a
premium equal to the excess of the price paid by such Certificateholder for the
Interest Weighted Certificate over its stated principal amount, if any. Under
this approach, a Certificateholder would be entitled to amortize such premium
only if it has in effect an election under Section 171 of the Code with respect
to all taxable debt instruments held by such holder, as described below.
Alternatively, the IRS could assert that the Interest Weighted Certificate
should be taxable under the final regulations under Section 1275 governing debt
issued with contingent principal
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payments, in which case a Certificateholder might recognize income at a slower
rate than if the Interest Weighted Certificate were treated as a Compound
Interest Certificate. If the contingent payment rules were applicable to
Interest Weighted Certificates (which, as 1272(a)(6) instruments, are
specifically excluded from the scope of the contingent payment regulations)
income on certain Certificates would be computed under the "Noncontingent Bond
Method." The noncontingent bond method would generally apply in a manner similar
to the method prescribed by the Code under Section 1272(a)(6). See "--Variable
Rate Regular Certificates." Because of uncertainty in the law, Counsel to the
Depositor will not render any opinion on these issues.
Variable Rate Regular Certificates. Regular Certificates bearing interest
at one or more variable rates are subject to certain special rules. The
qualified stated interest payable with respect to certain variable rate debt
instruments not bearing interest at a Single Variable Rate generally is
determined under the OID Regulations by converting such instruments into fixed
rate debt instruments. Instruments qualifying for such treatment generally
include those providing for stated interest at (i) more than one qualified
floating rates or (ii) a single fixed rate and (a) one or more qualified
floating rates or (b) a single "qualified inverse floating rate" (each, a
"Multiple Variable Rate"). A floating rate is a qualified floating rate if
variations in the rate can reasonably be expected to measure contemporaneous
variations in the cost of newly borrowed funds, where such rate is subject to a
fixed multiple that is greater than 0.65, but not more than 1.35. Such rate may
also be increased or decreased by a fixed spread or subject to a fixed cap or
floor, or a cap or floor that is not reasonably expected as of the issue date to
affect the yield of the instrument significantly. An objective rate (other than
a qualified floating rate) is a rate that is determined using a single fixed
formula and that is based on objective financial or economic information,
provided that such information is not (i) within the control of the issuer or a
related party or (ii) unique to the circumstances of the issuer or a related
party. A qualified inverse floating rate is an objective rate equal to a fixed
rate reduced by a qualified floating rate, the variations in which can
reasonably be expected to inversely reflect contemporaneous variations in the
cost of newly borrowed funds (disregarding permissible rate caps, floors,
governors and similar restrictions such as are described above).
Purchasers of Regular Certificates bearing a variable rate of interest
should be aware that there is uncertainty concerning the application of Code
Section 1272(a)(6) and the OID Regulations to such Certificates. In the absence
of other authority, the Depositor intends to be guided by the provisions of the
OID Regulations governing variable rate debt instruments in adapting the
provisions of Code Section 1272(a)(6) to such Certificates for the purpose of
preparing tax reports furnished to the IRS and Certificateholders. In that
regard, in determining OID with respect to Regular Certificates bearing interest
at a Single Variable Rate, (a) all stated interest with respect to a Regular
Certificate is treated as qualified stated interest and (b) the amount and
accrual of OID, if any, is determined under the OID rules applicable to fixed
rate debt instruments discussed above by assuming that the Single Variable Rate
is a fixed rate equal to (i) in the case of a qualified floating rate or
qualified inverse floating rate, the issue date value of the rate or (ii) in the
case of any other objective rate, a fixed rate that reflects the yield that is
reasonably expected for the Regular Certificate. Interest and OID attributable
to the Regular Certificates bearing interest at a Multiple Variable Rate
similarly will be taken into account under a methodology that converts the
Certificate into an equivalent fixed rate debt instrument. However, in
determining the amount and accrual of OID, the assumed fixed rates are (a) for
each qualified floating rate, the value of each such rate as of the issue date
(with appropriate adjustment for any differences in intervals between interest
adjustment dates); (b) for a qualified inverse floating rate, the value of the
rate as of the issue date; and (c) for any other objective rate, the fixed rate
that reflects the yield that is reasonably expected for the Certificate. In the
case of a Certificate that provides for stated interest at a fixed rate in one
or more accrual periods and either one or more qualified floating rates or a
qualified inverse floating rate in other accrual periods, the fixed rate is
initially converted into a qualified floating rate (or a qualified inverse
floating rate, if the Certificate provides for a qualified inverse floating
rate). The qualified floating rate or qualified inverse floating rate that
replaces the fixed rate must be such that the fair market value of the
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Regular Certificate as of its issue date is approximately the same as the fair
market value of an otherwise identical debt-instrument that provides for either
the qualified floating rate or the qualified inverse floating rate. Subsequent
to converting the fixed rate into either a qualified floating rate or a
qualified inverse floating rate, the Regular Certificate is then treated as
converted into an equivalent fixed rate debt instrument in the manner described
above. If the interest paid or accrued with respect to a Single Variable Rate or
Multiple Variable Rate Certificate during an accrual period differs from the
assumed fixed interest rate, such difference will be an adjustment (to interest
or OID, as applicable) to the Certificateholder's taxable income for the taxable
period or periods to which such difference relates.
Purchasers of Certificates bearing a variable rate of interest should be
aware that the provisions of the OID Regulations governing variable rate debt
instruments are limited in scope and may not apply to some Regular Certificates
having variable rates. If such a Certificate is not subject to the provisions of
the OID Regulations governing variable rate debt instruments, it may be subject
to the provisions of the OID Regulations applicable to debt instruments having
contingent payments. Prospective purchasers of variable rate Regular
Certificates should consult their tax advisers concerning the appropriate tax
treatment of such Certificates.
Constant Yield Election for Interest. Under the OID Regulations, holders of
Regular Certificates generally may elect to include all accrued interest on a
Regular Certificate in gross income using the constant yield to maturity method.
For purposes of this election, interest includes stated interest, OID, de
minimus OID, market discount, de minimus market discount and unstated interest,
as adjusted by any premium. If a holder of a Regular Certificate makes such an
election and (i) the Regular Certificate has amortizable bond premium, the
holder is 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 or (ii) the Regular Certificate has market
discount, the holder is deemed to have made an election to include market
discount in income currently for all debt instruments having market discount
acquired during the year of the election or thereafter. See "--Market Discount"
and "--Premium." The election to accrue interest, discount and premium on a
constant yield method is irrevocable without the consent of the IRS. A holder of
a Regular Certificate should consult its tax adviser before making this
election.
Market Discount. A purchaser of a Regular Certificate may also be subject
to the market discount rules of Code Section 1276 if the stated redemption price
at maturity (or the revised issue price where OID has accrued on such
Certificate) exceeds the basis of the Certificate in the hands of the purchaser.
Such purchaser generally will be required to recognize accrued market discount
as ordinary income as payments of principal are received on such Regular
Certificate, or upon the sale or exchange of the Regular Certificate. In general
terms, until regulations are promulgated, market discount may be treated as
accruing, at the election of the Certificateholder, either (i) under a constant
yield method, taking into account the Prepayment Assumption, or (ii) in
proportion to accruals of OID (or, if there is no OID, in proportion to accruals
of stated interest) allocated to such period in relation to the sum of such
interest together with the remaining interest as of the end of such period. A
holder of a Regular Certificate having market discount may also be required to
defer a portion of the interest deductions attributable to any indebtedness
incurred or continued to purchase or carry the Regular Certificate. The deferred
portion of such interest expense in any taxable year generally will not exceed
the accrued market discount on the Regular Certificate for such year. Any such
deferred interest expense is, in general, allowed as a deduction not later than
the year in which the related market discount income is recognized or the
Regular Certificate is disposed of. As an alternative to the inclusion of market
discount in income on the foregoing basis, the Certificateholder may elect to
include such market discount in income currently as it accrues on all market
discount instruments acquired by such holder in that taxable year or thereafter,
in which case the interest deferral rule will not apply. Such election will
apply to all taxable debt instruments (including all Regular Interests) held by
the Certificateholder at the beginning of the taxable year in which the election
is made, and to all taxable debt instruments acquired thereafter by such holder,
and will be
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irrevocable without the consent of the IRS. In Revenue Procedure 92-67, the IRS
set forth procedures for taxpayers (1) electing under Code Section 1278(b) to
include market discount in income currently, (2) electing under rules of Code
Section 1276(b) to use a constant interest rate to determine accrued market
discount on a bond where the holder of the bond is required to determine the
amount of accrued market discount at a time prior to the holder's disposition of
the bond, and (3) requesting consent to revoke an election under Code Section
1278(b). Purchasers who purchase Regular Certificates at a market discount
should consult their tax advisors regarding the elections for recognition of
such discount.
Market discount with respect to a Regular Certificate will be considered to
be zero if such market discount is less than 0.25% of the remaining stated
redemption price at maturity of such Regular Certificate multiplied by the
weighted average maturity of the Regular Certificates (determined as described
above under "--Original Issue Discount") remaining after the date of purchase.
Treasury regulations implementing the market discount rules have not yet been
issued, and therefore investors should consult their own tax advisors regarding
the application of these rules as well as the advisability of making any of the
elections with respect thereto.
Premium. A Certificateholder who purchases a Regular Certificate (other
than an Interest Weighted Certificate, to the extent described above) at a cost
greater than its stated redemption price at maturity, generally will be
considered to have purchased the Certificate at a premium. The Certificateholder
may elect under Code Section 171 to amortize such premium as an offset to
interest income on such Certificate (and not as a separate deduction item) on a
constant yield method. See "--Constant Yield Election for Interest."
Although no regulations addressing the computation of premium accrual on
collateralized mortgage obligations or Regular Interests have been issued, the
legislative history of the Tax Reform Act of 1986 (the "1986 Act") indicates
that premium is to be accrued in the same manner as market discount.
Accordingly, it appears that the accrual of premium on a Regular Certificate
will be calculated using the Prepayment Assumption. If a Certificateholder makes
an election to amortize premium on a Certificate, such election will apply to
all taxable debt instruments (including all Regular Interests) held by the
holder at the beginning of the taxable year in which the election is made, and
to all taxable debt instruments acquired thereafter by such holder, and will be
irrevocable without the consent of the IRS. Purchasers who pay a premium for
Regular Certificates should consult their tax advisers regarding the election to
amortize premium and the method to be employed.
Final Treasury regulations were issued in December 1997 which address the
amortization of bond premiums (the "Premium Regulations"). The preamble to the
Premium Regulations indicate that they do not apply to Regular Interests in a
REMIC or any pool of debt instruments the yield on which may be affected by
prepayments. The Premium Regulations describe the yield method of amortizing
premium and provide that a bond holder may offset the premium against
corresponding interest income only as that income is taken into account under
the bond holder's method of accounting. For instruments that may be called or
prepaid prior to maturity, a bond holder will be deemed to exercise its option
and an issuer will be deemed to exercise its redemption right in a manner that
maximizes the holder's yield. A holder of a debt instrument may elect to
amortize bond premium under the Premium Regulations for the taxable year
containing the effective date, with the election applying to all the holder's
debt instruments held on the first day of the taxable year. Because the Premium
Regulations are specifically not applicable to Regular Certificates purchasers
who pay a premium for their Regular Certificates should consult their tax
advisors regarding any election to amortize premium and the method to be
employed.
