<PAGE>
Filed pursuant to Rule 424(b)(5)
Registration Statement No. 333-95447
PROSPECTUS SUPPLEMENT
(To Prospectus dated May 30, 2000)
$716,910,000 (Approximate)
PNC Mortgage Acceptance Corp.
as Depositor
Midland Loan Services, Inc.
CIBC Inc.
Residential Funding Corporation
as Mortgage Loan Sellers and
Midland Loan Services, Inc.
as Master Servicer
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2000-C1
-------------------------
PNC Mortgage Acceptance Corp. is offering six classes of its series
2000-C1 commercial mortgage pass-through certificates, which represent
beneficial ownership interests in a trust. The trust's assets will primarily be
mortgage loans secured by first liens on 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 offered to you involves risks. See "Risk
Factors" beginning on page S-14 of this prospectus supplement and page 9 of the
prospectus.
The following classes of the series 2000-C1 certificates are being
offered by this prospectus supplement.
<TABLE>
<CAPTION>
Initial Approximate Initial Description of
Principal Pass-Through Pass-Through Scheduled Final Ratings
Class Balance Rate Rate Distribution Date Fitch/Moody's
----- ------- ---- ---- ----------------- -------------
<S> <C> <C> <C> <C> <C>
Class A-1 $152,026,000 7.52% Fixed 7/15/2008 AAA/Aaa
Class A-2 $460,741,000 7.61% Fixed 2/15/2010 AAA/Aaa
Class B $34,046,000 7.74% Fixed 3/15/2010 AA/Aa2
Class C $34,047,000 7.74% Fixed 3/15/2010 A/A2
Class D $10,014,000 7.74% Fixed 3/15/2010 A-/A3
Class E $26,036,000 7.74% Fixed 4/15/2010 BBB/Baa2
</TABLE>
The Securities and Exchange Commission and state securities regulators
have not approved or disapproved the offered certificates or determined if this
prospectus supplement and the accompanying prospectus are truthful and complete.
It is unlawful to represent otherwise.
Morgan Stanley & Co. Incorporated, PNC Capital Markets, Inc. and CIBC
World Markets Corp., 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. Morgan Stanley & Co.
Incorporated is acting as sole bookrunner and as co-lead manager with PNC
Capital Markets on this offering. The depositor will receive approximately
$714,923,671 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 Clearstream Banking, societe anonyme, Luxembourg, or the Euroclear
System, in Europe, against payment therefor on or about June 29, 2000.
---------------------------------
MORGAN STANLEY DEAN WITTER PNC CAPITAL MARKETS
CIBC WORLD MARKETS CORP.
---------------------------------
The date of this Prospectus Supplement is June 15, 2000
<PAGE>
[Map showing geographic distribution of mortgage pool]
[PHOTOGRAPHS OF U.S. LOCATIONS]
[PICTURES DEPICTING CERTAIN BUILDINGS]
S-2
<PAGE>
Important Notice about Information Presented in this Prospectus Supplement
and the Accompanying Prospectus
We provide information to you about the offered certificates in two
separate documents that progressively provide more detail:
o the accompanying prospectus, which provides general information, some
of which may not apply to the offered certificates, and
o this prospectus supplement, which describes the specific terms of the
offered certificates.
You should read both this prospectus supplement and the prospectus
before investing in any of the offered certificates.
You should rely only on the information contained in this prospectus
supplement and accompanying prospectus. If the descriptions of the offered
certificates in the prospectus and in this prospectus supplement vary, you
should rely on the information in this prospectus supplement.
We include cross-references in this prospectus supplement and the
prospectus to captions in these materials where you can find further related
discussions. Unless we tell you otherwise, all references to captions are to
sections of this prospectus supplement. The table of contents on page S-4
provides the page numbers on which these captions are located.
You can find a listing of the pages where capitalized terms used in
this prospectus supplement and the prospectus are defined under the caption
"Index of Definitions" on page S-95 in this prospectus supplement.
If you are viewing an electronic copy of this prospectus supplement or
the prospectus, references to internet addresses for web pages contained in this
prospectus supplement or the related prospectus are for informational purposes
only and are intended to be inactive URLs. The depositor and the underwriters
make no representation as to the truth or accuracy of any statements contained
on such web pages.
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 90 days after the date of this prospectus supplement, all dealers
that effect transactions in these securities, whether or not participating in
this offering, may be required to deliver a prospectus. This is in addition to
the dealer's obligation to deliver a prospectus when acting as an underwriter
and with respect to unsold allotments or subscriptions.
S-3
<PAGE>
TABLE OF CONTENTS
SUMMARY..............................................S-5
RISK FACTORS........................................S-14
DESCRIPTION OF THE MORTGAGE POOL....................S-31
General........................................S-31
Security for the Mortgage Loans................S-32
Underwriting Standards.........................S-32
Certain Terms and Conditions of the
Mortgage Loans...............................S-33
Certain Characteristics of the Mortgage Pool...S-37
Other Information..............................S-39
The Sellers....................................S-41
Changes in Mortgage Pool Characteristics.......S-42
Representations and Warranties; Repurchase.....S-42
MASTER SERVICER.....................................S-45
Background.....................................S-45
Midland's Servicing Portfolio..................S-45
SPECIAL SERVICER....................................S-46
DESCRIPTION OF THE CERTIFICATES.....................S-46
General........................................S-46
Principal Balances and Notional Amounts........S-47
Pass-Through Rates.............................S-47
Distributions..................................S-48
Treatment of REO Properties....................S-52
Appraisal Reductions of Loan Balances..........S-52
Application of Realized Losses and Expense
Losses to Principal Balances.................S-53
Prepayment Interest Excesses and Shortfalls....S-54
Scheduled Final Distribution Date..............S-55
Subordination..................................S-55
Optional Termination...........................S-56
Voting Rights..................................S-56
Delivery, Form and Denomination................S-56
Registration and Transfer of Definitive
Certificates.................................S-58
YIELD AND MATURITY CONSIDERATIONS...................S-59
Rate and Timing of Principal Payments..........S-59
Weighted Average Life..........................S-62
THE POOLING AND SERVICING AGREEMENT.................S-67
Assignment of the Mortgage Loans...............S-67
Servicing of the Mortgage Loans; Collection
of Payments..................................S-67
Collection Activities..........................S-68
Advances.......................................S-69
Accounts.......................................S-70
Enforcement of "Due-on-Sale" Clauses..........S-72
Enforcement of "Due-on-Encumbrance" Clauses...S-73
Inspections....................................S-74
Realization Upon Mortgage Loans................S-74
Amendments, Modifications and Waivers..........S-76
The Trustee....................................S-77
The Fiscal Agent...............................S-78
Servicing Compensation and Payment of Expenses.S-79
Special Servicing..............................S-79
The Operating Adviser..........................S-81
Sub-Servicers..................................S-82
Reports to Certificateholders; Where You
Can Find More Information....................S-83
MATERIAL FEDERAL INCOME TAX CONSEQUENCES............S-86
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS LOCATED
IN CALIFORNIA AND NEW YORK........................S-87
California.....................................S-87
New York.......................................S-87
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-92
USE OF PROCEEDS.....................................S-94
LEGAL MATTERS.......................................S-94
RATINGS.............................................S-94
INDEX OF DEFINITIONS................................S-95
APPENDIX I - Mortgage Pool Information...............I-1
APPENDIX II - Certain Characteristics of the
Mortgage Loans....................................II-1
APPENDIX III -- Significant Loan Summaries.........III-1
APPENDIX V - Form of Monthly Distribution Statement.IV-1
TERM SHEET...........................................T-1
S-4
<PAGE>
SUMMARY
o This summary highlights selected information from this prospectus
supplement and does not contain all of the information that you need to
consider in making your investment decision. To understand the terms of
the offered certificates you must carefully read this entire document
and the accompanying prospectus.
o This summary provides an overview of certain calculations, cash flows
and other information to aid your understanding and is qualified by the
full description of these calculations, cash flows and other
information in this prospectus supplement and the accompanying
prospectus.
o We provide information on the privately offered certificates in this
prospectus supplement only to enhance your understanding of the offered
certificates.
o All numerical information about the mortgage loans is provided on an
approximate basis.
o Unless we tell you otherwise, all percentages of the mortgage loans, or
any group of mortgage loans, referred to in this prospectus supplement
are based on the principal balances as of the cut-off date and not the
number of mortgage loans.
<TABLE>
<CAPTION>
Approximate Approximate Weighted Description Approximate
Initial Rating by Percent of Percent of Average Principal of Initial
Principal Fitch/ Initial Credit Life Window Pass-Through Pass-Through
Class Balance Moody's Pool Balance Support (Years) (Months) Rate Rate
---------- -------------- ----------- ------------- ------------- ----------- ---------- ------------ --------------
Senior Certificates
<S> <C> <C> <C> <C> <C> <C> <C>
A-1 $152,026,000 AAA/Aaa 18.98% 23.50% 5.7 1-97 Fixed 7.52%
A-2 $460,741,000 AAA/Aaa 57.52% 23.50% 9.0 97-116 Fixed 7.61%
X $801,024,722 -- N/A N/A -- -- -- --
Subordinate Certificates
B $ 34,046,000 AA/Aa2 4.25% 19.25% 9.6 116-117 Fixed 7.74%
C $ 34,047,000 A/A2 4.25% 15.00% 9.7 117-117 Fixed 7.74%
D $ 10,014,000 A-/A3 1.25% 13.75% 9.7 117-117 Fixed 7.74%
E $ 26,036,000 BBB/Baa2 3.25% 10.50% 9.7 117-118 Fixed 7.74%
F-O $ 84,114,722 -- 10.50% -- -- -- -- --
</TABLE>
[_] Offered certificates. [_] These
certificates are
not offered by
this prospectus
supplement. They
constitute
"privately offered
certificates".
The initial principal balances and notional amounts for each class of
certificates may vary by up to 5%.
The percentages indicated under the column "Approximate Percent of Credit
Support" with respect to the class A-1 and class A-2 certificates represent the
approximate credit support for the class A-1 and class A-2 certificates in the
aggregate.
The column entitled "Principal Window" lists the months following the closing
during which certificateholders would receive distributions of principal. The
weighted average life and principal window figures are based on the maturity
assumptions described under "Yield and Maturity Considerations" assuming no
prepayments and that the hyper-amortization loans pay on their anticipated
repayment dates.
For any distribution date, the pass through rate for the offered certificates
may not exceed the weighted average of the net mortgage rates.
The privately offered certificates will also include the following classes of
certificates that are not shown above: class V, 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-5
<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 "PNC Mortgage Acceptance Corp." in the
prospectus.
Sellers
Midland Loan Services, Inc., a wholly owned subsidiary of PNC Bank,
N.A., is selling 107 loans (52.3%). Midland is an affiliate of PNC Capital
Markets, Inc.
CIBC Inc. is selling 58 loans (28.7%). CIBC Inc. is an affiliate of
CIBC World Markets Corp.
Residential Funding Corporation is selling 59 loans (19.0%).
Residential Funding Corporation is an affiliate of GMAC Commercial Mortgage
Corporation.
Book-running Lead Manager
Morgan Stanley & Co. Incorporated.
Underwriters
Morgan Stanley & Co. Incorporated, PNC Capital Markets, Inc. and CIBC
World Markets Corp.
Master Servicer
Midland Loan Services, Inc. or any successor master servicer. See
"Master Servicer".
Special Servicer
GMAC Commercial Mortgage Corporation, or any successor special
servicer. See "Special Servicer".
Trustee
LaSalle Bank National Association. See "The Pooling and Servicing
Agreement--The Trustee".
Fiscal Agent
ABN AMRO Bank N.V., a Netherlands banking corporation. See "The Pooling
and Servicing Agreement--The Fiscal Agent".
Controlling Class
The most subordinate class of principal balance certificates that has
at least 25% of its initial principal balance still outstanding. 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.
Operating Adviser
G2 Opportunity Fund LP or, if it no longer owns at least 50% of the
Controlling Class, the holders of a simple majority of the controlling class,
may appoint an operating adviser as their representative. The master servicer
and the special servicer must notify the operating adviser before taking certain
actions. The operating adviser may replace the special servicer without cause.
See "The Pooling and Servicing Agreement--Special Servicing--Ability of
Operating Adviser to Remove Special Servicer" and "--The Operating Adviser".
-------------------------
S-6
<PAGE>
Significant Dates
Cut-off Date
June 1, 2000.
Closing Date
On or about June 29, 2000.
Distribution Date
The 15th of each month, or if the 15th is not a business day, the next
business day, beginning in July, 2000.
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.
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 March, 2033, which is the distribution date
occurring three years after the latest maturity date for any of the mortgage
loans as of 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 fifth business day before the
distribution date.
Due Date
The date scheduled payments come due under each mortgage loan
(disregarding grace periods). The due date for all the mortgage loans is the
first day of the month.
--------------------------------------------
Information About the Certificates
Offered Certificates
We are offering the following classes of PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates, Series 2000-C1.
class A-1
class A-2
class B
class C
class D
class E
We have not registered the other classes of certificates under the
Securities Act of 1933 and are not offering them to you.
The approximate initial class principal balance, initial pass-through
rate and interest type of each class of the offered certificates will be as
listed on the chart on page S-5.
S-7
<PAGE>
Certificate Designations
In this prospectus supplement, we will refer to the following groups of
certificates by the indicated designations:
-----------------------------------------------------
Designation Related Classes
-----------------------------------------------------
Offered certificates Classes A-1, A-2, B, C, D
and E
Privately offered Classes X, F, G, H, J, K,
certificates L, M, N, O, V, R-I, R-II
and R-III
Senior certificates Classes A-1, A-2 and X
Principal balance A-1, A-2, B, C, D, E, F,
certificates G, H, J, K, L, M, N and O
Interest only Class X
certificates
Subordinate certificates Classes B, C, D, E, F, G,
H, J, K, L, M, N and O
Deferred interest Class V
certificates
Residual certificates Classes R-I, R-II and
R-III
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 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 pro rata to the
holders of the senior certificates in an amount equal to their interest
entitlement.
Principal on Class A-1 and Class A-2 Certificates: to pay principal
from the funds available for principal distributions to the holders of the class
A-1 and class A-2 certificates, in that order, until reduced to zero. If the
principal amount of each class of principal balance certificates other than the
class A-1 and class A-2 certificate has been reduced to zero, funds available
for principal distributions will be distributed to the holders of the class A-1
and class A-2 certificates, pro rata, rather than sequentially.
Reimbursement of Class A-1 and Class A-2 Losses: to reimburse the
holders of the class A-1 and class A-2 certificates, pro rata, for any losses on
the mortgage loans that resulted in an unreimbursed reduction of the principal
balances of such certificates.
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 order of class designation. In the case of each
class of subordinate certificates, the 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-1 and class A-2
certificates and each other class of subordinate certificates, if any, with
an earlier alphabetical class designation has been reduced to zero; and
o third, to reimburse the class for any losses on the mortgage loans that
resulted in an unreimbursed reduction of the principal balance of such
class of certificates.
Each class of subordinate certificates will receive distributions only
after all required distributions have been made on the senior certificates and
each other class of subordinate certificates, if any, with an earlier
alphabetical class designation.
Distribution of Prepayment Premiums
Any prepayment premium collected on a mortgage loan during a collection
period will be distributed on the next distribution date as and to the extent
set forth in "Description of the Certificates--Distributions--Distributions of
Prepayment Premiums".
S-8
<PAGE>
Subordination
The rights of the subordinate certificates to receive payments of
principal and interest will be subordinated to the rights of the senior
certificates. Each class of subordinate certificates is also subordinate to the
rights of holders of each other class of subordinate certificates with an
earlier alphabetical class designation.
Such subordination results from:
o applying the funds available from the 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 class designations.
After the balances of all subordinate certificates have been reduced to
zero, losses are allocated to the class A-1 and class A-2 certificates in
proportion to their class principal balances.
The certificates have no other form of credit enhancement.
Interest Shortfalls and Excesses Due to Prepayments and Balloon Payments
If a borrower prepays a loan or makes a balloon payment on a loan
before the determination date in any calendar month and pays interest which
accrued on the prepayment or balloon payment from the beginning of the calendar
month, then that interest, net of related master servicer fees, is a
"prepayment/balloon payment interest excess".
If a borrower prepays a loan or makes a balloon payment on a loan after
the determination date in a calendar month and does not pay interest on the
prepayment or balloon payment through the end of the calendar month, then this
interest shortfall, net of related master servicer fees, is a
"prepayment/balloon payment interest shortfall".
Prepayment/balloon payment interest excesses collected during a
collection period will first offset prepayment/balloon payment interest
shortfalls during the collection period. The master servicer retains any
remaining amount as additional servicing compensation. The master servicer must
cover prepayment/balloon payment interest shortfalls not offset by
prepayment/balloon payment interest excesses from its own funds up to certain
maximum amounts.
If and to the extent there are prepayment/balloon payment interest
shortfalls not offset by prepayment/balloon payment interest excesses or covered
by the master servicer from its own funds, then those prepayment/balloon payment
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.
The master servicer must also make advances to cover certain servicing expenses.
The special servicer must make advances to cover certain servicing expenses that
need to be paid on an emergency basis.
If the special servicer fails to make a required emergency advance, the
master servicer must make it. If the master servicer fails to make a required
advance, the trustee must make it. If the trustee fails to make a required
advance, the fiscal agent must make it.
Advances are required only if the advancing party determines in its
reasonable discretion that they are ultimately recoverable from future
collections on the related mortgage loan or mortgaged property.
All advances will accrue interest at the "prime rate".
To the extent not offset by collected late payment charges or default
interest on the related 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 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 certain reserves pledged as
S-9
<PAGE>
collateral for the loan, 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 of Loan Balances".
------------------------------------------
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 224 fixed-rate loans with a total cut-off date principal balance of
approximately $801,024,722 (plus or minus 5%). In making this count, where a
single indebtedness is secured by mortgages over multiple separate properties,
each of those separate properties was generally counted as a separate loan
created by allocating a pro rata portion of the cut-off date principal balance
secured by the separate properties.
A first lien on a fee simple or leasehold estate in a mortgaged
property secures each loan.
o Fee - 212 loans (92.0%).
o Leasehold - 12 loans (8.0%).
The mortgage pool includes 6 separate sets of cross-collateralized
loans. The largest of these sets constitutes 2.4% of the initial pool balance.
No person or entity insures or guarantees any of the loans. You should
consider all of the loans to be non-recourse loans.
209 loans (96.7%) are "balloon loans" that are expected to have more
than 5% of their original principal balance remaining unpaid at their maturity
date. 34 of these balloon loans (28.4%) are hyper-amortization loans and provide
for an increase in their interest rate and/or principal amortization prior to
maturity.
The loans generally grant the related borrower a right to transfer its
loan under certain conditions, including the lender's prior consent. Some of the
loans may provide that the lender cannot unreasonably withhold its consent to
the proposed transferee.
Property types included in the mortgage pool include:
o retail - 75 loans (29.6%).
o multifamily - 62 loans (28.6%).
o office - 35 loans (16.1%).
o industrial - 32 loans (16.4%).
o hospitality - 8 loans (6.7%).
o self storage - 7 loans (1.3%).
o mixed use - 4 loan (1.3%).
o other - 1 loan (0.1%).
Loans secured by properties located in California and New York each
represent more than 10% of the initial pool balance. Also, loans secured by
properties located in Pennsylvania, Michigan, Texas and New Jersey each
represent more than 5%, but less than 10%, of the initial pool balance. None of
the remaining 30 jurisdictions have mortgaged properties securing loans
representing 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 3.4% of the initial pool balance.
90 loans (35.1%) are secured by properties at least 50% occupied by a
major tenant or the borrower.
157 loans (69.7%) permit the borrower to defease its loan, subject to
certain conditions.
Other than loans allowing defeasance, the loans generally permit
voluntary prepayments after any lock-out period if a prepayment premium is also
paid. Prepayment premiums are generally calculated based on a yield maintenance
formula or a specified percentage of the amount prepaid. The prepayment premium
percentage may remain constant or decline over time. The "Percentage of Mortgage
Pool Balance by Prepayment Restriction" table included in the attached Term
Sheet analyzes the percentage of the declining balance of the mortgage pool that
will be within a lock-out period or in which principal
S-10
<PAGE>
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 6.5% to 10.0% per annum, with a weighted average
mortgage rate of 8.1% per annum;
o remaining terms to stated maturity range from 73 months to 237 months, with
a weighted average remaining term to stated maturity of 114 months;
o cut-off date principal balances range from $281,659 to $27,208,269, with an
average cut-off date principal balance of $3,576,003;
o a weighted average debt service coverage ratio of 1.35x; and
o a weighted average cut-off date loan to value ratio of 70.6%.
The characteristics of the loans are more fully described under
"Description of the Mortgage Pool" and in the Appendices.
------------------------------------------
Yield and Prepayment Considerations
The yield on 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 of
the certificate;
o appraisal reductions;
o expense losses; and
o realized losses.
See "Description of the Certificates--Distributions--Applying Available
Funds" and "--Distributions--Principal Distribution Amount".
We cannot predict the actual rate of principal prepayments. You should
independently estimate prepayment rates to use in evaluating an investment in
the offered certificates. See "Yield and Maturity Considerations".
A different rate of principal payments than you anticipate will cause
the actual yield to vary, perhaps significantly, from your expected yield.
You may be unable to reinvest principal distributions in an alternative
investment with a comparable yield.
-----------------------------------------------------
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 E certificates will be issued with original issue discount. The
class B, class C and class D certificates will be issued with de minimis
original issue discount. The class A-1 and class A-2 certificates will not
be issued with original issue discount.
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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 of the loans 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 class A-l and A-2 certificates in minimum
denominations of $25,000 initial principal balance and in any higher
whole-dollar denomination. You may purchase class B, class C, class D and class
E certificates in minimum denominations of $50,000 initial principal balance 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 Clearstream Banking, societe
anonyme, Luxembourg, or the Euroclear System. DTC, Clearstream or Euroclear
rules and operating procedures govern transfers within the system.
ERISA Considerations
Subject to important considerations described under "ERISA
Considerations" in this prospectus supplement and in the accompanying
prospectus, the class A-1 and class A-2 certificates are eligible for purchase
by persons investing assets of employee benefit plans or individual retirement
accounts.
The class B, class C, class D and class E 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 Fitch, Inc. (or its successors and assigns) and
Moody's Investors Service, Inc. (or its successors and assigns).
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
None of the classes of offered certificates will constitute "mortgage
related securities" for purposes of the Secondary Mortgage Market Enhancement
Act of 1984.
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If your investment authority is restricted by law, then you should
consult your own legal advisors to determine whether and to what extent the
offered certificates constitute legal investments for you. See "Legal
Investment" in this prospectus supplement and in the prospectus.
Reports To Certificateholders
The trustee will make monthly reports to certificateholders of record.
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RISK FACTORS
You should carefully consider the risks before making an investment
decision. In particular, the timing and amount of distributions on your
certificates will depend on payments received on and other recoveries with
respect to the loans. Therefore, you should carefully consider the risk factors
relating to the loans and the mortgaged properties.
The risks and uncertainties described below are not the only ones
relating to the 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.
167 loans (70.5%) 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;
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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
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.
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Each of these risks is more significant if a mortgaged property is
leased to a single tenant.
In 90 loans (35.0%) a single tenant or the borrower occupies more than
50% of the related mortgaged property.
A concentration of particular tenants among the mortgaged properties or
of tenants in a particular business or industry may also adversely affect retail
and office properties.
Leasing Mortgaged Properties to Multiple Tenants May Result in Higher Re-Leasing
Expenditures, Which May Have an Adverse Effect on the Payment of Your
Certificates
If a mortgaged property has multiple tenants, re-leasing expenditures
may be more 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 3 largest loans, or groups of cross-collateralized loans, represent
8.8% 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 2.4% 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 3 largest of these
groups represent 3.4%, 2.9% and 2.6% of the initial pool balance.
The bankruptcy or insolvency of any borrower in any such group could
have an adverse effect on the operation of all of the related mortgaged
properties and on the ability of such related mortgaged properties to produce
sufficient cash flow to make required payments on the related loans. For
example, if a person that owns or controls several mortgaged properties
experiences financial difficulty at one such property, it could:
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 36 jurisdictions. Loans secured
by mortgaged properties located in each of California and New York represent
approximately 13.6% and 13.5% of the initial pool balance. Loans secured by
mortgaged properties located in each of Pennsylvania, Michigan, Texas and New
Jersey each represent more than 5%, but less than 10%, of the initial pool
balance. None of the remaining 30 jurisdictions have mortgaged properties
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securing loans representing 5% or more of the initial pool balance. See
"Description of the Mortgage Pool".
Large Concentrations of Retail Properties Securing Loans Will Subject Your
Investment to the Special Risks of These Properties
Retail properties secure 75 of the loans (29.6%). 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 retail properties 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
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 Multifamily Properties Securing Loans Will Subject Your
Investment to the Special Risks of These Properties
Multifamily properties secure 62 of the loans (28.6%).
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;
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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.
Large Concentrations of Office Properties Securing Loans Will Subject Your
Investment to the Special Risks of These Properties
Office properties secure 35 of the loans (16.1%).
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 32 of the loans (16.4%). 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 8 of the loans (6.7%). 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
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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.
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
8 of the hospitality properties (6.7%) 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 1 loan (2.2%) secured by a mortgaged
property operated as a Holiday Inn.
Large Concentrations of Self Storage Properties Securing Loans Will Subject Your
Investment to the Special Risks of These Properties
Self storage properties secure 7 of the loans (1.3%).
Tenant privacy, anonymity and unsupervised access may heighten
environmental risks in a loan secured by a self storage property. The
environmental site assessments discussed in this prospectus supplement did not
include an inspection of the contents of the individual self-storage units.
Thus, there is no assurance that these individual units are free from hazardous
substances or other pollutants or contaminants or will remain so in the future.
As leases for individual self storage units are typically short term, these
properties also may be subject to more volatility than loans secured by other
types of properties.
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
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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.
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 Mortgage Loans" in the prospectus.
Environmental Issues Relating to Specific Properties May Have an Adverse Effect
on the Payment of Your Certificates
The mortgaged properties securing 220 of the loans (99.7%) have been
subject to environmental site assessments in connection with the origination or
acquisition of the loans. The assessments for the mortgaged properties securing
10 of those loans (0.8%) 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 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
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to cover remediation costs, an environmental insurance policy has been obtained
to cover potential clean-up costs or an indemnity was obtained from a culpable
party:
o 3 mortgaged properties (2.2%) - potential or existing contamination arising
from the operation of dry cleaning facilities upon or near such properties;
o 5 mortgaged properties (1.1%) - 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 (1.9%) - by the former uses of this property as a gas
station, automobile repair facility, tannery and metal works facility;
o 3 mortgaged properties (1.2%) - by the presence of aboveground or
underground storage tanks upon this property; and
o 2 mortgaged properties (0.4%) - 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.
No environmental site assessments were obtained for the mortgaged
properties securing 4 loans (0.3%). However, the related originator obtained a
secured creditor impaired property policy covering certain environmental matters
with respect to such mortgaged properties.
Each environmental insurance policy obtained with respect to a
mortgaged property contains certain coverage limits, and reporting and notice
requirements. 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
insurance proceeds or escrowed funds will be sufficient to complete remediation
of any environmental conditions affecting the related mortgaged property.
The environmental assessments have not revealed any environmental
liability that the depositor believes would have a material adverse effect on
the borrowers' businesses, assets or results of operations taken as a whole.
Nevertheless, there may be material environmental liabilities of which the
depositor is unaware. Moreover, there is no assurance that:
o future laws, ordinances or regulations will not impose any material
environmental liability; or
o the current environmental condition of the mortgaged properties will not be
adversely affected by tenants or by the condition of land or operations in
the vicinity of the mortgaged properties, such as underground storage
tanks.
Before the special servicer acquires title to a property on behalf of
the trust or assumes operation of the 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
209 of the loans (96.7%) are expected to have more than 5% 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.
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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.
See "Description of the Mortgage Pool - Certain Terms and Conditions of
the Mortgage Loans".
Borrowers That Are Organized as Special Purpose Entities Are Subject to the Risk
of Substantive Consolidation.
Some of the borrowers are organized as special purpose entities with an
independent director whose consent is required if the borrower were to file a
voluntary bankruptcy petition.
In the event of the bankruptcy of their parent, these borrowers have
been organized so as to avoid a substantive consolidation into their parent's
bankruptcy estate. However, despite this organizational structure, there is
nevertheless the risk that a bankruptcy court could consolidate the borrower
into its parent's bankruptcy, if the separateness criteria put in place at the
borrower's formation are not observed.
Borrowers That Are Not Special-Purpose Entities May be More Likely to Pursue a
Bankruptcy
The organizational documents of some of the borrowers do not limit the
borrowers' business activities to owning their respective properties.
Most of the borrowers (and any special-purpose entity having an
interest in any of the borrowers) do not have an independent director whose
consent would be required to file a voluntary bankruptcy petition on behalf of
the borrower.
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, for 1 loan
(0.2%), the related borrower is permitted to maintain an existing subordinate
mortgage over the related mortgaged property.
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
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other lender has agreed not to foreclose. A foreclosure by the other lender may
cause a delay in payments and/or an involuntary repayment of the loan prior to
maturity. The trust may also be subject to the costs and administrative burdens
of involvement in foreclosure proceedings or related litigation.
Bankruptcy Proceedings Relating to a Borrower May Result in a Restructuring of
the Loan
Under federal bankruptcy law, the filing of a petition in bankruptcy by
or against a borrower will stay the sale of the real property that the borrower
owns, as well as the commencement or continuation of a foreclosure action. In
addition, if a court determines that the value of the mortgaged property is less
than the principal balance of the loan it secures, the court may prevent a
lender from foreclosing on the mortgaged property, subject to certain
protections available to the lender. As part of a restructuring plan, a court
also may reduce the amount of secured indebtedness to the current value of the
mortgaged property. Such an action would make the lender a general unsecured
creditor for the difference between the current value of the property and the
amount of its loan. A bankruptcy court also may:
o grant a debtor a reasonable time to cure a payment default on a loan;
o reduce monthly payments due under a loan;
o change the rate of interest due on a loan; or
o otherwise alter the loan's repayment schedule.
Moreover, the filing of a petition in bankruptcy by, or on behalf of, a
junior lienholder may stay the senior lienholder from taking action to foreclose
on the junior lien. Additionally, the borrower's trustee or the borrower, as
debtor-in-possession, has certain special powers to avoid, subordinate or
disallow debts. In certain circumstances, the claims of the trustee may be
subordinated to financing obtained by a debtor-in-possession subsequent to its
bankruptcy.
Under federal bankruptcy law, the lender will be stayed from enforcing
a borrower's assignment of rents and leases. Federal bankruptcy law also may
interfere with a lender's ability to enforce any lockbox requirements. The legal
proceedings necessary to resolve these issues can be time-consuming and may
significantly delay the lender's receipt of rents. Rents also may escape an
assignment if the borrower uses the rents to maintain the mortgaged property or
for other court authorized expenses.
Thus, the trustee's recovery from borrowers in bankruptcy proceedings
may be significantly delayed, and the total amount ultimately collected may be
substantially less than the amount owed.
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.
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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
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. Earthquake insurance was required for all loans where the probable
maximum loss exceeded 20%.
As a result of any of the foregoing, the amount available to make
distributions on the certificates could be reduced.
Appraisals May Inaccurately Reflect the Value of the Mortgaged 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 Appendix I, Appendix II and Appendix III for
illustrative purposes only.
The Timing of Loan Amortization May Have an Adverse Effect on the Payment of
Your Certificates
As principal payments or prepayments are made on loans in the mortgage
pool, the remaining 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 certificates that have a later alphabetical designation or a
lower payment priority are more likely to be exposed to this concentration risk
than are classes with an earlier alphabetical 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.
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Subordination of Subordinate Certificates Will Affect the Timing of Payments and
the Application of Losses on Your Certificates
As described in this prospectus supplement, unless your certificates
are class A-1 or class A-2 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 principal balance certificates with an earlier
alphabetical designation and the interest only certificates. See "Description of
the Certificates--Distributions", "--Application of Realized Losses and Expense
Losses to Principal Balances" and "--Subordination" in this prospectus
supplement and "Description of Credit Support--Subordinate Certificates" 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 sub-tenant or allocable to a
non-customary service, will subject the trust to a federal tax on such income at
the highest marginal corporate tax rate (currently 35%), and in addition, 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.
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.
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Loans Secured by Mortgages on a Leasehold Interest Will Subject Your Investment
to a Risk of Loss Upon a Lease Default
12 of the loans (8.0%) are secured by mortgages encumbering a
borrower's leasehold interest in the property under a ground lease. These loans
include 6 loans (3.6%) secured by a mortgage encumbering both a borrower's
leasehold interest in the related mortgaged property under a ground lease and
the fee interest of the owner of all or a part 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, 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
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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.
The Cash Flow From Mortgaged Properties Not in Compliance With the Americans
with Disabilities Act May be Affected, Which May Have an Adverse Effect on the
Payment of Your Certificates
Under the Americans with Disabilities Act of 1990, all public
accommodations are required to meet certain federal requirements related to
access and use by disabled persons. Borrowers may incur costs complying with the
ADA. In addition, noncompliance could result in the imposition of fines by the
federal government or an award of damages to private litigants.
Various Conflicts of Interest May Have an Adverse Effect on Your Certificates
Conflicts Between Various Classes of Certificateholders. The special
servicer is given considerable latitude in determining when and how to liquidate
or modify defaulted loans. The operating adviser has the right to replace the
special servicer. At any given time, the 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 operating adviser. 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
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the trust than would have been realized if earlier action had been taken.
The special servicer or an affiliate may acquire certain of the most
subordinated certificates, including those that have the right to appoint the
initial operating adviser. Under such circumstances, the special servicer may
have interests that conflict with the interests of the other holders of the
certificates.
Conflicts Between 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.
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.
We anticipate that an affiliate of Residential Funding Corporation will
initially acquire a majority of the controlling class and appoint the initial
operating adviser. In addition, affiliates of the other sellers could in the
future acquire the certificates entitled to appoint the operating adviser.
Decisions made by the operating adviser 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.
Servicers May Have Conflicts of Interest. 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
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 agreement requires the master servicer
or the special servicer, as applicable, 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 and GMAC Commercial Mortgage Corporation may
experience a conflict of interest to the extent that Residential Funding
Corporation is obligated to repurchase or substitute a loan as a seller.
Yield Considerations
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.
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
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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:
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 or balloon payments;
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.
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The rights of holders of each class of subordinate certificates to
receive certain payments of principal and interest otherwise payable on their
certificates will be subordinated to the rights of the holders of the more
senior certificates having an earlier alphabetical class designation. See
"Description of the Certificates - Distributions". Losses on the loans will be
allocated to the class O, class N, class M, class L, class K, class J, class H,
class G, class F, class E, class D, class C and class B certificates, in that
order, reducing amounts otherwise payable to each class. Any remaining losses
would then be allocated to the class A-1 and class A-2 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 to the Master Servicer, the Special Servicer and the Trustee May
Have an Adverse Effect on the Payment of Your Certificates
To the extent described in this prospectus supplement, the master
servicer, the special servicer, the trustee and the fiscal agent will each be
entitled to receive interest on unreimbursed advances made by it. This interest
will generally accrue from the date on which the related advance is made or the
related expense is incurred through the date of reimbursement. In addition,
under certain circumstances, including delinquencies in the payment of principal
and interest, a loan will be specially serviced, and the special servicer is
entitled to compensation for special servicing activities. The right to receive
interest on advances or special servicing compensation is senior to the rights
of certificateholders to receive distributions.
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 each
of the underwriters currently intends to make a secondary market in the offered
certificates, it is not obligated to do so. Accordingly, you may not have an
active or liquid secondary market for your certificates. Lack of liquidity could
result in a substantial decrease in the market value of your certificates. The
market value of your certificates also may be affected by many other factors,
including the then prevailing interest rates. Furthermore, you should be aware
that the market for securities of the same type as the certificates has recently
been volatile and offered very limited liquidity. Finally, affiliates of the
sellers may acquire certain classes of offered certificates in which case the
market for those classes of offered certificates may not be as liquid as if
third parties had acquired such certificates.
Risk of Pass-Through Rate Variability
The interest rates of the offered certificates may not exceed the
weighted average of the 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 could have
the effect of reducing the interest rate of the offered certificates.
Other Risks
See "Risk Factors" in the prospectus for a description of certain other
risks and special
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considerations that may be applicable to your certificates.
----------------------------------------
DESCRIPTION OF THE MORTGAGE POOL
General
The mortgage pool will consist of 224 multifamily and commercial
"whole" loans, with an aggregate Cut-off Date Principal Balance of $801,024,772
(the "Initial Pool Balance"), subject to a variance of plus or minus 5%. In
making this count, where a single indebtedness is secured by mortgages over
multiple separate properties, each of those separate properties was generally
counted as a separate loan (collectively, the "Multiple Property Loans"),
created by allocating a pro rata portion of the cut-off date principal balance
secured by the separate properties. 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 June 1, 2000 (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 12 largest Mortgage Loans,
or groups of Cross-Collateralized Loans, is set forth in Appendix III.
Additionally, certain information regarding Mortgage Loans secured by Mortgages
encumbering multifamily properties is set forth in Appendix II.
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 Appendix I for information as to the percentage of the
Initial Pool Balance represented by each type of Mortgaged Property.
None of the Mortgage Loans is insured or guaranteed by the United
States of America, 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 fiscal agent, 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 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.
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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
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
12 Mortgage Loans (8.0%) are secured by a first lien encumbering the
related borrower's leasehold interest in the related Mortgaged Property. This
includes 6 mortgage loans (3.6%) secured by mortgages encumbering both the
related borrower's leasehold interest and the fee interest of the owner/landlord
in all or a part of the related mortgaged property. For each ground lease, the
related ground lessors have agreed to afford the mortgagee certain notices and
rights, including without limitation, cure rights with respect to breaches of
the related ground lease by the related borrower.
Cross-Collateralized Loans
The mortgage pool includes 6 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 2.4% of the Initial Pool Balance. See Appendix II for more information
regarding the Cross-Collateralized Loans.
Multiple Property Loans
Except as described below, Multiple Property Loans were created
whenever a single indebtedness is secured by Mortgages over multiple separate
Mortgaged Properties. The Multiple Property Loans were created by allocating a
pro rata portion of the Cut-off Date Principal Balance secured by the related
Mortgaged Properties based upon:
o relative appraised value;
o relative underwritable cash flow; or
o prior allocations reflected in the related loan documents.
In those instances where a single indebtedness is secured by Mortgages
over multiple separate Mortgaged Properties that are contiguous or located in a
concentrated geographic area, and where these Mortgaged Properties are generally
treated as a single property by the related borrower for financial purposes,
this indebtedness is deemed to be a single Mortgage Loan secured by one
Mortgaged Property, and is not considered a Multiple Property Loan.
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;
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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 obtained.
Except as otherwise described in this prospectus supplement, third party Phase I
environmental site assessments were also obtained.
Factors typically analyzed in connection with a prospective borrower
include:
o credit history;
o capitalization and overall financial resources; and
o management skill and experience in the applicable property type.
The above information has been provided by the sellers and has not been
independently verified by the depositor, the master servicer, the special
servicer, the underwriters, the trustee or the fiscal agent.
Certain Terms and Conditions of the Mortgage Loans
Due Dates
Monthly Payments are due on the first day of each month.
Mortgage Rates; Calculations of Interest
223 of the Mortgage Loans (98.7%) accrue interest on the basis of the
actual number of days elapsed each month in an assumed 360-day year. The
remaining Mortgage Loan accrues 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.
209 Mortgage Loans (96.7%) are "balloon loans" that are expected to have more
than 5% of their original principal balance remaining unpaid at their maturity
date. 34 of such balloon loans (28.4%) 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. 15 Mortgage Loans (3.4%) have
remaining amortization terms that are substantially the same as their remaining
terms to maturity. However, if the Monthly Payment for any Mortgage Loan
(including any Hyper-Amortization Loan) is calculated on an assumed 30/360 basis
but interest accrues on an actual/360 basis, there will be a remaining balance
or a larger balloon payment due upon maturity.
The weighted average Balloon LTV Ratio of the mortgage pool is 59.8%.
With respect to 1 Mortgage Loan (0.2%), the grace period for the
payment of Monthly Payments expires on the 16th of each month.
34 of the Mortgage Loans (28.4%) (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;
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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
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 (2.0%), the Revised Interest
Rate is equal to the Initial Interest Rate plus 5%.
Prepayment Provisions
224 of the Mortgage Loans (100%) 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.
In 2 Mortgage Loans (1.4%), the borrower has deposited either a letter
of credit or cash escrow funds with the lender to secure that borrower's
completion of certain leasing conditions within a specified time period. If
those conditions are not completed as required, the amount deposited may be used
to partially prepay the related Mortgage Loan, without a prepayment premium.
2 Mortgage Loans (2.0%) allow the borrower to obtain a release of
either of the 2 separate Mortgaged Properties for such Mortgage Loan upon the
payment of 125% of the Mortgage Loan balance allocated to the Mortgaged Property
being released. 3 other Mortgage Loans (1.9%) allow the related borrower to
obtain a release of a portion of the related Mortgaged Property without
requiring any release payment. The borrower's ability to obtain such release is
dependent upon its providing the lender with an acceptable title insurance
policy endorsement and its payment of all costs and expenses incurred by the
lender in connection with the release.
A borrower does not have to pay a prepayment premium if it pays a
Hyper-Amortization Loan on or after its Anticipated Repayment Date.
For Mortgage Loans other than the Defeasance Loans, the applicable
prepayment premium is generally calculated:
o for a certain period (a "Yield Maintenance Period") after the origination
of the related Mortgage Loan or the expiration of the applicable Lock-out
Period, if any, on the basis of a yield maintenance formula or, for some
Mortgage Loans, a specified percentage of the
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amount prepaid if the percentage is greater than the yield maintenance
amount, and
o after the expiration of the applicable Yield Maintenance Period, a
specified percentage of the amount prepaid, which percentage may either
remain constant or decline over time.
Appendix II contains more specific information about the prepayment
premiums for each Mortgage Loan, including the method of calculation of the
prepayment premiums.
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
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 "Percentage of Mortgage Pool Balance by Prepayment Restriction"
table included in the attached Term Sheet sets forth an analysis of the
percentage of the declining balance of the mortgage pool that, for each of the
time periods indicated, will be within a Lock-out Period or in which Principal
Prepayments must be accompanied by the indicated prepayment premium.
Defeasance
For 157 of the Mortgage Loans (69.7%) (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.
A borrower's ability to obtain a release is in each case subject to
certain conditions specified in the related loan documents, including provision
of all opinions of counsel (including opinions as to REMIC issues and full
enforceability of all related mortgage loan documents) and a requirement that a
written confirmation be obtained from the applicable Rating Agency that the
acceptance of the pledge of the substitute collateral in lieu of a full
prepayment will not result in a qualification, downgrade or withdrawal of the
rating then assigned by each Rating Agency to any class of the certificates. The
costs and expenses associated with obtaining a defeasance will not be an expense
of the trust.
"Due-on-Encumbrance" and "Due-on-Sale" Provisions
The Mortgages generally contain "due-on-encumbrance" clauses that
permit the holder of the Mortgage to accelerate the maturity of the related
Mortgage Loan if the borrower encumbers the related Mortgaged Property without
the consent of the mortgagee. The special servicer will determine, in a manner
consistent with the servicing standard described under "The Pooling and
Servicing Agreement--Servicing of the Mortgage Loans; Collection of Payments",
whether to exercise or waive its right to exercise any right the mortgagee may
have under any such clause to accelerate payment of a Mortgage Loan upon 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
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Mortgage Loan documents are satisfied. These conditions may include one or more
of the following:
o no event of default exists;
o the proposed transferee meets the mortgagee's customary underwriting
criteria;
o the Mortgaged Property continues to meet the mortgagee's customary
underwriting criteria; and
o an acceptable assumption agreement is executed.
The related Mortgages may also allow changes in the ownership or
control of the related borrower between partners, members or shareholders as of
the closing of the Mortgage Loan, family members, affiliated companies and
certain specified individuals, or for estate planning purposes.
The special servicer will determine, in a manner consistent with the
servicing standard described under "The Pooling and Servicing
Agreement--Servicing of the Mortgage Loans; Collection of Payments", whether to
exercise or waive its right to exercise any right the mortgagee may have to
accelerate payment of a Mortgage Loan upon 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--Due-on-Sale and Due-on-Encumbrance Provisions" in the
prospectus.
Hazard, Liability and Other Insurance
Generally, each Mortgage Loan requires that the Mortgaged Property be
insured against loss or damage by fire or other risks and hazards covered by a
standard extended coverage insurance policy. The minimum amount of such
insurance is usually the lesser of the full replacement cost of the Mortgaged
Property or the outstanding principal balance of the loan, but in any event in
an amount sufficient to ensure that the insurer would not deem the borrower a
co-insurer. Generally, each Mortgage Loan also requires that the related
borrower maintain the following insurance during the term of the Mortgage Loan:
o comprehensive public liability insurance, typically with a minimum limit of
$1,000,000 per occurrence;
o if any part of the Mortgaged Property upon which a material improvement is
located lies in a special flood hazard area and for which flood insurance
has been made available, a flood insurance policy in an amount equal to the
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
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
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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.
Borrower Escrows and Reserve Accounts
In many of the Mortgage Loans, the borrower was required, or may under
certain circumstances in the future be required, to establish one or more
reserve or escrow accounts (such accounts, "Reserve Accounts") for those matters
and in such amounts deemed necessary by the originator of the loan. These
matters may include one or more of the following:
o necessary repairs and replacements,
o tenant improvements and leasing commissions,
o real estate taxes and assessments,
o water and sewer charges,
o insurance premiums,
o environmental remediation,
o improvements mandated under the Americans with Disabilities Act of 1990, or
o deferred maintenance and/or scheduled capital improvements.
Appendix II 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 3.4% of the Initial Pool Balance. The 3 largest individual
Mortgage Loans (or sets of Cross-Collateralized Loans) represent in the
aggregate 8.7% 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 3.4% of the Initial Pool Balance. See Appendix II for further information
regarding these Mortgage Loans.
Environmental Risks
Environmental site assessments were obtained for the Mortgaged
Properties securing 167 of the Mortgage Loans (74.2%) during the 18-month period
ending on the Cut-off Date. Environmental site assessments were obtained for the
Mortgaged Properties securing 38 Mortgage Loans (15.9%) during the period from
18 months to 24 months prior to the Cut-off Date. Environmental site assessments
were obtained for the Mortgaged Properties securing 15 Mortgage Loans (9.6%)
during the period from 24 months to 30 months prior to the Cut-off Date. The
assessments for the Mortgaged Properties securing 10 of the Mortgage Loans
(0.8%) did not satisfy all of the requirements necessary to be considered "Phase
I" environmental site assessments.
No environmental site assessments were obtained for the Mortgaged
Properties securing 4 Mortgage Loans (0.3%). However, the related originator
obtained a secured creditor impaired property policy covering certain
environmental matters with respect to these Mortgaged Properties.
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
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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 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.
The presence of such contamination or potential contamination 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.
Geographic Concentration
Mortgage Loans secured by Mortgaged Properties located in California
and New York respectively represent approximately 13.6% and 13.5% of the Initial
Pool Balance. Additionally, Mortgage Loans secured by Mortgaged Properties
located in Pennsylvania, Michigan, Texas and New Jersey each represent 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 such
Mortgage Loans or the value of the related Mortgaged Properties. Such Mortgaged
Properties may be more susceptible to certain special hazard losses than
properties located
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in other areas of the country. No more than 5% of the Initial Pool Balance is
secured by Mortgaged Properties located in any other jurisdiction. See "Risk
Factors--Increased Geographic Concentrations of Mortgaged Properties May Have an
Adverse Effect on the Payment of Your Certificates" and Appendix I.
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 Appendix I. 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 insurance over the improvements thereon and maintain
the physical condition of such improvements. For 90 of the Mortgage Loans
(35.1%), the owner or major tenant occupies 50% or more of the Mortgaged
Property.
Other Information
Each of the tables in Appendix I lists certain characteristics of the
mortgage pool presented, where applicable, as of the Cut-off Date. The sum in
any column of any of the tables in Appendix I may not add to 100% and may not
equal the indicated total due to rounding. For a detailed presentation of
certain of the characteristics of the Mortgage Loans and the Mortgaged
Properties, on an individual basis, see Appendix II. For a brief summary of
certain of the terms of the 12 largest Mortgage Loans, or groups of
Cross-Collateralized Loans, see Appendix III. Certain information regarding
Mortgage Loans secured by Mortgages encumbering multifamily properties is listed
in Appendix II.
For purposes of the tables in Appendix I and for the information
included in this prospectus supplement and in Appendix II and Appendix III, the
following definitions and assumptions apply:
Debt Service Coverage Ratio
In general, income property lenders use debt service coverage ratios
(DSCR) to measure the ratio of (a) cash currently generated by a property that
is available for debt service to (b) required debt service payments. However,
debt service coverage ratios only measure the current, or recent, ability of a
property to service mortgage debt. If a property does not possess a stable
operating expectancy (for instance, if it is subject to material leases that are
scheduled to expire during the loan term and that provide for above-market rents
and/or that may be difficult to replace), a debt service coverage ratio may not
be a reliable indicator of a property's ability to service the mortgage debt
over the entire remaining loan term.
For purposes of this prospectus supplement, including for the tables in
Appendix I and the information in Appendix II and Appendix III, the "Debt
Service Coverage Ratio" or "DSCR" for any Mortgage Loan (or group of
Cross-Collateralized Loans) is the ratio of "Underwritable Cash Flow" estimated
to be produced by the related Mortgaged Property or Properties to the annualized
amount of debt service payable under that Mortgage Loan (or that group of
Cross-Collateralized Loans).
"Underwritable Cash Flow" in each case is an estimate of stabilized
cash flow available for debt service. In general, it is the estimated stabilized
revenue derived from the use and operation of a Mortgaged Property (consisting
primarily of rental income) less the sum of:
o estimated stabilized operating expenses (such as utilities, administrative
expenses, repairs and maintenance, management fees and advertising),
o fixed expenses (such as insurance, real estate taxes and, if applicable,
ground lease payments) and
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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 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 cases, lease rentals were adjusted to take into
account rent reviews 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.
No assurance can be given with respect to the accuracy of the
information provided by any borrowers, or the adequacy of the procedures used by
the seller in determining the presented operating information.
The Debt Service Coverage Ratios are presented for illustrative
purposes only and, as discussed above, are limited in their usefulness in
assessing the current, or predicting the future, ability of a Mortgaged Property
to generate sufficient cash flow to repay the Mortgage Loan. Accordingly, no
assurance can be given, and no representation is made that the Debt Service
Coverage Ratios accurately reflect that ability.
Cut-off Date Loan-to-Value
References in the tables to "Cut-off Date Loan-to-Value" or "Cut-off
Date LTV" are references to the ratio, expressed as a percentage, of the Cut-off
Date Principal Balance of a Mortgage Loan (or the aggregate principal balance of
a group of Cross-Collateralized Loans) to the value of the related Mortgaged
Property or Properties as determined by the most recent appraisal or market
valuation of such Mortgaged Property, as described below.
References to "Balloon LTV" or "Balloon LTV Ratio" are references to
the ratio, expressed as a percentage of the principal balance of a 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) to the value of the related Mortgaged Property or
Properties as determined by the most recent appraisal or market valuation of
such Mortgaged Property or Properties available to the depositor.
No representation is made that any such value would approximate either
the value that would be determined in a current appraisal of the related
Mortgaged Property or the amount that would be realized upon a sale.
Each Mortgaged Property was appraised at the request of the originator
of the Mortgage Loan by a state certified appraiser or an appraiser belonging to
the Appraisal Institute. The purpose of each appraisal was to provide an opinion
of the fair market value of the Mortgaged Property. None of the depositor, the
sellers, the master servicer, the special servicer, the underwriters, the
trustee or the fiscal agent or any other entity has prepared or obtained a
separate
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independent appraisal or reappraisal, unless such person was the originator of
the Mortgage Loan. There can be no assurance that another appraiser would have
arrived at the same opinion of value. No representation is made that any
appraised value would approximate either the value that would be determined in a
current appraisal of the Mortgaged Property or the amount that would be realized
upon a sale. Accordingly, you should not place undue reliance on the
loan-to-value ratios set forth in this prospectus supplement.
Year Built/Renovated
References to "years built/renovated" are references to the later of
the year in which a Mortgaged Property was originally constructed or the most
recent year in which the Mortgaged Property was substantially renovated.
Weighted Averages
References to "weighted averages" are references to averages weighted
on the basis of the Cut-off Date Principal Balances of the Mortgage Loans.
The Sellers
Midland Loan Services, Inc.
Midland Loan Services, L.P., was organized under the laws of the State
of Missouri in 1992 as a limited partnership. On April 3, 1998, Midland Loan
Services, Inc., a newly formed, wholly owned subsidiary of PNC Bank, National
Association, acquired substantially all of the assets of Midland Loan Services,
L.P. Since 1994, Midland has been originating commercial and multifamily
mortgage loans for the purpose of securitization. Midland is an affiliate of PNC
Capital Markets, Inc. See "Master Servicer".
42 of the Mortgage Loans (15.1%)will be sold by Midland to the
depositor on the closing date. An additional 65 Mortgage Loans (37.2%) were
originated by Midland and 34 of these loans (15.0%) were sold to the Midland
Commercial Mortgage Loan Owner Trust III, a Delaware business trust, and 31 of
these loans (22.2%) were sold to the Midland Commercial Mortgage Owner Trust IV,
a Delaware business trust. The holders of the certificates for the Midland Owner
Trusts will sell their certificates to Morgan Stanley Dean Witter Mortgage
Capital Inc. on the closing date. On the closing date, Morgan Stanley Dean
Witter Mortgage Capital Inc. intends to terminate the Midland Owner Trusts and
transfer to the depositor the Mortgage Loans that were in the Midland Owner
Trusts. 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.
CIBC Inc.
CIBC Inc. is a majority-owned subsidiary of Canadian Imperial Holdings
Inc. and is incorporated under the laws of Delaware. Canadian Imperial Holdings
Inc. is a wholly-owned subsidiary of CIBC Delaware Holdings Inc., also a
Delaware corporation, which is a subsidiary of Canadian Imperial Bank of
Commerce. Canadian Imperial Bank of Commerce is a bank chartered under the Bank
Act of Canada having its head office in the City of Toronto, in the Province of
Ontario, Canada. It is licensed to do business in the United States through its
Agency located at 425 Lexington Avenue, New York, New York 10017. CIBC Inc. is a
commercial finance company that originates commercial and multifamily real
estate loans, purchases participations in loans from third-party lenders and
otherwise extends credit to Fortune 1000 companies. CIBC Inc. has offices in
Atlanta, Chicago, Houston, Dallas, San Francisco, Los Angeles and New York. The
principal office of CIBC Inc. is located at 425 Lexington Avenue, New York, New
York 10017.
CIBC Inc. is an affiliate of CIBC World Markets Corp., formerly known
as CIBC Oppenheimer Corp. Although CIBC World Markets is an indirect, wholly
owned subsidiary of Canadian Imperial Bank of Commerce, it is solely responsible
for its contractual obligations and commitments. Any securities products offered
or recommended or purchased or sold in any client accounts by CIBC World
Markets:
o will not be insured by the Federal Deposit Insurance Corporation;
o will not be deposits or other obligations of Canadian Imperial Bank of
Commerce;
o will not be endorsed or guaranteed by Canadian Imperial Bank of Commerce;
and
o will be subject to investment risks, including possible loss of principal
invested.
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Residential Funding Corporation
Residential Funding Corporation is a direct wholly owned subsidiary of
GMAC Mortgage Group, Inc. and was formed as a Delaware corporation. RFC
Commercial is a division of RFC which originates and acquires loans secured by
mortgages on commercial and multifamily real estate. Prior to origination or
acquisition, RFC Commercial's staff underwrites all the loans. RFC maintains its
principal office at 8400 Normandale Lake Boulevard, Suite 600, Minneapolis,
Minnesota 55437. Its telephone number is (612) 832-7000. RFC Commercial's
offices are located at 4800 Montgomery Lane, Suite 300, Bethesda, Maryland 20814
and its telephone number is (301) 215-6200. GMAC Commercial Mortgage Corporation
is an affiliate of RFC.
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
pledges, liens or security interests.
3. No scheduled payment of principal and interest under any Mortgage Loan is
30 days or more past due as of the Cut-off Date 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 limitations and general principles of equity,
o liens for current real estate taxes and assessments not yet delinquent
or accruing interest or penalties,
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.
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6. The seller is not aware of any proceeding pending for the total or partial
condemnation of 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 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.
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. We
refer to any such non-conformance as a "defect". See "The Pooling and
Servicing Agreement--Assignment of the Mortgage Loans".
The applicable mortgage loan purchase agreement provides that, if a
breach or defect that materially and adversely affects the value of the Mortgage
Loan or the interests of the trustee or the certificateholders is not cured
within the applicable cure period, 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 the
Mortgage Loan,
o accrued interest on Advances (including P&I Advances) at the Advance
Rate,
o a fee payable to the special servicer in the amount of 0.25% of the
outstanding principal balance of the Mortgage Loan,
o the amount of any unpaid servicing compensation (other than master
servicing fees and the standby special servicing fee) and trust fund
expenses allocable to the Mortgage Loan, and
o the amount of any expenses reasonably incurred by the master servicer,
the special servicer or the trustee in respect of the repurchase
obligation, including any expenses arising out of the enforcement of
the repurchase obligation, or
2. substitute a Qualified Substitute Mortgage Loan for the 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.
Each of the mortgage loan purchase agreements provides that certain
defects are conclusively presumed to materially and adversely affect the value
of the Mortgage Loan or the interests of the trustee and the certficateholders.
If the Mortgage Loan continues to be a "qualified mortgage" within the
meaning of the REMIC provisions of the Internal Revenue Code of 1986, the
applicable cure period will be 90 days commencing when 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
master servicer and the trustee an officer's certificate:
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o describing the measures being taken to cure the breach or defect,
o stating that it is possible to cure the breach or defect within the 90 day
period, and
o stating that the Mortgage Loan continues to be a "qualified mortgage"
within the meaning of the REMIC provisions of the Internal Revenue Code of
1986.
Furthermore, with respect to document defects for a defaulted Mortgage Loan,
such additional cure period may not be permitted or may be shortened to end no
later than 90 days after the applicable seller receives notice of or discovers
that the Mortgage Loan is in default.
If the breach or defect causes the Mortgage Loan to no longer be a
"qualified mortgage" within the meaning of the REMIC provisions of the Internal
Revenue Code of 1986, the applicable cure period will be 60 days commencing when
the applicable seller, the depositor, the custodian, the master servicer, the
special servicer or the trustee discovers such breach or defect, and no
extension of the 60-day period will be permitted.
If the seller is required to repurchase the Mortgage Loan or substitute
a Qualified Substitute Mortgage Loan for the Mortgage Loan because of a breach
or defect and such Mortgage Loan is one of a cross-collateralized group of
Mortgage Loans, the seller will also be required to repurchase or substitute all
of the other Mortgage Loans in the cross-collateralized group at the same time.
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 in writing by each Rating Agency that the
substitution will not result in the withdrawal, downgrade, or qualification
of the rating assigned by the Rating Agency to any class of the
certificates then rated by the Rating Agency. The seller will pay the cost,
if any, of obtaining the confirmation;
13. not be substituted for a deleted Mortgage Loan if it would result in the
termination of the REMIC status of REMIC I, REMIC II or REMIC III or the
imposition of tax on REMIC I, REMIC II or REMIC III other than a tax on
income expressly permitted or contemplated to be received by the terms of
the pooling and servicing agreement; and
14. not be substituted for a deleted Mortgage Loan unless the operating adviser
has approved the substitution based upon, among other things, an
engineering report and the environmental report obtained for the Qualified
Substitute Mortgage Loan, which approval may not be unreasonably withheld.
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If two or more mortgage loans are substituted for one or more deleted
Mortgage Loans, then:
o the amounts described in clause (1) above 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.
The obligations of the sellers to substitute, repurchase or cure
constitute the sole remedies available to the trustee for the benefit of the
holders of certificates for:
o a breach of a representation or warranty with regard to a Mortgage Loan by
a seller, or
o missing or defective Mortgage Loan documentation.
If a seller defaults on its obligation to substitute, repurchase or
cure, no other person will have an obligation to fulfill the seller's
obligations. No assurance can be given that any seller will fulfill its
obligations. If such obligations are not met, as to a Mortgage Loan that is not
a "qualified mortgage" within the meaning of the REMIC provisions of the
Internal Revenue Code of 1986, REMIC I, REMIC II and REMIC III may be
disqualified.
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MASTER SERVICER
Background
Midland Loan Services, L.P., was organized under the laws of the State
of Missouri in 1992 as a limited partnership. On April 3, 1998, Midland Loan
Services, Inc., a newly-formed, wholly-owned subsidiary of PNC Bank, National
Association, acquired substantially all of the assets of Midland Loan Services,
L.P. Midland is a real estate financial services company that provides loan
servicing and asset management for large pools of commercial and multifamily
real estate assets and that originates commercial real estate loans. Midland's
address is:
210 West 10th Street
6th Floor
Kansas City, Missouri 64105.
Midland will serve as the master servicer for the trust fund. In
addition, Midland and its affiliates are the seller with respect to 107 of the
Mortgage Loans (52.3%). See "Description of the Mortgage Pool--The Sellers".
Standard & Poor's Ratings Services and Fitch, 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 March 31, 2000, Midland was servicing approximately 14,385
commercial and multifamily loans with a principal balance of approximately $46.4
billion. The collateral for these loans is located in all 50 states, the
District of Columbia, Puerto Rico and Canada. Approximately 10,094 of the loans,
with a total principal balance of approximately $36.1 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.
------------------------------------
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SPECIAL SERVICER
GMAC Commercial Mortgage Corporation, a California corporation, will
act as the special servicer pursuant to the pooling and servicing agreement.
GMAC Commercial Mortgage Corporation is a wholly-owned direct subsidiary of GMAC
Commercial Holding Corporation, which in turn is a direct subsidiary of GMAC
Mortgage Group, Inc. GMAC Mortgage Group, Inc. is in turn a wholly-owned direct
subsidiary of General Motors Acceptance Corporation. The principal offices of
GMAC Commercial Mortgage Corporation are located at 200 Witmer Road, Horsham,
Pennsylvania 19044.
As of March 31, 2000, GMAC Commercial Mortgage Corporation was the
special servicer of a portfolio of multifamily and commercial loans totaling
approximately $40 billion in aggregate outstanding principal amount.
The information in this prospectus supplement concerning the special
servicer has been provided by GMAC Commercial Mortgage Corporation, and neither
the depositor nor the underwriters make any representation or warranty as to the
accuracy or completeness of such information.
-------------------------------------
DESCRIPTION OF THE CERTIFICATES
General
The certificates are issued under the pooling and servicing agreement
and will consist of 20 classes:
o Class A-1 Certificates
o Class A-2 Certificates
o Class X Certificates
o Class B Certificates
o Class C Certificates
o Class D Certificates
o Class E Certificates
o Class F Certificates
o Class G Certificates
o Class H Certificates
o Class J Certificates
o Class K Certificates
o Class L Certificates
o Class M Certificates
o Class N Certificates
o Class O Certificates
o Class V Certificates
o Class R-I Certificates
o Class R-II Certificates
o Class R-III Certificates
We are only offering the class A-1, A-2, B, C, D and E certificates to
you. See "The Pooling and Servicing Agreement" in this prospectus supplement and
"Description of the Certificates" and "Description of the Governing Document" 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
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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 V 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
Upon initial issuance, each class of principal balance certificates
will have the class principal balance set forth in the table on page S-5, which
may 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.
Pass-Through Rates
The rate per annum at which any class of offered certificates accrues
interest from time to time is its "pass-through rate".
The pass-through rates for each class of offered certificates is fixed
at the per annum rate set forth on the cover of this prospectus supplement.
However, these pass-through rates may not exceed 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 "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.
The "Net Mortgage Rate" for each Mortgage Loan is the interest rate for
the Mortgage Loan minus the rates at which the master servicer fee, the standby
special servicer fee and the trustee fee are computed. 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
a fraction, expressed as a percentage, the numerator of which is, subject to
adjustment as described below, 12 times the amount
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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 June 1, 2000 less the rates at which
the related master servicer fee, the standby special servicer fee and the
trustee fee are computed, and the denominator of which is the Stated Principal
Balance of the Mortgage Loan immediately prior to that distribution date.
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
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 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
Distributions on the certificates will be made on the 15th day of each
month or, if the 15th is not a business day, then on the next business day,
beginning in July, 2000.
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 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 offered certificates are allocated among
the outstanding certificates of the class based on their principal 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 the 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, the trustee or the fiscal agent as compensation
or to reimburse outstanding Advances, and amounts payable as
Additional Trust Fund Expenses),
4. amounts deposited in the Collection Account in error,
5. Excess Liquidation Proceeds, and
6. 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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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 July 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 fifth business
day before the distribution date.
Applying Available Funds
On each distribution date, the trustee will first apply Available
Funds to make distributions to the holders of the senior certificates in the
following order:
1. to pay interest to the holders of the classes of senior certificates, up to
an amount equal to, and pro rata as among 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-1 certificates; and
o second to the holders of the class A-2 certificates;
in each case, up to an amount equal to the lesser of:
(a) the then-outstanding 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-1 and class
A-2 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-1 and class A-2 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-1 and class A-2 certificates and for which no
reimbursement has previously been paid.
On each distribution date, the holders of each class of subordinate
certificates will be entitled to the following distributions, to the extent of
the Available Funds remaining after all required distributions have been made on
the senior certificates and each other class of subordinate certificates, if
any, with an earlier alphabetical class designation:
1. distributions of interest, up to an amount equal to the Distributable
Certificate Interest in respect of such class of certificates for that
distribution date;
2. if the principal balance of the class A-1 and class A-2 certificates and
each other class of subordinate certificates, if any, with an earlier
alphabetical class designation has been reduced to zero, distributions of
principal, up to an amount equal to the lesser of:
(a) the then-outstanding 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
3. distributions for the purpose of reimbursement, up to an amount equal to
all Realized Losses and Expense Losses, if any, previously allocated to
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such class and for which no reimbursement has previously been paid.
The trustee will pay any remaining Available Funds to the holders of
the residual 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.
Distribution of Excess Liquidation Proceeds
If the trust receives any Excess Liquidation Proceeds, those proceeds
will be deposited into the Excess Liquidation Proceeds Account. On each
distribution date, amounts on deposit in the Excess Liquidation Proceeds Account
will be used to reimburse the holders of the principal balance certificates (in
order of alphabetical class designation) for, and to the extent of, unreimbursed
Realized Losses or Expense Losses previously allocated to them. Distributions
will be made to the holders of the class A-1 and class A-2 certificates pro rata
as between such classes in accordance with the respective then-outstanding
aggregate certificate balances of such certificates. The depositor does not
expect that certificateholders will receive any distributions of Excess
Liquidation Proceeds. See "The Pooling and Servicing Agreement--Accounts--Excess
Liquidation Proceeds Account".
"Excess Liquidation Proceeds" means the excess of:
o all liquidation proceeds from the sale or liquidation of a Mortgage Loan or
related REO Property, net of any related liquidation expenses, interest on
any related Advances and any related Servicing Advances, over
o the amount needed to pay off the Mortgage Loan in full.
Reimbursement of previously allocated Realized Losses or 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 closing date),
o reduced (to not less than zero) by the class's allocable share of any Net
Aggregate Prepayment/Balloon Payment 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 Excesses and 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 excess, if any, of:
1. all Distributable Certificate Interest for the class on the preceding
distribution date,
over
2. all distributions of interest made for the class on the preceding
distribution date.
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
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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.
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
the class A, class B, class C, class D, class E and class F certificates
receiving principal distributions on such distribution date will be entitled to
a total amount equal to the lesser of:
o the prepayment premium, and
o the prepayment premium multiplied by a fraction:
1. the numerator of which equals the excess, if any, of:
o the pass-through rate applicable to the most senior class of the
outstanding class A, class B, class C, class D, class E and class
F certificates (or, if both classes of class A certificates are
still outstanding, the class A-1 certificates),
over
o the Discount Rate, and
2. the denominator of which equals the excess, if any, of the interest
rate for the prepaid Mortgage Loan, over the Discount Rate.
If more than one of the class A-1, class A-2, class B, class C, class
D, class E and class F certificates is entitled to principal distributions on
the distribution date, the amount described in the preceding sentence will be
allocated among the classes in proportion to the principal distributions to
which they are entitled on the distribution date. Some certificates that receive
principal may not receive prepayment premiums based on the above fraction.
All prepayment premiums not distributed to holders of these principal
balance certificates will be distributed to the holders of the interest only
certificates.
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
Anticipated Repayment Date, if applicable) of the Mortgage Loan
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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.
Treatment of REO Properties
If the trust fund acquires a Mortgaged Property through foreclosure,
deed in lieu of foreclosure or otherwise, then, until the REO Property is
liquidated, the related Mortgage Loan (an "REO Mortgage Loan") will be treated
as outstanding for several purposes, including:
o determining distributions on the certificates,
o allocations of Realized Losses and Expense Losses to the certificates,
o computing master servicing fees, special servicing fees and trustee fees,
and
o determining pass-through rates and the Principal Distribution Amount.
Net operating revenues and other net proceeds derived from such REO
Property will be "applied" by the master servicer as principal, interest and
other amounts "due" on the Mortgage Loan. With some exceptions, the master
servicer, the trustee and the fiscal agent are required to make P&I Advances on
the REO Mortgage Loan, if proceeds received from the REO Property are less than
the Assumed Monthly Payment for the REO Mortgage Loan. See "The Pooling and
Servicing Agreement--Advances".
Appraisal Reductions of Loan Balances
An Appraisal Reduction will be calculated following the earliest of any
of the following "Appraisal Reduction Events" affecting a Mortgage Loan:
o the third anniversary of the effective date of a modification agreed to by
the special servicer that extends a Mortgage Loan's maturity date without
changing the amount of the Monthly Payment,
o 90 days after an uncured delinquency occurs on a Mortgage Loan,
o 30 days after a receiver is appointed or an involuntary bankruptcy
proceeding commences,
o immediately after a borrower declares bankruptcy, and
o immediately after a Mortgage Loan becomes an REO Mortgage Loan.
The "Appraisal Reduction" for any Mortgage Loan as to which any
Appraisal Reduction Event has occurred will be an amount equal to:
o the outstanding Stated Principal Balance of such Mortgage Loan as of the
last day of the related Collection Period, less
o the excess, if any, of:
1. 90% of the sum of:
(a) the appraised or otherwise estimated value of the related
Mortgaged Property or Properties, plus
(b) the amount of all reserves and escrows that are pledged as
collateral for the Mortgage Loan (other than those that are for
taxes and insurance), but only to the extent that such amounts
are not taken into account in determining the appraised or
otherwise estimated value of the related Mortgaged Property or
Properties
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, the trustee or the fiscal agent,
(b) all unreimbursed Advances for the Mortgage Loan, plus interest at
the Advance Rate,
(c) all currently due and unpaid real estate taxes and assessments
and insurance premiums and all other amounts, including, if
applicable, ground rents, due and unpaid under the Mortgage Loan
(which taxes, premiums and other amounts have not been escrowed
or the subject of an Advance), and
(d) unpaid special servicing compensation.
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Within 60 days (or such longer period as the special servicer is (as
certified thereby to the Trustee in writing) diligently and in good faith
proceeding to obtain such appraisal or internal valuation) 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 an amount determined by the Rating
Agencies, which will be specified in the pooling and servicing agreement.
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 special servicer will calculate the Appraisal Reduction based on
the Updated Appraisal or the special servicer's Appraisal Reduction Estimate. If
the Appraisal Reduction is calculated using the Appraisal Reduction Estimate,
then on the first distribution date after the delivery of the Updated Appraisal,
the special servicer will adjust the Appraisal Reduction to take into account
the Updated Appraisal.
The special servicer will obtain annual updates of the Updated
Appraisal during the continuance of an Appraisal Reduction Event. The master
servicer will pay the cost of such annual updates as a Servicing Advance, unless
the Advance would be nonrecoverable. In addition, the operating adviser may at
any time request the special servicer to obtain (at the operating adviser's
expense) an Updated Appraisal. The special servicer will recalculate the
Appraisal Reduction each time an Updated Appraisal is obtained. The special
servicer will deliver a copy of each Updated Appraisal to the master servicer,
the trustee and the operating adviser within 15 days after it receives the
Updated Appraisal. The trustee will deliver each Updated Appraisal to the
holders of the privately offered certificates (other than the holders of the
deferred interest certificates and the residual certificates) within 15 days
after it receives the Updated Appraisal from the special servicer.
The Appraisal Reduction will be eliminated upon full payment or
liquidation of the Mortgage Loan or if the Mortgage Loan is no longer a
Specially Serviced Mortgage Loan.
An Appraisal Reduction:
o will reduce the master servicer's, the trustee's and the fiscal agent's
obligation to advance delinquent interest on the Mortgage Loan;
o may reduce current distributions to one or more of the then most
subordinate classes of principal balance certificates; and
o may cause an Expense Loss to be allocated to one or more of the then most
subordinate classes of principal balance certificates.
See "The Pooling and Servicing Agreement--Advances".
Application of Realized Losses and Expense Losses to 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
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order beginning with the class O certificates. The principal balance of the
lowest class will be reduced until:
1. the deficit is reduced to zero; or
2. 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-1 and class A-2 certificates will be reduced, in
proportion to their remaining class principal balances, until:
o the deficit is reduced to zero; or
o the principal balances of the class A-1 and class A-2 certificates are
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.
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:
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.
"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 or late payment charges
on the related Mortgage Loan as and to the extent described in "The Pooling
and Servicing Agreement - Advances",
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 fiscal agent, the
master servicer, the special servicer and the depositor, and
2. certain federal, state and local taxes, and related expenses payable
out of the trust fund, 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 or makes a balloon
payment on a Mortgage Loan on or before the Determination Date in any calendar
month and pays interest which accrued on the prepayment or balloon payment from
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the beginning of the calendar month through the day preceding the prepayment
date or balloon payment date, then such interest (less related master servicer
fees), is a "Prepayment/Balloon Payment Interest Excess".
If a borrower prepays all or part of a Mortgage Loan or makes a balloon
payment on a Mortgage Loan after the Determination Date in a calendar month and
does not pay interest on the prepayment or balloon payment 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/Balloon Payment
Interest Shortfall".
Prepayment/Balloon Payment Interest Excesses collected during a
Collection Period will be used to offset Prepayment/Balloon Payment 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/Balloon Payment Interest Shortfalls in respect of
the Mortgage Loans that are not offset by Prepayment/Balloon Payment 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 0.02% per annum.
Any payment that the master servicer makes to cover such shortfalls will be a
"Compensating Interest Payment".
The total of all Prepayment/Balloon Payment Interest Shortfalls
remaining in a Collection Period after offsetting Prepayment/Balloon Payment
Interest Excesses and applying Compensating Interest Payments, is the "Net
Aggregate Prepayment/Balloon Payment Interest Shortfall" for the distribution
date.
The trustee will allocate any Net Aggregate Prepayment/Balloon Payment
Interest Shortfall among the certificates in proportion to the interest accrued
on each class for the distribution date. Such an allocation will reduce the
Distributable Certificate Interest for each class.
See "The Pooling and Servicing Agreement--Servicing Compensation and
Payment of Expenses".
Scheduled Final Distribution Date
The "Scheduled Final Distribution Date" for a class of certificates is
the distribution date on which its 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
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o each other class of subordinate certificates with an earlier alphabetical
class designation.
This subordination is intended to:
o protect the senior certificates against losses associated with delinquent
and defaulted Mortgage Loans, and
o enhance the likelihood of timely receipt by senior certificateholders of
the full amount of Distributable Certificate Interest payable to them, and
the ultimate receipt by the class A-1 and class A-2 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 order.
Realized Losses and Expense Losses are allocated to the class A-1 and
class A-2 certificates in proportion to their principal balances.
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,
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 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 those 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
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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 Clearstream
Banking, societe anonyme, Luxembourg or Euroclear (in Europe), if they are
participants in those systems or indirectly through organizations that are
participants in those systems. Clearstream and Euroclear will hold omnibus
positions on behalf of their participants through customers' certificates
accounts in Clearstream'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.
Transfers between DTC participants will occur in accordance with DTC
rules. Transfers between Clearstream 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 Clearstream or
Euroclear, on the other, will be effected in DTC in accordance with DTC rules
through Clearstream's or Euroclear's depositary. Clearstream participants and
Euroclear participants may not deliver instructions directly to these
depositaries.
Because of time-zone differences, credits of certificates received in
Clearstream or Euroclear as a result of a transaction with a DTC participant
will be made during subsequent certificates settlement processing and dated the
business day following the DTC settlement date. Such credits or any transactions
in such certificates settled during such processing will be reported to the
relevant Euroclear or Clearstream participant on such business day. Cash
received in Clearstream or Euroclear as a result of sales of certificates by or
through a Clearstream 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 Clearstream or Euroclear cash account only as of the
business day following settlement in DTC.
The trustee will not be responsible for monitoring or restricting
transfer of ownership interests in offered certificates through the book-entry
facilities of DTC.
In DTC's book-entry system, a purchaser purchases through, or as, a
direct participant. The direct participant receives credit for the certificates
on DTC's records. The ownership interest of each beneficial owner is ultimately
reflected on the records of one of DTC's direct or indirect participants.
Beneficial owners are expected to receive written confirmations detailing the
transaction and periodic statements of their holdings, from the direct or
indirect DTC participant with whom the beneficial owner dealt. Neither the
depositor, the trustee, the master servicer, the special servicer, the fiscal
agent nor any paying agent is responsible for records of ultimate beneficial
ownership or for payments to ultimate beneficial owners.
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.
If DTC or a direct or indirect participant becomes insolvent, then the
ability of ultimate beneficial owners to obtain timely payment may be
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impaired. If an insolvency causes a loss that exceeds the limits of applicable
Securities Investor Protection Corporation insurance or if such coverage is
unavailable, the ultimate payment of amounts distributable on offered
certificates may be impaired.
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.
Denominations
The trust will issue class A certificates in minimum denominations of
$25,000 initial principal balance (and any larger whole dollar amount). The
trust will issue the remaining classes of offered certificates in minimum
denominations of $50,000 initial principal balance (or any larger whole dollar
amount). However, the trust may issue one certificate for each class in a lower
denomination to make up the difference between certificate interests sold and
the total amount offered.
Registration and Transfer of Definitive Certificates
Subject to the restrictions in the pooling and servicing agreement,
holders may transfer or exchange any definitive physical certificate in whole or
in part. No transfer or exchange can be of an amount smaller than the
denominations specified under "--Delivery, Form and Denomination
--Denominations" above. The registered holder or his attorney-in-fact must
surrender the definitive certificate at the corporate trust office of the
certificate registrar appointed under the pooling and servicing agreement or at
the office of any transfer agent. The certificate must be accompanied by:
o an executed instrument of assignment and transfer, in the case of transfer,
or
o a written request for exchange, in the case of exchange.
The certificate registrar will cancel the old certificate and execute
and deliver (or mail) a new definitive certificate to the appropriate person
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".
-----------------------------------------
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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.
Rate and Timing of Principal Payments
The yield to holders of any 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 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-1 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 order of class designation, in each
case until the principal balance of each class of certificates is, in turn,
reduced to zero.
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 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,
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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.
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 Mortgage Loans--Default Interest and Limitations
on Prepayments" 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 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,
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, 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
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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.
Because the rate of principal payments on the Mortgage Loans will
depend on future events and a variety of factors (as described more fully
below), the depositor can give you no assurance as to such rate or the rate of
Principal Prepayments in particular. The depositor is not aware of any relevant
publicly available or authoritative statistics with respect to the historical
prepayment experience of a large group of commercial and/or multifamily loans
comparable to the Mortgage Loans. See "Risk Factors--Yield Considerations".
Balloon Payments 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 Appendix I 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/Balloon Payment Interest Shortfalls) will generally be borne by
holders of each class of principal balance certificates in reverse alphabetical
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-1 and class A-2
certificates on a pro rata basis.
Realized Losses and Expense Losses will be:
o allocated to the principal balance certificates in reverse alphabetical
order of their class designation, and
o applied to reduce the principal balance of each affected class.
As a result, a loss on any one of the Mortgage Loans could cause a
significant loss, even a complete loss, of an investor's investment in any
class, but especially the subordinate certificates with the latest alphabetic
designations. You should make your own estimate of the expected timing and
severity of Realized Losses and Expense Losses before investing in any
subordinate certificate.
Pass-Through Rates
The pass-through rates for the offered certificates may not exceed 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
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mortgage pool as a whole, the pass-through rates for the offered certificates
may be adversely affected.
Delay in Payment of Distributions
Monthly distributions will be made no earlier than the 15th day of the
month following the month in which the interest accrued on the certificates. You
should take this delay into account in determining how much to pay for the
offered certificates.
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 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 following tables, 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 "3%", "5%", "7%", "10%" and "15%" assume that no prepayments are
made on any Mortgage Loan during the Mortgage Loan's Lock-out Period or Yield
Maintenance Period, if any, and are otherwise made on each of the Mortgage Loans
at the indicated CPRs. The tables and assumptions are intended to illustrate the
sensitivity of the weighted average life of a class of offered 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 have been prepared on the basis of the following assumptions
(collectively, the "Maturity Assumptions"):
o the Initial Pool Balance is approximately $801,024,722.
o the initial principal balance 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 Appendix II,
o all Monthly Payments are due and timely received on the first day of each
month,
o there are no delinquencies or losses on the Mortgage Loans,
o there are no extensions of maturity of the Mortgage Loans,
o there are no Appraisal Reductions for the Mortgage Loans,
o there are no casualties or condemnations affecting the Mortgaged
Properties,
o prepayments are made on each of the Mortgage Loans at the indicated CPRs,
except that:
1. no prepayments are received for any Mortgage Loan during a Lock-out
Period, Defeasance Period or Yield Maintenance Period, and
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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/Balloon Payment Interest Shortfalls are incurred,
o there are no Additional Trust Fund Expenses,
o distributions on the certificates are made on the 15th day of each month,
commencing in July, 2000,
o the certificates are issued on June 29, 2000,
o the only expenses payable out of the trust are the master servicer fees,
the standby special servicer fees 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 preparing the tables set forth below, the offered
certificates may mature earlier or later than indicated by the tables.
It is highly unlikely that the Mortgage Loans will prepay in accordance
with the Maturity Assumptions at any constant rate until maturity or that all
the Mortgage Loans will prepay in accordance with the Maturity Assumptions at
the same rate. In addition, variations in the actual prepayment experience and
the balance of the Mortgage Loans that prepay may increase or decrease the
percentages of initial class principal balances (and weighted average lives)
shown in the following tables. These variations may occur even if the average
prepayment experience of the Mortgage Loans were to reflect the Maturity
Assumptions and any of the specified CPR percentages.
You should conduct your own analyses of the rates at which the Mortgage
Loans may be expected to prepay.
Subject to the above discussion and assumptions, the following tables
indicate:
o the weighted average life of each class of the offered certificates, and
o the percentages of the initial principal balance of each class of the
offered 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.
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Percentage of
Initial Certificate Balance
of the Class A-1 Certificates
at the Specified CPRs
Prepayment Assumption (CPR)
<TABLE>
<CAPTION>
Distribution Date 0% 3% 5% 7% 10% 15%
-- -- -- -- --- ---
<S> <C> <C> <C> <C> <C> <C>
Closing Date 100% 100% 100% 100% 100% 100%
June, 2001 94 94 94 94 94 94
June, 2002 88 88 88 88 88 88
June, 2003 82 82 82 82 82 82
June, 2004 75 75 75 75 75 75
June, 2005 67 67 67 67 67 67
June, 2006 59 59 59 59 59 59
June, 2007 42 42 42 42 42 42
June, 2008 1 0 0 0 0 0
June, 2009 0 0 0 0 0 0
Weighted average life (years) 5.70 5.69 5.69 5.69 5.68 5.68
<CAPTION>
Percentage of Initial Certificate Balance
of the Class A-2 Certificates
at the Specified CPRs
Prepayment Assumption (CPR)
Distribution Date 0% 3% 5% 7% 10% 15%
-- -- -- -- --- ---
<S> <C> <C> <C> <C> <C> <C>
Closing Date 100% 100% 100% 100% 100% 100%
June, 2001 100 100 100 100 100 100
June, 2002 100 100 100 100 100 100
June, 2003 100 100 100 100 100 100
June, 2004 100 100 100 100 100 100
June, 2005 100 100 100 100 100 100
June, 2006 100 100 100 100 100 100
June, 2007 100 100 100 100 100 100
June, 2008 100 100 100 100 99 99
June, 2009 68 68 68 68 67 67
June, 2010 0 0 0 0 0 0
Weighted average life (years) 9.05 9.04 9.04 9.04 9.04 9.03
</TABLE>
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<PAGE>
Percentage of Initial Certificate Balance
of the Class B Certificates
at the Specified CPRs
Prepayment Assumption (CPR)
<TABLE>
<CAPTION>
Distribution Date 0% 3% 5% 7% 10% 15%
-- -- -- -- --- ---
<S> <C> <C> <C> <C> <C> <C>
Closing Date 100% 100% 100% 100% 100% 100%
June, 2001 100 100 100 100 100 100
June, 2002 100 100 100 100 100 100
June, 2003 100 100 100 100 100 100
June, 2004 100 100 100 100 100 100
June, 2005 100 100 100 100 100 100
June, 2006 100 100 100 100 100 100
June, 2007 100 100 100 100 100 100
June, 2008 100 100 100 100 100 100
June, 2009 100 100 100 100 100 100
June, 2010 0 0 0 0 0 0
Weighted average life (years) 9.64 9.64 9.64 9.64 9.63 9.63
<CAPTION>
Percentage of Initial Certificate Balance
of the Class C Certificates
at the Specified CPRs
Prepayment Assumption (CPR)
Distribution Date 0% 3% 5% 7% 10% 15%
-- -- -- -- --- ---
<S> <C> <C> <C> <C> <C> <C>
Closing Date 100% 100% 100% 100% 100% 100%
June, 2001 100 100 100 100 100 100
June, 2002 100 100 100 100 100 100
June, 2003 100 100 100 100 100 100
June, 2004 100 100 100 100 100 100
June, 2005 100 100 100 100 100 100
June, 2006 100 100 100 100 100 100
June, 2007 100 100 100 100 100 100
June, 2008 100 100 100 100 100 100
June, 2009 100 100 100 100 100 100
June, 2010 0 0 0 0 0 0
Weighted average life (years) 9.71 9.71 9.71 9.71 9.71 9.71
</TABLE>
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<PAGE>
Percentage of Initial Certificate Balance
of the Class D Certificates
at the Specified CPRs
Prepayment Assumption (CPR)
<TABLE>
<CAPTION>
Distribution Date 0% 3% 5% 7% 10% 15%
-- -- -- -- --- ---
<S> <C> <C> <C> <C> <C> <C>
Closing Date 100% 100% 100% 100% 100% 100%
June, 2001 100 100 100 100 100 100
June, 2002 100 100 100 100 100 100
June, 2003 100 100 100 100 100 100
June, 2004 100 100 100 100 100 100
June, 2005 100 100 100 100 100 100
June, 2006 100 100 100 100 100 100
June, 2007 100 100 100 100 100 100
June, 2008 100 100 100 100 100 100
June, 2009 100 100 100 100 100 100
June, 2010 0 0 0 0 0 0
Weighted average life (years) 9.71 9.71 9.71 9.71 9.71 9.71
<CAPTION>
Percentage of Initial Certificate Balance
of the Class E Certificates
at the Specified CPRs
Prepayment Assumption (CPR)
Distribution Date 0% 3% 5% 7% 10% 15%
-- -- -- -- --- ---
<S> <C> <C> <C> <C> <C> <C>
Closing Date 100% 100% 100% 100% 100% 100%
June, 2001 100 100 100 100 100 100
June, 2002 100 100 100 100 100 100
June, 2003 100 100 100 100 100 100
June, 2004 100 100 100 100 100 100
June, 2005 100 100 100 100 100 100
June, 2006 100 100 100 100 100 100
June, 2007 100 100 100 100 100 100
June, 2008 100 100 100 100 100 100
June, 2009 100 100 100 100 100 100
+June, 2010 0 0 0 0 0 0
Weighted average life (years) 9.75 9.75 9.75 9.74 9.74 9.74
</TABLE>
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THE POOLING AND SERVICING AGREEMENT
The certificates will be issued under a pooling and servicing agreement
to be dated as of June 1, 2000, among the depositor, the master servicer, the
special servicer, the trustee and the fiscal agent.
You may obtain a free copy of the pooling and servicing agreement
(without exhibits) by writing to:
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;
o an assignment in favor of the trustee of each effective UCC financing
statement; and
o in those cases where applicable, a copy of the related ground lease.
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. The failure to receive a recorded document due to delays of a
public recording office will not cause a Mortgage Loan to be a defective
Mortgage Loan.
The trustee is obligated to review the documents delivered to it for
each Mortgage Loan within 60 days after the later of delivery or the closing
date and report any missing documents or certain types of defects to the
depositor. 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 fiscal
agent, 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
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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 (as determined by the master
servicer or the special servicer, as applicable, in its good faith and
reasonable judgment) in accordance with applicable law, 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 may not take into account:
o any other relationship that the master servicer or the special servicer, as
the case may be, may have with any borrower;
o the ownership of any certificate by the master servicer or the special
servicer, as the case may be, or their respective affiliates;
o any obligation to make Advances or incur servicing expenses;
o the master servicer's or the special servicer's right to receive
compensation for its services;
o the ownership or 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, if ever applicable the special
servicer, if ever applicable 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 willful misfeasance, bad faith or negligence in performing its duties under
the pooling and servicing agreement, or
o negligent disregard of its obligations or duties under the pooling and
servicing agreement.
The master servicer and the special servicer must make reasonable
efforts to collect amounts due under the Mortgage Loans, and must follow
collection procedures consistent with the servicing 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
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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, less the related master servicer fee (each such amount, a "P&I
Advance").
The master servicer must make the P&I Advance on the business day
before each distribution date.
The amount of interest to be advanced for a Mortgage Loan for which an
Appraisal Reduction has been calculated will equal the product of:
1. the amount of interest that would otherwise be required to be advanced, and
2. a fraction,
o whose numerator equals the Stated Principal Balance of the loan at the
close of the preceding distribution date less the Appraisal Reduction,
and
o whose denominator is such Stated Principal Balance.
In addition to P&I Advances, the master servicer will also be obligated
to make cash advances ("Servicing Advances" and together with P&I Advances,
"Advances") to pay:
o certain costs and expenses incurred in connection with defaulted Mortgage
Loans, acquiring or managing REO Property or selling defaulted Mortgage
Loans or REO Properties,
o delinquent real estate taxes, assessments and hazard insurance premiums,
and
o other similar costs and expenses necessary to protect and preserve the
security of a Mortgage.
However, the special servicer will be obligated to make any Servicing
Advance that needs to be paid on an emergency basis.
If the special servicer fails to make a required emergency Advance, the
master servicer must make the Advance. If the master servicer fails to make a
required Advance, the trustee must make the Advance. If the trustee fails to
make a required Advance, the fiscal agent must make it. Any Advance by the
fiscal agent will cure the trustee's failure to make an Advance.
However, each of the master servicer, the special servicer, the trustee
and the fiscal agent only has to make an Advance if it determines that it will
be recoverable from late payments, insurance proceeds, liquidation proceeds or
other collections on the Mortgage Loan. None of the master servicer, the special
servicer, the trustee or the fiscal agent is required to make any Advance that
it determines is not so recoverable.
If the master servicer or the special servicer makes such a
nonrecoverability determination, it must deliver to the trustee (and, with
respect to the special servicer, the master servicer) 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
sevicer, the special servicer, the trustee or the fiscal agent, such as:
o property operating statements,
o rent rolls,
o property inspection reports, and
o engineering reports.
Both the trustee and the fiscal agent will be entitled to rely
conclusively on a nonrecoverability determination by the master servicer or the
special servicer. The master servicer will be entitled to rely conclusively on a
nonrecoverability determination by the special servicer.
Unless there is a nonrecoverability determination, the obligation to
make Advances on a Mortgage Loan continues until foreclosure and liquidation of
the loan and related properties. Advances are intended to provide a limited
amount of liquidity, not to guarantee or insure against losses.
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If the special servicer agrees to a modification of a Mortgage Loan
that forgives loan payments or other amounts that the special servicer, the
master servicer, the trustee or the fiscal agent previously advanced, and the
special servicer, the master servicer, the trustee or the fiscal agent
determines that no other source of payment or reimbursement for such Advances is
available to it, such Advances will be deemed to be nonrecoverable.
The master servicer, the trustee and the fiscal agent 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, the trustee or the fiscal agent 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. If Advance
interest is outstanding on a Mortgage Loan at the time a late payment charge or
default interest is collected for that Mortgage Loan, then those amounts will be
used to pay such outstanding Advance interest. 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, late payment
charges 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,
any prepayment premiums and any 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/Balloon Payment 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 two business days 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 are all revenues received by the
special servicer on the REO Property other than liquidation proceeds.
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"Net REO Proceeds" for any REO Property are REO Proceeds less any
insurance premiums, taxes, assessments and other costs and expenses permitted to
be paid from the related REO Account.
The master servicer need not deposit into the Collection Account any
payments in the nature of 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 trustee will establish and maintain an "Interest Reserve Account"
for the benefit of the holders of the certificates. For the distribution date in
each January (other than a leap year) and each February, the trustee will
deposit into the Interest Reserve Account for each Mortgage Loan bearing
interest computed on an actual/360 basis (the "Interest Reserve Loans") an
amount equal to one day's interest at the related Mortgage Rate less the rates
at which the related master servicer fee, the standby special servicer fee and
the trustee fee are computed on its Stated Principal Balance as of the due date
in the month in which the distribution date occurs (the "Interest Reserve
Amount"). The trustee will not make the deposit if the applicable Monthly
Payment has not been paid or advanced. The trustee will calculate the Interest
Reserve Amount without regard to the adjustments to the Net Mortgage Rates for
Interest Reserve Loans described under "Description of the
Certificates--Pass-Through Rates". For distribution dates in March of each year,
the trustee will deposit the Interest Reserve Amounts into the Distribution
Account and include these amounts as part of the Available Funds for the
distribution date.
Excess Liquidation Proceeds Account
If any Excess Liquidation Proceeds are received, the trustee will
establish and maintain a segregated account or accounts (the "Excess Liquidation
Proceeds Account") in the name of the trustee, in trust for the benefit of the
certificateholders. On the business day before each distribution date, the
master servicer will remit to the trustee from the Collection Account and for
deposit into the Excess Liquidation Proceeds Account all Excess Liquidation
Proceeds received during the related collection period. The trustee will
distribute Excess Liquidation Proceeds to the certificateholders in the manner
set forth in "Description of the Certificates--Distributions--Distributions of
Excess Liquidation Proceeds".
Distribution Account
The trustee will establish a segregated account or accounts (the
"Distribution Account") into which the master servicer must deposit the
following amounts:
o a total amount equal to the Available Funds (to the extent included in the
Collection Account, which will be determined without regard to Interest
Reserve Amounts),
o any prepayment premiums 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, Distribution Account, Interest Reserve Account
and Excess Liquidation Proceeds 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 (or of its parent holding company) are
rated "Aa3" or better by Moody's (or, if not so rated by Moody's, then
otherwise approved by Moody's), and "AA-" or better by Fitch (or, if not so
rated by Fitch, then otherwise approved by Fitch); 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 "P1" or better by Moody's
(or, if not so rated by Moody's, then otherwise approved by
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Moody's), and "F-1+" or better by Fitch (or, if not so rated by Fitch, then
otherwise approved by Fitch); 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; or
o an account or accounts maintained with PNC Bank, National Association so
long as PNC Bank (or its parent holding company's) long term unsecured debt
rating shall be at least "A1" from Moody's and "A" from Fitch.
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 Governing Documents--Collection and
Other Servicing Procedures With Respect to Mortgage Loans--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 remit Excess Liquidation Proceeds to the Excess Liquidation Proceeds
Account,
o to pay or reimburse itself, the special servicer, the trustee or the fiscal
agent for Advances and interest on Advances, those payments or
reimbursements to be made from the sources described under "--Advances"
above,
o to pay the unpaid portion of the master servicing fee, the standby special
servicing fee and the 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/Balloon Payment Interest Excess received in the
preceding Collection Period to itself as additional servicing compensation,
o to pay to itself or the special servicer other amounts constituting
additional servicing compensation,
o to pay to the depositor, the applicable seller or other purchaser with
respect to each Mortgage Loan or REO Property that has been purchased or
repurchased by it, all amounts received on such loan or property during the
related Collection Period and subsequent to the date as of which the amount
required to effect the purchase or repurchase was determined,
o to reimburse or pay itself, the special servicer, the trustee, the
depositor and/or the fiscal agent for other unreimbursed expenses that are
reimbursable under the pooling and servicing agreement,
o to satisfy any indemnification obligations of the trust fund under the
pooling and servicing agreement,
o to pay to the trustee amounts requested by it to pay taxes on certain net
income with respect to REO Properties,
o to withdraw any amount mistakenly deposited into the Collection Account,
and
o to clear and terminate the Collection Account upon termination and
liquidation of the trust fund.
