<PAGE>
PROSPECTUS SUPPLEMENT
(To Prospectus dated November 22, 1999)
$678,669,000 (Approximate)
PNC Mortgage Acceptance Corp.
as Depositor
Midland Loan Services, Inc. and Column Financial, Inc.
as Mortgage Loan Sellers
and
Midland Loan Services, Inc.
as Master Servicer and Special Servicer
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1999-CM1
-------------------------
PNC Mortgage Acceptance Corp. is offering eight classes of its
series 1999-CM1 commercial mortgage pass-through certificates, which represent
beneficial ownership interests in a trust. The trust's assets will primarily be
207 loans secured by first liens on 212 commercial and multifamily residential
properties. The offered certificates are not obligations of PNC 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.
PNC Mortgage Acceptance Corp. will not list the offered 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 5 of the
prospectus.
The following classes of the series 1999-CM1 certificates are being
offered by this prospectus supplement:
<TABLE>
<CAPTION>
Initial
Principal Approximate Initial Description of Pass-
Balance or Pass-Through Through Scheduled Final Ratings
Class Notional Amount Rate Rate Distribution Date S&P/Fitch
----- --------------- ---- ---- ----------------- ---------
<S> <C> <C> <C> <C> <C>
Class S ......... $760,414,266 0.8340% Variable IO January 2020 AAAr/AAA
Class A-1A ...... $123,351,000 7.1100% Fixed July 2008 AAA/AAA
Class A-1B ...... $433,652,000 7.3300% WAC Cap October 2009 AAA/AAA
Class A-2 ....... $ 39,922,000 7.5100% WAC Cap November 2009 AA/AA
Class A-3 ....... $ 34,218,000 7.6600% WAC Cap November 2009 A/A
Class A-4 ....... $ 13,308,000 7.8500% WAC Cap November 2009 A-/A-
Class B-1 ....... $ 24,713,000 8.1610% WAC November 2009 BBB/BBB
Class B-2 ....... $ 9,505,000 8.1610% WAC November 2009 BBB-/BBB-
</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.
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital
Markets, Inc. and Prudential Securities Incorporated, as underwriters, will
purchase the offered certificates from the depositor. They will offer the
offered certificates for sale to the public at negotiated prices determined at
the time of sale. The depositor will receive approximately $711,516,580 in sale
proceeds, plus accrued interest, before expenses. It is expected that delivery
of the offered certificates will be made in book-entry form only through the
facilities of The Depository Trust Company in the United States, or Cedel Bank,
S.A. or the Euroclear System, in Europe, against payment therefor on or about
December 2, 1999.
---------------------------------
Donaldson, Lufkin & Jenrette
PNC Capital Markets, Inc.
Prudential Securities
The date of this Prospectus Supplement is November 22, 1999
<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-3
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 75 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,
the accompanying prospectus and the related registration statement. 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 February 24, 2000, 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-2
<PAGE>
TABLE OF CONTENTS
SUMMARY .....................................................................S-4
RISK FACTORS ...............................................................S-13
DESCRIPTION OF THE MORTGAGE POOL ...........................................S-30
General ..................................................................S-30
Security for the Mortgage Loans ..........................................S-30
Underwriting Standards ...................................................S-31
Certain Terms and Conditions of the
Mortgage Loans ...........................................................S-32
Certain Characteristics of the Mortgage Pool .............................S-36
Other Information ........................................................S-39
The Sellers ..............................................................S-42
Changes in Mortgage Pool Characteristics .................................S-43
Representations and Warranties; Repurchase ...............................S-43
MASTER SERVICER AND SPECIAL SERVICER .......................................S-46
DESCRIPTION OF THE CERTIFICATES ............................................S-49
General ..................................................................S-49
Principal Balances and Notional Amounts ..................................S-49
Pass-Through Rates .......................................................S-50
Distributions ............................................................S-51
Treatment of REO Properties ..............................................S-54
Appraisal Reductions of Loan Balances ....................................S-55
Application of Realized Losses and Expense
Losses to Principal Balances .............................................S-56
Prepayment Interest Excesses and Shortfalls ..............................S-57
Scheduled Final Distribution Date ........................................S-58
Subordination ............................................................S-58
Optional Termination .....................................................S-58
Voting Rights ............................................................S-59
Delivery, Form and Denomination ..........................................S-59
Registration and Transfer of Definitive
Certificates .............................................................S-62
YIELD AND MATURITY CONSIDERATIONS ..........................................S-62
Rate and Timing of Principal Payments ....................................S-63
Yield Sensitivity of the Interest Only
Certificates .............................................................S-66
Weighted Average Life ....................................................S-66
THE POOLING AND SERVICING AGREEMENTS-68
Assignment of the Mortgage Loans .........................................S-68
Servicing of the Mortgage Loans; Collection
of Payments ..............................................................S-69
Collection Activities ....................................................S-70
Advances .................................................................S-70
Accounts .................................................................S-71
Enforcement of "Due-on-Sale" Clauses .....................................S-73
Enforcement of "Due-on-Encumbrance"
Clauses ..................................................................S-74
Inspections ..............................................................S-74
Realization Upon Mortgage Loans ..........................................S-75
Amendments, Modifications and Waivers ....................................S-77
The Trustee ..............................................................S-77
Servicing Compensation and Payment of
Expenses .................................................................S-79
Special Servicing ........................................................S-79
The Controlling Class Representative .....................................S-81
Sub-Servicers ............................................................S-83
Reports to Certificateholders; Where You
Can Find More Information ................................................S-83
MATERIAL FEDERAL INCOME TAX CONSEQUENCES ...................................S-85
CERTAIN LEGAL ASPECTS OF MORTGAGE
LOANS LOCATED IN CALIFORNIA AND TEXAS ......................................S-87
California ...............................................................S-87
Texas ....................................................................S-88
ERISA CONSIDERATIONS .......................................................S-88
Plan Asset Regulation ....................................................S-88
Individual Exemption .....................................................S-89
Other Exemptions .........................................................S-91
Insurance Company Purchasers .............................................S-91
LEGAL INVESTMENT ...........................................................S-92
PLAN OF DISTRIBUTION .......................................................S-93
USE OF PROCEEDS ............................................................S-94
LEGAL MATTERS ..............................................................S-94
RATINGS ....................................................................S-94
INDEX OF DEFINITIONS .......................................................S-96
EXHIBIT A-1 - Certain Characteristics of the
Mortgage Loans and Mortgaged Properties ...................................A-1-1
EXHIBIT A-2 - Mortgage Pool Information ...................................A-2-1
EXHIBIT B - Significant Loan Summaries ......................................B-1
EXHIBIT C - Form of Trustee Report ..........................................C-1
EXHIBIT D - Decrement Tables for the Class A-1A,
Class A-1B, Class A-2, Class A-3, Class A-4,
Class B-1 and Class B-2 Certificates ........................................D-1
EXHIBIT E - Price/Yield Tables for the Class S
Certificates ................................................................E-1
EXHIBIT F - Summary Term Sheet ..............................................F-1
S-3
<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.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Initial Description Approximate
Principal Approximate Approximate Weighted of Initial
Balance Percent of Percent of Average Principal Pass- Pass-
or Notional Rating by Initial Pool Credit Life Window Through Through
Class Amount S&P/Fitch Balance Support (Years) (Months/Year) Rate Rate
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Senior Certificates
- ------------------------------------------------------------------------------------------------------------------------------
S $760,414,266 AAAr/AAA N/A N/A 9.1 N/A Variable IO 0.8340%
- ------------------------------------------------------------------------------------------------------------------------------
A-1A $123,351,000 AAA/AAA 16.22% 26.75% 5.7 1/00-7/08 Fixed 7.1100%
- ------------------------------------------------------------------------------------------------------------------------------
A-1B $433,652,000 AAA/AAA 57.03% 26.75% 9.6 7/08-10/09 WAC Cap 7.3300%
- ------------------------------------------------------------------------------------------------------------------------------
Subordinate Certificates
- ------------------------------------------------------------------------------------------------------------------------------
A-2 $ 39,922,000 AA/AA 5.25% 21.50% 9.9 10/09-11/09 WAC Cap 7.5100%
- ------------------------------------------------------------------------------------------------------------------------------
A-3 $ 34,218,000 A/A 4.50% 17.00% 9.9 11/09-11/09 WAC Cap 7.6600%
- ------------------------------------------------------------------------------------------------------------------------------
A-4 $ 13,308,000 A-/A- 1.75% 15.25% 9.9 11/09-11/09 WAC Cap 7.8500%
- ------------------------------------------------------------------------------------------------------------------------------
B-1 $ 24,713,000 BBB/BBB 3.25% 12.00% 9.9 11/09-11/09 WAC 8.1610%
- ------------------------------------------------------------------------------------------------------------------------------
B-2 $ 9,505,000 BBB-/BBB- 1.25% 10.75% 9.9 11/09-11/09 WAC 8.1610%
- ------------------------------------------------------------------------------------------------------------------------------
B-3 to D $ 81,745,266 -- 10.75% -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/_/ Offered certificates.
/_/ These certificates are not offered by this prospectus supplement. They
constitute "privately offered certificates".
The total initial principal balances and notional amounts for the certificates
may vary by up to 5%.
The column entitled "Principal Window" lists the months 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 and
that the hyper-amoritization loans pay on their anticipated repayment dates.
The percentages indicated under the column "Approximate Percent of Credit
Support" with respect to the class A-1A and class A-1B certificates represent
the approximate credit support for the class A-1A and class A-1B certificates in
the aggregate.
The notional amount for the class S certificates will generally be equal to the
total principal balance of the other classes of certificates identified in the
table above.
"Variable IO" refers to a variable pass-through rate that is equal to the
excess, if any, of (1) a weighted average coupon derived from net interest rates
on the loans that will back the certificates, over (2) a weighted average of the
pass-through rates in respect of each of the other classes of certificates
identified in the table above.
"WAC Cap" refers to a variable pass-through rate that is equal to the lesser of
(1) the initial pass-through rate for the subject class of certificates and (2)
a weighted average coupon derived from net interest rates on the loans that will
back the certificates.
"WAC" refers to a variable pass-through rate that is equal to a weighted average
coupon derived from net interest rates on the loans that will back the
certificates.
The privately offered certificates will also include the following classes of
certificates that are not shown above: class E, class R-I, class R-II and class
R-III. These other privately offered certificates do not have principal
balances, notional amounts or pass-through rates. They do not provide any
material credit support for the offered certificates.
- --------------------------------------------------------------------------------
S-4
<PAGE>
- --------------------------------------------------------------------------------
Relevant Parties and Dates
Depositor
PNC Mortgage Acceptance Corp., a wholly-owned subsidiary of Midland
Loan Services, Inc. PNC Mortgage Acceptance Corp.'s principal offices are
located at 210 West 10th Street, 6th Floor, Kansas City, Missouri, 64105,
telephone number (816) 435-5000. See "The Depositor" in the prospectus.
Sellers
Midland Loan Services, Inc., a wholly owned subsidiary of PNC Bank,
N.A., is selling 143 loans (55.6%). Midland is an affiliate of PNC Capital
Markets, Inc.
Column Financial, Inc., an affiliate of Donaldson, Lufkin & Jenrette
Securities Corporation, is selling 64 loans (44.4%).
Underwriters
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital
Markets, Inc. and Prudential Securities Incorporated. Donaldson, Lufkin &
Jenrette is the lead manager and sole bookrunner for this offering. PNC Capital
Markets and Prudential Securities are co-managers.
Master Servicer and Special Servicer
Midland Loan Services, Inc. or any successor master servicer or
special servicer. See "Master Servicer and Special Servicer".
Trustee
Norwest Bank Minnesota, National Association. See "The Pooling and
Servicing Agreement--The Trustee".
Controlling Class
The most subordinate class of principal balance certificates that
has at least 25% of its initial principal balance still outstanding. If no class
has at least 25% of its initial principal balance still outstanding, the most
subordinate class of principal balance certificates still outstanding will be
the controlling class.
Controlling Class Representative
The holder of a majority of the controlling class may appoint a
representative. The special servicer must notify the controlling class
representative before it takes certain actions and must obtain the controlling
class representative's approval on certain matters. The controlling class
representative may replace the special servicer without cause. See "The Pooling
and Servicing Agreement--General" and "--The Controlling Class Representative".
Significant Dates
Cut-off Date
December 1, 1999.
Closing Date
On or about December 2, 1999.
Distribution Date
Payments on the offered certificates are scheduled to occur monthly,
commencing in January 2000. The distribution date for each month will be the
later of:
o the 10th calendar day of that month, or if that day is not a business day,
then the next business day, and
o the fourth business day after the determination date for the month.
Scheduled Final Distribution Date
The distribution date on which a class's principal balance or
notional amount would become zero if there are:
o no defaults or delinquencies,
o no prepayments of any kind, except that it is assumed that
hyper-amortization loans will pay on their anticipated repayment dates;
and
o no modifications or extensions of any loans.
- --------------------------------------------------------------------------------
S-5
<PAGE>
- --------------------------------------------------------------------------------
Please note that it is very unlikely that these assumptions will
hold true. See "Description of the Certificates--Scheduled Final Distribution
Date".
Rated Final Distribution Date
The distribution date in December 2032, which is the distribution
date occurring three years after the end of the amortization term of the loan
with the longest remaining amortization term on the closing date. See "Ratings".
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.
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 fourth calendar day of the month or,
if that day is not a business day, the first business day before that day.
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 PNC Mortgage Acceptance
Corp. Commercial Mortgage Pass-Through Certificates, Series 1999-CM1.
Class S
Class A-1A
Class A-1B
Class A-2
Class A-3
Class A-4
Class B-1
Class B-2
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-4.
Certificate Designations
In this prospectus supplement, we will refer to the following groups
of certificates by the indicated designations:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Designation Related Classes
- -------------------------------------------------------------------------------------------------------------
<S> <C>
Offered certificates Classes S, A-1A, A-1B, A-2, A-3, A-4, B-1 and B-2
- -------------------------------------------------------------------------------------------------------------
Privately offered certificates Classes B-3, B-4, B-5, B-6, B-7, B-8, C, D, E, R-I, R-II and R-III
- -------------------------------------------------------------------------------------------------------------
Senior certificates Classes S, A-1A and A-1B
- -------------------------------------------------------------------------------------------------------------
Principal balance certificates Classes A-1A, A-1B, A-2, A-3, A-4, B-1, B-2, B-3, B-4, B-5, B-6, B-7, B-8, C
and D
- -------------------------------------------------------------------------------------------------------------
Interest only certificates Class S
- -------------------------------------------------------------------------------------------------------------
Subordinate certificates Classes A-2, A-3, A-4, B-1, B-2, B-3, B-4, B-5, B-6, B-7, B-8, C and D
- -------------------------------------------------------------------------------------------------------------
Deferred interest certificates Class E
- -------------------------------------------------------------------------------------------------------------
Residual certificates Classes R-I, R-II and R-III
- -------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
S-6
<PAGE>
- --------------------------------------------------------------------------------
Accrual of Interest
Each class of offered certificates will bear interest. In each case,
that interest will accrue during each interest accrual period based upon--
o the pass-through rate applicable for the particular class for that
interest accrual period,
o the aggregate principal balance or notional amount, as the case may be, of
the particular class outstanding immediately prior to the related
distribution date, and
o the assumption that each year consists of 12 30-day months.
Distributions
Distributions to Senior Certificates
On each distribution date, funds available for distribution from the
mortgage loans, net of prepayment premiums and deferred interest, will be
distributed to the holders of the senior certificates in the following order:
Interest on Senior Certificates: to pay interest to the holders of
the senior certificates in an amount equal to their interest entitlement.
Principal on Class A-1A and Class A-1B Certificates: to pay
principal from the funds available for principal distributions to the holders of
the class A-1A and class A-1B certificates, in that order, until reduced to
zero. If the principal amount of each class of principal balance certificates
other than class A-1A and class A-1B certificates has been reduced to zero,
funds available for principal distributions will be distributed to the holders
of the class A-1A and class A-1B certificates, pro rata, rather than
sequentially.
Reimbursement of Class A-1A and Class A-1B Losses: to reimburse the
holders of the class A-1A and class A-1B certificates, pro rata, for any losses
on the mortgage loans that resulted in an unreimbursed reduction of the
principal balances 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 holders of each class of subordinate
certificates in alphabetical and numerical order of class designation. In the
case of each class of subordinate certificates, those payments will be 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 principal balance of the class A-1A and class A-1B
certificates and each other class of subordinate certificates, if any,
with an earlier alphabetical and numerical class designation, has been
reduced to zero; and
o third, to reimburse the class for any losses on the mortgage loans that
resulted in an unreimbursed reduction of the principal balance of such
class of 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 and numerical class designation.
In this prospectus supplement, "alphabetical and numerical order" is
determined first by alphabetical order, and then if the alphabetical
designations are the same, by numerical order.
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 and numerical class designation.
Such subordination results from:
o applying the funds available from the loans in the order described above;
and
o allocating losses on the loans and certain default-related and
unanticipated expenses of the trust to the certificates in reverse order
of their alphabetical and numerical class designations.
- --------------------------------------------------------------------------------
S-7
<PAGE>
- --------------------------------------------------------------------------------
After the balances of all subordinate certificates have been reduced
to zero, losses are allocated to the class A-1A and A-1B certificates in
proportion to their class principal balances.
The class S certificates receive no such allocations but do incur
reductions of their notional amount whenever the principal balance is reduced on
any class.
The certificates have no other form of credit enhancement.
Prepayment Interest Shortfalls and Excesses
If a borrower prepays a 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 that interest, net of master servicer
fees, is a "prepayment interest excess".
If a borrower prepays a 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, net of master servicer fees,
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 and to the extent there are prepayment interest shortfalls not
offset by prepayment interest excesses or covered by the master servicer from
its own funds, then those prepayment interest shortfalls will be allocated among
the certificates in proportion to the interest accrued on each certificate
during the corresponding interest accrual period. 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".
Advances
The master servicer must make advances for delinquent payments of
principal (except for delinquent balloon payments) and/or interest on the loans
and to cover certain servicing expenses.
If the master servicer fails to make a required advance and the
trustee is aware of the failure, the trustee 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 loan or mortgaged property.
All advances will accrue interest at the "prime rate".
To the extent not offset by collected late payment charges on the
related loan or default interest on any loan, payments of advance interest will
reduce the cash available to pay interest on the most subordinate class of
certificates then outstanding. See "The Pooling and Servicing
Agreement--Advances".
Appraisal Reductions
If certain adverse events or circumstances occur or exist with
respect to a loan or the related mortgaged property, the master servicer or the
special servicer must obtain a new appraisal of the mortgaged property. If the
principal balance of the loan, plus certain other amounts due under the loan, is
more than 90% of the new appraised value plus the amount of any escrows or
reserves for the loan that are not related to taxes or insurance, 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 207 fixed-rate loans with a total cut-off date principal balance of
approximately $760,414,266, plus or minus 5%. We frequently refer to the total
cut-off date principal balance of the loans as the "initial pool balance".
- --------------------------------------------------------------------------------
S-8
<PAGE>
- --------------------------------------------------------------------------------
We include in this prospectus supplement a variety of information
regarding the loans and mortgaged properties. In reviewing this information, you
should be aware that:
o All numerical information provided with respect to the loans is provided
on an approximate basis.
o All weighted average information provided with respect to the loans or any
sub-group of loans reflects the weighting of those loans by their
respective cut-off date principal balances. The "cut-off date principal
balance" of any loan is its unpaid principal balance on December 1, 1999,
after application of all payments of principal due with respect to the
loan on or before that date, whether or not those payments are received.
o In the presenting the cut-off date principal balances of the loans, we
have assumed that:
(i) all scheduled payments of principal and/or interest due on the loans
on or before December 1, 1999 are timely made, and,
(ii) there are no prepayments or other unscheduled collections of
principal with respect to any of the loans during the period from
November 1, 1999 up to and including December 1, 1999.
o When information with respect to the loans or the properties is expressed
as a percentage, the percentage is based upon the cut-off date principal
balances of the related loans and not the number of loans.
o Some of the loans provide that they are cross-collateralized and
cross-defaulted with one or more other loans. Except as otherwise
indicated, when a loan is cross-collateralized and cross-defaulted with
another loan, we have presented the information regarding those loans as
if each of them was secured only by a lien on the corresponding property
identified on Exhibit A-1 to this prospectus supplement. One such
exception is that each and every loan in any particular group of
cross-collateralized and cross-defaulted loans is treated as having the
combined loan-to-value ratio and the combined debt service coverage ratio
for that entire group. None of the loans is cross-collateralized with any
loan that will not be included in the trust.
o In making the count of loans in the trust fund, any single loan evidenced
by one or more notes and secured by mortgages over multiple properties was
counted as one loan. In some cases, for purposes of providing certain
property-specific information with respect to such multiple property loans
we have allocated each such loan among its related properties based upon:
(i) relative appraised values;
(ii) relative underwritable cash flow; or
(iii) prior allocations reflected in the related loan documents.
The loan-to-value ratios and debt service coverage ratios shown for each
of the separate properties securing a multiple property loan are the
ratios for that loan based upon all of those properties.
o In some cases, when multiple parcels of property secure a single
indebtedness, we have treated those parcels as a single "property" because
of their proximity to each other, the interrelationship of their
operations or for other reasons deemed appropriate by us.
o Whenever we refer to a particular property by name, we mean the property
identified by that name on Exhibit A-1 to this prospectus supplement.
o Statistical information regarding the loans may change prior to the date
of initial issuance of the certificates due to changes in the composition
of the mortgage pool prior to that date.
A first lien on a fee simple or leasehold estate in a mortgaged
property secures each loan.
o Fee - 206 properties (97.8%).
o Leasehold - 4 properties (1.3%).
o Fee/Leasehold - 2 properties (0.9%).
The mortgage pool includes 5 separate sets of cross-collateralized
loans. The largest of these sets is 1.2% of the initial pool balance.
You should consider all of the loans to be non-recourse. You should
also consider them not to be insured or guaranteed by any person or entity.
One hundred ninety-two loans (89.7%) are "balloon loans" that are
expected to have more than 10% of their original principal balance remaining
unpaid at their maturity date.
Ten of the loans (9.3%) are hyper-amortization loans and provide for
an increase in their interest rate and/or principal amortization prior to
maturity.
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Five Mortgage Loans (1.0%) have remaining amortization terms that
are substantially the same as their remaining terms 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 - 84 properties (38.9%).
o retail - 43 properties (26.5%).
o office - 37 properties (17.7%).
o industrial - 17 properties (5.2%).
o hospitality - 6 properties (4.2%).
o mixed use - 7 properties (3.4%).
o manufactured housing - 6 properties (2.4%).
o self storage - 11 properties (1.4%).
o credit tenant lease - 1 property (0.3%).
Properties located in each of California and Texas secure at least
10% of the initial pool balance. Also, properties located in each of New York,
Florida, Michigan, Oklahoma and Massachusetts secure at least 5%, but less than
10%, of the initial pool balance. None of the remaining 28 jurisdictions has
mortgaged properties securing 5% or more of the initial pool balance.
No set of loans to a single borrower or to a single group of
affiliated borrowers constitutes more than 6.0% of the initial pool balance.
Forty-four properties (16.4%) are at least 50% occupied by a major
tenant or the borrower.
One hundred fifty-three loans (75.0%) 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 will remain constant over time. The tables included in Exhibit A-2
analyze 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, for each of the time periods
indicated.
As of the cut-off date, the loans have the following
characteristics:
o mortgage rates range from 6.320% to 9.280% per annum, with a weighted
average mortgage rate of 7.982% per annum;
o remaining terms to stated maturity range from 38 months to 241 months,
with a weighted average remaining term to stated maturity of 116 months;
o cut-off date principal balances range from $399,636 to $44,973,184, with
an average cut-off date principal balance of $3,673,499;
o a weighted average underwritable debt service coverage ratio of 1.32x (see
"Description of the Mortgage Pool--Other Information"); and a weighted
average cut-off date loan-to-value ratio of 72.6% (see "Description of the
Mortgage Pool--Other Information").
Any weighted average loan-to-value and debt service coverage ratio
calculations in this prospectus supplement exclude the 1 loan (0.3%) secured by
a mortgaged property subject to a credit tenant lease.
The characteristics of the loans are more fully described under
"Description of the Mortgage Pool" and in the Exhibits.
Yield and Prepayment Considerations
The yield on an offered certificate will depend on many factors,
including:
o the pass-through rate for the certificate 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 principal balance or
notional amount of the certificate;
o appraisal reductions;
o expense losses; and
o realized losses.
See "Description of the Certificates--Distributions--Application of
Available Funds" and
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"--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, perhaps significantly, from your expected yield.
You may be unable to reinvest principal distributions in an
alternative investment with a comparable yield.
The class S certificates are interest-only certificates and receive
no distributions of principal. The yield to maturity of class S 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 - 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 S and class B-2 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 stated principal balance of all outstanding principal
balance certificates is less than 1% 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 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 offered certificates in minimum denominations of
$5,000 initial principal balance or notional amount, as applicable, 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.
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ERISA Considerations
Subject to important considerations described under "ERISA
Considerations" in this prospectus supplement and in the accompanying
prospectus, the class S, class A-1A and class A-1B certificates are eligible for
purchase by persons investing assets of employee benefit plans or individual
retirement accounts.
The class A-2, class A-3, class A-4, class B-1 and class B-2
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, or Section 4975 of the Internal Revenue Code of 1986, 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.
If you are a fiduciary of any retirement plan or other employee benefit plan or
arrangement subject to ERISA or section 4975 of the Internal Revenue Code of
1986, you should review carefully with your legal advisors whether the purchase
or holding of the offered certificates could give rise to a transaction that is
prohibited under ERISA or Section 4975 of the Internal Revenue Code of 1986. 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 Standard & Poor's Ratings Services, a division
of The McGraw-Hill Companies, Inc. and Fitch IBCA, Inc.
A credit rating is not a recommendation to buy, sell or hold
securities and may be revised or 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
The class S, A-1A, A-1B and A-2 certificates will be "mortgage
related securities" for purposes of the Secondary Mortgage Market Enhancement
Act of 1984 so long as they are rated in one of the two highest rating
categories by at least one nationally recognized statistical rating
organization.
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 available 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 offered 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 and the prospectus.
Your Investment Is Not Insured or Guaranteed and Your Source for Repayment Is
Limited
You should consider all of the loans to be nonrecourse loans. You
should also consider them not to be insured or guaranteed by any person or
entity. If a default occurs, the lender's remedies generally are limited to
foreclosing against the specific real property and other assets pledged to
secure the defaulted 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 offered 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 class of the offered certificates will
depend solely on the amount and timing of payments on the loans.
One hundred sixty-eight of the loans (83.9%) were originated within
12 months prior to the cut-off date. Consequently, these loans do not have a
long-standing payment history.
The Repayment of a Multifamily or 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 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 the current use of 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, or if the lease payments of such tenant or tenants
account for a significant portion of the property's gross revenue. Such
properties 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 all or a significant
portion of the property's 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.
For 44 properties (16.4%), a single tenant or the borrower occupies
more than 50% of the related mortgaged property.
One loan (0.3%) is secured by a mortgaged property subject to a
credit tenant lease. This loan has a lower debt service coverage ratio and a
higher loan-to-value ratio than would have been acceptable if the property had
been leased to a less creditworthy tenant. The tenant for this property has a
long-term local issuer credit rating of "A" from Standard & Poor's. This loan is
fully amortizing over the lease term of the related credit tenant.
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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 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 Presence of Large Loans or a Large Concentration of Loans Among Related
Borrowers Increases the Possibility of Losses 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 5 largest loans, or groups of cross-collateralized loans,
represent 19.6% of the initial pool balance. The potential loss on any of these
loans may have a more adverse effect on the offered certificates than a loss on
a smaller loan. Each of the other loans represents less than 1.7% of the initial
pool balance.
A concentration of loans with the same borrower or related borrowers
also can pose increased risks. 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 5.9%, 4.8% and 4.3%, respectively, of the initial pool
balance. The mortgaged properties for 5 loans (5.7%) are owned by affiliated
borrowers and are also commonly managed by the same property management company.
This property management company is also related to each of the separate
borrowers through common ownership.
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:
o 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
o 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 35 jurisdictions. Mortgaged
properties located in each of California and Texas secure at least 10% of the
initial pool balance. Also, mortgaged properties located in each of New York,
Florida, Michigan, Oklahoma and Massachusetts secure at least 5%, but less than
10%, of the initial pool balance. None of the remaining 28 jurisdictions has
mortgaged properties securing 5% or more of the initial pool balance. See
"Description of the Mortgage Pool".
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Large Concentrations of Multifamily Properties Securing Loans Will Subject Your
Investment to the Special Risks of These Properties
Multifamily properties secure 38.9% of the initial pool balance.
A large number of factors may affect the value and successful
operation of a multifamily property, including:
o the physical attributes of the property, such as its age, appearance and
construction quality;
o the location of the property;
o the characteristics of the surrounding neighborhood;
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 tenant mix, such as a tenant population that is dependent upon
students, workers from a particular business or personnel from a local
military base;
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 the extent to which a property is subject to covenants that require rental
to low income tenants;
o state and local regulations, such as rent control regulations and
regulations that govern eviction; and
o government assistance/rent subsidy programs.
Two multifamily properties (0.7%) are residential condominium
projects. These properties are subject to the governing documents of the owners'
association, local laws applicable to condominiums and other special
considerations. Consequently, realizing upon any such property following a
default under the related loan could expose the trust to greater delay, expense
and risk than a loan secured by a property that is not a condominium.
Large Concentrations of Retail Properties Securing Loans Will Subject Your
Investment to the Special Risks of These Properties
Retail properties secure 26.5% of the initial pool balance. 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 success of tenants at a retail property will be affected by:
o competition from other retail properties;
o perceptions regarding the safety, convenience and attractiveness of the
property;
o demographics of the surrounding area;
o traffic patterns and access to major thoroughfares;
o availability of parking;
o customer tastes and preferences; and
o the drawing power of other tenants.
The presence or absence of an "anchor store" at a retail property
also can be important. Anchors play a key role in generating customer traffic
and making a retail property 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 an anchor store at a mortgaged property were to close, the
related borrower may be unable to replace the anchor 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
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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 17.7% of the initial pool balance.
A large number of factors may adversely affect the value of office
properties, including:
o the quality of an office property's tenants;
o the diversity of an office property's tenants or reliance on a single or
dominant tenant;
o the physical attributes of the property in relation to competing office
properties, such as 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.
Large Concentrations of Industrial Properties Securing Loans Will Subject Your
Investment to the Special Risks of Such Properties
Industrial properties secure 5.2% of the initial pool balance.
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 4.2% of the initial pool balance.
Various factors may adversely affect the economic performance of a hospitality
property, 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 hospitality properties;
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 hospitality property; and
o changes in travel patterns, changes in access, increases in energy prices,
strikes, relocation of highways or the construction of additional
highways.
Because rooms at hospitality properties generally are rented for
short periods of time, the financial performance of those properties tend to be
affected by adverse economic conditions and competition more quickly than other
types of commercial properties.
Moreover, the hospitality industry is generally seasonal in nature.
This seasonality can be expected to cause periodic fluctuations in a hospitality
property's revenues, occupancy levels, room rates and operating expenses.
Further, in the event of a foreclosure, the trustee or a purchaser
of a hospitality property probably would not be entitled to the rights under any
liquor license for that property. Such party would be required to apply for a
new license in its own name. The inability to obtain a new liquor license may
have an adverse effect on the value of a hospitality property.
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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
Five of the hospitality properties (2.9%) are operated as franchises
of national hotel chains or managed by a hotel management company. The
performance of a hospitality 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.
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 loans in the mortgage pool. In this
regard, the largest concentration consists of 2 hospitality properties (1.6%)
that are operated as Marriott franchises.
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;
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.
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%, not to exceed
3 years, 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, lead-based paint or other hazardous
substances.
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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
Environmental site assessments were obtained for 193 of the
mortgaged properties (97.5%) during the 24-month period ending on September 20,
1999. The assessments for 12 of those mortgaged properties (5.0%) were obtained
more than 18 months prior to the cut-off date. The assessments for 3 of those
mortgaged properties (0.4%) did not satisfy all of the requirements necessary to
be considered "Phase I" environmental site assessments.
Environmental consultants have detected asbestos or lead-based paint
at several mortgaged properties by sampling. The environmental consultants
suspect that asbestos or lead-based paint may be located at other mortgaged
properties. In some cases, the asbestos or lead-based paint is in poor
condition. The asbestos or lead-based paint found or suspected is not expected
to present a significant risk as long as the related mortgaged property is
properly managed or, when recommended by the consultant, the problem is remedied
or abated. Nonetheless, the value of a mortgaged property as collateral for the
related loan could be adversely affected, and claims for damages could arise
from parties injured by such asbestos or lead-based paint.
In certain cases, an assessment disclosed other known or potential
adverse environmental conditions, such as underground storage tanks or soil or
groundwater 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.
Except as described herein, where an assessment disclosed a known or
potential material and adverse environmental condition, the originator required
the borrower to:
o escrow funds deemed sufficient to ensure remediation of or to monitor the
environmental issue;
o obtain an environmental insurance policy that covers the environmental
issue; or
o establish an operations and maintenance plan that, if implemented, would
prevent any material and adverse consequences resulting from the
environmental issue.
Set forth below are some of the known or potential material and
adverse environmental conditions for which an escrow has been established to
cover remediation costs or an environmental insurance policy has been obtained
to cover potential clean-up costs:
o 5 mortgaged properties (1.7%) - potential or existing contamination
arising from the operation of dry cleaning facilities upon or near such
properties;
o 4 mortgaged properties (1.2%) - potential or existing contamination
arising from the operation of gas stations or automobile/marine repair
facilities upon or near such properties;
o 1 mortgaged property (0.2%) - by the former use of this property as part
of an oil production field;
o 1 mortgaged property (1.5%) - by the presence of underground storage tanks
upon this property; or
o 7 mortgaged properties (3.5%) - by the presence of leaking underground
storage tanks or other adverse environmental conditions on or near such
properties.
In some cases, the environmental consultant did not recommend that
any action be taken with respect to a known or potential adverse environmental
condition at a mortgaged property or a nearby property because:
o a remediation, under the supervision of an environmental regulatory
agency, had been completed or was currently underway;
o an environmental regulatory agency had issued a "no further action" letter
regarding the condition; or
o a responsible party with respect to the condition had already been
identified.
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No environmental site assessments were obtained for 19 mortgaged
properties (2.5%). For 6 mortgaged properties (2.0%) a "Phase II" environmental
site assessment was recommended but not performed. In general, the decision not
to take the foregoing actions with respect to any of those mortgaged properties
was based upon the borrower or the lender obtaining an environmental insurance
policy with respect to the mortgaged property.
For 14 of the mortgaged properties (6.1%), the depositor will obtain
a separate secured creditor impaired property group policy covering certain
environmental matters with respect to such properties. For each of 19 other
mortgaged properties (2.5%), Column Financial, Inc. obtained a separate secured
creditor impaired property policy covering certain environmental matters with
respect to such properties. See "Description of the Mortgage Pool--Environmental
Insurance" for a more detailed description of these secured creditor impaired
property policies.
Each environmental insurance policy obtained with respect to a
mortgaged property contains certain coverage limits. In addition, the policies
do not provide coverage for adverse environmental conditions at levels below
legal limits or for conditions involving asbestos and lead-based paint. There is
no assurance that any escrowed funds will be sufficient to complete remediation
of any environmental conditions affecting the related mortgaged property.
The environmental assessments, when obtained, 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 mortgaged property, it must obtain an
environmental assessment of the mortgaged 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 or Anticipated Repayment Date, Which May Have an Adverse Effect on the
Payment of Your Certificates
Two hundred two of the loans (99.4%) are expected to have more than
10% of the original principal balance remaining unpaid on their stated maturity
date or, in the case of hyper-amortization loans, on their anticipated repayment
date. We cannot assure you that each borrower will have the ability to repay the
remaining principal balance on the pertinent date. Additionally, a borrower in a
hyper-amortization loan is not obligated to repay its loan on the anticipated
repayment date. Loans with substantial remaining principal balances at their
stated or anticipated maturity involve greater risk than fully amortizing loans.
A borrower's ability to repay a loan on its maturity date or
anticipated repayment 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 and
multifamily properties;
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.
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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 the borrowers for 73 loans (19.9%)
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 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 do not permit the borrower to incur additional
indebtedness using the mortgaged property as collateral. However, 1 property
(0.5%) is known to be encumbered by a subordinate mortgage securing other debt
of the related borrower. The borrower for 1 other loan (0.7%) is also known to
have, and other borrowers may have, other unsecured debt, including debt
incurred in the ordinary course of business.
When a borrower (or its constituent members) also has one or more
other outstanding loans (even if subordinated, unsecured or mezzanine loans),
the trust is subjected to additional risk. The borrower and/or its constituent
members 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
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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.
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 all of 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 Properties
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.
There is also 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.
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.
As a result of any of the foregoing, the amount available to make
distributions on the certificates could be reduced.
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Appraisals May Inaccurately Reflect the Value of the Mortgaged Properties
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 valuation was performed. In addition, appraisals
seek to establish the amount a typically motivated buyer would pay a typically
motivated seller. Such amount could be significantly higher than the amount
obtained from the sale of a mortgaged property under a distress or liquidation
sale. Information regarding the values of mortgaged properties available to the
depositor is presented in Exhibits A-1, A-2 and B 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 certificateholders may be subject to more risk
because of the decreased:
o number of mortgaged properties;
o diversity of mortgaged property types;
o diversity of geographic locations; and
o number of borrowers and affiliated borrowers.
Classes of the certificates that have a later alphabetical or
numerical designation or a lower payment priority are more likely to be exposed
to this concentration risk than are classes with an earlier alphabetical or
numerical designation or higher priority. This is 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 S, class A-1A or class A-1B 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 or numerical 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 a 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 subtenant 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, to
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. If the mortgaged property did not qualify as foreclosure property
because of certain disqualifying events, any income realized from operation or
disposition of the property would be subject to a 100% prohibited transaction
tax. It is not anticipated that the trust will receive any income from
prohibited transactions.
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 loans 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.
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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 mortgaged 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 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
Four of the mortgaged properties (1.3%) are encumbered by mortgages
on a borrower's leasehold interest under ground leases. Two other mortgaged
properties (0.9%) are encumbered by mortgages on a borrower's leasehold interest
under ground leases and the fee interest of the owner of the 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 interest
upon a lease default, the leasehold mortgagee would lose its security. The
ground lease loans may require the master servicer to give notices or to take
actions in addition to those required for a fee loan in order for the trust to
avail itself of its rights under the related loan. 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.
The execution of a mortgage over its fee interest by an
owner/landlord to secure the debt of a borrower/tenant may be subject to
challenge as a fraudulent conveyance. Among other things, a legal challenge to
the granting of the liens may focus on the benefits realized by the
owner/landlord from the loan. If a court concluded that the granting of the
mortgage was an avoidable fraudulent conveyance, it might take actions
detrimental to the holders of the certificates, including, under certain
circumstances,
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invalidating the mortgage over the fee interest of the owner/landlord.
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
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.
The Trust May Not Control the Termination of Leases Upon Foreclosure
In some jurisdictions, a lease may terminate upon the transfer of a
mortgaged 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/or 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.
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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 controlling class representative has the right to
replace the special servicer. At any given time, the holders of the most
subordinate class of principal balance certificates that has at least 25% of its
initial principal balance still outstanding will control the controlling class
representative. If no class has at least 25% of its initial principal balance
still outstanding, the most subordinate class of principal balance certificates
still outstanding will be the controlling class. 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 result
in less proceeds to the trust than would have been realized if earlier action
had been taken.
It is anticipated that an entity managed by an affiliate of Midland
Loan Services, Inc., the initial special servicer, will acquire most of the
privately offered certificates, including those that have the right to appoint
the initial controlling class representative. Under such circumstances, the
special servicer may have interests that conflict with the interests of the
other holders of the certificates.
Conflicts Between the Trust 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. Midland Loan Services, Inc., one of the sellers, is also the
initial master servicer and special servicer.
Conflicts Between Managers and the 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 controlling class representative. Decisions made by the
controlling class representative may favor the interests of affiliates of such
certificateholders in a manner that could adversely affect the amount and timing
of distributions on the other certificates.
Midland Loan Services, Inc. May Have Conflicts as a Seller and as
Master Servicer. Each seller is obligated to substitute a qualified substitute
loan or to repurchase a loan if:
o there is a defect with respect to the documents relating to the loan, or
o one or more of its representations or warranties concerning the loan in
the related loan purchase agreement are breached,
provided that such defect or breach materially and adversely affects the
interests of the certificateholders and such defect or breach is not cured as
required. The ability of Midland to perform its obligations as master servicer
and special servicer under the pooling and servicing agreement may be
jeopardized if it incurs significant liabilities for the repurchase or
substitution of loans. In addition, since the pooling and servicing
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agreement requires the master servicer to enforce on behalf of the trust the
sellers' obligations to repurchase or substitute loans, Midland may experience a
conflict of interest to the extent that Midland is obligated to repurchase or
substitute a loan as a seller.
Prepayments May Reduce the Yield on Your Certificates
The yield to maturity on your certificates may 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 S certificates is based
upon the principal balance of the certificates with principal amounts, the yield
to maturity on the class S 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 prepayment premium unless the loan is within a specified number of days of the
anticipated repayment 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 percentage 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.
Generally, the loan documents do not require the borrower to pay a
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 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 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 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 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 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:
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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 principal 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 and numerical class
designation. See "Description of the Certificates - Distributions." Losses on
the loans will be allocated to the class D, class C, class B-8, class B-7, class
B-6, class B-5, class B-4, class B-3, class B-2, class B-1, class A-4, class A-3
and class A-2 certificates, in that order, reducing amounts otherwise payable to
each class. Any remaining losses would then be allocated to the class A-1A and
class A-1B certificates, pro rata, based on their then-outstanding class
principal balances.
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 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
hyper-amortization feature by its anticipated repayment date, the effect will be
to increase the weighted average life of your certificates and, if your
certificate was purchased at a discount, may reduce your yield to maturity.
Compensation and Other Payments 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 and the trustee 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.
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A Number of Factors That Affect the Liquidity of Your Certificates 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
Donaldson, Lufkin & Jenrette and Prudential Securities each 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. 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 S, class B-1 and class B-2
certificates are based on a weighted average of certain net mortgage rates 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-1B, class
A-2, class A-3 and class A-4 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 either:
o are implementing modifications to their respective existing systems to the
extent required to cause them to be year 2000 compliant, or
o will acquire computer systems that are year 2000 compliant.
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 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.
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DESCRIPTION OF THE MORTGAGE POOL
General
The mortgage pool will consist of 207 multifamily and commercial
"whole" loans, with an aggregate Cut-off Date Principal Balance of $760,414,266
(the "Initial Pool Balance"), subject to a variance of plus or minus 5%. In
making this count, each Multiple Property Loan was counted as one 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 December 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 5 largest Mortgage
Loans, or groups of Cross-Collateralized Loans, is set forth in Exhibit B.
Additionally, certain information regarding Mortgage Loans secured by Mortgages
encumbering multifamily properties is set forth in Exhibit A-1.
Each Mortgage Loan is evidenced by one or more separate promissory
notes. 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"), which creates 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 Exhibit A-2 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, by any governmental agency or instrumentality, by any private
mortgage insurer or by the depositor, the sellers, the master servicer, the
special servicer, the trustee, the underwriters or any of their respective
affiliates.
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 generally
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 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
matters of public record as of the date of recording of the Mortgage or
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otherwise specified in the applicable lender's title insurance policy,
o purchase money security interests,
o other exceptions and encumbrances on the Mortgaged Property that are
reflected in the related title insurance policies, and
o other matters to which like properties are commonly subject.
Ground Leases
The Mortgages for 4 Mortgaged Properties (1.3%) encumber the related
borrower's leasehold interest in 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. The Mortgages for
2 other Mortgaged Properties (0.9%) encumber both the related borrower's
leasehold interest and the fee interest of the owner/landlord in the related
Mortgaged Property.
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 1.2% of the Initial Pool Balance. See Exhibit A-1 for more information
regarding the Cross-Collateralized Loans.
Multiple Property Loans
For purposes of the statistical information contained in this
prospectus supplement and the Exhibits, a single indebtedness secured by
separate Mortgages encumbering separate Mortgaged Properties is considered as
one Mortgage Loan (collectively, the "Multiple Property Loans").
However, for purposes of providing certain property-specific
information for the Multiple Property Loans, each such Mortgage Loan has been
allocated among its respective Mortgaged Properties based upon:
o relative appraised value;
o relative underwritable cash flow; or
o prior allocations reflected in the related loan documents.
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 and engineering reports were generally
obtained. Environmental site assessments were obtained in connection with 193
Mortgaged Properties (97.5%), and environmental insurance policies were obtained
for the remaining Mortgaged Properties.
Factors typically analyzed in connection with a prospective borrower
include:
o credit history;
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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 or the trustee.
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
Two hundred six of the Mortgage Loans (98.9%) 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.
One hundred ninety-two Mortgage Loans (89.7%) are "balloon loans" that are
expected to have more than 10% of their original principal balance remaining
unpaid at their maturity date. Ten of the Mortgage Loans (9.3%) 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.
Five Mortgage Loans (1.0%) 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 Maturity/ARD LTV Ratio of the mortgage pool is
64.0%. See "Description of the Mortgage Pool--Other Information".
Ten of the Mortgage Loans (9.3%) (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 generally applied in the following order
(although individual loans may have exceptions):
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 may 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" or "ARD" 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
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after its Anticipated Repayment Date. The Revised Interest Rate is typically
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
or succeeding month in which the original maturity date of the
Hyper-Amortization Loan occurs plus 2%.
The Revised Interest Rate may also be subject to a cap equal to its
Initial Interest Rate plus a percentage specified in the related note.
However, for 2 Hyper-Amortization Loans (6.3%), the Revised Interest
Rate is equal to the Initial Interest Rate plus 2.0% and 2.5%, respectively.
Prepayment Provisions
Two hundred six of the Mortgage Loans (99.4%) 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 prepayment.
A borrower does not have to pay a prepayment premium if it pays a
Hyper-Amortization Loan on or after its Anticipated Repayment Date.
With respect to Mortgage Loans other than the Defeasance Loans, the
applicable prepayment premium is generally calculated:
o for 52 Mortgage Loans, 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,
o for 1 Mortgage Loan, after the expiration of the applicable Yield
Maintenance Period, a specified percentage of the amount prepaid, which
percentage will remain constant over time, and
o for 1 Mortgage Loan, no prepayment premium is required after the
expiration of the applicable Lock-out Period.
Exhibit A-1 contains more specific information about the prepayment
premiums for each Mortgage Loan.
Each Mortgage Loan providing for the payment of a yield maintenance
amount in connection with a permitted principal prepayment provides that the
amount will be calculated by one of the following methods:
o subtracting the amount of principal being prepaid from the discounted
present value (using a discount rate determined in accordance with the
note), as of the prepayment date, of the remaining scheduled payments of
principal and interest on that Mortgage Loan from the prepayment date
through its maturity date (including any balloon payment); or
o multiplying:
1. the amount of principal being prepaid; times
2. the difference obtained by subtracting a United States Treasury
Security yield rate (determined in accordance with the note) from
the interest rate applicable to the related Mortgage Loan; times
3. a present value factor calculated using the following formula:
1 - (1+r)^-n
-------------
r
r = the specified yield rate (per item 2. above)
n = number of years, and any fraction thereof, remaining between
the prepayment date and the maturity date of the Mortgage
Loan, or Anticipated Repayment Date for Hyper-Amortization
Loans.
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 require the payment of the applicable prepayment premium for any
prepayment after an event of default (but prior to the sale by the
mortgagee of the Mortgaged Property through foreclosure or otherwise); and
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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 tables included in Exhibit A-2 set 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
For 153 of the Mortgage Loans (75.0%) (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. No defeasance
may occur before the second anniversary of the closing date. 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. For Hyper-Amortization Loans, the
payments on the substitute collateral must be sufficient to pay-off the loan on
its Anticipated Repayment Date. Any excess amounts will be returned to the
borrower.
The master servicer will require the cost, if any, of a defeasance
to be paid by the borrower and not by the trust.
"Due-on-Encumbrance" and "Due-on-Sale" Provisions
The Mortgages 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 master servicer or special servicer, as applicable, 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 generally will 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 master servicer or the special servicer, as applicable, 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 to
accelerate payment of a Mortgage Loan upon, or to withhold its consent to, any
transfer of all or any of a Mortgaged Property or 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.
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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 least of the outstanding principal balance of the loan, full
replacement cost of the Mortgaged Property and 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; and
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.
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
Subject to the rights of the lessor under any ground lease, the
Mortgage Loan documents typically provide that all material 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.
In general, 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.
Delinquencies
No Mortgage Loan was 30 or more days delinquent in respect of any
Monthly Payment as of the Cut-off Date, or during the 12 months immediately
preceding the Cut-off Date.
Prior Bankruptcies
Some of the borrowers under the Mortgage Loans or their affiliates
have been parties to, and/or
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some of the underlying real properties have been the subject of, prior
bankruptcy proceedings.
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.
Exhibit A-1 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 5.9% of the Initial Pool Balance. The 5 largest
individual Mortgage Loans (or sets of Cross-Collateralized Loans) represent in
the aggregate 19.6% 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 6.0% of the Initial Pool Balance. See Exhibit A-1 for further
information regarding these Mortgage Loans.
Environmental Risks
Environmental site assessments were obtained for 193 of the
Mortgaged Properties (97.5%) during the 24-month period ending on September 20,
1999. The assessments for 12 of those Mortgaged Properties (5.0%) were obtained
more than 18 months prior to the Cut-off Date. The assessments for 3 of those
Mortgaged Properties (0.4%) did not satisfy all of the requirements necessary to
be considered "Phase I" environmental site assessments.
No environmental site assessments were obtained for 19 Mortgaged
Properties (2.5%). For each of 6 Mortgaged Properties (2.0%), a "Phase II"
environmental site assessment was recommended but not performed. In general, the
decision not to take either of the foregoing actions with respect to any of
those Mortgaged Properties was based upon the borrower or the lender obtaining
an environmental insurance policy with respect to the Mortgaged Property.
Except as described herein, where an environmental site assessment
disclosed a known or potential material and adverse environmental condition, the
originator required the borrower to:
o escrow funds deemed sufficient to ensure remediation of or to monitor the
environmental issue;
o obtain an environmental insurance policy that covers the environmental
issue; or
o establish an operations and maintenance plan that, if implemented, would
prevent any material and adverse consequences resulting from the
environmental issue.
In some cases, the environmental consultant did not recommend that
any action be taken with respect to a known or potential adverse environmental
condition at a Mortgaged Property or a nearby property because:
o a remediation, under the supervision of an environmental regulatory
agency, had been completed or was currently underway;
o an environmental regulatory agency had issued a "no further action" letter
regarding the condition; or
o a responsible party with respect to the condition had already been
identified.
See "Risk Factors--Environmental Issues Relating to Specific
Properties May Have an Adverse Effect on the Payment of Your Certificates" for
more information about the environmental condition of certain Mortgaged
Properties.
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
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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:
o refinance the Mortgage Loan using the Mortgaged Property as collateral, or
o sell the Mortgaged Property to a third party.
It may also affect the value of the Mortgaged Property that may be realized upon
any foreclosure.
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.
Environmental Insurance
Depositor Group Policy.
In connection with the issuance of the certificates, the depositor
will obtain a secured creditor impaired property group policy covering
environmental matters with respect to 14 Mortgaged Properties (6.1%). In
general, that group policy provides coverage for the following losses, subject
to no deductibles and, further, to the coverage limits discussed below:
o if during the term of the policy, adverse environmental conditions exist
at levels above legal limits on an insured Mortgaged Property and the
borrower defaults under the related Mortgage Loan, the insurer will
indemnify the trust for the outstanding principal balance of the related
Mortgage Loan on the date of the default, together with accrued interest;
o if the trust becomes legally obligated to pay as a result of a claim first
made against the trust and reported to the insurer during the term of the
policy, for bodily injury, property damage or clean-up costs resulting
from adverse environmental conditions on, under or emerging from an
insured Mortgaged Property, the insurer will cover that claim; and
o if the trust enforces the related mortgage and the related insured
Mortgaged Property is acquired by the trust, the insurer will thereafter
pay clean-up costs for adverse environmental conditions at levels above
legal limits which exist on or under that Mortgaged Property.
The coverage limits for this secured creditor impaired property
group policy are as follows:
o the per occurrence limit will equal 125% of the principal balance of the
related Mortgage Loan, and
o the aggregate limit will equal 40% of the aggregate principal balance of
all the covered Mortgage Loans.
Column Individual Policies.
Additionally, with respect to 19 Mortgage Loans (2.5%) to be
acquired by the depositor from
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Column Financial, Inc., secured creditor impaired property policies were
obtained covering environmental matters with respect to the related Mortgaged
Properties. In general, each of these policies provide coverage for the
following losses, subject to the exclusions from coverage discussed under
"--Environmental Insurance--General Information" below:
o if during the term of the policy, adverse environmental conditions exist
at levels above legal limits on the related insured Mortgaged Property and
the borrower defaults under the related Mortgage Loan, the insurer will
indemnify the trust for the outstanding principal balance of the related
Mortgage Loan on the date of the default, together with accrued interest;
o if the trust becomes legally obligated to pay as a result of a claim first
made against the trust and reported to the insurer during the term of the
policy, for bodily injury, property damage or clean-up costs resulting
from adverse environmental conditions on, under or emerging from the
related insured Mortgaged Property, the insurer will cover that claim; and
o if the trust enforces the related mortgage and the related insured
Mortgaged Property is acquired by the trust, the insurer will thereafter
pay clean-up costs for adverse environmental conditions at levels above
legal limits which exist on or under that Mortgaged Property;
provided that the trustee, the master servicer and/or the special servicer first
became aware of those adverse environmental conditions during the term of the
policy and the appropriate party reported those conditions to the government in
accordance with applicable law.
General Information.
Each of the secured creditor impaired property policies described
above, including the group policy, require that the appropriate party associated
with the trust report a claim during the term of the related policy. None of
those policies includes coverage for asbestos and lead-based paint. Furthermore,
none of those policies pays for unreimbursed servicing advances.
The premium for each of the secured creditor impaired policies
described above, including the group policy, has been or, as of the date of
initial issuance of the certificates, will be paid in full. The insurer under
each of those policies is either American International Specialty Lines
Insurance Company or Commerce and Industry Insurance Co. Both of those insurers
are member companies of the American Insurance Group, Inc.
Geographic Concentration
Mortgaged Properties located in California and Texas secure
approximately 15.0% and 11.6%, respectively, of the Initial Pool Balance.
Additionally, Mortgaged Properties located in each of New York, Florida,
Michigan, Oklahoma and Massachusetts secure at least 5%, but less than 10%, of
the Initial Pool Balance. The occurrence of adverse economic conditions in any
such jurisdiction may affect repayments of the related Mortgage Loans or the
value of such 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 Exhibit A-2.
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. Where a Mortgaged Property is operated as a permitted
non-conforming use, an analysis was generally conducted as to whether existing
replacement cost hazard insurance or, if necessary, supplemental "law and
ordinance coverage" would, in the event of a material casualty, be sufficient to
satisfy the entire Mortgage Loan or, taking into account the cost of the repair,
be sufficient to pay down that Mortgage Loan to a level that the remaining
collateral would be adequate security for the remaining loan amount.
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 Exhibit A-2. Generally, these owners or major tenants do not have
investment-grade credit ratings. The major tenants generally occupy their
premises pursuant to leases which may require them to pay all applicable real
property taxes, maintain
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insurance over the improvements thereon and maintain the physical condition of
such improvements. For 44 of the Mortgaged Properties (16.4%), the owner or
major tenant occupies 50% or more of the Mortgaged Property.
Other Information
Each of the tables in Exhibit A-2 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 Exhibit A-2 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 Exhibit A-1. For a brief summary of
certain of the terms of the 5 largest Mortgage Loans, or groups of
Cross-Collateralized Loans, see Exhibit B. Certain information regarding
Mortgage Loans secured by Mortgages encumbering multifamily properties is listed
in Exhibit A-1. Finally, certain information regarding the Reserve Accounts for
each Mortgage Loan is set forth in Exhibit A-1.
For purposes of the tables in Exhibit A-2 and for the information
included in this prospectus supplement and in Exhibits A-1 and B 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 Exhibit A-2 and the information in Exhibits A-1 and B, the "Debt Service
Coverage Ratio" or "DSCR" for any Mortgage Loan (or group of
Cross-Collateralized Loans) is the ratio of either the "Underwritable Cash Flow"
estimated to be produced by the related Mortgaged Property or Properties or the
Most Recent Net Operating Income, as described below, to the annualized amount
of debt service payable under that Mortgage Loan (or that group of
Cross-Collateralized Loans). All debt service coverage ratio information
included in this prospectus supplement excludes the 1 Mortgaged Property subject
to a credit tenant lease.
"Most Recent DSCR" for a Mortgage Loan (or group of
Cross-Collateralized Loans) is the ratio of its Most Recent Net Operating Income
to the annualized amount of debt service payable under that Mortgage Loan (or
group of Cross-Collateralized Loans).
"U/W DSCR" or "Underwritable Debt Service Coverage Ratio" for a
Mortgage Loan (or group of Cross-Collateralized Loans) is the ratio of its
Underwritable Cash Flow calculated in connection with the underwriting of the
Mortgage Loan to the annualized amount of debt service payable under that
Mortgage Loan (or 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 adjustments to particular
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items in the 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. These adjustments were 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. Such adjustments may not have been consistent with generally
accepted accounting principles. 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 one or more affiliates of the borrower, the
rents under some of such leases have been adjusted to reflect market rents for
similar properties. In some instances, lease rentals were adjusted to take into
account rent increases scheduled to occur within the next 12 months. 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.
The amount of any underwritten or contractual recurring replacement
reserve amounts and/or underwritten or contractual leasing commissions and
tenant improvements for each of the Mortgaged Properties is shown in the table
titled "Engineering Reserves and Recurring Replacement Reserves" on Exhibit A-1.
The underwritten or contractual recurring replacement reserve amounts shown on
Exhibit A-1 are expressed as dollars per unit in the case of multifamily rental
properties and manufactured housing communities, a percentage of total
departmental revenues in the case of hospitality properties and dollars per
leasable square footage in the case of other commercial properties.
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.
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 Principal Balance of a Mortgage Loan (or the aggregate Cut-off Date
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.
All loan-to-value ratio information included in this prospectus supplement does
not include the 1 Mortgaged Property subject to a credit tenant lease.
References to "Maturity/ARD Balance" is the principal balance of a
Mortgage Loan (or the aggregate principal balance of a group of
Cross-Collaterialized Loans) anticipated to be outstanding at its maturity date,
or for a Hyper-Amortization Loan, at its Anticipated Repayment Date (calculated
based on the Maturity Assumptions and a 0% CPR).
References to "Maturity/ARD LTV" or "Maturity/ARD LTV Ratio" are
references to the ratio, expressed as a percentage, of the Maturity/ARD Balance
of a Mortgage Loan (excluding the Mortgage Loans expected to fully amortize over
their remaining term) 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.
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 or the trustee 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
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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 Principal Balances of the Mortgage
Loans.
Most Recent Appraised Value
References to "Most Recent Appraised Value" for each of the
Mortgaged Properties is the "as is" or, if provided, the "as cured" value
estimate reflected in the most recent appraisal or market valuation obtained by
or otherwise in the possession of the related seller. The "cured value" is
generally calculated as the sum of:
o the"as is" value set forth in the related appraisal or market valuation,
plus
o the estimated costs (as of the date of the appraisal or market valuation),
if any, of implementing any deferred maintenance required to be undertaken
immediately or in the short term under the terms of the related Mortgage
Loan.
In general, the amount of these estimated costs is based on:
o an estimate by the individual preparing the appraisal or market valuation,
o an estimate by the related borrower,
o the estimate set forth in the property condition assessment conducted in
connection with the origination of the related Mortgage Loan, or
o a combination of these estimates.
Leasable Square Footage
References to "S.F." or "Sq.Ft." means, in the case of any Mortgaged
Property that is a commercial property (other than a hospitality property), the
estimated square footage of its gross leasable area, as reflected in information
provided by the related borrower or in the appraisal or market valuation on
which the Most Recent Appraised Value of the Mortgaged Property is based.
Units
References to (1) in the case of any Mortgaged Property that is a
multifamily rental property, its estimated number of apartments, regardless of
the number or size of rooms in the apartments, and (2) in the case of any
Mortgaged Property that is a manufactured housing community, its estimated
number of pads to which a mobile home can be hooked up, in each case, as
reflected in information provided by the related borrower or in the appraisal or
market valuation on which the Most Recent Appraised Value is based.
Rooms
References to "Rooms" means, in the case of any Mortgaged Property
that is a hospitality property, its estimated number of rooms and/or suites,
without regard to the size of the rooms or the number or size of the rooms in
the suites, as reflected in information provided by the related borrower or in
the appraisal or market valuation on which the Most Recent Appraised Value of
the property is based.
Occupancy Rate At Underwriting
References to "Occupancy Rate at Underwriting" or "Occupancy Rate at
U/W" generally mean the percentage of leasable square footage, in the case of
Mortgaged Properties that are commercial properties (other than hospitality
properties), or units, in the case of Mortgaged Properties that are multifamily
rental properties and manufactured housing communities, of the subject Mortgaged
Properties that were occupied or leased as of the approximate date of the
original underwriting of the related Mortgage Loan or such later date as we
considered appropriate, in any event as reflected in information provided by the
related borrower or in the appraisal or market valuation on which the Most
Recent Appraised Value of the Mortgaged Property is based. Information shown in
this prospectus supplement with respect to any weighted average of
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occupancy rates at underwriting excludes hospitality properties from the
relevant calculations.
Major Tenant
References to "Major Tenant" means any one of the top three tenants
(based on the net rentable area of its space) of a commercial property that
leases at least 10% or more of the net rentable area of the Mortgaged Property.
Most Recent Operating Statement Date
References to "Most Recent Operating Statement Date" means, with
respect to each of the Mortgage Loans, the date indicated on Exhibit A-1 as the
"most recent operating statement date" with respect to the Mortgage Loan. In
general, this date is the end date of the period covered by the latest available
annual or, in some cases, partial-year operating statement for the related
Mortgaged Property.
Most Recent Net Operating Income
References to "Most Recent Net Operating Income" means, with respect
to each of the Mortgaged Properties, its total cash flow that was available for
annual debt service on the related Mortgage Loan, calculated as the most recent
revenues less most recent expenses for that Mortgaged Property. For purposes of
calculating the most recent net operating income for each of the Mortgaged
Properties:
o "most recent revenues" are the revenues received, or annualized or
estimated in certain cases, in respect of a Mortgaged Property for the
12-month period ended as of the most recent operating statement date,
based upon the latest available annual or, in some cases, partial-year
operating statement and other information furnished by the related
borrower, and
o "most recent expenses" are the expenses incurred, or annualized or
estimated in certain cases, for a Mortgaged Property for the 12-month
period ended as of the most recent operating statement end date, based
upon the latest available annual or, in some cases, partial-year operating
statement and other information furnished by the related borrower.
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. Midland is an
affiliate of PNC Capital Markets, Inc. See "Master Servicer and Special
Servicer".
Seventy-three of the Mortgage Loans (30.5%) were originated by
Midland and sold to the Midland Commercial Mortgage Loan Owner Trust II, a
business trust organized under the laws of the State of Delaware. The holders of
the Midland Owner Trust certificates will sell their certificates to an
affiliate of Donaldson, Lufkin & Jenrette Securities Corporation on or before
the closing date. On or before the closing date, that affiliate of Donaldson,
Lufkin & Jenrette Securities Corporation will terminate the Midland Owner Trust
and transfer to the depositor the Mortgage Loans that were in the Midland Owner
Trust. 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.
An additional 70 Mortgage Loans (25.1%) were also originated by
Midland. Midland will sell these Mortgage Loans directly to the depositor on the
closing date.
Column Financial, Inc.
Column is a corporation organized under the laws of Delaware, and
its principal offices are in Atlanta, Georgia. Column underwrites and closes
multifamily rental and commercial mortgage loans through its own origination
offices and various correspondents in local markets across the country. Loan
underwriting and quality control procedures are undertaken principally in
regional offices located in:
o Bethesda, Maryland;
o Chicago, Illinois;
o Cleveland, Ohio;
o Dallas, Texas;
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o Denver, Colorado;
o Hollywood, Florida;
o Houston, Texas
o Los Angeles, California;
o Nashville, Tennessee;
o New York, New York;
o Newport Beach, California
o Norwalk, Connecticut;
o Philadelphia, Pennsylvania;
o San Francisco, California;
o Seattle, Washington; and
o Tampa, Florida
Column has closed more than $7.5 billion of commercial and
multifamily mortgage loans since beginning operations in 1993. Column is a
wholly-owned subsidiary of DLJ Mortgage Capital, Inc., which in turn is a
wholly-owned subsidiary of Donaldson, Lufkin & Jenrette, Inc., the parent of
Donaldson, Lufkin & Jenrette Securities Corporation.
Column Financial, Inc. originated 58 of the Mortgage Loans (43.7%).
Column acquired an additional 6 Mortgage Loans (0.7%) from Union Capital
Investments, LLC.
Union Capital Investments, LLC is a limited liability company, with
its principal offices in Atlanta, Georgia. Union Capital is primarily involved
in conduit lending, and it originates, underwrites and closes first mortgage
loans secured by all types of multifamily rental and commercial real estate
throughout the United States. The principals of Union Capital have been involved
in the conduit lending field since January 1993.
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.
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.
Other representations and warranties may also be required by the Rating Agencies
or the purchasers of the privately offered certificates. 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 is true and correct in all
material respects as of the Cut-off Date.
2. The seller owns the Mortgage Loans and is conveying them free and clear of
any pledge, lien or security interest.
3. No scheduled payment of principal and interest under any Mortgage Loan is
30 days or more past due nor has been during the preceding 12-month
period.
4. The related Mortgage constitutes a valid and enforceable first lien upon
the related Mortgaged Property, subject to:
o creditors' rights and general principles of equity,
o liens for current real estate taxes and assessments not yet
delinquent or accruing interest or penalties,
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<PAGE>
o exceptions and exclusions specifically referred to in the lender's
title insurance policy,
o purchase money security interests,
o other matters to which like properties are commonly subject,
o the rights of tenants to remain at the related Mortgaged Property
following foreclosure, and
o the lien for another Mortgage Loan which is cross-collateralized
with such Mortgage Loan.
5. The related Mortgage has not been satisfied, cancelled, rescinded or
subordinated in whole or in material part.
6. The seller is not aware of any proceeding pending for the total or partial
condemnation of or affecting the related Mortgaged Property.
7. The related Mortgaged Property is or will be covered by an American Land
Title Association (or an equivalent 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.
8. The proceeds of the Mortgage Loan have been fully disbursed (subject to
funds being held back pending the satisfaction of certain leasing, repair
or other conditions), and there is no obligation for future advances with
respect to such Mortgage Loan.
9. Each note, Mortgage and other agreement of the borrower with respect to
the Mortgage Loan is its legal, valid and binding obligation, enforceable
in accordance with its terms, subject to:
o the non-recourse provisions of the loan;
o applicable state anti-deficiency or market value limit deficiency
legislation;
o bankruptcy, insolvency, reorganization and state laws related to
creditors' rights; and
o general principles of equity.
With respect to each Mortgage Loan originated by Union Capital,
Union Capital made certain representations and warranties in connection with the
sale of the Mortgage Loan to Column. These representations and warranties and
the related obligations of Union Capital for breach are being assigned by Column
to the depositor and by the depositor to the trustee under the pooling and
servicing agreement. The representations and warranties made by Union Capital
will not be identical to those made by the sellers. The representations and
warranties made by Union Capital are in addition to the representations and
warranties made by Column with respect to the Mortgage Loans it acquired from
Union Capital.
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 that 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. See
"The Pooling and Servicing Agreement--Assignment of the Mortgage Loans".
Subject to the discussion below, the applicable mortgage loan purchase agreement
provides that, if a breach or default that materially and adversely affects the
interests of the trustee or the certificateholders 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 the affected 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 and excluding any Deferred Interest) 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
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<PAGE>
expenses arising out of the enforcement of the repurchase
obligation, or
2. substitute a Qualified Substitute Mortgage Loan for the affected Mortgage
Loan and pay the trustee a shortfall amount equal to the difference
between the Repurchase Price of the affected 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 of 1986.
However, if there is a breach of representations and warranties with
respect to a Mortgage Loan by both Union Capital and Column, then:
o Column will have an obligation to effect a cure, repurchase or replacement
(if applicable) only if Union Capital fails to cure the breaches or
repurchase or replace the affected Mortgage Loan within the time allowed
under its loan purchase agreement, and
o Column's time period to effect a cure, repurchase or replacement will be
limited to 90 days following the end of Union Capital's time period to
cure the breach or repurchase or replace the Mortgage Loan.
This extension of the period within which Column is obligated to
effect a cure, repurchase or replacement does not apply if the breach would
cause the Mortgage Loan to not be a "qualified mortgage" within the meaning of
the REMIC provisions of the Internal Revenue Code of 1986. If Union Capital
repurchases or replaces a Mortgage Loan and the price or additional cash amount
which Union Capital is required to pay is less than the applicable Repurchase
Price or shortfall amount, Column is required to pay the deficiency out of its
own funds.
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);
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 and a current
debt service coverage ratio not less than the then current 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 of 1986;
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
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<PAGE>
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 controlling
class representative has approved the substitution in its reasonable
discretion.
If one or more mortgage loans are substituted for one or more
deleted Mortgage Loans, then:
o the amounts described in clause (1) will be determined on the basis of
total principal balances,
o the rates described in clause (2) above will be determined on a weighted
average basis, and
o 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 Qualified
Substitute Mortgage Loan meets all of the requirements of the above definition
and shall send the certification to the trustee and the controlling class
representative.
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.
In addition to the above remedies for breach of representations and
warranties, the controlling class representative may require a seller to
establish a cash reserve or provide a letter of credit in the amount of 20% of
the principal balance of any Mortgage Loan if the related Mortgage, assignment
of leases, certain financing statements or certain assignments in favor of the
trustee remain missing, unrecorded or unfiled 18 months or more after the
closing because such document was never provided in the proper form, was lost or
was returned unrecorded or unfiled as a result of a defect, but only if such
omission would materially and adversely affect the enforcement of the related
lien or security interest or the value of the Mortgage Loan at such time. If the
seller fails to cure such defects or repurchase or replace the related Mortgage
Loan when required by the related loan purchase agreement, the cash reserve or
letter of credit for the related Mortgage Loan may under certain circumstances
be applied to reimburse the trust for any expenses directly incurred as a result
of such document defects, including the costs of enforcing the seller's
obligations or curing such document defects.
If a seller defaults on its obligation to substitute, repurchase,
cure or provide a cash reserve or letter of credit, 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 of 1986, REMIC I, REMIC II and
REMIC III may be disqualified.
MASTER SERVICER AND SPECIAL 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.
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<PAGE>
Midland will serve as the master servicer for the trust fund. In
addition, Midland and its affiliates are the seller with respect to 143 of the
Mortgage Loans (55.6%). 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 September 30, 1999, Midland was servicing approximately 14,900
commercial and multifamily loans with a principal balance of approximately $42.5
billion. The collateral for these loans is located in all 50 states, the
District of Columbia, Puerto Rico and Canada. Approximately 10,400 of the loans,
with a total principal balance of approximately $32.8 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
----- -------- ----- -------- ----- --------
(Dollar amounts in thousands)
<S> <C> <C> <C> <C> <C> <C>
Total portfolio ........ 2,782 $ 6,557,024 3,644 $13,129,936 6,493 $29,656,681
Period of delinquency(1)
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(2) ... 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%
======== =========== ======== =========== ======== ===========
</TABLE>
(1) 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.
(2) Includes pending foreclosures.
S-47
<PAGE>
As of September 30,
-----------------------------------------------------
1998 1999
------------------------ -------------------------
By No. By Dollar By No. By Dollar
of Amount Of Amount
Loans of Loans Loans of Loans
----- -------- ----- --------
(Dollar amounts in thousands)
Total portfolio ........ 5,858 20,529,878 6,978 31,587,048
Period of delinquency(1)
30-59 days ........... 61 43,090 28 40,830
60 to 89 days ........ 26 37,620 18 15,418
90 days or more(2) ... 96 52,300 100 62,354
REO .................. 14 35,367 16 48,221
------- ---------- ------- ----------
Total delinquent loans . 197 168,377 162 166,823
====================================================
Percent of portfolio ... 3.4% 0.8% 2.3% 0.5%
====================================================
(1) 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.
(2) Includes pending foreclosures.
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.
Midland'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 sellers and the underwriters make no
representation or warranty as to its accuracy.
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<PAGE>
DESCRIPTION OF THE CERTIFICATES
General
The certificates are issued under the pooling and servicing
agreement and will consist of 20 classes:
o Class S Certificates
o Class A-1A Certificates
o Class A-1B Certificates
o Class A-2 Certificates
o Class A-3 Certificates
o Class A-4 Certificates
o Class B-1 Certificates
o Class B-2 Certificates
o Class B-3 Certificates
o Class B-4 Certificates
o Class B-5 Certificates
o Class B-6 Certificates
o Class B-7 Certificates
o Class B-8 Certificates
o Class C Certificates
o Class D Certificates
o Class E Certificates
o Class R-I Certificates
o Class R-II Certificates
o Class R-III Certificates
We are only offering the class S, A-1A, A-1B, A-2, A-3, A-4, B-1 and
B-2 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 additional 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 and interest 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, and
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.
The class E certificates will evidence undivided interests in a
grantor trust consisting of collections of Deferred Interest on the Mortgage
Loans. The principal balance certificates and the interest only certificates
will not receive any Deferred Interest collected on the Mortgage Loans.
As described under "Material Federal Income Tax Consequences", the
class R-I, R-II and R-III certificates will constitute "residual interests" in a
REMIC. We do not anticipate that the residual certificates will receive any
distributions of cash from the trust.
Principal Balances and Notional Amounts
Upon initial issuance, the respective classes of principal balance
certificates will have the class principal balances set forth in the table on
page S-4, which may in the aggregate vary by up to 5%.
The principal 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 principal 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 S certificates are interest-only certificates, have no
principal balances and are not entitled to distributions of principal. The total
notional amount of the class S certificates as of any date is equal to 100% of
the total principal balance of the Principal Balance Certificates.
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<PAGE>
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 that 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 rate for the class A-1A certificates is fixed at
7.1100% per annum.
The pass-through rates for the class A-1B, class A-2, class A-3 and
class A-4 certificates for each interest accrual period will equal the lesser of
(1) the initial pass-through rate for that class, and (2) the weighted average
of the Net Mortgage Rates for the related distribution date, weighted on the
basis of the Mortgage Loans' respective Stated Principal Balances immediately
before the distribution date.
The pass-through rates for the class B-1 and class B-2 certificates
for each interest accrual period will equal the weighted average of the Net
Mortgage Rates for the related distribution date, weighted on the basis of the
Mortgage Loans' respective Stated Principal Balances immediately before the
distribution date.
The pass-through rates for the class B-3, class B-4 and class B-5
certificates for each interest accrual period will equal the lesser of (1)
7.1000% and (2) the weighted average of the Net Mortgage Rates for the related
distribution date, weighted on the basis of the Mortgage Loans' respective
Stated Principal Balances immediately before the distribution date. The
pass-through rates for the class B-6, class B-7, class B-8, class C and class D
certificates for each interest accrual period will equal the lesser of (1)
6.8500% and (2) the weighted average of the Net Mortgage Rates for the related
distribution date, weighted on the basis of the Mortgage Loans' respective
Stated Principal Balances immediately before the distribution date.
The pass-through rate on the class S certificates for the initial
interest accrual period will equal 0.8340%. For each subsequent interest accrual
period, the pass-through rate on the class S certificates will generally be a
per annum rate equal to the excess of:
o the weighted average of the Net Mortgage Rates for the related
distribution date, weighted on the basis of the Mortgage Loans' respective
Stated Principal Balances immediately before the distribution date, over
o the weighted average of the pass-through rates for the principal balance
certificates for that interest accrual period, weighted on the basis of
the respective principal balances thereof immediately before the
distribution date.
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 pass-through rates.
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 on an actual/360 basis (the
"Interest Reserve Loans") will be adjusted to an annual rate generally equal to:
o a fraction, expressed as a percentage, the numerator of which is, subject
to adjustment as
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<PAGE>
described below, 12 times the amount of interest that accrued or would
have accrued with respect to that Mortgage Loan on an actual/360 basis
during the related interest accrual period, based on its Stated Principal
Balance immediately preceding that distribution date and its mortgage
interest rate in effect as of December 1, 1999, and the denominator of
which is the Stated Principal Balance of the Mortgage Loan immediately
prior to that distribution date, minus
o the related master servicer fee and the trustee fee.
Notwithstanding the foregoing, if the subject distribution date
occurs during January (except during a leap year) or February, then, in the case
of any particular Interest Reserve Loan, the numerator of the fraction described
in the first bullet point of the preceding paragraph will be decreased by any
Interest Reserve Amount with respect to that Mortgage Loan that is transferred
from the Collection Account to the Interest Reserve Account during that month.
Furthermore, if the subject distribution date occurs during March, then, in the
case of any particular Interest Reserve Loan, the numerator of the fraction
described in the first bullet point of the preceding paragraph will be increased
by any Interest Reserve Amounts with respect to that Mortgage Loan that are
transferred from the Interest Reserve Account to the Distribution Account during
that month.
See "The Pooling and Servicing Agreement--Servicing Compensation and
Payment of Expenses".
Distributions
Method, Timing and Amount
Payments on the offered certificates are scheduled to occur monthly,
commencing in January 2000. The distribution date for each month will be the
later of:
o the 10th calendar day of that month, or if that day is not a business day,
then the next business day, and
o the fourth business day after the determination date for the month.
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 on or 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 principal or notional
balances.
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, excluding:
1. Monthly Payments collected but due on a due date after the related
Collection Period,
2. prepayment premiums and Deferred Interest (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 or the trustee 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
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<PAGE>
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 January 2000 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 fourth
calendar day of the month or, if that day is not a business day, the first
business day before that day.