Subordinate Certificates--Effects of Defaults, Delinquencies and Losses. As
described above under "CREDIT ENHANCEMENT --Subordinate Certificates," certain
Series of Certificates may contain one or more Classes of Subordinate
Certificates. Holders of Subordinate Certificates will be
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required to accrue interest and OID with respect to such Certificates on the
accrual method without giving effect to delays and reductions in distributions
attributable to defaults or delinquencies on any Mortgage Loans, except possibly
to the extent that it can be established that such amounts are uncollectible. As
a result, the amount of income reported by a holder of a Subordinate Certificate
in any period could significantly exceed the amount of cash distributed to such
holder in that period.
Although not entirely clear, and to the extent the bad debt rules of
Section 166 of the Code apply, it appears a Certificateholder that is a
corporation or otherwise holds such Certificates in connection with a trade or
business should generally be allowed to deduct as an ordinary loss any loss
sustained on account of partial or complete worthlessness of a Regular
Certificate. Although similarly unclear, a noncorporate Certificateholder
generally should be allowed to deduct as a short-term capital loss any loss
sustained on account of complete worthlessness of a Regular Certificate. A
noncorporate Certificateholder alternatively, depending on the factual
circumstances, may be allowed a capital loss deduction as the principal balance
of a Subordinate Certificate is reduced by reason of realized losses resulting
from liquidated Mortgage Loans; however, the IRS could contend that a
noncorporate Certificateholder should be allowed such losses only after all
Mortgage Loans in the Trust Fund have been liquidated or the Subordinate
Certificates otherwise have been retired. Special rules are applicable to banks
and thrift institutions, including rules regarding reserves for bad debts.
Holders of Subordinate Certificates should consult their own tax advisers
regarding the appropriate timing, character and amount of any loss sustained
with respect to Subordinate Certificates.
Allocation of Expenses in a Single Class REMIC. As a general rule, all of
the servicing, administrative and other non-interest expenses of a REMIC will be
taken into account by holders of the 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
holders of REMIC Regular Certificates and the holders of REMIC Residual
Certificates on a daily basis in proportion to the relative amounts of income
accruing to each Certificateholder on that day. In general terms, a single class
REMIC is one that either (i) would qualify, under existing Treasury regulations,
as a grantor trust if it were not a REMIC (treating all interests as ownership
interests, even if they would be classified as debt for federal income tax
purposes) or (ii) is similar to such a trust and is structured with the
principal purpose of avoiding the single class REMIC rules. Unless otherwise
stated in the applicable Prospectus Supplement, the expenses of the REMIC will
be allocated to holders of the related REMIC Residual Certificates in their
entirety and not to holders of the related REMIC Regular Certificates. If the
REMIC is considered to be a "single-class REMIC" and a Regular Interest
Certificateholder is an individual or a "pass-through interest holder"
(including certain pass-through entities but not including real estate
investment trusts), such expenses will be deductible only to the extent that
such expenses, plus other "miscellaneous itemized deductions" of the
Certificateholder, exceed 2% of such Certificateholder's adjusted gross income.
In addition, Code Section 68 provides that the amount of itemized deductions
otherwise allowable for the taxable year for an individual whose adjusted gross
income exceeds the applicable amount (for 1998, estimated to be $124,500, or
$62,250, in the case of a separate return of a married individual within the
meaning of Code Section 7703, which amounts will be adjusted annually for
inflation) (the "Applicable Amount") will be reduced by the lesser of (i) 3% of
the excess of adjusted gross income over the Applicable Amount or (ii) 80% of
the amount of itemized deductions otherwise allowable for such taxable year. The
partial or total disallowance of these deductions may have a significant adverse
impact on the yield of the Regular Certificate to such a holder.
Sale or Exchange of Regular Certificates. A Regular Interest
Certificateholder's tax basis in its Regular Certificate is the price such
holder pays for a Certificate, plus amounts of OID or market discount included
in income and reduced by any payments received (other than qualified stated
interest payments) and any amortized premium. Gain or loss recognized on a sale,
exchange or redemption of a Regular Certificate, measured by the difference
between the amount realized and the Regular Certificate's basis as
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so adjusted, will generally be capital gain or loss, assuming that the Regular
Certificate is held as a capital asset. If, however, a Certificateholder is a
bank, thrift or similar institution described in Section 582 of the Code, gain
or loss realized on the sale or exchange of a Certificate will be taxable as
ordinary income or loss.
Gain from the disposition of a Regular Certificate that might otherwise be
capital gain will be treated as ordinary income to the extent of the excess, if
any, of (i) the amount that would have been includible in the holder's income if
the yield on such Regular Certificate had equaled 110% of the applicable federal
rate (as defined in Code Section 1274(d)) as of the beginning of such holder's
holding period, over (ii) the amount of ordinary income actually recognized by
the holder with respect to such Regular Certificate prior to its sale. In
addition, all or a portion of any gain from the sale of a Certificate that might
otherwise be capital gain may be treated as ordinary income (i) if such
Certificate is held as part of a "Conversion Transaction" as defined in Code
Section 1258(c), in an amount equal to the interest that would have accrued on
the holder'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 reduced by any amount treated as
ordinary income with respect to any prior disposition of property that was held
as part of such transaction, or (ii) if, in the case of a noncorporate taxpayer,
an election is made under Code Section 163(d)(4) to have net capital gains taxed
as investment income at ordinary income rates for purposes of the rule that
limits the deduction of interest on indebtedness incurred to purchase or carry
property held for investment to a taxpayer's net investment income. 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 (i) the holder entered the contract to
sell the REMIC Regular Certificate substantially contemporaneously with
acquiring the REMIC Regular Certificate, (ii) the REMIC Regular Certificate is
part of a straddle, (iii) the REMIC Regular Certificate is marketed or sold as
producing capital gains, or (iv) other transactions to be specified in Treasury
regulations that have not yet been issued.
As of date of this Prospectus the maximum marginal tax rate on ordinary
income for individual taxpayers is 39.6%. The maximum marginal tax rate on
long-term capital gains for non-corporate taxpayers is 20%. The maximum marginal
tax rate on both ordinary income and long-term capital gains of corporate
taxpayers is 35% subject to certain higher marginal tax rates which phase out
the benefits of the guaranteed corporate tax rate structure. Net capital gain
realized on a capital asset which is sold after being held by 12 months or less
is subject to tax at ordinary income tax rates. Any gain realized on a capital
asset which is sold after being held for more than 12 months but not more than
18 months is subject to tax at ordinary income tax rates, subject to a maximum
tax rate of 28% (a "Mid-term Capital Gain"). Gain realized on a sale of a
capital asset after a holding period of more than 18 months is subject to tax at
20%, assuming that the taxpayer is otherwise in a rate bracket equal to or
greater than 20%.
Taxation of the REMIC
General. Although a REMIC is a separate entity for federal income tax
purposes, a REMIC is not generally subject to entity-level taxation. Rather,
except in the case of a "Single-Class REMIC," the taxable income or net loss of
a REMIC is taken into account by the holders of Residual Interests. The Regular
Interests are generally treated as debt of the REMIC and taxed accordingly. See
"--Taxation of REMIC Regular Certificates" above.
Calculation of REMIC Income. The taxable income or net loss of a REMIC is
determined under an accrual method of accounting and in the same manner as in
the case of an individual having the calendar year as a taxable year, with
certain adjustments as required under Code Section 860C(b). The "daily portions"
of REMIC taxable income or net loss will be includible as ordinary income or
loss in determining the federal taxable income of holders of Residual
Certificates. See "--Taxation of Holders
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of Residual Certificates." In general, the taxable income or net loss will be
the difference between (i) the gross income produced by the REMIC's assets,
including stated interest and any OID or market discount on loans and other
assets, plus any cancellation of indebtedness income due to the allocation of
realized losses to the Regular Certificates, and (ii) deductions, including
stated interest and OID accrued on Regular Certificates, amortization of any
premium with respect to loans and servicing fees and other expenses of the
REMIC.
For purposes of computing its taxable income or net loss, the REMIC should
have an initial aggregate tax basis in its assets equal to the aggregate fair
market value of the Regular Interests and the Residual Interests on the "Startup
Day" (generally, the day that the interests are issued). That aggregate basis
will be allocated among the assets of the REMIC in proportion to their
respective fair market values.
The OID provisions of the Code apply to loans to individuals originated on
or after March 2, 1984, and the market discount provisions apply to all loans.
Subject to possible application of the de minimus rules, the method of accrual
by the REMIC of OID or market discount income on such loans will be equivalent
to the method under which holders of Regular Certificates accrue OID (i.e.,
under the constant yield method taking into account the Prepayment Assumption).
The REMIC will deduct OID on the Regular Certificates in the same manner that
the holders of the Certificates include such discount in income, but without
regard to the de minimus rules. See "--Taxation of REMIC Regular Certificates"
above.
To the extent that the REMIC's basis allocable to loans that it holds
exceeds their principal amounts, the resulting premium, if attributable to
mortgages originated after September 27, 1985, will be amortized over the life
of the loans (taking into account the Prepayment Assumption) on a constant yield
method. Although the law is somewhat unclear regarding the recovery of premium
attributable to loans originated on or before such date, it is possible that
such premium may be recovered in proportion to payments of loan principal.
Prohibited Transactions Tax and Other Taxes. The REMIC will be subject to a
100% tax on any net income derived from a "prohibited transaction." For this
purpose, net income will be calculated without taking into account any losses
from prohibited transactions or any deductions attributable to any prohibited
transaction that resulted in a loss. In general, prohibited transactions include
(i) subject to limited exceptions, the sale or other disposition of any
qualified mortgage transferred to the REMIC; (ii) subject to a limited
exception, the sale or other disposition of a cash flow investment; (iii) the
receipt of any income from assets not permitted to be held by the REMIC pursuant
to the Code; or (iv) the receipt of any fees or other compensation for services
rendered by the REMIC. Notwithstanding (i) and (iv), it is not a prohibited
transaction to sell REMIC pool property to prevent a default on Regular
Certificates as a result of a default on qualified mortgages or to facilitate a
clean-up call (generally, an optional termination to save administrative costs
when no more than a small percentage of the Certificates is outstanding). It is
anticipated that a REMIC will not engage in any prohibited transactions in which
it would recognize a material amount of net income. In addition, subject to a
number of limited exceptions for cash contributions, a tax is imposed at the
rate of 100% on amounts contributed to a REMIC after the close of the
three-month period beginning on the Startup Day. It is not anticipated that any
such contributions will occur or that any such tax will be imposed.