Enforcement of "Due-on-Sale" Clauses
The special servicer will exercise or waive its right to exercise
"due-on-sale" clauses in Mortgage Loan documents in accordance with the
servicing standard. However, if a Mortgage Loan has one of the then ten largest
current outstanding
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principal balances of all Mortgage Loans in the trust fund, the special servicer
may waive a "due-on-sale" clause only if it first obtains written confirmation
from each Rating Agency that the waiver will not result in a qualification,
downgrade or withdrawal of the rating then assigned by that Rating Agency to any
class of certificates. The costs and expenses associated with obtaining such a
Rating Agency confirmation will not be an expense of the Trust. For purposes of
determining whether such a Rating Agency confirmation is required, all Mortgage
Loans in a set of Cross-Collateralized Loans and all Mortgage Loans in a group
with the same or affiliated borrowers will be aggregated and treated as one. See
"--The Operating Adviser" for additional limitations on the ability of the
special servicer to waive "due-on-sale" clauses.
If the special servicer waives the "due-on-sale" clause it may either:
o release the original borrower from liability under the Mortgage Loan and
substitute the new owner as the borrower, or
o enter into an assumption agreement with the new owner of the Mortgaged
Property.
To the extent permitted by law, the special servicer will enter into an
assumption or substitution agreement only if the credit status of the
prospective new owner is in compliance with:
o the special servicer's regular commercial mortgage origination or servicing
standards and criteria,
o the terms of the Mortgage Loan, and
o any other standards set by the special servicer consistent with the
servicing standard.
If a Mortgage Loan is assumed, the only permitted modifications that
may be made as part of the assumption are those described below under
"--Amendments, Modifications and Waivers".
The master servicer will receive 66-2/3% and the special servicer will
receive 33-1/3% of assumption fees on non-Specially Serviced Mortgage Loans paid
by the borrower or the new owner as additional servicing compensation. The
special servicer will receive 100% of the assumption fees on Specially Serviced
Mortgage Loans as additional servicing compensation.
In a bankruptcy or similar proceeding involving a Mortgaged Property, a
court may substitute a new owner or impose a junior or senior lien on the
Mortgaged Property, without the consent of the master servicer, the special
servicer or the trustee.
Enforcement of "Due-on-Encumbrance" Clauses
Most of the Mortgage Loans contain a "due-on-encumbrance" clause, which
generally either:
o provides that the Mortgage Loan will (or may at the related mortgagee's
option) become due and payable upon the creation of any lien or other
encumbrance on the Mortgaged Property, or
o requires the consent of the related mortgagee to the creation of any lien
or other encumbrance on the Mortgaged Property.
Such clauses usually permit the owner of the Mortgage Loan to either:
o accelerate the payments due on the Mortgage Loan, or
o withhold its consent to the creation of any such lien or other encumbrance.
The special servicer may in accordance with the servicing standard
either exercise or waive its right to exercise the trust fund's rights under the
"due-on-encumbrance" clauses in the Mortgage Loan documents. However, the
special servicer 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 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 Operating Adviser" for additional limitations on the ability
of the special servicer to waive "due-on-encumbrance" clauses.
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
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proceeding involving the Mortgaged Property without obtaining a Rating Agency
confirmation.
Inspections
The special servicer is responsible for inspecting the Mortgaged
Properties securing Specially Serviced Mortgage Loans and REO Properties. The
master servicer is responsible for inspecting the other Mortgaged Properties.
Each Mortgaged Property and REO Property will be inspected at least once every
two years and within 60 days after it becomes a Specially Serviced Mortgage
Loan. If a Mortgage Loan has a then current principal balance of at least
$2,000,000 or 2% of the then outstanding principal balance of all Mortgage Loans
in the trust fund or is a Specially Serviced Mortgaged Loan, the related
Mortgaged Property will be inspected at least once every year. The annual and
bi-annual inspections described above will be done at the expense of the
servicer performing the inspection. The inspection done at the time a Mortgage
Loan becomes a Specially Serviced Mortgage Loan will be an expense of the trust.
The master servicer and the special servicer will cause a written inspection
report to be prepared as soon as reasonably possible after completing the
inspection. A copy of each inspection report must be delivered to the trustee
and the operating adviser within 15 days after its preparation.
Realization Upon Mortgage Loans
Standards for Conduct Generally in Effecting Foreclosure or the Sale of
Defaulted Loans
The master servicer will advance costs and expenses of a foreclosure or
other acquisition as a Servicing Advance, unless the Advance would be
nonrecoverable.
The special servicer may proceed with a non-judicial foreclosure under
the laws of the state where the property is located. The special servicer need
not pursue a deficiency judgment against the borrower or any other party if the
laws of the state do not permit a deficiency judgment after a non-judicial
foreclosure. The special servicer may also refrain from seeking a deficiency
judgment if it determines that the likely recovery would not warrant the cost,
time, expense and/or exposure of pursuing the deficiency judgment.
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, as the holder of the REMIC I certificates and as trustee for the
holders of the certificates. Notwithstanding any such acquisition of title and
cancellation of the related Mortgage Loan, the Mortgage Loan will be considered
to be a Mortgage Loan held in the trust fund until the related REO Property is
sold by the trust fund, 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 extensions of this period.
The principal balance of the loan will be reduced by Net
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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. The special servicer must
hire the independent contractor within 90 days after the trust fund acquires the
Mortgaged Property. Generally, REMIC I will not be taxed on income received on
Mortgaged Property which constitutes "rents from real property," under section
856(c)(3)(A) of the Internal Revenue Code and the related Treasury regulations.
"Rents from real property" do not include the portion of any rental
based on the net income or gain of any tenant or sub-tenant. No determination
has been made whether rent on any of the Mortgaged Properties meets this
requirement.
"Rents from real property" include charges for services customarily
furnished or rendered in connection with the rental of real property, whether or
not the charges are separately stated. Services furnished to the tenants of a
particular building will be considered customary if, in the geographic market in
which the building is located, tenants in buildings that are of a similar class
are customarily provided with the service. The depositor has not determined
whether the services furnished to the tenants of the Mortgaged Properties are
"customary" within the meaning of applicable regulations. It is therefore
possible that a portion of the rental income from a Mortgaged Property owned by
the trust fund would not constitute "rents from real property".
Net income from a trade or business operated or managed by an
independent contractor on a Mortgaged Property owned by REMIC I does not
constitute "rents from real property". 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 "Federal Income Tax Consequences--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 "Federal Income Tax
Consequences--REMICs--Taxation of Owners of REMIC Regular Certificates" and
"--Taxation of Owners of REMIC 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 in accordance with the servicing
standard that the sale would be in the best economic interests of the trust
fund.
The special servicer must give the trustee and the operating adviser at
least 10 business days prior written notice of its intention to sell any
Specially Serviced Mortgage Loan or REO Property The operating adviser may
purchase the loan or property, directly or through an affiliate, for
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cash equal to the Repurchase Price (excluding the 0.25% fee payable to the
special servicer).
If the operating adviser (or a designated affiliate) fails to purchase
the loan or property within 10 business days after the operating advisor
receives notice, either the special servicer or the master servicer, in that
order of priority, may purchase the loan or property, directly or through an
affiliate, for cash equal to the Repurchase Price (excluding the 0.25% fee
payable to the special servicer).
If none of the forgoing purchases the loan or property, the special
servicer may then offer to sell the loan or property if and when the special
servicer determines that the sale would be in the best economic interests of the
trust fund. The special servicer must sell the loan or property within the
period specified in the pooling and servicing agreement, including extensions.
The operating adviser, the master servicer and the special servicer may
offer to purchase any such loan or property. The special servicer will accept
any offer received from any person:
o that it determines to be a fair price, unless the highest offeror is the
special servicer or one of its affiliates, or
o that the trustee determines to be a fair price, if the highest offeror is
the special servicer or one of its affiliates.
In making such a fairness determination, the special servicer or
trustee may rely upon an updated independent appraisal. Any offer from the
depositor, the master servicer, the special servicer, any borrower, the manager
of a Mortgaged Property or any of their affiliates in the amount of the
Repurchase Price shall be deemed to be a fair price (excluding the 0.25% fee
payable to the special servicer).
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, but shall not include provisions
relating to late fees, Deferred Interest or Default Interest, (each, a "Money
Term") of, or materially impair the collateral securing, any loan that is not a
Specially Serviced Mortgage Loan.
Subject to any restrictions applicable to REMICs, and to limitations
under the pooling and servicing agreement, the master servicer may agree to a
modification, waiver or amendment of the terms of any loan that is not a
Specially Serviced Mortgage Loan with respect to a release or substitution of
the related Mortgaged Property only if such modification, waiver or amendment is
approved by the Special Servicer.
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.
Examples of the types of modifications, waivers or amendments to which
the special servicer may agree include:
o reducing the amounts owing under the loan by forgiving principal, accrued
interest and/or any prepayment premium,
o reducing the amount of the monthly payment on the loan, including a
reduction in the interest rate,
o not enforcing any right granted under any note or mortgage relating to the
loan,
o extending the maturity date of the loan, and/or
o accepting a principal prepayment during a Lock-out Period.
However, the special servicer may not permit a borrower to extend the
maturity date to a date later than:
o two years before the Rated Final Distribution Date, or
o ten years before any ground lease that secures the loan expires.
If the terms of a Mortgage Loan having one of the ten largest current
outstanding principal
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balances of all Mortgage Loans in the trust fund require the related borrower to
obtain the Mortgagee's consent before changing any franchise with respect to any
hotel or motel located on the related Mortgaged Property, the master servicer or
special servicer, as applicable, may consent to any such change only if it first
obtains written confirmation from each Rating Agency that the consent will not
result in a qualification, downgrade or withdrawal of the rating then assigned
by that Rating Agency to any class of certificates. For purposes of determining
whether such a Rating Agency confirmation is required, all Mortgage Loans in a
set of Cross-Collateralized Loans and all Mortgage Loans in a group with the
same or affiliated borrowers will be aggregated and treated as one. In addition,
the master servicer may grant such consent only if it first receives the consent
of the special servicer. The master servicer or the special servicer, as
applicable, shall use its reasonable efforts to cause the borrower to pay the
costs of obtaining any required Rating Agency confirmation. If such costs are
not paid by the borrower, the master servicer will advance such costs as a
Servicing Advance, unless such Advance would be a Nonrecoverable Advance.
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--Application of Realized Loses and Expense Losses and Principal
Balances" and "--Subordination" in this prospectus supplement.
The Trustee
LaSalle Bank National Association will act as trustee. The address of
the trustee's corporate trust office is:
135 South LaSalle Street
Suite 1625
Chicago, Illinois 60603
Attn: Asset-Backed Trust Services Group
PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates, Series 2000-C1
Resignation and Removal of Trustee
The trustee may resign at any time by notifying the depositor, the
master servicer, the special servicer and the Rating Agencies in writing. The
trustee's resignation will also remove the fiscal agent. The master servicer
will appoint the successor trustee and fiscal agent. Before appointing a
successor trustee, the master servicer must obtain confirmation from the Rating
Agencies that the successor trustee's appointment will not adversely affect the
rating then assigned by the Rating Agencies to any of the certificates. If any
successor fiscal agent is not rated by each rating agency in one of its two
highest long-term unsecured debt rating categories and written confirmation will
be obtained from each Rating Agency that the successor fiscal agent's
appointment will not adversely affect the rating then assigned by the Rating
Agency to any certificates. The resigning trustee must pay any cost of obtaining
the Rating Agency confirmations. If the successor trustee and successor fiscal
agent are not appointed within 30 days after the notice of resignation, the
resigning trustee and departing fiscal agent may petition a court of competent
jurisdiction to appoint a successor trustee and successor fiscal agent.
The depositor or the master servicer may remove the trustee and the
fiscal agent if, among other things:
o the trustee becomes ineligible to continue as such under the pooling and
servicing agreement,
o the trustee or the fiscal agent becomes incapable of acting,
o the trustee or the fiscal agent is adjudged bankrupt or insolvent,
o a receiver is appointed for the trustee, the fiscal agent or their
property, or
o any public officer takes charge or control of the trustee, the fiscal agent
or their property.
The holders of certificates evidencing a majority of the total voting
rights may remove the trustee and the fiscal agent upon written notice to the
master servicer, the special servicer, the depositor, the trustee and the fiscal
agent. If such removal is without cause, the reasonable costs and expenses of
the removed trustee and fiscal agent in connection with such removal shall be
paid as an Additional Trust Fund Expense.
Resignation or removal of the trustee and the fiscal agent is effective
only when the successor trustee (and fiscal agent, if necessary) accepts the
appointment.
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Trustee Fee
The pooling and servicing agreement entitles the trustee to a monthly
fee from amounts in the Collection Account. The trustee fee is calculated at the
rate specified in the pooling and servicing agreement and is based on the then
outstanding principal balance of each Mortgage Loan and in the same manner as
interest is calculated on the Mortgage Loan. Any trustee fee rate calculated on
an Actual/360 basis will be recomputed on a 30/360 basis for purposes of
calculating the Net Mortgage Rate.
Indemnification of Trustee
The trust fund will indemnify the trustee, the fiscal agent and their
directors, officers, employees, agents and affiliates against any and all
losses, liabilities, damages, claims or expenses (including reasonable
attorneys' fees) arising under the pooling and servicing agreement or the
certificates (but only to the extent that they are expressly reimbursable under
the pooling and servicing agreement or are unanticipated expenses incurred by
the REMIC). However, the indemnification will not apply to matters resulting
from the negligence, 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, the fiscal agent and their directors, officers, employees, agents and
affiliates for similar losses related to the willful misconduct, 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 required to be furnished to it, the trustee must examine the
documents and determine whether they conform on their face to the requirements
of the pooling and servicing agreement.
If the master servicer fails to make a required Advance, the trustee
must make the Advance unless it deems the Advance nonrecoverable. See
"--Advances".
Except for funds held by the trustee, the trustee and the fiscal agent
will not be accountable for:
o the use or application by the depositor of any certificates or the proceeds
of the certificates,
o the use or application of funds paid to the depositor, the master servicer
or the special servicer relating to the Mortgage Loans, or
o the use or application of funds deposited in or withdrawn from the
Collection Account or the Distribution Account by the depositor, the master
servicer or the special servicer.
The trustee, the fiscal agent, the special servicer and master servicer
will make no representation as to:
o the validity or sufficiency of the pooling and servicing agreement, the
certificates, this prospectus supplement or the prospectus, or
o the validity, enforceability or sufficiency of the Mortgage Loans or
related documents.
The Fiscal Agent
ABN AMRO Bank N.V., a Netherlands banking corporation that is the
trustee's indirect parent, will act as fiscal agent for the trustee. The fiscal
agent must make any Advance the trustee is required to make but does not make.
However, the fiscal agent need not make any Advance that it deems
nonrecoverable. See "--Advances".
If the trustee resigns or is removed, the fiscal agent will resign or
will be removed. The initial fiscal agent need not act in such capacity at any
time that LaSalle Bank National Association is not the trustee.
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Servicing Compensation and Payment of Expenses
The master servicer will be entitled to a monthly servicing fee for
each Mortgage Loan. The fee is calculated at the per annum rate listed in
Appendix II based on the then outstanding principal balance of the Mortgage Loan
and in the same manner as interest is calculated on the Mortgage Loan. Any
master servicing fee rate calculated on an Actual/360 basis will be recomputed
on a 30/360 basis for purposes of calculating the Net Mortgage Rate.
The master servicing fee for each loan will be retained by the master
servicer from payments and collections (including insurance proceeds and
liquidation proceeds) on the loan. The master servicer will 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 or
default interest (other than amounts used to pay Advance interest), loan
service transaction fees, demand fees, beneficiary statement charges and
similar fees and charges (but excluding prepayment premiums or default
interest),
o 66-2/3% of any extension fees, modification fees, consent fees and
assumption fees collected on the Mortgage Loans (except Specially Serviced
Mortgage Loans),
o all insufficient funds check charges (including insufficient funds check
charges arising from Specially Serviced Mortgage Loans), and
o any Prepayment/Balloon Payment Interest Excess (to the extent not offset
against any Prepayment/Balloon Payment Interest Shortfall).
If Midland resigns or is terminated as the master servicer and the
successor master servicer agrees to perform the services of the master servicer
for an amount less than the master servicing fee, the certificateholders will
not receive any portion of the excess master servicing fee.
The master servicer will pay all expenses incurred by it in connection
with its responsibilities under the pooling and servicing agreement (subject to
reimbursement as provided in the agreement), including all fees of any
sub-servicers retained by it.
Special Servicing
Ability of Operating Adviser to Remove Special Servicer
The operating advisor may at any time remove the special servicer
without cause and appoint a successor special servicer. The removal of the
special servicer and appointment of a successor special servicer will be
effective only when:
o the successor special servicer has assumed in writing all of the
responsibilities, duties and liabilities of the special servicer under the
pooling and servicing agreement, and
o each Rating Agency confirms to the trustee in writing that such appointment
and assumption will not result, in and of itself, in a downgrading,
withdrawal or qualification of the rating then assigned by the Rating
Agency to any class of certificates.
The operating adviser or the successor special servicer 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, including the right to receive any workout fees payable on
Mortgage Loans that became Corrected Mortgage Loans while it acted as special
servicer.
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 either
o 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,
or
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o on or before the date of the default, the borrower has delivered to
the master servicer a firm commitment to refinance the related
Mortgage Loan within 60 days of the 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 become the subject of any bankruptcy, insolvency or similar
proceeding, admitted in writing the inability to pay its debts as they come
due or made an assignment for the benefit of creditors, or
o the master servicer proposes to commence foreclosure or other workout
arrangements;
however, such loans cease to be Specially Serviced Mortgage Loans when:
o the above circumstances cease to exist in the good faith and reasonable
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 for purposes of
determining whether a Mortgage Loan is a Specially Serviced Mortgage Loan.
Special Servicer Compensation
The special servicer is entitled to a monthly standby special servicing
fee and a monthly special servicing fee. The standby special servicing fee will
accrue with respect to each Mortgage Loan (including each Specially Serviced
Mortgage Loan and each Mortgage Loan as to which the related Mortgaged Property
has become an REO Property) in the same manner as the master servicing fee, at a
rate equal to 1/12th of 0.005%. 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, liquidation or condemnation of, or any partial or
unscheduled payment with respect to, any Specially Serviced Mortgage Loan
or REO Property
less
o any broker's commission and related brokerage referral fees.
No disposition fee will be paid in connection with:
o the repurchase of a Mortgage Loan as described under "Description of the
Mortgage Pool--Representations and Warranties; Repurchase"; however, the
special servicer will receive a 0.25% fee in connection with such a
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 operating adviser, the
master servicer or special servicer as described under "The Pooling
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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 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 will also retain as additional servicing
compensation:
o all investment income earned on amounts on deposit in any REO Account,
o if permitted under the Mortgage Loan, late payment charges or late fees or
default interest (other than amounts used to pay Advance interest),
assumption fees, loan modification fees, extension fees, loan service
transaction fees, beneficiary statement charges or similar items that are
collected on Specially Serviced Mortgage Loans, and
o if permitted under the Mortgage Loan, 33-1/3% of any extension fees,
modification fees, consent fees and assumption fees collected on Mortgage
Loans that are not Specially Serviced Mortgage Loans.
Additional special servicing compensation does not include prepayment
premiums or any other amount required to be deposited or retained in the
Collection Account.
The Operating Adviser
Selection
So long as G2 Opportunity Fund LP or its affiliates own at least 50% of
the principal balance of the Controlling Class, they may appoint an operating
adviser to represent their interests. If they no longer own at least 50% of the
principal balance of the Controlling Class, the holders of more than 50% of the
principal balance of the Controlling Class may appoint the operating adviser. If
the holders of more than 50% of the principal balance of the Controlling Class
cannot agree on the election of the Operating Adviser, then GMAC Commercial
Mortgage Corporation will be the Operating Adviser.
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 operating adviser may advise the special servicer about the
following matters:
o foreclosure or similar conversion of the ownership of properties securing
Specially Serviced Mortgage Loans that are in default, including acquiring
an REO Property,
o amendment, waiver or modification of a Money-Term or any other material
non-monetary term of a Specially Serviced Mortgage Loan,
o proposed sale of a defaulted Mortgage Loan or REO Property for less than
the Repurchase Price, except upon termination of the trust fund as
described under "Description of the Certificates--Optional Termination",
o acceptance of a discounted payoff,
o determination to bring an REO Property into compliance with environmental
laws or to address hazardous materials located at an REO Property,
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o release of collateral, other than in accordance with the terms or upon
satisfaction of a loan,
o acceptance of substitute or additional collateral, other than in accordance
with the terms of a loan,
o any waiver of a "due-on-sale" or "due-on-encumbrance" clause,
o acceptance of an assumption agreement releasing a borrower from liability
under a loan, and
o any release of a letter of credit or debt service reserve,
provided that, in the event that the special servicer determines that immediate
action is necessary to protect the interest of the certificateholders (as a
collective whole), the special servicer may take any such action without waiting
for the operating adviser's response.
The operating adviser may object to the above actions in writing within
10 business days after being notified of the proposed action and provided with
all reasonably requested information. The operating adviser will be considered
to have approved any such action if it does not object within 10 days.
Furthermore, the special servicer shall not be obligated to obtain the approval
of the operating adviser for any actions to be taken with respect to any
particular Mortgage Loan if the special servicer has notified the operating
adviser in writing of the various actions that the special servicer proposes to
take with respect to such Mortgage Loan and, for 60 days following the first
such notice, the operating adviser has objected to all of those proposed actions
and has failed to suggest any alternative actions that the special servicer
considers to be consistent with the servicing standard.
The operating adviser also may advise the special servicer to take, or
to refrain from taking, such other actions as the operating adviser deems
advisable. However, the operating adviser may never require the special servicer
to violate the pooling and servicing agreement, including its obligation to act
in accordance with the servicing standard.
Limitation on Liability of Operating Adviser
The operating adviser and its officers, directors, employees and owners
will have no liability to certificateholders for any action taken, or for
refraining from the taking of any action. By accepting certificates, each
certificateholder agrees that the operating adviser:
o may have special relationships and interests that conflict with those of
holders of one or more classes of certificates,
o may act solely in the interests of the holders of the Controlling Class,
o has no duties to certificateholders, except for holders of the Controlling
Class,
o may act to favor the interests of the Controlling Class over the interests
of other classes, and
o will violate no duty and incur no liability by acting solely in the
interests of the Controlling Class.
No certificateholder may take legal action against the operating
adviser because it acted solely in the interests of the Controlling Class.
Sub-Servicers
The master servicer and special servicer may each delegate its
servicing obligations to one or more third-party sub-servicers. Despite any such
delegation, the master servicer or special servicer remains directly responsible
for the delegated duties and for the acts and omissions of any sub-servicer. The
master servicer or the special servicer must monitor the performance of any
sub-servicer that it uses. 11 Mortgage Loans (3.5%) are currently serviced by
third-party servicers that are expected to continue to service such loans as
sub-servicers. GMAC Commercial Mortgage Corporation will sub-service 105
Mortgage Loans (44.2%). Except for the sub-servicing agreements related to these
Mortgage Loans, 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 agreements for the Mortgage Loans that will be
sub-serviced on the closing date provide that the related sub-servicer may only
be terminated if it is in default under its sub-servicing 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
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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 (unless
the recipient requests otherwise in writing) and make available electronically
the statement to the certificateholders, the depositor, the paying agent, the
underwriters, the master servicer, the special servicer, the operating adviser
and each Rating Agency. The trustee will use the form of monthly distribution
statement included as Appendix IV 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 distributed to the class;
o The pass-through rate applicable to each class of the certificates for the
distribution date;
o The amount of any P&I Advances by the master servicer, the trustee or the
fiscal agent included in the amounts distributed to the certificateholders;
o The total amount of Realized Losses and Expenses incurred during the
related Collection Period, the cumulative Realized Losses and Expense
Losses incurred since the closing date and their allocation to the
principal balance of any class of principal balance certificates, together
with a list of Additional Trust Fund Expenses itemized by category of
expense;
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 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;
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o The amount of the master servicer fee and additional servicing compensation
paid to the master servicer for the distribution date;
o The amount of any standby special servicing fee, special servicing fee,
disposition fee, workout fee or additional servicing compensation 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 Deferred 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;
o Both current and cumulative prepayments;
o Ratings from all rating agencies for all applicable classes of
certificates;
o Any Mortgage Loan as to which bankruptcy proceedings have been commenced
against the related borrower, but only to the extent that the servicer has
notified the trustee thereof;
o Any draws on letters of credit or debt service reserves, and the remaining
balance thereof; and
o Any other information required under the pooling and servicing agreement.
The master servicer will provide the trustee with the following
portions of the Commercial Mortgage Securities Association Investor Reporting
Package reports and files for inclusion in the monthly distribution statement:
o Loan Set-up File,
o Loan Periodic Update File,
o Financial File,
o Property File,
o Servicer Watch List,
o Delinquent Loan Status Report,
o REO Status Report,
o Comparative Financial Status Report,
o Historical Loan Modification Report,
o Historical Liquidation 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 (other than the Loan Periodic Update File) before the
distribution date in September 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.
Some of the information made available in the distribution date
statements referred to above may be obtained electronically from the trustee as
follows:
1. by facsimile through the trustee's ASAP System by calling (714) 282-5518
and requesting statement number 504;
2. on the Internet at www.lnbabs.com; or
3. on its electronic bulletin board service at (714) 282-3990.
CMBS Surveillance Inquiries
The master servicer currently maintains an Internet-based investor
reporting system, CMBS Investor Insightsm, that contains updated performance
information at the portfolio, loan and property levels on the various commercial
mortgage-backed securities transactions that it services. Certificateholders,
prospective transferees and other appropriate parties may obtain access to CMBS
Investor Insightsm through the master servicer's website, www.midlandls.com. The
master servicer may require registration and the execution of an access
agreement in connection with providing access to CMBS Investor Insightsm.
Specific questions about portfolio, loan and property
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performance may be sent to the master servicer via e-mail at
[email protected].
Other Available Information
In addition to the other reports and information made available and
distributed under the pooling and servicing agreement by the trustee, the master
servicer and the special servicer will also make available any other information
relating to the Mortgage Loans, the Mortgaged Properties or the borrowers for
review by the depositor, the underwriters, the operating adviser, the trustee
and the Rating Agencies. The master servicer and the special servicer will also
make such information available to any person that the trustee at the request of
the master servicer or special servicer certifies is a certificateholder or
potential certificateholder. The trustee may base the certification on any
information from the certificateholder or the potential certificateholder that
it may require in its sole discretion. Such person will be required to pay any
expenses incurred by the trustee in making such certification. The master
servicer and the special servicer are not required to provide the information if
doing so is prohibited by applicable law or by any documents related to a
Mortgage Loan. The master servicer and the special servicer may adopt reasonable
rules and procedures governing access to the information, which may include a
requirement that the person requesting such information execute an agreement
governing the availability, use and disclosure of such information. The
agreement may provide for the indemnification of the master servicer or the
special servicer for any liability or damage that may arise from the use or
disclosure of the information.
The following are available for your review at the trustee's offices
during normal business hours:
o the pooling and servicing agreement,
o all monthly statements to certificateholders,
o annual compliance statements, and
o annual accountants' reports.
Unless prohibited by applicable law or the Mortgage Loan documents, the
following will be available for your review at the trustee's offices during
normal business hours:
o all modifications, waivers and amendments of the Mortgage Loans,
o officer's certificates and other evidence supporting a determination that
an Advance is nonrecoverable, and
o upon request, the property inspection reports.
The master servicer, the special servicer and the trustee may impose a
reasonable charge for expenses of providing copies or access to the above
information. The Rating Agencies and the operating adviser will not have to pay
any such charge.
Filings with the SEC
The master servicer will, on behalf of the trust fund, prepare, sign
and file with the Securities and Exchange Commission all reports, statements and
information respecting the trust fund that the master servicer or the depositor
determines are required to be filed with the SEC or the filing of which is
otherwise desirable. The master servicer will file each report, statement and
information on or prior to the required filing date. However, the depositor will
file with the SEC, within 15 days of the closing date, a Form 8-K together with
the pooling and servicing agreement.
The trustee, the fiscal agent, the master servicer and the special
servicer are not responsible for the accuracy or completeness of any information
supplied to it by a borrower or other third party for inclusion in any notice,
report or information furnished or provided by the master servicer, the special
servicer or the trustee under the pooling and servicing agreement. The trust
fund will indemnify and hold harmless the master servicer, the special servicer,
the trustee and the fiscal agent against any loss, liability or expense incurred
in connection with any legal action relating to any statement or omission or
alleged statement or omission in any information supplied by a borrower or other
third party, including any liability related to the inclusion of the information
in any report filed with the SEC.
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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-1, class A-2, class X, class B, class C, class D, class E,
class F, class G, class H, class J, class K, class L, class M, class N and
class O certificates will be, 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 V 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-1
and class A-2 certificates are not expected to be treated as having been issued
with original issue discount for federal income tax reporting purposes. The
class B, class C and Class D certificates are expected to be treated as having
been issued with de minimis original issue discount for federal income tax
purposes. The class E certificates are expected to be treated as having been
issued with original issue discount for federal income tax purposes.
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.
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 Dates. No representation is made
as to whether the Mortgage Loans will prepay at that rate or any other rate. See
"Federal Income Tax Consequences--REMICs--Taxation of Owners of REMIC Regular
Certificates--Original Issue Discount" and "--Premium" 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 "Federal
Income Tax Consequences--REMICS--Taxation of Holders of REMIC Regular
Certificates" in the prospectus.
Generally, the offered certificates will be "real estate assets" within
the meaning of Section 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, 28.6% 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
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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 "Federal Income Tax
Consequences--REMICs--Taxable Income 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 NEW YORK
The following discussion summarizes certain legal aspects of Mortgage
Loans secured by real property in California (13.6%) and New York (13.5%), which
are general in nature. These summaries do not purport to be complete and are
qualified in their entirety by reference to the applicable federal and state
laws governing the Mortgage Loans.
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.
New York
Under New York law, while a foreclosure may be accomplished either
judicially or non-judicially, nonjudicial foreclosures are virtually unused
today. Upon a default, a mortgagee may either proceed in equity to foreclose
upon the mortgaged property or to proceed at law and sue on the note. New York
law does not require that the mortgagee must bring a foreclosure action before
being entitled to sue on the note. However, once having begun a foreclosure
action or an action to sue on the note or guaranty, a mortgagee is generally not
permitted to initiate the other without leave of court. New York does not
restrict a mortgagee from seeking a deficiency judgment. In order to obtain a
deficiency
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judgment, a series of procedural and substantive requirements must be
satisfied.
--------------------------------
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 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
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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 provides 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 some of the underwriters an
individual prohibited transaction exemption (Prohibited Transaction Exemption
No. 90-24, as amended by Prohibited Transaction Exemption No. 97-34, to Morgan
Stanley & Co. Incorporated, 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. Morgan Stanley & Co. Incorporated,
2. any person directly or indirectly, through one or more intermediaries,
controlling, controlled by or under common control with Morgan Stanley &
Co. Incorporated, and
3. any member of the underwriting syndicate or selling group of which a person
described in (1) or (2) is a manager or co-manager with respect to the
senior certificates, including any of the other underwriters.
Each of the individual prohibited transaction exemptions 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, Moody's Investors Service or Fitch, Inc. (or
their successors and assigns).
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
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
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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 Moody's and
"AAA" by Fitch, 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, 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 a prohibited 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
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also constitute a violation of federal or state criminal law.
Any assets of an insurance company general account that support
insurance policies or annuity contracts issued to Plans:
o after December 31, 1998, or
o on or before December 31, 1998, for which the insurance company does not
comply with the 401(c) regulations,
may be treated as plan assets. In addition, because Section 401(c) does not
relate to insurance company separate accounts, separate account assets are still
treated as plan assets of any Plan invested in such separate account. Insurance
companies contemplating the investment of general account assets in the
certificates should consult their legal counsel with respect to the
applicability of Section 401(c) of ERISA.
-----------------------------------
LEGAL INVESTMENT
The offered certificates will not constitute "mortgage related
securities" for purposes of the Secondary Mortgage Market Enhancement Act of
1984.
The appropriate characterization of the certificates under various
legal investment restrictions may be subject to significant interpretive
uncertainties. As a result, the depositor is unable to determine whether
investors subject to these restrictions may purchase the certificates. The
depositor makes no representations as to:
o the proper characterization of the offered certificates for legal
investment purposes, financial institution regulatory purposes or other
purposes, or
o the ability of particular investors to purchase the offered certificates
under applicable legal investment restrictions.
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.
---------------------------------
PLAN OF DISTRIBUTION
Subject to the underwriting agreement, each underwriter has agreed to
purchase the principal amounts of offered certificates set forth opposite its
name below:
S-92
<PAGE>
Underwriter Class A-1 Class A-2 Class B
Morgan Stanley & Co. Incorporated $78,100,000 $237,000,000 $19,000,000
PNC Capital Markets, Inc. 63,926,000 193,741,000 15,046,000
CIBC World Markets Corp. 10,000,000 30,000,000 --
----------- ------------ -----------
Total $152,026,000 $460,741,000 $34,046,000
============ ============ ===========
Underwriter Class C Class D Class E
Morgan Stanley & Co. Incorporated $19,000,000 $5,500,000 $14,000,000
PNC Capital Markets, Inc. 15,047,000 4,514,000 12,036,000
CIBC World Markets Corp. -- -- --
----------- ----------- -----------
Total $34,047,000 $10,014,000 $26,036,000
=========== =========== ===========
The underwriting agreement imposes conditions on the obligations of the
underwriters. The underwriters must purchase all of the offered certificates if
they purchase any.
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 June 29, 2000, which is the 10th business
day following the date of pricing of the certificates. Under Rule 15c6-1 adopted
by the Securities and Exchange Commission under the Securities Exchange Act of
1934, trades in the secondary market generally are required to settle in three
business days, unless the parties to any trade expressly agree otherwise.
Accordingly, purchasers who wish to trade offered certificates in the secondary
market prior to such delivery should specify a longer settlement cycle, or
should refrain from specifying a shorter settlement cycle, if failing to do so
would result in a settlement date that is earlier than the delivery date of the
offered certificates.
The underwriters and any dealers that participate with the underwriters
in the distribution of the offered certificates may be deemed to be
underwriters, and any discounts or commissions received by them and any profit
on the resale of such classes of offered certificates by them may be deemed to
be underwriting discounts or commissions, under the Securities Act of 1933.
The depositor has agreed to indemnify the underwriters against civil
liabilities, including liabilities under the Securities Act of 1933 or
contribute to payments the underwriters may be required to make in respect
thereof.
The underwriters intend to make a secondary market in the offered
certificates. They have no obligation to do so, however, and any market making
may be discontinued at any time.
If and to the extent required by applicable law or regulation, this
prospectus supplement and the prospectus may be used by PNC Capital Markets,
Inc. in connection with market-making transactions in the offered certificates.
PNC Capital Markets, Inc. may act as principal or as agent in such transactions.
Sales may be made at negotiated prices determined at the time of sale.
--------------------------------
S-93
<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 Latham & Watkins, New York, New York.
-----------------------------------
RATINGS
It is a condition of the issuance of the offered certificates that they
receive the following credit ratings from Fitch, Inc. and Moody's Investors
Service, Inc. (with their successors and assigns, the "Rating Agencies"):
Class Fitch Moodys
Class A-1 AAA Aaa
Class A-2 AAA Aaa
Class B AA Aa2
Class C A A2
Class D A- A3
Class E BBB Baa2
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 March, 2033 (the
"Rated Final Distribution Date" ). This date is the distribution date occurring
three years after the latest maturity date for any of the mortgage loans as of
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/Balloon
Payment Interest Shortfalls will be realized, or
o the yield to maturity that investors may experience.
The ratings thus address credit risk and not prepayment risk.
It is possible that a rating agency other than Fitch and Moody's could
issue an unsolicited rating for one or more of the classes of certificates.
These unsolicited ratings could be lower than the ratings issued by Fitch and
Moody's.
S-94
<PAGE>
INDEX OF DEFINITIONS
Additional Trust Fund Expenses...................S-54
Advance Rate.....................................S-70
Advances.........................................S-69
Anticipated Repayment Date.......................S-34
Appraisal Reduction..............................S-52
Appraisal Reduction Estimate.....................S-53
Appraisal Reduction Events.......................S-52
ARD..............................................S-34
Assumed Monthly Payment..........................S-51
Available Funds..................................S-48
Balloon LTV......................................S-40
Balloon LTV Ratio................................S-40
Class Interest Shortfall.........................S-50
Collection Account...............................S-70
Collection Period................................S-49
Compensating Interest Payment....................S-55
Constant Prepayment Rate.........................S-62
Controlling Class................................S-81
Corrected Mortgage Loan..........................S-81
CPR..............................................S-62
Cross-Collateralized Loans.......................S-32
Cut-off Date.....................................S-31
Cut-off Date Loan-to-Value.......................S-40
Cut-off Date LTV.................................S-40
Cut-off Date Principal Balance...................S-31
Debt Service Coverage Ratio......................S-39
Defeasance Loans.................................S-35
Deferred Interest................................S-34
Determination Date...............................S-49
Discount Rate....................................S-51
Distributable Certificate Interest...............S-50
Distribution Account.............................S-71
DSCR.............................................S-39
ERISA............................................S-88
Excess Liquidation Proceeds......................S-50
Excess Liquidation Proceeds Account..............S-71
Expense Losses...................................S-54
Hyper-Amortization Loans.........................S-33
Initial Interest Rate............................S-34
Initial Pool Balance.............................S-31
Interest Reserve Account.........................S-71
Interest Reserve Amount..........................S-71
Interest Reserve Loans.....................S-47, S-71
Lock-out Period..................................S-34
Maturity Assumptions.............................S-62
Money Term.......................................S-76
Monthly Payment..................................S-51
Mortgage.........................................S-31
Mortgage Loans...................................S-31
Mortgaged Property...............................S-31
Mortgages........................................S-31
Multiple Property Loans..........................S-31
Net Aggregate Prepayment/Balloon Payment
Interest Shortfall.............................S-55
Net Collections..................................S-81
Net Mortgage Rate................................S-47
Net REO Proceeds.................................S-71
Other Plans......................................S-91
P&I Advance......................................S-69
Plan.............................................S-88
Prepayment/Balloon Payment Interest Excess.......S-55
Prepayment/Balloon Payment Interest Shortfall....S-55
Principal Distribution Amount....................S-50
Principal Prepayments............................S-49
Qualified Substitute Mortgage Loan...............S-44
Rated Final Distribution Date....................S-94
Rating Agencies..................................S-94
Realized Loss....................................S-54
Record Date......................................S-48
REMIC............................................S-86
REO Account......................................S-47
REO Mortgage Loan................................S-52
REO Proceeds.....................................S-70
REO Property.....................................S-46
Repurchase Price.................................S-43
Reserve Accounts.................................S-37
Restricted Group.................................S-89
Revised Interest Rate............................S-34
Scheduled Final Distribution Date................S-55
Servicing Advances...............................S-69
Specially Serviced Mortgage Loan.................S-79
Stated Principal Balance.........................S-47
Treasury Rate....................................S-51
Underwritable Cash Flow..........................S-39
Updated Appraisal................................S-53
Yield Maintenance Period.........................S-34
S-95
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
APPENDIX I
MORTGAGE POOL INFORMATION
SELLER
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
Weighted
Percent by Weighted Average Weighted
Number of Aggregate Aggregate Average Stated Average Weighted
Mortgage Current Current Mortgage Remaining Current Average
Seller Loans Balance ($) Balance (%) Rate (%) Term (mos) LTV (%) DSCR
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CIBC 58 229,963,790 28.71 8.402 111 70.2 1.37
MID 107 418,532,711 52.25 7.740 112 71.3 1.35
RFC 59 152,528,221 19.04 8.647 124 69.2 1.34
--------------------------------------------------------------------------------------------------------------------------------
Total or Weighted Average 224 801,024,722 100.00 8.102 114 70.6 1.35
================================================================================================================================
</TABLE>
I-1
<PAGE>
APPENDIX I
MORTGAGE POOL INFORMATION
CUT-OFF DATE BALANCES
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Weighted
Percent by Weighted Average Weighted
Number of Aggregate Aggregate Average Stated Average Weighted
Mortgage Current Current Mortgage Remaining Current Average
Current Balances($) Loans Balance ($) Balance (%) Rate (%) Term (mos) LTV (%) DSCR
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 - 1,000,000 40 26,699,503 3.33 8.372 118 64.5 1.45
1,000,001 - 2,000,000 64 94,992,703 11.86 8.236 121 69.7 1.38
2,000,001 - 3,000,000 42 103,877,859 12.97 8.324 125 71.0 1.31
3,000,001 - 4,000,000 19 64,005,323 7.99 8.034 122 69.4 1.40
4,000,001 - 5,000,000 9 40,149,133 5.01 8.244 117 68.9 1.37
5,000,001 - 6,000,000 16 88,200,554 11.01 8.002 109 71.6 1.37
6,000,001 - 7,000,000 9 57,735,095 7.21 8.334 114 67.5 1.35
7,000,001 - 8,000,000 3 23,405,997 2.92 8.830 116 67.9 1.41
9,000,001 - 10,000,000 4 38,215,216 4.77 8.547 107 71.8 1.28
10,000,001 - 15,000,000 12 142,374,631 17.77 7.677 107 72.9 1.36
15,000,001 - 20,000,000 4 70,790,234 8.84 8.178 110 74.7 1.34
20,000,001 - 25,000,000 1 23,370,205 2.92 8.270 116 68.7 1.25
greater than
or equal to 25,000,001 1 27,208,269 3.40 6.950 97 66.0 1.35
-----------------------------------------------------------------------------------------------------------------------------------
Total or Weighted Average 224 801,024,722 100.00 8.102 114 70.6 1.35
===================================================================================================================================
</TABLE>
Min: $ 281,659
Max: $ 27,208,269
Average: $ 3,576,003
I-2
<PAGE>
APPENDIX I
MORTGAGE POOL INFORMATION
STATES
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
Weighted
Percent by Weighted Average Weighted
Number of Aggregate Aggregate Average Stated Average Weighted
Mortgage Current Current Mortgage Remaining Current Average
States Loans Balance ($) Balance (%) Rate (%) Term (mos) LTV (%) DSCR
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
California 25 108,931,238 13.60 8.008 113 66.3 1.40
New York 25 108,002,779 13.48 8.429 116 70.0 1.34
Pennsylvania 20 67,099,666 8.38 7.835 109 70.4 1.35
Michigan 10 62,900,591 7.85 8.343 111 72.5 1.29
Texas 29 61,573,243 7.69 8.395 145 71.0 1.33
New Jersey 11 59,205,242 7.39 8.148 117 71.9 1.36
Illinois 8 37,308,087 4.66 8.125 107 66.7 1.46
Arizona 6 29,982,269 3.74 8.435 115 72.3 1.27
Florida 10 27,846,474 3.48 8.413 111 73.5 1.32
Nevada 6 25,889,562 3.23 7.106 97 73.4 1.32
New Hampshire 11 22,361,215 2.79 7.516 105 75.3 1.32
Oklahoma 4 17,886,523 2.23 6.804 99 75.9 1.37
Virginia 3 17,384,480 2.17 7.330 106 75.6 1.41
Louisiana 5 16,511,745 2.06 7.737 107 69.0 1.51
Georgia 7 15,981,208 2.00 8.811 115 71.0 1.45
Maryland 2 13,737,323 1.71 8.361 117 73.6 1.29
Colorado 3 13,056,964 1.63 8.732 90 73.2 1.29
Ohio 7 12,490,149 1.56 8.903 94 64.6 1.32
Rhode Island 1 12,219,619 1.53 7.460 111 75.4 1.27
Nebraska 1 10,963,810 1.37 8.140 114 79.4 1.28
Oregon 2 7,919,124 0.99 7.715 100 70.3 1.35
Missouri 3 7,079,702 0.88 7.924 101 68.2 1.51
Minnesota 3 6,825,089 0.85 7.662 142 63.1 1.54
Indiana 3 6,818,319 0.85 7.666 144 75.3 1.20
North Carolina 2 4,834,677 0.60 8.554 112 73.5 1.25
Tennessee 4 4,798,841 0.60 7.400 190 56.5 1.63
Massachusetts 2 4,241,962 0.53 8.907 116 70.7 1.26
Washington 1 3,617,070 0.45 6.720 101 70.2 1.41
Utah 2 3,323,110 0.41 8.920 116 60.5 1.45
Connecticut 2 3,129,444 0.39 8.213 111 68.0 1.37
North Dakota 1 2,069,270 0.26 8.100 111 79.6 1.32
</TABLE>
I-3
<PAGE>
MORTGAGE POOL INFORMATION
STATES
(continued)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
Weighted
Percent by Weighted Average Weighted
Number of Aggregate Aggregate Average Stated Average Weighted
Mortgage Current Current Mortgage Remaining Current Average
States Loans Balance ($) Balance (%) Rate (%) Term (mos) LTV (%) DSCR
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Alabama 1 1,544,684 0.19 9.990 117 61.2 1.67
South Carolina 1 1,356,970 0.17 8.220 109 69.1 1.30
Kansas 1 1,282,706 0.16 8.310 111 65.8 1.25
Maine 1 494,522 0.06 8.320 113 35.3 2.22
Mississippi 1 357,047 0.04 8.840 110 62.9 1.36
----------------------------------------------------------------------------------------------------------------------------------
Total or Weighted Average 224 801,024,722 100.00 8.102 114 70.6 1.35
==================================================================================================================================
</TABLE>
I-4
<PAGE>
APPENDIX I
MORTGAGE POOL INFORMATION
PROPERTY TYPES
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Weighted
Percent by Weighted Average Weighted
Number of Aggregate Aggregate Average Stated Average Weighted
Mortgage Current Current Mortgage Remaining Current Average
Property Type Loans Balance ($) Balance (%) Rate (%) Term (mos) LTV (%) DSCR
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Retail 75 237,436,733 29.64 8.288 118 71.8 1.31
Multifamily 62 228,700,679 28.55 7.666 110 73.0 1.34
Industrial 32 131,427,144 16.41 8.291 112 69.3 1.37
Office 35 128,749,149 16.07 8.041 110 70.2 1.34
Hospitality 8 53,832,049 6.72 8.665 123 63.6 1.53
Self Storage 7 10,289,986 1.28 8.039 170 57.7 1.53
Mixed Use 4 10,094,459 1.26 9.000 116 61.8 1.41
Other 1 494,522 0.06 8.320 113 35.3 2.22
-----------------------------------------------------------------------------------------------------------------------------------
Total or Weighted
Average 224 801,024,722 100.00 8.102 114 70.6 1.35
===================================================================================================================================
</TABLE>
I-5
<PAGE>
APPENDIX I
MORTGAGE POOL INFORMATION
MORTGAGE RATES
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Weighted
Percent by Weighted Average Weighted
Number of Aggregate Aggregate Average Stated Average Weighted
Mortgage Current Current Mortgage Remaining Current Average
Mortgage Rate (%) Loans Balance ($) Balance (%) Rate (%) Term (mos) LTV (%) DSCR
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
6.001 - 6.500 2 5,021,761 0.63 6.457 100 71.3 1.34
6.501 - 7.000 32 158,625,131 19.80 6.845 101 70.2 1.46
7.001 - 7.500 17 55,355,384 6.91 7.259 113 68.8 1.45
7.501 - 8.000 10 41,486,098 5.18 7.740 110 76.5 1.27
8.001 - 8.500 75 283,836,323 35.43 8.297 116 72.4 1.30
8.501 - 9.000 61 167,730,227 20.94 8.760 121 70.3 1.33
9.001 - 9.500 23 81,661,652 10.19 9.235 126 64.7 1.37
9.501 - 10.000 4 7,308,145 0.91 9.668 117 60.1 1.46
------------------------------------------------------------------------------------------------------------------------------------
Total or Weighted
Average 224 801,024,722 100.00 8.102 114 70.6 1.35
====================================================================================================================================
</TABLE>
Min: 6.450%
Max: 9.990%
Weighted Average Coupon: 8.102%
I-6
<PAGE>
APPENDIX I
MORTGAGE POOL INFORMATION
SEASONING
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
Weighted
Percent by Weighted Average Weighted
Number of Aggregate Aggregate Average Stated Average Weighted
Mortgage Current Current Mortgage Remaining Current Average
Seasoning (mos) Loans Balance ($) Balance (%) Rate (%) Term (mos) LTV (%) DSCR
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
equal to or less than 0 1 6,935,000 0.87 8.410 120 66.1 1.31
1 - 12 169 584,979,354 73.03 8.505 118 70.9 1.32
13 - 24 47 170,811,152 21.32 6.917 106 69.0 1.47
25 - 36 7 38,299,216 4.78 7.190 98 73.2 1.35
---------------------------------------------------------------------------------------------------------------------------------
Total or Weighted Average 224 801,024,722 100.00 8.102 114 70.6 1.35
=================================================================================================================================
</TABLE>
Min: 0
Max: 27
Weighted Average: 10
I-7
<PAGE>
APPENDIX I
MORTGAGE POOL INFORMATION
ORIGINAL TERMS TO STATED MATURITY
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Weighted
Percent by Weighted Average Weighted
Number of Aggregate Aggregate Average Stated Average Weighted
Original Term to Stated Mortgage Current Current Mortgage Remaining Current Average
Maturity (mos) Loans Balance ($) Balance (%) Rate (%) Term (mos) LTV (%) DSCR
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
61 - 120 199 738,040,162 92.14 8.102 109 70.8 1.35
121 - 180 12 40,514,719 5.06 7.865 142 68.3 1.42
181 - 240 13 22,469,840 2.81 8.552 232 66.5 1.33
-----------------------------------------------------------------------------------------------------------------------------------
Total or Weighted Average 224 801,024,722 100.00 8.102 114 70.6 1.35
===================================================================================================================================
</TABLE>
Min: 78
Max: 240
Weighted Average: 124
I-8
<PAGE>
APPENDIX I
MORTGAGE POOL INFORMATION
REMAINING TERMS TO STATED MATURITY
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Weighted
Percent by Weighted Average Weighted
Number of Aggregate Aggregate Average Stated Average Weighted
Remaining Term to Stated Mortgage Current Current Mortgage Remaining Current Average
Maturity (mos) Loans Balance ($) Balance (%) Rate (%) Term (mos) LTV (%) DSCR
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
61 - 120 201 754,006,903 94.13 8.091 109 71.0 1.35
121 - 180 10 24,547,979 3.06 8.048 162 63.0 1.50
181 - 240 13 22,469,840 2.81 8.552 232 66.5 1.33
-----------------------------------------------------------------------------------------------------------------------------------
Total or Weighted Average 224 801,024,722 100.00 8.102 114 70.6 1.35
===================================================================================================================================
</TABLE>
Min: 73
Max: 237
Weighted Average: 114
I-9
<PAGE>
APPENDIX I
MORTGAGE POOL INFORMATION
ORIGINAL AMORTIZATION TERMS
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
Percent by Weighted
Number of Aggregate Aggregate Average
Original Amortization Term Mortgage Cut-off Date Cut-off Date Mortgage
(mos) Loans Balance ($) Balance (%) Rate (%)
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balloon Loan
121 - 180 3 12,448,761 1.55 8.385
181 - 240 11 29,323,805 3.66 7.883
241 - 360 195 732,389,248 91.43 8.089
--------------------------------------------------------------------------------------------------
Subtotal: 209 774,161,814 96.65 8.086
--------------------------------------------------------------------------------------------------
Fully Amortizing Loan
180 2 4,393,068 0.55 8.740
240 13 22,469,840 2.81 8.552
--------------------------------------------------------------------------------------------------
Subtotal: 15 26,862,907 3.35 8.582
--------------------------------------------------------------------------------------------------
==================================================================================================
Total or Weighted Average 224 $ 801,024,722 100.00% 8.102%
==================================================================================================
<CAPTION>
--------------------------------------------------------------------------------------------------
Weighted
Average
Remaining Weighted Weighted
Term to Weighted Average Average
Original Amortization Term Maturity Average Current Ballon
(mos) (mos) DSCR (x) LTV (%) LTV (%)
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balloon Loan
121 - 180 94 1.28 62.2 37.0
181 - 240 116 1.43 68.8 46.6
241 - 360 111 1.35 71.0 62.8
--------------------------------------------------------------------------------------------------
Subtotal: 111 1.35 70.8 61.8
--------------------------------------------------------------------------------------------------
Fully Amortizing Loan
180 172 1.43 53.2 1.6
240 232 1.33 66.5 3.9
--------------------------------------------------------------------------------------------------
Subtotal: 223 1.35 64.3 3.5
--------------------------------------------------------------------------------------------------
==================================================================================================
Total or Weighted Average 114 1.35x 70.6% 59.9%
==================================================================================================
</TABLE>
Min: 180
Max: 360
Weighted Average: 333
I-10
<PAGE>
APPENDIX I
MORTGAGE POOL INFORMATION
REMAINING AMORTIZATION TERMS
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
Percent by Weighted
Number of Aggregate Aggregate Average
Remaining Amortization Term Mortgage Current Current Mortgage
(mos) Loans Balance ($) Balance (%) Rate (%)
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
121 - 180 5 16,841,828 2.10 8.478
181 - 240 24 51,793,645 6.47 8.173
241 - 300 79 194,114,628 24.23 8.284
301 - 360 116 538,274,620 67.20 8.019
--------------------------------------------------------------------------------------------------
Total or Weighted Average 224 801,024,722 100.00 8.102
==================================================================================================
<CAPTION>
----------------------------------------------------------------------------------
Weighted
Average Weighted
Stated Average Weighted
Remaining Amortization Term Remaining Current Average
(mos) Term (mos) LTV (%) DSCR
----------------------------------------------------------------------------------
<S> <C> <C> <C>
121 - 180 115 59.8 1.32
181 - 240 167 67.8 1.39
241 - 300 112 65.6 1.43
301 - 360 110 73.0 1.32
----------------------------------------------------------------------------------
Total or Weighted Average 114 70.6 1.35
==================================================================================
</TABLE>
Min: 153
Max: 360
Weighted Average: 324
I-11
<PAGE>
APPENDIX I
MORTGAGE POOL INFORMATION
DEBT SERVICE COVERAGE RATIOS
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
Weighted
Percent by Weighted Average Weighted
Number of Aggregate Aggregate Average Stated Average Weighted
Debt Service Mortgage Current Current Mortgage Remaining Current Average
Coverage Ratio (x) Loans Balance ($) Balance (%) Rate (%) Term (mos) LTV (%) DSCR
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1.01 - 1.15 2 3,434,550 0.43 7.653 183 78.1 1.07
1.16 - 1.25 33 132,796,085 16.58 8.244 126 73.9 1.23
1.26 - 1.35 101 395,608,782 49.39 8.205 111 72.7 1.29
1.36 - 1.50 51 141,541,167 17.67 7.965 109 67.0 1.41
1.51 - 1.75 25 95,787,140 11.96 8.076 117 66.7 1.57
1.76 - 2.00 7 25,772,460 3.22 6.845 110 60.4 1.80
greater than or equal to 2.01 5 6,084,538 0.76 7.535 124 47.7 2.28
----------------------------------------------------------------------------------------------------------------------------
Total or Weighted Average 224 801,024,722 100.00 8.102 114 70.6 1.35
============================================================================================================================
</TABLE>
Min: 1.05
Max: 2.35
Weighted Average: 1.35
I-12
<PAGE>
APPENDIX I
MORTGAGE POOL INFORMATION
CUT-OFF DATE LOAN-TO-VALUE RATIOS
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
Weighted
Percent by Weighted Average Weighted
Current Number of Aggregate Aggregate Average Stated Average Weighted
Loan-to-Value Mortgage Current Current Mortgage Remaining Current Average
Ratio (%) Loans Balance ($) Balance (%) Rate (%) Term (mos) LTV (%) DSCR
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
30.1 - 40.0 3 2,783,996 0.35 8.336 115 32.9 2.30
40.1 - 50.0 2 7,033,009 0.88 9.299 115 42.8 1.39
50.1 - 60.0 17 41,395,088 5.17 8.374 121 56.7 1.53
60.1 - 70.0 84 268,177,675 33.48 8.119 118 66.1 1.40
70.1 - 80.0 118 481,634,953 60.13 8.051 111 74.9 1.31
---------------------------------------------------------------------------------------------------------------------------
Total or Weighted Average 224 801,024,722 100.00 8.102 114 70.6 1.35
===========================================================================================================================
</TABLE>
Min: 30.4
Max: 79.8
Weighted Average: 70.6
I-13
<PAGE>
APPENDIX I
MORTGAGE POOL INFORMATION
BALLOON LOAN-TO-VALUE RATIOS
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
Weighted
Percent by Weighted Average Weighted
Number of Aggregate Aggregate Average Stated Average Weighted
Ballon Loan-to-Value Mortgage Current Current Mortgage Remaining Current Average
Ratio (%) Loans Balance ($) Balance (%) Rate (%) Term (mos) LTV (%) DSCR
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
0.1 - 10.0 15 26,862,907 3.35 8.582 223 64.3 1.35
20.1 - 30.0 5 11,144,994 1.39 7.918 140 56.2 1.72
30.1 - 40.0 3 14,271,726 1.78 7.981 125 54.4 1.46
40.1 - 50.0 12 27,513,775 3.43 8.292 100 58.2 1.50
50.1 - 60.0 73 215,574,717 26.91 7.959 109 66.1 1.43
60.1 - 70.0 95 399,184,802 49.83 8.128 109 73.1 1.32
70.1 - 80.0 21 106,471,801 13.29 8.161 115 78.8 1.26
--------------------------------------------------------------------------------------------------------------------------------
Total or Weighted Average 224 801,024,722 100.00 8.102 114 70.6 1.35
================================================================================================================================
</TABLE>
Min: 1.5
Max: 72.4
Weighted Average: 59.8
I-14
<PAGE>
APPENDIX I
MORTGAGE POOL INFORMATION
HYPER AMORTIZING LOANS
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
Weighted
Percent by Weighted Average Weighted
Number of Aggregate Aggregate Average Stated Average Weighted
Mortgage Current Current Mortgage Remaining Current Average
Hyper Amortizing Loans Balance ($) Balance (%) Rate (%) Term (mos) LTV (%) DSCR
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
No 190 573,544,686 71.60 8.091 117 71.1 1.35
Yes 34 227,480,036 28.40 8.132 108 69.4 1.37
---------------------------------------------------------------------------------------------------------------------------------
Total or Weighted Average 224 801,024,722 100.00 8.102 114 70.6 1.35
==================================================================================================================================
</TABLE>
I-15
<PAGE>
APPENDIX I
MORTGAGE POOL INFORMATION
OWNERSHIP TYPE
<TABLE>
<CAPTION>
Weighted
Percent by Weighted Average Weighted
Number of Aggregate Aggregate Average Stated Average Weighted
Mortgage Current Current Mortgage Remaining Current Average
Ownership Type Loans Balance ($) Balance (%) Rate (%) Term (mos) LTV (%) DSCR
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Fee Simple 212 736,677,699 91.97 8.130 115 70.5 1.36
Fee Simple & Leasehold 6 29,047,819 3.63 7.795 108 74.6 1.34
Leasehold 6 35,299,204 4.41 7.785 107 70.0 1.32
------------------------------------------------------------------------------------------------------------------------------------
Total or Weighted Average 224 801,024,722 100.00 8.102 114 70.6 1.35
====================================================================================================================================
</TABLE>
I-16
<PAGE>
APPENDIX I
MORTGAGE POOL INFORMATION
PREPAYMENT RESTRICTION ANALYSIS
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
Prepayment Restrictions June 00 June 01 June 02 June 03 June 04 June 05
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Locked Out 99.26% 96.23% 92.38% 82.16% 73.88% 71.46%
Yield Maintenance Total 0.74% 3.77% 7.62% 17.84% 26.01% 28.43%
Penalty Points :
5.00% and greater 0.00% 0.00% 0.00% 0.00% 0.11% 0.00%
4.00% to 4.99% 0.00% 0.00% 0.00% 0.00% 0.00% 0.11%
3.00% to 3.99% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2.00% to 2.99% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
1.00% to 1.99% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Open 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
---------------------------------------------------------------------------------------------------------------------------------
TOTALS 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
---------------------------------------------------------------------------------------------------------------------------------
Pool Balance Outstanding 801,024,722 792,619,257 783,509,465 773,635,523 763,106,968 751,519,301
% Initial Pool Balance 100.00% 98.95% 97.81% 96.58% 95.27% 93.82%
=================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
Prepayment Restrictions June 06 June 07 June 08 June 09 June 10
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Locked Out 70.46% 70.66% 72.66% 60.71% 69.50%
Yield Maintenance Total 28.83% 29.23% 11.54% 4.88% 30.50%
Penalty Points :
5.00% and greater 0.00% 0.00% 0.00% 0.00% 0.00%
4.00% to 4.99% 0.00% 0.00% 0.00% 0.00% 0.00%
3.00% to 3.99% 0.11% 0.00% 0.00% 0.00% 0.00%
2.00% to 2.99% 0.00% 0.11% 0.00% 0.00% 0.00%
1.00% to 1.99% 0.00% 0.00% 0.12% 0.15% 0.00%
Open 0.60% 0.00% 15.68% 34.26% 0.00%
--------------------------------------------------------------------------------------------------------------
TOTALS 100.00% 100.00% 100.00% 100.00% 100.00%
--------------------------------------------------------------------------------------------------------------
Pool Balance Outstanding 738,956,611 712,430,512 650,102,091 502,913,614 32,367,599
% Initial Pool Balance 92.25% 88.94% 81.16% 62.78% 4.04%
==============================================================================================================
</TABLE>
Notes: (1) The above analysis is based on Maturity Assumptions and a 0% CPR as
discussed in the Prospectus Supplement.
I-17
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
LOAN INFORMATION
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Maturity Date
Original Aggregate Cut-Off or Anticipated
Loan Principal Cut-Off Date Balance/ Note Repayment Date
No. Seller(1) Property Name(2) Balance Date Balance(3) Unit or SF(4) Date to ARD(5)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 MID Campus Apartments $28,000,000 $27,208,269 $70,854.87 6/26/98 7/1/08
2 CIBC 17 John Street $23,425,000 $23,370,205 $210,542.39 1/24/00 2/1/10
3 MID San Croix Apartments $20,000,000 $19,578,662 $55,621.20 3/26/98 4/1/08
4 CIBC 4343 Commerce Court (A) (I) $13,100,000 $12,854,405 $53.77 7/27/99 5/1/08
5 CIBC 1051 North Kirk Road (A) (I) $3,411,000 $3,347,051 $53.77 7/27/99 5/1/08
6 CIBC Narco River Business Center (A) $2,800,000 $2,785,970 $53.77 11/10/99 12/1/09
7 MID Ryder Integrated Logistics $18,219,000 $18,163,497 $39.92 11/30/99 12/1/09
8 CIBC Holiday Inn Rochester $17,700,000 $17,664,749 $70,659.00 2/4/00 3/1/10
9 MID Nevada Street Apartments $15,400,000 $15,383,326 $50,272.31 3/22/00 4/1/10
10 MID Camelot Apartments $14,896,500 $14,856,703 $32,580.49 12/29/99 1/1/10
11 MID Neurocrine Biosciences $14,760,000 $14,520,520 $156.13 9/1/98 10/1/08
12 MID CSC Office Building $13,096,000 $13,062,719 $94.69 12/22/99 1/1/10
13 MID Kinetic Systems Building (B) $6,400,000 $6,365,380 $47.63 11/9/99 12/1/09
14 MID Globix Corporation Building (B) $6,100,000 $6,067,002 $47.63 11/9/99 12/1/09
15 CIBC Summit Square $12,300,000 $12,219,619 $91.42 8/24/98 9/1/09
16 CIBC Bed, Bath & Beyond $11,500,000 $11,435,153 $135.41 9/25/98 9/1/09
17 MID The Quidel Building $11,250,000 $11,221,258 $154.00 12/16/99 1/1/10
18 MID Candletree Apartments $11,000,000 $10,963,810 $26,872.08 11/15/99 12/1/09
19 CIBC Latham Crossing & Crossroads Plaza $10,900,000 $10,794,070 $114.39 2/9/99 3/1/09
20 RFC Hampton Inn & Suites (II) $7,810,000 $7,798,542 $66,654.20 3/14/00 4/1/10
21 RFC Big Bowl/Wildfire (II) $2,890,000 $2,885,760 $200.58 3/14/00 4/1/10
22 MID Backlick Center South $10,600,000 $10,416,515 $47.64 9/28/98 10/1/08
23 CIBC Willow Run Business Center II $10,075,000 $10,014,899 $25.15 6/29/99 7/1/09
24 MID East Side Plaza $10,215,000 $10,014,960 $47.87 7/30/98 8/1/08
25 RFC Ritchie Highway Shopping Center $10,000,000 $9,990,201 $77.87 3/31/00 4/1/10
26 CIBC Lincoln Park (C) $5,500,000 $5,493,907 $19.88 2/15/00 3/1/10
27 CIBC Pompano Merchandise Mart (C) $4,350,000 $4,345,129 $19.88 2/15/00 3/1/10
28 RFC Big Kmart Shopping Center $9,650,000 $9,612,479 $92.63 10/13/99 11/1/09
29 RFC Marston Park Plaza $9,355,000 $9,336,233 $88.94 1/13/00 2/1/07
30 CIBC Union Center $9,300,000 $9,276,303 $27.03 12/15/99 1/1/10
31 MID La Jolla Corporate Center $7,950,000 $7,925,305 $122.95 11/13/99 12/1/09
32 CIBC Southlake Festival Shopping Center $7,700,000 $7,682,150 $55.14 12/29/99 1/1/10
33 RFC HomeBase-Phoenix, AZ $6,935,000 $6,935,000 $61.96 5/26/00 6/1/10
34 MID Hyatt Suites Hotel $6,600,000 $6,574,857 $34,244.05 12/1/99 1/1/10
35 RFC Holiday Square Shopping Center $6,510,000 $6,492,608 $89.10 12/29/99 1/1/10
36 RFC Stagecoach Plaza $6,500,000 $6,497,497 $68.44 4/28/00 5/1/10
37 RFC Today's Man Oxford Valley $6,491,000 $6,484,711 $106.62 3/24/00 4/1/10
38 CIBC Parkway Corporate Plaza 138 $6,300,000 $6,268,274 $82.65 7/28/99 8/1/09
39 MID Lexington Commons Apartments $6,150,000 $6,049,765 $29,367.79 9/30/98 10/1/08
40 MID Regal Cinema $6,000,000 $5,922,685 $90.90 12/22/99 7/1/06
41 MID One Airport Center Office Building $6,200,000 $5,910,081 $80.49 4/27/98 5/1/08
42 MID San Pablo Apartments $6,000,000 $5,882,435 $29,412.17 4/2/98 5/1/08
43 MID Oaks of Ashford Point Apartments $5,700,000 $5,686,604 $28,575.90 1/24/00 2/1/10
44 CIBC Comfort Inn - Philadelphia Airport $5,700,000 $5,676,471 $37,843.14 12/14/99 1/1/10
45 MID Grouse Run Apartments $5,690,000 $5,585,140 $22,889.92 6/29/98 7/1/08
46 RFC Avanex Building $5,591,000 $5,585,443 $103.30 3/21/00 4/1/10
47 MID The Regents Cove Apartments $5,550,000 $5,525,023 $20,312.58 9/15/99 10/1/09
48 CIBC 156 10-40 Cross Bay Boulevard $5,500,000 $5,488,622 $115.25 2/14/00 3/1/10
49 MID Freehold Executive Center $5,474,000 $5,467,565 $83.61 2/23/00 3/1/10
50 MID K-Mart (D) $2,748,000 $2,736,790 $23.87 2/15/00 3/1/20
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
Original Original Remaining
Term to Amort. Term to
Loan ARD Maturity or Term Remaining Maturity or
No. Seller(1) Property Name(2) Loan ARD (mos) (mos)(6) Amort. Term ARD (mos)
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 MID Campus Apartments Yes 120 300 277 97
2 CIBC 17 John Street Yes 120 360 356 116
3 MID San Croix Apartments No 120 360 334 94
4 CIBC 4343 Commerce Court (A) (I) Yes 105 347 337 95
5 CIBC 1051 North Kirk Road (A) (I) Yes 105 347 337 95
6 CIBC Narco River Business Center (A) No 120 300 294 114
7 MID Ryder Integrated Logistics No 120 360 354 114
8 CIBC Holiday Inn Rochester Yes 120 300 297 117
9 MID Nevada Street Apartments No 120 360 358 118
10 MID Camelot Apartments No 120 360 355 115
11 MID Neurocrine Biosciences No 120 360 340 100
12 MID CSC Office Building No 120 360 355 115
13 MID Kinetic Systems Building (B) No 120 300 294 114
14 MID Globix Corporation Building (B) No 120 300 294 114
15 CIBC Summit Square Yes 121 360 350 111
16 CIBC Bed, Bath & Beyond Yes 120 360 351 111
17 MID The Quidel Building No 120 360 355 115
18 MID Candletree Apartments No 120 360 354 114
19 CIBC Latham Crossing & Crossroads Plaza Yes 120 360 345 105
20 RFC Hampton Inn & Suites (II) Yes 120 300 298 118
21 RFC Big Bowl/Wildfire (II) Yes 120 300 298 118
22 MID Backlick Center South No 120 360 340 100
23 CIBC Willow Run Business Center II Yes 120 360 349 109
24 MID East Side Plaza Yes 120 360 338 98
25 RFC Ritchie Highway Shopping Center No 120 360 358 118
26 CIBC Lincoln Park (C) Yes 120 360 357 117
27 CIBC Pompano Merchandise Mart (C) Yes 120 360 357 117
28 RFC Big Kmart Shopping Center No 120 360 353 113
29 RFC Marston Park Plaza Yes 84 360 356 80
30 CIBC Union Center Yes 120 360 355 115
31 MID La Jolla Corporate Center No 120 360 354 114
32 CIBC Southlake Festival Shopping Center Yes 120 360 355 115
33 RFC HomeBase-Phoenix, AZ Yes 120 360 360 120
34 MID Hyatt Suites Hotel No 120 300 295 115
35 RFC Holiday Square Shopping Center No 120 360 355 115
36 RFC Stagecoach Plaza No 120 360 359 119
37 RFC Today's Man Oxford Valley No 120 360 358 118
38 CIBC Parkway Corporate Plaza 138 Yes 120 360 350 110
39 MID Lexington Commons Apartments No 120 360 340 100
40 MID Regal Cinema No 78 180 175 73
41 MID One Airport Center Office Building No 120 240 215 95
42 MID San Pablo Apartments No 120 360 335 95
43 MID Oaks of Ashford Point Apartments No 120 360 356 116
44 CIBC Comfort Inn - Philadelphia Airport Yes 120 300 295 115
45 MID Grouse Run Apartments No 120 360 337 97
46 RFC Avanex Building No 120 360 358 118
47 MID The Regents Cove Apartments No 120 360 352 112
48 CIBC 156 10-40 Cross Bay Boulevard Yes 120 300 297 117
49 MID Freehold Executive Center No 120 360 357 117
50 MID K-Mart (D) No 240 240 237 237
<CAPTION>
-----------------------------------------------------------------------------------
Loan Security
No. Seller(1) Property Name(2) Type (12)
-----------------------------------------------------------------------------------
<S> <C> <C> <C>
1 MID Campus Apartments Fee Simple
2 CIBC 17 John Street Fee Simple
3 MID San Croix Apartments Fee Simple
4 CIBC 4343 Commerce Court (A) (I) Fee Simple
5 CIBC 1051 North Kirk Road (A) (I) Fee Simple
6 CIBC Narco River Business Center (A) Fee Simple
7 MID Ryder Integrated Logistics Fee Simple
8 CIBC Holiday Inn Rochester Fee Simple
9 MID Nevada Street Apartments Fee Simple
10 MID Camelot Apartments Fee Simple
11 MID Neurocrine Biosciences Fee Simple
12 MID CSC Office Building Fee Simple
13 MID Kinetic Systems Building (B) leasehold
14 MID Globix Corporation Building (B) leasehold
15 CIBC Summit Square Fee Simple
16 CIBC Bed, Bath & Beyond Fee Simple & Leasehold
17 MID The Quidel Building Fee Simple
18 MID Candletree Apartments Fee Simple
19 CIBC Latham Crossing & Crossroads Plaza Leasehold
20 RFC Hampton Inn & Suites (II) Fee Simple
21 RFC Big Bowl/Wildfire (II) Fee Simple
22 MID Backlick Center South Fee Simple
23 CIBC Willow Run Business Center II Fee Simple
24 MID East Side Plaza Fee Simple
25 RFC Ritchie Highway Shopping Center Fee Simple
26 CIBC Lincoln Park (C) Fee Simple