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 those classes in accordance
with, the Distributable Certificate Interest for that class for that
distribution date;
2. to pay principal from the Principal Distribution Amount for that
distribution date:
o first to the holders of the class A-1A certificates; and
o second to the holders of the class A-1B certificates;
in each case, up to an amount equal to the lesser of:
(a) the then-outstanding principal balance of the class; and
(b) the remaining portion of the Principal Distribution Amount.
However, principal payments will be made to the class A-1A and class A-1B
certificates up to an amount equal to, and pro rata based on, their
outstanding class principal balances:
o if the principal 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-1A and class A-1B certificates, up
to an amount equal to, and pro rata as among those classes in accordance
with the amount of Realized Losses and Expense Losses, if any, previously
allocated to the class A-1A and class A-1B certificates and for which no
reimbursement has previously been paid; plus all unpaid interest on such
amounts (compounded monthly) at the pass-through rates for those 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 and numerical class designation:
1. distributions of interest, up to an amount equal to the Distributable
Certificate Interest in respect of such class of certificates for that
distribution date;
2. if the principal balance of the class A-1A and class A-1B certificates and
each other class of subordinate certificates, if any, with an earlier
alphabetical and numerical class designation has been reduced to zero,
distributions of principal, up to an amount equal to the lesser of:
(a) the then-outstanding principal balance of that 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 principal
balance of the class); and
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3. distributions for the purpose of reimbursement, up to an amount equal to
all Realized Losses and Expense Losses, if any, previously allocated to
such class and for which no reimbursement has previously been paid; plus
all unpaid interest on such amounts (compounded monthly) at the
pass-through rates for those classes.
"Alphabetical and numerical order" is determined first by
alphabetical order, and then if the alphabetical designations are the same, by
numerical order.
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 principal 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 principal 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 Cutoff 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 Class Interest Shortfall, if any, 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 (or, in the case of the class
S certificates, at a rate equal to the weighted average of the
pass-through rates for the principal balance certificates, weighted
on the basis of their respective principal balances).
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.
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.
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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 a Mortgage Loan as to which the related Mortgaged Property has become
an REO Property, 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.
Any prepayment premium will be distributed as follows. The holders
of each class of offered certificates receiving principal distributions on a
distribution date will be entitled to an amount equal to the product of:
o the prepayment premium available for distribution, multiplied by
o a fraction (not more than one or less than zero):
1. the numerator of which equals the excess, if any, of the
pass-through rate applicable to that class of offered certificates,
over 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,
multiplied by
o a fraction (not more than one or less than zero):
1. the numerator of which is equal to the aggregate distributions of
principal to be made with respect to that class of offered
certificates on that distribution date, and
2. the denominator of which is equal to the Principal Distribution
Amount for that distribution date.
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.
All prepayment premiums not distributed to holders of offered
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 and the trustee are required to make P&I Advances on the REO Mortgage
Loan, if proceeds received from the
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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 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 120 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 60 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, if any, of:
1. 90% of the appraised or otherwise estimated value of the related
Mortgaged Property or Properties, plus the amount of any escrows or
reserves for the Mortgage Loan that are not related to taxes or
insurance,
over
2. the sum of:
(a) all unpaid interest on the principal balance of the Mortgage
Loan (without giving effect to any default rates or Revised
Interest Rates), but only if not previously advanced by the
master servicer or the trustee,
(b) all unreimbursed Advances for the Mortgage Loan, plus interest
at the Advance Rate, and
(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 and are not the subject of an Advance).
Within 60 days after the special servicer becomes aware of an
Appraisal Reduction Event, the special servicer must:
o obtain 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 at its discretion, conduct an internal property valuation 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 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.
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 master 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 master servicer will adjust the
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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 controlling class
representative may at any time request the special servicer to obtain (at the
controlling class representative's expense) an Updated Appraisal. The master
servicer will recalculate the Appraisal Reduction each time an Updated Appraisal
is obtained. The master servicer will deliver a copy of each Updated Appraisal
to the trustee and the controlling class representative within 15 days after it
receives the Updated Appraisal from the special servicer. Upon request, the
trustee will provide each Updated Appraisal to any holder of the privately
offered certificates.
The Appraisal Reduction will be eliminated upon full payment or
liquidation of the Mortgage Loan or if the Mortgage Loan becomes a Corrected
Mortgage Loan and the borrower makes three consecutive monthly debt service
payments.
An Appraisal Reduction:
o will reduce the master servicer's and the trustee'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 Principal Balances
If immediately following distributions on any distribution date the
Stated Principal Balance of the Mortgage Pool is less than the total principal
balance of the principal balance certificates, then the principal balances of
the various classes of the principal balance certificates will be reduced as
follows:
o First, the principal balances of the various classes of the subordinate
certificates will be reduced, sequentially in reverse alphabetical and
numerical order beginning with the class D certificates. The principal
balance of the lowest class will be reduced until:
o the deficit is reduced to zero; or
o the principal balance of that class is reduced to zero.
o Any deficit remaining after reducing the principal balance of the most
subordinate class to zero will be applied to reduce the principal balance
of the next lowest class, and so forth until the deficit is eliminated or
until the total principal balance on all the subordinate certificates is
reduced to zero.
If any portion of the deficit remains after the total principal
balance of all the subordinate certificates is reduced to zero, then the class
principal balances of the class A-1A and class A-1B certificates will be
reduced, in proportion to their remaining class principal balances, until:
o the deficit is reduced to zero; or
o the principal balance of the class A-1A and A-1B 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
principal balances allocate Realized Losses and Expense Losses among the
certificates.
Any reduction in the principal balance of any class of principal
balance certificates also reduces the notional amount of the interest only
certificates.
Within a given class of principal balance 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:
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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, excluding
Deferred Interest and default interest in excess of the mortgage
interest rate;
3. all unreimbursed Servicing Advances; 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.
"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, if these costs are not covered by a
Servicing Advance or paid by a borrower,
o certain unanticipated, non-Mortgage Loan specific expenses of the Trust
Fund, including:
1. indemnities and reimbursements to the trustee, 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 Foreclosure or the Sale of Defaulted Loans"), if
these costs are not covered by a Servicing Advance, 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 (less related master servicer
fees) 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 servicer 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".
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Scheduled Final Distribution Date
The "Scheduled Final Distribution Date" for a class of certificates
is the distribution date on which its principal 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, except that Hyper-Amortization Loans are assumed
to pay on their Anticipated Repayment Dates, or
o modification or extension of any loan.
It is very unlikely that these assumptions will hold true.
The Scheduled Final Distribution Date for each class of the offered
certificates is the distribution date in the month and year listed for such
class in the "Scheduled Final Distribution Date" column in the table on the
cover page. These Scheduled Final Distribution Dates 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 voluntary and involuntary
prepayments) of the Mortgage Loans may exceed the scheduled rate of payments,
and may 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.
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
and numerical 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-1A and class A-1B certificateholders
of principal equal to the initial class principal balance of those
classes.
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 and numerical order.
Realized Losses and Expense Losses are allocated to the class A-1A
and class A-1B certificates in proportion to their principal balances.
No losses are allocated to the class S certificates, but any
reduction in the principal balance of a class of principal balance certificates
will reduce the notional amount of the class S certificates.
No other form of credit enhancement is provided.
Optional Termination
If on any distribution date the total Stated Principal Balance of
the Mortgage Loans is less than 1% of the Initial Pool Balance, 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 master servicer,
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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 as to which the special servicer has determined all payments
or recoveries have been made, and
2. loans as to which the Mortgaged Property has become an REO Property,
o accrued and unpaid interest on those Mortgage Loans to the due date in the
Collection Period when the termination occurs,
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 option exercise 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 98% to the holders of the classes of principal balance certificates in
proportion to the principal balances of these classes, and
o 2% to the holders of the interest only 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 except in
the limited circumstances described below.
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 those systems or indirectly
through organizations that are participants in those 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 Cedelbank or Euroclear 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 Cedelbank or Euroclear cash account only as of the business day
following settlement in DTC.
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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 nor any paying
agent is responsible for records of ultimate beneficial ownership or for
payments to ultimate beneficial owners.
So long as any class of offered certificates are held in book-entry
form:
o actions by certificateholders will be taken by DTC upon instructions from
its participants, who in turn receive instructions directly or indirectly
from the beneficial owners of those certificates, and
o distributions, notices, reports and statements to certificateholders will
be sent to DTC or its nominee as the registered holder of those
certificates for ultimate distribution to beneficial owners of those
certificates 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 by the beneficial owners of those
certificates.
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 beneficial
owners. Upon becoming registered holders of certificates, those beneficial
owners 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:
o a limited purpose trust company organized under New York law,
o a "banking corporation" within the meaning of the New York Banking Law,
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 that
maintain accounts with DTC include securities brokers and 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
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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 whose account offered 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
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 on or after
January 1, 2000. 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 its participants,
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 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
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simultaneous electronic book-entry delivery against payment. Transactions may
now be settled in any of 40 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 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 the offered certificates in minimum
denominations of $5,000 initial principal balance or notional amount (or in any
whole dollar amount in excess of $5,000). 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 within a reasonable period of time.
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, plus accrued interest;
o the rate and timing of payments of principal on the certificate; and
o the aggregate amount of distributions on the certificate.
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Rate and Timing of Principal Payments
The yield to holders of the class S 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 principal balance
or notional amount of those certificates. As described in this prospectus
supplement, the Principal Distribution Amount for each distribution date
generally will be distributed to the holders of the class A-1A and/or class A-1B
certificates until their principal balance is reduced to zero, and then will be
distributed to the holders of each remaining class of principal balance
certificates, sequentially in alphabetical and numerical order of class
designation, in each case until the principal balance of each class of
certificates is, in turn, reduced to zero.
Reductions in the principal balance of the principal balance
certificates will reduce the notional amount of the class S certificates.
The rate and timing of principal payments made in reduction of the
principal balance of the offered certificates will be 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, including any hyper-amortization
of a Hyper-Amortization Loan following its Anticipated Repayment Date,
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 converting to another
fixed rate loan with a lower interest rate.
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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 yield on 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 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 principal 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 principal 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 principal balance of any principal balance
certificate purchased at a discount or premium (or, in the case of an interest
only certificate, applied in reduction of its 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".
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Balloon Payments and Anticipated Repayment Date Payments
Most of the Mortgage Loans are either balloon loans that will have
substantial balloon payments due at their stated maturities or are
Hyper-Amortization Loans that will have a substantial balance still owing on
their Anticipated Repayment Dates. A borrower's ability to pay a balloon
payment, or pay-off a loan on its Anticipated Repayment Date, 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, or to pay-off an
Hyper-Amortization Loan on its Anticipated Repayment Date, will lengthen the
average life of the certificates. See the Remaining Terms to Stated Maturity
Table in Exhibit A-2 for additional information regarding the maturity dates of
the Mortgage Loans.
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 Additional Trust Fund Expenses, including interest on Advances, 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 and numerical order in
each case to the extent of amounts otherwise payable to the class. Any such
shortfalls will be allocated to the holders of the class A-1A and class A-1B
certificates on a pro rata basis.
Realized Losses and Expense Losses will be:
o allocated to the principal balance certificates in reverse alphabetical
and numerical order of their class designation, and
o applied to reduce the principal 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 of an investor's investment in any class, but especially the
subordinate certificates with the latest alphabetic and numeric 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 S 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 principal balance
certificates.
The pass-through rates for the offered certificates (other than the
class A-1A certificates) are sensitive to changes in the weighted average of the
Net Mortgage Rates.
The weighted average of the pass-through rates for the principal
balance certificates will fluctuate based on the relative sizes of the principal
balances of those classes.
The weighted average of the Net Mortgage Rates will fluctuate over
the lives of the offered 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 S, class B-1 and
class B-2 certificates will be adversely affected.
In addition, the pass-through rates for the class A-1B, class A-2,
class A-3 and class A-4 certificates may not exceed the weighted average of the
Net Mortgage Rates.
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Delay in Payment of Distributions
Monthly distributions will be made no earlier than the 10th 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
offered 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.
The table in Exhibit E 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. That 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:
o expressed in 32nds (e.g. 4-03 means 4.09375%) as a percentage of the
initial aggregate notional amount of the class S certificates, and
o exclusive of accrued interest, and
o that the initial pass-through rate and the initial notional amount for the
interest only certificates 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 in Exhibit E. Discrepancies between assumed and actual characteristics and
performance underscore the hypothetical nature of that table. The depositor has
provided that table to give you a general sense of the sensitivity of yields in
varying prepayment scenarios.
The pre-tax yields in the table in Exhibit E 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 those certificates, including accrued interest. These
monthly rates were then converted to semi-annual corporate bond equivalent
rates. Such calculation does not take into account:
o Prepayment Interest Shortfalls, or
o the interest rates at which you may be able to reinvest distributions on
the interest only certificates.
Accordingly, the table in Exhibit E 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 table
in Exhibit E, 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 that
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 interest only certificates.
You should make your investment decision based on your assessment of
the anticipated rates of prepayment under a variety of scenarios.
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 principal
balance of that class by
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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 principal
balance of that class.
The weighted average life of any principal balance 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 principal 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 those
loans. As used in each of the tables in Exhibit D, the column headed "0%"
assumes that none of the Mortgage Loans is prepaid before maturity, except that
each Hyper-Amortization Loan is assumed to pay on its Anticipated Repayment
Date. The columns headed "25%", "50%", "75%"and"100%" 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 a class of offered
certificates (other than the interest only 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 any class of offered
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 in Exhibit D and E have been prepared on the basis of the
following assumptions (collectively, the "Maturity Assumptions"):
o the Initial Pool Balance is approximately $760,414,266,
o the initial principal balance or notional amount for each class of offered
certificates is the amount on the cover page,
o the pass-through rate for each class of certificates is as described in
this prospectus supplement,
o the scheduled Monthly Payments for each Mortgage Loan are the amounts
listed in Exhibit A-1,
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:
1. no prepayments are received for any Mortgage Loan during a Lock-out
Period or Yield Maintenance Period, and
2. Hyper-Amortization Loans are paid 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 10th day of each month,
commencing in January 2000,
o the certificates are settled with investors on December 7, 1999,
o the only expenses payable out of the trust are the master servicer and the
trustee fees, 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 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
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preparing the tables in Exhibit D, 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 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 class principal balances (and weighted average lives)
shown in the tables in Exhibit D. 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 tables in
Exhibit D indicate:
o the weighted average life of each class of the offered certificates (other
than the interest only certificates), and
o the percentages of the initial principal 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, starting after the expiration of lockout, defeasance and
yield maintenance periods.
THE POOLING AND SERVICING AGREEMENT
The certificates will be issued under a pooling and servicing
agreement to be dated as of December 1, 1999, among the depositor, the master
servicer, the special servicer and the trustee.
You may obtain a free copy of the pooling and servicing agreement
(without exhibits) by writing to:
PNC Mortgage Acceptance Corp.
210 West 10th Street, 6th Floor
Kansas City, Missouri 64105
Attention: Lawrence D. Ashley
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. Each seller must also deliver the following documents, among
others, for each of its Mortgage Loans:
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 any 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;
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;
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);
o originals or copies of all assumptions, modifications and substitution
agreements in those instances where the terms or provisions of the
mortgage have been modified or the Mortgage Loan assumed; and
o a copy of each assignment in favor of the trustee of each effective UCC
financing statement.
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If a seller cannot deliver any original recorded document described
above or a copy of such document showing evidence of having been recorded on the
closing date, the seller will deliver it promptly after receipt from the
recording office, and in any case shall use best efforts to deliver such
documents not later than 180 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 and the controlling class representative. Ninety days after the
closing date, the sellers will make an inquiry with each appropriate recording
office regarding the status of each unreturned assignment and will notify the
trustee of the results of their inquires. The scope of the trustee's review of
each mortgage file is, in general, limited solely to confirming that certain of
the documents listed above have been received in the manner specified. None of
the trustee, the master servicer, the special servicer or the custodian is under
any duty or obligation to inspect, review or examine any of the documents
relating to the Mortgage Loans to determine whether such document is valid,
effective, enforceable, in recordable form or otherwise appropriate for the
represented purpose.
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
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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 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 Determination Date for 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.
If the master servicer fails to make a required Advance and the
trustee is aware of the failure, the trustee must make the Advance.
However, each of the master servicer and the trustee 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. Neither the master servicer nor the trustee is required to make any
Advance that it determines is not so recoverable. If the master servicer makes
such 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 or the trustee, such as:
o property operating statements,
o rent rolls,
o property inspection reports, and
o engineering reports.
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The trustee 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.
If the special servicer agrees to a modification of a Mortgage Loan
that forgives loan payments or other amounts that the master servicer or the
trustee previously advanced, and the master servicer or the trustee determines
that no other source of payment or reimbursement for such Advances is available
to it, such Advances will be deemed to be nonrecoverable.
The master servicer and the trustee will each be entitled to recover
any P&I Advances made by it, out of its own funds, from collections on the
Mortgage Loan as to which the Advance was made. If the master servicer or the
trustee determines that an Advance previously made is not so recoverable, that
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 on any Mortgage Loan and late
payment charges collected on the related Mortgage Loan. If those 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 until after the
grace period for the related Mortgage Loan has expired. In addition, no interest
will accrue for a P&I Advance if the borrower pays the delinquent Monthly
Payment on or before the business day before the related distribution date.
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, including default interest and Deferred
Interest, and any prepayment premiums, late fees and late payment charges;
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.
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The master servicer need not deposit into the Collection Account any
payments in the nature of 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 the
Collection Account, it may withdraw the mistaken deposit from the Collection
Account at any time.
Interest Reserve Account
The master servicer 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 master servicer 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 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 master
servicer will not make the deposit if the applicable Monthly Payment has not
been paid or advanced. The master servicer 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 master servicer 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 or the Interest Reserve Account);
o any prepayment premiums and Deferred Interest 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 for funds that will be held for more than 30 days, an account or accounts
maintained with a depository institution or trust company the long-term
unsecured debt obligations of which are related "AA" or better by Fitch
(or, if not so rated by Fitch, then otherwise approved by Fitch), and
"AA-" or better by Standard & Poor's (or, if not so rated by Standard &
Poor's, then otherwise approved by Standard & Poor's); or
o for funds that will be held for 30 days or less, an account or accounts
maintained with a depository institution or trust company, the short-term
unsecured debt obligations of which are rated "F-1+" or better by Fitch
(or, if not so rated by Fitch, then otherwise approved by Fitch), and
"A-1" or better by Standard & Poor's (or, if not so rated by Standard &
Poor's, then otherwise approved by Standard & Poor's); 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. for state-chartered institutions, subject to regulations regarding
fiduciary funds on deposit 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
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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, Deferred Interest and prepayment premiums to the
Distribution Account,
o to pay or reimburse itself or the trustee for Advances and interest on
Advances, that payment or reimbursement to be made from the sources
described under "--Advances" above,
o to pay the unpaid portion of the master servicing fee and special
servicing fee (in the case of the 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 any 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 and/or the
depositor 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 master servicer or the special servicer will exercise or waive
"due-on-sale" clauses in Mortgage Loan documents in accordance with the
servicing standard. However, the master servicer or the special servicer, as
applicable, may waive a "due-on-sale" clause only if it first obtains written
confirmation from:
o Standard & Poor's, with respect to any Mortgage Loan, group of
cross-collateralized Mortgage Loans or group of Mortgage Loans with
affiliated borrowers that has a then outstanding principal balance equal
to or greater than the lesser of $20 million and 5% of the then
outstanding principal balance of all of the Mortgage Loans, and
o Fitch, with respect to any Mortgage Loan that at such time is one of the
10 largest loans in the trust,
that the waiver will not result in a qualification, downgrade or withdrawal of
the rating then assigned by that Rating Agency to any class of certificates. The
master servicer or 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).
See "--The Controlling Class Representative" for additional
limitations on the ability of the master servicer and the special servicer to
waive "due-on-sale" clauses.
If the master servicer or 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 master servicer or the special
servicer, as applicable, will enter into an assumption or substitution agreement
only if the credit status of the prospective new owner is in compliance with:
o the master servicer's or the special servicer's, as applicable, regular
commercial mortgage origination or servicing standards and criteria,
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o the terms of the Mortgage Loan, and
o any other standards set by the master servicer or the special servicer, as
applicable, 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 or special servicer may retain as additional
servicing compensation any assumption fees paid by the borrower or the new
owner. 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
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 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 master servicer or the special servicer, as applicable, may in
accordance with the servicing standard either exercise or waive the trust fund's
rights under the "due-on-encumbrance" clause. However, the master servicer or
the special servicer, as applicable, may consent to the creation of any lien or
encumbrance only if it first obtains written confirmation from each of the
Rating Agencies that such consent will not result in a qualification, downgrade
or withdrawal of the rating then assigned by that Rating Agency to any class of
certificates.
The master servicer or 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).
See "--The Controlling Class Representative" for additional
limitations on the ability of the master servicer and the special servicer to
waive "due-on-encumbrance" clauses.
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.
The special servicer may at its option assume the master servicer's obligation
to inspect some or all of the Mortgaged Properties. Each Mortgaged Property and
REO Property will be inspected at least once every two years. If a Mortgage Loan
has a then current principal balance of at least $2 million or is a Specially
Serviced Mortgaged Loan, the related Mortgaged Property will be inspected at
least once every year. The annual inspections described above will be done at
the expense of the servicer performing the inspection. In addition, the special
servicer will inspect any Mortgaged Property if the related borrower is 60 or
more days delinquent in the payment of a Monthly Payment or other obligation. If
the last annual inspection was performed more than nine months ago, the special
servicer will perform the inspection at its expense. Otherwise, the master
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servicer will advance the cost of any such inspection as a Servicing Advance
(unless the Advance would be nonrecoverable). 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 controlling class
representative 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.
Until the conditions listed in the next sentence are satisfied, 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. 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, containment, clean-up or remediation
could be required under current federal, state or local law or regulation
or, if any such hazardous materials are present for which such action
could be required, after consultation with an environmental consultant,
that it would be in the trust fund's best economic interest to take such
actions.
The cost of any environmental assessments, as well as the cost of
any remedial, corrective or other further action contemplated by the prior
paragraph will be advanced as a Servicing Advance, unless the advance would not
be recoverable.
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. 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, which must occur before the close of the third taxable year following the
taxable year in which the trust acquired the property. The Internal Revenue
Service has the authority to grant a three year extension of this period. The
principal balance of the loan will be reduced by Net REO Proceeds allocated to
it as a recovery of principal.
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 expense of the legal opinion will be covered by a Servicing
Advance, unless the advance would not be recoverable. Generally, REMIC I will
not be taxed on income received on Mortgaged Property which constitutes "rents
from real property,"
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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." Finally, any income from the sale of REO
Property that is held by REMIC I as a dealer in property is not considered "rent
from real property."
If the REO Property remains "foreclosure property", any income that
is not "rent from real property" is subject to tax at the highest corporate rate
(currently 35%). REMIC I may also be subject to state and local taxes on such
amounts. In addition, certain income from REO Property may be subject to a
"prohibited transactions" tax. Any such income would be subject to a 100% tax;
however, REMIC I does not expect any income from any REO Property to be subject
to this 100% tax. See "Material Federal Income Tax Consequences--Taxation of the
REMIC--Prohibited Transactions Tax and Other Taxes" in the prospectus.
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
o the sale would be in the best economic interests of the trust fund.
The special servicer must give the trustee and the controlling class
representative written notice that it is contemplating a sale at least 10
business days before considering any further action. The controlling class
representative may purchase the loan or property, directly or through an
affiliate, for cash equal to the Repurchase Price.
If the controlling class representative (or a designated affiliate)
fails to purchase the loan or property within 30 days after the controlling
class representative 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 controlling class representative, 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:
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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 that does not affect the maturity date, interest rate, principal balance,
amortization term or payment frequency (each, a "Money Term") of, or materially
impair the collateral securing, any loan that is not a Specially Serviced
Mortgage Loan.
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, however, "--The Controlling Class Representative".
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 Lockout Period.
However, the special servicer may not permit a borrower to extend
the maturity date to a date later than:
o two years before the Rated Final Distribution Date,
o 20 years before any ground lease that secures the loan expires, or
o 60 months after the original maturity date for the Mortgage Loan.
Modifications of a Mortgage Loan that forgive principal or interest
(other than Deferred Interest and, in some cases, default 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
Norwest Bank Minnesota, National Association will act as trustee.
The address of the trustee's corporate trust office is:
11000 Broken Land Parkway
Columbia, Maryland 21044-3562
Attn: Corporate Trust Services
(CMBS)--PNC Mortgage Acceptance
Corp. Commercial Mortgage Pass-Through
Certificates, 1999-CM1
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All requests relating to the transfer of certificates should be
delivered to the trustee at:
Norwest Center
Sixth and Marquette-MAC#N9303-121
Minneapolis, Minnesota 55479-0113
Attn: Corporate Trust Services
(CMBS) -PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through
Certificates Series 1999-CM1
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
master servicer will appoint the successor trustee. Before appointing a
successor trustee, the master servicer must obtain confirmation from Fitch that
the successor trustee's appointment will not adversely affect the rating then
assigned by Fitch to any of the certificates. The resigning trustee must pay any
cost of obtaining the confirmation from Fitch. However, if the
certificateholders remove the trustee without cause, the costs and expenses of
the trustee incurred in connection with the removal and the cost of obtaining
the confirmation from Fitch will be paid as an Additional Trust Fund Expense. If
the successor trustee is not appointed within 30 days after the notice of
resignation, the resigning trustee may petition a court of competent
jurisdiction to appoint a successor trustee.
The depositor or the master servicer may remove the trustee if,
among other things:
o the trustee becomes ineligible to continue as such under the pooling and
servicing agreement,
o the trustee becomes incapable of acting,
o the trustee is adjudged bankrupt or insolvent,
o a receiver is appointed for the trustee or its property, or
o any public officer takes charge or control of the trustee or its property.
The holders of certificates evidencing a majority of the total
voting rights may remove the trustee upon written notice to the master servicer,
the special servicer, the depositor and the trustee.
Resignation or removal of the trustee is effective only when the
successor trustee 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 .0023%
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 will indemnify the trustee and its 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 or for any expense or liability specifically required to be borne by the
trustee in the pooling and servicing agreement. 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 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 and its 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 by the master
servicer or the special servicer, as the case may be, of its 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
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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 and the
trustee is aware of the failure, the trustee must make the Advance unless it
deems the Advance nonrecoverable. See "--Advances".
Except for funds held by the trustee, the trustee 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 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.
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
Exhibit A-1 based on the then outstanding principal balance of the loan. The
master servicing fee is calculated on a 30/360 basis.
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 or late fees (to the
extent not offset against advance interest on the related Mortgage Loan),
loan service transaction fees, extension fees, demand fees, modification
fees, assumption fees, beneficiary statement charges and similar fees and
charges (but excluding prepayment premiums or default interest),
o all insufficient funds check charges (including insufficient funds 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 Controlling Class Representative to Remove Special Servicer
Midland will be the initial special servicer. The controlling class
representative 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 controlling class representative 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.
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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 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:
1. become the subject of any bankruptcy, insolvency or similar
proceeding,
2. admitted in writing the inability to pay its debts as they come due,
or
3. 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:
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 controlling class representative 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 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:
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o the repurchase of a Mortgage Loan as described under "Description of the
Mortgage Pool--Representations and Warranties; Repurchase",
o the termination of the trust as described under "Description of the
Certificates--Optional Termination", or
o the purchase of any defaulted Mortgage Loan by the controlling class
representative, the master servicer or special servicer as described under
"The Pooling and Servicing Agreement--Realization Upon Mortgage
Loans--Sale of Specially Serviced Mortgage Loans and REO Properties".
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.
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 modification, restructuring or workout
negotiated by the special servicer evidenced by a signed writing 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, and
o if permitted under the Mortgage Loan, late payment charges or late fees
(to the extent not offset against advance interest on the related Mortgage
Loan), 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.
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.
The Controlling Class Representative
Selection
Holders of more than 50% of the principal balance of the Controlling
Class may appoint a controlling class representative to represent their
interests. If at any time the holders of the Controlling Class have not
appointed a controlling class representative, the holder owning the largest
percentage of the principal balance of the Controlling Class will be the
controlling class representative.
The "Controlling Class" is the most subordinate class of principal
balance certificates that still has at least 25% of its original principal
balance outstanding. If no class has at least 25% of its initial principal
balance still outstanding, the most subordinate class of principal balance
certificates still outstanding will be the controlling class.
Rights and Powers
The controlling class representative has the right to direct the
special servicer (and the master servicer solely with respect to clause 2 below)
about the following matters:
1. foreclosure or similar conversion of the ownership of properties securing
Specially Serviced Mortgage Loans that are in default, including acquiring
an REO Property,
2. any material amendment, waiver or modification of any Mortgage Loan and
any amendment, waiver or modification of a Specially Serviced Mortgage
Loan,
3. 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",
4. acceptance of a discounted payoff,
5. determination to bring an REO Property into compliance with environmental
laws or to address hazardous materials located at an REO Property,
6. release of collateral, other than in accordance with the terms or upon
satisfaction of a loan,
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7. acceptance of substitute or additional collateral, other than in
accordance with the terms of a loan,
8. any waiver of a "due-on-sale" or "due-on-encumbrance" clause, and
9. acceptance of an assumption agreement releasing a borrower from liability
under a loan.
The special servicer or the master servicer, as applicable, may not
take any of the above actions unless the controlling class representative has
approved such action in writing within 10 business days after being notified of
the proposed action and provided with all reasonably requested information. The
controlling class representative will be considered to have approved any such
action if the controlling class representative does not notify the special
servicer or the master servicer, as applicable, within 10 business days.
In addition, except as otherwise described below, the controlling
class representative may direct the special servicer to take, or refrain from
taking, such actions as the controlling class representative may consider
advisable or as to which provision is otherwise made in the pooling and
servicing agreement.
Notwithstanding the foregoing, no advice, direction or objection
given or made by the controlling class representative, as contemplated by either
of the two preceding paragraphs, may:
o require or cause the special servicer or the master servicer to violate
applicable law, the terms of any Mortgage Loan or any other provision of
the pooling and servicing agreement including the special servicer's or
the master servicer's obligation to act in accordance with the servicing
standard described in this prospectus supplement;
o a result in certain adverse tax consequences for the trust;
o expose the trust, the depositor, the master servicer, the special
servicer, the trustee or any of their respective affiliates, directors,
officers, employees or agents, to any material claim, suit or liability;
or
o materially expand the scope of the master servicer's or special servicer's
responsibilities under the pooling and servicing agreement.
The special servicer and the master servicer are to disregard any such advice,
direction or objection that does so. In addition, unless the pooling and
servicing agreement provides otherwise, the special servicer will not be
required to seek approval from the controlling class representative for any
actions listed in clauses 1, 2 (but only for a waiver, modification or amendment
involving a Money Term) and 3 above that it seeks to take with respect to any
particular Specially Serviced Mortgage Loan if:
o the special servicer has, as described above, notified the controlling
class representative in writing of various actions that the special
servicer proposes to take with respect to the workout or liquidation of
that Mortgage Loan, and
o for 60 days following the first notice, the controlling class
representative has objected to all of those proposed actions and has
failed to suggest any alternative actions that the special servicer
reasonably considers to be consistent with the servicing standard.
You should consider the effects that the rights and powers of the
controlling class representative discussed above could have on the actions of
the special servicer.
Limitation on Liability of Controlling Class Representative
The controlling class representative 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 controlling class representative:
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 controlling
class representative because it acted solely in the interests of the Controlling
Class. The special servicer generally must keep confidential all advice,
directions, recommendations and/or
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objections received from the controlling class representative.
Sub-Servicers
The master servicer and special servicer may each delegate its
servicing obligations to one or more third-party sub-servicers. However, the
special servicer must obtain the approval of Fitch before it may retain
sub-servicers for Mortgage Loans with outstanding principal balances greater
than or equal to 25% or more of the then outstanding principal balance of all
the Mortgage Loans. 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. On the closing
date, only one Mortgage Loan (1.1%) will be serviced by a sub-servicer. Except
for the sub-servicing agreement related to this Mortgage Loan, 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:
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 sub-servicing agreement for the one Mortgage Loan that will be
sub-serviced on the closing date provides that the sub-servicer may only be
terminated if it is in default under the subservicing agreement.
The master servicer and special servicer are solely responsible for
the fees owed to any sub-servicer they retain, even if those 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 upon
request and otherwise make available electronically the statement to the
certificateholders, the depositor, the paying agent, the underwriters, the
master servicer, the controlling class representative and each Rating Agency.
The trustee will use the form of monthly distribution statement included as
Exhibit C to this prospectus supplement. The information will include the
following:
o For each class of certificates and for each $1,000 of initial principal
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 principal 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 each class of offered certificates for
the distribution date, other than the class A-1A certificates;
o The amount of any P&I Advances by the master servicer or the trustee
included in the amounts distributed to the certificateholders;
o Realized Losses and Expense Losses and their allocation to the principal
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, and
4. as to which foreclosure proceedings have been commenced;
o For each delinquent Mortgage Loan:
1. the amount of the P&I Advances made on the distribution date; and
2. 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
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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;
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.
The master servicer will provide the trustee with the following Commercial
Mortgage Securities Association Standard Investor Package reports for inclusion
in the monthly distribution statement:
o Property File,
o Watch List Report,
o Delinquent Loan Status Report,
o REO Status Report,
o Comparative Financial Status Report,
o Historical Loan Modification Report,
o Historical Loss Estimate Report,
o Operating Statement Analysis Report, and
o NOI Adjustment Worksheet.
Due to the time required to collect all the necessary data and enter
it onto the master servicer's computer system, the master servicer is not
required to provide these reports before the distribution date in March 2000.
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 of 1986.
In addition, the trustee will forward or make available 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, which information the
trustee may attach to the monthly distribution statement.
The distribution date statements referred to above may be obtained
electronically from the trustee as follows:
1. by facsimile through the trustee's fax-on-demand service by calling (301)
815-6610; or
2. on the Internet at www.ctslink.com/cmbs.
For assistance with the above mentioned services, you may call (301)
815-6600. The Trustee may require registration and the acceptance of a
disclaimer in connection with providing access to its internet website.
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 and the controlling class representative about any other occurrences of
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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.
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 controlling class representative,
the trustee and the Rating Agencies. The master servicer and the special
servicer will also make such information available to any person that certifies
to the trustee that it is a certificateholder, an owner of a beneficial interest
in a book entry certificate, or a potential owner of a certificate or an
interest in a certificate. 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
o annual accountants' reports.
See "Servicing of the Mortgage Loans - Evidence of Compliance" in the
prospectus.
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 controlling class representative will
not have to pay any such charge.
Filings with the SEC
Within 15 days after each distribution date, the trustee will file
with the Securities and Exchange Commission, a Form 8-K with a copy of the
related distribution date statement. Before January 30, 2000, the trustee will
file a Form 15 Suspension Notification for the trust, if applicable. Before
March 30, 2000, the trustee will file a Form 10-K for the trust, in substance
conforming to industry standards.
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 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.
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
respective portions of 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 of 1986;
o the class A-1A, class A-1B, class S, class A-2, class A-3, class A-4,
class B-1, class B-2, class B-3, class B-4, class B-5, class B-6, class
B-7, class B-8, class C and class D certificates will be,
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or will represent ownership of, REMIC "regular interests";
o the class R-I, class R-II and class R-III certificates, respectively, will
be the sole "residual interest" in the related REMIC; and
o the class E certificates will represent beneficial interests in the
portion of the trust assets consisting of Deferred Interest, which portion
will be treated as a grantor trust for federal income tax purposes.
The certificates representing regular interests generally will be
treated as newly originated debt instruments for federal income tax purposes.
Holders of those 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-1A,
class A-1B, class A-2, class A-3 and class A-4 certificates are not expected to
be treated as having been issued with original issue discount for federal income
tax reporting purposes. The class B-1 certificates are expected to be treated as
having been issued with de minimis original issue discount for federal income
tax purposes. The class S and class B-2 certificates are expected to be deemed
to have been issued with original issue discount.
The IRS has issued regulations under Sections 1271 to 1275 of the
Internal Revenue Code of 1986 generally addressing the treatment of debt
instruments issued with original issue discount. Holders of the offered
certificates should be aware, however, that those regulations and Section
1272(a)(6) of the Internal Revenue Code of 1986 do not adequately address
certain issues relevant to, or are not applicable to, prepayable securities such
as the offered certificates. We recommend that holders consult with their own
tax advisor concerning the tax treatment of the offered certificates.
The trust intends to treat the class S certificates as having no
"qualified stated interest". Accordingly, the class S 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 S
certificates over their respective issue prices (including interest accrued
prior to the closing date, 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 S
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, holders of a class S certificate may be entitled to a
loss deduction if it becomes certain that such holder will not recover a portion
of 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,
the Prepayment Assumption (as defined in the prospectus) is that the Mortgage
Loans will prepay at the rate of 0% CPR, except that Hyper-Amortization Loans
are assumed to pay on their Anticipated Repayment Date. 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 A-1B, class A-2, class A-3, class
A-4, class B-1 and class B-2 certificates will qualify as "variable rate
instruments" under treasury regulations, the trustee will assume 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 and--Interest Weighted
Certificates" 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.
Generally, the offered certificates will be "real estate assets"
within the meaning of Section
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856(c)(5)(B) of the Internal Revenue Code of 1986. In addition, interest
(including original issue discount, if any) on the offered certificates will be
interest described in Section 856(c)(3)(B) of the Internal Revenue Code of 1986.
As of the closing date, 41.3% of the Mortgage Loans are secured by
real estate used for residential or certain other purposes prescribed in Section
7701(a)(19)(C) of the Internal Revenue Code of 1986, and consequently the
offered certificates will be treated as assets qualifying under that section to
only a limited extent. Accordingly, investment in the offered certificates may
not be suitable for thrift institutions seeking to be treated as a "domestic
building and loan association" under Section 7701(a)(19)(C) of the Internal
Revenue Code of 1986. The determination as to the percentage of the REMIC's
assets that constitute assets described in the foregoing sections of the
Internal Revenue Code of 1986 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 times required by applicable Treasury
regulations.
Finally, the offered certificates will be treated as "qualified
mortgages" for another REMIC under Section 860G(a)(3)(C) of the Internal Revenue
Code of 1986 and "permitted assets" for a "financial asset securitization
investment trust" under Section 860L(c) of the Code.
If the trust collects a prepayment premium on a mortgage loan, it is
anticipated that the prepayment premium will be reported as ordinary income and
allocated to the class of certificates entitled to the premium. For federal
income tax reporting purposes, the premium or charge will be reported as income
upon actual receipt by the master servicer. The correct characterization of and
timing for recognition of, prepayment premiums is not entirely clear.
Certificateholders should consult their tax advisors concerning the tax
treatment of prepayment premiums.
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 CALIFORNIA AND TEXAS
The following discussion summarizes certain legal aspects of
Mortgage Loans secured by real property in California (15.0%) and Texas (11.6%)
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.
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.
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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.
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 of 1986
(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 of 1986 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. Accordingly, 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 of 1986 and exempt from
taxation under section 501(a) of the Internal Revenue Code of 1986 is subject to
the prohibited transaction rules set forth in Section 503 of the Internal
Revenue Code of 1986.
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 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".
Certain fiduciary and prohibited transaction issues arise only if
the assets of the trust fund are "plan assets" for the purposes of Part 4 of
Title I of ERISA and Section 4975 of the Internal Revenue Code of 1986. Whether
the assets of the trust fund will be plan assets at any time will depend on a
number of factors, including the portion of any class of certificates (as
discussed below under "--Plan Asset Regulation") that is held by "benefit plan
investors" (as defined in U.S. Department of Labor Regulation Section
2510.3-101).
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
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Internal Revenue Code of 1986, 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 person who provide
investment advice directly or indirectly for a fee with respect to the assets of
the entity (or any affiliate of either such 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 each of the underwriters an
individual prohibited transaction exemption (Prohibited Transaction Exemption
No. 90-83, as amended by Prohibited Transaction Exemption No. 97-34, to
Donaldson, Lufkin & Jenrette Securities Corporation, Prohibited Transaction
Exemption No. 90-32, as amended by Prohibited Transaction Exemption No. 97-34,
to Prudential Securities Incorporated, and Prohibited Transaction Exemption No.
98-07 to PNC Capital Markets, Inc.). These exemptions generally exempt from the
application of the prohibited transaction provisions of Section 406(a) and (b)
and 407(a) of ERISA, and the excise taxes imposed on such prohibited
transactions pursuant to Section 4975(a) and (b) of the Internal Revenue Code of
1986, 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. Donaldson, Lufkin & Jenrette Securities Corporation,
2. any person directly or indirectly, through one or more intermediaries,
controlling, controlled by or under common control with Donaldson, Lufkin
& Jenrette Securities Corporation, 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 PNC Capital Markets, Inc. and
Prudential Securities Incorporated.
Each of the individual prohibited transaction exemptions sets 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, at the time of acquisition by the Plan the senior certificates 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, in addition to the trustee, consists of:
o the underwriters,
o the depositor,
o the master servicer,
o the special servicer,
o any sub-servicer,
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,
and
o any and all affiliates of any of the above persons.
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
those obligations; and
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o the master servicer, the special servicer or any sub-servicer must
represent not more than reasonable compensation for that person's
services under the pooling and servicing agreement and reimbursement
of that 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 subordinated 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 each of the Rating Agencies, on the closing date, the third condition will be
satisfied for the senior certificates on the closing date. As the initial
trustee is not an affiliate of any other members of the restricted group, 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 those other investment pools must have been rated in one
of the three highest categories of Standard & Poor's, Duff & Phelps,
Moody's or Fitch for at least one year prior to the Plan's acquisition of
the senior certificates; and
o certificates in those 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 a
class of senior certificates, at least 50% of that 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 of 1986
by reason of Section 4975(c) of the Internal Revenue Code of 1986 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 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 individual prohibited transaction 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.
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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 of 1986 ("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 definitive 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 aprohibited transaction within the meaning
of Section 406 or 407 of ERISA, Section 4975 of the Internal Revenue
Code of 1986 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 of 1986.
If you purchase a beneficial interest in a book-entry subordinate certificate,
you will be deemed to have made the representation in the first bullet point
above.
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 Section III of Prohibited
Transaction Class Exemption 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 of 1986, including the prohibited transaction restrictions imposed
by ERISA and the related excise taxes imposed by the Internal Revenue Code of
1986, for transactions involving an insurance company general account. This
exemption is in addition to any exemption that may be available under Prohibited
Transaction Class Exemption 95-60 for the purchase and holding of offered
certificates by 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
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.
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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.
LEGAL INVESTMENT
The class S, A-1A, A-1B and A-2 certificates will be "mortgage
related securities" for purposes of the Secondary Mortgage Market Enhancement
Act of 1984 ("SMMEA") so long as they are rated in one of the two highest rating
categories by at least one nationally recognized statistical rating
organization. The class A-3, A-4, B-1 and B-2 certificates will not be "mortgage
related securities" for purposes of SMMEA.
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.
In addition, some states have enacted legislation overriding the
legal investment provisions of SMMEA.
All depository institutions considering investment in the offered
certificates should review the Federal Financial Institutions Examination
Council's Supervisory Policy Statement on the Selection of Securities Dealers
and Unsuitable Investment Practices (to the extent adopted by their respective
regulatory authorities), setting forth, in relevant part, certain investment
practices deemed to be unsuitable for an institution's investment portfolio, as
well as guidelines for investing in certain types of mortgage related
securities.
There may be other restrictions on the ability of certain investors
to purchase the offered certificates or to purchase offered certificates
representing more than a specified percentage of the investor's assets. 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.
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PLAN OF DISTRIBUTION
Subject to the underwriting agreement, each underwriter has agreed
to purchase the principal or notional amounts of offered certificates
(expressed, in the case of each class thereof, as a percentage of the total
principal balance or notional amount) set forth opposite its name below:
<TABLE>
<CAPTION>
Underwriter Class S Class A-1A Class A-1B Class A-2
<S> <C> <C> <C> <C>
Donaldson, Lufkin & Jenrette Securities Corporation 100.0% 75.6% 74.6% 100.0%
PNC Capital Markets, Inc. -- 12.2 12.7 --
Prudential Securities Incorporated -- 12.2 12.7 --
----- ----- ----- -----
Total 100.0% 100.0% 100.0% 100.0%
===== ===== ===== =====
<CAPTION>
Underwriter Class A-3 Class A-4 Class B-1 Class B-2
<S> <C> <C> <C> <C>
Donaldson, Lufkin & Jenrette Securities Corporation 100.0% 100.0% 100.0% 100.0%
PNC Capital Markets, Inc. -- -- -- --
Prudential Securities Incorporated -- -- -- --
----- ----- ----- -----
Total 100% 100% 100% 100%
</TABLE>
The underwriting agreement provides that the obligation of the
underwriters to pay for and accept delivery of the offered certificates is
subject to, among other things, the receipt of certain legal opinions and to the
conditions, among others, that no stop order suspending the depositor's
registration statement shall be in effect, and that no proceeding for the
purpose of obtaining a stop order shall be pending before or threatened by the
Securities and Exchange Commission.
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 to the
underwriters will be made in book-entry form through the facilities of DTC
against payment therefor on or about December 2, 1999, which is the 7th business
day following the date of pricing of the certificates. The underwriters intend
to settle with investors on December 7, 1999. 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 depositor also has been advised by Donaldson, Lufkin & Jenrette
and Prudential Securities that they presently intend to make a market in the
offered certificates. They have no obligation to do so, however, and any market
making may be discontinued at any time.
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<PAGE>
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 Sidley & Austin, New York, New York.
RATINGS
It is a condition of the issuance of the offered certificates that
they receive the following credit ratings from Standard & Poor's Ratings
Services, a division of The McGraw-Hill Companies, Inc. and Fitch IBCA, Inc.
(the "Rating Agencies"):
Class S&P Fitch
Class S AAAr AAA
Class A-1A AAA AAA
Class A-1B AAA AAA
Class A-2 AA AA
Class A-3 A A
Class A-4 A- A-
Class B-1 BBB BBB
Class B-2 BBB- BBB-
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 December 2032 (the
"Rated Final Distribution Date"). This date is the distribution date occurring
three years after the end of the amortization term for the mortgage loan with
the longest remaining amortization term on the closing 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 tax attributes of the offered certificates or of the trust,
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.
S-94
<PAGE>
The ratings thus address credit risk and not prepayment risk.
As described in this prospectus supplement, the amounts payable on
the interest only certificates consist only of interest and prepayment premiums.
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
ratings received on the interest only certificates from Standard & Poor's and
Fitch. The total notional amount used to calculate interest on the 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 amount, but only the
obligation to pay interest timely on whatever the proper notional amount may be
from time to time. Accordingly, potential purchasers of the interest only
certificates should evaluate the ratings of the interest only certificates
differently from similar ratings on other types of securities.
Standard & Poor's assigns the additional symbol of "r" to highlight
classes of securities that Standard & Poor's believes may experience high
volatility or high variability in expected returns due to non-credit risks. The
absence of an "r" symbol should not be taken as an indication that a class will
exhibit no volatility or variability in total return.
It is possible that a rating agency other than Standard & Poor's and
Fitch 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 Standard & Poor's and Fitch.
S-95
<PAGE>
INDEX OF DEFINITIONS
Additional Trust Fund Expenses ............................................S-57
Advance Rate ..............................................................S-71
Advances ..................................................................S-70
Anticipated Repayment Date ................................................S-32
Appraisal Reduction .......................................................S-55
Appraisal Reduction Estimate ..............................................S-55
Appraisal Reduction Events" ...............................................S-55
ARD .......................................................................S-32
Assumed Monthly Payment ...................................................S-54
Available Funds ...........................................................S-51
Class Interest Shortfall ..................................................S-53
Collection Account ........................................................S-71
Collection Period .........................................................S-52
Compensating Interest Payment .............................................S-57
Constant Prepayment Rate ..................................................S-67
Controlling Class .........................................................S-81
Corrected Mortgage Loan ...................................................S-81
CPR .......................................................................S-67
Cross-Collateralized Loans ................................................S-31
Cut-off Date ..............................................................S-30
Cut-off Date Loan-to-Value ................................................S-40
Cut-off Date LTV ..........................................................S-40
Cut-off Date Principal Balance ............................................S-30
Debt Service Coverage Ratio ...............................................S-39
Defeasance Loans ..........................................................S-34
Deferred Interest .........................................................S-32
Determination Date ........................................................S-52
Discount Rate .............................................................S-54
Distributable Certificate Interest ........................................S-53
Distribution Account ......................................................S-72
DSCR ......................................................................S-39
ERISA .....................................................................S-88
Euroclear Operator ........................................................S-62
Expense Losses ............................................................S-57
Hyper-Amortization Loans ..................................................S-32
Initial Interest Rate .....................................................S-32
Initial Pool Balance ......................................................S-30
Interest Reserve Account" .................................................S-72
Interest Reserve Amount ...................................................S-72
Interest Reserve Loans ..............................................S-50, S-72
Lock-out Period ...........................................................S-33
Maturity Assumptions ......................................................S-67
Maturity/ARD Balance ......................................................S-40
Maturity/ARD LTV ..........................................................S-40
Maturity/ARD LTV Ratio ....................................................S-40
Money Term ................................................................S-77
Monthly Payment ...........................................................S-53
Mortgage ..................................................................S-30
Mortgage Loans ............................................................S-30
Mortgaged Property ........................................................S-30
Mortgages .................................................................S-30
Most Recent DSCR ..........................................................S-39
Multiple Property Loans ...................................................S-31
Net Aggregate Prepayment Interest Shortfall ...............................S-57
Net Collections ...........................................................S-81
Net Mortgage Rate .........................................................S-50
Net REO Proceeds ..........................................................S-71
Other Plans ...............................................................S-91
P&I Advance ...............................................................S-70
Plan ......................................................................S-88
Prepayment Interest Excess ................................................S-57
Prepayment Interest Shortfall .............................................S-57
Principal Distribution Amount .............................................S-53
Principal Prepayments .....................................................S-52
Qualified Substitute Mortgage Loan ........................................S-45
Rated Final Distribution Date .............................................S-94
Rating Agencies ...........................................................S-94
Realized Loss .............................................................S-57
Record Date ...............................................................S-51
REMIC .....................................................................S-85
REO Account ...............................................................S-49
REO Mortgage Loan .........................................................S-54
REO Proceeds ..............................................................S-71
REO Property ..............................................................S-49
Repurchase Price ..........................................................S-44
Reserve Accounts ..........................................................S-36
Restricted Group ..........................................................S-89
Revised Interest Rate .....................................................S-32
Scheduled Final Distribution Date .........................................S-58
Servicing Advances ........................................................S-70
SMMEA .....................................................................S-92
Specially Serviced Mortgage Loan ..........................................S-80
Stated Principal Balance ..................................................S-50
Treasury Rate .............................................................S-54
Underwritable Cash Flow ...................................................S-39
Underwritable Debt Service Coverage Ratio .................................S-39
Updated Appraisal .........................................................S-55
U/W DSCR ..................................................................S-39
Yield Maintenance Period ..................................................S-33
S-96
<PAGE>
EXHIBIT A-1
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS AND MORTGAGED PROPERTIES
See this Exhibit for tables titled:
Managers and Locations of the Mortgaged Properties
Descriptions of the Mortgaged Properties
Characteristics of the Mortgage Loans
Additional Mortgage Loan Information
Engineering Reserves and Recurring Replacement Reserves
Major Tenants of the Commercial Properties
Multifamily Schedule
A-1-1
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
A-1-2
<PAGE>
PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates Series 1999-CM1
Preliminary Information - November 19, 1999
<TABLE>
<CAPTION>
# Property Name Management Company
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1 The Wilton Mall Genessee Management, Inc.
2 Frandor Mall The Frandorson Corporation
3 The Alliance Loan
3a Hampton Court Apartments Alliance Residential Management, L.L.C.
3b Lake of the Woods Apartments Alliance Residential Management, L.L.C.
3c Holly Tree Apartments Alliance Residential Management, L.L.C.
4 Stanford Square Stanford Square Management Co. and Tarlton Properties, Inc.
5 Woodscape Apartments Case & Associates Properties, Inc.
6 Westminster Apartments Intervest Management
7 Sycamore Square Office Center Brookhill Management Corporation
8 Inner Tech Park Pinnacle Properties Mgmt. Inc.
9 40 West 55th Street Manhattan Pacific Management Co., Inc.
10 Mill Creek Mobile Home Park Investment Realty Management, Inc.
11 The Villas Apartments I.D.M. Management, Inc.
12 Vista Plaza Shopping Center Peter D. Cummings & Associates, Inc.
13 Shadow Ridge Apartments Case & Associates Properties, Inc.
14 Beverly Plaza Hotel P & K, Inc.
15 The Woodland Hills Village Apartments MBS Management Services, Inc.
16 Lakewood House Apartments (1A) General Properties, Inc.
17 Vali Hi Shopping Center (1A) General Properties, Inc.
18 Somers Plaza Shopping Center (1A) General Properties, Inc.
19 Apple Valley Shopping Center (1A) General Properties, Inc.
20 Lakewood Shopping Center (1A) General Properties, Inc.
21 North Side Plaza The MEG Companies
22 Orchard Square Shopping Center Broder & Sachse Real Estate Services, Inc.
23 Hacienda San Dieguito Corporate Center Silverado Management Company
24 New Wave Entertainment Building Owner Managed
25 Copperfield Apartments Case & Associates Properties, Inc.
26 Bachman Oaks Apartments Flagship Management Corporation
27 The Grove Apartments MBS Management Services, Inc.
<CAPTION>
# Property Name Address City
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 The Wilton Mall 3065 Route 50 Saratoga Springs
2 Frandor Mall 300 Frandor Avenue Lansing
3 The Alliance Loan
3a Hampton Court Apartments 441 North Armistead Street Alexandria
3b Lake of the Woods Apartments 746 Garden Walk Boulevard College Park
3c Holly Tree Apartments 2481 Lake Drive Waldorf
4 Stanford Square 100 Hamilton Avenue Palo Alto
5 Woodscape Apartments 4401 Northwest 39th Street Oklahoma City
6 Westminster Apartments 4858 South 78th East Place Tulsa
7 Sycamore Square Office Center 1699-1733 Sycamore View Road Memphis
8 Inner Tech Park 52-56 Roland Street Boston
9 40 West 55th Street 40 West 55th Street New York
10 Mill Creek Mobile Home Park Camp Betty Washington Road & Allen Road York
11 The Villas Apartments 2360 Northwest 56th Avenue Lauderhill
12 Vista Plaza Shopping Center 2550 Northwest Federal Highway Jensen Beach
13 Shadow Ridge Apartments 9375 Viscount Boulevard El Paso
14 Beverly Plaza Hotel 8384 West Third Street Los Angeles
15 The Woodland Hills Village Apartments 2139 Lake Hills Drive Kingwood
16 Lakewood House Apartments (1A) 4801 North Hills Boulevard North Little Rock
17 Vali Hi Shopping Center (1A) 4600, 4602-4622 & 4540-4560 John F. Kennedy Boulevard North Little Rock
18 Somers Plaza Shopping Center (1A) 5111 Warden Road North Little Rock
19 Apple Valley Shopping Center (1A) 8000 State Highway 107 Sherwood
20 Lakewood Shopping Center (1A) 2513 Mccain Boulevard and 4501 Fairway Avenue North Little Rock
21 North Side Plaza 1050 Bicentennial Drive Manchester/Hooksett
22 Orchard Square Shopping Center 64660-64980 Van Dyke Road Washington Township
23 Hacienda San Dieguito Corporate Center 12625 High Bluff Drive San Diego
24 New Wave Entertainment Building 2660 West Olive Avenue Burbank
25 Copperfield Apartments 2400 Northwest 30th Street Oklahoma City
26 Bachman Oaks Apartments 2501 Webb Chapel Extension Dallas
27 The Grove Apartments 2320 South Conway Road Orlando
<CAPTION>
Zip
# Property Name County State Code Property Type
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 The Wilton Mall Saratoga NY 12866 Retail
2 Frandor Mall Ingham MI 48912 Retail
3 The Alliance Loan
3a Hampton Court Apartments Alexandria City VA 22312 Multifamily
3b Lake of the Woods Apartments Clayton GA 30349 Multifamily
3c Holly Tree Apartments Charles MD 20601 Multifamily
4 Stanford Square Santa Clara CA 94301 Office
5 Woodscape Apartments Oklahoma OK 73112 Multifamily
6 Westminster Apartments Tulsa OK 74145 Multifamily
7 Sycamore Square Office Center Shelby TN 38134 Office
8 Inner Tech Park Suffolk MA 02118 Mixed Use
9 40 West 55th Street New York NY 10019 Multifamily
10 Mill Creek Mobile Home Park York PA 17402 Manufactured Housing
11 The Villas Apartments Broward FL 33313 Multifamily
12 Vista Plaza Shopping Center Martin FL 34994 Retail
13 Shadow Ridge Apartments El Paso TX 79925 Multifamily
14 Beverly Plaza Hotel Los Angeles CA 90048 Hotel
15 The Woodland Hills Village Apartments Harris TX 77339 Multifamily
16 Lakewood House Apartments (1A) Pulaski AR 72116 Multifamily
17 Vali Hi Shopping Center (1A) Pulaski AR 72116 Retail
18 Somers Plaza Shopping Center (1A) Pulaski AR 72116 Retail
19 Apple Valley Shopping Center (1A) Pulaski AR 72120 Retail
20 Lakewood Shopping Center (1A) Pulaski AR 72114 Retail
21 North Side Plaza Hillsborough NH 03104 Retail
22 Orchard Square Shopping Center Macomb MI 48094 Retail
23 Hacienda San Dieguito Corporate Center San Diego CA 92130 Office
24 New Wave Entertainment Building Los Angeles CA 91505 Office
25 Copperfield Apartments Oklahoma OK 73112 Multifamily
26 Bachman Oaks Apartments Dallas TX 75220 Multifamily
27 The Grove Apartments Orange FL 32812 Multifamily
<CAPTION>
Units/
Sq. Ft./
Mortgage Rooms/
# Property Name Property Sub-type Loan Seller Pads
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 The Wilton Mall Anchored Column 540,021
2 Frandor Mall Anchored Column 457,978
3 The Alliance Loan Column
3a Hampton Court Apartments 307
3b Lake of the Woods Apartments 216
3c Holly Tree Apartments 143
4 Stanford Square Column 70,816
5 Woodscape Apartments Midland 498
6 Westminster Apartments Column 467
7 Sycamore Square Office Center Column 127,484
8 Inner Tech Park Office/Industrial Midland 154,550
9 40 West 55th Street Column 36
10 Mill Creek Mobile Home Park Midland 587
11 The Villas Apartments Column 405
12 Vista Plaza Shopping Center Anchored Column 109,255
13 Shadow Ridge Apartments Midland 352
14 Beverly Plaza Hotel Full Service Midland 98
15 The Woodland Hills Village Apartments Midland 260
16 Lakewood House Apartments (1A) Midland 107
17 Vali Hi Shopping Center (1A) Unanchored Midland 39,900
18 Somers Plaza Shopping Center (1A) Unanchored Midland 30,400
19 Apple Valley Shopping Center (1A) Unanchored Midland 23,450
20 Lakewood Shopping Center (1A) Shadow Anchored Midland 12,000
21 North Side Plaza Anchored Midland 115,187
22 Orchard Square Shopping Center Anchored Column 92,450
23 Hacienda San Dieguito Corporate Center Midland 67,132
24 New Wave Entertainment Building Column 39,967
25 Copperfield Apartments Midland 262
26 Bachman Oaks Apartments Column 208
27 The Grove Apartments Midland 232
<CAPTION>
Occupancy
Fee Simple/ Year Year Rate at
# Property Name Leasehold Built Renovated U/W (3)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 The Wilton Mall Fee 1990 1991 91%
2 Frandor Mall Fee 1950 1999 95%
3 The Alliance Loan
3a Hampton Court Apartments Fee 1965 1992 98%
3b Lake of the Woods Apartments Fee 1988 1989 95%
3c Holly Tree Apartments Fee 1974 1994 95%
4 Stanford Square Fee 1983 N/A 100%
5 Woodscape Apartments Fee 1984 N/A 94%
6 Westminster Apartments Fee 1973 1992 95%
7 Sycamore Square Office Center Fee 1984 1998 100%
8 Inner Tech Park Fee 1900 1989 98%
9 40 West 55th Street Fee 1920 1998 100%
10 Mill Creek Mobile Home Park Fee 1972 1989 95%
11 The Villas Apartments Fee 1988 N/A 95%
12 Vista Plaza Shopping Center Fee 1998 1999 100%
13 Shadow Ridge Apartments Fee 1985 N/A 100%
14 Beverly Plaza Hotel Fee 1984 1996 N/A
15 The Woodland Hills Village Apartments Fee 1977 1993 93%
16 Lakewood House Apartments (1A) Fee 1967 N/A 98%
17 Vali Hi Shopping Center (1A) Fee 1984 1986 96%
18 Somers Plaza Shopping Center (1A) Fee 1986 N/A 100%
19 Apple Valley Shopping Center (1A) Fee 1986 N/A 100%
20 Lakewood Shopping Center (1A) Fee 1987 N/A 100%
21 North Side Plaza Fee 1983 N/A 95%
22 Orchard Square Shopping Center Fee 1998 N/A 99%
23 Hacienda San Dieguito Corporate Center Fee 1985 N/A 100%
24 New Wave Entertainment Building Fee 1946 1999 100%
25 Copperfield Apartments Fee 1985 N/A 99%
26 Bachman Oaks Apartments Fee 1979 1998 91%
27 The Grove Apartments Fee 1973 1990 97%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Maturity/
Date of Cut-off ARD
Occupancy Appraised Date LTV Date LTV Underwritable
# Property Name Rate Value Ratio (4) Ratio (4) (5) NOI
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 The Wilton Mall 6/30/99 $ 64,500,000 69.7% 63.2% $ 5,609,129
2 Frandor Mall 7/1/99 50,000,000 72.9% 65.3% 4,379,082
3 The Alliance Loan 42,450,000 77.2% 68.9% 3,657,754
3a Hampton Court Apartments 9/23/99 19,800,000
3b Lake of the Woods Apartments 9/24/99 12,850,000
3c Holly Tree Apartments 9/23/99 9,800,000
4 Stanford Square 8/1/99 35,000,000 60.0% 53.7% 3,033,682
5 Woodscape Apartments 8/3/99 17,500,000 77.6% 68.5% 1,589,529
6 Westminster Apartments 8/24/99 16,500,000 75.7% 67.4% 1,709,968
7 Sycamore Square Office Center 8/1/99 16,500,000 73.9% 69.8% 1,631,906
8 Inner Tech Park 6/15/99 16,300,000 71.6% 64.5% 1,578,952
9 40 West 55th Street 10/1/99 17,400,000 65.5% 59.0% 1,261,932
10 Mill Creek Mobile Home Park 8/17/99 15,175,000 74.9% 64.9% 1,356,837
11 The Villas Apartments 9/20/99 13,800,000 79.6% 71.6% 1,491,163
12 Vista Plaza Shopping Center 7/1/99 13,800,000 79.6% 71.5% 1,249,144
13 Shadow Ridge Apartments 8/22/99 13,200,000 77.7% 68.0% 1,243,773
14 Beverly Plaza Hotel N/A 18,600,000 53.6% 45.1% 1,574,039
15 The Woodland Hills Village Apartments 6/30/99 11,875,000 79.7% 70.7% 1,061,291
16 Lakewood House Apartments (1A) 8/25/99 5,925,000 71.4% 64.5% 544,980
17 Vali Hi Shopping Center (1A) 8/25/99 2,400,000 71.4% 64.5% 255,792
18 Somers Plaza Shopping Center (1A) 8/25/99 1,700,000 71.4% 64.5% 168,591
19 Apple Valley Shopping Center (1A) 8/25/99 1,400,000 71.4% 64.5% 126,737
20 Lakewood Shopping Center (1A) 8/25/99 1,000,000 71.4% 64.5% 101,883
21 North Side Plaza 7/20/99 10,800,000 78.9% 68.5% 955,897
22 Orchard Square Shopping Center 9/27/99 10,600,000 79.9% 71.6% 993,683
23 Hacienda San Dieguito Corporate Center 8/5/99 11,540,000 68.3% 61.2% 1,063,013
24 New Wave Entertainment Building 9/13/99 10,250,000 72.9% 65.2% 859,519
25 Copperfield Apartments 8/3/99 9,300,000 77.3% 68.3% 850,522
26 Bachman Oaks Apartments 8/25/99 8,950,000 80.0% 72.5% 916,821
27 The Grove Apartments 9/13/99 8,900,000 79.7% 70.6% 782,325
<CAPTION>
Contractual
Engineering Recurring Contractual
Underwritable Reserve at Replacement Recurring
# Property Name NCF (6) DSCR (7) Origination Reserve LC&TI
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 The Wilton Mall $ 5,286,893 1.26x $14,338 $98,340 $99,996
2 Frandor Mall 4,051,315 1.26 $62,037 N/A N/A
3 The Alliance Loan 3,491,254 1.24 $591,313 $166,500 N/A
3a Hampton Court Apartments $492,000 $76,750 N/A
3b Lake of the Woods Apartments $68,813 $54,000 N/A
3c Holly Tree Apartments $30,500 $35,750 N/A
4 Stanford Square 2,913,281 1.57 $208,938 N/A N/A
5 Woodscape Apartments 1,465,029 1.29 $30,415 N/A N/A
6 Westminster Apartments 1,593,218 1.48 $76,499 $91,752 N/A
7 Sycamore Square Office Center 1,472,120 1.30 $7,606 $25,497 $150,000
8 Inner Tech Park 1,369,687 1.31 N/A $23,182 N/A
9 40 West 55th Street 1,252,617 1.21 $1,863 $9,315 N/A
10 Mill Creek Mobile Home Park 1,317,787 1.54 N/A $48,000 N/A
11 The Villas Apartments 1,363,183 1.38 $67,625 $127,980 N/A
12 Vista Plaza Shopping Center 1,183,590 1.21 N/A N/A N/A
13 Shadow Ridge Apartments 1,155,773 1.44 $165,000 N/A N/A
14 Beverly Plaza Hotel 1,376,276 1.41 N/A 4.00% N/A
15 The Woodland Hills Village Apartments 996,291 1.25 $260,000 $65,000 N/A
16 Lakewood House Apartments (1A) 497,621 1.28 N/A $34,668 $6,000
17 Vali Hi Shopping Center (1A) 214,656 1.28 N/A $10,776 $24,000
18 Somers Plaza Shopping Center (1A) 133,446 1.28 N/A $4,560 $20,004
19 Apple Valley Shopping Center (1A) 104,867 1.28 N/A $3,528 $12,000
20 Lakewood Shopping Center (1A) 85,708 1.28 N/A $2,400 $12,708
21 North Side Plaza 869,512 1.27 N/A $15,528 $35,232
22 Orchard Square Shopping Center 940,293 1.25 N/A N/A $15,000
23 Hacienda San Dieguito Corporate Center 934,165 1.34 N/A $13,431 N/A
24 New Wave Entertainment Building 795,066 1.22 N/A $5,995 $10,000
25 Copperfield Apartments 785,022 1.31 $47,080 N/A N/A
26 Bachman Oaks Apartments 864,821 1.30 $5,250 $52,000 N/A
27 The Grove Apartments 724,325 1.21 $175,000 $58,000 N/A
<CAPTION>
Underwritable
Recurring Percentage of
Replacement Underwritable Original Cut-off Initial
# Property Name Reserve LC&TI Balance Balance (8) Pool Balance
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 The Wilton Mall $81,003 $241,233 $ 45,000,000 $ 44,973,184 5.9%
2 Frandor Mall $68,697 $259,070 36,500,000 36,434,197 4.8%
3 The Alliance Loan $166,500 N/A 32,874,000 32,777,802 4.3%
3a Hampton Court Apartments $76,750 N/A
3b Lake of the Woods Apartments $54,000 N/A
3c Holly Tree Apartments $35,750 N/A
4 Stanford Square $14,163 $106,238 21,000,000 20,986,080 2.8%
5 Woodscape Apartments $124,500 N/A 13,600,000 13,571,925 1.8%
6 Westminster Apartments $116,750 N/A 12,500,000 12,485,046 1.6%
7 Sycamore Square Office Center $25,497 $134,289 12,200,000 12,188,403 1.6%
8 Inner Tech Park $27,510 $181,755 11,700,000 11,669,757 1.5%
9 40 West 55th Street $9,315 N/A 11,400,000 11,392,819 1.5%
10 Mill Creek Mobile Home Park $39,050 N/A 11,500,000 11,365,842 1.5%
11 The Villas Apartments $127,980 N/A 11,000,000 10,988,270 1.4%
12 Vista Plaza Shopping Center $10,926 $54,628 11,000,000 10,987,946 1.4%
13 Shadow Ridge Apartments $88,000 N/A 10,380,000 10,251,140 1.3%
14 Beverly Plaza Hotel 5.00% N/A 10,000,000 9,966,650 1.3%
15 The Woodland Hills Village Apartments $65,000 N/A 9,500,000 9,462,872 1.2%
16 Lakewood House Apartments (1A) $34,668 $12,691 4,478,000 4,473,106 0.6%
17 Vali Hi Shopping Center (1A) $10,773 $30,362 1,757,000 1,755,378 0.2%
18 Somers Plaza Shopping Center (1A) $4,560 $30,587 1,089,000 1,087,994 0.1%
19 Apple Valley Shopping Center (1A) $3,518 $18,351 856,000 855,210 0.1%
20 Lakewood Shopping Center (1A) $2,400 $13,775 699,000 698,355 0.1%
21 North Side Plaza $17,278 $69,107 8,640,000 8,519,081 1.1%
22 Orchard Square Shopping Center $13,868 $39,522 8,480,000 8,474,356 1.1%
23 Hacienda San Dieguito Corporate Center $13,387 $115,461 7,900,000 7,885,723 1.0%
24 New Wave Entertainment Building $7,993 $56,460 7,485,000 7,476,346 1.0%
25 Copperfield Apartments $65,500 N/A 7,200,000 7,185,137 0.9%
26 Bachman Oaks Apartments $52,000 N/A 7,160,000 7,155,725 0.9%
27 The Grove Apartments $58,000 N/A 7,100,000 7,091,078 0.9%
<CAPTION>
Orig Rem. Orig Rem.