Net Income from Foreclosure Property. REMICs also are 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. Generally, property acquired by deed in lieu of foreclosure
would be treated as "foreclosure property" for a period ending with the third
calendar year following the year of acquisition of such property, with a
possible extension. "Net income from foreclosure property" generally means gain
from the sale of a foreclosure property that is inventory property and gross
income
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from foreclosure property other than qualifying rents and other qualifying
income for a real estate investment trust. It is not anticipated that any REMIC
will recognize "net income from foreclosure property" subject to federal income
tax.
Liquidation of the REMIC. If a REMIC and the Trustee adopt a plan of
complete liquidation, within the meaning of Code Section 860F(a)(4)(A)(i) and
sell all the REMIC's assets (other than cash) within a 90-day period beginning
on the date of the adoption of the plan of liquidation, the REMIC will recognize
no gain or loss on the sale of its assets, provided that the REMIC credits or
distributes in liquidation all the sale proceeds plus its cash (other than
amounts retained to meet claims against the REMIC) to holders of Regular
Certificates and Residual Certificate holders within the 90-day period.
Taxation of Holders of Residual Certificates
The holder of a Certificate representing a residual interest (a "Residual
Certificate") will take into account the "daily portion" of the taxable income
or net loss of the REMIC for each day during the taxable year on which such
holder held the Residual Certificate. The daily portion is determined by
allocating to each day in any calendar quarter its ratable portion of the
taxable income or net loss of the REMIC for such quarter, and by allocating that
amount among the holders (on such day) of the Residual Certificates in
proportion to their respective holdings on such day. For this purpose, the
taxable income or net loss of the REMIC, in general, will be allocated to each
day in the calendar quarter ratably using such reasonable convention as set
forth in the Prospectus Supplement including, as applicable, a "30 days per
month/90 days per quarter/360 days per year" convention. The related Prospectus
Supplement will indicate whether a different allocation method will be used.
Ordinary income derived from Residual Certificates will be "portfolio income"
for taxpayers subject to Code Section 469 limitation on the deductibility of
"passive losses."
A holder of a Residual Certificate that is an individual or a "Pass-Through
Interest Holder" (including certain pass-through entities, but not including
real estate investment trusts) will be unable to deduct servicing fees payable
on the loans or other administrative expenses of the REMIC for a given taxable
year to the extent that such expenses, when aggregated with the Residual
Interest Certificateholder's other miscellaneous itemized deductions for that
year, do not exceed 2% of such holder's adjusted gross income. In addition, Code
Section 68 provides that the amount of itemized deductions otherwise allowable
for the taxable year for an individual whose adjusted gross income exceeds the
Applicable Amount will be reduced by the lesser of (i) 3% of the excess of
adjusted gross income over the Applicable Amount, or (ii) 80% of the amount of
itemized deductions otherwise allowable for such taxable year. The amount of
additional taxable income reportable by Certificateholders that are subject to
the limitations of either Section 67 or Section 68 of the Code may be
substantial.
As a result, such investors may have aggregate taxable income in excess of
the aggregate amount of cash received on such Certificates with respect to
interest at the pass-through rate on such Certificates or discount thereon.
Furthermore, in determining the alternative minimum taxable income of such a
Certificateholder that is an individual, estate or trust, or a "pass-through
entity" beneficially owned by one or more individuals, estates or trusts, no
deduction will be allowed for such holder's allocable portion of servicing fees
and other miscellaneous itemized deductions of the REMIC, even though an amount
equal to the amount of such fees and other deductions will be included in such
holder's gross income. Moreover, where there is fixed retained yield with
respect to the Mortgage Loans underlying a series of Certificates or where the
servicing fees are in excess of reasonable servicing compensation, the
transaction will be subject to the application of the "stripped bond" and
"stripped coupon" rules of the Code, as described below under "--Federal Income
Tax Consequences For Certificates As To Which No Remic Election Is
Made--Stripped Certificates--Discount or Premium on Stripped Certificates."
Accordingly, such Certificates may not be appropriate investments for
individuals, estates or trusts, or
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pass-through entities beneficially owned by one or more individuals, estates or
trusts. Such prospective investors should consult with their tax advisors prior
to making an investment in such Certificates.
The holder of a Residual Certificate must report its proportionate share of
the taxable income of the REMIC regardless of whether or not it receives cash
distributions from the REMIC attributable to such income or loss. The reporting
of taxable income without corresponding distributions could occur, for example,
in certain REMICs in which the loans held by the REMIC were issued or acquired
at a discount, since mortgage prepayments cause recognition of discount income,
while the corresponding portion of the prepayment could be used in whole or in
part to make principal payments on Regular Interests issued without any discount
or at an insubstantial discount. When there is more than one Class of Regular
Certificates that distribute principal sequentially, this mismatching of income
and deductions is particularly likely to occur in the early years following
issuance of the Regular Certificates when distributions in reduction of
principal are being made in respect of earlier maturing Classes of Certificates
to the extent that such Classes are not issued with substantial discount. If
taxable income attributable to such a mismatching is realized in general, losses
would be allowed in later years as distributions on the later Classes of Regular
Certificates are made. (If this occurs, it is likely that cash distributions to
holders of Residual Certificates will exceed taxable income in later years.)
Taxable income may also be greater in the earlier years of certain REMICs as a
result of the fact that interest expense deductions, as a percentage of
outstanding principal of Regular Certificates, will typically increase over time
as lower yielding Certificates are paid, whereas interest income with respect to
loans will generally remain constant over time as a percentage of outstanding
loan principal.
In any event, because the holder of a Residual Interest is taxed on the net
income of the REMIC, the taxable income derived from a Residual Certificate in a
given taxable year will not be equal to the taxable income associated with
investment in a corporate bond or stripped instrument having similar cash flow
characteristics and pre-tax yield. Therefore, the after-tax yield on the
Residual Certificate will most likely be less than that of such a bond or
instrument.
Basis. A Residual Certificateholder will not be permitted to amortize
directly the cost of its Residual Certificate as an offset to its share of the
taxable income of the related REMIC. However, such taxable income will not
include cash received by the REMIC that represents a recovery of the REMIC's
basis in its assets. Such recovery of basis by the REMIC will have the effect of
amortization of the issue price of the Residual Certificates over their life.
However, in view of the possible acceleration of the income of Residual
Certificateholders discussed previously under "--Taxation of Holders of Residual
Certificates," the period of time over which such issue price is effectively
amortized may be longer than the economic life of the Residual Certificates.
A Residual Certificate may have a negative value if the net present value
of anticipated tax liabilities exceeds the present value of anticipated cash
flows. If a Residual Certificate has a negative value, it is not clear whether
its issue price would be considered to be zero or such negative amount for
purposes of determining the REMIC's basis in its assets. The REMIC Regulations
do not address whether residual interests could have a negative basis and a
negative issue price. The Depositor does not intend to treat a Class of Residual
Certificates as having a value of less than zero for purposes of determining the
bases of the related REMIC in its assets. The preamble to the REMIC Regulations
states that the Service may provide future guidance on the proper tax treatment
of payments made by a transferor of such a residual interest to induce the
transferee to acquire the interest, and Residual Certificateholders should
consult their own tax advisors in this regard.
Further, to the extent that the initial adjusted basis of a Residual
Certificateholder (other than an original holder) in a Residual Certificate is
greater than the corresponding portion of the REMIC's basis in the Mortgage
Loans, the Residual Certificateholder will not recover a portion of such basis
until
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termination of the REMIC, unless future Treasury regulations provide for
periodic adjustments to the REMIC income otherwise reportable by such holder.
The REMIC Regulations do not currently so provide. See "--Sale or Exchange"
below regarding possible treatment of a loss upon termination of the REMIC as a
capital loss.
Limitation on Losses. The amount of the REMIC's net loss that a
Certificateholder may take into account currently is limited to the holder's
adjusted basis at the end of the calendar quarter in which such loss arises. A
holder's basis in a Residual Certificate will initially equal such holder's
purchase price, and will subsequently be increased by the amount of the REMIC's
taxable income allocated to the holder, and decreased (but not below zero) by
the amount of distributions made and the amount of the REMIC's net loss
allocated to the holder. Any disallowed loss may be carried forward
indefinitely, but may be used only to offset income of the REMIC generated by
the same REMIC. The ability of Residual Interest Certificateholders to deduct
net losses may be subject to additional limitations under the Code, as to which
such holders should consult their tax advisers.
Distributions. Distributions on a Residual Certificate, if any, will
generally not result in any additional taxable income or loss to a holder of a
Residual Certificate. If the amount of such distribution exceeds a holder's
adjusted basis in the Residual Certificate, however, the holder will recognize
gain (treated as gain from the sale of the Residual Certificate) to the extent
of such excess. If the Residual Certificate is property held for investment,
such gain will generally be capital in nature.
Limitations on Offset or Exemption of REMIC Income: Excess Inclusions and
UBTI. The portion of a Residual Interest Certificateholder's REMIC taxable
income consisting of "excess inclusion" income may not be offset by other
deductions or losses, including net operating losses, on such
Certificateholder's federal income tax return. The Small Business Job Protection
Act of 1996 eliminated a prior law exception to this rule for certain
organizations taxed under Section 593 (thrift institutions) with respect to
Residual Certificates with significant value. This change is effective for
Residual Certificates acquired in taxable years beginning after December 31,
1995. If the holder of a Residual Certificate is an organization subject to the
tax on unrelated business taxable income ("UBTI") imposed by Code Section 511,
such as a pension fund or other exempt organization, such Residual Interest
Certificateholder's excess inclusion income will be treated as unrelated
business taxable income of such Certificateholder. In addition, under Treasury
regulations yet to be issued, if a real estate investment trust, a regulated
investment company, a common trust fund or certain cooperatives were to own a
Residual Certificate, a portion of dividends (or other distributions) paid by
the real estate investment trust (or other entity) would be treated as excess
inclusion income. If a Residual Certificate is owned by a foreign person, excess
inclusion income is subject to tax at a rate of 30%, which rate may not be
reduced by treaty and is not eligible for treatment as "portfolio interest." See
"--Tax Treatment of Foreign Investors--Residual Certificates." Although not
entirely clear, the REMIC Regulations indicate that the significant value
determination is made only on the Startup Day.
The excess inclusion portion of a REMIC's income is generally equal to the
excess, if any, of REMIC taxable income for the quarterly period allocable to a
Residual Certificate, over the daily accruals for such quarterly period of (i)
120% of the long term applicable federal rate on the Startup Day multiplied by
(ii) the adjusted issue price of such Residual Certificate at the beginning of
such quarterly period. The adjusted issue price of a Residual Interest at the
beginning of each calendar quarter will equal its issue price (calculated in a
manner analogous to the determination of the issue price of a Regular Interest),
increased by the aggregate of the daily accruals for prior calendar quarters,
and decreased (but not below zero) by the amount of loss allocated to a holder
and the amount of distributions made on the Residual Certificate before the
beginning of the quarter. Accordingly, the portion of the REMIC pool's taxable
income that will be treated as excess inclusions will be a larger portion of
such income as the adjusted issue price of the Residual Certificates diminishes.