27 CIBC Pompano Merchandise Mart (C) Fee Simple
28 RFC Big Kmart Shopping Center Fee Simple
29 RFC Marston Park Plaza Fee Simple
30 CIBC Union Center Fee Simple
31 MID La Jolla Corporate Center Fee Simple
32 CIBC Southlake Festival Shopping Center Fee Simple
33 RFC HomeBase-Phoenix, AZ Fee Simple
34 MID Hyatt Suites Hotel Fee Simple
35 RFC Holiday Square Shopping Center Fee Simple
36 RFC Stagecoach Plaza Fee Simple
37 RFC Today's Man Oxford Valley Fee Simple
38 CIBC Parkway Corporate Plaza 138 Fee Simple & Leasehold
39 MID Lexington Commons Apartments Fee Simple
40 MID Regal Cinema Fee Simple
41 MID One Airport Center Office Building leasehold
42 MID San Pablo Apartments Fee Simple
43 MID Oaks of Ashford Point Apartments Fee Simple
44 CIBC Comfort Inn - Philadelphia Airport Fee Simple
45 MID Grouse Run Apartments Fee Simple
46 RFC Avanex Building Fee Simple
47 MID The Regents Cove Apartments Fee Simple
48 CIBC 156 10-40 Cross Bay Boulevard Fee Simple
49 MID Freehold Executive Center Fee Simple
50 MID K-Mart (D) Fee Simple
</TABLE>
II-1
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
LOAN INFORMATION
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Maturity Date
Original Aggregate Cut-Off or Anticipated
Loan Principal Cut-Off Date Balance/ Note Repayment Date
No. Seller(1) Property Name(2) Balance Date Balance(3) Unit or SF(4) Date to ARD(5)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
51 MID K-Mart (D) $2,634,000 $2,623,255 $23.87 2/15/00 3/1/20
52 MID Seton Chase Apartments $5,350,000 $5,331,967 $23,283.70 11/18/99 12/1/09
53 CIBC Tel Huron Shopping Center $5,400,000 $5,319,224 $55.26 4/29/98 5/1/08
54 MID Quality Inn Sports Complex $5,500,000 $5,283,445 $37,207.36 9/16/98 10/1/13
55 MID Ramada Limited $5,170,000 $5,040,957 $35,499.70 9/29/98 10/1/08
56 MID Walker's Station Apartments $5,080,000 $5,000,985 $21,743.41 10/14/98 11/1/08
57 MID Saturn Electronics & Engineering $4,991,000 $4,984,950 $72.97 2/28/00 3/1/10
58 MID Plaza Pointe $4,900,000 $4,811,953 $79.76 6/25/98 7/1/08
59 RFC GAI-Tronics Corporation $4,560,000 $4,547,562 $43.37 12/10/99 1/1/10
60 CIBC 2600 Building $4,520,000 $4,506,950 $37.76 12/1/99 12/1/09
61 CIBC Hoyt's Cinemas $4,440,000 $4,431,514 $95.13 2/15/00 3/1/10
62 CIBC Advance Auto Parts - York, PA (III) $560,000 $555,407 $76.76 7/2/99 8/1/09
63 CIBC Advance Auto Parts - Harrisburg, PA
(Swatara) $500,000 $495,899 $76.76 7/2/99 8/1/09
64 CIBC Advance Auto Parts - Steelton, PA (III) $490,000 $485,981 $76.76 7/2/99 8/1/09
65 CIBC Advance Auto Parts - Celina, OH (III) $395,000 $391,760 $76.76 7/2/99 8/1/09
66 CIBC Advance Auto Parts - Youngstown, OH (III) $475,000 $471,104 $76.76 7/2/99 8/1/09
67 CIBC Advance Auto Parts - Warren, OH (III) $450,000 $446,309 $76.76 7/2/99 8/1/09
68 CIBC Advance Auto Parts - Atlanta, GA (III) $530,000 $525,653 $76.76 7/2/99 8/1/09
69 CIBC Advance Auto Parts - Penn Hills, PA (III) $560,000 $555,407 $76.76 7/2/99 8/1/09
70 CIBC Advance Auto Parts - Pontotoc, MS (III) $360,000 $357,047 $76.76 7/2/99 8/1/09
71 MID Hampton Inn Maple Grove $4,350,000 $4,248,346 $35,402.88 9/3/98 10/1/13
72 RFC Maple Tree Mall $4,150,000 $4,139,648 $80.86 12/20/99 1/1/10
73 MID The Sterling Falls Apartments $4,200,000 $4,133,080 $24,601.66 9/25/98 10/1/08
74 RFC Stelton Shopping Center $3,800,000 $3,764,341 $85.98 5/28/99 6/1/09
75 CIBC Parkview Towers $3,760,000 $3,747,122 $29,976.98 11/10/99 1/1/10
76 CIBC Unilab Building $3,650,000 $3,635,317 $111.09 12/28/99 1/1/10
77 MID Cambridge Apartments $3,675,000 $3,617,070 $37,677.82 10/8/98 11/1/08
78 MID Tempe Plaza $3,500,000 $3,485,695 $49.68 12/27/99 1/1/10
79 RFC Byram Self-Storage $3,500,000 $3,473,450 $69.15 2/25/00 3/1/15
80 MID Sixth Street Building $3,700,000 $3,448,523 $74.59 9/21/98 10/1/08
81 MID Lake Pine Apartments $3,500,000 $3,440,000 $22,051.28 8/27/98 9/1/08
82 RFC Las Lomas Apartments $3,400,000 $3,389,203 $14,735.67 11/3/99 12/1/14
83 RFC Pinellas Industrial Center $3,300,000 $3,288,639 $31.74 1/11/00 2/1/10
84 CIBC Mount Joy Square $3,300,000 $3,283,886 $49.58 8/20/99 9/1/09
85 MID Town & Country Apartments (Phase II) $3,300,000 $3,209,401 $16,047.00 7/20/98 8/1/08
86 MID Bartles Corner Business Park $3,227,000 $3,203,077 $45.76 12/3/99 1/1/10
87 RFC Jeffery Manor Shopping Center $3,198,000 $3,193,979 $88.37 2/4/00 3/1/10
88 MID Eckerd's Drug Store $2,810,000 $2,796,280 $256.35 9/10/99 10/1/09
89 MID Clayton Apartments and Duplexes $3,200,000 $3,143,270 $26,865.55 7/29/98 8/1/08
90 MID Regal Cinemas 12-Screen Movie Theatre $3,100,000 $3,077,552 $71.39 2/2/00 3/1/11
91 RFC 1506 N. Lee Trevino $3,091,000 $3,073,332 $65.26 1/20/00 2/1/20
92 MID Eckerd Pharmacy $3,000,000 $2,985,353 $234.40 9/10/99 10/1/09
93 MID Kroger Grocery Store $3,050,000 $2,979,610 $50.86 10/13/98 11/1/08
94 CIBC Datatec Warehouse $2,985,000 $2,949,806 $31.03 9/30/99 10/1/09
95 MID Legacy Business Park Medical Office 8 (E) $2,075,000 $2,039,329 $144.00 6/18/98 7/1/08
96 MID Legacy Business Park Medical Office - 4 (E) $870,000 $855,044 $144.00 6/18/98 7/1/08
97 MID East Los Angeles Retail Center $3,000,000 $2,874,542 $87.05 8/27/98 9/1/08
98 MID Acadia Park Apartments $2,900,000 $2,820,383 $14,689.49 7/20/98 8/1/08
99 MID Eckerd's Drug Store $3,200,000 $3,184,416 $291.93 9/10/99 10/1/09
100 MID Dana Innovations $2,800,000 $2,792,343 $64.04 12/17/99 1/1/10
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
Original Original Remaining
Term to Amort. Term to
Loan ARD Maturity or Term Remaining Maturity or
No. Seller(1) Property Name(2) Loan ARD (mos) (mos)(6) Amort. Term ARD (mos)
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
51 MID K-Mart (D) No 240 240 237 237
52 MID Seton Chase Apartments No 120 360 354 114
53 CIBC Tel Huron Shopping Center Yes 120 360 335 95
54 MID Quality Inn Sports Complex No 180 240 220 160
55 MID Ramada Limited No 120 300 280 100
56 MID Walker's Station Apartments No 120 360 341 101
57 MID Saturn Electronics & Engineering No 120 360 357 117
58 MID Plaza Pointe No 120 360 337 97
59 RFC GAI-Tronics Corporation Yes 120 360 355 115
60 CIBC 2600 Building No 120 360 354 114
61 CIBC Hoyt's Cinemas No 120 300 297 117
62 CIBC Advance Auto Parts - York, PA (III) Yes 120 300 290 110
63 CIBC Advance Auto Parts - Harrisburg, PA
(Swatara) Yes 120 300 290 110
64 CIBC Advance Auto Parts - Steelton, PA (III) Yes 120 300 290 110
65 CIBC Advance Auto Parts - Celina, OH (III) Yes 120 300 290 110
66 CIBC Advance Auto Parts - Youngstown, OH (III) Yes 120 300 290 110
67 CIBC Advance Auto Parts - Warren, OH (III) Yes 120 300 290 110
68 CIBC Advance Auto Parts - Atlanta, GA (III) Yes 120 300 290 110
69 CIBC Advance Auto Parts - Penn Hills, PA (III) Yes 120 300 290 110
70 CIBC Advance Auto Parts - Pontotoc, MS (III) Yes 120 300 290 110
71 MID Hampton Inn Maple Grove No 180 300 280 160
72 RFC Maple Tree Mall No 120 360 355 115
73 MID The Sterling Falls Apartments No 120 360 340 100
74 RFC Stelton Shopping Center No 120 324 312 108
75 CIBC Parkview Towers No 121 360 354 115
76 CIBC Unilab Building No 120 300 295 115
77 MID Cambridge Apartments No 120 360 341 101
78 MID Tempe Plaza No 120 300 295 115
79 RFC Byram Self-Storage No 180 180 177 177
80 MID Sixth Street Building No 120 180 160 100
81 MID Lake Pine Apartments No 120 360 339 99
82 RFC Las Lomas Apartments No 180 360 354 174
83 RFC Pinellas Industrial Center No 120 300 296 116
84 CIBC Mount Joy Square No 120 360 351 111
85 MID Town & Country Apartments (Phase II) No 120 300 278 98
86 MID Bartles Corner Business Park No 120 240 235 115
87 RFC Jeffery Manor Shopping Center No 120 360 357 117
88 MID Eckerd's Drug Store No 120 360 352 112
89 MID Clayton Apartments and Duplexes No 120 360 338 98
90 MID Regal Cinemas 12-Screen Movie Theatre No 132 180 177 129
91 RFC 1506 N. Lee Trevino No 240 240 236 236
92 MID Eckerd Pharmacy No 120 360 352 112
93 MID Kroger Grocery Store No 120 300 281 101
94 CIBC Datatec Warehouse No 120 240 232 112
95 MID Legacy Business Park Medical Office 8 (E) No 120 360 337 97
96 MID Legacy Business Park Medical Office - 4 (E) No 120 360 337 97
97 MID East Los Angeles Retail Center No 120 240 219 99
98 MID Acadia Park Apartments No 120 300 278 98
99 MID Eckerd's Drug Store No 120 360 352 112
100 MID Dana Innovations No 120 360 355 115
<CAPTION>
----------------------------------------------------------------------------------
Loan Security
No. Seller(1) Property Name(2) Type (12)
----------------------------------------------------------------------------------
<S> <C> <C> <C>
51 MID K-Mart (D) Fee Simple
52 MID Seton Chase Apartments Fee Simple
53 CIBC Tel Huron Shopping Center Fee Simple
54 MID Quality Inn Sports Complex Fee Simple
55 MID Ramada Limited Fee Simple & Leasehold
56 MID Walker's Station Apartments Fee Simple
57 MID Saturn Electronics & Engineering Fee Simple
58 MID Plaza Pointe Fee Simple
59 RFC GAI-Tronics Corporation Fee Simple
60 CIBC 2600 Building Fee Simple
61 CIBC Hoyt's Cinemas Fee Simple
62 CIBC Advance Auto Parts - York, PA (III) Fee Simple
63 CIBC Advance Auto Parts - Harrisburg, PA (Swatara) Fee Simple
64 CIBC Advance Auto Parts - Steelton, PA (III) Fee Simple
65 CIBC Advance Auto Parts - Celina, OH (III) Fee Simple
66 CIBC Advance Auto Parts - Youngstown, OH (III) Fee Simple
67 CIBC Advance Auto Parts - Warren, OH (III) Fee Simple
68 CIBC Advance Auto Parts - Atlanta, GA (III) Fee Simple
69 CIBC Advance Auto Parts - Penn Hills, PA (III) Fee Simple
70 CIBC Advance Auto Parts - Pontotoc, MS (III) Fee Simple
71 MID Hampton Inn Maple Grove Fee Simple
72 RFC Maple Tree Mall Fee Simple
73 MID The Sterling Falls Apartments Fee Simple
74 RFC Stelton Shopping Center Fee Simple
75 CIBC Parkview Towers Fee Simple
76 CIBC Unilab Building Fee Simple
77 MID Cambridge Apartments Fee Simple
78 MID Tempe Plaza Fee Simple
79 RFC Byram Self-Storage Fee Simple
80 MID Sixth Street Building leasehold
81 MID Lake Pine Apartments Fee Simple
82 RFC Las Lomas Apartments Fee Simple
83 RFC Pinellas Industrial Center Fee Simple
84 CIBC Mount Joy Square Fee Simple
85 MID Town & Country Apartments (Phase II) Fee Simple
86 MID Bartles Corner Business Park Fee Simple
87 RFC Jeffery Manor Shopping Center Fee Simple
88 MID Eckerd's Drug Store Fee Simple
89 MID Clayton Apartments and Duplexes Fee Simple
90 MID Regal Cinemas 12-Screen Movie Theatre Fee Simple
91 RFC 1506 N. Lee Trevino Fee Simple
92 MID Eckerd Pharmacy Fee Simple
93 MID Kroger Grocery Store Fee Simple & Leasehold
94 CIBC Datatec Warehouse Fee Simple
95 MID Legacy Business Park Medical Office 8 (E) Fee Simple
96 MID Legacy Business Park Medical Office - 4 (E) Fee Simple
97 MID East Los Angeles Retail Center Fee Simple
98 MID Acadia Park Apartments Fee Simple
99 MID Eckerd's Drug Store Fee Simple
100 MID Dana Innovations Fee Simple
</TABLE>
II-2
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
LOAN INFORMATION
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Maturity Date
Original Aggregate Cut-Off or Anticipated
Loan Principal Cut-Off Date Balance/ Note Repayment Date
No. Seller(1) Property Name(2) Balance Date Balance(3) Unit or SF(4) Date to ARD(5)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
101 MID Eckerd's Drug Store $2,750,000 $2,736,573 $250.88 9/10/99 10/1/09
102 RFC Oregon Court (F) $1,638,000 $1,630,967 $29,398.38 12/28/99 1/1/15
103 RFC Oregon Arms (F) $1,100,000 $1,095,277 $29,398.38 12/28/99 1/1/15
104 MID Eckerd Drugs $2,731,000 $2,718,412 $239.57 9/23/99 10/1/09
105 CIBC Dicks Clothing and Sporting Goods $2,730,000 $2,714,149 $45.24 10/18/99 11/1/09
106 CIBC Sugarland Shopping Center $2,700,000 $2,676,417 $22.63 7/12/99 8/1/09
107 MID Eckerd Drug Store $2,604,000 $2,597,151 $238.10 12/7/99 1/1/10
108 RFC Bassett Furniture Store $2,587,000 $2,584,215 $98.45 2/22/00 3/1/10
109 CIBC Oak Leaf West $2,550,000 $2,535,207 $88.61 6/28/99 7/1/09
110 CIBC 2000 White Elks Springs Court $2,515,000 $2,510,004 $13.05 1/31/00 2/1/10
111 CIBC Triangle Shopping Center $2,480,000 $2,461,015 $29.87 12/8/99 1/1/10
112 CIBC Northern Medical Offices $2,485,000 $2,443,468 $86.31 6/25/99 7/1/09
113 MID Bronco Apartments $2,500,000 $2,433,712 $9,773.94 8/27/98 9/1/08
114 MID K-Mart $2,443,000 $2,425,217 $28.04 12/23/99 1/1/20
115 RFC Villa Eleni $2,405,000 $2,402,515 $82,845.33 3/23/00 4/1/10
116 MID Perkins Place & Fox Ridge (IV) $900,000 $728,963 $25,227.27 2/29/00 3/1/10
117 MID Barrington Hills Apartments (IV) $730,000 $898,722 $25,227.27 2/29/00 3/1/10
118 MID McDuffee Brook Place (IV) $448,000 $447,364 $25,227.27 2/29/00 3/1/10
119 MID Kearsarge Apartments (IV) $322,000 $321,543 $25,227.27 2/29/00 3/1/10
120 RFC Agawam Industrial Building $2,400,000 $2,394,726 $20.85 2/4/00 3/1/10
121 CIBC Tampa Multifamily Portfolio $2,380,000 $2,370,253 $18,962.02 12/30/99 1/1/10
122 RFC Park Place II Office Building $2,350,000 $2,345,210 $73.29 1/31/00 2/1/10
123 MID The Sequoia Institute $2,285,000 $2,279,038 $72.44 12/10/99 1/1/10
124 MID Staples $2,286,000 $2,278,520 $94.74 11/10/99 12/1/09
125 MID Brookwood Townhomes $2,275,000 $2,269,912 $29,867.26 1/7/00 2/1/08
126 MID Staples Office Supply Store $2,267,000 $2,255,516 $93.79 8/16/99 9/1/09
127 CIBC Jefferson Pilot Financial Center $2,230,000 $2,224,644 $80.63 12/30/99 1/1/10
128 MID Eckerd Drug Store $2,202,000 $2,195,027 $201.23 11/18/99 12/1/09
129 MID Staples Property $2,198,000 $2,186,865 $91.41 8/16/99 9/1/09
130 MID CVS Drugstore $2,151,000 $2,126,840 $210.06 10/29/99 11/1/19
131 CIBC Maple Building $2,125,000 $2,110,728 $39.34 9/30/99 10/1/09
132 MID Woodward Avenue Office Building $2,100,000 $2,098,129 $91.94 3/2/00 4/1/10
133 RFC Alameda Towne Centre $2,100,000 $2,091,710 $59.24 2/4/00 3/1/20
134 CIBC Park Place Apartments $2,080,000 $2,069,270 $25,865.87 8/23/99 9/1/09
135 CIBC 244-48 East 117th Street $2,085,000 $2,064,956 $50,364.78 6/25/99 7/1/09
136 MID Prudential Office Building $2,014,000 $2,009,043 $75.60 12/21/99 1/1/10
137 MID 1/2 Price Store $2,000,000 $1,991,473 $35.69 9/29/99 10/1/09
138 MID Sunshine Square Shopping Center $2,000,000 $1,968,278 $61.34 9/24/98 10/1/08
139 RFC Westfair Center $1,970,000 $1,967,864 $122.72 2/4/00 3/1/10
140 CIBC Bell Gardens Shopping Center $1,950,000 $1,934,328 $106.58 8/24/99 9/1/09
141 MID Staples $1,923,000 $1,915,562 $79.65 10/7/99 11/1/09
142 CIBC Morgan Garden Apartments $1,900,000 $1,896,290 $17,239.00 1/21/00 2/1/10
143 CIBC Colonial Garden Apartments $1,900,000 $1,894,490 $25,951.91 12/8/99 1/1/10
144 MID 170 West Road $1,900,000 $1,893,983 $32.42 11/15/99 12/1/09
145 RFC Lamar Industrial Center $1,897,000 $1,890,834 $27.04 1/21/00 2/1/10
146 MID Columbus Plaza Shopping Center $1,892,000 $1,884,871 $38.81 10/6/99 11/1/09
147 RFC Lakeshore Village Office Complex $1,864,100 $1,856,359 $67.86 12/27/99 1/1/10
148 MID The Lucent Technologies Building $1,858,000 $1,854,105 $93.34 1/25/00 2/1/10
149 MID Leonard Professional Building $1,855,000 $1,847,236 $66.86 12/17/99 1/1/10
150 CIBC Cross River Mill $1,765,000 $1,756,517 $39.97 8/25/99 9/1/09
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
Original Original Remaining
Term to Amort. Term to
Loan ARD Maturity or Term Remaining Maturity or
No. Seller(1) Property Name(2) Loan ARD (mos) (mos)(6) Amort. Term ARD (mos)
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
101 MID Eckerd's Drug Store No 120 360 352 112
102 RFC Oregon Court (F) No 180 300 295 175
103 RFC Oregon Arms (F) No 180 300 295 175
104 MID Eckerd Drugs No 120 360 352 112
105 CIBC Dicks Clothing and Sporting Goods No 120 300 293 113
106 CIBC Sugarland Shopping Center No 120 300 290 110
107 MID Eckerd Drug Store No 120 360 355 115
108 RFC Bassett Furniture Store No 120 360 357 117
109 CIBC Oak Leaf West No 120 360 349 109
110 CIBC 2000 White Elks Springs Court No 120 360 356 116
111 CIBC Triangle Shopping Center No 120 240 235 115
112 CIBC Northern Medical Offices No 120 240 229 109
113 MID Bronco Apartments No 120 300 279 99
114 MID K-Mart No 240 240 235 235
115 RFC Villa Eleni No 120 360 358 118
116 MID Perkins Place & Fox Ridge (IV) No 120 360 357 117
117 MID Barrington Hills Apartments (IV) No 120 360 357 117
118 MID McDuffee Brook Place (IV) No 120 360 357 117
119 MID Kearsarge Apartments (IV) No 120 360 357 117
120 RFC Agawam Industrial Building No 120 300 297 117
121 CIBC Tampa Multifamily Portfolio No 120 300 295 115
122 RFC Park Place II Office Building No 120 360 356 116
123 MID The Sequoia Institute No 120 360 355 115
124 MID Staples No 120 360 354 114
125 MID Brookwood Townhomes No 96 360 356 92
126 MID Staples Office Supply Store No 120 360 351 111
127 CIBC Jefferson Pilot Financial Center No 120 360 355 115
128 MID Eckerd Drug Store No 120 360 354 114
129 MID Staples Property No 120 360 351 111
130 MID CVS Drugstore No 240 240 233 233
131 CIBC Maple Building No 120 300 292 112
132 MID Woodward Avenue Office Building No 120 360 358 118
133 RFC Alameda Towne Centre No 240 240 237 237
134 CIBC Park Place Apartments No 120 360 351 111
135 CIBC 244-48 East 117th Street No 120 300 289 109
136 MID Prudential Office Building No 120 360 355 115
137 MID 1/2 Price Store No 120 360 352 112
138 MID Sunshine Square Shopping Center Yes 120 360 340 100
139 RFC Westfair Center No 120 360 357 117
140 CIBC Bell Gardens Shopping Center No 120 300 291 111
141 MID Staples No 120 360 353 113
142 CIBC Morgan Garden Apartments No 120 360 356 116
143 CIBC Colonial Garden Apartments No 120 360 355 115
144 MID 170 West Road No 120 360 354 114
145 RFC Lamar Industrial Center No 120 300 296 116
146 MID Columbus Plaza Shopping Center No 120 360 353 113
147 RFC Lakeshore Village Office Complex No 120 300 295 115
148 MID The Lucent Technologies Building No 120 360 356 116
149 MID Leonard Professional Building No 120 300 295 115
150 CIBC Cross River Mill No 120 360 351 111
<CAPTION>
----------------------------------------------------------------------------------
Loan Security
No. Seller(1) Property Name(2) Type (12)
----------------------------------------------------------------------------------
<S> <C> <C> <C>
101 MID Eckerd's Drug Store Fee Simple
102 RFC Oregon Court (F) Fee Simple
103 RFC Oregon Arms (F) Fee Simple
104 MID Eckerd Drugs Fee Simple
105 CIBC Dicks Clothing and Sporting Goods Leasehold
106 CIBC Sugarland Shopping Center Fee Simple
107 MID Eckerd Drug Store Fee Simple
108 RFC Bassett Furniture Store Fee Simple
109 CIBC Oak Leaf West Fee Simple
110 CIBC 2000 White Elks Springs Court Fee Simple
111 CIBC Triangle Shopping Center Fee Simple
112 CIBC Northern Medical Offices Fee Simple
113 MID Bronco Apartments Fee Simple
114 MID K-Mart Fee Simple
115 RFC Villa Eleni Fee Simple
116 MID Perkins Place & Fox Ridge (IV) Fee Simple
117 MID Barrington Hills Apartments (IV) Fee Simple
118 MID McDuffee Brook Place (IV) Fee Simple
119 MID Kearsarge Apartments (IV) Fee Simple
120 RFC Agawam Industrial Building Fee Simple
121 CIBC Tampa Multifamily Portfolio Fee Simple
122 RFC Park Place II Office Building Fee Simple
123 MID The Sequoia Institute Fee Simple
124 MID Staples Fee Simple
125 MID Brookwood Townhomes Fee Simple
126 MID Staples Office Supply Store Fee Simple
127 CIBC Jefferson Pilot Financial Center Fee Simple
128 MID Eckerd Drug Store Fee Simple
129 MID Staples Property Fee Simple
130 MID CVS Drugstore Fee Simple
131 CIBC Maple Building Fee Simple & Leasehold
132 MID Woodward Avenue Office Building Fee Simple
133 RFC Alameda Towne Centre Fee Simple
134 CIBC Park Place Apartments Fee Simple
135 CIBC 244-48 East 117th Street Fee Simple
136 MID Prudential Office Building Fee Simple
137 MID 1/2 Price Store Fee Simple
138 MID Sunshine Square Shopping Center Fee Simple
139 RFC Westfair Center Fee Simple
140 CIBC Bell Gardens Shopping Center Fee Simple
141 MID Staples Fee Simple
142 CIBC Morgan Garden Apartments Fee Simple
143 CIBC Colonial Garden Apartments Fee Simple
144 MID 170 West Road Fee Simple
145 RFC Lamar Industrial Center Fee Simple
146 MID Columbus Plaza Shopping Center Fee Simple
147 RFC Lakeshore Village Office Complex Fee Simple
148 MID The Lucent Technologies Building Fee Simple
149 MID Leonard Professional Building Fee Simple
150 CIBC Cross River Mill Fee Simple
</TABLE>
II-3
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
LOAN INFORMATION
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Maturity Date
Original Aggregate Cut-Off or Anticipated
Loan Principal Cut-Off Date Balance/ Note Repayment Date
No. Seller(1) Property Name(2) Balance Date Balance(3) Unit or SF(4) Date to ARD(5)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
151 MID Steele's Market $1,734,000 $1,729,258 $52.65 12/17/99 1/1/10
152 CIBC The Commonwealth Building $1,740,000 $1,725,631 $61.42 8/27/99 9/1/09
153 CIBC Gateway 2000 - Hobart $1,722,000 $1,711,870 $213.58 6/18/99 7/1/09
154 MID Frolics Plaza $1,670,000 $1,666,521 $44.77 2/11/00 3/1/10
155 RFC Lorain Apartments $1,640,000 $1,635,607 $19,471.51 12/29/99 1/1/10
156 RFC Opdyke Investments $1,625,000 $1,623,090 $86.89 2/9/00 3/1/10
157 MID Sungard Financial Systems Office Property $1,623,000 $1,609,337 $52.58 8/18/99 9/1/09
158 RFC 420 Clinton Avenue $1,625,000 $1,588,049 $32,409.16 9/10/98 10/1/08
159 CIBC Village Shoppes of Paradise Beach $1,600,000 $1,584,650 $50.23 6/18/99 7/1/09
160 MID Tiscor Corporate Office Building $1,600,000 $1,573,238 $74.92 10/29/98 11/1/08
161 MID Omnicare Building $1,568,000 $1,562,307 $68.99 10/29/99 11/1/09
162 CIBC Best Western $1,550,000 $1,544,684 $30,893.68 2/7/00 3/1/10
163 RFC Ironwood Apartments $1,550,000 $1,540,801 $16,218.96 10/22/99 11/1/09
164 RFC Crossroads South Shopping Center $1,530,000 $1,528,044 $92.61 2/4/00 3/1/10
165 MID West Wind Apartments Phase IV $1,534,000 $1,527,768 $58,760.32 10/7/99 11/1/09
166 CIBC Chastain Pines Apartments $1,500,000 $1,492,322 $18,890.15 8/10/99 9/1/09
167 MID 166 South River Road $1,520,000 $1,441,924 $62.29 10/19/98 11/1/08
168 CIBC Grayco Apartments $1,490,000 $1,485,978 $14,288.25 12/16/99 1/1/10
169 MID Reseda Retail Building $1,459,000 $1,423,377 $88.96 8/24/98 9/1/08
170 MID Mesa Engineering Systems, Inc. $1,450,000 $1,415,841 $83.82 10/15/98 11/1/08
171 MID Concord Garden Apartments $1,392,000 $1,388,887 $24,366.44 1/7/00 2/1/10
172 RFC 233 Jamaica Avenue $1,400,000 $1,368,165 $25,336.39 9/18/98 10/1/08
173 MID Goffstown Village Apartments (V) $800,000 $778,373 $16,216.11 7/31/98 8/1/08
174 MID Maple Leaf Apartments (V) $600,000 $583,780 $16,216.11 7/31/98 8/1/08
175 CIBC Gateway 2000 - Columbia $1,365,000 $1,356,970 $169.62 6/18/99 7/1/09
176 RFC Kenworthy Medical Building $1,352,000 $1,346,780 $75.88 2/3/00 3/1/20
177 MID Lakes Mini Storage $1,325,000 $1,318,252 $32.74 11/4/99 12/1/09
178 MID Town & Country Apartments Phase I $1,350,000 $1,312,937 $13,129.37 7/20/98 8/1/08
179 MID Tucson East Apartments $1,328,000 $1,307,710 $25,148.28 10/20/98 11/1/08
180 RFC Pal Ex, Inc. $1,302,000 $1,299,362 $28.84 1/24/00 2/1/10
181 RFC 312-332 East Rosecrans Avenue $1,300,000 $1,294,051 $14.97 12/13/99 1/1/10
182 MID Building 35 - Corporate Woods $1,289,000 $1,282,706 $65.04 8/16/99 9/1/09
183 RFC Art Museum Apartments $1,260,000 $1,258,814 $41,960.46 3/16/00 4/1/10
184 CIBC Gateway 2000 - Henderson $1,264,000 $1,256,564 $157.07 6/18/99 7/1/09
185 MID Helicomb International Plant $1,300,000 $1,250,633 $15.52 10/12/98 11/1/08
186 CIBC Gateway 2000 - Chattanooga $1,260,000 $1,252,587 $156.57 6/18/99 7/1/09
187 MID U-Stor Facility $1,283,000 $1,231,185 $19.12 9/1/98 9/1/18
188 MID 17-33 Elm Street $1,229,000 $1,226,230 $83.29 2/7/00 3/1/10
189 RFC Montwood Village Shopping Center $1,230,000 $1,225,296 $64.74 2/3/00 3/1/20
190 RFC D Boys Office Building $1,215,000 $1,213,096 $83.96 3/17/00 4/1/10
191 MID U-Stor Facility $1,261,500 $1,210,553 $19.94 9/1/98 9/1/18
192 MID 43 North Road $1,191,000 $1,161,581 $28.88 10/27/98 11/1/08
193 RFC Park Apartments $1,155,000 $1,152,228 $32,006.33 1/19/00 2/1/10
194 MID The Champion Gardens Apartments $1,152,000 $1,148,461 $14,178.53 11/16/99 12/1/14
195 MID 168 South River Road $1,170,000 $1,111,956 $59.21 10/16/98 11/1/08
196 RFC The Pines Business Park $1,116,200 $1,111,528 $50.75 12/30/99 1/1/10
197 MID U-Stor Winchester II $1,151,000 $1,104,516 $17.81 9/1/98 9/1/18
198 MID Knowledge Beginnings (VI) $594,560 $466,898 $41.44 2/9/00 3/1/10
199 MID Knowledge Beginnings (VI) $467,440 $593,870 $41.44 2/9/00 3/1/10
200 CIBC 233, 235, 237 East 111th Street $1,060,000 $1,049,810 $21,871.03 6/25/99 7/1/09
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
Original Original Remaining
Term to Amort. Term to
Loan ARD Maturity or Term Remaining Maturity or
No. Seller(1) Property Name(2) Loan ARD (mos) (mos)(6) Amort. Term ARD (mos)
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
151 MID Steele's Market No 120 360 355 115
152 CIBC The Commonwealth Building No 120 300 291 111
153 CIBC Gateway 2000 - Hobart No 120 360 349 109
154 MID Frolics Plaza No 120 300 297 117
155 RFC Lorain Apartments No 120 360 355 115
156 RFC Opdyke Investments No 120 360 357 117
157 MID Sungard Financial Systems Office Property No 120 300 291 111
158 RFC 420 Clinton Avenue No 120 300 280 100
159 CIBC Village Shoppes of Paradise Beach No 120 300 289 109
160 MID Tiscor Corporate Office Building No 120 360 341 101
161 MID Omnicare Building No 120 360 353 113
162 CIBC Best Western No 120 240 237 117
163 RFC Ironwood Apartments No 120 300 293 113
164 RFC Crossroads South Shopping Center No 120 360 357 117
165 MID West Wind Apartments Phase IV No 120 360 353 113
166 CIBC Chastain Pines Apartments No 120 360 351 111
167 MID 166 South River Road No 120 300 281 101
168 CIBC Grayco Apartments No 120 360 355 115
169 MID Reseda Retail Building No 120 300 279 99
170 MID Mesa Engineering Systems, Inc. No 120 300 281 101
171 MID Concord Garden Apartments No 120 360 356 116
172 RFC 233 Jamaica Avenue No 120 300 280 100
173 MID Goffstown Village Apartments (V) No 120 300 278 98
174 MID Maple Leaf Apartments (V) No 120 300 278 98
175 CIBC Gateway 2000 - Columbia No 120 360 349 109
176 RFC Kenworthy Medical Building No 240 240 237 237
177 MID Lakes Mini Storage No 120 300 294 114
178 MID Town & Country Apartments Phase I No 120 300 278 98
179 MID Tucson East Apartments No 120 360 341 101
180 RFC Pal Ex, Inc. No 120 360 356 116
181 RFC 312-332 East Rosecrans Avenue No 120 300 295 115
182 MID Building 35 - Corporate Woods No 120 360 351 111
183 RFC Art Museum Apartments No 120 360 358 118
184 CIBC Gateway 2000 - Henderson No 120 360 349 109
185 MID Helicomb International Plant Yes 120 240 221 101
186 CIBC Gateway 2000 - Chattanooga No 120 360 349 109
187 MID U-Stor Facility No 240 240 219 219
188 MID 17-33 Elm Street No 120 300 297 117
189 RFC Montwood Village Shopping Center No 240 240 237 237
190 RFC D Boys Office Building No 120 300 298 118
191 MID U-Stor Facility No 240 240 219 219
192 MID 43 North Road No 120 300 281 101
193 RFC Park Apartments No 120 360 356 116
194 MID The Champion Gardens Apartments No 180 360 354 174
195 MID 168 South River Road No 120 300 281 101
196 RFC The Pines Business Park No 120 300 295 115
197 MID U-Stor Winchester II No 240 240 219 219
198 MID Knowledge Beginnings (VI) No 120 360 357 117
199 MID Knowledge Beginnings (VI) No 120 360 357 117
200 CIBC 233, 235, 237 East 111th Street No 120 300 289 109
<CAPTION>
----------------------------------------------------------------------------------
Loan Security
No. Seller(1) Property Name(2) Type (12)
----------------------------------------------------------------------------------
<S> <C> <C> <C>
151 MID Steele's Market Fee Simple
152 CIBC The Commonwealth Building Fee Simple
153 CIBC Gateway 2000 - Hobart Fee Simple
154 MID Frolics Plaza Fee Simple
155 RFC Lorain Apartments Fee Simple
156 RFC Opdyke Investments Fee Simple
157 MID Sungard Financial Systems Office Property Fee Simple
158 RFC 420 Clinton Avenue Fee Simple
159 CIBC Village Shoppes of Paradise Beach Fee Simple
160 MID Tiscor Corporate Office Building Fee Simple
161 MID Omnicare Building Fee Simple
162 CIBC Best Western Fee Simple
163 RFC Ironwood Apartments Fee Simple
164 RFC Crossroads South Shopping Center Fee Simple
165 MID West Wind Apartments Phase IV Fee Simple
166 CIBC Chastain Pines Apartments Fee Simple
167 MID 166 South River Road Fee Simple
168 CIBC Grayco Apartments Fee Simple
169 MID Reseda Retail Building Fee Simple
170 MID Mesa Engineering Systems, Inc. Fee Simple
171 MID Concord Garden Apartments Fee Simple
172 RFC 233 Jamaica Avenue Fee Simple
173 MID Goffstown Village Apartments (V) Fee Simple
174 MID Maple Leaf Apartments (V) Fee Simple
175 CIBC Gateway 2000 - Columbia Fee Simple
176 RFC Kenworthy Medical Building Fee Simple
177 MID Lakes Mini Storage Fee Simple
178 MID Town & Country Apartments Phase I Fee Simple
179 MID Tucson East Apartments Fee Simple
180 RFC Pal Ex, Inc. Fee Simple
181 RFC 312-332 East Rosecrans Avenue Fee Simple
182 MID Building 35 - Corporate Woods Fee Simple
183 RFC Art Museum Apartments Fee Simple
184 CIBC Gateway 2000 - Henderson Fee Simple
185 MID Helicomb International Plant Fee Simple
186 CIBC Gateway 2000 - Chattanooga Fee Simple
187 MID U-Stor Facility Fee Simple
188 MID 17-33 Elm Street Fee Simple
189 RFC Montwood Village Shopping Center Fee Simple
190 RFC D Boys Office Building Fee Simple & Leasehold
191 MID U-Stor Facility Fee Simple
192 MID 43 North Road Fee Simple
193 RFC Park Apartments Fee Simple
194 MID The Champion Gardens Apartments Fee Simple
195 MID 168 South River Road Fee Simple
196 RFC The Pines Business Park Fee Simple
197 MID U-Stor Winchester II Fee Simple
198 MID Knowledge Beginnings (VI) Fee Simple
199 MID Knowledge Beginnings (VI) Fee Simple
200 CIBC 233, 235, 237 East 111th Street Fee Simple
</TABLE>
II-4
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
LOAN INFORMATION
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Maturity Date
Original Aggregate Cut-Off or Anticipated
Loan Principal Cut-Off Date Balance/ Note Repayment Date
No. Seller(1) Property Name(2) Balance Date Balance(3) Unit or SF(4) Date to ARD(5)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
201 RFC Sunset Shopping Center $1,050,000 $1,047,954 $44.88 2/18/00 3/1/10
202 MID Lauderhill Plaza $1,040,000 $1,015,164 $50.56 10/16/98 11/1/08
203 RFC 14401 South San Pedro Street $1,000,000 $995,424 $14.52 12/13/99 1/1/10
204 RFC Woods Cross Self Storage $980,000 $977,900 $18.53 2/2/00 3/1/10
205 MID Fresno Self Storage $1,000,000 $974,131 $26.81 9/25/98 10/1/08
206 MID Crosstown Square Shopping Center $975,000 $967,406 $78.80 8/16/99 9/1/09
207 CIBC 112-116 East 103rd Street $975,000 $965,627 $32,187.56 6/25/99 7/1/09
208 MID Leon Trace Apartments $950,000 $924,810 $12,844.59 8/27/98 9/1/08
209 RFC Southern Oaks Apartments $1,000,000 $919,618 $14,832.54 2/17/98 3/1/13
210 RFC Middletown Industrial $912,000 $908,534 $18.43 2/16/00 3/1/10
211 RFC 401-611 Braker Lane $879,000 $878,472 $28.48 4/14/00 5/1/10
212 RFC Mandell Place $875,000 $873,795 $99.01 3/3/00 4/1/10
213 MID The Allendale Village Apartments $900,000 $866,830 $9,029.48 10/16/98 11/1/18
214 RFC Roswell Point Shopping Center $855,000 $854,148 $122.72 2/24/00 3/1/10
215 RFC Royal Apartments $850,000 $841,712 $19,574.69 6/8/99 7/1/09
216 RFC 402 - 406 Albee Square $825,000 $807,059 $20,176.47 9/23/98 10/1/08
217 RFC Mansfield Retail Center $725,000 $723,560 $91.67 1/31/00 2/1/10
218 RFC 224 South 3rd Brooklyn $712,500 $707,879 $21,450.87 9/27/99 10/1/09
219 MID Circuit City Land $500,000 $494,522 $3.26 10/29/99 11/1/09
220 RFC Charles Garden Apartments $494,100 $489,427 $30,589.18 6/11/99 7/1/09
221 RFC Blockbuster Video $459,000 $458,153 $73.90 2/1/00 3/1/10
222 RFC 16-10 Caffrey Avenue $432,000 $422,177 $21,108.83 9/18/98 10/1/08
223 RFC 650 E 182 St $425,000 $407,537 $15,674.49 4/6/98 5/1/18
224 RFC Temple Apartments $290,000 $281,659 $28,165.94 3/13/98 4/1/13
Total/Weighted Average $801,024,722
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
Original Original Remaining
Term to Amort. Term to
Loan ARD Maturity or Term Remaining Maturity or
No. Seller(1) Property Name(2) Loan ARD (mos) (mos)(6) Amort. Term ARD (mos)
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
201 RFC Sunset Shopping Center No 120 300 297 117
202 MID Lauderhill Plaza No 120 300 281 101
203 RFC 14401 South San Pedro Street No 120 300 295 115
204 RFC Woods Cross Self Storage No 120 300 297 117
205 MID Fresno Self Storage No 120 300 280 100
206 MID Crosstown Square Shopping Center No 120 300 291 111
207 CIBC 112-116 East 103rd Street No 120 300 289 109
208 MID Leon Trace Apartments No 120 300 279 99
209 RFC Southern Oaks Apartments No 180 180 153 153
210 RFC Middletown Industrial No 120 240 237 117
211 RFC 401-611 Braker Lane No 120 300 299 119
212 RFC Mandell Place No 120 300 298 118
213 MID The Allendale Village Apartments No 240 240 221 221
214 RFC Roswell Point Shopping Center No 120 360 357 117
215 RFC Royal Apartments No 120 300 289 109
216 RFC 402 - 406 Albee Square No 120 300 280 100
217 RFC Mansfield Retail Center No 120 360 356 116
218 RFC 224 South 3rd Brooklyn No 120 300 292 112
219 MID Circuit City Land No 120 240 233 113
220 RFC Charles Garden Apartments No 120 300 289 109
221 RFC Blockbuster Video No 120 300 297 117
222 RFC 16-10 Caffrey Avenue No 120 300 280 100
223 RFC 650 E 182 St No 240 240 215 215
224 RFC Temple Apartments No 180 300 274 154
Total/Weighted Average 124 333 324
<CAPTION>
----------------------------------------------------------------------------------
Loan Security
No. Seller(1) Property Name(2) Type (12)
----------------------------------------------------------------------------------
<S> <C> <C> <C>
201 RFC Sunset Shopping Center Fee Simple
202 MID Lauderhill Plaza Fee Simple
203 RFC 14401 South San Pedro Street Fee Simple
204 RFC Woods Cross Self Storage Fee Simple
205 MID Fresno Self Storage Fee Simple
206 MID Crosstown Square Shopping Center Fee Simple
207 CIBC 112-116 East 103rd Street Fee Simple
208 MID Leon Trace Apartments Fee Simple
209 RFC Southern Oaks Apartments Fee Simple
210 RFC Middletown Industrial Fee Simple
211 RFC 401-611 Braker Lane Fee Simple
212 RFC Mandell Place Fee Simple
213 MID The Allendale Village Apartments Fee Simple
214 RFC Roswell Point Shopping Center Fee Simple
215 RFC Royal Apartments Fee Simple
216 RFC 402 - 406 Albee Square Fee Simple
217 RFC Mansfield Retail Center Fee Simple
218 RFC 224 South 3rd Brooklyn Fee Simple
219 MID Circuit City Land Fee Simple
220 RFC Charles Garden Apartments Fee Simple
221 RFC Blockbuster Video Fee Simple
222 RFC 16-10 Caffrey Avenue Fee Simple
223 RFC 650 E 182 St Fee Simple
224 RFC Temple Apartments Fee Simple
Total/Weighted Average
</TABLE>
II-5
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
LOAN INFORMATION II
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
Interest
Loan Interest Accrual
No. Seller(1) Property Name(2) Rate Method
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 MID Campus Apartments 6.950% Actual/360
2 CIBC 17 John Street 8.270% Actual/360
3 MID San Croix Apartments 6.870% Actual/360
4 CIBC 4343 Commerce Court (A) (I) 7.170% Actual/360
5 CIBC 1051 North Kirk Road (A) (I) 7.170% Actual/360
6 CIBC Narco River Business Center (A) 8.680% Actual/360
7 MID Ryder Integrated Logistics 8.420% Actual/360
8 CIBC Holiday Inn Rochester 9.410% Actual/360
9 MID Nevada Street Apartments 8.140% Actual/360
10 MID Camelot Apartments 8.390% Actual/360
11 MID Neurocrine Biosciences 6.800% Actual/360
12 MID CSC Office Building 8.580% Actual/360
13 MID Kinetic Systems Building (B) 8.300% Actual/360
14 MID Globix Corporation Building (B) 8.300% Actual/360
15 CIBC Summit Square 7.460% Actual/360
16 CIBC Bed, Bath & Beyond 7.750% Actual/360
17 MID The Quidel Building 8.560% Actual/360
18 MID Candletree Apartments 8.140% Actual/360
19 CIBC Latham Crossing & Crossroads Plaza 7.570% Actual/360
20 RFC Hampton Inn & Suites (II) 9.230% Actual/360
21 RFC Big Bowl/Wildfire (II) 9.230% Actual/360
22 MID Backlick Center South 6.510% Actual/360
23 CIBC Willow Run Business Center II 8.170% Actual/360
24 MID East Side Plaza 6.890% 30/360
25 RFC Ritchie Highway Shopping Center 8.500% Actual/360
26 CIBC Lincoln Park (C) 9.100% Actual/360
27 CIBC Pompano Merchandise Mart (C) 9.070% Actual/360
28 RFC Big Kmart Shopping Center 8.220% Actual/360
29 RFC Marston Park Plaza 8.910% Actual/360
30 CIBC Union Center 8.570% Actual/360
31 MID La Jolla Corporate Center 8.350% Actual/360
32 CIBC Southlake Festival Shopping Center 8.920% Actual/360
33 RFC HomeBase-Phoenix, AZ 8.410% Actual/360
34 MID Hyatt Suites Hotel 9.270% Actual/360
35 RFC Holiday Square Shopping Center 8.390% Actual/360
36 RFC Stagecoach Plaza 8.400% Actual/360
37 RFC Today's Man Oxford Valley 8.540% Actual/360
38 CIBC Parkway Corporate Plaza 138 8.500% Actual/360
39 MID Lexington Commons Apartments 6.780% Actual/360
40 MID Regal Cinema 9.020% Actual/360
41 MID One Airport Center Office Building 7.380% Actual/360
42 MID San Pablo Apartments 6.980% Actual/360
43 MID Oaks of Ashford Point Apartments 8.250% Actual/360
44 CIBC Comfort Inn - Philadelphia Airport 8.870% Actual/360
45 MID Grouse Run Apartments 6.860% Actual/360
46 RFC Avanex Building 8.450% Actual/360
47 MID The Regents Cove Apartments 8.070% Actual/360
48 CIBC 156 10-40 Cross Bay Boulevard 9.250% Actual/360
49 MID Freehold Executive Center 8.930% Actual/360
50 MID K-Mart (D) 8.910% Actual/360
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
Scheduled
Loan Related Borrower Balloon
No. Seller(1) Property Name(2) Loan Groups (by Loan No.) Balance
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 MID Campus Apartments $22,437,517
2 CIBC 17 John Street $21,079,539
3 MID San Croix Apartments $17,414,035
4 CIBC 4343 Commerce Court (A) (I) 5,6 $11,479,911
5 CIBC 1051 North Kirk Road (A) (I) 4,6 $2,989,158
6 CIBC Narco River Business Center (A) 4,5 $2,352,990
7 MID Ryder Integrated Logistics 57 $16,481,593
8 CIBC Holiday Inn Rochester $15,164,233
9 MID Nevada Street Apartments $13,834,772
10 MID Camelot Apartments $13,460,905
11 MID Neurocrine Biosciences 14,13 $12,828,878
12 MID CSC Office Building $11,884,371
13 MID Kinetic Systems Building (B) 11,14 $5,335,609
14 MID Globix Corporation Building (B) 11,13 $5,085,502
15 CIBC Summit Square $10,844,793
16 CIBC Bed, Bath & Beyond $10,223,984
17 MID The Quidel Building $10,204,630
18 MID Candletree Apartments $9,887,261
19 CIBC Latham Crossing & Crossroads Plaza $9,651,354
20 RFC Hampton Inn & Suites (II) $6,657,945
21 RFC Big Bowl/Wildfire (II) $2,463,696
22 MID Backlick Center South $9,140,655
23 CIBC Willow Run Business Center II 153,175,184,186 $9,051,221
24 MID East Side Plaza $8,759,832
25 RFC Ritchie Highway Shopping Center $9,047,008
26 CIBC Lincoln Park (C) 27 $5,043,010
27 CIBC Pompano Merchandise Mart (C) 26 $3,986,009
28 RFC Big Kmart Shopping Center 35 $8,675,815
29 RFC Marston Park Plaza $8,864,756
30 CIBC Union Center $8,427,998
31 MID La Jolla Corporate Center $7,180,448
32 CIBC Southlake Festival Shopping Center $7,032,090
33 RFC HomeBase-Phoenix, AZ $6,260,984
34 MID Hyatt Suites Hotel $5,644,423
35 RFC Holiday Square Shopping Center 28 $5,875,574
36 RFC Stagecoach Plaza $5,868,144
37 RFC Today's Man Oxford Valley $5,877,718
38 CIBC Parkway Corporate Plaza 138 $5,702,005
39 MID Lexington Commons Apartments $5,342,496
40 MID Regal Cinema 93, 90 $4,417,488
41 MID One Airport Center Office Building $4,303,510
42 MID San Pablo Apartments $5,241,044
43 MID Oaks of Ashford Point Apartments 47, 73, 52 $5,133,259
44 CIBC Comfort Inn - Philadelphia Airport $4,813,523
45 MID Grouse Run Apartments 56 $4,954,315
46 RFC Avanex Building $5,052,449
47 MID The Regents Cove Apartments 52,73, 43 $4,980,614
48 CIBC 156 10-40 Cross Bay Boulevard $4,692,486
49 MID Freehold Executive Center $5,009,829
50 MID K-Mart (D) 51 $179,593
<CAPTION>
-------------------------------------------------------------------------------------------
Loan
No. Seller(1) Property Name(2) Ballooon LTV (4)
-------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 MID Campus Apartments 54.46%
2 CIBC 17 John Street 62.00%
3 MID San Croix Apartments 66.72%
4 CIBC 4343 Commerce Court (A) (I) 59.02%
5 CIBC 1051 North Kirk Road (A) (I) 59.02%
6 CIBC Narco River Business Center (A) 59.02%
7 MID Ryder Integrated Logistics 68.96%
8 CIBC Holiday Inn Rochester 60.18%
9 MID Nevada Street Apartments 70.23%
10 MID Camelot Apartments 71.22%
11 MID Neurocrine Biosciences 53.01%
12 MID CSC Office Building 63.89%
13 MID Kinetic Systems Building (B) 56.33%
14 MID Globix Corporation Building (B) 56.33%
15 CIBC Summit Square 66.94%
16 CIBC Bed, Bath & Beyond 70.99%
17 MID The Quidel Building 67.58%
18 MID Candletree Apartments 71.65%
19 CIBC Latham Crossing & Crossroads Plaza 65.21%
20 RFC Hampton Inn & Suites (II) 51.83%
21 RFC Big Bowl/Wildfire (II) 51.83%
22 MID Backlick Center South 67.21%
23 CIBC Willow Run Business Center II 59.94%
24 MID East Side Plaza 68.60%
25 RFC Ritchie Highway Shopping Center 64.62%
26 CIBC Lincoln Park (C) 66.59%
27 CIBC Pompano Merchandise Mart (C) 66.59%
28 RFC Big Kmart Shopping Center 66.99%
29 RFC Marston Park Plaza 69.26%
30 CIBC Union Center 62.43%
31 MID La Jolla Corporate Center 67.30%
32 CIBC Southlake Festival Shopping Center 62.79%
33 RFC HomeBase-Phoenix, AZ 59.63%
34 MID Hyatt Suites Hotel 36.42%
35 RFC Holiday Square Shopping Center 68.40%
36 RFC Stagecoach Plaza 57.53%
37 RFC Today's Man Oxford Valley 70.82%
38 CIBC Parkway Corporate Plaza 138 64.43%
39 MID Lexington Commons Apartments 68.94%
40 MID Regal Cinema 43.52%
41 MID One Airport Center Office Building 51.85%
42 MID San Pablo Apartments 69.88%
43 MID Oaks of Ashford Point Apartments 70.80%
44 CIBC Comfort Inn - Philadelphia Airport 56.63%
45 MID Grouse Run Apartments 68.81%
46 RFC Avanex Building 66.48%
47 MID The Regents Cove Apartments 70.15%
48 CIBC 156 10-40 Cross Bay Boulevard 49.39%
49 MID Freehold Executive Center 68.63%
50 MID K-Mart (D) 4.41%
</TABLE>
II-6
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
LOAN INFORMATION II
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
Interest
Loan Interest Accrual
No. Seller(1) Property Name(2) Rate Method
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
51 MID K-Mart (D) 8.910% Actual/360
52 MID Seton Chase Apartments 8.050% Actual/360
53 CIBC Tel Huron Shopping Center 8.090% Actual/360
54 MID Quality Inn Sports Complex 6.880% Actual/360
55 MID Ramada Limited 6.840% Actual/360
56 MID Walker's Station Apartments 6.780% Actual/360
57 MID Saturn Electronics & Engineering 8.840% Actual/360
58 MID Plaza Pointe 6.970% Actual/360
59 RFC GAI-Tronics Corporation 8.310% Actual/360
60 CIBC 2600 Building 8.610% Actual/360
61 CIBC Hoyt's Cinemas 9.580% Actual/360
62 CIBC Advance Auto Parts - York, PA (III) 8.840% Actual/360
63 CIBC Advance Auto Parts - Harrisburg, PA (Swatara) (III) 8.840% Actual/360
64 CIBC Advance Auto Parts - Steelton, PA (III) 8.840% Actual/360
65 CIBC Advance Auto Parts - Celina, OH (III) 8.840% Actual/360
66 CIBC Advance Auto Parts - Youngstown, OH (III) 8.840% Actual/360
67 CIBC Advance Auto Parts - Warren, OH (III) 8.840% Actual/360
68 CIBC Advance Auto Parts - Atlanta, GA (III) 8.840% Actual/360
69 CIBC Advance Auto Parts - Penn Hills, PA (III) 8.840% Actual/360
70 CIBC Advance Auto Parts - Pontotoc, MS (III) 8.840% Actual/360
71 MID Hampton Inn Maple Grove 7.220% Actual/360
72 RFC Maple Tree Mall 8.650% Actual/360
73 MID The Sterling Falls Apartments 6.880% Actual/360
74 RFC Stelton Shopping Center 8.070% Actual/360
75 CIBC Parkview Towers 7.990% Actual/360
76 CIBC Unilab Building 9.000% Actual/360
77 MID Cambridge Apartments 6.720% Actual/360
78 MID Tempe Plaza 8.920% Actual/360
79 RFC Byram Self-Storage 8.870% Actual/360
80 MID Sixth Street Building 6.460% Actual/360
81 MID Lake Pine Apartments 6.810% Actual/360
82 RFC Las Lomas Apartments 8.270% Actual/360
83 RFC Pinellas Industrial Center 8.870% Actual/360
84 CIBC Mount Joy Square 8.310% Actual/360
85 MID Town & Country Apartments (Phase II) 6.870% Actual/360
86 MID Bartles Corner Business Park 8.690% Actual/360
87 RFC Jeffery Manor Shopping Center 8.730% Actual/360
88 MID Eckerd's Drug Store 7.760% Actual/360
89 MID Clayton Apartments and Duplexes 6.850% Actual/360
90 MID Regal Cinemas 12-Screen Movie Theatre 9.320% Actual/360
91 RFC 1506 N. Lee Trevino 9.120% Actual/360
92 MID Eckerd Pharmacy 7.760% Actual/360
93 MID Kroger Grocery Store 7.010% Actual/360
94 CIBC Datatec Warehouse 8.690% Actual/360
95 MID Legacy Business Park Medical Office 8 (E) 7.160% Actual/360
96 MID Legacy Business Park Medical Office - 4 (E) 7.160% Actual/360
97 MID East Los Angeles Retail Center 6.830% Actual/360
98 MID Acadia Park Apartments 6.870% Actual/360
99 MID Eckerd's Drug Store 7.770% Actual/360
100 MID Dana Innovations 8.300% Actual/360
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
Scheduled
Loan Related Borrower Balloon
No. Seller(1) Property Name(2) Loan Groups (by Loan No.) Balance
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
51 MID K-Mart (D) 50 $172,144
52 MID Seton Chase Apartments 47, 73, 43 $4,798,686
53 CIBC Tel Huron Shopping Center $4,841,800
54 MID Quality Inn Sports Complex $2,285,260
55 MID Ramada Limited $4,127,942
56 MID Walker's Station Apartments 45 $4,411,568
57 MID Saturn Electronics & Engineering 7 $4,558,909
58 MID Plaza Pointe $4,278,934
59 RFC GAI-Tronics Corporation $4,108,058
60 CIBC 2600 Building $4,100,755
61 CIBC Hoyt's Cinemas $3,820,549
62 CIBC Advance Auto Parts - York, PA (III) 63,64,65,66,67,68,69,70 $472,700
63 CIBC Advance Auto Parts - Harrisburg, PA (Swatara) (III) 62,64,65,66,67,68,69,70 $422,054
64 CIBC Advance Auto Parts - Steelton, PA (III) 62,63,65,66,67,68,69,70 $413,613
65 CIBC Advance Auto Parts - Celina, OH (III) 62,63,64,66,67,68,69,70 $333,422
66 CIBC Advance Auto Parts - Youngstown, OH (III) 62,63,64,65,67,68,69,70 $400,951
67 CIBC Advance Auto Parts - Warren, OH (III) 62,63,64,65,66,68,69,70 $379,848
68 CIBC Advance Auto Parts - Atlanta, GA (III) 62,63,64,65,66,67,69,70 $447,377
69 CIBC Advance Auto Parts - Penn Hills, PA (III) 62,63,64,65,66,67,68,70 $472,700
70 CIBC Advance Auto Parts - Pontotoc, MS (III) 62,63,64,65,66,67,68,69 $303,879
71 MID Hampton Inn Maple Grove $2,798,409
72 RFC Maple Tree Mall $3,767,615
73 MID The Sterling Falls Apartments 52, 47, 43 $3,658,304
74 RFC Stelton Shopping Center $3,262,146
75 CIBC Parkview Towers $3,358,197
76 CIBC Unilab Building $3,093,078
77 MID Cambridge Apartments $3,186,292
78 MID Tempe Plaza $2,966,037
79 RFC Byram Self-Storage $103,568
80 MID Sixth Street Building $1,706,357
81 MID Lake Pine Apartments $3,041,997
82 RFC Las Lomas Apartments $2,749,552
83 RFC Pinellas Industrial Center $2,786,042
84 CIBC Mount Joy Square $2,973,186
85 MID Town & Country Apartments (Phase II) 178, 98 $2,636,917
86 MID Bartles Corner Business Park $2,340,648
87 RFC Jeffery Manor Shopping Center $2,908,803
88 MID Eckerd's Drug Store 99, 92, 101 $2,503,130
89 MID Clayton Apartments and Duplexes $2,784,608
90 MID Regal Cinemas 12-Screen Movie Theatre 93, 40 $1,367,730
91 RFC 1506 N. Lee Trevino 176, 189, 133 $179,168
92 MID Eckerd Pharmacy 99, 101, 88 $2,672,382
93 MID Kroger Grocery Store 40, 90 $2,447,263
94 CIBC Datatec Warehouse $2,155,875
95 MID Legacy Business Park Medical Office 8 (E) 96 $1,821,017
96 MID Legacy Business Park Medical Office - 4 (E) 95 $763,510
97 MID East Los Angeles Retail Center $2,040,214
98 MID Acadia Park Apartments 178, 85 $2,317,291
99 MID Eckerd's Drug Store 101, 92, 88 $2,851,232
100 MID Dana Innovations $2,524,991
<CAPTION>
-------------------------------------------------------------------------------------------
Loan
No. Seller(1) Property Name(2) Ballooon LTV (4)
-------------------------------------------------------------------------------------------
<S> <C> <C> <C>
51 MID K-Mart (D) 4.41%
52 MID Seton Chase Apartments 71.62%
53 CIBC Tel Huron Shopping Center 61.68%
54 MID Quality Inn Sports Complex 28.57%
55 MID Ramada Limited 57.33%
56 MID Walker's Station Apartments 66.84%
57 MID Saturn Electronics & Engineering 69.07%
58 MID Plaza Pointe 49.32%
59 RFC GAI-Tronics Corporation 71.44%
60 CIBC 2600 Building 66.14%
61 CIBC Hoyt's Cinemas 50.94%
62 CIBC Advance Auto Parts - York, PA (III) 53.55%
63 CIBC Advance Auto Parts - Harrisburg, PA (Swatara) (III) 53.55%
64 CIBC Advance Auto Parts - Steelton, PA (III) 53.55%
65 CIBC Advance Auto Parts - Celina, OH (III) 53.55%
66 CIBC Advance Auto Parts - Youngstown, OH (III) 53.55%
67 CIBC Advance Auto Parts - Warren, OH (III) 53.55%
68 CIBC Advance Auto Parts - Atlanta, GA (III) 53.55%
69 CIBC Advance Auto Parts - Penn Hills, PA (III) 53.55%
70 CIBC Advance Auto Parts - Pontotoc, MS (III) 53.55%
71 MID Hampton Inn Maple Grove 39.55%
72 RFC Maple Tree Mall 66.10%
73 MID The Sterling Falls Apartments 65.09%
74 RFC Stelton Shopping Center 59.31%
75 CIBC Parkview Towers 71.45%
76 CIBC Unilab Building 59.48%
77 MID Cambridge Apartments 61.87%
78 MID Tempe Plaza 50.27%
79 RFC Byram Self-Storage 1.58%
80 MID Sixth Street Building 34.82%
81 MID Lake Pine Apartments 69.45%
82 RFC Las Lomas Apartments 51.88%
83 RFC Pinellas Industrial Center 62.19%
84 CIBC Mount Joy Square 67.57%
85 MID Town & Country Apartments (Phase II) 50.37%
86 MID Bartles Corner Business Park 50.88%
87 RFC Jeffery Manor Shopping Center 69.01%
88 MID Eckerd's Drug Store 70.81%
89 MID Clayton Apartments and Duplexes 63.29%
90 MID Regal Cinemas 12-Screen Movie Theatre 26.82%
91 RFC 1506 N. Lee Trevino 4.27%
92 MID Eckerd Pharmacy 63.63%
93 MID Kroger Grocery Store 63.57%
94 CIBC Datatec Warehouse 53.23%
95 MID Legacy Business Park Medical Office 8 (E) 64.05%
96 MID Legacy Business Park Medical Office - 4 (E) 64.05%
97 MID East Los Angeles Retail Center 51.01%
98 MID Acadia Park Apartments 52.67%
99 MID Eckerd's Drug Store 71.28%
100 MID Dana Innovations 63.92%
</TABLE>
II-7
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
LOAN INFORMATION II
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
Interest
Loan Interest Accrual
No. Seller(1) Property Name(2) Rate Method
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
101 MID Eckerd's Drug Store 7.760% Actual/360
102 RFC Oregon Court (F) 8.670% Actual/360
103 RFC Oregon Arms (F) 8.670% Actual/360
104 MID Eckerd Drugs 7.980% Actual/360
105 CIBC Dicks Clothing and Sporting Goods 8.840% Actual/360
106 CIBC Sugarland Shopping Center 8.530% Actual/360
107 MID Eckerd Drug Store 8.450% Actual/360
108 RFC Bassett Furniture Store 9.180% Actual/360
109 CIBC Oak Leaf West 8.270% Actual/360
110 CIBC 2000 White Elks Springs Court 8.950% Actual/360
111 CIBC Triangle Shopping Center 8.460% Actual/360
112 CIBC Northern Medical Offices 8.500% Actual/360
113 MID Bronco Apartments 6.810% Actual/360
114 MID K-Mart 8.820% Actual/360
115 RFC Villa Eleni 8.310% Actual/360
116 MID Perkins Place & Fox Ridge (IV) 8.350% Actual/360
117 MID Barrington Hills Apartments (IV) 8.350% Actual/360
118 MID McDuffee Brook Place (IV) 8.350% Actual/360
119 MID Kearsarge Apartments (IV) 8.350% Actual/360
120 RFC Agawam Industrial Building 8.990% Actual/360
121 CIBC Tampa Multifamily Portfolio 8.910% Actual/360
122 RFC Park Place II Office Building 8.845% Actual/360
123 MID The Sequoia Institute 8.480% Actual/360
124 MID Staples 8.160% Actual/360
125 MID Brookwood Townhomes 8.460% Actual/360
126 MID Staples Office Supply Store 8.170% Actual/360
127 CIBC Jefferson Pilot Financial Center 8.790% Actual/360
128 MID Eckerd Drug Store 8.280% Actual/360
129 MID Staples Property 8.170% Actual/360
130 MID CVS Drugstore 8.140% Actual/360
131 CIBC Maple Building 8.690% Actual/360
132 MID Woodward Avenue Office Building 8.830% Actual/360
133 RFC Alameda Towne Centre 9.120% Actual/360
134 CIBC Park Place Apartments 8.100% Actual/360
135 CIBC 244-48 East 117th Street 8.480% Actual/360
136 MID Prudential Office Building 8.700% Actual/360
137 MID 1/2 Price Store 8.270% Actual/360
138 MID Sunshine Square Shopping Center 6.900% Actual/360
139 RFC Westfair Center 9.160% Actual/360
140 CIBC Bell Gardens Shopping Center 8.480% Actual/360
141 MID Staples 8.240% Actual/360
142 CIBC Morgan Garden Apartments 9.020% Actual/360
143 CIBC Colonial Garden Apartments 8.070% Actual/360
144 MID 170 West Road 8.280% Actual/360
145 RFC Lamar Industrial Center 9.180% Actual/360
146 MID Columbus Plaza Shopping Center 8.340% Actual/360
147 RFC Lakeshore Village Office Complex 8.840% Actual/360
148 MID The Lucent Technologies Building 8.730% Actual/360
149 MID Leonard Professional Building 8.800% Actual/360
150 CIBC Cross River Mill 8.370% Actual/360
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
Scheduled
Loan Related Borrower Balloon
No. Seller(1) Property Name(2) Loan Groups (by Loan No.) Balance
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
101 MID Eckerd's Drug Store 99, 92, 88 $2,449,684
102 RFC Oregon Court (F) $1,128,467
103 RFC Oregon Arms (F) $757,823
104 MID Eckerd Drugs $2,445,623
105 CIBC Dicks Clothing and Sporting Goods $2,303,691
106 CIBC Sugarland Shopping Center $2,259,844
107 MID Eckerd Drug Store $2,356,233
108 RFC Bassett Furniture Store $2,376,082
109 CIBC Oak Leaf West $2,296,250
110 CIBC 2000 White Elks Springs Court $2,297,789
111 CIBC Triangle Shopping Center $1,776,722
112 CIBC Northern Medical Offices $1,783,999
113 MID Bronco Apartments 208 $1,993,608
114 MID K-Mart $153,061
115 RFC Villa Eleni $2,166,380
116 MID Perkins Place & Fox Ridge (IV) $659,564
117 MID Barrington Hills Apartments (IV) $813,161
118 MID McDuffee Brook Place (IV) $404,774
119 MID Kearsarge Apartments (IV) $290,931
120 RFC Agawam Industrial Building $2,033,608
121 CIBC Tampa Multifamily Portfolio $2,012,015
122 RFC Park Place II Office Building $2,142,163
123 MID The Sequoia Institute $2,068,978
124 MID Staples 141 $2,055,709
125 MID Brookwood Townhomes $2,117,807
126 MID Staples Office Supply Store 129 $2,038,410
127 CIBC Jefferson Pilot Financial Center $2,030,801
128 MID Eckerd Drug Store $1,985,668
129 MID Staples Property 126 $1,976,366
130 MID CVS Drugstore $114,249
131 CIBC Maple Building $1,786,335
132 MID Woodward Avenue Office Building $1,915,939
133 RFC Alameda Towne Centre 189,91,176 $126,477
134 CIBC Park Place Apartments $1,864,840
135 CIBC 244-48 East 117th Street 200,207 $1,743,095
136 MID Prudential Office Building $1,832,504
137 MID 1/2 Price Store $1,803,175
138 MID Sunshine Square Shopping Center $1,742,975
139 RFC Westfair Center $1,808,620
140 CIBC Bell Gardens Shopping Center $1,629,457
141 MID Staples 124 $1,731,820
142 CIBC Morgan Garden Apartments $1,738,512
143 CIBC Colonial Garden Apartments $1,702,115
144 MID 170 West Road 149, 173,174 $1,713,336
145 RFC Lamar Industrial Center 211 $1,614,761
146 MID Columbus Plaza Shopping Center $1,707,802
147 RFC Lakeshore Village Office Complex $1,572,920
148 MID The Lucent Technologies Building $1,691,292
149 MID Leonard Professional Building 173, 144,174 $1,566,992
150 CIBC Cross River Mill $1,592,402
<CAPTION>
-------------------------------------------------------------------------------------------
Loan
No. Seller(1) Property Name(2) Ballooon LTV (4)
-------------------------------------------------------------------------------------------
<S> <C> <C> <C>
101 MID Eckerd's Drug Store 70.49%
102 RFC Oregon Court (F) 54.28%
103 RFC Oregon Arms (F) 54.28%
104 MID Eckerd Drugs 68.22%
105 CIBC Dicks Clothing and Sporting Goods 57.59%
106 CIBC Sugarland Shopping Center 62.77%
107 MID Eckerd Drug Store 67.90%
108 RFC Bassett Furniture Store 61.32%
109 CIBC Oak Leaf West 67.54%
110 CIBC 2000 White Elks Springs Court 65.65%
111 CIBC Triangle Shopping Center 55.52%
112 CIBC Northern Medical Offices 49.56%
113 MID Bronco Apartments 47.47%
114 MID K-Mart 4.25%
115 RFC Villa Eleni 63.72%
116 MID Perkins Place & Fox Ridge (IV) 67.43%
117 MID Barrington Hills Apartments (IV) 67.43%
118 MID McDuffee Brook Place (IV) 67.43%
119 MID Kearsarge Apartments (IV) 67.43%
120 RFC Agawam Industrial Building 59.81%
121 CIBC Tampa Multifamily Portfolio 60.51%
122 RFC Park Place II Office Building 54.23%
123 MID The Sequoia Institute 61.95%
124 MID Staples 69.69%
125 MID Brookwood Townhomes 62.29%
126 MID Staples Office Supply Store 67.95%
127 CIBC Jefferson Pilot Financial Center 63.07%
128 MID Eckerd Drug Store 67.20%
129 MID Staples Property 67.00%
130 MID CVS Drugstore 4.18%
131 CIBC Maple Building 59.54%
132 MID Woodward Avenue Office Building 68.43%
133 RFC Alameda Towne Centre 4.08%
134 CIBC Park Place Apartments 71.72%
135 CIBC 244-48 East 117th Street 61.16%
136 MID Prudential Office Building 61.60%
137 MID 1/2 Price Store 66.78%
138 MID Sunshine Square Shopping Center 62.25%
139 RFC Westfair Center 62.37%
140 CIBC Bell Gardens Shopping Center 57.38%
141 MID Staples 69.27%
142 CIBC Morgan Garden Apartments 72.44%
143 CIBC Colonial Garden Apartments 70.92%
144 MID 170 West Road 71.39%
145 RFC Lamar Industrial Center 59.81%
146 MID Columbus Plaza Shopping Center 67.64%
147 RFC Lakeshore Village Office Complex 57.20%
148 MID The Lucent Technologies Building 69.89%
149 MID Leonard Professional Building 60.27%
150 CIBC Cross River Mill 56.87%
</TABLE>
II-8
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
LOAN INFORMATION II
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
Interest
Loan Interest Accrual
No. Seller(1) Property Name(2) Rate Method
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
151 MID Steele's Market 8.300% Actual/360
152 CIBC The Commonwealth Building 8.340% Actual/360
153 CIBC Gateway 2000 - Hobart 8.220% Actual/360
154 MID Frolics Plaza 9.220% Actual/360
155 RFC Lorain Apartments 8.380% Actual/360
156 RFC Opdyke Investments 8.930% Actual/360
157 MID Sungard Financial Systems Office Property 8.240% Actual/360
158 RFC 420 Clinton Avenue 7.375% Actual/360
159 CIBC Village Shoppes of Paradise Beach 8.490% Actual/360
160 MID Tiscor Corporate Office Building 6.450% Actual/360
161 MID Omnicare Building 8.480% Actual/360
162 CIBC Best Western 9.990% Actual/360
163 RFC Ironwood Apartments 8.730% Actual/360
164 RFC Crossroads South Shopping Center 8.680% Actual/360
165 MID West Wind Apartments Phase IV 8.050% Actual/360
166 CIBC Chastain Pines Apartments 8.130% Actual/360
167 MID 166 South River Road 7.080% Actual/360
168 CIBC Grayco Apartments 8.350% Actual/360
169 MID Reseda Retail Building 7.290% Actual/360
170 MID Mesa Engineering Systems, Inc. 6.890% Actual/360
171 MID Concord Garden Apartments 8.460% Actual/360
172 RFC 233 Jamaica Avenue 7.375% Actual/360
173 MID Goffstown Village Apartments (V) 6.960% Actual/360
174 MID Maple Leaf Apartments (V) 6.960% Actual/360
175 CIBC Gateway 2000 - Columbia 8.220% Actual/360
176 RFC Kenworthy Medical Building 9.260% Actual/360
177 MID Lakes Mini Storage 8.600% Actual/360
178 MID Town & Country Apartments Phase I 6.870% Actual/360
179 MID Tucson East Apartments 6.860% Actual/360
180 RFC Pal Ex, Inc. 8.870% Actual/360
181 RFC 312-332 East Rosecrans Avenue 8.340% Actual/360
182 MID Building 35 - Corporate Woods 8.310% Actual/360
183 RFC Art Museum Apartments 8.640% Actual/360
184 CIBC Gateway 2000 - Henderson 8.220% Actual/360
185 MID Helicomb International Plant 6.760% Actual/360
186 CIBC Gateway 2000 - Chattanooga 8.220% Actual/360
187 MID U-Stor Facility 7.110% Actual/360
188 MID 17-33 Elm Street 8.880% Actual/360
189 RFC Montwood Village Shopping Center 9.320% Actual/360
190 RFC D Boys Office Building 8.920% Actual/360
191 MID U-Stor Facility 7.110% Actual/360
192 MID 43 North Road 6.610% Actual/360
193 RFC Park Apartments 8.160% Actual/360
194 MID The Champion Gardens Apartments 8.390% Actual/360
195 MID 168 South River Road 7.080% Actual/360
196 RFC The Pines Business Park 8.800% Actual/360
197 MID U-Stor Winchester II 7.110% Actual/360
198 MID Knowledge Beginnings (VI) 8.970% Actual/360
199 MID Knowledge Beginnings (VI) 8.970% Actual/360
200 CIBC 233, 235, 237 East 111th Street 8.480% Actual/360
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
Scheduled
Loan Related Borrower Balloon
No. Seller(1) Property Name(2) Loan Groups (by Loan No.) Balance
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
151 MID Steele's Market $1,563,692
152 CIBC The Commonwealth Building $1,448,310
153 CIBC Gateway 2000 - Hobart 175, 184, 186, 23 $1,548,835
154 MID Frolics Plaza 182 $1,427,719
155 RFC Lorain Apartments $1,479,836
156 RFC Opdyke Investments $1,484,544
157 MID Sungard Financial Systems Office Property $1,350,329
158 RFC 420 Clinton Avenue 172, 216, 222 $1,315,132
159 CIBC Village Shoppes of Paradise Beach $1,338,000
160 MID Tiscor Corporate Office Building $1,377,012
161 MID Omnicare Building $1,419,825
162 CIBC Best Western $1,167,254
163 RFC Ironwood Apartments $1,304,067
164 RFC Crossroads South Shopping Center $1,390,096
165 MID West Wind Apartments Phase IV $1,375,413
166 CIBC Chastain Pines Apartments $1,345,788
167 MID 166 South River Road 195 $1,143,382
168 CIBC Grayco Apartments $1,343,561
169 MID Reseda Retail Building $1,180,745
170 MID Mesa Engineering Systems, Inc. $1,159,142
171 MID Concord Garden Apartments $1,259,572
172 RFC 233 Jamaica Avenue 216, 222, 158 $1,133,035
173 MID Goffstown Village Apartments (V) 174, 144, 149 $641,044
174 MID Maple Leaf Apartments (V) 173, 144, 149 $480,783
175 CIBC Gateway 2000 - Columbia 153, 184, 186, 23 $1,227,734
176 RFC Kenworthy Medical Building 189, 91, 133 $84,587
177 MID Lakes Mini Storage $1,113,804
178 MID Town & Country Apartments Phase I 98, 85 $1,078,738
179 MID Tucson East Apartments $1,155,726
180 RFC Pal Ex, Inc. $1,187,495
181 RFC 312-332 East Rosecrans Avenue 203 $1,081,964
182 MID Building 35 - Corporate Woods 154 $1,162,762
183 RFC Art Museum Apartments $1,143,513
184 CIBC Gateway 2000 - Henderson 153, 175, 186, 23 $1,136,892
185 MID Helicomb International Plant $881,801
186 CIBC Gateway 2000 - Chattanooga 153, 175, 184, 23 $1,133,293
187 MID U-Stor Facility 197, 191 $52,312
188 MID 17-33 Elm Street $1,041,331
189 RFC Montwood Village Shopping Center 91, 176, 133 $78,186
190 RFC D Boys Office Building $1,027,314
191 MID U-Stor Facility 187, 197 $51,440
192 MID 43 North Road $943,750
193 RFC Park Apartments $1,036,698
194 MID The Champion Gardens Apartments $938,457
195 MID 168 South River Road 167 $883,834
196 RFC The Pines Business Park $940,830
197 MID U-Stor Winchester II 187,191 $46,930
198 MID Knowledge Beginnings (VI) $428,171
199 MID Knowledge Beginnings (VI) $544,611
200 CIBC 233, 235, 237 East 111th Street 207, 135 $886,177
<CAPTION>
-------------------------------------------------------------------------------------------
Loan
No. Seller(1) Property Name(2) Ballooon LTV (4)
-------------------------------------------------------------------------------------------
<S> <C> <C> <C>
151 MID Steele's Market 66.82%
152 CIBC The Commonwealth Building 62.16%
153 CIBC Gateway 2000 - Hobart 61.95%
154 MID Frolics Plaza 54.91%
155 RFC Lorain Apartments 72.19%
156 RFC Opdyke Investments 63.85%
157 MID Sungard Financial Systems Office Property 54.01%
158 RFC 420 Clinton Avenue 59.78%
159 CIBC Village Shoppes of Paradise Beach 62.67%
160 MID Tiscor Corporate Office Building 64.05%
161 MID Omnicare Building 66.66%
162 CIBC Best Western 46.23%
163 RFC Ironwood Apartments 58.61%
164 RFC Crossroads South Shopping Center 71.29%
165 MID West Wind Apartments Phase IV 66.45%
166 CIBC Chastain Pines Apartments 63.33%
167 MID 166 South River Road 54.44%
168 CIBC Grayco Apartments 70.71%
169 MID Reseda Retail Building 58.16%
170 MID Mesa Engineering Systems, Inc. 57.96%
171 MID Concord Garden Apartments 71.16%
172 RFC 233 Jamaica Avenue 59.63%
173 MID Goffstown Village Apartments (V) 59.83%
174 MID Maple Leaf Apartments (V) 59.83%
175 CIBC Gateway 2000 - Columbia 62.48%
176 RFC Kenworthy Medical Building 4.23%
177 MID Lakes Mini Storage 57.71%
178 MID Town & Country Apartments Phase I 45.52%
179 MID Tucson East Apartments 69.41%
180 RFC Pal Ex, Inc. 64.54%
181 RFC 312-332 East Rosecrans Avenue 25.46%
182 MID Building 35 - Corporate Woods 59.63%
183 RFC Art Museum Apartments 61.31%
184 CIBC Gateway 2000 - Henderson 62.30%
185 MID Helicomb International Plant 41.01%
186 CIBC Gateway 2000 - Chattanooga 62.96%
187 MID U-Stor Facility 2.15%
188 MID 17-33 Elm Street 57.85%
189 RFC Montwood Village Shopping Center 4.32%
190 RFC D Boys Office Building 57.07%
191 MID U-Stor Facility 2.32%
192 MID 43 North Road 55.51%
193 RFC Park Apartments 69.11%
194 MID The Champion Gardens Apartments 52.14%
195 MID 168 South River Road 50.51%
196 RFC The Pines Business Park 55.34%
197 MID U-Stor Winchester II 2.13%
198 MID Knowledge Beginnings (VI) 63.58%
199 MID Knowledge Beginnings (VI) 63.58%
200 CIBC 233, 235, 237 East 111th Street 52.13%
</TABLE>
II-9
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
LOAN INFORMATION II
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
Interest
Loan Interest Accrual
No. Seller(1) Property Name(2) Rate Method
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
201 RFC Sunset Shopping Center 9.500% Actual/360
202 MID Lauderhill Plaza 6.810% Actual/360
203 RFC 14401 South San Pedro Street 8.340% Actual/360
204 RFC Woods Cross Self Storage 9.100% Actual/360
205 MID Fresno Self Storage 6.630% Actual/360
206 MID Crosstown Square Shopping Center 8.640% Actual/360
207 CIBC 112-116 East 103rd Street 8.480% Actual/360
208 MID Leon Trace Apartments 6.810% Actual/360
209 RFC Southern Oaks Apartments 8.250% Actual/360
210 RFC Middletown Industrial 9.360% Actual/360
211 RFC 401-611 Braker Lane 9.240% Actual/360
212 RFC Mandell Place 9.520% Actual/360
213 MID The Allendale Village Apartments 7.000% Actual/360
214 RFC Roswell Point Shopping Center 9.390% Actual/360
215 RFC Royal Apartments 8.410% Actual/360
216 RFC 402 - 406 Albee Square 7.625% Actual/360
217 RFC Mansfield Retail Center 8.950% Actual/360
218 RFC 224 South 3rd Brooklyn 8.860% Actual/360
219 MID Circuit City Land 8.320% Actual/360
220 RFC Charles Garden Apartments 8.560% Actual/360
221 RFC Blockbuster Video 9.720% Actual/360
222 RFC 16-10 Caffrey Avenue 7.375% Actual/360
223 RFC 650 E 182 St 8.375% Actual/360
224 RFC Temple Apartments 7.625% Actual/360
Total/Weighted Average 8.102%
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
Scheduled
Loan Related Borrower Balloon
No. Seller(1) Property Name(2) Loan Groups (by Loan No.) Balance
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
201 RFC Sunset Shopping Center $901,661
202 MID Lauderhill Plaza $829,313
203 RFC 14401 South San Pedro Street 181 $832,280
204 RFC Woods Cross Self Storage $832,822
205 MID Fresno Self Storage $793,169
206 MID Crosstown Square Shopping Center $820,172
207 CIBC 112-116 East 103rd Street 135,200 $815,116
208 MID Leon Trace Apartments 113 $757,570
209 RFC Southern Oaks Apartments $25,885
210 RFC Middletown Industrial $673,221
211 RFC 401-611 Braker Lane 145 $749,701
212 RFC Mandell Place $751,542
213 MID The Allendale Village Apartments $35,579
214 RFC Roswell Point Shopping Center $788,750
215 RFC Royal Apartments $709,227
216 RFC 402 - 406 Albee Square 172,158,222 $672,707
217 RFC Mansfield Retail Center $662,384
218 RFC 224 South 3rd Brooklyn $601,718
219 MID Circuit City Land $358,255
220 RFC Charles Garden Apartments $413,993
221 RFC Blockbuster Video $396,369
222 RFC 16-10 Caffrey Avenue 172, 158, 216 $349,623
223 RFC 650 E 182 St $21,031
224 RFC Temple Apartments $189,633
Total/Weighted Average
<CAPTION>
-------------------------------------------------------------------------------------------
Loan
No. Seller(1) Property Name(2) Ballooon LTV (4)
-------------------------------------------------------------------------------------------
<S> <C> <C> <C>
201 RFC Sunset Shopping Center 64.40%
202 MID Lauderhill Plaza 55.29%
203 RFC 14401 South San Pedro Street 29.20%
204 RFC Woods Cross Self Storage 53.73%
205 MID Fresno Self Storage 61.97%
206 MID Crosstown Square Shopping Center 63.09%
207 CIBC 112-116 East 103rd Street 58.22%
208 MID Leon Trace Apartments 51.36%
209 RFC Southern Oaks Apartments 1.52%
210 RFC Middletown Industrial 52.80%
211 RFC 401-611 Braker Lane 51.70%
212 RFC Mandell Place 60.12%
213 MID The Allendale Village Apartments 2.74%
214 RFC Roswell Point Shopping Center 65.73%
215 RFC Royal Apartments 47.28%
216 RFC 402 - 406 Albee Square 51.75%
217 RFC Mansfield Retail Center 46.48%
218 RFC 224 South 3rd Brooklyn 60.78%
219 MID Circuit City Land 25.59%
220 RFC Charles Garden Apartments 55.95%
221 RFC Blockbuster Video 41.29%
222 RFC 16-10 Caffrey Avenue 53.79%
223 RFC 650 E 182 St 2.94%
224 RFC Temple Apartments 47.41%
Total/Weighted Average 59.83%
</TABLE>
II-10
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
PROPERTY OPERATING INFORMATION
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
Loan Underwritable Net Operating Monthly Appraised
No. Seller Property Name(2) Cash Flow Income Payment DSCR(4) Value
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 MID Campus Apartments $3,200,310 $3,341,600 $197,006 1.35 $41,200,000
2 CIBC 17 John Street $2,636,228 $2,663,978 $176,314 1.25 $34,000,000
3 MID San Croix Apartments $2,088,462 $2,158,862 $131,319 1.33 $26,100,000
4 CIBC 4343 Commerce Court (A) (I) $1,775,216 $1,985,330 $88,655 1.55 $19,000,000
5 CIBC 1051 North Kirk Road (A) (I) $360,589 $408,212 $23,084 1.55 $4,400,000
6 CIBC Narco River Business Center (A) $366,598 $422,726 $22,887 1.55 $5,100,000
7 MID Ryder Integrated Logistics $2,085,932 $2,265,645 $139,057 1.25 $23,900,000
8 CIBC Holiday Inn Rochester $2,764,558 $3,150,389 $153,538 1.50 $25,200,000
9 MID Nevada Street Apartments $1,823,747 $1,900,247 $114,506 1.30 $19,700,000
10 MID Camelot Apartments $1,632,804 $1,746,804 $113,382 1.20 $18,900,000
11 MID Neurocrine Biosciences $2,027,359 $2,167,057 $96,224 1.76 $24,200,000
12 MID CSC Office Building $1,521,608 $1,704,937 $101,440 1.25 $18,600,000
13 MID Kinetic Systems Building (B) $797,158 $917,725 $50,675 1.29 $9,700,000
14 MID Globix Corporation Building (B) $740,796 $845,823 $48,299 1.29 $8,800,000
15 CIBC Summit Square $1,305,438 $1,366,477 $85,667 1.27 $16,200,000
16 CIBC Bed, Bath & Beyond $1,234,655 $1,292,503 $82,387 1.25 $14,400,000
17 MID The Quidel Building $1,304,919 $1,409,890 $86,982 1.25 $15,100,000
18 MID Candletree Apartments $1,253,052 $1,375,452 $81,790 1.28 $13,800,000
19 CIBC Latham Crossing & Crossroads Plaza $1,221,252 $1,270,077 $76,738 1.33 $14,800,000
20 RFC Hampton Inn & Suites (II) $1,161,677 $1,312,498 $66,776 1.40 $13,500,000
21 RFC Big Bowl/Wildfire (II) $373,479 $385,564 $24,710 1.40 $4,100,000
22 MID Backlick Center South $1,168,460 $1,323,503 $67,069 1.45 $13,600,000
23 CIBC Willow Run Business Center II $1,216,740 $1,290,158 $75,124 1.35 $15,100,000
24 MID East Side Plaza $1,068,069 $1,205,968 $67,208 1.32 $12,770,000
25 RFC Ritchie Highway Shopping Center $1,157,068 $1,218,166 $76,891 1.25 $14,000,000
26 CIBC Lincoln Park (C) $737,273 $877,525 $44,651 1.34 $7,420,000
27 CIBC Pompano Merchandise Mart (C) $547,453 $638,554 $35,220 1.34 $6,140,000
28 RFC Big Kmart Shopping Center $1,110,829 $1,151,560 $72,294 1.28 $12,950,000
29 RFC Marston Park Plaza $1,158,198 $1,269,400 $74,667 1.29 $12,800,000
30 CIBC Union Center $1,103,283 $1,317,032 $71,971 1.28 $13,500,000
31 MID La Jolla Corporate Center $925,654 $1,042,752 $60,286 1.28 $10,670,000
32 CIBC Southlake Festival Shopping Center $1,149,997 $1,285,565 $61,513 1.56 $11,200,000
33 RFC HomeBase-Phoenix, AZ $831,083 $875,853 $52,882 1.31 $10,500,000
34 MID Hyatt Suites Hotel $948,831 $1,407,105 $56,612 1.40 $15,500,000
35 RFC Holiday Square Shopping Center $743,213 $767,988 $49,550 1.25 $8,590,000
36 RFC Stagecoach Plaza $940,894 $1,029,616 $49,519 1.58 $10,200,000
37 RFC Today's Man Oxford Valley $810,137 $825,951 $50,094 1.35 $8,300,000
38 CIBC Parkway Corporate Plaza 138 $765,399 $860,994 $48,442 1.32 $8,850,000
39 MID Lexington Commons Apartments $646,436 $697,936 $40,012 1.35 $7,750,000
40 MID Regal Cinema $959,279 $1,002,694 $60,927 1.31 $10,150,000
41 MID One Airport Center Office Building $819,282 $856,028 $49,493 1.38 $8,300,000
42 MID San Pablo Apartments $586,986 $636,986 $39,838 1.23 $7,500,000
43 MID Oaks of Ashford Point Apartments $653,382 $703,132 $42,822 1.27 $7,250,000
44 CIBC Comfort Inn - Philadelphia Airport $850,680 $972,619 $47,328 1.50 $8,500,000
45 MID Grouse Run Apartments $619,685 $680,685 $37,322 1.38 $7,200,000
46 RFC Avanex Building $641,832 $676,939 $42,792 1.25 $7,600,000
47 MID The Regents Cove Apartments $592,795 $660,795 $40,995 1.21 $7,100,000
48 CIBC 156 10-40 Cross Bay Boulevard $842,009 $912,062 $47,101 1.49 $9,500,000
49 MID Freehold Executive Center $657,066 $756,435 $43,770 1.25 $7,300,000
50 MID K-Mart (D) $353,855 $394,117 $24,566 1.20 $3,825,000
51 MID K-Mart (D) $339,183 $379,064 $23,547 1.20 $4,150,000
52 MID Seton Chase Apartments $570,478 $627,728 $39,443 1.21 $6,700,000
53 CIBC Tel Huron Shopping Center $722,855 $792,483 $39,963 1.51 $7,850,000
54 MID Quality Inn Sports Complex $869,231 $1,024,611 $42,246 1.71 $8,000,000
55 MID Ramada Limited $704,049 $823,772 $36,014 1.63 $7,200,000
56 MID Walker's Station Apartments $480,521 $538,021 $33,050 1.21 $6,600,000
57 MID Saturn Electronics & Engineering $593,789 $639,553 $39,585 1.25 $6,600,000
58 MID Plaza Pointe $489,042 $579,121 $32,501 1.25 $8,675,000
59 RFC GAI-Tronics Corporation $518,958 $565,095 $34,450 1.26 $5,750,000
60 CIBC 2600 Building $591,075 $715,705 $35,108 1.40 $6,200,000
<CAPTION>
------------------------------------------------------------------------------------------------------------------
Loan Cut-Off Date Percent Percent Leased
No. Seller Property Name(2) Value as of Date LTV(4) Leased (7) as of Date (7)
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 MID Campus Apartments 04/15/1998 66.04% 100.0% 03/17/2000
2 CIBC 17 John Street 12/23/1999 68.74% 100.0% 12/20/1999
3 MID San Croix Apartments 02/24/1998 75.01% 94.0% 01/15/2000
4 CIBC 4343 Commerce Court (A) (I) 05/07/1999 66.62% 91.1% 01/26/2000
5 CIBC 1051 North Kirk Road (A) (I) 04/27/1999 66.62% 100.0% 02/28/1998
6 CIBC Narco River Business Center (A) 10/29/1999 66.62% 75.8% 02/01/2000
7 MID Ryder Integrated Logistics 11/01/1999 76.00% 100.0% 11/30/1999
8 CIBC Holiday Inn Rochester 01/05/2000 70.10% 70.5% 09/30/1999
9 MID Nevada Street Apartments 12/27/1999 78.09% 99.0% 02/09/2000
10 MID Camelot Apartments 10/18/1999 78.61% 96.0% 12/28/1999
11 MID Neurocrine Biosciences 06/11/1998 60.00% 100.0% 12/31/1999
12 MID CSC Office Building 12/01/1999 70.23% 100.0% 12/08/1999
13 MID Kinetic Systems Building (B) 07/23/1999 67.20% 100.0% 10/20/1999
14 MID Globix Corporation Building (B) 07/23/1999 67.20% 100.0% 10/20/1999
15 CIBC Summit Square 01/01/2000 75.43% 98.1% 11/29/1999
16 CIBC Bed, Bath & Beyond 10/01/1999 79.41% 100.0% NAP
17 MID The Quidel Building 12/01/1999 74.31% 100.0% 12/01/1999
18 MID Candletree Apartments 10/21/1999 79.45% 98.0% 01/03/2000
19 CIBC Latham Crossing & Crossroads Plaza 09/29/1999 72.93% 95.5% 01/01/2000
20 RFC Hampton Inn & Suites (II) 12/07/1999 60.71% 72.7% 02/29/2000
21 RFC Big Bowl/Wildfire (II) 12/07/1999 60.71% 100.0% 03/01/2000
22 MID Backlick Center South 08/25/1998 76.59% 100.0% 12/31/1999
23 CIBC Willow Run Business Center II 04/22/1999 66.32% 100.0% 04/22/1999
24 MID East Side Plaza 05/08/1998 78.43% 98.6% 02/16/2000
25 RFC Ritchie Highway Shopping Center 02/01/2000 71.36% 93.8% 03/31/2000
26 CIBC Lincoln Park (C) 11/03/1999 72.56% 90.0% 12/29/1999
27 CIBC Pompano Merchandise Mart (C) 11/03/1999 72.56% 99.0% 12/29/1999
28 RFC Big Kmart Shopping Center 09/01/1999 74.23% 100.0% 10/05/1999
29 RFC Marston Park Plaza 11/02/1999 72.94% 97.4% 01/31/2000
30 CIBC Union Center 09/20/1999 68.71% 100.0% 01/01/2000
31 MID La Jolla Corporate Center 10/11/1999 74.28% 96.0% 02/03/2000
32 CIBC Southlake Festival Shopping Center 12/01/1999 68.59% 81.4% 11/02/1999
33 RFC HomeBase-Phoenix, AZ 12/15/1999 66.05% 100.0% 11/04/1999
34 MID Hyatt Suites Hotel 08/17/1999 42.42% 80.0% 09/30/1999
35 RFC Holiday Square Shopping Center 11/15/1999 75.58% 98.4% 12/06/1999
36 RFC Stagecoach Plaza 05/01/1999 63.70% 97.4% 04/04/2000
37 RFC Today's Man Oxford Valley 01/02/2000 78.13% 100.0% 03/01/2000
38 CIBC Parkway Corporate Plaza 138 04/27/1999 70.83% 100.0% 10/01/1999
39 MID Lexington Commons Apartments 09/16/1998 78.06% 86.4% 11/19/1999
40 MID Regal Cinema 06/25/1999 58.35% 100.0% 12/24/1999
41 MID One Airport Center Office Building 01/01/1998 71.21% 100.0% 12/30/1999
42 MID San Pablo Apartments 01/22/1998 78.43% 88.0% 11/30/1999
43 MID Oaks of Ashford Point Apartments 01/04/2000 78.44% 94.5% 01/25/2000
44 CIBC Comfort Inn - Philadelphia Airport 12/31/1999 66.78% 78.7% NAP
45 MID Grouse Run Apartments 05/19/1998 77.57% 95.5% 12/22/1999
46 RFC Avanex Building 11/25/1999 73.49% 100.0% 11/02/1999
47 MID The Regents Cove Apartments 08/23/1999 77.82% 95.2% 12/31/1999
48 CIBC 156 10-40 Cross Bay Boulevard 11/02/1999 57.77% 92.7% 01/26/2000
49 MID Freehold Executive Center 10/25/1999 74.90% 100.0% 01/25/2000
50 MID K-Mart (D) 11/04/1999 67.21% 100.0% 02/14/2000
51 MID K-Mart (D) 10/20/1999 67.21% 100.0% 01/24/2000
52 MID Seton Chase Apartments 10/12/1999 79.58% 95.6% 09/20/1999
53 CIBC Tel Huron Shopping Center 04/22/1999 67.76% 97.9% 12/31/1999
54 MID Quality Inn Sports Complex 06/22/1998 66.04% 75.2% 11/28/1999
55 MID Ramada Limited 06/08/1998 70.01% 76.4% 12/31/1999
56 MID Walker's Station Apartments 09/29/1998 75.77% 96.5% 12/22/1999
57 MID Saturn Electronics & Engineering 11/01/1999 75.53% 100.0% 02/10/2000
58 MID Plaza Pointe 06/17/1998 55.47% 95.4% 11/30/1999
59 RFC GAI-Tronics Corporation 10/22/1999 79.09% 100.0% 12/08/1999
60 CIBC 2600 Building 09/01/1999 72.69% 97.6% 01/06/2000
<CAPTION>
-------------------------------------------------------------------------------------------------------------
Loan
No. Seller Property Name(2) Largest Tenant (8) % NSF
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 MID Campus Apartments NAP NAP
2 CIBC 17 John Street NAP NAP
3 MID San Croix Apartments NAP NAP
4 CIBC 4343 Commerce Court (A) (I) Porsche Credit 13.3%
5 CIBC 1051 North Kirk Road (A) (I) Stephen J. Nardi 100.0%
6 CIBC Narco River Business Center (A) CSX Transportation 26.3%
7 MID Ryder Integrated Logistics Ryder Integrated Logistics 100.0%
8 CIBC Holiday Inn Rochester NAP NAP
9 MID Nevada Street Apartments NAP NAP
10 MID Camelot Apartments NAP NAP
11 MID Neurocrine Biosciences Neurocrine Biosciences, Inc. 100.0%
12 MID CSC Office Building CSC Healthcare Systems, Inc. 86.3%
13 MID Kinetic Systems Building (B) Kinetic Systems 100.0%
14 MID Globix Corporation Building (B) Globix Corporation 100.0%
15 CIBC Summit Square Staples 18.0%
16 CIBC Bed, Bath & Beyond Bed Bath & Beyond 100.0%
17 MID The Quidel Building Quidel Corporation 100.0%
18 MID Candletree Apartments NAP NAP
19 CIBC Latham Crossing & Crossroads Plaza PetsMart 28.7%
20 RFC Hampton Inn & Suites (II) NAP NAP
21 RFC Big Bowl/Wildfire (II) Wildfire 60.7%
22 MID Backlick Center South Scholastic Book Fairs 8.1%
23 CIBC Willow Run Business Center II General Motors 100.0%
24 MID East Side Plaza Hanover Rich Associ 35.0%
25 RFC Ritchie Highway Shopping Center Food-A-Rama/Metro Food Market 45.6%
26 CIBC Lincoln Park (C) Roseart Lampshades 10.7%
27 CIBC Pompano Merchandise Mart (C) Pino Enterprises 11.1%
28 RFC Big Kmart Shopping Center Big K-Mart 69.9%
29 RFC Marston Park Plaza Prosound Music Center 14.8%
30 CIBC Union Center Bed, Bath & Beyond 40.6%
31 MID La Jolla Corporate Center LG Biomedical 19.0%
32 CIBC Southlake Festival Shopping Center TJ Maxx 22.8%
33 RFC HomeBase-Phoenix, AZ HomeBase 100.0%
34 MID Hyatt Suites Hotel NAP NAP
35 RFC Holiday Square Shopping Center Sav-A-Center 61.7%
36 RFC Stagecoach Plaza U.S. Post Office 7.9%
37 RFC Today's Man Oxford Valley Today's Man 41.2%
38 CIBC Parkway Corporate Plaza 138 Parkway Finance, Inc. 46.5%
39 MID Lexington Commons Apartments NAP NAP
40 MID Regal Cinema Regal Cinemas, Inc. 100.0%
41 MID One Airport Center Office Building Rentrak 75.6%
42 MID San Pablo Apartments NAP NAP
43 MID Oaks of Ashford Point Apartments NAP NAP
44 CIBC Comfort Inn - Philadelphia Airport NAP NAP
45 MID Grouse Run Apartments NAP NAP
46 RFC Avanex Building Avanex Corporation 100.0%
47 MID The Regents Cove Apartments NAP NAP
48 CIBC 156 10-40 Cross Bay Boulevard J&S Open Realty 8.4%
49 MID Freehold Executive Center Vantas 20.6%
50 MID K-Mart (D) K-Mart Corporation 100.0%
51 MID K-Mart (D) K-Mart Corporation 100.0%
52 MID Seton Chase Apartments NAP NAP
53 CIBC Tel Huron Shopping Center Rite Aid 19.9%
54 MID Quality Inn Sports Complex NAP NAP
55 MID Ramada Limited NAP NAP
56 MID Walker's Station Apartments NAP NAP
57 MID Saturn Electronics & Engineering Saturn Electronics and Engineering, Inc. 100.0%
58 MID Plaza Pointe Del Taco 36.8%
59 RFC GAI-Tronics Corporation GAI-Tronics Corp. 100.0%
60 CIBC 2600 Building Police Department 27.6%
</TABLE>
II-11
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
PROPERTY OPERATING INFORMATION
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
Loan Underwritable Net Operating Monthly Appraised
No. Seller Property Name(2) Cash Flow Income Payment DSCR(4) Value
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
61 CIBC Hoyt's Cinemas $672,743 $704,309 $39,039 1.44 $7,500,000
62 CIBC Advance Auto Parts - York, PA (III) $76,053 $81,553 $4,638 1.36 $885,000
63 CIBC Advance Auto Parts - Harrisburg, PA (Swatara) $67,310 $72,430 $4,141 1.36 $785,000
64 CIBC Advance Auto Parts - Steelton, PA (III) $66,212 $71,988 $4,059 1.36 $780,000
65 CIBC Advance Auto Parts - Celina, OH (III) $53,361 $58,032 $3,272 1.36 $630,000
66 CIBC Advance Auto Parts - Youngstown, OH (III) $64,042 $69,113 $3,934 1.36 $750,000
67 CIBC Advance Auto Parts - Warren, OH (III) $60,898 $65,850 $3,727 1.36 $710,000
68 CIBC Advance Auto Parts - Atlanta, GA (III) $71,356 $77,135 $4,390 1.36 $820,000
69 CIBC Advance Auto Parts - Penn Hills, PA (III) $75,433 $81,553 $4,638 1.36 $880,000
70 CIBC Advance Auto Parts - Pontotoc, MS (III) $48,919 $53,424 $2,982 1.36 $570,000
71 MID Hampton Inn Maple Grove $639,458 $753,115 $31,358 1.70 $7,075,000
72 RFC Maple Tree Mall $486,145 $537,301 $32,352 1.25 $5,700,000
73 MID The Sterling Falls Apartments $487,266 $529,266 $27,605 1.47 $5,620,000
74 RFC Stelton Shopping Center $446,438 $482,188 $28,843 1.29 $5,500,000
75 CIBC Parkview Towers $459,814 $494,189 $27,563 1.39 $4,700,000
76 CIBC Unilab Building $495,604 $535,023 $30,631 1.35 $5,200,000
77 MID Cambridge Apartments $402,027 $426,027 $23,763 1.41 $5,150,000
78 MID Tempe Plaza $540,008 $611,442 $29,180 1.54 $5,900,000
79 RFC Byram Self-Storage $619,811 $627,345 $35,229 1.47 $6,560,000
80 MID Sixth Street Building $492,920 $535,284 $32,150 1.28 $4,900,000
81 MID Lake Pine Apartments $346,699 $385,699 $22,841 1.26 $4,380,000
82 RFC Las Lomas Apartments $476,848 $534,348 $25,591 1.55 $5,300,000
83 RFC Pinellas Industrial Center $423,128 $491,971 $27,400 1.29 $4,480,000
84 CIBC Mount Joy Square $391,601 $419,991 $24,931 1.31 $4,400,000
85 MID Town & Country Apartments (Phase II) $506,010 $556,010 $23,051 1.83 $5,235,000
86 MID Bartles Corner Business Park $425,948 $479,929 $28,394 1.25 $4,600,000
87 RFC Jeffery Manor Shopping Center $413,571 $464,533 $25,113 1.37 $4,215,000
88 MID Eckerd's Drug Store $290,236 $291,872 $20,151 1.20 $3,535,000
89 MID Clayton Apartments and Duplexes $445,385 $477,560 $20,968 1.77 $4,400,000
90 MID Regal Cinemas 12-Screen Movie Theatre $467,339 $492,677 $32,035 1.22 $5,100,000
91 RFC 1506 N. Lee Trevino $403,937 $457,158 $28,050 1.20 $4,200,000
92 MID Eckerd Pharmacy $324,012 $325,923 $21,513 1.26 $4,200,000
93 MID Kroger Grocery Store $323,716 $346,984 $21,576 1.25 $3,850,000
94 CIBC Datatec Warehouse $394,068 $426,627 $26,265 1.25 $4,050,000
95 MID Legacy Business Park Medical Office 8 (E) $220,162 $241,011 $14,029 1.35 $2,785,000
96 MID Legacy Business Park Medical Office - 4 (E) $102,319 $118,488 $5,882 1.35 $1,250,000
97 MID East Los Angeles Retail Center $347,574 $368,262 $22,954 1.26 $4,000,000
98 MID Acadia Park Apartments $395,954 $443,954 $20,257 1.63 $4,400,000
99 MID Eckerd's Drug Store $331,732 $333,368 $22,969 1.20 $4,000,000
100 MID Dana Innovations $323,715 $348,842 $21,134 1.28 $3,950,000
101 MID Eckerd's Drug Store $285,114 $286,750 $19,720 1.20 $3,475,000
102 RFC Oregon Court (F) $201,165 $215,165 $13,378 1.27 $2,100,000
103 RFC Oregon Arms (F) $140,961 $150,961 $8,984 1.27 $1,375,000
104 MID Eckerd Drugs $288,059 $289,695 $20,001 1.20 $3,585,000
105 CIBC Dicks Clothing and Sporting Goods $365,443 $388,592 $22,612 1.35 $4,000,000
106 CIBC Sugarland Shopping Center $374,323 $429,228 $21,796 1.43 $3,600,000
107 MID Eckerd Drug Store $287,029 $288,665 $19,930 1.20 $3,470,000
108 RFC Bassett Furniture Store $324,181 $338,619 $21,152 1.28 $3,875,000
109 CIBC Oak Leaf West $299,403 $338,093 $19,193 1.30 $3,400,000
110 CIBC 2000 White Elks Springs Court $301,857 $352,550 $20,146 1.25 $3,500,000