Maturity Amort. Amort. Term to Term to Interest
# Property Name Balance Term Term Maturity (9) Maturity (9) Rate
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 The Wilton Mall $ 40,791,671 360 359 120 119 8.580%
2 Frandor Mall 32,646,771 360 357 120 117 8.000%
3 The Alliance Loan 29,229,389 360 355 120 115 7.740%
3a Hampton Court Apartments
3b Lake of the Woods Apartments
3c Holly Tree Apartments
4 Stanford Square 18,809,149 360 359 120 119 8.060%
5 Woodscape Apartments 11,994,954 360 357 120 117 7.430%
6 Westminster Apartments 11,117,291 360 358 120 118 7.760%
7 Sycamore Square Office Center 11,514,430 360 358 84 82 8.600%
8 Inner Tech Park 10,513,568 360 355 120 115 8.180%
9 40 West 55th Street 10,270,568 360 359 120 119 8.310%
10 Mill Creek Mobile Home Park 9,843,688 360 347 120 107 6.320%
11 The Villas Apartments 9,884,546 360 358 120 118 8.190%
12 Vista Plaza Shopping Center 9,861,295 360 358 120 118 8.090%
13 Shadow Ridge Apartments 8,979,958 360 345 120 105 6.700%
14 Beverly Plaza Hotel 8,397,516 300 296 120 116 8.650%
15 The Woodland Hills Village Apartments 8,391,062 360 354 120 114 7.480%
16 Lakewood House Apartments (1A) 4,015,393 360 358 120 118 8.100%
17 Vali Hi Shopping Center (1A) 1,597,312 360 358 120 118 8.700%
18 Somers Plaza Shopping Center (1A) 990,024 360 358 120 118 8.700%
19 Apple Valley Shopping Center (1A) 778,201 360 358 120 118 8.700%
20 Lakewood Shopping Center (1A) 635,471 360 358 120 118 8.700%
21 North Side Plaza 7,394,893 360 344 120 104 6.890%
22 Orchard Square Shopping Center 7,591,710 360 359 120 119 8.040%
23 Hacienda San Dieguito Corporate Center 7,064,327 360 357 120 117 7.990%
24 New Wave Entertainment Building 6,678,133 360 358 120 118 7.890%
25 Copperfield Apartments 6,350,270 360 357 120 117 7.430%
26 Bachman Oaks Apartments 6,488,951 360 359 120 119 8.570%
27 The Grove Apartments 6,284,994 360 358 120 118 7.570%
<CAPTION>
First
Interest Calculation Monthly Payment Maturity
# Property Name (30/360 / Actual/360) Payment Date Date ARD (10) Seasoning
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 The Wilton Mall Actual/360 $ 348,565.63 12/1/99 11/1/29 11/1/09 1
2 Frandor Mall Actual/360 267,824.07 10/1/99 9/1/09 3
3 The Alliance Loan Actual/360 235,286.23 8/1/99 7/1/09 5
3a Hampton Court Apartments
3b Lake of the Woods Apartments
3c Holly Tree Apartments
4 Stanford Square Actual/360 154,969.83 12/1/99 11/1/09 1
5 Woodscape Apartments Actual/360 94,442.14 10/1/99 9/1/09 3
6 Westminster Apartments Actual/360 89,637.93 11/1/99 10/1/09 2
7 Sycamore Square Office Center Actual/360 94,673.43 11/1/99 10/1/06 2
8 Inner Tech Park Actual/360 87,323.09 8/1/99 7/1/09 5
9 40 West 55th Street Actual/360 86,125.73 12/1/99 11/1/09 1
10 Mill Creek Mobile Home Park Actual/360 71,331.87 12/1/98 11/1/08 13
11 The Villas Apartments Actual/360 82,175.80 11/1/99 10/1/09 2
12 Vista Plaza Shopping Center Actual/360 81,405.31 11/1/99 10/1/09 2
13 Shadow Ridge Apartments Actual/360 66,979.86 10/1/98 9/1/08 15
14 Beverly Plaza Hotel Actual/360 81,536.05 9/1/99 8/1/09 4
15 The Woodland Hills Village Apartments Actual/360 66,295.32 7/1/99 6/1/09 6
16 Lakewood House Apartments (1A) Actual/360 33,170.68 11/1/99 10/1/09 2
17 Vali Hi Shopping Center (1A) Actual/360 13,759.63 11/1/99 10/1/09 2
18 Somers Plaza Shopping Center (1A) Actual/360 8,528.31 11/1/99 10/1/09 2
19 Apple Valley Shopping Center (1A) Actual/360 6,703.61 11/1/99 10/1/09 2
20 Lakewood Shopping Center (1A) Actual/360 5,474.09 11/1/99 10/1/09 2
21 North Side Plaza 30/360 56,845.27 9/1/98 8/1/28 8/1/08 16
22 Orchard Square Shopping Center Actual/360 62,459.86 12/1/99 11/1/09 1
23 Hacienda San Dieguito Corporate Center Actual/360 57,912.34 10/1/99 9/1/09 3
24 New Wave Entertainment Building Actual/360 54,349.39 11/1/99 10/1/09 2
25 Copperfield Apartments Actual/360 49,998.78 10/1/99 9/1/09 3
26 Bachman Oaks Apartments Actual/360 55,409.80 12/1/99 11/1/09 1
27 The Grove Apartments Actual/360 49,984.99 11/1/99 10/1/09 2
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Original
Lockout
Servicing and Prepayment Provision Period
# Property Name Trustee Fees as of Origination (11) (Months)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 The Wilton Mall 0.0523% L (9.5), O (0.5) 114
2 Frandor Mall 0.0523% L (9.5), O (0.5) 114
3 The Alliance Loan 0.0523% L (9.5), O (0.5) 114
3a Hampton Court Apartments
3b Lake of the Woods Apartments
3c Holly Tree Apartments
4 Stanford Square 0.0523% L (9.5), O (0.5) 114
5 Woodscape Apartments 0.1153% L (4.92), YM 1% (4.75), O (0.33) 59
6 Westminster Apartments 0.0523% L (9.5), O (0.5) 114
7 Sycamore Square Office Center 0.0523% L (6.5), O (0.5) 78
8 Inner Tech Park 0.0823% L (9.67), O (0.33) 116
9 40 West 55th Street 0.0523% L (9.5), O (0.5) 114
10 Mill Creek Mobile Home Park 0.0823% L (2.92), YM 1% (6.75), O (0.33) 35
11 The Villas Apartments 0.0523% L (9.5), O (0.5) 114
12 Vista Plaza Shopping Center 0.0523% L (9.5), O (0.5) 114
13 Shadow Ridge Apartments 0.0823% L (4.92), YM 1% (4.75), O (0.33) 59
14 Beverly Plaza Hotel 0.0823% L (9.67), O (0.33) 116
15 The Woodland Hills Village Apartments 0.0823% L (2.92), YM 1% (6.75), O (0.33) 35
16 Lakewood House Apartments (1A) 0.0823% L (9.67), O (0.33) 116
17 Vali Hi Shopping Center (1A) 0.0823% L (9.67), O (0.33) 116
18 Somers Plaza Shopping Center (1A) 0.0823% L (9.67), O (0.33) 116
19 Apple Valley Shopping Center (1A) 0.0823% L (9.67), O (0.33) 116
20 Lakewood Shopping Center (1A) 0.0823% L (9.67), O (0.33) 116
21 North Side Plaza 0.1214% L (3.92), YM 1% (5.5), O (0.58) 47
22 Orchard Square Shopping Center 0.0523% L (9.5), O (0.5) 114
23 Hacienda San Dieguito Corporate Center 0.1723% L (9.67), O (0.33) 116
24 New Wave Entertainment Building 0.0523% L (9.5), O (0.5) 114
25 Copperfield Apartments 0.1453% L (4.92), YM 1% (4.75), O (0.33) 59
26 Bachman Oaks Apartments 0.0523% L (9.5), O (0.5) 114
27 The Grove Apartments 0.0823% L (3), YM 1% (6.67), O (0.33) 36
<CAPTION>
Original Original
Yield Prepayment Original Yield
Maintenance Premium Open Lockout Maintenance
Period Period Period Expiration Expiration
# Property Name (Months) (Months) (Months) Defeasance (12) Date Date
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 The Wilton Mall 0 0 6 Yes 5/1/09 N/A
2 Frandor Mall 0 0 6 Yes 3/1/09 N/A
3 The Alliance Loan 0 0 6 Yes 1/1/09 N/A
3a Hampton Court Apartments
3b Lake of the Woods Apartments
3c Holly Tree Apartments
4 Stanford Square 0 0 6 Yes 5/1/09 N/A
5 Woodscape Apartments 57 0 4 No 8/1/04 5/1/09
6 Westminster Apartments 0 0 6 Yes 4/1/09 N/A
7 Sycamore Square Office Center 0 0 6 Yes 4/1/06 N/A
8 Inner Tech Park 0 0 4 Yes 3/1/09 N/A
9 40 West 55th Street 0 0 6 Yes 5/1/09 N/A
10 Mill Creek Mobile Home Park 81 0 4 No 10/1/01 7/1/08
11 The Villas Apartments 0 0 6 Yes 4/1/09 N/A
12 Vista Plaza Shopping Center 0 0 6 Yes 4/1/09 N/A
13 Shadow Ridge Apartments 57 0 4 No 8/1/03 5/1/08
14 Beverly Plaza Hotel 0 0 4 Yes 4/1/09 N/A
15 The Woodland Hills Village Apartments 81 0 4 No 5/1/02 2/1/09
16 Lakewood House Apartments (1A) 0 0 4 Yes 6/1/09 N/A
17 Vali Hi Shopping Center (1A) 0 0 4 Yes 6/1/09 N/A
18 Somers Plaza Shopping Center (1A) 0 0 4 Yes 6/1/09 N/A
19 Apple Valley Shopping Center (1A) 0 0 4 Yes 6/1/09 N/A
20 Lakewood Shopping Center (1A) 0 0 4 Yes 6/1/09 N/A
21 North Side Plaza 66 0 7 No 7/1/02 1/1/08
22 Orchard Square Shopping Center 0 0 6 Yes 5/1/09 N/A
23 Hacienda San Dieguito Corporate Center 0 0 4 Yes 5/1/09 N/A
24 New Wave Entertainment Building 0 0 6 Yes 4/1/09 N/A
25 Copperfield Apartments 57 0 4 No 8/1/04 5/1/09
26 Bachman Oaks Apartments 0 0 6 Yes 5/1/09 N/A
27 The Grove Apartments 80 0 4 No 10/1/02 6/1/09
<CAPTION>
Prepayment
Premium Utilities Subject
Expiration Hotel Multifamily Tenant Multifamily Studio
# Property Name Date Franchise Pays Elevators Units
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 The Wilton Mall N/A N/A N/A N/A N/A
2 Frandor Mall N/A N/A N/A N/A N/A
3 The Alliance Loan N/A
3a Hampton Court Apartments N/A Electric/Gas 0 N/A
3b Lake of the Woods Apartments N/A Electric 0 N/A
3c Holly Tree Apartments N/A Electric/Gas/Water/Sewer 0 N/A
4 Stanford Square N/A N/A N/A N/A N/A
5 Woodscape Apartments N/A N/A Electric 0 N/A
6 Westminster Apartments N/A N/A Electric 0 N/A
7 Sycamore Square Office Center N/A N/A N/A N/A N/A
8 Inner Tech Park N/A N/A N/A N/A N/A
9 40 West 55th Street N/A N/A Electric 2 N/A
10 Mill Creek Mobile Home Park N/A N/A N/A N/A N/A
11 The Villas Apartments N/A N/A Electric 0 N/A
12 Vista Plaza Shopping Center N/A N/A N/A N/A N/A
13 Shadow Ridge Apartments N/A N/A Electric/Gas/Water/Sewer 0 20
14 Beverly Plaza Hotel N/A None N/A N/A N/A
15 The Woodland Hills Village Apartments N/A N/A Electric 0 N/A
16 Lakewood House Apartments (1A) N/A N/A None 2 N/A
17 Vali Hi Shopping Center (1A) N/A N/A N/A N/A N/A
18 Somers Plaza Shopping Center (1A) N/A N/A N/A N/A N/A
19 Apple Valley Shopping Center (1A) N/A N/A N/A N/A N/A
20 Lakewood Shopping Center (1A) N/A N/A N/A N/A N/A
21 North Side Plaza N/A N/A N/A N/A N/A
22 Orchard Square Shopping Center N/A N/A N/A N/A N/A
23 Hacienda San Dieguito Corporate Center N/A N/A N/A N/A N/A
24 New Wave Entertainment Building N/A N/A N/A N/A N/A
25 Copperfield Apartments N/A N/A Electric 0 N/A
26 Bachman Oaks Apartments N/A N/A Electric 0 N/A
27 The Grove Apartments N/A N/A Electric/Water/Sewer 0 40
<CAPTION>
Subject Subject Subject Subject Subject
Studio Studio 1 BR 1 BR 1 BR
# Property Name Avg. Rent Max. Rent Units Avg. Rent Max. Rent
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 The Wilton Mall N/A N/A N/A N/A N/A
2 Frandor Mall N/A N/A N/A N/A N/A
3 The Alliance Loan
3a Hampton Court Apartments N/A N/A 83 $659 $745
3b Lake of the Woods Apartments N/A N/A 72 $581 $600
3c Holly Tree Apartments N/A N/A 43 $718 $766
4 Stanford Square N/A N/A N/A N/A N/A
5 Woodscape Apartments N/A N/A 384 $435 $574
6 Westminster Apartments N/A N/A 30 $349 $379
7 Sycamore Square Office Center N/A N/A N/A N/A N/A
8 Inner Tech Park N/A N/A N/A N/A N/A
9 40 West 55th Street N/A N/A 1 $4,400 $4,400
10 Mill Creek Mobile Home Park N/A N/A N/A N/A N/A
11 The Villas Apartments N/A N/A 96 $538 $570
12 Vista Plaza Shopping Center N/A N/A N/A N/A N/A
13 Shadow Ridge Apartments $425 $459 156 $430 $559
14 Beverly Plaza Hotel N/A N/A N/A N/A N/A
15 The Woodland Hills Village Apartments N/A N/A 120 $548 $569
16 Lakewood House Apartments (1A) N/A N/A 42 $731 $850
17 Vali Hi Shopping Center (1A) N/A N/A N/A N/A N/A
18 Somers Plaza Shopping Center (1A) N/A N/A N/A N/A N/A
19 Apple Valley Shopping Center (1A) N/A N/A N/A N/A N/A
20 Lakewood Shopping Center (1A) N/A N/A N/A N/A N/A
21 North Side Plaza N/A N/A N/A N/A N/A
22 Orchard Square Shopping Center N/A N/A N/A N/A N/A
23 Hacienda San Dieguito Corporate Center N/A N/A N/A N/A N/A
24 New Wave Entertainment Building N/A N/A N/A N/A N/A
25 Copperfield Apartments N/A N/A 214 $437 $530
26 Bachman Oaks Apartments N/A N/A 132 $564 $665
27 The Grove Apartments $437 $455 116 $496 $520
<CAPTION>
Subject Subject Subject Subject Subject
2 BR 2 BR 2 BR 3 BR 3 BR
# Property Name Units Avg. Rent Max. Rent Units Avg. Rent
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 The Wilton Mall N/A N/A N/A N/A N/A
2 Frandor Mall N/A N/A N/A N/A N/A
3 The Alliance Loan
3a Hampton Court Apartments 168 $797 $901 56 $924
3b Lake of the Woods Apartments 144 $684 $802 N/A N/A
3c Holly Tree Apartments 100 $769 $927 N/A N/A
4 Stanford Square N/A N/A N/A N/A N/A
5 Woodscape Apartments 114 $643 $715 N/A N/A
6 Westminster Apartments 393 $537 $649 44 $670
7 Sycamore Square Office Center N/A N/A N/A N/A N/A
8 Inner Tech Park N/A N/A N/A N/A N/A
9 40 West 55th Street 35 $3,968 $6,000 N/A N/A
10 Mill Creek Mobile Home Park N/A N/A N/A N/A N/A
11 The Villas Apartments 260 $647 $685 49 $758
12 Vista Plaza Shopping Center N/A N/A N/A N/A N/A
13 Shadow Ridge Apartments 152 $608 $689 24 $687
14 Beverly Plaza Hotel N/A N/A N/A N/A N/A
15 The Woodland Hills Village Apartments 124 $721 $853 16 $933
16 Lakewood House Apartments (1A) 45 $912 $1,070 20 $1,009
17 Vali Hi Shopping Center (1A) N/A N/A N/A N/A N/A
18 Somers Plaza Shopping Center (1A) N/A N/A N/A N/A N/A
19 Apple Valley Shopping Center (1A) N/A N/A N/A N/A N/A
20 Lakewood Shopping Center (1A) N/A N/A N/A N/A N/A
21 North Side Plaza N/A N/A N/A N/A N/A
22 Orchard Square Shopping Center N/A N/A N/A N/A N/A
23 Hacienda San Dieguito Corporate Center N/A N/A N/A N/A N/A
24 New Wave Entertainment Building N/A N/A N/A N/A N/A
25 Copperfield Apartments 48 $628 $710 N/A N/A
26 Bachman Oaks Apartments 76 $691 $710 N/A N/A
27 The Grove Apartments 66 $627 $715 10 $720
<CAPTION>
Subject Subject Subject Subject
3 BR 4 BR 4 BR 4 BR
# Property Name Max. Rent Units Avg. Rent Max. Rent
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 The Wilton Mall N/A N/A N/A N/A
2 Frandor Mall N/A N/A N/A N/A
3 The Alliance Loan
3a Hampton Court Apartments $935 N/A N/A N/A
3b Lake of the Woods Apartments N/A N/A N/A N/A
3c Holly Tree Apartments N/A N/A N/A N/A
4 Stanford Square N/A N/A N/A N/A
5 Woodscape Apartments N/A N/A N/A N/A
6 Westminster Apartments $759 N/A N/A N/A
7 Sycamore Square Office Center N/A N/A N/A N/A
8 Inner Tech Park N/A N/A N/A N/A
9 40 West 55th Street N/A N/A N/A N/A
10 Mill Creek Mobile Home Park N/A N/A N/A N/A
11 The Villas Apartments $785 N/A N/A N/A
12 Vista Plaza Shopping Center N/A N/A N/A N/A
13 Shadow Ridge Apartments $735 N/A N/A N/A
14 Beverly Plaza Hotel N/A N/A N/A N/A
15 The Woodland Hills Village Apartments $995 N/A N/A N/A
16 Lakewood House Apartments (1A) $1,585 N/A N/A N/A
17 Vali Hi Shopping Center (1A) N/A N/A N/A N/A
18 Somers Plaza Shopping Center (1A) N/A N/A N/A N/A
19 Apple Valley Shopping Center (1A) N/A N/A N/A N/A
20 Lakewood Shopping Center (1A) N/A N/A N/A N/A
21 North Side Plaza N/A N/A N/A N/A
22 Orchard Square Shopping Center N/A N/A N/A N/A
23 Hacienda San Dieguito Corporate Center N/A N/A N/A N/A
24 New Wave Entertainment Building N/A N/A N/A N/A
25 Copperfield Apartments N/A N/A N/A N/A
26 Bachman Oaks Apartments N/A N/A N/A N/A
27 The Grove Apartments $735 N/A N/A N/A
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Major Major Major
Tenant #1 Tenant #1 Tenant #1 Lease
# Property Name Name Sq. Ft. Expiration Date
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 The Wilton Mall Sears 82,352 7/17/05
2 Frandor Mall N/A N/A N/A
3 The Alliance Loan
3a Hampton Court Apartments N/A N/A N/A
3b Lake of the Woods Apartments N/A N/A N/A
3c Holly Tree Apartments N/A N/A N/A
4 Stanford Square PHB Hagler Bailey 18,331 8/1/02
5 Woodscape Apartments N/A N/A N/A
6 Westminster Apartments N/A N/A N/A
7 Sycamore Square Office Center SITEL Corporation 81,850 11/1/07
8 Inner Tech Park Bay State Computer Group 33,873 3/31/01
9 40 West 55th Street N/A N/A N/A
10 Mill Creek Mobile Home Park N/A N/A N/A
11 The Villas Apartments N/A N/A N/A
12 Vista Plaza Shopping Center Bed, Bath & Beyond Inc. 34,900 6/1/13
13 Shadow Ridge Apartments N/A N/A N/A
14 Beverly Plaza Hotel N/A N/A N/A
15 The Woodland Hills Village Apartments N/A N/A N/A
16 Lakewood House Apartments (1A) N/A N/A N/A
17 Vali Hi Shopping Center (1A) The Crafters' Village, Inc. 5,600 12/31/00
18 Somers Plaza Shopping Center (1A) Tops Shoes 8,800 8/31/03
19 Apple Valley Shopping Center (1A) Chinese Pavilion 5,700 12/31/02
20 Lakewood Shopping Center (1A) Jeri Nevins 2,000 1/31/00
21 North Side Plaza Alexander's Shop N' Save 64,160 12/31/10
22 Orchard Square Shopping Center Farmer Jack 48,750 1/1/19
23 Hacienda San Dieguito Corporate Center Landgrant Development 8,587 4/30/01
24 New Wave Entertainment Building NW Entertainment, Inc. 39,967 9/6/09
25 Copperfield Apartments N/A N/A N/A
26 Bachman Oaks Apartments N/A N/A N/A
27 The Grove Apartments N/A N/A N/A
<CAPTION>
Major Major Major
Tenant #2 Tenant #2 Tenant #2 Lease
# Property Name Name Sq. Ft. Expiration Date
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 The Wilton Mall Bon Ton 71,222 1/1/04
2 Frandor Mall N/A N/A N/A
3 The Alliance Loan
3a Hampton Court Apartments N/A N/A N/A
3b Lake of the Woods Apartments N/A N/A N/A
3c Holly Tree Apartments N/A N/A N/A
4 Stanford Square Bon Appetit Mgmt. Co. 17,825 7/1/09
5 Woodscape Apartments N/A N/A N/A
6 Westminster Apartments N/A N/A N/A
7 Sycamore Square Office Center Telecorp Realty LLC 45,634 12/1/08
8 Inner Tech Park Virtual Ink Corp. 20,402 8/30/04
9 40 West 55th Street N/A N/A N/A
10 Mill Creek Mobile Home Park N/A N/A N/A
11 The Villas Apartments N/A N/A N/A
12 Vista Plaza Shopping Center Circuit City Stores Inc. 28,190 1/1/19
13 Shadow Ridge Apartments N/A N/A N/A
14 Beverly Plaza Hotel N/A N/A N/A
15 The Woodland Hills Village Apartments N/A N/A N/A
16 Lakewood House Apartments (1A) N/A N/A N/A
17 Vali Hi Shopping Center (1A) Clean Threads of Little Rock 3,700 5/31/03
18 Somers Plaza Shopping Center (1A) Sport Four, Inc. 4,770 2/28/02
19 Apple Valley Shopping Center (1A) Social Security Admin. 4,800 12/31/02
20 Lakewood Shopping Center (1A) Lakewood Foods, Inc. 2,000 9/30/01
21 North Side Plaza M.G.A., Inc. (Attn: RE Dept) 7,200 2/28/01
22 Orchard Square Shopping Center N/A N/A N/A
23 Hacienda San Dieguito Corporate Center Jason Associates 4,710 3/31/00
24 New Wave Entertainment Building N/A N/A N/A
25 Copperfield Apartments N/A N/A N/A
26 Bachman Oaks Apartments N/A N/A N/A
27 The Grove Apartments N/A N/A N/A
<CAPTION>
Major Major Major
Tenant #3 Tenant #3 Tenant #3 Lease
# Property Name Name Sq. Ft. Expiration Date
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 The Wilton Mall N/A N/A N/A
2 Frandor Mall N/A N/A N/A
3 The Alliance Loan
3a Hampton Court Apartments N/A N/A N/A
3b Lake of the Woods Apartments N/A N/A N/A
3c Holly Tree Apartments N/A N/A N/A
4 Stanford Square N/A N/A N/A
5 Woodscape Apartments N/A N/A N/A
6 Westminster Apartments N/A N/A N/A
7 Sycamore Square Office Center N/A N/A N/A
8 Inner Tech Park ChiRex Technology Ctr. 14,859 10/31/03
9 40 West 55th Street N/A N/A N/A
10 Mill Creek Mobile Home Park N/A N/A N/A
11 The Villas Apartments N/A N/A N/A
12 Vista Plaza Shopping Center Michaels Stores, Inc. 23,725 2/1/09
13 Shadow Ridge Apartments N/A N/A N/A
14 Beverly Plaza Hotel N/A N/A N/A
15 The Woodland Hills Village Apartments N/A N/A N/A
16 Lakewood House Apartments (1A) N/A N/A N/A
17 Vali Hi Shopping Center (1A) Armstrong's Furniture Sales 3,700 9/30/00
18 Somers Plaza Shopping Center (1A) John Brown University 4,200 10/31/00
19 Apple Valley Shopping Center (1A) Partners Jewelry & Loan 2,400 3/31/01
20 Lakewood Shopping Center (1A) Dr. Richard Rankin 2,000 12/31/00
21 North Side Plaza Shorty's Mexican Roadhouse Inn 6,000 9/1/01
22 Orchard Square Shopping Center N/A N/A N/A
23 Hacienda San Dieguito Corporate Center Dialpro 4,513 12/31/00
24 New Wave Entertainment Building N/A N/A N/A
25 Copperfield Apartments N/A N/A N/A
26 Bachman Oaks Apartments N/A N/A N/A
27 The Grove Apartments N/A N/A N/A
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
# Property Name Management Company
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
28 Selma Square Shopping Center Owner Managed
29 Holmdel Corporate Plaza/One Misco Plaza JGT Management
30 Commons on Sanger Apartments Brothers Management Company
31 The Marbrisa Apartments MBS Management Services, Inc.
32 Point of Pines Apartments Heritage Management Company, Inc.
33 Tammaron Village Apartments Case & Associates Properties, Inc.
34 TownePlace Suites by Marriott - Brookfield CSM Lodging Services Incorporated
35 Pittsfield Plaza Atlantic Retail Properties
36 Hurstbourne Office Park Jefferson Development Group, Inc.
37 Trails East Apartments Case & Associates Properties, Inc.
38 TownePlace Suites by Marriott - Eden Prairie CSM Lodging Services Incorporated
39 Brookside Plaza Shopping Center Rosen Associates Management Corp.
40 The Sun City Shopping Center Tapley Commercial Real Estate
41 The Judson House SHP Management
42 Long Lake Office Center Stern Management Services, Inc.
43 Copper Beech Townhomes II McWhirter Property Management, Inc.
44 Town & Country Business Park AmeriCo Realty Services, Inc.
45 Four Winds Apartments The Barrington Group Incorporated
46 Allora Way Apartments Flagship Management Corporation
47 Sycamore Park Apartments HSC California, Inc.
48 Promotions Distributor Services Corp. (1B) Bernard Gainey
49 Production Distribution Services Corp. (1B) PDS
50 Alltel Office Building RealVest Partners, Inc.
51 Winn Medical Center Meadows & Ohly
52 56-62 Canal Street North Star Management Company
53 16 Herbert Street Owner Managed
54 Beau Rivage Apartments Rudeen Development
55 Tierra Corners Shopping Center C. W. Clark, Inc.
56 Two Technology Way Wiggin Properties, Inc.
57 Crossroads Shopping Center Westar Management, Inc.
58 County Mall Greenwich-American Operating Company
59 The Radisson Graystone Castle Hotel Doramar Hotels, Inc.
60 Palms East Apartments Strong Properties, Inc
61 North Creek Condominiums Oakwood Property Company
62 Fallbrook Office Park The Simay Company, Inc.
63 Miami One Office Building Savitar Realty Advisors
64 Huntington Place Apartments Chase National Management Corporation
65 Comfort Inn-South Burlington-VT KW Companies
66 City Centre Building The Rudolph Company
67 Country Village Apartments MBS Management Services, Inc.
68 185 Commerce Drive Keystone Real Estate
69 The South Point Apartments MBS Management Services, Inc.
70 Copper Beech Townhomes I McWhirter Property Management, Inc.
71 Southbridge Office Buildings Owner Managed
72 Pro-Met, Inc. Wolfe Investment Company
73 Super Food Town Plaza National Realty & Development Corporation
74 The Hamptons at Central Apartments DMJ Management, Inc.
75 Southwest Plaza Colliers & Co.
76 The Basin Street Complex John J. Albarano, P.E.
77 Waterford Plaza Atlantic Retail Properties
78 Cerritos State Road Industrial Park Kenski Properties, Inc.
79 Chambers Center Shopping Center Trammell Crow Company
80 Hackettstown Commerce Park Building I B&W Associates LLP
81 Nationsbank Service Center Gihls Properties, Inc.
82 Freeport Self Storage Rhumbline Realty Management Co.
83 The Virginia Highland Loan
83a 842 North Highland Avenue The Simpson Organization, Inc.
83b 1052-1062 St. Charles Avenue The Simpson Organization, Inc.
83c 784-792 North Highland Avenue The Simpson Organization, Inc.
83d 776-778 North Highland Avenue The Simpson Organization, Inc.
84 Dolphin Self Storage (1C) Accountable Management & Realty, Inc.
85 Kangaroom Mini-Storage (1C) Accountable Management & Realty, Inc.
86 Airport Self Storage (1C) Accountable Management & Realty, Inc.
87 Stonehurst Court Apartments Woodward Properties, Inc.
88 The River Meadows Mobile Home Park Newport Pacific Capital Company
89 Maplewood Apartments (1D) C & R Realty
90 Columbus Village Apartments (1D) C & R Realty
91 Dominion Center CDC Management Group, Inc.
92 The Argyle Apartments Hicks King Investments
93 Guthrie Medical Center L&S Development
94 The Hope Group Corporate Headquarters The Hope Group Corporation
95 SavMax Foods Charles Dunn Real Estate Services, Inc.
<CAPTION>
# Property Name Address City
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
28 Selma Square Shopping Center 2803-2883 South Highland Drive Selma
29 Holmdel Corporate Plaza/One Misco Plaza 2137 and 2139 Highway 35 North Holmdel
30 Commons on Sanger Apartments 5000 Sanger Avenue Waco
31 The Marbrisa Apartments 4405 North Navarro Street Victoria
32 Point of Pines Apartments 190 North Shore Road Revere
33 Tammaron Village Apartments 11100 Roxboro Avenue Oklahoma City
34 TownePlace Suites by Marriott - Brookfield 600 North Calhoun Road Brookfield
35 Pittsfield Plaza 676-690 Merrill Road Pittsfield
36 Hurstbourne Office Park Whittington Parkway and Leesgate Road Louisville
37 Trails East Apartments 1653 East Harris Street Mesa
38 TownePlace Suites by Marriott - Eden Prairie 11576 and 11588 Leona Road Eden Prairie
39 Brookside Plaza Shopping Center 13750-13780 Millard Avenue Omaha
40 The Sun City Shopping Center 26800 Cherry Hills Boulevard Sun City
41 The Judson House 40 Welcome Street Haverhill
42 Long Lake Office Center 900 Long Lake Road New Brighton
43 Copper Beech Townhomes II 1003 West Aaron Drive State College
44 Town & Country Business Park 3990-3998 and 4030-4052 East Bijou Street Colorado Springs
45 Four Winds Apartments 2601 Morning Star Lane Anderson
46 Allora Way Apartments 4101 East Rancier Avenue Killeen
47 Sycamore Park Apartments 1151 West Arrow Highway Azusa
48 Promotions Distributor Services Corp. (1B) 10303 Norris Avenue Pacoima
49 Production Distribution Services Corp. (1B) 12760 Foothill Boulevard Sylmar
50 Alltel Office Building 2200 Lucien Way Maitland
51 Winn Medical Center 497 Winn Way Decatur
52 56-62 Canal Street 56-62 Canal Street Boston
53 16 Herbert Street 16 Herbert Street Newark
54 Beau Rivage Apartments 4707 East Upriver Drive Spokane
55 Tierra Corners Shopping Center 1000-1020 Tierra Del Rey Chula Vista
56 Two Technology Way Two Technology Way Norwood
57 Crossroads Shopping Center SWQ Betteravia Road & Highway 101 Santa Maria
58 County Mall 250 Westport Avenue Norwalk
59 The Radisson Graystone Castle Hotel 83 East 120th Avenue Thornton
60 Palms East Apartments 211 Caroline Street Cape Canaveral
61 North Creek Condominiums 9351 Pinyon Tree Lane Dallas
62 Fallbrook Office Park 6700 Fallbrook Avenue Los Angeles
63 Miami One Office Building 8725 Northwest 18th Terrace Miami
64 Huntington Place Apartments 1401 North Midwest Boulevard Midwest City
65 Comfort Inn-South Burlington-VT 1285 Williston Road South Burlington
66 City Centre Building One South Nevada Avenue Colorado Springs
67 Country Village Apartments 2551 Loop 35 South Alvin
68 185 Commerce Drive 185 Commerce Drive Upper Dublin Township
69 The South Point Apartments 1021 Pecan Crossing Drive Desoto
70 Copper Beech Townhomes I 1100 West Aaron Drive State College
71 Southbridge Office Buildings 1030 Main Street St. Helena
72 Pro-Met, Inc. 950 Bridgeview Street North Zilwaukee
73 Super Food Town Plaza 1080 South Main Street Bowling Green
74 The Hamptons at Central Apartments 805 Central Drive Bedford
75 Southwest Plaza 115 North El Camino Real Oceanside
76 The Basin Street Complex 201 Basin Street Williamsport
77 Waterford Plaza 825-829 Hartford Turnpike Route 85 Waterford
78 Cerritos State Road Industrial Park 20014-20210 State Road Cerritos
79 Chambers Center Shopping Center 15200-15290 East 6th Avenue Aurora
80 Hackettstown Commerce Park Building I 101 Bilby Road Hackettstown
81 Nationsbank Service Center 2901 West Cypress Creek Road Ft Lauderdale
82 Freeport Self Storage 73 East Merrick Road Freeport
83 The Virginia Highland Loan
83a 842 North Highland Avenue 842 North Highland Avenue Atlanta
83b 1052-1062 St. Charles Avenue 1052-1062 St. Charles Avenue Atlanta
83c 784-792 North Highland Avenue 784-792 North Highland Avenue Atlanta
83d 776-778 North Highland Avenue 776-778 North Highland Avenue Atlanta
84 Dolphin Self Storage (1C) 6350 Babcock Street Southeast Palm Bay
85 Kangaroom Mini-Storage (1C) 5717 14th Street West Bradenton
86 Airport Self Storage (1C) 6953 Nasa Boulevard West Melbourne
87 Stonehurst Court Apartments 7250 Walnut Street Upper Darby Township
88 The River Meadows Mobile Home Park 62880 West Lasalle Road Montrose
89 Maplewood Apartments (1D) 2161-95 Maplewood Drive Salem
90 Columbus Village Apartments (1D) 1794 Southwest Fellows Street Mcminnville
91 Dominion Center 13540, 13550 and 13598 Minnieville Road Woodbridge
92 The Argyle Apartments 3721 North Hall Street Dallas
93 Guthrie Medical Center 31 Arnot Road Big Flats
94 The Hope Group Corporate Headquarters 70 Bearfoot Road Northborough
95 SavMax Foods 563 Lewelling Boulevard San Leandro
<CAPTION>
Zip
# Property Name County State Code Property Type
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
28 Selma Square Shopping Center Fresno CA 93662 Retail
29 Holmdel Corporate Plaza/One Misco Plaza Monmouth NJ 07733 Office
30 Commons on Sanger Apartments McLennan TX 76710 Multifamily
31 The Marbrisa Apartments Victoria TX 77904 Multifamily
32 Point of Pines Apartments Suffolk MA 02151 Multifamily
33 Tammaron Village Apartments Oklahoma OK 73162 Multifamily
34 TownePlace Suites by Marriott - Brookfield Waukesha WI 53005 Hotel
35 Pittsfield Plaza Berkshire MA 01201 Retail
36 Hurstbourne Office Park Jefferson KY 40222 Office
37 Trails East Apartments Maricopa AZ 85204 Multifamily
38 TownePlace Suites by Marriott - Eden Prairie Hennepin MN 55344 Hotel
39 Brookside Plaza Shopping Center Douglas NE 68137 Retail
40 The Sun City Shopping Center Riverside CA 92586 Retail
41 The Judson House Essex MA 01830 Multifamily
42 Long Lake Office Center Ramsey MN 55112 Office
43 Copper Beech Townhomes II Centre PA 16803 Multifamily
44 Town & Country Business Park El Paso CO 80918 Office
45 Four Winds Apartments Madison IN 46011 Multifamily
46 Allora Way Apartments Bell TX 76543 Multifamily
47 Sycamore Park Apartments Los Angeles CA 91702 Multifamily
48 Promotions Distributor Services Corp. (1B) Los Angeles CA 91331 Industrial
49 Production Distribution Services Corp. (1B) Los Angeles CA 91342 Industrial
50 Alltel Office Building Orange FL 32751 Office
51 Winn Medical Center DeKalb GA 30030 Office
52 56-62 Canal Street Suffolk MA 02111 Mixed Use
53 16 Herbert Street Essex NJ 07105 Industrial
54 Beau Rivage Apartments Spokane WA 99217 Multifamily
55 Tierra Corners Shopping Center San Diego CA 91910 Retail
56 Two Technology Way Norfolk MA 02062 Industrial
57 Crossroads Shopping Center Santa Barbara CA 93454 Retail
58 County Mall Fairfield CT 06851 Retail
59 The Radisson Graystone Castle Hotel Adams CO 80233 Hotel
60 Palms East Apartments Brevard FL 32920 Multifamily
61 North Creek Condominiums Dallas TX 75243 Multifamily
62 Fallbrook Office Park Los Angeles CA 91307 Office
63 Miami One Office Building Miami-Dade FL 33172 Office
64 Huntington Place Apartments Oklahoma OK 73110 Multifamily
65 Comfort Inn-South Burlington-VT Chittenden VT 05403 Hotel
66 City Centre Building El Paso CO 80903 Office
67 Country Village Apartments Brazoria TX 77511 Multifamily
68 185 Commerce Drive Montgomery PA 19034 Office
69 The South Point Apartments Dallas TX 75115 Multifamily
70 Copper Beech Townhomes I Centre PA 16803 Multifamily
71 Southbridge Office Buildings Napa CA 94574 Office
72 Pro-Met, Inc. Saginaw MI 48604 Industrial
73 Super Food Town Plaza Wood OH 43402 Retail
74 The Hamptons at Central Apartments Tarrant TX 76022 Multifamily
75 Southwest Plaza San Diego CA 92054 Retail
76 The Basin Street Complex Lycoming PA 17701 Mixed Use
77 Waterford Plaza New London CT 06785 Retail
78 Cerritos State Road Industrial Park Los Angeles CA 90703 Industrial
79 Chambers Center Shopping Center Arapahoe CO 80011 Office
80 Hackettstown Commerce Park Building I Warren NJ 07840 Industrial
81 Nationsbank Service Center Broward FL 33309 Office
82 Freeport Self Storage Nassau NY 11520 Mixed Use
83 The Virginia Highland Loan
83a 842 North Highland Avenue Fulton GA 30306 Retail
83b 1052-1062 St. Charles Avenue Fulton GA 30306 Retail
83c 784-792 North Highland Avenue Fulton GA 30306 Retail
83d 776-778 North Highland Avenue Fulton GA 30306 Retail
84 Dolphin Self Storage (1C) Brevard FL 32909 Self Storage
85 Kangaroom Mini-Storage (1C) Manatee FL 34207 Self Storage
86 Airport Self Storage (1C) Brevard FL 32904 Self Storage
87 Stonehurst Court Apartments Delaware PA 19082 Multifamily
88 The River Meadows Mobile Home Park Montrose CO 81401 Manufactured Housing
89 Maplewood Apartments (1D) Marion OR 97306 Multifamily
90 Columbus Village Apartments (1D) Yamhill OR 97128 Multifamily
91 Dominion Center Prince William VA 22192 Retail
92 The Argyle Apartments Dallas TX 75219 Multifamily
93 Guthrie Medical Center Chemung NY 14845 Office
94 The Hope Group Corporate Headquarters Worcester MA 01532 Industrial
95 SavMax Foods Alameda CA 94579 Retail
<CAPTION>
Units/
Sq. Ft./
Mortgage Rooms/
# Property Name Property Sub-type Loan Seller Pads
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
28 Selma Square Shopping Center Anchored Column 77,383
29 Holmdel Corporate Plaza/One Misco Plaza Midland 120,160
30 Commons on Sanger Apartments Column 327
31 The Marbrisa Apartments Midland 288
32 Point of Pines Apartments Midland 72
33 Tammaron Village Apartments Midland 400
34 TownePlace Suites by Marriott - Brookfield Limited Service Column 112
35 Pittsfield Plaza Anchored Midland 127,402
36 Hurstbourne Office Park Midland 105,116
37 Trails East Apartments Midland 209
38 TownePlace Suites by Marriott - Eden Prairie Limited Service Column 103
39 Brookside Plaza Shopping Center Anchored Column 90,420
40 The Sun City Shopping Center Shadow Anchored Midland 83,513
41 The Judson House Midland 117
42 Long Lake Office Center Midland 68,043
43 Copper Beech Townhomes II Midland 86
44 Town & Country Business Park Midland 79,645
45 Four Winds Apartments Column 168
46 Allora Way Apartments Column 200
47 Sycamore Park Apartments Midland 122
48 Promotions Distributor Services Corp. (1B) Midland 68,403
49 Production Distribution Services Corp. (1B) Midland 43,850
50 Alltel Office Building Midland 59,997
51 Winn Medical Center Midland 61,028
52 56-62 Canal Street Office/Industrial Midland 44,985
53 16 Herbert Street Column 304,696
54 Beau Rivage Apartments Midland 132
55 Tierra Corners Shopping Center Anchored Midland 38,966
56 Two Technology Way Midland 76,376
57 Crossroads Shopping Center Shadow Anchored Midland 25,788
58 County Mall Unanchored Column 44,247
59 The Radisson Graystone Castle Hotel Full Service Column 135
60 Palms East Apartments Midland 216
61 North Creek Condominiums Column 158
62 Fallbrook Office Park Column 52,723
63 Miami One Office Building Column 57,244
64 Huntington Place Apartments Midland 287
65 Comfort Inn-South Burlington-VT Limited Service Midland 105
66 City Centre Building Midland 36,061
67 Country Village Apartments Midland 152
68 185 Commerce Drive Midland 41,744
69 The South Point Apartments Midland 128
70 Copper Beech Townhomes I Midland 59
71 Southbridge Office Buildings Column 26,398
72 Pro-Met, Inc. Midland 92,052
73 Super Food Town Plaza Anchored Midland 91,325
74 The Hamptons at Central Apartments Column 136
75 Southwest Plaza Unanchored Midland 35,368
76 The Basin Street Complex Office/Retail Column 90,258
77 Waterford Plaza Unanchored Midland 20,531
78 Cerritos State Road Industrial Park Column 78,614
79 Chambers Center Shopping Center Midland 81,308
80 Hackettstown Commerce Park Building I Midland 65,671
81 Nationsbank Service Center Midland 39,978
82 Freeport Self Storage Self Storage/Industrial Midland 48,313
83 The Virginia Highland Loan Column
83a 842 North Highland Avenue Unanchored 15,411
83b 1052-1062 St. Charles Avenue Unanchored 8,556
83c 784-792 North Highland Avenue Unanchored 5,688
83d 776-778 North Highland Avenue Unanchored 3,812
84 Dolphin Self Storage (1C) Column 34,813
85 Kangaroom Mini-Storage (1C) Column 35,252
86 Airport Self Storage (1C) Column 21,630
87 Stonehurst Court Apartments Midland 144
88 The River Meadows Mobile Home Park Midland 195
89 Maplewood Apartments (1D) Midland 33
90 Columbus Village Apartments (1D) Midland 66
91 Dominion Center Unanchored Column 27,977
92 The Argyle Apartments Midland 48
93 Guthrie Medical Center Midland 35,000
94 The Hope Group Corporate Headquarters Midland 61,280
95 SavMax Foods Unanchored Column 49,050
<CAPTION>
Occupancy
Fee Simple/ Year Year Rate at
# Property Name Leasehold Built Renovated U/W (3)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
28 Selma Square Shopping Center Fee 1999 N/A 88%
29 Holmdel Corporate Plaza/One Misco Plaza Fee 1990 N/A 96%
30 Commons on Sanger Apartments Fee 1978 1997 94%
31 The Marbrisa Apartments Fee 1982 N/A 91%
32 Point of Pines Apartments Fee 1987 N/A 100%
33 Tammaron Village Apartments Fee 1983 N/A 97%
34 TownePlace Suites by Marriott - Brookfield Fee 1997 1998 N/A
35 Pittsfield Plaza Fee 1970 1998 87%
36 Hurstbourne Office Park Fee 1975 1997 95%
37 Trails East Apartments Fee 1983 N/A 95%
38 TownePlace Suites by Marriott - Eden Prairie Fee 1997 1998 N/A
39 Brookside Plaza Shopping Center Fee 1990 1991 99%
40 The Sun City Shopping Center Fee 1965 N/A 91%
41 The Judson House Fee 1979 N/A 97%
42 Long Lake Office Center Fee 1990 N/A 100%
43 Copper Beech Townhomes II Fee/Leasehold 1998 N/A 100%
44 Town & Country Business Park Fee 1983 1997 100%
45 Four Winds Apartments Fee 1970 1998 89%
46 Allora Way Apartments Fee 1974 1994 94%
47 Sycamore Park Apartments Fee 1987 N/A 99%
48 Promotions Distributor Services Corp. (1B) Fee 1990 1996 100%
49 Production Distribution Services Corp. (1B) Fee 1982 N/A 100%
50 Alltel Office Building Fee 1984 N/A 100%
51 Winn Medical Center Fee 1976 N/A 94%
52 56-62 Canal Street Fee 1899 1997 100%
53 16 Herbert Street Fee 1930 1970 100%
54 Beau Rivage Apartments Fee 1997 N/A 98%
55 Tierra Corners Shopping Center Fee 1998 N/A 100%
56 Two Technology Way Fee 1979 N/A 100%
57 Crossroads Shopping Center Fee 1999 N/A 89%
58 County Mall Fee 1974 1998 100%
59 The Radisson Graystone Castle Hotel Fee 1984 1999 N/A
60 Palms East Apartments Fee 1966 1990 94%
61 North Creek Condominiums Fee 1969 1999 93%
62 Fallbrook Office Park Fee 1981 1993 100%
63 Miami One Office Building Fee 1983 1999 87%
64 Huntington Place Apartments Fee 1974 1997 97%
65 Comfort Inn-South Burlington-VT Leasehold 1988 N/A N/A
66 City Centre Building Fee 1999 N/A 100%
67 Country Village Apartments Fee 1977 N/A 93%
68 185 Commerce Drive Fee 1958 1998 100%
69 The South Point Apartments Fee 1984 N/A 98%
70 Copper Beech Townhomes I Fee 1996 N/A 100%
71 Southbridge Office Buildings Fee 1912 1997 100%
72 Pro-Met, Inc. Fee 1996 N/A 100%
73 Super Food Town Plaza Fee 1970 1991 100%
74 The Hamptons at Central Apartments Fee 1969 1993 94%
75 Southwest Plaza Fee 1980 N/A 93%
76 The Basin Street Complex Fee 1934 1998 96%
77 Waterford Plaza Fee 1986 1995 100%
78 Cerritos State Road Industrial Park Fee 1972 N/A 100%
79 Chambers Center Shopping Center Fee 1980 N/A 83%
80 Hackettstown Commerce Park Building I Fee 1988 N/A 100%
81 Nationsbank Service Center Fee 1982 1994 100%
82 Freeport Self Storage Fee 1969 1997 94%
83 The Virginia Highland Loan
83a 842 North Highland Avenue Fee 1960 1992 100%
83b 1052-1062 St. Charles Avenue Fee 1940 1992 100%
83c 784-792 North Highland Avenue Fee 1927 1992 100%
83d 776-778 North Highland Avenue Fee 1920 1992 100%
84 Dolphin Self Storage (1C) Fee 1986 1999 98%
85 Kangaroom Mini-Storage (1C) Fee 1986 N/A 85%
86 Airport Self Storage (1C) Fee 1979 1994 98%
87 Stonehurst Court Apartments Fee 1927 1998 92%
88 The River Meadows Mobile Home Park Fee 1979 N/A 99%
89 Maplewood Apartments (1D) Fee 1997 N/A 100%
90 Columbus Village Apartments (1D) Fee 1995 N/A 99%
91 Dominion Center Fee 1988 1989 98%
92 The Argyle Apartments Fee 1926 1991 96%
93 Guthrie Medical Center Fee 1968 1995 100%
94 The Hope Group Corporate Headquarters Fee 1984 N/A 100%
95 SavMax Foods Fee 1986 1992 100%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Maturity/
Date of Cut-off ARD
Occupancy Appraised Date LTV Date LTV Underwritable
# Property Name Rate Value Ratio (4) Ratio (4) (5) NOI
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
28 Selma Square Shopping Center 5/1/99 8,855,000 79.0% 71.3% 817,944
29 Holmdel Corporate Plaza/One Misco Plaza 7/9/99 9,500,000 72.5% 64.9% 900,602
30 Commons on Sanger Apartments 7/26/99 9,590,000 69.3% 62.2% 813,817
31 The Marbrisa Apartments 6/24/99 8,400,000 78.9% 70.6% 778,222
32 Point of Pines Apartments 8/10/99 8,310,000 78.1% 69.8% 744,058
33 Tammaron Village Apartments 7/15/99 8,300,000 77.9% 68.6% 749,203
34 TownePlace Suites by Marriott - Brookfield N/A 9,200,000 69.0% 57.5% 977,861
35 Pittsfield Plaza 8/9/99 10,400,000 59.8% 49.6% 781,329
36 Hurstbourne Office Park 8/10/99 7,300,000 78.3% 70.4% 767,195
37 Trails East Apartments 6/20/99 7,388,000 77.2% 68.8% 638,946
38 TownePlace Suites by Marriott - Eden Prairie N/A 8,600,000 65.6% 54.7% 901,936
39 Brookside Plaza Shopping Center 5/1/99 7,000,000 80.0% 72.2% 657,904
40 The Sun City Shopping Center 8/1/99 7,530,000 73.8% 61.1% 826,399
41 The Judson House 9/13/99 7,000,000 77.7% 70.1% 674,354
42 Long Lake Office Center 8/31/99 7,600,000 71.4% 64.4% 717,153
43 Copper Beech Townhomes II 7/28/99 7,271,000 74.1% 66.1% 675,673
44 Town & Country Business Park 8/31/99 7,000,000 74.7% 66.7% 657,312
45 Four Winds Apartments 9/3/99 6,560,000 78.5% 70.1% 595,951
46 Allora Way Apartments 8/25/99 6,250,000 80.0% 72.5% 655,324
47 Sycamore Park Apartments 6/25/99 6,400,000 77.6% 61.5% 640,506
48 Promotions Distributor Services Corp. (1B) 9/7/99 4,400,000 73.8% 64.6% 391,596
49 Production Distribution Services Corp. (1B) 8/2/99 2,300,000 73.8% 64.6% 214,711
50 Alltel Office Building 5/1/99 6,520,000 71.1% 63.7% 620,638
51 Winn Medical Center 6/30/99 6,275,000 72.4% 65.2% 665,276
52 56-62 Canal Street 7/31/99 6,250,000 72.2% 56.9% 806,951
53 16 Herbert Street 9/1/99 6,400,000 70.2% 58.9% 671,158
54 Beau Rivage Apartments 9/16/99 5,300,000 83.6% 74.4% 510,441
55 Tierra Corners Shopping Center 9/7/99 5,600,000 78.3% 69.5% 502,890
56 Two Technology Way 6/30/99 5,600,000 77.8% 62.6% 533,722
57 Crossroads Shopping Center 4/9/99 6,300,000 68.0% 60.7% 510,585
58 County Mall 2/1/99 6,850,000 61.3% 54.0% 563,001
59 The Radisson Graystone Castle Hotel N/A 8,275,000 49.5% 41.6% 802,297
60 Palms East Apartments 9/1/99 5,300,000 75.5% 68.3% 582,096
61 North Creek Condominiums 6/8/99 5,050,000 79.0% 71.1% 486,308
62 Fallbrook Office Park 7/1/99 5,700,000 68.4% 61.6% 524,644
63 Miami One Office Building 9/1/99 5,200,000 75.0% 67.2% 481,119
64 Huntington Place Apartments 10/29/99 5,265,000 73.2% 64.5% 541,479
65 Comfort Inn-South Burlington-VT N/A 5,335,000 71.5% 58.6% 652,564
66 City Centre Building 7/19/99 4,800,000 74.9% 67.5% 461,542
67 Country Village Apartments 6/8/99 4,500,000 79.7% 70.3% 424,034
68 185 Commerce Drive 8/1/99 4,500,000 76.5% 69.0% 444,017
69 The South Point Apartments 6/30/99 4,280,000 78.0% 69.8% 384,513
70 Copper Beech Townhomes I 7/28/99 4,850,000 68.3% 60.1% 471,911
71 Southbridge Office Buildings 9/1/99 4,800,000 68.7% 61.7% 416,305
72 Pro-Met, Inc. 9/22/99 4,200,000 78.5% 70.5% 418,468
73 Super Food Town Plaza 9/3/99 4,150,000 79.2% 69.6% 407,630
74 The Hamptons at Central Apartments 5/3/99 4,450,000 72.9% 68.7% 436,033
75 Southwest Plaza 6/11/99 4,375,000 73.0% 65.9% 419,077
76 The Basin Street Complex 6/1/99 4,500,000 70.9% 60.5% 531,848
77 Waterford Plaza 7/27/99 4,200,000 74.7% 62.2% 401,355
78 Cerritos State Road Industrial Park 4/1/99 4,430,000 68.2% 60.4% 436,202
79 Chambers Center Shopping Center 9/13/99 4,840,000 61.8% 51.9% 494,058
80 Hackettstown Commerce Park Building I 7/23/99 4,000,000 74.8% 62.0% 390,489
81 Nationsbank Service Center 4/15/99 3,900,000 74.7% 67.0% 379,414
82 Freeport Self Storage 6/9/99 4,250,000 68.4% 57.5% 387,821
83 The Virginia Highland Loan 4,185,000 68.6% 57.4% 406,105
83a 842 North Highland Avenue 7/1/99 1,760,000
83b 1052-1062 St. Charles Avenue 7/1/99 1,110,000
83c 784-792 North Highland Avenue 7/1/99 800,000
83d 776-778 North Highland Avenue 7/1/99 515,000
84 Dolphin Self Storage (1C) 7/31/99 1,850,000 63.6% 53.8% 199,565
85 Kangaroom Mini-Storage (1C) 7/31/99 1,900,000 63.6% 53.8% 142,999
86 Airport Self Storage (1C) 7/31/99 650,000 63.6% 53.8% 67,666
87 Stonehurst Court Apartments 7/26/99 3,900,000 71.6% 63.9% 352,009
88 The River Meadows Mobile Home Park 6/18/99 3,420,000 78.7% 75.7% 313,510
89 Maplewood Apartments (1D) 6/29/99 1,400,000 67.5% 59.7% 113,369
90 Columbus Village Apartments (1D) 6/29/99 2,550,000 67.5% 59.7% 216,358
91 Dominion Center 8/1/99 3,600,000 73.0% 65.9% 347,783
92 The Argyle Apartments 8/26/99 3,400,000 75.0% 66.3% 279,257
93 Guthrie Medical Center 8/12/99 4,000,000 63.3% 1.7% 395,596
94 The Hope Group Corporate Headquarters 7/6/99 3,350,000 75.5% 54.0% 359,377
95 SavMax Foods 6/30/99 4,210,000 59.3% 48.7% 378,063
<CAPTION>
Contractual
Engineering Recurring Contractual
Underwritable Reserve at Replacement Recurring
# Property Name NCF (6) DSCR (7) Origination Reserve LC&TI
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
28 Selma Square Shopping Center 788,334 1.24 N/A N/A N/A
29 Holmdel Corporate Plaza/One Misco Plaza 762,802 1.26 $20,938 $18,024 $100,000
30 Commons on Sanger Apartments 732,067 1.24 $65,000 $81,750 N/A
31 The Marbrisa Apartments 706,222 1.22 $550,000 $72,000 N/A
32 Point of Pines Apartments 726,058 1.28 N/A $14,400 N/A
33 Tammaron Village Apartments 649,203 1.26 $105,000 N/A N/A
34 TownePlace Suites by Marriott - Brookfield 877,465 1.45 $20,000 4.00% N/A
35 Pittsfield Plaza 722,341 1.25 N/A $19,140 $24,000
36 Hurstbourne Office Park 640,816 1.25 $100,000 $21,021 $50,000
37 Trails East Apartments 586,696 1.24 $275,000 N/A N/A
38 TownePlace Suites by Marriott - Eden Prairie 803,922 1.49 N/A 4.00% N/A
39 Brookside Plaza Shopping Center 619,242 1.21 $4,313 $13,563 $18,000
40 The Sun City Shopping Center 715,964 1.43 N/A $16,704 $64,404
41 The Judson House 645,354 1.30 N/A $102,560 N/A
42 Long Lake Office Center 615,067 1.25 $20,000 $13,609 $60,000
43 Copper Beech Townhomes II 645,573 1.39 N/A $25,800 N/A
44 Town & Country Business Park 589,184 1.31 N/A $12,000 $24,000
45 Four Winds Apartments 553,951 1.23 N/A $25,200 N/A
46 Allora Way Apartments 605,324 1.30 $14,875 $50,000 N/A
47 Sycamore Park Apartments 610,006 1.45 N/A $30,500 N/A
48 Promotions Distributor Services Corp. (1B) 367,765 1.25 N/A $6,840 N/A
49 Production Distribution Services Corp. (1B) 194,090 1.25 N/A $9,209 N/A
50 Alltel Office Building 535,461 1.31 N/A $11,948 N/A
51 Winn Medical Center 568,804 1.39 N/A $13,426 $36,000
52 56-62 Canal Street 754,472 1.75 N/A N/A N/A
53 16 Herbert Street 549,574 1.26 $66,500 $30,500 $99,996
54 Beau Rivage Apartments 477,441 1.31 N/A N/A N/A
55 Tierra Corners Shopping Center 483,281 1.30 N/A $3,032 $35,000
56 Two Technology Way 480,257 1.32 $340,825 $11,456 $25,800
57 Crossroads Shopping Center 483,043 1.31 N/A $2,579 $12,000
58 County Mall 519,336 1.28 $4,540 N/A $40,800
59 The Radisson Graystone Castle Hotel 604,232 1.50 $171,250 4.00% N/A
60 Palms East Apartments 528,096 1.49 N/A $54,000 N/A
61 North Creek Condominiums 446,808 1.25 $24,125 $39,500 N/A
62 Fallbrook Office Park 450,848 1.28 N/A N/A $52,723
63 Miami One Office Building 417,987 1.21 N/A $11,449 N/A
64 Huntington Place Apartments 469,479 1.52 N/A N/A N/A
65 Comfort Inn-South Burlington-VT 555,283 1.65 N/A 4.00% N/A
66 City Centre Building 412,254 1.27 N/A $5,500 $15,000
67 Country Village Apartments 386,034 1.30 $150,000 $38,000 N/A
68 185 Commerce Drive 394,945 1.27 $24,438 $8,350 $45,000
69 The South Point Apartments 352,513 1.21 N/A $32,000 N/A
70 Copper Beech Townhomes I 454,211 1.72 N/A $12,957 N/A
71 Southbridge Office Buildings 371,428 1.26 N/A N/A N/A
72 Pro-Met, Inc. 389,879 1.33 N/A $9,000 $15,000
73 Super Food Town Plaza 358,749 1.37 $4,375 $8,830 $15,000
74 The Hamptons at Central Apartments 402,033 1.36 N/A $34,000 N/A
75 Southwest Plaza 382,081 1.32 N/A $5,065 N/A
76 The Basin Street Complex 444,784 1.37 $2,500 $13,539 N/A
77 Waterford Plaza 380,775 1.28 N/A $3,080 $15,000
78 Cerritos State Road Industrial Park 382,169 1.33 $7,500 N/A N/A
79 Chambers Center Shopping Center 413,101 1.42 N/A $12,026 $50,004
80 Hackettstown Commerce Park Building I 352,102 1.26 N/A $7,350 N/A
81 Nationsbank Service Center 337,974 1.32 N/A $8,000 $32,000
82 Freeport Self Storage 369,684 1.30 $99,063 $7,198 $11,303
83 The Virginia Highland Loan 368,274 1.33 N/A N/A $24,924
83a 842 North Highland Avenue N/A N/A $10,483
83b 1052-1062 St. Charles Avenue N/A N/A $6,610
83c 784-792 North Highland Avenue N/A N/A $4,764
83d 776-778 North Highland Avenue N/A N/A $3,067
84 Dolphin Self Storage (1C) 194,343 1.42 N/A $6,960 N/A
85 Kangaroom Mini-Storage (1C) 137,711 1.42 N/A $7,050 N/A
86 Airport Self Storage (1C) 64,421 1.42 N/A $4,376 N/A
87 Stonehurst Court Apartments 316,009 1.31 $300,000 $36,000 N/A
88 The River Meadows Mobile Home Park 303,760 1.27 N/A $9,750 N/A
89 Maplewood Apartments (1D) 105,119 1.41 N/A N/A N/A
90 Columbus Village Apartments (1D) 199,858 1.41 N/A N/A N/A
91 Dominion Center 310,644 1.30 $12,500 N/A $47,568
92 The Argyle Apartments 262,954 1.27 N/A $12,735 N/A
93 Guthrie Medical Center 362,313 1.20 N/A $7,000 N/A
94 The Hope Group Corporate Headquarters 341,067 1.32 N/A $6,132 N/A
95 SavMax Foods 346,113 1.52 N/A N/A N/A
<CAPTION>
Underwritable
Recurring Percentage of
Replacement Underwritable Original Cut-off Initial
# Property Name Reserve LC&TI Balance Balance (8) Pool Balance
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
28 Selma Square Shopping Center $8,500 $21,110 7,000,000 6,995,600 0.9%
29 Holmdel Corporate Plaza/One Misco Plaza $18,024 $119,776 6,900,000 6,884,317 0.9%
30 Commons on Sanger Apartments $81,750 N/A 6,650,000 6,642,732 0.9%
31 The Marbrisa Apartments $72,000 N/A 6,650,000 6,631,331 0.9%
32 Point of Pines Apartments $18,000 N/A 6,500,000 6,488,024 0.9%
33 Tammaron Village Apartments $100,000 N/A 6,550,000 6,462,194 0.8%
34 TownePlace Suites by Marriott - Brookfield 5.00% N/A 6,350,000 6,343,714 0.8%
35 Pittsfield Plaza $19,139 $39,849 6,260,000 6,223,800 0.8%
36 Hurstbourne Office Park $21,021 $105,358 5,725,000 5,715,099 0.8%
37 Trails East Apartments $52,250 N/A 5,800,000 5,702,303 0.7%
38 TownePlace Suites by Marriott - Eden Prairie 5.00% N/A 5,645,000 5,639,412 0.7%
39 Brookside Plaza Shopping Center $13,563 $25,099 5,600,000 5,596,509 0.7%
40 The Sun City Shopping Center $16,703 $93,732 5,675,000 5,560,431 0.7%
41 The Judson House $29,000 N/A 5,440,000 5,436,622 0.7%
42 Long Lake Office Center $13,609 $88,477 5,432,000 5,426,380 0.7%
43 Copper Beech Townhomes II $30,100 N/A 5,400,000 5,389,711 0.7%
44 Town & Country Business Park $12,743 $55,385 5,250,000 5,230,800 0.7%
45 Four Winds Apartments $42,000 N/A 5,150,000 5,146,502 0.7%
46 Allora Way Apartments $50,000 N/A 5,000,000 4,997,014 0.7%
47 Sycamore Park Apartments $30,500 N/A 5,050,000 4,966,433 0.7%
48 Promotions Distributor Services Corp. (1B) $6,840 $16,991 3,300,000 3,296,423 0.4%
49 Production Distribution Services Corp. (1B) $9,542 $11,079 1,650,000 1,645,244 0.2%
50 Alltel Office Building $11,948 $73,229 4,646,000 4,637,624 0.6%
51 Winn Medical Center $13,426 $83,046 4,550,000 4,545,201 0.6%
52 56-62 Canal Street $6,748 $45,731 4,600,000 4,514,716 0.6%
53 16 Herbert Street $30,470 $91,114 4,500,000 4,492,412 0.6%
54 Beau Rivage Apartments $33,000 N/A 4,500,000 4,433,118 0.6%
55 Tierra Corners Shopping Center $3,032 $16,577 4,400,000 4,383,106 0.6%
56 Two Technology Way $11,456 $42,009 4,430,000 4,356,373 0.6%
57 Crossroads Shopping Center $2,579 $24,963 4,299,000 4,281,174 0.6%
58 County Mall $8,048 $35,617 4,200,000 4,196,959 0.6%
59 The Radisson Graystone Castle Hotel 4.00% N/A 4,100,000 4,096,137 0.5%
60 Palms East Apartments $54,000 N/A 4,050,000 4,003,157 0.5%
61 North Creek Condominiums $39,500 N/A 4,000,000 3,989,600 0.5%
62 Fallbrook Office Park $10,933 $62,863 3,900,000 3,897,518 0.5%
63 Miami One Office Building $8,587 $54,545 3,900,000 3,897,425 0.5%
64 Huntington Place Apartments $72,000 N/A 3,900,000 3,854,115 0.5%
65 Comfort Inn-South Burlington-VT 5.00% N/A 3,875,000 3,812,987 0.5%
66 City Centre Building $7,212 $42,076 3,600,000 3,593,911 0.5%
67 Country Village Apartments $38,000 N/A 3,600,000 3,588,151 0.5%
68 185 Commerce Drive $7,515 $41,557 3,450,000 3,444,136 0.5%
69 The South Point Apartments $32,000 N/A 3,350,000 3,340,464 0.4%
70 Copper Beech Townhomes I $17,700 N/A 3,350,000 3,310,140 0.4%
71 Southbridge Office Buildings $5,280 $39,597 3,300,000 3,297,857 0.4%
72 Pro-Met, Inc. $9,200 $19,389 3,300,000 3,296,413 0.4%
73 Super Food Town Plaza $13,699 $35,182 3,320,000 3,285,903 0.4%
74 The Hamptons at Central Apartments $34,000 N/A 3,250,000 3,242,008 0.4%
75 Southwest Plaza $5,305 $31,691 3,202,500 3,194,436 0.4%
76 The Basin Street Complex $13,538 $73,526 3,200,000 3,192,374 0.4%
77 Waterford Plaza $3,080 $17,500 3,150,000 3,138,520 0.4%
78 Cerritos State Road Industrial Park $11,792 $42,241 3,025,000 3,021,393 0.4%
79 Chambers Center Shopping Center $14,338 $66,619 3,000,000 2,991,961 0.4%
80 Hackettstown Commerce Park Building I $7,350 $31,037 3,000,000 2,991,257 0.4%
81 Nationsbank Service Center $8,000 $33,440 2,925,000 2,914,768 0.4%
82 Freeport Self Storage $7,198 $10,939 2,911,000 2,906,161 0.4%
83 The Virginia Highland Loan $5,020 $32,811 2,875,000 2,870,042 0.4%
83a 842 North Highland Avenue $2,312 $15,109
83b 1052-1062 St. Charles Avenue $1,283 $8,388
83c 784-792 North Highland Avenue $853 $5,577
83d 776-778 North Highland Avenue $572 $3,737
84 Dolphin Self Storage (1C) $5,222 N/A 1,300,000 1,298,817 0.2%
85 Kangaroom Mini-Storage (1C) $5,288 N/A 1,100,000 1,098,999 0.1%
86 Airport Self Storage (1C) $3,245 N/A 400,000 399,636 0.1%
87 Stonehurst Court Apartments $36,000 N/A 2,800,000 2,793,344 0.4%
88 The River Meadows Mobile Home Park $9,750 N/A 2,700,000 2,692,755 0.4%
89 Maplewood Apartments (1D) $8,250 N/A 860,000 849,504 0.1%
90 Columbus Village Apartments (1D) $16,500 N/A 1,840,000 1,817,543 0.2%
91 Dominion Center $9,232 $27,907 2,630,000 2,627,309 0.3%
92 The Argyle Apartments $12,735 $3,568 2,580,000 2,550,393 0.3%
93 Guthrie Medical Center $7,000 $26,284 2,553,000 2,532,305 0.3%
94 The Hope Group Corporate Headquarters $6,128 $12,182 2,546,000 2,530,113 0.3%
95 SavMax Foods $7,358 $24,592 2,500,000 2,497,302 0.3%
<CAPTION>
Orig Rem. Orig Rem.