For this purpose, the long-term applicable
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federal rate, which is announced monthly by the Treasury Department, is an
interest rate that is based on the average market yield of outstanding
marketable obligations of the United States government having remaining
maturities in excess of nine years.
Alternative Minimum Tax. The 1996 Act also provides new rules affecting the
determination of alternative minimum taxable income ("AMTI") of a Residual
Certificate holder. First, AMTI is calculated without regard to the special rule
that taxable income cannot be less than excess inclusion income for the year.
Second, AMTI for a taxable year cannot be less than excess inclusion income for
the year. Finally, any AMTI net operating loss deduction is computed without
regard to excess inclusions. These changes are effective for tax years beginning
after December 31, 1986, unless a Residual Certificate holder elects to have the
rules apply only to tax years beginning after August 20, 1996.
Under the REMIC Regulations, in certain circumstances, transfers of
Residual Certificates may be disregarded. See "--Restrictions on Ownership and
Transfer of Residual Certificates" and "--Tax Treatment of Foreign Investors."
Sale or Exchange. A holder of a Residual Certificate will recognize gain or
loss on the sale or exchange of a Residual Certificate equal to the difference,
if any, between the amount realized and such Certificateholder's adjusted basis
in the Residual Certificate at the time of such sale or exchange. Any such loss
may be a capital loss subject to limitation; gain which might otherwise be
capital may be treated as ordinary income under certain circumstances. See
"--Sale or Exchange of Regular Certificates" above. Except to the extent
provided in regulations, which have not yet been issued, the "wash sale" rules
of Code Section 1091 will disallow any loss upon disposition or a Residual
Certificate if the selling Certificateholder acquires any Residual Interest in a
REMIC or similar mortgage pool within six months before or after such
disposition. Any such disallowed loss would be added to the Residual Interest
Certificateholder's adjusted basis in the newly acquired Residual Interest.
Restrictions on Ownership and Transfer of Residual Certificates. As a
condition to qualification as a REMIC, reasonable arrangements must be made to
prevent the ownership of a Residual Interest by any "Disqualified Organization."
"Disqualified Organizations" include the United States, any state 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 of its activities are subject to tax
and a majority of its board of directors is not selected by any such
governmental entity.), a rural electric or telephone cooperative described in
Section 1381(a)(2)(C) of the Code, or any entity exempt from the tax imposed by
Sections 1-1399 of the Code, if such entity is not subject to tax on its
unrelated business income. Accordingly, the applicable Agreement will prohibit
Disqualified Organizations from owning a Residual Certificate. In addition, no
transfer of a Residual Certificate will be permitted unless the proposed
transferee shall have furnished to the Trustee an affidavit representing and
warranting that it is neither a Disqualified Organization nor an agent or
nominee acting on behalf of a Disqualified Organization and the transferor
provides a statement in writing to the Depositor and the Trustee that it has no
actual knowledge that the statement is false.
The Prospectus Supplement relating to a Series of Certificates may provide
that a Residual Certificate may not be purchased by or transferred to any person
that is not a U.S. Person or may describe the circumstances and restrictions
pursuant to which such a transfer may be made. The term "U.S. Person" means a
citizen or resident of the United States, a corporation, partnership or other
entity created or organized in or under the laws of the United States or any
political subdivision thereof or an estate or trust that is subject to U.S.
federal income tax regardless of the source of its income.
If a Residual Certificate is transferred to a Disqualified Organization (in
violation of the restrictions set forth above), a tax will be imposed on the
transferor of such Residual Certificate at the
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time of the transfer pursuant to Code Section 860E(e)(2) equal to the product of
(i) the present value (discounted using the "applicable federal rate" for
obligations whose term ends on the close of the last quarter in which excess
inclusions are expected to accrue with respect to the Residual Certificate) of
the total anticipated excess inclusions with respect to such Residual
Certificate for periods after the transfer and (ii) the highest marginal federal
income tax rate applicable to corporations. In addition, if a Disqualified
Organization is the record holder of an interest in a pass-through entity
(including, among others, a partnership, trust, real estate investment trust,
regulated investment company or any person holding as nominee) that owns a
Residual Certificate, the pass-through entity will be required to pay tax equal
to its product of (i) the amount of excess inclusion income of the REMIC for
such taxable year allocable to the interest held by such Disqualified
Organization; multiplied by (ii) the highest marginal federal income tax rate
imposed on corporations by Code Section 11(b)(1).
Such a tax generally would be imposed on the transferor of the Residual
Certificate, except that where such transfer is through an agent (including a
broker, nominee, or other middleman) for a Disqualified Organization, the tax
would instead be imposed on such agent. A transferor of a Residual Certificate
would in no event, however, be liable for such tax with respect to a transfer if
the transferee furnishes to the transferor an affidavit that the transferee is
not a Disqualified Organization and, as of the time of the transfer, the
transferor does not have actual knowledge that such affidavit is false. The tax
also may be waived by the Treasury Department if the Disqualified Organization
promptly disposes of the Residual Certificate and the transferor pays income tax
at the highest corporate rate on the excess inclusion for the period the
Residual Certificate is actually held by the Disqualified Organization.
In addition, if a "Pass-Through Entity" has excess inclusion income with
respect to a Residual Certificate during a taxable year and a Disqualified
Organization is the record holder of an equity interest in such entity, then a
tax is imposed on such entity equal to the product of (i) the amount of excess
inclusions that are allocable to the interest in the Pass-Through Entity during
the period such interest is held by such Disqualified Organization and (ii) the
highest marginal federal corporate income tax rate. Such tax would be deductible
from the ordinary gross income of the Pass-Through Entity for the taxable year.
The Pass-Through Entity would not be liable for such tax if it has received an
affidavit from such record holder that (i) states under penalty of perjury that
it is not a Disqualified Organization or (ii) furnishes a social security number
and states under penalties of perjury that the social security number is that of
the transferee, provided that during the period such person is the record holder
of the Residual Certificate, the Pass-Through Entity does not have actual
knowledge that such affidavit is false.
Noneconomic Residual Interests. Under the REMIC Regulations, if a Residual
Certificate is a "noneconomic residual interest," as described below, a transfer
of a Residual Certificate to a non-U.S. Person will be disregarded for all
federal tax purposes if a significant purpose of the transfer was to impede the
assessment or collection of tax. If a transfer of a Residual Interest is
disregarded, the transferor would be liable for any federal income tax imposed
upon the taxable income derived by the transferee from the REMIC. A Residual
Certificate is a "noneconomic residual interest" unless, at the time of the
transfer (i) the present value of the expected future distributions on the
Residual Certificate at least equals the product of the present value of the
anticipated excess inclusions and the highest rate of tax imposed on
corporations for the year in which the transfer occurs and (ii) the transferor
reasonably expects that the transferee will receive distributions from the REMIC
at or after the time at which the taxes accrue on the anticipated excess
inclusions in an amount sufficient to satisfy the accrued taxes. The present
value is calculated based on the Prepayment Assumption, using a discount rate
equal to the applicable federal rate under Code Section 1274(d)(1) that would
apply to a debt instrument issued on the date the noneconomic residual interest
was transferred and whose term ended on the close of the last quarter in which
excess inclusions were expected to accrue with respect to the Residual Interest
at the time of transfer. A significant purpose to impede the assessment or
collection of tax exists if the transferor, at the time of transfer, knew or
should have known that the transferee would be unwilling or
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unable to pay taxes on its share of the taxable income of the REMIC. Under the
REMIC Regulations, a transferor is presumed not to have improper knowledge if
(i) the transferor conducted, at the time of the transfer, a reasonable
investigation of the financial condition of the transferee and, as a result of
the investigation, the transferor found that the transferee had historically
paid its debts as they came due and found no significant evidence to indicate
that the transferor will not continue to pay its debts as they come due in the
future; and (ii) the transferee represents to the transferor that it understands
that, as the holder of the noneconomic residual interest, the transferee may
incur tax liabilities in excess of any cash flows generated by the residual
interest and that the transferee intends to pay taxes associated with holding of
residual interest as they become due. The Agreement will require the transferee
of a Residual Certificate to state as part of the affidavit described above
under the heading "--Disqualified Organizations" that such transferee (i) has
historically paid its debts as they come due, (ii) intends to continue to pay
its debts as they come due in the future, (iii) understands that, as the holder
of a noneconomic residual interest, it may incur tax liabilities in excess of
any cash flows generated by the Residual Certificate, and (iv) intends to pay
any and all taxes associated with holding the Residual Certificate as they
become due. The transferor must have no reason to believe that such statement is
untrue. A similar type of limitation exists with respect to certain transfers of
Residual Interests by foreign persons to U.S. Persons. See "--Tax Treatment of
Foreign Investors."
Mark-to-Market Rules. A "negative value" Residual Interest (and any
Residual Interest or arrangement that the IRS deems to have substantially the
same economic effect) is not treated as a security and thus may not be marked to
market under final Treasury regulations under Section 475 of the Code that
generally require a securities dealer to mark to market securities held for sale
to customers. In general, a Residual Interest has negative value if, as of the
date a taxpayer acquires the Residual Interest, the present value of the tax
liabilities associated with holding the Residual Interest exceeds the sum of (i)
the present value of the expected future distributions on the Residual Interest,
and (ii) the present value of the anticipated tax savings associated with
holding the Residual Interest as the REMIC generates losses. In addition, in the
Preamble to the temporary Treasury regulations, the IRS requested comments
regarding whether additional rules are needed to carry out the purposes of
Section 475 of the Code. Consequently, the IRS may further limit, prospectively
or retroactively, the definition of "security" for purposes of Section 475 of
the Code by carving out of such definition all Residual Interests.
Reporting Requirements and Backup Withholding
A Certificateholder, other than a Residual Interest Certificateholder, may,
under certain circumstances, be subject to "backup withholding" at the rate of
31% with respect to distributions or the proceeds of a sale of Certificates to
or through brokers that represent interest or original issue discount on the
Certificates. This withholding generally applies if the holder of a Certificate
(i) fails to furnish the Trustee with its taxpayer identification number
("TIN"); (ii) furnishes the Trustee an incorrect TIN; (iii) fails to report
properly interest, dividends or other "reportable payments" as defined in the
Code; or (iv) under certain circumstances, fails to provide the Trustee or such
holder's securities broker with a certified statement, signed under penalty of
perjury, that the TIN provided is its correct TIN and that the holder is not
subject to backup withholding. Backup withholding will not apply, however, with
respect to certain payments made to Certificateholders, including payments to
certain exempt recipients (such as exempt organizations) and to certain Non-U.S.
Persons. Holders of the Certificates should consult their tax advisers as to
their qualification for exemption from backup withholding and the procedure for
obtaining the exemption.
The Trustee will report to the Certificateholders and to the Master
Servicer for each calendar year the amount of any "reportable payments" during
such year and the amount of tax withheld, if any, with respect to payments on
the Certificates. Any amounts withheld from distribution on Regular Certificates
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would be allowed as a credit against such Certificateholders, federal income tax
liability or would be refunded by the IRS.