111 CIBC Triangle Shopping Center $327,348 $368,820 $21,459 1.27 $3,200,000
112 CIBC Northern Medical Offices $324,207 $361,003 $21,565 1.25 $3,600,000
113 MID Bronco Apartments $473,730 $535,980 $17,368 2.27 $4,200,000
114 MID K-Mart $325,598 $338,570 $21,698 1.25 $3,600,000
115 RFC Villa Eleni $272,853 $280,103 $18,170 1.25 $3,400,000
116 MID Perkins Place & Fox Ridge (IV) $116,490 $124,810 $6,825 1.37 $1,130,000
117 MID Barrington Hills Apartments (IV) $89,759 $98,009 $5,536 1.37 $1,040,000
118 MID McDuffee Brook Place (IV) $53,926 $58,498 $3,397 1.37 $611,000
119 MID Kearsarge Apartments (IV) $38,417 $41,417 $2,442 1.37 $435,000
120 RFC Agawam Industrial Building $304,828 $334,685 $20,124 1.26 $3,400,000
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
Loan Value as Cut-Off Date Percent Percent Leased
No. Seller Property Name(2) of Date LTV(4) Leased (7) as of Date (7)
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
61 CIBC Hoyt's Cinemas 02/01/2000 59.09% 100.0% 02/14/2000
62 CIBC Advance Auto Parts - York, PA (III) 04/16/1999 62.92% 100.0% 01/01/2000
63 CIBC Advance Auto Parts - Harrisburg, PA (Swatara) 04/16/1999 62.92% 100.0% 01/01/2000
64 CIBC Advance Auto Parts - Steelton, PA (III) 04/16/1999 62.92% 100.0% 01/01/2000
65 CIBC Advance Auto Parts - Celina, OH (III) 04/19/1999 62.92% 100.0% 01/01/2000
66 CIBC Advance Auto Parts - Youngstown, OH (III) 04/20/1999 62.92% 100.0% 01/01/2000
67 CIBC Advance Auto Parts - Warren, OH (III) 04/20/1999 62.92% 100.0% 01/01/2000
68 CIBC Advance Auto Parts - Atlanta, GA (III) 05/10/1999 62.92% 100.0% 01/01/2000
69 CIBC Advance Auto Parts - Penn Hills, PA (III) 04/20/1999 62.92% 100.0% 01/01/2000
70 CIBC Advance Auto Parts - Pontotoc, MS (III) 05/10/1999 62.92% 100.0% 01/01/2000
71 MID Hampton Inn Maple Grove 07/15/1998 60.05% 74.0% 12/28/1999
72 RFC Maple Tree Mall 10/14/1999 72.63% 100.0% 10/01/1999
73 MID The Sterling Falls Apartments 09/18/1998 73.54% 97.6% 11/30/1999
74 RFC Stelton Shopping Center 02/20/1999 68.44% 97.5% 01/12/2000
75 CIBC Parkview Towers 05/27/1999 79.73% 100.0% 01/01/2000
76 CIBC Unilab Building 09/17/1999 69.91% 100.0% 09/01/1999
77 MID Cambridge Apartments 08/01/1998 70.23% 99.0% 11/25/1999
78 MID Tempe Plaza 12/02/1999 59.08% 98.0% 02/10/2000
79 RFC Byram Self-Storage 11/15/1999 52.95% 80.9% 12/31/1999
80 MID Sixth Street Building 05/20/1998 70.38% 100.0% 11/30/1999
81 MID Lake Pine Apartments 04/16/1998 78.54% 99.4% 11/19/1999
82 RFC Las Lomas Apartments 10/01/1999 63.95% 92.2% 10/18/1999
83 RFC Pinellas Industrial Center 10/28/1999 73.41% 94.9% 01/01/2000
84 CIBC Mount Joy Square 07/01/1999 74.63% 94.9% 12/01/1999
85 MID Town & Country Apartments (Phase II) 05/12/1998 61.31% 99.0% 11/30/1999
86 MID Bartles Corner Business Park 06/08/1999 69.63% 98.0% 12/04/1999
87 RFC Jeffery Manor Shopping Center 11/01/1999 75.78% 91.7% 12/31/1999
88 MID Eckerd's Drug Store 07/24/1999 79.10% 100.0% 08/20/1999
89 MID Clayton Apartments and Duplexes 05/15/1998 71.44% 100.0% 12/31/1999
90 MID Regal Cinemas 12-Screen Movie Theatre 11/05/1999 60.34% 100.0% 01/27/2000
91 RFC 1506 N. Lee Trevino 11/15/1999 73.17% 93.2% 12/16/1999
92 MID Eckerd Pharmacy 08/11/1999 71.08% 100.0% 08/20/1999
93 MID Kroger Grocery Store 07/20/1998 77.39% 100.0% 11/02/1999
94 CIBC Datatec Warehouse 08/30/1999 72.83% 100.0% NAP
95 MID Legacy Business Park Medical Office 8 (E) 05/07/1998 71.73% 100.0% 11/30/1999
96 MID Legacy Business Park Medical Office - 4 (E) 05/07/1998 71.73% 100.0% 11/30/1999
97 MID East Los Angeles Retail Center 05/30/1998 71.86% 100.0% 12/07/1999
98 MID Acadia Park Apartments 05/06/1998 64.10% 93.0% 11/30/1999
99 MID Eckerd's Drug Store 07/24/1999 79.61% 100.0% 08/20/1999
100 MID Dana Innovations 10/18/1999 70.69% 100.0% 11/17/1999
101 MID Eckerd's Drug Store 07/24/1999 78.75% 100.0% 08/20/1999
102 RFC Oregon Court (F) 11/15/1999 78.45% 100.0% 11/30/1999
103 RFC Oregon Arms (F) 11/15/1999 78.45% 100.0% 11/30/1999
104 MID Eckerd Drugs 06/04/1999 75.83% 100.0% 12/31/1999
105 CIBC Dicks Clothing and Sporting Goods 10/01/1999 67.85% 97.0% 10/18/1999
106 CIBC Sugarland Shopping Center 05/05/1999 74.34% 89.9% 06/01/1999
107 MID Eckerd Drug Store 10/25/1999 74.85% 100.0% 12/03/1999
108 RFC Bassett Furniture Store 12/14/1999 66.69% 100.0% 11/29/1999
109 CIBC Oak Leaf West 03/25/1999 74.56% 100.0% 01/01/2000
110 CIBC 2000 White Elks Springs Court 12/28/1999 71.71% 100.0% 12/27/1999
111 CIBC Triangle Shopping Center 10/06/1999 76.91% 100.0% 09/14/1999
112 CIBC Northern Medical Offices 01/29/1999 67.87% 97.0% 06/01/1999
113 MID Bronco Apartments 06/17/1998 57.95% 92.4% 01/20/2000
114 MID K-Mart 12/01/1999 67.37% 100.0% 12/22/1999
115 RFC Villa Eleni 01/12/2000 70.66% 100.0% 11/01/1999
116 MID Perkins Place & Fox Ridge (IV) 01/05/2000 74.52% 97.0% 03/01/2000
117 MID Barrington Hills Apartments (IV) 01/05/2000 74.52% 96.4% 12/07/1999
118 MID McDuffee Brook Place (IV) 01/05/2000 74.52% 96.4% 03/01/2000
119 MID Kearsarge Apartments (IV) 01/05/2000 74.52% 96.0% 12/07/1999
120 RFC Agawam Industrial Building 12/01/1999 70.43% 100.0% 01/27/2000
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
Loan
No. Seller Property Name(2) Largest Tenant (8) % NSF
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
61 CIBC Hoyt's Cinemas Hoyt's Cinemas 100.0%
62 CIBC Advance Auto Parts - York, PA (III) Advance Auto 100.0%
63 CIBC Advance Auto Parts - Harrisburg, PA (Swatara) Advance Auto 100.0%
64 CIBC Advance Auto Parts - Steelton, PA (III) Advance Auto 100.0%
65 CIBC Advance Auto Parts - Celina, OH (III) Advance Auto 100.0%
66 CIBC Advance Auto Parts - Youngstown, OH (III) Advance Auto 100.0%
67 CIBC Advance Auto Parts - Warren, OH (III) Advance Auto 100.0%
68 CIBC Advance Auto Parts - Atlanta, GA (III) Advance Auto 100.0%
69 CIBC Advance Auto Parts - Penn Hills, PA (III) Advance Auto 100.0%
70 CIBC Advance Auto Parts - Pontotoc, MS (III) Advance Auto 100.0%
71 MID Hampton Inn Maple Grove NAP NAP
72 RFC Maple Tree Mall Chantilly's Billiards 25.0%
73 MID The Sterling Falls Apartments NAP NAP
74 RFC Stelton Shopping Center Stelton Lanes 54.8%
75 CIBC Parkview Towers NAP NAP
76 CIBC Unilab Building Unilab Corporation 100.0%
77 MID Cambridge Apartments NAP NAP
78 MID Tempe Plaza Des 44.6%
79 RFC Byram Self-Storage NAP NAP
80 MID Sixth Street Building Department of Public Social Services 100.0%
81 MID Lake Pine Apartments NAP NAP
82 RFC Las Lomas Apartments NAP NAP
83 RFC Pinellas Industrial Center GTW Space Systems 24.6%
84 CIBC Mount Joy Square AWI/Darrenkamps 51.8%
85 MID Town & Country Apartments (Phase II) NAP NAP
86 MID Bartles Corner Business Park DEK USA Inc. 46.4%
87 RFC Jeffery Manor Shopping Center Peoples Gas 17.3%
88 MID Eckerd's Drug Store Eckerds 100.0%
89 MID Clayton Apartments and Duplexes NAP NAP
90 MID Regal Cinemas 12-Screen Movie Theatre Regal Cinemas, Inc. 100.0%
91 RFC 1506 N. Lee Trevino Audio Express 12.7%
92 MID Eckerd Pharmacy Eckerds 100.0%
93 MID Kroger Grocery Store Kroger Supermarkets 100.0%
94 CIBC Datatec Warehouse Datatec Systems, Inc. 100.0%
95 MID Legacy Business Park Medical Office 8 (E) Alan D. Steljes 100.0%
96 MID Legacy Business Park Medical Office - 4 (E) Desert Springs Hospital 75.0%
97 MID East Los Angeles Retail Center Pick N Save 63.6%
98 MID Acadia Park Apartments NAP NAP
99 MID Eckerd's Drug Store Eckerds 100.0%
100 MID Dana Innovations Dana Innovations/Sonance 100.0%
101 MID Eckerd's Drug Store Eckerds 100.0%
102 RFC Oregon Court (F) NAP NAP
103 RFC Oregon Arms (F) NAP NAP
104 MID Eckerd Drugs Eckerd Drug Store 100.0%
105 CIBC Dicks Clothing and Sporting Goods Dick's Clothing and Sporting Goods 100.0%
106 CIBC Sugarland Shopping Center Winn Dixie 26.6%
107 MID Eckerd Drug Store Eckerd's #2095R 100.0%
108 RFC Bassett Furniture Store Bassett Direct Plus Texas 100.0%
109 CIBC Oak Leaf West US Home Corporation 50.3%
110 CIBC 2000 White Elks Springs Court Quality Farm and Fleet 58.5%
111 CIBC Triangle Shopping Center Food Lion 38.2%
112 CIBC Northern Medical Offices Dental Care Alliance 9.1%
113 MID Bronco Apartments NAP NAP
114 MID K-Mart Kmart #3764 100.0%
115 RFC Villa Eleni NAP NAP
116 MID Perkins Place & Fox Ridge (IV) NAP NAP
117 MID Barrington Hills Apartments (IV) NAP NAP
118 MID McDuffee Brook Place (IV) NAP NAP
119 MID Kearsarge Apartments (IV) NAP NAP
120 RFC Agawam Industrial Building Quality Packaging Specialis 100.0%
</TABLE>
II-12
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
PROPERTY OPERATING INFORMATION
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
Loan Underwritable Net Operating Monthly Appraised
No. Seller Property Name(2) Cash Flow Income Payment DSCR(4) Value
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
121 CIBC Tampa Multifamily Portfolio $325,413 $356,663 $19,826 1.37 $3,325,000
122 RFC Park Place II Office Building $334,943 $368,102 $18,647 1.50 $3,950,000
123 MID The Sequoia Institute $263,133 $298,558 $17,537 1.25 $3,340,000
124 MID Staples $255,549 $259,156 $17,030 1.25 $2,950,000
125 MID Brookwood Townhomes $279,761 $298,761 $17,428 1.34 $3,400,000
126 MID Staples Office Supply Store $254,803 $258,410 $16,904 1.26 $3,000,000
127 CIBC Jefferson Pilot Financial Center $263,520 $297,497 $17,607 1.25 $3,220,000
128 MID Eckerd Drug Store $238,952 $240,588 $16,589 1.20 $2,955,000
129 MID Staples Property $247,076 $250,665 $16,389 1.26 $2,950,000
130 MID CVS Drugstore $229,092 $231,927 $18,180 1.05 $2,730,000
131 CIBC Maple Building $300,890 $359,357 $17,384 1.44 $3,000,000
132 MID Woodward Avenue Office Building $250,163 $287,168 $16,641 1.25 $2,800,000
133 RFC Alameda Towne Centre $273,857 $313,027 $19,057 1.20 $3,100,000
134 CIBC Park Place Apartments $244,977 $264,977 $15,408 1.32 $2,600,000
135 CIBC 244-48 East 117th Street $249,866 $260,116 $16,761 1.24 $2,850,000
136 MID Prudential Office Building $236,688 $268,691 $15,772 1.25 $2,975,000
137 MID 1/2 Price Store $233,169 $269,794 $15,053 1.29 $2,700,000
138 MID Sunshine Square Shopping Center $254,343 $278,601 $13,172 1.61 $2,800,000
139 RFC Westfair Center $261,895 $285,278 $16,078 1.36 $2,900,000
140 CIBC Bell Gardens Shopping Center $290,609 $314,960 $15,676 1.54 $2,840,000
141 MID Staples $216,589 $220,196 $14,433 1.25 $2,500,000
142 CIBC Morgan Garden Apartments $233,409 $260,909 $15,315 1.27 $2,400,000
143 CIBC Colonial Garden Apartments $224,631 $242,881 $14,034 1.33 $2,400,000
144 MID 170 West Road $215,391 $249,124 $14,314 1.25 $2,400,000
145 RFC Lamar Industrial Center $242,350 $281,096 $16,154 1.25 $2,700,000
146 MID Columbus Plaza Shopping Center $215,041 $230,969 $14,334 1.25 $2,525,000
147 RFC Lakeshore Village Office Complex $230,820 $273,107 $15,440 1.25 $2,750,000
148 MID The Lucent Technologies Building $227,725 $256,407 $14,590 1.30 $2,420,000
149 MID Leonard Professional Building $229,727 $269,995 $15,314 1.25 $2,600,000
150 CIBC Cross River Mill $232,949 $272,707 $13,409 1.45 $2,800,000
151 MID Steele's Market $196,387 $201,314 $13,088 1.25 $2,340,000
152 CIBC The Commonwealth Building $206,614 $234,103 $13,824 1.25 $2,330,000
153 CIBC Gateway 2000 - Hobart $201,893 $213,893 $12,901 1.30 $2,500,000
154 MID Frolics Plaza $214,081 $250,793 $14,267 1.25 $2,600,000
155 RFC Lorain Apartments $188,092 $209,092 $12,471 1.26 $2,050,000
156 RFC Opdyke Investments $194,428 $208,944 $12,993 1.25 $2,325,000
157 MID Sungard Financial Systems Office Property $192,431 $223,697 $12,786 1.25 $2,500,000
158 RFC 420 Clinton Avenue $214,168 $226,418 $11,877 1.50 $2,200,000
159 CIBC Village Shoppes of Paradise Beach $243,494 $270,918 $12,873 1.58 $2,135,000
160 MID Tiscor Corporate Office Building $176,945 $201,641 $10,061 1.47 $2,150,000
161 MID Omnicare Building $187,803 $204,844 $12,034 1.30 $2,130,000
162 CIBC Best Western $300,175 $331,759 $14,948 1.67 $2,525,000
163 RFC Ironwood Apartments $206,143 $229,893 $12,722 1.35 $2,225,000
164 RFC Crossroads South Shopping Center $194,038 $212,234 $11,960 1.35 $1,950,000
165 MID West Wind Apartments Phase IV $169,656 $176,156 $11,309 1.25 $2,070,000
166 CIBC Chastain Pines Apartments $214,939 $234,689 $11,143 1.61 $2,125,000
167 MID 166 South River Road $166,892 $203,823 $10,821 1.29 $2,100,000
168 CIBC Grayco Apartments $162,053 $188,053 $11,299 1.20 $1,900,000
169 MID Reseda Retail Building $177,257 $193,764 $10,583 1.40 $2,030,000
170 MID Mesa Engineering Systems, Inc. $161,963 $186,261 $10,147 1.33 $2,000,000
171 MID Concord Garden Apartments $174,826 $189,076 $10,664 1.37 $1,770,000
172 RFC 233 Jamaica Avenue $174,787 $189,777 $10,232 1.42 $1,900,000
173 MID Goffstown Village Apartments (V) $106,950 $118,950 $5,634 1.43 $1,100,000
174 MID Maple Leaf Apartments (V) $61,968 $70,968 $4,225 1.43 $775,000
175 CIBC Gateway 2000 - Columbia $160,087 $170,514 $10,226 1.30 $1,965,000
176 RFC Kenworthy Medical Building $185,454 $215,886 $12,391 1.25 $2,000,000
177 MID Lakes Mini Storage $163,825 $171,063 $10,759 1.27 $1,930,000
178 MID Town & Country Apartments Phase I $217,082 $242,082 $9,430 1.92 $2,370,000
179 MID Tucson East Apartments $115,712 $128,712 $8,711 1.11 $1,665,000
180 RFC Pal Ex, Inc. $166,296 $183,869 $10,355 1.34 $1,840,000
<CAPTION>
------------------------------------------------------------------------------------------------------------------
Loan Cut-Off Date Percent Percent Leased
No. Seller Property Name(2) Value as of Date LTV(4) Leased (7) as of Date (7)
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
121 CIBC Tampa Multifamily Portfolio 10/22/1999 71.29% 100.0% 11/09/1999
122 RFC Park Place II Office Building 12/02/1999 59.37% 100.0% 01/25/2000
123 MID The Sequoia Institute 05/04/1999 68.23% 100.0% 11/24/1999
124 MID Staples 07/15/1999 77.24% 100.0% 11/10/1999
125 MID Brookwood Townhomes 09/28/1999 66.76% 100.0% 12/31/1999
126 MID Staples Office Supply Store 07/01/1999 75.18% 100.0% 08/09/1999
127 CIBC Jefferson Pilot Financial Center 09/01/1999 69.09% 97.5% 11/01/1999
128 MID Eckerd Drug Store 10/28/1999 74.28% 100.0% 12/03/1999
129 MID Staples Property 07/01/1999 74.13% 100.0% 08/09/1999
130 MID CVS Drugstore 07/12/1999 77.91% 100.0% 10/18/1999
131 CIBC Maple Building 03/10/1999 70.36% 100.0% 09/01/1999
132 MID Woodward Avenue Office Building 12/14/1999 74.93% 100.0% 02/24/2000
133 RFC Alameda Towne Centre 10/01/1999 67.47% 96.1% 01/12/2000
134 CIBC Park Place Apartments 08/06/1999 79.59% 98.0% 08/01/1999
135 CIBC 244-48 East 117th Street 03/15/1999 72.45% 90.2% 10/31/1999
136 MID Prudential Office Building 07/01/1999 67.53% 100.0% 12/16/1999
137 MID 1/2 Price Store 08/04/1999 73.76% 100.0% 09/22/1999
138 MID Sunshine Square Shopping Center 03/13/1998 70.30% 100.0% 12/17/1999
139 RFC Westfair Center 10/21/1999 67.86% 100.0% 12/10/1999
140 CIBC Bell Gardens Shopping Center 06/07/1999 68.11% 100.0% 12/01/1999
141 MID Staples 07/16/1999 76.62% 100.0% 09/17/1999
142 CIBC Morgan Garden Apartments 10/25/1999 79.01% 95.5% 11/01/1999
143 CIBC Colonial Garden Apartments 10/20/1999 78.94% 95.9% 12/02/1999
144 MID 170 West Road 09/01/1999 78.92% 100.0% 11/15/1999
145 RFC Lamar Industrial Center 09/15/1999 70.03% 97.9% 01/06/2000
146 MID Columbus Plaza Shopping Center 05/26/1999 74.65% 100.0% 04/11/1999
147 RFC Lakeshore Village Office Complex 11/18/1999 67.50% 91.9% 12/18/1999
148 MID The Lucent Technologies Building 12/13/1999 76.62% 100.0% 01/21/2000
149 MID Leonard Professional Building 09/30/1999 71.05% 98.0% 11/29/1999
150 CIBC Cross River Mill 06/15/1999 62.73% 95.2% 12/20/1999
151 MID Steele's Market 11/07/1999 73.90% 100.0% 02/16/2000
152 CIBC The Commonwealth Building 07/27/1999 74.06% 92.2% 11/11/1999
153 CIBC Gateway 2000 - Hobart 05/01/1999 68.47% 100.0% 05/01/1999
154 MID Frolics Plaza 05/14/1999 64.10% 100.0% 11/29/1999
155 RFC Lorain Apartments 11/04/1999 79.79% 98.8% 11/04/1999
156 RFC Opdyke Investments 10/31/1999 69.81% 100.0% 01/07/2000
157 MID Sungard Financial Systems Office Property 05/21/1999 64.37% 100.0% 12/31/1999
158 RFC 420 Clinton Avenue 05/19/1998 72.18% 93.9% 09/01/1999
159 CIBC Village Shoppes of Paradise Beach 05/27/2000 74.22% 85.1% 09/01/1999
160 MID Tiscor Corporate Office Building 08/03/1998 73.17% 100.0% 11/30/1999
161 MID Omnicare Building 09/22/1999 73.35% 100.0% 10/26/1999
162 CIBC Best Western 11/22/1999 61.18% 65.0% 08/01/1999
163 RFC Ironwood Apartments 06/14/1999 69.25% 100.0% 11/01/1999
164 RFC Crossroads South Shopping Center 12/09/1999 78.36% 93.9% 03/10/2000
165 MID West Wind Apartments Phase IV 08/30/1999 73.81% 100.0% 10/15/1999
166 CIBC Chastain Pines Apartments 06/09/1999 70.23% 98.7% 06/30/1999
167 MID 166 South River Road 07/17/1998 70.73% 100.0% 11/30/1999
168 CIBC Grayco Apartments 10/20/1999 78.21% 98.2% 01/18/2000
169 MID Reseda Retail Building 02/23/1998 70.12% 100.0% 01/05/2000
170 MID Mesa Engineering Systems, Inc. 08/12/1998 70.79% 100.0% 12/31/1999
171 MID Concord Garden Apartments 11/03/1999 78.47% 96.0% 12/24/1999
172 RFC 233 Jamaica Avenue 05/19/1998 72.01% 96.3% 09/01/1999
173 MID Goffstown Village Apartments (V) 05/13/1998 72.65% 96.0% 12/01/1999
174 MID Maple Leaf Apartments (V) 05/13/1998 72.65% 92.0% 12/01/1999
175 CIBC Gateway 2000 - Columbia 05/23/1999 69.06% 100.0% 05/01/1999
176 RFC Kenworthy Medical Building 11/08/1999 67.34% 100.0% 02/01/2000
177 MID Lakes Mini Storage 08/24/1999 68.30% 91.0% 12/31/1999
178 MID Town & Country Apartments Phase I 05/12/1998 55.40% 97.0% 11/30/1999
179 MID Tucson East Apartments 09/10/1998 78.54% 96.2% 02/15/2000
180 RFC Pal Ex, Inc. 11/05/1999 70.62% 100.0% 01/13/2000
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
Loan
No. Seller Property Name(2) Largest Tenant (8) % NSF
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
121 CIBC Tampa Multifamily Portfolio NAP NAP
122 RFC Park Place II Office Building Vitrex 31.3%
123 MID The Sequoia Institute Sequoia Education, Inc. 100.0%
124 MID Staples Staples #608 100.0%
125 MID Brookwood Townhomes NAP NAP
126 MID Staples Office Supply Store Staples Superstore 100.0%
127 CIBC Jefferson Pilot Financial Center Jefferson Pilot Corporation 32.7%
128 MID Eckerd Drug Store Eckerd Corporation 100.0%
129 MID Staples Property Staples Superstore 100.0%
130 MID CVS Drugstore Hook-SupeRX, Inc. 100.0%
131 CIBC Maple Building Family Health Center 31.5%
132 MID Woodward Avenue Office Building Sentech 9.7%
133 RFC Alameda Towne Centre Fashion Bug 19.8%
134 CIBC Park Place Apartments NAP NAP
135 CIBC 244-48 East 117th Street NAP NAP
136 MID Prudential Office Building The Prudential Real Estate Prof 87.3%
137 MID 1/2 Price Store Richman Gordman 1/2 Price Store 100.0%
138 MID Sunshine Square Shopping Center 575 Farmers Market 65.4%
139 RFC Westfair Center Health Foods 12.0%
140 CIBC Bell Gardens Shopping Center Payless ShoeSource 23.6%
141 MID Staples Staples #856 100.0%
142 CIBC Morgan Garden Apartments NAP NAP
143 CIBC Colonial Garden Apartments NAP NAP
144 MID 170 West Road Corning Costar 39.4%
145 RFC Lamar Industrial Center Longhorn Carpet Dist 12.9%
146 MID Columbus Plaza Shopping Center Food Lion 73.2%
147 RFC Lakeshore Village Office Complex Portraits by Reg 17.1%
148 MID The Lucent Technologies Building Lucent Technologies 100.0%
149 MID Leonard Professional Building Future Management Corporation 23.5%
150 CIBC Cross River Mill Calvary Chapel 8.2%
151 MID Steele's Market Nash-Finch Company 100.0%
152 CIBC The Commonwealth Building The Pennsylvania Department of Welfare 92.2%
153 CIBC Gateway 2000 - Hobart Gateway 2000 Country Stores 100.0%
154 MID Frolics Plaza Team Tires Plus 19.3%
155 RFC Lorain Apartments NAP NAP
156 RFC Opdyke Investments Metro 25 Auburn Hills 51.0%
157 MID Sungard Financial Systems Office Property Sungard Financial Systems 100.0%
158 RFC 420 Clinton Avenue NAP NAP
159 CIBC Village Shoppes of Paradise Beach Woody's BBQ 19.0%
160 MID Tiscor Corporate Office Building Tiscor 100.0%
161 MID Omnicare Building Gatti LTC Services, Inc. 100.1%
162 CIBC Best Western NAP NAP
163 RFC Ironwood Apartments NAP NAP
164 RFC Crossroads South Shopping Center Blockbuster Videos, Inc. 33.3%
165 MID West Wind Apartments Phase IV NAP NAP
166 CIBC Chastain Pines Apartments NAP NAP
167 MID 166 South River Road Summit Title Services 28.1%
168 CIBC Grayco Apartments NAP NAP
169 MID Reseda Retail Building Goodwill Industries 81.3%
170 MID Mesa Engineering Systems, Inc. Mesa Energy Systems Inc. 100.0%
171 MID Concord Garden Apartments NAP NAP
172 RFC 233 Jamaica Avenue NAP NAP
173 MID Goffstown Village Apartments (V) NAP NAP
174 MID Maple Leaf Apartments (V) NAP NAP
175 CIBC Gateway 2000 - Columbia Gateway 2000 Country Stores 100.0%
176 RFC Kenworthy Medical Building El Paso Healthcare Sys. 65.2%
177 MID Lakes Mini Storage NAP NAP
178 MID Town & Country Apartments Phase I NAP NAP
179 MID Tucson East Apartments NAP NAP
180 RFC Pal Ex, Inc. Fraisers Industries (Pal Ex) 100.0%
</TABLE>
II-13
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
PROPERTY OPERATING INFORMATION
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
Loan Underwritable Net Operating Monthly Appraised
No. Seller Property Name(2) Cash Flow Income Payment DSCR(4) Value
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
181 RFC 312-332 East Rosecrans Avenue $283,228 $326,458 $10,328 2.29 $4,250,000
182 MID Building 35 - Corporate Woods $146,184 $172,928 $9,738 1.25 $1,950,000
183 RFC Art Museum Apartments $164,351 $172,721 $9,814 1.40 $1,865,000
184 CIBC Gateway 2000 - Henderson $148,149 $158,129 $9,469 1.30 $1,825,000
185 MID Helicomb International Plant $235,891 $266,418 $9,892 1.99 $2,150,000
186 CIBC Gateway 2000 - Chattanooga $148,434 $158,424 $9,439 1.31 $1,800,000
187 MID U-Stor Facility $211,389 $221,049 $10,032 1.76 $2,431,000
188 MID 17-33 Elm Street $153,221 $163,933 $10,213 1.25 $1,800,000
189 RFC Montwood Village Shopping Center $162,809 $184,873 $11,321 1.20 $1,810,000
190 RFC D Boys Office Building $151,645 $164,964 $10,130 1.25 $1,800,000
191 MID U-Stor Facility $179,376 $188,481 $9,864 1.52 $2,213,000
192 MID 43 North Road $134,500 $156,472 $8,124 1.38 $1,700,000
193 RFC Park Apartments $129,155 $138,155 $8,604 1.25 $1,500,000
194 MID The Champion Gardens Apartments $130,815 $154,193 $8,768 1.24 $1,800,000
195 MID 168 South River Road $140,718 $171,231 $8,329 1.41 $1,750,000
196 RFC The Pines Business Park $142,193 $167,567 $9,215 1.29 $1,700,000
197 MID U-Stor Winchester II $215,711 $225,011 $9,000 2.00 $2,200,000
198 MID Knowledge Beginnings (VI) $71,615 $77,653 $4,771 1.25 $830,000
199 MID Knowledge Beginnings (VI) $56,257 $63,766 $3,751 1.25 $700,000
200 CIBC 233, 235, 237 East 111th Street $146,926 $158,926 $8,521 1.44 $1,700,000
201 RFC Sunset Shopping Center $142,150 $162,711 $9,174 1.29 $1,400,000
202 MID Lauderhill Plaza $140,232 $163,126 $7,225 1.62 $1,500,000
203 RFC 14401 South San Pedro Street $224,504 $258,777 $7,945 2.35 $2,850,000
204 RFC Woods Cross Self Storage $131,757 $137,036 $8,291 1.32 $1,550,000
205 MID Fresno Self Storage $125,190 $130,986 $6,834 1.53 $1,280,000
206 MID Crosstown Square Shopping Center $122,252 $133,435 $7,943 1.28 $1,300,000
207 CIBC 112-116 East 103rd Street $126,463 $133,963 $7,838 1.34 $1,400,000
208 MID Leon Trace Apartments $124,454 $142,454 $6,600 1.57 $1,475,000
209 RFC Southern Oaks Apartments $150,885 $166,385 $9,701 1.30 $1,700,000
210 RFC Middletown Industrial $129,863 $146,131 $8,418 1.29 $1,275,000
211 RFC 401-611 Braker Lane $113,490 $128,256 $7,522 1.26 $1,450,000
212 RFC Mandell Place $115,858 $125,722 $7,657 1.26 $1,250,000
213 MID The Allendale Village Apartments $189,764 $215,972 $6,978 2.27 $1,300,000
214 RFC Roswell Point Shopping Center $106,841 $114,837 $7,121 1.25 $1,200,000
215 RFC Royal Apartments $107,105 $117,855 $6,793 1.31 $1,500,000
216 RFC 402 - 406 Albee Square $101,547 $112,747 $6,164 1.37 $1,300,000
217 RFC Mansfield Retail Center $108,339 $118,138 $5,807 1.55 $1,425,000
218 RFC 224 South 3rd Brooklyn $98,345 $107,850 $5,911 1.39 $990,000
219 MID Circuit City Land $114,187 $114,187 $4,282 2.22 $1,400,000
220 RFC Charles Garden Apartments $60,625 $64,625 $3,999 1.26 $740,000
221 RFC Blockbuster Video $65,569 $73,226 $4,081 1.34 $960,000
222 RFC 16-10 Caffrey Avenue $55,457 $62,677 $3,157 1.46 $650,000
223 RFC 650 E 182 St $75,541 $82,041 $3,655 1.72 $715,000
224 RFC Temple Apartments $36,848 $40,158 $2,167 1.42 $400,000
Total/Weighted Average 1.35
<CAPTION>
------------------------------------------------------------------------------------------------------------------
Loan Cut-Off Date Percent Percent Leased
No. Seller Property Name(2) Value as of Date LTV(4) Leased(7) as of Date (7)
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
181 RFC 312-332 East Rosecrans Avenue 09/15/1999 30.45% 100.0% 12/14/1999
182 MID Building 35 - Corporate Woods 06/08/1999 65.78% 100.0% 12/22/1999
183 RFC Art Museum Apartments 12/12/1999 67.50% 100.0% 03/01/2000
184 CIBC Gateway 2000 - Henderson 05/26/1999 68.85% 100.0% 05/01/1999
185 MID Helicomb International Plant 06/24/1998 58.17% 100.0% 01/07/2000
186 CIBC Gateway 2000 - Chattanooga 05/19/1999 69.59% 100.0% 05/01/1999
187 MID U-Stor Facility 05/09/1998 50.65% 89.0% 01/13/2000
188 MID 17-33 Elm Street 05/28/1999 68.12% 94.0% 01/27/2000
189 RFC Montwood Village Shopping Center 09/28/1999 67.70% 100.0% 01/11/2000
190 RFC D Boys Office Building 02/01/2000 67.39% 100.0% 03/01/2000
191 MID U-Stor Facility 05/02/1998 54.70% 95.0% 01/13/2000
192 MID 43 North Road 07/28/1998 68.33% 100.0% 09/30/1999
193 RFC Park Apartments 11/18/1999 76.82% 97.2% 01/01/2000
194 MID The Champion Gardens Apartments 10/18/1999 63.80% 97.5% 10/05/1999
195 MID 168 South River Road 07/17/1998 65.33% 100.0% 11/30/1999
196 RFC The Pines Business Park 10/12/1999 65.38% 100.0% 12/15/1999
197 MID U-Stor Winchester II 05/02/1998 50.21% 95.0% 01/13/2000
198 MID Knowledge Beginnings (VI) 11/30/1999 69.33% 100.0% 01/18/2000
199 MID Knowledge Beginnings (VI) 11/30/1999 69.33% 100.0% 01/18/2000
200 CIBC 233, 235, 237 East 111th Street 03/15/1999 61.75% 93.8% 12/31/1999
201 RFC Sunset Shopping Center 01/12/2000 74.85% 91.9% 02/01/2000
202 MID Lauderhill Plaza 08/19/1998 67.68% 100.0% 12/01/1999
203 RFC 14401 South San Pedro Street 09/15/1999 34.93% 100.0% 10/25/1999
204 RFC Woods Cross Self Storage 10/01/1999 63.09% 86.6% 12/31/1999
205 MID Fresno Self Storage 08/19/1998 76.10% 87.0% 01/12/2000
206 MID Crosstown Square Shopping Center 05/21/1999 74.42% 100.0% 02/11/2000
207 CIBC 112-116 East 103rd Street 03/15/1999 68.97% 90.0% 12/31/1999
208 MID Leon Trace Apartments 06/17/1998 62.70% 98.6% 01/27/2000
209 RFC Southern Oaks Apartments 11/21/1997 54.10% 98.4% 12/31/1999
210 RFC Middletown Industrial 11/19/1999 71.26% 100.0% 12/22/1999
211 RFC 401-611 Braker Lane 09/15/1999 60.58% 100.0% 02/01/2000
212 RFC Mandell Place 07/07/1999 69.90% 100.0% 02/14/2000
213 MID The Allendale Village Apartments 07/06/1998 66.68% 98.0% 11/30/1999
214 RFC Roswell Point Shopping Center 12/07/1999 71.18% 83.3% 02/22/2000
215 RFC Royal Apartments 03/01/1999 56.11% 93.0% 10/01/1999
216 RFC 402 - 406 Albee Square 05/19/1998 62.08% 100.0% 09/01/1999
217 RFC Mansfield Retail Center 11/22/1999 50.78% 100.0% 01/06/2000
218 RFC 224 South 3rd Brooklyn 06/29/1999 71.50% 100.0% 07/19/1999
219 MID Circuit City Land 08/19/1999 35.32% 100.0% 10/01/1999
220 RFC Charles Garden Apartments 04/15/1999 66.14% 93.8% 05/01/1999
221 RFC Blockbuster Video 08/10/1999 47.72% 100.0% 01/12/2000
222 RFC 16-10 Caffrey Avenue 05/19/1999 64.95% 100.0% 09/01/1999
223 RFC 650 E 182 St 02/12/1998 57.00% 100.0% 01/01/2000
224 RFC Temple Apartments 11/24/1997 70.41% 90.0% 01/26/2000
Total/Weighted Average 70.62%
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
Loan
No. Seller Property Name(2) Largest Tenant (8) % NSF
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
181 RFC 312-332 East Rosecrans Avenue Nygard, Inc. 100.0%
182 MID Building 35 - Corporate Woods Energy Masters Corp. 55.1%
183 RFC Art Museum Apartments NAP NAP
184 CIBC Gateway 2000 - Henderson Gateway 2000 Country Stores 100.0%
185 MID Helicomb International Plant Helicomb International, Inc. 100.0%
186 CIBC Gateway 2000 - Chattanooga Gateway 2000 Country Stores 100.0%
187 MID U-Stor Facility NAP NAP
188 MID 17-33 Elm Street Image 1 Hr Photo 6.0%
189 RFC Montwood Village Shopping Center Just for You Day Care 29.4%
190 RFC D Boys Office Building PA Liquor Control Board 72.3%
191 MID U-Stor Facility NAP NAP
192 MID 43 North Road Lego Systems 70.9%
193 RFC Park Apartments NAP NAP
194 MID The Champion Gardens Apartments NAP NAP
195 MID 168 South River Road The New England 37.2%
196 RFC The Pines Business Park Fresh Coat, Inc. 22.8%
197 MID U-Stor Winchester II NAP NAP
198 MID Knowledge Beginnings (VI) Children's Discovery Center 100.0%
199 MID Knowledge Beginnings (VI) Children's Discovery Center 100.0%
200 CIBC 233, 235, 237 East 111th Street NAP NAP
201 RFC Sunset Shopping Center Varsity Sports 11.1%
202 MID Lauderhill Plaza United States of America 17.0%
203 RFC 14401 South San Pedro Street Nygard, Inc. 100.0%
204 RFC Woods Cross Self Storage NAP NAP
205 MID Fresno Self Storage NAP NAP
206 MID Crosstown Square Shopping Center Anoka-Hennepin School District No. 11 30.6%
207 CIBC 112-116 East 103rd Street NAP NAP
208 MID Leon Trace Apartments NAP NAP
209 RFC Southern Oaks Apartments NAP NAP
210 RFC Middletown Industrial Middletown Gravure Cylinder 100.0%
211 RFC 401-611 Braker Lane Oak Furniture Outlet 45.6%
212 RFC Mandell Place Utrecht Manufacturing Corp. 46.2%
213 MID The Allendale Village Apartments NAP NAP
214 RFC Roswell Point Shopping Center Dunkin Donuts/Baskin Robbins 33.0%
215 RFC Royal Apartments NAP NAP
216 RFC 402 - 406 Albee Square NAP NAP
217 RFC Mansfield Retail Center Radio Shack 25.1%
218 RFC 224 South 3rd Brooklyn Remon Vasquez NAP
219 MID Circuit City Land Basile Limited Liability Co 100.0%
220 RFC Charles Garden Apartments NAP NAP
221 RFC Blockbuster Video Blockbuster Video 100.0%
222 RFC 16-10 Caffrey Avenue NAP NAP
223 RFC 650 E 182 St NAP NAP
224 RFC Temple Apartments NAP NAP
Total/Weighted Average
</TABLE>
II-14
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
PROPERTY INFORMATION
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Loan
No. Seller Property Name(2) Address
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 MID Campus Apartments University City
2 CIBC 17 John Street 17 John Street
3 MID San Croix Apartments 8000 W Spring Mountain Rd
4 CIBC 4343 Commerce Court (A) (I) 4343 Commerce Court
5 CIBC 1051 North Kirk Road (A) (I) 1051 North Kirk Road
6 CIBC Narco River Business Center (A) 1600 West 167th Street
7 MID Ryder Integrated Logistics 4445 N Atlantic
8 CIBC Holiday Inn Rochester 1111 Jefferson Road
9 MID Nevada Street Apartments 2 Nevada St
10 MID Camelot Apartments 1334 S Ave B
11 MID Neurocrine Biosciences 10555 Science Center Dr
12 MID CSC Office Building 26711 Northwestern Hwy
13 MID Kinetic Systems Building (B) 2805 Mission College Blvd
14 MID Globix Corporation Building (B) 2807 Mission College Blvd
15 CIBC Summit Square 1276 Bald Hill Road
16 CIBC Bed, Bath & Beyond 233-235 and 251 Tarrytown Road
17 MID The Quidel Building 10165 Mckellar Ct
18 MID Candletree Apartments 10535 Ellison Plaza
19 CIBC Latham Crossing & Crossroads Plaza 601 Troy-Schenectady Road & 801 New Loudon Road
20 RFC Hampton Inn & Suites (II) 1400 North Milwaukee Avenue
21 RFC Big Bowl/Wildfire (II) 215 & 235 Parkway Drive
22 MID Backlick Center South 8241, 45 , 49, & 53 Backlick Rd
23 CIBC Willow Run Business Center II 2885 Tyler Road
24 MID East Side Plaza 891 Hanover St
25 RFC Ritchie Highway Shopping Center 5600-5700 Ritchie Highway
26 CIBC Lincoln Park (C) 3435-3535 Northwest 19th St. & 1842-1870 Northwest 38th Ave.
27 CIBC Pompano Merchandise Mart (C) 150-196 North Powerline Rd, 2401 & 2099-2201 West Atlantic Blvd
28 RFC Big Kmart Shopping Center 928-1090 North San Fernando Boulevard
29 RFC Marston Park Plaza 5066 South Wadsworth Boulevard
30 CIBC Union Center 650-660 Liberty Avenue
31 MID La Jolla Corporate Center 3252-62 Holiday Ct
32 CIBC Southlake Festival Shopping Center 1544-1568 Southlake Parkway
33 RFC HomeBase-Phoenix, AZ 2201 East Bell Road
34 MID Hyatt Suites Hotel 285 North Palm Canyon Drive
35 RFC Holiday Square Shopping Center 4001 General Degaulle Drive
36 RFC Stagecoach Plaza 1560-1640 Newbury Road
37 RFC Today's Man Oxford Valley 500-516 N. Oxford Valley Road
38 CIBC Parkway Corporate Plaza 138 1700 Galloping Hill Road
39 MID Lexington Commons Apartments 841 Colony Dr
40 MID Regal Cinema 2466 Brice Rd
41 MID One Airport Center Office Building 7700 Ne Ambassador Pl
42 MID San Pablo Apartments 14401 Jose Vedra Boulevard
43 MID Oaks of Ashford Point Apartments 4040 Synott Road
44 CIBC Comfort Inn - Philadelphia Airport 53 Industrial Highway
45 MID Grouse Run Apartments 2401 Northwest 122nd Street
46 RFC Avanex Building 40915 Encyclopedia Circle
47 MID The Regents Cove Apartments 6775 Mccart Ave
48 CIBC 156 10-40 Cross Bay Boulevard 156 10-40 Cross Bay Boulevard
49 MID Freehold Executive Center 4400 Rte 9
50 MID K-Mart (D) 9334 E Rl Thornton Fwy
51 MID K-Mart (D) 9484 Dyer St
52 MID Seton Chase Apartments 7703 Seton Lake Dr
53 CIBC Tel Huron Shopping Center 1-91 S. Telegraph Road
54 MID Quality Inn Sports Complex 10 Polito Ave
55 MID Ramada Limited 2989 Hamilton Blvd
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Loan Property
No. Seller Property Name(2) City State Zip Code Type
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 MID Campus Apartments Philadelphia PA 19104 Multifamily
2 CIBC 17 John Street New York NY 10038 Multifamily
3 MID San Croix Apartments Las Vegas NV 89117 Multifamily
4 CIBC 4343 Commerce Court (A) (I) Lisle IL 60532 Office
5 CIBC 1051 North Kirk Road (A) (I) Batavia IL 60510 Industrial
6 CIBC Narco River Business Center (A) Calumet City IL 60409 Office
7 MID Ryder Integrated Logistics Auburn Hills MI 48326 Industrial
8 CIBC Holiday Inn Rochester Henrietta NY 14623 Hospitality
9 MID Nevada Street Apartments Newark NJ 07102 Multifamily
10 MID Camelot Apartments Yuma AZ 85364 Multifamily
11 MID Neurocrine Biosciences San Diego CA 92121 Industrial
12 MID CSC Office Building Southfield MI 48034 Office
13 MID Kinetic Systems Building (B) Santa Clara CA 95054 Industrial
14 MID Globix Corporation Building (B) Santa Clara CA 95054 Industrial
15 CIBC Summit Square Warwick RI 02886 Retail
16 CIBC Bed, Bath & Beyond Elmsford NY 10523 Retail
17 MID The Quidel Building San Diego CA 92121 Office
18 MID Candletree Apartments Omaha NE 68154 Multifamily
19 CIBC Latham Crossing & Crossroads Plaza Latham NY 12110 Retail
20 RFC Hampton Inn & Suites (II) Lincolnshire IL 60069 Hospitality
21 RFC Big Bowl/Wildfire (II) Lincolnshire IL 60069 Retail
22 MID Backlick Center South Newington VA 22122 Office
23 CIBC Willow Run Business Center II Ypsilanti MI 48197 Industrial
24 MID East Side Plaza Manchester NH 03104 Retail
25 RFC Ritchie Highway Shopping Center Brooklyn Park MD 21225 Retail
26 CIBC Lincoln Park (C) Lauderdale Lakes & Lauderhill FL 33311 Industrial
27 CIBC Pompano Merchandise Mart (C) Pompano Beach FL 33069 Industrial
28 RFC Big Kmart Shopping Center Burbank CA 91504 Retail
29 RFC Marston Park Plaza Lakewood CO 80123 Retail
30 CIBC Union Center Union NJ 07083 Industrial
31 MID La Jolla Corporate Center San Diego CA 92037 Office
32 CIBC Southlake Festival Shopping Center Morrow GA 30260 Retail
33 RFC HomeBase-Phoenix, AZ Phoenix AZ 85022 Retail
34 MID Hyatt Suites Hotel Palm Springs CA 92262 Hospitality
35 RFC Holiday Square Shopping Center New Orleans LA 70114 Retail
36 RFC Stagecoach Plaza Newbury Park CA 91320 Retail
37 RFC Today's Man Oxford Valley Langhorne PA 19047 Retail
38 CIBC Parkway Corporate Plaza 138 Kenilworth NJ 07033 Office
39 MID Lexington Commons Apartments Bartlesville OK 74006 Multifamily
40 MID Regal Cinema Columbus OH 43068 Retail
41 MID One Airport Center Office Building Portland OR 97220 Office
42 MID San Pablo Apartments Jacksonville FL 32250 Multifamily
43 MID Oaks of Ashford Point Apartments Houston TX 77082 Multifamily
44 CIBC Comfort Inn - Philadelphia Airport Essington PA 19029 Hospitality
45 MID Grouse Run Apartments Oklahoma City OK 73120 Multifamily
46 RFC Avanex Building Fremont CA 94538 Industrial
47 MID The Regents Cove Apartments Fort Worth TX 76133 Multifamily
48 CIBC 156 10-40 Cross Bay Boulevard Howard Beach NY 11414 Mixed Use
49 MID Freehold Executive Center Freehold Township NJ 07728 Office
50 MID K-Mart (D) Dallas TX 75228 Retail
51 MID K-Mart (D) El Paso TX 79924 Retail
52 MID Seton Chase Apartments Houston TX 77086 Multifamily
53 CIBC Tel Huron Shopping Center Pontiac MI 48341 Retail
54 MID Quality Inn Sports Complex Lyndhurst NJ 07071 Hospitality
55 MID Ramada Limited South Plainfield NJ 07080 Hospitality
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Loan Property Year Year
No. Seller Property Name(2) Sub-Type Units/NSF Built Renovated
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 MID Campus Apartments High-Rise 384 1868 1986
2 CIBC 17 John Street High-Rise 111 1926 1999
3 MID San Croix Apartments Garden 352 1996 NAP
4 CIBC 4343 Commerce Court (A) (I) Suburban 167,756 1986 NAP
5 CIBC 1051 North Kirk Road (A) (I) Warehouse 120,004 1991 NAP
6 CIBC Narco River Business Center (A) Suburban 65,394 1980 1998
7 MID Ryder Integrated Logistics Warehouse 455,000 1999 NAP
8 CIBC Holiday Inn Rochester Full Service 250 1985 1996
9 MID Nevada Street Apartments High-Rise 306 1978 NAP
10 MID Camelot Apartments Garden 456 1985 1989
11 MID Neurocrine Biosciences Flex 93,000 1998 NAP
12 MID CSC Office Building Suburban 137,954 1970 1997
13 MID Kinetic Systems Building (B) Flex 71,662 1998 NAP
14 MID Globix Corporation Building (B) Flex 61,986 1999 NAP
15 CIBC Summit Square Anchored 133,664 1986 1999
16 CIBC Bed, Bath & Beyond Big Box 84,450 1999 NAP
17 MID The Quidel Building Suburban 72,863 1988 1999
18 MID Candletree Apartments Garden 408 1972 NAP
19 CIBC Latham Crossing & Crossroads Plaza Anchored 94,366 1989, 1993, 1995-1999 NAP
20 RFC Hampton Inn & Suites (II) Limited Service 117 1998 NAP
21 RFC Big Bowl/Wildfire (II) Unanchored 14,387 1998 NAP
22 MID Backlick Center South Suburban 218,652 1985 NAP
23 CIBC Willow Run Business Center II Warehouse 398,200 1998 NAP
24 MID East Side Plaza Anchored 209,214 1983 NAP
25 RFC Ritchie Highway Shopping Center Anchored 128,300 1950 1999
26 CIBC Lincoln Park (C) Flex 325,900 1974-1978 1997
27 CIBC Pompano Merchandise Mart (C) Flex 168,920 1960/68/79/81/84 1997
28 RFC Big Kmart Shopping Center Anchored 103,778 1962 1989
29 RFC Marston Park Plaza Unanchored 104,976 1985 NAP
30 CIBC Union Center Flex 343,154 1953 & 1965 1999
31 MID La Jolla Corporate Center Suburban 64,462 1982 1996
32 CIBC Southlake Festival Shopping Center Anchored 139,315 1986 NAP
33 RFC HomeBase-Phoenix, AZ Big Box 111,924 1999 NAP
34 MID Hyatt Suites Hotel Full Service 192 1986 NAP
35 RFC Holiday Square Shopping Center Anchored 72,870 1993 NAP
36 RFC Stagecoach Plaza Unanchored 94,931 1964, 1989 NAP
37 RFC Today's Man Oxford Valley Unanchored 60,822 1988 NAP
38 CIBC Parkway Corporate Plaza 138 Suburban 75,839 1982 NAP
39 MID Lexington Commons Apartments Garden 206 1980 1995
40 MID Regal Cinema Unanchored 65,158 1999 NAP
41 MID One Airport Center Office Building Suburban 73,426 1997 NAP
42 MID San Pablo Apartments Garden 200 1972 1997
43 MID Oaks of Ashford Point Apartments Garden 199 1983 NAP
44 CIBC Comfort Inn - Philadelphia Airport Limited Service 150 1989 NAP
45 MID Grouse Run Apartments Garden 244 1983 NAP
46 RFC Avanex Building Flex 54,068 1999 NAP
47 MID The Regents Cove Apartments Garden 272 1985 1999
48 CIBC 156 10-40 Cross Bay Boulevard Unanchored 47,625 1958/1990 NAP
49 MID Freehold Executive Center Suburban 65,391 1985 NAP
50 MID K-Mart (D) Big Box 112,115 1965 NAP
51 MID K-Mart (D) Big Box 112,415 1965 NAP
52 MID Seton Chase Apartments Garden 229 1983 NAP
53 CIBC Tel Huron Shopping Center Anchored 96,255 1953 1998
54 MID Quality Inn Sports Complex Limited Service 142 1965 1988
55 MID Ramada Limited Limited Service 142 1984 1996
</TABLE>
II-15
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
PROPERTY INFORMATION
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Loan
No. Seller Property Name(2) Address
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
56 MID Walker's Station Apartments 2600 Tealwood Drive
57 MID Saturn Electronics & Engineering 255 Rex Blvd
58 MID Plaza Pointe 23041 Avenida De La Carlota
59 RFC GAI-Tronics Corporation 400 East Wyomissing Avenue
60 CIBC 2600 Building 2600 Washington Avenue
61 CIBC Hoyt's Cinemas 900 & 902 Front Street
62 CIBC Advance Auto Parts - York, PA (III) 1824 W. Market Street
63 CIBC Advance Auto Parts - Harrisburg, PA
(Swatara) (III) 2890 Paxton Street
64 CIBC Advance Auto Parts - Steelton, PA (III) 350 North Front Street
65 CIBC Advance Auto Parts - Celina, OH (III) 521 Grand Lake Road
66 CIBC Advance Auto Parts - Youngstown, OH (III) 3501 Mahoning Avenue
67 CIBC Advance Auto Parts - Warren, OH (III) 2727 Parkman Road, NW
68 CIBC Advance Auto Parts - Atlanta, GA (III) 946 Martin Luther King, Jr.
69 CIBC Advance Auto Parts - Penn Hills, PA (III) 349 Rodi Road
70 CIBC Advance Auto Parts - Pontotoc, MS (III) 253 West Oxford
71 MID Hampton Inn Maple Grove 7745 Elm Creek Blvd
72 RFC Maple Tree Mall 545-555 Hooksett Road
73 MID The Sterling Falls Apartments 2000 Park Place Blvd
74 RFC Stelton Shopping Center 1665 Stelton Road
75 CIBC Parkview Towers 7667 Maple Avenue
76 CIBC Unilab Building 967 Maybury Road
77 MID Cambridge Apartments 737 7th St Se
78 MID Tempe Plaza 5018 S Price Road
79 RFC Byram Self-Storage 2 Highland Street
80 MID Sixth Street Building 2415 W 6th St
81 MID Lake Pine Apartments 2655 Lake Pine Dr
82 RFC Las Lomas Apartments 6161 Trail Glen Drive
83 RFC Pinellas Industrial Center 12555 Enterprise Blvd & 12505 Starkey Road
84 CIBC Mount Joy Square 919-945 E. Main St.
85 MID Town & Country Apartments (Phase II) 3111 Old Sterlington Rd
86 MID Bartles Corner Business Park 8 Bartles Corner Rd
87 RFC Jeffery Manor Shopping Center 1908-2028 E. 95th Street
88 MID Eckerd's Drug Store 7398 Oswego Road
89 MID Clayton Apartments and Duplexes 1407 Nw 65th Ter
90 MID Regal Cinemas 12-Screen Movie Theatre 750 Builders Way
91 RFC 1506 N. Lee Trevino 1506 N. Lee Trevino
92 MID Eckerd Pharmacy West Main Street And Finney Blvd
93 MID Kroger Grocery Store 10450 E Washington St
94 CIBC Datatec Warehouse 386 Crawford Road
95 MID Legacy Business Park Medical Office 8 (E) 1701-8 Green Valley Parkway
96 MID Legacy Business Park Medical Office - 4 (E) 1701-4 Green Valley Pky
97 MID East Los Angeles Retail Center 654/666 And 700/722 S Atlantic Blvd
98 MID Acadia Park Apartments 1300 Laban Avenue
99 MID Eckerd's Drug Store 2612-16 Brewerton Road
100 MID Dana Innovations 212 Avenida Fabricante
101 MID Eckerd's Drug Store 600 Butternut Street
102 RFC Oregon Court (F) 1835 Johnston Street
103 RFC Oregon Arms (F) 2619 S. 19th Street
104 MID Eckerd Drugs 709 Main St
105 CIBC Dicks Clothing and Sporting Goods 4036 Medina Road
106 CIBC Sugarland Shopping Center 4560 Louisiana Highway 1
107 MID Eckerd Drug Store 1057 W Camp Wisdom Rd
108 RFC Bassett Furniture Store 17955 North Freeway
109 CIBC Oak Leaf West 800 West Main Street
110 CIBC 2000 White Elks Springs Court 2000 White Elks Springs Court
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Loan Property
No. Seller Property Name(2) City State Zip Code Type
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
56 MID Walker's Station Apartments Oklahoma City OK 73120 Multifamily
57 MID Saturn Electronics & Engineering Auburn Hills MI 48326 Industrial
58 MID Plaza Pointe Laguna Hills CA 92653 Office
59 RFC GAI-Tronics Corporation Mohnton PA 19603 Industrial
60 CIBC 2600 Building Newport News VA 23607 Office
61 CIBC Hoyt's Cinemas Dickinson NY 13901 Retail
62 CIBC Advance Auto Parts - York, PA (III) York PA 17404 Retail
63 CIBC Advance Auto Parts - Harrisburg, PA
(Swatara) (III) Harrisburg PA 17111 Retail
64 CIBC Advance Auto Parts - Steelton, PA (III) Steelton PA 17113 Retail
65 CIBC Advance Auto Parts - Celina, OH (III) Celina OH 45882 Retail
66 CIBC Advance Auto Parts - Youngstown, OH (III) Youngstown OH 44509 Retail
67 CIBC Advance Auto Parts - Warren, OH (III) Warren OH 44485 Retail
68 CIBC Advance Auto Parts - Atlanta, GA (III) Atlanta GA 30314 Retail
69 CIBC Advance Auto Parts - Penn Hills, PA (III) Penn Hills PA 15235 Retail
70 CIBC Advance Auto Parts - Pontotoc, MS (III) Pontotoc MS 38863 Retail
71 MID Hampton Inn Maple Grove Maple Grove MN 55369 Hospitality
72 RFC Maple Tree Mall Manchester NH 3104 Retail
73 MID The Sterling Falls Apartments Bedford TX 76021 Multifamily
74 RFC Stelton Shopping Center Piscataway NJ 8854 Retail
75 CIBC Parkview Towers Takoma Park MD 20912 Multifamily
76 CIBC Unilab Building San Jose CA 95133 Industrial
77 MID Cambridge Apartments Puyallup WA 98372 Multifamily
78 MID Tempe Plaza Tempe AZ 85282 Office
79 RFC Byram Self-Storage Port Chester NY 10573 Self Storage
80 MID Sixth Street Building Los Angeles CA 90057 Office
81 MID Lake Pine Apartments St Joseph MI 49085 Multifamily
82 RFC Las Lomas Apartments Dallas TX 75217 Multifamily
83 RFC Pinellas Industrial Center Largo FL 33773 Industrial
84 CIBC Mount Joy Square Mount Joy PA 17552 Retail
85 MID Town & Country Apartments (Phase II) Monroe LA 71203 Multifamily
86 MID Bartles Corner Business Park Raritan NJ 08821 Industrial
87 RFC Jeffery Manor Shopping Center Chicago IL 60617 Retail
88 MID Eckerd's Drug Store Clay NY 13088 Retail
89 MID Clayton Apartments and Duplexes Kansas City MO 64118 Multifamily
90 MID Regal Cinemas 12-Screen Movie Theatre Niagara Falls NY 14304 Retail
91 RFC 1506 N. Lee Trevino El Paso TX 79936 Retail
92 MID Eckerd Pharmacy Malone NY 12953 Retail
93 MID Kroger Grocery Store Indianapolis IN 46229 Retail
94 CIBC Datatec Warehouse Statesville NC 28625 Industrial
95 MID Legacy Business Park Medical Office 8 (E) Henderson NV 89014 Office
96 MID Legacy Business Park Medical Office - 4 (E) Henderson NV 89014 Office
97 MID East Los Angeles Retail Center Los Angeles CA 90022 Retail
98 MID Acadia Park Apartments Houma LA 70363 Multifamily
99 MID Eckerd's Drug Store Mattydale NY 13211 Retail
100 MID Dana Innovations San Clemente CA 92673 Industrial
101 MID Eckerd's Drug Store Syracuse NY 13203 Retail
102 RFC Oregon Court (F) Philadelphia PA 19145 Multifamily
103 RFC Oregon Arms (F) Philadelphia PA 19145 Multifamily
104 MID Eckerd Drugs Poughkeepsie NY 12601 Retail
105 CIBC Dicks Clothing and Sporting Goods Akron OH 44333 Retail
106 CIBC Sugarland Shopping Center Mathews LA 70394 Retail
107 MID Eckerd Drug Store Dallas TX 75232 Retail
108 RFC Bassett Furniture Store Houston TX 77090 Retail
109 CIBC Oak Leaf West Freehold NJ 07728 Office
110 CIBC 2000 White Elks Springs Court Macon GA 31217 Industrial
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Loan Property Year Year
No. Seller Property Name(2) Sub-Type Units/NSF Built Renovated
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
56 MID Walker's Station Apartments Garden 230 1983 NAP
57 MID Saturn Electronics & Engineering Flex 68,315 1989 NAP
58 MID Plaza Pointe Suburban 60,330 1985 NAP
59 RFC GAI-Tronics Corporation Flex 104,858 1973 1996
60 CIBC 2600 Building Suburban 119,359 1969 1998
61 CIBC Hoyt's Cinemas Unanchored 46,585 1999 NAP
62 CIBC Advance Auto Parts - York, PA (III) Unanchored 7,000 1997 NAP
63 CIBC Advance Auto Parts - Harrisburg, PA
(Swatara) (III) Unanchored 5,520 1997 NAP
64 CIBC Advance Auto Parts - Steelton, PA (III) Unanchored 7,000 1997 NAP
65 CIBC Advance Auto Parts - Celina, OH (III) Unanchored 5,675 1997 NAP
66 CIBC Advance Auto Parts - Youngstown, OH (III) Unanchored 5,675 1998 NAP
67 CIBC Advance Auto Parts - Warren, OH (III) Unanchored 5,675 1997 NAP
68 CIBC Advance Auto Parts - Atlanta, GA (III) Unanchored 6,600 1998 NAP
69 CIBC Advance Auto Parts - Penn Hills, PA (III) Unanchored 7,000 1998 NAP
70 CIBC Advance Auto Parts - Pontotoc, MS (III) Unanchored 5,675 1998 NAP
71 MID Hampton Inn Maple Grove Limited Service 120 1997 NAP
72 RFC Maple Tree Mall Unanchored 51,197 1987 NAP
73 MID The Sterling Falls Apartments Garden 168 1983 1995
74 RFC Stelton Shopping Center Unanchored 43,780 1953 1989
75 CIBC Parkview Towers High-Rise 125 1960 Ongoing
76 CIBC Unilab Building Light 32,725 1967 1989
77 MID Cambridge Apartments Garden 96 1970 1997
78 MID Tempe Plaza Suburban 70,159 1976 NAP
79 RFC Byram Self-Storage Self Storage 50,228 1909 1998
80 MID Sixth Street Building Urban 46,233 1968 1998
81 MID Lake Pine Apartments Garden 156 1978 NAP
82 RFC Las Lomas Apartments Garden 230 1970 1998
83 RFC Pinellas Industrial Center Light 103,600 1984 NAP
84 CIBC Mount Joy Square Anchored 66,230 1990 NAP
85 MID Town & Country Apartments (Phase II) Garden 200 1974 1991
86 MID Bartles Corner Business Park Light 70,000 1990 1998
87 RFC Jeffery Manor Shopping Center Unanchored 36,143 1987 NAP
88 MID Eckerd's Drug Store Anchored 10,908 1998 NAP
89 MID Clayton Apartments and Duplexes Garden 117 1972 1986
90 MID Regal Cinemas 12-Screen Movie Theatre Unanchored 43,108 1999 NAP
91 RFC 1506 N. Lee Trevino Unanchored 47,091 1997 NAP
92 MID Eckerd Pharmacy Anchored 12,736 1999 NAP
93 MID Kroger Grocery Store Anchored 58,590 1988 NAP
94 CIBC Datatec Warehouse Light 95,060 1999 NAP
95 MID Legacy Business Park Medical Office 8 (E) Medical 12,900 1997 NAP
96 MID Legacy Business Park Medical Office - 4 (E) Medical 7,200 1996 NAP
97 MID East Los Angeles Retail Center Anchored 33,023 1960 1998
98 MID Acadia Park Apartments Garden 192 1973 NAP
99 MID Eckerd's Drug Store Anchored 10,908 1999 NAP
100 MID Dana Innovations Flex 43,604 1999 NAP
101 MID Eckerd's Drug Store Anchored 10,908 1999 NAP
102 RFC Oregon Court (F) Low-Rise 56 1962 1995
103 RFC Oregon Arms (F) Low-Rise 40 1962 1995
104 MID Eckerd Drugs Anchored 11,347 1999 NAP
105 CIBC Dicks Clothing and Sporting Goods Big Box 60,000 1995 NAP
106 CIBC Sugarland Shopping Center Anchored 118,265 1969 NAP
107 MID Eckerd Drug Store Anchored 10,908 1999 NAP
108 RFC Bassett Furniture Store Big Box 26,250 1999 NAP
109 CIBC Oak Leaf West Suburban 28,611 1987 NAP
110 CIBC 2000 White Elks Springs Court Warehouse 192,400 1982/1985 1999
</TABLE>
II-16
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
PROPERTY INFORMATION
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Loan
No. Seller Property Name(2) Address
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
111 CIBC Triangle Shopping Center 5021 George Washington Highway, etc.
112 CIBC Northern Medical Offices 1335 West Tabor Road
113 MID Bronco Apartments 8228 Bronco Lane
114 MID K-Mart 1400 Mercey Springs Rd
115 RFC Villa Eleni 1150 21st Street
116 MID Perkins Place & Fox Ridge (IV) 5 & 8 Rhodes Dr And 8,17-19 Judkins Dr
117 MID Barrington Hills Apartments (IV) Rte 9
118 MID McDuffee Brook Place (IV) 17 Felker St
119 MID Kearsarge Apartments (IV) 115 Kearsarge Mountain Rd
120 RFC Agawam Industrial Building 609-619 Silver Street
121 CIBC Tampa Multifamily Portfolio 10400 Davis Road, 8710 Copeland Road, 8726 Springtree Lane
122 RFC Park Place II Office Building 1530 North Layton Hills Parkway
123 MID The Sequoia Institute 180-200 Whitney Pl
124 MID Staples 408 Perry Street
125 MID Brookwood Townhomes 400-506 Ne Knox St 508-620 Ne 5th St
126 MID Staples Office Supply Store 1201 East Charleston Avenue
127 CIBC Jefferson Pilot Financial Center 3275 West Hillsboro Boulevard
128 MID Eckerd Drug Store 1901 Se Green Oaks Blvd
129 MID Staples Property 4350 Mahoney Drive
130 MID CVS Drugstore 1233 N State St
131 CIBC Maple Building 3 Washington Center
132 MID Woodward Avenue Office Building 36400 Woodward Ave
133 RFC Alameda Towne Centre 9411 Alameda
134 CIBC Park Place Apartments 715 North 42nd Street
135 CIBC 244-48 East 117th Street 244-48 East 117th Street
136 MID Prudential Office Building 340 Vista Ave Se
137 MID 1/2 Price Store 14400 E Alameda Ave
138 MID Sunshine Square Shopping Center 575 Adams Ave
139 RFC Westfair Center 1751-1789 Post Road East
140 CIBC Bell Gardens Shopping Center 7110-7126 Eastern Avenue
141 MID Staples 1064 M-32 West
142 CIBC Morgan Garden Apartments 7651 Morgan Road
143 CIBC Colonial Garden Apartments 5425-5427 Wayne Avenue
144 MID 170 West Road 170 West Rd
145 RFC Lamar Industrial Center 10710-10720 North Lamar Blvd
146 MID Columbus Plaza Shopping Center Nc Hwy 108
147 RFC Lakeshore Village Office Complex 5394-5470 S. Lakeshore Drive
148 MID The Lucent Technologies Building 17080 Dallas Pky
149 MID Leonard Professional Building 380 Pleasant St
150 CIBC Cross River Mill 1200 River Avenue
151 MID Steele's Market 1159 W Main St
152 CIBC The Commonwealth Building 101-117 S. 7th Street
153 CIBC Gateway 2000 - Hobart 8130 Colorado Street
154 MID Frolics Plaza 7101-21 Barry Rd
155 RFC Lorain Apartments 2307-2705 Washington Ave./974-975 Central Dr.
156 RFC Opdyke Investments 1080 North Opdyke Road
157 MID Sungard Financial Systems Office Property 509 Second Avenue South
158 RFC 420 Clinton Avenue 420 Clinton Avenue
159 CIBC Village Shoppes of Paradise Beach 2320-2386 N. Highway AIA
160 MID Tiscor Corporate Office Building 12250 Parkway Center Dr
161 MID Omnicare Building 4700 Steubenville Pike
162 CIBC Best Western 5837 Monticello Drive
163 RFC Ironwood Apartments 9802 N. 9th Avenue
164 RFC Crossroads South Shopping Center 8053-8105 Tara Boulevard
165 MID West Wind Apartments Phase IV 5200 Block Old Zuck Rd
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Loan Property
No. Seller Property Name(2) City State Zip Code Type
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
111 CIBC Triangle Shopping Center Portsmouth VA 23702 Retail
112 CIBC Northern Medical Offices Philadelphia PA 19141 Office
113 MID Bronco Apartments San Antonio TX 78227 Multifamily
114 MID K-Mart Los Banos CA 93635 Retail
115 RFC Villa Eleni San Diego CA 92102 Multifamily
116 MID Perkins Place & Fox Ridge (IV) Belmont NH 03220 Multifamily
117 MID Barrington Hills Apartments (IV) Barrington NH 03825 Multifamily
118 MID McDuffee Brook Place (IV) Rochester NH 03867 Multifamily
119 MID Kearsarge Apartments (IV) Warner NH 03278 Multifamily
120 RFC Agawam Industrial Building Agawam MA 1001 Industrial
121 CIBC Tampa Multifamily Portfolio Temple Terrace FL 33617 Multifamily
122 RFC Park Place II Office Building Layton UT 84041 Office
123 MID The Sequoia Institute Fremont CA 94539 Industrial
124 MID Staples Big Rapids MI 49307 Retail
125 MID Brookwood Townhomes Blue Springs MO 64014 Multifamily
126 MID Staples Office Supply Store Mattoon IL 61938 Retail
127 CIBC Jefferson Pilot Financial Center Deerfield Beach FL 33442 Office
128 MID Eckerd Drug Store Arlington TX 76013 Retail
129 MID Staples Property Peru IL 61354 Retail
130 MID CVS Drugstore Greenfield IN 46140 Retail
131 CIBC Maple Building Newburgh NY 12550 Office
132 MID Woodward Avenue Office Building Bloomfield Hills MI 48304 Office
133 RFC Alameda Towne Centre El Paso TX 79907 Retail
134 CIBC Park Place Apartments Grand Forks ND 58203 Multifamily
135 CIBC 244-48 East 117th Street New York NY 10035 Multifamily
136 MID Prudential Office Building Salem OR 97302 Office
137 MID 1/2 Price Store Aurora CO 80011 Retail
138 MID Sunshine Square Shopping Center Philadelphia PA 19120 Retail
139 RFC Westfair Center Westport CT 6880 Retail
140 CIBC Bell Gardens Shopping Center Bell Gardens CA 90201 Retail
141 MID Staples Alpena MI 49707 Retail
142 CIBC Morgan Garden Apartments Liverpool (Clay Township) NY 13090 Multifamily
143 CIBC Colonial Garden Apartments Philadelphia PA 19144 Multifamily
144 MID 170 West Road Portsmouth NH 03801 Industrial
145 RFC Lamar Industrial Center Austin TX 78753 Industrial
146 MID Columbus Plaza Shopping Center Columbus NC 28722 Retail
147 RFC Lakeshore Village Office Complex Tempe AZ 85004 Office
148 MID The Lucent Technologies Building Dallas TX 75248 Office
149 MID Leonard Professional Building Malden MA 02148 Office
150 CIBC Cross River Mill Lakewood NJ 08701 Mixed Use
151 MID Steele's Market Windsor CO 80550 Retail
152 CIBC The Commonwealth Building Allentown PA 18101 Office
153 CIBC Gateway 2000 - Hobart Hobart IN 46410 Retail
154 MID Frolics Plaza Kansas City MO 64152 Retail
155 RFC Lorain Apartments Lorain OH 44052 Multifamily
156 RFC Opdyke Investments Auburn Hills MI 48326 Mixed Use
157 MID Sungard Financial Systems Office Property Hopkins MN 55343 Office
158 RFC 420 Clinton Avenue Brooklyn NY 11238 Multifamily
159 CIBC Village Shoppes of Paradise Beach Melbourne FL 32903 Retail
160 MID Tiscor Corporate Office Building Poway CA 92064 Office
161 MID Omnicare Building Robinson Township PA 15205 Industrial
162 CIBC Best Western Montgomery AL 36117 Hospitality
163 RFC Ironwood Apartments Phoenix AZ 85021 Multifamily
164 RFC Crossroads South Shopping Center Jonesboro GA 30236 Retail
165 MID West Wind Apartments Phase IV Millcreek PA 16505 Multifamily
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Loan Property Year Year
No. Seller Property Name(2) Sub-Type Units/NSF Built Renovated
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
111 CIBC Triangle Shopping Center Anchored 82,382 1957 1986
112 CIBC Northern Medical Offices Medical 28,310 1967 NAP
113 MID Bronco Apartments Garden 249 1974 1998
114 MID K-Mart Big Box 86,479 1990 1999
115 RFC Villa Eleni Garden 29 1991 NAP
116 MID Perkins Place & Fox Ridge (IV) Garden 32 1983 NAP
117 MID Barrington Hills Apartments (IV) Garden 33 1973 NAP
118 MID McDuffee Brook Place (IV) Garden 18 1986 NAP
119 MID Kearsarge Apartments (IV) Garden 12 1972 NAP
120 RFC Agawam Industrial Building Warehouse 114,832 1970 1999
121 CIBC Tampa Multifamily Portfolio Garden 125 1970/2 1997
122 RFC Park Place II Office Building Suburban 32,000 1998 NAP
123 MID The Sequoia Institute Light 31,463 1985 NAP
124 MID Staples Big Box 24,049 1999 NAP
125 MID Brookwood Townhomes Garden 76 1991 NAP
126 MID Staples Office Supply Store Big Box 24,049 1998 NAP
127 CIBC Jefferson Pilot Financial Center Suburban 27,592 1986 1998-1999
128 MID Eckerd Drug Store Anchored 10,908 1999 NAP
129 MID Staples Property Big Box 23,925 1998 NAP
130 MID CVS Drugstore Anchored 10,125 1999 NAP
131 CIBC Maple Building Suburban 53,657 1989 NAP
132 MID Woodward Avenue Office Building Suburban 22,820 1956 1989
133 RFC Alameda Towne Centre Shadow Anchored 35,312 1998 NAP
134 CIBC Park Place Apartments Garden 80 1971 & 1986 1996+
135 CIBC 244-48 East 117th Street Low-Rise 41 1950 1998
136 MID Prudential Office Building Suburban 26,576 1992 NAP
137 MID 1/2 Price Store Unanchored 55,800 1979 NAP
138 MID Sunshine Square Shopping Center Unanchored 32,088 1960 1994
139 RFC Westfair Center Unanchored 16,035 1952 1986-1991
140 CIBC Bell Gardens Shopping Center Shadow Anchored 18,149 1985 1998
141 MID Staples Big Box 24,049 1999 NAP
142 CIBC Morgan Garden Apartments Garden 110 1970 1990
143 CIBC Colonial Garden Apartments Garden 73 1950s 1999
144 MID 170 West Road Light 58,422 1985 NAP
145 RFC Lamar Industrial Center Light 69,935 1974 NAP
146 MID Columbus Plaza Shopping Center Anchored 48,565 1987 1998
147 RFC Lakeshore Village Office Complex Suburban 27,356 1973 1998
148 MID The Lucent Technologies Building Urban 19,864 1983 1999
149 MID Leonard Professional Building Suburban 27,630 1920 1985
150 CIBC Cross River Mill Suburban 43,949 1979-1980 1996
151 MID Steele's Market Anchored 32,845 1975 1994
152 CIBC The Commonwealth Building Suburban 28,097 1980 1988/1998
153 CIBC Gateway 2000 - Hobart Unanchored 8,015 1998 NAP
154 MID Frolics Plaza Unanchored 37,220 1978 NAP
155 RFC Lorain Apartments Garden 84 1965 1996
156 RFC Opdyke Investments Unanchored 18,680 1997 1999
157 MID Sungard Financial Systems Office Property Suburban 30,610 1980 NAP
158 RFC 420 Clinton Avenue Low-Rise 49 1930 1991
159 CIBC Village Shoppes of Paradise Beach Unanchored 31,550 1980 NAP
160 MID Tiscor Corporate Office Building Suburban 21,000 1998 NAP
161 MID Omnicare Building Warehouse 22,647 1988 1999
162 CIBC Best Western Limited Service 50 1996 NAP
163 RFC Ironwood Apartments Garden 95 1965 1996
164 RFC Crossroads South Shopping Center Shadow Anchored 16,500 1988 NAP
165 MID West Wind Apartments Phase IV Garden 26 1999 NAP
</TABLE>
II-17
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
PROPERTY INFORMATION
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Loan
No. Seller Property Name(2) Address
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
166 CIBC Chastain Pines Apartments 3228 Boulder Park Drive
167 MID 166 South River Road 166 S River Rd
168 CIBC Grayco Apartments 115 North Street
169 MID Reseda Retail Building 7126-40 Reseda Blvd
170 MID Mesa Engineering Systems, Inc. 5 Vanderbilt
171 MID Concord Garden Apartments 899 Concord Rd
172 RFC 233 Jamaica Avenue 233 Jamaica Avenue
173 MID Goffstown Village Apartments (V) 27-42 Maple Ave
174 MID Maple Leaf Apartments (V) 76-80 Terrace Rd
175 CIBC Gateway 2000 - Columbia 131 Harbison Boulevard
176 RFC Kenworthy Medical Building 9999 Kenworthy Street
177 MID Lakes Mini Storage 2949 Lake East Drive
178 MID Town & Country Apartments Phase I 3111 Old Sterlington Rd
179 MID Tucson East Apartments 8490 E Old Spanish Trail
180 RFC Pal Ex, Inc. 6829 Flintlock Road
181 RFC 312-332 East Rosecrans Avenue 312 &332 East Rosecrans Ave
182 MID Building 35 - Corporate Woods 9101 West 110th Street
183 RFC Art Museum Apartments 1624 Green St, 1709 Spring Garden St.
184 CIBC Gateway 2000 - Henderson 375 N. Stephanie Street, Unit 511
185 MID Helicomb International Plant 1402 S 69th E Ave
186 CIBC Gateway 2000 - Chattanooga 2001 Gunbarrel Road
187 MID U-Stor Facility 5570 Summer Avenue
188 MID 17-33 Elm Street 17-33 Elm St
189 RFC Montwood Village Shopping Center 11660 Montwood
190 RFC D Boys Office Building 8305 Ridge Avenue
191 MID U-Stor Facility 6900 East Raines Rd
192 MID 43 North Road 43 North Road
193 RFC Park Apartments 3615 Southwest 52nd Ave
194 MID The Champion Gardens Apartments 1802 W Samano St
195 MID 168 South River Road 168 S River Rd
196 RFC The Pines Business Park 26009 Budde Road
197 MID U-Stor Winchester II 4700 Winchester Rd
198 MID Knowledge Beginnings (VI) 4580 W Buckingham Rd
199 MID Knowledge Beginnings (VI) 1920 Walnut Plaza
200 CIBC 233, 235, 237 East 111th Street 233, 235, 237 East 111th Street
201 RFC Sunset Shopping Center 601-715 Sunset Street
202 MID Lauderhill Plaza 1406 N State Rd 7
203 RFC 14401 South San Pedro Street 14401 South San Pedro Street
204 RFC Woods Cross Self Storage 50 East Pacific Ave
205 MID Fresno Self Storage 2612 North Clovis Avenue
206 MID Crosstown Square Shopping Center 13628 -13660 Crosstown Blvd Nw
207 CIBC 112-116 East 103rd Street 112-116 East 103rd Street
208 MID Leon Trace Apartments 6812 Poss Road
209 RFC Southern Oaks Apartments 3424 Southern Oaks Boulevard
210 RFC Middletown Industrial 4004,4014 and 4104 Tytus Avenue
211 RFC 401-611 Braker Lane 401-611 Braker Lane
212 RFC Mandell Place 1614 Westheimer
213 MID The Allendale Village Apartments 6005 Allendale
214 RFC Roswell Point Shopping Center 11706 Alpharetta Highway
215 RFC Royal Apartments 2710 Menlo
216 RFC 402 - 406 Albee Square 402 - 406 Albee Square
217 RFC Mansfield Retail Center 900 North Walnut Creek
218 RFC 224 South 3rd Brooklyn 224 South Third Street
219 MID Circuit City Land 555 Maine Mall Rd
220 RFC Charles Garden Apartments 190 SE 12th Avenue
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Loan Property
No. Seller Property Name(2) City State Zip Code Type
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
166 CIBC Chastain Pines Apartments Atlanta GA 30311 Multifamily
167 MID 166 South River Road Bedford NH 03110 Office
168 CIBC Grayco Apartments Harrisburg PA 17101 Multifamily
169 MID Reseda Retail Building Reseda CA 91335 Retail
170 MID Mesa Engineering Systems, Inc. Irvine CA 92618 Industrial
171 MID Concord Garden Apartments Smyma GA 30080 Multifamily
172 RFC 233 Jamaica Avenue Brooklyn NY 11207 Multifamily
173 MID Goffstown Village Apartments (V) Goffstown NH 03045 Multifamily
174 MID Maple Leaf Apartments (V) Franklin NH 03235 Multifamily
175 CIBC Gateway 2000 - Columbia Columbia SC 29121 Retail
176 RFC Kenworthy Medical Building El Paso TX 79924 Office
177 MID Lakes Mini Storage Las Vegas NV 89128 Self Storage
178 MID Town & Country Apartments Phase I Monroe LA 71203 Multifamily
179 MID Tucson East Apartments Tucson AZ 85710 Multifamily
180 RFC Pal Ex, Inc. Houston TX 77040 Industrial
181 RFC 312-332 East Rosecrans Avenue Gardena CA 90248 Industrial
182 MID Building 35 - Corporate Woods Overland Park KS 66210 Office
183 RFC Art Museum Apartments Philadelphia PA 19130 Multifamily
184 CIBC Gateway 2000 - Henderson Henderson NV 89014 Retail
185 MID Helicomb International Plant Tulsa OK 74112 Industrial
186 CIBC Gateway 2000 - Chattanooga Chattanooga TN 37421 Retail
187 MID U-Stor Facility Memphis TN 38134 Self Storage
188 MID 17-33 Elm Street Westfield NJ 07090 Mixed Use
189 RFC Montwood Village Shopping Center El Paso TX 79936 Retail
190 RFC D Boys Office Building Philadelphia PA 19128 Office
191 MID U-Stor Facility Memphis TN 38115 Self Storage
192 MID 43 North Road East Windsor CT 06088 Industrial
193 RFC Park Apartments Pembroke Park Fl 33023 Multifamily
194 MID The Champion Gardens Apartments Edinburg TX 78539 Multifamily
195 MID 168 South River Road Bedford NH 03110 Office
196 RFC The Pines Business Park The Woodlands TX 77380 Industrial
197 MID U-Stor Winchester II Memphis TN 38118 Self Storage
198 MID Knowledge Beginnings (VI) Garland TX 75042 Office
199 MID Knowledge Beginnings (VI) Carrollton TX 75006 Office
200 CIBC 233, 235, 237 East 111th Street New York NY 10035 Multifamily
201 RFC Sunset Shopping Center Denton TX 76201 Retail
202 MID Lauderhill Plaza Lauderhill FL 33313 Retail
203 RFC 14401 South San Pedro Street Gardena CA 90248 Industrial
204 RFC Woods Cross Self Storage Salt Lake City UT 84054 Self Storage
205 MID Fresno Self Storage Fresno CA 93727 Self Storage
206 MID Crosstown Square Shopping Center Andover MN 55304 Retail
207 CIBC 112-116 East 103rd Street New York NY 10035 Multifamily
208 MID Leon Trace Apartments Leon Valley TX 78238 Multifamily
209 RFC Southern Oaks Apartments Dallas TX 75216 Multifamily
210 RFC Middletown Industrial Middletown OH 45042 Industrial
211 RFC 401-611 Braker Lane Austin TX 78753 Industrial
212 RFC Mandell Place Houston TX 77006 Retail
213 MID The Allendale Village Apartments Houston TX 77017 Multifamily
214 RFC Roswell Point Shopping Center Roswell GA 30076 Retail
215 RFC Royal Apartments Carson City NV 89701 Multifamily
216 RFC 402 - 406 Albee Square Brooklyn NY 11201 Multifamily
217 RFC Mansfield Retail Center Mansfield TX 76063 Retail
218 RFC 224 South 3rd Brooklyn Brooklyn NY 11211 Multifamily
219 MID Circuit City Land Scarborough ME 04106 Other
220 RFC Charles Garden Apartments Pompano Beach FL 33606 Multifamily
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Loan Property Year Year
No. Seller Property Name(2) Sub-Type Units/NSF Built Renovated
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
166 CIBC Chastain Pines Apartments Garden 79 1973 1998
167 MID 166 South River Road Suburban 23,150 1980 1997
168 CIBC Grayco Apartments Garden 104 1939 1980s
169 MID Reseda Retail Building Unanchored 16,000 1998 NAP
170 MID Mesa Engineering Systems, Inc. Flex 16,892 1985 1995
171 MID Concord Garden Apartments Garden 57 1968 1999
172 RFC 233 Jamaica Avenue Low-Rise 54 1963 NAP
173 MID Goffstown Village Apartments (V) Garden 48 1972 1986
174 MID Maple Leaf Apartments (V) Garden 36 1974 NAP
175 CIBC Gateway 2000 - Columbia Unanchored 8,000 1998 NAP
176 RFC Kenworthy Medical Building Medical 17,748 1996 NAP
177 MID Lakes Mini Storage Self Storage 40,259 1988 NAP
178 MID Town & Country Apartments Phase I Garden 100 1973 1991
179 MID Tucson East Apartments Garden 52 1983 1993
180 RFC Pal Ex, Inc. Flex 45,060 1981 1999
181 RFC 312-332 East Rosecrans Avenue Warehouse 86,460 1974 1998
182 MID Building 35 - Corporate Woods Suburban 19,722 1980 1998
183 RFC Art Museum Apartments Garden 30 1917 1987
184 CIBC Gateway 2000 - Henderson Unanchored 8,000 1998 NAP
185 MID Helicomb International Plant Light 80,582 1958 NAP
186 CIBC Gateway 2000 - Chattanooga Unanchored 8,000 1998 NAP
187 MID U-Stor Facility Self Storage 64,400 1995 NAP
188 MID 17-33 Elm Street Low-Rise 14,722 1927 1998
189 RFC Montwood Village Shopping Center Unanchored 18,925 1997 NAP
190 RFC D Boys Office Building Suburban 14,448 1996 1999
191 MID U-Stor Facility Self Storage 60,700 1996 NAP
192 MID 43 North Road Warehouse 40,216 1988 1998
193 RFC Park Apartments Garden 36 1984 NAP
194 MID The Champion Gardens Apartments Garden 81 1983 1998
195 MID 168 South River Road Suburban 18,779 1982 NAP
196 RFC The Pines Business Park Flex 21,900 1999 NAP
197 MID U-Stor Winchester II Self Storage 62,000 1996 NAP
198 MID Knowledge Beginnings (VI) Suburban 10,106 1985 NAP
199 MID Knowledge Beginnings (VI) Suburban 15,492 1985 NAP
200 CIBC 233, 235, 237 East 111th Street Low-Rise 48 1910 1998
201 RFC Sunset Shopping Center Unanchored 23,350 1971 NAP
202 MID Lauderhill Plaza Unanchored 20,078 1988 NAP
203 RFC 14401 South San Pedro Street Warehouse 68,546 1974 NAP
204 RFC Woods Cross Self Storage Self Storage 52,785 1997 NAP
205 MID Fresno Self Storage Self Storage 36,329 1973 1988
206 MID Crosstown Square Shopping Center Unanchored 12,276 1989 NAP
207 CIBC 112-116 East 103rd Street Low-Rise 30 1920 1998
208 MID Leon Trace Apartments Garden 72 1975 NAP
209 RFC Southern Oaks Apartments Garden 62 1958 1997
210 RFC Middletown Industrial Light 49,296 1956 1982
211 RFC 401-611 Braker Lane Light 30,845 1973 1998
212 RFC Mandell Place Unanchored 8,825 1936 1998
213 MID The Allendale Village Apartments Garden 96 1971 1997
214 RFC Roswell Point Shopping Center Unanchored 6,960 1999 NAP
215 RFC Royal Apartments Garden 43 1974 NAP
216 RFC 402 - 406 Albee Square Garden 40 1902 1991
217 RFC Mansfield Retail Center Shadow Anchored 7,893 1999 NAP
218 RFC 224 South 3rd Brooklyn Low-Rise 33 1910 1995
219 MID Circuit City Land Big Box 151,586 1995 NAP
220 RFC Charles Garden Apartments Garden 16 1970 1996
</TABLE>
II-18
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
PROPERTY INFORMATION
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Loan
No. Seller Property Name(2) Address
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
221 RFC Blockbuster Video 1235 Grand Avenue
222 RFC 16-10 Caffrey Avenue 16-10 Caffrey Avenue
223 RFC 650 E 182 St 650 East 182 St
224 RFC Temple Apartments 13641 Temple Avenue
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Loan Property
No. Seller Property Name(2) City State Zip Code Type
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
221 RFC Blockbuster Video Baldwin NY 11510 Retail
222 RFC 16-10 Caffrey Avenue Far Rockaway NY 11691 Multifamily
223 RFC 650 E 182 St Bronx NY 10459 Multifamily
224 RFC Temple Apartments La Puenta CA 91746 Multifamily
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Loan Property Year Year
No. Seller Property Name(2) Sub-Type Units/NSF Built Renovated
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
221 RFC Blockbuster Video Unanchored 6,200 1970 1994
222 RFC 16-10 Caffrey Avenue Garden 20 1962 NAP
223 RFC 650 E 182 St Low-Rise 26 1930 1997
224 RFC Temple Apartments Garden 10 1962 NAP
</TABLE>
II-19
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
PREPAYMENT AND SERVICING INFORMATION
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
Loan Lockout
No. Seller Property Name(2) Seasoning(9) Period DEF YM5 YM1 YM
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 MID Campus Apartments 23 47 66
2 CIBC 17 John Street 4 28 85
3 MID San Croix Apartments 26 35 78
4 CIBC 4343 Commerce Court (A) (I) 10 34 64
5 CIBC 1051 North Kirk Road (A) (I) 10 34 64
6 CIBC Narco River Business Center (A) 6 30 83
7 MID Ryder Integrated Logistics 6 36 80
8 CIBC Holiday Inn Rochester 3 27 86
9 MID Nevada Street Apartments 2 36 80
10 MID Camelot Apartments 5 59 54
11 MID Neurocrine Biosciences 20 47 66
12 MID CSC Office Building 5 36 79
13 MID Kinetic Systems Building (B) 6 35 81
14 MID Globix Corporation Building (B) 6 35 81
15 CIBC Summit Square 10 34 80
16 CIBC Bed, Bath & Beyond 9 33 80
17 MID The Quidel Building 5 35 81
18 MID Candletree Apartments 6 35 78
19 CIBC Latham Crossing & Crossroads Plaza 15 39 74
20 RFC Hampton Inn & Suites (II) 2 26 90
21 RFC Big Bowl/Wildfire (II) 2 26 90
22 MID Backlick Center South 20 59 57
23 CIBC Willow Run Business Center II 11 35 78
24 MID East Side Plaza 22 47 66
25 RFC Ritchie Highway Shopping Center 2 26 90
26 CIBC Lincoln Park (C) 3 27 86
27 CIBC Pompano Merchandise Mart (C) 3 27 86
28 RFC Big Kmart Shopping Center 7 31 85
29 RFC Marston Park Plaza 4 28 51
30 CIBC Union Center 5 29 84
31 MID La Jolla Corporate Center 6 35 81
32 CIBC Southlake Festival Shopping Center 5 29 84
33 RFC HomeBase-Phoenix, AZ 0 24 92
34 MID Hyatt Suites Hotel 5 35 81
35 RFC Holiday Square Shopping Center 5 29 87
36 RFC Stagecoach Plaza 1 25 91
37 RFC Today's Man Oxford Valley 2 26 90
38 CIBC Parkway Corporate Plaza 138 10 34 79
39 MID Lexington Commons Apartments 20 59 57
40 MID Regal Cinema 5 36 38
41 MID One Airport Center Office Building 25 23 90
42 MID San Pablo Apartments 25 59 54
43 MID Oaks of Ashford Point Apartments 4 35 81
44 CIBC Comfort Inn - Philadelphia Airport 5 29 84
45 MID Grouse Run Apartments 23 59 54
46 RFC Avanex Building 2 26 90
47 MID The Regents Cove Apartments 8 35 81
48 CIBC 156 10-40 Cross Bay Boulevard 3 27 86
49 MID Freehold Executive Center 3 36 80
50 MID K-Mart (D) 3 36 200
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
Prepayment Code(10)
Loan
No. Seller Property Name(2) 5 4.5 4 3.5 3 2.5 2 1 Open
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 MID Campus Apartments 7
2 CIBC 17 John Street 7
3 MID San Croix Apartments 7
4 CIBC 4343 Commerce Court (A) (I) 7
5 CIBC 1051 North Kirk Road (A) (I) 7
6 CIBC Narco River Business Center (A) 7
7 MID Ryder Integrated Logistics 4
8 CIBC Holiday Inn Rochester 7
9 MID Nevada Street Apartments 4
10 MID Camelot Apartments 7
11 MID Neurocrine Biosciences 7
12 MID CSC Office Building 5
13 MID Kinetic Systems Building (B) 4
14 MID Globix Corporation Building (B) 4
15 CIBC Summit Square 7
16 CIBC Bed, Bath & Beyond 7
17 MID The Quidel Building 4
18 MID Candletree Apartments 7
19 CIBC Latham Crossing & Crossroads Plaza 7
20 RFC Hampton Inn & Suites (II) 4
21 RFC Big Bowl/Wildfire (II) 4
22 MID Backlick Center South 4
23 CIBC Willow Run Business Center II 7
24 MID East Side Plaza 7
25 RFC Ritchie Highway Shopping Center 4
26 CIBC Lincoln Park (C) 7
27 CIBC Pompano Merchandise Mart (C) 7
28 RFC Big Kmart Shopping Center 4
29 RFC Marston Park Plaza 5
30 CIBC Union Center 7
31 MID La Jolla Corporate Center 4
32 CIBC Southlake Festival Shopping Center 7
33 RFC HomeBase-Phoenix, AZ 4
34 MID Hyatt Suites Hotel 4
35 RFC Holiday Square Shopping Center 4
36 RFC Stagecoach Plaza 4
37 RFC Today's Man Oxford Valley 4
38 CIBC Parkway Corporate Plaza 138 7
39 MID Lexington Commons Apartments 4
40 MID Regal Cinema 4
41 MID One Airport Center Office Building 7
42 MID San Pablo Apartments 7
43 MID Oaks of Ashford Point Apartments 4
44 CIBC Comfort Inn - Philadelphia Airport 7
45 MID Grouse Run Apartments 7
46 RFC Avanex Building 4
47 MID The Regents Cove Apartments 4
48 CIBC 156 10-40 Cross Bay Boulevard 7
49 MID Freehold Executive Center 4
50 MID K-Mart (D) 4
<CAPTION>
------------------------------------------------------------------------------------------------------------
Total
Loan Admin Cost YM
No. Seller Property Name(2) (bps) (11) Code (22)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 MID Campus Apartments 8.78 C
2 CIBC 17 John Street 8.78 NAP
3 MID San Croix Apartments 11.03 A
4 CIBC 4343 Commerce Court (A) (I) 8.78 NAP
5 CIBC 1051 North Kirk Road (A) (I) 8.78 NAP
6 CIBC Narco River Business Center (A) 8.78 NAP
7 MID Ryder Integrated Logistics 8.78 NAP
8 CIBC Holiday Inn Rochester 8.78 NAP
9 MID Nevada Street Apartments 11.78 NAP
10 MID Camelot Apartments 8.78 A
11 MID Neurocrine Biosciences 13.86 A
12 MID CSC Office Building 11.78 NAP
13 MID Kinetic Systems Building (B) 8.78 NAP
14 MID Globix Corporation Building (B) 8.78 NAP
15 CIBC Summit Square 8.78 NAP
16 CIBC Bed, Bath & Beyond 8.78 NAP
17 MID The Quidel Building 8.78 NAP
18 MID Candletree Apartments 18.78 A
19 CIBC Latham Crossing & Crossroads Plaza 8.78 NAP
20 RFC Hampton Inn & Suites (II) 12.28 NAP
21 RFC Big Bowl/Wildfire (II) 12.28 NAP
22 MID Backlick Center South 13.07 A
23 CIBC Willow Run Business Center II 8.78 NAP
24 MID East Side Plaza 12.08 C
25 RFC Ritchie Highway Shopping Center 8.78 NAP
26 CIBC Lincoln Park (C) 8.78 NAP
27 CIBC Pompano Merchandise Mart (C) 8.78 NAP
28 RFC Big Kmart Shopping Center 8.78 NAP
29 RFC Marston Park Plaza 8.78 NAP
30 CIBC Union Center 8.78 NAP
31 MID La Jolla Corporate Center 15.78 NAP
32 CIBC Southlake Festival Shopping Center 8.78 NAP
33 RFC HomeBase-Phoenix, AZ 8.78 NAP
34 MID Hyatt Suites Hotel 13.78 NAP
35 RFC Holiday Square Shopping Center 8.78 NAP
36 RFC Stagecoach Plaza 8.78 NAP
37 RFC Today's Man Oxford Valley 8.78 NAP
38 CIBC Parkway Corporate Plaza 138 8.78 NAP
39 MID Lexington Commons Apartments 8.78 A
40 MID Regal Cinema 8.78 NAP
41 MID One Airport Center Office Building 8.78 A
42 MID San Pablo Apartments 8.78 A
43 MID Oaks of Ashford Point Apartments 18.78 A
44 CIBC Comfort Inn - Philadelphia Airport 8.78 NAP
45 MID Grouse Run Apartments 8.78 A
46 RFC Avanex Building 8.78 NAP
47 MID The Regents Cove Apartments 8.78 A
48 CIBC 156 10-40 Cross Bay Boulevard 8.78 NAP
49 MID Freehold Executive Center 8.78 NAP
50 MID K-Mart (D) 18.78 NAP
</TABLE>
II-20
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
PREPAYMENT AND SERVICING INFORMATION
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
Loan Lockout
No. Seller Property Name(2) Seasoning(9) Period DEF YM5 YM1 YM
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
51 MID K-Mart (D) 3 36 200
52 MID Seton Chase Apartments 6 35 81
53 CIBC Tel Huron Shopping Center 25 47 66
54 MID Quality Inn Sports Complex 20 47 126
55 MID Ramada Limited 20 59 61
56 MID Walker's Station Apartments 19 59 57
57 MID Saturn Electronics & Engineering 3 36 80
58 MID Plaza Pointe 23 35 81
59 RFC GAI-Tronics Corporation 5 29 87
60 CIBC 2600 Building 6 30 83
61 CIBC Hoyt's Cinemas 3 27 86
62 CIBC Advance Auto Parts - York, PA (III) 10 34 79
63 CIBC Advance Auto Parts - Harrisburg, PA (Swatara) (III) 10 34 79
64 CIBC Advance Auto Parts - Steelton, PA (III) 10 34 79
65 CIBC Advance Auto Parts - Celina, OH (III) 10 34 79
66 CIBC Advance Auto Parts - Youngstown, OH (III) 10 34 79
67 CIBC Advance Auto Parts - Warren, OH (III) 10 34 79
68 CIBC Advance Auto Parts - Atlanta, GA (III) 10 34 79
69 CIBC Advance Auto Parts - Penn Hills, PA (III) 10 34 79
70 CIBC Advance Auto Parts - Pontotoc, MS (III) 10 34 79
71 MID Hampton Inn Maple Grove 20 89 87
72 RFC Maple Tree Mall 5 29 87
73 MID The Sterling Falls Apartments 20 35 81
74 RFC Stelton Shopping Center 12 36 80
75 CIBC Parkview Towers 6 30 84
76 CIBC Unilab Building 5 29 84
77 MID Cambridge Apartments 19 59 57
78 MID Tempe Plaza 5 35 81
79 RFC Byram Self-Storage 3 27 149
80 MID Sixth Street Building 20 59 54
81 MID Lake Pine Apartments 21 59 57
82 RFC Las Lomas Apartments 6 30 146
83 RFC Pinellas Industrial Center 4 28 88
84 CIBC Mount Joy Square 9 33 80
85 MID Town & Country Apartments (Phase II) 22 59 54
86 MID Bartles Corner Business Park 5 36 80
87 RFC Jeffery Manor Shopping Center 3 27 89
88 MID Eckerd's Drug Store 8 36 77
89 MID Clayton Apartments and Duplexes 22 59 54
90 MID Regal Cinemas 12-Screen Movie Theatre 3 36 92
91 RFC 1506 N. Lee Trevino 4 28 208
92 MID Eckerd Pharmacy 8 36 77
93 MID Kroger Grocery Store 19 59 57
94 CIBC Datatec Warehouse 8 32 81
95 MID Legacy Business Park Medical Office 8 (E) 23 59 54
96 MID Legacy Business Park Medical Office - 4 (E) 23 59 54
97 MID East Los Angeles Retail Center 21 59 54
98 MID Acadia Park Apartments 22 59 54
99 MID Eckerd's Drug Store 8 36 77
100 MID Dana Innovations 5 35 81
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
Prepayment Code(10)
Loan
No. Seller Property Name(2) 5 4.5 4 3.5 3 2.5 2 1 Open
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
51 MID K-Mart (D) 4
52 MID Seton Chase Apartments 4
53 CIBC Tel Huron Shopping Center 7
54 MID Quality Inn Sports Complex 7
55 MID Ramada Limited NAP
56 MID Walker's Station Apartments 4
57 MID Saturn Electronics & Engineering 4
58 MID Plaza Pointe 4
59 RFC GAI-Tronics Corporation 4
60 CIBC 2600 Building 7
61 CIBC Hoyt's Cinemas 7
62 CIBC Advance Auto Parts - York, PA (III) 7
63 CIBC Advance Auto Parts - Harrisburg, PA (Swatara) (III) 7
64 CIBC Advance Auto Parts - Steelton, PA (III) 7
65 CIBC Advance Auto Parts - Celina, OH (III) 7
66 CIBC Advance Auto Parts - Youngstown, OH (III) 7
67 CIBC Advance Auto Parts - Warren, OH (III) 7
68 CIBC Advance Auto Parts - Atlanta, GA (III) 7
69 CIBC Advance Auto Parts - Penn Hills, PA (III) 7
70 CIBC Advance Auto Parts - Pontotoc, MS (III) 7
71 MID Hampton Inn Maple Grove 4
72 RFC Maple Tree Mall 4
73 MID The Sterling Falls Apartments 4
74 RFC Stelton Shopping Center 4
75 CIBC Parkview Towers 7
76 CIBC Unilab Building 7
77 MID Cambridge Apartments 4
78 MID Tempe Plaza 4
79 RFC Byram Self-Storage 4
80 MID Sixth Street Building 7
81 MID Lake Pine Apartments 4
82 RFC Las Lomas Apartments 4
83 RFC Pinellas Industrial Center 4
84 CIBC Mount Joy Square 7
85 MID Town & Country Apartments (Phase II) 7
86 MID Bartles Corner Business Park 4
87 RFC Jeffery Manor Shopping Center 4
88 MID Eckerd's Drug Store 7
89 MID Clayton Apartments and Duplexes 7
90 MID Regal Cinemas 12-Screen Movie Theatre 4
91 RFC 1506 N. Lee Trevino 4
92 MID Eckerd Pharmacy 7
93 MID Kroger Grocery Store 4
94 CIBC Datatec Warehouse 7
95 MID Legacy Business Park Medical Office 8 (E) 7
96 MID Legacy Business Park Medical Office - 4 (E) 7
97 MID East Los Angeles Retail Center 7
98 MID Acadia Park Apartments 7
99 MID Eckerd's Drug Store 7
100 MID Dana Innovations 4
<CAPTION>
------------------------------------------------------------------------------------------------------------
Total
Loan Admin Cost YM
No. Seller Property Name(2) (bps) (11) Code (22)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
51 MID K-Mart (D) 18.78 NAP
52 MID Seton Chase Apartments 8.78 A
53 CIBC Tel Huron Shopping Center 8.78 NAP
54 MID Quality Inn Sports Complex 8.78 A
55 MID Ramada Limited 8.78 NAP
56 MID Walker's Station Apartments 10.78 A
57 MID Saturn Electronics & Engineering 11.78 NAP
58 MID Plaza Pointe 17.96 A
59 RFC GAI-Tronics Corporation 8.78 NAP
60 CIBC 2600 Building 8.78 NAP
61 CIBC Hoyt's Cinemas 8.78 NAP
62 CIBC Advance Auto Parts - York, PA (III) 8.78 NAP
63 CIBC Advance Auto Parts - Harrisburg, PA (Swatara) (III) 8.78 NAP
64 CIBC Advance Auto Parts - Steelton, PA (III) 8.78 NAP
65 CIBC Advance Auto Parts - Celina, OH (III) 8.78 NAP
66 CIBC Advance Auto Parts - Youngstown, OH (III) 8.78 NAP
67 CIBC Advance Auto Parts - Warren, OH (III) 8.78 NAP
68 CIBC Advance Auto Parts - Atlanta, GA (III) 8.78 NAP
69 CIBC Advance Auto Parts - Penn Hills, PA (III) 8.78 NAP
70 CIBC Advance Auto Parts - Pontotoc, MS (III) 8.78 NAP
71 MID Hampton Inn Maple Grove 18.78 A
72 RFC Maple Tree Mall 8.78 NAP
73 MID The Sterling Falls Apartments 18.78 A
74 RFC Stelton Shopping Center 8.78 NAP
75 CIBC Parkview Towers 8.78 NAP
76 CIBC Unilab Building 8.78 NAP
77 MID Cambridge Apartments 8.78 A
78 MID Tempe Plaza 18.78 NAP
79 RFC Byram Self-Storage 8.78 NAP
80 MID Sixth Street Building 8.78 A
81 MID Lake Pine Apartments 8.78 A
82 RFC Las Lomas Apartments 8.78 NAP
83 RFC Pinellas Industrial Center 8.78 NAP
84 CIBC Mount Joy Square 8.78 NAP
85 MID Town & Country Apartments (Phase II) 8.78 A
86 MID Bartles Corner Business Park 8.78 NAP
87 RFC Jeffery Manor Shopping Center 8.78 NAP
88 MID Eckerd's Drug Store 8.78 NAP
89 MID Clayton Apartments and Duplexes 8.78 A
90 MID Regal Cinemas 12-Screen Movie Theatre 16.78 NAP
91 RFC 1506 N. Lee Trevino 9.78 NAP
92 MID Eckerd Pharmacy 8.78 NAP
93 MID Kroger Grocery Store 8.78 A
94 CIBC Datatec Warehouse 8.78 NAP
95 MID Legacy Business Park Medical Office 8 (E) 13.78 A
96 MID Legacy Business Park Medical Office - 4 (E) 13.78 A
97 MID East Los Angeles Retail Center 18.78 A
98 MID Acadia Park Apartments 8.78 A
99 MID Eckerd's Drug Store 8.78 NAP
100 MID Dana Innovations 18.78 NAP
</TABLE>
11-21
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
PREPAYMENT AND SERVICING INFORMATION
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
Loan Lockout
No. Seller Property Name(2) Seasoning(9) Period DEF YM5 YM1 YM
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
101 MID Eckerd's Drug Store 8 36 77
102 RFC Oregon Court (F) 5 29 147
103 RFC Oregon Arms (F) 5 29 147
104 MID Eckerd Drugs 8 36 80
105 CIBC Dicks Clothing and Sporting Goods 7 31 82
106 CIBC Sugarland Shopping Center 10 34 79
107 MID Eckerd Drug Store 5 36 80