Maturity Amort. Amort. Term to Term to Interest
# Property Name Balance Term Term Maturity (9) Maturity (9) Rate
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
28 Selma Square Shopping Center 6,315,631 360 359 119 118 8.320%
29 Holmdel Corporate Plaza/One Misco Plaza 6,169,779 360 356 120 116 7.980%
30 Commons on Sanger Apartments 5,963,012 360 358 120 118 8.100%
31 The Marbrisa Apartments 5,934,439 360 355 120 115 7.890%
32 Point of Pines Apartments 5,801,277 360 357 120 117 7.910%
33 Tammaron Village Apartments 5,692,762 360 343 120 103 6.860%
34 TownePlace Suites by Marriott - Brookfield 5,289,686 300 299 120 119 8.370%
35 Pittsfield Plaza 5,155,807 300 294 120 114 7.960%
36 Hurstbourne Office Park 5,141,252 360 357 120 117 8.170%
37 Trails East Apartments 5,081,143 360 338 120 98 7.190%
38 TownePlace Suites by Marriott - Eden Prairie 4,702,406 300 299 120 119 8.370%
39 Brookside Plaza Shopping Center 5,051,003 360 359 120 119 8.360%
40 The Sun City Shopping Center 4,599,452 300 282 120 102 7.420%
41 The Judson House 4,908,942 360 359 120 119 8.380%
42 Long Lake Office Center 4,893,691 360 358 120 118 8.300%
43 Copper Beech Townhomes II 4,803,177 360 357 120 117 7.770%
44 Town & Country Business Park 4,667,302 360 354 120 114 7.740%
45 Four Winds Apartments 4,599,536 360 359 120 119 7.940%
46 Allora Way Apartments 4,531,389 360 359 120 119 8.570%
47 Sycamore Park Apartments 3,938,685 360 337 180 157 7.440%
48 Promotions Distributor Services Corp. (1B) 2,961,185 360 358 120 118 8.130%
49 Production Distribution Services Corp. (1B) 1,365,264 300 297 120 117 8.130%
50 Alltel Office Building 4,155,532 360 357 120 117 8.000%
51 Winn Medical Center 4,092,432 360 358 120 118 8.230%
52 56-62 Canal Street 3,558,310 300 281 144 125 8.160%
53 16 Herbert Street 3,769,340 300 298 120 118 8.560%
54 Beau Rivage Apartments 3,944,036 360 340 120 100 7.180%
55 Tierra Corners Shopping Center 3,893,239 360 354 120 114 7.550%
56 Two Technology Way 3,503,474 300 287 120 107 6.640%
57 Crossroads Shopping Center 3,824,396 360 353 120 113 7.760%
58 County Mall 3,700,839 330 329 120 119 8.790%
59 The Radisson Graystone Castle Hotel 3,443,830 300 299 120 119 8.670%
60 Palms East Apartments 3,619,225 360 341 120 101 7.950%
61 North Creek Condominiums 3,592,690 360 355 120 115 8.160%
62 Fallbrook Office Park 3,509,551 360 359 120 119 8.260%
63 Miami One Office Building 3,494,782 360 359 120 119 8.080%
64 Huntington Place Apartments 3,395,914 360 345 120 105 6.940%
65 Comfort Inn-South Burlington-VT 3,125,128 300 286 120 106 7.260%
66 City Centre Building 3,239,722 360 357 120 117 8.260%
67 Country Village Apartments 3,165,605 360 355 120 115 7.300%
68 185 Commerce Drive 3,103,290 360 357 120 117 8.240%
69 The South Point Apartments 2,985,901 360 355 120 115 7.840%
70 Copper Beech Townhomes I 2,913,106 360 345 120 105 6.890%
71 Southbridge Office Buildings 2,962,701 360 359 120 119 8.160%
72 Pro-Met, Inc. 2,960,486 360 358 120 118 8.120%
73 Super Food Town Plaza 2,887,705 360 347 120 107 6.900%
74 The Hamptons at Central Apartments 3,056,794 360 355 84 79 8.350%
75 Southwest Plaza 2,883,819 360 355 120 115 8.270%
76 The Basin Street Complex 2,721,408 300 297 120 117 9.130%
77 Waterford Plaza 2,612,933 300 296 120 116 8.210%
78 Cerritos State Road Industrial Park 2,674,251 336 334 120 118 8.610%
79 Chambers Center Shopping Center 2,509,637 300 297 120 117 8.520%
80 Hackettstown Commerce Park Building I 2,478,045 300 297 120 117 8.070%
81 Nationsbank Service Center 2,611,145 360 354 120 114 7.910%
82 Freeport Self Storage 2,443,049 300 298 120 118 8.630%
83 The Virginia Highland Loan 2,400,854 300 298 120 118 8.450%
83a 842 North Highland Avenue
83b 1052-1062 St. Charles Avenue
83c 784-792 North Highland Avenue
83d 776-778 North Highland Avenue
84 Dolphin Self Storage (1C) 1,098,176 300 299 120 119 8.880%
85 Kangaroom Mini-Storage (1C) 929,226 300 299 120 119 8.880%
86 Airport Self Storage (1C) 337,900 300 299 120 119 8.880%
87 Stonehurst Court Apartments 2,493,412 360 356 120 116 7.810%
88 The River Meadows Mobile Home Park 2,587,919 360 355 60 55 8.050%
89 Maplewood Apartments (1D) 750,742 360 344 120 104 7.030%
90 Columbus Village Apartments (1D) 1,606,239 360 344 120 104 7.030%
91 Dominion Center 2,371,560 360 358 120 118 8.340%
92 The Argyle Apartments 2,253,088 360 345 120 105 7.050%
93 Guthrie Medical Center 68,041 180 177 180 177 8.510%
94 The Hope Group Corporate Headquarters 1,808,086 240 236 120 116 8.190%
95 SavMax Foods 2,051,259 300 299 120 119 7.840%
<CAPTION>
First
Interest Calculation Monthly Payment Maturity
# Property Name (30/360 / Actual/360) Payment Date Date ARD (10) Seasoning
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
28 Selma Square Shopping Center Actual/360 52,933.53 12/1/99 10/1/09 1
29 Holmdel Corporate Plaza/One Misco Plaza Actual/360 50,533.59 9/1/99 8/1/09 4
30 Commons on Sanger Apartments Actual/360 49,259.72 11/1/99 10/1/09 2
31 The Marbrisa Apartments Actual/360 48,286.37 8/1/99 7/1/09 5
32 Point of Pines Apartments Actual/360 47,287.52 10/1/99 9/1/09 3
33 Tammaron Village Apartments Actual/360 42,963.21 8/1/98 7/1/08 17
34 TownePlace Suites by Marriott - Brookfield Actual/360 50,576.82 12/1/99 11/1/09 1
35 Pittsfield Plaza Actual/360 48,149.94 7/1/99 6/1/09 6
36 Hurstbourne Office Park Actual/360 42,688.46 10/1/99 9/1/09 3
37 Trails East Apartments Actual/360 39,330.46 3/1/98 2/1/08 22
38 TownePlace Suites by Marriott - Eden Prairie Actual/360 44,961.60 12/1/99 11/1/09 1
39 Brookside Plaza Shopping Center Actual/360 42,504.77 12/1/99 11/1/09 1
40 The Sun City Shopping Center Actual/360 41,642.89 7/1/98 6/1/08 18
41 The Judson House Actual/360 41,367.13 12/1/99 11/1/09 1
42 Long Lake Office Center Actual/360 40,999.90 11/1/99 10/1/09 2
43 Copper Beech Townhomes II Actual/360 38,760.92 10/1/99 9/1/09 3
44 Town & Country Business Park Actual/360 37,575.37 7/1/99 6/1/09 6
45 Four Winds Apartments Actual/360 37,573.69 12/1/99 11/1/09 1
46 Allora Way Apartments Actual/360 38,694.00 12/1/99 11/1/09 1
47 Sycamore Park Apartments Actual/360 35,103.09 2/1/98 1/1/13 23
48 Promotions Distributor Services Corp. (1B) Actual/360 24,513.96 11/1/99 10/1/09 2
49 Production Distribution Services Corp. (1B) Actual/360 12,877.39 10/1/99 9/1/09 3
50 Alltel Office Building Actual/360 34,090.70 10/1/99 9/1/09 3
51 Winn Medical Center Actual/360 34,118.68 11/1/99 10/1/09 2
52 56-62 Canal Street Actual/360 35,992.48 6/1/98 5/1/10 19
53 16 Herbert Street Actual/360 36,417.35 11/1/99 10/1/09 2
54 Beau Rivage Apartments Actual/360 30,484.57 5/1/98 4/1/08 20
55 Tierra Corners Shopping Center Actual/360 30,916.22 7/1/99 6/1/09 6
56 Two Technology Way Actual/360 30,300.37 12/1/98 11/1/08 13
57 Crossroads Shopping Center Actual/360 30,828.28 6/1/99 5/1/09 7
58 County Mall Actual/360 33,806.04 12/1/99 11/1/09 1
59 The Radisson Graystone Castle Hotel Actual/360 33,485.33 12/1/99 11/1/09 1
60 Palms East Apartments Actual/360 29,576.42 6/1/98 5/1/08 19
61 North Creek Condominiums Actual/360 29,797.96 8/1/99 7/1/09 5
62 Fallbrook Office Park Actual/360 29,326.82 12/1/99 11/1/09 1
63 Miami One Office Building Actual/360 28,834.62 12/1/99 11/1/09 1
64 Huntington Place Apartments Actual/360 25,789.83 10/1/98 9/1/08 15
65 Comfort Inn-South Burlington-VT Actual/360 28,033.74 11/1/98 10/1/08 14
66 City Centre Building Actual/360 27,070.91 10/1/99 9/1/09 3
67 Country Village Apartments Actual/360 24,680.55 8/1/99 7/1/09 5
68 185 Commerce Drive Actual/360 25,894.45 10/1/99 9/1/09 3
69 The South Point Apartments Actual/360 24,208.49 8/1/99 7/1/09 5
70 Copper Beech Townhomes I Actual/360 22,040.70 10/1/98 9/1/28 9/1/08 15
71 Southbridge Office Buildings Actual/360 24,583.31 12/1/99 11/1/09 1
72 Pro-Met, Inc. Actual/360 24,490.86 11/1/99 10/1/09 2
73 Super Food Town Plaza Actual/360 21,865.52 12/1/98 11/1/28 11/1/08 13
74 The Hamptons at Central Apartments Actual/360 24,645.02 8/1/99 7/1/06 5
75 Southwest Plaza Actual/360 24,104.36 8/1/99 7/1/09 5
76 The Basin Street Complex Actual/360 27,139.73 10/1/99 9/1/24 9/1/09 3
77 Waterford Plaza Actual/360 24,752.04 9/1/99 8/1/09 4
78 Cerritos State Road Industrial Park Actual/360 23,864.58 11/1/99 10/1/09 2
79 Chambers Center Shopping Center Actual/360 24,197.26 10/1/99 9/1/09 3
80 Hackettstown Commerce Park Building I Actual/360 23,293.77 10/1/99 9/1/09 3
81 Nationsbank Service Center Actual/360 21,279.38 7/1/99 6/1/09 6
82 Freeport Self Storage Actual/360 23,695.73 11/1/99 10/1/09 2
83 The Virginia Highland Loan Actual/360 23,053.49 11/1/99 10/1/09 2
83a 842 North Highland Avenue
83b 1052-1062 St. Charles Avenue
83c 784-792 North Highland Avenue
83d 776-778 North Highland Avenue
84 Dolphin Self Storage (1C) Actual/360 10,802.93 12/1/99 11/1/09 1
85 Kangaroom Mini-Storage (1C) Actual/360 9,140.94 12/1/99 11/1/09 1
86 Airport Self Storage (1C) Actual/360 3,323.98 12/1/99 11/1/09 1
87 Stonehurst Court Apartments Actual/360 20,175.76 9/1/99 8/1/09 4
88 The River Meadows Mobile Home Park Actual/360 19,905.84 8/1/99 7/1/04 5
89 Maplewood Apartments (1D) Actual/360 5,738.94 9/1/98 8/1/08 16
90 Columbus Village Apartments (1D) Actual/360 12,278.66 9/1/98 8/1/08 16
91 Dominion Center Actual/360 19,924.96 11/1/99 10/1/09 2
92 The Argyle Apartments Actual/360 17,251.53 10/1/98 9/1/08 15
93 Guthrie Medical Center Actual/360 25,155.37 10/1/99 9/1/14 3
94 The Hope Group Corporate Headquarters Actual/360 21,597.80 9/1/99 8/1/09 4
95 SavMax Foods Actual/360 19,031.18 12/1/99 11/1/09 1
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Original
Lockout
Servicing and Prepayment Provision Period
# Property Name Trustee Fees as of Origination (11) (Months)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
28 Selma Square Shopping Center 0.0523% L (9.42), O (0.5) 113
29 Holmdel Corporate Plaza/One Misco Plaza 0.0823% L (9.67), O (0.33) 116
30 Commons on Sanger Apartments 0.0523% L (9.5), O (0.5) 114
31 The Marbrisa Apartments 0.0823% L (2.92), YM 1% (6.75), O (0.33) 35
32 Point of Pines Apartments 0.0823% L (9.42), O (0.58) 113
33 Tammaron Village Apartments 0.0823% L (4.92), YM 1% (4.5), O (0.58) 59
34 TownePlace Suites by Marriott - Brookfield 0.0523% L (9.25), O (0.75) 111
35 Pittsfield Plaza 0.1543% L (9.67), O (0.33) 116
36 Hurstbourne Office Park 0.1323% L (9.67), O (0.33) 116
37 Trails East Apartments 0.1323% L (4), YM 1% (5.5), O (0.5) 48
38 TownePlace Suites by Marriott - Eden Prairie 0.0523% L (9.25), O (0.75) 111
39 Brookside Plaza Shopping Center 0.0523% L (9.5), O (0.5) 114
40 The Sun City Shopping Center 0.1616% L (4.92), YM 1% (4.5), O (0.58) 59
41 The Judson House 0.0823% L (9.67), O (0.33) 116
42 Long Lake Office Center 0.0823% L (9.67), O (0.33) 116
43 Copper Beech Townhomes II 0.0823% L (9.67), O (0.33) 116
44 Town & Country Business Park 0.0823% L (9.42), O (0.58) 113
45 Four Winds Apartments 0.0523% L (9.5), O (0.5) 114
46 Allora Way Apartments 0.0523% L (9.5), O (0.5) 114
47 Sycamore Park Apartments 0.1714% L (8), YM 1% (6.5), O (0.5) 96
48 Promotions Distributor Services Corp. (1B) 0.0823% L (9.67), O (0.33) 116
49 Production Distribution Services Corp. (1B) 0.0823% L (9.67), O (0.33) 116
50 Alltel Office Building 0.1793% L (9.67), O (0.33) 116
51 Winn Medical Center 0.1823% L (9.67), O (0.33) 116
52 56-62 Canal Street 0.0823% YM 5% (9.92), 5% (1), O (1.08) 0
53 16 Herbert Street 0.0523% L (9.5), O (0.5) 114
54 Beau Rivage Apartments 0.1823% L (4.92), YM 1% (4.5), O (0.58) 59
55 Tierra Corners Shopping Center 0.0823% L (9.67), O (0.33) 116
56 Two Technology Way 0.1823% L (4.92), YM 1% (4.75), O (0.33) 59
57 Crossroads Shopping Center 0.1323% L (9.67), O (0.33) 116
58 County Mall 0.0523% L (9.5), O (0.5) 114
59 The Radisson Graystone Castle Hotel 0.0523% L (9.5), O (0.5) 114
60 Palms East Apartments 0.0823% L (4.92), YM 1% (4.5), O (0.58) 59
61 North Creek Condominiums 0.0523% L (9.5), O (0.5) 114
62 Fallbrook Office Park 0.0523% L (9.5), O (0.5) 114
63 Miami One Office Building 0.0523% L (9.5), O (0.5) 114
64 Huntington Place Apartments 0.1823% L (4.92), YM 5% (4.5), O (0.58) 59
65 Comfort Inn-South Burlington-VT 0.1823% L (1.92), YM 1% (7.5), O (0.58) 23
66 City Centre Building 0.0823% L (9.67), O (0.33) 116
67 Country Village Apartments 0.0823% L (2.92), YM 1% (6.75), O (0.33) 35
68 185 Commerce Drive 0.1573% L (9.67), O (0.33) 116
69 The South Point Apartments 0.0823% L (2.92), YM 1% (6.75), O (0.33) 35
70 Copper Beech Townhomes I 0.0823% L (3.92), YM 1% (5.5), O (0.58) 47
71 Southbridge Office Buildings 0.0523% L (9.5), O (0.5) 114
72 Pro-Met, Inc. 0.0823% L (9.67), O (0.33) 116
73 Super Food Town Plaza 0.0823% L (3.92), YM 1% (5.5), O (0.58) 47
74 The Hamptons at Central Apartments 0.0523% L (6.5), O (0.5) 78
75 Southwest Plaza 0.1823% L (9.67), O (0.33) 116
76 The Basin Street Complex 0.0523% L (9.5), O (0.5) 114
77 Waterford Plaza 0.0823% L (9.67), O (0.33) 116
78 Cerritos State Road Industrial Park 0.0523% L (9.5), O (0.5) 114
79 Chambers Center Shopping Center 0.0823% L (9.42), O (0.58) 113
80 Hackettstown Commerce Park Building I 0.0823% L (9.67), O (0.33) 116
81 Nationsbank Service Center 0.1823% L (9.67), O (0.33) 116
82 Freeport Self Storage 0.0823% L (9.67), O (0.33) 116
83 The Virginia Highland Loan 0.0523% L (9.5), O (0.5) 114
83a 842 North Highland Avenue
83b 1052-1062 St. Charles Avenue
83c 784-792 North Highland Avenue
83d 776-778 North Highland Avenue
84 Dolphin Self Storage (1C) 0.0523% L (9.5), O (0.5) 114
85 Kangaroom Mini-Storage (1C) 0.0523% L (9.5), O (0.5) 114
86 Airport Self Storage (1C) 0.0523% L (9.5), O (0.5) 114
87 Stonehurst Court Apartments 0.1573% L (9.67), O (0.33) 116
88 The River Meadows Mobile Home Park 0.0823% L (4.67), O (0.33) 56
89 Maplewood Apartments (1D) 0.0823% L (4.92), YM 1% (4.5), O (0.58) 59
90 Columbus Village Apartments (1D) 0.1823% L (4.92), YM 1% (4.5), O (0.58) 59
91 Dominion Center 0.0523% L (9.5), O (0.5) 114
92 The Argyle Apartments 0.0823% L (4.92), YM 1% (4.75), O (0.33) 59
93 Guthrie Medical Center 0.1823% L (14.67), O (0.33) 176
94 The Hope Group Corporate Headquarters 0.1823% L (9.67), O (0.33) 116
95 SavMax Foods 0.0523% L (9.5), O (0.5) 114
<CAPTION>
Original Original
Yield Prepayment Original Yield
Maintenance Premium Open Lockout Maintenance
Period Period Period Expiration Expiration
# Property Name (Months) (Months) (Months) Defeasance (12) Date Date
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
28 Selma Square Shopping Center 0 0 6 Yes 4/1/09 N/A
29 Holmdel Corporate Plaza/One Misco Plaza 0 0 4 Yes 4/1/09 N/A
30 Commons on Sanger Apartments 0 0 6 Yes 4/1/09 N/A
31 The Marbrisa Apartments 81 0 4 No 6/1/02 3/1/09
32 Point of Pines Apartments 0 0 7 Yes 2/1/09 N/A
33 Tammaron Village Apartments 54 0 7 No 6/1/03 12/1/07
34 TownePlace Suites by Marriott - Brookfield 0 0 9 Yes 2/1/09 N/A
35 Pittsfield Plaza 0 0 4 Yes 2/1/09 N/A
36 Hurstbourne Office Park 0 0 4 Yes 5/1/09 N/A
37 Trails East Apartments 66 0 6 No 2/1/02 8/1/07
38 TownePlace Suites by Marriott - Eden Prairie 0 0 9 Yes 2/1/09 N/A
39 Brookside Plaza Shopping Center 0 0 6 Yes 5/1/09 N/A
40 The Sun City Shopping Center 54 0 7 No 5/1/03 11/1/07
41 The Judson House 0 0 4 Yes 7/1/09 N/A
42 Long Lake Office Center 0 0 4 Yes 6/1/09 N/A
43 Copper Beech Townhomes II 0 0 4 Yes 5/1/09 N/A
44 Town & Country Business Park 0 0 7 Yes 11/1/08 N/A
45 Four Winds Apartments 0 0 6 Yes 5/1/09 N/A
46 Allora Way Apartments 0 0 6 Yes 5/1/09 N/A
47 Sycamore Park Apartments 78 0 6 No 1/1/06 7/1/12
48 Promotions Distributor Services Corp. (1B) 0 0 4 Yes 6/1/09 N/A
49 Production Distribution Services Corp. (1B) 0 0 4 Yes 5/1/09 N/A
50 Alltel Office Building 0 0 4 Yes 5/1/09 N/A
51 Winn Medical Center 0 0 4 Yes 6/1/09 N/A
52 56-62 Canal Street 119 12 13 No 5/1/98 4/1/08
53 16 Herbert Street 0 0 6 Yes 4/1/09 N/A
54 Beau Rivage Apartments 54 0 7 No 3/1/03 9/1/07
55 Tierra Corners Shopping Center 0 0 4 Yes 2/1/09 N/A
56 Two Technology Way 57 0 4 No 10/1/03 7/1/08
57 Crossroads Shopping Center 0 0 4 Yes 1/1/09 N/A
58 County Mall 0 0 6 Yes 5/1/09 N/A
59 The Radisson Graystone Castle Hotel 0 0 6 Yes 5/1/09 N/A
60 Palms East Apartments 54 0 7 No 4/1/03 10/1/07
61 North Creek Condominiums 0 0 6 Yes 1/1/09 N/A
62 Fallbrook Office Park 0 0 6 Yes 5/1/09 N/A
63 Miami One Office Building 0 0 6 Yes 5/1/09 N/A
64 Huntington Place Apartments 54 0 7 No 8/1/03 2/1/08
65 Comfort Inn-South Burlington-VT 90 0 7 No 9/1/00 3/1/08
66 City Centre Building 0 0 4 Yes 5/1/09 N/A
67 Country Village Apartments 81 0 4 No 6/1/02 3/1/09
68 185 Commerce Drive 0 0 4 Yes 5/1/09 N/A
69 The South Point Apartments 81 0 4 No 6/1/02 3/1/09
70 Copper Beech Townhomes I 66 0 7 No 8/1/02 2/1/08
71 Southbridge Office Buildings 0 0 6 Yes 5/1/09 N/A
72 Pro-Met, Inc. 0 0 4 Yes 6/1/09 N/A
73 Super Food Town Plaza 66 0 7 No 10/1/02 4/1/08
74 The Hamptons at Central Apartments 0 0 6 Yes 1/1/06 N/A
75 Southwest Plaza 0 0 4 Yes 3/1/09 N/A
76 The Basin Street Complex 0 0 6 Yes 3/1/09 N/A
77 Waterford Plaza 0 0 4 Yes 4/1/09 N/A
78 Cerritos State Road Industrial Park 0 0 6 Yes 4/1/09 N/A
79 Chambers Center Shopping Center 0 0 7 Yes 2/1/09 N/A
80 Hackettstown Commerce Park Building I 0 0 4 Yes 5/1/09 N/A
81 Nationsbank Service Center 0 0 4 Yes 2/1/09 N/A
82 Freeport Self Storage 0 0 4 Yes 6/1/09 N/A
83 The Virginia Highland Loan 0 0 6 Yes 4/1/09 N/A
83a 842 North Highland Avenue
83b 1052-1062 St. Charles Avenue
83c 784-792 North Highland Avenue
83d 776-778 North Highland Avenue
84 Dolphin Self Storage (1C) 0 0 6 Yes 5/1/09 N/A
85 Kangaroom Mini-Storage (1C) 0 0 6 Yes 5/1/09 N/A
86 Airport Self Storage (1C) 0 0 6 Yes 5/1/09 N/A
87 Stonehurst Court Apartments 0 0 4 Yes 4/1/09 N/A
88 The River Meadows Mobile Home Park 0 0 4 No 3/1/04 N/A
89 Maplewood Apartments (1D) 54 0 7 No 7/1/03 1/1/08
90 Columbus Village Apartments (1D) 54 0 7 No 7/1/03 1/1/08
91 Dominion Center 0 0 6 Yes 4/1/09 N/A
92 The Argyle Apartments 57 0 4 No 8/1/03 5/1/08
93 Guthrie Medical Center 0 0 4 Yes 5/1/14 N/A
94 The Hope Group Corporate Headquarters 0 0 4 Yes 4/1/09 N/A
95 SavMax Foods 0 0 6 Yes 5/1/09 N/A
<CAPTION>
Prepayment
Premium Utilities Subject
Expiration Hotel Multifamily Tenant Multifamily Studio
# Property Name Date Franchise Pays Elevators Units
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
28 Selma Square Shopping Center N/A N/A N/A N/A N/A
29 Holmdel Corporate Plaza/One Misco Plaza N/A N/A N/A N/A N/A
30 Commons on Sanger Apartments N/A N/A Electric 0 N/A
31 The Marbrisa Apartments N/A N/A Electric 0 N/A
32 Point of Pines Apartments N/A N/A Electric/Gas/Water/Sewer 1 N/A
33 Tammaron Village Apartments N/A N/A Electric 0 100
34 TownePlace Suites by Marriott - Brookfield N/A Marriott N/A N/A N/A
35 Pittsfield Plaza N/A N/A N/A N/A N/A
36 Hurstbourne Office Park N/A N/A N/A N/A N/A
37 Trails East Apartments N/A N/A Electric 0 N/A
38 TownePlace Suites by Marriott - Eden Prairie N/A Marriott N/A N/A N/A
39 Brookside Plaza Shopping Center N/A N/A N/A N/A N/A
40 The Sun City Shopping Center N/A N/A N/A N/A N/A
41 The Judson House N/A N/A None 2 N/A
42 Long Lake Office Center N/A N/A N/A N/A N/A
43 Copper Beech Townhomes II N/A N/A Electric/Water/Sewer 0 N/A
44 Town & Country Business Park N/A N/A N/A N/A N/A
45 Four Winds Apartments N/A N/A Electric/Gas 0 N/A
46 Allora Way Apartments N/A N/A Electric 0 N/A
47 Sycamore Park Apartments N/A N/A Electric 0 N/A
48 Promotions Distributor Services Corp. (1B) N/A N/A N/A N/A N/A
49 Production Distribution Services Corp. (1B) N/A N/A N/A N/A N/A
50 Alltel Office Building N/A N/A N/A N/A N/A
51 Winn Medical Center N/A N/A N/A N/A N/A
52 56-62 Canal Street 4/1/09 N/A N/A N/A N/A
53 16 Herbert Street N/A N/A N/A N/A N/A
54 Beau Rivage Apartments N/A N/A Electric 0 N/A
55 Tierra Corners Shopping Center N/A N/A N/A N/A N/A
56 Two Technology Way N/A N/A N/A N/A N/A
57 Crossroads Shopping Center N/A N/A N/A N/A N/A
58 County Mall N/A N/A N/A N/A N/A
59 The Radisson Graystone Castle Hotel N/A Radisson N/A N/A N/A
60 Palms East Apartments N/A N/A Electric/Gas 0 24
61 North Creek Condominiums N/A N/A Electric 0 N/A
62 Fallbrook Office Park N/A N/A N/A N/A N/A
63 Miami One Office Building N/A N/A N/A N/A N/A
64 Huntington Place Apartments N/A N/A Electric 0 N/A
65 Comfort Inn-South Burlington-VT N/A Comfort Inn N/A N/A N/A
66 City Centre Building N/A N/A N/A N/A N/A
67 Country Village Apartments N/A N/A Electric 0 N/A
68 185 Commerce Drive N/A N/A N/A N/A N/A
69 The South Point Apartments N/A N/A Electric/Gas 0 N/A
70 Copper Beech Townhomes I N/A N/A Electric/Water/Sewer 0 N/A
71 Southbridge Office Buildings N/A N/A N/A N/A N/A
72 Pro-Met, Inc. N/A N/A N/A N/A N/A
73 Super Food Town Plaza N/A N/A N/A N/A N/A
74 The Hamptons at Central Apartments N/A N/A Electric 0 N/A
75 Southwest Plaza N/A N/A N/A N/A N/A
76 The Basin Street Complex N/A N/A N/A N/A N/A
77 Waterford Plaza N/A N/A N/A N/A N/A
78 Cerritos State Road Industrial Park N/A N/A N/A N/A N/A
79 Chambers Center Shopping Center N/A N/A N/A N/A N/A
80 Hackettstown Commerce Park Building I N/A N/A N/A N/A N/A
81 Nationsbank Service Center N/A N/A N/A N/A N/A
82 Freeport Self Storage N/A N/A N/A N/A N/A
83 The Virginia Highland Loan N/A
83a 842 North Highland Avenue N/A N/A N/A N/A
83b 1052-1062 St. Charles Avenue N/A N/A N/A N/A
83c 784-792 North Highland Avenue N/A N/A N/A N/A
83d 776-778 North Highland Avenue N/A N/A N/A N/A
84 Dolphin Self Storage (1C) N/A N/A N/A N/A N/A
85 Kangaroom Mini-Storage (1C) N/A N/A N/A N/A N/A
86 Airport Self Storage (1C) N/A N/A N/A N/A N/A
87 Stonehurst Court Apartments N/A N/A Electric 4 14
88 The River Meadows Mobile Home Park N/A N/A N/A N/A N/A
89 Maplewood Apartments (1D) N/A N/A Electric 0 N/A
90 Columbus Village Apartments (1D) N/A N/A Electric 0 N/A
91 Dominion Center N/A N/A N/A N/A N/A
92 The Argyle Apartments N/A N/A None 4 12
93 Guthrie Medical Center N/A N/A N/A N/A N/A
94 The Hope Group Corporate Headquarters N/A N/A N/A N/A N/A
95 SavMax Foods N/A N/A N/A N/A N/A
<CAPTION>
Subject Subject Subject Subject Subject
Studio Studio 1 BR 1 BR 1 BR
# Property Name Avg. Rent Max. Rent Units Avg. Rent Max. Rent
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
28 Selma Square Shopping Center N/A N/A N/A N/A N/A
29 Holmdel Corporate Plaza/One Misco Plaza N/A N/A N/A N/A N/A
30 Commons on Sanger Apartments N/A N/A 215 $389 $455
31 The Marbrisa Apartments N/A N/A 168 $395 $465
32 Point of Pines Apartments N/A N/A 1 $925 $925
33 Tammaron Village Apartments $282 $309 200 $311 $339
34 TownePlace Suites by Marriott - Brookfield N/A N/A N/A N/A N/A
35 Pittsfield Plaza N/A N/A N/A N/A N/A
36 Hurstbourne Office Park N/A N/A N/A N/A N/A
37 Trails East Apartments N/A N/A 112 $492 $599
38 TownePlace Suites by Marriott - Eden Prairie N/A N/A N/A N/A N/A
39 Brookside Plaza Shopping Center N/A N/A N/A N/A N/A
40 The Sun City Shopping Center N/A N/A N/A N/A N/A
41 The Judson House N/A N/A 104 $861 $861
42 Long Lake Office Center N/A N/A N/A N/A N/A
43 Copper Beech Townhomes II N/A N/A N/A N/A N/A
44 Town & Country Business Park N/A N/A N/A N/A N/A
45 Four Winds Apartments N/A N/A 22 $422 $440
46 Allora Way Apartments N/A N/A 120 $441 $875
47 Sycamore Park Apartments N/A N/A 61 $673 $725
48 Promotions Distributor Services Corp. (1B) N/A N/A N/A N/A N/A
49 Production Distribution Services Corp. (1B) N/A N/A N/A N/A N/A
50 Alltel Office Building N/A N/A N/A N/A N/A
51 Winn Medical Center N/A N/A N/A N/A N/A
52 56-62 Canal Street N/A N/A N/A N/A N/A
53 16 Herbert Street N/A N/A N/A N/A N/A
54 Beau Rivage Apartments N/A N/A 44 $493 $495
55 Tierra Corners Shopping Center N/A N/A N/A N/A N/A
56 Two Technology Way N/A N/A N/A N/A N/A
57 Crossroads Shopping Center N/A N/A N/A N/A N/A
58 County Mall N/A N/A N/A N/A N/A
59 The Radisson Graystone Castle Hotel N/A N/A N/A N/A N/A
60 Palms East Apartments $375 $420 80 $423 $470
61 North Creek Condominiums N/A N/A 94 $442 $530
62 Fallbrook Office Park N/A N/A N/A N/A N/A
63 Miami One Office Building N/A N/A N/A N/A N/A
64 Huntington Place Apartments N/A N/A 176 $288 $340
65 Comfort Inn-South Burlington-VT N/A N/A N/A N/A N/A
66 City Centre Building N/A N/A N/A N/A N/A
67 Country Village Apartments N/A N/A 84 $446 $895
68 185 Commerce Drive N/A N/A N/A N/A N/A
69 The South Point Apartments N/A N/A 104 $498 $635
70 Copper Beech Townhomes I N/A N/A N/A N/A N/A
71 Southbridge Office Buildings N/A N/A N/A N/A N/A
72 Pro-Met, Inc. N/A N/A N/A N/A N/A
73 Super Food Town Plaza N/A N/A N/A N/A N/A
74 The Hamptons at Central Apartments N/A N/A 64 $485 $555
75 Southwest Plaza N/A N/A N/A N/A N/A
76 The Basin Street Complex N/A N/A N/A N/A N/A
77 Waterford Plaza N/A N/A N/A N/A N/A
78 Cerritos State Road Industrial Park N/A N/A N/A N/A N/A
79 Chambers Center Shopping Center N/A N/A N/A N/A N/A
80 Hackettstown Commerce Park Building I N/A N/A N/A N/A N/A
81 Nationsbank Service Center N/A N/A N/A N/A N/A
82 Freeport Self Storage N/A N/A N/A N/A N/A
83 The Virginia Highland Loan
83a 842 North Highland Avenue N/A N/A N/A N/A N/A
83b 1052-1062 St. Charles Avenue N/A N/A N/A N/A N/A
83c 784-792 North Highland Avenue N/A N/A N/A N/A N/A
83d 776-778 North Highland Avenue N/A N/A N/A N/A N/A
84 Dolphin Self Storage (1C) N/A N/A N/A N/A N/A
85 Kangaroom Mini-Storage (1C) N/A N/A N/A N/A N/A
86 Airport Self Storage (1C) N/A N/A N/A N/A N/A
87 Stonehurst Court Apartments $400 $480 117 $520 $570
88 The River Meadows Mobile Home Park N/A N/A N/A N/A N/A
89 Maplewood Apartments (1D) N/A N/A N/A N/A N/A
90 Columbus Village Apartments (1D) N/A N/A N/A N/A N/A
91 Dominion Center N/A N/A N/A N/A N/A
92 The Argyle Apartments $475 $475 18 $957 $957
93 Guthrie Medical Center N/A N/A N/A N/A N/A
94 The Hope Group Corporate Headquarters N/A N/A N/A N/A N/A
95 SavMax Foods N/A N/A N/A N/A N/A
<CAPTION>
Subject Subject Subject Subject Subject
2 BR 2 BR 2 BR 3 BR 3 BR
# Property Name Units Avg. Rent Max. Rent Units Avg. Rent
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
28 Selma Square Shopping Center N/A N/A N/A N/A N/A
29 Holmdel Corporate Plaza/One Misco Plaza N/A N/A N/A N/A N/A
30 Commons on Sanger Apartments 112 $496 $545 N/A N/A
31 The Marbrisa Apartments 96 $518 $1,200 24 $650
32 Point of Pines Apartments 71 $1,239 $1,500 N/A N/A
33 Tammaron Village Apartments 100 $407 $449 N/A N/A
34 TownePlace Suites by Marriott - Brookfield N/A N/A N/A N/A N/A
35 Pittsfield Plaza N/A N/A N/A N/A N/A
36 Hurstbourne Office Park N/A N/A N/A N/A N/A
37 Trails East Apartments 97 $600 $629 N/A N/A
38 TownePlace Suites by Marriott - Eden Prairie N/A N/A N/A N/A N/A
39 Brookside Plaza Shopping Center N/A N/A N/A N/A N/A
40 The Sun City Shopping Center N/A N/A N/A N/A N/A
41 The Judson House 13 $990 $990 N/A N/A
42 Long Lake Office Center N/A N/A N/A N/A N/A
43 Copper Beech Townhomes II 2 $788 $825 84 $938
44 Town & Country Business Park N/A N/A N/A N/A N/A
45 Four Winds Apartments 98 $532 $575 48 $571
46 Allora Way Apartments 80 $540 $620 N/A N/A
47 Sycamore Park Apartments 61 $785 $850 N/A N/A
48 Promotions Distributor Services Corp. (1B) N/A N/A N/A N/A N/A
49 Production Distribution Services Corp. (1B) N/A N/A N/A N/A N/A
50 Alltel Office Building N/A N/A N/A N/A N/A
51 Winn Medical Center N/A N/A N/A N/A N/A
52 56-62 Canal Street N/A N/A N/A N/A N/A
53 16 Herbert Street N/A N/A N/A N/A N/A
54 Beau Rivage Apartments 88 $568 $595 N/A N/A
55 Tierra Corners Shopping Center N/A N/A N/A N/A N/A
56 Two Technology Way N/A N/A N/A N/A N/A
57 Crossroads Shopping Center N/A N/A N/A N/A N/A
58 County Mall N/A N/A N/A N/A N/A
59 The Radisson Graystone Castle Hotel N/A N/A N/A N/A N/A
60 Palms East Apartments 112 $521 $570 N/A N/A
61 North Creek Condominiums 64 $550 $650 N/A N/A
62 Fallbrook Office Park N/A N/A N/A N/A N/A
63 Miami One Office Building N/A N/A N/A N/A N/A
64 Huntington Place Apartments 79 $381 $420 32 $447
65 Comfort Inn-South Burlington-VT N/A N/A N/A N/A N/A
66 City Centre Building N/A N/A N/A N/A N/A
67 Country Village Apartments 60 $570 $605 8 $700
68 185 Commerce Drive N/A N/A N/A N/A N/A
69 The South Point Apartments 24 $631 $750 N/A N/A
70 Copper Beech Townhomes I N/A N/A N/A 59 $941
71 Southbridge Office Buildings N/A N/A N/A N/A N/A
72 Pro-Met, Inc. N/A N/A N/A N/A N/A
73 Super Food Town Plaza N/A N/A N/A N/A N/A
74 The Hamptons at Central Apartments 60 $596 $760 12 $883
75 Southwest Plaza N/A N/A N/A N/A N/A
76 The Basin Street Complex N/A N/A N/A N/A N/A
77 Waterford Plaza N/A N/A N/A N/A N/A
78 Cerritos State Road Industrial Park N/A N/A N/A N/A N/A
79 Chambers Center Shopping Center N/A N/A N/A N/A N/A
80 Hackettstown Commerce Park Building I N/A N/A N/A N/A N/A
81 Nationsbank Service Center N/A N/A N/A N/A N/A
82 Freeport Self Storage N/A N/A N/A N/A N/A
83 The Virginia Highland Loan
83a 842 North Highland Avenue N/A N/A N/A N/A N/A
83b 1052-1062 St. Charles Avenue N/A N/A N/A N/A N/A
83c 784-792 North Highland Avenue N/A N/A N/A N/A N/A
83d 776-778 North Highland Avenue N/A N/A N/A N/A N/A
84 Dolphin Self Storage (1C) N/A N/A N/A N/A N/A
85 Kangaroom Mini-Storage (1C) N/A N/A N/A N/A N/A
86 Airport Self Storage (1C) N/A N/A N/A N/A N/A
87 Stonehurst Court Apartments 13 $670 $700 N/A N/A
88 The River Meadows Mobile Home Park N/A N/A N/A N/A N/A
89 Maplewood Apartments (1D) 33 $532 $545 N/A N/A
90 Columbus Village Apartments (1D) 66 $519 $520 N/A N/A
91 Dominion Center N/A N/A N/A N/A N/A
92 The Argyle Apartments 18 $1,135 $1,135 N/A N/A
93 Guthrie Medical Center N/A N/A N/A N/A N/A
94 The Hope Group Corporate Headquarters N/A N/A N/A N/A N/A
95 SavMax Foods N/A N/A N/A N/A N/A
<CAPTION>
Subject Subject Subject Subject
3 BR 4 BR 4 BR 4 BR
# Property Name Max. Rent Units Avg. Rent Max. Rent
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
28 Selma Square Shopping Center N/A N/A N/A N/A
29 Holmdel Corporate Plaza/One Misco Plaza N/A N/A N/A N/A
30 Commons on Sanger Apartments N/A N/A N/A N/A
31 The Marbrisa Apartments $1,450 N/A N/A N/A
32 Point of Pines Apartments N/A N/A N/A N/A
33 Tammaron Village Apartments N/A N/A N/A N/A
34 TownePlace Suites by Marriott - Brookfield N/A N/A N/A N/A
35 Pittsfield Plaza N/A N/A N/A N/A
36 Hurstbourne Office Park N/A N/A N/A N/A
37 Trails East Apartments N/A N/A N/A N/A
38 TownePlace Suites by Marriott - Eden Prairie N/A N/A N/A N/A
39 Brookside Plaza Shopping Center N/A N/A N/A N/A
40 The Sun City Shopping Center N/A N/A N/A N/A
41 The Judson House N/A N/A N/A N/A
42 Long Lake Office Center N/A N/A N/A N/A
43 Copper Beech Townhomes II $1,035 N/A N/A N/A
44 Town & Country Business Park N/A N/A N/A N/A
45 Four Winds Apartments $625 N/A N/A N/A
46 Allora Way Apartments N/A N/A N/A N/A
47 Sycamore Park Apartments N/A N/A N/A N/A
48 Promotions Distributor Services Corp. (1B) N/A N/A N/A N/A
49 Production Distribution Services Corp. (1B) N/A N/A N/A N/A
50 Alltel Office Building N/A N/A N/A N/A
51 Winn Medical Center N/A N/A N/A N/A
52 56-62 Canal Street N/A N/A N/A N/A
53 16 Herbert Street N/A N/A N/A N/A
54 Beau Rivage Apartments N/A N/A N/A N/A
55 Tierra Corners Shopping Center N/A N/A N/A N/A
56 Two Technology Way N/A N/A N/A N/A
57 Crossroads Shopping Center N/A N/A N/A N/A
58 County Mall N/A N/A N/A N/A
59 The Radisson Graystone Castle Hotel N/A N/A N/A N/A
60 Palms East Apartments N/A N/A N/A N/A
61 North Creek Condominiums N/A N/A N/A N/A
62 Fallbrook Office Park N/A N/A N/A N/A
63 Miami One Office Building N/A N/A N/A N/A
64 Huntington Place Apartments $470 N/A N/A N/A
65 Comfort Inn-South Burlington-VT N/A N/A N/A N/A
66 City Centre Building N/A N/A N/A N/A
67 Country Village Apartments $705 N/A N/A N/A
68 185 Commerce Drive N/A N/A N/A N/A
69 The South Point Apartments N/A N/A N/A N/A
70 Copper Beech Townhomes I $1,060 N/A N/A N/A
71 Southbridge Office Buildings N/A N/A N/A N/A
72 Pro-Met, Inc. N/A N/A N/A N/A
73 Super Food Town Plaza N/A N/A N/A N/A
74 The Hamptons at Central Apartments $930 N/A N/A N/A
75 Southwest Plaza N/A N/A N/A N/A
76 The Basin Street Complex N/A N/A N/A N/A
77 Waterford Plaza N/A N/A N/A N/A
78 Cerritos State Road Industrial Park N/A N/A N/A N/A
79 Chambers Center Shopping Center N/A N/A N/A N/A
80 Hackettstown Commerce Park Building I N/A N/A N/A N/A
81 Nationsbank Service Center N/A N/A N/A N/A
82 Freeport Self Storage N/A N/A N/A N/A
83 The Virginia Highland Loan
83a 842 North Highland Avenue N/A N/A N/A N/A
83b 1052-1062 St. Charles Avenue N/A N/A N/A N/A
83c 784-792 North Highland Avenue N/A N/A N/A N/A
83d 776-778 North Highland Avenue N/A N/A N/A N/A
84 Dolphin Self Storage (1C) N/A N/A N/A N/A
85 Kangaroom Mini-Storage (1C) N/A N/A N/A N/A
86 Airport Self Storage (1C) N/A N/A N/A N/A
87 Stonehurst Court Apartments N/A N/A N/A N/A
88 The River Meadows Mobile Home Park N/A N/A N/A N/A
89 Maplewood Apartments (1D) N/A N/A N/A N/A
90 Columbus Village Apartments (1D) N/A N/A N/A N/A
91 Dominion Center N/A N/A N/A N/A
92 The Argyle Apartments N/A N/A N/A N/A
93 Guthrie Medical Center N/A N/A N/A N/A
94 The Hope Group Corporate Headquarters N/A N/A N/A N/A
95 SavMax Foods N/A N/A N/A N/A
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Major Major Major
Tenant #1 Tenant #1 Tenant #1 Lease
# Property Name Name Sq. Ft. Expiration Date
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
28 Selma Square Shopping Center Fleming 49,950 4/1/14
29 Holmdel Corporate Plaza/One Misco Plaza Misco America, Inc. 51,269 2/28/02
30 Commons on Sanger Apartments N/A N/A N/A
31 The Marbrisa Apartments N/A N/A N/A
32 Point of Pines Apartments N/A N/A N/A
33 Tammaron Village Apartments N/A N/A N/A
34 TownePlace Suites by Marriott - Brookfield N/A N/A N/A
35 Pittsfield Plaza TJX Companies, Inc. 35,000 11/30/07
36 Hurstbourne Office Park The Kroger Co. 23,799 3/31/04
37 Trails East Apartments N/A N/A N/A
38 TownePlace Suites by Marriott - Eden Prairie N/A N/A N/A
39 Brookside Plaza Shopping Center No Frills Supermarket 79,220 2/4/11
40 The Sun City Shopping Center Sun City Gift & Hardware Inc. 6,650 5/31/00
41 The Judson House N/A N/A N/A
42 Long Lake Office Center American Express 30,803 4/30/02
43 Copper Beech Townhomes II N/A N/A N/A
44 Town & Country Business Park System Technology Assoc. Inc. 59,892 11/7/05
45 Four Winds Apartments N/A N/A N/A
46 Allora Way Apartments N/A N/A N/A
47 Sycamore Park Apartments N/A N/A N/A
48 Promotions Distributor Services Corp. (1B) Promotions Distributor Services Corp. 68,403 5/31/14
49 Production Distribution Services Corp. (1B) Promotions Distributor Services Corp. 43,850 5/31/14
50 Alltel Office Building Alltel 20,920 10/31/02
51 Winn Medical Center Bio-Medical Application 13,433 11/30/05
52 56-62 Canal Street Advantage School 21,360 1/31/08
53 16 Herbert Street General Business 141,529 4/1/05
54 Beau Rivage Apartments N/A N/A N/A
55 Tierra Corners Shopping Center Pep Boys (Manny, Moe, Jack) 18,560 12/31/19
56 Two Technology Way Advanced Instruments, Inc. 46,701 6/30/07
57 Crossroads Shopping Center Kinko's, Inc. 5,000 2/7/09
58 County Mall TSI Norwalk 17,587 5/1/14
59 The Radisson Graystone Castle Hotel N/A N/A N/A
60 Palms East Apartments N/A N/A N/A
61 North Creek Condominiums N/A N/A N/A
62 Fallbrook Office Park Fallbrook Mortgage Corp. 9,871 11/1/03
63 Miami One Office Building Tradco, LTD., Inc. 10,271 3/31/06
64 Huntington Place Apartments N/A N/A N/A
65 Comfort Inn-South Burlington-VT N/A N/A N/A
66 City Centre Building Colorado Information Technologies, Inc. 5,450 6/30/04
67 Country Village Apartments N/A N/A N/A
68 185 Commerce Drive Decision Data 11,754 6/14/03
69 The South Point Apartments N/A N/A N/A
70 Copper Beech Townhomes I N/A N/A N/A
71 Southbridge Office Buildings St. Helena Club Spa Associates, LP 7,495 9/1/07
72 Pro-Met, Inc. Promet 92,000 2/28/08
73 Super Food Town Plaza Seaway Food Town, Inc. 61,600 5/31/06
74 The Hamptons at Central Apartments N/A N/A N/A
75 Southwest Plaza Hollywood Video 7,910 5/31/06
76 The Basin Street Complex Lycoming-Clinton Joinder Board 38,042 6/1/01
77 Waterford Plaza Petco Animal Supplies, Inc. 13,498 1/31/10
78 Cerritos State Road Industrial Park N/A N/A N/A
79 Chambers Center Shopping Center It's All 99 Cents 10,246 11/30/03
80 Hackettstown Commerce Park Building I Andrex, Inc. 18,200 3/31/02
81 Nationsbank Service Center Nationsbank 39,978 4/15/04
82 Freeport Self Storage Dentaco Corp. 12,900 3/31/06
83 The Virginia Highland Loan
83a 842 North Highland Avenue Virginia Highland Primary Care 7,390 2/1/00
83b 1052-1062 St. Charles Avenue Ten Thousand Village 2,016 9/1/04
83c 784-792 North Highland Avenue Chameleon Trading, Inc. 3,559 6/1/04
83d 776-778 North Highland Avenue Van Michael Salon 2,340 7/1/02
84 Dolphin Self Storage (1C) N/A N/A N/A
85 Kangaroom Mini-Storage (1C) N/A N/A N/A
86 Airport Self Storage (1C) N/A N/A N/A
87 Stonehurst Court Apartments N/A N/A N/A
88 The River Meadows Mobile Home Park N/A N/A N/A
89 Maplewood Apartments (1D) N/A N/A N/A
90 Columbus Village Apartments (1D) N/A N/A N/A
91 Dominion Center American Transportation 9,000 7/1/03
92 The Argyle Apartments N/A N/A N/A
93 Guthrie Medical Center Guthrie Clinic Ltd - Family Practice 17,500 9/30/10
94 The Hope Group Corporate Headquarters The Hope Group Corporation 61,280 3/31/19
95 SavMax Foods SavMax Foods, Inc. 49,050 8/14/12
<CAPTION>
Major Major Major
Tenant #2 Tenant #2 Tenant #2 Lease
# Property Name Name Sq. Ft. Expiration Date
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
28 Selma Square Shopping Center N/A N/A N/A
29 Holmdel Corporate Plaza/One Misco Plaza Lucent Technologies, Inc. 20,599 8/31/01
30 Commons on Sanger Apartments N/A N/A N/A
31 The Marbrisa Apartments N/A N/A N/A
32 Point of Pines Apartments N/A N/A N/A
33 Tammaron Village Apartments N/A N/A N/A
34 TownePlace Suites by Marriott - Brookfield N/A N/A N/A
35 Pittsfield Plaza Home Goods, Inc. 24,808 1/31/09
36 Hurstbourne Office Park Dept. Of Corrections 17,308 6/30/04
37 Trails East Apartments N/A N/A N/A
38 TownePlace Suites by Marriott - Eden Prairie N/A N/A N/A
39 Brookside Plaza Shopping Center N/A N/A N/A
40 The Sun City Shopping Center Boston Billie's Restaurant 6,019 9/30/02
41 The Judson House N/A N/A N/A
42 Long Lake Office Center Control Corporation 11,887 3/31/01
43 Copper Beech Townhomes II N/A N/A N/A
44 Town & Country Business Park United States Of America 8,050 6/29/05
45 Four Winds Apartments N/A N/A N/A
46 Allora Way Apartments N/A N/A N/A
47 Sycamore Park Apartments N/A N/A N/A
48 Promotions Distributor Services Corp. (1B) N/A N/A N/A
49 Production Distribution Services Corp. (1B) N/A N/A N/A
50 Alltel Office Building RVP 12,059 12/31/01
51 Winn Medical Center Eye Physicians & Surgeons 13,295 1/31/04
52 56-62 Canal Street AIDS Action 9,385 2/28/06
53 16 Herbert Street Tile & Stone 47,115 9/1/01
54 Beau Rivage Apartments N/A N/A N/A
55 Tierra Corners Shopping Center Krauses Furniture 10,600 3/31/09
56 Two Technology Way Analog Devices, Inc. 29,675 6/30/07
57 Crossroads Shopping Center Shoe Factory 2,960 2/25/04
58 County Mall Big M 10,000 1/1/04
59 The Radisson Graystone Castle Hotel N/A N/A N/A
60 Palms East Apartments N/A N/A N/A
61 North Creek Condominiums N/A N/A N/A
62 Fallbrook Office Park N/A N/A N/A
63 Miami One Office Building Systeam of Florida 6,417 4/30/03
64 Huntington Place Apartments N/A N/A N/A
65 Comfort Inn-South Burlington-VT N/A N/A N/A
66 City Centre Building Commonwealth Title 3,953 8/14/03
67 Country Village Apartments N/A N/A N/A
68 185 Commerce Drive Decision Data 9,579 6/14/03
69 The South Point Apartments N/A N/A N/A
70 Copper Beech Townhomes I N/A N/A N/A
71 Southbridge Office Buildings St. Helena Hospital 3,639 9/1/02
72 Pro-Met, Inc. N/A N/A N/A
73 Super Food Town Plaza Staples Superstore East, Inc 23,925 5/31/13
74 The Hamptons at Central Apartments N/A N/A N/A
75 Southwest Plaza Great Western 3,520 7/24/01
76 The Basin Street Complex N/A N/A N/A
77 Waterford Plaza Ritz Camera Center, Inc. 7,033 6/30/03
78 Cerritos State Road Industrial Park N/A N/A N/A
79 Chambers Center Shopping Center Blockbuster Video #08081 8,000 12/31/01
80 Hackettstown Commerce Park Building I Union Stove Works, Inc. 15,800 6/30/03
81 Nationsbank Service Center N/A N/A N/A
82 Freeport Self Storage N/A N/A N/A
83 The Virginia Highland Loan
83a 842 North Highland Avenue American Roadhouse 3,494 3/1/06
83b 1052-1062 St. Charles Avenue Bill and Laraine Devenie 1,904 7/1/01
83c 784-792 North Highland Avenue Bill Hallman Boutique 1,178 10/1/03
83d 776-778 North Highland Avenue Hallman Shoes 1,472 9/1/03
84 Dolphin Self Storage (1C) N/A N/A N/A
85 Kangaroom Mini-Storage (1C) N/A N/A N/A
86 Airport Self Storage (1C) N/A N/A N/A
87 Stonehurst Court Apartments N/A N/A N/A
88 The River Meadows Mobile Home Park N/A N/A N/A
89 Maplewood Apartments (1D) N/A N/A N/A
90 Columbus Village Apartments (1D) N/A N/A N/A
91 Dominion Center Dance Etc. 5,377 12/1/02
92 The Argyle Apartments N/A N/A N/A
93 Guthrie Medical Center Guthrie Clinic-Ophthamology 11,000 7/1/19
94 The Hope Group Corporate Headquarters N/A N/A N/A
95 SavMax Foods N/A N/A N/A
<CAPTION>
Major Major Major
Tenant #3 Tenant #3 Tenant #3 Lease
# Property Name Name Sq. Ft. Expiration Date
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
28 Selma Square Shopping Center N/A N/A N/A
29 Holmdel Corporate Plaza/One Misco Plaza Linden Trading Company 11,653 3/31/03
30 Commons on Sanger Apartments N/A N/A N/A
31 The Marbrisa Apartments N/A N/A N/A
32 Point of Pines Apartments N/A N/A N/A
33 Tammaron Village Apartments N/A N/A N/A
34 TownePlace Suites by Marriott - Brookfield N/A N/A N/A
35 Pittsfield Plaza Pep Boys 22,990 8/31/18
36 Hurstbourne Office Park Board Of Nursing 11,284 6/30/02
37 Trails East Apartments N/A N/A N/A
38 TownePlace Suites by Marriott - Eden Prairie N/A N/A N/A
39 Brookside Plaza Shopping Center N/A N/A N/A
40 The Sun City Shopping Center Sun City Medical-Dental Center 5,482 5/31/04
41 The Judson House N/A N/A N/A
42 Long Lake Office Center Health Dimensions 6,101 9/14/03
43 Copper Beech Townhomes II N/A N/A N/A
44 Town & Country Business Park AFBA Industrial Bank 6,303 3/31/03
45 Four Winds Apartments N/A N/A N/A
46 Allora Way Apartments N/A N/A N/A
47 Sycamore Park Apartments N/A N/A N/A
48 Promotions Distributor Services Corp. (1B) N/A N/A N/A
49 Production Distribution Services Corp. (1B) N/A N/A N/A
50 Alltel Office Building TWC 6,570 1/31/02
51 Winn Medical Center Central Home Health 10,794 8/31/01
52 56-62 Canal Street Landauer Assoc. 7,120 1/31/04
53 16 Herbert Street Tru Mask 38,627 MTM
54 Beau Rivage Apartments N/A N/A N/A
55 Tierra Corners Shopping Center Simmons Beautyrest 2,500 2/28/09
56 Two Technology Way N/A N/A N/A
57 Crossroads Shopping Center Payless Shoes #3442 2,934 2/10/09
58 County Mall Chinese Buffett 4,440 9/1/01
59 The Radisson Graystone Castle Hotel N/A N/A N/A
60 Palms East Apartments N/A N/A N/A
61 North Creek Condominiums N/A N/A N/A
62 Fallbrook Office Park N/A N/A N/A
63 Miami One Office Building N/A N/A N/A
64 Huntington Place Apartments N/A N/A N/A
65 Comfort Inn-South Burlington-VT N/A N/A N/A
66 City Centre Building Burger King Corporate 3,640 3/31/04
67 Country Village Apartments N/A N/A N/A
68 185 Commerce Drive Kinko's 8,911 6/30/03
69 The South Point Apartments N/A N/A N/A
70 Copper Beech Townhomes I N/A N/A N/A
71 Southbridge Office Buildings California Medical Foundation, Inc. 2,756 12/1/02
72 Pro-Met, Inc. N/A N/A N/A
73 Super Food Town Plaza Shastar, Inc. 4,900 4/30/04
74 The Hamptons at Central Apartments N/A N/A N/A
75 Southwest Plaza National Petcare 3,200 1/31/00
76 The Basin Street Complex N/A N/A N/A
77 Waterford Plaza N/A N/A N/A
78 Cerritos State Road Industrial Park N/A N/A N/A
79 Chambers Center Shopping Center Imagination Plus 6,400 1/31/00
80 Hackettstown Commerce Park Building I Yamakazi Tableware, Inc. 7,800 5/31/00
81 Nationsbank Service Center N/A N/A N/A
82 Freeport Self Storage N/A N/A N/A
83 The Virginia Highland Loan
83a 842 North Highland Avenue Harper's Bazar Trading Company 2,227 9/1/01
83b 1052-1062 St. Charles Avenue Fox Glove & Ivy, LLC 1,800 4/1/09
83c 784-792 North Highland Avenue Khamit Kinks 951 6/1/00
83d 776-778 North Highland Avenue N/A N/A N/A
84 Dolphin Self Storage (1C) N/A N/A N/A
85 Kangaroom Mini-Storage (1C) N/A N/A N/A
86 Airport Self Storage (1C) N/A N/A N/A
87 Stonehurst Court Apartments N/A N/A N/A
88 The River Meadows Mobile Home Park N/A N/A N/A
89 Maplewood Apartments (1D) N/A N/A N/A
90 Columbus Village Apartments (1D) N/A N/A N/A
91 Dominion Center Southern Financial Bank 3,060 12/1/03
92 The Argyle Apartments N/A N/A N/A
93 Guthrie Medical Center Guthrie Clinic-Ambulatory 6,500 12/31/20
94 The Hope Group Corporate Headquarters N/A N/A N/A
95 SavMax Foods N/A N/A N/A
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
# Property Name Management Company
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
96 Sweetbriar Apartments Century 21 Nachman Realty
97 Dobbin Square K & M Development Corp.
98 Bayside Village Apartments East Suburban Management I
99 Wickshire On Lane Apartments Strong Properties, Inc
100 Sun City Plaza H.S. Brown Associates
101 Village Green Apartments Irwin R. Rose & Company
102 Lot 1 of Silver Creek Business Park Ronald J. Sharp & Associates, Inc.
103 The Continental House Apartments John Holmes & Company
104 West End Shopping Center Vannland LTD
105 Wyle Laboratories Owner Managed
106 Thunderbird Professional Center Plaza del Rio Property Management
107 Petsmart at the Crossroads Center Westar Management, Inc.
108 Meadow Estates Apartments Holste & Associates, Inc.
109 Comfort Inn-Weeki Wachee-FL Maya Motels, Inc.
110 Springfield Place Office Building The Simpson Companies
111 Okatibbee Ridge Apartments The Pueblo Group, Inc.
112 The Center Place Apartments Wells Asset Management
113 Thompson Executive Center Commercial Realty of Pinellas, Inc.
114 CVS Pharmacy - Atlanta, GA (2) Owner Managed
115 Staples at Tri-County Plaza Glimcher Group, Inc.
116 Valley-Grove Apartments SMC Management Corporation
117 Palm Ridge Shopping Center Business Real Estate Management Company
118 Simtec Building Chalmers Property Company
119 Eckerd's Drug Store-Salina-NY Eckerd Drug Store
120 Hawthorn Duplexes First Management Company
121 Village Square Apartments Income Property Management Co.
122 Pine Terrace Apartments RAS Management
123 Pentagon Garden Apartments Patricia Jordan
124 Menlo Townhomes Top City Management
125 Heritage House II Apartments Chase National Management Corporation
126 General Power Warehouse Owner Managed
127 Century Hills Shopping Center CSM Corporation
128 Cayuga Lake Estates (1E) Owner Managed
129 Erin Estates (1E) Owner Managed
130 River Park Village Westwood Financial Corp.
131 Eckerd's Drug Store-Clay-NY Leroy Cowen
132 Granada Apartments Western Management Associates
133 Hampton Garden Apartments The Galman Group
134 Berkley Flats Nolan Real Estate
135 King's Court Apartments Castlegate Apartments, LLC
136 Legacy Business Park Medical Office Bldg. Priority One Commercial
137 Bel Air Square MacKenzie Management Company
138 The Roussos Office Building Realty Management, Inc.
139 The Brookwood Apartments WTA Management
140 CVS Drugstore Lee & Urbahns Company
141 Castlegate II Sycamore Group, LLC
142 Eagle - Vail Commercial Service Center Southwestern Investment Group, LLC
143 Martins Crossing Apartments Billy Pettit
144 Smithville Self Storage Long Property Management Co.
145 The Oak Grove Apartments Ui Rivera
146 Ashford Hill Apartments First Phillips, Inc.
147 Half Moon Bay Office Building Marcus & Millichap
148 University Park Retail Center RBI Management Services, LLC
149 2650 Franklin Apartments Owner Managed
150 Salomon Smith Barney Arnold Gewirtz
151 Meadow Glen Townhomes Hurt & Stell Management
152 3100 Building Clarkson Management
153 Brookhollow Apartments Leinbach Company
154 Tropical Isle Mayport Repair, Inc.
155 1001 Pacific Buidling NW Real Estate Property Management
156 Action Wear USA/Peerless Maintenance Damavandi Capital
157 Rockville Plaza Lee & Urbahns Company
158 Existing Shopping Center Landmark Properties, Inc.
159 Silverthorn Court Brown & Associates, Ltd.
160 Campus View Apartments Premier Properties
161 State Street Industrial Park Anndon Company
162 DeWolfe Plaza First Phillips Inc.
163 Midland Self Storage Midland Self-Storage, LTD
164 Lake Pointe Condominiums Owner Managed
165 Sandalfoot Pointe Apartments Real Estate Property Management
166 Canterberry Apartments Chamberlain & Associates
167 Lakeshore Villa Apartments Owner Managed
<CAPTION>
# Property Name Address City
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
96 Sweetbriar Apartments 1585 Briarfield Road Hampton
97 Dobbin Square 6480 Dobbin Center Way Columbia
98 Bayside Village Apartments 8855 North Port Washington Road Bayside
99 Wickshire On Lane Apartments 1570 Lane Avenue South Jacksonville
100 Sun City Plaza 26100 Newport Road Sun City
101 Village Green Apartments 201 South First Street San Marcos
102 Lot 1 of Silver Creek Business Park 6400 and 6410 Business Park Loop Road Park City
103 The Continental House Apartments 4848 Alcott Street Dallas
104 West End Shopping Center 124 B West End Avenue Farragut
105 Wyle Laboratories 3200 Magruder Boulevard Hampton
106 Thunderbird Professional Center 13760 North 93rd Avenue Peoria
107 Petsmart at the Crossroads Center 2306 Bradley Road Santa Maria
108 Meadow Estates Apartments 8515 Hammerly Boulevard Houston
109 Comfort Inn-Weeki Wachee-FL 9373 Cortez Boulevard Weeki Wachee
110 Springfield Place Office Building 6506 Loisdale Road Springfield
111 Okatibbee Ridge Apartments 1719 Highway 19 North Meridian
112 The Center Place Apartments 3005 South Center Street Arlington
113 Thompson Executive Center 120 South Myrtle Avenue Clearwater
114 CVS Pharmacy - Atlanta, GA (2) 3615 Clairmont Road Atlanta
115 Staples at Tri-County Plaza 796 Tri-County Plaza Rostraver Township
116 Valley-Grove Apartments 722-744 Valley Street & 733-739 Grove Street Manchester
117 Palm Ridge Shopping Center 4350, 4370 and 4380 Palm Avenue San Diego
118 Simtec Building 10356-10376 Battleview Parkway Manassas
119 Eckerd's Drug Store-Salina-NY 701-707 Old Liverpool Road Salina
120 Hawthorn Duplexes 2300 Hawthorn Lawrence
121 Village Square Apartments 1625 Southeast Roberts Avenue Gresham
122 Pine Terrace Apartments 1912 North Seventh Street West Monroe
123 Pentagon Garden Apartments 46 West New Haven Avenue Melbourne
124 Menlo Townhomes 2726-2816 Menlo Avenue Los Angeles
125 Heritage House II Apartments 1307 North Meridian Avenue Oklahoma City
126 General Power Warehouse 2625 International Street Columbus
127 Century Hills Shopping Center 2670-2730 County Road E East White Bear Lake
128 Cayuga Lake Estates (1E) Tollgate Hill Road & State Highway 38 Locke and Moravia
129 Erin Estates (1E) 1356 Breesport Road Erin
130 River Park Village 5075 and 5095 North La Canada Road Tuscon
131 Eckerd's Drug Store-Clay-NY 4975-4977 Bear Road Clay
132 Granada Apartments 1731-1759 Bowling Avenue Taylorsville
133 Hampton Garden Apartments 13451 Philmont Avenue Philadelphia
134 Berkley Flats 1101-1127 Indiana/1100-1124 Mississippi Lawrence
135 King's Court Apartments 2888 Dougherty Drive Baton Rouge
136 Legacy Business Park Medical Office Bldg. 1701-2 and 1701-3 Green Valley Parkway Henderson
137 Bel Air Square 260 Gateway Drive Bel Air
138 The Roussos Office Building 5115 South Decatur Boulevard Las Vegas
139 The Brookwood Apartments 1601 Valley View College Station
140 CVS Drugstore 2419 Nichol Avenue Anderson
141 Castlegate II 9231-9273 Castlegate Drive Indianapolis
142 Eagle - Vail Commercial Service Center 4078 US Highway 6/24 Eagle-Vail
143 Martins Crossing Apartments 10144 Henderson Drive Covington
144 Smithville Self Storage 36 New York Road Smithville
145 The Oak Grove Apartments 3625 South First Street Austin
146 Ashford Hill Apartments 95 Varga Road Ashford
147 Half Moon Bay Office Building 248 Main Street Half Moon Bay
148 University Park Retail Center 960 West University Drive Tempe
149 2650 Franklin Apartments 2650 Franklin Street San Francisco
150 Salomon Smith Barney 290-296 Merrick Road Rockville Centre
151 Meadow Glen Townhomes 5534 and 5569 93rd Street Lubbock
152 3100 Building 3100 South University Boulevard Jacksonville
153 Brookhollow Apartments 965 Biloxi Drive Norman
154 Tropical Isle 15175 Stringfellow Road Bokeelia
155 1001 Pacific Buidling 1001 Pacific Avenue Tacoma
156 Action Wear USA/Peerless Maintenance 10537 Glenoaks Boulevard Pacoima
157 Rockville Plaza 50-150 (except 118) South Girls School Road Indianapolis
158 Existing Shopping Center 4848 Route 8, William Flynn Highway Hampton Township
159 Silverthorn Court 167 Meraly Way Silverthorne
160 Campus View Apartments 2030 South Dmacc Boulevard Ankeny
161 State Street Industrial Park 1750 East State Street Eagle
162 DeWolfe Plaza 337 Amherst Street Nashua
163 Midland Self Storage 3600 and 3610 Big Spring Street Midland
164 Lake Pointe Condominiums 2181-2255 Piccardo Circle Stockton
165 Sandalfoot Pointe Apartments 9410 Southwest 8th Street Boca Raton
166 Canterberry Apartments 2433 West Campbell Avenue Phoenix
167 Lakeshore Villa Apartments 206 Curve Drive Monroe
<CAPTION>
Zip
# Property Name County State Code Property Type
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
96 Sweetbriar Apartments Hampton VA 23666 Multifamily
97 Dobbin Square Howard MD 21045 Retail
98 Bayside Village Apartments Milwaukee WI 53211 Multifamily
99 Wickshire On Lane Apartments Duval FL 32210 Multifamily
100 Sun City Plaza Riverside CA 92586 Retail
101 Village Green Apartments Hays TX 78666 Multifamily
102 Lot 1 of Silver Creek Business Park Summit UT 84060 Industrial
103 The Continental House Apartments Dallas TX 75204 Multifamily
104 West End Shopping Center Knox TN 37922 Retail
105 Wyle Laboratories Hampton City VA 23666 Industrial
106 Thunderbird Professional Center Maricopa AZ 85381 Office
107 Petsmart at the Crossroads Center Santa Barbara CA 93458 Retail
108 Meadow Estates Apartments Harris TX 77055 Multifamily
109 Comfort Inn-Weeki Wachee-FL Hernando FL 34613 Hotel
110 Springfield Place Office Building Fairfax VA 22150 Office
111 Okatibbee Ridge Apartments Lauderdale MS 39302 Multifamily
112 The Center Place Apartments Tarrant TX 76014 Multifamily
113 Thompson Executive Center Pinellas FL 33756 Office
114 CVS Pharmacy - Atlanta, GA (2) DeKalb GA 30319 CTL
115 Staples at Tri-County Plaza Westmoreland PA 15012 Retail
116 Valley-Grove Apartments Hillsborough NH 03103 Multifamily
117 Palm Ridge Shopping Center San Diego CA 92154 Retail
118 Simtec Building Prince William VA 22110 Office
119 Eckerd's Drug Store-Salina-NY Onondaga NY 13088 Retail
120 Hawthorn Duplexes Douglas KS 66049 Multifamily
121 Village Square Apartments Multnomah OR 97080 Multifamily
122 Pine Terrace Apartments Ouachita Parish LA 71291 Multifamily
123 Pentagon Garden Apartments Brevard FL 32901 Multifamily
124 Menlo Townhomes Los Angeles CA 90007 Multifamily
125 Heritage House II Apartments Oklahoma OK 73107 Multifamily
126 General Power Warehouse Franklin OH 43228 Industrial
127 Century Hills Shopping Center Ramsey MN 55110 Retail
128 Cayuga Lake Estates (1E) Cayuga NY 13118 Manufactured Housing
129 Erin Estates (1E) Chemung NY 14838 Manufactured Housing
130 River Park Village Pima AZ 85704 Retail
131 Eckerd's Drug Store-Clay-NY Onondaga NY 13088 Retail
132 Granada Apartments Salt Lake UT 84119 Multifamily
133 Hampton Garden Apartments Philadelphia PA 19116 Multifamily
134 Berkley Flats Douglas KS 66044 Multifamily
135 King's Court Apartments East Baton Rouge Parish LA 70805 Multifamily
136 Legacy Business Park Medical Office Bldg. Clark NV 89014 Office
137 Bel Air Square Harford MD 21014 Office
138 The Roussos Office Building Clark NV 89118 Office
139 The Brookwood Apartments Brazos TX 77840 Multifamily
140 CVS Drugstore Madison IN 46016 Retail
141 Castlegate II Marion IN 46256 Industrial
142 Eagle - Vail Commercial Service Center Eagle CO 81620 Retail
143 Martins Crossing Apartments Newton GA 30015 Multifamily
144 Smithville Self Storage Atlantic NJ 08201 Self Storage
145 The Oak Grove Apartments Travis TX 78704 Multifamily
146 Ashford Hill Apartments Windham CT 06278 Multifamily
147 Half Moon Bay Office Building San Mateo CA 94019 Office
148 University Park Retail Center Maricopa AZ 85281 Retail
149 2650 Franklin Apartments San Francisco CA 94123 Multifamily
150 Salomon Smith Barney Nassau NY 11570 Office
151 Meadow Glen Townhomes Lubbock TX 79424 Multifamily
152 3100 Building Duval FL 32207 Office
153 Brookhollow Apartments Cleveland OK 73071 Multifamily
154 Tropical Isle Lee FL 33922 Manufactured Housing
155 1001 Pacific Buidling Pierce WA 98402 Office
156 Action Wear USA/Peerless Maintenance Los Angeles CA 91331 Industrial
157 Rockville Plaza Marion IN 46231 Retail
158 Existing Shopping Center Allegheny PA 15101 Retail
159 Silverthorn Court Summit CO 80498 Retail
160 Campus View Apartments Polk IA 50021 Multifamily
161 State Street Industrial Park Ada ID 83616 Industrial
162 DeWolfe Plaza Hillsborough NH 03063 Mixed Use
163 Midland Self Storage Midland TX 79705 Self Storage
164 Lake Pointe Condominiums San Joaquin CA 95207 Multifamily
165 Sandalfoot Pointe Apartments Palm Beach FL 33428 Multifamily
166 Canterberry Apartments Maricopa AZ 85015 Multifamily
167 Lakeshore Villa Apartments Ouachita LA 71203 Multifamily
<CAPTION>
Units/
Sq. Ft./
Mortgage Rooms/
# Property Name Property Sub-type Loan Seller Pads
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
96 Sweetbriar Apartments Midland 180
97 Dobbin Square Unanchored Midland 24,295
98 Bayside Village Apartments Midland 48
99 Wickshire On Lane Apartments Midland 123
100 Sun City Plaza Shadow Anchored Midland 14,200
101 Village Green Apartments Midland 125
102 Lot 1 of Silver Creek Business Park Midland 29,704
103 The Continental House Apartments Midland 170
104 West End Shopping Center Unanchored Midland 54,822
105 Wyle Laboratories Column 59,125
106 Thunderbird Professional Center Midland 25,801
107 Petsmart at the Crossroads Center Shadow Anchored Midland 26,120
108 Meadow Estates Apartments Midland 188
109 Comfort Inn-Weeki Wachee-FL Limited Service Midland 68
110 Springfield Place Office Building Midland 40,663
111 Okatibbee Ridge Apartments Midland 104
112 The Center Place Apartments Midland 100
113 Thompson Executive Center Midland 38,305
114 CVS Pharmacy - Atlanta, GA (2) Column 10,125
115 Staples at Tri-County Plaza Anchored Midland 24,049
116 Valley-Grove Apartments Midland 96
117 Palm Ridge Shopping Center Unanchored Midland 27,600
118 Simtec Building Midland 39,091
119 Eckerd's Drug Store-Salina-NY Anchored Midland 11,317
120 Hawthorn Duplexes Midland 38
121 Village Square Apartments Midland 72
122 Pine Terrace Apartments Midland 120
123 Pentagon Garden Apartments Midland 120
124 Menlo Townhomes Midland 25
125 Heritage House II Apartments Midland 110
126 General Power Warehouse Midland 72,000
127 Century Hills Shopping Center Unanchored Column 54,165
128 Cayuga Lake Estates (1E) Column 149
129 Erin Estates (1E) Column 67
130 River Park Village Shadow Anchored Column 16,650
131 Eckerd's Drug Store-Clay-NY Anchored Midland 11,347
132 Granada Apartments Midland 57
133 Hampton Garden Apartments Midland 72
134 Berkley Flats Midland 100
135 King's Court Apartments Midland 183
136 Legacy Business Park Medical Office Bldg. Midland 13,800
137 Bel Air Square Midland 38,016
138 The Roussos Office Building Midland 11,991
139 The Brookwood Apartments Midland 80
140 CVS Drugstore Anchored Midland 10,125
141 Castlegate II Column 45,200
142 Eagle - Vail Commercial Service Center Unanchored Midland 14,350
143 Martins Crossing Apartments Midland 64
144 Smithville Self Storage Midland 50,000
145 The Oak Grove Apartments Midland 62
146 Ashford Hill Apartments Midland 52
147 Half Moon Bay Office Building Midland 8,365
148 University Park Retail Center Unanchored Midland 22,525
149 2650 Franklin Apartments Column 27
150 Salomon Smith Barney Midland 12,290
151 Meadow Glen Townhomes Midland 36
152 3100 Building Midland 42,564
153 Brookhollow Apartments Midland 121
154 Tropical Isle Midland 146
155 1001 Pacific Buidling Midland 34,156
156 Action Wear USA/Peerless Maintenance Midland 36,516
157 Rockville Plaza Unanchored Midland 59,124
158 Existing Shopping Center Unanchored Midland 53,247
159 Silverthorn Court Unanchored Midland 10,030
160 Campus View Apartments Midland 51
161 State Street Industrial Park Midland 52,080
162 DeWolfe Plaza Retail/Office Midland 19,563
163 Midland Self Storage Midland 57,160
164 Lake Pointe Condominiums Column 28
165 Sandalfoot Pointe Apartments Midland 36
166 Canterberry Apartments Midland 76
167 Lakeshore Villa Apartments Column 81
<CAPTION>
Occupancy
Fee Simple/ Year Year Rate at
# Property Name Leasehold Built Renovated U/W (3)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
96 Sweetbriar Apartments Fee 1971 N/A 89%
97 Dobbin Square Fee 1987 N/A 89%
98 Bayside Village Apartments Fee 1973 1995 100%
99 Wickshire On Lane Apartments Fee 1973 N/A 96%
100 Sun City Plaza Fee 1998 N/A 100%
101 Village Green Apartments Fee 1985 1997 98%
102 Lot 1 of Silver Creek Business Park Fee 1997 N/A 91%
103 The Continental House Apartments Fee 1960 1995 98%
104 West End Shopping Center Fee 1984 N/A 100%
105 Wyle Laboratories Fee 1968 1994 100%
106 Thunderbird Professional Center Fee 1990 N/A 100%
107 Petsmart at the Crossroads Center Fee 1999 N/A 100%
108 Meadow Estates Apartments Fee 1970 1991 99%
109 Comfort Inn-Weeki Wachee-FL Fee 1993 N/A N/A
110 Springfield Place Office Building Leasehold 1982 1995 100%
111 Okatibbee Ridge Apartments Fee 1976 N/A 89%
112 The Center Place Apartments Fee 1984 N/A 99%
113 Thompson Executive Center Fee 1983 1998 93%
114 CVS Pharmacy - Atlanta, GA (2) Fee 1998 N/A 100%
115 Staples at Tri-County Plaza Leasehold 1999 N/A 100%
116 Valley-Grove Apartments Fee 1980 N/A 99%
117 Palm Ridge Shopping Center Fee 1980 N/A 91%
118 Simtec Building Fee 1987 N/A 100%
119 Eckerd's Drug Store-Salina-NY Fee 1999 N/A 100%
120 Hawthorn Duplexes Fee 1982 1997 100%
121 Village Square Apartments Fee 1992 N/A 94%
122 Pine Terrace Apartments Fee 1973 1997 99%
123 Pentagon Garden Apartments Fee 1965 1993 98%
124 Menlo Townhomes Fee 1989 N/A 100%
125 Heritage House II Apartments Fee 1972 1995 96%
126 General Power Warehouse Fee 1998 N/A 100%
127 Century Hills Shopping Center Fee 1974 1998 97%
128 Cayuga Lake Estates (1E) Fee 1970 N/A 80%
129 Erin Estates (1E) Fee 1970 N/A 94%
130 River Park Village Fee 1998 N/A 81%
131 Eckerd's Drug Store-Clay-NY Fee 1998 N/A 100%
132 Granada Apartments Fee 1968 1996 93%
133 Hampton Garden Apartments Fee 1962 1992 94%
134 Berkley Flats Fee 1962 1985 95%
135 King's Court Apartments Fee 1968 1987 99%
136 Legacy Business Park Medical Office Bldg. Fee 1996 N/A 100%
137 Bel Air Square Fee 1989 N/A 89%
138 The Roussos Office Building Fee 1998 N/A 100%
139 The Brookwood Apartments Fee 1982 N/A 98%
140 CVS Drugstore Fee 1998 N/A 100%
141 Castlegate II Fee 1986 N/A 100%
142 Eagle - Vail Commercial Service Center Fee 1975 1997 100%
143 Martins Crossing Apartments Fee 1985 1996 95%
144 Smithville Self Storage Fee 1988 N/A 84%
145 The Oak Grove Apartments Fee 1979 N/A 100%
146 Ashford Hill Apartments Fee 1969 1999 100%
147 Half Moon Bay Office Building Fee 1998 N/A 100%
148 University Park Retail Center Fee 1987 N/A 100%
149 2650 Franklin Apartments Fee 1920 1997 100%
150 Salomon Smith Barney Fee/Leasehold 1949 1999 97%
151 Meadow Glen Townhomes Fee 1984 1985 92%
152 3100 Building Fee 1975 N/A 97%
153 Brookhollow Apartments Fee 1972 1990 92%
154 Tropical Isle Fee 1982 N/A 88%
155 1001 Pacific Buidling Fee 1942 1998 100%
156 Action Wear USA/Peerless Maintenance Fee 1987 1998 100%
157 Rockville Plaza Fee 1976 1997 96%
158 Existing Shopping Center Fee 1981 1991 100%
159 Silverthorn Court Fee 1992 1997 100%
160 Campus View Apartments Leasehold 1989 1996 79%
161 State Street Industrial Park Fee 1990 1995 100%
162 DeWolfe Plaza Fee 1982 N/A 100%
163 Midland Self Storage Fee 1975 1992 94%
164 Lake Pointe Condominiums Fee 1984 1999 100%
165 Sandalfoot Pointe Apartments Fee 1986 N/A 100%
166 Canterberry Apartments Fee 1972 N/A 93%
167 Lakeshore Villa Apartments Fee 1974 1999 98%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Maturity/
Date of Cut-off ARD
Occupancy Appraised Date LTV Date LTV Underwritable
# Property Name Rate Value Ratio (4) Ratio (4) (5) NOI
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
96 Sweetbriar Apartments 8/30/99 3,150,000 79.3% 71.2% 340,601
97 Dobbin Square 8/24/99 3,700,000 67.5% 60.9% 362,619
98 Bayside Village Apartments 7/31/99 3,300,000 74.9% 65.8% 253,416
99 Wickshire On Lane Apartments 10/1/99 2,850,000 86.4% 77.9% 305,414
100 Sun City Plaza 9/1/99 3,420,000 71.6% 64.3% 294,327
101 Village Green Apartments 5/12/99 3,500,000 69.2% 55.5% 306,000
102 Lot 1 of Silver Creek Business Park 8/19/99 3,494,000 68.6% 62.0% 302,656
103 The Continental House Apartments 9/1/99 3,775,000 63.2% 51.6% 327,270
104 West End Shopping Center 6/16/99 3,400,000 69.8% 62.7% 299,116
105 Wyle Laboratories 10/13/99 3,150,000 73.8% 61.8% 315,210
106 Thunderbird Professional Center 8/4/99 2,925,000 79.4% 71.5% 331,730
107 Petsmart at the Crossroads Center 8/1/99 3,600,000 64.5% 58.1% 277,217
108 Meadow Estates Apartments 8/16/99 3,100,000 74.8% 62.1% 349,516
109 Comfort Inn-Weeki Wachee-FL N/A 3,100,000 70.9% 60.6% 455,356
110 Springfield Place Office Building 7/20/99 3,400,000 64.5% 53.2% 389,132
111 Okatibbee Ridge Apartments 6/11/99 2,745,000 78.7% 70.8% 266,744
112 The Center Place Apartments 7/20/99 3,830,000 56.1% 46.2% 326,683
113 Thompson Executive Center 8/24/99 2,890,000 73.6% 66.3% 287,478
114 CVS Pharmacy - Atlanta, GA (2) 6/29/99 2,400,000 87.2% 22.6% 195,311
115 Staples at Tri-County Plaza 9/22/99 2,665,000 78.4% 70.5% 237,701
116 Valley-Grove Apartments 7/1/99 2,700,000 76.3% 62.0% 251,288
117 Palm Ridge Shopping Center 7/12/99 2,625,000 78.3% 65.6% 299,165
118 Simtec Building 8/6/99 2,700,000 74.0% 66.9% 263,563
119 Eckerd's Drug Store-Salina-NY 8/20/99 2,475,000 79.6% 70.9% 205,285
120 Hawthorn Duplexes 6/24/99 2,500,000 78.8% 76.3% 232,354
121 Village Square Apartments 9/7/99 3,770,000 51.0% 45.8% 232,474
122 Pine Terrace Apartments 6/30/99 2,825,000 67.8% 55.2% 267,157
123 Pentagon Garden Apartments 9/20/99 2,900,000 65.4% 54.0% 251,759
124 Menlo Townhomes 9/24/99 2,350,000 79.9% 71.8% 224,127
125 Heritage House II Apartments 6/21/99 2,550,000 73.6% 60.6% 242,965
126 General Power Warehouse 4/2/99 2,500,000 73.7% 60.6% 238,539
127 Century Hills Shopping Center 9/1/99 3,000,000 60.0% 54.7% 301,600
128 Cayuga Lake Estates (1E) 8/1/99 1,450,000 80.0% 72.4% 152,742
129 Erin Estates (1E) 8/1/99 800,000 80.0% 72.4% 79,590
130 River Park Village 9/1/99 2,750,000 65.4% 59.2% 234,624
131 Eckerd's Drug Store-Clay-NY 8/25/99 2,430,000 73.9% 66.0% 201,732
132 Granada Apartments 6/30/99 2,310,000 77.5% 64.0% 221,740
133 Hampton Garden Apartments 6/30/99 2,300,000 77.2% 68.2% 236,089
134 Berkley Flats 6/25/99 2,250,000 78.6% 63.8% 250,152
135 King's Court Apartments 6/22/99 2,365,000 74.7% 62.4% 294,381
136 Legacy Business Park Medical Office Bldg. 4/9/99 2,380,000 74.1% 66.3% 217,930
137 Bel Air Square 6/28/99 2,350,000 74.2% 61.8% 292,706
138 The Roussos Office Building 6/15/99 2,200,000 76.0% 68.6% 219,455
139 The Brookwood Apartments 9/7/99 2,200,000 75.9% 50.2% 224,952
140 CVS Drugstore 9/24/99 2,080,000 79.5% 3.4% 176,743
141 Castlegate II 7/15/99 2,310,000 71.4% 64.4% 221,277
142 Eagle - Vail Commercial Service Center 9/7/99 2,530,000 65.1% 54.6% 216,936
143 Martins Crossing Apartments 7/26/99 2,150,000 76.5% 63.5% 232,698
144 Smithville Self Storage 9/14/99 2,200,000 74.5% 61.7% 210,265
145 The Oak Grove Apartments 9/7/99 2,100,000 78.0% 70.0% 200,497
146 Ashford Hill Apartments 9/2/99 2,100,000 76.7% 68.9% 192,958
147 Half Moon Bay Office Building 6/29/99 2,515,000 63.5% 57.1% 195,846
148 University Park Retail Center 6/1/99 2,100,000 74.7% 62.6% 232,969
149 2650 Franklin Apartments 9/1/99 3,000,000 51.6% 46.5% 193,541
150 Salomon Smith Barney 9/9/99 2,000,000 77.4% 69.5% 176,124
151 Meadow Glen Townhomes 7/30/99 1,980,000 78.1% 70.2% 183,831
152 3100 Building 7/20/99 2,240,000 68.1% 56.8% 226,152
153 Brookhollow Apartments 9/30/99 2,200,000 69.2% 56.8% 275,687
154 Tropical Isle 9/13/99 2,100,000 71.3% 59.9% 196,095
155 1001 Pacific Buidling 8/27/99 2,775,000 54.0% 44.8% 256,792
156 Action Wear USA/Peerless Maintenance 3/1/99 2,150,000 69.6% 62.7% 188,275
157 Rockville Plaza 6/17/99 3,200,000 46.7% 33.4% 228,897
158 Existing Shopping Center 7/14/99 2,300,000 64.1% 52.5% 219,699
159 Silverthorn Court 3/1/99 2,050,000 71.0% 64.0% 186,390
160 Campus View Apartments 4/6/99 2,160,000 66.6% 29.7% 213,719
161 State Street Industrial Park 6/15/99 2,200,000 64.3% 2.1% 198,537
162 DeWolfe Plaza 5/20/99 2,100,000 67.1% 56.2% 202,818
163 Midland Self Storage 7/28/99 2,000,000 69.8% 58.4% 186,227
164 Lake Pointe Condominiums 7/21/99 1,770,000 76.1% 68.7% 161,376
165 Sandalfoot Pointe Apartments 7/14/99 1,850,000 72.4% 64.9% 156,191
166 Canterberry Apartments 8/31/99 1,825,000 71.1% 59.1% 174,873
167 Lakeshore Villa Apartments 7/30/99 1,700,000 76.3% 63.4% 178,160
<CAPTION>
Contractual
Engineering Recurring Contractual
Underwritable Reserve at Replacement Recurring
# Property Name NCF (6) DSCR (7) Origination Reserve LC&TI
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
96 Sweetbriar Apartments 295,601 1.33 $69,120 $45,000 N/A
97 Dobbin Square 332,538 1.46 N/A $5,102 N/A
98 Bayside Village Apartments 240,456 1.22 $4,125 $12,960 N/A
99 Wickshire On Lane Apartments 274,664 1.28 N/A $27,675 N/A
100 Sun City Plaza 280,361 1.28 N/A $2,130 N/A
101 Village Green Apartments 274,750 1.29 N/A $31,250 N/A
102 Lot 1 of Silver Creek Business Park 281,367 1.28 N/A $2,976 $12,000
103 The Continental House Apartments 284,770 1.37 $161,780 $42,492 N/A
104 West End Shopping Center 263,483 1.25 N/A $10,964 $25,000
105 Wyle Laboratories 281,886 1.25 N/A N/A N/A
106 Thunderbird Professional Center 286,743 1.37 N/A $5,160 $18,000
107 Petsmart at the Crossroads Center 261,924 1.25 N/A $2,612 N/A
108 Meadow Estates Apartments 302,516 1.39 $140,000 $47,000 N/A
109 Comfort Inn-Weeki Wachee-FL 400,727 1.77 $30,000 4.00% N/A
110 Springfield Place Office Building 321,284 1.59 $25,000 $15,200 N/A
111 Okatibbee Ridge Apartments 240,744 1.25 N/A $26,000 N/A
112 The Center Place Apartments 301,683 1.52 N/A N/A N/A
113 Thompson Executive Center 240,515 1.25 N/A $7,661 $12,000
114 CVS Pharmacy - Atlanta, GA (2) 194,088 1.01 N/A $3,443 N/A
115 Staples at Tri-County Plaza 234,094 1.25 N/A $3,607 N/A
116 Valley-Grove Apartments 227,538 1.29 N/A $23,750 N/A
117 Palm Ridge Shopping Center 271,656 1.41 $175,000 $4,200 $20,400
118 Simtec Building 234,826 1.29 N/A $7,036 $24,000
119 Eckerd's Drug Store-Salina-NY 203,649 1.20 N/A N/A N/A
120 Hawthorn Duplexes 220,954 1.30 N/A N/A N/A
121 Village Square Apartments 214,474 1.25 $49,781 $18,000 N/A
122 Pine Terrace Apartments 236,385 1.43 N/A $30,772 N/A
123 Pentagon Garden Apartments 221,759 1.26 N/A N/A N/A
124 Menlo Townhomes 216,627 1.29 N/A $7,500 N/A
125 Heritage House II Apartments 215,215 1.25 $33,000 N/A N/A
126 General Power Warehouse 209,893 1.25 N/A $7,200 N/A
127 Century Hills Shopping Center 249,796 1.46 N/A N/A $12,000
128 Cayuga Lake Estates (1E) 145,292 1.34 N/A N/A N/A
129 Erin Estates (1E) 76,240 1.34 N/A N/A N/A
130 River Park Village 215,523 1.30 N/A $2,498 N/A
131 Eckerd's Drug Store-Clay-NY 200,096 1.28 N/A $1,636 N/A
132 Granada Apartments 207,409 1.26 $8,750 $14,331 N/A
133 Hampton Garden Apartments 218,089 1.53 N/A $17,320 N/A
134 Berkley Flats 220,152 1.46 N/A $30,000 N/A
135 King's Court Apartments 248,631 1.47 N/A $45,768 N/A
136 Legacy Business Park Medical Office Bldg. 192,875 1.25 N/A $2,760 $12,000
137 Bel Air Square 223,041 1.35 N/A $8,550 $20,000
138 The Roussos Office Building 198,741 1.31 N/A $2,398 $12,000
139 The Brookwood Apartments 200,952 1.33 N/A $24,000 N/A
140 CVS Drugstore 174,718 1.06 N/A $2,025 N/A
141 Castlegate II 192,190 1.28 $500 N/A N/A
142 Eagle - Vail Commercial Service Center 200,893 1.25 N/A $2,153 $10,000
143 Martins Crossing Apartments 216,698 1.40 N/A $16,000 N/A
144 Smithville Self Storage 202,765 1.32 N/A $7,500 N/A
145 The Oak Grove Apartments 184,997 1.27 N/A $15,500 N/A
146 Ashford Hill Apartments 179,958 1.25 N/A $13,000 N/A
147 Half Moon Bay Office Building 181,729 1.27 N/A N/A $9,000
148 University Park Retail Center 208,436 1.38 N/A $3,384 $9,996
149 2650 Franklin Apartments 186,791 1.34 N/A $6,750 N/A
150 Salomon Smith Barney 172,526 1.25 N/A $3,073 N/A
151 Meadow Glen Townhomes 174,831 1.27 N/A $9,000 N/A
152 3100 Building 181,694 1.25 $24,921 $8,513 $24,600
153 Brookhollow Apartments 239,387 1.78 N/A N/A N/A
154 Tropical Isle 186,015 1.27 N/A $10,080 N/A
155 1001 Pacific Buidling 202,052 1.43 N/A $6,889 $25,000
156 Action Wear USA/Peerless Maintenance 168,195 1.25 N/A $3,652 $30,000
157 Rockville Plaza 196,064 1.27 N/A $9,600 $20,000
158 Existing Shopping Center 186,654 1.44 N/A N/A N/A
159 Silverthorn Court 173,325 1.32 N/A $1,505 $11,430
160 Campus View Apartments 198,419 1.36 N/A $15,000 N/A
161 State Street Industrial Park 176,079 1.31 N/A $5,328 N/A
162 DeWolfe Plaza 176,356 1.30 N/A $8,412 $12,000
163 Midland Self Storage 177,257 1.32 N/A $8,574 N/A
164 Lake Pointe Condominiums 154,376 1.26 $82,684 $7,000 N/A
165 Sandalfoot Pointe Apartments 147,191 1.25 N/A $9,000 N/A
166 Canterberry Apartments 155,873 1.27 $48,750 $19,000 N/A
167 Lakeshore Villa Apartments 157,910 1.29 $2,125 $20,250 N/A
<CAPTION>
Underwritable
Recurring Percentage of
Replacement Underwritable Original Cut-off Initial
# Property Name Reserve LC&TI Balance Balance (8) Pool Balance
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
96 Sweetbriar Apartments $45,000 N/A 2,500,000 2,497,297 0.3%
97 Dobbin Square $5,102 $24,979 2,500,000 2,495,876 0.3%
98 Bayside Village Apartments $12,960 N/A 2,500,000 2,470,119 0.3%
99 Wickshire On Lane Apartments $30,750 N/A 2,500,000 2,462,845 0.3%
100 Sun City Plaza $2,130 $11,836 2,450,000 2,447,351 0.3%
101 Village Green Apartments $31,250 N/A 2,432,000 2,423,648 0.3%
102 Lot 1 of Silver Creek Business Park $3,267 $18,022 2,400,000 2,397,592 0.3%
103 The Continental House Apartments $42,500 N/A 2,425,000 2,385,151 0.3%
104 West End Shopping Center $8,223 $27,410 2,380,000 2,374,705 0.3%
105 Wyle Laboratories $11,825 $21,499 2,327,900 2,325,656 0.3%
106 Thunderbird Professional Center $5,160 $39,827 2,325,000 2,321,048 0.3%
107 Petsmart at the Crossroads Center $2,612 $12,681 2,325,000 2,321,048 0.3%
108 Meadow Estates Apartments $47,000 N/A 2,325,000 2,318,323 0.3%
109 Comfort Inn-Weeki Wachee-FL 5.00% N/A 2,200,000 2,196,812 0.3%
110 Springfield Place Office Building $15,200 $52,648 2,200,000 2,191,463 0.3%
111 Okatibbee Ridge Apartments $26,000 N/A 2,166,000 2,160,270 0.3%
112 The Center Place Apartments $25,000 N/A 2,150,000 2,147,721 0.3%
113 Thompson Executive Center $7,661 $39,302 2,128,000 2,125,786 0.3%
114 CVS Pharmacy - Atlanta, GA (2) $1,223 N/A 2,095,726 2,092,645 0.3%
115 Staples at Tri-County Plaza $3,607 N/A 2,092,000 2,090,644 0.3%
116 Valley-Grove Apartments $23,750 N/A 2,100,000 2,061,214 0.3%
117 Palm Ridge Shopping Center $4,140 $23,369 2,090,000 2,054,356 0.3%
118 Simtec Building $7,980 $20,757 2,000,000 1,996,725 0.3%
119 Eckerd's Drug Store-Salina-NY $1,636 N/A 1,972,000 1,969,641 0.3%
120 Hawthorn Duplexes $11,400 N/A 2,000,000 1,969,368 0.3%
121 Village Square Apartments $18,000 N/A 1,926,000 1,923,907 0.3%
122 Pine Terrace Apartments $30,772 N/A 1,950,000 1,914,597 0.3%
123 Pentagon Garden Apartments $30,000 N/A 1,900,000 1,897,996 0.2%
124 Menlo Townhomes $7,500 N/A 1,880,000 1,877,979 0.2%
125 Heritage House II Apartments $27,750 N/A 1,883,000 1,875,636 0.2%
126 General Power Warehouse $7,200 $21,446 1,852,000 1,842,944 0.2%
127 Century Hills Shopping Center $8,125 $43,679 1,800,000 1,798,979 0.2%
128 Cayuga Lake Estates (1E) $7,450 N/A 1,170,000 1,169,290 0.2%
129 Erin Estates (1E) $3,350 N/A 630,000 629,618 0.1%
130 River Park Village $2,498 $16,603 1,800,000 1,798,224 0.2%
131 Eckerd's Drug Store-Clay-NY $1,636 N/A 1,800,000 1,796,627 0.2%
132 Granada Apartments $14,331 N/A 1,800,000 1,789,429 0.2%
133 Hampton Garden Apartments $18,000 N/A 1,800,000 1,776,313 0.2%
134 Berkley Flats $30,000 N/A 1,800,000 1,769,317 0.2%
135 King's Court Apartments $45,750 N/A 1,773,750 1,767,438 0.2%
136 Legacy Business Park Medical Office Bldg. $2,760 $22,295 1,769,000 1,762,795 0.2%
137 Bel Air Square $8,550 $61,115 1,750,000 1,743,610 0.2%
138 The Roussos Office Building $2,398 $18,316 1,675,000 1,671,490 0.2%
139 The Brookwood Apartments $24,000 N/A 1,700,000 1,670,131 0.2%
140 CVS Drugstore $2,025 N/A 1,659,000 1,653,637 0.2%
141 Castlegate II $6,780 $22,307 1,650,000 1,648,302 0.2%
142 Eagle - Vail Commercial Service Center $2,156 $13,886 1,650,000 1,647,212 0.2%
143 Martins Crossing Apartments $16,000 N/A 1,650,000 1,645,235 0.2%
144 Smithville Self Storage $7,500 N/A 1,640,000 1,638,312 0.2%
145 The Oak Grove Apartments $15,500 N/A 1,640,000 1,638,203 0.2%
146 Ashford Hill Apartments $13,000 N/A 1,613,000 1,611,256 0.2%
147 Half Moon Bay Office Building $1,673 $12,444 1,600,000 1,596,517 0.2%
148 University Park Retail Center $5,181 $19,352 1,575,000 1,568,326 0.2%
149 2650 Franklin Apartments $6,750 N/A 1,550,000 1,548,361 0.2%
150 Salomon Smith Barney $2,383 $1,215 1,550,000 1,548,297 0.2%
151 Meadow Glen Townhomes $9,000 N/A 1,550,000 1,547,280 0.2%
152 3100 Building $8,513 $35,945 1,529,000 1,524,730 0.2%
153 Brookhollow Apartments $36,300 N/A 1,550,000 1,523,242 0.2%
154 Tropical Isle $10,080 N/A 1,500,000 1,497,486 0.2%
155 1001 Pacific Buidling $6,889 $47,851 1,500,000 1,497,269 0.2%
156 Action Wear USA/Peerless Maintenance $3,652 $16,428 1,500,000 1,496,779 0.2%
157 Rockville Plaza $8,869 $23,964 1,500,000 1,495,425 0.2%
158 Existing Shopping Center $8,258 $24,787 1,500,000 1,473,694 0.2%
159 Silverthorn Court $1,505 $11,634 1,460,000 1,455,274 0.2%
160 Campus View Apartments $15,300 N/A 1,450,000 1,438,558 0.2%
161 State Street Industrial Park $5,112 $17,346 1,450,000 1,413,723 0.2%
162 DeWolfe Plaza $8,412 $18,050 1,415,500 1,409,439 0.2%
163 Midland Self Storage $8,970 N/A 1,400,000 1,396,184 0.2%
164 Lake Pointe Condominiums $7,000 N/A 1,350,000 1,347,734 0.2%
165 Sandalfoot Pointe Apartments $9,000 N/A 1,343,000 1,339,923 0.2%
166 Canterberry Apartments $19,000 N/A 1,300,000 1,297,662 0.2%
167 Lakeshore Villa Apartments $20,250 N/A 1,300,000 1,297,643 0.2%
<CAPTION>
Orig Rem. Orig Rem.