Tax Treatment of Foreign Investors
Regular Certificates. Under the Code, unless interest (including OID) paid
on a Certificate (other than a Residual Certificate) is considered to be
"effectively connected" with a trade or business conducted in the United States
by a nonresident alien individual, foreign partnership or foreign corporation
(each, a "Non-U.S. Person") such interest will normally qualify as portfolio
interest (except if (i) the recipient is a holder, directly or by attribution,
of 10% or more of the capital or profits interest in the issuer or (ii) the
recipient is a controlled foreign corporation as to which the issuer is a
related person) and will not be subject to the 30% United States withholding
tax. Upon receipt of appropriate ownership statements signed under penalties of
perjury, identifying the beneficial owner and stating, together with other
statements, that the beneficial owner of the Regular Certificate is a Non-U.S.
Person, the issuer normally will be relieved of obligations to withhold tax from
such interest payments. These provisions supersede the generally applicable
provisions of United States law that would otherwise require the issuer to
withhold at a 30% rate (unless reduced or eliminated by an applicable tax
treaty) on, among other things, interest and other fixed or determinable, annual
or periodic income paid to Non-U.S. Persons. Holders of Certificates, including
"stripped certificates" (i.e., Certificates that separate ownership of principal
payments and interest payments on the Mortgage Loans), however, may be subject
to withholding to the extent that the Mortgage Loans were originated on or
before July 18, 1984.
Interest and OID of Certificateholders who are foreign persons are not
subject to withholding if they are effectively connected with a United States
business conducted by the Certificateholder. They will, however, generally be
subject to United States federal income tax at regular rates.
Residual Certificates. Payments to holders of Residual Certificates who are
foreign persons will generally be treated as interest and be subject to United
States withholding tax at 30% or any lower applicable treaty rate. Holders
should assume that such income does not qualify for exemption from United States
withholding tax as portfolio interest. If the amounts paid to Residual
Certificateholders who are Non-U.S. Persons are effectively connected with the
conduct of a trade or business within the United States by such Non-U.S. Person,
30% (or lower treaty rate) withholding will not apply. Instead, the amounts paid
to such Non-U.S. Persons will be subject to United States federal income tax at
regular rates. It is clear that, to the extent that a payment represents a
portion of REMIC taxable income that constitutes excess inclusion income, a
holder of a Residual Certificate will not be entitled to an exemption from or
reduction of the 30% (or lower treaty rate) withholding tax. See "--Taxation of
Holders of Residual Certificates--Limitations on Offset or Exemption of REMIC
Income: Excess Inclusions". If the payments are subject to United States
withholding tax, they generally will be taken into account for withholding tax
purposes only when paid or distributed (or when the Residual Certificate is
disposed of). The Treasury has statutory authority, however, to promulgate
regulations that would require such amounts to be taken into account at an
earlier time in order to prevent the avoidance of tax. Such regulations could,
for example, require withholding prior to the distribution of cash in the case
of Residual Certificates that do not have significant value.
If a Residual Certificate has tax avoidance potential, a transfer of a
Residual Certificate to a Non-U.S. Persons will be disregarded for all federal
tax purposes. A Residual Certificate has tax avoidance potential unless, at the
time of the transfer, the transferor reasonably expects that the REMIC will
distribute to the transferee Residual Interest holder amounts that will equal at
least 30% of each excess inclusion, and that such amounts will be distributed at
or after the time at which the excess inclusion accrues and not later than the
close of the calendar year following the calendar year of accrual. If a Non-U.S.
Person transfers a Residual Certificate to a U.S. Person, and if the transfer
has the effect of allowing
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the transferor to avoid tax on accrued excess inclusions, then the transfer is
disregarded and the transferor continues to be treated as the owner of the
Residual Certificate for purposes of the withholding tax provisions of the Code.
See "--Taxation of Holders of Residual Certificates--Limitations on Offset or
Exemption of REMIC Income: Excess Inclusions."
On April 22, 1996, the IRS issued proposed regulations which, if adopted in
final form, could have an affect on the United States taxation of foreign
investors holding Regular Certificates or Residual Certificates. The proposed
regulations would apply to payments after December 31, 1997. Investors who are
Non-U.S. Persons should consult their tax advisors regarding the specific tax
consequences to them of owning Regular Certificates or Residual Certificates.
Administrative Matters
The REMIC's books must be maintained on a calendar year basis and the REMIC
must file an annual federal income tax return. The REMIC will also be subject to
the procedural and administrative rules of the Code applicable to partnerships,
including the determination of any adjustments to, among other things, items of
REMIC income, gain, loss, deduction or credit by the IRS in a unified
administrative proceeding.
In general, the Trustee will, to the extent permitted by applicable law,
act as agent of the REMIC, and will file REMIC federal income tax returns on
behalf of the related REMIC. Reports of accrued interest and OID will be made
annually to the IRS and to individuals, estates, non-exempt and non-charitable
trusts, and partnerships who are either holders of record of Regular
Certificates or beneficial owners who own Regular Certificates through a broker
or middleman as nominee. All brokers, nominees and all other non-exempt holders
of record of Regular Certificates (including corporations, non-calendar year
taxpayers, securities or commodities dealers, real estate investment trusts,
investment companies, common trust funds, thrift institutions and charitable
trusts) may request such information for any calendar quarter by telephone or in
writing by contacting the person designated in IRS Publication 938 with respect
to a particular Series of Regular Certificates. Holders through nominees must
request such information from the nominee.
The IRS's Form 1066 has an accompanying Schedule Q, Quarterly Notice to
Residual Interest Holders of REMIC Taxable Income or Net Loss Allocation.
Treasury regulations require that Schedule Q be furnished by the REMIC to each
Residual Certificateholder by the end of the month following the close of each
calendar quarter (41 days after the end of a quarter under proposed Treasury
regulations) in which the REMIC is in existence.
Treasury regulations require that, in addition to the foregoing
requirements, information must be furnished quarterly to Residual
Certificateholders, furnished annually, if applicable, to holders of Regular
Certificates, and filed annually with the IRS concerning Code Section 67
expenses (see "--Taxation of the REMIC--Calculation of REMIC Income" above)
allocable to such holders. Furthermore, under such regulations, information must
be furnished quarterly to Residual Certificateholders, furnished annually to
holders of Regular Certificates, and filed annually with the IRS concerning the
percentage of the REMIC's assets meeting the qualified asset tests described
above under "--Qualification as a REMIC--Status of REMIC Certificates."
The holder of the largest percentage interest of the Residual Certificates
will be designated as and will act as the "tax matters person" with respect to
the REMIC in all respects. In general, the Trustee will act as attorney in fact
and agent for the tax matters person and, subject to certain notice requirements
and various restrictions and limitations, generally will have the authority to
act on behalf of the REMIC and the Residual Interest Certificateholders in
connection with the administrative and judicial review of items
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of income, deduction, gain or loss of the REMIC, as well as the REMIC's
classification. Residual Interest Certificateholders generally will be required
to report such REMIC items consistently with their treatment on the related
REMIC's tax return and may in some circumstances be bound by a settlement
agreement between the Trustee as attorney in fact and agent for tax matters
person, and the IRS concerning any such REMIC item. Adjustments made to the
REMIC tax return may require a Residual Interest Certificateholder to make
corresponding adjustments on its return, and an audit of the REMIC's tax return,
or the adjustments resulting from such an audit, could result in an audit of a
Residual Interest Certificateholder's return. No REMIC will be registered as a
tax shelter pursuant to Section 6111 of the Code because it is not anticipated
that any REMIC will have a net loss for any of the first five taxable years of
its existence. Any person that holds a Residual Certificate as a nominee for
another person may be required to furnish to the related REMIC, in a manner to
be provided in Treasury regulations, the name and address of such person and
other information.
Federal Income Tax Consequences For Certificates
As To Which No REMIC Election Is Made
Tax Status as a Grantor Trust
General. If the applicable Prospectus Supplement so specifies with respect
to a Series of Certificates, the Certificates of such Series will not be treated
as regular or residual interests in a REMIC for federal income tax purposes but
instead will be treated as an undivided beneficial ownership interest in the
Mortgage Loans. Under such circumstances the arrangement, pursuant to which the
Mortgage Loans will be held and the Certificates will be issued, will be
classified for federal income tax purposes as a grantor trust under Subpart E,
Part 1 of Subchapter J of the Code and not as an association taxable as a
corporation. In such a case, Morrison & Hecker L.L.P., counsel to the Depositor,
will deliver its opinion to the effect that the arrangement by which the
Certificates of that Series are issued will be treated as a grantor trust as
long as all of the provisions of the applicable Trust Agreement are complied
with and the statutory and regulatory requirements are satisfied.
In some Series ("Pass-Through Certificates"), there will be no separation
of the principal and interest payments on the Mortgage Loans. In such
circumstances, a Certificateholder will be considered to have purchased an
undivided interest in each of the Mortgage Loans. In other cases ("Stripped
Certificates"), sale of the Certificates will produce a separation in the
ownership of the principal payments and interest payments on the Mortgage Loans.
Each Certificateholder will be required to report on its federal income tax
return its pro rata share of the gross income derived from the Mortgage Loans
(not reduced by the amount payable as fees to the Trustee, the Master Servicer
and the Special Servicer, if any, and similar fees provided that such amounts
are reasonable compensation for services rendered (collectively, the "Servicing
Fee")), at the same time and in the same manner as such items would have been
reported under the Certificateholder's tax accounting method had it held its
interest in the Mortgage Loans directly, received directly its share of the
amounts received with respect to the Mortgage Loans and paid directly its share
of the Servicing Fees. In the case of Pass-Through Certificates, such gross
income will consist of a pro rata share of all of the income derived from all of
the Mortgage Loans and, in the case of Stripped Certificates, such income will
consist of a pro rata share of the income derived from each stripped bond or
stripped coupon in which the Certificateholder owns an interest. The holder of a
Certificate will generally be entitled to deduct such Servicing Fees under
Section 162 or Section 212 of the Code to the extent that such Servicing Fees
represent "reasonable" compensation for the services rendered by the Trustee,
the Master Servicer and the Special Servicer, if any. In the case of a
noncorporate holder, however, Servicing Fees (to the extent not otherwise
disallowed, e.g., because they exceed reasonable compensation) will be
deductible in computing such holder's regular tax liability only to the extent
that such fees, when added to other miscellaneous itemized deductions, exceed 2%
of adjusted gross income and may not be deductible to any extent in computing
such holder's alternative
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minimum tax liability. In addition, Section 68 of the Code provides that the
amount of itemized deductions otherwise allowable for the taxable year for an
individual whose adjusted gross income exceeds the Applicable Amount will be
reduced by the lesser of (i) 3% of the excess of adjusted gross income over the
applicable amount or (ii) 80% of the amount of itemized deductions otherwise
allowable for such taxable year.