108 RFC Bassett Furniture Store 3 27 89
109 CIBC Oak Leaf West 11 35 78
110 CIBC 2000 White Elks Springs Court 4 28 85
111 CIBC Triangle Shopping Center 5 29 84
112 CIBC Northern Medical Offices 11 35 78
113 MID Bronco Apartments 21 47 66
114 MID K-Mart 5 35 201
115 RFC Villa Eleni 2 26 90
116 MID Perkins Place & Fox Ridge (IV) 3 36 77
117 MID Barrington Hills Apartments (IV) 3 36 77
118 MID McDuffee Brook Place (IV) 3 36 77
119 MID Kearsarge Apartments (IV) 3 36 77
120 RFC Agawam Industrial Building 3 27 89
121 CIBC Tampa Multifamily Portfolio 5 29 84
122 RFC Park Place II Office Building 4 28 88
123 MID The Sequoia Institute 5 35 81
124 MID Staples 6 36 80
125 MID Brookwood Townhomes 4 36 56
126 MID Staples Office Supply Store 9 36 80
127 CIBC Jefferson Pilot Financial Center 5 29 84
128 MID Eckerd Drug Store 6 36 80
129 MID Staples Property 9 36 80
130 MID CVS Drugstore 7 36 200
131 CIBC Maple Building 8 32 81
132 MID Woodward Avenue Office Building 2 36 80
133 RFC Alameda Towne Centre 3 27 209
134 CIBC Park Place Apartments 9 33 80
135 CIBC 244-48 East 117th Street 11 35 78
136 MID Prudential Office Building 5 59 54
137 MID 1/2 Price Store 8 35 81
138 MID Sunshine Square Shopping Center 20 47 66
139 RFC Westfair Center 3 27 89
140 CIBC Bell Gardens Shopping Center 9 33 80
141 MID Staples 7 36 80
142 CIBC Morgan Garden Apartments 4 28 85
143 CIBC Colonial Garden Apartments 5 29 84
144 MID 170 West Road 6 36 80
145 RFC Lamar Industrial Center 4 28 88
146 MID Columbus Plaza Shopping Center 7 36 80
147 RFC Lakeshore Village Office Complex 5 29 87
148 MID The Lucent Technologies Building 4 36 80
149 MID Leonard Professional Building 5 36 80
150 CIBC Cross River Mill 9 33 80
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
Prepayment Code(10)
Loan
No. Seller Property Name(2) 5 4.5 4 3.5 3 2.5 2 1 Open
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
101 MID Eckerd's Drug Store 7
102 RFC Oregon Court (F) 4
103 RFC Oregon Arms (F) 4
104 MID Eckerd Drugs 4
105 CIBC Dicks Clothing and Sporting Goods 7
106 CIBC Sugarland Shopping Center 7
107 MID Eckerd Drug Store 4
108 RFC Bassett Furniture Store 4
109 CIBC Oak Leaf West 7
110 CIBC 2000 White Elks Springs Court 7
111 CIBC Triangle Shopping Center 7
112 CIBC Northern Medical Offices 7
113 MID Bronco Apartments 7
114 MID K-Mart 4
115 RFC Villa Eleni 4
116 MID Perkins Place & Fox Ridge (IV) 7
117 MID Barrington Hills Apartments (IV) 7
118 MID McDuffee Brook Place (IV) 7
119 MID Kearsarge Apartments (IV) 7
120 RFC Agawam Industrial Building 4
121 CIBC Tampa Multifamily Portfolio 7
122 RFC Park Place II Office Building 4
123 MID The Sequoia Institute 4
124 MID Staples 4
125 MID Brookwood Townhomes 4
126 MID Staples Office Supply Store 4
127 CIBC Jefferson Pilot Financial Center 7
128 MID Eckerd Drug Store 4
129 MID Staples Property 4
130 MID CVS Drugstore 4
131 CIBC Maple Building 7
132 MID Woodward Avenue Office Building 4
133 RFC Alameda Towne Centre 4
134 CIBC Park Place Apartments 7
135 CIBC 244-48 East 117th Street 7
136 MID Prudential Office Building 7
137 MID 1/2 Price Store 4
138 MID Sunshine Square Shopping Center 7
139 RFC Westfair Center 4
140 CIBC Bell Gardens Shopping Center 7
141 MID Staples 4
142 CIBC Morgan Garden Apartments 7
143 CIBC Colonial Garden Apartments 7
144 MID 170 West Road 4
145 RFC Lamar Industrial Center 4
146 MID Columbus Plaza Shopping Center 4
147 RFC Lakeshore Village Office Complex 4
148 MID The Lucent Technologies Building 4
149 MID Leonard Professional Building 4
150 CIBC Cross River Mill 7
<CAPTION>
------------------------------------------------------------------------------------------------------------
Total
Loan Admin Cost YM
No. Seller Property Name(2) (bps) (11) Code (22)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
101 MID Eckerd's Drug Store 8.78 NAP
102 RFC Oregon Court (F) 8.78 NAP
103 RFC Oregon Arms (F) 8.78 NAP
104 MID Eckerd Drugs 8.78 NAP
105 CIBC Dicks Clothing and Sporting Goods 8.78 NAP
106 CIBC Sugarland Shopping Center 8.78 NAP
107 MID Eckerd Drug Store 8.78 NAP
108 RFC Bassett Furniture Store 11.28 NAP
109 CIBC Oak Leaf West 8.78 NAP
110 CIBC 2000 White Elks Springs Court 8.78 NAP
111 CIBC Triangle Shopping Center 8.78 NAP
112 CIBC Northern Medical Offices 8.78 NAP
113 MID Bronco Apartments 18.78 A
114 MID K-Mart 18.78 NAP
115 RFC Villa Eleni 8.78 NAP
116 MID Perkins Place & Fox Ridge (IV) 18.78 NAP
117 MID Barrington Hills Apartments (IV) 18.78 NAP
118 MID McDuffee Brook Place (IV) 18.78 NAP
119 MID Kearsarge Apartments (IV) 18.78 NAP
120 RFC Agawam Industrial Building 11.28 NAP
121 CIBC Tampa Multifamily Portfolio 8.78 NAP
122 RFC Park Place II Office Building 8.78 NAP
123 MID The Sequoia Institute 18.78 NAP
124 MID Staples 8.78 NAP
125 MID Brookwood Townhomes 8.78 NAP
126 MID Staples Office Supply Store 8.78 NAP
127 CIBC Jefferson Pilot Financial Center 8.78 NAP
128 MID Eckerd Drug Store 18.78 NAP
129 MID Staples Property 8.78 NAP
130 MID CVS Drugstore 8.78 NAP
131 CIBC Maple Building 8.78 NAP
132 MID Woodward Avenue Office Building 8.78 NAP
133 RFC Alameda Towne Centre 11.28 NAP
134 CIBC Park Place Apartments 8.78 NAP
135 CIBC 244-48 East 117th Street 8.78 NAP
136 MID Prudential Office Building 8.78 A
137 MID 1/2 Price Store 8.78 NAP
138 MID Sunshine Square Shopping Center 8.78 D
139 RFC Westfair Center 8.78 NAP
140 CIBC Bell Gardens Shopping Center 8.78 NAP
141 MID Staples 8.78 NAP
142 CIBC Morgan Garden Apartments 8.78 NAP
143 CIBC Colonial Garden Apartments 8.78 NAP
144 MID 170 West Road 18.78 NAP
145 RFC Lamar Industrial Center 11.28 NAP
146 MID Columbus Plaza Shopping Center 8.78 NAP
147 RFC Lakeshore Village Office Complex 8.78 NAP
148 MID The Lucent Technologies Building 8.78 NAP
149 MID Leonard Professional Building 18.78 NAP
150 CIBC Cross River Mill 8.78 NAP
</TABLE>
11-22
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
PREPAYMENT AND SERVICING INFORMATION
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
Loan Lockout
No. Seller Property Name(2) Seasoning(9) Period DEF YM5 YM1 YM
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
151 MID Steele's Market 5 59 57
152 CIBC The Commonwealth Building 9 33 80
153 CIBC Gateway 2000 - Hobart 11 35 78
154 MID Frolics Plaza 3 36 80
155 RFC Lorain Apartments 5 29 87
156 RFC Opdyke Investments 3 27 89
157 MID Sungard Financial Systems Office Property 9 35 81
158 RFC 420 Clinton Avenue 20 47 67
159 CIBC Village Shoppes of Paradise Beach 11 35 78
160 MID Tiscor Corporate Office Building 19 59 57
161 MID Omnicare Building 7 36 80
162 CIBC Best Western 3 27 86
163 RFC Ironwood Apartments 7 48 65
164 RFC Crossroads South Shopping Center 3 27 89
165 MID West Wind Apartments Phase IV 7 36 80
166 CIBC Chastain Pines Apartments 9 33 80
167 MID 166 South River Road 19 59 57
168 CIBC Grayco Apartments 5 29 84
169 MID Reseda Retail Building 21 59 57
170 MID Mesa Engineering Systems, Inc. 19 59 57
171 MID Concord Garden Apartments 4 36 80
172 RFC 233 Jamaica Avenue 20 47 67
173 MID Goffstown Village Apartments (V) 22 59 54
174 MID Maple Leaf Apartments (V) 22 59 54
175 CIBC Gateway 2000 - Columbia 11 35 78
176 RFC Kenworthy Medical Building 3 27 209
177 MID Lakes Mini Storage 6 59 54
178 MID Town & Country Apartments Phase I 22 59 54
179 MID Tucson East Apartments 19 59 57
180 RFC Pal Ex, Inc. 4 28 88
181 RFC 312-332 East Rosecrans Avenue 5 48 67
182 MID Building 35 - Corporate Woods 9 35 81
183 RFC Art Museum Apartments 2 26 90
184 CIBC Gateway 2000 - Henderson 11 35 78
185 MID Helicomb International Plant 19 47 66
186 CIBC Gateway 2000 - Chattanooga 11 35 78
187 MID U-Stor Facility 21 119 114
188 MID 17-33 Elm Street 3 36 80
189 RFC Montwood Village Shopping Center 3 27 209
190 RFC D Boys Office Building 2 26 90
191 MID U-Stor Facility 21 119 114
192 MID 43 North Road 19 59 57
193 RFC Park Apartments 4 28 88
194 MID The Champion Gardens Apartments 6 36 140
195 MID 168 South River Road 19 59 57
196 RFC The Pines Business Park 5 29 87
197 MID U-Stor Winchester II 21 119 114
198 MID Knowledge Beginnings (VI) 3 36 80
199 MID Knowledge Beginnings (VI) 3 36 80
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
Prepayment Code(10)
Loan
No. Seller Property Name(2) 5 4.5 4 3.5 3 2.5 2 1 Open
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
151 MID Steele's Market 4
152 CIBC The Commonwealth Building 7
153 CIBC Gateway 2000 - Hobart 7
154 MID Frolics Plaza 4
155 RFC Lorain Apartments 4
156 RFC Opdyke Investments 4
157 MID Sungard Financial Systems Office Property 4
158 RFC 420 Clinton Avenue 6
159 CIBC Village Shoppes of Paradise Beach 7
160 MID Tiscor Corporate Office Building 4
161 MID Omnicare Building 4
162 CIBC Best Western 7
163 RFC Ironwood Apartments 7
164 RFC Crossroads South Shopping Center 4
165 MID West Wind Apartments Phase IV 4
166 CIBC Chastain Pines Apartments 7
167 MID 166 South River Road 4
168 CIBC Grayco Apartments 7
169 MID Reseda Retail Building 4
170 MID Mesa Engineering Systems, Inc. 4
171 MID Concord Garden Apartments 4
172 RFC 233 Jamaica Avenue 6
173 MID Goffstown Village Apartments (V) 7
174 MID Maple Leaf Apartments (V) 7
175 CIBC Gateway 2000 - Columbia 7
176 RFC Kenworthy Medical Building 4
177 MID Lakes Mini Storage 7
178 MID Town & Country Apartments Phase I 7
179 MID Tucson East Apartments 4
180 RFC Pal Ex, Inc. 4
181 RFC 312-332 East Rosecrans Avenue 5
182 MID Building 35 - Corporate Woods 4
183 RFC Art Museum Apartments 4
184 CIBC Gateway 2000 - Henderson 7
185 MID Helicomb International Plant 7
186 CIBC Gateway 2000 - Chattanooga 7
187 MID U-Stor Facility 7
188 MID 17-33 Elm Street 4
189 RFC Montwood Village Shopping Center 4
190 RFC D Boys Office Building 4
191 MID U-Stor Facility 7
192 MID 43 North Road 4
193 RFC Park Apartments 4
194 MID The Champion Gardens Apartments 4
195 MID 168 South River Road 4
196 RFC The Pines Business Park 4
197 MID U-Stor Winchester II 7
198 MID Knowledge Beginnings (VI) 4
199 MID Knowledge Beginnings (VI) 4
<CAPTION>
------------------------------------------------------------------------------------------------------------
Total
Loan Admin Cost YM
No. Seller Property Name(2) (bps) (11) Code (22)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
151 MID Steele's Market 8.78 A
152 CIBC The Commonwealth Building 8.78 NAP
153 CIBC Gateway 2000 - Hobart 8.78 NAP
154 MID Frolics Plaza 8.78 NAP
155 RFC Lorain Apartments 8.78 NAP
156 RFC Opdyke Investments 8.78 NAP
157 MID Sungard Financial Systems Office Property 18.78 NAP
158 RFC 420 Clinton Avenue 8.78 B
159 CIBC Village Shoppes of Paradise Beach 8.78 NAP
160 MID Tiscor Corporate Office Building 8.78 A
161 MID Omnicare Building 8.78 NAP
162 CIBC Best Western 8.78 NAP
163 RFC Ironwood Apartments 8.78 B
164 RFC Crossroads South Shopping Center 8.78 NAP
165 MID West Wind Apartments Phase IV 8.78 NAP
166 CIBC Chastain Pines Apartments 8.78 NAP
167 MID 166 South River Road 8.78 A
168 CIBC Grayco Apartments 8.78 NAP
169 MID Reseda Retail Building 8.78 A
170 MID Mesa Engineering Systems, Inc. 8.78 A
171 MID Concord Garden Apartments 8.78 NAP
172 RFC 233 Jamaica Avenue 8.78 B
173 MID Goffstown Village Apartments (V) 8.78 A
174 MID Maple Leaf Apartments (V) 8.78 A
175 CIBC Gateway 2000 - Columbia 8.78 NAP
176 RFC Kenworthy Medical Building 11.28 NAP
177 MID Lakes Mini Storage 18.78 A
178 MID Town & Country Apartments Phase I 8.78 A
179 MID Tucson East Apartments 16.78 A
180 RFC Pal Ex, Inc. 11.28 NAP
181 RFC 312-332 East Rosecrans Avenue 8.78 B
182 MID Building 35 - Corporate Woods 8.78 NAP
183 RFC Art Museum Apartments 8.78 NAP
184 CIBC Gateway 2000 - Henderson 8.78 NAP
185 MID Helicomb International Plant 8.78 D
186 CIBC Gateway 2000 - Chattanooga 8.78 NAP
187 MID U-Stor Facility 8.78 A
188 MID 17-33 Elm Street 8.78 NAP
189 RFC Montwood Village Shopping Center 11.28 NAP
190 RFC D Boys Office Building 8.78 NAP
191 MID U-Stor Facility 8.78 A
192 MID 43 North Road 8.78 C
193 RFC Park Apartments 8.78 NAP
194 MID The Champion Gardens Apartments 8.78 NAP
195 MID 168 South River Road 8.78 A
196 RFC The Pines Business Park 8.78 NAP
197 MID U-Stor Winchester II 8.78 A
198 MID Knowledge Beginnings (VI) 8.78 NAP
199 MID Knowledge Beginnings (VI) 8.78 NAP
</TABLE>
II-23
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
PREPAYMENT AND SERVICING INFORMATION
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
Loan Lockout
No. Seller Property Name(2) Seasoning(9) Period DEF YM5 YM1 YM
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
200 CIBC 233, 235, 237 East 111th Street 11 35 78
201 RFC Sunset Shopping Center 3 27 89
202 MID Lauderhill Plaza 19 59 57
203 RFC 14401 South San Pedro Street 5 48 67
204 RFC Woods Cross Self Storage 3 27 89
205 MID Fresno Self Storage 20 59 57
206 MID Crosstown Square Shopping Center 9 35 81
207 CIBC 112-116 East 103rd Street 11 35 78
208 MID Leon Trace Apartments 21 47 66
209 RFC Southern Oaks Apartments 27 119 55
210 RFC Middletown Industrial 3 27 89
211 RFC 401-611 Braker Lane 1 25 91
212 RFC Mandell Place 2 48
213 MID The Allendale Village Apartments 19 119 117
214 RFC Roswell Point Shopping Center 3 27 89
215 RFC Royal Apartments 11 48 65
216 RFC 402 - 406 Albee Square 20 47 66
217 RFC Mansfield Retail Center 4 28 88
218 RFC 224 South 3rd Brooklyn 8 48 65
219 MID Circuit City Land 7 36 80
220 RFC Charles Garden Apartments 11 48 65
221 RFC Blockbuster Video 3 47 69
222 RFC 16-10 Caffrey Avenue 20 47 66
223 RFC 650 E 182 St 25 179 55
224 RFC Temple Apartments 26 119 54
Total/Weighted Average 10
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
Prepayment Code(10)
Loan
No. Seller Property Name(2) 5 4.5 4 3.5 3 2.5 2 1 Open
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
200 CIBC 233, 235, 237 East 111th Street 7
201 RFC Sunset Shopping Center 4
202 MID Lauderhill Plaza 4
203 RFC 14401 South San Pedro Street 5
204 RFC Woods Cross Self Storage 4
205 MID Fresno Self Storage 4
206 MID Crosstown Square Shopping Center 4
207 CIBC 112-116 East 103rd Street 7
208 MID Leon Trace Apartments 7
209 RFC Southern Oaks Apartments 6
210 RFC Middletown Industrial 4
211 RFC 401-611 Braker Lane 4
212 RFC Mandell Place 4
213 MID The Allendale Village Apartments 4
214 RFC Roswell Point Shopping Center 4
215 RFC Royal Apartments 7
216 RFC 402 - 406 Albee Square 7
217 RFC Mansfield Retail Center 4
218 RFC 224 South 3rd Brooklyn 7
219 MID Circuit City Land 4
220 RFC Charles Garden Apartments 7
221 RFC Blockbuster Video 4
222 RFC 16-10 Caffrey Avenue 7
223 RFC 650 E 182 St 6
224 RFC Temple Apartments 7
Total/Weighted Average
<CAPTION>
------------------------------------------------------------------------------------------------------------
Total
Loan Admin Cost YM
No. Seller Property Name(2) (bps) (11) Code (22)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
200 CIBC 233, 235, 237 East 111th Street 8.78 NAP
201 RFC Sunset Shopping Center 8.78 NAP
202 MID Lauderhill Plaza 8.78 A
203 RFC 14401 South San Pedro Street 8.78 B
204 RFC Woods Cross Self Storage 8.78 NAP
205 MID Fresno Self Storage 8.78 A
206 MID Crosstown Square Shopping Center 18.78 NAP
207 CIBC 112-116 East 103rd Street 8.78 NAP
208 MID Leon Trace Apartments 18.78 A
209 RFC Southern Oaks Apartments 8.78 B
210 RFC Middletown Industrial 8.78 NAP
211 RFC 401-611 Braker Lane 11.28 NAP
212 RFC Mandell Place 11.28 NAP
213 MID The Allendale Village Apartments 18.78 A
214 RFC Roswell Point Shopping Center 8.78 NAP
215 RFC Royal Apartments 8.78 B
216 RFC 402 - 406 Albee Square 8.78 B
217 RFC Mansfield Retail Center 8.78 NAP
218 RFC 224 South 3rd Brooklyn 8.78 B
219 MID Circuit City Land 8.78 NAP
220 RFC Charles Garden Apartments 8.78 B
221 RFC Blockbuster Video 8.78 B
222 RFC 16-10 Caffrey Avenue 8.78 B
223 RFC 650 E 182 St 8.78 B
224 RFC Temple Apartments 8.78 B
Total/Weighted Average
</TABLE>
II-24
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
ESCROW INFORMATION
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
Monthly (13) Upfront (14) 5/15/2000 (15) Monthly (16) Upfront (17)
Loan Capex Capex Capex Insurance Insurance
No. Seller Property Name(2) Escrow Escrow Balance Escrow Escrow
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 MID Campus Apartments $376,200 $148,806 $18,733
2 CIBC 17 John Street $2,313 $2,313 $6,959 $2,792 $5,583
3 MID San Croix Apartments $2,355
4 CIBC 4343 Commerce Court (A) (I) $7,040 $24,315 $248,146
5 CIBC 1051 North Kirk Road (A) (I) $1,833 $6,331 $64,613
6 CIBC Narco River Business Center (A) $1,090 $1,090 $5,479 $242 $967
7 MID Ryder Integrated Logistics $20,000
8 CIBC Holiday Inn Rochester $33,242 $33,242 $66,597 $3,623 $21,737
9 MID Nevada Street Apartments $75,000 $75,308
10 MID Camelot Apartments $2,439
11 MID Neurocrine Biosciences $1,632
12 MID CSC Office Building
13 MID Kinetic Systems Building (B)
14 MID Globix Corporation Building (B) $2,328
15 CIBC Summit Square $1,673 $15,214 $2,500
16 CIBC Bed, Bath & Beyond $742 $5,249
17 MID The Quidel Building $3,404
18 MID Candletree Apartments $204,985 $208,198 $3,568
19 CIBC Latham Crossing & Crossroads Plaza $1,180 $1,180 $1,178 $545 $5,454
20 RFC Hampton Inn & Suites (II)
21 RFC Big Bowl/Wildfire (II)
22 MID Backlick Center South $698
23 CIBC Willow Run Business Center II $3,318 $6,637 $33,183 $509 $3,565
24 MID East Side Plaza $9,375 $9,472
25 RFC Ritchie Highway Shopping Center $430 $2,149
26 CIBC Lincoln Park (C) $2,113 $4,074 $8,162 $2,872 $3,632
27 CIBC Pompano Merchandise Mart (C) $4,075 $2,112 $4,230 $3,632 $2,872
28 RFC Big Kmart Shopping Center $130,625 $1,391 $8,346
29 RFC Marston Park Plaza $875 $875 $1,421 $4,263
30 CIBC Union Center $5,719 $5,719 $22,982 $2,323 $6,968
31 MID La Jolla Corporate Center $800
32 CIBC Southlake Festival Shopping Center $1,974 $1,974 $7,928 $1,741 $5,223
33 RFC HomeBase-Phoenix, AZ
34 MID Hyatt Suites Hotel
35 RFC Holiday Square Shopping Center $607 $4,856
36 RFC Stagecoach Plaza $1,407 $12,663
37 RFC Today's Man Oxford Valley $2,250 $2,250 $9,469
38 CIBC Parkway Corporate Plaza 138 $1,580 $1,580 $14,381 $1,397 $5,587
39 MID Lexington Commons Apartments $800
40 MID Regal Cinema
41 MID One Airport Center Office Building
42 MID San Pablo Apartments $500,000 $1,975
43 MID Oaks of Ashford Point Apartments $230,000 $232,194 $2,313
44 CIBC Comfort Inn - Philadelphia Airport $10,162 $10,162 $40,840 $2,206 $17,647
45 MID Grouse Run Apartments $85,000 $1,560
46 RFC Avanex Building $494 $5,924
47 MID The Regents Cove Apartments $350,000 $121,972 $2,005
48 CIBC 156 10-40 Cross Bay Boulevard $992 $992 $1,988 $6,350 $63,500
49 MID Freehold Executive Center $14,750 $14,750 $347
50 MID K-Mart (D)
51 MID K-Mart (D)
52 MID Seton Chase Apartments $24,381 $19,381 $1,836
53 CIBC Tel Huron Shopping Center $1,203 $777 $1,505 $9,030
54 MID Quality Inn Sports Complex $147,750 $4,851
55 MID Ramada Limited $100,000 $105,224 $4,449
56 MID Walker's Station Apartments $2,398
57 MID Saturn Electronics & Engineering
58 MID Plaza Pointe $545
59 RFC GAI-Tronics Corporation
60 CIBC 2600 Building $1,492 $1,492 $560 $1,084 $14,094
61 CIBC Hoyt's Cinemas $388 $388 $778
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
Monthly (13) Upfront (14) 5/15/2000 (15)
5/15/2000 (18) Replacement Replacement Replacement Monthly (16)
Loan Insurance Reserve Reserve Reserve Tax
No. Seller Property Name(2) Balance Escrow Escrow Balance Escrow
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 MID Campus Apartments $115,758 $10,824 $1,246 $29,796
2 CIBC 17 John Street $11,167 $10,526
3 MID San Croix Apartments $9,181 $21,455
4 CIBC 4343 Commerce Court (A) (I) $76,015 $82,707 $30,355
5 CIBC 1051 North Kirk Road (A) (I) $1,150 $2,518 $7,904
6 CIBC Narco River Business Center (A) $1,933 $18,839
7 MID Ryder Integrated Logistics
8 CIBC Holiday Inn Rochester $25,360 $36,745
9 MID Nevada Street Apartments
10 MID Camelot Apartments $14,634 $9,500 $38,170 $11,461
11 MID Neurocrine Biosciences $14,690 $16,710
12 MID CSC Office Building $2,295 $9,220 $25,750
13 MID Kinetic Systems Building (B) $1,194 $5,972 $13,437
14 MID Globix Corporation Building (B) $30,260 $1,026 $5,129 $10,395
15 CIBC Summit Square $22,500 $17,529
16 CIBC Bed, Bath & Beyond $10,298
17 MID The Quidel Building $13,617 $1,214 $4,858 $13,916
18 MID Candletree Apartments $31,251 $8,500 $19,046 $19,502
19 CIBC Latham Crossing & Crossroads Plaza $9,172 $6,370
20 RFC Hampton Inn & Suites (II) $12,198 $8,401
21 RFC Big Bowl/Wildfire (II) $3,774
22 MID Backlick Center South $8,057 $2,185 $42,526 $10,915
23 CIBC Willow Run Business Center II $7,639 $22,027
24 MID East Side Plaza $2,348 $49,776 $30,490
25 RFC Ritchie Highway Shopping Center $2,579 $1,604 $1,604 $6,280
26 CIBC Lincoln Park (C) $7,263 $12,990
27 CIBC Pompano Merchandise Mart (C) $5,744 $13,516
28 RFC Big Kmart Shopping Center $16,692 $1,297 $7,784 $8,522
29 RFC Marston Park Plaza $8,526 $1,312 $3,937 $19,466
30 CIBC Union Center $13,935 $30,000 $36,855
31 MID La Jolla Corporate Center $5,601 $1,074 $5,404 $9,509
32 CIBC Southlake Festival Shopping Center $10,446 $58,563 $7,917
33 RFC HomeBase-Phoenix, AZ NAV $1,399 NAV
34 MID Hyatt Suites Hotel $20,497
35 RFC Holiday Square Shopping Center $7,284 $911 $3,644 $13,399
36 RFC Stagecoach Plaza $12,663 $1,187 $8,657
37 RFC Today's Man Oxford Valley $9,469 $1,318 $1,318 $11,918
38 CIBC Parkway Corporate Plaza 138 $15,365 $22,844 $22,844 $9,987
39 MID Lexington Commons Apartments $800 $4,292 $25,750 $4,590
40 MID Regal Cinema $954 $3,833 $11,813
41 MID One Airport Center Office Building $307 $7,594 $8,586
42 MID San Pablo Apartments $19,752 $4,167 $8,374 $8,314
43 MID Oaks of Ashford Point Apartments $8,715 $4,146 $12,473 $13,133
44 CIBC Comfort Inn - Philadelphia Airport $24,265 $40,313 $40,313 $18,897
45 MID Grouse Run Apartments $10,824 $9,935
46 RFC Avanex Building $6,418 $902 $902 $5,225
47 MID The Regents Cove Apartments $8,019 $5,667 $12,380 $16,886
48 CIBC 156 10-40 Cross Bay Boulevard $57,085 $15,125
49 MID Freehold Executive Center $694 $1,090 $2,180 $14,339
50 MID K-Mart (D)
51 MID K-Mart (D)
52 MID Seton Chase Apartments $10,604 $4,771 $9,542 $14,821
53 CIBC Tel Huron Shopping Center $18,919 $364,491 $48,309 $8,092
54 MID Quality Inn Sports Complex $50,824 $13,484
55 MID Ramada Limited $11,956 $6,145
56 MID Walker's Station Apartments $10,313 $7,555
57 MID Saturn Electronics & Engineering
58 MID Plaza Pointe $2,548 $1,005 $22,722 $4,287
59 RFC GAI-Tronics Corporation $1,223 $4,893
60 CIBC 2600 Building $4,827 $4,910
61 CIBC Hoyt's Cinemas
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
Upfront (17) 5/15/2000 (18) Monthly (19) Upfront (20) 5/15/2000 (21)
Loan Tax Tax TI/LC TI/LC TI/LC
No. Seller Property Name(2) Escrow Balance Escrow Escrow Balance
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 MID Campus Apartments $123,414
2 CIBC 17 John Street $31,578 $52,630
3 MID San Croix Apartments $74,198
4 CIBC 4343 Commerce Court (A) (I) $273,193 $10,845 $330,203
5 CIBC 1051 North Kirk Road (A) (I) $71,135 $2,824 $85,979
6 CIBC Narco River Business Center (A) $150,713 $113,035 $4,583 $54,583 $73,737
7 MID Ryder Integrated Logistics $135,000 $135,000
8 CIBC Holiday Inn Rochester $193,180 $230,115
9 MID Nevada Street Apartments
10 MID Camelot Apartments $442,000 $11,461
11 MID Neurocrine Biosciences $30,627
12 MID CSC Office Building $128,750 $8,333 $33,487
13 MID Kinetic Systems Building (B) $124,636
14 MID Globix Corporation Building (B) $93,554
15 CIBC Summit Square $149,279 $3,292 $219,033
16 CIBC Bed, Bath & Beyond $79,345
17 MID The Quidel Building $27,831 $4,688 $18,865
18 MID Candletree Apartments $122,023
19 CIBC Latham Crossing & Crossroads Plaza $43,373 $44,831 $2,533 $2,533 $2,533
20 RFC Hampton Inn & Suites (II) $58,800
21 RFC Big Bowl/Wildfire (II) $26,399 $833
22 MID Backlick Center South $67,313
23 CIBC Willow Run Business Center II $176,217 $86,059
24 MID East Side Plaza $233,483 $4,746 $78,224
25 RFC Ritchie Highway Shopping Center $50,239 $56,663
26 CIBC Lincoln Park (C) $67,579 $81,096 $5,480 $107,614 $116,025
27 CIBC Pompano Merchandise Mart (C) $64,951 $77,942 $7,613 $55,480 $61,365
28 RFC Big Kmart Shopping Center $17,044 $17,054 $2,600 $15,600
29 RFC Marston Park Plaza $77,864 $136,262 $8,234 $24,703
30 CIBC Union Center $147,419 $36,855 $11,667 $11,667 $46,880
31 MID La Jolla Corporate Center $19,018
32 CIBC Southlake Festival Shopping Center $31,667 $54,443 $5,522 $255,522 $275,159
33 RFC HomeBase-Phoenix, AZ NAV $2,332 NAV
34 MID Hyatt Suites Hotel $40,994
35 RFC Holiday Square Shopping Center $13,399 $66,995 $75,000 $75,000
36 RFC Stagecoach Plaza $25,971 $25,971 $6,059
37 RFC Today's Man Oxford Valley $89,038 $100,956 $500,000 $499,500
38 CIBC Parkway Corporate Plaza 138 $19,154 $11,415 $10,000 $210,000 $281,984
39 MID Lexington Commons Apartments $32,354
40 MID Regal Cinema $70,875
41 MID One Airport Center Office Building $3,027 $2,500 $182,685 $53,504
42 MID San Pablo Apartments $58,611
43 MID Oaks of Ashford Point Apartments $45,966
44 CIBC Comfort Inn - Philadelphia Airport $80,855 $99,487
45 MID Grouse Run Apartments $38,609
46 RFC Avanex Building $10,449 $15,674 $4,506 $4,506
47 MID The Regents Cove Apartments $53,384
48 CIBC 156 10-40 Cross Bay Boulevard $151,250 $166,375 $4,686 $54,686 $13,192
49 MID Freehold Executive Center $20,724
50 MID K-Mart (D)
51 MID K-Mart (D)
52 MID Seton Chase Apartments $51,957
53 CIBC Tel Huron Shopping Center $72,825 $75,872 $3,667 $61
54 MID Quality Inn Sports Complex $11,671
55 MID Ramada Limited $6,229
56 MID Walker's Station Apartments $31,383
57 MID Saturn Electronics & Engineering
58 MID Plaza Pointe $11,903 $4,000 $90,435
59 RFC GAI-Tronics Corporation
60 CIBC 2600 Building $9,820 $0 $8,894 $8,894 $22,786
61 CIBC Hoyt's Cinemas
</TABLE>
II-25
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
ESCROW INFORMATION
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
Monthly (13) Upfront (14) 5/15/2000 (15) Monthly (16) Upfront (17)
Loan Capex Capex Capex Insurance Insurance
No. Seller Property Name(2) Escrow Escrow Balance Escrow Escrow
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
62 CIBC Advance Auto Parts - York, PA (III) $88 $88 $823
63 CIBC Advance Auto Parts - Harrisburg, PA
(Swatara) (III) $78 $78 $735
64 CIBC Advance Auto Parts - Steelton, PA (III) $78 $78 $720
65 CIBC Advance Auto Parts - Celina, OH (III) $71 $71 $581
66 CIBC Advance Auto Parts - Youngstown, OH (III) $71 $71 $698
67 CIBC Advance Auto Parts - Warren, OH (III) $71 $71 $661
68 CIBC Advance Auto Parts - Atlanta, GA (III) $83 $83 $779
69 CIBC Advance Auto Parts - Penn Hills, PA (III) $88 $88 $823
70 CIBC Advance Auto Parts - Pontotoc, MS (III) $71 $71 $529
71 MID Hampton Inn Maple Grove
72 RFC Maple Tree Mall $7,031 $668 $2,004
73 MID The Sterling Falls Apartments $13,800 $2,049
74 RFC Stelton Shopping Center $25,509 $25,509 $1,133 $6,798
75 CIBC Parkview Towers $2,865 $2,865 $26,780 $1,061 $13,792
76 CIBC Unilab Building $682 $682 $2,727
77 MID Cambridge Apartments $697
78 MID Tempe Plaza $840
79 RFC Byram Self-Storage $2,045 $18,863
80 MID Sixth Street Building $370
81 MID Lake Pine Apartments $65,000 $0 $863
82 RFC Las Lomas Apartments $2,400 $19,200
83 RFC Pinellas Industrial Center $95,000 $95,000 $1,285 $2,571
84 CIBC Mount Joy Square $828 $828 $6,688 $475 $4,753
85 MID Town & Country Apartments (Phase II) $2,976
86 MID Bartles Corner Business Park
87 RFC Jeffery Manor Shopping Center $22,375 $22,375 $525 $525
88 MID Eckerd's Drug Store
89 MID Clayton Apartments and Duplexes $32,500 $6 $1,798
90 MID Regal Cinemas 12-Screen Movie Theatre
91 RFC 1506 N. Lee Trevino $488 $3,906
92 MID Eckerd Pharmacy
93 MID Kroger Grocery Store
94 CIBC Datatec Warehouse $1,188 $1,188 $8,318
95 MID Legacy Business Park Medical Office 8 (E) $290
96 MID Legacy Business Park Medical Office - 4 (E) $217
97 MID East Los Angeles Retail Center $5,978
98 MID Acadia Park Apartments $1,126
99 MID Eckerd's Drug Store
100 MID Dana Innovations $325
101 MID Eckerd's Drug Store
102 RFC Oregon Court (F) $572 $4,576
103 RFC Oregon Arms (F) $5,000 $5,000 $351 $2,808
104 MID Eckerd Drugs
105 CIBC Dicks Clothing and Sporting Goods
106 CIBC Sugarland Shopping Center $1,880 $1,880 $16,919 $2,815 $11,261
107 MID Eckerd Drug Store
108 RFC Bassett Furniture Store
109 CIBC Oak Leaf West $477 $477 $4,829 $572 $4,572
110 CIBC 2000 White Elks Springs Court $802 $802 $2,412 $230 $230
111 CIBC Triangle Shopping Center $1,174 $1,174 $4,696 $817 $3,267
112 CIBC Northern Medical Offices $590 $590 $5,898 $453 $2,716
113 MID Bronco Apartments $1,453
114 MID K-Mart $833
115 RFC Villa Eleni $289 $1,734
116 MID Perkins Place & Fox Ridge (IV) $8,719 $8,719 $350
117 MID Barrington Hills Apartments (IV) $7,072 $3,119 $125
118 MID McDuffee Brook Place (IV) $4,340 $4,340 $174
119 MID Kearsarge Apartments (IV) $3,119 $7,072 $284
120 RFC Agawam Industrial Building $464 $1,856
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
Monthly (13) Upfront (14) 5/15/2000 (15)
5/15/2000 (18) Replacement Replacement Replacement Monthly (16)
Loan Insurance Reserve Reserve Reserve Tax
No. Seller Property Name(2) Balance Escrow Escrow Balance Escrow
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
62 CIBC Advance Auto Parts - York, PA (III)
63 CIBC Advance Auto Parts - Harrisburg, PA
(Swatara) (III)
64 CIBC Advance Auto Parts - Steelton, PA (III)
65 CIBC Advance Auto Parts - Celina, OH (III)
66 CIBC Advance Auto Parts - Youngstown, OH (III)
67 CIBC Advance Auto Parts - Warren, OH (III)
68 CIBC Advance Auto Parts - Atlanta, GA (III)
69 CIBC Advance Auto Parts - Penn Hills, PA (III)
70 CIBC Advance Auto Parts - Pontotoc, MS (III)
71 MID Hampton Inn Maple Grove $2,452 $159,146 $20,416
72 RFC Maple Tree Mall $4,676 $811 $3,243 $8,258
73 MID The Sterling Falls Apartments $5,852 $3,150 $3,162 $12,685
74 RFC Stelton Shopping Center $5,977 $803 $8,829 $6,500
75 CIBC Parkview Towers $3,377 $11,875 $36,000 $4,738
76 CIBC Unilab Building $16,250 $16,250
77 MID Cambridge Apartments $9,753 $2,000 $14,004 $4,919
78 MID Tempe Plaza $344 $878 $3,528 $4,704
79 RFC Byram Self-Storage $22,101 $691 $1,382 $1,619
80 MID Sixth Street Building $3,487 $578 $11,246 $1,751
81 MID Lake Pine Apartments $3,014 $7,650 $64,802 $4,924
82 RFC Las Lomas Apartments $31,200 $4,791 $4,791 $23,958 $4,298
83 RFC Pinellas Industrial Center $6,427 $1,554 $4,662 $4,506
84 CIBC Mount Joy Square $951 $2,907
85 MID Town & Country Apartments (Phase II) $32,354 $4,167 $89,820 $2,875
86 MID Bartles Corner Business Park $100 $400 $7,255
87 RFC Jeffery Manor Shopping Center $1,575 $1,235 $1,235 $3,453 $13,881
88 MID Eckerd's Drug Store
89 MID Clayton Apartments and Duplexes $6,662 $2,681 $24,833 $2,947
90 MID Regal Cinemas 12-Screen Movie Theatre $647 $1,295 $1,078
91 RFC 1506 N. Lee Trevino $5,371 $594 $1,781 $3,620
92 MID Eckerd Pharmacy
93 MID Kroger Grocery Store $488 $8,987
94 CIBC Datatec Warehouse $453
95 MID Legacy Business Park Medical Office 8 (E) $2,687 $215 $4,865 $1,864
96 MID Legacy Business Park Medical Office - 4 (E) $3,276 $120 $2,715 $1,089
97 MID East Los Angeles Retail Center $410 $8,406 $1,936
98 MID Acadia Park Apartments $42,186 $4,000 $54,647 $2,139
99 MID Eckerd's Drug Store
100 MID Dana Innovations $2,017 $360 $1,441 $3,321
101 MID Eckerd's Drug Store
102 RFC Oregon Court (F) $6,864 $2,400
103 RFC Oregon Arms (F) $4,212 $1,840
104 MID Eckerd Drugs $136 $954
105 CIBC Dicks Clothing and Sporting Goods
106 CIBC Sugarland Shopping Center $32,660 $60,771 $1,602
107 MID Eckerd Drug Store $140 $560
108 RFC Bassett Furniture Store $328 $656 $6,507
109 CIBC Oak Leaf West $2,213 $5,625 $5,778 $5,956
110 CIBC 2000 White Elks Springs Court $3,454 $2,710
111 CIBC Triangle Shopping Center $15,957 $12,500 $3,398
112 CIBC Northern Medical Offices $1,571 $9,500 $3,086
113 MID Bronco Apartments $14,089 $5,188 $31,217 $4,499
114 MID K-Mart $5,000 $1,081 $4,343
115 RFC Villa Eleni $2,023 $363 $363 $2,144
116 MID Perkins Place & Fox Ridge (IV) $1,452 $742 $1,484 $1,734
117 MID Barrington Hills Apartments (IV) $519 $266 $531 $620
118 MID McDuffee Brook Place (IV) $723 $369 $739 $863
119 MID Kearsarge Apartments (IV) $1,177 $602 $1,204 $1,407
120 RFC Agawam Industrial Building $2,785 $1,435 $2,871 $4,380
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
Upfront (17) 5/15/2000 (18) Monthly (19) Upfront (20) 5/15/2000 (21)
Loan Tax Tax TI/LC TI/LC TI/LC
No. Seller Property Name(2) Escrow Balance Escrow Escrow Balance
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
62 CIBC Advance Auto Parts - York, PA (III) $1,816 $3,032
63 CIBC Advance Auto Parts - Harrisburg, PA
(Swatara) (III) $1,621 $2,707
64 CIBC Advance Auto Parts - Steelton, PA (III) $1,589 $2,653
65 CIBC Advance Auto Parts - Celina, OH (III) $1,281 $2,139
66 CIBC Advance Auto Parts - Youngstown, OH (III) $1,540 $2,572
67 CIBC Advance Auto Parts - Warren, OH (III) $1,459 $2,436
68 CIBC Advance Auto Parts - Atlanta, GA (III) $1,719 $2,870
69 CIBC Advance Auto Parts - Penn Hills, PA (III) $1,816 $3,032
70 CIBC Advance Auto Parts - Pontotoc, MS (III) $1,167 $1,949
71 MID Hampton Inn Maple Grove $59,609
72 RFC Maple Tree Mall $24,744 $57,806 $2,133 $50,000 $58,296
73 MID The Sterling Falls Apartments $34,992
74 RFC Stelton Shopping Center $26,000 $18,415 $2,406 $28,000 $54,555
75 CIBC Parkview Towers $23,690 $42,642
76 CIBC Unilab Building $3,000 $3,000 $12,000
77 MID Cambridge Apartments $11,231
78 MID Tempe Plaza $4,704
79 RFC Byram Self-Storage $9,992 $5,896
80 MID Sixth Street Building $3,543 $3,000 $58,368
81 MID Lake Pine Apartments $31,737
82 RFC Las Lomas Apartments $4,298 $25,788
83 RFC Pinellas Industrial Center $18,238 $31,545 $2,475 $75,000 $44,732
84 CIBC Mount Joy Square $4,646 $17,602 $1,663 $1,663 $13,436
85 MID Town & Country Apartments (Phase II) $21,264
86 MID Bartles Corner Business Park $25,000 $25,351
87 RFC Jeffery Manor Shopping Center $27,762 $55,524 $3,020 $3,020 $84,061
88 MID Eckerd's Drug Store
89 MID Clayton Apartments and Duplexes $29,720
90 MID Regal Cinemas 12-Screen Movie Theatre $497
91 RFC 1506 N. Lee Trevino $10,861 $21,721
92 MID Eckerd Pharmacy
93 MID Kroger Grocery Store
94 CIBC Datatec Warehouse $5,430 $2,264
95 MID Legacy Business Park Medical Office 8 (E) $7,767 $500 $11,315
96 MID Legacy Business Park Medical Office - 4 (E) $3,988 $333 $7,535
97 MID East Los Angeles Retail Center $13,827 $1,250 $25,627
98 MID Acadia Park Apartments $12,836
99 MID Eckerd's Drug Store
100 MID Dana Innovations $2,714 $1,500 $6,000
101 MID Eckerd's Drug Store
102 RFC Oregon Court (F) $2,400 $12,000
103 RFC Oregon Arms (F) $1,840 $9,200
104 MID Eckerd Drugs
105 CIBC Dicks Clothing and Sporting Goods
106 CIBC Sugarland Shopping Center $16,021 $10,009 $2,703 $52,703 $74,326
107 MID Eckerd Drug Store
108 RFC Bassett Furniture Store $26,028 $39,042 $919 $1,838
109 CIBC Oak Leaf West $19,283 $7,069 $2,917 $52,917 $80,899
110 CIBC 2000 White Elks Springs Court $18,968 $21,624 $2,500 $52,500 $57,974
111 CIBC Triangle Shopping Center $17,747 $9,114
112 CIBC Northern Medical Offices $21,583 $12,715
113 MID Bronco Apartments $30,323
114 MID K-Mart
115 RFC Villa Eleni $4,289 $6,433
116 MID Perkins Place & Fox Ridge (IV) $9,896
117 MID Barrington Hills Apartments (IV) $3,540
118 MID McDuffee Brook Place (IV) $4,926
119 MID Kearsarge Apartments (IV) $8,026
120 RFC Agawam Industrial Building $21,899 $4,380 $1,053 $2,105
</TABLE>
II-26
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
ESCROW INFORMATION
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
Monthly (13) Upfront (14) 5/15/2000 (15) Monthly (16) Upfront (17)
Loan Capex Capex Capex Insurance Insurance
No. Seller Property Name(2) Escrow Escrow Balance Escrow Escrow
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
121 CIBC Tampa Multifamily Portfolio $2,604 $2,604 $10,463 $1,083 $3,250
122 RFC Park Place II Office Building $182 $912
123 MID The Sequoia Institute
124 MID Staples $269
125 MID Brookwood Townhomes $38,000 $38,426 $457
126 MID Staples Office Supply Store
127 CIBC Jefferson Pilot Financial Center $736 $736 $595 $1,288 $3,864
128 MID Eckerd Drug Store
129 MID Staples Property
130 MID CVS Drugstore $2,125
131 CIBC Maple Building $894 $894 $6,260 $1,240 $11,160
132 MID Woodward Avenue Office Building $445
133 RFC Alameda Towne Centre $418 $2,091
134 CIBC Park Place Apartments $1,667 $1,667 $6,735 $822 $8,222
135 CIBC 244-48 East 117th Street $854 $854 $8,542 $409 $1,634
136 MID Prudential Office Building $236
137 MID 1/2 Price Store $22,375 $22,375 $541
138 MID Sunshine Square Shopping Center $1,438 $715
139 RFC Westfair Center $8,871
140 CIBC Bell Gardens Shopping Center $390 $390 $3,121 $917 $4,583
141 MID Staples $269
142 CIBC Morgan Garden Apartments $2,292 $6,788 $1,048 $2,095
143 CIBC Colonial Garden Apartments $1,521 $1,521 $5,961 $1,086 $3,257
144 MID 170 West Road $244
145 RFC Lamar Industrial Center $4,938 $4,938 $579 $4,632
146 MID Columbus Plaza Shopping Center $232
147 RFC Lakeshore Village Office Complex $431 $4,741
148 MID The Lucent Technologies Building $212
149 MID Leonard Professional Building $203
150 CIBC Cross River Mill $917 $917 $7,333 $717 $7,495
151 MID Steele's Market
152 CIBC The Commonwealth Building $468 $468 $3,746 $193 $580
153 CIBC Gateway 2000 - Hobart $67 $67 $667 $49 $293
154 MID Frolics Plaza $64,700 $64,700 $319
155 RFC Lorain Apartments $568 $1,136
156 RFC Opdyke Investments $258 $3,348
157 MID Sungard Financial Systems Office Property
158 RFC 420 Clinton Avenue $8,750 $8,750 $1,347 $3,963
159 CIBC Village Shoppes of Paradise Beach $394 $394 $3,944 $676 $1,750
160 MID Tiscor Corporate Office Building $153
161 MID Omnicare Building
162 CIBC Best Western $2,640 $2,640 $5,298 $917 $5,500
163 RFC Ironwood Apartments $481 $1,443
164 RFC Crossroads South Shopping Center $2,125 $2,125 $578 $5,780
165 MID West Wind Apartments Phase IV $259
166 CIBC Chastain Pines Apartments $1,646 $1,646 $13,167 $818 $8,999
167 MID 166 South River Road $207
168 CIBC Grayco Apartments $2,167 $2,167 $8,702 $508 $2,030
169 MID Reseda Retail Building $629
170 MID Mesa Engineering Systems, Inc. $479
171 MID Concord Garden Apartments $34,871 $34,871 $1,025
172 RFC 233 Jamaica Avenue $9,375 $9,375 $1,060 $3,179
173 MID Goffstown Village Apartments (V) $312
174 MID Maple Leaf Apartments (V) $234
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
Monthly (13) Upfront (14) 5/15/2000 (15)
5/15/2000 (18) Replacement Replacement Replacement Monthly (16)
Loan Insurance Reserve Reserve Reserve Tax
No. Seller Property Name(2) Balance Escrow Escrow Balance Escrow
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
121 CIBC Tampa Multifamily Portfolio $6,500 $13,750 $13,750 $2,833
122 RFC Park Place II Office Building $542 $533 $1,600 $2,135
123 MID The Sequoia Institute $846 $3,385
124 MID Staples $2,155 $301 $1,503
125 MID Brookwood Townhomes $0 $3,361
126 MID Staples Office Supply Store $301 $2,405
127 CIBC Jefferson Pilot Financial Center $7,728 $11,000 $3,795
128 MID Eckerd Drug Store $136 $686
129 MID Staples Property $299 $2,393 $4,310
130 MID CVS Drugstore $236 $1,426
131 CIBC Maple Building $9,433 $13,500 $3,500 $4,583
132 MID Woodward Avenue Office Building $4,452 $380 $380 $2,431
133 RFC Alameda Towne Centre $2,928 $441 $883 $3,221
134 CIBC Park Place Apartments $3,514 $4,302
135 CIBC 244-48 East 117th Street $5,312 $313 $313 $2,426
136 MID Prudential Office Building $2,124 $394 $1,574 $3,471
137 MID 1/2 Price Store $4,871 $6,434
138 MID Sunshine Square Shopping Center $8,585 $205 $3,991 $2,833
139 RFC Westfair Center $8,871 $200 $401 $3,332
140 CIBC Bell Gardens Shopping Center $11,000 $1,683
141 MID Staples $2,155 $301 $1,803
142 CIBC Morgan Garden Apartments $1,048 $4,125 $7,868
143 CIBC Colonial Garden Apartments $6,514 $19,125 $1,257
144 MID 170 West Road $1,334 $730 $2,921 $4,839
145 RFC Lamar Industrial Center $6,369 $874 $2,644 $4,062
146 MID Columbus Plaza Shopping Center $1,391 $769 $4,644
147 RFC Lakeshore Village Office Complex $1,590 $465 $1,824 $4,292
148 MID The Lucent Technologies Building $1,061 $331 $993
149 MID Leonard Professional Building $875 $461 $1,842 $3,550
150 CIBC Cross River Mill $4,474 $5,435
151 MID Steele's Market
152 CIBC The Commonwealth Building $1,933 $2,030
153 CIBC Gateway 2000 - Hobart $731 $2,601
154 MID Frolics Plaza $3,509 $731 $1,464 $5,209
155 RFC Lorain Apartments $3,408 $1,750 $7,000 $1,994
156 RFC Opdyke Investments $294 $234 $467 $3,605
157 MID Sungard Financial Systems Office Property $510 $4,081 $7,087
158 RFC 420 Clinton Avenue $13,557 $956 $956 $19,110 $4,566
159 CIBC Village Shoppes of Paradise Beach $5,414 $2,308
160 MID Tiscor Corporate Office Building $2,299 $333 $6,136 $2,960
161 MID Omnicare Building $288 $1,725
162 CIBC Best Western $6,417 $625 $625 $1,250
163 RFC Ironwood Apartments $4,329 $1,406
164 RFC Crossroads South Shopping Center $6,936 $206 $413 $1,709
165 MID West Wind Apartments Phase IV $2,813 $542 $3,250 $2,685
166 CIBC Chastain Pines Apartments $19,376 $1,481
167 MID 166 South River Road $1,657 $482 $19,311 $3,935
168 CIBC Grayco Apartments $3,553 $12,870 $4,422
169 MID Reseda Retail Building $9,746 $1,297
170 MID Mesa Engineering Systems, Inc. $4,438 $347 $6,382 $984
171 MID Concord Garden Apartments $5,126 $1,188 $3,563 $1,767
172 RFC 233 Jamaica Avenue $10,710 $1,251 $1,251 $25,020 $2,576
173 MID Goffstown Village Apartments (V) $2,844 $1,000 $2,004 $2,087
174 MID Maple Leaf Apartments (V) $2,133 $750 $1,503 $1,565
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
Upfront (17) 5/15/2000 (18) Monthly (19) Upfront (20) 5/15/2000 (21)
Loan Tax Tax TI/LC TI/LC TI/LC
No. Seller Property Name(2) Escrow Balance Escrow Escrow Balance
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
121 CIBC Tampa Multifamily Portfolio $11,333 $19,833
122 RFC Park Place II Office Building $8,542 $14,863 $2,927 $36,000 $36,000
123 MID The Sequoia Institute $3,000 $12,000
124 MID Staples
125 MID Brookwood Townhomes $14,500
126 MID Staples Office Supply Store
127 CIBC Jefferson Pilot Financial Center $3,795 $15,180 $2,096 $2,096 $8,477
128 MID Eckerd Drug Store
129 MID Staples Property $47,413
130 MID CVS Drugstore $11,262
131 CIBC Maple Building $27,500 $9,167 $3,130 $3,130 $21,910
132 MID Woodward Avenue Office Building $9,725
133 RFC Alameda Towne Centre $12,883 $19,324
134 CIBC Park Place Apartments $34,420 $15,214
135 CIBC 244-48 East 117th Street $4,667 $11,645
136 MID Prudential Office Building $24,295 $833 $100,000 $100,000
137 MID 1/2 Price Store $48,321 $3,000 $21,182
138 MID Sunshine Square Shopping Center $11,282 $1,397 $27,174
139 RFC Westfair Center $5,272 $11,936 $1,794 $3,588
140 CIBC Bell Gardens Shopping Center $11,783 $8,417 $1,000 $16,000 $23,000
141 MID Staples
142 CIBC Morgan Garden Apartments $29,454 $47,716
143 CIBC Colonial Garden Apartments $1,257 $5,027
144 MID 170 West Road $1,667 $6,667
145 RFC Lamar Industrial Center $8,124 $20,310 $2,227 $6,680
146 MID Columbus Plaza Shopping Center
147 RFC Lakeshore Village Office Complex $25,752 $17,173 $858 $3,432
148 MID The Lucent Technologies Building $2,083 $6,250
149 MID Leonard Professional Building $2,541 $2,083 $8,333
150 CIBC Cross River Mill $14,534 $5,928 $3,750 $53,750 $71,566
151 MID Steele's Market
152 CIBC The Commonwealth Building $4,086 $7,921 $1,995 $21,995 $35,957
153 CIBC Gateway 2000 - Hobart $381 $5,050 $1,541 $1,541 $15,414
154 MID Frolics Plaza $31,253 $835 $1,673
155 RFC Lorain Apartments $15,952 $11,410
156 RFC Opdyke Investments $10,815 $18,025
157 MID Sungard Financial Systems Office Property $9,103 $833 $6,667
158 RFC 420 Clinton Avenue $25,048 $40,728
159 CIBC Village Shoppes of Paradise Beach $12,375 $15,315 $1,785 $1,785 $17,847
160 MID Tiscor Corporate Office Building $5,920
161 MID Omnicare Building $2,000
162 CIBC Best Western $5,000 $6,250
163 RFC Ironwood Apartments $2,812 $11,248
164 RFC Crossroads South Shopping Center $10,254 $13,672 $2,000 $4,000
165 MID West Wind Apartments Phase IV $7,255
166 CIBC Chastain Pines Apartments $17,766 $10,632
167 MID 166 South River Road $18,228 $1,667 $30,679
168 CIBC Grayco Apartments $25,652 $17,465
169 MID Reseda Retail Building $17,065 $585 $11,990
170 MID Mesa Engineering Systems, Inc. $1,953
171 MID Concord Garden Apartments $12,369
172 RFC 233 Jamaica Avenue $18,141 $15,957
173 MID Goffstown Village Apartments (V) $12,521
174 MID Maple Leaf Apartments (V) $9,391
</TABLE>
II-27
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
ESCROW INFORMATION
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
Monthly (13) Upfront (14) 5/15/2000 (15) Monthly (16) Upfront (17)
Loan Capex Capex Capex Insurance Insurance
No. Seller Property Name(2) Escrow Escrow Balance Escrow Escrow
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
175 CIBC Gateway 2000 - Columbia $67 $67 $667 $40 $239
176 RFC Kenworthy Medical Building $209 $10,317
177 MID Lakes Mini Storage $311
178 MID Town & Country Apartments Phase I $611
179 MID Tucson East Apartments $258
180 RFC Pal Ex, Inc.
181 RFC 312-332 East Rosecrans Avenue $3,320 $3,654
182 MID Building 35 - Corporate Woods $350
183 RFC Art Museum Apartments $5,813 $5,813 $1,011 $8,088
184 CIBC Gateway 2000 - Henderson $67 $67 $667 $37 $223
185 MID Helicomb International Plant $551
186 CIBC Gateway 2000 - Chattanooga $67 $67 $667 $37 $220
187 MID U-Stor Facility $416
188 MID 17-33 Elm Street $3,150 $656
189 RFC Montwood Village Shopping Center $281 $1,122
190 RFC D Boys Office Building $418 $418
191 MID U-Stor Facility $404
192 MID 43 North Road $875 $350
193 RFC Park Apartments $1,189 $3,567
194 MID The Champion Gardens Apartments $647
195 MID 168 South River Road $85
196 RFC The Pines Business Park $318 $636
197 MID U-Stor Winchester II $380
198 MID Knowledge Beginnings (VI) $12,877 $12,977
199 MID Knowledge Beginnings (VI) $10,123 $10,203
200 CIBC 233, 235, 237 East 111th Street $1,000 $1,000 $10,000 $748 $2,991
201 RFC Sunset Shopping Center $60,625 $40,625 $364 $1,092
202 MID Lauderhill Plaza $4,875 $1,068
203 RFC 14401 South San Pedro Street $437 $3,933
204 RFC Woods Cross Self Storage $245 $1,960
205 MID Fresno Self Storage $291
206 MID Crosstown Square Shopping Center $93
207 CIBC 112-116 East 103rd Street $625 $625 $6,250 $495 $1,982
208 MID Leon Trace Apartments $406
209 RFC Southern Oaks Apartments $4,575 $900 $8,218
210 RFC Middletown Industrial
211 RFC 401-611 Braker Lane $2,313 $2,313 $525 $525
212 RFC Mandell Place $499 $1,497
213 MID The Allendale Village Apartments $1,188
214 RFC Roswell Point Shopping Center $1,100
215 RFC Royal Apartments $417 $2,484
216 RFC 402 - 406 Albee Square $1,082 $3,247
217 RFC Mansfield Retail Center $253 $759
218 RFC 224 South 3rd Brooklyn $2,500 $2,500 $557 $1,671
219 MID Circuit City Land
220 RFC Charles Garden Apartments $493 $1,479
221 RFC Blockbuster Video
222 RFC 16-10 Caffrey Avenue $12,000 $12,000 $574 $1,773
223 RFC 650 E 182 St $778 $9,228
224 RFC Temple Apartments $3,638 $145 $1,033
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
Monthly (13) Upfront (14) 5/15/2000 (15)
5/15/2000 (18) Replacement Replacement Replacement Monthly (16)
Loan Insurance Reserve Reserve Reserve Tax
No. Seller Property Name(2) Balance Escrow Escrow Balance Escrow
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
175 CIBC Gateway 2000 - Columbia $597 $2,753
176 RFC Kenworthy Medical Building $1,675 $296 $592 $2,579
177 MID Lakes Mini Storage $2,977 $505 $2,525 $1,280
178 MID Town & Country Apartments Phase I $13,487 $2,083 $22,193 $1,773
179 MID Tucson East Apartments $2,105 $1,084 $7,274 $1,465
180 RFC Pal Ex, Inc.
181 RFC 312-332 East Rosecrans Avenue $5,278 $406
182 MID Building 35 - Corporate Woods $3,845 $329 $2,655 $3,571
183 RFC Art Museum Apartments $9,099 $698 $698 $2,337
184 CIBC Gateway 2000 - Henderson $158 $483
185 MID Helicomb International Plant $8,811 $1,209 $22,246 $1,759
186 CIBC Gateway 2000 - Chattanooga $549 $1,679
187 MID U-Stor Facility $2,510 $6,748
188 MID 17-33 Elm Street $2,622 $355 $710 $2,801
189 RFC Montwood Village Shopping Center $1,683 $237 $473 $2,580
190 RFC D Boys Office Building $836 $181 $181 $551
191 MID U-Stor Facility $2,445 $6,922
192 MID 43 North Road $1,805 $527 $4,740 $2,528
193 RFC Park Apartments $7,134 $750 $2,250 $2,949
194 MID The Champion Gardens Apartments $4,530 $1,948 $9,742 $2,302
195 MID 168 South River Road $1,023 $470 $12,538 $1,627
196 RFC The Pines Business Park $1,908 $2,109
197 MID U-Stor Winchester II $2,298 $4,561
198 MID Knowledge Beginnings (VI)
199 MID Knowledge Beginnings (VI)
200 CIBC 233, 235, 237 East 111th Street $9,721 $1,875 $1,875 $1,833
201 RFC Sunset Shopping Center $1,820 $1,858
202 MID Lauderhill Plaza $7,277 $218 $4,025 $2,977
203 RFC 14401 South San Pedro Street $5,681 $2,706
204 RFC Woods Cross Self Storage $2,450 $1,141
205 MID Fresno Self Storage $3,145 $483 $9,399 $1,469
206 MID Crosstown Square Shopping Center $839 $166 $1,339 $2,655
207 CIBC 112-116 East 103rd Street $6,440 $7,938 $7,938 $1,000
208 MID Leon Trace Apartments $3,938 $1,500 $24,045 $1,904
209 RFC Southern Oaks Apartments $8,575 $1,152 $1,152 $16,257 $660
210 RFC Middletown Industrial $1,311
211 RFC 401-611 Braker Lane $525 $386 $1,954
212 RFC Mandell Place $2,369 $1,495
213 MID The Allendale Village Apartments $9,320 $1,920
214 RFC Roswell Point Shopping Center $1,100 $599
215 RFC Royal Apartments $1,843 $894
216 RFC 402 - 406 Albee Square $10,899 $943 $943 $18,867 $3,300
217 RFC Mansfield Retail Center $1,518 $99 $296 $2,542
218 RFC 224 South 3rd Brooklyn $5,570 $1,602
219 MID Circuit City Land
220 RFC Charles Garden Apartments $5,956 $1,033
221 RFC Blockbuster Video
222 RFC 16-10 Caffrey Avenue $5,866 $602 $12,033 $1,664
223 RFC 650 E 182 St $8,560 $433 $433 $10,833 $1,400
224 RFC Temple Apartments $1,449 $276 $276 $2,745 $468
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
Upfront (17) 5/15/2000 (18) Monthly (19) Upfront (20) 5/15/2000 (21)
Loan Tax Tax TI/LC TI/LC TI/LC
No. Seller Property Name(2) Escrow Balance Escrow Escrow Balance
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
175 CIBC Gateway 2000 - Columbia $7,425 $7,362 $1,538 $1,538 $15,385
176 RFC Kenworthy Medical Building $1,256 $15,476 $2,276 $4,552
177 MID Lakes Mini Storage $3,840
178 MID Town & Country Apartments Phase I $10,634
179 MID Tucson East Apartments $2,747
180 RFC Pal Ex, Inc. $750 $1,500
181 RFC 312-332 East Rosecrans Avenue $13,280 $26,560
182 MID Building 35 - Corporate Woods $16,451 $4,167 $129,650 $50,828
183 RFC Art Museum Apartments $7,011 $9,348
184 CIBC Gateway 2000 - Henderson $5,800 $39 $1,509 $1,509 $15,094
185 MID Helicomb International Plant $19,834 $417 $7,670
186 CIBC Gateway 2000 - Chattanooga $2,123 $6,719 $1,600 $1,600 $16,000
187 MID U-Stor Facility $23,601
188 MID 17-33 Elm Street $3,064
189 RFC Montwood Village Shopping Center $10,319 $15,478 $1,577 $3,154
190 RFC D Boys Office Building $1,653 $2,204 $1,204 $1,204
191 MID U-Stor Facility $24,220
192 MID 43 North Road $12,488 $1,304 $24,000 $46,337
193 RFC Park Apartments $11,796 $20,643
194 MID The Champion Gardens Apartments $36,706
195 MID 168 South River Road $12,448 $2,000 $36,819
196 RFC The Pines Business Park $2,109 $10,545
197 MID U-Stor Winchester II $15,952
198 MID Knowledge Beginnings (VI) $18,475
199 MID Knowledge Beginnings (VI) $14,525
200 CIBC 233, 235, 237 East 111th Street $3,667 $4,136
201 RFC Sunset Shopping Center $5,592 $9,308
202 MID Lauderhill Plaza $15,063
203 RFC 14401 South San Pedro Street $10,824 $21,648
204 RFC Woods Cross Self Storage $5,705 $7,987
205 MID Fresno Self Storage $6,266
206 MID Crosstown Square Shopping Center $5,082 $500 $1,035
207 CIBC 112-116 East 103rd Street $2,000 $7,943
208 MID Leon Trace Apartments $13,740
209 RFC Southern Oaks Apartments $567 $3,376
210 RFC Middletown Industrial $3,933 $6,555 $2,084 $3,669
211 RFC 401-611 Braker Lane $11,724 $11,724 $744 $8,924 $9,424
212 RFC Mandell Place $5,980 $8,686 $712 $712
213 MID The Allendale Village Apartments $19,352
214 RFC Roswell Point Shopping Center $4,017 $5,215
215 RFC Royal Apartments $5,364 $3,376
216 RFC 402 - 406 Albee Square $16,076 $16,834
217 RFC Mansfield Retail Center $5,084 $12,710
218 RFC 224 South 3rd Brooklyn $8,010 $10,270 $2,975
219 MID Circuit City Land
220 RFC Charles Garden Apartments $9,297 $6,768
221 RFC Blockbuster Video
222 RFC 16-10 Caffrey Avenue $5,229 $13,863
223 RFC 650 E 182 St $4,826 $12,068
224 RFC Temple Apartments $1,485 $2,223
</TABLE>
II-28
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
MULTIFAMILY INFORMATION I
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
Multifamily Multifamily
Unit Weighted Unit Weighted
Multifamily Multifamily Average Multifamily Multifamily Average
Loan Unit Type Rent Range Monthly Rent Unit Type Rent Range Monthly Rent
No. Seller Property Name(2) (Bachelor) (Bachelor) (Bachelor) (Efficiency) (Efficiency) (Efficiency)
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 MID Campus Apartments
2 CIBC 17 John Street
3 MID San Croix Apartments
9 MID Nevada Street Apartments
10 MID Camelot Apartments
18 MID Candletree Apartments
39 MID Lexington Commons Apartments
42 MID San Pablo Apartments
43 MID Oaks of Ashford Point Apartments
45 MID Grouse Run Apartments
47 MID The Regents Cove Apartments
52 MID Seton Chase Apartments
56 MID Walker's Station Apartments
73 MID The Sterling Falls Apartments
75 CIBC Parkview Towers 1 $530 $530
77 MID Cambridge Apartments
81 MID Lake Pine Apartments
82 RFC Las Lomas Apartments
85 MID Town & Country Apartments
(Phase II)
89 MID Clayton Apartments and Duplexes
98 MID Acadia Park Apartments
102 RFC Oregon Court (F) 4 $435-455 $444
103 RFC Oregon Arms (F) 10 $425-460 $443
113 MID Bronco Apartments
115 RFC Villa Eleni
116 MID Perkins Place & Fox Ridge (IV)
117 MID Barrington Hills Apartments (IV)
118 MID McDuffee Brook Place (IV)
119 MID Kearsarge Apartments (IV)
121 CIBC Tampa Multifamily Portfolio
125 MID Brookwood Townhomes
134 CIBC Park Place Apartments
135 CIBC 244-48 East 117th Street
142 CIBC Morgan Garden Apartments
143 CIBC Colonial Garden Apartments
155 RFC Lorain Apartments
158 RFC 420 Clinton Avenue 8 $107-428 $266
163 RFC Ironwood Apartments
165 MID West Wind Apartments Phase IV
166 CIBC Chastain Pines Apartments
168 CIBC Grayco Apartments 7 $220-$275 $239 54 $365-$395 $375
172 MID Concord Garden Apartments
173 RFC 233 Jamaica Avenue 18 $139-628 $483
174 MID Goffstown Village Apartments (V)
175 MID Maple Leaf Apartments (V)
179 MID Town & Country Apartments
Phase I
180 MID Tucson East Apartments
184 RFC Art Museum Apartments
194 RFC Park Apartments
195 MID The Champion Gardens Apartments
201 CIBC 233, 235, 237 East 111th Street
208 CIBC 112-116 East 103rd Street
209 MID Leon Trace Apartments
210 RFC Southern Oaks Apartments
214 MID The Allendale Village Apartments
216 RFC Royal Apartments
217 RFC 402 - 406 Albee Square
219 RFC 224 South 3rd Brooklyn
221 RFC Charles Garden Apartments
223 RFC 16-10 Caffrey Avenue
224 RFC 650 E 182 St
225 RFC Temple Apartments
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
Multifamily Multifamily
Unit Weighted Unit Weighted
Multifamily Multifamily Average Multifamily Multifamily Average
Loan Unit Type Rent Range Monthly Rent Unit Type Rent Range Monthly Rent
No. Seller Property Name(2) (Studio) (Studio) (Studio) (1 Bedroom) (1 Bedroom) (1 Bedroom)
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 MID Campus Apartments 51 $330-500 $435 131 $160-695 $527
2 CIBC 17 John Street 55 $1,575-2,350 $2,067 42 $2,040-2,900 $2,485
3 MID San Croix Apartments 176 $420-1390 $753
9 MID Nevada Street Apartments 36 $843-843 $843 270 $912-912 $912
10 MID Camelot Apartments 80 $460-470 $470
18 MID Candletree Apartments 54 $460-510 $473
39 MID Lexington Commons Apartments 115 $339-539 $381
42 MID San Pablo Apartments 10 $395-460 $447 60 $495-560 $538
43 MID Oaks of Ashford Point Apartments 100 $440-540 $492
45 MID Grouse Run Apartments 120 $332-425 $381
47 MID The Regents Cove Apartments 80 $300-375 $363 96 $400-450 $427
52 MID Seton Chase Apartments 162 $311-469 $399
56 MID Walker's Station Apartments 132 $275-435 $378
73 MID The Sterling Falls Apartments 136 $432-530 $484
75 CIBC Parkview Towers 61 $618-675 $649
77 MID Cambridge Apartments 37 $555-705 $596
81 MID Lake Pine Apartments 48 $480-490 $480
82 RFC Las Lomas Apartments 146 $275-595 $463
85 MID Town & Country Apartments
(Phase II) 72 $150-1060 $414
89 MID Clayton Apartments and Duplexes 17 $405-435 $421
98 MID Acadia Park Apartments 56 $359-429 $388
102 RFC Oregon Court (F) 37 $515-610 $563
103 RFC Oregon Arms (F) 16 $515-585 $558
113 MID Bronco Apartments 188 $270-349 $318
115 RFC Villa Eleni 8 $750-925 $838
116 MID Perkins Place & Fox Ridge (IV)
117 MID Barrington Hills Apartments (IV) 7 $395-465 $428
118 MID McDuffee Brook Place (IV)
119 MID Kearsarge Apartments (IV)
121 CIBC Tampa Multifamily Portfolio 2 $375 $375
125 MID Brookwood Townhomes
134 CIBC Park Place Apartments
135 CIBC 244-48 East 117th Street 23 $650-790 $755
142 CIBC Morgan Garden Apartments 44 $385-395 $393
143 CIBC Colonial Garden Apartments 59 $465-525 $500
155 RFC Lorain Apartments 32 $300-325 $312
158 RFC 420 Clinton Avenue 7 $446-541 $498
163 RFC Ironwood Apartments
165 MID West Wind Apartments Phase IV
166 CIBC Chastain Pines Apartments
168 CIBC Grayco Apartments 36 $450-522 $475
172 MID Concord Garden Apartments 28 $539-620 $592
173 RFC 233 Jamaica Avenue 30 $572-665 $625
174 MID Goffstown Village Apartments (V) 7 $345-495 $401 34 $380-525 $463
175 MID Maple Leaf Apartments (V) 2 $335-350 $343 12 $395-425 $407
179 MID Town & Country Apartments
Phase I 52 $200-1090 $416
180 MID Tucson East Apartments 41 $390-550 $413
184 RFC Art Museum Apartments 20 $580-935 $733
194 RFC Park Apartments 18 $475-585 $531
195 MID The Champion Gardens Apartments 16 $379-430 $387
201 CIBC 233, 235, 237 East 111th Street 48 $80-675 $535
208 CIBC 112-116 East 103rd Street 14 $70-900 $659
209 MID Leon Trace Apartments 72 $360-375 $362
210 RFC Southern Oaks Apartments
214 MID The Allendale Village Apartments 24 $330-395 $383
216 RFC Royal Apartments 9 $450-450 $450
217 RFC 402 - 406 Albee Square 12 $100-598 $483
219 RFC 224 South 3rd Brooklyn 11 $175-661 $487
221 RFC Charles Garden Apartments
223 RFC 16-10 Caffrey Avenue 18 $450-674 $601
224 RFC 650 E 182 St 12 $466-525 $497
225 RFC Temple Apartments
</TABLE>
II-29
<PAGE>
FOOTNOTES TO APPENDIX II
1 "MID","CIBC" and "RFC" denote Midland Loan Services, Inc., CIBC Inc.
and Residential Funding Corporation, respectively, as Sellers.
2 Sets of Mortgage Loans that have identical alphabetical coding
designate multiple loans that are cross-collateralized and
cross-defaulted, while Mortgage Loans that have identical Roman Numeral
coding indicate multiple properties securing one note. The following
loan pools represent cross collateralized/cross-defaulted properties
and are designated by identical alphabetical coding: Mortgage Loan Nos.
4-6, 13-14, 26-27, 50-51, 95-96 and 102-103. Mortgage Loans nos. 4-5,
20-21, 62-70, 116-119, 174-175 and 199-200, represent multiple
properties secured under a single note.
3 With respect to Mortgage Loan nos. 4 and 5, 4343 Commerce Court and
1051 North Kirk Road respectively, these cross-collateralized loans
during the prepayment lockout period permit the borrower to release the
lien of the mortgage by defeasing the loan. If one property is
released, the release price (and the amount to be defeased) is the
greater of 125% the allocated loan amount (as set forth in the note),
or (ii) an amount providing DSCR of not less than 1.25:100 on the
remaining property. With respect to Mortgage Loan no. 6, Narco River
Business Center, the borrower during the prepayment lockout period may
release the lien of the mortgage by defeasing the loan in an amount
equal to the then outstanding principal balance of the loan.
With respect to Mortgage Loan no. 5, 1501 North Kirk Road is currently
unoccupied but 100% leased.
With respect to Mortgage Loan nos. 26 and 27, the borrower during the
prepayment lockout period may release the lien of one or both mortgages
by defeasing the loan(s) to be released in an amount equal to the then
outstanding principal balance of said loan(s).
With respect to Loan No.163, Ironwood Apartments is encumbered by
secondary debt from the City of Phoenix in the amount of $100,000
4 Certain ratios including Cut-Off Date Balance / Unit or SF, DSCR,
Cut-Off Date LTV and Balloon LTV are calculated on a combined basis for
Mortgage Loans that are secured by multiple properties or are
cross-collateralized and cross-defaulted. For the purposes of the
statistical information set forth in this Prospectus Supplement, as to
such multiple property loans, a portion of the aggregate Cut-Off Date
Balance has been allocated to each property, based on the allocation
assigned in the note or on Underwritable Cash Flows. For purposes of
information contained within the Prospectus Supplement, Balloon Loans
are defined as having a balance at maturity totaling 5% or more of the
related Mortgage Loan's original principal balance.
5 "ARD" indicates the Anticipated Repayment Date for hyper-amortizing
Mortgage Loans. 34 of the Mortgage Loans in the Mortgage Pool are
hyper-amortization loans. See "Description of the Mortgage Loans".
6 The Amortization Term shown is the basis for determining the fixed
monthly principal and interest payment as set forth in the related
note. Due to the actual/360 interest calculation methodology applied to
most Mortgage Loans, the actual amortization to a zero balance will be
longer.
7 In general for each property, "Percent Leased" was determined based on
a rent roll provided by the borrower. In certain cases, "Percent
Leased" was determined based on an appraisal, executed lease, operating
statement or occupancy report. "Percent Leased as of Date" indicates
the date as of which "Percent Leased" was determined based on such
information. For hospitality properties, the data shown is the average
daily occupancy rate, generally for the immediately preceeding twelve
month period.
8 "Largest Tenant" refers to the tenant that represents the greatest
percentage of the total square footage at the subject property.
9 "Seasoning" represents the number of payments elapsed from the date of
the first regularly scheduled payment or due date to and including the
Cut-Off Date.
10 Indicates prepayment provisions from the first Due Date as stated in
the Mortgage Loan. "DEF" represents defeasance. "YM" represents yield
maintenance. "YM5" represents the greater of yield maintenance or five
percent, and "YM1" represents the greater of yield maintenance or one
percent, of the outstanding principal balance at such time,
respectively. The stated percentages represent Percentage Premiums.
"Open" represents a period during which Principal Prepayments are
permitted without payment of a Prepayment Premium. For each Mortgage
Loan, the number set forth under a category of prepayment provision
represents the number of payment dates in the original term to maturity
for which such provision applies.
II-31
<PAGE>
11 The "Administrative Cost Rate" indicated for each Mortgage Loan will be
calculated based on the same interest calculation methodology
applicable to each Mortgage Loan.
12 Loan No. 219, Circuit City, is secured by fee interest only. Subject is
improved with a 151,586 square foot Circuit City retail store.
13 Monthly Capex Escrow and Monthly Replacement Reserve Escrow indicates
the amount the lender currently collects monthly (on an annual basis)
for deposit into the related property's Capex Escrow account. In
certain cases, the related deposits will end upon certain dates or are
capped at certain amounts. In certain cases, annual collection amounts
may change, such as in the case of Hospitality Mortgage Loans which
generally base collections on related-property revenues. On-going
collections may not be adequate to fund all capital expense
requirements for the related property for the term of the related
Mortgage Loan.
14 Upfront Capex Escrow and Upfront Replacement Reserve Escrow indicates
the amount the lender collected (or, in certain cases, a letter of
credit received), for deposit into the related property's Capex Escrow
and Replacement Reserve Escrow accounts at loan closing to fully or
partially fund estimated, property-related deferred maintenance costs
and/or on-going capital expenses.
15 5/15/2000 Capex Balance and 5/15/2000 Replacement Reserve Escrow
indicates the balance of the related property's Capex Escrow and
Replacement Reserve accounts as of May 15, 2000. In certain cases,
balances will not be replenished upon a release of funds.
16 Monthly Insurance Escrow and Monthly Tax Escrow indicates the amount
the lender currently collects monthly (on an annual basis) for deposit
into the related property's Insurance Escrow and Tax Escrow accounts.
The related deposits are in amounts adequate to pay property hazard
insurance bills and real estate tax bills, when due.
17 Upfront Insurance Escrow and Upfront Tax Escrow indicates the amounts
the lender collected (or, in certain cases, a letter of credit
received), for deposit into the related property's Insurance Escrow and
Tax Escrow accounts at loan closing to fully or partially fund
estimated, property hazard insurance and real estate tax bills.
18 5/15/2000 Insurance Balance and 5/15/2000 Tax Balance indicates the
balance of the related property's Insurance Escrow and Tax Escrow
accounts as of May 15, 2000. In certain cases, balances will not be
replenished upon a release of funds.
19 Monthly TI/LC Escrow indicates the amount the lender currently collects
monthly (on an annual basis) for deposit into the related property's
TI/LC Escrow account. In certain cases, the related deposits will end
upon certain events (for example, certain tenant renewals), or upon
certain dates, or are capped at certain amounts. On-going collections
may not be adequate to fund all tenant improvement and leasing
commission requirements for the related property for the term of the
related Mortgage Loan.
20 Upfront TI/LC Escrow indicates the amount the lender collected (or, in
certain cases, a letter of credit received), for deposit into the
related property's TI/LC Escrow account at loan closing.
21 5/15/2000 TI/LC Balance indicates the balance of the related property's
TI/LC Escrow account as of May 15, 2000. In certain cases, balances
will not be replenished upon a release of funds.
22 Mortgage Loans with associated Yield Maintenance Premiums are
categorized according to unique Yield Maintenance Formulas. There are 4
unique yield maintenance formulas represented by the mortgage loans,
each labeled as "A", "B", "C" and "D".Summaries for the 4 formulas are
listed beginning on page II-31
II-32
<PAGE>
FOOTNOTES TO APPENDIX II
YIELD MAINTENANCE FORMULAS
The following are summaries of yield maintenance provisions, or
formulas, contained in the related promissory note for certain of the
mortgage loans. There are 4 unique yield maintenance formulas
represented by the mortgage loans, each labeled as "A", "B", "C" and
"D". Each Mortgage Loan, which provides for a yield maintenance
formula, references the applicable formula printed below in the column
titled "YM Formula".
A The "Yield Maintenance Amount" shall mean the present value, as of the
Prepayment Date, of the remaining scheduled payments of principal and
interest from the Prepayment Date through the Maturity Date (including
any balloon payment) determined by discounting such payments at the
Discount Rate (hereinafter defined), less the amount of principal being
prepaid. The term "Discount Rate" shall mean the rate which, when
compounded monthly, is equivalent to the Treasury Rate (hereinafter
defined), when compounded semi-annually. The term "Treasury Rate" shall
mean the yield calculated by the linear interpolation of the yields, as
reported in Federal Reserve Statistical Release H.15-Selected Interest
Rates under the heading U.S. Government Securities/Treasury Constant
Maturities for the week ending prior to the Prepayment Date, of U.S.
Treasury constant maturities with muturity dates (one shorter and one
longer) most nearly approximating the Maturity Date. (In the event
Release H.15 is no longer published, Lender shall select a comparable
publication to determine the Treasury Rate.)
B The " Yield Maintenance Amount" shall be the excess, if any, of (A) the
aggregate respective present values of all scheduled interest and
principal payments payable on each Payment Date, discounted monthly at
a rate equal to the Treasury Constant Yield Index (defined below) and
based on a 360-day year of twelve 30-day months over (B) the then
current outstanding principal amount.
For purposes hereof, "Treasury Constant Maturity Yield Index" shall
mean the average yield for "This Week" as reported by the Federal
Reserve Board in Federal Reserve Statistical Release H.15(519 ("FRB
Release") published during the second full week preceding the
Prepayment Date for instruments having a maturity coterminous with the
remaining term of the loan. In the event the FRB Release is no longer
published, Lender shall select a comparable publication to determine
the Treasury Constant Maturity Yield Index. If there is no Treasury
Constant Maturity Yield Index for instruments having a maturity
coterminous with the remaining term of the loan, then the weighted
average yield to maturity of the Treasury Constant Maturity Yield
Indices with maturities next longer and shorter than such remaining
average life to maturity shall be used, calculated by averaging ( and
rounding upward to the nearest whole multiple of 1/100 of 1% per annum,
if the average is not such a multiple) the yields of the relevant
Treasury Constant Maturity Yield Indices (rounded, if necessary, to the
nearest 1/100 of 1% with any figure of 1/200 of 1% or above rounded
upward).
II-33
<PAGE>
C The "Yield Maintenance Amount" shall mean the aggregate (without
duplication) of:
(i) the product obtained by multiplying (1) the entire unpaid
principal balance of this Note at the time of prepayment,
times (2) the difference obtained by subtracting from the
interest rate on this Note the yield rate (the "Yield Rate")
on the 5.5% U.S. Treasury Security due February, 2008 (the
"Specified U.S. Treasury Security"), as the Yield Rate is
reported in the Wall Street Journal on the fifth Business Day
(as hereinafter defined) preceding (x) the date notice of
prepayment is given to holder hereof where prepayment is
voluntary, or (y) the date holder hereof accelerates the Loan,
times (3) the present value factor calculated using the
following formula:
-n
1-(1+r)
-------
r
r = Yield Rate
n = the number of years, and any fraction thereof, remaining
between the prepayment date and the Maturity Date.
In the event that no Yield Rate is published for the Specified
U.S. Treasury Security, then the nearest equivalent U.S.
Treasury Security shall be selected at Lender's sole
discretion. If the publication of such Yield Rates in the Wall
Street Journal is discontinued, Lender shall determine such
Yield Rates from another source selected by Lender. As used
herein, the term "Business Day" means any day other than a
Saturday, a Sunday, or any other day on which Lender hereof is
not open for business.
D The "Yield Maintenance Amount" shall mean the aggregate (without
duplication) of:
(a) the product obtained by multiplying (1) the entire unpaid
principal balance of this Note at the time of prepayment,
times (2) the difference obtained by subtracting from the
interest rate on this Note the yield rate (the "Yield Rate")
on the 5.625% U.S. Treasury Security due May, 2008 (the
"Specified U.S. Treasury Security"), as the Yield Rate is
reported in the Wall Street Journal on the fifth Business Day
(as hereinafter defined) preceding (x) the date notice of
prepayment is given to Lender hereof where prepayment is
voluntary, or (y) the date Lender hereof accelerates the Loan,
times (3) the present value factor calculated using the
following formula:
-n
1-(1+r)
-------
r
r = Yield Rate
n = the number of years, and any fraction thereof, remaining
between the prepayment date and the Optional Prepayment
Date.
In the event that no Yield Rate is published for the Specified
U.S. Treasury Security, then the nearest equivalent U.S.
Treasury Security shall be selected at Lender hereof's sole
discretion. If the publication of such Yield Rates in the Wall
Street Journal is discontinued, Lender hereof shall determine
such Yield Rates from another source selected by Lender
hereof. As used herein, the term "Business Day" means any day
other than a Saturday, a Sunday, or any other day on which the
lender hereof is not open for business.
II-34
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
APPENDIX III
Significant Loan Summaries
Loan No. 1 - Campus Apartments
<TABLE>
<S> <C> <C> <C>
-----------------------------------------------------------------------------------------------------------------
Cut-off Date Balance: $27,208,269 Balloon Balance: $22,437,517
-----------------------------------------------------------------------------------------------------------------
Loan Type: Principal & Interest Property Type: Multifamily
-----------------------------------------------------------------------------------------------------------------
Origination Date: June 26, 1998 Location: Philadelphia, PA
-----------------------------------------------------------------------------------------------------------------
*Maturity Date: July 1, 2008 Year Renovated: 1986
-----------------------------------------------------------------------------------------------------------------
Initial Mortgage Rate: 6.95% Appraised Value: $41,200,000
-----------------------------------------------------------------------------------------------------------------
Annual Debt Service: $2,364,072 Cut-off LTV: 66.0%
-----------------------------------------------------------------------------------------------------------------
DSCR: 1.35x Balloon LTV: 54.5%
-----------------------------------------------------------------------------------------------------------------
Underwritable Net Cash Flow: $3,200,310 Occupancy: 100%
-----------------------------------------------------------------------------------------------------------------
Occupancy Date: March 17, 2000
-----------------------------------------------------------------------------------------------------------------
</TABLE>
*For purposes hereof, the Anticipated Repayment Date described below is assumed
to be the Maturity Date of the Campus Apartments Loan
The Loan
The Campus Apartments Loan (the "Campus Loan") is secured by a first
mortgage on 81 apartment buildings, 4 commercial buildings (10,550 square feet)
and 3 parking lots (collectively, the "Campus Property") located in a section of
Philadelphia, Pennsylvania known as University City. Midland originated the
Campus Loan on June 26, 1998.
The Borrower. The borrower is Simon Associates, a Pennsylvania limited
partnership (the "Campus Borrower"). The managing partner of the Campus Borrower
is Horwitz Investments, Inc., a Pennsylvania corporation. The Campus Borrower is
a special purpose, bankruptcy remote entity. A non-consolidation opinion was
obtained at the closing of the Campus Loan.
Security. The Campus Loan is secured by a Mortgage and Security
Agreement, an Assignment of Leases and Rents, UCC Financing Statements and
certain additional security documents. The Mortgage is a first lien on the fee
interest in the Campus Property. The Campus Loan is non-recourse, subject to
certain limited exceptions.
Payment Terms. The Campus Loan has a fixed Mortgage Rate of 6.95% until
July 1, 2008 (the "Anticipated Repayment Date"), at which time the Mortgage Rate
will adjust to the greater of (i) 8.95% or (ii) the then applicable yield rate
on U.S. Treasury obligations maturing during July, 2023, the month in which the
actual maturity date of the Campus Loan occurs, plus 2%. Although the Campus
Loan has a stated term of 300 months, it is assumed for purposes hereof that it
has a term of 120 months with a maturity date of the Anticipated Repayment Date.
The Campus Loan has an original amortization term of 300 months. The Campus Loan
requires monthly payments of principal and interest equal to $197,005.97 until
the Anticipated Repayment Date. If the Campus Loan is not prepaid on such date,
all of the cash flow from the Campus Property is to be applied as described in
"Lockbox" below. If not sooner satisfied, all unpaid principal and accrued
interest is due on July 1, 2023. The Campus Loan accrues interest computed on
the basis of the actual number of days elapsed each month in a 360-day year.
Lockbox. Currently, within 1 business day after their receipt of any
payments related to the Campus Property, the Campus Borrower and the property
manager for the Campus Loan deposit these payments into a lockbox account
controlled by the lender. Prior to the Anticipated Repayment Date, disbursements
from such account are made as follows:
o to fund required reserves for the payment of real estate taxes,
insurance and other impounds;
III-1
<PAGE>
o to pay all interest then due;
o to pay all principal then due;
o to pay all other amounts owed the lender with respect to the Campus
Loan;
o to the Campus Borrower for the payment of operating expenses,
management fees and leasing commissions; and
o to the Campus Borrower for its use.
Subsequent to the Anticipated Repayment Date, disbursements
from such account are made as follows:
o to fund required reserves for the payment of real estate taxes and
insurance;
o to pay all interest (at the initial Mortgage Rate) then due;
o to pay all principal then due;
o to fund other reserves required under the related security documents;
o to pay budgeted operating expenses approved by the lender;
o to pay earned and accrued management fees and leasing commissions;
o to pay all accrued and unpaid interest then due;
o to pay all remaining outstanding principal; and
o to pay all other amounts owed the lender with respect to the Campus
Loan.
Prepayment. No prepayment is permitted before July 1, 2002. Thereafter,
the Campus Loan may be prepaid in full provided the prepayment includes a
prepayment premium equal to the greater of a yield maintenance amount or 1% of
the amount prepaid; plus an amount equal to the interest which would have
accrued on the amount of such prepayment during the remaining days of the full
calendar month within which such prepayment is made. From and after January 1,
2008, the Campus Loan may be prepaid without the payment of any prepayment
consideration.
Transfer of Properties or Interest in Borrower. Except as described
below, the lender will have the option to declare the Campus Loan immediately
due and payable upon the transfer of the Campus Property or any ownership
interest in the Campus Borrower or its general partner. Prohibited transfers
include:
o transfers or pledges of 49% or more of the stock of the general
partner, other than:
3. to existing partners or their lineal descendants;
4. as a result of devise, descent or by operation of law upon the
death of a partner; or
5. to an immediate family member of a partner or a trust for such
a family member;
o the change, removal or resignation of the general partner, or the
transfer or pledge of its partnership interest; and
o transfers or pledges of 49% or more of the limited partnership
interests in the Campus Borrower, other than:
6. to existing partners;
7. as a result of devise, descent or by operation of law upon the
death of a partner; or
8. to an immediate family member of a partner or a trust for such
a family member.
The Campus Borrower also has a one-time right to transfer the Campus
Property to a special purpose entity transferee approved by the lender if:
III-2
<PAGE>
o the proposed transferee reasonably satisfies the lender that it
possesses the ownership and managerial experience and financial
resources necessary to operate the Campus Property;
o the proposed transferee assumes the obligations of the Campus Borrower;
o the lender receives a 1% assumption fee, all reasonably required
documents, a title policy endorsement and reimbursement for all of its
costs and expenses; and
o a written confirmation is obtained from each applicable rating agency
specifying that the transfer and assumption will not result in a
downgrade, qualification or withdrawal of the then current ratings
assigned to any class of certificates.
Escrow/Reserves. There are tax and insurance reserves which require
monthly deposits in amounts sufficient to pay real estate taxes and insurance
premiums when due. There is a capital improvement reserve funded on a monthly
basis at the rate of $10,823.50 per month, and a deferred maintenance reserve
with a current balance of $148,806 as of May 15, 2000.
Subordination/Other Debt. Secured subordinate indebtedness and
encumbrances are prohibited.
The Property. The Campus Property consists of 81 apartment properties,
4 commercial properties (totaling 10,550 square feet) and 3 parking lots located
within several blocks of the University of Pennsylvania in a section of
Philadelphia, Pennsylvania known as University City. The 81 apartment properties
contain 384 units with 1,074 bedrooms spread among primarily Victorian era
houses ranging in age from 90 to 130 years old. In addition, there are several
small to medium size apartment buildings and 6 larger apartment complexes
ranging in age from 40 to 60 years old. Nearly all of the 384 apartment units
are leased to University of Pennsylvania students on 12 month basis, with 2
months' security deposit. As of March 17, 2000, 100% of the apartments were
leased. The 4 commercial properties consist of 2,000 and 1,700 square foot
retail units and 1,700 and 5,150 square foot office spaces. As of March 17, 2000
the commercial properties were 100% leased. The 3 parking lots total 59 leasable
spaces.
Management. The Campus Property is managed by Campus Property
Management, Inc., the leasing and management company of the Campus Property
Borrower. Campus Property Management, Inc. has been in business for over 30
years and employs a total of 40 full and part time employees. In addition to the
Campus Property, it manages an additional 161 apartment units and 2 commercial
retail units owned by entities affiliated with the Campus Property Borrower.
III-3
<PAGE>
<TABLE>
<CAPTION>
Loan No. 2 - 17 John Street Apartments
<S> <C> <C> <C>
---------------------------------------------------------------------------------------------------------------------
Cut-off Date Balance: $23,370,205 Balloon Balance: $21,079,539
---------------------------------------------------------------------------------------------------------------------
Loan Type: Principal & Interest Property Type: Multifamily
---------------------------------------------------------------------------------------------------------------------
Origination Date: January 24, 2000 Location: New York, NY
---------------------------------------------------------------------------------------------------------------------
*Maturity Date: February 1, 2010 Year Renovated: 1999
---------------------------------------------------------------------------------------------------------------------
Initial Mortgage Rate: 8.270% Appraised Value: $34,000,000
---------------------------------------------------------------------------------------------------------------------
Annual Debt Service: $2,115,764 Cut-off LTV: 68.7%
---------------------------------------------------------------------------------------------------------------------
DSCR: 1.25x Balloon LTV: 62.0%
---------------------------------------------------------------------------------------------------------------------
Underwritable Net Cash Flow: $2,636,228 Occupancy: 100%
---------------------------------------------------------------------------------------------------------------------
Occupancy Date: December 20,1999
---------------------------------------------------------------------------------------------------------------------
</TABLE>
*For purposes hereof, the Anticipated Repayment Date described below is assumed
to be the Maturity Date of the 17 John Street Loan
The Loan
The 17 John Street Apartments Loan (the "17 John Street Loan") is
secured by a first mortgage on a 111-unit apartment complex located at 17 John
Street, New York, New York (the "17 John Street Property"). CIBC originated the
17 John Street Loan on January 24, 2000.
The Borrower. The borrower is 17 John Street Associates, LLC, a New
York limited liability company (the "17 John Street Borrower"). The managing
member of the 17 John Street Borrower is 17 John Street Remote, Inc., a New York
corporation. Nathan Berman and Anthony Fromer are the principals of the 17 John
Street Borrower. The 17 John Street Borrower is a special purpose, bankruptcy
remote entity.