Maturity Amort. Amort. Term to Term to Interest
# Property Name Balance Term Term Maturity (9) Maturity (9) Rate
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
96 Sweetbriar Apartments 2,243,851 360 358 120 118 8.140%
97 Dobbin Square 2,255,010 360 357 120 117 8.360%
98 Bayside Village Apartments 2,172,793 360 345 120 105 6.870%
99 Wickshire On Lane Apartments 2,220,610 360 338 120 98 7.740%
100 Sun City Plaza 2,198,973 360 358 120 118 8.140%
101 Village Green Apartments 1,943,433 360 354 180 174 7.980%
102 Lot 1 of Silver Creek Business Park 2,167,646 360 358 120 118 8.410%
103 The Continental House Apartments 1,946,726 300 286 120 106 7.110%
104 West End Shopping Center 2,132,192 360 356 120 116 8.060%
105 Wyle Laboratories 1,947,834 300 299 120 119 8.530%
106 Thunderbird Professional Center 2,091,347 360 357 120 117 8.240%
107 Petsmart at the Crossroads Center 2,091,347 360 357 120 117 8.240%
108 Meadow Estates Apartments 1,924,878 300 297 120 117 8.150%
109 Comfort Inn-Weeki Wachee-FL 1,878,764 300 298 120 118 9.280%
110 Springfield Place Office Building 1,808,191 300 296 120 116 7.890%
111 Okatibbee Ridge Apartments 1,942,684 360 355 120 115 8.100%
112 The Center Place Apartments 1,769,728 300 299 120 119 7.950%
113 Thompson Executive Center 1,916,227 360 358 120 118 8.280%
114 CVS Pharmacy - Atlanta, GA (2) 542,365 276 274 243 241 8.140%
115 Staples at Tri-County Plaza 1,878,612 360 359 120 119 8.170%
116 Valley-Grove Apartments 1,673,554 300 285 120 105 6.880%
117 Palm Ridge Shopping Center 1,722,440 300 283 120 103 7.980%
118 Simtec Building 1,805,249 360 357 120 117 8.390%
119 Eckerd's Drug Store-Salina-NY 1,753,864 360 358 120 118 7.760%
120 Hawthorn Duplexes 1,907,171 360 338 60 38 7.610%
121 Village Square Apartments 1,727,849 360 358 120 118 8.120%
122 Pine Terrace Apartments 1,558,891 300 285 120 105 6.980%
123 Pentagon Garden Apartments 1,565,302 300 299 120 119 7.980%
124 Menlo Townhomes 1,688,170 360 358 120 118 8.160%
125 Heritage House II Apartments 1,545,844 300 296 120 116 7.850%
126 General Power Warehouse 1,516,245 300 295 120 115 7.750%
127 Century Hills Shopping Center 1,640,372 360 359 120 119 8.820%
128 Cayuga Lake Estates (1E) 1,058,433 360 359 120 119 8.490%
129 Erin Estates (1E) 569,926 360 359 120 119 8.490%
130 River Park Village 1,627,962 360 358 120 118 8.470%
131 Eckerd's Drug Store-Clay-NY 1,603,791 360 357 120 117 7.840%
132 Granada Apartments 1,479,058 300 294 120 114 7.880%
133 Hampton Garden Apartments 1,567,788 360 343 120 103 6.940%
134 Berkley Flats 1,435,560 300 286 120 106 6.900%
135 King's Court Apartments 1,476,328 300 296 120 116 8.330%
136 Legacy Business Park Medical Office Bldg. 1,578,803 360 354 120 114 7.900%
137 Bel Air Square 1,451,217 300 296 120 116 8.200%
138 The Roussos Office Building 1,508,372 360 356 120 116 8.280%
139 The Brookwood Apartments 1,104,792 300 284 180 164 7.510%
140 CVS Drugstore 70,561 240 238 240 238 7.890%
141 Castlegate II 1,487,174 360 358 120 118 8.320%
142 Eagle - Vail Commercial Service Center 1,381,709 300 298 120 118 8.550%
143 Martins Crossing Apartments 1,364,875 300 297 120 117 8.120%
144 Smithville Self Storage 1,356,928 300 299 120 119 8.130%
145 The Oak Grove Apartments 1,470,230 360 358 120 118 8.090%
146 Ashford Hill Apartments 1,447,733 360 358 120 118 8.140%
147 Half Moon Bay Office Building 1,436,123 360 356 120 116 8.140%
148 University Park Retail Center 1,315,625 300 295 120 115 8.450%
149 2650 Franklin Apartments 1,393,800 360 358 120 118 8.220%
150 Salomon Smith Barney 1,389,217 360 358 120 118 8.080%
151 Meadow Glen Townhomes 1,389,993 360 357 120 117 8.110%
152 3100 Building 1,271,253 300 297 120 117 8.300%
153 Brookhollow Apartments 1,250,257 300 285 120 105 7.270%
154 Tropical Isle 1,257,486 300 298 120 118 8.590%
155 1001 Pacific Buidling 1,243,136 300 298 120 118 8.180%
156 Action Wear USA/Peerless Maintenance 1,347,948 360 356 120 116 8.190%
157 Rockville Plaza 1,069,199 240 238 120 118 8.300%
158 Existing Shopping Center 1,206,597 300 285 120 105 7.180%
159 Silverthorn Court 1,312,359 360 354 120 114 8.200%
160 Campus View Apartments 640,824 240 235 180 175 8.030%
161 State Street Industrial Park 45,722 240 227 240 227 6.950%
162 DeWolfe Plaza 1,180,739 300 295 120 115 8.400%
163 Midland Self Storage 1,168,243 300 297 120 117 8.430%
164 Lake Pointe Condominiums 1,215,740 360 357 120 117 8.290%
165 Sandalfoot Pointe Apartments 1,200,007 360 356 120 116 7.950%
166 Canterberry Apartments 1,079,220 300 298 120 118 8.240%
167 Lakeshore Villa Apartments 1,077,997 300 298 120 118 8.200%
<CAPTION>
First
Interest Calculation Monthly Payment Maturity
# Property Name (30/360 / Actual/360) Payment Date Date ARD (10) Seasoning
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
96 Sweetbriar Apartments Actual/360 18,588.69 11/1/99 10/1/09 2
97 Dobbin Square Actual/360 18,975.34 10/1/99 9/1/09 3
98 Bayside Village Apartments Actual/360 16,414.87 10/1/98 9/1/28 9/1/08 15
99 Wickshire On Lane Apartments Actual/360 17,893.03 3/1/98 2/1/08 22
100 Sun City Plaza Actual/360 18,216.92 11/1/99 10/1/09 2
101 Village Green Apartments Actual/360 17,811.26 7/1/99 6/1/14 6
102 Lot 1 of Silver Creek Business Park Actual/360 18,301.06 11/1/99 10/1/09 2
103 The Continental House Apartments Actual/360 17,309.94 11/1/98 10/1/08 14
104 West End Shopping Center Actual/360 17,563.25 9/1/99 8/1/09 4
105 Wyle Laboratories Actual/360 18,791.97 12/1/99 11/1/09 1
106 Thunderbird Professional Center Actual/360 17,450.61 10/1/99 9/1/09 3
107 Petsmart at the Crossroads Center Actual/360 17,450.61 10/1/99 9/1/09 3
108 Meadow Estates Apartments Actual/360 18,176.37 10/1/99 9/1/09 3
109 Comfort Inn-Weeki Wachee-FL Actual/360 18,885.96 11/1/99 10/1/09 2
110 Springfield Place Office Building Actual/360 16,819.96 9/1/99 8/1/09 4
111 Okatibbee Ridge Apartments Actual/360 16,044.60 8/1/99 7/1/09 5
112 The Center Place Apartments Actual/360 16,522.90 12/1/99 11/1/09 1
113 Thompson Executive Center Actual/360 16,031.86 11/1/99 10/1/09 2
114 CVS Pharmacy - Atlanta, GA (2) Actual/360 15,989.06 11/1/99 1/1/20 2
115 Staples at Tri-County Plaza Actual/360 15,599.00 12/1/99 11/1/09 1
116 Valley-Grove Apartments Actual/360 14,681.99 10/1/98 9/1/08 15
117 Palm Ridge Shopping Center Actual/360 16,103.28 8/1/98 7/1/08 17
118 Simtec Building Actual/360 15,222.63 10/1/99 9/1/09 3
119 Eckerd's Drug Store-Salina-NY Actual/360 14,141.28 11/1/99 10/1/09 2
120 Hawthorn Duplexes Actual/360 14,135.24 3/1/98 2/1/03 22
121 Village Square Apartments Actual/360 14,293.75 11/1/99 10/1/09 2
122 Pine Terrace Apartments Actual/360 13,757.33 10/1/98 9/1/08 15
123 Pentagon Garden Apartments Actual/360 14,639.34 12/1/99 11/1/09 1
124 Menlo Townhomes Actual/360 14,005.04 11/1/99 10/1/09 2
125 Heritage House II Apartments Actual/360 14,346.69 9/1/99 8/1/09 4
126 General Power Warehouse Actual/360 13,988.69 8/1/99 7/1/09 5
127 Century Hills Shopping Center Actual/360 14,250.69 12/1/99 11/1/09 1
128 Cayuga Lake Estates (1E) Actual/360 8,988.00 12/1/99 11/1/09 1
129 Erin Estates (1E) Actual/360 4,839.69 12/1/99 11/1/09 1
130 River Park Village Actual/360 13,802.19 11/1/99 10/1/09 2
131 Eckerd's Drug Store-Clay-NY Actual/360 13,007.55 10/1/99 9/1/09 3
132 Granada Apartments Actual/360 13,749.91 7/1/99 6/1/09 6
133 Hampton Garden Apartments Actual/360 11,903.00 8/1/98 7/1/28 7/1/08 17
134 Berkley Flats Actual/360 12,607.43 11/1/98 10/1/08 14
135 King's Court Apartments Actual/360 14,080.09 9/1/99 8/1/09 4
136 Legacy Business Park Medical Office Bldg. Actual/360 12,857.19 7/1/99 6/1/09 6
137 Bel Air Square Actual/360 13,739.46 9/1/99 8/1/09 4
138 The Roussos Office Building Actual/360 12,619.06 9/1/99 8/1/09 4
139 The Brookwood Apartments Actual/360 12,573.91 9/1/98 8/1/13 16
140 CVS Drugstore Actual/360 13,763.18 11/1/99 10/1/19 2
141 Castlegate II Actual/360 12,477.19 11/1/99 10/1/09 2
142 Eagle - Vail Commercial Service Center Actual/360 13,341.89 11/1/99 10/1/09 2
143 Martins Crossing Apartments Actual/360 12,866.41 10/1/99 9/1/09 3
144 Smithville Self Storage Actual/360 12,799.34 12/1/99 11/1/09 1
145 The Oak Grove Apartments Actual/360 12,136.79 11/1/99 10/1/09 2
146 Ashford Hill Apartments Actual/360 11,993.42 11/1/99 10/1/09 2
147 Half Moon Bay Office Building Actual/360 11,896.76 9/1/99 8/1/09 4
148 University Park Retail Center Actual/360 12,629.30 8/1/99 7/1/09 5
149 2650 Franklin Apartments Actual/360 11,611.96 11/1/99 10/1/09 2
150 Salomon Smith Barney Actual/360 11,459.91 11/1/99 10/1/09 2
151 Meadow Glen Townhomes Actual/360 11,492.43 10/1/99 9/1/09 3
152 3100 Building Actual/360 12,106.53 10/1/99 9/1/09 3
153 Brookhollow Apartments Actual/360 11,223.49 10/1/98 9/1/08 15
154 Tropical Isle Actual/360 12,169.52 11/1/99 10/1/09 2
155 1001 Pacific Buidling Actual/360 11,756.67 11/1/99 10/1/09 2
156 Action Wear USA/Peerless Maintenance Actual/360 11,205.79 9/1/99 8/1/09 4
157 Rockville Plaza Actual/360 12,828.10 11/1/99 10/1/09 2
158 Existing Shopping Center Actual/360 10,774.55 10/1/98 9/1/23 9/1/08 15
159 Silverthorn Court Actual/360 10,917.22 7/1/99 6/1/09 6
160 Campus View Apartments Actual/360 12,155.47 8/1/99 7/1/14 5
161 State Street Industrial Park Actual/360 11,198.36 12/1/98 11/1/18 13
162 DeWolfe Plaza Actual/360 11,302.76 8/1/99 7/1/09 5
163 Midland Self Storage Actual/360 11,207.21 10/1/99 9/1/09 3
164 Lake Pointe Condominiums Actual/360 10,180.09 10/1/99 9/1/09 3
165 Sandalfoot Pointe Apartments Actual/360 9,807.69 9/1/99 8/1/09 4
166 Canterberry Apartments Actual/360 10,241.17 11/1/99 10/1/09 2
167 Lakeshore Villa Apartments Actual/360 10,206.45 11/1/99 10/1/09 2
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Original
Lockout
Servicing and Prepayment Provision Period
# Property Name Trustee Fees as of Origination (11) (Months)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
96 Sweetbriar Apartments 0.1623% L (9.67), O (0.33) 116
97 Dobbin Square 0.0823% L (9.67), O (0.33) 116
98 Bayside Village Apartments 0.0823% L (4.92), YM 1% (4.75), O (0.33) 59
99 Wickshire On Lane Apartments 0.0823% L (4.92), YM 1% (4.5), O (0.58) 59
100 Sun City Plaza 0.0823% L (9.67), O (0.33) 116
101 Village Green Apartments 0.1823% L (4.92), YM 1% (9.75), O (0.33) 59
102 Lot 1 of Silver Creek Business Park 0.0823% L (9.67), O (0.33) 116
103 The Continental House Apartments 0.0823% L (4.92), YM 1% (4.75), O (0.33) 59
104 West End Shopping Center 0.1323% L (9.67), O (0.33) 116
105 Wyle Laboratories 0.0523% L (9.5), O (0.5) 114
106 Thunderbird Professional Center 0.1323% L (4.92), YM 1% (4.75), O (0.33) 59
107 Petsmart at the Crossroads Center 0.0823% L (9.67), O (0.33) 116
108 Meadow Estates Apartments 0.1823% L (9.67), O (0.33) 116
109 Comfort Inn-Weeki Wachee-FL 0.1623% L (5), YM (4.75), O (0.25) 60
110 Springfield Place Office Building 0.1823% L (9.67), O (0.33) 116
111 Okatibbee Ridge Apartments 0.0823% L (9.67), O (0.33) 116
112 The Center Place Apartments 0.1823% L (4.92), YM 1% (4.5), O (0.58) 59
113 Thompson Executive Center 0.1623% L (9.58), O (0.42) 115
114 CVS Pharmacy - Atlanta, GA (2) 0.0523% L (19.75), O (0.5) 237
115 Staples at Tri-County Plaza 0.0823% L (9.67), O (0.33) 116
116 Valley-Grove Apartments 0.0823% L (5), YM 1% (4.5), O (0.5) 60
117 Palm Ridge Shopping Center 0.1823% L (4.92), YM 1% (4.5), O (0.58) 59
118 Simtec Building 0.0823% L (9.42), O (0.58) 113
119 Eckerd's Drug Store-Salina-NY 0.0823% L (9.42), O (0.58) 113
120 Hawthorn Duplexes 0.0823% L (2.5), YM 1% (2), O (0.5) 30
121 Village Square Apartments 0.0823% L (9.67), O (0.33) 116
122 Pine Terrace Apartments 0.0823% L (4.92), YM 1% (4.5), O (0.58) 59
123 Pentagon Garden Apartments 0.0823% L (2.92), YM 1% (6.5), O (0.58) 35
124 Menlo Townhomes 0.0823% L (9.67), O (0.33) 116
125 Heritage House II Apartments 0.0823% L (9.67), O (0.33) 116
126 General Power Warehouse 0.0823% L (9.67), O (0.33) 116
127 Century Hills Shopping Center 0.0523% L (9.25), O (0.75) 111
128 Cayuga Lake Estates (1E) 0.0523% L (9.5), O (0.5) 114
129 Erin Estates (1E) 0.0523% L (9.5), O (0.5) 114
130 River Park Village 0.0523% L (9.5), O (0.5) 114
131 Eckerd's Drug Store-Clay-NY 0.0823% L (9.67), O (0.33) 116
132 Granada Apartments 0.0823% L (9.67), O (0.33) 116
133 Hampton Garden Apartments 0.1573% L (3.92), YM 1% (5.5), O (0.58) 47
134 Berkley Flats 0.0823% L (2.92), YM 1% (6.5), O (0.58) 35
135 King's Court Apartments 0.0823% L (9.67), O (0.33) 116
136 Legacy Business Park Medical Office Bldg. 0.1823% L (4.92), YM 1% (4.58), O (0.5) 59
137 Bel Air Square 0.0823% L (3.92), YM 1% (5.75), O (0.33) 47
138 The Roussos Office Building 0.0823% L (9.67), O (0.33) 116
139 The Brookwood Apartments 0.0823% L (7.42), YM 1% (7), O (0.58) 89
140 CVS Drugstore 0.0823% L (19.67), O (0.33) 236
141 Castlegate II 0.0523% L (9.5), O (0.5) 114
142 Eagle - Vail Commercial Service Center 0.0823% L (9.67), O (0.33) 116
143 Martins Crossing Apartments 0.0823% L (9.67), O (0.33) 116
144 Smithville Self Storage 0.0823% L (9.67), O (0.33) 116
145 The Oak Grove Apartments 0.0823% L (9.67), O (0.33) 116
146 Ashford Hill Apartments 0.1823% L (9.67), O (0.33) 116
147 Half Moon Bay Office Building 0.0823% L (9.67), O (0.33) 116
148 University Park Retail Center 0.0823% L (9.67), O (0.33) 116
149 2650 Franklin Apartments 0.0523% L (9.5), O (0.5) 114
150 Salomon Smith Barney 0.0823% L (9.67), O (0.33) 116
151 Meadow Glen Townhomes 0.1823% L (9.67), O (0.33) 116
152 3100 Building 0.1823% L (9.42), O (0.58) 113
153 Brookhollow Apartments 0.1823% L (4.92), YM 1% (4.5), O (0.58) 59
154 Tropical Isle 0.1823% L (9.67), O (0.33) 116
155 1001 Pacific Buidling 0.1823% L (9.58), O (0.42) 115
156 Action Wear USA/Peerless Maintenance 0.0823% L (9.67), O (0.33) 116
157 Rockville Plaza 0.0823% L (9.67), O (0.33) 116
158 Existing Shopping Center 0.0823% L (3.92), YM 1% (5.5), O (0.58) 47
159 Silverthorn Court 0.0823% L (9.67), O (0.33) 116
160 Campus View Apartments 0.0823% L (14.67), O (0.33) 176
161 State Street Industrial Park 0.1823% L (9.92), YM 1% (9.75), O (0.33) 119
162 DeWolfe Plaza 0.1823% L (9.67), O (0.33) 116
163 Midland Self Storage 0.0823% L (9.67), O (0.33) 116
164 Lake Pointe Condominiums 0.0523% L (9.5), O (0.5) 114
165 Sandalfoot Pointe Apartments 0.0823% L (9.67), O (0.33) 116
166 Canterberry Apartments 0.0823% L (9.67), O (0.33) 116
167 Lakeshore Villa Apartments 0.0523% L (9.5), O (0.5) 114
<CAPTION>
Original Original
Yield Prepayment Original Yield
Maintenance Premium Open Lockout Maintenance
Period Period Period Expiration Expiration
# Property Name (Months) (Months) (Months) Defeasance (12) Date Date
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
96 Sweetbriar Apartments 0 0 4 Yes 6/1/09 N/A
97 Dobbin Square 0 0 4 Yes 5/1/09 N/A
98 Bayside Village Apartments 57 0 4 No 8/1/03 5/1/08
99 Wickshire On Lane Apartments 54 0 7 No 1/1/03 7/1/07
100 Sun City Plaza 0 0 4 Yes 6/1/09 N/A
101 Village Green Apartments 117 0 4 No 5/1/04 2/1/14
102 Lot 1 of Silver Creek Business Park 0 0 4 Yes 6/1/09 N/A
103 The Continental House Apartments 57 0 4 No 9/1/03 6/1/08
104 West End Shopping Center 0 0 4 Yes 4/1/09 N/A
105 Wyle Laboratories 0 0 6 Yes 5/1/09 N/A
106 Thunderbird Professional Center 57 0 4 No 8/1/04 5/1/09
107 Petsmart at the Crossroads Center 0 0 4 Yes 5/1/09 N/A
108 Meadow Estates Apartments 0 0 4 Yes 5/1/09 N/A
109 Comfort Inn-Weeki Wachee-FL 57 0 3 No 10/1/04 7/1/09
110 Springfield Place Office Building 0 0 4 Yes 4/1/09 N/A
111 Okatibbee Ridge Apartments 0 0 4 Yes 3/1/09 N/A
112 The Center Place Apartments 54 0 7 No 10/1/04 4/1/09
113 Thompson Executive Center 0 0 5 Yes 5/1/09 N/A
114 CVS Pharmacy - Atlanta, GA (2) 0 0 6 Yes 7/1/19 N/A
115 Staples at Tri-County Plaza 0 0 4 Yes 7/1/09 N/A
116 Valley-Grove Apartments 54 0 6 No 9/1/03 3/1/08
117 Palm Ridge Shopping Center 54 0 7 No 6/1/03 12/1/07
118 Simtec Building 0 0 7 Yes 2/1/09 N/A
119 Eckerd's Drug Store-Salina-NY 0 0 7 Yes 3/1/09 N/A
120 Hawthorn Duplexes 24 0 6 No 8/1/00 8/1/02
121 Village Square Apartments 0 0 4 Yes 6/1/09 N/A
122 Pine Terrace Apartments 54 0 7 No 8/1/03 2/1/08
123 Pentagon Garden Apartments 78 0 7 No 10/1/02 4/1/09
124 Menlo Townhomes 0 0 4 Yes 6/1/09 N/A
125 Heritage House II Apartments 0 0 4 Yes 4/1/09 N/A
126 General Power Warehouse 0 0 4 Yes 3/1/09 N/A
127 Century Hills Shopping Center 0 0 9 Yes 2/1/09 N/A
128 Cayuga Lake Estates (1E) 0 0 6 Yes 5/1/09 N/A
129 Erin Estates (1E) 0 0 6 Yes 5/1/09 N/A
130 River Park Village 0 0 6 Yes 4/1/09 N/A
131 Eckerd's Drug Store-Clay-NY 0 0 4 Yes 5/1/09 N/A
132 Granada Apartments 0 0 4 Yes 2/1/09 N/A
133 Hampton Garden Apartments 66 0 7 No 6/1/02 12/1/07
134 Berkley Flats 78 0 7 No 9/1/01 3/1/08
135 King's Court Apartments 0 0 4 Yes 4/1/09 N/A
136 Legacy Business Park Medical Office Bldg. 55 0 6 No 5/1/04 12/1/08
137 Bel Air Square 69 0 4 No 7/1/03 4/1/09
138 The Roussos Office Building 0 0 4 Yes 4/1/09 N/A
139 The Brookwood Apartments 84 0 7 No 1/1/06 1/1/13
140 CVS Drugstore 0 0 4 Yes 6/1/19 N/A
141 Castlegate II 0 0 6 Yes 4/1/09 N/A
142 Eagle - Vail Commercial Service Center 0 0 4 Yes 6/1/09 N/A
143 Martins Crossing Apartments 0 0 4 Yes 5/1/09 N/A
144 Smithville Self Storage 0 0 4 Yes 7/1/09 N/A
145 The Oak Grove Apartments 0 0 4 Yes 6/1/09 N/A
146 Ashford Hill Apartments 0 0 4 Yes 6/1/09 N/A
147 Half Moon Bay Office Building 0 0 4 Yes 4/1/09 N/A
148 University Park Retail Center 0 0 4 Yes 3/1/09 N/A
149 2650 Franklin Apartments 0 0 6 Yes 4/1/09 N/A
150 Salomon Smith Barney 0 0 4 Yes 6/1/09 N/A
151 Meadow Glen Townhomes 0 0 4 Yes 5/1/09 N/A
152 3100 Building 0 0 7 Yes 2/1/09 N/A
153 Brookhollow Apartments 54 0 7 No 8/1/03 2/1/08
154 Tropical Isle 0 0 4 Yes 6/1/09 N/A
155 1001 Pacific Buidling 0 0 5 Yes 5/1/09 N/A
156 Action Wear USA/Peerless Maintenance 0 0 4 Yes 4/1/09 N/A
157 Rockville Plaza 0 0 4 Yes 6/1/09 N/A
158 Existing Shopping Center 66 0 7 No 8/1/02 2/1/08
159 Silverthorn Court 0 0 4 Yes 2/1/09 N/A
160 Campus View Apartments 0 0 4 Yes 3/1/14 N/A
161 State Street Industrial Park 117 0 4 No 10/1/08 7/1/18
162 DeWolfe Plaza 0 0 4 Yes 3/1/09 N/A
163 Midland Self Storage 0 0 4 Yes 5/1/09 N/A
164 Lake Pointe Condominiums 0 0 6 Yes 3/1/09 N/A
165 Sandalfoot Pointe Apartments 0 0 4 Yes 4/1/09 N/A
166 Canterberry Apartments 0 0 4 Yes 6/1/09 N/A
167 Lakeshore Villa Apartments 0 0 6 Yes 4/1/09 N/A
<CAPTION>
Prepayment
Premium Utilities Subject
Expiration Hotel Multifamily Tenant Multifamily Studio
# Property Name Date Franchise Pays Elevators Units
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
96 Sweetbriar Apartments N/A N/A Electric 0 N/A
97 Dobbin Square N/A N/A N/A N/A N/A
98 Bayside Village Apartments N/A N/A Electric/Gas 1 N/A
99 Wickshire On Lane Apartments N/A N/A Electric/Gas 0 N/A
100 Sun City Plaza N/A N/A N/A N/A N/A
101 Village Green Apartments N/A N/A Electric 0 N/A
102 Lot 1 of Silver Creek Business Park N/A N/A N/A N/A N/A
103 The Continental House Apartments N/A N/A None 0 16
104 West End Shopping Center N/A N/A N/A N/A N/A
105 Wyle Laboratories N/A N/A N/A N/A N/A
106 Thunderbird Professional Center N/A N/A N/A N/A N/A
107 Petsmart at the Crossroads Center N/A N/A N/A N/A N/A
108 Meadow Estates Apartments N/A N/A Electric 0 N/A
109 Comfort Inn-Weeki Wachee-FL N/A Comfort Inn N/A N/A N/A
110 Springfield Place Office Building N/A N/A N/A N/A N/A
111 Okatibbee Ridge Apartments N/A N/A Electric 0 N/A
112 The Center Place Apartments N/A N/A Electric 0 N/A
113 Thompson Executive Center N/A N/A N/A N/A N/A
114 CVS Pharmacy - Atlanta, GA (2) N/A N/A N/A N/A N/A
115 Staples at Tri-County Plaza N/A N/A N/A N/A N/A
116 Valley-Grove Apartments N/A N/A None 0 4
117 Palm Ridge Shopping Center N/A N/A N/A N/A N/A
118 Simtec Building N/A N/A N/A N/A N/A
119 Eckerd's Drug Store-Salina-NY N/A N/A N/A N/A N/A
120 Hawthorn Duplexes N/A N/A Electric/Gas/Water/Sewer 0 N/A
121 Village Square Apartments N/A N/A Electric 0 N/A
122 Pine Terrace Apartments N/A N/A Electric 0 N/A
123 Pentagon Garden Apartments N/A N/A Electric 0 N/A
124 Menlo Townhomes N/A N/A Electric 0 N/A
125 Heritage House II Apartments N/A N/A Electric 0 N/A
126 General Power Warehouse N/A N/A N/A N/A N/A
127 Century Hills Shopping Center N/A N/A N/A N/A N/A
128 Cayuga Lake Estates (1E) N/A N/A N/A N/A N/A
129 Erin Estates (1E) N/A N/A N/A N/A N/A
130 River Park Village N/A N/A N/A N/A N/A
131 Eckerd's Drug Store-Clay-NY N/A N/A N/A N/A N/A
132 Granada Apartments N/A N/A Electric 0 N/A
133 Hampton Garden Apartments N/A N/A Electric/Gas 0 N/A
134 Berkley Flats N/A N/A Electric/Gas 0 28
135 King's Court Apartments N/A N/A Electric 0 N/A
136 Legacy Business Park Medical Office Bldg. N/A N/A N/A N/A N/A
137 Bel Air Square N/A N/A N/A N/A N/A
138 The Roussos Office Building N/A N/A N/A N/A N/A
139 The Brookwood Apartments N/A N/A Electric 0 N/A
140 CVS Drugstore N/A N/A N/A N/A N/A
141 Castlegate II N/A N/A N/A N/A N/A
142 Eagle - Vail Commercial Service Center N/A N/A N/A N/A N/A
143 Martins Crossing Apartments N/A N/A Electric/Water/Sewer 0 N/A
144 Smithville Self Storage N/A N/A N/A N/A N/A
145 The Oak Grove Apartments N/A N/A Electric/Water/Sewer 0 N/A
146 Ashford Hill Apartments N/A N/A Electric 1 N/A
147 Half Moon Bay Office Building N/A N/A N/A N/A N/A
148 University Park Retail Center N/A N/A N/A N/A N/A
149 2650 Franklin Apartments N/A N/A Electric/Gas 1 26
150 Salomon Smith Barney N/A N/A N/A N/A N/A
151 Meadow Glen Townhomes N/A N/A Electric/Gas/Water/Sewer 0 N/A
152 3100 Building N/A N/A N/A N/A N/A
153 Brookhollow Apartments N/A N/A Electric 0 11
154 Tropical Isle N/A N/A N/A N/A N/A
155 1001 Pacific Buidling N/A N/A N/A N/A N/A
156 Action Wear USA/Peerless Maintenance N/A N/A N/A N/A N/A
157 Rockville Plaza N/A N/A N/A N/A N/A
158 Existing Shopping Center N/A N/A N/A N/A N/A
159 Silverthorn Court N/A N/A N/A N/A N/A
160 Campus View Apartments N/A N/A None 0 N/A
161 State Street Industrial Park N/A N/A N/A N/A N/A
162 DeWolfe Plaza N/A N/A N/A N/A N/A
163 Midland Self Storage N/A N/A N/A N/A N/A
164 Lake Pointe Condominiums N/A N/A Electric/Gas 0 N/A
165 Sandalfoot Pointe Apartments N/A N/A Electric 0 N/A
166 Canterberry Apartments N/A N/A Electric 0 N/A
167 Lakeshore Villa Apartments N/A N/A Electric 0 N/A
<CAPTION>
Subject Subject Subject Subject Subject
Studio Studio 1 BR 1 BR 1 BR
# Property Name Avg. Rent Max. Rent Units Avg. Rent Max. Rent
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
96 Sweetbriar Apartments N/A N/A N/A N/A N/A
97 Dobbin Square N/A N/A N/A N/A N/A
98 Bayside Village Apartments N/A N/A 36 $728 $795
99 Wickshire On Lane Apartments N/A N/A 60 $404 $430
100 Sun City Plaza N/A N/A N/A N/A N/A
101 Village Green Apartments N/A N/A 80 $461 $490
102 Lot 1 of Silver Creek Business Park N/A N/A N/A N/A N/A
103 The Continental House Apartments $392 $450 31 $542 $575
104 West End Shopping Center N/A N/A N/A N/A N/A
105 Wyle Laboratories N/A N/A N/A N/A N/A
106 Thunderbird Professional Center N/A N/A N/A N/A N/A
107 Petsmart at the Crossroads Center N/A N/A N/A N/A N/A
108 Meadow Estates Apartments N/A N/A 66 $325 $345
109 Comfort Inn-Weeki Wachee-FL N/A N/A N/A N/A N/A
110 Springfield Place Office Building N/A N/A N/A N/A N/A
111 Okatibbee Ridge Apartments N/A N/A 24 $429 $440
112 The Center Place Apartments N/A N/A 48 $500 $515
113 Thompson Executive Center N/A N/A N/A N/A N/A
114 CVS Pharmacy - Atlanta, GA (2) N/A N/A N/A N/A N/A
115 Staples at Tri-County Plaza N/A N/A N/A N/A N/A
116 Valley-Grove Apartments $367 $425 44 $479 $525
117 Palm Ridge Shopping Center N/A N/A N/A N/A N/A
118 Simtec Building N/A N/A N/A N/A N/A
119 Eckerd's Drug Store-Salina-NY N/A N/A N/A N/A N/A
120 Hawthorn Duplexes N/A N/A N/A N/A N/A
121 Village Square Apartments N/A N/A N/A N/A N/A
122 Pine Terrace Apartments N/A N/A 32 $366 $385
123 Pentagon Garden Apartments N/A N/A 40 $399 $410
124 Menlo Townhomes N/A N/A N/A N/A N/A
125 Heritage House II Apartments N/A N/A 48 $268 $295
126 General Power Warehouse N/A N/A N/A N/A N/A
127 Century Hills Shopping Center N/A N/A N/A N/A N/A
128 Cayuga Lake Estates (1E) N/A N/A N/A N/A N/A
129 Erin Estates (1E) N/A N/A N/A N/A N/A
130 River Park Village N/A N/A N/A N/A N/A
131 Eckerd's Drug Store-Clay-NY N/A N/A N/A N/A N/A
132 Granada Apartments N/A N/A 12 $485 $510
133 Hampton Garden Apartments N/A N/A 24 $453 $490
134 Berkley Flats $174 $440 56 $392 $485
135 King's Court Apartments N/A N/A 112 $300 $300
136 Legacy Business Park Medical Office Bldg. N/A N/A N/A N/A N/A
137 Bel Air Square N/A N/A N/A N/A N/A
138 The Roussos Office Building N/A N/A N/A N/A N/A
139 The Brookwood Apartments N/A N/A N/A N/A N/A
140 CVS Drugstore N/A N/A N/A N/A N/A
141 Castlegate II N/A N/A N/A N/A N/A
142 Eagle - Vail Commercial Service Center N/A N/A N/A N/A N/A
143 Martins Crossing Apartments N/A N/A N/A N/A N/A
144 Smithville Self Storage N/A N/A N/A N/A N/A
145 The Oak Grove Apartments N/A N/A 40 $515 $560
146 Ashford Hill Apartments N/A N/A 28 $419 $450
147 Half Moon Bay Office Building N/A N/A N/A N/A N/A
148 University Park Retail Center N/A N/A N/A N/A N/A
149 2650 Franklin Apartments $809 $1,375 1 N/A N/A
150 Salomon Smith Barney N/A N/A N/A N/A N/A
151 Meadow Glen Townhomes N/A N/A N/A N/A N/A
152 3100 Building N/A N/A N/A N/A N/A
153 Brookhollow Apartments $343 $359 52 $382 $409
154 Tropical Isle N/A N/A N/A N/A N/A
155 1001 Pacific Buidling N/A N/A N/A N/A N/A
156 Action Wear USA/Peerless Maintenance N/A N/A N/A N/A N/A
157 Rockville Plaza N/A N/A N/A N/A N/A
158 Existing Shopping Center N/A N/A N/A N/A N/A
159 Silverthorn Court N/A N/A N/A N/A N/A
160 Campus View Apartments N/A N/A N/A N/A N/A
161 State Street Industrial Park N/A N/A N/A N/A N/A
162 DeWolfe Plaza N/A N/A N/A N/A N/A
163 Midland Self Storage N/A N/A N/A N/A N/A
164 Lake Pointe Condominiums N/A N/A N/A N/A N/A
165 Sandalfoot Pointe Apartments N/A N/A N/A N/A N/A
166 Canterberry Apartments N/A N/A N/A N/A N/A
167 Lakeshore Villa Apartments N/A N/A 24 $356 $375
<CAPTION>
Subject Subject Subject Subject Subject
2 BR 2 BR 2 BR 3 BR 3 BR
# Property Name Units Avg. Rent Max. Rent Units Avg. Rent
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
96 Sweetbriar Apartments 180 $383 $385 N/A N/A
97 Dobbin Square N/A N/A N/A N/A N/A
98 Bayside Village Apartments 12 $889 $910 N/A N/A
99 Wickshire On Lane Apartments 51 $486 $535 12 $540
100 Sun City Plaza N/A N/A N/A N/A N/A
101 Village Green Apartments 35 $674 $685 10 $801
102 Lot 1 of Silver Creek Business Park N/A N/A N/A N/A N/A
103 The Continental House Apartments 123 $650 $750 N/A N/A
104 West End Shopping Center N/A N/A N/A N/A N/A
105 Wyle Laboratories N/A N/A N/A N/A N/A
106 Thunderbird Professional Center N/A N/A N/A N/A N/A
107 Petsmart at the Crossroads Center N/A N/A N/A N/A N/A
108 Meadow Estates Apartments 104 $394 $445 18 $483
109 Comfort Inn-Weeki Wachee-FL N/A N/A N/A N/A N/A
110 Springfield Place Office Building N/A N/A N/A N/A N/A
111 Okatibbee Ridge Apartments 52 $523 $610 28 $590
112 The Center Place Apartments 52 $623 $655 N/A N/A
113 Thompson Executive Center N/A N/A N/A N/A N/A
114 CVS Pharmacy - Atlanta, GA (2) N/A N/A N/A N/A N/A
115 Staples at Tri-County Plaza N/A N/A N/A N/A N/A
116 Valley-Grove Apartments 48 $577 $615 N/A N/A
117 Palm Ridge Shopping Center N/A N/A N/A N/A N/A
118 Simtec Building N/A N/A N/A N/A N/A
119 Eckerd's Drug Store-Salina-NY N/A N/A N/A N/A N/A
120 Hawthorn Duplexes 13 $688 $710 25 $795
121 Village Square Apartments 62 $567 $627 10 $689
122 Pine Terrace Apartments 64 $427 $460 24 $490
123 Pentagon Garden Apartments 80 $470 $530 N/A N/A
124 Menlo Townhomes 15 $1,377 $1,400 10 $1,448
125 Heritage House II Apartments 62 $436 $475 N/A N/A
126 General Power Warehouse N/A N/A N/A N/A N/A
127 Century Hills Shopping Center N/A N/A N/A N/A N/A
128 Cayuga Lake Estates (1E) N/A N/A N/A N/A N/A
129 Erin Estates (1E) N/A N/A N/A N/A N/A
130 River Park Village N/A N/A N/A N/A N/A
131 Eckerd's Drug Store-Clay-NY N/A N/A N/A N/A N/A
132 Granada Apartments 44 $537 $600 1 $650
133 Hampton Garden Apartments 48 $565 $620 N/A N/A
134 Berkley Flats 16 $470 $595 N/A N/A
135 King's Court Apartments 70 $340 $340 1 $465
136 Legacy Business Park Medical Office Bldg. N/A N/A N/A N/A N/A
137 Bel Air Square N/A N/A N/A N/A N/A
138 The Roussos Office Building N/A N/A N/A N/A N/A
139 The Brookwood Apartments 80 $539 $550 N/A N/A
140 CVS Drugstore N/A N/A N/A N/A N/A
141 Castlegate II N/A N/A N/A N/A N/A
142 Eagle - Vail Commercial Service Center N/A N/A N/A N/A N/A
143 Martins Crossing Apartments 64 $480 $495 N/A N/A
144 Smithville Self Storage N/A N/A N/A N/A N/A
145 The Oak Grove Apartments 22 $644 $690 N/A N/A
146 Ashford Hill Apartments 20 $517 $550 4 $625
147 Half Moon Bay Office Building N/A N/A N/A N/A N/A
148 University Park Retail Center N/A N/A N/A N/A N/A
149 2650 Franklin Apartments N/A N/A N/A N/A N/A
150 Salomon Smith Barney N/A N/A N/A N/A N/A
151 Meadow Glen Townhomes 18 $703 $810 18 $778
152 3100 Building N/A N/A N/A N/A N/A
153 Brookhollow Apartments 46 $491 $509 12 $644
154 Tropical Isle N/A N/A N/A N/A N/A
155 1001 Pacific Buidling N/A N/A N/A N/A N/A
156 Action Wear USA/Peerless Maintenance N/A N/A N/A N/A N/A
157 Rockville Plaza N/A N/A N/A N/A N/A
158 Existing Shopping Center N/A N/A N/A N/A N/A
159 Silverthorn Court N/A N/A N/A N/A N/A
160 Campus View Apartments 51 $1,039 $2,000 N/A N/A
161 State Street Industrial Park N/A N/A N/A N/A N/A
162 DeWolfe Plaza N/A N/A N/A N/A N/A
163 Midland Self Storage N/A N/A N/A N/A N/A
164 Lake Pointe Condominiums 8 $804 $830 20 $876
165 Sandalfoot Pointe Apartments 36 $762 $800 N/A N/A
166 Canterberry Apartments 76 $475 $525 N/A N/A
167 Lakeshore Villa Apartments 57 $381 $425 N/A N/A
<CAPTION>
Subject Subject Subject Subject
3 BR 4 BR 4 BR 4 BR
# Property Name Max. Rent Units Avg. Rent Max. Rent
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
96 Sweetbriar Apartments N/A N/A N/A N/A
97 Dobbin Square N/A N/A N/A N/A
98 Bayside Village Apartments N/A N/A N/A N/A
99 Wickshire On Lane Apartments $620 N/A N/A N/A
100 Sun City Plaza N/A N/A N/A N/A
101 Village Green Apartments $850 N/A N/A N/A
102 Lot 1 of Silver Creek Business Park N/A N/A N/A N/A
103 The Continental House Apartments N/A N/A N/A N/A
104 West End Shopping Center N/A N/A N/A N/A
105 Wyle Laboratories N/A N/A N/A N/A
106 Thunderbird Professional Center N/A N/A N/A N/A
107 Petsmart at the Crossroads Center N/A N/A N/A N/A
108 Meadow Estates Apartments $565 N/A N/A N/A
109 Comfort Inn-Weeki Wachee-FL N/A N/A N/A N/A
110 Springfield Place Office Building N/A N/A N/A N/A
111 Okatibbee Ridge Apartments $630 N/A N/A N/A
112 The Center Place Apartments N/A N/A N/A N/A
113 Thompson Executive Center N/A N/A N/A N/A
114 CVS Pharmacy - Atlanta, GA (2) N/A N/A N/A N/A
115 Staples at Tri-County Plaza N/A N/A N/A N/A
116 Valley-Grove Apartments N/A N/A N/A N/A
117 Palm Ridge Shopping Center N/A N/A N/A N/A
118 Simtec Building N/A N/A N/A N/A
119 Eckerd's Drug Store-Salina-NY N/A N/A N/A N/A
120 Hawthorn Duplexes $825 N/A N/A N/A
121 Village Square Apartments $713 N/A N/A N/A
122 Pine Terrace Apartments $525 N/A N/A N/A
123 Pentagon Garden Apartments N/A N/A N/A N/A
124 Menlo Townhomes $1,600 N/A N/A N/A
125 Heritage House II Apartments N/A N/A N/A N/A
126 General Power Warehouse N/A N/A N/A N/A
127 Century Hills Shopping Center N/A N/A N/A N/A
128 Cayuga Lake Estates (1E) N/A N/A N/A N/A
129 Erin Estates (1E) N/A N/A N/A N/A
130 River Park Village N/A N/A N/A N/A
131 Eckerd's Drug Store-Clay-NY N/A N/A N/A N/A
132 Granada Apartments $720 N/A N/A N/A
133 Hampton Garden Apartments N/A N/A N/A N/A
134 Berkley Flats N/A N/A N/A N/A
135 King's Court Apartments $465 N/A N/A N/A
136 Legacy Business Park Medical Office Bldg. N/A N/A N/A N/A
137 Bel Air Square N/A N/A N/A N/A
138 The Roussos Office Building N/A N/A N/A N/A
139 The Brookwood Apartments N/A N/A N/A N/A
140 CVS Drugstore N/A N/A N/A N/A
141 Castlegate II N/A N/A N/A N/A
142 Eagle - Vail Commercial Service Center N/A N/A N/A N/A
143 Martins Crossing Apartments N/A N/A N/A N/A
144 Smithville Self Storage N/A N/A N/A N/A
145 The Oak Grove Apartments N/A N/A N/A N/A
146 Ashford Hill Apartments $650 N/A N/A N/A
147 Half Moon Bay Office Building N/A N/A N/A N/A
148 University Park Retail Center N/A N/A N/A N/A
149 2650 Franklin Apartments N/A N/A N/A N/A
150 Salomon Smith Barney N/A N/A N/A N/A
151 Meadow Glen Townhomes $920 N/A N/A N/A
152 3100 Building N/A N/A N/A N/A
153 Brookhollow Apartments $689 N/A N/A N/A
154 Tropical Isle N/A N/A N/A N/A
155 1001 Pacific Buidling N/A N/A N/A N/A
156 Action Wear USA/Peerless Maintenance N/A N/A N/A N/A
157 Rockville Plaza N/A N/A N/A N/A
158 Existing Shopping Center N/A N/A N/A N/A
159 Silverthorn Court N/A N/A N/A N/A
160 Campus View Apartments N/A N/A N/A N/A
161 State Street Industrial Park N/A N/A N/A N/A
162 DeWolfe Plaza N/A N/A N/A N/A
163 Midland Self Storage N/A N/A N/A N/A
164 Lake Pointe Condominiums $1,000 N/A N/A N/A
165 Sandalfoot Pointe Apartments N/A N/A N/A N/A
166 Canterberry Apartments N/A N/A N/A N/A
167 Lakeshore Villa Apartments N/A N/A N/A N/A
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Major Major Major
Tenant #1 Tenant #1 Tenant #1 Lease
# Property Name Name Sq. Ft. Expiration Date
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
96 Sweetbriar Apartments N/A N/A N/A
97 Dobbin Square Rocky Run Tap & Grill 8,703 12/31/06
98 Bayside Village Apartments N/A N/A N/A
99 Wickshire On Lane Apartments N/A N/A N/A
100 Sun City Plaza Tarbell Financial 3,664 1/4/04
101 Village Green Apartments N/A N/A N/A
102 Lot 1 of Silver Creek Business Park Black Diamond Gymnastics 5,148 3/31/04
103 The Continental House Apartments N/A N/A N/A
104 West End Shopping Center Food Lion 30,302 6/30/04
105 Wyle Laboratories Wyle Laboratories, Inc. 59,000 10/31/14
106 Thunderbird Professional Center Arizona Medical Clinic 16,751 8/11/05
107 Petsmart at the Crossroads Center PetsMart 26,120 5/31/14
108 Meadow Estates Apartments N/A N/A N/A
109 Comfort Inn-Weeki Wachee-FL N/A N/A N/A
110 Springfield Place Office Building Chesapeake Center, Inc. 8,949 7/14/06
111 Okatibbee Ridge Apartments N/A N/A N/A
112 The Center Place Apartments N/A N/A N/A
113 Thompson Executive Center Bennett, Johnson & Savel, M.D.s 4,544 4/30/05
114 CVS Pharmacy - Atlanta, GA (2) Big B Drugs, Inc. 10,125 1/31/2020
115 Staples at Tri-County Plaza Staples #533 24,049 4/30/14
116 Valley-Grove Apartments N/A N/A N/A
117 Palm Ridge Shopping Center San Diego County Superintendent of Schools 5,400 4/30/04
118 Simtec Building Simtec, Inc. 32,877 2/29/04
119 Eckerd's Drug Store-Salina-NY Eckerds Drug 11,317 1/6/19
120 Hawthorn Duplexes N/A N/A N/A
121 Village Square Apartments N/A N/A N/A
122 Pine Terrace Apartments N/A N/A N/A
123 Pentagon Garden Apartments N/A N/A N/A
124 Menlo Townhomes N/A N/A N/A
125 Heritage House II Apartments N/A N/A N/A
126 General Power Warehouse General Powerhouse Equipment Company 36,000 1/31/14
127 Century Hills Shopping Center Gold's Gym 22,400 3/31/07
128 Cayuga Lake Estates (1E) N/A N/A N/A
129 Erin Estates (1E) N/A N/A N/A
130 River Park Village Blockbuster Video 5,980 11/1/08
131 Eckerd's Drug Store-Clay-NY Eckerds 11,347 8/19/18
132 Granada Apartments N/A N/A N/A
133 Hampton Garden Apartments N/A N/A N/A
134 Berkley Flats N/A N/A N/A
135 King's Court Apartments N/A N/A N/A
136 Legacy Business Park Medical Office Bldg. Robert A. Gatlin, MD 2,850 4/30/04
137 Bel Air Square C.E.M. Inc. 2,304 6/30/01
138 The Roussos Office Building Interior Motives 6,311 12/31/10
139 The Brookwood Apartments N/A N/A N/A
140 CVS Drugstore Hook-SupeRX, Inc. 10,125 10/11/18
141 Castlegate II Offset Printing 7,500 6/30/00
142 Eagle - Vail Commercial Service Center Pine Factory Furniture 7,200 10/31/01
143 Martins Crossing Apartments N/A N/A N/A
144 Smithville Self Storage N/A N/A N/A
145 The Oak Grove Apartments N/A N/A N/A
146 Ashford Hill Apartments N/A N/A N/A
147 Half Moon Bay Office Building Coldwell Banker 4,620 7/9/08
148 University Park Retail Center Crisis Pregnancy Center 7,020 12/31/01
149 2650 Franklin Apartments N/A N/A N/A
150 Salomon Smith Barney Smith Barney, Inc. 10,450 9/30/13
151 Meadow Glen Townhomes N/A N/A N/A
152 3100 Building The Clarkson Co. 6,743 7/31/00
153 Brookhollow Apartments N/A N/A N/A
154 Tropical Isle N/A N/A N/A
155 1001 Pacific Buidling Wynwood Agency 10,807 12/31/01
156 Action Wear USA/Peerless Maintenance Action Wear USA 27,407 12/31/01
157 Rockville Plaza Ladies Only 30,975 5/31/07
158 Existing Shopping Center The Salvation Army 13,524 5/31/01
159 Silverthorn Court Specialty Sports 7,200 8/31/06
160 Campus View Apartments N/A N/A N/A
161 State Street Industrial Park Bledsoe Construction 5,760 5/31/99
162 DeWolfe Plaza Chen Yang Li 6,356 6/30/08
163 Midland Self Storage N/A N/A N/A
164 Lake Pointe Condominiums N/A N/A N/A
165 Sandalfoot Pointe Apartments N/A N/A N/A
166 Canterberry Apartments N/A N/A N/A
167 Lakeshore Villa Apartments N/A N/A N/A
<CAPTION>
Major Major Major
Tenant #2 Tenant #2 Tenant #2 Lease
# Property Name Name Sq. Ft. Expiration Date
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
96 Sweetbriar Apartments N/A N/A N/A
97 Dobbin Square Mattress Discounters 3,000 1/31/04
98 Bayside Village Apartments N/A N/A N/A
99 Wickshire On Lane Apartments N/A N/A N/A
100 Sun City Plaza Donut Star 2,000 12/14/04
101 Village Green Apartments N/A N/A N/A
102 Lot 1 of Silver Creek Business Park High Mountain Properties, Inc. 3,328 3/30/04
103 The Continental House Apartments N/A N/A N/A
104 West End Shopping Center Publishers 8,640 6/30/04
105 Wyle Laboratories N/A N/A N/A
106 Thunderbird Professional Center Arizona Medical Clinic 5,592 8/11/01
107 Petsmart at the Crossroads Center N/A N/A N/A
108 Meadow Estates Apartments N/A N/A N/A
109 Comfort Inn-Weeki Wachee-FL N/A N/A N/A
110 Springfield Place Office Building Remtech Services 6,792 10/31/00
111 Okatibbee Ridge Apartments N/A N/A N/A
112 The Center Place Apartments N/A N/A N/A
113 Thompson Executive Center William M. Golson 4,296 8/31/00
114 CVS Pharmacy - Atlanta, GA (2) N/A N/A N/A
115 Staples at Tri-County Plaza N/A N/A N/A
116 Valley-Grove Apartments N/A N/A N/A
117 Palm Ridge Shopping Center Fawzi Zaiya Liquor 3,000 12/31/99
118 Simtec Building Aeronautical Systems 3,358 2/29/04
119 Eckerd's Drug Store-Salina-NY N/A N/A N/A
120 Hawthorn Duplexes N/A N/A N/A
121 Village Square Apartments N/A N/A N/A
122 Pine Terrace Apartments N/A N/A N/A
123 Pentagon Garden Apartments N/A N/A N/A
124 Menlo Townhomes N/A N/A N/A
125 Heritage House II Apartments N/A N/A N/A
126 General Power Warehouse Gardner, Inc. 36,000 1/31/14
127 Century Hills Shopping Center Hardware Hank 8,000 4/30/08
128 Cayuga Lake Estates (1E) N/A N/A N/A
129 Erin Estates (1E) N/A N/A N/A
130 River Park Village N/A N/A N/A
131 Eckerd's Drug Store-Clay-NY N/A N/A N/A
132 Granada Apartments N/A N/A N/A
133 Hampton Garden Apartments N/A N/A N/A
134 Berkley Flats N/A N/A N/A
135 King's Court Apartments N/A N/A N/A
136 Legacy Business Park Medical Office Bldg. Gerorge E. Bonn, LTD. 2,200 10/31/03
137 Bel Air Square Harford County 1,728 6/30/00
138 The Roussos Office Building Epic Westpark Resorts 5,680 1/22/02
139 The Brookwood Apartments N/A N/A N/A
140 CVS Drugstore N/A N/A N/A
141 Castlegate II Computers & Networks, Inc. 7,500 8/31/04
142 Eagle - Vail Commercial Service Center Golden Sky Systems, Inc. 2,220 6/4/02
143 Martins Crossing Apartments N/A N/A N/A
144 Smithville Self Storage N/A N/A N/A
145 The Oak Grove Apartments N/A N/A N/A
146 Ashford Hill Apartments N/A N/A N/A
147 Half Moon Bay Office Building North American Title 2,258 10/31/03
148 University Park Retail Center Rosita's Fine Mexican Food 5,100 3/30/03
149 2650 Franklin Apartments N/A N/A N/A
150 Salomon Smith Barney Gerwitz & Co., Inc. 1,500 11/30/14
151 Meadow Glen Townhomes N/A N/A N/A
152 3100 Building Big Bros, Big Sisters 5,583 12/1/03
153 Brookhollow Apartments N/A N/A N/A
154 Tropical Isle N/A N/A N/A
155 1001 Pacific Buidling Wynwood Services & Technology 8,020 1/31/07
156 Action Wear USA/Peerless Maintenance Tuttle Family Enterprises 9,109 4/30/02
157 Rockville Plaza T.R.L.T. 10,125 7/31/04
158 Existing Shopping Center Schwebel's Baking Company Inc 11,760 1/31/03
159 Silverthorn Court Cal Spas 2,830 5/31/05
160 Campus View Apartments N/A N/A N/A
161 State Street Industrial Park Delta Plastics 5,760 10/1/00
162 DeWolfe Plaza Dewolfe Real Estate 3,427 4/30/03
163 Midland Self Storage N/A N/A N/A
164 Lake Pointe Condominiums N/A N/A N/A
165 Sandalfoot Pointe Apartments N/A N/A N/A
166 Canterberry Apartments N/A N/A N/A
167 Lakeshore Villa Apartments N/A N/A N/A
<CAPTION>
Major Major Major
Tenant #3 Tenant #3 Tenant #3 Lease
# Property Name Name Sq. Ft. Expiration Date
- ----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
96 Sweetbriar Apartments N/A N/A N/A
97 Dobbin Square TechLab 2000, Inc. 2,534 12/31/02
98 Bayside Village Apartments N/A N/A N/A
99 Wickshire On Lane Apartments N/A N/A N/A
100 Sun City Plaza The Gift Shop 1,500 11/30/03
101 Village Green Apartments N/A N/A N/A
102 Lot 1 of Silver Creek Business Park Resort Property Management 2,952 10/31/03
103 The Continental House Apartments N/A N/A N/A
104 West End Shopping Center Kalamata Kitchen 5,000 12/2/03
105 Wyle Laboratories N/A N/A N/A
106 Thunderbird Professional Center Oral & Mazillofacial 1,921 5/31/05
107 Petsmart at the Crossroads Center N/A N/A N/A
108 Meadow Estates Apartments N/A N/A N/A
109 Comfort Inn-Weeki Wachee-FL N/A N/A N/A
110 Springfield Place Office Building Newlink Global Engineering 5,093 12/31/00
111 Okatibbee Ridge Apartments N/A N/A N/A
112 The Center Place Apartments N/A N/A N/A
113 Thompson Executive Center Kast Orthotics & Prosthetics 2,790 1/31/01
114 CVS Pharmacy - Atlanta, GA (2) N/A N/A N/A
115 Staples at Tri-County Plaza N/A N/A N/A
116 Valley-Grove Apartments N/A N/A N/A
117 Palm Ridge Shopping Center Cabrillo Federal Credit Union 2,400 9/30/03
118 Simtec Building Galaxy Computer Services, Inc. 2,856 12/31/03
119 Eckerd's Drug Store-Salina-NY N/A N/A N/A
120 Hawthorn Duplexes N/A N/A N/A
121 Village Square Apartments N/A N/A N/A
122 Pine Terrace Apartments N/A N/A N/A
123 Pentagon Garden Apartments N/A N/A N/A
124 Menlo Townhomes N/A N/A N/A
125 Heritage House II Apartments N/A N/A N/A
126 General Power Warehouse N/A N/A N/A
127 Century Hills Shopping Center N/A N/A N/A
128 Cayuga Lake Estates (1E) N/A N/A N/A
129 Erin Estates (1E) N/A N/A N/A
130 River Park Village N/A N/A N/A
131 Eckerd's Drug Store-Clay-NY N/A N/A N/A
132 Granada Apartments N/A N/A N/A
133 Hampton Garden Apartments N/A N/A N/A
134 Berkley Flats N/A N/A N/A
135 King's Court Apartments N/A N/A N/A
136 Legacy Business Park Medical Office Bldg. ANPS 2,020 11/30/03
137 Bel Air Square Liberty Trust 1,152 11/30/03
138 The Roussos Office Building N/A N/A N/A
139 The Brookwood Apartments N/A N/A N/A
140 CVS Drugstore N/A N/A N/A
141 Castlegate II Lucent Technologies 5,000 12/31/03
142 Eagle - Vail Commercial Service Center Custom Pack Shipping 1,800 6/30/02
143 Martins Crossing Apartments N/A N/A N/A
144 Smithville Self Storage N/A N/A N/A
145 The Oak Grove Apartments N/A N/A N/A
146 Ashford Hill Apartments N/A N/A N/A
147 Half Moon Bay Office Building Catalyst Equity 1,487 6/30/03
148 University Park Retail Center Arizona Public Service 2,280 11/30/99
149 2650 Franklin Apartments N/A N/A N/A
150 Salomon Smith Barney N/A N/A N/A
151 Meadow Glen Townhomes N/A N/A N/A
152 3100 Building Amtrak 3,485 6/30/01
153 Brookhollow Apartments N/A N/A N/A
154 Tropical Isle N/A N/A N/A
155 1001 Pacific Buidling T/P.C. Visitor & Convention 4,734 3/31/02
156 Action Wear USA/Peerless Maintenance N/A N/A N/A
157 Rockville Plaza Curtain Call 4,000 12/28/02
158 Existing Shopping Center A & S Carpet Collection, Inc. 6,804 5/31/00
159 Silverthorn Court N/A N/A N/A
160 Campus View Apartments N/A N/A N/A
161 State Street Industrial Park High Desert Hardwood 5,040 9/30/03
162 DeWolfe Plaza John Hancock 2,494 9/30/03
163 Midland Self Storage N/A N/A N/A
164 Lake Pointe Condominiums N/A N/A N/A
165 Sandalfoot Pointe Apartments N/A N/A N/A
166 Canterberry Apartments N/A N/A N/A
167 Lakeshore Villa Apartments N/A N/A N/A
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
# Property Name Management Company
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
168 College Station Apartments First Management Company
169 CoMax Realty Building Co/Max Realty
170 Guardian Self Storage Roy and Anne Connard
171 Villas Of Loiret Goehausen & Company
172 West Marine Center Owner Managed
173 33 St. Mark's Place Tri-Star Equities
174 The Space Place Alliance Financial Investment Services
175 University of Phoenix Building UPX II L & M Asset Management, Inc.
176 The Chevelle Apartments G & G Properties
177 Foxborough Office Park Foxborough Office Building Partnership
178 Tree Tops Apartments Durr Property Management
179 Existing Industral Building Thomas Nickols
180 14255 North 79th Street B & H Enterprises of Arizona
181 Beverly Boulevard Retail Owner Managed
182 Littlefield Apartments The Gallagher Group, Inc.
183 The Woods of Old West Lawrence Roberts Realty Advisors, Inc.
184 Villa Fortuna Apartments Medina Properties
185 Clinton Heights Apartments Owner Managed
186 Green Acres Mobile Estates Owner Managed
187 University of Phoenix Building UPX III L & M Asset Management, Inc.
188 The Cedars Apartments Leinbach Company
189 Parkview Apartments CP Management, Inc.
190 Highland Arms Apartments Owner Managed
191 Central CA Health Services Owner Managed
192 Panorama Place First Flatiron, Inc.
193 Lone Oak Apartments RAS Management
194 Rio Mesa Self Storage Avilight Real Estate Development
195 Yorktown Apartments Coastline Equity Management
196 Crossings Center I Center Equities, Inc.
197 The Willow Woods Apartments Franks Real Estate, Inc.
198 409-415 Main Street Owner Managed
199 A-1 Mini-Storage E.R. Bishop
200 1740 Lynnwood Road Franklin Services Corporation
201 Williamsburg Apartments Owner Managed
202 3-5 Dana Drive Owner Managed
203 Lamar Place Apartments The Chelsea Group
204 218-14 and 218-22 Jamaica Avenue Owner Managed
205 Hines Plaza Apartments RAS Management
206 A-1 Self & Boat Storage Owner Managed
207 Valley Mini Storage Don Briggs
Total/Weighted Average (13):
<CAPTION>
# Property Name Address City
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
168 College Station Apartments 2541-2566 Redbud Lane Lawrence
169 CoMax Realty Building 6223 Richmond Avenue Houston
170 Guardian Self Storage 2961 Fruitridge Road Sacramento
171 Villas Of Loiret 9153-9227 Boehm Drive Lenexa
172 West Marine Center 6148 East County Line Road Highlands Ranch
173 33 St. Mark's Place 33 St. Mark's Place New York
174 The Space Place 2370 East Mulberry Angleton
175 University of Phoenix Building UPX II 1290 Country Club Road Sunland Park
176 The Chevelle Apartments 2607-15 Throckmorton Street Dallas
177 Foxborough Office Park 700 East Southlake Boulevard Southlake
178 Tree Tops Apartments 3601 Manchaca Road Austin
179 Existing Industral Building 12304 Mccann Drive Santa Fe Springs
180 14255 North 79th Street 14255 North 79th Street Scottsdale
181 Beverly Boulevard Retail 7366-7386 Beverly Boulevard & 176-178 North Martel Avenue Los Angeles
182 Littlefield Apartments 2606 Rio Grande Street Austin
183 The Woods of Old West Lawrence 630 Michigan Street Lawrence
184 Villa Fortuna Apartments 1233 North 35th Street Phoenix
185 Clinton Heights Apartments 3668 Cleveland Avenue Columbus
186 Green Acres Mobile Estates 3051 North Mosswood Drive Fresno
187 University of Phoenix Building UPX III 1270 Country Club Road Sunland Park
188 The Cedars Apartments 218 Bull Run Norman
189 Parkview Apartments 502 South Street Bristol
190 Highland Arms Apartments 43 Granite Street New London
191 Central CA Health Services 3567 East Mount Whitney Avenue Laton
192 Panorama Place 500 & 502 Carroll Avenue Southlake
193 Lone Oak Apartments 3303 Lone Oak Drive Baton Rouge
194 Rio Mesa Self Storage 112 Rio Flor Place El Paso
195 Yorktown Apartments 417 Yorktown Avenue Huntington Beach
196 Crossings Center I 3040 Holcomb Bridge Road Norcross
197 The Willow Woods Apartments 812 North Center Street Arlington
198 409-415 Main Street 409-415 Main Street Little Falls
199 A-1 Mini-Storage 17536 Stuebner-Airline Road Spring
200 1740 Lynnwood Road 1740 Lynnwood Road Allentown
201 Williamsburg Apartments 722-746 Williamsburg Drive Caro
202 3-5 Dana Drive 3-5 Dana Drive Hudson
203 Lamar Place Apartments 709 Lamar Place Austin
204 218-14 and 218-22 Jamaica Avenue 218-14 and 218-22 Jamaica Avenue Queens Village
205 Hines Plaza Apartments 3629 Cypress Street West Monroe
206 A-1 Self & Boat Storage 9021 Ruland Road & 1611 Oak Tree Drive Houston
207 Valley Mini Storage 64 Mulberry Avenue Red Bluff
Total/Weighted Average (13):
<CAPTION>
Zip
# Property Name County State Code Property Type
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
168 College Station Apartments Douglas KS 66046 Multifamily
169 CoMax Realty Building Harris TX 77057 Office
170 Guardian Self Storage Sacramento CA 95820 Self Storage
171 Villas Of Loiret Johnson KS 66219 Multifamily
172 West Marine Center Douglas CO 80126 Retail
173 33 St. Mark's Place New York NY 10003 Mixed Use
174 The Space Place Brazoria TX 77516 Self Storage
175 University of Phoenix Building UPX II Dona Ana NM 88008 Office
176 The Chevelle Apartments Dallas TX 75219 Multifamily
177 Foxborough Office Park Tarrant TX 76092 Office
178 Tree Tops Apartments Travis TX 78704 Multifamily
179 Existing Industral Building Los Angeles CA 90670 Industrial
180 14255 North 79th Street Maricopa AZ 85260 Industrial
181 Beverly Boulevard Retail Los Angeles CA 90036 Retail
182 Littlefield Apartments Travis TX 78705 Multifamily
183 The Woods of Old West Lawrence Douglas KS 66044 Multifamily
184 Villa Fortuna Apartments Maricopa AZ 85008 Multifamily
185 Clinton Heights Apartments Franklin OH 43224 Multifamily
186 Green Acres Mobile Estates Fresno CA 93722 Manufactured Housing
187 University of Phoenix Building UPX III Dona Ana NM 88008 Office
188 The Cedars Apartments Cleveland OK 73071 Multifamily
189 Parkview Apartments Hartford CT 06010 Multifamily
190 Highland Arms Apartments New London CT 06320 Multifamily
191 Central CA Health Services Fresno CA 93242 Office
192 Panorama Place Tarrant TX 76092 Office
193 Lone Oak Apartments East Baton Rouge Parish LA 70814 Multifamily
194 Rio Mesa Self Storage El Paso TX 79912 Self Storage
195 Yorktown Apartments Orange CA 92648 Multifamily
196 Crossings Center I Gwinnett GA 30071 Office
197 The Willow Woods Apartments Tarrant TX 76011 Multifamily
198 409-415 Main Street Passaic NJ 07424 Industrial
199 A-1 Mini-Storage Harris TX 77379 Self Storage
200 1740 Lynnwood Road Lehigh PA 18103 Office
201 Williamsburg Apartments Tuscola MI 48723 Multifamily
202 3-5 Dana Drive Hillsborough NH 03051 Multifamily
203 Lamar Place Apartments Travis TX 78752 Multifamily
204 218-14 and 218-22 Jamaica Avenue Queens NY 11428 Mixed Use
205 Hines Plaza Apartments Ouachita Parish LA 71291 Multifamily
206 A-1 Self & Boat Storage Harris TX 77055 Self Storage
207 Valley Mini Storage Tehama CA 96080 Self Storage
Total/Weighted Average (13):
<CAPTION>
Units/
Sq. Ft./
Mortgage Rooms/
# Property Name Property Sub-type Loan Seller Pads
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
168 College Station Apartments Midland 64
169 CoMax Realty Building Column 39,450
170 Guardian Self Storage Midland 35,035
171 Villas Of Loiret Midland 12
172 West Marine Center Unanchored Column 11,042
173 33 St. Mark's Place Retail/Multifamily Midland 2,912
174 The Space Place Midland 51,614
175 University of Phoenix Building UPX II Midland 13,200
176 The Chevelle Apartments Midland 64
177 Foxborough Office Park Midland 9,986
178 Tree Tops Apartments Column 32
179 Existing Industral Building Midland 24,823
180 14255 North 79th Street Midland 16,757
181 Beverly Boulevard Retail Unanchored Column 13,764
182 Littlefield Apartments Column 16
183 The Woods of Old West Lawrence Column 40
184 Villa Fortuna Apartments Midland 32
185 Clinton Heights Apartments Column 68
186 Green Acres Mobile Estates Column 112
187 University of Phoenix Building UPX III Midland 10,815
188 The Cedars Apartments Midland 96
189 Parkview Apartments Midland 48
190 Highland Arms Apartments Column 31
191 Central CA Health Services Column 9,400
192 Panorama Place Midland 10,623
193 Lone Oak Apartments Midland 60
194 Rio Mesa Self Storage Midland 50,560
195 Yorktown Apartments Column 17
196 Crossings Center I Column 15,106
197 The Willow Woods Apartments Midland 32
198 409-415 Main Street Column 27,000
199 A-1 Mini-Storage Midland 17,260
200 1740 Lynnwood Road Column 11,450
201 Williamsburg Apartments Column 34
202 3-5 Dana Drive Column 24
203 Lamar Place Apartments Column 30
204 218-14 and 218-22 Jamaica Avenue Office/Retail Column 8,075
205 Hines Plaza Apartments Midland 40
206 A-1 Self & Boat Storage Column 62,940
207 Valley Mini Storage Midland 30,360
Total/Weighted Average (13):
<CAPTION>
Occupancy
Fee Simple/ Year Year Rate at
# Property Name Leasehold Built Renovated U/W (3)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
168 College Station Apartments Fee 1961 1987 95%
169 CoMax Realty Building Fee 1975 1998 100%
170 Guardian Self Storage Fee 1976 N/A 97%
171 Villas Of Loiret Fee 1998 N/A 100%
172 West Marine Center Fee 1998 N/A 100%
173 33 St. Mark's Place Fee 1890 1995 100%
174 The Space Place Fee 1995 1999 99%
175 University of Phoenix Building UPX II Fee 1999 N/A 100%
176 The Chevelle Apartments Fee 1964 N/A 100%
177 Foxborough Office Park Fee 1998 N/A 100%
178 Tree Tops Apartments Fee 1974 N/A 97%
179 Existing Industral Building Fee 1988 N/A 100%
180 14255 North 79th Street Fee 1985 N/A 100%
181 Beverly Boulevard Retail Fee 1946 1984 100%
182 Littlefield Apartments Fee 1984 N/A 100%
183 The Woods of Old West Lawrence Fee 1984 1998 98%
184 Villa Fortuna Apartments Fee 1985 1998 100%
185 Clinton Heights Apartments Fee 1948 1989 99%
186 Green Acres Mobile Estates Fee 1963 N/A 97%
187 University of Phoenix Building UPX III Fee 1999 N/A 100%
188 The Cedars Apartments Fee 1981 N/A 91%
189 Parkview Apartments Fee 1965 N/A 92%
190 Highland Arms Apartments Fee 1920 1991 97%
191 Central CA Health Services Fee 1997 N/A 100%
192 Panorama Place Fee 1998 N/A 100%
193 Lone Oak Apartments Fee 1970 1997 98%
194 Rio Mesa Self Storage Fee 1993 N/A 88%
195 Yorktown Apartments Fee 1973 1999 94%
196 Crossings Center I Fee 1981 1996 100%
197 The Willow Woods Apartments Fee 1986 N/A 100%
198 409-415 Main Street Fee 1950 1973 100%
199 A-1 Mini-Storage Fee 1994 N/A 79%
200 1740 Lynnwood Road Fee 1969 1987 100%
201 Williamsburg Apartments Fee 1972 1997 88%
202 3-5 Dana Drive Fee 1968 1998 100%
203 Lamar Place Apartments Fee 1969 1997 100%
204 218-14 and 218-22 Jamaica Avenue Fee 1931 1996 100%
205 Hines Plaza Apartments Fee 1971 1998 100%
206 A-1 Self & Boat Storage Fee 1971 1977 94%
207 Valley Mini Storage Fee 1975 N/A 92%
-----------------------------------------
Total/Weighted Average (13): 1976 1994 96%
=========================================
</TABLE>
(1A) The Mortgage Loans secured by Lakewood House Apartments, Vali Hi Shopping
Center, Somers Plaza Shopping Center, Apple Valley Shopping Center and
Lakewood Shopping Center are cross-collateralized and cross-defaulted,
respectively.