Tax Status of Certificates
In the case of Stripped Certificates there is no specific legal authority
existing regarding whether the character of the Certificates, for federal income
tax purposes, will be the same as the Mortgage Loans. The IRS could take the
position that the Mortgage Loans' character is not carried over to the
Certificates in such circumstances. Pass-Through Certificates will be, and,
although the matter is not free from doubt, Stripped Certificates should be
considered to represent, "real estate assets" within the meaning of Section
856(c)(6)(B) of the Code, "loans secured by an interest in real property" within
the meaning of Section 7701(a)(19)(C) of the Code provided that the real
property securing the loan is of the type specified in such Code Section;
"obligation(s) principally secured by an interest in real property" within the
meaning of Section 860G(a)(3)(A) of the Code; and interest income attributable
to the Certificates should be considered to represent "interest on obligations
secured by mortgages on real property or on interests in real property" within
the meaning of Section 856(c)(3)(B) of the Code. However, Mortgage Loans secured
by non-residential real property will not constitute "loans secured by an
interest in real property" within the meaning of Section 7701(a)(19)(C) of the
Code. In addition, it is possible that various reserves or funds underlying the
Certificates may cause a proportionate reduction in the above-described
qualifying status categories of Certificates.
Pass-Through Certificates
Discount or Premium on Pass-Through Certificates. The holder's purchase
price of a Pass-Through Certificate is to be allocated among the Mortgage Loans
in proportion to their fair market values, determined as of the time of purchase
of the Certificates. In the typical case, the Depositor believes it is
reasonable for this purpose to treat each Mortgage Loan as having a fair market
value proportional to the share of the aggregate principal balances of all of
the Mortgage Loans that it represents, since the Mortgage Loans will have a
relatively uniform interest rate and other common characteristics. To the extent
that the portion of the purchase price of a Certificate allocated to a Mortgage
Loan (other than to a right to receive any accrued interest thereon and any
undistributed principal payments) is less than or greater than the portion of
the principal balance of the Mortgage Loan allocable to the Certificate, the
interest in the Mortgage Loan allocable to the Certificate will be deemed to
have been acquired at a discount or premium, respectively.
Original Issue Discount. The treatment of any discount will depend on
whether the discount represents OID or market discount. In the case of a
Mortgage Loan with OID in excess of a prescribed de minimus amount, a holder of
a Certificate will be required to report as interest income in each taxable year
its share of the amount of OID that accrues during that year, determined under a
constant yield method by reference to the initial yield to maturity of the
Mortgage Loan, in advance of receipt of the cash attributable to such income and
regardless of the method of federal income tax accounting employed by that
holder. OID with respect to a Mortgage Loan could arise for example by virtue of
the financing of points by the originator of the Mortgage Loan, or by virtue of
the charging of points by the originator of the Mortgage Loan in an amount
greater than a statutory de minimus exception, in circumstances under which the
points are not currently deductible pursuant to applicable Code provisions.
However, the OID Regulations provide that if a holder acquires an obligation at
a price that exceeds its stated redemption price, the holder will not include
any OID in gross income. In addition, if a subsequent holder acquires an
obligation for an amount that exceeds its adjusted issue price the subsequent
holder will be entitled to
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offset the OID with economic accruals of portions of such excess. Accordingly,
if the Mortgage Loans acquired by a Certificateholder are purchased at a price
that exceeds the adjusted issue price of such Mortgage Loans, any OID will be
reduced or eliminated.
Market Discount. Certificateholders also may be subject to the market
discount rules of Sections 1276-1278 of the Code. A Certificateholder that
acquires an interest in Mortgage Loans with more than a prescribed de minimus
amount of "market discount" (generally, the excess of the principal amount of
the Mortgage Loans over the purchaser's purchase price) will be required under
Section 1276 of the Code to include accrued market discount in income as
ordinary income in each month, but limited to an amount not exceeding the
principal payments on the Mortgage Loans received in that month and, if the
Certificates are sold, the gain realized. Such market discount would accrue in a
manner to be provided in Treasury regulations. The legislative history of the
1986 Act indicates that, until such regulations are issued, such market discount
would in general accrue either (i) on the basis of a constant interest rate or
(ii) in the ratio of (a) in the case of Mortgage Loans not originally issued
with OID, stated interest payable in the relevant period to total stated
interest remaining to be paid at the beginning of the period or (b) in the case
of Mortgage Loans originally issued at a discount, OID in the relevant period to
total OID remaining to be paid.
Section 1277 of the Code provides that the excess of interest paid or
accrued to purchase or carry a loan with market discount over interest received
on such loan is allowed as a current deduction only to the extent such excess is
greater than the market discount that accrued during the taxable year in which
such interest expense was incurred. In general, the deferred portion of any
interest expense will be deductible when such market discount is included in
income, including upon the sale, disposition or repayment of the loan. A holder
may elect to include market discount in income currently as it accrues, on all
market discount obligations acquired by such holder during the taxable year such
election is made and thereafter, in which case the interest deferral rule
discussed above will not apply.
A Certificateholder who purchases a Certificate at a premium generally will
be deemed to have purchased its interest in the underlying Mortgage Loans at a
premium. A Certificateholder who holds a Certificate as a capital asset may
generally elect under Section 171 of the Code to amortize such premium as an
offset to interest income on the Mortgage Loans (and not as a separate deduction
item) on a constant yield method. The legislative history of the 1986 Act
suggests that the same rules that will apply to the accrual of market discount
(described above) will generally also apply in amortizing premium with respect
to Mortgage Loans originated after September 27, 1985. If a holder makes an
election to amortize premium, such election will apply to all taxable debt
instruments held by such holder at the beginning of the taxable year in which
the election is made, and to all taxable debt instruments acquired thereafter by
such holder, and will be irrevocable without the consent of the IRS. Purchasers
who pay a premium for the Certificates should consult their tax advisers
regarding the election to amortize premium and the method to be employed.
Although the law is somewhat unclear regarding recovery of premium allocable to
Mortgage Loans originated before September 28, 1985, it is possible that such
premium may be recovered in proportion to payments of Mortgage Loan principal.
Stripped Certificates
Discount or Premium on Stripped Certificates. A Stripped Certificate may
represent a right to receive only a portion of the interest payments on the
Mortgage Loans, a right to receive only principal payments on the Mortgage
Loans, or a right to receive certain payments of both interest and principal.
Certain Stripped Certificates ("Ratio Strip Certificates") may represent a right
to receive differing percentages of both the interest and principal on each
Mortgage Loan. Pursuant to Section 1286 of the Code, 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
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creation of "stripped bonds" with respect to principal payments and "stripped
coupons" with respect to interest payments. Section 1286 of the Code applies the
OID rules to stripped bonds and stripped coupons. For purposes of computing OID,
a stripped bond or a stripped coupon is treated as a debt instrument issued on
the date that such stripped interest is purchased with an issue price equal to
its purchase price or, if more than one stripped interest is purchased, the
ratable share of the purchase price allocable to such stripped interest. The
Code, the OID Regulations and judicial decisions provide no direct guidance as
to how the interest and OID rules are to apply to Stripped Certificates. Under
the method described above for REMIC Regular Interest Certificates (the "Cash
Flow Bond Method"), a prepayment assumption is used and periodic recalculations
are made which take into account with respect to each accrual period the effect
of prepayments during such period. The 1986 Act prescribed the same method for
debt instruments "secured by" other debt instruments, the maturity of which may
be affected by prepayments on the underlying debt instruments. However, the 1986
Act does not, absent Treasury regulations, appear specifically to cover
instruments such as the Stripped Certificates which technically represent
ownership interests in the underlying Mortgage Loans, rather than being debt
instruments "secured by" those loans. Nevertheless, it is believed that the Cash
Flow Bond Method is a reasonable method of reporting income for such
Certificates, and it is expected that OID will be reported on that basis. In
applying the calculation to such Certificates, the Trustee will treat all
payments to be received with respect to the Certificates, whether attributable
to principal or interest on the loans, as payments on a single installment
obligation and as includible in the stated redemption price at maturity. The IRS
could, however, assert that OID must be calculated separately for each Mortgage
Loan underlying a Certificate. In addition, in the case of Ratio Strip
Certificates, the IRS could assert that OID must be calculated separately for
each stripped coupon or stripped bond underlying a Certificate.
Under certain circumstances, if the Mortgage Loans prepay at a rate faster
than the Prepayment Assumption, the use of the Cash Flow Bond Method may
accelerate a Certificateholder's recognition of income. If, however, the
Mortgage Loans prepay at a rate slower than the Prepayment Assumption, in some
circumstances the use of this method may decelerate a Certificateholder's
recognition of income.
In the case of a Stripped Certificate which either embodies only interest
payments on the underlying loans or (if it embodies some principal payments on
the Mortgage Loans) is issued at a price that exceeds the principal payments (an
"Interest Weighted Certificate"), additional uncertainty exists because of the
enhanced potential for applicability of the contingent payment debt instrument
provisions of the OID Regulations.
Under the contingent payment debt instrument provisions, the contingent
instrument is treated as if it were a debt with no contingent payments (the
"Noncontingent Bond Method"). Under this method the issue price is the amount
paid for the instrument and the Certificateholder is in effect put on the cash
method with respect to interest income at a comparable yield of a fixed rate
debt instrument with similar terms. The comparable yield must be a reasonable
yield for the issuer and must not be less than the applicable federal rate. A
projected payment schedule and daily portions of interest accrual is determined
based on the comparable yield. The interest for any accrual period, other than
an initial short period, is the product of the comparable yield and the adjusted
issue price at the beginning of the accrual period (the sum of the purchase
price of the instrument plus accrued interest for all prior accrual periods
reduced by any noncontingent or contingent payments on the debt instrument). If
the amount payable for a period were, however, greater or less than the amount
projected the income included for the period would be increased or decreased
accordingly. Any reduction in the income accrual for a period to an amount below
zero (a "Negative Adjustment") would be treated by a Certificateholder as an
ordinary loss to the extent of prior income accruals and may be carried forward
to offset future interest accruals. At maturity, any remaining Negative
Adjustment or any loss attributable to the Certificateholder's basis would be
treated as a loss from a sale or exchange of the Certificate. If the
loss-generating Mortgage Loan or Mortgage Loans was issued by a natural person,
such loss may be an ordinary loss because loss recognized on
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retirement of a debt instrument issued by a natural person is not a loss from a
sale or exchange. However, the IRS might contend that such loss should be a
capital loss if the Certificateholder held its Certificate as a capital asset. A
loss resulting from total interest inclusions exceeding total net Negative
Adjustments taken into account would be an ordinary loss. If a gain were
recognized on sale or exchange of the Certificate it would be capital in nature
if the Certificate were a capital asset in the hands of the Certificateholder.
Possible Alternative Characterizations. The characterizations of the
Stripped Certificates described above are not the only possible interpretations
of the applicable Code provisions. Among other possibilities, the IRS could
contend that (i) in certain Series, each non-Interest Weighted Certificate is
composed of an unstripped undivided ownership interest in Mortgage Loans and an
installment obligation consisting of stripped principal payments; (ii) the
non-Interest Weighted Certificates are subject to the contingent payment OID
Regulations; (iii) each Interest Weighted Certificate is composed of an
unstripped undivided ownership interest in the Mortgage Loans and an installment
obligation consisting of stripped interest payments; or (iv) there are as many
stripped bonds or stripped coupons as there are scheduled payments of principal
and/or interest on each Mortgage Loan.