Security. The 17 John Street Loan is secured by a Mortgage and Security
Agreement, an Assignment of Leases and Rents, UCC Financing Statements and
certain additional security documents. The Mortgage is a first lien on the fee
interest in the 17 John Street Property. The 17 John Street Loan is
non-recourse, subject to certain limited exceptions.
Payment Terms. The 17 John Street Loan has a fixed Mortgage Rate of
8.270% until February 1, 2010 (the "Anticipated Repayment Date"), at which time
the Mortgage Rate will adjust to the greater of (i) 10.27%or (ii) the then
applicable yield rate on U.S. Treasury obligations maturing during February,
2030, the month in which the actual maturity date of the 17 John Street Loan
occurs, plus 2%. Although the 17 John Street Loan has a stated term of 360
months, it is assumed for purposes hereof that it has a term of 120 months with
a maturity date of the Anticipated Repayment Date. The 17 John Street Loan has
an original amortization term of 360 months. The 17 John Street Loan requires
monthly payments of principal and interest equal to $176,313.67 until the
Anticipated Repayment Date. If the 17 John Street Loan is not prepaid on such
date, all of the cash flow from the 17 John Street Property is to be applied as
described in "Lockbox" below. If not sooner satisfied, all unpaid principal and
accrued interest is due on February 1, 2030. The 17 John Street Loan accrues
interest computed on the basis of the actual number of days elapsed each month
in a 360-day year.
Lockbox. Upon any default or upon the occurrence of the Anticipated
Repayment Date, the lender may require all gross income from the 17 John Street
Property to be deposited into a lockbox account controlled by the lender. Prior
to the Anticipated Repayment Date, disbursements from such account are made as
follows:
o to fund required reserves for the payment of real estate taxes,
insurance and other impounds;
o to pay all interest then due;
o to pay all principal then due;
o to fund other reserves required under the related security documents;
o to pay all other amounts owed the lender with respect to the 17 John
Street Loan; and
o to the 17 John Street Borrower for its use.
III-4
<PAGE>
Subsequent to the Anticipated Repayment Date, disbursements from such
account are made as follows:
o to fund required reserves for the payment of real estate taxes,
insurance and other impounds;
o to pay all interest (at the initial Mortgage Rate) then due;
o to pay all principal then due;
o to fund other reserves required under the related security documents;
o to pay budgeted operating expenses approved by the lender;
o to pay budgeted capital expenses approved by the lender;
o to pay other extraordinary expenses approved by the lender;
o to pay all remaining outstanding principal;
o to pay all accrued and unpaid interest then due;
o to pay all other amounts owed the lender with respect to the 17 John
Street Loan; and
o to the 17 John Street Borrower for its use.
Prepayment/Defeasance. No prepayment or defeasance is permitted prior
to the earlier of (a) January 24, 2004, or (b) 2 years following the date of the
assignment of the 17 John Street Loan to a REMIC in connection with a
securitization. Thereafter, until August 1, 2009, any prepayment must be in the
form of a defeasance. Any such defeasance will include the release of the 17
John Street Property and the pledge of substitute collateral in the form of
direct, non-callable United States Treasury obligations providing for payments
prior, but as close as possible, to all scheduled Monthly Payment dates, and on
the Maturity Date. Each such payment must be equal to or greater than each
scheduled Monthly Payment during the loan term, and greater than the anticipated
balloon balance due on the Maturity Date. Additionally, a written confirmation
must be obtained from each applicable rating agency specifying that the
defeasance would not result in a downgrade, qualification or withdrawal of the
then current ratings assigned to any class of certificates. From and after
August 1, 2009, the 17 John Street Loan may be prepaid without the payment of
any prepayment consideration.
Transfer of Properties or Interest in Borrower. Except as described
below, the lender will have the option to declare the 17 John Street Loan
immediately due and payable upon the transfer of the 17 John Street Property or
any ownership interest in the 17 John Street Borrower. The 17 John Street
Borrower has a one-time right to transfer the 17 John Street Property to a
qualifying single asset entity transferee approved by the lender if:
o the proposed transferee reasonably satisfies the lender that it
possesses the ownership and managerial experience and financial
resources necessary to operate the 17 John Street Property;
o the proposed transferee assumes the obligations of the 17 John Street
Borrower;
o no event of default then exists; and
o the lender receives a 1% assumption fee, all reasonably required
documents, a title policy endorsement and reimbursement for all of its
costs and expenses.
The 17 John Street Loan documents also allow transfers of membership
interests in the 17 John Street Borrower which:
o do not amount, in the aggregate, to a transfer of 10% or more of the
managing membership interests in the 17 John Street Borrower or the
stock of its managing member;
o are the result of a death; or
o are to an immediate family member or trust for such a family member.
Escrow/Reserves. There are tax and insurance reserves which require
monthly deposits in amounts sufficient to pay real estate taxes and insurance
premiums when due. There is an environmental remediation reserve funded at
closing in the amount of $16,250, and a replacement reserve funded on a monthly
basis at the rate of $2,312.50 per month.
III-5
<PAGE>
Subordination/Other Debt. Secured subordinate indebtedness and
encumbrances are prohibited.
The Property. The 17 John Street Property is located at 17 John Street
in downtown Manhattan, New York City, within the downtown business district. The
17 John Street Property was built in 1926 and renovated in 1999. It consists of
one 15-story building containing 111 residential units and approximately 19,000
square feet of commercial space. The 17 John Street Property contains 55 studio
units, 43 one-bedroom units and 13 two-bedroom units. Amenities include
elevators, 24-hour doorman controlled entry, a laundry facility and an appliance
package including stove, refrigerator and air conditioning.
In connection with its conversion to residential use, real property
taxes on the 17 John Street Property have been abated. Beginning July 1, 2000:
o all currently assessed real property taxes are abated for 14 years,
with a 20% per year phase out of the abatement beginning in year 10;
and
o all real property taxes resulting from a reassessment of the 17 John
Street Property as residential property are abated for 12 years, with a
20% per year phase out of the abatement beginning in year 8.
Management. The 17 John Street Property is managed by Metro Loft
Management, LLC, which has involved in the management of apartment complexes for
approximately 7 years, and currently manages several residential and commercial
properties in New York City.
III-6
<PAGE>
<TABLE>
<CAPTION>
Loan No. 3 - San Croix Apartments
<S> <C> <C> <C>
---------------------------------------------------------------------------------------------------------------
Cut-off Date Balance: $19,578,662 Balloon Balance: $17,414,035
---------------------------------------------------------------------------------------------------------------
Loan Type: Principal and Interest Property Type: Multifamily
---------------------------------------------------------------------------------------------------------------
Origination Date: March 26, 1998 Location: Las Vegas, NV
---------------------------------------------------------------------------------------------------------------
Maturity Date: April 1, 2008 Year Built 1996
---------------------------------------------------------------------------------------------------------------
Mortgage Rate: 6.87% Appraised Value: $26,100,000
---------------------------------------------------------------------------------------------------------------
Annual Debt Service: $1,575,827 Cut-off LTV: 75.0%
---------------------------------------------------------------------------------------------------------------
DSCR: 1.33x Balloon LTV: 66.7%
---------------------------------------------------------------------------------------------------------------
Underwritable Net Cash Flow: $2,088,462 Occupancy: 94%
---------------------------------------------------------------------------------------------------------------
Occupancy Date: January 15, 2000
---------------------------------------------------------------------------------------------------------------
</TABLE>
The Loan:
The San Croix Apartments Loan (the "San Croix Loan") is secured by a
first mortgage on the San Croix Apartments (the "San Croix Property"), a 352
unit, 23 building, Class A garden apartment complex located in Las Vegas,
Nevada. Midland originated the San Croix Loan on March 26, 1998.
The Borrower. The borrower is Kenna, LLC, a Nevada limited liability
company (the "San Croix Borrower"). Herman Ahlers is the manager and 100% owner
of the San Croix Borrower, which is a single asset, single purpose, bankruptcy
remote entity.
Security. The San Croix Loan is secured by a Deed of Trust, Security
Agreement, Assignment of Leases and Rents, UCC Financing Statements and certain
additional security documents. The Deed of Trust is a first lien on the fee
interest in the San Croix Property. The San Croix Loan is non-recourse, subject
to certain limited exceptions.
Payment Terms. The San Croix Loan has a fixed Mortgage Rate of 6.87%,
an original term of 120 months and an original amortization of 360 months. The
San Croix Loan requires monthly principal and interest payments of $131,318.95
until maturity, at which time all unpaid principal and accrued interest is due.
The San Croix Loan accrues interest computed on the basis of the actual number
of days elapsed each month in a 360-day year.
Prepayment. No prepayment is permitted prior to April 1, 2001.
Thereafter, 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
October 1, 2007.
Transfer of Properties or Interest in Borrower. Except as described
below, the lender will have the option to declare the San Croix Loan immediately
due and payable upon the transfer of the San Croix Property or any ownership
interest in the San Croix Borrower. The San Croix Loan documents contemplate a
potential waiver of such prohibition by the lender if:
o the lender has expressly approved the proposed transfer in writing;
o no event of default then exists;
o the proposed transferee and the San Croix Property reasonably satisfy
the lender's underwriting standards; and
o the lender receives a 1% assumption fee and reimbursement for all of
costs and expenses.
The San Croix Loan documents allow transfers of membership interests in
the San Croix Borrower which:
o do not amount, in the aggregate, to a transfer of 40% or more of such
membership interests to a third party; or
o are the result of a death or physical or mental disability.
Escrow/Reserves. There are tax and insurance reserves which require
monthly deposits in an amount sufficient to pay real estate taxes and insurance
premiums when due.
III-7
<PAGE>
Subordination/Other Debt. Secured subordinate indebtedness and
encumbrances are prohibited.
The Property. The San Croix Property is located at 8000 W. Spring
Mountain Road, in Las Vegas, Nevada. It is approximately 5 miles west of the Las
Vegas "Strip" and 5 miles southwest of the Las Vegas central business district.
The San Croix Property was built in 1996 and consists of 23 two-story garden
style apartment buildings containing 176 one bedroom units, 144 two bedroom
units and 32 three bedroom units. Amenities include gated access, two swimming
pools, a spa/fitness center, picnic areas with barbecue grills, a clubhouse and
318 covered parking spaces. Individual units may have a fireplace, a ceiling
fan, a microwave, a washer/dryer, a porch and the standard appliance package.
Management. The San Croix Property is managed by Stout Management
Company, a subsidiary of Rooster Philben, Inc., that was formed in 1982 to
operate and manage multifamily apartment complexes. Stout Management Company
manages properties in Nevada and California and employs 250 people.
III-8
<PAGE>
<TABLE>
<CAPTION>
Loan Nos. 4, 5 & 6 - Prime Portfolio Loans
<S> <C> <C> <C>
-------------------------------------------------------------------------------------------------------------------------
Cut-off Date Balance: $18,987,426 Property Type:
-------------------------------------------------------------------------------------------------------------------------
1051 North Kirk Road $ 3,347,051 1051 North Kirk Road Industrial
-------------------------------------------------------------------------------------------------------------------------
4343 Commerce Court $12,854,405 4343 Commerce Court Office
-------------------------------------------------------------------------------------------------------------------------
1600 West 167th Street $ 2,785,970 1600 West 167th Street Office
-------------------------------------------------------------------------------------------------------------------------
Loan Type: Location:
-------------------------------------------------------------------------------------------------------------------------
1051 North Kirk Road Principal & Interest 1051 North Kirk Road Batavia, Illinois
-------------------------------------------------------------------------------------------------------------------------
4343 Commerce Court Principal & Interest 4343 Commerce Court Lisle, Illinois
-------------------------------------------------------------------------------------------------------------------------
1600 West 167th Street Principal & Interest 1600 West 167th Street Calumet City, Illinois
-------------------------------------------------------------------------------------------------------------------------
Origination Date: Year Built:
-------------------------------------------------------------------------------------------------------------------------
1051 North Kirk Road July 27, 1999 1051 North Kirk Road 1991
-------------------------------------------------------------------------------------------------------------------------
4343 Commerce Court July 27, 1999 4343 Commerce Court 1986
-------------------------------------------------------------------------------------------------------------------------
1600 West 167th Street November 10, 1999 1600 West 167th Street 1980
-------------------------------------------------------------------------------------------------------------------------
Maturity Date: Appraised Value: $28,500,000
-------------------------------------------------------------------------------------------------------------------------
*1051 North Kirk Road May 1, 2008 1051 North Kirk Road $ 4,400,000
-------------------------------------------------------------------------------------------------------------------------
*4343 Commerce Court May 1, 2008 4343 Commerce Court $19,000,000
-------------------------------------------------------------------------------------------------------------------------
1600 West 167th Street December 1, 2009 1600 West 167th Street $ 5,100,000
-------------------------------------------------------------------------------------------------------------------------
Initial Mortgage Rate: Cut-off LTV: 66.6%
-------------------------------------------------------------------------------------------------------------------------
1051 North Kirk Road 7.170% 1051 North Kirk Road 66.6%
-------------------------------------------------------------------------------------------------------------------------
4343 Commerce Court 7.170% 4343 Commerce Court 66.6%
-------------------------------------------------------------------------------------------------------------------------
1600 West 167th Street 8.680% 1600 West 167th Street 66.6%
-------------------------------------------------------------------------------------------------------------------------
Annual Debt Service: $1,615,519 Balloon LTV: 59.02%
-------------------------------------------------------------------------------------------------------------------------
1051 North Kirk Road $ 277,011 1051 North Kirk Road 59.02%
-------------------------------------------------------------------------------------------------------------------------
4343 Commerce Court $1,063,864 4343 Commerce Court 59.02%
-------------------------------------------------------------------------------------------------------------------------
1600 West 167th Street $ 274,644 1600 West 167th Street 59.02%
-------------------------------------------------------------------------------------------------------------------------
DSCR: 1.55x Occupancy:
-------------------------------------------------------------------------------------------------------------------------
1051 North Kirk Road 1.55x 1051 North Kirk Road 100.0%
-------------------------------------------------------------------------------------------------------------------------
4343 Commerce Court 1.55x 4343 Commerce Court 91.1%
-------------------------------------------------------------------------------------------------------------------------
1600 West 167th Street 1.55x 1600 West 167th Street 75.8%
-------------------------------------------------------------------------------------------------------------------------
Underwritable Net Cash Flow: $2,502,403 Occupancy Date:
-------------------------------------------------------------------------------------------------------------------------
1051 North Kirk Road $ 360,589 1051 North Kirk Road February 28, 1998
-------------------------------------------------------------------------------------------------------------------------
4343 Commerce Court $1,775,216 4343 Commerce Court January 26, 2000
-------------------------------------------------------------------------------------------------------------------------
1600 West 167th Street $ 366,598 1600 West 167th Street February 1, 2000
-------------------------------------------------------------------------------------------------------------------------
Balloon Balance: $16,822,059
-------------------------------------------------------------------------------------------------------------------------
1051 North Kirk Road $ 2,989,158
-------------------------------------------------------------------------------------------------------------------------
4343 Commerce Court $11,479,911
-------------------------------------------------------------------------------------------------------------------------
1600 West 167th Street $ 2,352,990
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
*For purposes hereof, the Anticipated Repayment Date for the A&B Prime Loan, as
described below is assumed to be the maturity date of such loan. **Information
described herein with respect to the individual properties securing the A&B
Prime Loan is an allocated portion of such information based upon the ratio of
the appraised value or underwritable cash flow of the individual properties to
the aggregate appraised value or underwritable cash flow of all such properties.
The Loan. The Prime Portfolio Loans (the "Prime Loans") consists of 2
cross-collateralized, cross-defaulted loans secured by first mortgages on 1
industrial and 2 office properties located in the suburbs of Chicago (each, a
"Prime Property"). CIBC originated the first of these loans (the "A&B Prime
Loan") on May 1, 1998, and the second of these loans (the "C Prime Loan") on
November 10, 1999. The A&B Prime Loan was subsequently
III-9
<PAGE>
amended and restated as of July 27, 1999. The A&B Prime Loan is secured by first
mortgages on 1 industrial property, 1051 North Kirk Road, and 1 office property,
4343 Commerce Court (each, an "A&B Prime Property"). The C Prime Loan is secured
by a first mortgage on 1 office property, 1600 West 167th Street.
The Borrower. Three separate Delaware limited liability companies are
the borrowers on the Prime Loans (each a "Prime Borrower"). 1051 North Kirk
Road, L.L.C. and 4343 Commerce Court, L.L.C. are co-borrowers on the A&B Prime
Loan, and 1600 167th Street, L.L.C. is the borrower on the C Prime Loan. The
managing member of each Prime Borrower is Prime Group Realty, L.P., a Delaware
limited partnership. The managing partner of Prime Group Realty, L.P. is Prime
Group Realty Trust, a Maryland real estate investment trust and a NYSE company.
Each Prime Borrower is a single-purpose bankruptcy-remote entity.
Security. The Prime Loans are secured by separate Mortgages,
Assignments of Leases and Rents, UCC Financing Statements and certain additional
security documents executed by each Prime Borrower over the separate Prime
Property owned by it. Each Prime Borrower has executed an agreement that
cross-collateralizes and cross defaults the separate Prime Loans. Each Mortgage
is a first lien on the related Prime Borrower's fee interest in its Prime
Property. The Prime Loans are non-recourse, subject to certain limited
exceptions.
Payment Terms. The A&B Prime Loan has a fixed Mortgage Rate of 7.170%
until May 1, 2008 (the "Anticipated Repayment Date"), at which time the Mortgage
Rate on the A&B Prime Loan will adjust to the greater of (i) 9.170%or (ii) the
then applicable yield rate on U.S. Treasury obligations maturing during May
2028, the month in which the actual maturity date of the A&B Prime Loan occurs,
plus 2%. Although the A&B Prime Loan has a stated term of 347 months, it is
assumed for purposes hereof that it has a term of 105 months with a maturity
date of the Anticipated Repayment Date. The A&B Prime Loan has an original
amortization term of 347 months. The A&B Prime Loan requires monthly payments of
principal and interest equal to $111,740 until the Anticipated Repayment Date.
If the A&B Prime Loan is not prepaid on such date, all of the cash flow from the
A&B Prime Property is to be applied as described in "Lockbox" below. If not
sooner satisfied, all unpaid principal and accrued interest is due on May 1,
2028. The A&B Prime Loan accrues interest computed on the basis of the actual
number of days elapsed each month in a 360-day year.
The C Prime Loan has a fixed Mortgage Rate of 8.680%, an original term
of 120 months and an original amortization of 300 months. The C Prime Loan
requires monthly principal and interest payments of $22,887 until December 1,
2009, at which time all unpaid principal and accrued but unpaid interest is due.
The C Prime Loan accrues interest computed on the basis of the actual number of
days elapsed each month in a 360-day year.
Lockbox. Upon any default or upon the occurrence of the Anticipated
Repayment Date, the lender may require all gross income from the A&B Prime
Property to be deposited into a lockbox account controlled by the lender. Prior
to the Anticipated Repayment Date, disbursements from such account are made as
follows:
o to fund required reserves for the payment of real estate taxes,
insurance and other impounds;
o to pay all interest then due;
o to pay all principal then due;
o to fund other reserves required under the related security documents;
o to pay all other amounts owed the lender with respect to the A&B Prime
Loan; and
o to the related Prime Borrower for its use.
Subsequent to the Anticipated Repayment Date, disbursements from such
account are made as follows:
o to fund required reserves for the payment of real estate taxes,
insurance and other impounds;
o to pay all interest (at the initial Mortgage Rate for the A&B Prime
Loan) then due;
o to pay all principal then due;
o to fund other reserves required under the related security documents;
o to pay budgeted operating expenses approved by the lender;
III-10
<PAGE>
o to pay budgeted capital expenses approved by the lender;
o to pay other extraordinary expenses approved by the lender;
o to pay all remaining outstanding principal;
o to pay all accrued and unpaid interest then due;
o to pay all other amounts owed the lender with respect to the A&B Prime
Loan; and
o to the related Prime Borrower for its use.
Prepayment/Defeasance. No prepayment or defeasance the A&B Prime Loan
is permitted prior to the earlier of (a) July 27, 2003 or (b) two years
following the date of the assignment of the A&B Prime Loan to a REMIC in
connection with a securitization. Thereafter, until November 1, 2007, any
prepayment must be in the form of a defeasance. No prepayment or defeasance the
C Prime Loan is permitted prior to the earlier of (a) November 10, 2003 or (b)
two years following the date of the assignment of the C Prime Loan to a REMIC in
connection with a securitization. Thereafter, until June 1, 2009, any prepayment
must be in the form of a defeasance. After the expiration of the above-described
lock-out periods, any prepayment must be in the form of a full or partial
defeasance. Any such defeasance will include release of the related Prime
Property and the pledge of substitute collateral in the form of direct,
non-callable United States Treasury obligations providing for payments prior,
but as close as possible, to all scheduled Monthly Payment dates, to the
Anticipated Repayment Date for the A&B Prime Loan and the maturity date of the C
Prime Loan. Each such payment must be equal to or greater than 125% of the
portion of the scheduled Monthly Payment allocated to the released Prime
Property, and on the Anticipated Repayment Date for the A&B Prime Loan or the
maturity date of the C Prime Loan, must be sufficient to fully prepay at least
125% of the portion of the Prime Loans allocated to the released Prime Property.
Additionally, a written confirmation must be obtained from each applicable
rating agency specifying that the defeasance would not result in a downgrade,
qualification or withdrawal of the then current ratings assigned to any Class of
Certificates. From and after November 1, 2007, the A&B Prime Loan may be prepaid
without the payment of any prepayment consideration. From and after June 1,
2009, the C Prime Loan may be prepaid without the payment of any prepayment
consideration.
Transfer of Property or Interest in Borrower. Except as described
below, the lender will have the option to declare the Prime Loans immediately
due and payable upon the transfer of any Prime Property or any ownership
interest in any Prime Borrower. Each Prime Borrower has a one-time right to
transfer its Prime Property, after the first 12 months of the term or the
related Prime Loan, to a transferee approved by the lender if:
o no event of default then exists;
o the proposed transferee reasonably satisfies the lender that it
possesses the ownership and managerial experience and financial
resources necessary to operate the related Prime Property;
o the proposed transferee assumes the obligations of the Prime Borrower
and a person or entity acceptable to the lender assumes all guaranties
or indemnities; and
o the lender receives a 1% assumption fee, all reasonably required
documents, a title policy endorsement and reimbursement for all of its
costs and expenses.
The Prime Loan documents allow transfers of beneficial interests in the Prime
Borrower so long as Prime Group Realty Trust continues to have the same degree
of management control over each Prime Borrower and directly or indirectly owns
30% or more of the total equity interests in each Prime Borrower.
Escrow/Reserves. There are tax escrows for the Prime Loans which
require deposits in an amount sufficient to pay real estate taxes on the related
Prime Properties when due. For the A&B Prime Loan, there are currently both a
replacement reserve funded on a monthly basis at the rate of $8,872.60 per month
and a tenant improvement/leasing commission reserve funded on a monthly basis at
the rate of $13,668.60 per month. In addition, the operating company parent of
the A&B Prime Loan Borrower (Prime Group Realty, L.P.) guarantied the
contractually stipulated monthly replacement reserve and tenant
improvement/leasing commission reserve. The A&B Prime Borrower may, at any time,
elect to activate said guaranty and stop funding the replacement reserve and
tenant improvement/leasing commission reserve. For the C Prime Loan, there both
a replacement reserve funded on
III-11
<PAGE>
a monthly basis at the rate of $1,089.92 per month and a tenant
improvement/leasing commission reserve funded on a monthly basis at the rate of
$4,583.33 per month.
Subordination/Other Debt. Secured subordinate indebtedness and
encumbrances are prohibited.
The Property.
The 4343 Commerce Court property is located at 4343 Commerce Court,
Lisle, Illinois. It was built in 1986. It is a 7-story Class-A office building
containing approximately 167,756 rentable square feet of office space. As of
January 26, 2000, it is 91.1% leased to 26 tenants. The largest tenant is
Porsche Credit (22,395 square feet/13.3% of total), whose lease expires
September 30, 2004.
The 1051 North Kirk property is located at 1051 North Kirk Road,
Batavia, Illinois. It was built in 1991, and is a 120,004 square foot 1-story
industrial building. As of February 28, 1998, the 1051 North Kirk property is
100% to Stephen J. Nardi, a principal in Prime Group Realty, L.P. It is
currently unoccupied, however, and this lease expires February 28, 2003.
The 1600 West 167th Street Property (a/k/a Narco River Business Center)
is located at 1600 West 167th Street, Calumet City, Illinois. It was built in
1980, and consists of two 1-story office buildings containing 65,394 square feet
of net rentable area. As of February 1, 2000, it is 75.8% leased to 11 tenants.
The largest tenant is CSX Transportation (17,199 square feet/26.3% of total),
whose lease expires on October 31, 2010.
Management. The Prime Properties are managed by Prime Group Realty
Trust, the general partner of the managing member of each Prime Borrower.
III-12
<PAGE>
<TABLE>
<CAPTION>
Loan No. 7 - Ryder Integrated Logistics
<S> <C> <C> <C>
---------------------------------------------------------------------------------------------------------------------
Cut-off Date Balance: $18,163,497 Balloon Balance: $16,481,593
---------------------------------------------------------------------------------------------------------------------
Loan Type: Principal & Interest Property Type: Industrial
---------------------------------------------------------------------------------------------------------------------
Origination Date: November 30, 1999 Location: Auburn Hills, MI
---------------------------------------------------------------------------------------------------------------------
Maturity Date: December 1, 2009 Year Built: 1999
---------------------------------------------------------------------------------------------------------------------
Mortgage Rate: 8.420% Appraised Value: $23,900,000
---------------------------------------------------------------------------------------------------------------------
Annual Debt Service: $1,668,680 Cut-off LTV: 76.0%
---------------------------------------------------------------------------------------------------------------------
DSCR: 1.25x Balloon LTV: 69.0%
---------------------------------------------------------------------------------------------------------------------
Underwritable Net Cash Flow: $2,085,932 Occupancy: 100.00%
---------------------------------------------------------------------------------------------------------------------
Occupancy Date: November 30, 1999
---------------------------------------------------------------------------------------------------------------------
</TABLE>
The Loan
The Ryder Integrated Logistics Loan (the "Ryder Loan") is secured by a
first mortgage on a single story, 455,000 square foot industrial building
located in Auburn Hills, Michigan (the "Ryder Property"). Midland originated the
Ryder Loan on November 30, 1999.
The Borrower. The borrower is Franklin Transport, L.L.C., a Michigan
limited liability company (the "Ryder Borrower"). The sole managing member of
the Ryder Borrower is Franklin Auburn Corporation, a Michigan corporation. The
other members of the Ryder Borrower are J. Bennett Donaldson, Anthony V.
Battaglia, T&M, L.L.C. and Atlantic L.L.C.. The Ryder Borrower is a single
asset, single purpose, bankruptcy remote entity. A non-consolidation opinion was
obtained at the closing of the Ryder Loan.
Security. The Ryder Loan is secured by a Mortgage, an Assignment of
Leases and Rents, UCC Financing Statements and certain additional security
documents. The Mortgage is a first lien on the fee interest in the Ryder
Property. The Ryder Loan is non-recourse, subject to certain limited exceptions.
Payment Terms. The Ryder Loan has a fixed Mortgage Rate of 8.42%, an
original term of 120 months and an original amortization of 360 months. The
Ryder Loan requires monthly principal and interest payments of $139,056.70 until
maturity, at which time all unpaid principal and accrued interest is due. The
Ryder Loan accrues interest computed on the basis of the actual number of days
elapsed each month in a 360-day year.
Prepayment/Defeasance. No prepayment or defeasance is permitted prior
to the later of (a) 3 years following the date of the first regularly scheduled
monthly payment, or (b) 2 years following the date of the assignment of the
Ryder Loan to a REMIC in connection with a securitization. Thereafter, until
September 1, 2009, any prepayment must be in the form of a defeasance. Any such
defeasance will include release of the Ryder Property and the pledge of
substitute collateral in the form of direct, non-callable United States Treasury
obligations providing for payments prior, but as close as possible, to all
scheduled Monthly Payment dates, and on the Maturity Date. Each such payment
must be equal to or greater than each scheduled Monthly Payment during the loan
term, and greater than the anticipated balloon balance due on the Maturity Date.
Additionally, a written confirmation must be obtained from each applicable
rating agency specifying that the defeasance would not result in a downgrade,
qualification or withdrawal of the then current ratings assigned to any class of
certificates. From and after September 1, 2009, the Ryder Loan may be prepaid
without the payment of any prepayment consideration.
Transfer of Properties or Interest in Borrower. Except as described
below, the lender will have the option to declare the Ryder Loan immediately due
and payable upon the transfer of the Ryder Property or any ownership interest in
the Ryder Borrower. The Ryder Loan documents contemplate a potential waiver of
such prohibition by the lender if:
o the lender has expressly approved the proposed transfer in writing;
o no event of default then exists;
o the proposed transferee and the Ryder Property reasonably satisfy the
lender's underwriting standards; and
III-13
<PAGE>
o the lender receives a 1% assumption fee and reimbursement for all of
costs and expenses.
Additionally, any transfer of 49% or more of ownership interests in the
Ryder Borrower or it manager requires a nonconsolidation opinion acceptable to
the lender and the applicable rating agencies. The Ryder Loan documents allow
transfers of membership interest in the Ryder Borrower which:
o do not amount, in the aggregate, to a transfer of 49% or more of such
membership interests to a third party; or
o are the result of a death or physical or mental disability.
Escrow/Reserves. No monthly deposits for tax and insurance reserves are
required so long as:
o Ryder Integrated Logistics, Inc. ("Ryder"), remains in operation at the
Ryder Property;
o no default occurs under Ryder's lease;
o the lender receives satisfactory evidence of the payment of all
required taxes and insurance premiums; and
o Ryder's parent company, Ryder Systems, Inc., maintains a Standard &
Poor's issuer credit rating of BBB or better. Ryder Systems, Inc. has
no contractual obligations with respect to Ryder's lease or the Ryder
loan.
There are also the following reserves:
o A capital improvement reserve funded through a $20,000 letter of credit
delivered at the closing (the Ryder Borrower is required to annually
increase the face amount of this letter of credit by an additional
$20,000 per year to a maximum of $100,000).
o A tenant improvement and leasing commission reserve funded through a
$135,000 letter of credit delivered at the closing, with the Ryder
Borrower being required to annually increase the face amount of this
letter of credit as follows:
1. $135,000 annually through December 1, 2004;
2. $330,000 annually through December 1, 2005; and
3. $135,000 annually thereafter until maturity.
o A reserve as additional security until the Ryder lease term is extended
until at least December 1, 2010. This reserve was funded through a $49,000
letter of credit delivered at the closing, with the Ryder Borrower being
required to annually increase the face amount of this letter of credit by
an additional $49,000 per year to a maximum of $294,000.
Subordination/Other Debt. Secured subordinate indebtedness and
encumbrances are prohibited.
The Property. The Ryder Property is a single story industrial building
located at 4445 North Atlantic Boulevard, Auburn Hills, Michigan, near the
intersection of Interstate 75 and Highway 24. The Ryder Property was constructed
in 1999. It contains 455,000 rentable square feet in a climate controlled
warehouse with 63 docking bays. As of November 30, 1999, the Ryder Property is
100% leased to Ryder Integrated Logistics, Inc. under a lease with a current
expiration date of October 31, 2005.
Management. The Ryder Property is managed by J. Bennett Donaldson, one
of the principals of the Ryder Borrower. Mr. Bennett has an ownership interest
in 2,000,000 square feet of industrial/ high-tech buildings, located mostly in
lower Michigan. All leasing is handled by Signature Associates-ONCOR.
III-14
<PAGE>
<TABLE>
<CAPTION>
Loan No. 8 - Rochester, NY Holiday Inn
<S> <C> <C> <C>
---------------------------------------------------------------------------------------------------------------------
Cut-off Date Balance: $17,664,749 Balloon Balance: $15,164,233
---------------------------------------------------------------------------------------------------------------------
Loan Type: Principal & Interest Property Type: Hotel
---------------------------------------------------------------------------------------------------------------------
Origination Date: February 4, 2000 Location: Henrietta, NY
---------------------------------------------------------------------------------------------------------------------
*Maturity Date: March 1, 2010 Year Renovated: 1996
---------------------------------------------------------------------------------------------------------------------
Initial Mortgage Rate: 9.41% Appraised Value: $25,200,000
---------------------------------------------------------------------------------------------------------------------
Annual Debt Service: $1,842,461 Cut-off LTV: 70.1%
---------------------------------------------------------------------------------------------------------------------
DSCR: 1.50x Balloon LTV: 60.2%
---------------------------------------------------------------------------------------------------------------------
Underwritable Net Cash Flow: $2,764,558 Occupancy: 70.5%
---------------------------------------------------------------------------------------------------------------------
Occupancy Date: September 30, 1999
---------------------------------------------------------------------------------------------------------------------
</TABLE>
*For purposes hereof, the Anticipated Repayment Date described below is assumed
to be the Maturity Date of the Rochester Holiday Inn Loan
The Loan
The Rochester Holiday Inn Loan (the "Rochester Holiday Inn Loan") is
secured by a first mortgage on a 250-room full service hotel located in
Rochester, New York, New York (the "Rochester Holiday Inn Property"). CIBC
originated the Rochester Holiday Inn Loan on February 4, 2000.
The Borrower. The borrower is Columbia Properties Rochester, Ltd, a
Kentucky limited partnership (the "Rochester Holiday Inn Borrower"). The
corporate general partner of the Rochester Holiday Inn Borrower is Rochester GP,
Inc., a Kentucky corporation. Columbia Sussex Corporation is the principal of
the Rochester Holiday Inn Borrower. The Rochester Holiday Inn Borrower is a
special purpose, bankruptcy remote entity.
Security. The Rochester Holiday Inn Loan is secured by a Mortgage and
Security Agreement, an Assignment of Leases and Rents, UCC Financing Statements
and certain additional security documents. The Mortgage is a first lien on the
fee interest in the Rochester Holiday Inn Property. The Rochester Holiday Inn
Loan is non-recourse, subject to certain limited exceptions.
Payment Terms. The Rochester Holiday Inn Loan has a fixed Mortgage Rate
of 9.41% until March 1, 2010 (the "Anticipated Repayment Date"), at which time
the Mortgage Rate will adjust to the greater of (i) 11.41% or (ii) the then
applicable yield rate on U.S. Treasury obligations maturing during March, 2025,
the month in which the actual maturity date of the Rochester Holiday Inn Loan
occurs, plus 2%. Although the Rochester Holiday Inn Loan has a stated term of
300 months, it is assumed for purposes hereof that it has a term of 120 months
with a maturity date of the Anticipated Repayment Date. The Rochester Holiday
Inn Loan has an original amortization term of 300 months. The Rochester Holiday
Inn Loan requires monthly payments of principal and interest equal to
$153,538.41 until the Anticipated Repayment Date. If the Rochester Holiday Inn
Loan is not prepaid on such date, all of the cash flow from the Rochester
Holiday Inn Property is to be applied as described in "Lockbox" below. If not
sooner satisfied, all unpaid principal and accrued interest is due on March 1,
2025. The Rochester Holiday Inn Loan accrues interest computed on the basis of
the actual number of days elapsed each month in a 360-day year.
Lockbox. Upon any default or upon the occurrence of the Anticipated
Repayment Date, the lender may require all gross income from the Rochester
Holiday Inn Property to be deposited into a lockbox account controlled by the
lender. Prior to the Anticipated Repayment Date, disbursements from such account
are made as follows:
o to fund required reserves for the payment of real estate taxes,
insurance and other impounds;
o to pay all interest then due;
o to pay all principal then due;
o to fund other reserves required under the related security documents;
o to pay all other amounts owed the lender with respect to the Rochester
Holiday Inn Loan; and
III-15
<PAGE>
o to the Rochester Holiday Inn Borrower for its use.
Subsequent to the Anticipated Repayment Date, disbursements from such
account are made as follows:
o to fund required reserves for the payment of real estate taxes,
insurance and other impounds;
o to pay all interest (at the initial Mortgage Rate) then due;
o to pay all principal then due;
o to fund other reserves required under the related security documents;
o to pay budgeted operating expenses approved by the lender;
o to pay budgeted capital expenses approved by the lender;
o to pay other extraordinary expenses approved by the lender;
o to pay all remaining outstanding principal;
o to pay all accrued and unpaid interest then due;
o to pay all other amounts owed the lender with respect to the Rochester
Holiday Inn Loan; and
o to the Rochester Holiday Inn Borrower for its use.
Prepayment/Defeasance. No prepayment or defeasance is permitted prior
to the earlier of (a) February 4, 2004, or (b) 2 years following the date of the
assignment of the Rochester Holiday Inn Loan to a REMIC in connection with a
securitization. Thereafter, until September 1, 2009, any prepayment must be in
the form of a defeasance. Any such defeasance will include the release of the
Rochester Holiday Inn Property and the pledge of substitute collateral in the
form of direct, non-callable United States Treasury obligations providing for
payments prior, but as close as possible, to all scheduled Monthly Payment
dates, and on the Maturity Date. Each such payment must be equal to or greater
than each scheduled Monthly Payment during the loan term, and greater than the
anticipated balloon balance due on the Maturity Date. Additionally, a written
confirmation must be obtained from each applicable rating agency specifying that
the defeasance would not result in a downgrade, qualification or withdrawal of
the then current ratings assigned to any class of certificates. From and after
September 1, 2009, the Rochester Holiday Inn Loan may be prepaid without the
payment of any prepayment consideration.
Transfer of Properties or Interest in Borrower. Except as described
below, the lender will have the option to declare the Rochester Holiday Inn Loan
immediately due and payable upon the transfer of the Rochester Holiday Inn
Property or any ownership interest in the Rochester Holiday Inn Borrower. The
Rochester Holiday Inn Borrower has a one-time right to transfer the Rochester
Holiday Inn Property to a qualifying single asset entity transferee approved by
the lender if:
o the proposed transferee reasonably satisfies the lender that it
possesses the ownership and managerial experience and financial
resources necessary to operate the Rochester Holiday Inn Property;
o the proposed transferee assumes the obligations of the Rochester
Holiday Inn Borrower;
o no event of default then exists; and
o the lender receives a 1% assumption fee, all reasonably required
documents, a title policy endorsement and reimbursement for all of its
costs and expenses.
The Rochester Holiday Inn Loan documents also allow transfers of
partnership interests in the Rochester Holiday Inn Borrower which:
o do not amount, in the aggregate, to a transfer of 10% or more of the
general partnership interests in the Rochester Holiday Inn Borrower or
the stock of its general partner;
o are the result of a death; or
o are to an immediate family member or trust for such a family member.
III-16
<PAGE>
Escrow/Reserves. There is a tax reserve which require monthly deposits
in amounts sufficient to pay real estate taxes when due. There is an insurance
reserve funded at closing for six months of insurance premiums for the Rochester
Holiday Inn Property. The lender can require monthly deposits to this insurance
reserve if the Rochester Holiday Inn Borrower ever fails to pay its insurance
premiums when due. There is also a furniture, fixtures and equipment reserve
funded at closing in the amount of $33,242.11, which also requires monthly
deposits equal to 1/12th of 5% of the prior year's gross income from the
Rochester Holiday Inn Property.
Subordination/Other Debt. Secured subordinate indebtedness and
encumbrances are prohibited.
The Property. The Rochester Holiday Inn Property is located in
Henrietta, New York. The Rochester Holiday Inn Property was built in 1985 and
renovated in 1996. It consists of a 6-story 250-room full service hotel, with
119 king rooms, 116 double-bedded rooms, 13 handicapped accessible rooms and 2
parlor rooms. Each of the rooms include remote control cable televisions,
on-demand movies, telephones, desk and chair, bathroom heat lamp, iron and
ironing board, clock radio, coffee maker and hair dryers. The Rochester Holiday
Inn Property also includes 11 meeting rooms with totaling approximately 10,000
square feet, a 205 person restaurant and 2 lounges. The Rochester Holiday Inn
Property also includes a swimming pool and an adjacent exercise area.
Management. The Rochester Holiday Inn Property is managed by Columbia
Sussex Corporation, the principal of the Rochester Holiday Inn Borrower.
Columbia Sussex Corporation has been involved in the management of hotels for
approximately 28 years and currently owns and manages approximately 46 hotels
totaling approximately 11,000 guestrooms in the United States.
III-17
<PAGE>
<TABLE>
<CAPTION>
Loan No. 9 - Nevada Street Apartments
<S> <C> <C> <C>
---------------------------------------------------------------------------------------------------------------------
Cut-off Date Balance: $15,383,326 Balloon Balance: $13,834,772
---------------------------------------------------------------------------------------------------------------------
Loan Type: Principal & Interest Property Type: Multifamily
---------------------------------------------------------------------------------------------------------------------
Origination Date: March 22, 2000 Location: Newark, NJ
---------------------------------------------------------------------------------------------------------------------
Maturity Date: April 1, 2010 Year Built: 1978
---------------------------------------------------------------------------------------------------------------------
Initial Mortgage Rate: 8.140% Appraised Value: $19,700,000
---------------------------------------------------------------------------------------------------------------------
Annual Debt Service: $1,374,076 Cut-off LTV: 78.1%
---------------------------------------------------------------------------------------------------------------------
DSCR: 1.30x Balloon LTV: 70.2%
---------------------------------------------------------------------------------------------------------------------
Underwritable Net Cash Flow: $1,823,747 Occupancy: 99.00%
---------------------------------------------------------------------------------------------------------------------
Occupancy Date: February 9, 2000
---------------------------------------------------------------------------------------------------------------------
</TABLE>
The Loan:
The Nevada Street Apartments Loan (the "Nevada Street Loan") is secured
by a first mortgage on the Nevada Street Apartments (the "Nevada Street
Property"), a 19-story apartment building containing 306 units located in
Newark, New Jersey. Midland originated the Nevada Street Loan on March 22, 2000.
The Borrower. The borrower is N.S. Limited Partnership, a Maine limited
partnership (the "Nevada Street Borrower"). The general partners of the Nevada
Street Borrower are Burnt Coat Island, Inc. (2%) and HRC Investment Corporation
(1%). The Nevada Street Borrower is a single asset, single purpose, bankruptcy
remote entity. A non-consolidation opinion was obtained at the closing of the
Nevada Street Loan.
Security. The Nevada Street Loan is secured by a Mortgage, Security
Agreement and Assignment of Leases and Rents, UCC Financing Statements and
certain additional security documents. The Mortgage is a first lien on the fee
interest in the Nevada Street Property. The Nevada Street Loan is non-recourse,
subject to certain limited exceptions.
Payment Terms. The Nevada Street Loan has a fixed Mortgage Rate of
8.14%, an original term of 120 months and an original amortization of 360
months. The Nevada Street Loan requires monthly principal and interest payments
of $114,506.33 until maturity, at which time all unpaid principal and accrued
interest is due. The Nevada Street Loan accrues interest computed on the basis
of the actual number of days elapsed each month in a 360-day year.
Prepayment/Defeasance. No prepayment or defeasance is permitted prior
to the later of (a) 3 years following the date of the first regularly scheduled
monthly payment, or (b) 2 years following the date of the assignment of the
Nevada Street Loan to a REMIC in connection with a securitization. Thereafter,
until January 1, 2010, any prepayment must be in the form of a defeasance. Any
such defeasance will include the release of the Nevada Street Property and the
pledge of substitute collateral in the form of direct, non-callable United
States Treasury obligations providing for payments prior, but as close as
possible, to all scheduled Monthly Payment dates, and on the Maturity Date. Each
such payment must be equal to or greater than each scheduled Monthly Payment
during the loan term, and greater than the anticipated balloon balance due on
the Maturity Date. Additionally, a written confirmation must be obtained from
each applicable rating agency specifying that the defeasance would not result in
a downgrade, qualification or withdrawal of the then current ratings assigned to
any class of certificates. From and after January 1, 2010, the Nevada Street
Loan may be prepaid without the payment of any prepayment consideration.
Transfer of Properties or Interest in Borrower. Except as described
below, the lender will have the option to declare the Nevada Street Loan
immediately due and payable upon the transfer of the Nevada Street Property or
any ownership interest in the Nevada Street Borrower. The Nevada Street Loan
documents contemplate a potential waiver of such prohibition by the lender if:
o the lender has expressly approved the proposed transfer in writing;
III-18
<PAGE>
o no event of default then exists;
o the proposed transferee and the Nevada Street Property reasonably
satisfy the lender's underwriting standards; and
o the lender receives a 1% assumption fee and reimbursement for all of
costs and expenses.
The Nevada Street Loan documents allow transfers of membership interests in
the Nevada Street Borrower which:
o do not amount, in the aggregate, to a transfer of 49% or more of such
membership interests to a third party; or
o are the result of a death or physical or mental disability.
Escrow/Reserves. There are tax and insurance reserves which require
monthly deposits in amounts sufficient to pay real estate taxes and insurance
premiums when due. There are also the following additional reserves:
o a capital improvement reserve funded at closing in the amount of
$75,000; and
o a $400,000 reserve funded at closing, to be held as additional security
until the Nevada Street Borrower provides the lender with certain
required post-closing items, including required amendments to the
Nevada Street Borrower's limited partnership agreement and related
documents, a revised non-consolidation opinion and executed Articles of
Incorporation and Corporate Resolutions for the two general partners of
the Nevada Street Borrower.
Subordination/Other Debt. Secured subordinate indebtedness and
encumbrances are prohibited.
The Property. The Nevada Street Property is located at 2 Nevada Street
in Newark, New Jersey. It is just west of Broad Street and south of the Newark
central business district. The Nevada Street Property was built in 1978 and
consists of one 19-story building containing 36 studio/one-bath units and 270
one-bedroom units. Amenities include on-site security, a community room, 143
on-site parking spaces and an appliance package including stove, refrigerator
and air conditioning. The Nevada Street Property operates under a Section 8
housing contract from the Department of Housing and Urban Development.
Management. The Nevada Street Property is managed by SHP Management
Corp., which is wholly owned by the principals of the Nevada Street Borrower.
SHP Management Corp. has been active in property management since 1993 and
currently manages 25 properties totaling 2,700 units in five states, 23 of which
are Section 8 housing.
III-19
<PAGE>
<TABLE>
<CAPTION>
Loan No. 10 - Camelot Apartments
<S> <C> <C> <C>
---------------------------------------------------------------------------------------------------------------------
Cut-off Date Balance: $14,856,703 Balloon Balance: $13,460,905
---------------------------------------------------------------------------------------------------------------------
Loan Type: Principal & Interest Property Type: Multifamily
---------------------------------------------------------------------------------------------------------------------
Origination Date: December 29, 1999 Location: Yuma, AZ
---------------------------------------------------------------------------------------------------------------------
Maturity Date: January 1, 2010 Year Renovated: 1989
---------------------------------------------------------------------------------------------------------------------
Mortgage Rate: 8.390% Appraised Value: $18,900,000
---------------------------------------------------------------------------------------------------------------------
Annual Debt Service: $1,360,583 Cut-off LTV: 78.6%
---------------------------------------------------------------------------------------------------------------------
DSCR: 1.20x Balloon LTV: 71.2%
---------------------------------------------------------------------------------------------------------------------
Underwritable Net Cash Flow: $1,632,804 Occupancy: 96.0%
---------------------------------------------------------------------------------------------------------------------
Occupancy Date: December 28, 1999
---------------------------------------------------------------------------------------------------------------------
</TABLE>
The Loan:
The Camelot Apartments Loan (the "Camelot Loan") is secured by a first
mortgage on 46 two-story buildings (the "Camelot Property") containing 456 units
located in Yuma, Arizona. Midland originated the Camelot Loan on December 29,
1999.
The Borrower. The borrower is YCAM, Ltd., L.P., an Arizona limited
partnership (the "Camelot Borrower"). The general partner of the Camelot
Borrower is YCAM Management, Inc., an Arizona corporation. The Camelot Borrower
is a single asset, single purpose entity.
Security. The Camelot Loan is secured by a Deed of Trust, Security
Agreement and Assignment of Leases and Rents, an Assignment of Leases and Rents,
UCC Financing Statements and certain additional security documents. The Deed of
Trust is a first lien on the fee interest in the Camelot Property. The Camelot
Loan is non-recourse, subject to certain limited exceptions.
Payment Terms. The Camelot Loan has a fixed Mortgage Rate of 8.390%, an
original term of 120 months and an original amortization of 360 months. The
Camelot Loan requires monthly principal and interest payments of $113,381.93
until maturity, at which time all unpaid principal and accrued interest is due.
The Camelot Loan accrues interest computed on the basis of the actual number of
days elapsed each month in a 360-day year.
Prepayment. No prepayment is permitted prior to January 1, 2005.
Thereafter, 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 July
1, 2009.
Transfer of Properties or Interest in Borrower. Except as described
below, the lender will have the option to declare the Camelot Loan immediately
due and payable upon the transfer of the Camelot Property or any ownership
interest in the Camelot Borrower. The Camelot Loan documents contemplate a
potential waiver of such prohibition by the lender if:
o the lender has expressly approved the proposed transfer in writing;
o no event of default then exists;
o the proposed transferee and the Camelot Property reasonably satisfy the
lender's underwriting standards; and
o the lender receives a 1% assumption fee and reimbursement for all of
costs and expenses.
The Camelot Loan documents allow transfers of partnership interests in the
Camelot Borrower which:
o do not amount, in the aggregate, to a transfer of 49% or more of such
partnership interests to a third party;
o are the result of a death or physical or mental disability; or
o are a one-time transfer by one of the individual limited partners of
his limited partnership interests to a trust for estate planning
purposes.
III-20
<PAGE>
Escrow/Reserves. There are tax and insurance reserves which require
monthly deposits in amounts sufficient to pay real estate taxes and insurance
premiums when due. There is also a capital improvement reserve funded on a
monthly basis at the rate of $9,500 per month. Finally, a reserve in the amount
of $442,000 was funded at the closing of the Camelot Loan to ensure that funds
are available for the payment of any capital gains taxes incurred in connection
with the purchase of the Camelot Property.
Subordination/Other Debt. Secured subordinate indebtedness and
encumbrances are prohibited.
The Property. The Camelot Property is located at 1334 South Avenue B in
Yuma, Arizona, near the Marine Corps Air Station and U.S. Army Yuma Proving
Ground. The Camelot Property was built was built in 3 phases, with phases 1 and
2 completed in 1985 and phase 3 completed in 1989. It consists of 46 two-story
buildings containing 80 one-bedroom units and 376 two-bedroom units. Amenities
include a picnic area, a swimming pool, a jacuzzi, a sand volleyball court, a
playground, several gazebos, carports and 779 off street parking spaces.
Individual units have an appliance package including a stove, refrigerator, air
conditioning, washer/dryer hook-ups and storage closets off the porch. Some
units have ceiling fans and/or fireplaces.
Management. The Camelot Property is managed by Sharpstown Manor
Management, Inc., which is wholly owned by one of the principals of the Camelot
Borrower. Sharpstown Manor Management, Inc. has been active in property
management since 1992 and currently manages four complexes totaling 1,103 units.
III-21
<PAGE>
<TABLE>
<CAPTION>
Loan No. 11- Neurocrine Biosciences
<S> <C> <C> <C>
---------------------------------------------------------------------------------------------------------------------
Cut-off Date Balance: $14,520,520 Balloon Balance: $12,828,878
---------------------------------------------------------------------------------------------------------------------
Loan Type: Principal & Interest Property Type: Industrial
---------------------------------------------------------------------------------------------------------------------
Origination Date: September 1, 1998 Location: San Diego, CA
---------------------------------------------------------------------------------------------------------------------
Maturity Date: October 1, 2008 Year Built: 1998
---------------------------------------------------------------------------------------------------------------------
Mortgage Rate: 6.800% Appraised Value: $24,200,000
---------------------------------------------------------------------------------------------------------------------
Annual Debt Service: $1,154,690 Cut-off LTV: 60.0%
---------------------------------------------------------------------------------------------------------------------
DSCR: 1.76x Balloon LTV: 53.0%
---------------------------------------------------------------------------------------------------------------------
Underwritable Net Cash Flow: $2,027,359 Occupancy: 100.00%
---------------------------------------------------------------------------------------------------------------------
Occupancy Date: December 31, 1999
---------------------------------------------------------------------------------------------------------------------
</TABLE>
The Loan
The Neurocrine Biosciences Loan (the "Neurocrine Loan") is secured by a
first mortgage on a 2-story, 93,000 square foot flex/R&D/office building located
at 10555 Science Center Drive, San Diego, California (the "Neurocrine
Property"). Midland originated the Neurocrine Loan on September 1, 1998.
The Borrower. The borrower is Science Park Center, LLC, a California
limited liability company (the "Neurocrine Borrower"). The managing members of
the Neurocrine Borrower are Neurocrine Biosciences, Inc., a Delaware corporation
and Nexus Properties, Inc., a California corporation. The Neurocrine Loan is a
single asset, single purpose entity.
Security. The Neurocrine Loan is secured by a Deed of Trust, Security
Agreement, Assignment of Leases and Rents and Fixture Filing, an Assignment of
Leases and Rents, UCC Financing Statements and certain additional security
documents. The Deed of Trust is a first lien on the fee interest in the
Neurocrine Property. The Neurocrine Loan is non-recourse, subject to certain
limited exceptions.
Payment Terms. The Neurocrine Loan has a fixed Mortgage Rate of 6.80%,
an original term of 120 months and an original amortization of 360 months. The
Neurocrine Loan requires monthly principal and interest payments of $96,224.16
until maturity, at which time all unpaid principal and accrued interest is due.
The Neurocrine Loan accrues interest computed on the basis of the actual number
of days elapsed each month in a 360-day year.
Prepayment. No prepayment is permitted prior to October 1, 2002.
Thereafter, 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 April
1, 2008.
Transfer of Properties or Interest in Borrower. Except as described
below, the lender will have the option to declare the Neurocrine Loan
immediately due and payable upon the transfer of the Neurocrine Property or any
ownership interest in the Neurocrine Borrower. The Neurocrine Loan documents
contemplate a potential waiver of such prohibition by the lender if:
o the lender has expressly approved the proposed transfer in writing;
o no event of default then exists;
o the proposed transferee and the Neurocrine Property reasonably satisfy
the lender's underwriting standards; and
o the lender receives a 1% assumption fee and reimbursement for all of
costs and expenses.
The Neurocrine Loan documents allow transfers of membership interests in the
Neurocrine Borrower which:
o do not amount, in the aggregate, to a transfer of 40% or more of such
interests to a third party;
o are the result of a death or physical or mental disability; or
III-22
<PAGE>
o are purchases of membership interests in the Neurocrine Borrower by
Neurocrine Biosciences, Inc. pursuant to its option to purchase such
interests.
Finally, the Neurocrine Loan documents allow Neurocrine Biosciences,
Inc. to acquire the Neurocrine Property pursuant to its option to purchase such
property.
Escrow/Reserves. There are tax and insurance reserves which require
monthly deposits in amounts sufficient to pay real estate taxes and insurance
premiums when due.
Subordination/Other Debt. Secured subordinate indebtedness and
encumbrances are prohibited.
The Property. The Neurocrine Property is located at 10555 Science
Center Drive, San Diego, California, in the Torrey Pines Science. The Neurocrine
Property was constructed in 1998. It consists of a 2-story, 93,000 square foot
flex/R&D/office building with office and biotech wetlab uses. It also has 4,290
square feet of warehouse and computer room space and an 8,710 square foot
vivarium (high tech kennel). As of December 31, 1999, the Neurocrine Property is
100% leased to Neurocrine Biosciences, Inc. pursuant to a 15 year lease
currently expiring on August 31, 2013. Neurocrine Biosciences, Inc. also
possesses one five year extension option. Effective as of January 1, 1999,
Neurocrine Biosciences, Inc. subleased 17,266 square feet of the Neurocrine
Property to Ancile Pharmaceuticals, Inc. This sublease expires August 31, 2000,
with the subtenant possessing two extension options for a total of 17 additional
months.
Management. The Neurocrine Property is managed by Nexus Properties,
Inc., one of the managers of the Neurocrine Borrower. Nexus Properties, Inc. is
a fully integrated real estate development and management corporation primarily
engaged in developing, owning, managing, leasing and acquiring of scientific
research and high-tech R&D properties in San Diego and Silicon Valley. It
currently manages interests in 10 properties totaling approximately 800,000
square feet, including single level corporate facilities, high rise professional
office buildings and biomedical research facilities.
III-23
<PAGE>
<TABLE>
<CAPTION>
Loan No. 12- CSC Office Building
<S> <C> <C> <C>
---------------------------------------------------------------------------------------------------------------------
Cut-off Date Balance: $13,062,719 Balloon Balance: $11,884,371
---------------------------------------------------------------------------------------------------------------------
Loan Type: Principal & Interest Property Type: Office
---------------------------------------------------------------------------------------------------------------------
Origination Date: December 22, 1999 Location: Southfield, MI
---------------------------------------------------------------------------------------------------------------------
Maturity Date: January 1, 2010 Year Renovated: 1997
---------------------------------------------------------------------------------------------------------------------
Mortgage Rate: 8.580% Appraised Value: $18,600,000
---------------------------------------------------------------------------------------------------------------------
Annual Debt Service: $1,217,284 Cut-off LTV: 70.2%
---------------------------------------------------------------------------------------------------------------------
DSCR: 1.25x Balloon LTV: 63.9%
---------------------------------------------------------------------------------------------------------------------
Underwritable Net Cash Flow: $1,521,608 Occupancy: 100.00%
---------------------------------------------------------------------------------------------------------------------
Occupancy Date: December 8, 1999
---------------------------------------------------------------------------------------------------------------------
</TABLE>
The Loan
The CSC Office Building Loan (the "CSC Loan") is secured by a first
mortgage on a 6-story, 137,954 net rentable square foot office building located
at 26711 Northwestern Highway, Southfield, Michigan (the "CSC Property").
Midland originated the CSC Loan on December 22, 1999.
The Borrower. The borrower is 26711 Development Associates, L.L.C., a
Michigan limited liability company (the "CSC Borrower"). The managing member of
the CSC Borrower is Kojaian 26711 Development Associates, L.L.C., a Michigan
limited liability company. The CSC Borrower is a single asset, single purpose,
bankruptcy remote entity. A non-consolidation opinion was obtained at the
closing of the CSC Loan.
Security. The CSC Loan is secured by a Mortgage, an Assignment of
Rents, UCC Financing Statements and certain additional security documents. The
Mortgage is a first lien on the fee interest in the CSC Property. The CSC Loan
is non-recourse, subject to certain limited exceptions.
Payment Terms. The CSC Loan has a fixed Mortgage Rate of 8.58%, an
original term of 120 months and an original amortization of 360 months. The CSC
Loan requires monthly principal and interest payments of $101,440.34 until
maturity, at which time all unpaid principal and accrued interest is due. The
CSC Loan accrues interest computed on the basis of the actual number of days
elapsed each month in a 360-day year.
Prepayment/Defeasance. No prepayment or defeasance is permitted prior
to the later of (a) 3 years following the date of the first regularly scheduled
monthly payment, or (b) 2 years following the date of the assignment of the CSC
Loan to a REMIC in connection with a securitization. Thereafter, until September
1, 2009, any prepayment must be in the form of a defeasance. Any such defeasance
will include the release of the CSC Property and the pledge of substitute
collateral in the form of direct, non-callable United States Treasury
obligations providing for payments prior, but as close as possible, to all
scheduled Monthly Payment dates, and on the Maturity Date. Each such payment
must be equal to or greater than each scheduled Monthly Payment during the loan
term, and greater than the anticipated balloon balance due on the Maturity Date.
Additionally, a written confirmation must be obtained from each applicable
rating agency specifying that the defeasance would not result in a downgrade,
qualification or withdrawal of the then current ratings assigned to any class of
certificates. From and after September 1, 2009, the CSC Loan may be prepaid
without the payment of any prepayment consideration.
Transfer of Properties or Interest in Borrower. Except as described
below, the lender will have the option to declare the CSC Loan immediately due
and payable upon the transfer of the CSC Property or any ownership interest in
the CSC Borrower. The CSC Loan documents contemplate a potential waiver of such
prohibition by the lender if:
o the lender has expressly approved the proposed transfer in writing;
o no event of default then exists;
o the proposed transferee and the CSC Property reasonably satisfy the
lender's underwriting standards; and
III-24
<PAGE>
o the lender receives an assumption fee (0.50% assumption fee for the
first assumption and a 1% assumption fee for any subsequent assumption)
and reimbursement for all of costs and expenses.
The CSC Loan documents allow transfers of membership interests in the
CSC Borrower which:
o do not amount, in the aggregate, to a transfer of 40% or more of such
interests to a third party; or
o are the result of a death or physical or mental disability; or
Finally, the CSC Loan documents allow Michael Kojaian to assign his
stock in Kojaian 26711 Development-MM, Inc., the managing member of Kojaian
26711 Development Associates, L.L.C., the managing member of the CSC Borrower,
up to 3 times for estate planning purposes.
Escrow/Reserves. There are tax reserves which require monthly deposits
in amounts sufficient to pay real estate taxes when due. There are also the
following reserves:
o a capital improvement reserve funded on a monthly basis at the rate of
$2,294.50 per month;
o a tenant improvement and leasing commission reserve funded on a monthly
basis at the rate of $8,333.33 per month; and
o a $1,000 reserve funded at the closing of the CSC Loan, to be held as
additional security until the CSC Borrower provides the lender with an
acceptable asbestos operations and maintenance program.
Subordination/Other Debt. Secured subordinate indebtedness and
encumbrances are prohibited.
The Property. The CSC Property is located at 26711 Northwestern
Highway, Southfield, Michigan. The CSC Property was constructed in 1970 and
renovated in 1997. It consists of a 6-story, 137,954 square foot office
building. As of December 14, 1999, the CSC Property is 86.3% leased to CSC
Healthcare Systems, an A2 credit rated company (119,015 square feet) pursuant to
a 10 year lease currently expiring on August 31, 2007. CSC Healthcare Systems
also possesses 2 five year extension options. The remaining space (13.7%) is
leased to 3 other separate tenants.
Management. The CSC Property is managed by Grubb & Ellis Management
Services, Inc., a subsidiary of Grubb & Ellis Company. Grubb & Ellis has offices
in 90 markets in the United States , as well as London and Brussels. Grubb &
Ellis manage over 130 million square feet of space in the United States. Michael
Kojaian, one of the principals of the CSC Borrower, is also a 15% owner of Grubb
& Ellis Company. All leasing is handled by Kojaian Companies, a company
affiliated with the CSC Borrower. Kojaian Companies handles leasing for 20
million square feet of office and industrial space.
III-25
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
<TABLE>
<S> <C> <C>
ABN AMRO PNC Mortgage Acceptance Corp. Statement Date:
LaSalle Bank N.A. Midland Loan Services, Inc., Master Servicer Payment Date:
GMAC Commercial Mortgage Corporation, Special Servicer Prior Payment:
Commercial Mortgage Pass-Through Certificates Next Payment:
Series 2000-C1 Record Date:
ABN AMRO Acct: XX-XXXX-XX-X
</TABLE>
Appraisal Reduction Detail
<TABLE>
<CAPTION>
Remaining Term Appraisal
Disclosure Appraisal Scheduled Reduction Note Maturity ---------------- Property ------------
Control # Red. Date Balance Amount Rate Date Life Amort. Type State DSCR Value Date
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
05/26/2000 - 15:01 (MXXX-MXXX)(C) 2000 LaSalle Bank N.A.
<PAGE>
<TABLE>
<S> <C> <C>
ABN AMRO PNC Mortgage Acceptance Corp. Statement Date:
LaSalle Bank N.A. Midland Loan Services, Inc., Master Servicer Payment Date:
GMAC Commercial Mortgage Corporation, Special Servicer Prior Payment:
Commercial Mortgage Pass-Through Certificates Next Payment:
Series 2000-C1 Record Date:
ABN AMRO Acct: XX-XXXX-XX-X
</TABLE>
Realized Loss Detail
<TABLE>
<CAPTION>
Beginning Gross Proceeds Aggregate Net Net Proceeds
Distribution Disclosure Appraisal Appraisal Scheduled Gross as a % of Liquidation Liquidation as a % of Realized
Period Control # Date Value Balance Proceeds Sched Principal Expenses * Proceeds Sched. Balance Loss
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Current Total 0.00 0.00 0.00 0.00 0.00
Cumulative 0.00 0.00 0.00 0.00 0.00
</TABLE>
* Aggregate liquidation expenses also include outstanding P&I advances and
unpaid servicing fees, unpaid trustee fees, etc.
05/26/2000 - 15:01 (MXXX-MXXX)(C) 2000 LaSalle Bank N.A.
<PAGE>
<TABLE>
<S> <C> <C>
ABN AMRO PNC Mortgage Acceptance Corp. Statement Date:
LaSalle Bank N.A. Midland Loan Services, Inc., Master Servicer Payment Date:
GMAC Commercial Mortgage Corporation, Special Servicer Prior Payment:
Commercial Mortgage Pass-Through Certificates Next Payment:
Series 2000-C1 Record Date:
ABN AMRO Acct: XX-XXXX-XX-X
</TABLE>
Modified Loan Detail
<TABLE>
<CAPTION>
Disclosure Modification Modification Modification
Control # Date Code Description
<S> <C> <C> <C>
</TABLE>
05/26/2000 - 15:01 (MXXX-MXXX)(C) 2000 LaSalle Bank N.A.
<PAGE>
<TABLE>
<S> <C> <C>
ABN AMRO PNC Mortgage Acceptance Corp. Statement Date:
LaSalle Bank N.A. Midland Loan Services, Inc., Master Servicer Payment Date:
GMAC Commercial Mortgage Corporation, Special Servicer Prior Payment:
Commercial Mortgage Pass-Through Certificates Next Payment:
Series 2000-C1 Record Date:
ABN AMRO Acct: XX-XXXX-XX-X
</TABLE>
Specially Serviced Loan Detail (Part II) ~ Servicer Comments
<TABLE>
<CAPTION>
Disclosure Resolution
Control # Strategy Comments
<S> <C> <C>
</TABLE>
05/26/2000 - 15:01 (MXXX-MXXX)(C) 2000 LaSalle Bank N.A.
<PAGE>
<TABLE>
<S> <C> <C>
ABN AMRO PNC Mortgage Acceptance Corp. Statement Date:
LaSalle Bank N.A. Midland Loan Services, Inc., Master Servicer Payment Date:
GMAC Commercial Mortgage Corporation, Special Servicer Prior Payment:
Commercial Mortgage Pass-Through Certificates Next Payment:
Series 2000-C1 Record Date:
ABN AMRO Acct: XX-XXXX-XX-X
</TABLE>
Specially Serviced (Part I) ~ Loan Detail
<TABLE>
<CAPTION>
Balance Remaining Term
Disclosure Transfer ----------------- Note Maturity -------------- Property NOI
Control # Date Scheduled Actual Rate Date Life Amort. Type State NOI DSCR Date
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
05/26/2000 - 15:01 (MXXX-MXXX)(C) 2000 LaSalle Bank N.A.
<PAGE>
<TABLE>
<S> <C> <C>
ABN AMRO PNC Mortgage Acceptance Corp. Statement Date:
LaSalle Bank N.A. Midland Loan Services, Inc., Master Servicer Payment Date:
GMAC Commercial Mortgage Corporation, Special Servicer Prior Payment:
Commercial Mortgage Pass-Through Certificates Next Payment:
Series 2000-C1 Record Date:
ABN AMRO Acct: XX-XXXX-XX-X
</TABLE>
Loan Level Detail
<TABLE>
<CAPTION>
Operating Ending Spec. Loan Prepayment
Disclosure Property Statement Maturity Principal Note Scheduled Mod. Serv ASER Status -------------------
Control # Grp Type State DSCR NOI Date Date Balance Rate P&I Flag Flag Flag Code(1) Amount Penalty Date
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
W/Avg 0.00 0 0 0 0 0
</TABLE>
(*) NOI and DSCR, if available and reportable under the terms of the Pooling and
Servicing Agreement, are based on information obtained from the related
borrower, and no other party to the agreement shall be held liable for the
accuracy or methodology used to determine such figures.
(1) Legend:
A. P&I Adv - in Grace Period
B. P&I Adv - (less than) one month delinq
1. P&I Adv - delinquent 1 month
2. P&I Adv - delinquent 2 months
3. P&I Adv - delinquent 3+ months
4. Mat. Balloon/Assumed P&I
5. Prepaid in Full
6. Specially Serviced
7. Foreclosure
8. Bankruptcy
9. REO
10. DPO
11. Modification
05/26/2000 - 15:01 (MXXX-MXXX)(C) 2000 LaSalle Bank N.A.
<PAGE>
<TABLE>
<S> <C> <C>
ABN AMRO PNC Mortgage Acceptance Corp. Statement Date: 01/00/1900
LaSalle Bank N.A. Midland Loan Services, Inc., Master Servicer Payment Date: 01/00/1900
GMAC Commercial Mortgage Corporation, Special Servicer Prior Payment: 01/00/1900
Commercial Mortgage Pass-Through Certificates Next Payment: 01/00/1900
Series 2000-C1 Record Date: 01/00/1900
ABN AMRO Acct: XX-XXXX-XX-X
</TABLE>
Mortgage Loan Characteristics
<TABLE>
<CAPTION>
Distribution of Property Types
# of Scheduled % of
Property Types Loans Balance Balance WAMM WAC DSCR
<S> <C> <C> <C> <C> <C> <C>
0 0 0.00%
</TABLE>
Distribution of Amortization Type
<TABLE>
<CAPTION>
Current Scheduled # of Scheduled % of
Balances Loans Balance Balance WAMM WAC DSCR
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
Distribution of Loan Seasoning
<TABLE>
<CAPTION>
# of Scheduled % of
Number of Years Loans Balance Balance WAMM WAC DSCR
<S> <C> <C> <C> <C> <C> <C>
0 0 0.00%
</TABLE>
Distribution of Year Loans Maturing
<TABLE>
<CAPTION>
# of Scheduled % of
Year Loans Balance Balance WAMM WAC DSCR
<S> <C> <C> <C> <C> <C> <C>
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009 & Longer
0 0 0.00%
</TABLE>
05/26/2000 - 15:01 (MXXX-MXXX)(C) 2000 LaSalle Bank N.A.
<PAGE>
<TABLE>
<S> <C> <C>
ABN AMRO PNC Mortgage Acceptance Corp. Statement Date: 01/00/1900
LaSalle Bank N.A. Midland Loan Services, Inc., Master Servicer Payment Date: 01/00/1900
GMAC Commercial Mortgage Corporation, Special Servicer Prior Payment: 01/00/1900
Commercial Mortgage Pass-Through Certificates Next Payment: 01/00/1900
Series 2000-C1 Record Date: 01/00/1900
ABN AMRO Acct: XX-XXXX-XX-X
</TABLE>
Mortgage Loan Characteristics
Distribution of DSCR (Current)
<TABLE>
<CAPTION>
Debt Service # of Scheduled % of
Coverage Ratio Loans Balance Balance WAMM WAC DSCR
<S> <C> <C> <C> <C> <C> <C>
0 0 0.00%
</TABLE>
Maximum DSCR
Minimum DSCR
Distribution of DSCR (Cutoff)
<TABLE>
<CAPTION>
Debt Service # of Scheduled % of
Coverage Ratio Loans Balance Balance WAMM WAC DSCR
<S> <C> <C> <C> <C> <C> <C>
0 0 0.00%
</TABLE>
Maximum DSCR 0.00
Minimum DSCR 0.00
Geographic Distribution
<TABLE>
<CAPTION>
# of Scheduled % of
State Loans Balance Balance WAMM WAC DSCR
<S> <C> <C> <C> <C> <C> <C>
0 0.00%
</TABLE>
05/26/2000 - 15:01 (MXXX-MXXX)(C) 2000 LaSalle Bank N.A.
<PAGE>
<TABLE>
<S> <C> <C>
ABN AMRO PNC Mortgage Acceptance Corp. Statement Date:
LaSalle Bank N.A. Midland Loan Services, Inc., Master Servicer Payment Date:
GMAC Commercial Mortgage Corporation, Special Servicer Prior Payment:
Commercial Mortgage Pass-Through Certificates Next Payment:
Series 2000-C1 Record Date:
ABN AMRO Acct: XX-XXXX-XX-X
</TABLE>
Mortgage Loan Characteristics
Distribution of Principal Balances
<TABLE>
<CAPTION>
Weighted Average
Current Scheduled # of Scheduled % of -------------------------
Balances Loans Balance Balance Term Coupon DSCR
<S> <C> <C> <C> <C> <C> <C>
0 0 0.00%
</TABLE>
Average Scheduled Balance
Maximum Scheduled Balance
Minimum Scheduled Balance
Distribution of Remaining Term (Fully Amortizing)
<TABLE>
<CAPTION>
Weighted Average
Fully Amortizing # of Scheduled % of -------------------------
Mortgage Loans Loans Balance Balance Term Coupon DSCR
<S> <C> <C> <C> <C> <C> <C>
0 0 0.00%
</TABLE>
Minimum Remaining Term
Maximum Remaining Term
Distribution of Mortgage Interest Rates
<TABLE>
<CAPTION>
Weighted Average
Current Mortgage # of Scheduled % of ---------------------------
Interest Rate Loans Balance Balance Term Coupon DSCR
<S> <C> <C> <C> <C> <C> <C>
0 0 0.00%
</TABLE>
Minimum Mortgage Interest Rate 10.0000%
Maximum Mortgage Interest Rate 10.0000%
Distribution of Remaining Term (Balloon)
<TABLE>
<CAPTION>
Weighted Average
Balloon # of Scheduled % of ---------------------------
Mortgage Loans Loans Balance Balance Term Coupon DSCR
<S> <C> <C> <C> <C> <C> <C>
0 to 60
61 to 120
121 to 180
181 to 240
241 to 360
0 0 0.00%
</TABLE>
Minimum Remaining Term 0
Maximum Remaining Term 0
05/26/2000 - 15:01 (MXXX-MXXX)(C) 2000 LaSalle Bank N.A.
<PAGE>
<TABLE>
<S> <C> <C>
ABN AMRO PNC Mortgage Acceptance Corp. Statement Date:
LaSalle Bank N.A. Midland Loan Services, Inc., Master Servicer Payment Date:
GMAC Commercial Mortgage Corporation, Special Servicer Prior Payment:
Commercial Mortgage Pass-Through Certificates Next Payment:
Series 2000-C1 Record Date:
ABN AMRO Acct: XX-XXXX-XX-X
</TABLE>
Delinquent Loan Detail
<TABLE>
<CAPTION>
Paid Outstanding Out. Property Special
Disclosure Doc Thru Current P&I P&I Protection Advance Servicer Foreclosure Bankruptcy REO
Control # Date Advance Advances(**) Advances Description (1) Transfer Date Date Date Date
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
A. P&I Advance - Loan in Grace Period
B. P&I Advance - Late Payment but (less than) one month delinq
1. P&I Advance - Loan delinquent 1 month
2. P&I Advance - Loan delinquent 2 months
3. P&I Advance - Loan delinquent 3 months or More
4. Matured Balloon/Assumed Scheduled Payment
(**) Outstanding P&I Advances include the current period P&I Advance
05/26/2000 - 15:01 (MXXX-MXXX)(C) 2000 LaSalle Bank N.A.
<PAGE>
<TABLE>
<S> <C> <C>
ABN AMRO PNC Mortgage Acceptance Corp. Statement Date:
LaSalle Bank N.A. Midland Loan Services, Inc., Master Servicer Payment Date:
GMAC Commercial Mortgage Corporation, Special Servicer Prior Payment:
Commercial Mortgage Pass-Through Certificates Next Payment:
Series 2000-C1 Record Date:
ABN AMRO Acct: XX-XXXX-XX-X
</TABLE>
Historical Collateral Level Prepayment Report
<TABLE>
<CAPTION>
Remaining Term
Disclosure Distribution Initial Payoff Penalty Prepayment Maturity Property --------------- Note
Control # Date Balance Code Amount Amount Date Date Type State DSCR Life Amort. Rate
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
Cumulative 0 0
05/26/2000 - 15:01 (MXXX-MXXX)(C) 2000 LaSalle Bank N.A.
<PAGE>
<TABLE>
<S> <C> <C>
ABN AMRO PNC Mortgage Acceptance Corp. Statement Date:
LaSalle Bank N.A. Midland Loan Services, Inc., Master Servicer Payment Date:
GMAC Commercial Mortgage Corporation, Special Servicer Prior Payment:
Commercial Mortgage Pass-Through Certificates Next Payment:
Series 2000-C1 Record Date:
ABN AMRO Acct: XX-XXXX-XX-X
</TABLE>
Asset Backed Facts ~15 Month Historical Payoff/Loss Summary
<TABLE>
<CAPTION>
Ending Pool (1) Payoffs (2) Penalties Appraisal Reduct. (2) Liquidations (2)
Distribution --------------- ----------- ----------- --------------------- ----------------
Date # Balance # Balance # Amount # Balance # Balance
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
<CAPTION>
Realized Losses (2) Remaining Term Curr Weighted Avg.
Distribution ------------------- --------------- ------------------
Date # Amount Life Amort. Coupon Remit
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
(1) Percentage based on pool as of cutoff.
(2) Percentage based on pool as of beginning of period.
05/26/2000 - 15:01 (MXXX-MXXX)(C) 2000 LaSalle Bank N.A.
<PAGE>
<TABLE>
<S> <C> <C>
ABN AMRO PNC Mortgage Acceptance Corp. Statement Date:
LaSalle Bank N.A. Midland Loan Services, Inc., Master Servicer Payment Date:
GMAC Commercial Mortgage Corporation, Special Servicer Prior Payment:
Commercial Mortgage Pass-Through Certificates Next Payment:
Series 2000-C1 Record Date:
ABN AMRO Acct: XX-XXXX-XX-X
</TABLE>
Asset Backed Facts ~15 Month Historical Loan Status Summary
<TABLE>
<CAPTION>
Delinquency Aging Categories
---------------------------------------------------------------------------------------------
Delinq 1 Month Delinq 2 Months Delinq 3+ Months Foreclosure REO
Distribution ----------------- ----------------- ----------------- ----------------- -----------------
Date # Balance # Balance # Balance # Balance # Balance
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
01/00/00
<CAPTION>
Special Event Categories (1)
------------------------------------------------------------
Modifications Specially Serviced Bankruptcy
Distribution ----------------- ------------------ ---------------------
Date # Balance # Balance # Balance
<S> <C> <C> <C> <C> <C> <C>
01/00/00
</TABLE>
(1) Note: Modification, Specially Serviced & Bankruptcy Totals are Included in
the Appropriate Delinquency Aging Category
05/26/2000 - 15:01 (MXXX-MXXX)(C) 2000 LaSalle Bank N.A. Page 5 of 19
<PAGE>
<TABLE>
<S> <C> <C>
ABN AMRO PNC Mortgage Acceptance Corp. Statement Date:
LaSalle Bank N.A. Midland Loan Services, Inc., Master Servicer Payment Date:
GMAC Commercial Mortgage Corporation, Special Servicer Prior Payment:
Commercial Mortgage Pass-Through Certificates Next Payment:
Series 2000-C1 Record Date:
ABN AMRO Acct: XX-XXXX-XX-X
</TABLE>
Cash Reconciliation Summary
<TABLE>
Interest Summary
<S> <C>
Current Scheduled Interest
Less Deferred Interest
Plus Advance Interest
Plus Unscheduled Interest
PPIS Reducing Scheduled Interest
Less Total Fees Paid To Servicer
Plus Fees Advanced for PPIS
Less Fee Strips Paid by Servicer
Less Misc. Fees & Expenses
Less Non Recoverable Advances
--------------------------------------------------------------------------------
Interest Due Trust
--------------------------------------------------------------------------------
Less Trustee Fee
Less Fee Strips Paid by Trust
Less Misc. Fees Paid by Trust
--------------------------------------------------------------------------------
Remittance Interest
--------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Servicing Fee Summary
<S> <C>
Current Servicing Fees
Plus Fees Advanced for PPIS
Less Reduction for PPIS
Plus Unscheduled Servicing Fees
--------------------------------------------------------------------------------
Total Servicing Fees Paid
--------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PPIS Summary
<S> <C>
Gross PPIS
Reduced by PPIE
Reduced by Shortfalls in Fees
Reduced by Other Amounts
--------------------------------------------------------------------------------
PPIS Reducing Scheduled Interest
--------------------------------------------------------------------------------
PPIS Reducing Servicing Fee
--------------------------------------------------------------------------------
PPIS Due Certificate
--------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Pool Balance Summary
Balance Count
<S> <C> <C>
Beginning Pool
Scheduled Principal Distribution
Unscheduled Principal Distribution
Deferred Interest
Liquidations
Repurchases
Ending Pool
</TABLE>
<TABLE>
<CAPTION>
Principal Summary
<S> <C>
Scheduled Principal:
--------------------
Current Scheduled Principal
Advanced Scheduled Principal
--------------------------------------------------------------------------------
Scheduled Principal Distribution
--------------------------------------------------------------------------------
Unscheduled Principal:
----------------------
Curtailments
Prepayments in Full
Liquidation Proceeds
Repurchase Proceeds
Other Principal Proceeds
--------------------------------------------------------------------------------
Unscheduled Principal Distribution
--------------------------------------------------------------------------------
Remittance Principal
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Servicer Wire Amount
--------------------------------------------------------------------------------
</TABLE>
Advances
--------
<TABLE>
<CAPTION>
Prior Outstanding Current Period Recovered Ending Outstanding
--------------------------------- ---------------------------------- ----------------------------- ---------------------------------
Principal Interest Principal Interest Principal Interest Principal Interest
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
05/26/2000 - 15:01 (MXXX-MXXX)(C) 2000 LaSalle Bank N.A.
<PAGE>
<TABLE>
<S> <C> <C>
ABN AMRO PNC Mortgage Acceptance Corp. Statement Date:
LaSalle Bank N.A. Midland Loan Services, Inc., Master Servicer Payment Date:
GMAC Commercial Mortgage Corporation, Special Servicer Prior Payment:
Commercial Mortgage Pass-Through Certificates Next Payment:
Series 2000-C1 Record Date:
ABN AMRO Acct: XX-XXXX-XX-X
</TABLE>
Bond Interest Reconciliation
<TABLE>
<CAPTION>
Deductions
--------------------------------------------
Accrual Accrued Add. Deferred &
-------------- Certificate Allocable Trust Accretion Interest
Class Method Days Interest PPIS Expense(1) Interest Losses
<S> <C> <C> <C> <C> <C> <C> <C>
0.00 0.00 0.00 0.00 0.00
<CAPTION>
Additions
----------------------------------- Remaining
Prior Prepay- Other Distributable Interest Outstanding Credit Support
Int. Short- ment Interest Certificate Payment Interest --------------------
Class falls Due Penalties Proceeds(2) Interest Amount Shortfalls Original Current(3)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
0.00 0.00 0.00 0.00 0.00 0.00
</TABLE>
(1) Additional Trust Expenses are fees allocated directly to the bond resulting
in a deduction to accrued interest and not carried as an outstanding shortfall.
(2) Other Interest Proceeds include default interest, PPIE and Recoveries of
Interest.
(3) Determined as follows: (A) the ending balance of all the classes less (B)
the sum of (i) the ending balance of the class and (ii) the ending balance of
all classes which are not subordinate to the class divided by (A).
05/26/2000 - 15:01 (MXXX-MXXX)(C) 2000 LaSalle Bank N.A.
<PAGE>
<TABLE>
<S> <C> <C>
ABN AMRO PNC Mortgage Acceptance Corp. Statement Date:
LaSalle Bank N.A. Midland Loan Services, Inc., Master Servicer Payment Date:
GMAC Commercial Mortgage Corporation, Special Servicer Prior Payment:
Commercial Mortgage Pass-Through Certificates Next Payment:
Series 2000-C1 Record Date:
ABN AMRO Acct: XX-XXXX-XX-X
</TABLE>
Ratings Summary
<TABLE>
<CAPTION>
Original Ratings Current Ratings
---------------------------------------------------------------- --------------------------------------------------
Asset Moody's S&P Fitch Moody's S&P Fitch
<S> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
05/26/2000 - 15:04 (MXXX-MXXX)(C) 2000 LaSalle Bank N.A.
<PAGE>
<TABLE>
<S> <C> <C>
ABN AMRO PNC Mortgage Acceptance Corp. Statement Date:
LaSalle Bank N.A. Midland Loan Services, Inc., Master Servicer Payment Date:
GMAC Commercial Mortgage Corporation, Special Servicer Prior Payment:
WAC: Commercial Mortgage Pass-Through Certificates Next Payment:
WA Life Term: Series 2000-C1 Record Date:
WA Amort Term: ABN AMRO Acct: XX-XXXX-XX-X
Current Index:
Next Index:
</TABLE>
<TABLE>
<CAPTION>
Original Opening Principal Principal Negative Closing Interest Interest Pass-Through
Class Face Value (1) Balance Payment Adj. or Loss Amortization Balance Payment Adjustment Rate (2)
CUSIP Per 1,000 Per 1,000 Per 1,000 Per 1,000 Per 1,000 Per 1,000 Per 1,000 Per 1,000 Next Rate (3)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
<S> <C>
Total P&I Payment 0.00
</TABLE>
Notes:
(1) N denotes notional balance not included in total
(2) Interest Paid minus Interest Adjustment minus Deferred Interest equals
Accrual
(3) Estimated
05/26/2000 - 15:01 (MXXX-MXXX)(C) 2000 LaSalle Bank N.A.
<PAGE>
<TABLE>
<S> <C> <C>
ABN AMRO PNC Mortgage Acceptance Corp. Statement Date:
LaSalle Bank N.A. Midland Loan Services, Inc., Master Servicer Payment Date:
GMAC Commercial Mortgage Corporation, Special Servicer Prior Payment:
Commercial Mortgage Pass-Through Certificates Next Payment:
Series 2000-C1 Record Date:
ABN AMRO Acct: XX-XXXX-XX-X
Administrator: Analyst:
</TABLE>
Reporting Package Table of Contents
Issue Id:
ASAP #: 504
Monthly Data File Name:
Page(s)
-------
REMIC Certificate Report
Ratings
Bond Interest Reconciliation
Cash
Reconciliation
Summary
15 Month Historical Loan Status Summary
15 Month Historical Payoff/Loss Summary
Historical Collateral Level Prepayment Report
Delinquent Loan Detail
Mortgage Loan Characteristics
Loan Level Detail
Specially Serviced Report
Modified Loan Detail
Realized Loss Detail
Appraisal Reduction Detail
Closing Date:
First Payment Date:
Assumed Final Payment Date:
Contact Information
Issuer:
Depositor: PNC Mortgage Acceptance Corp.
Underwriter:
Master Servicer: Midland Loan Services, Inc.
Rating Agency:
Information is available for this issue from the following sources
LaSalle Web Site www.lnbabs.com
Servicer Website www.midlandls.com
LaSalle Bulletin Board (714) 282-3990
LaSalle "ASAP" Fax Back System (714) 282-5518
LaSalle Factor Line (800) 246-5761
05/26/2000 - 15:01 (MXXX-MXXX)(C) 2000 LaSalle Bank N.A.
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------- -------------------------------------------- ---------------------------------
<S> <C> <C>
Morgan Stanley Dean Witter [GRAPHIC OMITTED] June 15, 2000
Securitized Products Group
---------------------------------------------- -------------------------------------------- ---------------------------------
</TABLE>
CMBS New Issue
PNC Mortgage Acceptance Corp.
Series 2000-C1
Preliminary Term Sheet
------------------------------------------
Pricing Date: June 15, 2000
------------------------------------------
$716,910,000
(Approximate)
Midland Loan Services, Inc.
CIBC Inc.
Residential Funding Corporation
as Sellers
Midland Loan Services, Inc.
as Master Servicer
GMAC Commercial Mortgage Corporation
as Special Servicer
Commercial Mortgage Pass-Through Certificates
------------------------------------------
MORGAN STANLEY DEAN WITTER PNC CAPITAL MARKETS
CIBC WORLD MARKETS CORP.
--------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Goldman,
Sachs & Co. and Norwest Investment Services, Inc. (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transaction in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availability are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the "SEC")
and incorporated by reference into an effective registration statement
previously filed with the SEC under Rule 415 of the Securities Act of 1933,
including in cases where the material does not pertain to securities that are
ultimately offered for sale pursuant to such registration statement. To Morgan
Stanley's readers worldwide: In addition, please note that this publication has
been issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, any by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED BY THE U.K. SECURITIES
AND FUTURES AUTHORITY
------------------------------------------------------------------------------
<PAGE>
$716,910,000 (Approximate)
PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 2000-C1
Transaction Highlights
++ Contributors:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
Sellers No. of Loans Cut-Off Date Balance % of Pool
-----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Midland 107 $418,532,711 52.25%
CIBC 58 229,963,790 28.71
RFC 59 152,528,221 19.04
-----------------------------------------------------------------------------------------
Total: 224 $801,024,722 100.0%
-----------------------------------------------------------------------------------------
</TABLE>
++ Loan Pool:
o Average Loan Balance: $3.6 million (0.4% of Pool)
o Five Largest Loans/Loan Groups: 13.4% of Pool
o Largest Loan Balance: $27.2 million 3.4% of Pool
o Ten Largest Loans/Loan Groups: 22.8% of Pool
++ Credit Statistics:
o Weighted average debt service coverage ratio of 1.35x
o Weighted average cut-off date loan-to-value ratio of 70.6%
++ Property Types:
o Retail, office, industrial & multifamily properties comprise 90.7%
of the Pool
[PIE CHART]
Retail Multi-Family Mixed Use Other Self Storage
29.6% 28.6% 1.3% 0.1% 1.3%
Hospitality Industrial Office
6.7% 16.4% 16.1%
++ Call Protection:
o Lockout period followed by defeasance: 69.7% of Pool
o Lockout period followed by yield maintenance or the greater of yield
maintenance and 1% or 5% of the principal amount prepaid: 30.2% of Pool
o Lockout period followed by declining penalty: 0.1% of Pool
++ Collateral Terms: The Pool has a WAC of 8.102 and a WAM of 114 months
++ Collateral Information: Updated loan information will be part of the
monthly remittance report available from the Trustee in addition to
detailed payment and delinquency information. Updated property operating
and occupancy information, to the extent delivered by borrowers, will be
available to Certificateholders from the Master Servicer
++ Bond Information: Cash flows are expected to be modeled by TREPP,
CONQUEST and INTEX and are expected to be available on BLOOMBERG
++ It is expected that this transaction will be included as a part of the
Lehman Aggregate Bond Index
T-1
--------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Goldman,
Sachs & Co. and Norwest Investment Services, Inc. (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transaction in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availability are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the "SEC")
and incorporated by reference into an effective registration statement
previously filed with the SEC under Rule 415 of the Securities Act of 1933,
including in cases where the material does not pertain to securities that are
ultimately offered for sale pursuant to such registration statement. To Morgan
Stanley's readers worldwide: In addition, please note that this publication has
been issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, any by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
--------------------------------------------------------------------------------
<PAGE>
$716,910,000 (Approximate)
PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 2000-C1
Offered Certificates
<TABLE>
<CAPTION>
------------- ------------------ ---------------- -------------- ------------ --------------- ----------------- --------------------
Rating Average Scheduled Final Initial
Subordination (Fitch/ Life Principal Distribution Pass-Through
Class Amount(1) Levels Moody's) (years) (2) Window(3) Date Rate(4)
------------- ------------------ ---------------- -------------- ------------ --------------- ----------------- --------------------
<S> <C> <C> <C> <C> <C> <C> <C>
A-1 $152,026,000 23.50% AAA/Aaa 5.70 1-97 7/15/2008 7.52%
------------- ------------------ ---------------- -------------- ------------ --------------- ----------------- --------------------
------------- ------------------ ---------------- -------------- ------------ --------------- ----------------- --------------------
A-2 $460,741,000 23.50% AAA/Aaa 9.05 97-116 2/15/2010 7.61%
------------- ------------------ ---------------- -------------- ------------ --------------- ----------------- --------------------
------------- ------------------ ---------------- -------------- ------------ --------------- ----------------- --------------------
B $34,046,000 19.25% AA/Aa2 9.64 116-117 3/15/2010 7.74%
------------- ------------------ ---------------- -------------- ------------ --------------- ----------------- --------------------
------------- ------------------ ---------------- -------------- ------------ --------------- ----------------- --------------------
C $34,047,000 15.00% A/A2 9.71 117- 117 3/15/2010 7.74%
------------- ------------------ ---------------- -------------- ------------ --------------- ----------------- --------------------
------------- ------------------ ---------------- -------------- ------------ --------------- ----------------- --------------------
D $10,014,000 13.75% A-/A3 9.71 117-117 3/15/2010 7.74%
------------- ------------------ ---------------- -------------- ------------ --------------- ----------------- --------------------
E $26,036,000 10.50% BBB/Baa2 9.75 117-118 4/15/2010 7.74%
------------- ------------------ ---------------- -------------- ------------ --------------- ----------------- --------------------
Private Certificates (6)
<CAPTION>
------------ ---------------- --------------- -------------- ------------- -------------- ------------------ -----------------------
Rating Scheduled Final Initial
Subordination (Fitch/ Average Principal Distribution Pass-Through
Class Amount(1) Levels Moody's) Life(2) Window(3) Date Rate(4)(6)
------------ ------------------- --------------- -------------- ------------- -------------- ------------------ --------------------
<S> <C> <C> <C> <C> <C> <C> <C>
X -- -- -- -- -- -- Variable Rate
F-O $84,114,722 -- -- -- -- -- --
------------ ------------------- --------------- -------------- ------------- -------------- ------------------ --------------------
</TABLE>
Notes: (1) In the case of each such Class, subject to a permitted variance
of plus or minus 5%. The Class X Notional Amount is equal to the
sum of all Certificate Balances outstanding from time to time.
(2) Based on Maturity Assumptions and a 0% CPR as described in the
Prospectus Supplement.
(3) Principal Window is the period (expressed in terms of months and
commencing with the month of the first Distribution Date) during
which distributions of principal are expected to be made to the
holders of each designated Class in accordance with the Maturity
Assumptions and a 0% CPR as described in the Prospectus
Supplement.
(4) Other than the Class X certificates, each Class of Certificates
will accrue interest generally at a fixed rate of interest subject
to a WAC cap.
(5) Certificates to be offered privately pursuant to Rule 144A.
(6) The Pass-Through Rate on the Class X Certificates on each
Distribution Date will equal, in general, the NWAC Rate minus the
weighted average of the Pass-Through Rates of the classes of
certificates that are entitled to distributions of principal.
T-2
--------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Goldman,
Sachs & Co. and Norwest Investment Services, Inc. (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transaction in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availability are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the "SEC")
and incorporated by reference into an effective registration statement
previously filed with the SEC under Rule 415 of the Securities Act of 1933,
including in cases where the material does not pertain to securities that are
ultimately offered for sale pursuant to such registration statement. To Morgan
Stanley's readers worldwide: In addition, please note that this publication has
been issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, any by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
--------------------------------------------------------------------------------
<PAGE>
$716,910,000 (Approximate)
PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 2000-C1
<TABLE>
<CAPTION>
I. Issue Characteristics
<S> <C>
Issue Type: Public: Class A-1, A-2, B, C, D and E (the "Offered Certificates")
Private (Rule 144A): Class X, F, G, H, J, K, L, M, N and O
Securities Offered: Six fixed rate monthly pay, multi-class sequential pay principal and interest
commercial mortgage REMIC Pass-Through Certificates.
Collateral: The collateral consists of a $801,024,722 pool of fixed-rate commercial and
multifamily Mortgage Loans
Sellers: Midland Loan Services, Inc., CIBC Inc. and Residential Funding Corporation
Book-Running Manager: Morgan Stanley & Co. Incorporated
Co-Lead Managers: Morgan Stanley & Co. Incorporated and PNC Capital Markets Inc.
Co-Manager: CIBC World Markets Corp.
Master Servicer: Midland Loan Services, Inc.
Special Servicer: GMAC Commercial Mortgage Corporation
Trustee/Fiscal Agent: LaSalle Bank National Association
Pricing Date: On or about June 15, 2000
Closing Date: On or about June 29, 2000
Distribution Dates: The 15th of each month, or if the 15th is not a business day, the next business
day beginning in July, 2000
Cut-Off Date: June 1, 2000
Minimum Denominations: $25,000 for Class A Certificates; $50,000 for Class B, C, D and E Certificates
Settlement Terms: DTC, Euroclear and Clearstream, same day funds, with accrued interest
Legal/Regulatory Status: Class A-1 and A-2 Certificates are expected to be eligible for exemptive relief
under ERISA. No Class of Certificates is SMMEA eligible
Risk Factors: THE CERTIFICATES INVOLVE A DEGREE OF RISK AND MAY NOT BE SUITABLE FOR ALL
INVESTORS. SEE THE "RISK FACTORS" SECTION OF THE PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS
</TABLE>
T-3
--------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Goldman,
Sachs & Co. and Norwest Investment Services, Inc. (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transaction in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availability are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the "SEC")
and incorporated by reference into an effective registration statement
previously filed with the SEC under Rule 415 of the Securities Act of 1933,
including in cases where the material does not pertain to securities that are
ultimately offered for sale pursuant to such registration statement. To Morgan
Stanley's readers worldwide: In addition, please note that this publication has
been issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, any by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
T-3
--------------------------------------------------------------------------------
<PAGE>
$716,910,000 (Approximate)
PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 2000-C1
II. Structure Characteristics
Class A-1, A-2, B, C, D and E Certificates are fixed-rate, monthly pay,
multi-class, sequential pay REMIC Pass-Through Certificates. The Class X
Certificates are variable rate interest only REMIC Pass-Through
Certificates. All Classes of Certificates derive their cash flows from the
entire pool of Mortgage Loans.