(1B) The Mortgage Loans secured by Promotions Distributor Services Corp. and
Production Distribution Services Corp. are cross-collateralized and
cross-defaulted, respectively.
(1C) The Mortgage Loans secured by Dolphin Self Storage, Kangaroom Self Storage
and Airport Self Storage are cross-collateralized and cross-defaulted,
respectively.
(1D) The Mortgage Loans secured by Maplewood Apartments and Columbus Village
Apartments are cross-collateralized and cross-defaulted, respectively.
(1E) The Mortgage Loans secured by Cayuga Lake Estates and Erin Estates are
cross-collateralized and cross-defaulted, respectively.
(2) The Mortgage Loan secured by CVS Pharmacy - Atlanta, GA provides for the
increase in monthly payment as follows: $16,799.06 in April 2004,
$17,668.12 in April 2009 and $18,562.50 in April 2014.
(3) Does not include any hotel properties.
(4) In the case of cross-collateralized and cross-defaulted Mortgage Loans,
the combined LTV is presented for each and every related Mortgage Loan.
(5) At maturity with respect to Balloon Loans and Fully Amortizing Loans or at
the ARD in the case of ARD Loans. There can be no assurance that the value
of any particular Mortgaged Property will not have declined from the
original appraisal value. Weighted Average, Maximum and Minimum presented
are calculated without regard to any Fully Amortizing Loans.
(6) Underwritable NCF reflects the Net Cash Flow after Underwritable
Replacement Reserves, Underwritable LC's and TI's and Underwritable FF&E.
(7) DSCR is based on the amount of the monthly payments presented. In the case
of cross-collateralized and cross-defaulted Mortgage Loans the combined
DSCR is presented for each and every related Mortgage Loan.
(8) Assumes a Cut-off Date of December 1, 1999.
(9) In the case of the Anticipated Repayment Date loans, the Anticipated
Repayment Date is assumed to be the maturity date for the purposes of the
indicated column.
(10) Anticipated Repayment Date.
(11) Prepayment Provision as of Origination:
L (x) = Lockout or Defeasance for x years
YM A% (x) = Greater of Yield Maintenance Premium and A% Prepayment for x
years
A% (x) = A% Prepayment for x years
O (x) = Prepayable at par for x years
(12) "Yes" means that defeasance is permitted notwithstanding the Lockout
Period.
(13) For the purpose of Weighted Average as it relates to DSCR and LTV, the CTL
Loan has been excluded.
<PAGE>
<TABLE>
<CAPTION>
Maturitywr
/
Date of Cut-off ARD
Occupancy Appraised Date LTV Date LTV Underwritable
# Property Name Rate Value Ratio (4) Ratio (4) (5) NOI
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
168 College Station Apartments 9/1/99 1,575,000 78.5% 64.3% 168,666
169 CoMax Realty Building 9/1/99 1,900,000 64.5% 59.1% 189,878
170 Guardian Self Storage 7/27/99 1,700,000 70.5% 59.1% 157,266
171 Villas Of Loiret 8/17/99 1,500,000 79.8% 63.3% 135,498
172 West Marine Center 9/1/99 1,600,000 74.2% 67.6% 151,994
173 33 St. Mark's Place 7/31/99 1,665,000 71.0% 58.5% 168,924
174 The Space Place 9/21/99 1,650,000 71.1% 59.3% 157,254
175 University of Phoenix Building UPX II 10/6/99 2,025,000 54.0% 45.2% 154,205
176 The Chevelle Apartments 7/20/99 1,515,000 71.3% 58.5% 160,597
177 Foxborough Office Park 5/10/99 1,425,000 74.7% 67.5% 142,810
178 Tree Tops Apartments 6/8/99 1,300,000 80.0% 72.6% 128,551
179 Existing Industral Building 10/20/99 1,450,000 70.3% 67.4% 117,711
180 14255 North 79th Street 7/21/99 1,425,000 70.9% 63.7% 126,559
181 Beverly Boulevard Retail 7/29/99 2,495,000 40.5% 1.1% 227,506
182 Littlefield Apartments 8/1/99 1,470,000 68.5% 61.4% 116,533
183 The Woods of Old West Lawrence 9/28/99 1,275,000 78.4% 71.4% 129,190
184 Villa Fortuna Apartments 7/30/99 1,285,000 77.7% 69.9% 126,942
185 Clinton Heights Apartments 9/1/99 1,200,000 80.0% 72.8% 127,760
186 Green Acres Mobile Estates 5/1/99 1,600,000 56.2% 50.7% 149,602
187 University of Phoenix Building UPX III 7/15/99 1,600,000 55.9% 46.8% 125,798
188 The Cedars Apartments 9/30/99 1,325,000 66.8% 54.8% 176,211
189 Parkview Apartments 6/30/99 1,100,000 78.7% 64.0% 111,748
190 Highland Arms Apartments 10/7/99 1,200,000 70.7% 63.9% 103,844
191 Central CA Health Services 2/12/99 1,250,000 67.7% 57.6% 129,541
192 Panorama Place 6/7/99 1,310,000 63.2% 57.4% 120,223
193 Lone Oak Apartments 7/31/99 1,210,000 66.9% 54.5% 125,133
194 Rio Mesa Self Storage 7/12/99 1,400,000 56.7% 1.4% 149,645
195 Yorktown Apartments 8/1/99 1,550,000 50.3% 45.5% 94,900
196 Crossings Center I 9/1/99 975,000 77.9% 70.9% 112,171
197 The Willow Woods Apartments 7/6/99 1,035,000 72.3% 64.7% 90,156
198 409-415 Main Street 1/1/98 1,400,000 53.3% 26.8% 125,579
199 A-1 Mini-Storage 9/14/99 1,075,000 67.4% 56.4% 90,189
200 1740 Lynnwood Road 8/27/99 955,000 74.9% 63.3% 106,730
201 Williamsburg Apartments 8/24/99 915,000 73.1% 66.3% 83,075
202 3-5 Dana Drive 7/1/99 1,020,000 64.9% 47.2% 92,319
203 Lamar Place Apartments 10/26/99 900,000 72.8% 69.2% 85,849
204 218-14 and 218-22 Jamaica Avenue 7/1/99 1,055,000 60.6% 55.7% 89,659
205 Hines Plaza Apartments 7/31/99 835,000 73.5% 59.8% 80,293
206 A-1 Self & Boat Storage 6/15/99 920,000 60.7% 44.2% 93,913
207 Valley Mini Storage 7/28/99 715,000 75.8% 63.6% 73,094
------------------------------------------------------------------
Total/Weighted Average (13): $ 1,057,738,000 72.6% 64.0% $ 98,598,438
==================================================================
<CAPTION>
Contractual
Engineering Recurring Contractual
Underwritable Reserve at Replacement Recurring
# Property Name NCF (6) DSCR (7) Origination Reserve LC&TI
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
168 College Station Apartments 152,666 1.40 $40,000 $16,008 N/A
169 CoMax Realty Building 154,303 1.30 $55,250 N/A N/A
170 Guardian Self Storage 150,609 1.30 $26,969 $6,657 N/A
171 Villas Of Loiret 132,498 1.28 N/A $3,000 N/A
172 West Marine Center 139,897 1.25 N/A N/A N/A
173 33 St. Mark's Place 157,706 1.49 $11,063 $2,978 $8,263
174 The Space Place 150,739 1.34 N/A $6,515 N/A
175 University of Phoenix Building UPX II 138,942 1.33 N/A $2,640 $12,000
176 The Chevelle Apartments 144,597 1.52 N/A $16,020 N/A
177 Foxborough Office Park 127,299 1.31 N/A N/A $10,000
178 Tree Tops Apartments 120,551 1.24 $75,000 $8,000 N/A
179 Existing Industral Building 105,518 1.26 N/A $2,496 $18,000
180 14255 North 79th Street 112,389 1.25 N/A $1,676 $5,000
181 Beverly Boulevard Retail 211,677 1.75 N/A $2,065 N/A
182 Littlefield Apartments 111,733 1.25 N/A $4,800 N/A
183 The Woods of Old West Lawrence 119,190 1.26 N/A $10,000 N/A
184 Villa Fortuna Apartments 118,942 1.33 N/A $8,000 N/A
185 Clinton Heights Apartments 110,760 1.22 $313 $17,000 N/A
186 Green Acres Mobile Estates 144,002 1.76 N/A $5,600 N/A
187 University of Phoenix Building UPX III 113,293 1.33 N/A $2,163 $12,000
188 The Cedars Apartments 147,411 1.88 N/A N/A N/A
189 Parkview Apartments 99,028 1.33 $28,000 $12,720 N/A
190 Highland Arms Apartments 96,094 1.24 $4,688 $7,750 N/A
191 Central CA Health Services 118,261 1.38 N/A N/A N/A
192 Panorama Place 103,316 1.35 N/A $2,125 $16,000
193 Lone Oak Apartments 110,133 1.58 N/A $15,000 N/A
194 Rio Mesa Self Storage 142,061 1.53 N/A N/A N/A
195 Yorktown Apartments 90,042 1.25 N/A N/A N/A
196 Crossings Center I 89,814 1.26 $188 $6,042 N/A
197 The Willow Woods Apartments 81,196 1.24 N/A $8,000 N/A
198 409-415 Main Street 108,179 1.20 N/A $5,400 N/A
199 A-1 Mini-Storage 87,600 1.25 N/A $2,589 N/A
200 1740 Lynnwood Road 89,674 1.26 $2,000 N/A $21,000
201 Williamsburg Apartments 74,575 1.21 $4,813 $8,500 N/A
202 3-5 Dana Drive 86,319 1.22 $16,975 $6,000 N/A
203 Lamar Place Apartments 78,349 1.23 $12,000 $7,500 N/A
204 218-14 and 218-22 Jamaica Avenue 78,595 1.25 $16,250 $2,347 N/A
205 Hines Plaza Apartments 70,293 1.33 N/A $10,000 N/A
206 A-1 Self & Boat Storage 84,472 1.41 $10,000 $9,441 N/A
207 Valley Mini Storage 68,540 1.30 N/A $4,554 N/A
-----------------
Total/Weighted Average (13): $ 90,055,615
=================
<CAPTION>
Underwritable
Recurring Percentage of
Replacement Underwritable Original Cut-off Initial
# Property Name Reserve LC&TI Balance Balance (8) Pool Balance
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
168 College Station Apartments $16,000 N/A 1,255,000 1,236,284 0.2%
169 CoMax Realty Building $11,835 $23,740 1,227,000 1,226,331 0.2%
170 Guardian Self Storage $6,657 N/A 1,202,000 1,198,742 0.2%
171 Villas Of Loiret $3,000 N/A 1,200,000 1,197,703 0.2%
172 West Marine Center $1,104 $10,993 1,187,700 1,187,020 0.2%
173 33 St. Mark's Place $2,978 $8,240 1,200,000 1,181,502 0.2%
174 The Space Place $6,515 N/A 1,173,750 1,172,594 0.2%
175 University of Phoenix Building UPX II $2,640 $12,623 1,100,000 1,094,026 0.1%
176 The Chevelle Apartments $16,000 N/A 1,100,000 1,080,843 0.1%
177 Foxborough Office Park $1,997 $13,514 1,068,000 1,064,646 0.1%
178 Tree Tops Apartments $8,000 N/A 1,040,000 1,039,385 0.1%
179 Existing Industral Building $2,482 $9,711 1,029,000 1,019,082 0.1%
180 14255 North 79th Street $4,357 $9,813 1,012,000 1,010,215 0.1%
181 Beverly Boulevard Retail $2,065 $13,764 1,015,000 1,009,695 0.1%
182 Littlefield Apartments $4,800 N/A 1,007,000 1,006,338 0.1%
183 The Woods of Old West Lawrence $10,000 N/A 1,000,000 999,427 0.1%
184 Villa Fortuna Apartments $8,000 N/A 1,000,000 998,279 0.1%
185 Clinton Heights Apartments $17,000 N/A 960,000 959,450 0.1%
186 Green Acres Mobile Estates $5,600 N/A 900,000 899,440 0.1%
187 University of Phoenix Building UPX III $2,163 $10,342 900,000 895,112 0.1%
188 The Cedars Apartments $28,800 N/A 900,000 884,463 0.1%
189 Parkview Apartments $12,720 N/A 880,000 865,284 0.1%
190 Highland Arms Apartments $7,750 N/A 850,000 848,591 0.1%
191 Central CA Health Services $1,880 $9,400 850,000 846,014 0.1%
192 Panorama Place $2,125 $14,782 830,000 828,374 0.1%
193 Lone Oak Apartments $15,000 N/A 825,000 809,970 0.1%
194 Rio Mesa Self Storage $7,584 N/A 800,000 793,354 0.1%
195 Yorktown Apartments $4,858 N/A 780,000 779,528 0.1%
196 Crossings Center I $7,251 $15,106 760,000 759,300 0.1%
197 The Willow Woods Apartments $8,960 N/A 750,000 748,277 0.1%
198 409-415 Main Street $5,400 $12,000 750,000 746,107 0.1%
199 A-1 Mini-Storage $2,589 N/A 725,000 724,296 0.1%
200 1740 Lynnwood Road $2,843 $14,213 716,250 715,115 0.1%
201 Williamsburg Apartments $8,500 N/A 670,000 668,933 0.1%
202 3-5 Dana Drive $6,000 N/A 663,000 661,993 0.1%
203 Lamar Place Apartments $7,500 N/A 656,000 655,646 0.1%
204 218-14 and 218-22 Jamaica Avenue $2,372 $8,692 640,000 639,661 0.1%
205 Hines Plaza Apartments $10,000 N/A 625,000 613,653 0.1%
206 A-1 Self & Boat Storage $9,441 N/A 560,000 558,423 0.1%
207 Valley Mini Storage $4,554 N/A 543,750 542,290 0.1%
---------------------------------------------
Total/Weighted Average (13): $ 763,409,826 $760,414,266 100.0%
=============================================
<CAPTION>
Orig Rem. Orig Rem.
Maturity Amort. Amort. Term to Term to Interest
# Property Name Balance Term Term Maturity (9) Maturity (9) Rate
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
168 College Station Apartments 1,012,267 300 287 120 107 7.270%
169 CoMax Realty Building 1,122,802 360 359 120 119 9.010%
170 Guardian Self Storage 1,003,857 300 297 120 117 8.460%
171 Villas Of Loiret 949,107 360 357 180 177 7.750%
172 West Marine Center 1,081,184 360 359 120 119 8.770%
173 33 St. Mark's Place 973,962 300 286 120 106 7.470%
174 The Space Place 978,578 300 299 120 119 8.400%
175 University of Phoenix Building UPX II 914,304 300 294 120 114 8.280%
176 The Chevelle Apartments 885,924 300 285 120 105 7.220%
177 Foxborough Office Park 962,463 360 354 120 114 8.310%
178 Tree Tops Apartments 943,587 360 359 120 119 8.620%
179 Existing Industral Building 976,671 360 347 60 47 7.180%
180 14255 North 79th Street 907,102 360 357 120 117 8.090%
181 Beverly Boulevard Retail 28,426 180 178 180 178 8.660%
182 Littlefield Apartments 902,797 360 359 120 119 8.100%
183 The Woods of Old West Lawrence 910,318 360 359 120 119 8.770%
184 Villa Fortuna Apartments 898,455 360 357 120 117 8.190%
185 Clinton Heights Apartments 873,905 360 359 120 119 8.770%
186 Green Acres Mobile Estates 811,956 360 359 120 119 8.370%
187 University of Phoenix Building UPX III 748,067 300 294 120 114 8.280%
188 The Cedars Apartments 725,957 300 285 120 105 7.270%
189 Parkview Apartments 704,251 300 286 120 106 7.010%
190 Highland Arms Apartments 766,350 360 357 120 117 8.340%
191 Central CA Health Services 720,619 300 294 120 114 9.000%
192 Panorama Place 751,557 360 356 120 116 8.520%
193 Lone Oak Apartments 659,120 300 285 120 105 6.960%
194 Rio Mesa Self Storage 20,031 180 177 180 177 8.250%
195 Yorktown Apartments 705,942 360 359 120 119 8.510%
196 Crossings Center I 691,080 360 358 120 118 8.710%
197 The Willow Woods Apartments 669,984 360 356 120 116 7.940%
198 409-415 Main Street 375,631 180 178 120 118 8.730%
199 A-1 Mini-Storage 605,962 300 299 120 119 8.490%
200 1740 Lynnwood Road 604,885 300 298 120 118 8.860%
201 Williamsburg Apartments 606,276 360 357 120 117 8.500%
202 3-5 Dana Drive 481,875 240 239 120 119 8.890%
203 Lamar Place Apartments 622,984 360 359 84 83 9.060%
204 218-14 and 218-22 Jamaica Avenue 587,400 360 359 120 119 9.150%
205 Hines Plaza Apartments 499,645 300 285 120 105 6.980%
206 A-1 Self & Boat Storage 406,609 240 238 120 118 8.850%
207 Valley Mini Storage 454,745 300 297 120 117 8.510%
----------------------------------------------------------------------------
Total/Wghted Average (13): $ 661,528,692 345 340 121 116 7.982%
============================================================================
<CAPTION>
First
Interest Calculation Monthly Payment Maturity
# Property Name (30/360 / Actual/360) Payment Date Date ARD (10) Seasoning
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
168 College Station Apartments Actual/360 9,087.40 12/1/98 11/1/08 13
169 CoMax Realty Building Actual/360 9,881.55 12/1/99 11/1/09 1
170 Guardian Self Storage Actual/360 9,646.45 10/1/99 9/1/09 3
171 Villas Of Loiret Actual/360 8,596.95 10/1/99 9/1/14 3
172 West Marine Center Actual/360 9,360.61 12/1/99 11/1/09 1
173 33 St. Mark's Place Actual/360 8,844.49 11/1/98 10/1/23 10/1/08 14
174 The Space Place Actual/360 9,372.39 12/1/99 11/1/09 1
175 University of Phoenix Building UPX II Actual/360 8,695.01 7/1/99 6/1/09 6
176 The Chevelle Apartments Actual/360 7,929.63 10/1/98 9/1/08 15
177 Foxborough Office Park Actual/360 8,068.62 7/1/99 6/1/09 6
178 Tree Tops Apartments Actual/360 8,085.31 12/1/99 11/1/09 1
179 Existing Industral Building Actual/360 6,970.80 12/1/98 11/1/03 13
180 14255 North 79th Street Actual/360 7,489.29 10/1/99 9/1/09 3
181 Beverly Boulevard Retail Actual/360 10,090.53 11/1/99 10/1/14 2
182 Littlefield Apartments Actual/360 7,459.33 12/1/99 11/1/09 1
183 The Woods of Old West Lawrence Actual/360 7,881.29 12/1/99 11/1/09 1
184 Villa Fortuna Apartments Actual/360 7,470.53 10/1/99 9/1/09 3
185 Clinton Heights Apartments Actual/360 7,566.04 12/1/99 11/1/09 1
186 Green Acres Mobile Estates Actual/360 6,837.47 12/1/99 11/1/09 1
187 University of Phoenix Building UPX III Actual/360 7,114.10 7/1/99 6/1/09 6
188 The Cedars Apartments Actual/360 6,516.86 10/1/98 9/1/08 15
189 Parkview Apartments Actual/360 6,225.27 11/1/98 10/1/23 10/1/08 14
190 Highland Arms Apartments Actual/360 6,439.63 10/1/99 9/1/09 3
191 Central CA Health Services Actual/360 7,133.17 7/1/99 6/1/09 6
192 Panorama Place Actual/360 6,393.75 9/1/99 8/1/09 4
193 Lone Oak Apartments Actual/360 5,809.89 10/1/98 9/1/08 15
194 Rio Mesa Self Storage Actual/360 7,761.12 10/1/99 9/1/14 3
195 Yorktown Apartments Actual/360 6,003.05 12/1/99 11/1/09 1
196 Crossings Center I Actual/360 5,957.22 11/1/99 10/1/09 2
197 The Willow Woods Apartments Actual/360 5,471.90 9/1/99 8/1/09 4
198 409-415 Main Street Actual/360 7,487.01 11/1/99 10/1/09 2
199 A-1 Mini-Storage Actual/360 5,833.01 12/1/99 11/1/09 1
200 1740 Lynnwood Road Actual/360 5,942.23 11/1/99 10/1/09 2
201 Williamsburg Apartments Actual/360 5,151.72 10/1/99 9/1/09 3
202 3-5 Dana Drive Actual/360 5,918.36 12/1/99 11/1/09 1
203 Lamar Place Apartments Actual/360 5,306.67 12/1/99 11/1/06 1
204 218-14 and 218-22 Jamaica Avenue Actual/360 5,218.81 12/1/99 11/1/09 1
205 Hines Plaza Apartments Actual/360 4,409.40 10/1/98 9/1/08 15
206 A-1 Self & Boat Storage Actual/360 4,984.57 11/1/99 10/1/09 2
207 Valley Mini Storage Actual/360 4,382.09 10/1/99 9/1/09 3
---------------- ----------
Total/Weighted Average (13): $ 5,672,454.68 5
================ ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Original
Lockout
Servicing and Prepayment Provision Period
# Property Name Trustee Fees as of Origination (11) (Months)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
168 College Station Apartments 0.0823% L (4.92), YM 1% (4.75), O (0.33) 59
169 CoMax Realty Building 0.0523% L (9.5), O (0.5) 114
170 Guardian Self Storage 0.0823% L (9.67), O (0.33) 116
171 Villas Of Loiret 0.0823% L (14.67), O (0.33) 176
172 West Marine Center 0.0523% L (9.5), O (0.5) 114
173 33 St. Mark's Place 0.0823% L (3.92), YM 1% (5.5), O (0.58) 47
174 The Space Place 0.0823% L (9.67), O (0.33) 116
175 University of Phoenix Building UPX II 0.1823% L (9.67), O (0.33) 116
176 The Chevelle Apartments 0.0823% L (4.92), YM 1% (4.5), O (0.58) 59
177 Foxborough Office Park 0.0823% L (9.67), O (0.33) 116
178 Tree Tops Apartments 0.0523% L (9.5), O (0.5) 114
179 Existing Industral Building 0.0823% L (2.42), YM 1% (2.25), O (0.33) 29
180 14255 North 79th Street 0.1823% L (9.67), O (0.33) 116
181 Beverly Boulevard Retail 0.0523% L (14.5), O (0.5) 174
182 Littlefield Apartments 0.0523% L (9.5), O (0.5) 114
183 The Woods of Old West Lawrence 0.0523% L (9.5), O (0.5) 114
184 Villa Fortuna Apartments 0.0823% L (9.67), O (0.33) 116
185 Clinton Heights Apartments 0.0523% L (9.5), O (0.5) 114
186 Green Acres Mobile Estates 0.0523% L (9.5), O (0.5) 114
187 University of Phoenix Building UPX III 0.0823% L (9.67), O (0.33) 116
188 The Cedars Apartments 0.1823% L (4.92), YM 1% (4.5), O (0.58) 59
189 Parkview Apartments 0.0823% L (4.92), YM 1% (4.5), O (0.58) 59
190 Highland Arms Apartments 0.0523% L (9.5), O (0.5) 114
191 Central CA Health Services 0.0523% L (9.5), O (0.5) 114
192 Panorama Place 0.0823% L (9.67), O (0.33) 116
193 Lone Oak Apartments 0.0823% L (4.92), YM 1% (4.5), O (0.58) 59
194 Rio Mesa Self Storage 0.0823% L (14.67), O (0.33) 176
195 Yorktown Apartments 0.0523% L (9.5), O (0.5) 114
196 Crossings Center I 0.0523% L (9.5), O (0.5) 114
197 The Willow Woods Apartments 0.0823% L (9.67), O (0.33) 116
198 409-415 Main Street 0.0523% L (9.5), O (0.5) 114
199 A-1 Mini-Storage 0.0823% L (9.67), O (0.33) 116
200 1740 Lynnwood Road 0.0523% L (9.5), O (0.5) 114
201 Williamsburg Apartments 0.0523% L (9.5), O (0.5) 114
202 3-5 Dana Drive 0.0523% L (9.5), O (0.5) 114
203 Lamar Place Apartments 0.0523% L (6.5), O (0.5) 78
204 218-14 and 218-22 Jamaica Avenue 0.0523% L (9.5), O (0.5) 114
205 Hines Plaza Apartments 0.0823% L (4.92), YM 1% (4.5), O (0.58) 59
206 A-1 Self & Boat Storage 0.0523% L (9.5), O (0.5) 114
207 Valley Mini Storage 0.0823% L (9.67), O (0.33) 116
-----------------
Total/Weighted Average (13): 0.0849%
=================
<CAPTION>
Original Original
Yield Prepayment Original Yield
Maintenance Premium Open Lockout Maintenance
Period Period Period Expiration Expiration
# Property Name (Months) (Months) (Months) Defeasance (12) Date Date
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
168 College Station Apartments 57 0 4 No 10/1/03 7/1/08
169 CoMax Realty Building 0 0 6 Yes 5/1/09 N/A
170 Guardian Self Storage 0 0 4 Yes 5/1/09 N/A
171 Villas Of Loiret 0 0 4 Yes 5/1/14 N/A
172 West Marine Center 0 0 6 Yes 5/1/09 N/A
173 33 St. Mark's Place 66 0 7 No 9/1/02 3/1/08
174 The Space Place 0 0 4 Yes 7/1/09 N/A
175 University of Phoenix Building UPX II 0 0 4 Yes 2/1/09 N/A
176 The Chevelle Apartments 54 0 7 No 8/1/03 2/1/08
177 Foxborough Office Park 0 0 4 Yes 2/1/09 N/A
178 Tree Tops Apartments 0 0 6 Yes 5/1/09 N/A
179 Existing Industral Building 27 0 4 No 4/1/01 7/1/03
180 14255 North 79th Street 0 0 4 Yes 5/1/09 N/A
181 Beverly Boulevard Retail 0 0 6 Yes 4/1/14 N/A
182 Littlefield Apartments 0 0 6 Yes 5/1/09 N/A
183 The Woods of Old West Lawrence 0 0 6 Yes 5/1/09 N/A
184 Villa Fortuna Apartments 0 0 4 Yes 5/1/09 N/A
185 Clinton Heights Apartments 0 0 6 Yes 5/1/09 N/A
186 Green Acres Mobile Estates 0 0 6 Yes 5/1/09 N/A
187 University of Phoenix Building UPX III 0 0 4 Yes 2/1/09 N/A
188 The Cedars Apartments 54 0 7 No 8/1/03 2/1/08
189 Parkview Apartments 54 0 7 No 9/1/03 3/1/08
190 Highland Arms Apartments 0 0 6 Yes 3/1/09 N/A
191 Central CA Health Services 0 0 6 Yes 12/1/08 N/A
192 Panorama Place 0 0 4 Yes 4/1/09 N/A
193 Lone Oak Apartments 54 0 7 No 8/1/03 2/1/08
194 Rio Mesa Self Storage 0 0 4 Yes 5/1/14 N/A
195 Yorktown Apartments 0 0 6 Yes 5/1/09 N/A
196 Crossings Center I 0 0 6 Yes 4/1/09 N/A
197 The Willow Woods Apartments 0 0 4 Yes 4/1/09 N/A
198 409-415 Main Street 0 0 6 Yes 4/1/09 N/A
199 A-1 Mini-Storage 0 0 4 Yes 7/1/09 N/A
200 1740 Lynnwood Road 0 0 6 Yes 4/1/09 N/A
201 Williamsburg Apartments 0 0 6 Yes 3/1/09 N/A
202 3-5 Dana Drive 0 0 6 Yes 5/1/09 N/A
203 Lamar Place Apartments 0 0 6 Yes 5/1/06 N/A
204 218-14 and 218-22 Jamaica Avenue 0 0 6 Yes 5/1/09 N/A
205 Hines Plaza Apartments 54 0 7 No 8/1/03 2/1/08
206 A-1 Self & Boat Storage 0 0 6 Yes 4/1/09 N/A
207 Valley Mini Storage 0 0 4 Yes 5/1/09 N/A
Total/Weighted Average (13):
<CAPTION>
Prepayment
Premium Utilities Subject
Expiration Hotel Multifamily Tenant Multifamily Studio
# Property Name Date Franchise Pays Elevators Units
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
168 College Station Apartments N/A N/A Electric/Gas/Water/Sewer 0 N/A
169 CoMax Realty Building N/A N/A N/A N/A N/A
170 Guardian Self Storage N/A N/A N/A N/A N/A
171 Villas Of Loiret N/A N/A Electric/Water/Sewer 0 N/A
172 West Marine Center N/A N/A N/A N/A N/A
173 33 St. Mark's Place N/A N/A N/A N/A N/A
174 The Space Place N/A N/A N/A N/A N/A
175 University of Phoenix Building UPX II N/A N/A N/A N/A N/A
176 The Chevelle Apartments N/A N/A None 0 26
177 Foxborough Office Park N/A N/A N/A N/A N/A
178 Tree Tops Apartments N/A N/A Electric 0 1
179 Existing Industral Building N/A N/A N/A N/A N/A
180 14255 North 79th Street N/A N/A N/A N/A N/A
181 Beverly Boulevard Retail N/A N/A N/A N/A N/A
182 Littlefield Apartments N/A N/A Electric 0 N/A
183 The Woods of Old West Lawrence N/A N/A Electric 0 1
184 Villa Fortuna Apartments N/A N/A Electric/Water/Sewer 0 N/A
185 Clinton Heights Apartments N/A N/A Electric/Gas/Water 0 N/A
186 Green Acres Mobile Estates N/A N/A N/A N/A N/A
187 University of Phoenix Building UPX III N/A N/A N/A N/A N/A
188 The Cedars Apartments N/A N/A Electric/Water/Sewer 0 N/A
189 Parkview Apartments N/A N/A Electric 1 4
190 Highland Arms Apartments N/A N/A Electric 1 3
191 Central CA Health Services N/A N/A N/A N/A N/A
192 Panorama Place N/A N/A N/A N/A N/A
193 Lone Oak Apartments N/A N/A Electric 0 N/A
194 Rio Mesa Self Storage N/A N/A N/A N/A N/A
195 Yorktown Apartments N/A N/A Electric 0 N/A
196 Crossings Center I N/A N/A N/A N/A N/A
197 The Willow Woods Apartments N/A N/A Electric 0 N/A
198 409-415 Main Street N/A N/A N/A N/A N/A
199 A-1 Mini-Storage N/A N/A N/A N/A N/A
200 1740 Lynnwood Road N/A N/A N/A N/A N/A
201 Williamsburg Apartments N/A N/A Electric/Gas 0 N/A
202 3-5 Dana Drive N/A N/A Electric/Water/Sewer 0 N/A
203 Lamar Place Apartments N/A N/A Electric 0 N/A
204 218-14 and 218-22 Jamaica Avenue N/A N/A N/A N/A N/A
205 Hines Plaza Apartments N/A N/A Electric 0 N/A
206 A-1 Self & Boat Storage N/A N/A N/A N/A N/A
207 Valley Mini Storage N/A N/A N/A N/A N/A
Total/Weighted Average (13):
<CAPTION>
Subject Subject Subject Subject Subject
Studio Studio 1 BR 1 BR 1 BR
# Property Name Avg. Rent Max. Rent Units Avg. Rent Max. Rent
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
168 College Station Apartments N/A N/A 16 $371 $395
169 CoMax Realty Building N/A N/A N/A N/A N/A
170 Guardian Self Storage N/A N/A N/A N/A N/A
171 Villas Of Loiret N/A N/A N/A N/A N/A
172 West Marine Center N/A N/A N/A N/A N/A
173 33 St. Mark's Place N/A N/A N/A N/A N/A
174 The Space Place N/A N/A N/A N/A N/A
175 University of Phoenix Building UPX II N/A N/A N/A N/A N/A
176 The Chevelle Apartments $394 $415 17 $500 $595
177 Foxborough Office Park N/A N/A N/A N/A N/A
178 Tree Tops Apartments $325 $325 16 $528 $625
179 Existing Industral Building N/A N/A N/A N/A N/A
180 14255 North 79th Street N/A N/A N/A N/A N/A
181 Beverly Boulevard Retail N/A N/A N/A N/A N/A
182 Littlefield Apartments N/A N/A N/A N/A N/A
183 The Woods of Old West Lawrence $465 $465 N/A N/A N/A
184 Villa Fortuna Apartments N/A N/A N/A N/A N/A
185 Clinton Heights Apartments N/A N/A 68 $324 $335
186 Green Acres Mobile Estates N/A N/A N/A N/A N/A
187 University of Phoenix Building UPX III N/A N/A N/A N/A N/A
188 The Cedars Apartments N/A N/A 88 $298 $399
189 Parkview Apartments $437 $440 28 $505 $555
190 Highland Arms Apartments $422 $425 10 $523 $530
191 Central CA Health Services N/A N/A N/A N/A N/A
192 Panorama Place N/A N/A N/A N/A N/A
193 Lone Oak Apartments N/A N/A 14 $355 $360
194 Rio Mesa Self Storage N/A N/A N/A N/A N/A
195 Yorktown Apartments N/A N/A N/A N/A N/A
196 Crossings Center I N/A N/A N/A N/A N/A
197 The Willow Woods Apartments N/A N/A 1 $495 $495
198 409-415 Main Street N/A N/A N/A N/A N/A
199 A-1 Mini-Storage N/A N/A N/A N/A N/A
200 1740 Lynnwood Road N/A N/A N/A N/A N/A
201 Williamsburg Apartments N/A N/A 12 $349 $350
202 3-5 Dana Drive N/A N/A 3 $525 $550
203 Lamar Place Apartments N/A N/A 22 $430 $505
204 218-14 and 218-22 Jamaica Avenue N/A N/A N/A N/A N/A
205 Hines Plaza Apartments N/A N/A 8 $365 $370
206 A-1 Self & Boat Storage N/A N/A N/A N/A N/A
207 Valley Mini Storage N/A N/A N/A N/A N/A
Total/Weighted Average (13):
<CAPTION>
Subject Subject Subject Subject Subject
2 BR 2 BR 2 BR 3 BR 3 BR
# Property Name Units Avg. Rent Max. Rent Units Avg. Rent
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
168 College Station Apartments 48 $421 $450 N/A N/A
169 CoMax Realty Building N/A N/A N/A N/A N/A
170 Guardian Self Storage N/A N/A N/A N/A N/A
171 Villas Of Loiret N/A N/A N/A 12 $1,254
172 West Marine Center N/A N/A N/A N/A N/A
173 33 St. Mark's Place N/A N/A N/A N/A N/A
174 The Space Place N/A N/A N/A N/A N/A
175 University of Phoenix Building UPX II N/A N/A N/A N/A N/A
176 The Chevelle Apartments 21 $623 $725 N/A N/A
177 Foxborough Office Park N/A N/A N/A N/A N/A
178 Tree Tops Apartments 15 $631 $650 N/A N/A
179 Existing Industral Building N/A N/A N/A N/A N/A
180 14255 North 79th Street N/A N/A N/A N/A N/A
181 Beverly Boulevard Retail N/A N/A N/A N/A N/A
182 Littlefield Apartments 16 $1,152 $1,400 N/A N/A
183 The Woods of Old West Lawrence 39 $485 $490 N/A N/A
184 Villa Fortuna Apartments 32 $530 $535 N/A N/A
185 Clinton Heights Apartments N/A N/A N/A N/A N/A
186 Green Acres Mobile Estates N/A N/A N/A N/A N/A
187 University of Phoenix Building UPX III N/A N/A N/A N/A N/A
188 The Cedars Apartments 8 $396 $429 N/A N/A
189 Parkview Apartments 16 $553 $575 N/A N/A
190 Highland Arms Apartments 11 $593 $610 7 $666
191 Central CA Health Services N/A N/A N/A N/A N/A
192 Panorama Place N/A N/A N/A N/A N/A
193 Lone Oak Apartments 38 $419 $425 8 $468
194 Rio Mesa Self Storage N/A N/A N/A N/A N/A
195 Yorktown Apartments 17 $815 $875 N/A N/A
196 Crossings Center I N/A N/A N/A N/A N/A
197 The Willow Woods Apartments 31 $525 $550 N/A N/A
198 409-415 Main Street N/A N/A N/A N/A N/A
199 A-1 Mini-Storage N/A N/A N/A N/A N/A
200 1740 Lynnwood Road N/A N/A N/A N/A N/A
201 Williamsburg Apartments 22 $424 $425 N/A N/A
202 3-5 Dana Drive 21 $631 $675 N/A N/A
203 Lamar Place Apartments 8 $553 $635 N/A N/A
204 218-14 and 218-22 Jamaica Avenue N/A N/A N/A N/A N/A
205 Hines Plaza Apartments 24 $420 $430 8 $461
206 A-1 Self & Boat Storage N/A N/A N/A N/A N/A
207 Valley Mini Storage N/A N/A N/A N/A N/A
Total/Weighted Average (13):
<CAPTION>
Subject Subject Subject Subject
3 BR 4 BR 4 BR 4 BR
# Property Name Max. Rent Units Avg. Rent Max. Rent
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
168 College Station Apartments N/A N/A N/A N/A
169 CoMax Realty Building N/A N/A N/A N/A
170 Guardian Self Storage N/A N/A N/A N/A
171 Villas Of Loiret $1,350 N/A N/A N/A
172 West Marine Center N/A N/A N/A N/A
173 33 St. Mark's Place N/A N/A N/A N/A
174 The Space Place N/A N/A N/A N/A
175 University of Phoenix Building UPX II N/A N/A N/A N/A
176 The Chevelle Apartments N/A N/A N/A N/A
177 Foxborough Office Park N/A N/A N/A N/A
178 Tree Tops Apartments N/A N/A N/A N/A
179 Existing Industral Building N/A N/A N/A N/A
180 14255 North 79th Street N/A N/A N/A N/A
181 Beverly Boulevard Retail N/A N/A N/A N/A
182 Littlefield Apartments N/A N/A N/A N/A
183 The Woods of Old West Lawrence N/A N/A N/A N/A
184 Villa Fortuna Apartments N/A N/A N/A N/A
185 Clinton Heights Apartments N/A N/A N/A N/A
186 Green Acres Mobile Estates N/A N/A N/A N/A
187 University of Phoenix Building UPX III N/A N/A N/A N/A
188 The Cedars Apartments N/A N/A N/A N/A
189 Parkview Apartments N/A N/A N/A N/A
190 Highland Arms Apartments $685 N/A N/A N/A
191 Central CA Health Services N/A N/A N/A N/A
192 Panorama Place N/A N/A N/A N/A
193 Lone Oak Apartments $475 N/A N/A N/A
194 Rio Mesa Self Storage N/A N/A N/A N/A
195 Yorktown Apartments N/A N/A N/A N/A
196 Crossings Center I N/A N/A N/A N/A
197 The Willow Woods Apartments N/A N/A N/A N/A
198 409-415 Main Street N/A N/A N/A N/A
199 A-1 Mini-Storage N/A N/A N/A N/A
200 1740 Lynnwood Road N/A N/A N/A N/A
201 Williamsburg Apartments N/A N/A N/A N/A
202 3-5 Dana Drive N/A N/A N/A N/A
203 Lamar Place Apartments N/A N/A N/A N/A
204 218-14 and 218-22 Jamaica Avenue N/A N/A N/A N/A
205 Hines Plaza Apartments $475 N/A N/A N/A
206 A-1 Self & Boat Storage N/A N/A N/A N/A
207 Valley Mini Storage N/A N/A N/A N/A
Total/Weighted Average (13):
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Major Major Major
Tenant #1 Tenant #1 Tenant #1 Lease
# Property Name Name Sq. Ft. Expiration Date
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
168 College Station Apartments N/A N/A N/A
169 CoMax Realty Building Greenberg, Grant & Associates 12,950 1/1/02
170 Guardian Self Storage N/A N/A N/A
171 Villas Of Loiret N/A N/A N/A
172 West Marine Center West Marine Products Inc. 5,521 7/28/13
173 33 St. Mark's Place Smash Compact Discs 728 12/31/99
174 The Space Place N/A N/A N/A
175 University of Phoenix Building UPX II University of Phoenix 13,200 2/28/06
176 The Chevelle Apartments N/A N/A N/A
177 Foxborough Office Park Century 21 Worldwide/Johnston 3,438 4/30/03
178 Tree Tops Apartments N/A N/A N/A
179 Existing Industral Building Flex Metal Components 24,823 5/31/02
180 14255 North 79th Street Southwest Flexo 3,350 11/30/99
181 Beverly Boulevard Retail Modernica Inc. 3,662 3/31/02
182 Littlefield Apartments N/A N/A N/A
183 The Woods of Old West Lawrence N/A N/A N/A
184 Villa Fortuna Apartments N/A N/A N/A
185 Clinton Heights Apartments N/A N/A N/A
186 Green Acres Mobile Estates N/A N/A N/A
187 University of Phoenix Building UPX III University of Phoenix 10,815 2/28/06
188 The Cedars Apartments N/A N/A N/A
189 Parkview Apartments N/A N/A N/A
190 Highland Arms Apartments N/A N/A N/A
191 Central CA Health Services Central Valley Health 9,400 12/31/11
192 Panorama Place Coldwell Banker 3,035 2/28/02
193 Lone Oak Apartments N/A N/A N/A
194 Rio Mesa Self Storage N/A N/A N/A
195 Yorktown Apartments N/A N/A N/A
196 Crossings Center I B.O.S.S., Inc. 3,089 1/1/01
197 The Willow Woods Apartments N/A N/A N/A
198 409-415 Main Street Falls Metal Works, Inc. 27,000 12/31/09
199 A-1 Mini-Storage N/A N/A N/A
200 1740 Lynnwood Road Mack Truck, Inc. 11,450 8/26/05
201 Williamsburg Apartments N/A N/A N/A
202 3-5 Dana Drive N/A N/A N/A
203 Lamar Place Apartments N/A N/A N/A
204 218-14 and 218-22 Jamaica Avenue Genolyn Day Care 2,710 6/30/08
205 Hines Plaza Apartments N/A N/A N/A
206 A-1 Self & Boat Storage N/A N/A N/A
207 Valley Mini Storage N/A N/A N/A
Total/Weighted Average (13):
<CAPTION>
Major Major Major
Tenant #2 Tenant #2 Tenant #2 Lease
# Property Name Name Sq. Ft. Expiration Date
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
168 College Station Apartments N/A N/A N/A
169 CoMax Realty Building N/A N/A N/A
170 Guardian Self Storage N/A N/A N/A
171 Villas Of Loiret N/A N/A N/A
172 West Marine Center All About Fitness Inc 5,521 7/14/09
173 33 St. Mark's Place Dilara, Inc. 728 12/31/99
174 The Space Place N/A N/A N/A
175 University of Phoenix Building UPX II N/A N/A N/A
176 The Chevelle Apartments N/A N/A N/A
177 Foxborough Office Park Flynn & Campbell, LLP/Larry D. Flynn 2,902 4/30/14
178 Tree Tops Apartments N/A N/A N/A
179 Existing Industral Building N/A N/A N/A
180 14255 North 79th Street CBH Enterprises 2,687 6/30/01
181 Beverly Boulevard Retail In House 1,962 5/31/03
182 Littlefield Apartments N/A N/A N/A
183 The Woods of Old West Lawrence N/A N/A N/A
184 Villa Fortuna Apartments N/A N/A N/A
185 Clinton Heights Apartments N/A N/A N/A
186 Green Acres Mobile Estates N/A N/A N/A
187 University of Phoenix Building UPX III N/A N/A N/A
188 The Cedars Apartments N/A N/A N/A
189 Parkview Apartments N/A N/A N/A
190 Highland Arms Apartments N/A N/A N/A
191 Central CA Health Services N/A N/A N/A
192 Panorama Place Partners For Growth 1,538 2/28/02
193 Lone Oak Apartments N/A N/A N/A
194 Rio Mesa Self Storage N/A N/A N/A
195 Yorktown Apartments N/A N/A N/A
196 Crossings Center I e-Tech, Inc. 2,402 1/1/00
197 The Willow Woods Apartments N/A N/A N/A
198 409-415 Main Street N/A N/A N/A
199 A-1 Mini-Storage N/A N/A N/A
200 1740 Lynnwood Road N/A N/A N/A
201 Williamsburg Apartments N/A N/A N/A
202 3-5 Dana Drive N/A N/A N/A
203 Lamar Place Apartments N/A N/A N/A
204 218-14 and 218-22 Jamaica Avenue Popeye's 1,800 4/30/08
205 Hines Plaza Apartments N/A N/A N/A
206 A-1 Self & Boat Storage N/A N/A N/A
207 Valley Mini Storage N/A N/A N/A
Total/Weighted Average (13):
<CAPTION>
Major Major Major
Tenant #3 Tenant #3 Tenant #3 Lease
# Property Name Name Sq. Ft. Expiration Date
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
168 College Station Apartments N/A N/A N/A
169 CoMax Realty Building N/A N/A N/A
170 Guardian Self Storage N/A N/A N/A
171 Villas Of Loiret N/A N/A N/A
172 West Marine Center N/A N/A N/A
173 33 St. Mark's Place Perseus Body, Inc. 728 9/30/99
174 The Space Place N/A N/A N/A
175 University of Phoenix Building UPX II N/A N/A N/A
176 The Chevelle Apartments N/A N/A N/A
177 Foxborough Office Park Al Suarez and Associates 1,686 6/30/03
178 Tree Tops Apartments N/A N/A N/A
179 Existing Industral Building N/A N/A N/A
180 14255 North 79th Street Accents By Masters 1,675 2/28/00
181 Beverly Boulevard Retail Eduardo Lucero 1,820 5/14/02
182 Littlefield Apartments N/A N/A N/A
183 The Woods of Old West Lawrence N/A N/A N/A
184 Villa Fortuna Apartments N/A N/A N/A
185 Clinton Heights Apartments N/A N/A N/A
186 Green Acres Mobile Estates N/A N/A N/A
187 University of Phoenix Building UPX III N/A N/A N/A
188 The Cedars Apartments N/A N/A N/A
189 Parkview Apartments N/A N/A N/A
190 Highland Arms Apartments N/A N/A N/A
191 Central CA Health Services N/A N/A N/A
192 Panorama Place Jerrod Wright, D.C. 1,055 9/30/01
193 Lone Oak Apartments N/A N/A N/A
194 Rio Mesa Self Storage N/A N/A N/A
195 Yorktown Apartments N/A N/A N/A
196 Crossings Center I Dr. Joh's Tutoring 1,805 1/1/01
197 The Willow Woods Apartments N/A N/A N/A
198 409-415 Main Street N/A N/A N/A
199 A-1 Mini-Storage N/A N/A N/A
200 1740 Lynnwood Road N/A N/A N/A
201 Williamsburg Apartments N/A N/A N/A
202 3-5 Dana Drive N/A N/A N/A
203 Lamar Place Apartments N/A N/A N/A
204 218-14 and 218-22 Jamaica Avenue The Associates 1,250 2/28/01
205 Hines Plaza Apartments N/A N/A N/A
206 A-1 Self & Boat Storage N/A N/A N/A
207 Valley Mini Storage N/A N/A N/A
Total/Weighted Average (13):
</TABLE>
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE>
EXHIBIT A-2
MORTGAGE POOL INFORMATION
See this Exhibit for tables titled:
Mortgage Interest Rates
Cut-off Date Principal Balances
Original Amortization Terms
Original Terms to Stated Maturity
Remaining Amortization Terms
Remaining Terms to Stated Maturity
Years Built/Years Renovated
Occupancy Rates at Underwriting
U/W Debt Service Coverage Ratios
Cut-off Date Loan-to-Value Ratios
Mortgaged Properties by State
Mortgage Loans by Amortization Type
Mortgaged Properties by Property Type
Mortgaged Properties by Property Sub-Type
Prepayment Provision as of Cut-off Date
Prepayment Option
Mortgage Pool Prepayment Profile
A-2-1
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
A-2-2
<PAGE>
Mortgage Interest Rates
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Number of Cut-off Date Initial Mortgage Weighted Average
Range of Mortgage Principal Mortgage Pool Interest Average Cut-off Date
Mortgage Interest Rates Loans Balance (1) Balance Rates U/W DSCR (2) LTV Ratio (2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
6.320% - 7.000% 16 $ 64,233,696 8.4% 6.749% 1.41x 75.8%
7.001% - 7.250% 10 22,176,915 2.9% 7.137% 1.32 74.1%
7.251% - 7.500% 11 52,973,427 7.0% 7.408% 1.37 76.7%
7.501% - 7.750% 9 58,625,776 7.7% 7.695% 1.25 77.7%
7.751% - 8.000% 30 149,163,978 19.6% 7.918% 1.31 72.6%
8.001% - 8.250% 51 174,450,663 22.9% 8.133% 1.33 72.5%
8.251% - 8.500% 38 101,264,841 13.3% 8.346% 1.31 70.9%
8.501% - 8.750% 25 114,893,314 15.1% 8.593% 1.30 68.5%
8.751% - 9.000% 12 14,720,832 1.9% 8.829% 1.33 66.2%
9.001% - 9.280% 5 7,910,824 1.0% 9.149% 1.45 69.2%
--------------------------------------------------------------------------------------------------
Total/Weighted Average: 207 $ 760,414,266 100.0% 7.982% 1.32x 72.6%
==================================================================================================
</TABLE>
Maximum Wtd. Avg. Mortgage Interest Rate: 9.280%
Minimum Wtd. Avg. Mortgage Interest Rate: 6.320%
Wtd. Avg. Mortgage Interest Rate: 7.982%
(1) Assumes a Cut-off Date of December 1, 1999.
(2) Excluding the CTL Loan.
Cut-off Date Principal Balances
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Number of Cut-off Date Initial Mortgage Weighted Average
Range of Cut-off Date Mortgage Principal Mortgage Pool Interest Average Cut-off Date
Principal Balances Loans Balance (1) Balance Rates U/W DSCR (2) LTV Ratio (2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 399,636 - 500,000 1 $ 399,636 0.1% 8.880% 1.42x 63.6%
500,001 - 750,000 13 8,602,367 1.1% 8.552% 1.27 69.2%
750,001 - 1,000,000 16 13,871,300 1.8% 8.174% 1.40 68.2%
1,000,001 - 1,250,000 18 20,080,689 2.6% 8.205% 1.35 69.9%
1,250,001 - 1,500,000 15 21,155,610 2.8% 8.129% 1.32 66.7%
1,500,001 - 1,750,000 18 29,069,384 3.8% 8.109% 1.31 72.5%
1,750,001 - 2,000,000 19 35,100,836 4.6% 7.863% 1.33 71.8%
2,000,001 - 3,000,000 34 83,259,280 10.9% 8.066% 1.34 71.6%
3,000,001 - 4,000,000 19 65,693,774 8.6% 7.938% 1.35 74.0%
4,000,001 - 5,000,000 14 62,376,529 8.2% 7.970% 1.37 72.3%
5,000,001 - 6,000,000 10 54,843,770 7.2% 7.964% 1.31 75.1%
6,000,001 - 7,000,000 8 52,671,714 6.9% 7.928% 1.27 73.2%
7,000,001 - 8,000,000 5 36,794,009 4.8% 7.892% 1.28 75.5%
8,000,001 - 9,000,000 2 16,993,437 2.2% 7.463% 1.26 79.4%
9,000,001 - 11,500,000 7 74,415,539 9.8% 7.674% 1.35 73.0%
11,500,001 - 15,500,000 4 49,915,131 6.6% 7.974% 1.34 74.8%
15,500,001 - 34,500,000 2 53,763,882 7.1% 7.865% 1.37 70.5%
34,500,001 - $ 44,973,184 2 81,407,381 10.7% 8.320% 1.26 71.1%
---------------------------------------------------------------------------------------------
Total/Weighted Average: 207 $ 760,414,266 100.0% 7.982% 1.32x 72.6%
=============================================================================================
</TABLE>
Maximum Cut-off Date Scheduled Principal Balance: $ 44,973,184
Minimum Cut-off Date Scheduled Principal Balance: $ 399,636
Average Cut-off Date Scheduled Principal Balance: $ 3,673,499
(1) Assumes a Cut-off Date of December 1, 1999.
(2) Excluding the CTL Loan.
<PAGE>
Original Amortization Terms
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Range of Number of Cut-off Date Initial Mortgage Weighted Average
Original Amortization Mortgage Principal Mortgage Pool Interest Average Cut-off Date
Terms (Months) Loans Balance (1) Balance Rates U/W DSCR (2) LTV Ratio (2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
180 - 239 4 $ 5,081,460 0.7% 8.532% 1.36x 56.3%
240 - 299 8 11,844,518 1.6% 8.056% 1.27 67.3%
300 - 313 66 147,265,364 19.4% 8.083% 1.40 68.1%
314 - 360 129 596,222,924 78.4% 7.951% 1.31 73.9%
------------------------------------------------------------------------------------------------
Total/Weighted Average: 207 $ 760,414,266 100.0% 7.982% 1.32x 72.6%
================================================================================================
</TABLE>
Maximum Original Amortization Term (Months): 360
Minimum Original Amortization Term (Months): 180
Wtd. Avg. Original Amortization Term (Months): 345
(1) Assumes a Cut-off Date of December 1, 1999.
(2) Excluding the CTL Loan.
Original Terms to Stated Maturity (1)
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Range of Number of Cut-off Date Initial Mortgage Weighted Average
Original Terms Mortgage Principal Mortgage Pool Interest Average Cut-off Date
to Stated Maturity (Months) Loans Balance (2) Balance Rates U/W DSCR (3) LTV Ratio (3)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
60 - 115 6 $ 21,767,262 2.9% 8.353% 1.30x 74.6%
116 - 120 189 712,940,458 93.8% 7.974% 1.32 72.6%
121 - 200 9 20,546,541 2.7% 7.950% 1.46 70.2%
201 - 243 3 5,160,005 0.7% 7.734% 1.18 72.5%
------------------------------------------------------------------------------------------------
Total/Weighted Average: 207 $ 760,414,266 100.0% 7.982% 1.32x 72.6%
================================================================================================
</TABLE>
Maximum Original Term to Stated Maturity (Months): 243
Minimum Original Term to Stated Maturity (Months): 60
Wtd. Avg. Original Term to Stated Maturity (Months): 121
(1) In the case of hyper-amortization loans, the Anticipated Repayment Date is
assumed to be the maturity date for the purposes of the table.
(2) Assumes a Cut-off Date of December 1, 1999.
(3) Excluding the CTL Loan.
<PAGE>
Remaining Amortization Terms
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Range of Number of Cut-off Date Initial Mortgage Weighted Average
Remaining Amortization Mortgage Principal Mortgage Pool Interest Average Cut-off Date
Terms (Months) Loans Balance (1) Balance Rates U/W DSCR (2) LTV Ratio (2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
177 - 238 10 $ 14,171,340 1.9% 8.175% 1.31x 63.4%
239 - 298 55 118,739,410 15.6% 8.015% 1.39 69.1%
299 - 312 13 31,280,592 4.1% 8.363% 1.43 64.2%
313 - 359 129 596,222,924 78.4% 7.951% 1.31 73.9%
----------------------------------------------------------------------------------------------------
Total/Weighted Average: 207 $ 760,414,266 100.0% 7.982% 1.32x 72.6%
====================================================================================================
</TABLE>
Maximum Remaining Amortization Term (Months): 359
Minimum Remaining Amortization Term (Months): 177
Wtd. Avg. Remaining Amortization Term (Months): 340
(1) Assumes a Cut-off Date of December 1, 1999.
(2) Excluding the CTL Loan.
Remaining Terms to Stated Maturity (1)
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Range of Number of Cut-off Date Initial Mortgage Weighted Average
Remaining Terms Mortgage Principal Mortgage Pool Interest Average Cut-off Date
to Stated Maturity (Months) Loans Balance (2) Balance Rates U/W DSCR (3) LTV Ratio (3)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
38 - 114 52 $ 169,868,149 22.3% 7.365% 1.37x 74.6%
115 - 119 143 564,839,571 74.3% 8.171% 1.31 72.1%
120 - 199 9 20,546,541 2.7% 7.950% 1.46 70.2%
200 - 241 3 5,160,005 0.7% 7.734% 1.18 72.5%
----------------------------------------------------------------------------------------------------
Total/Weighted Average: 207 $ 760,414,266 100.0% 7.982% 1.32x 72.6%
====================================================================================================
</TABLE>
Maximum Remaining Term to Stated Maturity (Months): 241
Minimum Remaining Term to Stated Maturity (Months): 38
Wtd. Avg. Remaining Term to Stated Maturity (Months): 116
(1) In the case of hyper-amortization loans, the Anticipated Repayment Date is
assumed to be the maturity date for the purposes of the table.
(2) Assumes a Cut-off Date of December 1, 1999.
(3) Excluding the CTL Loan.
<PAGE>
Years Built/Years Renovated (1)
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Number of Cut-off Date Initial Mortgage Weighted Average
Range of Years Mortgaged Principal Mortgage Pool Interest Average Cut-off Date
Built/Renovated Properties Balance (2) Balance Rates U/W DSCR (3) LTV Ratio (3)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1963 - 1970 8 $ 19,170,424 2.5% 7.961% 1.36x 72.2%
1971 - 1980 21 49,608,416 6.5% 8.001% 1.32 74.9%
1981 - 1990 58 234,026,071 30.8% 7.727% 1.36 73.6%
1991 - 1999 125 457,609,356 60.2% 8.112% 1.31 71.8%
---------------------------------------------------------------------------------------------------
Total/Weighted Average: 212 $ 760,414,266 100.0% 7.982% 1.32x 72.6%
===================================================================================================
</TABLE>
Maximum Year Built/Renovated: 1999
Minimum Year Built/Renovated: 1963
Wtd. Avg. Year Built/Renovated: 1991
(1) Year Built/Renovated reflects the later of the Year Built or the Year
Renovated.
(2) Assumes a Cut-off Date of December 1, 1999.
(3) Excluding the CTL Loan.
Occupancy Rates at Underwriting
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Number of Cut-off Date Initial Mortgage Weighted Average
Range of Mortgaged Principal Mortgage Pool Interest Average Cut-off Date
Occupancy Rates at U/W Properties (1) Balance (2) Balance Rates U/W DSCR (3) LTV Ratio (3)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
79.0% - 79.9% 2 $ 2,162,854 0.3% 8.184% 1.32x 66.9%
80.0% - 89.9% 17 47,098,113 6.2% 8.177% 1.29 71.5%
90.0% - 94.9% 32 149,348,629 19.6% 8.127% 1.30 73.5%
95.0% - 97.4% 30 165,317,792 21.7% 7.715% 1.32 75.3%
97.5% - 100.0% 125 364,431,166 47.9% 7.979% 1.32 72.1%
---------------------------------------------------------------------------------------------------
Total/Weighted Average: 206 $ 728,358,554 95.8% 7.963% 1.32x 73.1%
===================================================================================================
</TABLE>
Maximum Occupancy Rate at U/W: 100.0%
Minimum Occupancy Rate at U/W: 79.0%
Wtd. Avg. Occupancy Rate at U/W: 96.3%
(1) Does not include any hotel properties.
(2) Assumes a Cut-off Date of December 1, 1999.
(3) Excluding the CTL Loan.
<PAGE>
U/W Debt Service Coverage Ratios
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Number of Cut-off Date Initial Mortgage Weighted Average
Range of Mortgage Principal Mortgage Pool Interest Average Cut-off Date
U/W DSCRs Loans Balance (1) Balance Rates U/W DSCR (2) LTV Ratio (2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CTL 1 $ 2,092,645 0.3% 8.140% N/A N/A
1.06x - 1.19 1 1,653,637 0.2% 7.890% 1.06x 79.5%
1.20 - 1.21 10 48,223,226 6.3% 8.103% 1.21 74.5%
1.22 - 1.29 90 364,015,466 47.9% 8.025% 1.26 73.6%
1.30 - 1.34 46 143,520,375 18.9% 8.057% 1.31 73.8%
1.35 - 1.39 14 44,092,870 5.8% 8.095% 1.38 74.5%
1.40 - 1.88x 45 156,816,048 20.6% 7.745% 1.51 67.8%
------------------------------------------------------------------------------------------------------
Total/Weighted Average: 207 $ 760,414,266 100.0% 7.982% 1.32x 72.6%
======================================================================================================
</TABLE>
Maximum U/W DSCR (2): 1.88x
Minimum U/W DSCR (2): 1.06x
Wtd. Avg. U/W DSCR (2): 1.32x
(1) Assumes a Cut-off Date of December 1, 1999.
(2) Excluding the CTL Loan.
Cut-off Date Loan-to-Value Ratios
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Number of Cut-off Date Initial Mortgage Weighted Average
Range of Cut-off Date Mortgage Principal Mortgage Pool Interest Average Cut-off Date
Loan-to-Value Ratios Loans Balance (1) Balance Rates U/W DSCR (2) LTV Ratio (2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CTL 1 $ 2,092,645 0.3% 8.140% N/A N/A
40.50% - 55.00% 10 24,157,104 3.2% 8.514% 1.40x 51.5%
55.10% - 65.00% 25 64,056,845 8.4% 8.165% 1.43 61.0%
65.10% - 67.50% 13 32,805,312 4.3% 8.156% 1.34 66.0%
67.60% - 70.00% 21 106,333,468 14.0% 8.293% 1.31 69.1%
70.10% - 72.50% 30 80,981,811 10.6% 8.195% 1.35 71.5%
72.60% - 75.00% 38 150,728,851 19.8% 7.891% 1.31 73.8%
75.10% - 77.50% 18 85,088,725 11.2% 7.737% 1.31 76.7%
77.60% - 78.50% 20 84,738,068 11.1% 7.577% 1.31 78.0%
78.60% - 79.50% 13 45,350,492 6.0% 7.704% 1.27 79.0%
79.60% - 80.00% 16 77,184,985 10.2% 8.048% 1.27 79.8%
80.10% - 86.40% 2 6,895,962 0.9% 7.380% 1.30 84.6%
---------------------------------------------------------------------------------------------------
Total/Weighted Average: 207 $ 760,414,266 100.0% 7.982% 1.32x 72.6%
===================================================================================================
</TABLE>
Maximum Cut-off Date LTV Ratio (2): 86.4%
Minimum Cut-off Date LTV Ratio (2): 40.5%
Wtd. Avg. Cut-off Date LTV Ratio (2): 72.6%
(1) Assumes a Cut-off Date of December 1, 1999.
(2) Excluding the CTL Loan.
<PAGE>
Mortgaged Properties by State
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Number of Cut-off Date Initial Mortgage Weighted Average
Mortgaged Principal Mortgage Pool Interest Average Cut-off Date
State Properties Balance (1) Balance Rates U/W DSCR (2) LTV Ratio (2)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
California 31 $ 114,336,631 15.0% 8.080% 1.38x 67.5%
Texas 31 88,276,580 11.6% 7.854% 1.31 75.2%
New York 11 70,739,105 9.3% 8.468% 1.26 69.5%
Florida 17 60,363,296 7.9% 8.105% 1.31 76.1%
Michigan 4 48,873,899 6.4% 8.022% 1.26 74.5%
Oklahoma 8 47,841,758 6.3% 7.408% 1.38 76.1%
Massachusetts 7 41,219,405 5.4% 7.966% 1.34 72.6%
Pennsylvania 10 35,551,312 4.7% 7.375% 1.45 73.6%
Virginia 6 26,877,675 3.5% 7.965% 1.29 75.4%
Colorado 8 22,895,070 3.0% 8.267% 1.34 68.1%
Georgia 9 21,853,610 2.9% 8.036% 1.30 74.8%
New Jersey 5 16,752,405 2.2% 8.200% 1.26 71.6%
Arizona 7 14,696,058 1.9% 7.869% 1.29 74.9%
Tennessee 2 14,563,109 1.9% 8.512% 1.29 73.2%
Minnesota 3 12,864,772 1.7% 8.403% 1.38 67.3%
New Hampshire 4 12,651,727 1.7% 7.161% 1.27 76.4%
Maryland 3 11,836,875 1.6% 7.938% 1.30 74.7%
Connecticut 5 10,660,610 1.4% 8.341% 1.28 69.7%
Indiana 4 9,943,866 1.3% 8.049% 1.22 72.7%
Arkansas 5 8,870,042 1.2% 8.397% 1.28 71.4%
Wisconsin 2 8,813,834 1.2% 7.950% 1.39 70.7%
Kansas 5 7,172,099 0.9% 7.561% 1.35 78.8%
Louisiana 5 6,403,302 0.8% 7.597% 1.42 71.9%
Ohio 3 6,088,297 0.8% 7.452% 1.31 77.7%
Washington 2 5,930,387 0.8% 7.432% 1.34 76.1%
Kentucky 1 5,715,099 0.8% 8.170% 1.25 78.3%
Nebraska 1 5,596,509 0.7% 8.360% 1.21 80.0%
Oregon 3 4,590,953 0.6% 7.487% 1.34 60.6%
Utah 2 4,187,021 0.6% 8.183% 1.27 72.4%
Vermont 1 3,812,987 0.5% 7.260% 1.65 71.5%
Nevada 2 3,434,286 0.5% 8.085% 1.28 75.0%
Mississippi 1 2,160,270 0.3% 8.100% 1.25 78.7%
New Mexico 2 1,989,138 0.3% 8.280% 1.33 54.9%
Iowa 1 1,438,558 0.2% 8.030% 1.36 66.6%
Idaho 1 1,413,723 0.2% 6.950% 1.31 64.3%
-----------------------------------------------------------------------------------------------
Total/Weighted Average: 212 $ 760,414,266 100.0% 7.982% 1.32x 72.6%
===============================================================================================
</TABLE>
(1) Assumes a Cut-off Date of December 1, 1999.
(2) Excluding the CTL Loan.
Mortgage Loans by Amortization Type
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Number of Cut-off Date Initial Mortgage Weighted Average
Mortgage Principal Mortgage Pool Interest Average Cut-off Date
Loan Type Loans Balance (1) Balance Rates U/W DSCR (2) LTV Ratio (2)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balloon 192 $ 681,963,958 89.7% 7.971% 1.33x 72.8%
Hyper-Amortizing 10 71,047,595 9.3% 8.079% 1.31 71.6%
Fully Amortizing 5 7,402,714 1.0% 8.066% 1.30 63.3%
----------------------------------------------------------------------------------------------
Total/Weighted Average: 207 $ 760,414,266 100.0% 7.982% 1.32x 72.6%
==============================================================================================
</TABLE>
(1) Assumes a Cut-off Date of December 1, 1999.
(2) Excluding the CTL Loan.
<PAGE>
Mortgaged Properties by Property Type
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Number of Cut-off Date Initial Mortgage Weighted Average
Mortgaged Principal Mortgage Pool Interest Average Cut-off Date
Property Type Properties Balance (1) Balance Rates U/W DSCR (2) LTV Ratio (2)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Multifamily 84 $ 295,917,163 38.9% 7.736% 1.32x 75.5%
Retail 43 201,274,526 26.5% 8.140% 1.28 72.1%
Office 37 134,954,503 17.7% 8.178% 1.34 69.8%
Industrial 17 39,530,029 5.2% 8.026% 1.28 72.5%
Hotel 6 32,055,712 4.2% 8.426% 1.50 61.5%
Mixed Use 7 25,513,610 3.4% 8.350% 1.40 70.7%
Manufactured Housing 6 18,254,431 2.4% 7.076% 1.47 74.7%
Self Storage 11 10,821,648 1.4% 8.517% 1.36 67.8%
CTL 1 2,092,645 0.3% 8.140% N/A N/A
---------------------------------------------------------------------------------------------
Total/Weighted Average: 212 $ 760,414,266 100.0% 7.982% 1.32x 72.6%
=============================================================================================
</TABLE>
(1) Assumes a Cut-off Date of December 1, 1999.
(2) Excluding the CTL Loan.
Mortgaged Properties by Property Sub-Type
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Number of Cut-off Date Initial Mortgage Weighted Average
Mortgaged Principal Mortgage Pool Interest Average Cut-off Date
Property Type Property Sub-Type Properties Balance (1) Balance Rates U/W DSCR LTV Ratio
- ------------------------------------------------------------------------------------------------------------------------------
Retail
<S> <C> <C> <C> <C> <C> <C> <C>
Anchored (2) 20 $ 160,490,813 21.1% 8.086% 1.26x 73.3%
Unanchored 23 40,783,713 5.4% 8.353% 1.35 67.4%
---------------------------------------------------------------------------------------
Total/Weighted Average: 43 $ 201,274,526 26.5% 8.140% 1.28x 72.1%
=======================================================================================
</TABLE>
(1) Assumes a Cut-off Date of December 1, 1999.
(2) Includes shadow anchored properties.
<PAGE>
Prepayment Provision as of Cut-off Date (1)
<TABLE>
<CAPTION>
Weighted Weighted Weighted
Average Average Average
Percentage of Remaining Remaining Remaining Weighted
Range of Number of Cut-off Date Initial Lockout Lockout Lockout Plus Average
Remaining Terms to Mortgage Principal Mortgage Pool Period Plus YM Period Premium Period Maturity
Stated Maturity (Years)(2) Loans Balance (1) Balance (Years) (Years) (Years) (Years)(2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
3.0 - 3.9 2 $ 2,988,450 0.4% 0.9 3.0 3.0 3.4
4.0 - 4.9 1 2,692,755 0.4% 4.3 4.3 4.3 4.6
6.0 - 6.9 3 16,086,057 2.1% 6.3 6.3 6.3 6.8
8.0 - 8.9 33 106,697,071 14.0% 3.0 8.2 8.2 8.7
9.0 - 9.9 156 606,243,387 79.7% 8.7 9.3 9.3 9.8
10.0 - 10.9 1 4,514,716 0.6% 0.0 8.3 9.3 10.4
13.0 - 13.9 2 6,636,564 0.9% 6.1 12.7 12.7 13.2
14.0 - 14.9 6 9,395,262 1.2% 11.8 14.3 14.3 14.7
18.0 - 18.9 1 1,413,723 0.2% 8.8 18.6 18.6 18.9
19.0 - 19.9 1 1,653,637 0.2% 19.5 19.5 19.5 19.8
20.0 - 20.9 1 2,092,645 0.3% 19.6 19.6 19.6 20.1
-----------------------------------------------------------------------------------------------------
Total/Weighted Average: 207 $ 760,414,266 100.0% 7.9 9.2 9.2 9.7
=====================================================================================================
</TABLE>
(1) Assumes a Cut-off Date of December 1, 1999.
(2) In the case of the hyper-amortization loans, the Anticipated Repayment
Date is assumed to be the maturity date for the purposes of the indicated
column.
Prepayment Option
<TABLE>
<CAPTION>
Weighted Weighted Weighted
Average Average Average
Percentage of Remaining Remaining Remaining Weighted
Number of Cut-off Date Initial Lockout Lockout Lockout Plus Average
Mortgage Principal Mortgage Pool Period Plus YM Period Premium Period Maturity
Prepayment Option Loans Balance (1) Balance (Years) (Years) (Years) (Years)(2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Lockout/Defeasance 153 $ 570,106,400 75.0% 9.4 9.4 9.4 9.8
Lockout/Yield Maintenance 52 183,100,396 24.1% 3.3 8.8 8.8 9.3
Yield Maintenance/Prepayment Premium 1 4,514,716 0.6% 0.0 8.3 9.3 10.4
Lockout 1 2,692,755 0.4% 4.3 4.3 4.3 4.6
-----------------------------------------------------------------------------------------------
Total/Weighted Average: 207 $ 760,414,266 100.0% 7.9 9.2 9.2 9.7
===============================================================================================
</TABLE>
(1) Assumes a Cut-off Date of December 1, 1999.
(2) In the case of the hyper-amortization loans, the Anticipated Repayment
Date is assumed to be the maturity date for the purposes of the indicated
column.
<PAGE>
Mortgage Pool Prepayment Profile (1)
<TABLE>
<CAPTION>
Number of
Months Since Mortgage Outstanding % of Pool Yield Prepayment % of Pool
Date Cut-off Date (2) Loans Balance (mm) Lockout Maintenance Premium Open Total
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Dec-99 0 207 $ 760.4 99.41% 0.59% 0.00% 0.00% 100.0%
Dec-00 12 207 $ 753.8 98.65% 1.35% 0.00% 0.00% 100.0%
Dec-01 24 207 $ 746.5 96.81% 3.19% 0.00% 0.00% 100.0%
Dec-02 36 207 $ 738.5 89.31% 10.43% 0.00% 0.26% 100.0%
Dec-03 48 205 $ 727.1 81.07% 18.93% 0.00% 0.00% 100.0%
Dec-04 60 204 $ 715.3 76.86% 23.14% 0.00% 0.00% 100.0%
Dec-05 72 204 $ 705.3 76.92% 23.08% 0.00% 0.00% 100.0%
Dec-06 84 201 $ 679.3 75.59% 24.41% 0.00% 0.00% 100.0%
Dec-07 96 201 $ 667.7 75.66% 21.40% 0.00% 2.94% 100.0%
Dec-08 108 168 $ 564.2 86.96% 11.54% 0.66% 0.83% 100.0%
Dec-09 120 12 $ 19.3 36.38% 44.88% 0.00% 18.73% 100.0%
Dec-10 132 11 $ 14.8 43.40% 56.60% 0.00% 0.00% 100.0%
Dec-11 144 11 $ 13.9 41.71% 58.29% 0.00% 0.00% 100.0%
Dec-12 156 11 $ 12.9 39.58% 29.83% 0.00% 30.59% 100.0%
Dec-13 168 9 $ 6.9 62.98% 37.02% 0.00% 0.00% 100.0%
Dec-14 180 3 $ 2.5 80.11% 19.89% 0.00% 0.00% 100.0%
Dec-15 192 3 $ 2.1 81.78% 18.22% 0.00% 0.00% 100.0%
Dec-16 204 3 $ 1.8 84.25% 15.75% 0.00% 0.00% 100.0%
Dec-17 216 3 $ 1.4 88.32% 11.68% 0.00% 0.00% 100.0%
Dec-18 228 2 $ 0.9 100.00% 0.00% 0.00% 0.00% 100.0%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Calculated assuming that no Mortgage Loan prepays, defaults or is
repurchased prior to stated maturity, except that the hyper-amortization
loans are assumed to pay in full on their respective Anticipated Repayment
Dates. Otherwise calculated based on Maturity Assumptions to be set forth
in the final prospectus supplement.
(2) Assumes a Cut-off Date of December 1, 1999.
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
EXHIBIT B
SIGNIFICANT LOAN SUMMARIES
Loan Number 1 - The Wilton Mall Loan
General. The "Wilton Mall Loan" has a Cut-off Date Principal Balance of
$44,973,184, representing 5.9% of the Initial Pool Balance. Column Financial,
Inc. originated the Wilton Mall Loan. The borrower under the Wilton Mall Loan
(the "Wilton Mall Borrower") is a limited liability company organized under the
laws of Delaware. The Wilton Mall Loan is secured by a mortgage (the "Wilton
Mall Mortgage") on the fee simple interest of the Wilton Mall Borrower in
540,021 square feet of a 655,682 square foot regional mall (the "Wilton Mall
Property") located at Routes 50 and I-87 in Saratoga Springs, New York.
Certain Payment Terms. The Wilton Mall Loan is a Hyper-Amortization Loan.
It has an Anticipated Repayment Date of November 1, 2009 and a final maturity
date of November 1, 2029. The Wilton Mall Loan amortizes on a 30-year schedule.
The Wilton Mall Loan accrues interest at a fixed mortgage interest rate of 8.58%
on the basis of the actual number of days elapsed each month in a year assumed
to consist of 360 days. If the Wilton Mall Borrower does not prepay the Wilton
Mall Loan in full by the related Anticipated Repayment Date, the Wilton Mall
Loan will accrue interest at a Revised Interest Rate equal to the initial
mortgage interest rate plus 2.5%.
The Wilton Mall Borrower may not voluntarily prepay the Wilton Mall Loan
until six months prior to the related Anticipated Repayment Date. Partial
prepayments of the Wilton Mall Loan are not permitted except in connection with
a casualty or condemnation or the hyper-amortization of the Wilton Mall Loan
following its Anticipated Repayment Date. No prepayment consideration is payable
in connection with:
o the lender's application of insurance proceeds or condemnation
proceeds to pay down the principal balance of the Wilton Mall Loan,
or
o any principal prepayment following the end of the lock-out period.
If the Wilton Mall Loan is partially prepaid through the application of
insurance proceeds or condemnation proceeds, then the Monthly Payment will be
recalculated. If the Wilton Mall Borrower fails to deliver to the lender, prior
to November 1, 2000, executed leases providing for an aggregate minimum base
rent of $50,000 per year, a $225,000 reserve can be applied to prepay The Wilton
Mall Loan and the Wilton Mall Borrower would be required to pay a yield
maintenance payment in connection therewith.
Defeasance. At any time following the second anniversary of the date of
the initial issuance of the offered certificates, the Wilton Mall Property may
be released from the lien of the Wilton Mall Mortgage through a defeasance of
the Wilton Mall Loan. Defeasance is only permitted upon the satisfaction of
certain conditions, including delivery of certain legal opinions and other
documentation.
The Wilton Mall Property. The Wilton Mall Property includes 540,021 square
feet of a 655,682 square foot regional mall having the characteristics described
in the table below.
<TABLE>
<CAPTION>
Property Name City State No. of Yr. Built/ Occupancy Most Recent Underwritable
Sq. Ft. Renovated at Appraised Cash Flow
Underwriting Value
<S> <C> <C> <C> <C> <C> <C> <C>
The Wilton Mall Saratoga Springs New York 540,021 1990/1991 91% $64,500,000 $5,286,893
</TABLE>
B-1
<PAGE>
The major tenants of the Wilton Mall Property are described in the table
below.