Sale of Certificates
As a general rule, if a Certificate is sold, gain or loss will be
recognized by the holder thereof in an amount equal to the difference between
the amount realized on the sale and the Certificateholder's adjusted tax basis
in the Certificate. Except as subsequently discussed, such gain or loss will
generally be capital gain or loss if the Certificate is held as a capital asset.
In the case of Pass-Through Certificates, such tax basis will generally equal
the holder's cost of the Certificate increased by any discount income with
respect to the loans represented by such Certificate previously included in
income, and decreased by the amount of any distributions of principal previously
received with respect to the Certificate. Such gain, to the extent not otherwise
treated as ordinary income, will be treated as ordinary income to the extent of
any accrued market discount not previously reported as income. In the case of
Stripped Certificates, the tax basis will generally equal the
Certificateholder's cost for the Certificate, increased by any discount income
with respect to the Certificate previously included in income, and decreased by
the amount of all payments previously received with respect to such Certificate.
Certain financial institutions subject to the provisions of Code Section
582(c), which recognize gain on the sale of a certificate will be taxable at
ordinary income rates on such gain. In addition, gain on the sale of a Standard
Certificate will be treated as ordinary income (i) if a Pass-Through 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
Pass-Through Certificateholder's applicable Federal rate 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 a part of such transaction or (ii) in the case of a non-corporate taxpayer,
to the extent such taxpayer has made an election under Code Section 163(d)(4) to
have net capital gains taxed as investment income at ordinary income rates.
Capital gains of certain non-corporate taxpayers generally area subject to a
lower maximum tax rate (28%) than ordinary income of such taxpayers (39.6%) for
property held for more than one year but not more than 18 months, and a still
lower maximum rate (20%) for property held for more than 18 months. The maximum
tax rate for corporations is the same with respect to both ordinary income and
capital gains.
Reporting Requirements and Backup Withholding
The Trustee will furnish, within a reasonable time after the end of each
calendar year, to each Pass-Through Certificateholder or Stripped
Certificateholder at any time during such year, such information (prepared on
the basis described above) as the Trustee deems to be necessary or desirable to
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enable such Certificateholders to prepare their federal income tax returns. Such
information will include the amount or original issue discount accrued on
Certificates held by persons other than Certificateholders exempted from the
reporting requirements. The amounts required to be reported by the Trustee may
not be equal to the proper amount of original issued discount required to be
reported as taxable income by a Certificateholder, other than an original
Certificateholder that purchased at the issue price. In particular, in the case
of Stripped Certificates, unless provided otherwise in the applicable Prospectus
Supplement, such reporting will be based upon a representative initial offering
price of such class of Stripped Certificates. The Trustee will also file such
original issue discount information with the Service. If a Certificateholder
fails to supply an accurate taxpayer identification number or if the Secretary
of the Treasury determines that a Certificateholder has not reported all
interest and dividend income required to be shown on his federal income tax
return, 31% backup withholding may be required in respect of any reportable
payments, as described above under "Material Federal Income Tax
Consequences--Federal Income Tax Consequences For REMIC Certificates--Reporting
Requirements and Backup Withholding".
Treatment of Foreign Investors
To the extent that a Certificate evidences ownership in Mortgage Loans that
are issued on or before July 18, 1984, interest or original issue discount paid
by the person required to withhold tax under Code Section 1441 or 1442 to
nonresident aliens, foreign corporations, or other Non-U.S. Persons generally
will be subject to 30% United States withholding tax, or such lower rate as may
be provided for interest by an applicable tax treaty. Accrued original issue
discount recognized by the Pass-Through Certificateholder or Stripped
Certificateholder on original issue discount recognized by the Pass-Through
Certificateholder or Stripped Certificateholders on the sale or exchange of such
a Certificate also will be subject to federal income tax at the same rate.
Treasury regulations provide that interest or original issue discount paid
by the Trustee or other withholding agent to a Non-U.S. Person evidencing
ownership interest in Mortgage Loans issued after July 18, 1984 will be
"portfolio interest" and will be treated in the manner, and such persons will be
subject to the same certification requirements, described above under "--Federal
Income Tax Consequences for REMIC Certificates--Tax Treatment of Foreign
Investors--Regular Certificates".
STATE TAX CONSIDERATIONS
In addition to the federal income tax consequences described in "MATERIAL
FEDERAL INCOME TAX CONSEQUENCES," potential investors should consider the state
income tax consequences of the acquisition, ownership and disposition of the
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 advisers with respect to the various state tax
consequences of an investment in the Certificates.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
imposes certain requirements on employee benefit plans subject to ERISA ("ERISA
Plans") and prohibits certain transactions between ERISA Plans and persons who
are "parties in interest" (as defined under ERISA) with respect to assets of
such Plans. Section 4975 of the Code prohibits a similar set of transactions
between certain plans ("Code Plans," and together with ERISA Plans, "Plans") and
persons who are "disqualified persons" (as defined in the Code) with respect to
Code 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 requirements of ERISA or Section 4975 of the Code.
However, a governmental plan or a church plan may be subject to similar
restrictions under other applicable federal
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and state law ("Similar Law"). Any such plan which is qualified under Section
401(a) of the Code and exempt from taxation under Section 501(a) of the Code is,
however, subject to the prohibited transaction rules set forth in Section 503 of
the Code. A fiduciary of a governmental plan or a church plan should make its
own determination as to the need for or availability of any exemptive relief
under Similar Law or Section 503 of the Code.
Investments by ERISA Plans are subject to ERISA's general fiduciary
requirements, including the requirement of investment prudence and
diversification and the requirement that investments be made in accordance with
the documents governing the ERISA Plan. Before investing in a Senior
Certificate, an ERISA Plan fiduciary should consider, among other factors,
whether to do so is appropriate in view of the overall investment policy and
liquidity needs of the ERISA Plan. Such fiduciary should especially consider the
sensitivity of the investments to the rate of principal payments (including
prepayments) on the Mortgage Loans, as discussed in the Prospectus Supplement
related to a Series.
Prohibited Transactions
Section 406 of ERISA and Section 4975 of the Code prohibit parties in
interest and disqualified persons with respect to ERISA Plans and Code Plans
from engaging in certain transactions involving such Plans or "plan assets" of
such Plans, unless a statutory or administrative exemption applies to the
transaction. Section 4975 of the Code and Sections 502(i) and 502(l) of ERISA
provide for the imposition of certain excise taxes and civil penalties on
certain persons that engage or participate in such prohibited transactions. The
Depositor, the Underwriter, the Master Servicer, the Special Servicer, if any,
or the Trustee or certain affiliates thereof may be considered or may become
parties in interest or disqualified persons with respect to a Plan. If so, the
acquisition or holding of Certificates by, on behalf of or with "plan assets" of
such Plan may be considered to give rise to a "prohibited transaction" within
the meaning of ERISA and/or Section 4975 of the Code, unless the administrative
exemption described below or some other exemption is available.
Special caution should be exercised before "plan assets" of a Plan are used
to purchase a Senior Certificate if, with respect to such assets, the Depositor,
the Underwriter, the Master Servicer, the Special Servicer, if any, or the
Trustee or an affiliate thereof either (a) has discretionary authority or
control with respect to the investment or management of such assets or (b) has
authority or responsibility to give, or regularly gives, investment advice with
respect to such assets pursuant to an agreement or understanding that such
advice will serve as a primary basis for investment decisions with respect to
such assets and that such advice will be based on the particular needs of the
Plan.
Further, if the underlying assets included in a Trust Fund were deemed to
constitute "plan assets," certain transactions involved in the operation of the
Trust Fund may be deemed to constitute prohibited transactions under ERISA
and/or the Code. Neither ERISA nor Section 4975 of the Code defines the term
"plan assets."
The U.S. Department of Labor (the "Department") has issued regulations (the
"Regulations") concerning whether a Plan's assets would be deemed to include an
undivided interest in each of the underlying assets of an entity (such as the
Trust Fund), for purposes of the reporting and disclosure and general fiduciary
responsibility provisions of ERISA and the prohibited transaction provisions of
ERISA and Section 4975 of the Code, if the Plan acquires an "equity interest"
(such as a Senior Certificate) in such an entity.
Certain exceptions are provided in the Regulations whereby an investing
Plan's assets would be considered merely to include its interest in the
Certificates instead of being deemed to include an undivided interest in each of
the underlying assets of the Trust Fund. However, it cannot be predicted in
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advance, nor can there be a continuing assurance whether such exceptions may be
met, because of the factual nature of certain of the rules set forth in the
Regulations. For example, one of the exceptions in the Regulations states that
the underlying assets of an entity will not be considered "plan assets" if less
than 25% of the value of each class of equity interests is held by "benefit plan
investors," which are defined as ERISA Plans, Code Plans, individual retirement
accounts and employee benefit plans not subject to ERISA (for example,
governmental plans and church plans), but this exemption is tested immediately
after each acquisition of an equity interest in the entity whether upon initial
issuance or in the secondary market.
Pursuant to the Regulations, if the assets of the Trust Fund were deemed to
be "plan assets" by reason of the investment of assets of a Plan in any
Certificates, the "plan assets" of such Plan would include an undivided interest
in the Mortgage Loans, the mortgages underlying the Mortgage Loans and any other
assets held in the Trust Fund. Therefore, because the Mortgage Loans and other
assets held in the Trust Fund may be deemed to be "plan assets" of each Plan
that purchases Certificates, in the absence of an exemption, the purchase, sale
or holding of Certificates of any Series or Class by or with "plan assets" of a
Plan may result in a prohibited transaction and the imposition of civil
penalties or excise taxes. Depending on the relevant facts and circumstances,
certain prohibited transaction exemptions may apply to the purchase, sale or
holding of Certificates of any Series or Class by a Plan, for example,
Prohibited Transaction Class Exemption ("PTCE") 95-60, which exempts certain
transactions between insurance company general accounts and parties in interest;
PTCE 91-38, which exempts certain transactions between bank collective
investment funds and parties in interest; PTCE 90-1, which exempts certain
transactions between insurance company pooled separate accounts and parties in
interest; or PTCE 84-14, which exempts certain transactions effected on behalf
of a plan by a "qualified professional asset manager." There can be no assurance
that any of these exemptions will apply with respect to any Plan's investment in
any Certificates or, even if an exemption were deemed to apply, that any
exemption would apply to all prohibited transactions that may occur in
connection with such investment. Also, the Department has issued individual
administrative exemptions from application of certain prohibited transaction
restrictions of ERISA and the Code to most underwriters of mortgage-backed
securities (each, an "Underwriter's Exemption"). Such an Underwriter's Exemption
can only apply to mortgage-backed securities which, among other conditions, are
sold in an offering with respect to which such an underwriter serves as the sole
or a managing underwriter, or as a selling or placement agent. If such an
Underwriter's Exemption might be applicable to a Series of Certificates, such as
Senior Certificates, the related Prospectus Supplement will refer to such
possibility. Further, the related Prospectus Supplement may provide that certain
Classes or Series of Certificates, such as Subordinate Certificates, may not be
purchased by, or transferred to, Plans or may only be purchased by, or
transferred to, an insurance company for its general account under circumstances
that would not result in a prohibited transaction.