<TABLE>
<S> <C> <C> <C> <C>
Class X (1) (2)
| ------------------------------ ------------------
| Class A-1 Aaa / AAA $152.0MM
|
| ------------------------------ ------------------
|
| ------------------------------ ------------------
| Class A-2 Aaa / AAA $460.7MM
|
Offered | ------------------------------ ------------------
Certificates |
| ------------------------------ ------------------
| Class B Aa2 / AA $34.0MM
|
| ------------------------------ ------------------
|
| ------------------------------ ------------------
| Class C A2 / A $34.0MM
|
| ------------------------------ ------------------
|
| ------------------------------ ------------------
| Class D A3 / A- $10.0MM
|
| ------------------------------ ------------------
|
| ------------------------------ ------------------
| Class E Baa2 / BBB $26.0MM
|
| ------------------------------ ------------------
| ------------------------------ ------------------
Privately | Class F (2) _ $12.0MM
Offered | ------------------------------ ------------------
Certificates |
| ----------------------------- ------------------
| Classes G-O (2) - $72.1MM
| ----------------------------- ------------------
</TABLE>
Note: (1) Class X is entitled to interest (on a notional amount equal to
the aggregate pool balance) at an annual rate generally equal to
the difference between the weighted average of the net mortgage
rates over the weighted average of the pass-through rates for the
classes of Principal Balance Certificates.
(2) To be offered privately pursuant to Rule 144A
T-4
--------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Goldman,
Sachs & Co. and Norwest Investment Services, Inc. (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transaction in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availability are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the "SEC")
and incorporated by reference into an effective registration statement
previously filed with the SEC under Rule 415 of the Securities Act of 1933,
including in cases where the material does not pertain to securities that are
ultimately offered for sale pursuant to such registration statement. To Morgan
Stanley's readers worldwide: In addition, please note that this publication has
been issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, any by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
--------------------------------------------------------------------------------
<PAGE>
$716,910,000 (Approximate)
PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 2000-C1
<TABLE>
<S> <C>
Interest Distributions: Each Class of Certificates (other than the Class V and Class R Certificates) will be
entitled on each Distribution Date to interest accrued at its Pass-Through Rate on the
outstanding Certificate Balance or Notional Amount of such Class, as applicable.
Pass-Through Rates: Class A-1: 7.52%
Class A-2: 7.61%
Class B: 7.74%
Class C: 7.74%
Class D: 7.74%
Class E: 7.74%
Classes F-O: --
Class X: See Note on page T-2
The Pass-Through Rate for each class of Principal Balance Certificates for
any Distribution Date will not exceed the Weighted Average Net Mortgage
Rate ("NWAC") for such Distribution Date.
Principal Distributions: Principal will be distributed on each Distribution Date to
the most senior Class (i.e., the Class with the earliest alphabetical/numerical
Class designation) of the Principal Balance Certificates outstanding, until its
Certificate Balance is reduced to zero (sequential order). If, due to losses, the
Certificate Balances of the Class B through Class O Certificates are reduced to
zero, payments of principal to the Class A-1 and A-2 Certificates will be made on
a pro rata basis.
Prepayment Premium Allocation: Any Prepayment Premium collected with respect to a Mortgage Loan during any
particular Collection Period will be distributed to the holders of each Class of
Principal Certificates (other than an excluded class as defined below) then
entitled to distributions of principal on such distribution date. Such class will
be entitled to an aggregate amount (allocable on a pro rata basis based on
principal payments if there is more than one Class of Principal Balance
Certificates entitled to a distribution of principal) equal to the lesser of (a)
such Prepayment Premium Payment and (b) such Prepayment Premium Payment multiplied
by a fraction, the numerator of which is equal to the excess, if any, of the
Pass-Through Rate applicable to the most senior of such Classes of Principal
Balance Certificates then outstanding (or, in the case of two Classes of Class A
Certificates, the one with the earlier payment priority), over the relevant
Discount Rate (as defined in the Prospectus Supplement), and the denominator of
which is equal to the excess, if any, of the Mortgage Rate of the Mortgage Loan
that prepaid, over the relevant Discount Rate.
The portion, if any, of the Prepayment Premium remaining after such payments to
the holders of the Principal Balance Certificates will be distributed to the
holders of the Class X Certificates. For the purposes of the foregoing, the
classes G, H, J, K, L, M, N and O are the excluded classes.
</TABLE>
T-5
--------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Goldman,
Sachs & Co. and Norwest Investment Services, Inc. (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transaction in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availability are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the "SEC")
and incorporated by reference into an effective registration statement
previously filed with the SEC under Rule 415 of the Securities Act of 1933,
including in cases where the material does not pertain to securities that are
ultimately offered for sale pursuant to such registration statement. To Morgan
Stanley's readers worldwide: In addition, please note that this publication has
been issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, any by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
--------------------------------------------------------------------------------
<PAGE>
$716,910,000 (Approximate)
PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 2000-C1
<TABLE>
<S> <C>
The following is an example of the Prepayment Premium Allocation under (b) above
based on the information contained herein and the following assumptions:
o Two Classes of Certificates: Class A-1 and X
o The characteristics of the Mortgage Loan being prepaid are as follows
- Loan Balance: $10,000,000
- Mortgage Rate: 8.00%
- Maturity Date: 10 years (May 1, 2010)
o The Discount Rate is equal to 5.75%
o The Class A-1 Pass Through Rate is equal to 7.52%
Class A-1 Class X
Method Certificates Certificates
------------------------------------ ------------------ ----------------
(Class A-1 Pass Through Rate - (7,00% - 5.75% (100.00% - 55.56%)
Discount Rate)
(Mortgage Rate - Discount Rate) (8.00% - 5.75%)
Prepayment Premium Allocation 55.56% 44.44%
------ ------
Credit Enhancement: Each Class of Certificates (other than Classes A-1, A-2 and X) will be subordinate
to all other Classes with an earlier alphabetical Class designation.
Advancing: The Master Servicer, the Trustee and the Fiscal Agent (in that order) will each be
obligated to make P&I Advances and Servicing Advances, including delinquent
property taxes and insurance (and the Special Servicer will be obligated to make
emergency Servicing Advances), but only to the extent that such Advances are
deemed recoverable.
Realized Losses and Expense Realized Losses and Expense Losses, if any, will be allocated to the Class O,
Losses: Class N, Class M, Class L, Class K, Class J, Class H, Class G, Class F, Class E,
Class D, Class C and Class B Certificates, in that order, and then to Classes A-1
and A-2, pro rata, in each case reducing amounts payable thereto. Any interest
shortfall of any Class of Certificates will result in unpaid interest for such
Class which will be payable, without interest, in subsequent periods, subject to
available funds.
Prepayment/Balloon Interest For any Distribution Date, any Net Aggregate Prepayment Interest Shortfall not
Shortfalls: offset by the Servicing Fee (but not to exceed 0.02% per annum per loan), will
generally be allocated pro rata to each Class of Certificates in proportion to its
entitlement to interest.
</TABLE>
T-6
--------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Goldman,
Sachs & Co. and Norwest Investment Services, Inc. (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transaction in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availability are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the "SEC")
and incorporated by reference into an effective registration statement
previously filed with the SEC under Rule 415 of the Securities Act of 1933,
including in cases where the material does not pertain to securities that are
ultimately offered for sale pursuant to such registration statement. To Morgan
Stanley's readers worldwide: In addition, please note that this publication has
been issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, any by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
--------------------------------------------------------------------------------
<PAGE>
$716,910,000 (Approximate)
PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 2000-C1
<TABLE>
<S> <C>
Appraisal Reductions: An appraisal reduction generally will be created in the amount, if any, by which
the Principal Balance of a Specially Serviced Mortgage Loan (plus other amounts
overdue in connection with such loan) exceeds 90% of the appraised value of the
related Mortgaged Property, plus reserves for escrows (other than taxes and
insurance) that are pledged as collateral for the loan. The Appraisal Reduction
Amount will reduce proportionately the amount of delinquent interest advanced for
such loan, which reduction will result, in general, in a reduction of interest
distributable to the most subordinate Class of Principal Balance Certificate
outstanding.
An Appraisal Reduction will be reduced to zero as of the date the related Mortgage
Loan has become a corrected mortgage loan, as defined in the Prospectus
Supplement.
Operating Adviser: The Operating Adviser, which may be appointed by the Controlling Class, will have
the right to advise the Special Servicer with respect to certain actions regarding
Specially Serviced Mortgage Loans. Examples include the right to make certain
modifications, foreclose, sell, bring an REO Property into environmental
compliance or accept substitute or additional collateral. In addition, subject to
the satisfaction of certain conditions, the Operating Adviser will have the right
to direct the Trustee to remove the Special Servicer and appoint a Successor
Special Servicer that must be acceptable to each Rating Agency.
Controlling Class: The Controlling Class will generally be the most subordinate Class of Certificates
outstanding at any time or, if the Certificate Balance of such Class is less than
25% of the initial Certificate Balance of such Class, the most subordinate Class
of Principal Balance Certificates still outstanding will be the controlling class.
Special Servicer: In general, the Special Servicer has the right to modify the terms of a Specially
Serviced Mortgage Loan if it determines that the related borrower is in default or
default is reasonably foreseeable and such modification would increase the net
present value of the proceeds to the Trust, provided that the Special Servicer
generally may not extend the maturity date of a Mortgage Loan beyond two years
prior to the Rated Final Distribution Date.
Optional Termination: The majority holders of the Controlling Class, then the Master Servicer, then
the Special Servicer and then the holder of a majority of the R-I Certificates
will have the option to purchase, in whole but not in part, the remaining assets
of the Trust on or after the Distribution Date on which the current aggregate
stated principal balance of the Mortgage Loans is less than or equal to 1% of
the initial aggregate stated principal balance of the Mortgage Loans. Such
purchase price will generally be at a price equal to the unpaid aggregate
Scheduled Principal Balance of the Mortgage Loans, plus accrued and unpaid
interest and unreimbursed Advances.
</TABLE>
T-7
--------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Goldman,
Sachs & Co. and Norwest Investment Services, Inc. (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transaction in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availability are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the "SEC")
and incorporated by reference into an effective registration statement
previously filed with the SEC under Rule 415 of the Securities Act of 1933,
including in cases where the material does not pertain to securities that are
ultimately offered for sale pursuant to such registration statement. To Morgan
Stanley's readers worldwide: In addition, please note that this publication has
been issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, any by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
--------------------------------------------------------------------------------
<PAGE>
$716,910,000 (Approximate)
PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 2000-C1
<TABLE>
<S> <C>
Reports to Certificateholders: The Trustee will prepare and deliver monthly Certificateholder Reports. The
Special Servicer will prepare and deliver to the Trustee a monthly Special
Servicer Report summarizing the status of each Specially Serviced Mortgage Loan.
The Master Servicer and the Special Servicer will prepare and deliver to the
Trustee an annual report setting forth, among other things, the debt service
coverage ratios for each Mortgage Loan, as available. Each of the reports will be
available to the Certificateholders. A report containing information regarding the
Mortgage Loans will be available electronically at www.lnbabs.com
</TABLE>
T-8
--------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Goldman,
Sachs & Co. and Norwest Investment Services, Inc. (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transaction in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availability are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the "SEC")
and incorporated by reference into an effective registration statement
previously filed with the SEC under Rule 415 of the Securities Act of 1933,
including in cases where the material does not pertain to securities that are
ultimately offered for sale pursuant to such registration statement. To Morgan
Stanley's readers worldwide: In addition, please note that this publication has
been issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, any by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
--------------------------------------------------------------------------------
<PAGE>
$716,910,000 (Approximate)
PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 2000-C1
<TABLE>
<S> <C>
III. Sellers Midland Loan Services, Inc.
The Mortgage Pool includes 107 Mortgage Loans, representing approximately 52.3% of the
Initial Pool Balance, which were originated by or on behalf of Midland Loan Services, Inc. ("MLS").
MLS is a wholly owned subsidiary of PNC Bank, National Association. MLS which originates and
acquires mortgage loans secured by mortgages on commercial and multifamily real estate. PNC
Capital Markets is an affiliate of MLS.
CIBC Inc.
The Mortgage Pool includes 58 Mortgage Loans, representing approximately 28.7% of the Initial
Pool Balance, which were either acquired or originated by or on behalf of CIBC Inc.
CIBC Inc. is a majority owned subsidiary of Canadian Imperial Holdings Inc. and is incorporated
under the laws of Delaware. Canadian Imperial Holdings Inc. is a wholly owned subsidiary of
CIBC Delaware Holdings Inc., also a Delaware corporation, which is a subsidiary of Canadian
Imperial Bank of Commerce, a bank chartered under the Bank Act of Canada. CIBC Inc. is a
commercial finance company that originates commercial and multi-family real estate loans,
purchases participations in loans from third-party lenders and otherwise extends credit to
Fortune 1000 companies. CIBC Inc. is an affiliate of CIBC World Markets Corp., formerly known
as CIBC Oppenheimer Corp.
Residential Funding Corporation
The Mortgage Pool includes 59 Mortgage Loans, representing approximately 19% of the Initial
Pool Balance, which were either acquired or originated by or on behalf of Residential Funding
Corporation ("RFC").
RFC is a direct wholly owned subsidiary of GMAC Mortgage Group, Inc. RFC Commercial is a
division of RFC which originates and acquires mortgage loans secured by mortgages on commercial
and multifamily real estate.
</TABLE>
T-9
--------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Goldman,
Sachs & Co. and Norwest Investment Services, Inc. (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transaction in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availability are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the "SEC")
and incorporated by reference into an effective registration statement
previously filed with the SEC under Rule 415 of the Securities Act of 1933,
including in cases where the material does not pertain to securities that are
ultimately offered for sale pursuant to such registration statement. To Morgan
Stanley's readers worldwide: In addition, please note that this publication has
been issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, any by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
--------------------------------------------------------------------------------
<PAGE>
$716,910,000 (Approximate)
PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 2000-C1
IV. Collateral Description
<TABLE>
<S> <C>
Summary: The Mortgage Pool consists of an $801,024,722 pool of 224 fixed-rate, first lien
mortgage loans secured by first liens on commercial and multifamily properties
located throughout 36 jurisdictions. As of the Cut-Off Date, the Mortgage Loans
have a weighted average mortgage rate of 8.102% and a weighted average remaining
term to maturity of 114 months. See the Appendices to the Prospectus Supplement
for more detailed collateral information.
Seismic Review Process: For loans originated by Midland, RFC or CIBC, all loan requests secured by properties
in California are subject to a third party seismic report.
Generally, any proposed loan originated by Midland, RFC or CIBC as to which the
property was estimated to have a PML in excess of 20% of the estimated replacement
cost would either be subject to a lower loan-to-value limit at origination, be
conditioned on seismic upgrading, be conditioned on satisfactory earthquake
insurance or be declined.
</TABLE>
T-10
--------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Goldman,
Sachs & Co. and Norwest Investment Services, Inc. (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transaction in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availability are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the "SEC")
and incorporated by reference into an effective registration statement
previously filed with the SEC under Rule 415 of the Securities Act of 1933,
including in cases where the material does not pertain to securities that are
ultimately offered for sale pursuant to such registration statement. To Morgan
Stanley's readers worldwide: In addition, please note that this publication has
been issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, any by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
--------------------------------------------------------------------------------
<PAGE>
$716,910,000 (Approximate)
PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 2000-C1
<TABLE>
<CAPTION>
Top Ten Mortgage Loans
Units/
Property Current Percent Square
Property Name City State Type Balance of Balance Feet
--------------------------- --------------- ------- ------------ ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Campus Apartments Philadelphia PA Multifamily $27,208,269 3.40% 384
17 John Street New York NY Multifamily $23,370,205 2.92% 111
San Croix Apartments Las Vegas NV Multifamily $19,578,662 2.44% 352
4343 Commerce Court (A) (I) Lisle IL Office $12,854,405 1.60% 167,756
1051 North Kirk Road (A) (I) Batavia IL Industrial $3,347,051 0.42% 120,004
Narco River Business Center (A) Calumet City IL Office $2,785,970 0.35% 65,394
Ryder Integrated Logistics Auburn Hills MI Industrial $18,163,497 2.27% 455,000
Holiday Inn Rochester Henrietta NY Hospitality $17,664,749 2.21% 250
Nevada Street Apartments Newark NJ Multifamily $15,383,326 1.92% 306
Camelot Apartments Yuma AZ Multifamily $14,856,703 1.85% 456
Neurocrine Biosciences San Diego CA Industrial $14,520,520 1.81% 93,000
CSC Office Building Southfield MI Office $13,062,719 1.63% 137,954
<CAPTION>
Current
Loan to Balloon
Property Name DSCR Value Loan to Value
--------------------------- ---- ------------ ---------------
<S> <C> <C> <C>
Campus Apartments 1.35 66.0% 54.5%
17 John Street 1.25 68.7% 62.0%
San Croix Apartments 1.33 75.0% 66.7%
4343 Commerce Court (A) (I) 1.55 66.6% 59.0%
1051 North Kirk Road (A) (I) 1.55 66.6% 59.0%
Narco River Business Center (A) 1.55 66.6% 59.0%
Ryder Integrated Logistics 1.25 76.0% 69.0%
Holiday Inn Rochester 1.50 70.1% 60.2%
Nevada Street Apartments 1.30 78.1% 70.2%
Camelot Apartments 1.20 78.6% 71.2%
Neurocrine Biosciences 1.76 60.0% 53.0%
CSC Office Building 1.25 70.2% 63.9%
</TABLE>
Notes: (1) The 4343 Commerce Court, 1051 North Kirk Road and Narco River
Business Center loans are cross-collateralized and cross-defaulted
with each other.
T-11
--------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Goldman,
Sachs & Co. and Norwest Investment Services, Inc. (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transaction in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availability are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the "SEC")
and incorporated by reference into an effective registration statement
previously filed with the SEC under Rule 415 of the Securities Act of 1933,
including in cases where the material does not pertain to securities that are
ultimately offered for sale pursuant to such registration statement. To Morgan
Stanley's readers worldwide: In addition, please note that this publication has
been issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, any by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
--------------------------------------------------------------------------------
<PAGE>
$716,910,000 (Approximate)
PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 2000-C1
GEOGRAPHIC DISTRIBUTION
[MAP OF UNITED STATES]
--------------------------------------------------------------------------------
T-12
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Goldman,
Sachs & Co. and Norwest Investment Services, Inc. (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transaction in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availability are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the "SEC")
and incorporated by reference into an effective registration statement
previously filed with the SEC under Rule 415 of the Securities Act of 1933,
including in cases where the material does not pertain to securities that are
ultimately offered for sale pursuant to such registration statement. To Morgan
Stanley's readers worldwide: In addition, please note that this publication has
been issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, any by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
--------------------------------------------------------------------------------
<PAGE>
$716,910,000 (Approximate)
PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 2000-C1
Sellers
----------------------------------------------
No. Aggregate %
of Current of
Loans Balance Pool
----------------------------------------------
CIBC 58 229,963,790 28.71
MID 107 418,532,711 52.25
RFC 59 152,528,221 19.04
----------------------------------------------
Total: 224 801,024,722 100.00
----------------------------------------------
Current Balances
----------------------------------------------
No. Aggregate %
of Current of
Loans Balance Pool
----------------------------------------------
1 - 1,000,000 40 26,699,503 3.33
1,000,001 - 64 94,992,703 11.86
2,000,000
2,000,001 - 42 103,877,859 12.97
3,000,000
3,000,001 - 19 64,005,323 7.99
4,000,000
4,000,001 - 9 40,149,133 5.01
5,000,000
5,000,001 - 16 88,200,554 11.01
6,000,000
6,000,001 - 9 57,735,095 7.21
7,000,000
7,000,001 - 3 23,405,997 2.92
8,000,000
9,000,001 - 4 38,215,216 4.77
10,000,000
10,000,001 - 12 142,374,631 17.77
15,000,000
15,000,001 - 4 70,790,234 8.84
20,000,000
20,000,001 - 1 23,370,205 2.92
25,000,000
25,000,001 1 27,208,269 3.40
(greater than or
equal to)
----------------------------------------------
Total: 224 801,024,722 100.00
----------------------------------------------
Min: 281,659 Max: 27,208,269
Average: 3,576,003
----------------------------------------------
States
----------------------------------------------
No. Cut-Off Date %
of Principal of
Loans Balance Pool
----------------------------------------------
California 25 108,931,238 13.60
New York 25 108,002,779 13.48
Pennsylvania 20 67,099,666 8.38
Michigan 10 62,900,591 7.85
Texas 29 61,573,243 7.69
New Jersey 11 59,205,242 7.39
Other 104 333,311962 41.61
----------------------------------------------
Total: 224 801,024,722 100.00
----------------------------------------------
Property Type
----------------------------------------------
No. Aggregate %
of Current of
Loans Balance Pool
----------------------------------------------
Retail 75 237,436,733 29.64
Multifamily 62 228,700,679 28.55
Industrial 32 131,427,144 16.41
Office 35 128,749,149 16.07
Hospitality 8 53,832,049 6.72
Self Storage 7 10,289,986 1.28
Mixed Use 4 10,094,459 1.26
Other 1 494,522 0.06
----------------------------------------------
Total: 224 801,024,722 100.00
----------------------------------------------
Mortgage Rates (%)
----------------------------------------------
No. Aggregate %
of Current Of
Loans Balance Pool
----------------------------------------------
6.001 - 6.500 2 5,021,761 0.63
6.501 - 7.000 32 158,625,131 19.80
7.001 - 7.500 17 55,355,384 6.91
7.501 - 8.000 10 41,486,098 5.18
8.001 - 8.500 75 283,836,323 35.43
8.501 - 9.000 61 167,730,227 20.94
9.001 - 9.500 23 81,661,652 10.19
9.501 - 10.000 4 7,308,145 0.91
----------------------------------------------
Total: 224 801,024,722 100.00
----------------------------------------------
Min: 6.450 Max: 9.990 WAC: 8.102
----------------------------------------------
Original Terms to Stated Maturity (mos.)
----------------------------------------------
No. Aggregate %
of Current Of
Loans Balance Pool
----------------------------------------------
61 - 120 199 738,040,162 92.14
121 - 180 12 40,514,719 5.06
181 - 240 13 22,469,840 2.81
----------------------------------------------
Total: 224 801,024,722 100.00
----------------------------------------------
Min: 78 Max: 240 Wtd. Avg.: 124
----------------------------------------------
Remaining Terms to Stated Maturity (mos.)
----------------------------------------------
No. Aggregate %
of Current Of
Loans Balance Pool
----------------------------------------------
61 - 120 201 754,006,903 94.13
121 - 180 10 24,547,979 3.06
181 - 240 13 22,469,840 2.81
----------------------------------------------
Total: 224 801,024,722 100.00
----------------------------------------------
Min: 73 Max: 237 Wtd. Avg.: 114
----------------------------------------------
Balloon Loans
----------------------------------------------
No. Cut-Off Date %
of Principal Of
Loans Balance Pool
----------------------------------------------
Yes 209 774,161,814 96.65
No 15 26,862,907 3.35
----------------------------------------------
Total: 224 801,024,722 100.00
----------------------------------------------
Debt Service Coverage Ratios (x)
---------------------------------------------
No. Aggregate %
of Current of
Loans Balance Pool
---------------------------------------------
1.01 - 1.15 2 3,434,550 0.43
1.16 - 1.25 33 132,796,085 16.58
1.26 - 1.35 101 395,608,782 49.39
1.36 - 1.50 51 141,541,167 17.67
1.51 - 1.75 25 95,787,140 11.96
1.76 - 2.00 7 25,772,460 3.22
2.01 (greater 5 6,084,538 0.76
than or equal
to)
--------------------------------------------
Total: 224 801,024,722 100.00
--------------------------------------------
Min: 1.05 Max: 2.35 Wtd. Avg.: 1.35
--------------------------------------------
Current Loan-to-Value Ratios (%)
--------------------------------------------
No. Aggregate %
of Current Of
Loans Balance Pool
--------------------------------------------
30.1 - 40.0 3 2,783,996 0.35
40.1 - 50.0 2 7,033,009 0.88
50.1 - 60.0 17 41,395,088 5.17
60.1 - 70.0 84 268,177,675 33.48
70.1 - 80.0 118 481,634,953 60.13
------------------------------------------
Total: 224 801,024,722 100.00
------------------------------------------
Min: 30.4 Max: 79.8 Wtd. Avg.: 70.6
------------------------------------------
Balloon Loan-to-Value Ratios (%)
------------------------------------------
No. Aggregate %
of Current Of
Loans Balance Pool
------------------------------------------
0.1 - 10.0 15 26,862,907 3.35
20.1 - 30.0 5 11,144,994 1.39
30.1 - 40.0 3 14,271,726 1.78
40.1 - 50.0 12 27,513,775 3.43
50.1 - 60.0 73 215,574,717 26.91
60.1 - 70.0 95 399,184,802 49.83
70.1 - 80.0 21 106,471,801 13.29
------------------------------------------
Total: 224 801,024,722 100.00
------------------------------------------
Min: 1.5 Max: 72.4 Wtd. Avg.: 59.8
------------------------------------------
T-13
--------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Goldman,
Sachs & Co. and Norwest Investment Services, Inc. (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transaction in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availability are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the "SEC")
and incorporated by reference into an effective registration statement
previously filed with the SEC under Rule 415 of the Securities Act of 1933,
including in cases where the material does not pertain to securities that are
ultimately offered for sale pursuant to such registration statement. To Morgan
Stanley's readers worldwide: In addition, please note that this publication has
been issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, any by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
--------------------------------------------------------------------------------
<PAGE>
Prepayment Protection Analysis
Percentage of Collateral by Prepayment Restriction
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Prepayment Restrictions June 2000 June 2001 June 2002 June 2003 June 2004 June 2005
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Locked Out 99.26% 96.23% 92.38% 82.16% 73.88% 71.46%
Yield 0.74% 3.77% 7.62% 17.84% 26.01% 28.43%
Maintenance Total
Penalty Points :
5.00% and 0.00% 0.00% 0.00% 0.00% 0.11% 0.00%
greater
4.00% to 0.00 0.00 0.00 0.00 0.00 0.11
4.99%
3.00% to 0.00 0.00 0.00 0.00 0.00 0.00
3.99%
2.00% to 0.00 0.00 0.00 0.00 0.00 0.00
2.99%
1.00% to 0.00 0.00 0.00 0.00 0.00 0.00
1.99%
Open 0.00 0.00 0.00 0.00 0.00 0.00
-----------------------------------------------------------------------------------------------------------------------------------
TOTALS 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
Pool Balance 801,024,722 792,619,257 783,509,465 773,665,523 763,106,967 751,519,301
Outstanding
% Initial 100.00% 98.95% 97.81% 96.58% 95.27% 93.82%
Pool Balance
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
Prepayment Restrictions June 2006 June 2007 June 2008 June 2009 June 2010
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Locked Out 70.46% 70.66% 72.66% 60.71% 69.50%
Yield Maintenance 28.83% 29.23% 11.54% 4.88% 30.50%
Total
Penalty Points :
5.00% and greater 0.00% 0.00% 0.00% 0.00% 0.00%
4.00% to 4.99% 0.00 0.00 0.00 0.00 0.00
3.00% to 3.99% 0.11 0.00 0.00 0.00 0.00
2.00% to 2.99% 0.00 0.11 0.00 0.00 0.00
1.00% to 1.99% 0.00 0.00 0.12 0.15 0.00
Open 0.60 0.00 15.68 34.26 0.00
---------------------------------------------------------------------------------------------------------------------
TOTALS 100.00% 100.00% 100.00% 100.00% 100.00%
---------------------------------------------------------------------------------------------------------------------
Pool Balance 738,956,611 712,430,512 650,102,091 502,913,614 32,367,599
Outstanding
% Initial Pool 92.25% 88.94% 81.16% 62.78% 4.04%
Balance
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
Notes: (1) The above analysis is based on Maturity Assumptions and a 0%
CPR as discussed in the Prospectus Supplement.
--------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Goldman,
Sachs & Co. and Norwest Investment Services, Inc. (collectively the
"Underwriters") disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. The Underwriters and others
associated with them may have positions in, and may effect transaction in,
securities and instruments of issuers mentioned herein and may also perform or
seek to perform investment banking services for the issuers of such securities
and instruments. Past performance is not necessarily indicative of future
results. Price and availability are subject to change without notice. This
material may be filed with the Securities and Exchange Commission (the "SEC")
and incorporated by reference into an effective registration statement
previously filed with the SEC under Rule 415 of the Securities Act of 1933,
including in cases where the material does not pertain to securities that are
ultimately offered for sale pursuant to such registration statement. To Morgan
Stanley's readers worldwide: In addition, please note that this publication has
been issued by Morgan Stanley & Co. Incorporated, approved by Morgan Stanley
International Limited, a member of The Securities and Futures Authority, any by
Morgan Stanley Japan Ltd. Morgan Stanley recommends that such readers obtain the
advice of their Morgan Stanley & Co. Incorporated, Morgan Stanley International
or Morgan Stanley Japan Ltd. representative about the investments concerned.
--------------------------------------------------------------------------------
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
Prospectus
PNC Mortgage Acceptance Corp.
Depositor
Mortgage Pass-Through Certificates
(issuable in series)
Our name is PNC Mortgage Acceptance Corp. and we intend to offer
commercial mortgage pass-through certificates from time to time. These offers
may be made through one or more different methods, including offerings through
underwriters. See "Method of Distribution."
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
The Offered Certificates: The Trust Assets:
<S> <C>
The offered certificates will be issuable in The assets of each trust will include:
series. Each series of offered certificates will:
o mortgage loans secured by first and junior liens on,
o have its own series designation, or security interests in, various interests in commercial
o consist of one or more classes with various and multifamily real properties,
payment characteristics, o mortgage-backed securities that directly or indirectly
o evidence beneficial ownership interests in a evidence interests in, or are directly or indirectly
trust established by us, and secured by, such types of mortgage loans,
o be payable solely out of trust assets. o direct obligations of the United States or other
governmental agencies, or
We do not currently intend to list the offered o some combination of such types of mortgage loans,
certificates of any series on any national securities mortgage-backed securities and government securities.
exchange or the Nasdaq stock market.
Trust assets may also include letters of credit,
surety bonds, insurance policies, guarantees, reserve funds,
guaranteed investment contracts, interest rate or currency
exchange agreements, interest rate cap or floor agreements,
or other similar instruments and agreements.
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
In connection with each offering, we will prepare a supplement to this
prospectus in order to describe in more detail the particular certificates being
offered and the related trust assets. In that document, we will also state the
price to the public for each class of offered certificates or explain the method
for determining such price. In addition, in that document, we will identify the
applicable lead or managing underwriter(s), if any, and the relevant
underwriting arrangements. You may not purchase the offered certificates of any
series unless you have also received the prospectus supplement for that series.
You should carefully consider the risk factors beginning on page 9 in
this prospectus, as well as those set forth in the related prospectus
supplement, prior to investing.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the offered certificates or passed
upon the adequacy or accuracy of this prospectus. Any representation to the
contrary is a criminal offense.
The date of this Prospectus is May 30, 2000.
<PAGE>
Important Notice About The Information Presented In This Prospectus
When deciding whether to invest in any of the offered certificates, you
should only rely on the information contained in this prospectus and the related
prospectus supplement. We have not authorized any dealer, salesman or other
person to give any information or to make any representation that is different.
In addition, information in this prospectus or any related prospectus supplement
is current only as of the date on its cover. By delivery of this prospectus and
any related prospectus supplement, we are not offering to sell any securities,
and are not soliciting an offer to buy any securities, in any state where the
offer and sale is not permitted.
2
<PAGE>
TABLE OF CONTENTS
IMPORTANT NOTICE ABOUT THE INFORMATION PRESENTED IN THIS PROSPECTUS............2
SUMMARY OF PROSPECTUS..........................................................4
RISK FACTORS...................................................................9
DESCRIPTION OF THE TRUST ASSETS...............................................32
YIELD AND MATURITY CONSIDERATIONS.............................................37
PNC MORTGAGE ACCEPTANCE CORP..................................................42
DESCRIPTION OF THE CERTIFICATES...............................................42
DESCRIPTION OF THE GOVERNING DOCUMENT.........................................48
DESCRIPTION OF CREDIT SUPPORT................................................ 59
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS.......................................61
FEDERAL INCOME TAX CONSEQUENCES...............................................71
STATE AND OTHER TAX CONSEQUENCES.............................................101
ERISA CONSIDERATIONS.........................................................101
LEGAL INVESTMENT.............................................................105
USE OF PROCEEDS..............................................................106
METHOD OF DISTRIBUTION.......................................................106
Where You Can Find More Information..........................................107
LEGAL MATTERS................................................................108
FINANCIAL INFORMATION........................................................108
RATINGS......................................................................108
3
<PAGE>
SUMMARY OF PROSPECTUS
This summary contains selected information from this prospectus. It does not
contain all of the information you need to consider in making your investment
decision. To understand all of the terms of a particular offering of
certificates, you should read carefully this prospectus and the related
prospectus supplement in full.
Who We Are
PNC Mortgage Acceptance Corp. is a Missouri corporation and a wholly
owned subsidiary of Midland Loan Services, Inc. Our principal offices are
located at:
210 West 10th Street
6th Floor
Kansas City, Missouri 64105
Our main telephone number is (816) 435-5000. See "PNC Mortgage
Acceptance Corp."
The Securities Being Offered
The securities that will be offered pursuant to this prospectus and the
related prospectus supplements consist of mortgage pass-through certificates.
These certificates will be issued in series, and each series will, in turn,
consist of one or more classes. Each class of offered certificates must, at the
time of issuance, be assigned an investment grade rating by at least one
nationally recognized statistical rating organization. Typically, the four
highest rating categories, within which there may be sub-categories or
gradations to indicate relative standing, signify investment grade. See
"Ratings."
Each series of offered certificates will evidence beneficial ownership
interests in a trust established by us and containing the assets described in
this prospectus and the related prospectus supplement.
The Offered Certificates may be Issued with Other Certificates
We may not publicly offer all the mortgage pass-through certificates
evidencing interests in a particular trust. We may elect to:
o retain some of those certificates;
o place some privately with institutional investors; or
o deliver some to the applicable seller as partial consideration for the
related mortgage assets.
In addition, some of those certificates may not satisfy the rating
requirement described above for offered certificates.
The Governing Documents
In general, a pooling and servicing agreement or other similar
agreement or collection of agreements will govern--
o the creation of and transfer of assets to each trust;
o the issuance of the related series of certificates; and
o the servicing and administration of the trust assets.
The parties to the governing document(s) will always include a trustee
and us. We will be responsible for establishing the trust relating to each
series of offered certificates. In addition, we will transfer or arrange for the
transfer of the initial trust assets to that trust. In general, the trustee will
be responsible for, among other things, making payments and preparing and
disseminating certain reports to the holders of the offered and non-offered
certificates.
If the trust assets include mortgage loans, the parties to the
governing document(s) will also include--
o a master servicer that will generally be responsible for performing
customary servicing duties with respect to those mortgage loans that are
not defaulted, non-performing or otherwise problematic in any material
respect; and
o a special servicer that will generally be responsible for servicing and
administering mortgage loans that are defaulted, non-performing or
otherwise problematic in any material respect and real estate assets
acquired in respect of defaulted mortgage loans.
The same person or entity, or affiliated entities, may act as both
master servicer and special servicer for any trust.
If the trust assets include mortgage-backed securities, the parties to
the governing document(s)
4
<PAGE>
may also include a manager that will be responsible for performing various
administrative duties with respect to the mortgage-backed securities. If the
related trustee assumes these duties, however, there will be no manager.
In the related prospectus supplement, we will identify the trustee and
any master servicer, special servicer or manager for each trust and will
describe their respective duties in further detail.
See "Description of the Governing Document."
Certain Characteristics of the Mortgage Assets
The trust assets with respect to any series of offered certificates
will, in general, include mortgage loans. Each mortgage loan to be included in a
trust will constitute the obligation of one or more persons to repay a debt.
Each mortgage loan will be secured by a first or junior lien on, or security
interest in, the ownership, leasehold or other interest(s) of the related
borrower or another person in one or more commercial or multifamily real
properties. In particular, those properties may include:
o rental or cooperatively-owned buildings with multiple dwelling units; o
retail properties related to the sale of consumer goods and other
products, or related to providing entertainment, recreational or personal
services, to the general public;
o office buildings;
o hospitality properties;
o casino properties;
o health care-related facilities;
o industrial facilities;
o warehouse facilities, mini-warehouse facilities and self-storage
facilities;
o restaurants, taverns and other establishments involved in the food and
beverage industry;
o manufactured housing communities, mobile home parks and recreational
vehicle parks;
o recreational and resort properties;
o arenas and stadiums;
o churches and other religious facilities;
o parking lots and garages;
o mixed use properties;
o other income-producing properties; and
o unimproved land that is zoned for multifamily residential or commercial
use.
The mortgage loans to be included in a trust may have a variety of
payment terms. For example, a mortgage loan:
o may provide for the accrual of interest at a mortgage interest rate that
is fixed over its term, that resets on one or more specified dates or that
otherwise adjusts from time to time;
o may provide for the accrual of interest at a mortgage interest rate that
may be converted at the borrower's election from an adjustable to a fixed
interest rate or from a fixed to an adjustable interest rate;
o may provide for no accrual of interest;
o may provide for level payments to stated maturity, for payments that reset
in amount on one or more specified dates or for payments that otherwise
adjust from time to time to accommodate changes in the interest rate or to
reflect the occurrence of certain events;
o may be fully amortizing or, alternatively, may be partially amortizing or
non-amortizing, with a substantial payment of principal due on its stated
maturity date;
o may permit the negative amortization or deferral of accrued interest;
o may prohibit some or all voluntary prepayments or require payment of a
premium, fee or charge in connection with those prepayments; and/or
o may provide for payments of principal, interest or both, on due dates that
occur monthly, bimonthly, quarterly, semi-annually, annually or at some
other interval.
Any mortgage loan may have two or more component parts, each having
characteristics that are otherwise described in this prospectus as being
attributable to separate and distinct mortgage loans.
We do not originate mortgage loans. However, Midland Loan Services,
Inc. or one of our other affiliates may originate some of the mortgage loans
underlying the offered certificates. Unless we expressly state otherwise in the
related prospectus supplement, the repayment of any of the mortgage loans to be
included in a trust will not be guaranteed or insured by us, any of our
affiliates, any governmental agency or instrumentality or any other person. See
"Description of the Trust Assets--Mortgage Loans."
The trust assets with respect to any series of offered certificates may
also include mortgage participations, mortgage pass-through certificates,
collateralized mortgage obligations and other
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mortgage-backed securities, that evidence an interest in, or are secured by a
pledge of, one or more mortgage loans of the type described above. See
"Description of the Trust Assets--Mortgage-Backed Securities."
We will describe the specific characteristics of the mortgage assets
underlying a series of offered certificates in the related prospectus
supplement.
In general, the total outstanding principal balance of the mortgage
assets transferred by us to any particular trust will equal or exceed the
initial total outstanding principal balance of the related series of
certificates. In the event that the total outstanding principal balance of the
related mortgage assets initially delivered by us to the related trustee is less
than the initial total outstanding principal balance of any series of
certificates, we may deposit or arrange for the deposit of cash or liquid
investments on an interim basis with the related trustee to cover the shortfall.
For 90 days following the date of initial issuance of that series of
certificates, we will be entitled to obtain a release of the deposited cash or
investments if we deliver or arrange for delivery of a corresponding amount of
mortgage assets. If we fail, however, to deliver mortgage assets sufficient to
make up the entire shortfall, any of the cash or, following liquidation,
investments remaining on deposit with the related trustee will be used by the
related trustee to pay down the principal balance of the related series of
certificates, as described in the related prospectus supplement.
Certain Characteristics of the Offered Certificates
An offered certificate may entitle the holder to receive:
o a stated principal amount;
o interest on a principal balance or notional amount, at a fixed, variable
or adjustable pass-through rate;
o specified, fixed or variable portions of the interest, principal or other
amounts received on the related mortgage assets;
o payments of principal, with disproportionate, nominal or no distributions
of interest;
o payments of interest, with disproportionate, nominal or no distributions
of principal;
o payments of interest or principal that commence only as of a specified
date or only after the occurrence of certain events, such as the payment
in full of the interest and principal outstanding on one or more other
classes of certificates of the same series;
o payments of principal to be made, from time to time or for designated
periods, at a rate that is faster (and, in some cases, substantially
faster) or slower (and, in some cases, substantially slower) than the rate
at which payments or other collections of principal are received on the
related mortgage assets;
o payments of principal to be made based on a specified principal payment
schedule or other methodology, which payments may be limited to the amount
of available funds; or
o payments of all or part of the prepayment or repayment premiums, fees and
charges, equity participation payments or other similar items received on
the related mortgage assets.
Any class of offered certificates may be senior or subordinate to one
or more other classes of certificates of the same series, including a
non-offered class of certificates of that series, for purposes of some or all
payments, allocations of losses or both.
A class of offered certificates may have two or more component parts,
each having characteristics that are otherwise described in this prospectus as
being attributable to separate and distinct classes.
We will describe the specific characteristics of each class of offered
certificates in the related prospectus supplement. See "Description of the
Certificates."
The Trust will Include Collection and Distribution Accounts
The master servicer must establish and maintain one or more collection
accounts for deposit of all payments and collections received or advanced on the
Mortgage Loans. The trustee must establish a distribution account for deposit of
amounts from the collection account to be used for distributions of principal
and interest to certificate holders.
Credit Support and Interest Rate Protection for the Offered Certificates
Some classes of offered certificates may be protected in full or in
part against certain defaults and losses on the related mortgage assets through
the subordination of one or more other classes of certificates of the same
series or by other types of credit support. The other types of credit support
may
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include a letter of credit, a surety bond, an insurance policy, a guarantee or a
reserve fund. We will describe the credit support, if any, for each class of
offered certificates in the related prospectus supplement.
The assets of any particular trust may also include any of the
following agreements:
o guaranteed investment contracts pursuant to which moneys held in the funds
and accounts established for the related series of certificates will be
invested at a specified rate;
o interest rate exchange agreements, interest rate cap or floor agreements,
or other agreements and arrangements designed to reduce the effects of
interest rate fluctuations on the related mortgage assets or on one or
more classes of offered certificates of the related series; or
o if any of the mortgage assets are payable in a foreign currency, foreign
currency exchange agreements or other agreements and arrangements designed
to reduce the effects of foreign currency fluctuations on the related
mortgage assets or one or more classes of offered certificates of the
related series.
We will describe the types of reinvestment and interest rate
protection, if any, for each class of offered certificates in the related
prospectus supplement.
See "Risk Factors," "Description of the Trust Assets" and "Description
of Credit Support."
Advances to Cover Delinquent Payments of Principal and Interest on the Mortgage
Assets.
If the related trust assets include mortgage loans, the master
servicer, the trustee, any provider of credit support and any other specified
person may be obligated to make, or may have the option of making, certain
advances with respect to delinquent scheduled payments of principal, interest or
both on the mortgage loans. Any party making advances will be entitled to
reimbursement from subsequent recoveries on the related mortgage loan and as
otherwise described in this prospectus or the related prospectus supplement.
That party may also be entitled to receive interest on its advances for a
specified period. See "Description of the Certificates--Advances in Respect of
Delinquencies."
If the related trust assets include mortgage-backed securities, we will
describe in the related prospectus supplement any comparable advancing
obligation in respect of those mortgage-backed securities or the underlying
mortgage loans.
Optional Termination
We will describe in the related prospectus supplement any circumstances
in which a specified party is permitted or obligated to purchase or sell any of
the mortgage assets underlying a series of offered certificates. In particular,
a master servicer, special servicer or other designated party may be permitted
or obligated to purchase or sell:
o all the mortgage assets in any particular trust, which would cause a
termination of the trust; or
o that portion of the mortgage assets in any particular trust as is
necessary or sufficient to retire one or more classes of offered
certificates of the related series.
See "Description of the Certificates--Termination."
Federal Income Tax Consequences
Any class of offered certificates will constitute or evidence ownership
of either:
o "regular interests" or "residual interests" in a "real estate mortgage
investment conduit" under Sections 860A through 860G of the Internal
Revenue Code of 1986; or
o "regular interests" or "residual interests" in a "financial asset
securitization investment trust" under Section 860L(a) of the Internal
Revenue Code of 1986; or
o interests in a grantor trust under Subpart E of Part I of Subchapter J of
the Internal Revenue Code of 1986.
See "Federal Income Tax Consequences."
ERISA Considerations
If you are a fiduciary of an employee benefit plan or other retirement
plan or arrangement, you should review with your legal advisor whether the
purchase or holding of offered certificates could give rise to a transaction
that is prohibited or is not otherwise permissible under applicable law. See
"ERISA Considerations."
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Legal Investment
If your investment authority is subject to legal restrictions, you
should consult your legal advisor to determine whether and to what extent the
offered certificates constitute a legal investment for you. We will specify in
the related prospectus supplement which classes of the offered certificates will
constitute "mortgage related securities" for purposes of the Secondary Mortgage
Market Enhancement Act of 1984. See "Legal Investment."
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RISK FACTORS
You should consider the following factors, as well as the factors set
forth under "Risk Factors" in the related prospectus supplement, in deciding
whether to purchase offered certificates.
A Number of Factors that Affect the Liquidity of Your Certificates May Have an
Adverse Effect on the Value of Your Certificates
The offered certificates may have limited or no liquidity. We cannot
assure you that a secondary market for your certificates will develop. There
will be no obligation on the part of anyone to establish a secondary market.
Even if a secondary market does develop for your certificates, it may provide
you with less liquidity than you anticipated and it may not continue for the
life of your certificates.
We will describe in the related prospectus supplement the information
that will be available to you with respect to your certificates. The limited
nature of such information may adversely affect the liquidity of your
certificates.
We do not currently intend to list the offered certificates on any
national securities exchange or the Nasdaq stock market.
Lack of liquidity will impair your ability to sell your certificates
and may prevent you from doing so at a time when you may want or need to sell
your certificates. This lack of liquidity could adversely affect the market
value of your certificates. We do not expect that you will have any redemption
rights with respect to your certificates.
If you decide to sell your certificates, you may have to sell them at a
discount from the price you paid for reasons unrelated to the performance of
your certificates or the related mortgage assets. Pricing information regarding
your certificates may not be generally available on an ongoing basis.
The Market Value of Your Certificates Will be Sensitive to Fluctuations in
Prevailing Interest Rates and Spreads
The market value of your certificates will be sensitive to fluctuations
in current interest rates. However, a change in the market value of your
certificates as a result of an upward or downward movement in current interest
rates may not equal the change in the market value of your certificates as a
result of an equal but opposite movement in interest rates.
Investor perceptions regarding the quality of commercial
mortgage-backed securities generally as an investment relative to alternative
investments such as U.S. treasury securities will affect the market value of
your certificates. That market value will decline if potential investors prefer
the safety of investments such as U.S. treasury securities. This may occur
regardless of the performance of your certificates or the related mortgage
assets.
Payments on Your Certificates Will be Made Solely From the Limited Assets of the
Related Trust
Your certificates do not represent obligations of any person or entity
and do not represent a claim against any assets other than those of the related
trust. Unless we expressly state otherwise in the related prospectus supplement,
neither we, nor any of our affiliates nor any governmental agency or
instrumentality or other person will guarantee or insure payment on your
certificates. If the related trust assets are insufficient to make payments on
your certificates, you will bear the resulting loss. Any advances made by a
master servicer or other party with respect to the mortgage assets underlying
your certificates are intended solely to provide liquidity and not credit
support. The party making those advances will have a right to reimbursement,
probably with interest, which is senior to your right to receive payment on your
certificates.
Any Credit Support for Your Certificates May be Insufficient to Protect You
Against all Potential Losses
The Amount of Credit Support Will be Limited
The rating agencies that assign ratings to your certificates will
establish the amount of credit support, if any, for your certificates based on,
among other things, an assumed level of defaults, delinquencies and losses with
respect to the related mortgage assets. Actual losses may, however, exceed the
assumed levels. See "Description of the Certificates--Allocation of Losses and
Shortfalls" and "Description of Credit Support." If actual losses on the related
mortgage assets exceed the assumed
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levels, you may be required to bear the additional losses.
Credit Support May Not Cover All Types of Losses
The credit support, if any, for your certificates may not cover all of
your potential losses. For example, certain forms of credit support may not
cover or may provide limited protection against losses that you may suffer by
reason of fraud or negligence or as a result of certain uninsured casualties at
the real properties securing the related mortgage loans. You may be required to
bear any losses that are not covered by the credit support.
Disproportionate Benefits to Certain Classes and Series
If a form of credit support covers multiple classes or series and
losses exceed the amount of the credit support, it is possible that the holders
of offered certificates of another series or class will be disproportionately
benefited by this credit support to your detriment.
The Investment Performance of Your Certificates Will Depend Upon Payments,
Defaults and Losses on the Underlying Mortgage Loans
The Terms of the Underlying Mortgage Loans Will Affect Payments on Your
Certificates
Each of the mortgage loans underlying the offered certificates will
specify the terms on which the related borrower must repay the outstanding
principal amount of the loan. The rate, timing and amount of scheduled payments
of principal may vary significantly from mortgage loan to mortgage loan. The
rate at which the underlying mortgage loans amortize will directly affect the
rate at which the principal balance or notional amount of your certificates is
paid down or otherwise reduced.
In addition, any mortgage loan underlying the offered certificates may
permit the related borrower to prepay the loan during some or all of the loan
term. In general, a borrower will be more likely to prepay its mortgage loan
when it has an economic incentive to do so, such as obtaining a larger loan on
the same underlying real property or a lower or otherwise more advantageous
interest rate through refinancing. If a mortgage loan includes some form of
prepayment restriction, the likelihood of prepayment should be less. These
restrictions may include:
o an absolute or partial prohibition against voluntary prepayments during
some or all of the loan term; or
o a requirement that voluntary prepayments be accompanied by some form of
prepayment premium, fee or charge during some or all of the loan term.
In many cases, a mortgage loan will have no restrictions on the
application of insurance proceeds or condemnation proceeds as a prepayment of
principal.
The amount, rate and timing of payments and other collections on the
mortgage loans will, to some degree, be unpredictable because of borrower
defaults and because of casualties and condemnations with respect to the
underlying real properties.
The investment performance of your certificates may vary materially and
adversely from your expectations due to:
o the rate of prepayments and other unscheduled collections of principal on
the underlying mortgage loans being faster or slower than you anticipated,
or
o the rate of defaults on the underlying mortgage loans being faster, or the
severity of losses on the underlying mortgage loans being greater, than
you anticipated.
The actual yield to you, as a holder of an offered certificate, may not
equal the yield you anticipated at the time of your purchase, and the total
return on investment that you expected may not be realized. In deciding whether
to purchase any offered certificates, you should make an independent decision as
to the appropriate prepayment, default and loss assumptions to be used. If the
trust assets underlying your certificates include mortgage-backed securities,
the terms of those securities may lessen or enhance the effects to you that may
result from prepayments, defaults and losses on the mortgage loans underlying
those securities.
Prepayments on the Underlying Mortgage Loans Will Affect the Average Life of
Your Certificates
Payments of principal and/or interest on your certificates will depend
upon, among other things, the rate and timing of payments on the related
mortgage assets. Prepayments on the underlying mortgage loans may result in a
faster rate of principal payments on your certificates, which would result in
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a shorter average life for your certificates, than if these prepayments had not
occurred. The rate and timing of principal prepayments on pools of mortgage
loans varies among pools and is influenced by a variety of economic,
demographic, geographic, social, tax and legal factors. Accordingly, neither you
nor we can predict the rate and timing of principal prepayments on the mortgage
loans directly or indirectly underlying your certificates. As a result,
repayment of your certificates could occur significantly earlier or later, and
the average life of your certificates could be significantly shorter or longer,
than you expected.
The extent to which prepayments on the underlying mortgage loans
ultimately affect the average life of your certificates depends on the terms and
provisions of your certificates. A class of offered certificates may entitle the
holders to a pro rata share of any prepayments on the related mortgage loans, to
all or a disproportionately large share of those prepayments, or to none or a
disproportionately small share of those prepayments. If you are entitled to a
disproportionately large share of any prepayments on the underlying mortgage
loans, your certificates may be retired at an earlier date. If, however, you are
only entitled to a small share of the prepayments on the underlying mortgage
loans, the average life of your certificates may be extended. Your entitlement
to receive payments, including prepayments, of principal of the underlying
mortgage loans may:
o vary based on the occurrence of certain events, such as the retirement of
one or more other classes of certificates of the same series; or
o be subject to certain contingencies, such as prepayment and default rates
with respect to the underlying mortgage loans.
We will describe the terms and provisions of your certificates more
fully in the related prospectus supplement.
Prepayments on the Underlying Mortgage Loans Will Affect the Yield on Your
Certificates
If you purchase your certificates at a discount or premium, the yield
on your certificates will be sensitive to prepayments on the mortgage loans. If
you purchase your certificates at a discount, you should consider the risk that
a slower than anticipated rate of principal payments on the underlying mortgage
loans could result in your actual yield being lower than your anticipated yield.
Alternatively, if you purchase your certificates at a premium, you should
consider the risk that a faster than anticipated rate of principal payments on
the underlying mortgage loans could result in your actual yield being lower than
your anticipated yield. The potential effect that prepayments may have on the
yield of your certificates will increase as the discount deepens or the premium
increases. If the amount of interest payable on your certificates is
disproportionately large, as compared to the amount of principal payable on your
certificates, you may fail to recover your original investment under some
prepayment scenarios.
Delinquencies, Defaults and Losses on the Underlying Mortgage Loans May Affect
the Amount and Timing of Payments on Your Certificates
The rate and timing of delinquencies and defaults, and the severity of
losses, on the underlying mortgage loans will affect the amount and timing of
payments on the related series of offered certificates to the extent that their
effects are not offset by delinquency advances or some form of credit support.
Unless otherwise covered by delinquency advances or some form of credit
support, defaults on the underlying mortgage loans may delay payments on the
related series of offered certificates while the defaulted mortgage loans are
worked-out or liquidated. However, liquidations of defaulted mortgage loans
prior to maturity could affect the yield and average life of an offered
certificate in a manner similar to a voluntary prepayment.
If you calculate your anticipated yield to maturity based on an assumed
rate of default and amount of losses on the underlying mortgage loans that is
lower than the default rate and amount of losses actually experienced, then, to
the extent that you are required to bear the additional losses, your actual
yield to maturity will be lower than you calculated and could, under certain
scenarios, be negative. Furthermore, the timing of losses on the underlying
mortgage loans can affect your yield. In general, the earlier you bear any loss
on an underlying mortgage loan, the greater the negative effect on your yield.
See "--Repayment of a Commercial or Multifamily Mortgage Loan Depends
Upon the Performance and Value of the Underlying Real Property and the Related
Borrower's Ability to Refinance the Property" below.
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An Increased Risk of Default Is Associated With Balloon Payments
Any of the mortgage loans underlying your certificates may be
non-amortizing or only partially amortizing. The borrowers under those mortgage
loans are required to make substantial payments of principal and interest (that
is, balloon payments) on the maturity dates of the loans. The ability of a
borrower to make a balloon payment generally depends upon the borrower's ability
to refinance or sell the real property securing the loan. The ability of the
borrower to refinance or sell the property will be affected by a number of
factors, including:
o the fair market value and condition of the underlying real property;
o the prevailing level of interest rates;
o the borrower's equity in the underlying real property;
o the borrower's financial condition;
o the operating history of the underlying real property;
o changes in zoning and tax laws;
o changes in competition in the relevant area;
o changes in rental rates in the relevant area;
o changes in governmental regulation and fiscal policy;
o prevailing general and regional economic conditions;
o the state of the fixed income and mortgage markets; and
o the availability of credit for multifamily rental or commercial
properties.
See "--Repayment of a Commercial or Multifamily Mortgage Loan Depends
Upon the Performance and Value of the Underlying Real Property and the Related
Borrower's Ability to Refinance the Property" below.
Neither we nor any of our affiliates have an obligation to refinance
any mortgage loan underlying your certificates.
The related master servicer or special servicer may, within prescribed
limits, extend and modify mortgage loans underlying your certificates that are
in default or as to which a payment default is imminent in order to maximize
recoveries on those loans. The related master servicer or special servicer is
only required to determine that any extension or modification is reasonably
likely to produce a greater recovery than a liquidation of the real property
securing the defaulted loan. The decision of the master servicer or special
servicer to extend or modify a mortgage loan may not in fact produce a greater
recovery.
Repayment of a Commercial or Multifamily Mortgage Loan Depends Upon the
Performance and Value of the Underlying Real Property and the Related Borrower's
Ability to Refinance the Property
Most of the Mortgage Loans Underlying Your Certificates Will be Nonrecourse
Loans to Entities
You should consider all of the mortgage loans underlying your
certificates to be non-recourse loans. This means that, in the event of a
default, recourse will be limited to the related real property or properties
securing the defaulted mortgage loan. In those cases where recourse to a
borrower or guarantor is permitted by the loan documents, we generally will not
undertake any evaluation of the financial condition of the borrower or
guarantor. Unlike individuals, entities formed to acquire real property
generally do not have personal assets and creditworthiness at stake. A
borrower's sophistication can lead to protracted litigation or bankruptcy in
default situations.
Consequently, full and timely payment on each mortgage loan underlying
your certificates will depend on one or more of the following:
o the sufficiency of the net operating income of the applicable real
property;
o the market value of the applicable real property at or prior to maturity;
and
o the ability of the related borrower to refinance or sell the applicable
real property.
In general, the value of a multifamily or commercial property will
depend on its ability to generate net operating income. The ability of an owner
to finance a multifamily or commercial property will depend, in large part, on
the property's value and ability to generate net operating income.
Unless we state otherwise in the related prospectus supplement, none of
the mortgage loans underlying your certificates will be insured or guaranteed by
us, any of our affiliates or any governmental entity or private mortgage
insurer.
The risks associated with lending on multifamily and commercial
properties are inherently different from those associated with lending on the
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security of single-family residential properties. This is because multifamily
rental and commercial real estate lending involves larger loans and, as
described above, repayment is dependent upon the successful operation and value
of the related real estate project.
We May Not Know What Underwriting Standards the Originator of a Mortgage Loan
Applied
The originators of the mortgage loans may have used underwriting
criteria that differ from the criteria which our affiliates use, and in some
cases we may be unable to verify the criteria that the originator used. Loans
may have been originated over long periods of time using varying underwriting
standards that we cannot now confirm. We will not generally reunderwrite
mortgage loans acquired for inclusion in a trust. Instead, we will rely upon
representations and warranties by the seller of the mortgage loan and the
seller's obligation to repurchase the loan if a representation or warranty was
not true when made.
Many Risk Factors are Common to Most or All Multifamily and Commercial
Properties
The following factors, among others, will affect the ability of a
multifamily or commercial property to generate net operating income and,
accordingly, its value:
o the age, design and construction quality of the property;
o perceptions regarding the safety, convenience and attractiveness of the
property;
o the characteristics of the neighborhood where the property is located;
o the proximity and attractiveness of competing properties;
o the existence and construction of competing properties;
o the adequacy of the property's management and maintenance;
o national, regional or local economic conditions, including plant closings,
industry slowdowns and unemployment rates;
o local real estate conditions, including an increase in or oversupply of
comparable commercial or residential space;
o demographic factors;
o customer tastes and preferences;
o retroactive changes in building codes; and
o changes in governmental rules, regulations and fiscal policies, including
environmental legislation.
Particular factors that may adversely affect the ability of a
multifamily or commercial property to generate net operating income include:
o an increase in interest rates, real estate taxes and other operating
expenses;
o an increase in the capital expenditures needed to maintain the property or
make improvements;
o a decline in the financial condition of a major tenant and, in particular,
a sole tenant or anchor tenant;
o an increase in vacancy rates;
o a decline in rental rates as leases are renewed or replaced; and
o natural disasters and civil disturbances such as earthquakes, hurricanes,
floods, eruptions or riots.
The volatility of net operating income generated by a multifamily or
commercial property over time 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 the rental rates at which leases are renewed or replaced;
o the percentage of total property expenses in relation to revenue;
o the ratio of fixed operating expenses to those that vary with revenues;
and
o the level of capital expenditures required to maintain the property and to
maintain or replace tenants.
Therefore, commercial and multifamily properties with short-term or
less creditworthy sources of revenue and/or relatively high operating costs,
such as those operated as hospitality and self-storage properties, can be
expected to have more volatile cash flows than commercial and multifamily
properties with medium- to long-term leases from creditworthy tenants and/or
relatively low operating costs. A decline in the real estate market will tend to
have a more immediate effect on the net operating income of commercial and
multifamily properties with short-term revenue sources and may lead to higher
rates of delinquency or defaults on the mortgage loans secured by those
properties.
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The Successful Operation of a Multifamily or Commercial Property Depends on
Tenants
Generally, multifamily and commercial properties are subject to leases.
The owner of a multifamily or commercial property typically uses lease or rental
payments for the following purposes:
o to pay for maintenance and other operating expenses associated with the
property;
o to fund repairs, replacements and capital improvements at the property;
and
o to service mortgage loans secured by, and any other debt obligations
associated with operating, the property.
Factors that may adversely affect the ability of a multifamily or
commercial property to generate net operating income from lease and rental
payments include:
o an increase in vacancy rates, which may result from tenants deciding not
to renew an existing lease or discontinuing operations;
o an increase in tenant payment defaults;
o a decline in rental rates as leases are entered into, renewed or extended
at lower rates;
o an increase in the capital expenditures needed to maintain the property or
to make improvements; and
o a decline in the financial condition of a major or sole tenant.
Various factors that will affect the operation and value of a
commercial property include:
o the business operated by the tenants;
o the creditworthiness of the tenants; and
o the number of tenants.
Dependence on a Single Tenant or a Small Number of Tenants Makes a Property
Riskier Collateral
In those cases where an income-producing property is leased to a single
tenant or is primarily leased to one or a small number of major tenants, a
deterioration in the financial condition or a change in the plan of operations
of any such tenant can have particularly significant effects on the net
operating income generated by the property. If a single or major tenant defaults
under its lease or fails to renew its lease, the resulting adverse financial
effect on the operation of the property will be substantially more severe than
would be the case for a property occupied by a large number of less significant
tenants.
An income-producing property operated for retail, office or industrial
purposes also may be adversely affected by a decline in a particular business or
industry if a concentration of tenants at the property is engaged in that
business or industry.
Tenant Bankruptcy Adversely Affects Property Performance
The bankruptcy or insolvency of a major tenant, or a number of smaller
tenants, at a commercial property may adversely affect the income produced by
the property. Under the U.S. bankruptcy code, a tenant has the option of
assuming 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 unless there is 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 any earlier surrender of the leased premises, plus
o an amount equal to the rent under the lease for the greater of one year or
15% (but not more than 3 years) of the remaining lease term.
The Success of an Income-Producing Property Depends on Reletting Vacant Spaces
The operations at an income-producing property will be adversely
affected if the owner or property manager is unable to renew leases or relet
space on comparable terms when existing leases expire or become defaulted. Even
if vacated space is successfully relet, the costs associated with reletting can
be substantial and could reduce cash flow from the property. Moreover, if a
tenant defaults in its lease obligations, the landlord 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.
If a property has multiple tenants, re-leasing expenditures may be more
frequent than in the case of a property with fewer tenants, which would reduce
the cash flow generated by the multi-tenanted property. Multi-tenanted
properties may also experience higher continuing vacancy rates and greater
volatility in rental income and expenses.
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Property Value May Be Adversely Affected Even When Current Operating Income Is
Not
Various factors may affect the value of multifamily and commercial
properties without affecting their current net operating income, including:
o changes in interest rates;
o the availability of refinancing sources;
o changes in governmental regulations, licensing or fiscal policy;
o changes in zoning or tax laws; and
o potential environmental or other legal liabilities.
Property Management May Affect Property Operations and Value
The operation of an income-producing property will depend upon the
property manager's performance and viability. The property manager generally is
responsible for:
o responding to changes in the local market;
o planning and implementing the rental structure, including staggering
durations of leases and establishing levels of rent payments;
o operating the property and providing building services; o managing
operating expenses; and
o ensuring that maintenance and capital improvements are carried out in a
timely fashion.
Income-producing properties that derive revenues primarily from
short-term rental commitments, such as hospitality or self-storage properties,
generally require more intensive management than properties leased to tenants
under long-term leases.
By controlling costs, providing appropriate and efficient services to
tenants and maintaining improvements in good condition, a property manager can
maintain or improve occupancy rates, business and cash flow, reduce operating
and repair costs and preserve building value. However, management errors can, in
some cases, impair the long-term viability of an income-producing property.
Maintaining a Property in Good Condition is Expensive
An owner may expend a substantial amount to maintain, renovate or
refurbish a commercial or multifamily property. The effects of poor construction
quality will increase over time in the form of increased maintenance and capital
improvements. Even superior construction will deteriorate over time if
management does not schedule and perform adequate maintenance in a timely
fashion.
Competition Will Adversely Affect the Profitability and Value of an
Income-Producing Property
Some income-producing properties are located in highly competitive
areas. Comparable income-producing properties located in the same area compete
on the basis of a number of factors including:
o rental rates;
o location;
o type of business or services and amenities offered; and
o nature and condition of the particular property.
The profitability and value of an income-producing property may be
adversely affected by a comparable property that:
o offers lower rents;
o has lower operating costs;
o offers a more favorable location; or
o offers better facilities.
Costs of renovating, refurbishing or expanding an income-producing
property in order to remain competitive can be substantial.
The Types and Concentrations of Income-Producing Properties Underlying the
Mortgage Loans in a Trust Will Subject Your Certificates to Special Risks
The mortgage loans underlying a series of offered certificates may be
secured by numerous types of multifamily and commercial properties. The adequacy
of an income-producing property as security for a mortgage loan depends in large
part on its value and ability to generate net operating income. The following is
a discussion of some of the various factors that may affect the value and
operations of the listed types of multifamily and commercial properties. The
effect of these factors upon your certificates will be dependent upon the
relative amounts of each particular property type included in a trust.
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Multifamily Rental Properties
Factors affecting the value and operation of a multifamily rental
property include:
o the physical attributes of the property, such as its age, appearance,
amenities and construction quality;
o the types of services offered at the property;
o the location of the property;
o the characteristics of the surrounding neighborhood, which may change over
time;
o the rents charged for dwelling units at the property relative to the rents
charged for comparable units at competing properties;
o the ability of management to provide adequate maintenance and insurance;
o the property's reputation;
o the level of mortgage interest rates, which may encourage tenants to
purchase rather than lease housing;
o the existence or construction of competing or alternative residential
properties, including other apartment buildings and complexes,
manufactured housing communities, mobile home parks and single-family
housing;
o the ability of management to respond to competition;
o the tenant mix and whether the property is primarily occupied by workers
from a particular company or type of business, personnel from a local
military base or students;
o adverse local, regional or national economic conditions, which may limit
the amount that may be charged for rents and may result in a reduction in
timely rent payments or a reduction in occupancy levels;
o state and local regulations, which may affect the property owner's ability
to increase rent to the market rent for an equivalent apartment;
o the extent to which the property is subject to land use restrictive
covenants or contractual covenants that require that units be rented to
low income tenants;
o the extent to which the cost of operating the property, including the cost
of utilities and the cost of required capital expenditures, may increase;
and
o the extent to which increases in operating costs may be passed through to
tenants.
Because units in a multifamily rental property are leased to
individuals, usually for no more than a year, the property is likely to respond
relatively quickly to a downturn in the local economy or to the closing of a
major employer in the area.
Certain states regulate the relationship of an owner and its tenants at
a multifamily rental property. Among other things, these states may:
o require written leases;
o require good cause for eviction;
o require disclosure of fees;
o prohibit unreasonable rules;
o prohibit retaliatory evictions;
o prohibit restrictions on a resident's choice of unit vendors;
o limit the basis on which a landlord may increase rent; or
o prohibit a landlord from terminating a tenancy solely by reason of the
sale of the owner's building.
Apartment building owners have been the subject of suits under state
"Unfair and Deceptive Practices Acts" and other general consumer protection
statutes for coercive, abusive or unconscionable leasing and sales practices.
Some counties and municipalities also impose rent control regulations
on apartment buildings. These regulations may limit rent increases to:
o fixed percentages;
o percentages of increases in the consumer price index;
o increases set or approved by a governmental agency; or
o increases determined through mediation or binding arbitration.
In many cases, the rent control laws do not provide for decontrol of
rental rates upon vacancy of individual units. Any limitations on a landlord's
ability to raise rents at a multifamily rental property may impair the
landlord's ability to repay a mortgage loan secured by the property or to meet
operating costs.
Some multifamily rental properties are subject to land use restrictive
covenants or contractual covenants in favor of federal or state housing
agencies. These covenants generally require that a minimum number or percentage
of units be rented to tenants who have incomes that are substantially lower than
median incomes in the area or region. These covenants may limit the potential
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rental rates that an owner can charge at a multifamily rental property, the
potential tenant base for the property or both. An owner may subject a
multifamily rental property to these covenants in exchange for tax credits or
rent subsidies. When the credits or subsidies cease, net operating income will
decline.
Some mortgage loans underlying the offered certificates will be secured
by the related borrower's interest in multiple units in a residential
condominium project and the related voting rights in the owners' association for
the project. Due to the nature of condominiums, a default on any of those
mortgage loans will not allow the holder of the mortgage loan the same
flexibility in realizing on its real property collateral as is generally
available with respect to multifamily rental properties that are not
condominiums. The rights of other unit owners, the governing documents of the
owners' association and the state and local laws applicable to condominiums must
be considered and respected. Consequently, servicing and realizing upon the
collateral for those mortgage loans could subject the lender to greater delay,
expense and risk than a loan secured by a multifamily rental property that is
not a condominium.
Cooperatively-Owned Apartment Buildings
Some multifamily properties are owned or leased by cooperative
corporations. In general, each shareholder in the corporation is entitled to
occupy a particular apartment unit pursuant to a long-term proprietary lease or
occupancy agreement.
A cooperative corporation is directly responsible for building
maintenance and payment of real estate taxes and hazard and liability insurance
premiums. A cooperative corporation's ability to meet debt service obligations
on a mortgage loan secured by, and to pay all other operating expenses of, the
cooperatively owned property depends primarily upon the receipt of:
o maintenance payments from the tenant/shareholders, and
o any rental income from units or commercial space that the cooperative
corporation might control.
A cooperative corporation may have to impose special assessments on the
tenant/shareholders in order to pay unanticipated expenditures. Accordingly, a
cooperative corporation is highly dependent on the financial well being of its
tenant/shareholders.
In a typical cooperative conversion plan, the owner of a rental
apartment building contracts to sell the building to a newly formed cooperative
corporation. The owner or sponsor allocates shares to each apartment unit, and
the current tenants have a certain period to subscribe at prices discounted from
the prices to be offered to the public after this period. As part of the
consideration for the sale, the owner or sponsor receives all the unsold shares
of the cooperative corporation. In general, the sponsor controls the
corporation's board of directors and management for a limited period of time. If
the sponsor holds the shares allocated to a large number of apartment units, the
lender on a mortgage loan secured by a cooperatively owned property may be
adversely affected by a decline in the creditworthiness of the sponsor.
Many cooperative conversion plans are "non-eviction" plans. Under a
non-eviction plan, a tenant at the time of conversion who chooses not to
purchase shares is entitled to reside in the unit as a subtenant of the owner of
the shares allocated to the apartment unit. Any applicable rent control or rent
stabilization laws would continue to be applicable to the sub-tenancy. In
addition, the subtenant may be entitled to renew its lease for an indefinite
number of years with continued protection from rent increases above those
permitted by any applicable rent control and rent stabilization laws. The
owner/shareholder is responsible for the maintenance payments to the cooperative
corporation without regard to whether it receives rent from the subtenant or
whether the rent payments are lower than maintenance payments on the unit. Newly
formed cooperative corporations typically have the greatest concentration of
non-tenant/shareholders.
Retail Properties
The term "retail property" encompasses a broad range of properties at
which businesses sell consumer goods and other products and provide various
entertainment, recreational or personal services to the general public. Some
examples of retail properties include:
o shopping centers;
o factory outlet centers;
o malls;
o automotive sales and service centers;
o consumer oriented businesses;
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o department stores;
o grocery stores;
o convenience stores;
o specialty shops;
o gas stations;
o movie theaters;
o fitness centers;
o bowling alleys;
o salons; and
o dry cleaners.
Unless owner occupied, retail properties generally derive all or a
substantial percentage of their income from lease payments from commercial
tenants. Therefore, it is important for the owner of a retail property to
attract and keep tenants, particularly significant tenants, that are able to
meet their lease obligations. In order to attract tenants, the owner of a retail
property may be required:
o to lower rents;
o to grant a potential tenant a "free rent" or reduced rent period;
o to improve the condition of the property generally; or
o to make at its own expense, or grant a rent abatement to cover, tenant
improvements for a potential tenant.
A prospective tenant will also be interested in the number and type of
customers that it will be able to attract at a particular retail property. The
ability of a tenant at a particular retail property to attract customers will be
affected by a number of factors related to the property and the surrounding
area, including:
o competition from other retail properties;
o perceptions regarding the safety, convenience and attractiveness of the
property;
o perceptions regarding the safety of the surrounding area;
o demographics of the surrounding area;
o the strength and stability of the local, regional and national economies;
o traffic patterns and access to major thoroughfares;
o the visibility of the property;
o availability of parking;
o the particular mixture of the goods and services offered at the property;
o customer tastes, preferences and spending patterns; and
o the drawing power of other tenants.
The success of a retail property is often dependent on the success of
its tenants' businesses. A significant component of the total rent paid by
tenants of retail properties is often tied to a percentage of gross sales or
revenues. Declines in sales or revenues of the tenants will likely cause a
corresponding decline in percentage rents and/or impair the tenants' ability to
pay their rent or other occupancy costs. A default by a tenant under its lease
could result in delays and costs in enforcing the landlord's rights. A decline
in the local economy and reduced consumer spending would directly and adversely
affect retail properties.
Repayment of a mortgage loan secured by a retail property will be
affected by the expiration of space leases at the property and the ability of
the borrower to renew or relet the space on comparable terms. Even if vacant
space is successfully relet, the costs associated with reletting, including
tenant improvements, leasing commissions and free rent, may be substantial and
could reduce cash flow from a retail property.
The presence or absence of an anchor tenant in a multi-tenanted retail
property can be important. Anchor tenants play a key role in generating customer
traffic and making the center desirable for other tenants. An "anchor tenant"
is, in general, a retail tenant whose space is substantially larger in size than
that of other tenants at the same retail property and whose operation is vital
in attracting customers to the property. At some retail properties, the anchor
tenant owns the space it occupies. In those cases where the property owner does
not control the space occupied by the anchor tenant, the property owner may not
be able to take actions with respect to the space that it otherwise typically
would take, such as granting concessions to retain an anchor tenant or removing
an ineffective anchor tenant. In some cases, an anchor tenant may cease to
operate at the property, even though it continues to own or pay rent on the
vacant space. If an anchor tenant ceases operations at a retail property, other
tenants at the property may be entitled to terminate their leases prior to the
scheduled termination date or to pay rent at a reduced rate for the remaining
term of the lease.
Various factors will adversely affect the economic performance of an
"anchored" retail property, including:
o an anchor tenant's failure to renew its lease;
o termination of an anchor tenant's lease;
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o the bankruptcy or economic decline of an anchor tenant or a self-owned
anchor;
o the cessation of the business of a self-owned anchor or of an anchor
tenant, even if it continues to own the property or pay rent; or
o a loss of an anchor tenant's ability to attract shoppers.
Retail properties may also face competition from sources outside a
given real estate market or with lower operating costs. For example, all of the
following compete with more traditional department stores and specialty shops
for consumer dollars:
o factory outlet centers;
o discount shopping centers and clubs;
o catalogue retailers;
o television shopping networks and programs;
o internet web sites; and
o telemarketing.
Similarly, home movie rentals and pay-per-view movies provide alternate
sources of entertainment to movie theaters. Continued growth of these
alternative retail outlets, which are often characterized by lower operating
costs, and entertainment sources could adversely affect the rents collectible at
retail properties.
Gas stations, automotive sales and service centers and dry cleaners
also pose unique environmental risks because of the nature of their businesses.
Office Properties
Factors affecting the value and operation of an office property
include:
o the number and quality of the tenants, particularly significant tenants,
at the property;
o the physical attributes of the building in relation to competing
buildings;
o the location of the property with respect to the central business district
or population centers;
o demographic trends within the metropolitan area to move away from or
towards the central business district;
o social trends combined with space management trends, which may change
towards options such as telecommuting or "hoteling" to satisfy space
needs;
o tax incentives offered to businesses or property owners by cities or
suburbs adjacent to or near where the building is located;
o local competitive conditions, such as the supply of office space or the
existence or construction of new competitive office buildings;
o the quality and philosophy of building management;
o access to mass transportation; and
o changes in zoning laws.
An economic decline in a tenant's business may adversely affect an
office property. The risk of such an economic decline is increased if revenue is
dependent on a single tenant or if there is a significant concentration of
tenants in a particular business or industry.
Office properties are also subject to competition with other office
properties in the same market. Competitive factors affecting an office property
include:
o rental rates;
o the building's age, condition and design, including floor sizes and
layout;
o access to public transportation and availability of parking; and
o amenities offered to its tenants, including sophisticated building
systems, such as fiber optic cables, satellite communications or other
base building technological features.
The cost of refitting office space for a new tenant is often higher
than for other property types.
The success of an office property also depends on the local economy.
Factors influencing a company's decision to locate in a given area include:
o the cost and quality of labor;
o tax incentives; and
o quality of life matters, such as schools and cultural amenities.
The strength and stability of the local or regional economy will affect
an office property's ability to attract stable tenants on a consistent basis. A
central business district may have a substantially different economy from that
of a suburb.
Hospitality Properties
Hospitality properties may involve different types of hotels and
motels, including:
o full service hotels;
o resort hotels with many amenities;
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o limited service hotels;
o hotels and motels associated with national or regional franchise chains;
o hotels that are not affiliated with any franchise chain but may have their
own brand identity; and
o other lodging facilities.
Factors affecting the economic performance of a hospitality property
include:
o the location of the property and its proximity to major population centers
or attractions;
o the seasonal nature of business at the property;
o the level of room rates relative to those charged by competitors;
o quality and perception of the franchise affiliation;
o economic conditions, either local, regional or national, which may limit
the amount that can be charged for a room and may result in a reduction in
occupancy levels;
o the existence or construction of competing hospitality properties;
o nature and quality of the services and facilities;
o financial strength and capabilities of the owner and operator;
o the need for continuing expenditures for modernizing, refurbishing and
maintaining existing facilities;
o increases in operating costs, which may not be offset by increased room
rates;
o the property's dependence on business and commercial travelers and
tourism; and
o changes in travel patterns caused by changes in access, energy prices,
labor strikes, relocation of highways, the reconstruction of additional
highways or other factors.
Because limited service hotels and motels are relatively quick and
inexpensive to construct and may quickly reflect a positive value, an
over-building of these hotels and motels could occur in any given region, which
would likely adversely affect occupancy and daily room rates. Further, because
rooms at hospitality properties are generally rented for short periods of time,
hospitality properties tend to be more sensitive to adverse economic conditions
and competition than many other types of commercial properties. Additionally,
the revenues of certain hospitality properties, particularly those located in
regions whose economies depend upon tourism, may be highly seasonal in nature.
Hospitality properties may be operated pursuant to franchise
agreements. The continuation of a franchise is typically subject to specified
operating standards and other terms and conditions. The franchisor periodically
inspects its licensed properties to confirm adherence to its operating
standards. The failure of the hospitality property to maintain those standards
or adhere to those other terms and conditions could result in the loss or
cancellation of the franchise license. It is possible that the franchisor could
condition the continuation of a franchise license on the completion of capital
improvements or the making of certain capital expenditures that the owner of the
hospitality property determines are too expensive or are otherwise unwarranted
in light of the operating results or prospects of the property. In that event,
the owner of the hospitality property may elect to allow the franchise license
to lapse. In any case, if the franchise is terminated, the owner of the
hospitality property may seek to obtain a suitable replacement franchise or to
operate the property independently of a franchise license. The loss of a
franchise license could have a material adverse effect upon the operations or
value of the hospitality property, because of the loss of associated name
recognition, marketing support and centralized reservation systems provided by
the franchisor.
The viability of any hospitality property that is a franchise of a
national or a regional hotel or motel chain is dependent upon:
o the continued existence and financial strength of the franchisor;
o the public perception of the franchise service mark; and
o the duration of the franchise licensing agreement.
A franchisor may restrict the transferability of its franchise license
agreements. In this case, the lender must obtain the consent of the franchisor
for the continued use of the franchise license by the hospitality property
following a foreclosure. Conversely, a lender may be unable to remove a
franchisor that it desires to replace following a foreclosure. Further, in the
event of a foreclosure on a hospitality property, the lender or other purchaser
of the hospitality property may not be entitled to the rights under any
associated liquor license. That party would be required to apply for its own
liquor license. There can be no assurance that a new license could be obtained
or that it could be obtained promptly.
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Casino Properties
Factors affecting the economic performance of a casino property
include:
o location, including proximity to or easy access from major population
centers;
o appearance;
o economic conditions, either local, regional or national, which may limit
the amount of disposable income that potential patrons may have for
gambling;
o the existence or construction of competing casinos;
o dependence on tourism; and
o local or state governmental regulation.
Competition among major casinos may involve attracting patrons by
providing alternate forms of entertainment, such as performers and sporting
events, and offering low-priced or free food and lodging. In addition, casino
owners may expend substantial sums to modernize, refurbish and maintain existing
facilities.
Because of their dependence on disposable income of patrons, casino
properties are likely to respond quickly to a downturn in the economy.
To avoid criminal influence, the ownership and operation of casino
properties is often subject to local or state governmental regulation. A
government agency or authority may have jurisdiction over or influence with
respect to the foreclosure of a casino property and/or the bankruptcy of its
owner or operator. In some jurisdictions, it may be necessary to receive
governmental approval before foreclosing, which could result in substantial
delays to a lender. Gaming licenses are not transferable, including in
connection with a foreclosure. We can not assure you that a lender or another
purchaser in foreclosure or otherwise will be able to obtain the requisite
approvals to continue operating the foreclosed property as a casino.
Any given state or municipality that currently allows legalized
gambling could pass legislation banning it.
The loss of a gaming license for any reason would have a material
adverse effect on the value of a casino property.
Health Care-Related Properties
Health-care related properties include:
o hospitals;
o skilled nursing facilities;
o nursing homes;
o congregate care facilities; and
o in some cases, assisted living centers and housing for seniors.
Health care-related facilities, particularly nursing homes, may receive
a substantial portion of their revenues from government reimbursement programs,
primarily Medicaid and Medicare. Medicaid and Medicare are subject to:
o statutory and regulatory changes;
o retroactive rate adjustments;
o administrative rulings;
o policy interpretations;
o delays by fiscal intermediaries; and
o government funding restrictions.
All of the foregoing can adversely affect the operating revenues of a
health care-related facility. Moreover, governmental payors have employed
cost-containment measures that limit payments to health care providers. In
addition, there are currently under consideration various proposals for national
health care relief that could further limit these payments.
Providers of long-term nursing care and other medical services are
highly regulated by federal, state and local law. They are subject to numerous
factors that can increase the cost of operation, limit growth and, in extreme
cases, require or result in suspension or cessation of operations, including:
o federal and state licensing requirements;
o facility inspections;
o rate setting;
o reimbursement policies; and
o laws relating to the adequacy of medical care, distribution of
pharmaceuticals, use of equipment, personnel operating policies and
maintenance of and additions to facilities and services.
Under applicable federal and state laws and regulations, Medicare and
Medicaid reimbursements generally may not be made to any person other than the
provider who actually furnished the related material goods and services.
Accordingly, if a lender
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forecloses on a health care-related facility, neither the lender nor a
subsequent lessee or operator of the property would generally be entitled to
obtain from federal or state governments any outstanding reimbursement payments
relating to services furnished at the property prior to the foreclosure.
Furthermore, in the event of foreclosure, there can be no assurance that a
lender or other purchaser in a foreclosure sale would be entitled to the rights
under any required licenses and regulatory approvals. The lender or other
purchaser may have to apply for its own licenses and approvals. There can be no
assurance that a new license could be obtained or that a new approval would be
granted.
Health care-related facilities are generally "special purpose"
properties that could not be readily converted to general residential, retail or
office use. This will adversely affect their liquidation value. Furthermore,
transfers of health care-related facilities are subject to regulatory approvals
under state, and in some cases federal, law that are not required for transfers
of most other types of commercial properties.
Industrial Properties
Industrial properties may be adversely affected by reduced demand for
industrial space occasioned by a decline in a particular industry segment and/or
by a general slowdown in the economy. In addition, an industrial property that
suited the particular needs of its original tenant may be difficult to relet to
another tenant or may become functionally obsolete relative to newer properties.
The value and operation of an industrial property depends on:
o location of the property, the desirability of which in a particular
instance may depend on:
(1) availability of labor services;
(2) proximity to supply sources and customers; and
(3) accessibility to various modes of transportation and shipping,
including railways, roadways, airline terminals and ports;
o building design of the property, the desirability of which in a particular
instance may depend on:
(4) ceiling heights;
(5) column spacing;
(6) number and depth of loading bays;
(7) divisibility;
(8) floor loading capacities;
(9) truck turning radius;
(10) overall functionality; and
(11) adaptability of the property, because industrial tenants often need
space that is acceptable for highly specialized activities; and
o the quality and creditworthiness of individual tenants, because industrial
properties frequently have higher tenant concentrations.
Industrial properties are generally "special purpose" properties that
an owner could not readily convert to general residential, retail or office use.
This will adversely affect their liquidation value.
Industrial properties may also pose unique environmental risks
depending upon the nature of the business conducted at the property.
Warehouse, Mini-Warehouse and Self-Storage Facilities
Warehouse, mini-warehouse and self-storage properties are considered
vulnerable to competition because both acquisition costs and break-even
occupancy are relatively low. In addition, an owner would incur substantial
capital expenditures to convert a warehouse, mini-warehouse or self-storage
property to an alternative use. These factors will materially impair the
liquidation value of the property if its operation for storage purposes becomes
unprofitable due to decreased demand, competition, age of improvements or other
factors.
Successful operation of a warehouse, mini-warehouse or self-store
property depends on:
o building design;
o location and visibility;
o tenant privacy;
o efficient access to the property;
o proximity to potential users, including apartment complexes or commercial
users;
o services provided at the property, such as security;
o age and appearance of the improvements; and
o quality of management.
Warehouse properties may pose environmental risks depending upon the
nature of the business conducted in the warehouse.
Restaurants and Taverns
Factors affecting the economic viability of individual restaurants,
taverns and other
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establishments that are part of the food and beverage service industry include:
o competition from facilities having businesses similar to a particular
restaurant or tavern;
o perceptions by prospective customers of safety, convenience, services and
attractiveness;
o the cost, quality and availability of food and beverage products;
o negative publicity, resulting from instances of food contamination,
food-borne illness, crime and similar events;
o changes in demographics, consumer habits and traffic patterns;
o the ability to provide or contract for capable management; and
o retroactive changes to building codes, similar ordinances and other legal
requirements.
Adverse economic conditions, whether local, regional or national, may
limit the amount that may be charged for food and beverages and the extent to
which potential customers dine out. Because of the nature of the business,
restaurants and taverns tend to respond to adverse economic conditions more
quickly than do many other types of commercial properties. Furthermore, the
transferability of any operating, liquor and other licenses to an entity
acquiring a bar or restaurant, either through purchase or foreclosure, is
subject to local law requirements.
The food and beverage service industry is highly competitive. The
principal means of competition are:
o segment;
o product;
o price;
o value;
o quality;
o service;
o convenience;
o location; and
o the nature and condition of the restaurant facility.
A restaurant or tavern operator competes with the operators of
comparable establishments in the area in which its restaurant or tavern is
located. Other restaurants could have:
o lower operating costs;
o more favorable locations;
o more effective marketing;
o more efficient operations; or
o better facilities.
The location and condition of a particular restaurant or tavern will
affect the number of customers and, to a certain extent, the prices that the
operator may charge. The characteristics of an area or neighborhood in which a
restaurant or tavern is located may change over time or in relation to competing
facilities. Also, the cleanliness and maintenance at a restaurant or tavern will
affect its appeal to customers. In the case of a regionally- or nationally-known
chain restaurant, there may be costly expenditures for renovation, refurbishment
or expansion, regardless of its condition.
Factors affecting the success of a regionally- or nationally-known
chain restaurant include:
o actions and omissions of any franchisor, including management practices
that adversely affect the nature of the business or that require
renovation, refurbishment, expansion or other expenditures;
o the degree of support the franchisor provides or arranges, including its
franchisee organizations and third-party providers of products or
services; and
o the bankruptcy or business discontinuation of the franchisor or any of its
franchisee organizations or third-party providers.
Chain restaurants may be operated under franchise agreements, and these
agreements typically do not contain provisions protective of lenders. A
franchisor typically may terminate a borrower's rights as a franchisee without
informing the lender, and the borrower may be precluded from competing with the
franchisor upon termination. In addition, a lender that acquires title to a
restaurant site through foreclosure or similar proceedings may be restricted in
the use of the site or may be unable to succeed to the rights of the franchisee
under the related franchise agreement. The transferability of a franchise may be
subject to other restrictions. Also, federal and state franchise regulations may
impose additional risk, including the risk that the transfer of a franchise
acquired through foreclosure or similar proceedings may require registration
with governmental authorities or disclosure to prospective transferees.
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Manufactured Housing Communities, Mobile Home Parks and Recreational Vehicle
Parks
Manufactured housing communities and mobile home parks consist of land
that is divided into "spaces" or "home sites" that are primarily leased to
owners of the individual mobile homes or other housing units. The homeowner
often invests in site-specific improvements such as carports, steps, fencing,
skirts around the base of the home, and landscaping. The landowner typically
provides private roads within the park, common facilities and, in many cases,
utilities. Due to relocation costs and, in some cases, demand for home sites,
the value of a mobile home or other housing unit in place in a manufactured
housing community or mobile home park is generally higher, and can be
significantly higher, than the value of the same unit not placed in a
manufactured housing community or mobile home park. As a result, a well-operated
manufactured housing community or mobile home park that has achieved stabilized
occupancy is typically able to maintain occupancy at or near that level. For the
same reason, a lender that provided financing for the home of a tenant who
defaulted on his or her space rent generally has an incentive to keep rental
payments current until the home can be resold in place, rather than to allow the
unit to be removed from the park. In general, the individual mobile homes and
other housing units will not constitute collateral for a mortgage loan
underlying a series of certificates.
Recreational vehicle parks lease spaces primarily or exclusively for
motor homes, travel trailers and portable truck campers, primarily designed for
recreational, camping or travel use. In general, parks that lease recreational
vehicle spaces have a less stable tenant population than parks occupied
predominantly by mobile homes. However, it is not unusual for the owner of a
recreational vehicle to leave the vehicle at the park on a year-round basis or
to use the vehicle as low cost housing and reside in the park indefinitely.
Factors that affect the successful operation of a manufactured housing
community, mobile home park or recreational vehicle park include:
o the number of comparable competing properties in the local market;
o the age, appearance and reputation of the property;
o the quality of management; and
o the types of facilities and services it provides.
Manufactured housing communities and mobile home parks also compete
against alternative forms of residential housing, including multifamily rental
properties, cooperatively owned apartment buildings, condominium complexes and
single-family residential developments. Recreational vehicle parks also compete
against alternative forms of recreation and short-term lodging, such as staying
at a hotel at the beach.
Manufactured housing communities, mobile home parks and recreational
vehicle parks are "special purpose" properties that the operator cannot readily
convert to general residential, retail or office use. This will adversely affect
the liquidation value of the property if its current operations become
unprofitable due to competition, age of the improvements or other factors.
Certain states regulate the relationship of an owner of a manufactured
housing community or mobile home park and its tenants in a manner similar to the
way they regulate the relationship between a landlord and tenant at a
multifamily rental property. Some states also regulate changes in the use of a
manufactured housing community or mobile home park and require that the owner
give written notice to its tenants a substantial period of time prior to the
projected change.
In addition to state regulation of the landlord-tenant relationship,
numerous counties and municipalities impose rent control on manufactured housing
communities and mobile home parks. These ordinances may limit rent increases to:
o fixed percentages;
o percentages tied to the consumer price index;
o increases set or approved by a governmental agency; or
o increases determined through mediation or binding arbitration.
In many cases, the rent control laws either do not permit vacancy
decontrol or permit vacancy decontrol only in the relatively rare event that the
mobile home or manufactured housing unit is removed from the home site. Local
authority to impose rent control on manufactured housing communities and mobile
home parks is pre-empted by state law in certain states and rent control is not
imposed at the state level in those states. In some states, however, local rent
control ordinances are not pre-empted for tenants having short-term or
month-to-month leases, and properties there may be subject
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to various forms of rent control with respect to those tenants.
Recreational and Resort Properties
Security for a mortgage loan may include a golf course, marina, ski
resort, amusement park or other property used for recreational purposes or as a
resort. Factors affecting the economic performance of a property of this type
include:
o the location and appearance of the property;
o the appeal of the recreational activities offered;
o the existence or construction of competing properties, whether or not they
offer the same activities;
o the need to make capital expenditures to maintain, refurbish, improve
and/or expand facilities in order to attract potential patrons;
o geographic location and dependence on tourism;
o changes in travel patterns caused by changes in energy prices, strikes,
location of highways, construction of additional highways and similar
factors;
o seasonality of the business, which may cause periodic fluctuations in
operating revenues and expenses;
o sensitivity to weather and climate changes; and
o local, regional and national economic conditions.
Statutes and government regulations that govern the use of, and
construction on, rivers, lakes and other waterways will affect a marina or other
recreational or resort property located next to water.
Because of the nature of the business, recreational and resort
properties tend to respond to adverse economic conditions more quickly than
other types of commercial properties.
Recreational and resort properties are generally "special purpose"
properties that the owner cannot readily convert to alternative uses. This will
adversely affect their liquidation value.
Arenas and Stadiums
The success of an arena or stadium generally depends on its ability to
attract patrons to a variety of events, including:
o sporting events;
o musical events;
o theatrical events;
o animal shows; and/or
o circuses.
The ability to attract patrons is dependent on such factors as:
o the appeal of the particular event;
o the cost of admission;
o perceptions by prospective patrons of the safety, convenience, services
and attractiveness of the arena or stadium;
o perceptions by prospective patrons of the safety of the surrounding area;
and
o the alternative forms of entertainment available in the particular locale.
In some cases, an arena's or stadium's success will depend on its
ability to attract and keep a sporting team as a tenant. An arena or stadium may
become unprofitable, or unacceptable to a sporting team, due to decreased
attendance, competition and age of improvements. Often, substantial expenditures
must be made to modernize, refurbish and/or maintain existing facilities.
Arenas and stadiums are "special purpose" properties that the owner
cannot readily convert to alternative uses. The "special purpose" nature of
these facilities will adversely affect their liquidation value.
Churches and Other Religious Facilities
Churches and other religious facilities generally depend on charitable
donations to meet expenses and pay for maintenance and capital expenditures.
Several social, political and economic factors affect attendance at a religious
facility and the willingness of attendees to make donations. Local, regional or
national economic conditions may also adversely affect donations. Religious
facilities are "special purpose" properties that the owner cannot readily
convert to alternative uses. The "special purpose" nature of these facilities
will adversely affect their liquidation value.
Parking Lots and Garages
The primary source of income for parking lots and garages is the rental
fees charged for parking spaces. Factors affecting the success of a parking lot
or garage include:
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o the number of rentable parking spaces and rates charged;
o the location of the lot or garage and, in particular, its proximity to
places where large numbers of people work, shop or live;
o the amount of alternative parking spaces in the area;
o the availability of mass transit; and
o the perceptions of the safety, convenience and services of the lot or
garage.
Unimproved Land
The value of unimproved land is largely a function of its potential
use. The land's potential use may depend on:
o its location;
o its size;
o the surrounding neighborhood; and
o local zoning laws.