<TABLE>
<CAPTION>
Tenant Month and Square Feet of Annual % of Total Annual
Year of Lease Leased Space Base Rent Annual Base Rent
Expiration Base Rent Per
Square Foot
<S> <C> <C> <C> <C> <C>
Sears 7/2005 82,352 $247,056 3.9% $3.00
J.C. Penney 8/2006 49,843 $193,670 3.1% $3.89
Bon-Ton 1/2004 71,222 $212,500 3.4% $2.98
Dick's Sporting 11/2013 51,004 $501,889 8.0% $9.84
Goods
Hoyt's Cinema 2/2011 26,689 $306,923 4.9% $11.50
</TABLE>
BJ's Wholesale Club is also a tenant at the Wilton Mall, but its space is
not included in the collateral.
Property Management. The Wilton Mall Property is subject to a management
agreement between the Wilton Mall Borrower and Genesee Management, Inc. (the
"Wilton Mall Property Manager"), an affiliate of the Wilton Mall Borrower. The
holder of the Wilton Mall Loan may replace the Wilton Mall Property Manager only
upon:
o gross negligence, wilful misconduct or fraud on the part of the
Wilton Mall Property Manager under the management agreement, or
o any change in control of the ownership of the Wilton Mall Property
Manager, or
o a default by the Wilton Mall Borrower under the loan documents for
the Wilton Mall Loan, or
o the holder's taking title to the Wilton Mall Property.
Cash Management. The Wilton Mall Borrower must cause all rents from the
Wilton Mall Property to be deposited into a "rent account" within one day of
receipt. Unless and until an event of default occurs under the Wilton Mall Loan,
the Wilton Mall Borrower will have access to that rent account.
Appraised Value. The Wilton Mall Loan has a Cut-off Date Loan-to-Value
Ratio of 69.7%, based on an appraised value of the Wilton Mall Property of
$64,500,000 (as derived from an appraisal conducted on September 1, 1999).
Underwritable Debt Service Coverage Ratio. The U/W DSCR of the Wilton Mall
Loan is 1.26x, based on an annual debt service of approximately $4,182,788 and
an annual Underwritable Cash Flow of $5,286,893.
Additional Indebtedness Prohibited. The Wilton Mall Borrower may not
encumber the Wilton Mall Property with subordinate financing without the consent
of the holder of the Wilton Mall Loan.
Transfer of Ownership Interests. In general, the Wilton Mall Mortgage
prohibits the transfer of interests in the Wilton Mall Property or ownership
interests in the Wilton Mall Borrower without the consent of the holder of the
Wilton Mall Loan, except in limited circumstances. However, the Wilton Mall
Borrower has the right to transfer the Wilton Mall Property to a real estate
investment trust ("REIT") or the operating partnership of such REIT upon
satisfaction of certain underwriting criteria. In addition, the holder of the
Wilton Mall Loan must consent to transfers of the Wilton Mall Property upon
satisfaction of certain underwriting criteria, including:
o payment of a non-refundable assumption fee equal to 0.5% of the
outstanding principal balance of the Wilton Mall Loan;
o execution of such documents and agreements as the Lender may
reasonably require to affirm the Wilton Mall Borrower's continued
liability under the Wilton Mall Loan documents; and
B-2
<PAGE>
o if required under the Pooling and Servicing Agreement, confirmation
in writing from the Rating Agencies that the proposed transfer will
not result in a requalification, reduction, downgrade or withdrawal
of any of the ratings on the certificates.
B-3
<PAGE>
Loan Number 2 - The Frandor Mall Loan
General. The "Frandor Mall Loan" has a Cut-off Date Principal Balance of
$36,434,197, representing 4.8% of the Initial Pool Balance. Column Financial,
Inc. originated the Frandor Mall Loan. The borrower under the Frandor Mall Loan
(the "Frandor Mall Borrower") is a limited liability company organized under the
laws of Michigan. The Frandor Mall Loan is secured by a mortgage (the "Frandor
Mall Mortgage") on the fee simple interest of the Frandor Mall Borrower in a
457,978 square foot retail power center located in Lansing, Michigan (the
"Frandor Mall Property").
Certain Payment Terms. The Frandor Mall is a balloon loan which matures on
September 1, 2009 and amortizes on a 30-year schedule. The Frandor Mall Loan
accrues interest at a fixed mortgage interest rate of 8.00% per annum on the
basis of the actual number of days elapsed each month in a year assumed to
consist of 360 days.
The Frandor Mall Borrower may not voluntarily prepay the Frandor Mall Loan
until six months prior to maturity, except in connection with a major casualty
or taking. If, following a major casualty or taking, the lender applies the
insurance proceeds or condemnation proceeds to pay down the principal balance of
the Frandor Mall Loan, the Frandor Mall Borrower is permitted to make an
additional prepayment to pay off the Frandor Mall Loan. Partial prepayments of
the Frandor Mall Loan are not permitted except in connection with the lender's
application of insurance proceeds or condemnation proceeds to pay down the
principal balance of the Frandor Mall Loan. No prepayment consideration is
payable in connection with:
o the lender's application of insurance proceeds or condemnation
proceeds to pay down the principal balance of the Frandor Mall Loan,
o any additional prepayment made by the Frandor Mall Borrower to pay
off the Frandor Mall Loan following a major casualty or taking,
assuming the insurance proceeds or condemnation proceeds, as the
case may be, were insufficient, or
o any principal prepayment following the lock-out period.
If the Frandor Mall Loan is partially prepaid through the application of
insurance proceeds or condemnation proceeds, then the Monthly Payment will be
recalculated.
Defeasance. After the second anniversary of the date of initial issuance
of the offered certificates, the Frandor Mall Borrower may obtain a release of
the Frandor Mall Property from the lien of the Frandor Mall Mortgage through a
defeasance of the Frandor Mall Loan. Defeasance is only permitted upon the
satisfaction of certain conditions, including delivery of certain legal opinions
and other documentation.
The Frandor Mall Property. The Frandor Mall Property is a retail power
center having the characteristics described in the table below.
<TABLE>
<CAPTION>
Property Name City State No. of Yr. Built/ Occupancy Most Recent Underwritable
Sq. Ft. Renovated at Appraised Cash Flow
Underwriting Value
<S> <C> <C> <C> <C> <C> <C> <C>
Frandor Mall Lansing Michigan 457,978 1950/1999 95% $50,000,000 $4,051,315
</TABLE>
The Frandor Mall Property is anchored by the tenants described in the
table below.
<TABLE>
<CAPTION>
Tenant Month and Year of Sq. Ft. of Annual % of Annual Base
Lease Expiration Leased Space Base Rent Total Annual Rent Per
Base Rent Square Foot
<S> <C> <C> <C> <C> <C>
Kroger 6/2001 36,234 $136,608 3.0% $3.77
Office Depot 5/2014 30,077 $391,001 8.5% $13.00
Comp USA 8/2014 28,000 $357,000 7.8% $12.75
</TABLE>
B-4
<PAGE>
Property Management. The Frandor Mall Property is subject to a management
agreement between the Frandor Mall Borrower and The Frandorson Corporation (the
"Frandor Mall Property Manager"), an affiliate of the Frandor Mall Borrower. The
holder of the Frandor Mall Loan may replace the Frandor Mall Property Manager
only upon:
o a default by the Frandor Mall Property Manager under the management
agreement, which default remains unremedied for 30 days, or
o the Frandor Mall Property Manager's filing a petition of bankruptcy,
making an assignment for the benefit of creditors or taking
advantage of an insolvency act, or
o the taking of the Frandor Mall Property through condemnation for
public or quasi-public use.
Cash Management. The Frandor Mall Borrower must cause all rents from the
Frandor Mall Property to be deposited into a "rent account" within one day of
receipt. Unless and until an event of default occurs under the Frandor Mall
Loan, the Frandor Mall Borrower will have access to that rent account.
Appraised Value. The Frandor Mall Loan has a Cut-off Date Loan-to-Value
Ratio of 72.9%, based on an appraised value of the Frandor Mall Property of
$50,000,000 (as derived from an appraisal conducted on August 13, 1999).
Underwritable Debt Service Coverage Ratio. The U/W DSCR of the Frandor
Mall Loan is 1.26x, based on an annual debt service of approximately $3,213,889
and an annual Underwritable Cash Flow of $4,051,315.
Additional Indebtedness Prohibited. The Frandor Mall Borrower may not
encumber the Frandor Mall Property with subordinate financing without the
consent of the holder of the Frandor Mall Loan.
Transfer of Ownership Interests. In general, the Frandor Mall Mortgage
prohibits the transfer of interests in the Frandor Mall Property or ownership
interests in the Frandor Mall Borrower without the consent of the holder of the
Frandor Mall Loan, except in limited circumstances. However, the holder of the
Frandor Mall Loan must consent to a transfer of the Frandor Mall Property upon
satisfaction of certain underwriting criteria, including:
o payment of a non-refundable assumption fee equal to 0.5% of the
outstanding principal balance of the Frandor Mall Loan;
o execution of such documents and agreements as the Lender may
reasonably require to affirm the Frandor Mall Borrower's continued
liability under the Frandor Mall Loan documents; and
o if required under the Pooling and Servicing Agreement, confirmation
in writing from the Rating Agencies that the proposed transfer will
not result in a requalification, reduction, downgrade or withdrawal
of any of the ratings on the certificates.
B-5
<PAGE>
Loan Number 3 - The Alliance Loan
General. The "Alliance Loan" has a Cut-off Date Principal Balance of
$32,777,802, representing 4.3% of the Initial Pool Balance. Column Financial,
Inc. originated the Alliance Loan. The borrower under the Alliance Loan (the
"Alliance Borrower") is a limited liability company organized under the laws of
Delaware. The Alliance Loan is secured by mortgages (the "Alliance Mortgages")
on the fee simple interests of the Alliance Borrower in three multifamily rental
properties (the "Alliance Properties"), which are located in College Park,
Georgia, Waldorf, Maryland and Alexandria, Virginia.
Certain Payment Terms. The Alliance Loan is a balloon loan which matures
on July 1, 2009 and amortizes on a 30-year schedule. The Alliance Loan accrues
interest at a fixed mortgage interest rate of 7.74% per annum on the basis of
the actual number of days elapsed each month in a year assumed to consist of 360
days.
The Alliance Borrower may not voluntarily prepay the Alliance Loan until
six months prior to maturity. Partial prepayments of the Alliance Loan are not
permitted except in connection with a casualty or condemnation. If a substantial
portion of the leasable square footage of any of the Alliance Properties is
taken or destroyed, the lender may elect, in its absolute discretion and without
regard to the adequacy of its security, to either accelerate the Alliance Loan
or make insurance or condemnation proceeds available to the Alliance Borrower
for repair or restoration of such Alliance Property. However, the lender cannot
accelerate the Alliance Loan if the taken or destroyed Alliance Property is
released from the lien of the Alliance Mortgages in connection with the
defeasance of all or part of the Alliance Loan.
No prepayment consideration is payable in connection with:
o the lender's application of insurance proceeds or condemnation
proceeds to pay down the principal balance of the Alliance Loan, or
o any principal prepayment following the lock-out period.
If the Alliance Loan is partially prepaid through the application of
insurance proceeds or condemnation proceeds, then the Monthly Payment will be
recalculated.
Defeasance. After the second anniversary of the date of initial issuance
of the offered certificates, the Alliance Borrower may obtain a release of any
of the Alliance Properties from the lien of the Alliance Mortgages through a
defeasance of the Alliance Loan (or, if fewer than all of the Alliance
Properties are to be released, through a defeasance of such portion of the
Alliance Loan as is equal to 125% of the allocated loan amount for each Alliance
Property to be released). Defeasance is only permitted upon the satisfaction of
certain conditions, including:
o delivery of certain legal opinions and other documentation,
o if less than the entire aggregate amount of the Alliance Loan is
defeased, the debt service coverage ratio for the non-defeased
portion of the Alliance Loan (based on the Alliance Properties then
remaining subject to the liens of the Alliance Mortgages) must be at
least equal to the greater of (i) the debt service coverage ratio
for the Alliance Loan (based on all the Alliance Properties,
including those that are being released) immediately prior to the
defeasance and (ii) the debt service coverage ratio for the Alliance
Loan (based on all the Alliance Properties, including those that are
being released) at origination, and
o if less than the entire aggregate amount of the Alliance Loan is
defeased, the loan-to-value ratio for the non-defeased portion of
the Alliance Loan (based on all the Alliance Properties then
remaining subject to the liens of the Alliance Mortgages) is not
greater than 80%.
B-6
<PAGE>
The Alliance Properties. The Alliance Properties consist of three
multifamily rental properties having the characteristics described in the table
below.
<TABLE>
<CAPTION>
Property Name City State No. of Yr. Built/ Occupancy at Most Recent Underwritable
Units Renovated Underwriting Appraised Cash Flow
Value
<S> <C> <C> <C> <C> <C> <C> <C>
Hampton Court Alexandria Virginia 307 1965/1992 98% $ 19,800,000 $ 1,641,733
Apartments
Lake of the Woods College Park Georgia 216 1988/1989 95% $ 12,850,000 $ 1,029,641
Apartments
Holly Tree Waldorf Maryland 143 1974/1994 95% $ 9,800,000 $ 819,880
Apartments ------- -------- --- --------- --- ------------ ------------
Total/Wtd. Avg. 666 96% $ 42,450,000 $ 3,491,254
</TABLE>
Property Management. The Alliance Properties are subject to management
agreements between the Alliance Borrower and Alliance Residential Management,
L.L.C. (the "Alliance Property Manager"), an affiliate of the Alliance Borrower.
The holder of the Alliance Loan may replace the Alliance Property Manager only
upon:
o a default by the Alliance Property Manager under the management
agreement or otherwise for cause, or
o the holder's acquiring title to the related Alliance Property by
foreclosure or otherwise, or
o if the Alliance Loan represents 2% or more of the Initial Pool
Balance, a 50% or greater change in control of the ownership of the
Alliance Property Manager, unless S&P and Fitch have confirmed that
the change in control would not result in a downgrade of any of the
ratings on the certificates, or
o a default by the Alliance Borrower under the loan documents for the
Alliance Loan.
Cash Management. The Alliance Borrower must cause all rents from the
Alliance Properties to be deposited into a "rent account" within one day of
receipt. Unless and until an event of default occurs under the Alliance Loan,
the Alliance Borrower will have access to that rent account.
Appraised Value. The Alliance Loan has a Cut-off Date Loan-to-Value Ratio
of 77.2%, based on an aggregate appraised value of the Alliance Properties of
$42,450,000 (as derived from appraisals conducted between June 13, 1999 and
September 13, 1999).
Underwritable Debt Service Coverage Ratio. The U/W DSCR of the Alliance
Loan is 1.24x, based on an aggregate annual debt service of approximately
$2,823,435 and an aggregate annual Underwritable Cash Flow of $3,491,254.
Additional Indebtedness Prohibited. The Alliance Borrower may not encumber
the Alliance Properties with subordinate financing without the consent of the
holder of the Alliance Loan.
Transfer of Ownership Interests. In general, the Alliance Mortgages
prohibit the transfer of interests in the Alliance Properties or ownership
interests in the Alliance Borrower without the consent of the holder of the
Alliance Loan, except in limited circumstances. However, transfer to Virginia
Associates I and Virginia Associates II of the 39% ownership interest in the
Alliance Borrower currently held by Alliance Holdings Investment LLC is
permitted. In addition, the holder of the Alliance Loan must consent to
transfers of the Alliance Properties upon satisfaction of certain underwriting
criteria, including:
o payment of a non-refundable assumption fee equal to 1% of the
outstanding principal balance of the Alliance Loan;
o execution of such documents and agreements as the Lender may
reasonably require to affirm the Alliance Borrower's continued
liability under the Alliance Loan documents; and
B-7
<PAGE>
o if required under the Pooling and Servicing Agreement, confirmation
in writing from the Rating Agencies that the proposed transfer will
not result in a requalification, reduction, downgrade or withdrawal
of any of the ratings on the certificates.
B-8
<PAGE>
Loan Number 4 - The Stanford Square Loan
General. The "Stanford Square Loan" has a Cut-off Date Principal Balance
of $20,986,080, representing 2.8% of the Initial Pool Balance. Column Financial,
Inc. originated the Stanford Square Loan. The borrower under the Stanford Square
Loan (the "Stanford Square Borrower") consists of a limited liability company
organized under the laws of California and a limited liability company organized
under the laws of Colorado, which companies hold the property as
tenants-in-common. The Stanford Square Loan is secured by a mortgage (the
"Stanford Square Mortgage") on the fee simple interests of the Stanford Square
Borrower in a 70,816 square foot, four-story, Class A, office building with two
levels of underground parking (the "Stanford Square Property"), located in the
central business district of Palo Alto, California.
Certain Payment Terms. The Stanford Square Loan is a balloon loan which
matures on November 1, 2009 and amortizes on a 30-year schedule. The Stanford
Square Loan accrues interest at a fixed mortgage interest rate of 8.06% per
annum on the basis of the actual number of days elapsed each month in a year
assumed to consist of 360 days.
The Stanford Square Borrower may not voluntarily prepay the Stanford
Square Loan until six months prior to maturity. Partial prepayments of the
Stanford Square Loan are not permitted except in connection with a casualty or
condemnation. No prepayment consideration is payable in connection with:
o the lender's application of insurance proceeds or condemnation
proceeds to pay down the principal balance of the Stanford Square
Loan, or
o any principal prepayment following the lockout period.
If the Stanford Square Loan is partially prepaid through the application
of insurance proceeds or condemnation proceeds, then the Monthly Payment will be
recalculated.
Defeasance. After the second anniversary of the date of initial issuance
of the offered certificates, the Stanford Square Borrower may obtain a release
of the Stanford Square Property from the lien of the Stanford Square Mortgage
through a defeasance of the Stanford Square Loan. Defeasance is only permitted
upon the satisfaction of certain conditions, including delivery of certain legal
opinions and other documentation.
The Stanford Square Property. The Stanford Square Property is a 70,816
square foot, four-story, Class A office building located in the central business
district of Palo Alto, California, having the characteristics described in the
table below.
<TABLE>
<CAPTION>
Property Name City State No. of Yr. Built/ Occupancy Most Recent Underwritable
Sq. Ft. Renovated at Appraised Cash Flow
Underwriting Value
<S> <C> <C> <C> <C> <C> <C> <C>
Stanford Square Palo Alto California 70,816 1983 100% $35,000,000 $2,913,281
</TABLE>
The major tenants of the Stanford Square Property are described in the
table below.
<TABLE>
<CAPTION>
Tenant Month and Square Feet Annual % of Annual Base
Year of of Base Rent Total Annual Rent Per
Lease Leased Space Base Rent Square Foot
Expiration
<S> <C> <C> <C> <C> <C>
PHB Hagler Bailey 8/2002 18,331 $659,916 20.3% $36.00
Bon Appetit Management 7/2009 17,825 $887,685 27.3% $49.80
Company
</TABLE>
Property Management. The Stanford Square Property is subject to a
management and operating agreement between the Stanford Square Borrower and
Stanford Square Management Co. (the "Stanford Square Operator") and a property
management agreement with Tarlton Properties, Inc. (the "Stanford Square
Property Manager"), both of
B-9
<PAGE>
which are affiliates of the Stanford Square Borrower. The holder of the Stanford
Square Loan may replace the Stanford Square Operator only upon:
o the sale or condemnation of the Stanford Square Property or
destruction of 25% or more of the Stanford Square Property, or
o the filing of a petition in bankruptcy or the making of an
assignment for the benefit of creditors by the Stanford Square
Operator, or if the Stanford Square Operator takes advantage of any
insolvency act, or
o a default by the Stanford Square Operator under the management and
operating agreement, which default continues unremedied for 30 days,
or
o the holder's taking title to the Stanford Square Property.
The holder of the Stanford Square Loan may replace the Stanford Square
Property Manager only upon:
o the breach of any of the covenants of the management agreement,
including, the failure of the Stanford Square Property Manager to
use due diligence in managing the Stanford Square Property, which
breach continues unremedied for 30 days, or
o by providing notice in writing as provided in the management
agreement, or
o the holder's taking title to the Stanford Square Property.
Cash Management. The Stanford Square Borrower must cause all rents from
the Stanford Square Property to be deposited into a "rent account" within one
day of receipt. Unless and until an event of default occurs under the Stanford
Square Loan, the Stanford Square Borrower will have access to that rent account.
Appraised Value. The Stanford Square Loan has a Cut-off Date Loan-to-Value
Ratio of 60.0%, based on an appraised value of the Stanford Square Property of
$35,000,000 (as derived from an appraisal conducted August 17, 1999).
Underwritable Debt Service Coverage Ratio. The U/W DSCR of the Stanford
Square Loan is 1.57x, based on an annual debt service of approximately
$1,859,638 and an annual Underwritable Cash Flow of $2,913,281.
Additional Indebtedness Prohibited. The Stanford Square Borrower may not
encumber the Stanford Square Property with subordinate financing without the
consent of the holder of the Stanford Square Loan.
Transfer of Ownership Interests. In general, the Stanford Square Mortgage
prohibits the transfer of interests in the Stanford Square Property or ownership
interests in the Stanford Square Borrower without the consent of the holder of
the Stanford Square Loan, except in limited circumstances. However, the holder
of the Stanford Square Loan must consent to transfers of the Stanford Square
Property upon satisfaction of certain underwriting criteria, including:
o payment of a non-refundable assumption fee equal to 1% of the
outstanding principal balance of the Stanford Square Loan;
o execution of such documents and agreements as the Lender may
reasonably require to affirm the Stanford Square Borrower's
continued liability under the Stanford Square Loan documents; and
o if required under the Pooling and Servicing Agreement, confirmation
in writing from the Rating Agencies that the proposed transfer will
not result in a requalification, reduction, downgrade or withdrawal
of any of the ratings on the certificates.
Litigation. ARMAX, Inc., the builder/developer of the Stanford Square
Property, claims to have retained a "participatory interest" in the Stanford
Square Property equal to 15% of any proceeds of a future resale or refinancing
of the Stanford Square Property in excess of $21,500,000. The "participatory
interest" is secured by a deed of trust and is subordinated to the Stanford
Square Mortgage. ARMAX, Inc. and an assignee of the deed of trust have commenced
proceedings to enforce the terms of the deed of trust. The Stanford Square
Borrower has counterclaimed to extinguish the "participartory interest".
B-10
<PAGE>
Loan Number 5 - Woodscape Loan
General. The "Woodscape Loan" has a Cut-off Date Principal Balance of
$13,571,925, representing 1.8% of the Initial Pool Balance. Midland Loan
Services, Inc. originated the Woodscape Loan. The borrower under the Woodscape
Loan (the "Woodscape Borrower") is a limited liability company organized under
the laws of Oklahoma. The Woodscape Loan is secured by a mortgage (the
"Woodscape Mortgage") on the fee simple interest of the Woodscape Borrower in a
multifamily rental property (the "Woodscape Property") located in the northwest
quadrant of Oklahoma City, Oklahoma.
Certain Payment Terms. The Woodscape Loan is a balloon loan which matures
on September 1, 2009 and amortizes on a 30-year schedule. The Woodscape Loan
accrues interest at a fixed mortgage interest rate of 7.43% per annum on the
basis of the actual number of days elapsed each month in a year assumed to
consist of 360 days.
No voluntary prepayments are permitted until the scheduled date of the
60th scheduled payment under the Woodscape Loan. Thereafter, prior to June 1,
2009, 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 June 1, 2009.
Partial prepayments of the Woodscape Loan are not permitted except in connection
with a casualty or condemnation. No prepayment consideration is payable in
connection with the lender's application of insurance proceeds or condemnation
proceeds to pay down the principal balance of the Woodscape Loan.
The Woodscape Property. The Woodscape Property is a 498 unit multifamily
rental property contained in 22 buildings. It has the characteristics described
in the table below.
<TABLE>
<CAPTION>
Property Name City State No. of Yr. Built/ Occupancy at Most Recent Underwritable
Units Renovated Underwriting Appraised Cash Flow
Value
<S> <C> <C> <C> <C> <C> <C> <C>
Woodscape Oklahoma Oklahoma 498 1984 94% $17,500,000 $ 1,465,029
Apartments City
</TABLE>
Property Management. The Woodscape Property is subject to a management
agreement between the Woodscape Borrower and Case & Associates Properties, Inc.
(the "Woodscape Property Manager"), an affiliate of the Woodscape Borrower. The
holder of the Woodscape Loan may replace the Woodscape Property Manager only
upon the holder's acquiring title to the Woodscape Property by foreclosure or
otherwise.
Appraised Value. The Woodscape Loan has a Cut-off Date Loan-to-Value Ratio
of 77.6%, based on an appraised value of $17,500,000 (as derived from an
appraisal dated July 10, 1999).
Underwritable Debt Service Coverage Ratio. The U/W DSCR of the Woodscape
Loan is 1.29x, based on an aggregate annual debt service of approximately
$1,133,306 and an annual Underwritable Cash Flow of $1,465,029.
Additional Indebtedness Prohibited. The Woodscape Borrower may not
encumber the Woodscape Property with subordinate financing without the consent
of the holder of the Woodscape Loan.
Transfer of Ownership Interests. Except as described below, the holder of
the Woodscape Loan will have the option to declare the Woodscape Loan
immediately due and payable upon the transfer of the Woodscape Property or any
ownership interest in the Woodscape Borrower. The Woodscape Loan documents
contemplate a potential waiver of such prohibition by the holder if (i) the
holder has expressly approved the proposed transfer in writing, (ii) no event of
default then exists, (iii) the proposed transferee and the Woodscape Property
reasonably satisfy the holder's underwriting standards, and (iv) the holder
receives a 1% assumption fee and reimbursement for all of costs and expenses.
The Woodscape Loan documents allow transfers of membership interest in the
Woodscape 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.
B-11
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
EXHIBIT C
FORM OF TRUSTEE REPORT
C-1
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
[LOGO] Norwest Banks
PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-CM1
------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 816-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 01/10/2000
New York, NY 10004 Record Date: 12/31/1999
DISTRIBUTION DATE STATEMENT
Table of Contents
STATEMENT SECTIONS PAGE(s)
------------------ -------
Certificate Distribution Detail 2
Certificate Factor Detail 3
Reconciliation Detail 4
Other Required Information 5
Ratings Detail 6
Current Mortgage Loan and Property Stratification Tables 7 - 9
Mortgage Loan Detail 10
Principal Prepayment Detail 11
Historical Detail 12
Delinquency Loan Detail 13
Specially Serviced Loan Detail 14 - 15
Modified Loan Detail 16
Liquidated Loan Detail 17
<TABLE>
<CAPTION>
Underwriter Underwriter
----------- -----------
<S> <C>
Donaldson, Lufkin & Jenrette Prudential Securities Incorporated
Securities Corporation One New York Plaza
277 Park Avenue New York, NY 10292
New York, NY 10172
Contact: N. Dante LaRocca Contact: John Mulligan
Phone Number: (212) 892-3000 Phone Number: (212) 778-4365
Underwriter Master and Special Servicer
----------- ---------------------------
PNC Capital Markets Midland Loan Services, Inc.
One PNC Plaza, 26th Floor 210 West 10th Street
249 Fifth Avenue Kansas City, MO 64105
Pittsburgh, PA 15222-2707
Contact: Tim Martin Contact: Brad Hauger
Phone Number: (412) 762-4256 Phone Number: (816) 292-8629
</TABLE>
This report has been compiled from information provided to Norwest by various
third parties, which may include the Servicer, Master Servicer, Special Servicer
and others. Norwest has not independently confirmed the accuracy of information
received from these third parties and assumes no duty to do so. Norwest
expressly disclaims any responsibility for the accuracy or completeness of
information furnished by third parties.
Copyright 1997, Norwest Bank Minnesota, N.A. Page 1 of 17
<PAGE>
[LOGO] Norwest Banks
PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-CM1
------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 816-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 01/10/2000
New York, NY 10004 Record Date: 12/31/1999
Certificate Distribution Detail
<TABLE>
<CAPTION>
Realized Loss/
Pass-Through Original Beginning Principal Interest Prepayment Additional Trust
Class CUSIP Rate Balance Balance Distribution Distribution Penalties Fund Expenses
----- ----- --------- ------- ------- ------------ ------------ --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
A-1A 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
A-1B 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
A-2 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
A-3 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
A-4 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
B-1 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
B-2 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
B-3 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
B-4 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
B-5 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
B-6 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
B-7 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
B-8 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
C 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
D 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
E 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
R-I 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
R-II 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
R-III 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
====== ==== ==== ==== ==== ==== ====
Totals 0.00 0.00 0.00 0.00 0.00 0.00
<CAPTION>
Current
Total Ending Subordination
Class Distribution Balance Level (1)
----- ------------ ------- ---------
<S> <C> <C> <C>
A-1A 0.00 0.00 0.00%
A-1B 0.00 0.00 0.00%
A-2 0.00 0.00 0.00%
A-3 0.00 0.00 0.00%
A-4 0.00 0.00 0.00%
B-1 0.00 0.00 0.00%
B-2 0.00 0.00 0.00%
B-3 0.00 0.00 0.00%
B-4 0.00 0.00 0.00%
B-5 0.00 0.00 0.00%
B-6 0.00 0.00 0.00%
B-7 0.00 0.00 0.00%
B-8 0.00 0.00 0.00%
C 0.00 0.00 0.00%
D 0.00 0.00 0.00%
E 0.00 0.00 0.00%
R-I 0.00 0.00 0.00%
R-II 0.00 0.00 0.00%
R-III 0.00 0.00 0.00%
====== ==== ====
Totals 0.00 0.00
<CAPTION>
Original Beginning Ending
Pass-Through Notional Notional Interest Prepayment Total Notional
Class CUSIP Rate Amount Amount Distribution Penalties Distribution Amount
----- ----- --------- -------- -------- ------------ ---------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
S 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
</TABLE>
- - ----------
(1) Calculated by taking (A) the sum of the ending certificate balance of all
classes less (B) the sum of (i) the ending certificate balance of the
designated class and (ii) the ending certificate balance of all classes
which are not subordinate to the designated class and dividing the result
by (A).
Copyright 1997, Norwest Bank Minnesota, N.A. Page 2 of 17
<PAGE>
[LOGO] Norwest Banks
PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-CM1
------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 816-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 01/10/2000
New York, NY 10004 Record Date: 12/31/1999
Certificate Factor Detail
<TABLE>
<CAPTION>
Realized Loss/
Beginning Principal Interest Prepayment Additional Trust Ending
Class CUSIP Balance Distribution Distribution Penalties Fund Expenses Balance
----- ----- ------- ------------ ------------ --------- ------------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
A-1A 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
A-1B 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
A-2 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
A-3 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
A-4 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
B-1 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
B-2 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
B-3 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
B-4 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
B-5 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
B-6 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
B-7 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
B-8 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
C 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
D 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
E 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
R-I 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
R-II 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
R-III 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
<CAPTION>
Beginning Ending
Notional Interest Prepayment Notional
Class CUSIP Balance Distribution Penalties Amount
----- ----- ------- ------------ --------- ---------
<S> <C> <C> <C> <C> <C>
S 0.00000000 0.00000000 0.00000000 0.00000000
Copyright 1997, Norwest Bank Minnesota, N.A. Page 3 of 17
<PAGE>
[LOGO] Norwest Banks
PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-CM1
------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 816-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 01/10/2000
New York, NY 10004 Record Date: 12/31/1999
Reconciliation Detail
</TABLE>
<TABLE>
<CAPTION>
Advance Summary Master Servicing Fee Summary
<S> <C> <C> <C>
P & I Advances Outstanding 0.00 Current Period Accrued Master Servicing Fees 0.00
Servicing Advances Outstanding 0.00 Less Master Servicing Fees on Delinquent Payments 0.00
Reimbursement for Interest on P & I Advances 0.00 Less Reductions to Master Servicing Fees 0.00
paid from general collections Plus Master Servicing Fees for Delinquent Payments Received 0.00
Reimbursement for Interest on Servicing 0.00 Plus Adjustments for Prior Master Servicing Calculation 0.00
Advances paid from general collections 0.00 Total Master Servicing Fees Collected 0.00
<CAPTION>
Certificate Interest Reconciliation
- -------------------------------------
Remaining
Net Aggregate Distributable Unpaid
Accrued Prepayment Distributable Certificate Additional Distributable
Certificate Interest Certificate Interest Trust Fund Interest Certificate
Class Interest Shortfall Interest Adjustment Expenses Distribution Interest
- ----- ----------- -------- ----------- ---------- -------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
S 0.00 0.00 0.00 0.00 0.00 0.00 0.00
A-1A 0.00 0.00 0.00 0.00 0.00 0.00 0.00
A-1B 0.00 0.00 0.00 0.00 0.00 0.00 0.00
A-2 0.00 0.00 0.00 0.00 0.00 0.00 0.00
A-3 0.00 0.00 0.00 0.00 0.00 0.00 0.00
A-4 0.00 0.00 0.00 0.00 0.00 0.00 0.00
B-1 0.00 0.00 0.00 0.00 0.00 0.00 0.00
B-2 0.00 0.00 0.00 0.00 0.00 0.00 0.00
B-3 0.00 0.00 0.00 0.00 0.00 0.00 0.00
B-4 0.00 0.00 0.00 0.00 0.00 0.00 0.00
B-5 0.00 0.00 0.00 0.00 0.00 0.00 0.00
B-6 0.00 0.00 0.00 0.00 0.00 0.00 0.00
B-7 0.00 0.00 0.00 0.00 0.00 0.00 0.00
B-8 0.00 0.00 0.00 0.00 0.00 0.00 0.00
C 0.00 0.00 0.00 0.00 0.00 0.00 0.00
D 0.00 0.00 0.00 0.00 0.00 0.00 0.00
E 0.00 0.00 0.00 0.00 0.00 0.00 0.00
- ----- ---- ---- ---- ---- ---- ---- ----
Total 0.00 0.00 0.00 0.00 0.00 0.00 0.00
</TABLE>
Copyright 1997, Norwest Bank Minnesota, N.A. Page 4 of 17
<PAGE>
[LOGO] Norwest Banks
PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-CM1
------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 816-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 01/10/2000
New York, NY 10004 Record Date: 12/31/1999
Other Required Information
--------------------------
Available Distribution Amount 0.00
Aggregate Number of Outstanding Loans 0.00
Aggregate Unpaid Principal Balance of Loans 0.00
Aggregate Stated Principal Balance of Loans 0.00
Aggregate Amount of Servicing Fee 0.00
Aggregate Amount of Special Servicing Fee 0.00
Aggregate Amount of Trustee Fee 0.00
Aggregate Stand-by Fee 0.00
Aggregate Trust Fund Expenses 0.00
Specially Serviced Loans not Delinquent
Number of Outstanding Loans 0
Aggregate Unpaid Principal Balance 0.00
Appraisal Reduction Amount
--------------------------
Appraisal Date Appraisal
Loan Reduction Reduction
Number Effected Effected
------ --------- --------
None
-----
Total
Copyright 1997, Norwest Bank Minnesota, N.A. Page 5 of 17
<PAGE>
[LOGO] Norwest Banks
PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-CM1
------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 816-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 01/10/2000
New York, NY 10004 Record Date: 12/31/1999
Ratings Detail
<TABLE>
<CAPTION>
Original Ratings Current Ratings (1)
----------------------------------- ---------------------------------
Class CUSIP DCR Fitch Moody's S & P DCR Fitch Moody's S & P
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
S
A-1A
A-1B
A-2
A-3
A-4
B-1
B-2
B-3
B-4
B-5
B-6
B-7
B-8
C
D
E
</TABLE>
NR - Designates that the class was not rated by the above agency at the time
of original issuance.
X - Designates that the above rating agency did not rate any classes in
this transaction at the time of original issuance.
N/A - Data not available this period.
1) For any class not rated at the time of original issuance by any particular
rating agency, no request has been made subsequent to issuance to obtain
rating information, if any, from such rating agency. The current ratings
were obtained directly from the applicable rating agency within 30 days of
the payment date listed above. The ratings may have changed since they were
obtained. Because the ratings may have changed, you may want to obtain
current ratings directly from the rating agencies.
<TABLE>
<S> <C> <C> <C>
Duff & Phelps Credit Rating Co. Fitch IBCA, Inc. Moody's Investors Service Standard & Poor's Rating Services
55 East Monroe Street One State Street Plaza 99 Church Street 26 Broadway
Chicago, Illinois 60603 New York, New York 10004 New York, New York 10007 New York, New York 10004
(312) 368-3100 (212) 908-0500 (212) 553-0300 (212) 208-8000
</TABLE>
Copyright 1997, Norwest Bank Minnesota, N.A. Page 6 of 17
<PAGE>
[LOGO] Norwest Banks
PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-CM1
------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 816-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 01/10/2000
New York, NY 10004 Record Date: 12/31/1999
Current Mortgage Loan and Property Stratification Tables
Scheduled Balance
-----------------
% of
Scheduled # of Scheduled Agg. WAM Weighted
Balance Loans Balance Bal. (2) WAC Avg DSCR(1)
------- ----- ------- ----- --- --- -----------
======
Totals
State (3)
---------
% of
# of Scheduled Agg. WAM Weighted
State Props. Balance Bal. (2) WAC Avg DSCR (1)
----- ------ ------- ----- --- --- ------------
======
Totals
See footnotes on last page of this section.
Copyright 1997, Norwest Bank Minnesota, N.A. Page 7 of 17
<PAGE>
[LOGO] Norwest Banks
PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-CM1
------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 816-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 01/10/2000
New York, NY 10004 Record Date: 12/31/1999
Current Mortgage Loan and Property Stratification Tables
Debt Service Coverage Ratio
---------------------------
% of
Debt Service # of Scheduled Agg. WAM Weighted
Coverage Ratio Loans Balance Bal. (2) WAC Avg DSCR (1)
- --------------- ----- ------- ----- --- --- -----------
======
Totals
Property Type (3)
-----------------
% of
Property # of Scheduled Agg. WAM Weighted
Type Props. Balance Bal. (2) WAC Avg DSCR (1)
---- ------ ------- ----- --- --- ------------
======
Totals
Note Rate
---------
% of
Note # of Scheduled Agg. WAM Weighted
Rate Loans Balance Bal. (2) WAC Avg DSCR (1)
---- ----- ------- ----- --- --- -----------
======
Totals
Seasoning
---------
% of
# of Scheduled Agg. WAM Weighted
Seasoning Loans Balance Bal. (2) WAC Avg DSCR (1)
- ---------- ------ -------- ----- --- --- ------------
======
Totals
See footnotes on last page of this section.
Copyright 1997, Norwest Bank Minnesota, N.A. Page 8 of 17
<PAGE>
[LOGO] Norwest Banks
PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-CM1
------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 816-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 01/10/2000
New York, NY 10004 Record Date: 12/31/1999
Current Mortgage Loan and Property Stratification Tables
Anticipated Remaining Term (ARD and Balloon Loans)
--------------------------------------------------
Anticipated % of
Remaining # of Scheduled Agg. WAM Weighted
Term (2) Loans Balance Bal. (2) WAC Avg DSCR(1)
- ------------ ----- ------- ----- --- --- -----------
======
Totals
Remaining Stated Term (Fully Amortizing Loans)
----------------------------------------------
Remaining % of
Stated # of Scheduled Agg. WAM Weighted
Term Loans Balance Bal. (2) WAC Avg DSCR (1)
---- ------ -------- ----- --- --- ------------
======
Totals
Remaining Amortization Term (ARD and Balloon Loans)
---------------------------------------------------
Remaining % of
Amortization # of Scheduled Agg. WAM Weighted
Term Loans Balance Bal. (2) WAC Avg DSCR(1)
---- ----- ------- ----- --- --- -----------
======
Totals
Age of Most Recent NOI
----------------------
% of
Age of Most # of Scheduled Agg. WAM Weighted
Recent NOI Loans Balance Bal. (2) WAC Avg DSCR (1)
- ---------- ------ ------- ----- --- --- ------------
======
Totals
- - ----------
(1) Debt Service Coverage Ratios are updated periodically as new NOI figures
become available from borrowers on an asset level. In all cases the most
current DSCR provided by the Servicer is used. To the extent that no DSCR
is provided by the Servicer, information from the offering document is
used. The Trustee makes no representations as to the accuracy of the data
provided by the borrower for this calculation.
(2) Anticipated Remaining Term and WAM are each calculated based upon the term
from the current month to the earlier of the Anticipated Repayment Date,
if applicable, and the maturity date.
(3) Data in this table was calculated by allocating pro-rata the current loan
information to the properties based upon the Cut-off Date Balance of the
related mortgage loan as disclosed in the offering document.
Note: (i) "Scheduled Balance" has the meaning assigned thereto in the CMSA
Standard Information Package.
Copyright 1997, Norwest Bank Minnesota, N.A. Page 9 of 17
<PAGE>
[LOGO] Norwest Banks
PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-CM1
------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 816-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 01/10/2000
New York, NY 10004 Record Date: 12/31/1999
Mortgage Loan Detail
--------------------
<TABLE>
<CAPTION>
Anticipated Neg. Beginning Ending
Loan Property Interest Principal Gross Repayment Maturity Amort Scheduled Scheduled
Number ODCR Type (1) City State Payment Payment Coupon Date Date (Y/N) Balance Balance
- ------ ---- -------- ---- ----- ------- ------- ------ ---- ---- ----- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
======
Totals
<CAPTION>
Paid Appraisal Appraisal Res. Mod.
Loan Thru Reduction Reduction Strat. Code
Number Date Date Amount (2) (3)
- ------ ---- ---- ------ --- ---
<S> <C> <C> <C> <C> <C>
======
Totals
<CAPTION>
(1) Property Type Code (2) Resolution Strategy Code
---------------------- ----------------------------
<S> <C> <C> <C> <C>
MF - Multi-Family OF - Office 1 - Modification 6 - DPO 10 - Deed In Lieu Of
RT - Retail MU - Mixed Use 2 - Foreclosure 7 - REO Foreclosure
HC - Health Care LO - Lodging 3 - Bankruptcy 8 - Resolved 11 - Full Payoff
IN - Industrial SS - Self Storage 4 - Extension 9 - Pending Return 12 - Reps and Warranties
WH - Warehouse OT - Other 5 - Note Sale to Master Servicer 13 - Other or TBD
MH - Mobile Home Park
</TABLE>
(3) Modification Code
---------------------
1 - Maturity Date Extension
2 - Amortization Change
3 - Principal Write-Off
4 - Combination
Copyright 1997, Norwest Bank Minnesota, N.A. Page 10 of 17
<PAGE>
[LOGO] Norwest Banks
PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-CM1
------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 816-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 01/10/2000
New York, NY 10004 Record Date: 12/31/1999
Principal Prepayment Detail
<TABLE>
<CAPTION>
Principal Prepayment Amount Prepayment Penalties
Offering Document ------------------------------------ ----------------------------------------------
Loan Number Cross-Reference Payoff Amount Curtailment Amount Prepayment Premium Yield Maintenance Premium
----------- --------------- ------------- ------------------ ------------------ -------------------------
<S> <C> <C> <C> <C> <C>
Totals
======
</TABLE>
Copyright 1997, Norwest Bank Minnesota, N.A. Page 11 of 17
<PAGE>
[LOGO] Norwest Banks
PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-CM1
------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 816-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 01/10/2000
New York, NY 10004 Record Date: 12/31/1999
Historical Detail
<TABLE>
<CAPTION>
Delinquencies Prepayments
---------------------------------------------------------------------------------------------------- -------------------------
Distribution 30-59 Days 60-89 Days 90 Days or More Foreclosure REO Modifications Curtailments Payoff
Date # Balance # Balance # Balance # Balance # Balance # Balance # Amount # Amount
---- ---------- ---------- ------------- ----------- ----------- ------------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
<CAPTION>
Rate and Maturities
---------------------------------------
Distribution Next Weighted Avg.
Date Coupon Remit WAM
---- ------ ----- ---
<S> <C> <C> <C>
</TABLE>
Note: Foreclosure and REO Totals are excluded from the delinquencies aging
categories.
Copyright 1997, Norwest Bank Minnesota, N.A. Page 12 of 17
<PAGE>
[LOGO] Norwest Banks
PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-CM1
------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 816-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 01/10/2000
New York, NY 10004 Record Date: 12/31/1999
Delinquency Loan Detail
<TABLE>
<CAPTION>
Offering # of Current Outstanding Status of Resolution
Document Months Paid Through P & I P & I Mortgage Strategy Servicing
Loan Number Cross-Reference Delinq. Date Advances Advances(**) Loan (1) Code (2) Transfer Date
- ----------- --------------- ------- ---- -------- ------------ -------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Totals
======
<CAPTION>
Current Outstanding
Foreclosure Servicing Servicing REO
Loan Number Date Advances Advances Bankruptcy Date Date
- ----------- ----------- --------- ---------- --------------- ----
<S> <C> <C> <C> <C> <C>
Totals
======
</TABLE>
(1) Status of Mortgage Loan
---------------------------
1 - Modification 6 - DPO 10 - Deed In Lieu Of
2 - Foreclosure 7 - REO Foreclosure
3 - Bankruptcy 8 - Resolved 11 - Full Payoff
4 - Extension 9 - Pending Return 12 - Reps and Warranties
5 - Note Sale to Master Servicer 13 - Other or TBD
(2) Resolution Strategy Code
----------------------------
1 - Modification 7 - REO
2 - Foreclosure 8 - Resolved
3 - Bankruptcy 9 - Pending Return
4 - Extension to Master Servicer
5 - Note Sale 10 - Deed In Lieu Of
6 - DPO Foreclosure
(**) Outstanding P & I Advances include the current period advance
Copyright 1997, Norwest Bank Minnesota, N.A. Page 13 of 17
<PAGE>
[LOGO] Norwest Banks
PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-CM1
------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 816-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 01/10/2000
New York, NY 10004 Record Date: 12/31/1999
Specially Serviced Loan Detail - Part 1
<TABLE>
<CAPTION>
Offering Servicing Resolution
Distribution Loan Document Transfer Strategy Scheduled Property Interest Actual
Date Number Cross-Reference Date Code (1) Balance Type (2) State Rate Balance
- ------------ ------ --------------- -------- ---------- --------- -------- ----- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
<CAPTION>
Net Remaining
Distribution Operating NOI Note Maturity Amortization
Date Income Date DSCR Date Date Term
- ------------ -------- ---- ---- ---- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
(1) Resolution Strategy Code
----------------------------
1 - Modification 7 - REO
2 - Foreclosure 8 - Resolved
3 - Bankruptcy 9 - Pending Return
4 - Extension to Master Servicer
5 - Note Sale 10 - Deed In Lieu Of
6 - DPO Foreclosure
(2) Property Type Code
----------------------
MF - Multi-Family OF - Office
RT - Retail MU - Mixed Use
HC - Health Care LO - Lodging
IN - Industrial SS - Self Storage
WH - Warehouse OT - Other
MH - Mobile Home Park
Copyright 1997, Norwest Bank Minnesota, N.A. Page 14 of 17
<PAGE>
[LOGO] Norwest Banks
PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-CM1
------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 816-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 01/10/2000
New York, NY 10004 Record Date: 12/31/1999
Specially Serviced Loan Detail - Part 2
<TABLE>
<CAPTION>
Offering Resolution Site
Distribution Loan Document Strategy Inspection Appraisal Appraisal Other REO
Date Number Cross-Reference Code (1) Date Phase 1 Date Date Value Property Revenue Comment
- ------------ ------ --------------- -------- ---------- ------------ -------- -------- ---------------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
(1) Resolution Strategy Code
----------------------------
1 - Modification 6 - DPO 10 - Deed In Lieu Of
2 - Foreclosure 7 - REO Foreclosure
3 - Bankruptcy 8 - Resolved 11 - Full Payoff
4 - Extension 9 - Pending Return 12 - Reps and Warranties
5 - Note Sale to Master Servicer 13 - Other or TBD
Copyright 1997, Norwest Bank Minnesota, N.A. Page 15 of 17
<PAGE>
[LOGO] Norwest Banks
PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-CM1
------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 816-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 01/10/2000
New York, NY 10004 Record Date: 12/31/1999
Modified Loan Detail
<TABLE>
<CAPTION>
Offering
Loan Document Pre-Modification
Number Cross-Reference Balance Modification Date Modification Description
- ------ --------------- ---------------- ----------------- ------------------------
<S> <C> <C> <C> <C>
Total
=====
</TABLE>
Copyright 1997, Norwest Bank Minnesota, N.A. Page 16 of 17
<PAGE>
[LOGO] Norwest Banks
PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-CM1
------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 816-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 01/10/2000
New York, NY 10004 Record Date: 12/31/1999
Liquidated Loan Detail
<TABLE>
<CAPTION>
Final Recovery Offering Gross Proceeds
Loan Determination Document Appraisal Appraisal Actual Gross as a % of
Number Date Cross-Reference Date Value Balance Proceeds Actual Balance
- ---------------- -------------- --------------- --------- --------- ------- -------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
<CAPTION>
Aggregate Net Net Proceeds Repurchased
Loan Liquidation Liquidation as a % of Realized by Seller
Number Expenses (*) Proceeds Actual Balance Loss (Y/N)
- ---------------- ------------ ----------- -------------- -------- -----------
<S> <C> <C> <C> <C> <C>
Current Total
Cumulative Total
- - ----------
(*) Aggregate liquidation expenses also include outstanding P & I advances and
unpaid fees (servicing, trustee, etc.).
Copyright 1997, Norwest Bank Minnesota, N.A. Page 17 of 17
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
EXHIBIT D
DECREMENT TABLES FOR THE CLASS A-1A, CLASS A-1B, CLASS A-2, CLASS A-3,
CLASS A-4, CLASS B-1 AND CLASS B-2 CERTIFICATES
Percentage of Initial Principal Balance
of the Class A-1A Certificates
at the Specified CPRs
Prepayment Assumption (CPR)
Distribution Date 0% 25% 50% 75% 100%
--- --- --- --- ----
Closing Date ................ 100% 100% 100% 100% 100%
December, 2000 .............. 95 95 95 95 95
December, 2001 .............. 89 89 89 89 89
December, 2002 .............. 82 82 82 82 81
December, 2003 .............. 73 73 73 73 73
December, 2004 .............. 63 63 63 63 63
December, 2005 .............. 55 55 55 55 55
December, 2006 .............. 34 34 34 34 34
December, 2007 .............. 25 24 22 21 9
December, 2008 .............. 0 0 0 0 0
December, 2009 .............. 0 0 0 0 0
December, 2010 .............. 0 0 0 0 0
December, 2011 .............. 0 0 0 0 0
December, 2012 .............. 0 0 0 0 0
December, 2013 .............. 0 0 0 0 0
December, 2014 .............. 0 0 0 0 0
December, 2015 .............. 0 0 0 0 0
December, 2016 .............. 0 0 0 0 0
December, 2017 .............. 0 0 0 0 0
December, 2018 .............. 0 0 0 0 0
December, 2019 and thereafter 0 0 0 0 0
----------------------------------------------
Weighted average life (years) 5.7 5.7 5.7 5.6 5.5
D-1
<PAGE>
Percentage of Initial Principal Balance
of the Class A-1B Certificates
at the Specified CPRs
Prepayment Assumption (CPR)
Distribution Date 0% 25% 50% 75% 100%
--- --- --- --- ----
Closing Date ................ 100% 100% 100% 100% 100%
December, 2000 .............. 100 100 100 100 100
December, 2001 .............. 100 100 100 100 100
December, 2002 .............. 100 100 100 100 100
December, 2003 .............. 100 100 100 100 100
December, 2004 .............. 100 100 100 100 100
December, 2005 .............. 100 100 100 100 100
December, 2006 .............. 100 100 100 100 100
December, 2007 .............. 100 100 100 100 100
December, 2008 .............. 83 83 83 83 81
December, 2009 .............. 0 0 0 0 0
December, 2010 .............. 0 0 0 0 0
December, 2011 .............. 0 0 0 0 0
December, 2012 .............. 0 0 0 0 0
December 2013 ............... 0 0 0 0 0
December, 2014 .............. 0 0 0 0 0
December, 2015 .............. 0 0 0 0 0
December, 2016 .............. 0 0 0 0 0
December, 2017 .............. 0 0 0 0 0
December, 2018 .............. 0 0 0 0 0
December, 2019 and thereafter 0 0 0 0 0
----------------------------------------------
Weighted average life (years) 9.6 9.5 9.5 9.4 9.2
D-2
<PAGE>
Percentage of Initial Principal Balance
of the Class A-2 Certificates
at the Specified CPRs
Prepayment Assumption (CPR)
Distribution Date 0% 25% 50% 75% 100%
--- --- --- --- ----
Closing Date ................ 100% 100% 100% 100% 100%
December, 2000 .............. 100 100 100 100 100
December, 2001 .............. 100 100 100 100 100
December, 2002 .............. 100 100 100 100 100
December, 2003 .............. 100 100 100 100 100
December, 2004 .............. 100 100 100 100 100
December, 2005 .............. 100 100 100 100 100
December, 2006 .............. 100 100 100 100 100
December, 2007 .............. 100 100 100 100 100
December, 2008 .............. 100 100 100 100 100
December, 2009 .............. 0 0 0 0 0
December, 2010 .............. 0 0 0 0 0
December, 2011 .............. 0 0 0 0 0
December, 2012 .............. 0 0 0 0 0
December, 2013 .............. 0 0 0 0 0
December, 2014 .............. 0 0 0 0 0
December, 2015 .............. 0 0 0 0 0
December, 2016 .............. 0 0 0 0 0
December, 2017 .............. 0 0 0 0 0
December, 2018 .............. 0 0 0 0 0
December, 2019 and thereafter 0 0 0 0 0
----------------------------------------------
Weighted average life (years) 9.9 9.8 9.8 9.8 9.5
D-3
<PAGE>
Percentage of Initial Principal Balance
of the Class A-3 Certificates
at the Specified CPRs
Prepayment Assumption (CPR)
Distribution Date 0% 25% 50% 75% 100%
--- --- --- --- ----
Closing Date ................ 100% 100% 100% 100% 100%
December, 2000 .............. 100 100 100 100 100
December, 2001 .............. 100 100 100 100 100
December, 2002 .............. 100 100 100 100 100
December, 2003 .............. 100 100 100 100 100
December, 2004 .............. 100 100 100 100 100
December, 2005 .............. 100 100 100 100 100
December, 2006 .............. 100 100 100 100 100
December, 2007 .............. 100 100 100 100 100
December, 2008 .............. 100 100 100 100 100
December, 2009 .............. 0 0 0 0 0
December, 2010 .............. 0 0 0 0 0
December, 2011 .............. 0 0 0 0 0
December, 2012 .............. 0 0 0 0 0
December, 2013 .............. 0 0 0 0 0
December, 2014 .............. 0 0 0 0 0
December, 2015 .............. 0 0 0 0 0
December, 2016 .............. 0 0 0 0 0
December, 2017 .............. 0 0 0 0 0
December, 2018 .............. 0 0 0 0 0
December, 2019 and thereafter 0 0 0 0 0
----------------------------------------------
Weighted average life (years) 9.9 9.9 9.9 9.8 9.5
D-4
<PAGE>
Percentage of Initial Principal
Balance of the Class A-4 Certificates
at the Specified CPRs
Prepayment Assumption (CPR)
Distribution Date 0% 25% 50% 75% 100%
--- --- --- --- ----
Closing Date ................ 100% 100% 100% 100% 100%
December, 2000 .............. 100 100 100 100 100
December, 2001 .............. 100 100 100 100 100
December, 2002 .............. 100 100 100 100 100
December, 2003 .............. 100 100 100 100 100
December, 2004 .............. 100 100 100 100 100
December, 2005 .............. 100 100 100 100 100
December, 2006 .............. 100 100 100 100 100
December, 2007 .............. 100 100 100 100 100
December, 2008 .............. 100 100 100 100 100
December, 2009 .............. 0 0 0 0 0
December, 2010 .............. 0 0 0 0 0
December, 2011 .............. 0 0 0 0 0
December, 2012 .............. 0 0 0 0 0
December, 2013 .............. 0 0 0 0 0
December, 2014 .............. 0 0 0 0 0
December, 2015 .............. 0 0 0 0 0
December, 2016 .............. 0 0 0 0 0
December, 2017 .............. 0 0 0 0 0
December, 2018 .............. 0 0 0 0 0
December, 2019 and thereafter 0 0 0 0 0
----------------------------------------------
Weighted average life (years) 9.9 9.9 9.9 9.8 9.5
D-5
<PAGE>
Percentage of Initial Principal Balance
of the Class B-1 Certificates
at the Specified CPRs
Prepayment Assumption (CPR)
Distribution Date 0% 25% 50% 75% 100%
--- --- --- --- ----
Closing Date ................ 100% 100% 100% 100% 100%
December, 2000 .............. 100 100 100 100 100
December, 2001 .............. 100 100 100 100 100
December, 2002 .............. 100 100 100 100 100
December, 2003 .............. 100 100 100 100 100
December, 2004 .............. 100 100 100 100 100
December, 2005 .............. 100 100 100 100 100
December, 2006 .............. 100 100 100 100 100
December, 2007 .............. 100 100 100 100 100
December, 2008 .............. 100 100 100 100 100
December, 2009 .............. 0 0 0 0 0
December, 2010 .............. 0 0 0 0 0
December, 2011 .............. 0 0 0 0 0
December, 2012 .............. 0 0 0 0 0
December, 2013 .............. 0 0 0 0 0
December, 2014 .............. 0 0 0 0 0
December, 2015 .............. 0 0 0 0 0
December, 2016 .............. 0 0 0 0 0
December, 2017 .............. 0 0 0 0 0
December, 2018 .............. 0 0 0 0 0
December, 2019 and thereafter 0 0 0 0 0
----------------------------------------------
Weighted average life (years) 9.9 9.9 9.9 9.9 9.5
D-6
<PAGE>
Percentage of Initial Principal Balance
of the Class B-2 Certificates
at the Specified CPRs
Prepayment Assumption (CPR)
Distribution Date 0% 25% 50% 75% 100%
--- --- --- --- ----
Closing Date ................ 100% 100% 100% 100% 100%
December, 2000 .............. 100 100 100 100 100
December, 2001 .............. 100 100 100 100 100
December, 2002 .............. 100 100 100 100 100
December, 2003 .............. 100 100 100 100 100
December, 2004 .............. 100 100 100 100 100
December, 2005 .............. 100 100 100 100 100
December, 2006 .............. 100 100 100 100 100
December, 2007 .............. 100 100 100 100 100
December, 2008 .............. 100 100 100 100 100
December, 2009 .............. 0 0 0 0 0
December, 2010 .............. 0 0 0 0 0
December, 2011 .............. 0 0 0 0 0
December, 2012 .............. 0 0 0 0 0
December, 2013 .............. 0 0 0 0 0
December, 2014 .............. 0 0 0 0 0
December, 2015 .............. 0 0 0 0 0
December, 2016 .............. 0 0 0 0 0
December, 2017 .............. 0 0 0 0 0
December, 2018 .............. 0 0 0 0 0
December, 2019 and thereafter 0 0 0 0 0
----------------------------------------------
Weighted average life (years) 9.9 9.9 9.9 9.9 9.5
D-7
<PAGE>
EXHIBIT E
PRICE/YIELD TABLES FOR THE CLASS S CERTIFICATES
Corporate Bond Equivalent (CBE) Yield of the Class S Certificates
at Various CPRs 0.8340% Initial Pass-Through Rate
$760,414,266 Initial Aggregate Notional Amount
</TABLE>
<TABLE>
<CAPTION>
Price (32nds)* 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ---------------------------------------------------------------------------------------------------
CBE Yield % CBE Yield % CBE Yield % CBE Yield % CBE Yield %
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
4-00 10.53% 10.49% 10.44% 10.38% 9.98%
4-01 10.33 10.29 10.24 10.18 9.78
4-02 10.13 10.09 10.04 9.98 9.57
4-03 9.93 9.89 9.85 9.78 9.37
4-04 9.74 9.70 9.65 9.58 9.17
4-05 9.55 9.51 9.46 9.39 8.98
4-06 9.36 9.32 9.27 9.20 8.79
</TABLE>
* Exclusive of accrued interest.
E-1
<PAGE>
EXHIBIT F
SUMMARY TERM SHEET
F-1
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
F-2
<PAGE>
PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates,
Series 1999-CM1
$678,669,000
(Approximate)
Offered Certificates
[GRAPHIC OMITTED] [GRAPHIC OMITTED]
MIDLAND A DONALDSON, LUFKIN & JENRETTE COMPANY
LOAN SERVICES, INC.
Donaldson, Lufkin & Jenrette
PNC Capital Markets
Prudential Securities
This investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc. and Prudential Securities Incorporated
personnel to assist them in determining whether potential investors wish to
proceed with an in-depth investigation of the proposed offering. While the
information contained herein is from sources believed to be reliable, it has not
been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc., Prudential Securities Incorporated, or
any of their respective affiliates, and such entities make no representations or
warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in information and is
subject to modification or withdrawal at any time with or without notice. The
contents hereof are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated. The information contained herein
supersedes any and all information contained in any previously furnished
summaries or term sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements. Each of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated expressly reserves the right, at its sole
discretion, to reject any or all proposals or expressions of interest in the
subject proposed offering and to terminate discussions with any party at any
time with or without notice.
<PAGE>
PNCMAC Series 1999-CM1 November 19, 1999
Collateral and Structural Term Sheet
Transaction Offering:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
Percentage
Initial of Initial Pass-
Aggregate Mortgage Initial Through
Principal Pool Credit Pass-Through Rate
Class Ratings(1) Balance Balance Support Rate Description
- ----- ---------- ------- ------- ------- ---- -----------
<S> <C> <C> <C> <C> <C> <C>
Publicly Offered Certificates:
S AAAr/AAA $760,414,266(2) -- -- -- --
A-1A AAA/AAA 123,351,000 16.22% 26.75% -- --
A-1B AAA/AAA 433,652,000 57.03% 26.75% -- --
A-2 AA/AA 39,922,000 5.25% 21.50% -- --
A-3 A/A 34,218,000 4.50% 17.00% -- --
A-4 A-/A- 13,308,000 1.75% 15.25% -- --
B-1 BBB/BBB 24,713,000 3.25% 12.00% -- --
B-2 BBB-/BBB- 9,505,000 1.25% 10.75% -- --
Privately Offered Certificates(5):
B-3 -- -- -- -- -- --
B-4 -- -- -- -- -- --
B-5 -- -- -- -- -- --
B-6 -- -- -- -- -- --
B-7 -- -- -- -- -- --
B-8 -- -- -- -- -- --
C -- -- -- -- -- --
D -- -- -- -- -- --
- --------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------------
Wtd.
Avg. Principal Legal
Class Life(3) Maturity(3) Window(3) Status SMMEA/ERISA(4)
- ----- ------- ----------- --------- ------ --------------
<S> <C> <C> <C> <C> <C>
Publicly Offered Certificates:
S 9.1 1/20 -- Public Yes/Yes
A-1A 5.7 7/08 1/00-7/08 Public Yes/Yes
A-1B 9.6 10/09 7/08-10/09 Public Yes/Yes
A-2 9.9 11/09 10/09-11/09 Public Yes/No
A-3 9.9 11/09 11/09-11/09 Public No/No
A-4 9.9 11/09 11/09-11/09 Public No/No
B-1 9.9 11/09 11/09-11/09 Public No/No
B-2 9.9 11/09 11/09-11/09 Public No/No
Privately Offered Certificates(5):
B-3 -- -- -- Private-144A --
B-4 -- -- -- Private-144A --
B-5 -- -- -- Private-144A --
B-6 -- -- -- Private-144A --
B-7 -- -- -- Private-144A --
B-8 -- -- -- Private-144A --
C -- -- -- Private-144A --
D -- -- -- Private-144A --
- --------------------------------------------------------------------------------------------
</TABLE>
(1) Standard & Poor's Ratings Services/Fitch IBCA, Inc.
(2) Notional amount. The Class S certificates will be interest only and will
not entitle their holders to distributions of principal.
(3) Assumes 0% CPR, no defaults, no extensions and each mortgage loan with an
anticipated repayment date pays in full on that date. Otherwise based on
"maturity assumptions" set forth under "Yield and Maturity Considerations"
in the Prospectus Supplement.
(4) Expected to be eligible for each of the underwriters' individual
prohibited transaction exemptions under ERISA.
(5) This term sheet was prepared solely in connection with a proposed offering
of the publicly offered certificates.
- --------------------------------------------------------------------------------
Originator Profile:
The mortgage loans were originated or acquired primarily by (i) Midland Loan
Services, Inc. ("Midland") and (ii) Column Financial, Inc. ("Column").
Approximately 55.6 % of the mortgage loans by balance are being contributed by
Midland and 44.4% are being contributed by Column. All of the mortgage loans
were originated either in 1998 or 1999.
Midland, organized in 1992 and acquired by PNC Bank in 1998, has originated over
1,200 loans totaling $3.79 billion since its inception. Midland is a vertically
integrated real estate financial services firm specializing in the origination,
securitization and servicing of commercial real estate assets.
Column, an indirect wholly owned subsidiary of Donaldson, Lufkin & Jenrette,
Inc., was established in August 1993. Column has originated over 1,900
commercial mortgage loans totaling $8.0 billion since its inception. Column
sources, underwrites and closes various mortgage loan products through 17
production offices located throughout the country.
- --------------------------------------------------------------------------------
This investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc. and Prudential Securities Incorporated
personnel to assist them in determining whether potential investors wish to
proceed with an in-depth investigation of the proposed offering. While the
information contained herein is from sources believed to be reliable, it has not
been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc., Prudential Securities Incorporated, or
any of their respective affiliates, and such entities make no representations or
warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in information and is
subject to modification or withdrawal at any time with or without notice. The
contents hereof are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated. The information contained herein
supersedes any and all information contained in any previously furnished
summaries or term sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements. Each of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated expressly reserves the right, at its sole
discretion, to reject any or all proposals or expressions of interest in the
subject proposed offering and to terminate discussions with any party at any
time with or without notice.
Page 2
<PAGE>
PNCMAC Series 1999-CM1 November 19, 1999
Collateral and Structural Term Sheet
Collateral Overview:
o Total Cut-off Date
Principal Balance: $760,414,266
o Avg. Cut-off Date
Principal Balance: $3,673,499
o Loans/Properties: 207 Loans/212 Properties
o Property Type: Multifamily (38.9%), Retail (26.5%),
Office (17.7%), Other (16.9%)
o Geographic Distribution: 35 States. CA (15.0%), TX (11.6%), NY
(9.3%), Other (64.1%)
o Amortization Types: Balloon (89.7%), Hyper-Amortizing
(9.3%), Fully Amortizing (1.0%)
o Wtd. Avg. U/W
DSCR (1): 1.32x
o Wtd. Avg. Cut-off Date
LTV Ratio (1): 72.6%
o Appraisals: 100% of the appraisals state that they
follow the guidelines set forth in
Title XI of FIRREA.
o Largest Loan: 5.9%
o Five Largest Loans: 19.6%
o Ten Largest Loans: 27.3%
o Wtd. Avg. Remaining
Term to Maturity: 116 months
o Wtd. Avg. Seasoning: 5 months
o Gross WAC: 7.982%
o Call Protection: In general, the Mortgage Loans provide
for a prepayment lockout period
("Lockout"), a defeasance period
("Defeasance"), a yield maintenance
premium ("YMP") period, or a
combination thereof. The remaining
weighted average lockout and
defeasance period for all loans is 7.9
years.
o Defeasance: 75.0%
o Credit Tenant Lease: 0.3%
(1) Excluding the CTL Loan.
This investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc. and Prudential Securities Incorporated
personnel to assist them in determining whether potential investors wish to
proceed with an in-depth investigation of the proposed offering. While the
information contained herein is from sources believed to be reliable, it has not
been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc., Prudential Securities Incorporated, or
any of their respective affiliates, and such entities make no representations or
warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in information and is
subject to modification or withdrawal at any time with or without notice. The
contents hereof are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated. The information contained herein
supersedes any and all information contained in any previously furnished
summaries or term sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements. Each of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated expressly reserves the right, at its sole
discretion, to reject any or all proposals or expressions of interest in the
subject proposed offering and to terminate discussions with any party at any
time with or without notice.
Page 3
<PAGE>
PNCMAC Series 1999-CM1 November 19, 1999
Collateral and Structural Term Sheet
Collateral Overview (continued):
o Participation Loans: None
o Secured Subordinate Debt: 0.5%
o Leasehold: 1.3%
o Delinquency: No loan delinquent 30 days or more as
of the Cut-off Date.
Transaction Overview:
o Structure: Senior/subordinated, sequential pay
pass-through bonds.
o Lead Manager: Donaldson, Lufkin & Jenrette
Securities Corporation
o Co-Managers: PNC Capital Markets, Inc. and
Prudential Securities
o Mortgage Loan Sellers: Midland Loan Services, Inc. and Column
Financial, Inc.
o Rating Agencies: Standard & Poor's Ratings Services/
Fitch IBCA, Inc.
o Master Servicer: Midland Loan Services, Inc.
o Special Servicer: Midland Loan Services, Inc.
o Trustee: Norwest Bank Minnesota, National
Association
o Cut-off Date: December 1, 1999
o Settlement Date: December 7, 1999
o Determination Date: The 4th calendar day of the month, but
if that day is not a business day,
then the 1st business day before that
day.
o Distribution Date: The 10th day of the month, or if such
day is not a business day, the
following business day, but no sooner
than the 4th business day after the
Determination Date
o Delivery: The Depository Trust Company ("DTC")
through Cede & Co. (in the United
States) or Cedel Bank, Societe Anonyme
("Cedel") or The Euroclear System
("Euroclear") (in Europe).
o ERISA: Classes A-1A, A-1B and S are expected
to be eligible for each of the
underwriters' individual prohibited
transaction exemptions with respect to
ERISA, subject to certain conditions
of eligibility.
o SMMEA: Classes A-1A, A-1B, A-2 and S are
expected to be SMMEA eligible.
This investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc. and Prudential Securities Incorporated
personnel to assist them in determining whether potential investors wish to
proceed with an in-depth investigation of the proposed offering. While the
information contained herein is from sources believed to be reliable, it has not
been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc., Prudential Securities Incorporated, or
any of their respective affiliates, and such entities make no representations or
warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in information and is
subject to modification or withdrawal at any time with or without notice. The
contents hereof are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated. The information contained herein
supersedes any and all information contained in any previously furnished
summaries or term sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements. Each of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated expressly reserves the right, at its sole
discretion, to reject any or all proposals or expressions of interest in the
subject proposed offering and to terminate discussions with any party at any
time with or without notice.
Page 4
<PAGE>
PNCMAC Series 1999-CM1 November 19, 1999
Collateral and Structural Term Sheet
Transaction Overview (continued):
o Tax Treatment: REMIC
o Optional Right to Terminate
Trust: 1%
o Analytics:
Cashflows are expected to be available
through Bloomberg, the Trepp Group,
Intex Solutions and Charter Research.
o Extensions: The Special Servicer will be
responsible for performing certain
servicing functions with respect to
Mortgage Loans that, in general, are
in default or as to which default is
imminent, and for administering any
REO properties. The Pooling and
Servicing Agreement will generally
permit the Special Servicer to modify,
waive or amend any term of any
Mortgage Loan if it determines, in
accordance with the servicing
standard, that it is appropriate to do
so. The Special Servicer will not be
permitted to grant any extension of
the maturity of a Mortgage Loan beyond
60 months after its stated maturity
date.
o Controlling Class: The Controlling Class of
Certificateholders may appoint an
operating advisor that may advise or
replace the Special Servicer. In
general, the Controlling Class will be
the most subordinate Class of
Principal Balance Certificates (as
defined below) which has a current
aggregate certificate principal amount
no less than 25% of its original
aggregate certificate principal
balance.
o Advances: The Master Servicer will be obligated
to make advances of scheduled
principal and interest payments,
excluding balloon payments, subject to
recoverability determination and
appraisal reductions. If the Master
Servicer fails to make a required P &
I Advance and the Trustee is aware of
the failure, the Trustee will be
obligated to make that Advance.
o Appraisal Reductions: An appraisal reduction generally will
be created in the amount, if any, by
which the unpaid principal balance of
a Specially Serviced Mortgage Loan
(plus other amounts overdue in
connection with such loan) exceeds 90%
of the appraised value of the related
Mortgaged Property, plus reserves and
escrows other than for taxes and
insurance. The Appraisal Reduction
Amount will reduce proportionately the
interest portion (but not the
principal portion) of any amount of
P&I Advances for the loan, which
reduction will result, in general, in
a reduction of interest distributable
to the most subordinate Class of
Principal Balance Certificates
outstanding. An appraisal reduction
will be reduced to zero as of the date
the related Mortgage Loan has been
brought current for at least six
consecutive months, or has been paid
in full, liquidated, repurchased, or
otherwise disposed of. Appraisal
reductions will not effect class sizes
for the purposes of determining the
Controlling Class.
This investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc. and Prudential Securities Incorporated
personnel to assist them in determining whether potential investors wish to
proceed with an in-depth investigation of the proposed offering. While the
information contained herein is from sources believed to be reliable, it has not
been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc., Prudential Securities Incorporated, or
any of their respective affiliates, and such entities make no representations or
warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in information and is
subject to modification or withdrawal at any time with or without notice. The
contents hereof are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated. The information contained herein
supersedes any and all information contained in any previously furnished
summaries or term sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements. Each of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated expressly reserves the right, at its sole
discretion, to reject any or all proposals or expressions of interest in the
subject proposed offering and to terminate discussions with any party at any
time with or without notice.
Page 5
<PAGE>
PNCMAC Series 1999-CM1 November 19, 1999
Collateral and Structural Term Sheet
Structure Description:
[BAR GRAPH]
Based on the "maturity assumptions" set forth under the "Yield and Maturity
Considerations" in the Prospectus Supplement and a 0% CPR (except each mortgage
loan with an anticipated repayment date is assumed to be paid in full on that
date).
This investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc. and Prudential Securities Incorporated
personnel to assist them in determining whether potential investors wish to
proceed with an in-depth investigation of the proposed offering. While the
information contained herein is from sources believed to be reliable, it has not
been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc., Prudential Securities Incorporated, or
any of their respective affiliates, and such entities make no representations or
warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in information and is
subject to modification or withdrawal at any time with or without notice. The
contents hereof are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated. The information contained herein
supersedes any and all information contained in any previously furnished
summaries or term sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements. Each of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated expressly reserves the right, at its sole
discretion, to reject any or all proposals or expressions of interest in the
subject proposed offering and to terminate discussions with any party at any
time with or without notice.
Page 6
<PAGE>
PNCMAC Series 1999-CM1 November 19, 1999
Collateral and Structural Term Sheet
Interest Distributions:
The holders of each Class of Principal Balance Certificates will be entitled on
each distribution date to interest accrued at the Pass-Through Rate for that
Class on the aggregate principal balance of that Class outstanding immediately
prior to the related distribution date. The Class S Certificates will be
entitled on each distribution date to the aggregate interest accrued on the
aggregate principal balance of the Principal Balance Certificates at an annual
rate equal to the difference between a weighted average of certain net mortgage
interest rates on the mortgage loans and the weighted average coupon of the
Principal Balance Certificates. All Classes will pay interest on a 30/360 basis.
Principal Distributions:
Available principal will be paid on each distribution date to the outstanding
Classes of Principal Balance Certificates in the following sequential order:
Class A-1A, A-1B, A-2, A-3, A-4, B-1, B-2, B-3, B-4, B-5, B-6, B-7, B-8, C and D
(the "Principal Balance Certificates"). However, if Classes A-2 through D have
been retired as a result of losses and additional trust fund expenses, Classes
A-1A and A-1B will receive principal on a pro-rata basis.
Realized Losses and Expenses:
Realized losses from any mortgage loan and additional trust fund expenses will
be allocated to the outstanding classes of Principal Balance Certificates in the
following sequential order: Class D, C, B-8, B-7, B-6, B-5, B-4, B-3, B-2, B-1,
A-4, A-3 and A-2. If Classes A-2 through D have been retired as a result of
losses and additional trust fund expenses, future losses and additional trust
fund expenses shall be applied to Classes A-1A and A-1B pro-rata.
Credit Enhancements:
Credit enhancement for each Class of publicly registered Certificates will be
provided by the Classes of Certificates which are subordinate in priority with
respect to payments of interest and principal.
Allocation of Yield Maintenance and Percentage Prepayment Premiums:
The certificate yield maintenance amount ("CYMA") and certificate percentage
prepayment premium amount ("CPPPA") for the Class A-1A, A-1B, A-2, A-3, A-4, B-1
and B-2 Certificates (collectively, the "Yield Maintenance Certificates") equals
the total yield maintenance premium or percentage prepayment premium collected,
multiplied by a fraction (not greater than one or less than zero) which is based
upon a formula involving the relationship between the Pass-Through Rate for each
Class currently receiving principal, the mortgage rate of the mortgage loan that
has prepaid, and current interest rates. In general, the CYMA and CPPPA for any
distribution date will be calculated in respect of and payable to the Class(es)
of Yield Maintenance Certificates entitled to receive payments of principal on
such distribution date.
- --------------------------------------------------------------------------------
CYMA & CPPPA = (Pass-Through Rate - Discount Rate)
Allocation -----------------------------------
to Yield Maintenance Certificates (Mortgage Rate - Discount Rate)
- --------------------------------------------------------------------------------
The portion of any yield maintenance or percentage prepayment premium payable to
the Class S (interest only) Certificates, will equal the total yield maintenance
or percentage prepayment premium, as the case may be, less the CYMA or CPPPA, as
applicable, for the Yield Maintenance Certificates as defined above.
This investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc. and Prudential Securities Incorporated
personnel to assist them in determining whether potential investors wish to
proceed with an in-depth investigation of the proposed offering. While the
information contained herein is from sources believed to be reliable, it has not
been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc., Prudential Securities Incorporated, or
any of their respective affiliates, and such entities make no representations or
warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in information and is
subject to modification or withdrawal at any time with or without notice. The
contents hereof are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated. The information contained herein
supersedes any and all information contained in any previously furnished
summaries or term sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements. Each of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated expressly reserves the right, at its sole
discretion, to reject any or all proposals or expressions of interest in the
subject proposed offering and to terminate discussions with any party at any
time with or without notice.