Any fiduciary or other Plan investor who proposes to invest "plan assets"
of a Plan in Certificates of any Series or Class should consult with its counsel
with respect to the potential consequences under ERISA and Section 4975 of the
Code or, in the case of governmental plans or church plans, Similar Law of any
such acquisition and ownership of such Certificates.
Unrelated Business Taxable Income-Residual Interests
The purchase of a Certificate evidencing an interest in the Residual
Interest in a Series that is treated as a REMIC by any employee benefit or other
plan that is exempt from taxation under Code Section 501(a), including most
varieties of Plans, may give rise to "unrelated business taxable income" as
described in Code Sections 511-515 and 860E. Further, prior to the purchase of
an interest in a Residual Interest, a prospective transferee may be required to
provide an affidavit to a transferor that it is not, nor is it purchasing an
interest in a Residual Interest on behalf of, a "Disqualified Organization,"
which term as defined above includes certain tax-exempt entities not subject to
Code Section 511, such as certain
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governmental plans, as discussed above under "MATERIAL FEDERAL INCOME TAX
CONSEQUENCES--Federal Income Tax Consequences For REMIC Certificates--Taxation
of Holders of Residual Certificates" and "--Federal Income Tax Consequences for
REMIC Certificates--Taxation of Holders of Residual Certificates--Restrictions
on Ownership and Transfer of Residual Certificates."
Due to the complexity of these rules and the penalties imposed upon persons
involved in prohibited transactions, it is particularly important that
individuals responsible for investment decisions with respect to ERISA Plans and
Code Plans consult with their counsel regarding the consequences under ERISA
and/or the Code of their acquisition and ownership of Certificates.
The sale of Certificates to a Plan is in no respect a representation by the
Depositor, the applicable underwriter or any other service provider with respect
to the Certificates, such as the Trustee, the Master Servicer and the Special
Servicer, if any, that this investment meets all relevant legal requirements
with respect to investments by Plans generally or any particular Plan or that
this investment is appropriate for Plans generally or any particular Plan.
LEGAL INVESTMENT
The related Prospectus Supplement will indicate whether the Offered
Certificates will constitute "mortgage related securities" for purposes of the
Secondary Mortgage Market Enhancement Act of 1984 (the "Enhancement Act"). It is
anticipated that the Offered Certificates generally will not constitute
"mortgage related securities" for purposes of the Enhancement Act.
All depository institutions considering an investment in the Certificates
should review the Supervisory Policy Statement on Securities Activities dated
January 28, 1992 (the "Policy Statement") of the Federal Financial Institutions
Examination Council (to the extent adopted by their respective regulators),
which in relevant part prohibits depository institutions from investing in
certain "high-risk" mortgage securities, except under limited circumstances, and
sets forth certain investment practices deemed to be unsuitable for regulated
institutions.
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, provisions that
may restrict or prohibit investment in securities that are not "interest
bearing" or "income-paying," and provisions that may restrict or prohibit
investments in securities that are issued in book-entry form.
The appropriate characterization of the Certificates under various legal
investment restrictions, and thus the ability of investors subject to these
restrictions to purchase Certificates, may be subject to significant
interpretive uncertainties. All investors whose investment authority is subject
to legal restrictions should consult their own legal advisers to determine
whether, and to what extent, the Certificates will constitute legal investments
for them.
PLAN OF DISTRIBUTION
The Depositor may sell the Certificates offered hereby in Series either
directly or through underwriters. The related Prospectus Supplement or
Prospectus Supplements for each Series will describe the terms of the offering
for that Series and will state the public offering or purchase price of each
Class of Certificates of such Series, or the method by which such price is to be
determined, and the net proceeds to the Depositor from such sale.
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If the sale of any Certificates is made pursuant to an underwriting
agreement pursuant to which one or more underwriters agree to act in such
capacity, such Certificates will be acquired by such underwriters for their own
account and may be resold 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. Firm commitment underwriting and public reoffering by underwriters may
be done through underwriting syndicates or through one or more firms acting
alone. The specific managing underwriter or underwriters, if any, with respect
to the offer and sale of a particular Series of Certificates will be set forth
on the cover of the Prospectus Supplement related to such Series and the members
of the underwriting syndicate, if any, will be named in such Prospectus
Supplement. The Prospectus Supplement will describe any discounts and
commissions to be allowed or paid by the Depositor to the underwriters, any
other items constituting underwriting compensation and any discounts and
commissions to be allowed or paid to the dealers. The obligations of the
underwriters will be subject to certain conditions precedent. The underwriters
with respect to a sale of any Class of Certificates will generally be obligated
to purchase all such Certificates if any are purchased. Pursuant to each such
underwriting agreement, the Depositor will indemnify the related underwriters
against certain civil liabilities, including liabilities under the 1933 Act.
If any Certificates are offered other than through underwriters pursuant to
such underwriting agreements, the related Prospectus Supplement or Prospectus
Supplements will contain information regarding the terms of such offering and
any agreements to be entered into in connection with such offering.
Purchasers of Certificates, including dealers, may, depending on the facts
and circumstances of such purchases, be deemed to be "underwriters" within the
meaning of the 1933 Act in connection with reoffers and sales by them of
Certificates. Certificateholders should consult with their legal advisors in
this regard prior to any such reoffer and sale.
LEGAL MATTERS
Certain legal matters relating to the Certificates offered hereby will be
passed upon for the Depositor by Morrison & Hecker L.L.P., Kansas City,
Missouri, and for the Underwriters as specified in the related Prospectus
Supplement.
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 be
included in this Prospectus or in the related Prospectus Supplement.
RATINGS
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 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,
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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. See "RISK FACTORS--Limited Nature of Credit
Ratings."
A security rating is not a recommendation to buy, sell or hold securities
and may be subject to revision or withdrawal at any time by the assigning rating
organization. Each security rating should be evaluated independently of any
other security rating.
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INDEX OF DEFINITIONS
1933 Act.................................iii
1934 Act..................................iv
1986 Act..................................66
ACMs......................................51
ADA.......................................56
Agreement..............................3, 16
AMTI......................................73
Applicable Amount.........................67
Bankruptcy Code...........................43
Cash Flow Bond Method.....................81
CERCLA................................13, 49
Certificateholders........................18
Certificates...........................i, 1
Classes....................................i
Closing Date..............................24
Code...................................5, 57
Code Plans................................83
Collection Account.....................2, 18
Commission...............................iii
Compound Interest Certificates............61
Counsel...................................57
Credit Enhancement.....................3, 35
Cut-off Date...........................4, 18
Department................................84
Depositor..................................i
Disqualified Organizations............14, 73
Distribution Account...................2, 18
Distribution Date......................3, 18
Enhancement Act...........................86
EPA.......................................51
ERISA..................................5, 83
ERISA Plans...............................83
Escrow Account............................28
Escrow Payments...........................28
Event of Default..........................33
Fannie Mae................................19
FHA.......................................25
FHLMC.....................................19
Forfeiture Laws...........................56
Form 8-K..................................24
Garn-St. Germain Act......................52
Hazardous Materials.......................50
HUD.......................................25
Installment Contracts..................1, 22
Interest Weighted Certificate.........63, 81
IRS.......................................59
Lead Paint Act............................51
Lender Liability Act......................49
Master Servicer...........................27
Master Servicer Remittance Date...........19
Midland...................................16
Mid-term Capital Gain.....................68
Mortgage...............................1, 22
Mortgage Loan..........................1, 22
Mortgage Loan File........................24
Mortgage Loan Groups......................24
Mortgage Loan Schedule....................24
Mortgage Loans............................ii
Mortgage Pool..........................ii, 1
Mortgaged Property.....................1, 22
Multiple Variable Rate....................64
NCUA......................................54
Negative Adjustment.......................81
Noncontingent Bond Method.............64, 81
Non-U.S. Person...........................76
Note......................................23
Offered Certificates.......................i
OID.......................................61
OID Regulations...........................58
Pass-Through Certificates.................78
Pass-Through Rate........................iii
Permitted Investments.....................19
Plan.......................................5
Plans.....................................83
Policy Statement..........................86
Premium Regulations.......................66
Prepayment Assumption.................61, 63
Property Protection Expenses..............19
PTCE......................................85
Rating Agency..........................5, 17
Ratio Strip Certificates..................80
Registration Statement...................iii
Regular Certificates...................5, 61
Regular Interests..........................5
Regulations...............................84
Relief Act................................53
REMIC.....................................ii
REMIC Certificates........................58
REMIC Provisions..........................58
REMIC Regulations.........................58
REO Account...............................19
REO Property..............................17
Reserve Account...........................17
Reserve Fund..............................36
Residual Certificate......................70
Residual Certificates......................5
Residual Interests.........................5
S&P.......................................20
Seller....................................26
Senior Certificates.......................35
Series.....................................i
Servicing Fee.........................30, 78
Similar Law...............................84
Simple Interest Loans.....................23
Single Variable Rate......................62
Special Servicer...........................1
Special Servicing Fee.....................30
Specially Serviced Mortgage Loans.........27
Startup Day...........................58, 69
Stripped Certificates.....................78
Subordinate Certificates..................35
Tiered REMICs.............................60
TIN.......................................75
Title V...................................54
Title VIII................................54
Trust Fund.............................i, 17
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Trustee................................1, 22
U.S. Person...............................73
UBTI......................................72
UCC.......................................40
Underwriter's Exemption...................85
USTs......................................51
Voting Rights.............................15
90
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DISCLAIMER
Prospective investors are advised to read carefully, and should rely solely on,
the Prospectus Supplement dated July 2, 1999 and accompanying Prospectus dated
September 9, 1999 (together, the "Prospectus") relating to the Certificates
referred to below in making their investment decision.
This diskette accompanies and is a part of the Prospectus Supplement relating to
the Commercial Mortgage Acceptance Corp. Commercial Mortgage Pass - Through
Certificates Series 1999-C1 (the "Certificates"). The information set forth on
this diskette is an electronic copy of the information set forth in Appendix II
"Certain Characteristics of the Mortgage Loans" in the Prospectus. This diskette
should be reviewed only in conjunction with the entire Prospectus. This diskette
does not contain all relevant information relating to the Certificates. Such
information is described elsewhere in the Prospectus.
Methodologies used in deriving certain information contained on this diskette
are more fully described elsewhere in the Prospectus.
The information on this diskette should not be viewed as projections, forecasts,
predictions or opinions with respect to value.
Prior to making any investment decision, a prospective investor must receive and
should carefully review the Prospectus. NOTHING IN THIS DISKETTE SHOULD BE
CONSIDERED AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
CERTIFICATES.