Page 7
<PAGE>
PNCMAC Series 1999-CM1 November 19, 1999
Collateral and Structural Term Sheet
Allocation of Yield Maintenance and Percentage Prepayment Premiums (continued):
Allocation of Yield Maintenance and Percentage Prepayment Premiums Example:
Discount Rate Fraction Methodology:
Mortgage Rate = 8%
P & I Class Coupon = 6%
Discount Rate (Based on a Treasury Rate) = 5%
% of Principal Distributed to Class = 100%
P & I Class Allocation: Class S Allocation:
- ----------------------- -------------------
6% - 5% x 100% = 33 1/3% 100% - P & I Class(es) Allocation = 66 2/3%
- ------
8% - 5%
In general, this formula provides for an increase in the allocation of yield
maintenance and percentage prepayment premiums to the Yield Maintenance
Certificates as interest rates decrease and a decrease in the allocation to such
Classes as interest rates rise.
This investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc. and Prudential Securities Incorporated
personnel to assist them in determining whether potential investors wish to
proceed with an in-depth investigation of the proposed offering. While the
information contained herein is from sources believed to be reliable, it has not
been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc., Prudential Securities Incorporated, or
any of their respective affiliates, and such entities make no representations or
warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in information and is
subject to modification or withdrawal at any time with or without notice. The
contents hereof are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated. The information contained herein
supersedes any and all information contained in any previously furnished
summaries or term sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements. Each of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated expressly reserves the right, at its sole
discretion, to reject any or all proposals or expressions of interest in the
subject proposed offering and to terminate discussions with any party at any
time with or without notice.
Page 8
<PAGE>
PNCMAC Series 1999-CM1 November 19, 1999
Collateral and Structural Term Sheet
Stratification:
[MAP]
Mortgaged Properties by State
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Number of Cut-off Date Initial Mortgage Weighted Average
Mortgaged Principal Mortgage Pool Interest Average Cut-off Date
State Properties Balance (1) Balance Rates U/W DSCR (2) LTV Ratio (2)
=========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
California 31 $114,336,631 15.0% 8.080% 1.38x 67.5%
Texas 31 88,276,580 11.6% 7.854% 1.31 75.2%
New York 11 70,739,105 9.3% 8.468% 1.26 69.5%
Florida 17 60,363,296 7.9% 8.105% 1.31 76.1%
Michigan 4 48,873,899 6.4% 8.022% 1.26 74.5%
Oklahoma 8 47,841,758 6.3% 7.408% 1.38 76.1%
Massachusetts 7 41,219,405 5.4% 7.966% 1.34 72.6%
Pennsylvania 10 35,551,312 4.7% 7.375% 1.45 73.6%
Virginia 6 26,877,675 3.5% 7.965% 1.29 75.4%
Colorado 8 22,895,070 3.0% 8.267% 1.34 68.1%
Georgia 9 21,853,610 2.9% 8.036% 1.30 74.8%
New Jersey 5 16,752,405 2.2% 8.200% 1.26 71.6%
Arizona 7 14,696,058 1.9% 7.869% 1.29 74.9%
Tennessee 2 14,563,109 1.9% 8.512% 1.29 73.2%
Minnesota 3 12,864,772 1.7% 8.403% 1.38 67.3%
New Hampshire 4 12,651,727 1.7% 7.161% 1.27 76.4%
Maryland 3 11,836,875 1.6% 7.938% 1.30 74.7%
Connecticut 5 10,660,610 1.4% 8.341% 1.28 69.7%
Indiana 4 9,943,866 1.3% 8.049% 1.22 72.7%
Arkansas 5 8,870,042 1.2% 8.397% 1.28 71.4%
Wisconsin 2 8,813,834 1.2% 7.950% 1.39 70.7%
Kansas 5 7,172,099 0.9% 7.561% 1.35 78.8%
Louisiana 5 6,403,302 0.8% 7.597% 1.42 71.9%
Ohio 3 6,088,297 0.8% 7.452% 1.31 77.7%
Washington 2 5,930,387 0.8% 7.432% 1.34 76.1%
Kentucky 1 5,715,099 0.8% 8.170% 1.25 78.3%
Nebraska 1 5,596,509 0.7% 8.360% 1.21 80.0%
Oregon 3 4,590,953 0.6% 7.487% 1.34 60.6%
Utah 2 4,187,021 0.6% 8.183% 1.27 72.4%
Vermont 1 3,812,987 0.5% 7.260% 1.65 71.5%
Nevada 2 3,434,286 0.5% 8.085% 1.28 75.0%
Mississippi 1 2,160,270 0.3% 8.100% 1.25 78.7%
New Mexico 2 1,989,138 0.3% 8.280% 1.33 54.9%
Iowa 1 1,438,558 0.2% 8.030% 1.36 66.6%
Idaho 1 1,413,723 0.2% 6.950% 1.31 64.3%
----------------------------------------------------------------------------------------------
Total/Weighted Average: 212 $760,414,266 100.0% 7.982% 1.32x 72.6%
==============================================================================================
</TABLE>
(1) Assumes a Cut-off Date of December 1, 1999.
(2) Excluding the CTL Loan.
This investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc. and Prudential Securities Incorporated
personnel to assist them in determining whether potential investors wish to
proceed with an in-depth investigation of the proposed offering. While the
information contained herein is from sources believed to be reliable, it has not
been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc., Prudential Securities Incorporated, or
any of their respective affiliates, and such entities make no representations or
warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in information and is
subject to modification or withdrawal at any time with or without notice. The
contents hereof are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated. The information contained herein
supersedes any and all information contained in any previously furnished
summaries or term sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements. Each of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated expressly reserves the right, at its sole
discretion, to reject any or all proposals or expressions of interest in the
subject proposed offering and to terminate discussions with any party at any
time with or without notice.
Page 9
<PAGE>
PNCMAC Series 1999-CM1 November 19, 1999
Collateral and Structural Term Sheet
[PIE CHART]
Self Storage 1.4%
Manufactured Housing 2.4%
CTL 0.3%
Mixed Use 3.4%
Hotel 4.2%
Industrial 5.2%
Multifamily 38.9%
Office 17.7%
Retail 26.5%
Mortgaged Properties by Property Type
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Number of Cut-off Date Initial Mortgage Weighted Average
Mortgaged Principal Mortgage Pool Interest Average Cut-off Date
Property Type Properties Balance (1) Balance Rates U/W DSCR (2) LTV Ratio (2)
=========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Multifamily 84 $295,917,163 38.9% 7.736% 1.32x 75.5%
Retail 43 201,274,526 26.5% 8.140% 1.28 72.1%
Office 37 134,954,503 17.7% 8.178% 1.34 69.8%
Industrial 17 39,530,029 5.2% 8.026% 1.28 72.5%
Hotel 6 32,055,712 4.2% 8.426% 1.50 61.5%
Mixed Use 7 25,513,610 3.4% 8.350% 1.40 70.7%
Manufactured Housing 6 18,254,431 2.4% 7.076% 1.47 74.7%
Self Storage 11 10,821,648 1.4% 8.517% 1.36 67.8%
CTL 1 2,092,645 0.3% 8.140% N/A N/A
-------------------------------------------------------------------------------------
Total/Weighted Average: 212 $760,414,266 100.0% 7.982% 1.32x 72.6%
=====================================================================================
</TABLE>
(1) Assumes a Cut-off Date of December 1, 1999.
(2) Excluding the CTL Loan.
This investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc. and Prudential Securities Incorporated
personnel to assist them in determining whether potential investors wish to
proceed with an in-depth investigation of the proposed offering. While the
information contained herein is from sources believed to be reliable, it has not
been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc., Prudential Securities Incorporated, or
any of their respective affiliates, and such entities make no representations or
warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in information and is
subject to modification or withdrawal at any time with or without notice. The
contents hereof are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated. The information contained herein
supersedes any and all information contained in any previously furnished
summaries or term sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements. Each of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated expressly reserves the right, at its sole
discretion, to reject any or all proposals or expressions of interest in the
subject proposed offering and to terminate discussions with any party at any
time with or without notice.
Page 10
<PAGE>
PNCMAC Series 1999-CM1 November 19, 1999
Collateral and Structural Term Sheet
Original Amortization Terms
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Range of Number of Cut-off Date Initial Mortgage Weighted Average
Original Amortization Mortgage Principal Mortgage Pool Interest Average Cut-off Date
Terms (Months) Loans Balance (1) Balance Rates U/W DSCR (2) LTV Ratio (2)
============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
180 - 239 4 $ 5,081,460 0.7% 8.532% 1.36x 56.3%
240 - 299 8 11,844,518 1.6% 8.056% 1.27 67.3%
300 - 313 66 147,265,364 19.4% 8.083% 1.40 68.1%
314 - 360 129 596,222,924 78.4% 7.951% 1.31 73.9%
------------------------------------------------------------------------------------
Total/Weighted Average: 207 $760,414,266 100.0% 7.982% 1.32x 72.6%
====================================================================================
</TABLE>
Maximum Original Amortization Term (Months): 360
Minimum Original Amortization Term (Months): 180
Wtd. Avg. Original Amortization Term (Months): 345
(1) Assumes a Cut-off Date of December 1, 1999.
(2) Excluding the CTL Loan.
Original Terms to Stated Maturity (1)
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Range of Number of Cut-off Date Initial Mortgage Weighted Average
Original Amortization Mortgage Principal Mortgage Pool Interest Average Cut-off Date
to Stated Maturity (Months) Loans Balance (2) Balance Rates U/W DSCR (3) LTV Ratio (3)
=============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
60 - 115 6 $ 21,767,262 2.9% 8.353% 1.30x 74.6%
116 - 120 189 712,940,458 93.8% 7.974% 1.32 72.6%
121 - 200 9 20,546,541 2.7% 7.950% 1.46 70.2%
201 - 243 3 5,160,005 0.7% 7.734% 1.18 72.5%
-------------------------------------------------------------------------------------
Total/Weighted Average: 207 $760,414,266 100.0% 7.982% 1.32x 72.6%
=====================================================================================
</TABLE>
Maximum Original Term to Stated Maturity (Months): 243
Minimum Original Term to Stated Maturity (Months): 60
Wtd. Avg. Original Term to Stated Maturity (Months): 121
(1) In the case of hyper-amortization loans, the Anticipated Repayment Date is
assumed to be the maturity date for the purposes of the table.
(2) Assumes a Cut-off Date of December 1, 1999.
(3) Excluding the CTL Loan.
This investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc. and Prudential Securities Incorporated
personnel to assist them in determining whether potential investors wish to
proceed with an in-depth investigation of the proposed offering. While the
information contained herein is from sources believed to be reliable, it has not
been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc., Prudential Securities Incorporated, or
any of their respective affiliates, and such entities make no representations or
warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in information and is
subject to modification or withdrawal at any time with or without notice. The
contents hereof are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated. The information contained herein
supersedes any and all information contained in any previously furnished
summaries or term sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements. Each of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated expressly reserves the right, at its sole
discretion, to reject any or all proposals or expressions of interest in the
subject proposed offering and to terminate discussions with any party at any
time with or without notice.
Page 11
<PAGE>
PNCMAC Series 1999-CM1 November 19, 1999
Collateral and Structural Term Sheet
Remaining Amortization Terms
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Range of Number of Cut-off Date Initial Mortgage Weighted Average
Remaining Amortization Mortgage Principal Mortgage Pool Interest Average Cut-off Date
Terms (Months) Loans Balance (1) Balance Rates U/W DSCR (2) LTV Ratio (2)
==========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
177 - 238 10 $ 14,171,340 1.9% 8.175% 1.31x 63.4%
239 - 298 55 118,739,410 15.6% 8.015% 1.39 69.1%
299 - 312 13 31,280,592 4.1% 8.363% 1.43 64.2%
313 - 359 129 596,222,924 78.4% 7.951% 1.31 73.9%
----------------------------------------------------------------------------------
Total/Weighted Average: 207 $760,414,266 100.0% 7.982% 1.32x 72.6%
==================================================================================
</TABLE>
Maximum Remaining Amortization Term (Months): 359
Minimum Remaining Amortization Term (Months): 177
Wtd. Avg. Remaining Amortization Term (Months): 340
(1) Assumes a Cut-off Date of December 1, 1999.
(2) Excluding the CTL Loan.
Remaining Terms to Stated Maturity (1)
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Range of Number of Cut-off Date Initial Mortgage Weighted Average
Remaining Terms Mortgage Principal Mortgage Pool Interest Average Cut-off Date
to Stated Maturity (Months) Loans Balance (2) Balance Rates U/W DSCR (3) LTV Ratio (3)
===========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
38 - 114 52 $169,868,149 22.3% 7.365% 1.37x 74.6%
115 - 119 143 564,839,571 74.3% 8.171% 1.31 72.1%
120 - 199 9 20,546,541 2.7% 7.950% 1.46 70.2%
200 - 241 3 5,160,005 0.7% 7.734% 1.18 72.5%
-----------------------------------------------------------------------------------
Total/Weighted Average: 207 $760,414,266 100.0% 7.982% 1.32x 72.6%
===================================================================================
</TABLE>
Maximum Remaining Term to Stated Maturity (Months): 241
Minimum Remaining Term to Stated Maturity (Months): 38
Wtd. Avg. Remaining Term to Stated Maturity (Months): 116
(1) In the case of hyper-amortization loans, the Anticipated Repayment Date is
assumed to be the maturity date for the purposes of the table.
(2) Assumes a Cut-off Date of December 1, 1999.
(3) Excluding the CTL Loan.
This investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc. and Prudential Securities Incorporated
personnel to assist them in determining whether potential investors wish to
proceed with an in-depth investigation of the proposed offering. While the
information contained herein is from sources believed to be reliable, it has not
been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc., Prudential Securities Incorporated, or
any of their respective affiliates, and such entities make no representations or
warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in information and is
subject to modification or withdrawal at any time with or without notice. The
contents hereof are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated. The information contained herein
supersedes any and all information contained in any previously furnished
summaries or terms sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements. Each of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated expressly reserves the right, at its sole
discretion, to reject any or all proposals or expressions of interest in the
subject proposed offering and to terminate discussions with any party at any
time with or without notice.
Page 12
<PAGE>
PNCMAC Series 1999-CM1 November 19, 1999
Collateral and Structural Term Sheet
U/W Debt Service Coverage Ratios
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Number of Cut-off Date Initial Mortgage Weighted Average
Range of Mortgage Principal Mortgage Pool Interest Average Cut-off Date
U/W DSCRs Loans Balance (1) Balance Rates U/W DSCR (2) LTV Ratio (2)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CTL 1 $ 2,092,645 0.3% 8.140% N/A N/A
1.06x - 1.19 1 1,653,637 0.2% 7.890% 1.06x 79.5%
1.20 - 1.21 10 48,223,226 6.3% 8.103% 1.21 74.5%
1.22 - 1.29 90 364,015,466 47.9% 8.025% 1.26 73.6%
1.30 - 1.34 46 143,520,375 18.9% 8.057% 1.31 73.8%
1.35 - 1.39 14 44,092,870 5.8% 8.095% 1.38 74.5%
1.40 - 1.88x 45 156,816,048 20.6% 7.745% 1.51 67.8%
--------------------------------------------------------------------------------------
Total/Weighted Average: 207 $760,414,266 100.0% 7.982% 1.32x 72.6%
======================================================================================
</TABLE>
Maximum U/W DSCR (2): 1.88x
Minimum U/W DSCR (2): 1.06x
Wtd. Avg. U/W DSCR (2): 1.32x
(1) Assumes a Cut-off Date of December 1, 1999.
(2) Excluding the CTL Loan.
Cut-off Date Loan-to-Value Ratios
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Number of Cut-off Date Initial Mortgage Weighted Average
Range of Cut-off Date Mortgage Principal Mortgage Pool Interest Average Cut-off Date
Loan-to-Value Ratios Loans Balance (1) Balance Rates U/W DSCR (2) LTV Ratio (2)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CTL 1 $ 2,092,645 0.3% 8.140% N/A N/A
40.50% - 55.00% 10 24,157,104 3.2% 8.514% 1.40x 51.5%
55.10% - 65.00% 25 64,056,845 8.4% 8.165% 1.43 61.0%
65.10% - 67.50% 13 32,805,312 4.3% 8.156% 1.34 66.0%
67.60% - 70.00% 21 106,333,468 14.0% 8.293% 1.31 69.1%
70.10% - 72.50% 30 80,981,811 10.6% 8.195% 1.35 71.5%
72.60% - 75.00% 38 150,728,851 19.8% 7.891% 1.31 73.8%
75.10% - 77.50% 18 85,088,725 11.2% 7.737% 1.31 76.7%
77.60% - 78.50% 20 84,738,068 11.1% 7.577% 1.31 78.0%
78.60% - 79.50% 13 45,350,492 6.0% 7.704% 1.27 79.0%
79.60% - 80.00% 16 77,184,985 10.2% 8.048% 1.27 79.8%
80.10% - 86.40% 2 6,895,962 0.9% 7.380% 1.30 84.6%
--------------------------------------------------------------------------------------
Total/Weighted Average: 207 $760,414,266 100.0% 7.982% 1.32x 72.6%
======================================================================================
</TABLE>
Maximum Cut-off Date LTV Ratio (2): 86.4%
Minimum Cut-off Date LTV Ratio (2): 40.5%
Wtd. Avg. Cut-off Date LTV Ratio (2): 72.6%
(1) Assumes a Cut-off Date of December 1, 1999.
(2) Excluding the CTL Loan.
This investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc. and Prudential Securities Incorporated
personnel to assist them in determining whether potential investors wish to
proceed with an in-depth investigation of the proposed offering. While the
information contained herein is from sources believed to be reliable, it has not
been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc., Prudential Securities Incorporated, or
any of their respective affiliates, and such entities make no representations or
warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in information and is
subject to modification or withdrawal at any time with or without notice. The
contents hereof are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated. The information contained herein
supersedes any and all information contained in any previously furnished
summaries or term sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements. Each of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated expressly reserves the right, at its sole
discretion, to reject any or all proposals or expressions of interest in the
subject proposed offering and to terminate discussions with any party at any
time with or without notice.
Page 13
<PAGE>
PNCMAC Series 1999-CM1 November 19, 1999
Collateral and Structural Term Sheet
Cut-off Date Principal Balances
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Number of Cut-off Date Initial Mortgage Weighted Average
Range of Cut-off Date Mortgage Principal Mortgage Pool Interest Average Cut-off Date
Principal Balances Loans Balance (1) Balance Rates U/W DSCR (2) LTV Ratio (2)
===============================================================================================================
<S> <C> <C> <C> <C> <C> <C>
$ 399,636 - 500,000 1 $ 399,636 0.1% 8.880% 1.42x 63.6%
500,001 - 750,000 13 8,602,367 1.1% 8.552% 1.27 69.2%
750,001 - 1,000,000 16 13,871,300 1.8% 8.174% 1.40 68.2%
1,000,001 - 1,250,000 18 20,080,689 2.6% 8.205% 1.35 69.9%
1,250,001 - 1,500,000 15 21,155,610 2.8% 8.129% 1.32 66.7%
1,500,001 - 1,750,000 18 29,069,384 3.8% 8.109% 1.31 72.5%
1,750,001 - 2,000,000 19 35,100,836 4.6% 7.863% 1.33 71.8%
2,000,001 - 3,000,000 34 83,259,280 10.9% 8.066% 1.34 71.6%
3,000,001 - 4,000,000 19 65,693,774 8.6% 7.938% 1.35 74.0%
4,000,001 - 5,000,000 14 62,376,529 8.2% 7.970% 1.37 72.3%
5,000,001 - 6,000,000 10 54,843,770 7.2% 7.964% 1.31 75.1%
6,000,001 - 7,000,000 8 52,671,714 6.9% 7.928% 1.27 73.2%
7,000,001 - 8,000,000 5 36,794,009 4.8% 7.892% 1.28 75.5%
8,000,001 - 9,000,000 2 16,993,437 2.2% 7.463% 1.26 79.4%
9,000,001 - 11,500,000 7 74,415,539 9.8% 7.674% 1.35 73.0%
11,500,001 - 15,500,000 4 49,915,131 6.6% 7.974% 1.34 74.8%
15,500,001 - 34,500,000 2 53,763,882 7.1% 7.865% 1.37 70.5%
34,500,001 - $ 44,973,184 2 81,407,381 10.7% 8.320% 1.26 71.1%
--------------------------------------------------------------------------------
Total/Weighted Average: 207 $760,414,266 100.0% 7.982% 1.32x 72.6%
================================================================================
</TABLE>
Maximum Cut-off Date Scheduled Principal Balance: $44,973,184
Minimum Cut-off Date Scheduled Principal Balance: $ 399,636
Average Cut-off Date Scheduled Principal Balance: $ 3,673,499
(1) Assumes a Cut-off Date of December 1, 1999.
(2) Excluding the CTL Loan.
Mortgage Loans by Amortization Type
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Number of Cut-off Date Initial Mortgage Weighted Average
Mortgage Principal Mortgage Pool Interest Average Cut-off Date
Loan Type Loans Balance (1) Balance Rates U/W DSCR (2) LTV Ratio (2)
=============================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Balloon 192 $681,963,958 89.7% 7.971% 1.33x 72.8%
Hyper-Amortizing 10 71,047,595 9.3% 8.079% 1.31 71.6%
Fully Amortizing 5 7,402,714 1.0% 8.066% 1.30 63.3%
----------------------------------------------------------------------------------
Total/Weighted Average: 207 $760,414,266 100.0% 7.982% 1.32x 72.6%
==================================================================================
</TABLE>
(1) Assumes a Cut-off Date of December 1, 1999.
(2) Excluding the CTL Loan.
This investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc. and Prudential Securities Incorporated
personnel to assist them in determining whether potential investors wish to
proceed with an in-depth investigation of the proposed offering. While the
information contained herein is from sources believed to be reliable, it has not
been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc., Prudential Securities Incorporated, or
any of their respective affiliates, and such entities make no representations or
warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in information and is
subject to modification or withdrawal at any time with or without notice. The
contents hereof are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated. The information contained herein
supersedes any and all information contained in any previously furnished
summaries or term sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements. Each of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated expressly reserves the right, at its sole
discretion, to reject any or all proposals or expressions of interest in the
subject proposed offering and to terminate discussions with any party at any
time with or without notice.
Page 14
<PAGE>
PNCMAC Series 1999-CM1 November 19, 1999
Collateral and Structural Term Sheet
Mortgage Interest Rates
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Number of Cut-off Date Initial Mortgage Weighted Average
Range of Mortgage Principal Mortgage Pool Interest Average Cut-off Date
Mortgage Interest Rates Loans Balance (1) Balance Rates U/W DSCR (2) LTV Ratio (2)
==================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
6.320% - 7.000% 16 $ 64,233,696 8.4% 6.749% 1.41x 75.8%
7.001% - 7.250% 10 22,176,915 2.9% 7.137% 1.32 74.1%
7.251% - 7.500% 11 52,973,427 7.0% 7.408% 1.37 76.7%
7.501% - 7.750% 9 58,625,776 7.7% 7.695% 1.25 77.7%
7.751% - 8.000% 30 149,163,978 19.6% 7.918% 1.31 72.6%
8.001% - 8.250% 51 174,450,663 22.9% 8.133% 1.33 72.5%
8.251% - 8.500% 38 101,264,841 13.3% 8.346% 1.31 70.9%
8.501% - 8.750% 25 114,893,314 15.1% 8.593% 1.30 68.5%
8.751% - 9.000% 12 14,720,832 1.9% 8.829% 1.33 66.2%
9.001% - 9.280% 5 7,910,824 1.0% 9.149% 1.45 69.2%
------------------------------------------------------------------------------------
Total/Weighted Average: 207 $760,414,266 100.0% 7.982% 1.32x 72.6%
====================================================================================
</TABLE>
Maximum Wtd. Avg. Mortgage Interest Rate: 9.280%
Minimum Wtd. Avg. Mortgage Interest Rate: 6.320%
Wtd. Avg. Mortgage Interest Rate: 7.982%
(1) Assumes a Cut-off Date of December 1, 1999.
(2) Excluding the CTL Loan.
Occupancy Rates at Underwriting
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Number of Cut-off Date Initial Mortgage Weighted Average
Range of Mortgaged Principal Mortgage Pool Interest Average Cut-off Date
Occupancy Rates at U/W Properties (1) Balance (2) Balance Rates U/W DSCR (3) LTV Ratio (3)
===================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
79.0% - 79.9% 2 $ 2,162,854 0.3% 8.184% 1.32x 66.9%
80.0% - 89.9% 17 47,098,113 6.2% 8.177% 1.29 71.5%
90.0% - 94.9% 32 149,348,629 19.6% 8.127% 1.30 73.5%
95.0% - 97.4% 30 165,317,792 21.7% 7.715% 1.32 75.3%
97.5% - 100.0% 125 364,431,166 47.9% 7.979% 1.32 72.1%
---------------------------------------------------------------------------------------
Total/Weighted Average: 206 $ 728,358,554 95.8% 7.963% 1.32x 73.1%
=======================================================================================
</TABLE>
Maximum Occupancy Rate at U/W: 100.0%
Minimum Occupancy Rate at U/W: 79.0%
Wtd. Avg. Occupancy Rate at U/W: 96.3%
(1) Does not include any hotel properties.
(2) Assumes a Cut-off Date of December 1, 1999.
(3) Excluding the CTL Loan.
This investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc. and Prudential Securities Incorporated
personnel to assist them in determining whether potential investors wish to
proceed with an in-depth investigation of the proposed offering. While the
information contained herein is from sources believed to be reliable, it has not
been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc., Prudential Securities Incorporated, or
any of their respective affiliates, and such entities make no representations or
warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in information and is
subject to modification or withdrawal at any time with or without notice. The
contents hereof are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated. The information contained herein
supersedes any and all information contained in any previously furnished
summaries or term sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements. Each of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated expressly reserves the right, at its sole
discretion, to reject any or all proposals or expressions of interest in the
subject proposed offering and to terminate discussions with any party at any
time with or without notice.
Page 15
<PAGE>
PNCMAC Series 1999-CM1 November 19, 1999
Collateral and Structural Term Sheet
Years Built/Years Renovated (1)
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Number of Cut-off Date Initial Mortgage Weighted Average
Range of Years Mortgaged Principal Mortgage Pool Interest Average Cut-off Date
Built/Renovated Properties Balance (2) Balance Rates U/W DSCR (3) LTV Ratio (3)
===================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
1963 - 1970 8 $ 19,170,424 2.5% 7.961% 1.36x 72.2%
1971 - 1980 21 49,608,416 6.5% 8.001% 1.32 74.9%
1981 - 1990 58 234,026,071 30.8% 7.727% 1.36 73.6%
1991 - 1999 125 457,609,356 60.2% 8.112% 1.31 71.8%
----------------------------------------------------------------------------------------
Total/Weighted Average: 212 $ 760,414,266 100.0% 7.982% 1.32x 72.6%
========================================================================================
</TABLE>
Maximum Year Built/Renovated: 1999
Minimum Year Built/Renovated: 1963
Wtd. Avg. Year Built/Renovated: 1991
(1) Year Built/Renovated reflects the later of the Year Built or the Year
Renovated.
(2) Assumes a Cut-off Date of December 1, 1999.
(3) Excluding the CTL Loan.
Mortgage Pool Prepayment Profile (1)
<TABLE>
<CAPTION>
Number of
Months Since Mortgage Outstanding % of Pool Yield Prepayment % of Pool
Date Cut-off Date (2) Loans Balance (mm) Lockout Maintenance Premium Open Total
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Dec-99 0 207 $ 760.4 99.41% 0.59% 0.00% 0.00% 100.0%
Dec-00 12 207 $ 753.8 98.65% 1.35% 0.00% 0.00% 100.0%
Dec-01 24 207 $ 746.5 96.81% 3.19% 0.00% 0.00% 100.0%
Dec-02 36 207 $ 738.5 89.31% 10.43% 0.00% 0.26% 100.0%
Dec-03 48 205 $ 727.1 81.07% 18.93% 0.00% 0.00% 100.0%
Dec-04 60 204 $ 715.3 76.86% 23.14% 0.00% 0.00% 100.0%
Dec-05 72 204 $ 705.3 76.92% 23.08% 0.00% 0.00% 100.0%
Dec-06 84 201 $ 679.3 75.59% 24.41% 0.00% 0.00% 100.0%
Dec-07 96 201 $ 667.7 75.66% 21.40% 0.00% 2.94% 100.0%
Dec-08 108 168 $ 564.2 86.96% 11.54% 0.66% 0.83% 100.0%
Dec-09 120 12 $ 19.3 36.38% 44.88% 0.00% 18.73% 100.0%
Dec-10 132 11 $ 14.8 43.40% 56.60% 0.00% 0.00% 100.0%
Dec-11 144 11 $ 13.9 41.71% 58.29% 0.00% 0.00% 100.0%
Dec-12 156 11 $ 12.9 39.58% 29.83% 0.00% 30.59% 100.0%
Dec-13 168 9 $ 6.9 62.98% 37.02% 0.00% 0.00% 100.0%
Dec-14 180 3 $ 2.5 80.11% 19.89% 0.00% 0.00% 100.0%
Dec-15 192 3 $ 2.1 81.78% 18.22% 0.00% 0.00% 100.0%
Dec-16 204 3 $ 1.8 84.25% 15.75% 0.00% 0.00% 100.0%
Dec-17 216 3 $ 1.4 88.32% 11.68% 0.00% 0.00% 100.0%
Dec-18 228 2 $ 0.9 100.00% 0.00% 0.00% 0.00% 100.0%
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Calculated assuming that no Mortgage Loan prepays, defaults or is
repurchased prior to stated maturity, except that the hyper-amortization
loans are assumed to pay in full on their respective Anticipated Repayment
Dates. Otherwise calculated based on Maturity Assumptions to be set forth in
the final prospectus supplement.
(2) Assumes a Cut-off Date of December 1, 1999.
This investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc. and Prudential Securities Incorporated
personnel to assist them in determining whether potential investors wish to
proceed with an in-depth investigation of the proposed offering. While the
information contained herein is from sources believed to be reliable, it has not
been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc., Prudential Securities Incorporated, or
any of their respective affiliates, and such entities make no representations or
warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in information and is
subject to modification or withdrawal at any time with or without notice. The
contents hereof are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated. The information contained herein
supersedes any and all information contained in any previously furnished
summaries or term sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements. Each of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated expressly reserves the right, at its sole
discretion, to reject any or all proposals or expressions of interest in the
subject proposed offering and to terminate discussions with any party at any
time with or without notice.
Page 16
<PAGE>
PNCMAC Series 1999-CM1 November 19, 1999
Collateral and Structural Term Sheet
Prepayment Provision as of Cut-off Date (1)
<TABLE>
<CAPTION>
Weighted Weighted Weighted
Average Average Average
Percentage of Remaining Remaining Remaining Weighted
Range of Number of Cut-off Date Initial Lockout Lockout Lockout Plus Average
Remaining Terms to Mortgage Principal Mortgage Pool Period Plus YM Period Premium Period Maturity
Stated Maturity (Years) (2) Loans Balance (1) Balance (Years) (Years) (Years) (Years) (2)
==================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
3.0 - 3.9 2 $ 2,988,450 0.4% 0.9 3.0 3.0 3.4
4.0 - 4.9 1 2,692,755 0.4% 4.3 4.3 4.3 4.6
6.0 - 6.9 3 16,086,057 2.1% 6.3 6.3 6.3 6.8
8.0 - 8.9 33 106,697,071 14.0% 3.0 8.2 8.2 8.7
9.0 - 9.9 156 606,243,387 79.7% 8.7 9.3 9.3 9.8
10.0 - 10.9 1 4,514,716 0.6% 0.0 8.3 9.3 10.4
13.0 - 13.9 2 6,636,564 0.9% 6.1 12.7 12.7 13.2
14.0 - 14.9 6 9,395,262 1.2% 11.8 14.3 14.3 14.7
18.0 - 18.9 1 1,413,723 0.2% 8.8 18.6 18.6 18.9
19.0 - 19.9 1 1,653,637 0.2% 19.5 19.5 19.5 19.8
20.0 - 20.9 1 2,092,645 0.3% 19.6 19.6 19.6 20.1
----------------------------------------------------------------------------------------------------
Total/Weighted Average: 207 $ 760,414,266 100.0% 7.9 9.2 9.2 9.7
====================================================================================================
</TABLE>
(1) Assumes a Cut-off Date of December 1, 1999.
(2) In the case of the hyper-amortization loans, the Anticipated Repayment Date
is assumed to be the maturity date for the purposes of the indicated column.
Prepayment Option
<TABLE>
<CAPTION>
Weighted Weighted Weighted
Average Average Average
Percentage of Remaining Remaining Remaining Weighted
Number of Cut-off Date Initial Lockout Lockout Lockout Plus Average
Mortgage Principal Mortgage Pool Period Plus YM Period Premium Period Maturity
Prepayment Option Loans Balance (1) Balance (Years) (Years) (Years) (Years) (2)
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Lockout / Defeasance 153 $ 570,106,400 75.0% 9.4 9.4 9.4 9.8
Lockout / Yield Maintenance 52 183,100,396 24.1% 3.3 8.8 8.8 9.3
Yield Maintenance / Prepayment Premium 1 4,514,716 0.6% 0.0 8.3 9.3 10.4
Lockout 1 2,692,755 0.4% 4.3 4.3 4.3 4.6
---------------------------------------------------------------------------------------------
Total/Weighted Average: 207 $ 760,414,266 100.0% 7.9 9.2 9.2 9.7
=============================================================================================
</TABLE>
(1) Assumes a Cut-off Date of December 1, 1999.
(2) In the case of the hyper-amortization loans, the Anticipated Repayment Date
is assumed to be the maturity date for the purposes of the indicated column.
This investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc. and Prudential Securities Incorporated
personnel to assist them in determining whether potential investors wish to
proceed with an in-depth investigation of the proposed offering. While the
information contained herein is from sources believed to be reliable, it has not
been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc., Prudential Securities Incorporated, or
any of their respective affiliates, and such entities make no representations or
warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in information and is
subject to modification or withdrawal at any time with or without notice. The
contents hereof are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated. The information contained herein
supersedes any and all information contained in any previously furnished
summaries or term sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements. Each of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated expressly reserves the right, at its sole
discretion, to reject any or all proposals or expressions of interest in the
subject proposed offering and to terminate discussions with any party at any
time with or without notice.
Page 17
<PAGE>
PNCMAC Series 1999-CM1 November 19, 1999
Collateral and Structural Term Sheet
Significant Mortgage Loans
<TABLE>
<CAPTION>
Percentage of
Property Units/ Cut-off Date Initial Mortgage Appraised Mortgage Interest
# Property Name Type Square Feet Principal Balance (1) Pool Balance Value Rate
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
1 The Wilton Mall Retail 540,021 SF $ 44,973,184 5.9% $ 64,500,000 8.580%
- ------------------------------------------------------------------------------------------------------------------------------------
2 Frandor Mall Retail 457,978 SF 36,434,197 4.8% 50,000,000 8.000%
- ------------------------------------------------------------------------------------------------------------------------------------
3 The Alliance Loan Multifamily 666 Units 32,777,802 4.3% 42,450,000 7.740%
- ------------------------------------------------------------------------------------------------------------------------------------
4 Stanford Square Office 70,816 SF 20,986,080 2.8% 35,000,000 8.060%
- ------------------------------------------------------------------------------------------------------------------------------------
5 Woodscape Apartments Multifamily 498 Units 13,571,925 1.8% 17,500,000 7.430%
- ------------------------------------------------------------------------------------------------------------------------------------
Total/Weighted Average: $ 148,743,188 19.6% $ 209,450,000 8.075%
=========================================================================
<CAPTION>
Cut-off Date
# Property Name U/W DSCR LTV
===================================================
<S> <C> <C>
1 The Wilton Mall 1.26x 69.7%
- ---------------------------------------------------
2 Frandor Mall 1.26 72.9%
- ---------------------------------------------------
3 The Alliance Loan 1.24 77.2%
- ---------------------------------------------------
4 Stanford Square 1.57 60.0%
- ---------------------------------------------------
5 Woodscape Apartments 1.29 77.6%
- ---------------------------------------------------
Total/Weighted Average: 1.30x 71.5%
===========================
</TABLE>
(1) Assumes a Cut-off Date of December 1, 1999.
This investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc. and Prudential Securities Incorporated
personnel to assist them in determining whether potential investors wish to
proceed with an in-depth investigation of the proposed offering. While the
information contained herein is from sources believed to be reliable, it has not
been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc., Prudential Securities Incorporated, or
any of their respective affiliates, and such entities make no representations or
warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in information and is
subject to modification or withdrawal at any time with or without notice. The
contents hereof are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated. The information contained herein
supersedes any and all information contained in any previously furnished
summaries or term sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements. Each of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated expressly reserves the right, at its sole
discretion, to reject any or all proposals or expressions of interest in the
subject proposed offering and to terminate discussions with any party at any
time with or without notice.
Page 18
<PAGE>
PNCMAC Series 1999-CM1 November 19, 1999
Collateral and Structural Term Sheet
The Wilton Mall
LOAN INFORMATION
- --------------------------------------------------------------------------------
Cut-off Date Principal Balance: $44,973,184
% of Initial Mortgage Pool
Balance: 5.9%
Mortgage Loan Seller: Column Financial, Inc.
Mortgage Interest Rate: 8.580%
Term to ARD: 10 years
Amortization Term: 30 years
Call Protection: Prepayment Lockout; U.S. Treasury
defeasance permitted as of the 2
year anniversary of the Closing Date.
Cut-off Date LTV: 69.7%
Maturity/ARD LTV: 63.2%
U/W DSCR: 1.26x
Cross Collateralization/Default: No/No
Special Provisions: Hyper-Amortization Loan; Cash
Management
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
Single Asset/Portfolio: Single Asset
Property Type: Retail
Location: Saratoga Springs, New York
Years Built/Renovated: 1990/1991
Collateral: 540,021 square feet of a 655,682
square foot regional mall located in
Saratoga Springs
Property Manager: Genessee Management, Inc.
Underwritable Cash Flow: $5,286,893
Appraised Value: $64,500,000
Appraisal Date: September 1, 1999
Occupancy Rate at U/W: 91%
- --------------------------------------------------------------------------------
Additional Information:
Subject Property includes 540,021 square feet of a 655,682 square foot regional
mall located at 3065 Route 50 in Saratoga Springs, New York. The center was
constructed in 1990 and was subsequently expanded in 1991. The Property is a
one-level, enclosed regional shopping mall. Major tenants include Sears (S&P
rated A-) and Bon Ton; other tenants include J.C. Penney (S&P rated BBB+),
Dick's Sporting Goods and an eight screen Hoyt's movie theatre. The property
also contains a BJ's Wholesale Club as a freestanding outparcel (not included in
collateral). In addition to the existing three anchor tenants, a separate parcel
exists which potentially could serve as a fourth anchor tenant site (not to be
included within the collateral).
Sarwil Associates, L.P., a New York limited partnership, is the owner/developer
of Wilton Mall. The property is managed by Genessee Management, Inc. Both
companies are affiliates of Wilmorite, Inc. ("Wilmorite"), which is a leading
owner and operator of regional malls in the United States. Wilmorite manages 16
regional malls and 5 power centers comprising 17.1 million square feet.
Wilmorite has been in business since the late 1940's and since that time has
been a family owned and operated real estate development company. Wilmorite has
been involved in the development of many different property types including
retail, office, residential and hotel, but in the last 15 years, the company has
narrowed its focus on retail property development and in particular, on regional
shopping malls.
This investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc. and Prudential Securities Incorporated
personnel to assist them in determining whether potential investors wish to
proceed with an in-depth investigation of the proposed offering. While the
information contained herein is from sources believed to be reliable, it has not
been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc., Prudential Securities Incorporated, or
any of their respective affiliates, and such entities make no representations or
warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in information and is
subject to modification or withdrawal at any time with or without notice. The
contents hereof are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated. The information contained herein
supersedes any and all information contained in any previously furnished
summaries or term sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements. Each of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated expressly reserves the right, at its sole
discretion, to reject any or all proposals or expressions of interest in the
subject proposed offering and to terminate discussions with any party at any
time with or without notice.
Page 19
<PAGE>
PNCMAC Series 1999-CM1 November 19, 1999
Collateral and Structural Term Sheet
Frandor Mall
LOAN INFORMATION
- --------------------------------------------------------------------------------
Cut-off Date Principal Balance: $36,434,197
% of Initial Mortgage Pool Balance: 4.8%
Mortgage Loan Seller: Column Financial, Inc.
Mortgage Interest Rate: 8.000%
Balloon Term: 10 years
Amortization Term: 30 years
Call Protection: Prepayment Lockout; U.S. Treasury
defeasance permitted as of the 2
year anniversary of the Closing Date.
Cut-off Date LTV: 72.9%
Maturity LTV: 65.3%
U/W DSCR: 1.26x
Cross Collateralization/Default: No/No
Special Provisions: Cash Management
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
Single Asset/Portfolio: Single Asset
Property Type: Retail
Location: Lansing, Michigan
Years Built/Renovated: 1950/1999
Collateral: 457,978 square foot retail power
center located in Lansing
Property Management: The Frandorson Coporation
Underwritable Cash Flow: $4,051,315
Appraised Value: $50,000,000
Appraisal Date: August 13, 1999
Occupancy Rate at U/W: 95%
- --------------------------------------------------------------------------------
Additional Information:
Subject property is a 457,978 square foot retail power center anchored by Kroger
(S&P rated BBB-), Office Depot (S&P rated BBB) and CompUSA, located in Lansing,
Michigan.
Frandor Mall was originally constructed in phases beginning in 1950 by
Frandorson Properties. In March of 1998, Lomax Stern Development Company and
Frandorson Properties formed a Joint Venture in which Lomax acquired 50%
ownership of the property. The newly formed ownership commenced a $17.5 million
redevelopment program. The redevelopment program, which was completed during the
summer of 1999, included the razing of an existing enclosed mall area and
existing structures, plus construction of 150,000 square feet of additional
space. The property is currently 95% leased. Many of the existing leases are
long-term leases with terms exceeding the term of the loan.
The development partner, Lomax Stern Development Company, has extensive
experience in both construction and leasing. The principals, Chris Brochert and
David Stern, have been partners in over 30 retail centers ranging in size from
31,000 square feet to 550,000 square feet.
This investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc. and Prudential Securities Incorporated
personnel to assist them in determining whether potential investors wish to
proceed with an in-depth investigation of the proposed offering. While the
information contained herein is from sources believed to be reliable, it has not
been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc., Prudential Securities Incorporated, or
any of their respective affiliates, and such entities make no representations or
warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in information and is
subject to modification or withdrawal at any time with or without notice. The
contents hereof are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated. The information contained herein
supersedes any and all information contained in any previously furnished
summaries or term sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements. Each of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated expressly reserves the right, at its sole
discretion, to reject any or all proposals or expressions of interest in the
subject proposed offering and to terminate discussions with any party at any
time with or without notice.
Page 20
<PAGE>
PNCMAC Series 1999-CM1 November 19, 1999
Collateral and Structural Term Sheet
The Alliance Loan
LOAN INFORMATION
- --------------------------------------------------------------------------------
Cut-off Date Principal Balance: $32,777,802
% of Initial Mortgage Pool
Balance: 4.3%
Mortgage Loan Seller: Column Financial, Inc.
Mortgage Interest Rate: 7.740%
Balloon Term: 10 years
Amortization Term: 30 years
Call Protection: Prepayment Lockout; U.S.
Treasury defeasance permitted as of
the 2 year anniversary of the Closing
Date.
Cut-off Date LTV: 77.2%
Maturity LTV: 68.9%
U/W DSCR: 1.24x
Cross Collateralization/
Default: Yes/Yes
Special Provisions:
Release Provision available if
(i) DSCR not less than 1.20x and (ii)
LTV not greater than 80%; Cash
Management.
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
Single
Asset/Portfolio: Portfolio
Property Type: Multifamily
Location: Virginia, Georgia and Maryland
Years Built/Renovated: 1965 to 1994
Collateral: 3 Multifamily properties with 666
total units
Property Management: Alliance Residential Management,
L.L.C.
Underwritable Cash
Flow: $3,491,254
Appraised Value: $42,450,000
Appraisal Date: June 13, 1999 to September 13,
1999
Wtd. Avg. Occupancy
Rate at U/W: 96%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Built/ Underwritable
Property Name City State Units Occupancy Renovated Appraised Value Cash Flow
=====================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Hampton Court Apartments Alexandria VA 307 98% 1965/1992 $ 19,800,000 $ 1,641,733
Lake of the Woods Apartments College Park GA 216 95% 1988/1989 12,850,000 1,029,641
Holly Tree Apartments Waldorf MD 143 95% 1974/1994 9,800,000 819,880
=====================================================================================================================
</TABLE>
Additional Information:
Subject properties include three multifamily housing complexes including Hampton
Court Apartments, Lake of the Woods Apartments and Holly Tree Apartments.
Hampton Court Apartments is a 307-unit multifamily complex contained in 7 brick,
three and four-story walk-up apartment buildings located in Alexandria, VA. Unit
mix at the subject is 83 1BR/1BA units, 72 2BR/1BA units, 96 2BR/1.5BA and 56
3BR/2BA units. Lake of The Woods Apartments is a 216-unit multifamily complex
contained in 14 walk-up, two and three-story garden-style apartment buildings,
located in College Park, GA. Unit mix at the subject is 72 1BR/1BA and 144
2BR/2BA units. Holly Tree Apartments is a 143-unit multifamily complex contained
in 6 walk-up, three-story apartment buildings located in Waldorf, MD. Unit mix
at the subject is 43 1BR/1BA units, 99 2BR/1.5BA and 1 2BR/2BA units.
The subject multifamily properties' amenities include swimming pools, fitness
centers, laundry facilities, tennis and volleyball courts, surface parking,
extensive landscaping and on-site management offices.
The three subject properties secure a single Mortgage Note. The borrower is a
single purpose entity. Principals of the borrower include Andrew Schor and
Steven Ivankovich. The borrower is affiliated with Alliance Holdings, Inc.
("Alliance"), a privately owned real estate investment, development and finance
firm concentrated in the multifamily housing business. Alliance and its
affiliates own interests in and manage more than 31,000 units throughout Texas,
in the Midwest and along the eastern seaboard from Virginia to Florida.
This investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc. and Prudential Securities Incorporated
personnel to assist them in determining whether potential investors wish to
proceed with an in-depth investigation of the proposed offering. While the
information contained herein is from sources believed to be reliable, it has not
been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc., Prudential Securities Incorporated, or
any of their respective affiliates, and such entities make no representations or
warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in information and is
subject to modification or withdrawal at any time with or without notice. The
contents hereof are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated. The information contained herein
supersedes any and all information contained in any previously furnished
summaries or term sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements. Each of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated expressly reserves the right, at its sole
discretion, to reject any or all proposals or expressions of interest in the
subject proposed offering and to terminate discussions with any party at any
time with or without notice.
Page 21
<PAGE>
PNCMAC Series 1999-CM1 November 19, 1999
Collateral and Structural Term Sheet
Stanford Square
LOAN INFORMATION
- --------------------------------------------------------------------------------
Cut-off Date Principal Balance: $20,986,080
% of Initial Mortgage Pool
Balance: 2.8%
Mortgage Loan Seller: Column Financial, Inc.
Mortgage Interest Rate: 8.060%
Balloon Term: 10 years
Amortization Term: 30 years
Call Protection: Prepayment Lockout; U.S.
Treasury defeasance permitted as of
the 2 year anniversary of the Closing
Date.
Cut-off Date LTV: 60.0%
Maturity LTV: 53.7%
U/W DSCR: 1.57x
Cross Collateralization/
Default: No/No
Special Provisions: Cash Management
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
Single
Asset/Portfolio: Single Asset
Property Type: Office
Location: Palo Alto, California
Years Built/Renovated: 1983
Collateral: 70,816 square foot Class A,
multi-tenanted office building
located in California
Property Management: Stanford Square Management Co. and
Tarlton Properties, Inc.
Underwritable Cash
Flow: $2,913,281
Appraised Value: $35,000,000
Appraisal Date: August 17, 1999
Occupancy Rate at U/W: 100%
- --------------------------------------------------------------------------------
Additional Information:
Subject property is a 70,816 square foot, Class A office building located in the
Central Business District of Palo Alto, California, constructed in 1983.
Improvements consist of one four-story structure, and two levels of underground
parking. Amenities include two elevators, a central atrium/courtyard, private
balconies and landscaping. Major tenants include PHB Hagler Bailey (18,331
square feet), an international management and economic consulting firm, and Bon
Appetit Management Company (17,825 square feet), a food service management
company that contracts its services to corporations, institutions and
universities.
The borrowing entity consists of two Tenants-In-Common SPE's including Stanford
Square, LLC ("SSLP") (94.87% ownership) and Sea Biscuit, LLC (5.13% ownership).
Joan Rounds, the Managing Member of SSLP, became involved in the partnership in
1986 through an entity she controls, JGR Ventures ("JGR"), which made the
investment in SSLP. Through JGR and its ownership of several entities and
affiliates, Joan Rounds manages commercial real estate in excess of $35 million.
The property is managed by Stanford Square Management Co. and Tarlton
Properties, Inc. ("Tarlton"), which manages several office and industrial
buildings within the subject area. Tarlton Managing Partner, Tig Tarlton, has
more than 30 years of real estate development, construction, and property
management experience. During that period, he has personally managed, developed
or remodeled over 2,500,000 square feet of commercial property.
This investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc. and Prudential Securities Incorporated
personnel to assist them in determining whether potential investors wish to
proceed with an in-depth investigation of the proposed offering. While the
information contained herein is from sources believed to be reliable, it has not
been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc., Prudential Securities Incorporated, or
any of their respective affiliates, and such entities make no representations or
warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in information and is
subject to modification or withdrawal at any time with or without notice. The
contents hereof are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated. The information contained herein
supersedes any and all information contained in any previously furnished
summaries or term sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements. Each of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated expressly reserves the right, at its sole
discretion, to reject any or all proposals or expressions of interest in the
subject proposed offering and to terminate discussions with any party at any
time with or without notice.
Page 22
<PAGE>
PNCMAC Series 1999-CM1 November 19, 1999
Collateral and Structural Term Sheet
Woodscape Apartments
LOAN INFORMATION
- --------------------------------------------------------------------------------
Cut-off Date Principal Balance: $13,571,925
% of Initial Mortgage Pool
Balance: 1.8%
Mortgage Loan Seller: Midland Loan Services, Inc.
Mortgage Interest Rate: 7.430%
Balloon Term: 10 years
Amortization Term: 30 years
Call Protection: Prepayment Lockout; Yield
Maintenance.
Cut-off Date LTV: 77.6%
Maturity LTV: 68.5%
U/W DSCR: 1.29x
Cross Collateralization/Default: No/No
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
Single Asset/Portfolio: Single Asset
Property Type: Multifamily
Location: Oklahoma City, Oklahoma
Years Built/Renovated: 1984
Collateral: A Multifamily complex with 498
units in Oklahoma.
Property Management: Case & Associates Properties,
Inc.
Underwritable Cash Flow: $1,465,029
Appraised Value: $17,500,000
Appraisal Date: July 10, 1999
Occupancy Rate at U/W: 94%
- --------------------------------------------------------------------------------
Additional Information:
Subject property is a 498-unit, garden-style multifamily apartment complex
contained in 22 one, two and three-story apartment buildings, located in the
northwest quadrant of Oklahoma City, Oklahoma. Unit mix at the subject is 384
1BR/1BA and 114 2BR/2BA. Apartments range in size between 525-1,078 square feet.
Amenities include two in-ground swimming pools, two heated spas, a fitness
center, a clubhouse facility, three central laundry facilities a dual tennis
court and on-site management office.
The Borrower is Woodscape Apartments limited partnership, a single asset entity.
Mr. Michael D. Case owns the controlling interest in the partnership. Michael
Case of Tulsa, Oklahoma and his related entities are active investors in
multifamily ownership, all of which is managed by Mr. Case through Case &
Associates Properties, Inc. of Tulsa, Oklahoma. The related partnerships
together control and operate over 20,000 units throughout the southwest. Mr.
Case has a net worth in excess of $80 million with a strong liquid asset
position.
This investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc. and Prudential Securities Incorporated
personnel to assist them in determining whether potential investors wish to
proceed with an in-depth investigation of the proposed offering. While the
information contained herein is from sources believed to be reliable, it has not
been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc., Prudential Securities Incorporated, or
any of their respective affiliates, and such entities make no representations or
warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in information and is
subject to modification or withdrawal at any time with or without notice. The
contents hereof are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated. The information contained herein
supersedes any and all information contained in any previously furnished
summaries or term sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements. Each of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated expressly reserves the right, at its sole
discretion, to reject any or all proposals or expressions of interest in the
subject proposed offering and to terminate discussions with any party at any
time with or without notice.
Page 23
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
PNC Mortgage Acceptance Corp.
Depositor
Commercial Mortgage Pass-Through Certificates
(Issuable in Series)
-----------------------
PNC 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 5 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 November 22, 1999.
<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.
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
ii
<PAGE>
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: PNC 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.
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: PNC 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
iii
<PAGE>
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.
iv
<PAGE>
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT.........................................................ii
ADDITIONAL INFORMATION.......................................................iii
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE............................iii
REPORTS......................................................................iii
SUMMARY OF PROSPECTUS ....................................................... 1
RISK FACTORS ................................................................ 5
Limited Liquidity; Lack of Market for Resale .............................. 5
Limited Assets as Security for Investment in Certificates; No Personal
Liability ............................................................... 5
Effects of Prepayments on Average Life of Certificates and Yields ......... 5
Risks Associated with Lending on Income Producing Properties .............. 6
Potential Conflicts of Interest ........................................... 7
Certain Tax Considerations of Variable Rate Certificates .................. 7
Limited Nature of Credit Ratings .......................................... 7
Potential Inability to Verify Underwriting Standards ...................... 8
Nonrecourse Mortgage Loans; Limited Recovery .............................. 8
Inclusion of Delinquent and Non-Performing Mortgage Loans
May Adversely Affect Yields ............................................. 8
Junior Mortgage Loans ..................................................... 8
Balloon Payments .......................................................... 9
Extensions and Modifications of Defaulted Mortgage Loans;
Additional Servicing Fees ............................................... 9
Risks Related to the Mortgagor's Form of Entity and Sophistication ........ 9
Credit Enhancement Limitations ............................................ 9
Risks to Subordinated Certificateholders; Lower Payment
Priority .................................................................... 10
Taxable Income in Excess of Distributions Received ........................ 10
Due-on-Sale Clauses and Assignments of Leases and Rents ................... 10
Environmental Risks ....................................................... 11
Certain Federal Tax Considerations Regarding Residual Certificates ........ 11
ERISA Considerations ...................................................... 12
Special Hazard Losses ..................................................... 12
Control; Decisions by Certificateholders .................................. 12
Book-Entry Registration ................................................... 13
THE DEPOSITOR ............................................................... 13
THE MASTER SERVICER ......................................................... 13
USE OF PROCEEDS ............................................................. 13
DESCRIPTION OF THE CERTIFICATES ............................................. 14
General ................................................................... 14
Distributions on Certificates ............................................. 15
Accounts .................................................................. 15
Amendment ................................................................. 17
Termination ............................................................... 18
Reports to Certificateholders ............................................. 18
The Trustee ............................................................... 18
THE MORTGAGE POOLS .......................................................... 18
General ................................................................... 18
Assignment of Mortgage Loans .............................................. 20
Mortgage Underwriting Standards and Procedures ............................ 21
Representations and Warranties ............................................ 21
SERVICING OF THE MORTGAGE
LOANS ....................................................................... 23
General ................................................................... 23
Collections and Other Servicing Procedures ................................ 23
Insurance ................................................................. 24
Fidelity Bonds and Errors and Omissions Insurance ......................... 25
Servicing Compensation and Payment of Expenses ............................ 25
Advances .................................................................. 26
Modifications, Waivers and Amendments ..................................... 26
Evidence of Compliance .................................................... 26
Certain Matters With Respect to the Master Servicer, the
Special Servicer, the Trustee and the Depositor ......................... 26
Events of Default ......................................................... 28
Rights Upon Event of Default .............................................. 28
v
<PAGE>
CREDIT ENHANCEMENT .......................................................... 29
General ................................................................... 29
Subordinate Certificates .................................................. 30
Reserve Funds ............................................................. 30
Cross-Support Features .................................................... 31
Certificate Guarantee Insurance ........................................... 31
Limited Guarantee ......................................................... 31
Letter of Credit .......................................................... 31
Pool Insurance Policies; Special Hazard Insurance Policies ................ 32
Surety Bonds .............................................................. 32
Fraud Coverage ............................................................ 32
Mortgagor Bankruptcy Bond ................................................. 32
CERTAIN LEGAL ASPECTS OF THE MORTGAGE LOANS ................................. 32
General ................................................................... 32
Types of Mortgage Instruments ............................................. 33
Personalty ................................................................ 33
Installment Contracts ..................................................... 34
Junior Mortgages; Rights of Senior Mortgagees or Beneficiaries ............ 34
Foreclosure ............................................................... 35
Environmental Risks ....................................................... 41
Enforceability of Certain Provisions ...................................... 43
Soldiers' and Sailors' Relief Act ......................................... 45
Applicability of Usury Laws ............................................... 45
Alternative Mortgage Instruments .......................................... 45
Leases and Rents .......................................................... 46
Secondary Financing; Due-on-Encumbrance Provisions ........................ 46
Certain Laws and Regulations .............................................. 47
Type of Mortgaged Property ................................................ 47
Criminal Forfeitures ...................................................... 47
Americans With Disabilities Act ........................................... 48
MATERIAL FEDERAL INCOME TAX CONSEQUENCES .................................... 48
General ................................................................... 48
Federal Income Tax Consequences For REMIC
Certificates ................................................................ 49
General ................................................................... 49
Qualification as a REMIC .................................................. 49
Taxation of REMIC Regular Certificates .................................... 51
Taxation of the REMIC ..................................................... 58
Taxation of Holders of Residual Certificates .............................. 59
Reporting Requirements and Backup Withholding ............................. 63
Tax Treatment of Foreign Investors ........................................ 64
Administrative Matters .................................................... 65
Federal Income Tax Consequences For Certificates As To Which No REMIC
Election Is Made ........................................................ 66
Tax Status as a Grantor Trust ............................................. 66
Tax Status of Certificates ................................................ 66
Pass-Through Certificates ................................................. 67
Stripped Certificates ..................................................... 68
Sale of Certificates ...................................................... 69
Reporting Requirements and Backup Withholding ............................. 69
Treatment of Foreign Investors ............................................ 70
STATE TAX CONSIDERATIONS .................................................... 70
ERISA CONSIDERATIONS ........................................................ 70
Prohibited Transactions ................................................... 71
Unrelated Business Taxable Income-Residual Interests ...................... 72
LEGAL INVESTMENT ............................................................ 72
PLAN OF DISTRIBUTION ........................................................ 73
LEGAL MATTERS ............................................................... 73
FINANCIAL INFORMATION ....................................................... 73
RATINGS ..................................................................... 74
INDEX OF DEFINITIONS ........................................................ 75
vi
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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 "Certificates").
Depositor .........................PNC 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 ("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. 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 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
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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 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
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2
<PAGE>
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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.
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
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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
investment 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."
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.
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RISK FACTORS
Investors should consider, in connection with the purchase of Offered
Certificates, among other things, the following factors and certain other
factors as may be set forth in "RISK FACTORS" in the related Prospectus
Supplement.
Limited Liquidity; 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 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
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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 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.
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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.
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
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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".
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
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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 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 subordination is intended to reduce the
risk to holders of Senior Certificates of delinquent distributions or ultimate
losses, the amount of
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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.
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
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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 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
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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 residual 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."
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."
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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
PNC Mortgage Acceptance Corp. was incorporated in the State of Missouri on
September 17, 1996 as Commercial Mortgage Acceptance Corp. The Depositor's name
was changed to PNC Mortgage Acceptance Corp. on ______________, 1999. 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.
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.
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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 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
- ----------
* 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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disproportionately interest weighted, Classes purchased at a premium may not
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
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.
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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 only), the Financing Corp. (consolidated debt obligations
only) and the Resolution Funding Corp. (debt obligations only);
(iii) federal funds, time deposits in, or unsecured 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;
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(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; (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; or (iii) may be purchased at a price greater than par
if such investment may be prepaid or called at price less than its purchase
price prior to stated maturity.
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, 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.
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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.
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
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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;
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
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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 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 Cutoff 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
Agreement. If any
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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 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
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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 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.
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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 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.
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Insurance
The Agreement for each Series will require that the Master Servicer use
its best efforts in accordance with the servicing standard specified in the
related Prospectus Supplement 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 in a federally
designated special flood hazard area, the Master Servicer will also use its best
efforts in accordance with the servicing standard specified in the related
Prospectus Supplement 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 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-
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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.
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.
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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.
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.
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;
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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 obligations under the Agreement;
provided that certain conditions are met, including the 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. Notwithstanding the foregoing, the Agreement
may also provide that the Master Servicer, and the Special Servicer, if any, may
each resign from the obligations and duties imposed on it by the Agreement;
provided that (i) a successor servicer meeting the criteria specified in the
Agreement assumes the Master Servicer's or the Special Servicer's, as
applicable, obligations under the Agreement; (ii) the resigning party bears all
costs associated with its
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resignation and the transfer of servicing; and (iii) each Rating Agency confirms
in writing that such servicing transfer will not result in a downgrading,
withdrawal or qualification of the ratings then assigned by such Rating Agency
to any Class of Certificates.
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 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
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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.
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
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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 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
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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 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.
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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 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.
General
All of the Mortgage Loans are loans evidenced by one or more notes or
bonds that are secured by a lien and security interest in real property. The
instrument granting a security interest in real property may be a mortgage, deed
of trust or deed to secure debt, depending upon the prevailing practice and law
in the state in which a particular
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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 and represents the security for the
repayment of the indebtedness. 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 real property in good
condition and for paying real estate taxes, assessments and hazard insurance
premiums associated with the real 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 real 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 real 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.
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, must 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.
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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 real
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 real 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
real property in good condition and for paying real estate taxes, assessments
and hazard insurance premiums associated with the real 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 real property, the entire indebtedness is accelerated and the
mortgagor's equitable interest in the related real property is forfeited. The
mortgagee in such a situation does not have to foreclose in order to obtain
title to the real property, although in some cases both a quiet title action to
clear title to the related real 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 real 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 real 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 real property
may be permitted to share in the proceeds of any sale of the related real
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 rights of the
senior mortgagee to: (i) receive rents, hazard insurance proceeds and
condemnation proceeds; and (ii) cause the real property securing the Mortgage
Loan to be sold upon the occurrence of a default under the senior mortgage,
thereby extinguishing the lien of the junior mortgage, unless the Master
Servicer or Special Servicer, if applicable, either asserts such subordinate
interest in the related real 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 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 real property are damaged or destroyed by fire or
other casualty, or in the event the related real 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 real 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
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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 real property between the date of recording of the senior mortgage and the
date of the future advance, or 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 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 related mortgage.
Another provision typically found in the form of mortgage used by many
institutional lenders obligates the mortgagor: (i) to pay all taxes and
assessments affecting the real property prior to delinquency; (ii) to pay, when
due, all other encumbrances, charges and liens affecting the real property that
may be prior to the lien of the mortgage; (iii) to provide and maintain hazard
insurance on the real property; (iv) to maintain and repair the real 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 real 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 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 real 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 the mortgaged property
initiated by the service of legal pleadings upon all parties having a
subordinate interest in the real property and all parties in possession of the
real property whose interests are subordinate to the mortgage. 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
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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 real 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 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 property,
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 the lender's 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 mortgaged 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 on the sale price thereof.
Potential buyers may be reluctant to purchase real 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 as well as the 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
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common for the mortgagee to purchase the real 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 real 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 real property to a third party can be
arranged.
The costs of operating and maintaining commercial real property may be
significant and may be greater than the income derived from the related real
property. The costs of management and operation of mortgaged properties
operating as hotels, motels or nursing or convalescent homes or hospitals may be
particularly significant, because of the expertise, knowledge and, with respect
to nursing or convalescent homes or hospitals, regulatory approvals required to
successfully operate such mortgage properties. A foreclosure and a change in
ownership may have an adverse effect on the public's as well as the related
industry's (including any franchisors') perception of the quality of the
operations conducted on the mortgaged property. The mortgagee will commonly
obtain the services of a real estate broker and pay the broker's commission in
connection with the sale of any property. Depending upon market conditions, the
ultimate proceeds of sale of the real 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, if a mortgagee obtains
title to a mortgaged property or otherwise takes possession of the real
property, it may be responsible under federal or state environmental law for the
cost of cleaning up an existing environmental condition on the mortgaged
property. See "--Environmental Risks" below. There may also be state transfer
taxes due and payable upon acquiring a real property 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 real 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 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 related mortgage instrument is
not monetary (such as the failure to adequately maintain the mortgaged property
or the further encumbrance of the mortgaged 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
receive notice 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 mortgage providing for 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 of the REO Property by the Master Servicer or Special Servicer, if
any. See "SERVICING OF THE MORTGAGE LOANS--Collections and Other Servicing
Procedures."
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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 a subordinate interest in the mortgaged property, from exercising any
right to redeem the mortgaged property. 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 of the foreclosing mortgagee may redeem the
mortgaged property by paying the entire outstanding indebtedness with interest.
In addition, in some states, once a foreclosure action has been commenced, the
redeeming party must pay certain costs of such action. Those having an equity of
redemption must generally be made parties and joined in the foreclosure
proceeding in order for their equity of redemption to be terminated. Equity of
redemption is generally a common-law (non-statutory) right that only exists if
exercised prior to completion of the foreclosure sale. The mortgagor cannot
waive its equity of redemption.
In some states, the mortgagor and foreclosed junior lienors are given a
statutory period after the completion of foreclosure proceedings to redeem the
mortgaged property by payment of a redemption price. Some states require the
payment of the entire principal balance of the related mortgage loan plus
accrued interest and expenses of foreclosure or the payment of the foreclosure
sale price, while other states require the payment of only a portion of the
indebtedness due. The effect of a statutory right of redemption is to diminish
the ability of the mortgagee to sell the foreclosed mortgaged 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 related mortgaged 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 mortgaged 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 the mortgaged property after a trustee's
sale under a deed of trust.
Under the REMIC Regulations currently in effect, real property acquired by
foreclosure generally must not be held for more than three years following the
year in which the related real property was 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 longer period is permissible under the REMIC Regulations.
Mortgagors under Installment Contracts generally do not have the benefits
of redemption periods. 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 real 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 amount of the 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 other remedies with
respect to the security. Consequently, mortgagees will usually proceed first
against the mortgaged property rather than bringing a personal action against
the related mortgagor. Other statutory provisions limit the amount of any
deficiency judgment against the 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 sale. The purpose of these statutes is generally to 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.
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Cross-Collateralization. Certain of the Mortgage Loans may be secured by
more than one mortgage covering real 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 real property
located in another state, it may be necessary upon the occurrence of an event of
default 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 related real 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 related ground lease or
if 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 in a
separate related 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. As additional
security the mortgagee may require that 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 may file a bankruptcy petition to delay or
prevent the exercise by the mortgagee of its remedies under the related 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 a "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 the
filing of a petition by or against a mortgagor or, by virtue of the doctrine of
"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
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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 the loan amount in arrears 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
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.
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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 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
real property to potential tenants. In certain circumstances, a mortgagee may
choose not to foreclose on contaminated real property rather than risk incurring
liability for remedial actions.
In addition, a mortgagee may be obligated to disclose environmental
conditions on a mortgaged 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 real 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 real properties are
conditioned upon cleanup of contamination prior to transfer. In these cases, a
mortgagee that becomes the owner of a real 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",
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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 has 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 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 real
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
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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 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 real 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 real 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
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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 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 amount of the debt upon a monetary or 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.
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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 or is called
to active duty status (including the Army, Navy, Air Force, Marines, Coast
Guard, members of the National Guard or any Reserves 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, would result in a reduction in the amounts distributable 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 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. Title V 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
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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 real property and/or obtain judicial
appointment of a receiver before such mortgagee is entitled to collect rents.
Although mortgagees actually taking possession of the real 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 ownership and
operation of real property. 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 subsequent 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
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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.
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 real 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.
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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 property owner, landlord or other applicable
person. In addition to imposing a possible financial burden on the mortgagor in
its capacity as owner or landlord, the ADA may also impose such requirements on
a foreclosing 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 minimis 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 minimis
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 minimis 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 (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
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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, among other rates, 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.
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
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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.
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.
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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
minimis amount determined under the Code.
Under this de minimis 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, the Trustee will assume 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
used in pricing the Regular Certificates. 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
minimis discount in income pro rata as stated principal payments are received.
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 minimis, 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 below .65 and 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,
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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 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
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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 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 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,
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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
minimis OID, market discount, de minimis 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 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.
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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 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 short-term 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
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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 1999, estimated to be $126,600, or
$63,300, 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 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.
The Code as of the date of this Prospectus provides for lower rates as to
long-term capital gains than those applicable to the short-term capital gains
and ordinary income realized or received by individuals. No such rate
differential exists for corporations. However, the distinction between a capital
gain or loss and ordinary income or loss remains relevant for other purposes.
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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 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 minimis 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 minimis 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
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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 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 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
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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 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
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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 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.
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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 (other than a cooperative
described in Section 521 of the Code) 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 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" (other than an "electing large
partnership") 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 (other
than an "electing large partnership") 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. Special rules exist for
"electing large
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partnerships" which hold Residual Certificates. These rules are generally less
favorable than the rules that apply to other Pass-Through Entities that hold
Residual Certificates. Electing large partnerships should consult their tax
advisors before purchasing such Certificates.
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 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 Residual Interest (and any 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. It is recommended that
prospective purchasers of Residual Certificates consult their tax advisors
regarding application of the mark-to-market rules.
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.
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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
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 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."
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On October 6, 1997, the IRS issued proposed regulations which modify the
United States taxation of foreign investors holding Regular Certificates or
Residual Certificates. The proposed regulations, as modified by Notice 99-25,
apply to payments after December 31, 2000. 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 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.
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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 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.
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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 minimis 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 minimis 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 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 minimis
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
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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 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
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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 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
enable such Certificateholders to prepare their
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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 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 any 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
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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
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,
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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, any Similar Law of
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 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
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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.
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.
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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, 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.....................................................................iii
1986 Act......................................................................56
ACMs..........................................................................43
ADA...........................................................................48
Agreement..................................................................2, 14
AMTI..........................................................................61
Applicable Amount.............................................................57
Bankruptcy Code...............................................................36
Cash Flow Bond Method.........................................................68
CERCLA....................................................................11, 41
Certificateholders............................................................15
Certificates..............................................................i. See
Classes........................................................................i
Closing Date..................................................................20
Code.......................................................................4, 48
Code Plans....................................................................70
Collection Account.........................................................2, 15
Commission...................................................................iii
Compound Interest Certificates................................................51
Counsel.......................................................................48
Credit Enhancement.........................................................2, 29
Cut-off Date...............................................................3, 15
Department....................................................................71
Depositor......................................................................i
Disqualified Organizations................................................12, 62
Distribution Account.......................................................2, 15
Distribution Date..........................................................3, 15
Enhancement Act...............................................................72
EPA...........................................................................43
ERISA......................................................................4, 70
ERISA Plans...................................................................70
Escrow Account................................................................23
Escrow Payments...............................................................23
Event of Default..............................................................28
Fannie Mae....................................................................16
FHA...........................................................................21
FHLMC.........................................................................16
Forfeiture Laws...............................................................47
Form 8-K......................................................................20
Garn-St. Germain Act..........................................................44
Hazardous Materials...........................................................42
HUD...........................................................................21
Installment Contracts......................................................1, 18
Interest Weighted Certificate.............................................53, 68
IRS...........................................................................50
Lead Paint Act................................................................43
Lender Liability Act..........................................................42
Master Servicer...............................................................23
Master Servicer Remittance Date...............................................16
Midland.......................................................................13
Mortgage...................................................................1, 18
Mortgage Loan..............................................................1, 19
Mortgage Loan File............................................................20
Mortgage Loan Groups..........................................................20
Mortgage Loan Schedule........................................................20
Mortgage Loans................................................................ii
Mortgage Pool..............................................................ii, 1
Mortgaged Property.........................................................1, 18
Multiple Variable Rate........................................................54
NCUA..........................................................................46
Negative Adjustment...........................................................69
Noncontingent Bond Method.................................................54, 68
Non-U.S. Person...............................................................64
Note..........................................................................19
Offered Certificates...........................................................i
OID...........................................................................51
OID Regulations...............................................................49
Pass-Through Certificates.....................................................66
Pass-Through Rate.............................................................ii
Permitted Investments.........................................................16
Plan...........................................................................4
Plans.........................................................................70
Policy Statement..............................................................72
Premium Regulations...........................................................56
Prepayment Assumption.........................................................53
Property Protection Expenses..................................................15
PTCE..........................................................................72
Rating Agency..............................................................4, 14
Ratio Strip Certificates......................................................68
Registration Statement.......................................................iii
Regular Certificates.......................................................4, 51
Regular Interests..............................................................4
Regulations...................................................................71
Relief Act....................................................................45
REMIC.........................................................................ii
REMIC Certificates............................................................49
REMIC Provisions..............................................................49
REMIC Regulations.............................................................49
REO Account...................................................................16
REO Property..................................................................14
Reserve Account...............................................................14
Reserve Fund..................................................................30
Residual Certificate..........................................................59
Residual Certificates..........................................................4
Residual Interests.............................................................4
S&P...........................................................................17
Seller........................................................................21
Senior Certificates...........................................................30
Series.........................................................................i
Servicing Fee.............................................................25, 66
Similar Law...................................................................70
Simple Interest Loans.........................................................19
Single Variable Rate..........................................................52
Special Servicer...............................................................1
Special Servicing Fee.........................................................25
Specially Serviced Mortgage Loans.............................................23
Startup Day...............................................................49, 58
Stripped Certificates.........................................................66
Subordinate Certificates......................................................30
Tiered REMICs.................................................................51
TIN...........................................................................63
Title V.......................................................................45
Title VIII....................................................................46
Trust Fund.................................................................i, 14
Trustee....................................................................1, 18
75
<PAGE>
U.S. Person...................................................................62
UBTI..........................................................................61
UCC...........................................................................33
Underwriter's Exemption.......................................................72
USTs..........................................................................43
Voting Rights.................................................................12
76
<PAGE>
The attached diskette contains one spreadsheet file (the "spreadsheet
file") that can be put on a user-specified hard drive or network drive. This
file is "PNC99CM1.XLS". The file "PNC99CM1.XLS" is a Microsoft Excel(1), Version
5.0 spreadsheet. The file provides, in electronic format, certain statistical
information that appears under the caption "Description of the Mortgage Pool"
in, and on Exhibits A-1 and A-2 to, this prospectus supplement. Defined terms
used, but not otherwise defined, in the spreadsheet file will have the
respective meanings assigned to them in this prospectus supplement. All the
information contained in the spreadsheet file is subject to the same limitations
and qualifications contained in this prospectus supplement. Prospective
investors are strongly urged to read this prospectus supplement and accompanying
prospectus in its entirety prior to accessing the spreadsheet file.
----------------
(1) Microsoft Excel is a registered trademark of Microsoft Corporation.
<PAGE>
================================================================================
TABLE OF CONTENTS
Page
Prospectus Supplement
Important Notice About Information Presented in
this Prospectus Supplement and the
Accompanying Prospectus ................................................ S-2
Summary .................................................................. S-4
Risk Factors ............................................................ S-13
Description of the Mortgage Pool ........................................ S-30
Master Servicer and Special Servicer .................................... S-46
Description of the Certificates ......................................... S-49
Yield and Maturity Considerations ....................................... S-62
The Pooling and Servicing Agreement ..................................... S-68
Material Federal Income Tax Consequences ................................ S-85
Certain Legal Aspects of Mortgage Loans
Located in California and Texas ....................................... S-87
ERISA Considerations .................................................... S-88
Legal Investment ........................................................ S-92
Plan of Distribution .................................................... S-93
Use of Proceeds ......................................................... S-94
Legal Matters ........................................................... S-94
Ratings ................................................................. S-94
Index of Definitions .................................................... S-96
Exhibit A-1--Certain Characteristics of the
Mortgage Loans and Mortgaged Properties .............................. A-1-1
Exhibit A-2--Mortgage Pool Information ................................. A-2-1
Exhibit B--Significant Loan Summaries .................................... B-1
Exhibit C--Form of Trustee Report ........................................ C-1
Exhibit D--Decrement Tables for the Certificates of the Class A-1A,
A-1B, A-2, A-3, A-4, B-1 and B-2 Certificates .......................... D-1
Exhibit E--Price/Yield Tables for the Class S Certificates ............... E-1
Exhibit F--Summary Term Sheet ............................................ F-1
Prospectus
Prospectus Supplement .................................................... ii
Additional Information ................................................... iii
Incorporation of Certain Information by Reference ........................ iii
Reports .................................................................. iii
Summary of Prospectus .................................................... 1
Risk Factors ............................................................. 5
The Depositor ............................................................ 13
The Master Servicer ...................................................... 13
Use of Proceeds .......................................................... 13
Description of the Certificates .......................................... 14
The Mortgage Pools ....................................................... 18
Servicing of the Mortgage Loans .......................................... 23
Credit Enhancement ....................................................... 29
Certain Legal Aspects of the Mortgage Loans............................... 32
Material Federal Income Tax Consequences ................................. 48
State Tax Considerations ................................................. 70
ERISA Considerations ..................................................... 70
Legal Investment ......................................................... 72
Plan of Distribution ..................................................... 73
Legal Matters ............................................................ 73
Financial Information .................................................... 73
Ratings .................................................................. 74
Index of Definitions ..................................................... 75
================================================================================
================================================================================
$678,669,000 (Approximate)
PNC Mortgage Acceptance Corp.
(Depositor)
Midland Loan Services, Inc.
and
Column Financial, Inc.
(Mortgage Loan Sellers)
Class S, Class A-1A, Class A-1B,
Class A-2, Class A-3, Class A-4,
Class B-1 and Class B-2
Commercial Mortgage Pass-
Through Certificates,
Series 1999-CM1
- --------------------------------------------------------------------------------
PROSPECTUS SUPPLEMENT
- --------------------------------------------------------------------------------
Donaldson, Lufkin & Jenrette
PNC Capital Markets, Inc.
Prudential Securities
November 22, 1999
================================================================================