Borrower Concentration Within a Trust Exposes Investors to Greater Risk of
Default and Loss
A particular borrower or group of related borrowers may be associated
with multiple real properties securing the mortgage loans in any particular
trust. The bankruptcy or insolvency of, or other financial problems with respect
to, that borrower or group of borrowers could have an adverse effect on the
operation of all of the related real properties and on the ability of those
properties to produce sufficient cash flow to make required payments on the
related mortgage loans. For example, if a borrower or group of related borrowers
that owns or controls several real properties experiences financial difficulty
at one of those properties, it could defer maintenance at another of those
properties in order to satisfy current expenses with respect to the first
property. That borrower or group of related borrowers could also attempt to
avert foreclosure by filing a bankruptcy petition that might have the effect of
interrupting debt service payments on all the related mortgage loans for an
indefinite period. In addition, multiple real properties owned by the same
borrower or related borrowers are likely to have common management. This would
increase the risk that financial or other difficulties experienced by the
property manager could have a greater impact on the lender, including one of the
trusts, holding the related loans.
Loan Concentration Within a Trust Exposes Investors to Greater Risk of Default
and Loss
Any of the mortgage loans in one of the trusts may be substantially
larger than the other loans in that trust. In general, the inclusion in a trust
of one or more mortgage loans that have outstanding principal balances that are
substantially larger than the other mortgage loans in the trust can result in
losses that are more severe, relative to the size of the related mortgage pool,
than would be the case if the total balance of that pool were distributed more
evenly.
Geographic Concentration Within a Trust Exposes Investors to Greater Risk of
Default and Loss
If a concentration of mortgage loans in any of the trusts is secured by
real properties in a particular locale, state or region, the holders of the
related offered certificates will have a greater exposure to:
o any adverse economic developments that occur in the locale, state or
region where the properties are located;
o changes in the real estate market where the properties are located;
o changes in governmental rules and fiscal policies in the governmental
jurisdiction where the properties are located; and
o acts of nature, including floods, tornadoes and earthquakes, in the areas
where properties are located.
Changes in Pool Composition Will Change the Nature of Your Investment
The mortgage loans underlying any series of offered certificates will
amortize at different rates and mature on different dates. In addition, some of
those mortgage loans may be prepaid or liquidated. As a result, the relative
composition of the mortgage pool will change over time.
If you purchase certificates with a pass-through rate that is equal to
or calculated based upon a weighted average of interest rates on the underlying
mortgage loans, your pass-through rate will be affected, and may decline, as the
relative composition of the mortgage pool changes.
In addition, as payments and other collections of principal are
received with respect to
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the underlying mortgage loans, the remaining mortgage pool backing your
certificates may exhibit an increased concentration with respect to property
type, number and affiliation of borrowers and geographic location.
Subordinate Debt Increases the Likelihood of a Borrower Default
Most mortgage loans included in one of the trusts will either:
o prohibit the related borrower from encumbering the related real property
with additional secured debt; or
o require the consent of the holder of the mortgage loan prior to so
encumbering the property.
However, a lender may be unaware of a violation of this prohibition
until the borrower otherwise defaults on the mortgage loan. You should be aware
that a lender, such as one of the trusts, may not realistically be able to
prevent a borrower from incurring subordinate debt.
The existence of any secured subordinated indebtedness increases the
difficulty of refinancing a mortgage loan backing your certificates at the
loan's maturity. In addition, the related borrower may have difficulty repaying
multiple loans. Moreover, the filing of a petition in bankruptcy by, or on
behalf of, a junior lienholder may prevent the senior lienholder from taking
action to foreclose its lien. See "Certain Legal Aspects of Mortgage
Loans--Subordinate Financing".
Borrower Bankruptcy May Adversely Affect Payment on Your Certificates
Under the U.S. bankruptcy code, the filing of a petition in bankruptcy
by or against a borrower will stay the sale of a real property owned by that
borrower, as well as the commencement or continuation of a foreclosure action.
In addition, if a court determines that the value of a real property is less
than the principal balance of the mortgage loan it secures, the court may reduce
the amount of secured indebtedness to the then-value of the property. Such an
action would make the lender a general unsecured creditor for the difference
between the then-value of the property and the amount of its outstanding
mortgage indebtedness. A bankruptcy court also may:
o grant a debtor a reasonable time to cure a payment default on a mortgage
loan;
o reduce monthly payments due under a mortgage loan;
o change the rate of interest due on a mortgage loan; or
o otherwise alter the mortgage loan's repayment schedule.
Additionally, the borrower, as debtor-in-possession, or its bankruptcy
trustee has certain special powers to avoid, subordinate or disallow debts. In
certain circumstances, the claims of a secured lender, such as one of the
trusts, may be subordinated to financing obtained by a debtor-in-possession
subsequent to its bankruptcy.
Under the U.S. bankruptcy code, a lender will be stayed from enforcing
a borrower's assignment of rents and leases. The U.S. bankruptcy code also may
interfere with a lender's ability to enforce lockbox requirements. The legal
proceedings necessary to resolve these issues can be time consuming and may
significantly delay the receipt of rents. Rents also may escape an assignment to
the extent they are used by a borrower to maintain its property or for other
court authorized expenses.
As a result of the foregoing, the related trust's recovery with respect
to borrowers in bankruptcy proceedings may be significantly delayed, and the
total amount ultimately collected may be substantially less than the amount
owed.
Environmental Liabilities Will Adversely Affect the Value and Operation of
Contaminated Property and May Deter a Lender from Foreclosing
We can give you no assurance as to any environmental testing conducted
at the related real properties in connection with the origination of the
mortgage loans underlying your certificates:
o that the environmental testing identified all adverse environmental
conditions and risks at the related real properties;
o that the results of the environmental testing were accurately evaluated in
all cases;
o that the related borrowers have implemented or will implement all
operations and maintenance plans and other remedial actions recommended by
an environmental consultant that conducted the testing at the related real
properties; or
o that any recommended remedial action will fully remediate or otherwise
address all the
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identified adverse environmental conditions and risks.
In addition, tenants, such as gasoline stations or dry cleaners, or
conditions or operations in the vicinity of the property, such as leaking
underground storage tanks at another property nearby, could adversely affect the
current environmental condition of a real property securing a mortgage loan
underlying 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 or adjacent to 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 the materials. The owner's
liability for any required remediation generally is unlimited and could exceed
the value of the property and/or the total assets of the owner. In addition, the
presence of hazardous or toxic substances, or the failure to remediate the
adverse environmental condition, may adversely affect the owner's or operator's
ability to use the affected property. In certain states, contamination of a
property may give rise to a lien on the property to ensure the costs of cleanup.
In some of those states, this lien has priority over the lien of an existing
mortgage. In addition, third parties may seek recovery from owners or operators
of real property for personal injury associated with exposure to hazardous
substances, including asbestos and lead-based paint. Persons who arrange for the
disposal or treatment of hazardous or toxic substances may be liable for the
costs of removal or remediation of the substances at the disposal or treatment
facility.
The federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, commonly referred to as "CERCLA", together with certain
other federal and state laws, provide that a secured lender, such as one of the
trusts, may be liable as an "owner" or "operator" of the real property,
regardless of whether the borrower or a previous owner caused the environmental
damage, if:
o agents or employees of the lender are deemed to have participated in the
management of the borrower, or
o under certain conditions, the lender actually takes possession of a
borrower's property or control of its day-to-day operations, including
through the appointment of a receiver or foreclosure.
Although recently enacted legislation clarifies the activities in which
a lender may engage without becoming subject to liability under CERCLA and
similar federal laws, that legislation has no applicability to state
environmental laws. Moreover, future laws, ordinances or regulations could
impose material environmental liability.
Federal law requires owners of residential housing constructed prior to
1978 to disclose to potential residents or purchasers:
o any condition on the property that causes exposure to lead-based paint,
and
o the potential hazards to pregnant women and young children, including that
the ingestion of lead-based paint chips and/or the inhalation of dust
particles from lead-based paint by children can cause permanent injury,
even at low levels of exposure.
Property owners may be liable for injuries to their tenants or third
parties resulting from exposure under various laws that impose affirmative
obligations on property owners of residential housing containing lead-based
paint.
Some Provisions in the Mortgage Loans Underlying Your Certificates May Be
Challenged as Being Unenforceable
Cross-Collateralization Arrangements
It may be possible to challenge cross-collateralization arrangements
involving more than one borrower as a fraudulent conveyance, even if the
borrowers are related. If one of those borrowers were to become a debtor in a
bankruptcy case, creditors of the bankrupt party or the representative of the
bankruptcy estate of the bankrupt party could seek to have the bankruptcy court
avoid any lien granted by the bankrupt party to secure repayment of another
borrower's loan. In order to do so, the court would have to determine that:
o the bankrupt party was--
1) insolvent at the time of granting the lien,
2) rendered insolvent by the granting of the lien,
3) left with inadequate capital, or
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4) not able to pay its debts as they matured; and
o the bankrupt party did not receive fair consideration or reasonably
equivalent value for pledging its property to secure the debt of the other
borrower.
If the court were to conclude that the granting of the lien was an
avoidable fraudulent conveyance, it could nullify the lien or mortgage effecting
the cross-collateralization. The court could also allow the bankrupt party to
recover payments it made pursuant to the avoided cross-collateralization.
Prepayment Premiums, Fees and Charges
Under the laws of a number of states, the enforceability of any
mortgage loan provisions that require payment of a prepayment premium, fee or
charge upon a voluntary and/or an involuntary prepayment is unclear. If those
provisions were unenforceable in connection with an involuntary prepayment,
borrowers would have an incentive to default in order to prepay their loans.
Due-on-sale and Debt Acceleration Clauses
Many of the mortgage loans underlying the offered certificates will
contain a due-on-sale clause. This clause permits the lender, with some
exceptions, to accelerate the maturity of the mortgage loan upon the sale,
transfer or conveyance of:
o the related real property; or
o an ownership interest in the related borrower.
All of the mortgage loans will include some form of debt-acceleration
clause, which permits the lender to accelerate the debt upon specified monetary
or non-monetary defaults by the related borrower. The courts of all states will
enforce acceleration clauses in the event of a material payment default. The
equity courts of any state, however, may refuse to allow the foreclosure of a
mortgage or deed of trust or to permit the acceleration of the indebtedness if:
o the default is deemed to be immaterial;
o the exercise of these remedies would be inequitable or unjust; or
o the circumstances would render the acceleration unconscionable.
Assignments of Leases
Many of the mortgage loans underlying the offered certificates will
also be secured by an assignment of leases and rents. The related borrower will
assign its interest in the leases on the related real property and the income
from those leases to the lender as additional security for the related mortgage
loan. Generally, the borrower may continue to collect rents until the borrower
defaults. In some cases, state law may require that the lender take possession
of the property, obtain a judicial appointment of a receiver or take some other
similar action before becoming entitled to collect the rents. In addition, the
commencement of bankruptcy or similar proceedings by or in respect of the
borrower will adversely affect the lender's ability to collect the rents. See
"Certain Legal Aspects of Mortgage Loans--Foreclosure--Bankruptcy Laws."
Defeasance
A mortgage loan underlying a series of offered certificates may, during
specified periods and subject to certain conditions, permit the related borrower
to pledge to the holder of the mortgage loan a specified amount of direct,
non-callable United States government securities in exchange for releasing the
lien on the underlying real property. The cash amount which a borrower must
expend to purchase the required United States government securities may exceed
the principal balance of the mortgage loan. There can be no assurance that a
court would not interpret that excess amount as a form of prepayment premium or
would not take it into account for usury purposes. In some states, some forms of
prepayment premiums are unenforceable. If the payment of that excess amount were
held to be unenforceable, the remaining portion of the cash amount to be
delivered may be insufficient to purchase the requisite amount of United States
government securities.
Lack of Insurance Coverage Exposes a Trust to Risk for Certain Special Hazard
Losses
In general, the standard form of fire and extended coverage policy
covers physical damage to or destruction of the improvements of a property by
fire, lightning, explosion, smoke, windstorm and hail, and riot, strike and
civil commotion, subject to the conditions and exclusions specified in the
related policy. The specific forms of policy vary from state to state. Most
insurance policies do not cover any physical damage resulting from:
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o war;
o revolution;
o governmental actions;
o floods and other water-related causes;
o earth movement, including earthquakes; landslides and mudflows;
o wet or dry rot;
o vermin;
o domestic animals; and
o certain other kinds of risks.
Unless the related mortgage loan documents specifically require the
borrower to insure against physical damage arising from these causes, and the
borrower does so, the resulting losses may be borne by you as a holder of
offered certificates.
Mortgage Loans Secured by Mortgages On Ground Leases Create Risks not Present
when Lending on a Fee Ownership Interest in a Real Property
In order to secure a mortgage loan, a borrower may grant a lien on its
leasehold interest in a real property as tenant under a ground lease. If the
ground lease does not provide for notice to a lender of a default by the
borrower under the lease, and a reasonable opportunity for the lender to cure
the default, the lender may be unable to prevent termination of the lease and
may lose its collateral.
In addition, upon the bankruptcy of a landlord or a tenant under a
ground lease, the debtor entity has the right to assume or reject the ground
lease. If a debtor landlord rejects the lease, the tenant has the right to
remain in possession of its leased premises at the rent reserved in the lease
for the term, including renewals. If a debtor tenant rejects any or all of its
leases, the tenant's lender may not be able to succeed to the tenant's position
under the lease unless the landlord has specifically granted the lender that
right. If both the landlord and the tenant are involved in bankruptcy
proceedings, it is possible that the trustee for your certificates could be
deprived of its security interest in the leasehold estate, notwithstanding
lender protection provisions contained in the lease or mortgage loan documents.
Changes in Zoning Laws May Adversely Affect the Use or Value of a Real Property
Due to changes in zoning requirements after an income-producing
property was built, a property may not comply with current zoning laws,
including density, use, parking and set back requirements. Accordingly, the
property may be a "permitted non-conforming structure" or the operation of the
property may be a "permitted non-conforming use". This means that the owner is
not required to alter the property's structure or use to comply with the new
law, but the owner may be limited in its ability to rebuild the premises "as is"
in the event of a substantial casualty loss. This may adversely affect the cash
flow available following the casualty. If a substantial casualty were to occur,
insurance proceeds may not be sufficient to pay a mortgage loan secured by the
property in full. In addition, if the property were repaired or restored in
conformity with the current law, its value or revenue-producing potential may be
less than before the casualty.
Compliance With the Americans With Disabilities Act of 1990 May be Expensive
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. If a property does not currently comply with
that law, the owner of the property may be required to incur significant costs
in order to bring the property into compliance. In addition, noncompliance could
result in the imposition of fines by the federal government or an award or
damages to private litigants.
Litigation may Adversely Affect a Borrower's Ability to Repay its Mortgage Loan
A borrower may be a defendant in litigation arising out of, among other
things, the following:
o breach of contract involving a tenant, a supplier or other party;
o negligence resulting in a personal injury; or
o responsibility for an environmental problem.
Litigation will divert the borrower's attention from operating its
property. If the litigation were decided adversely to the borrower, the award to
the plaintiff may adversely affect the borrower's ability to repay a mortgage
loan secured by the property.
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"Residual Interests" in a "Real Estate Mortgage Investment Conduit" Have Adverse
Tax Consequences
Inclusion of Taxable Income in Excess of Cash Received
If you own a certificate that is a "residual interest" in a "real
estate mortgage investment conduit" or "REMIC", you will have to report on your
income tax return as ordinary income your pro rata share of the taxable income
of the REMIC, regardless of the amount or timing of your possible receipt of any
cash on the certificate. As a result, your certificate may have "phantom income"
early in the term of the REMIC, because the taxable income from the certificate
may exceed the amount of cash you actually receive. Although you will have a
corresponding amount of tax losses later in the term of the REMIC, the present
value of the "phantom income" may significantly exceed the present value of the
tax losses. Therefore, the after-tax yield on any "residual interest"
certificate may be significantly less than that of a corporate bond or other
instrument having similar cash flow characteristics. In fact, certain offered
certificates which are "residual interests" may have a negative value.
You must report your share of the taxable income and net loss of the
REMIC until all the certificates in the related series have a principal balance
of zero. See "Federal Income Tax Consequences--REMICs".
Some Taxable Income of a "Residual Interest" can not be Offset under the Tax
Code
A portion of the taxable income from a "residual interest" certificate
may be treated as "excess inclusion" under the Internal Revenue Code of 1986.
You will have to pay tax on the "excess inclusion" regardless of whether you
have other credits, deductions or losses. In particular, the tax on "excess
inclusion":
o generally will not be reduced by losses from other activities;
o for a tax-exempt holder, will be treated as unrelated business taxable
income; and
o for a foreign holder, will not qualify for any exemption from withholding
tax.
Certain Entities Should not Invest in Certificates which are "Residual
Interests"
The fees and non-interest expenses of a REMIC will be allocated pro
rata to certificates that are "residual interests" of the REMIC. However,
individuals will only be able to deduct these expenses as miscellaneous itemized
deductions, which are subject to numerous restrictions and limitations under the
Internal Revenue Code of 1986. Therefore, the certificates that are "residual
interests" generally are not appropriate investments for:
o individuals;
o estates;
o trusts beneficially owned by any individual or estate; and
o pass-through entities having any individual, estate or trust as a
shareholder, member or partner.
In addition, the "residual interest" certificates are subject to
numerous transfer restrictions. These restrictions reduce your ability to
liquidate a "residual interest" certificate. For example, unless we indicate
otherwise in the related prospectus supplement, you will not be able to transfer
a "residual interest" certificate to a non-U.S. person under the Internal
Revenue Code of 1986.
See "Federal Income Tax Consequences--REMICs--Taxation of Owners of
REMIC Residual Certificates".
Problems With Book-Entry Registration
Your certificates may be issued in book-entry form through the
facilities of The Depository Trust Company. As a result:
o you will be able to exercise your rights as a certificateholder only
indirectly through DTC and its participating organizations;
o you may have only limited access to information regarding your
certificates;
o you may suffer delays in the receipt of payments on your certificates; and
o your ability to pledge or otherwise take action with respect to your
certificates may be limited due to the lack of a physical certificate
evidencing your ownership of those certificates.
See "Description of the Certificates--Book-Entry Registration and
Definitive Certificates."
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Potential Conflicts of Interest Can Affect a Person's Performance
The master servicer or special servicer for any of the trusts, or any
of their respective affiliates, may purchase certificates evidencing interests
in that trust.
In addition, the master servicer or special servicer for any of the
trusts, or any of their respective affiliates, may have interests in, or other
financial relationships with, borrowers under the related mortgage loans.
In servicing the mortgage loans in any of the trusts, the related
master servicer and special servicer will each be required to observe the terms
of the governing document(s) for the related series of offered certificates and,
in particular, to act in accordance with the servicing standard described in the
related prospectus supplement. You should consider, however, that either of
these parties, if it or an affiliate owns certificates, or has financial
interests in or other financial dealings with any of the related borrowers, may
have interests when dealing with the mortgage loans that are in conflict with
your interests. For example, if the related special servicer owns any
certificates, it could seek to mitigate the potential loss on its certificates
from a troubled mortgage loan by delaying enforcement in the hope of realizing
greater proceeds in the future. However, this action by a special servicer could
result in a lower recovery to the related trust than would have been the case if
the special servicer had not delayed in taking enforcement action.
Furthermore, the master servicer or special servicer for any of the
trusts may service existing and new loans for third parties, including
portfolios of loans similar to the mortgage loans included in that trust. The
properties securing these other loans may be in the same markets as and compete
with the properties securing mortgage loans in that trust. Accordingly, that
master servicer or special servicer may be acting on behalf of parties with
conflicting interests.
The Rating on a Class of Certificates Reflects only the Rating Agency's
Assessment of the Likelihood That Certificate Holders Will Receive Payments to
Which They Are Legally Entitled.
Ratings on mortgage pass-through certificates reflect no assessment of
the likelihood of principal prepayments by borrowers or of the degree to which
the prepayments might differ from those originally anticipated. As a result, if
you purchase any offered certificates, you might suffer a lower than anticipated
yield. For example, if you purchase interest only certificates, you might, in
certain cases, fail to recoup your initial investment even though you receive
all payments to which you are entitled. Ratings also do not evaluate the price
of the certificates or the suitability of the certificates as an investment for
you.
You Should Not Place Undue Reliance Upon Forward-Looking Statements
This prospectus and the related prospectus supplement contain
forward-looking statements that involve risks and uncertainties. Actual events
could differ from those anticipated in these forward-looking statements because
of a variety of factors, including the risks described in the "Risk Factors"
sections and elsewhere in this prospectus or the related prospectus supplement.
You should make your own estimate of future events that you consider material
before you invest.
DESCRIPTION OF THE TRUST ASSETS
We will be responsible for establishing the trust underlying each
series of offered certificates. The assets of the trust will primarily consist
of:
o various types of multifamily and/or commercial mortgage loans;
o mortgage participations, pass-through certificates, collateralized
mortgage obligations or other mortgage-backed securities that directly or
indirectly evidence interests in, or are secured by pledges of, one or
more of various types of multifamily and/or commercial mortgage loans;
o direct obligations of the United States or other governmental agencies; or
o a combination of mortgage loans, mortgage-backed securities or government
securities of the types described above.
We do not originate mortgage loans. Accordingly, we must acquire each
of the mortgage loans to be included in one of the trusts from the originator or
a subsequent assignee. In some cases,
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that originator or subsequent assignee will be Midland Loan Services, Inc. or
another of our affiliates.
Unless we indicate otherwise in the related prospectus supplement,
neither we nor any of our affiliates nor any governmental agency or
instrumentality or other person will guarantee or insure any of those mortgage
assets.
Mortgage Loans
Each mortgage loan underlying the offered certificates will constitute
the obligation of one or more persons to repay a debt. A promissory note or bond
will evidence that obligation. That obligation will be secured by a mortgage,
deed of trust or other security instrument that creates a first or junior lien
on, or security interest in, one or more of the following types of real
property:
o rental or cooperatively-owned buildings with multiple dwelling units;
o retail properties related to the sale of consumer goods and other products
to the general public, such as shopping centers, malls, factory outlet
centers, automotive sales centers, department stores and other retail
stores, grocery stores, specialty shops, convenience stores and gas
stations;
o retail properties related to providing entertainment, recreational and
personal services to the general public, such as movie theaters, fitness
centers, bowling alleys, salons, dry cleaners and automotive service
centers;
o office properties;
o hospitality properties, such as hotels, motels and other lodging
facilities;
o casino properties;
o health care-related properties, such as hospitals, skilled nursing
facilities, nursing homes, congregate care facilities and, in some cases,
assisted living centers and senior housing;
o industrial properties;
o warehouse facilities, mini-warehouse facilities and self-storage
facilities;
o restaurants, taverns and other establishments involved in the food and
beverage industry;
o manufactured housing communities, mobile home parks and recreational
vehicle parks;
o recreational and resort properties, such as recreational vehicle parks,
golf courses, marinas, ski resorts and amusement parks;
o arenas and stadiums;
o churches and other religious facilities;
o parking lots and garages;
o mixed use properties; and
o unimproved land zoned for multifamily residential or commercial use.
A mortgage loan may encumber the following types of real property
interests:
o a fee interest or estate, which consists of ownership of the property for
an indefinite period;
o an estate for years, which consists of ownership of the property for a
specified period of years;
o a leasehold interest or estate, which consists of a right to occupy and
use the property for a specified period of years, subject to the terms and
conditions of a lease;
o shares in a cooperative corporation that owns the property; or
o any other real estate interest under applicable local law.
Any of these real property interests may be subject to deed
restrictions, easements, rights of way and other matters of public record.
Zoning laws and other legal restrictions may apply to the use of any particular
real property and the improvements constructed on it.
If indicated in the related prospectus supplement, a junior lien on the
real property may secure one or more of the mortgage loans underlying a series
of offered certificates. However, the trust may not include the loan or loans
secured by the more senior liens on that property. The primary risk to the
holder of a mortgage loan secured by a junior lien on a real property is the
possibility that the foreclosure proceeds remaining after payment of the loans
secured by more senior liens will be insufficient to pay the junior loan in
full. In a foreclosure proceeding, the sale proceeds are applied:
o first to the payment of court costs and fees in connection with the
foreclosure;
o second to the payment of real estate taxes; and
o third to the payment of all principal, interest, prepayment or
acceleration penalties, if any, and all other amounts owing to the holder
of the senior loans.
The claims of the holders of the senior loans must be satisfied in full before
the holder of the junior loan receives any payments on the junior loan. If a
lender forecloses on a junior loan, it does so subject to any related senior
loans.
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If indicated in the related prospectus supplement, the mortgage loans
underlying a series of offered certificates may be delinquent as of the date the
certificates are initially issued. In those cases, we will describe in the
related prospectus supplement the period of the delinquency, any forbearance
arrangement then in effect, the condition of the related real property and the
ability of the related real property to generate income to service the mortgage
debt. However, we will not transfer to a trust any mortgage loan if we know, at
the time of transfer, that the loan is:
o more than 90 days delinquent in any scheduled principal or interest
payment; or
o in foreclosure.
Default and Loss Considerations with Respect to the Mortgage Loans
Mortgage loans secured by liens on income-producing properties differ
substantially from mortgage loans secured by owner-occupied single-family homes.
The repayment of a loan secured by a lien on an income-producing property
typically depends upon the successful operation of the property and its ability
to generate income sufficient to make payments on the loan. This is particularly
true because most or all of the mortgage loans underlying the offered
certificates will be non-recourse loans.
The debt service coverage ratio of a multifamily or commercial mortgage
loan is a measure of the likelihood of default on the loan. In general, the
"debt service coverage ratio" of a multifamily or commercial mortgage loan at
any given time is the ratio of:
o the amount of income derived or expected to be derived from the related
real property for a twelve-month period that is available to pay debt
service, to
o the annualized scheduled payments of principal and/or interest on the
mortgage loan and any other senior loans that are secured by the related
real property.
The amount described in clause (a) of the preceding sentence is often a
highly subjective number based on several assumptions and adjustments to
revenues and expenses for the property. We will provide a more detailed
discussion of its calculation in the related prospectus supplement.
The cash flow generated by a multifamily or commercial property will
generally fluctuate over time and may or may not suffice to make the mortgage
loan payments, cover operating expenses and fund capital improvements. The
condition of the local real estate market and/or area economy may affect
operating revenues of a non-owner occupied, income-producing property. Changes
in market and business conditions tend to affect properties leased, occupied or
used on a short-term basis (such as certain health care-related facilities,
hotels and motels, recreational vehicle parks, and mini-warehouse and
self-storage facilities) more rapidly than properties typically leased for
longer periods (such as warehouses, retail stores, office buildings and
industrial facilities).
Some commercial properties may be owner-occupied or leased to a small
number of tenants. The operating revenues of these properties may depend
substantially on the financial condition of the borrower or one or a few
tenants. Mortgage loans secured by liens on owner-occupied and single-tenant
properties may pose a greater likelihood of default and loss than loans secured
by liens on multifamily properties or on multi-tenant commercial properties.
Increased property operating expenses can increase the likelihood of a
default on a loan secured by the property. Increases in property operating
expenses may result from:
o increases in energy costs and labor costs;
o increases in interest rates and real estate tax rates; and
o changes in governmental rules, regulations and fiscal policies.
Some "net leases" of commercial properties may obligate the lessee,
rather than the borrower/landlord, to pay operating expenses. However, a net
lease will yield stable net operating income to the borrower/landlord only if
the lessee can pay both increased operating expenses and rent payments.
Lenders also look to the loan-to-value ratio of a mortgage loan as a
factor in evaluating the likelihood of loss if a property is liquidated
following a default. In general, the "loan-to-value ratio" of a multifamily or
commercial mortgage loan at any given time is the ratio, expressed as a
percentage, of:
o the then outstanding principal balance of the mortgage loan and any other
senior loans that are
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secured by the related real property, to
o the estimated value of the related real property based on an appraisal, a
cash flow analysis, a recent sales price or another method.
A low loan-to-value ratio means the borrower has a large amount of its
own equity in the property that secures its loan. In these circumstances:
o the borrower has a greater financial incentive to perform under the
mortgage loan in order to protect its equity, and
o the lender has greater protection against loss on liquidation following a
default.
Loan-to-value ratios are not necessarily an accurate measure of the
likelihood of loss in a pool of multifamily and commercial mortgage loans. For
example, estimated property value at the time the loan was originated may exceed
the value of the property when the offered certificates are issued. Property
values fluctuate. Even current appraisals are not necessarily reliable estimates
of value. Appraised values of income-producing properties are generally based
on:
o the market comparison method, which takes into account the recent resale
value of comparable properties at the date of the appraisal;
o the cost replacement method, which takes into account the cost of
replacing the property at such date;
o the income capitalization method, which takes into account the property's
projected net cash flow; or
o some combination of these methods.
Each of these appraisal methods presents analytical difficulties:
o it is often difficult to find truly comparable properties that have
recently been sold;
o the replacement cost of a property may have little to do with its current
market value; and
o income capitalization is inherently based on inexact projections of income
and expense and selection of a capitalization rate and discount rate.
If different appraisal methods yield significantly different results,
an accurate determination of value and, correspondingly, a reliable analysis of
the likelihood of default and loss, is even more difficult.
A property's performance will affect its value. As a result, if a
multifamily or commercial mortgage loan defaults because the income generated by
the related property is insufficient to pay operating costs and expenses as well
as debt service, then the value of the property will decline and a liquidation
loss may occur.
We believe that the foregoing considerations are important factors that
generally distinguish mortgage loans secured by liens on income-producing real
estate from single-family mortgage loans. However, the originators of the
mortgage loans underlying the offered certificates may not have considered all
these factors for the loans they originated.
See "Risk Factors--Repayment of a Commercial or Multifamily Mortgage
Loan Depends Upon the Performance and Value of the Underlying Real Property and
the Related Borrower's Ability to Refinance the Property."
Payment Provisions of the Mortgage Loans
Except as described in the related prospectus supplement, each of the
mortgage loans included in one of the trusts will have the following features:
o an original term to maturity of not more than approximately 40 years; and
o scheduled payments of principal, interest or both, to be made on specified
dates, that occur monthly, bimonthly quarterly, semi-annually, annually or
at some other interval.
A mortgage loan included in one of the trusts may also:
o provide for the accrual of interest at a mortgage interest rate that is
fixed over its term, that resets on one or more specified dates or that
otherwise adjusts from time to time;
o provide for the accrual of interest at a mortgage interest rate that may
be converted at the borrower's election from an adjustable to a fixed
interest rate or from a fixed to an adjustable interest rate;
o provide for no accrual of interest;
o provide for level payments to stated maturity, for payments that reset in
amount on one or more specified dates or for payments that otherwise
adjust from time to time to accommodate changes in the interest rate or to
reflect the occurrence of certain events;
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o be fully amortizing or partially amortizing or non-amortizing, with a
substantial payment of principal due on its stated maturity date;
o permit the negative amortization or deferral of accrued interest; and/or
o prohibit some or all voluntary prepayments or require payment of a
premium, fee or charge in connection with those prepayments.
Mortgage Loan Information in Prospectus Supplements
In general, the prospectus supplement will provide the following
information about the mortgage loans in each trust:
o the total outstanding principal balance and the largest, smallest and
average outstanding principal balances;
o the type or types of property that provide security for repayment;
o the earliest and latest origination date and maturity date;
o the original and remaining terms to maturity, or the range thereof, and
the weighted average original and remaining terms to maturity;
o loan-to-value ratios either at origination or at a more recent date, or
the range thereof, and the weighted average of those loan-to-value ratios;
o the mortgage interest rates, or the range thereof, and the weighted
average mortgage interest rate;
o if any mortgage loans have adjustable mortgage interest rates, the index
or indices upon which the adjustments are based, the adjustment dates, the
range of gross margins and the weighted average gross margin, and any
limits on mortgage interest rate adjustments at the time of any adjustment
and over the life of the loan;
o information on the payment characteristics, including applicable
prepayment restrictions;
o debt service coverage ratios either at origination or at a more recent
date, or the range thereof, and the weighted average of those debt service
coverage ratios; and
o the geographic distribution of the properties securing the mortgage loans
on a state-by-state basis.
If we are unable to provide the specific information described above at
the time a series of offered certificates is initially offered, we will provide:
o more general information in the related prospectus supplement; and
o specific information in a Current Report on Form 8-K filed with the SEC
within 15 days after the issuance of the certificates.
If a trust includes any mortgage loan, or group of related mortgage
loans, that represent a material concentration of credit risk, we will include
in the related prospectus supplement financial statements or other financial
information on the related real property or properties.
Mortgage-Backed Securities
The mortgage backed-securities underlying a series of offered
certificates may include:
o mortgage participations, mortgage pass-through certificates,
collateralized mortgage obligations or other mortgage-backed securities
that are not insured or guaranteed by any governmental agency or
instrumentality; or
o certificates issued and/or insured or guaranteed by the Federal Home Loan
Mortgage Corporation, the Federal National Mortgage Association, the
Governmental National Mortgage Association, the Federal Agricultural
Mortgage Corporation or another federal or state governmental agency or
instrumentality.
In addition, each of those mortgage-backed securities will directly or
indirectly evidence an interest in, or be secured by a pledge of, multifamily
and/or commercial mortgage loans.
We will describe in the related prospectus supplement characteristics
of the mortgage-backed securities included in a trust, including the following
information:
o the initial and outstanding principal amount(s) and type of the
securities;
o the original and remaining term(s) to stated maturity of the securities;
o the pass-through or bond rate(s) of the securities or the formula for
determining these rate(s);
o the payment characteristics of the securities;
o the identity of the issuer(s), servicer(s) and trustee(s) for the
securities;
o a description of the related credit support, if any;
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o the type(s) of mortgage loans underlying the securities;
o the circumstances under which the underlying mortgage loans, or the
securities themselves, may be purchased prior to maturity;
o the terms and conditions for substituting mortgage loans backing the
securities; and
o the characteristics of any agreements or instruments providing interest
rate protection to the securities.
In our reports filed under the Exchange Act of 1934, we will provide
the same information about mortgage-backed securities included in a trust as is
provided by the issuer of the security:
o in its own reports filed under the Securities Exchange Act of 1934, if the
security was publicly offered; or
o in whatever reports the issuer of the security provides to the related
trustee, if the security was privately issued.
The prospectus supplement for a series will contain the disclosure
concerning the mortgage-backed securities described in the preceding paragraph
and, in particular, will disclose the underlying mortgage loans appropriately in
light of the percentage of the aggregate principal balance of all assets
represented by the principal balance of the mortgage-backed securities.
Government Securities
The prospectus supplement for a series of certificates evidencing
interests in assets of a trust fund that include government securities will
specify, to the extent available:
o the aggregate approximate initial and outstanding principal amounts or
notional amounts, as applicable, and types of the government securities to
be included in the trust fund;
o the original and remaining terms to stated maturity of the government
securities;
o whether the government securities are entitled only to interest payments,
only to principal payments or to both;
o the interest rates of the government securities or the formula to
determine the rates, if any;
o the applicable payment provisions for the government securities; and
o to what extent, if any, the obligation evidenced by the related series of
certificates is backed by the full faith and credit of the United States.
Undelivered Mortgage Assets
In general, the total outstanding principal balance of the mortgage
assets transferred by us to any particular trust will equal or exceed the
initial total outstanding principal balance of the related series of
certificates. If we initially deliver to the trustee mortgage assets with total
outstanding principal balances less than the initial total outstanding principal
balance of any series of certificates, we may cover the shortfall by depositing
or arranging to deposit with the related trustee cash or liquid investments on
an interim basis. For 90 days following the date of initial issuance of that
series of certificates, we will be entitled to obtain a release of the deposited
cash or investments if we deliver or arrange for delivery of a corresponding
amount of mortgage assets. However, If we fail to deliver mortgage assets
sufficient to make up the entire shortfall, the related trustee will liquidate
the investments and use the cash and proceeds of the liquidation to pay down the
total principal balance of the related series of certificates, as described in
the related prospectus supplement.
YIELD AND MATURITY CONSIDERATIONS
The yield on your certificates will depend on:
o the price you paid for your certificates;
o the pass-through rate on your certificates;
o the amount and timing of payments on your certificates.
The following discussion contemplates a trust established by us that
consists primarily of mortgage loans. If one of the trusts also includes a
mortgage-backed security, the payment terms of that security will lessen or
enhance the effects that the characteristics and behavior of mortgage loans
backing that security can have on the yield to maturity and/or weighted average
life of a class of offered certificates. If one of the trusts includes a
mortgage-backed security or government security, we will discuss in the related
prospectus supplement the effect, if any, that these securities may have on the
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yield to maturity and weighted average lives of the related offered
certificates.
Pass-Through Rate
A class of interest-bearing offered certificates may have a fixed,
variable or adjustable pass-through rate. We will specify in the related
prospectus supplement the pass-through rate for each class of interest-bearing
offered certificates or, if the pass-through rate is variable or adjustable, the
method of determining the pass-through rate.
Payment Delays
There will be a delay between the date on which payments on the
underlying mortgage loans are due and the date on which those payments are
passed through to you and other investors. That delay will reduce the yield that
would otherwise be produced if mortgage loan payments were passed through on
your certificates on the same date that the payments were due.
Yield and Prepayment Considerations
The yield to maturity on your certificates will be affected by the rate
of principal payments on the mortgage loans and the allocation of those
principal payments to reduce the principal balance or notional amount of your
certificates. The rate of principal payments will be affected by the following:
o the amortization schedules of the mortgage loans, which may change from
time to time to reflect, among other things, changes in mortgage interest
rates or partial prepayments of principal;
o the dates on which any balloon payments are due; and
o the rate of principal prepayments on the mortgage loans, including
voluntary prepayments by borrowers and involuntary prepayments resulting
from liquidations, casualties or purchases of mortgage loans.
Because the rate of principal prepayments will depend on future events
and a variety of factors, we cannot give you any assurance as to what that rate
will be.
The yield to maturity of your certificates may vary from your
anticipated yield depending upon:
o whether you purchased your certificates at a discount or premium and, if
so, the extent of that discount or premium; and
o when, and to what degree, payments of principal on the underlying mortgage
loans reduce the principal balance or notional amount of your
certificates.
If you purchase your certificates at a discount, you should consider
the risk that a slower than anticipated rate of principal payments on the
underlying mortgage loans could result in an actual yield to you that is lower
than your anticipated yield. If you purchase your certificates at a premium, you
should consider the risk that a faster than anticipated rate of principal
payments on the underlying mortgage loans could result in an actual yield to you
that is lower than your anticipated yield.
If your certificates entitle you to payments of interest, with
disproportionate, nominal or no payments of principal, you should consider that
your yield will be extremely sensitive to prepayments on the underlying mortgage
loans and, under some prepayment scenarios, may be negative.
If a class of offered certificates accrues interest on a notional
amount, that notional amount will, in general, either:
(a) be based on the principal balances of some or all of the mortgage
assets in the related trust; or
(b) be equal to the total principal balance of one or more of the
other classes of certificates of the same series.
Accordingly, the yield on that class of certificates will be inversely
related to, as applicable, the rate at which payments and other collections of
principal are received on the mortgage assets referred to in clause (a) above or
payments are made in reduction of the total principal balance of the class or
classes of certificates referred to in clause (b) above.
Several factors may influence repayments of principal on the mortgage
loans, including:
o the availability of mortgage credit;
o the relative economic vitality of the area in which the related real
properties are located;
o the quality of management of the related real properties;
o the servicing of the mortgage loans;
o possible changes in tax laws; and
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o the availability of other investment opportunities.
In general, those factors which increase the attractiveness of selling
or refinancing a multifamily or commercial property that secures a mortgage
loan, as well as those factors which increase the likelihood of default under
the mortgage loan, would be expected to cause the rate of prepayment to
accelerate. In contrast, those factors having an opposite effect would be
expected to cause the rate of prepayment to slow.
The existence and enforceability of prepayment restrictions, such as
prepayment lock-out periods and requirements that voluntary principal
prepayments be accompanied by prepayment premiums, fees or charges, could also
effect the rate of principal payments on the mortgage loans. If enforceable,
those provisions could either bar or discourage a borrower from voluntarily
prepaying its mortgage loan, which could slow the rate of prepayments.
Prevailing market interest rates for mortgage loans of a comparable
type, term and risk level, may also affect the rate of prepayment. As prevailing
market interest rates decline, a borrower may have an increased incentive to
refinance its mortgage loan. Even in the case of adjustable rate mortgage loans,
as prevailing market interest rates decline, the related borrowers may have an
increased incentive to refinance in order to:
o convert to a fixed rate loan and thereby "lock in" that rate; or
o take advantage of a different index, margin or rate cap or floor on
another adjustable rate mortgage loan.
Subject to prevailing market interest rates and economic conditions
generally, a borrower may sell a real property in order to:
o realize its equity in the property;
o meet cash flow needs; or
o make other investments.
Federal and state tax laws, which are subject to change, may motivate
borrowers to sell their properties prior to the exhaustion of tax depreciation
benefits. We make no representation as to:
o the particular factors that will affect prepayments of, or losses on, the
mortgage loans underlying any series of offered certificates;
o the relative importance of those factors;
o the percentage of the principal balance of those mortgage loans that will
be paid or incur a loss as of any date; or
o the overall rate of prepayments or losses on those mortgage loans.
Weighted Average Life and Maturity
The rate at which principal payments are received or losses are
realized on the mortgage loans underlying any series of offered certificates
will affect the ultimate maturity and the weighted average life of one or more
classes of the offered certificates of that related series. In general, weighted
average life refers to the average amount of time that will elapse from the date
of issuance of an instrument until each dollar allocable as principal of the
instrument is repaid to the investor.
The weighted average life and maturity of a class of offered
certificates will be influenced by the rate at which principal on the underlying
mortgage loans is paid to that class, whether in the form of scheduled
amortization or prepayments, including voluntary prepayments by borrowers and
involuntary prepayments resulting from liquidations, casualties or condemnations
and purchases of mortgage loans out of the related trust.
Prepayment rates on loans are commonly measured relative to a
prepayment standard or model, such as the Constant Prepayment Rate or "CPR"
prepayment model or the Standard Prepayment Assumption or "SPA" prepayment
model. CPR represents an assumed constant rate of prepayment each month
(expressed as an annual percentage) relative to the then outstanding principal
balance of a pool of mortgage loans for the life of the loans. SPA represents an
assumed variable rate of prepayment each month (expressed as an annual
percentage) relative to the then outstanding principal balance of a pool of
mortgage loans, with different prepayment assumptions often expressed as
percentages of SPA. For example, a prepayment assumption of 100% of SPA might
assume prepayment rates of 0.2% per annum of the then outstanding principal
balance of those loans in the first month of the life of the loans and an
additional 0.2% per annum in each month thereafter until the thirtieth month.
Beginning in the thirtieth month, and in each month thereafter during the life
of the loans, 100% of SPA would assume a
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constant prepayment rate of 6% per annum each month.
Neither CPR nor SPA nor any other prepayment model or assumption is a
historical description of prepayment experience or a prediction of the
anticipated rate of prepayment of any particular pool of mortgage loans.
Moreover, the CPR and SPA models were developed based upon historical prepayment
experience for single-family mortgage loans. It is unlikely that the prepayment
experience of the mortgage loans underlying any series of offered certificates
will conform to any particular level of CPR or SPA.
In the prospectus supplement for a series of offered certificates, we
will include tables, if applicable, setting forth the projected weighted average
life of each class of those offered certificates with a total principal balance,
and the percentage of the initial total certificate principal balance of each
class that would be outstanding on specified dates, based on the assumptions
stated in that prospectus supplement, including assumptions regarding
prepayments on the underlying mortgage loans. Those tables and assumptions
illustrate the sensitivity of the weighted average lives of the certificates to
various assumed prepayment rates and are not intended to predict, or to provide
information that will enable you to predict, the actual weighted average lives
of your certificates.
Other Factors Affecting Yield, Weighted Average Life and Maturity
Balloon Payments; Extensions of Maturity
Some or all of the mortgage loans underlying a series of offered
certificates may require the borrower to make a balloon payment at maturity. A
borrower's ability to make a balloon payment typically will depend upon its
ability either to:
o refinance the loan; or
o to sell the related real property.
If a borrower is unable to refinance or sell the property, the borrower might
default on the mortgage loan unless the maturity of the mortgage loan is
extended in connection with a workout. If a borrower defaults, recovery of
proceeds may be delayed by bankruptcy proceedings or adverse economic conditions
in the market where the property is located.
In order to minimize losses on defaulted mortgage loans, the related
master servicer or special servicer may be authorized within prescribed limits
to modify mortgage loans that are in default or as to which a payment default is
reasonably foreseeable. Any defaulted balloon payment or modification that
extends the maturity of a mortgage loan may delay payments of principal on your
certificates and extend the weighted average life of your certificates.
Negative Amortization
Mortgage loans that permit negative amortization to occur can affect
the weighted average life of a class of certificates. Negative amortization
loans require current interest payments at a rate lower than the rate at which
interest is accruing on the mortgage loan. The unpaid portion of the current
interest is added to the related principal balance. Negative amortization most
commonly occurs on adjustable rate mortgage loans that:
o limit the amount by which the scheduled payment may adjust in response to
a change in the mortgage interest rate;
o provide that the scheduled payment will adjust less frequently than the
mortgage interest rate; or
o provide for constant scheduled payments regardless of adjustments to the
mortgage interest rate.
Negative amortization on loans in a trust may cause negative
amortization on the offered certificates. We will describe in the related
prospectus supplement, if applicable, how this negative amortization will be
allocated among the classes of a series of offered certificates.
The portion of any mortgage loan negative amortization allocated to a
class of offered certificates may result in a deferral of some or all of the
interest payable on those certificates. Deferred interest may be added to the
aggregate principal balance of a class of offered certificates. During a period
of increasing interest rates, an adjustable rate mortgage loan that permits
negative amortization would be expected to not amortize or to amortize at a
slower rate than if interest rates were declining or remaining constant. This
slower rate of mortgage loan amortization would cause a slower rate of
amortization for one or more classes of certificates of the related series. This
would increase the weighted average lives of those classes of certificates to
which mortgage loan negative amortization is allocated or
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that bear the effects of a slower rate of amortization of the underlying
mortgage loans.
During a period of declining interest rates, the scheduled payment on
an adjustable rate mortgage loan may exceed the amount necessary to amortize the
loan fully over its remaining amortization schedule and pay interest at the then
applicable mortgage interest rate. The result is the accelerated amortization of
the mortgage loan. The acceleration in amortization of a mortgage loan will
shorten the weighted average lives of those classes of certificates that entitle
their holders to a portion of the principal payments on the mortgage loan.
The extent to which the inclusion in a trust of mortgage loans that
permit negative amortization will affect the yield on your certificates will
depend upon:
o whether you purchase your certificates at a premium or a discount; and
o whether the payment characteristics of the underlying mortgage loans delay
or accelerate the payments of principal on, or in reduction of the
notional amount of, your certificates.
See "--Yield and Prepayment Considerations".
Foreclosures and Payment Plans
The weighted average life of and yield on your certificates will be
affected by:
o the number of foreclosures with respect to the underlying mortgage loans;
and
o the principal amount of the foreclosed mortgage loans in relation to the
principal amount of those mortgage loans that are repaid in accordance
with their terms.
Servicing decisions made with respect to mortgage loans, including the
use of payment plans prior to a demand for acceleration and the restructuring of
mortgage loans in bankruptcy proceedings or otherwise, may also affect the
payment patterns of particular mortgage loans and the weighted average life of
and yield on your certificates.
Losses and Shortfalls on the Mortgage Assets
The yield on your certificates will directly depend on the extent to
which you are required to bear the effects of any losses or shortfalls in
collections on the underlying mortgage loans and the timing of those losses and
shortfalls. In general, the earlier that you bear any loss or shortfall, the
greater the negative effect on the yield of your certificates.
The amount of any losses or shortfalls in collections on the mortgage
assets in any of the trusts will, to the extent not covered or offset by draws
on any reserve fund or under any instrument of credit support, be allocated
among the various classes of certificates of the related series in the priority
and manner, and subject to the limitations, that we specify in the related
prospectus supplement. As described in the related prospectus supplement, those
allocations may be effected by:
o a reduction in the entitlements to interest and/or the total principal
balances of one or more classes of certificates; and/or
o the establishment of a priority of payments among classes of certificates.
If you purchase subordinated certificates, the yield to maturity on
those certificates may be extremely sensitive to losses and shortfalls in
collections on the underlying mortgage loans.
Additional Certificate Amortization
If your certificates have a principal balance, then they entitle you to
a specified portion of the principal payments received on the underlying
mortgage loans. They may also entitle you to payments of principal from the
following sources:
o amounts attributable to interest accrued but not currently payable on one
or more other classes of certificates;
o interest received or advanced on the underlying mortgage assets that is in
excess of the interest currently accrued on the certificates of the
applicable series;
o prepayment premiums, fees and charges, payments from equity participations
or any other amounts received on the underlying mortgage assets that do
not constitute interest or principal; or
o any other amounts described in the related prospectus supplement.
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The amortization of your certificates out of the sources described in
the prior paragraph would shorten their weighted average life and, if your
certificates were purchased at a premium, reduce their yield to maturity.
PNC MORTGAGE ACCEPTANCE CORP.
We were incorporated in the State of Missouri on September 17, 1996. We
are a wholly-owned subsidiary of Midland Loan Services, Inc., a Delaware
corporation. We were organized, among other things, for the purposes of issuing
debt securities and establishing trusts, selling beneficial interests therein
and acquiring and selling mortgage assets to those trusts. Our principal
executive offices are located at:
210 West 10th Street
6th Floor
Kansas City, Missouri 64105
Our telephone number is (816) 435-5000. We do not have, and we do not
expect to have, any significant assets.
DESCRIPTION OF THE CERTIFICATES
Each series of offered certificates, together with any non-offered
certificates of the same series, will represent the entire beneficial ownership
interest in a trust established by us. Each series of offered certificates will
consist of one or more classes. Any non-offered certificates of that series will
likewise consist of one or more classes.
A "series" of certificates are all those certificates that:
o have the same series designation;
o were issued pursuant to the same governing documents; and
o represent beneficial ownership interests in the same trust.
A "class" of certificates are all those certificates of a particular
series that:
o have the same class designation; and
o have the same payment terms.
The respective classes of offered and non-offered certificates of any
series may have a variety of payment terms. An offered certificate may entitle
the holder to receive:
o a stated principal amount, which will be represented by its principal
balance;
o interest on a principal balance or notional amount, at a fixed, variable
or adjustable pass-through rate;
o specified, fixed or variable portions of the interest, principal or other
amounts received on the related mortgage assets;
o payments of principal, with disproportionate, nominal or no distributions
of interest;
o payments of interest, with disproportionate, nominal or no distributions
of principal;
o payments of interest or principal that commence only as of a specified
date or only after the occurrence of certain events, such as the payment
in full of the interest and principal outstanding on one or more other
classes of certificates of the same series;
o payments of principal to be made, from time to time or for designated
periods, at a rate that is faster (and, in some cases, substantially
faster) or slower (and, in some cases, substantially slower) than the rate
at which payments or other collections of principal are received on the
related mortgage assets;
o payments of principal to be made, subject to available funds, based on a
specified principal payment schedule or other methodology; or
o payments of all or part of the prepayment or repayment premiums, fees and
charges, equity participations payments or other similar items received on
the related mortgage assets.
Any class of offered certificates may be senior or subordinate to one
or more other classes of certificates of the same series, including a
non-offered class of certificates of that series, for purposes of some or all
payments and/or allocations of losses or other shortfalls.
A class of offered certificates may have two or more component parts,
each having characteristics that are described in this prospectus as being
attributable to separate and distinct classes. For example, a class of offered
certificates may have a total principal balance on which it accrues interest at
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a fixed, variable or adjustable rate. That class of offered certificates may
also accrue interest on a total notional amount at a different fixed, variable
or adjustable rate. In addition, a class of offered certificates may accrue
interest on one portion of its total principal balance or notional amount at one
fixed, variable or adjustable rate and on another portion of its total principal
balance or notional amount at a different fixed, variable or adjustable rate.
Each class of offered certificates will be issued in minimum
denominations corresponding to specified principal balances, notional amounts or
percentage interests, as described in the related prospectus supplement. A class
of offered certificates may be issued in fully registered, definitive form and
evidenced by physical certificates or may be issued in book-entry form through
the facilities of The Depository Trust Company. Offered certificates held in
fully registered, definitive form may be transferred or exchanged, subject to
any restrictions on transfer described in the related prospectus supplement, at
the location specified in the related prospectus supplement, without the payment
of any service charges, except for any tax or other governmental charge payable
in connection with the transfer or exchange. Interests in offered certificates
held in book entry form will be transferred on the book-entry records of DTC and
its participating organizations.
See"--Book-Entry Registration and Definitive Certificates".
Payments on the Certificates
Payments on a series of offered certificates may occur monthly,
bimonthly, quarterly, semi-annually, annually or at any other specified
interval. In the prospectus supplement for each series of offered certificates,
we will identify:
o the periodic payment date for that series; and
o the record date as of which certificateholders entitled to payments on any
particular payment date will be established.
All payments with respect to a class of offered certificates on any
payment date will be allocated pro rata among the outstanding certificates of
that class in proportion to the respective principal balances, notional amounts
or percentage interests, as the case may be, of those certificates. Payments on
an offered certificate will be made to the holder entitled thereto either:
o by wire transfer of immediately available funds to the account of that
holder at a bank or similar entity, provided that the holder has furnished
the party making the payments with wiring instructions no later than the
applicable record date and has satisfied any other conditions specified in
the related prospectus supplement; or
o by check mailed to the address of that holder as it appears in the
certificate register, in all other cases.
In general, the final payment on any offered certificate will be made
only upon presentation and surrender of that certificate at the location
specified to the holder in the notice of final payment.
Payments of Interest
In the case of each class of interest-bearing offered certificates,
interest will accrue from time to time, at the applicable pass-through rate and
in accordance with the applicable interest accrual method, on the total
outstanding principal balance or notional amount of that class.
The pass-through rate for a class of interest-bearing offered
certificates may be fixed, variable or adjustable. We will specify in the
related prospectus supplement the pass-through rate for each class of
interest-bearing offered certificates or, in the case of a variable or
adjustable pass-through rate, the method for determining that pass-through rate.
Interest may accrue with respect to any offered certificate on the
basis of:
o a 360-day year consisting of 12 30-day months;
o the actual number of days elapsed during each relevant period in a year
assumed to consist of 360 days;
o the actual number of days elapsed during each relevant period in a normal
calendar year; or
o another method identified in the related prospectus supplement.
We will identify the interest accrual method for each class of offered
certificates in the related prospectus supplement.
Subject to available funds and any adjustments to interest entitlements
described in the related prospectus supplement, accrued interest on each class
of interest-bearing offered certificates will
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normally be payable on each payment date. However, in the case of some classes
of interest-bearing offered certificates, which we will refer to as "compound
interest certificates", payments of accrued interest will only begin on a
particular payment date or under the circumstances described in the related
prospectus supplement. Prior to that time, the amount of accrued interest
otherwise payable on that class will be added to its total principal balance on
each date or otherwise deferred as described in the related prospectus
supplement.
If a class of offered certificates accrues interest on a total notional
amount, that total notional amount, in general, will be either:
(c) based on the principal balances of some or all of the related
mortgage assets; or
(d) equal to the total principal balances of one or more other
classes of certificates of the same series.
Reference to the notional amount of any certificate is solely for
convenience in making certain calculations of interest and does not represent
the right to receive any distributions of principal.
We will describe in the related prospectus supplement the extent to
which the amount of accrued interest that is payable on, or that may be added to
the total principal balance of, a class of interest-bearing offered certificates
may be reduced as a result of any contingencies, including shortfalls in
interest collections due to prepayments, delinquencies, losses and deferred
interest on the related mortgage assets.
Payments of Principal
A class of offered certificates may or may not have a total principal
balance. If it does, the total principal balance outstanding from time to time
will represent the maximum amount that the holders of that class will be
entitled to receive as principal out of the future cash flow on the related
mortgage assets and the other related trust assets. The total outstanding
principal balance of any class of offered certificates will be reduced by:
o payments of principal actually made to the holders of that class; and
o if and to the extent that we so specify in the related prospectus
supplement, losses of principal on the related mortgage assets that are
allocated to or are required to be borne by that class.
If a class of offered certificates are compound interest certificates,
then the total outstanding principal balance of that class may be increased by
the amount of any interest accrued, but not currently payable, on that class. We
will describe in the related prospectus supplement any other adjustments to the
total outstanding principal balance of a class of offered certificates.
Unless we so state in the related prospectus supplement, the initial
total principal balance of all classes of a series will not be greater than the
total outstanding principal balance of the related mortgage assets transferred
by us to the related trust. We will specify the expected initial total principal
balance of each class of offered certificates in the related prospectus
supplement.
The payments of principal to be made on a series of offered
certificates from time to time will, in general, be a function of the payments,
other collections and advances received or made on the mortgage assets as
described in the related prospectus supplement. Payments of principal on a
series of offered certificates may also be made from the following sources:
o amounts attributable to interest accrued but not currently payable on one
or more other classes of certificates;
o interest received or advanced on the underlying mortgage assets that
exceeds the interest currently accrued on the certificates of the
applicable series;
o prepayment premiums, fees and charges, payments from equity participations
or any other amounts received on the underlying mortgage assets that do
not constitute interest or principal; or
o any other amounts described in the related prospectus supplement.
We will describe in the related prospectus supplement the principal
entitlement of each class of offered certificates on each payment date.
Allocation of Losses and Shortfalls
If and to the extent that any losses or shortfalls in collections on
the mortgage assets in any of the trusts are not covered or offset by
delinquency advances or draws on any reserve fund or under any
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instrument of credit support, they will be allocated among the classes of
certificates of the related series in the priority and manner, and subject to
the limitations, specified in the related prospectus supplement. As described in
the related prospectus supplement, the allocations may be effected as follows:
o by reducing the entitlements to interest and/or the total principal
balances of one or more of those classes; and/or
o by establishing a priority of payments among those classes.
See "Description of Credit Support."
Advances in Respect of Delinquencies
If any trust established by us includes mortgage loans, then as and to
the extent described in the related prospectus supplement, the related master
servicer, the related trustee, any related provider of credit support and any
other specified person may be obligated to advance, or have the option of
advancing, delinquent payments of principal and interest due on those mortgage
loans, other than balloon payments. If there are any limitations with respect to
a party's advancing obligations, we will discuss those limitations in the
related prospectus supplement.
Advances are intended to maintain a regular flow of scheduled interest
and principal payments to certificateholders. Advances are not a guarantee
against losses. The advancing party will be entitled to recover all of its
advances out of subsequent recoveries on the related mortgage loans, including
amounts drawn under any fund or instrument constituting credit support, and out
of any other specific sources identified in the related prospectus supplement.
If and to the extent that we specify in the related prospectus
supplement, any entity making advances will be entitled to receive interest on
some or all of those advances for a specified period during which they are
outstanding at the rate specified in that prospectus supplement. That entity may
be entitled to payment of interest on its outstanding advances periodically from
general collections on the mortgage assets in the related trust, or at such
other times and from such sources as we may describe in the related prospectus
supplement, prior to any payment to the related series of certificateholders.
If any trust established by us includes mortgage-backed securities, we
will discuss in the related prospectus supplement any comparable advancing
obligations in respect of those securities or the mortgage loans that back them.
Reports to Certificateholders
On or about each payment date, the related trustee will forward to each
offered certificateholder a statement substantially in the form, or specifying
the information, set forth in the related prospectus supplement. In general,
that statement will include information regarding:
o the payments made on that payment date with respect to the applicable
class of offered certificates; and
o the recent performance of the mortgage assets.
Within a reasonable period of time after the end of each calendar year,
the trustee will be required to furnish to each person who at any time during
the calendar year was a holder of an offered certificate a statement containing
information regarding the principal, interest and other amounts paid on the
applicable class of offered certificates, totaled for that calendar year or the
applicable portion thereof during which the person was a certificateholder. The
obligation to provide that annual statement will be deemed to have been
satisfied by the related trustee to the extent that substantially comparable
information is provided pursuant to any requirements of the Internal Revenue
Code of 1986.
See, also, "--Book-Entry Registration and Definitive Certificates"
below.
If one of the trusts includes mortgage-backed securities, the ability
of the related trustee to include in any payment date statement information
regarding the mortgage loans that back those securities will depend on
comparable reports being received with respect to them.
Voting Rights
Voting rights will be allocated among the respective classes of offered
and non-offered certificates of each series in the manner described in the
related prospectus supplement. Certificateholders will generally not have a
right to vote, except with respect to certain amendments to the governing
documents or as otherwise specified in the related
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prospectus supplement. See "Description of the Governing Document--Amendment."
As and to the extent described in the related prospectus supplement,
the holders of specified amounts of certificates of a particular series will
have the right to act as a group to remove or replace the related trustee,
master servicer, special servicer or manager. In general, any removal or
replacement must be for cause. We will identify exceptions in the related
prospectus supplement.
Termination
The trust for each series of offered certificates will terminate and
cease to exist following:
o the final payment or other liquidation of the last mortgage asset in that
trust; and
o the payment, or provision for payment, to the certificateholders of that
series of all amounts required to be paid to them.
Written notice of termination of a trust will be given to each affected
certificateholder, and the final distribution will be made only upon
presentation and surrender of the certificates of the related series at the
location to be specified in the notice of termination.
If we so specify in the related prospectus supplement, one or more
designated parties will be entitled to purchase all of the mortgage assets
underlying a series of offered certificates, resulting in an early retirement of
the certificates and an early termination of the related trust. We will describe
in the related prospectus supplement the circumstances under which that purchase
may occur.
In addition, if we so specify in the related prospectus supplement, on
a specified date or upon the reduction of the total principal balance of a
specified class or classes of certificates by a specified percentage or amount,
a party designated in the related prospectus supplement may be authorized or
required to solicit bids for the purchase of all the mortgage assets of the
related trust or of a sufficient portion of the mortgage assets to retire that
class or those classes of certificates. The solicitation of bids must be
conducted in a commercially reasonable manner, and assets will, in general, be
sold at their fair market value. If the fair market value of the mortgage assets
being sold is less than their unpaid balance, then the certificateholders of one
or more classes of certificates may receive an amount less than the total
certificate principal balance of, and accrued and unpaid interest on, their
certificates.
Book-Entry Registration and Definitive Certificates
Any class of offered certificates may be issued in book-entry form
through the facilities of The Depository Trust Company. If so, that class will
be represented by one or more global certificates registered in the name of DTC
or its nominee. If we so specify in the related prospectus supplement, we will
arrange for clearance and settlement through the Euroclear System or Clearstream
Banking, societe anonyme, Luxembourg, for so long they are participants in DTC.
The Depository Trust Company
DTC is:
o a limited-purpose trust company organized under the New York Banking 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 the provisions of Section 17A
of the Securities Exchange Act of 1934.
DTC was created to hold securities for DTC participants and to
facilitate the clearance and settlement of securities transactions between DTC
participants through electronic computerized book-entry changes in their
accounts, which eliminates the need for physical movement of securities
certificates. DTC participants that maintain accounts with DTC include
securities brokers and dealers, banks, trust companies and clearing corporations
and may include other organizations. DTC is owned by a number of DTC
participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc. and the National Association of Securities Dealers, Inc. Access
to the DTC system is also available to others such as banks, brokers, dealers
and trust companies that directly or indirectly clear through or maintain a
custodial relationship with a DTC participant that maintains an account with
DTC. The rules applicable to DTC and DTC participants are on file with the SEC.
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Purchases of book-entry certificates under the DTC system must be made
by or through, and will be recorded on the records of, the brokerage firm, bank,
thrift institution or other financial intermediary (each, a "Financial
Intermediary") that maintains the beneficial owner's account for this purpose.
In turn, the Financial Intermediary's ownership of those certificates will be
recorded on the records of DTC or, alternatively, if the beneficial owner's
Financial Intermediary is not a DTC participant, on the records of a
participating firm that acts as agent for the Financial Intermediary, whose
interest will in turn be recorded on the records of DTC. A beneficial owner of
book-entry certificates must rely on the foregoing procedures to evidence its
beneficial ownership of those certificates. The beneficial ownership interest of
the owner of a book-entry certificate may only be transferred by compliance with
the rules, regulations and procedures of the Financial Intermediaries and DTC
participants.
DTC has no knowledge of the actual beneficial owners of the book-entry
certificates. DTC's records reflect only the identity of the DTC participants to
whose accounts those certificates are credited, which may or may not be the
actual beneficial owners. The DTC participants will remain responsible for
keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to DTC
participants, and by DTC participants to Financial Intermediaries and beneficial
owners, will be governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time.
Payments on the book-entry certificates will be made to DTC. DTC's
practice is to credit DTC participants' accounts on the related payment date in
accordance with their respective holdings shown on DTC's records, unless DTC has
reason to believe that it will not receive payment on that date. Disbursement of
payments by DTC participants to Financial Intermediaries and beneficial owners
will be:
o governed by standing instructions and customary practices, as is the case
with securities held for the accounts of customers in bearer form or
registered in "street name";
o the sole responsibility of each DTC participant, subject to any statutory
or regulatory requirements in effect from time to time.
Under a book-entry system, beneficial owners may receive payments after
the related payment date.
The only "certificateholders" of book-entry certificates will be DTC or
its nominee. Parties to the governing documents for any series of offered
certificates need not recognize beneficial owners of book-entry certificates as
"certificateholders". The beneficial owners of book-entry certificates will be
permitted to exercise the rights of "certificateholders" only indirectly through
the DTC participants, who in turn will exercise their rights through DTC. We
have been informed that DTC will take action permitted to be taken by a
"certificateholder" only at the direction of one or more DTC participants. DTC
may take conflicting actions with respect to the book-entry certificates to the
extent that the actions are taken on behalf of Financial Intermediaries whose
holdings include those certificates.
Because DTC can act only on behalf of DTC participants, who in turn act
on behalf of Financial Intermediaries and certain beneficial owners, the ability
of a beneficial owner to pledge its interest in a class of book-entry
certificates to persons or entities that do not participate in the DTC system,
or otherwise to take actions in respect of its interest in a class of book-entry
certificates, may be limited due to the lack of a physical certificate
evidencing the interest.
Unless we specify otherwise in the related prospectus supplement,
beneficial owners of affected offered certificates initially issued in
book-entry form will not be able to obtain physical certificates that represent
those offered certificates, unless:
o we advise the related trustee in writing that DTC is no longer willing or
able to discharge properly its responsibilities as depository with respect
to those offered certificates and we are unable to locate a qualified
successor; or
o we elect, at our option, to terminate the book-entry system through DTC
with respect to those offered certificates.
Upon the occurrence of either of the two events described above, DTC
will be required to notify all DTC participants of the availability through DTC
of physical certificates with respect to the affected offered certificates. Upon
surrender by DTC of the certificate or certificates representing a class of
book-entry offered certificates, together with instructions for registration,
the related trustee or other designated party will be required to issue to the
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beneficial owners identified in those instructions physical certificates
representing those offered certificates.
Clearstream Banking
Clearstream Banking is incorporated under the laws of Luxembourg as a
professional depository. Clearstream 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 Clearstream in any of 28 currencies, including United States dollars.
Clearstream provides safekeeping, administration, clearance and settlement of
internationally traded securities and securities lending and borrowing to its
participants. Clearstream interfaces with domestic markets in several countries.
The Luxembourg Monetary Institute regulates Clearstream as a professional
depository. Clearstream 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 Clearstream is also available to others, such as banks, brokers,
dealers, and trust companies that maintain a clearing or custodial relationship
with a Clearstream participant.
Euroclear
The Euroclear System was created in 1968 to hold securities for
participants and to clear and settle transactions between participants through
simultaneous electronic book-entry delivery against payment. Transactions may
now be settled in any of 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.
DESCRIPTION OF THE GOVERNING DOCUMENT
The offered certificates of each series will be issued pursuant to a
pooling and servicing agreement or other similar agreement or collection of
agreements (individually and collectively, the ("Governing Document"). In
general, the parties to the Governing Document for a series of offered
certificates will include us, a trustee, a master servicer and a special
servicer. However, if the related trust assets include mortgage-backed
securities, the Governing Document may include a manager as a party, but may not
include a master servicer, special servicer or other servicer as a party. We
will identify in the related prospectus supplement the parties to the Governing
Document for a series of offered certificates. Midland Loan Services, our parent
corporation, will be the master servicer for each of the trusts, unless we
specify a different master servicer in the related prospectus supplement.
Midland Loan Services may also be the special servicer for some of the trusts.
Any party to the Governing Document for a series of offered
certificates, or any of its affiliates, may own certificates issued thereunder.
Except in limited circumstances, certificates that are held by the related
master servicer, special servicer or manager will have the same voting rights as
certificates held by others.
A form of a pooling and servicing agreement has been filed as an
exhibit to the registration statement of which this prospectus is a part.
However, the provisions of the Governing Document for each series of offered
certificates will vary depending upon the nature of the certificates to be
issued thereunder and the nature of the related trust assets. The following
summaries describe certain provisions that may appear in the Governing Document
for each series of offered certificates. The prospectus supplement for each
series of offered certificates will provide additional information
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regarding the Governing Document for that series. The summaries in this
prospectus do not describe all of the provisions of the Governing Document for
each series of certificates. You should refer to the provisions of the Governing
Document for your certificates and to the description of those provisions in the
related prospectus supplement for additional information. We will provide a copy
of the Governing Document, exclusive of exhibits, that relates to your
certificates, without charge, upon written request addressed to our principal
executive offices specified under "PNC Mortgage Acceptance Corp."
Assignment of Mortgage Assets
At the time of initial issuance of any series of offered certificates,
we will assign or cause to be assigned to the designated trustee the mortgage
assets to be included in the related trust, together with certain related
assets. We will specify in the related prospectus all material documents for the
related mortgage assets that will be delivered to the related trustee, and all
other actions to be taken by us or any prior holder of the related mortgage
assets, in connection with that assignment. Concurrently with that assignment,
the related trustee will deliver to our designee or us the certificates of that
series in exchange for the mortgage assets and the other assets to be included
in the related trust.
Each mortgage asset included in one of the trusts will be identified in
a schedule appearing as an exhibit to the related Governing Document. That
schedule generally will include detailed information about each mortgage asset
transferred to the related trust, including:
o in the case of a mortgage loan:
1) the address of the related real property and the type of that
property;
2) the mortgage interest rate and, if applicable, the applicable
index, gross margin, adjustment date and any rate cap information;
3) the remaining term to maturity;
4) the remaining amortization term; and
5) the outstanding principal balance; and
o in the case of a mortgage-backed security, the outstanding principal
balance and the pass-through rate or coupon rate.
Representations and Warranties with Respect to Mortgage Assets;
Repurchases and Other Remedies
Unless we state otherwise in the prospectus supplement for any series
of offered certificates, we will, with respect to each mortgage asset in the
related trust, make or assign, or cause to be made or assigned, certain
representations and warranties (the person making the representations and
warranties, the "Warranting Party") covering, by way of example:
o the accuracy of the information set forth for each mortgage asset on the
schedule of mortgage assets appearing as an exhibit to the Governing
Document for that series;
o the Warranting Party's title to each mortgage asset and the authority of
the Warranting Party to sell that mortgage asset; and
o in the case of a mortgage loan:
1) the enforceability of the related mortgage note and mortgage;
2) the existence of title insurance insuring the lien priority of the
related mortgage;
3) the payment status of the mortgage loan; and
4) the delivery of all documents required to be delivered with respect
to the mortgage loan as contemplated under "--Assignment of
Mortgage Assets."
We will identify the Warranting Party, and give a more complete
sampling of the representations and warranties made by the Warranting Party, in
the related prospectus supplement. We will also specify in the related
prospectus supplement any remedies against the Warranting Party available to the
related certificateholders, or the related trustee on their behalf, in the event
of a breach of any of those representations and warranties. In most cases, the
Warranting Party will be a prior holder of the particular mortgage assets.
Collection and Other Servicing Procedures With Respect to Mortgage Loans
The Governing Document for each series of offered certificates will
govern the servicing and administration of any mortgage loans included in the
related trust.
In general, the related master servicer and special servicer, directly
or through sub-servicers, will be obligated to service and administer for the
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benefit of the related certificateholders the mortgage loans in any of the
trusts. The master servicer and the special servicer will be required to service
and administer those mortgage loans in accordance with applicable law and,
further, in accordance with the terms of the related Governing Document, the
mortgage loans themselves and any instrument of credit support included in that
trust. Subject to the foregoing, the master servicer and the special servicer
will each have full power and authority to do any and all things in connection
with the servicing and administration of the mortgage loans that it may deem
necessary and desirable.
As part of its servicing duties, each of the master servicer and the
special servicer for one of the trusts will be required to make reasonable
efforts to collect all payments called for under the terms and provisions of the
related mortgage loans that it services and, in general will be obligated to
follow the same collection procedures that it would follow for comparable
mortgage loans held for its own account, provided that:
o those procedures are consistent with the terms of the related Governing
Document; and
o they do not impair recovery under any instrument of credit support
included in the related trust.
Consistent with the foregoing, the master servicer and the special
servicer will each be permitted, in its discretion, to waive any default charge
in connection with collecting a late payment on any defaulted mortgage loan.
Accounts
We expect that Governing Document will require the Master Servicer to
establish and maintain one or more collection accounts 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 may make
withdrawals from the collection account to, among other things:
o remit certain amounts for the related payment date into the distribution
account;
o pay certain property protection expenses, taxes, assessments and insurance
premiums and certain third-party expenses in accordance with the Governing
Document;
o pay accrued and unpaid servicing fees and other servicing compensation to
the master servicer and the special servicer;
o reimburse the master servicer, the special servicer, the trustee and us
for certain expenses; and
o provide indemnification to the master servicer, the special servicer, the
trustee and us, as described in the Governing Document.
The related prospectus supplement may provide for additional
circumstances when the master servicer may make withdrawals from the collection
account.
We expect that the Governing Document for each series of certificates
will require the trustee to establish a distribution account into which the
master servicer will deposit amounts held in the collection account from which
certificateholder distributions will be made for each payment date. On each
payment 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.
The amount at any time credited to the collection account or the
distribution account may be invested in Permitted Investments that:
o are payable on demand; or
o in general mature or are subject to withdrawal or redemption on the date
so specified in the Governing Document.
The master servicer must remit to the distribution account on or before
the business day preceding the related payment date amounts on deposit in the
collection account that are required for distribution to certificateholders.
The income from the investment of funds in the collection account and
the distribution account in Permitted Investments will constitute additional
compensation for the master servicer or the trustee. 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 or trustee, as applicable. The
amount of each such loss must be deposited by the master servicer or the trustee
in the collection account or the distribution account, as the case may be,
promptly as realized.
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We expect that the Governing Document for each series of certificates
will require that an account be established and maintained for use in connection
with:
o real properties acquired upon foreclosure of a mortgage loan, which are
commonly referred to as "REO properties"; and
o if specified in the related prospectus supplement, certain other real
properties securing the mortgage loans.
To the extent set forth in the Governing Document, certain withdrawals
from this account will be made to, among other things:
o make remittances to the collection account as required;
o pay taxes, assessments, insurance premiums, other amounts necessary for
the proper operation, management and maintenance of the REO properties and
other specified real properties securing the mortgage loans and certain
third-party expenses; and
o reimburse certain expenses in respect of the REO properties and the other
specified real properties securing the mortgage loans.
The amount at any time credited to this 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 these amounts must be remitted to the master servicer for deposit in the
collection account. The income from the investment of funds in the account in
Permitted Investments will be for the benefit of the master servicer, the
special servicer or the trustee, as applicable, and the risk of loss of funds in
this account resulting from such investments will be borne by the master
servicer, the special servicer or the trustee, as applicable.
Permitted Investments
"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:
o 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;
o direct obligations of the Federal Home Loan Mortgage Corporation (debt
obligations only), the Federal National Mortgage Association (debt
obligations only), the Federal Farm Credit System (consolidated
system-wide 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);
o 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;
o 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;
o 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;
o 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
o other obligations acceptable as Permitted Investments to each rating
agency rating the certificates of a series.
Insurance
The Governing Document for each series will require that the master
servicer use reasonable efforts in accordance with the servicing standard
specified in the related prospectus supplement to
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cause each borrower 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:
o the full replacement cost of the improvements and equipment securing the
mortgage loan; or
o the outstanding principal balance owing on the mortgage loan or the amount
as is necessary to prevent any reduction in such policy by reason of the
application of co-insurance and to prevent the trustee for the series 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
borrower to maintain any other insurance required by 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 Governing Document waive the requirement of a mortgage
loan that the related borrower 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 reasonable
efforts in accordance with the servicing standard in the related prospectus
supplement to cause the related borrower 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 Governing Document will provide that the master servicer must maintain
the foregoing insurance if the related borrower fails to maintain this insurance
to the extent the insurance is available at commercially reasonable rates and to
the extent the trustee, as mortgagee, has an insurable interest.
The cost of any insurance maintained by the master servicer will be
advanced by the master servicer. The special servicer will cause to be
maintained fire and hazard insurance on each REO property in such amounts as are
specified in the related Governing Document. The cost of any insurance for an
REO property will be payable out of amounts collected on the related REO
property 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.
Any insurance that is required to be maintained with respect to any REO
property will only be so required to the extent the insurance is available at
commercially reasonable rates.
The Governing Document 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 the insurance allocable to any particular mortgage
loan or REO property, if not borne by the related borrower, 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 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 in the account but for such clause to
the extent that the 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 Governing Document.
The prospectus supplement may describe other provisions concerning the
insurance policies required to be maintained under the Governing Document.
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.
Fidelity Bonds and Errors and Omissions Insurance
The Governing Document for each series will generally require that the
master servicer and the
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special servicer 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. The Governing Document will allow the master servicer and the special
servicer to self-insure against loss occasioned by the errors and omissions of
the officers and employees of the master servicer and the special servicer so
long as certain criteria set forth in the Governing Document are met.
Servicing Compensation and Payment of Expenses
The master servicer's principal compensation for its activities under
the Governing Document for each series will come from the payment to it or
retention by it, with respect to each mortgage loan, of a "servicing fee". The
exact amount and calculation of the servicing fee will be established in the
prospectus supplement and Governing Document for the related series. Since the
total 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 Governing Document for a series may provide that the
master service is entitled to receive, as additional compensation:
o prepayment premiums, late fees and certain other fees collected from
borrowers;
o any interest or other income earned on funds deposited in the collection
account and, distribution account except to the extent such income is
required to be paid to the related borrowers, any escrow accounts.
The amount and calculation of the fee for the servicing of specially
serviced mortgage loans will be described in the prospectus supplement and the
Governing Document for each series.
In addition to the compensation described above, the master servicer
and the special servicer 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.
Modifications, Waivers and Amendments
The Governing Document for each series will provide the master servicer
or the special servicer 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 listed in the Governing
Document. These conditions will generally include the condition that the
modification, waiver or amendment will not result in the mortgage loan ceasing
to be a "qualified mortgage" under the REMIC regulations.
Events of Default
In summary, the Governing Document for each series will provide that
the following are events of default with respect to the master servicer and
special servicer:
o any failure by the master servicer or the special servicer 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 the
Governing Document requires to be so remitted;
o any failure by the master servicer or special servicer 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 with respect to
any mortgage loan) under the Governing Document, 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 by the trustee
or us, or to the master servicer, special servicer, the trustee and us, by
the holders of certificates evidencing voting rights of at least 25% of
any affected class;
o 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;
o 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
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special servicer, as applicable, indicating its insolvency or inability to
pay its obligations; or
o any failure by the master servicer to make a required advance.
The related Governing Document may provide for other events of default
or additional cure periods to the extent required or permitted 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
terminate all of the rights and obligations of the master servicer or special
servicer, as the case may be, and the trustee must do so upon the written
direction of the holders of certificates entitled to 25% of the aggregate voting
rights of all certificates of a series. The Governing Document provides that the
terminated master servicer or special servicer remains 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 Governing Document. The Governing Document for the 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 at least 66 2/3% of the total
voting rights of the certificates of a series may, on behalf of all holders of
certificates, waive any default by the master servicer or special servicer in
the performance of its obligations under the Governing Document and its
consequences, except a default in making any required deposits to (including
advances) or payments from the collection account or the distribution account or
in remitting payments as received, in each case in accordance with the Governing
Document. Upon any such waiver of a past default, the default will cease to
exist, and any event of default arising therefrom will be deemed to have been
remedied for every purpose of the Governing Document. No such waiver will extend
to any subsequent or other default or impair any resulting right.
On and after the date of termination, the trustee will succeed to all
authority and power of the terminated master servicer or special servicer under
the Governing Document and will be entitled to compensation similar to that to
which the terminated master servicer or special servicer would have been
entitled. The trustee must appoint, or petition a court of competent
jurisdiction to appoint, an established mortgage loan servicing institution to
act as successor to the terminated master servicer or special servicer under the
Governing Document if:
o the trustee is unwilling or unable to act as successor;
o the holders of certificates evidencing a majority of the total voting
rights so request; or
o the trustee is not approved as a master servicer or special servicer, as
applicable, by each of the rating agencies rating the certificates of such
series;
the appointment of which will not result in the downgrading, withdrawal or
qualification of the ratings then assigned to any class of certificates as
evidenced in writing by each rating agency rating the certificates of such
series.
The trustee and any 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 Governing
Document.
Other Matters
The master servicer and/or the special servicer for one of the trusts,
directly or through sub-servicers, must also perform various other customary
functions of a servicer of comparable loans, including:
o maintaining escrow or impound accounts for the payment of taxes, insurance
premiums, ground rents and similar items, or otherwise monitoring the
timely payment of those items;
o ensuring that the related properties are properly insured;
o attempting to collect delinquent payments;
o supervising foreclosures;
o negotiating modifications;
o responding to borrower requests for partial releases of the encumbered
property, easements, consents to alteration or demolition and similar
matters;
o protecting the interests of certificateholders with respect to senior
lienholders;
o conducting inspections of the related real properties on a periodic or
other basis;
o collecting and evaluating financial statements for the related real
properties;
o managing or overseeing the management of real properties acquired on
behalf of the trust
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through foreclosure, deed-in-lieu of foreclosure or otherwise; and
o maintaining servicing records relating to mortgage loans in the trust.
We will specify in the related prospectus supplement when, and the
extent to which, servicing of a mortgage loan is to be transferred from a master
servicer to a special servicer. In general, a special servicer for any of the
trusts will be responsible for the servicing and administration of:
o mortgage loans that are delinquent in respect of a specified number of
scheduled payments;
o mortgage loans as to which there is a material non-monetary default;
o mortgage loans as to which the related borrower has entered into or
consented to bankruptcy, appointment of a receiver or conservator or
similar insolvency proceeding, or the related borrower has become the
subject of a decree or order for such a proceeding which shall have
remained in force undischarged or unstayed for a specified number of days;
and
o real properties acquired as part of the trust in respect of defaulted
mortgage loans.
The related Governing Document may also may provide that if a default
on a mortgage loan in the related trust has occurred or, in the judgment of the
related master servicer, a payment default is reasonably foreseeable, the
related master servicer may elect to transfer the servicing of that mortgage
loan, in whole or in part, to the related special servicer. When the
circumstances no longer warrant a special servicer continuing to service a
particular mortgage loan, such as when the related borrower is paying in
accordance with the forbearance arrangement entered into between the special
servicer and that borrower, the master servicer will generally resume the
servicing duties with respect to the particular mortgage loan.
Unless we state otherwise in the related prospectus supplement, the
master servicer for your series will be responsible for filing and settling
claims in respect of particular mortgage loans for your series under any
applicable instrument of credit support. See "Description of Credit Support" in
this prospectus.
A borrower's failure to make required mortgage loan payments may mean
that operating income from the related borrower's real property is insufficient
to service the mortgage debt, or may reflect the diversion of that income from
the servicing of the mortgage debt. In addition, a borrower that is unable to
make mortgage loan payments may also be unable to make timely payment of taxes
and otherwise to maintain and insure the related real property. In general, the
related special servicer will be required to:
o monitor any mortgage loan that is in default;
o evaluate whether the causes of the default can be corrected over a
reasonable period without significant impairment of the value of the
related real property;
o initiate corrective action in cooperation with the mortgagor if cure is
likely;
o inspect the related real property; and
o take such other actions as it deems necessary and appropriate.
A significant period of time may elapse before a special servicer is
able to assess the success of any corrective action or the need for additional
initiatives. The time within which a special servicer can make the initial
determination of appropriate action, evaluate the success of corrective action,
develop additional initiatives, institute foreclosure proceedings and actually
foreclose (or accept a deed to a real property in lieu of foreclosure) on behalf
of the certificateholders of the related series may vary considerably depending
on:
o the particular mortgage loan;
o the related real property;
o the borrower;
o the presence of an acceptable party to assume the mortgage loan;
o and the laws of the jurisdiction in which the related real Property is
located.
If a borrower files a bankruptcy petition, the special servicer may not
be permitted to accelerate the maturity of the defaulted loan or to foreclose on
the related real property for a considerable period of time. See "Certain Legal
Aspects of Mortgage Loans--Foreclosure--Bankruptcy Laws."
A special servicer may also perform certain limited duties in respect
of mortgage loans for which the master servicer is primarily responsible, such
as performing property inspections and collecting and evaluating financial
statements. A master servicer may perform certain limited duties in respect of
any mortgage loan for which the special servicer is primarily responsible, such
as continuing to receive payments on the mortgage loan, making certain
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calculations with respect to the mortgage loan and making remittances and
preparing certain reports to the related trustee and/or certificateholders with
respect to the mortgage loan. The duties of the master servicer and special
servicer for your series will be more fully described in the related prospectus
supplement.
Sub-Servicers
A master servicer or special servicer may delegate its servicing
obligations to one or more third-party servicers or sub-servicers. However,
unless we specify otherwise in the related prospectus supplement, the master
servicer or special servicer will remain obligated under the related Governing
Document. Each sub-servicing agreement between a master servicer or special
servicer, as applicable, and a sub-servicer must provide for servicing of the
applicable mortgage loans consistent with the related Governing Document. Each
master servicer or special servicer for one of the trusts must monitor the
performance of sub-servicers that it retains.
Unless we specify otherwise in the related prospectus supplement, any
master servicer or special servicer for the related trust will be solely liable
for all fees owed by it to any sub-servicer, regardless of whether the master
servicer's or special servicer's compensation pursuant to the related Governing
Document is sufficient to pay those fees. Each sub-servicer will be entitled to
reimbursement from the master servicer or special servicer, as the case may be,
that retained it, for certain expenditures that it makes, generally to the same
extent the master servicer or special servicer would be reimbursed under the
related Governing Document.
Collection of Payments on Mortgage-Backed Securities
Unless we specify otherwise in the related prospectus supplement, if a
mortgage-backed security is included among the trust assets underlying any
series of offered certificates, then:
o that mortgage-backed security will be registered in the name of the
related trustee or its designee;
o the related trustee will receive payments on that mortgage-backed
security; and
o subject to any conditions described in the related prospectus supplement,
the related trustee or a designated manager will, on behalf and at the
expense of the trust, exercise all rights and remedies in respect of that
mortgaged-backed security, including the prosecution of any legal action
necessary in connection with any payment default.
Certain Matters Regarding the Master Servicer, the Special Servicer, the
REMIC Administrator, the Manager and the Depositor
Unless we specify otherwise in the related prospectus supplement, no
master servicer, special servicer or manager for any of the trusts may resign
from its obligations in such capacity, except upon--
o the appointment of, and the acceptance of the appointment by, a successor
to the resigning party and receipt by the related trustee of written
confirmation from each applicable rating agency that the resignation and
appointment will not result in a withdrawal or downgrade of any rating
assigned by that rating agency to any class of certificates of the related
series; or
o a determination that those obligations are no longer permissible under
applicable law or are in material conflict by reason of applicable law
with any other activities carried on by the resigning party.
In general, no resignation will become effective until the related
trustee or other successor has assumed the obligations and duties of the
resigning master servicer, special servicer or manager, as the case may be. Each
master servicer, special servicer and, if it receives distributions on
mortgage-backed securities, manager for one of the trusts will be required to
maintain a fidelity bond and errors and omissions policy or their equivalent
that provides coverage against losses that may be sustained as a result of an
officer's or employee's misappropriation of funds or errors and omissions,
subject to such limitations as to amount of coverage, deductible amounts,
conditions, exclusions and exceptions as may be permitted by the rating agencies
assigning ratings to the related series of certificates.
In no event will we, any master servicer, special servicer or manager
for one of the trusts, or any of our or their respective directors, officers,
employees or agents be under any liability to the related trust or
certificateholders for any action taken, or not taken, in good faith pursuant to
the Governing Document for any series of certificates or for errors in judgment.
None of those persons or entities will be
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protected, however, against any liability that would otherwise be imposed by
reason of willful misfeasance, bad faith or negligence in the performance of
obligations or duties under the Governing Document for any series of
certificates or by reason of reckless disregard of those obligations and duties.
Furthermore, the Governing Document for each series of offered
certificates will entitle us, the master servicer, special servicer and/or
manager for the related trust, and our and their respective directors, officers,
employees and agents to indemnification out of the related trust assets for any
loss, liability or expense incurred in connection with any legal action that
relates to that Governing Document or series of offered certificates or to the
related trust. The indemnification will not extend, however, to any loss,
liability or expense incurred by reason of willful misfeasance, bad faith or
negligence in the performance of obligations or duties under that Governing
Document, or by reason of reckless disregard of those obligations or duties.
Neither we nor any master servicer, special servicer or manager for the
related trust will be under any obligation to appear in, prosecute or defend any
legal action that is not incidental to its respective responsibilities under the
Governing Document for any series of offered certificates or that in its opinion
may involve it in any ultimate expense or liability. However, we and each of
those other parties may undertake any legal action that may be necessary or
desirable with respect to the enforcement and/or protection of the rights and
duties of the parties to the Governing Document for any series of offered
certificates and the interests of the certificateholders of that series under
that Governing Document. In that event, the legal expenses and costs of the
action, and any liability resulting therefrom, will be expenses, costs and
liabilities of the related trust and payable out of related trust assets.
Any person into which we or any related master servicer, special
servicer or manager may be merged or consolidated, or any person resulting from
any merger or consolidation to which we or any related master servicer, special
servicer or manager is a party, or any person succeeding to the business of us
or any related master servicer, special servicer or manager, will be the
successor of us or that master servicer, special servicer or manager, as the
case may be, under the Governing Document for each series of offered
certificates.
The compensation arrangements with respect to the master servicer,
special servicer and/or manager for any of the trusts will be described in the
related prospectus supplement. In general, that compensation will be payable out
of the related trust assets.
Amendment
The Governing Document for each series of offered certificates may be
amended by the parties thereto, without the consent of any of the holders of
those certificates, or of any non-offered certificates of the same series, for
the following reasons:
1) to cure any ambiguity;
2) to correct, modify or supplement any provision in the Governing
Document that is inconsistent with any other provision in the
Governing Document, in this prospectus or the related prospectus
supplement or to correct any error;
3) to maintain the ratings assigned to each class of the certificates
for that series;
4) to add any other provisions with respect to matters or questions
arising under the Governing Document that are not inconsistent with
the existing provisions of that document;
5) to the extent applicable, to relax or eliminate any requirement
under the Governing Document imposed by the provisions of the
Internal Revenue Code of 1986 relating to REMICs if the provisions
of that code are amended or clarified so as to allow for the
relaxation or elimination of that requirement;
6) to relax or eliminate any requirement under the Governing Document
imposed by the Securities Act of 1933 or the rules under that Act
if the Securities Act of 1933 or those rules are amended or
clarified so as to allow for the relaxation or elimination of that
requirement;
7) to comply with any requirements imposed by the Internal Revenue
Code of 1986 or any final, temporary or, in some cases, proposed
regulation, revenue ruling, revenue procedure or other written
official announcement or interpretation relating to federal income
tax laws, or to avoid a prohibited transaction or reduce the
incidence of any tax that would arise from any actions taken with
respect to the operation of any REMIC created under the Governing
Document;
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8) to the extent applicable, to modify, add to or eliminate certain
transfer restrictions relating to the certificates that are
"residual interests" in a REMIC; or
9) for any other purpose.
However, no amendment of the Governing Document for any series of
offered certificates covered by clauses (4), (5), (6) or (9) may:
o be inconsistent with the provisions of the Governing document;
o adversely affect in any material respect the interests of any holders of
offered or non-offered certificates of that series; or
o result in a downgrade or withdrawal of any then current rating assigned to
any class of certificates of the related series, as evidenced by written
confirmation to that effect from each applicable rating agency obtained by
or delivered to the related trustee.
In general, the Governing Document for a series of offered certificates
may also be amended by the parties to that document, with the consent of the
holders of offered and non-offered certificates representing not less than
66-2/3%, or another percentage specified in the related prospectus supplement,
of all the voting rights allocated to those classes of that series that are
affected by the amendment. However, the Governing Document for a series of
offered certificates may not be amended to:
o reduce in any manner the amount of, or delay the timing of, payments
received on the related mortgage assets that are required to be
distributed on any offered or non-offered certificate of that series
without the consent of the holder of that certificate; or
o adversely affect in any material respect the interests of the holders of
any class of offered or non-offered certificates of that series in any
other manner without the consent of the holders of all certificates of
that class; or
o modify the provisions of the Governing Document relating to amendments
thereof without the consent of the holders of all offered and non-offered
certificates of that series then outstanding.
List of Certificateholders
Three or more certificateholders of record of any series may request
access to a recent list of certificateholders for that series for the purpose of
communicating with other holders of certificates of the same series with respect
to their rights under the related Governing Document. The related trustee or
other certificate registrar of that series will afford the requesting
certificateholders access during normal business hours to the most recent list
of certificateholders of that series. If the date of the list is more than 90
days before the date of receipt of the certificateholders' request, then the
trustee, if it is not the certificate registrar for that series, must request
from the registrar a current list and provide access to the current list
promptly upon receipt.
The Trustee
The trustee for each series of offered certificates will be named in
the related prospectus supplement. The commercial bank, national banking
association, banking corporation or trust company that serves as trustee for any
series of offered certificates may have typical banking relationships with us
and our affiliates and with any of the other parties to the related Governing
Document and its affiliates.
Duties of the Trustee
The trustee for each series of offered certificates will make no
representation as to the validity or sufficiency of those certificates, the
related Governing Document or any underlying mortgage asset or related document
and will not be accountable for the use or application by or on behalf of any
other party to the related Governing Document of any funds paid to that party in
respect of those certificates or the underlying mortgage assets. If no event of
default has occurred and is continuing, the trustee for each series will be
required to perform only those duties specifically required under the related
Governing Document. However, upon receipt of any of the various certificates,
reports or other instruments required to be furnished to it pursuant to the
related Governing Document, the trustee must examine those documents and
determine whether they conform to the requirements of that Governing Document.
Certain Matters Regarding the Trustee
Unless the related prospectus supplement describes another source of
payment, the fees of the
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trustee for any series of offered certificates will be paid by the related trust
assets.
The trustee for each series of offered certificates will be entitled to
indemnification, out of related trust assets, for any loss, liability or expense
incurred by that trustee in connection with its acceptance or administration of
its trusts under the related Governing Document. The indemnification of a
trustee will not extend to any loss, liability or expense incurred by reason of
willful misfeasance, bad faith or negligence on the part of the trustee in the
performance of its obligations and duties under the related Governing Document,
or by reason of its reckless disregard of those obligations or duties.
The trustee for each series of offered certificates will be entitled to
execute any of its trusts or powers and perform any of its duties under the
related Governing Document, either directly or by or through agents or
attorneys. The trustee will not be responsible for any willful misconduct or
negligence on the part of any such agent or attorney appointed by it with due
care.
Resignation and Removal of the Trustee
The trustee for any series of offered certificates may resign at any
time. We will be obligated to appoint a successor to a resigning trustee. We may
also remove the trustee for any series of offered certificates if that trustee
ceases to be eligible to continue as such under the related Governing Document.
Unless we indicate otherwise in the related prospectus supplement, the trustee
for any series of offered certificates may also be removed at any time by the
holders of the offered and non-offered certificates of that series evidencing
not less than 51%, or such other percentage specified in the related prospectus
supplement, of the voting rights for that series. However, if the removal was
without cause, the certificateholders effecting the removal may be responsible
for any costs and expenses incurred by the terminated trustee in connection with
its removal. Any resignation or removal of a trustee and appointment of a
successor trustee will not become effective until acceptance of the appointment
by the successor trustee.
DESCRIPTION OF CREDIT SUPPORT
Credit support may be provided with respect to one or more classes of
the offered certificates of any series or with respect to the related mortgage
assets. That credit support may be in the form of any of the following:
o the subordination of one or more other classes of certificates of the same
series;
o the use of a letter of credit, a surety bond, an insurance policy or a
guarantee;
o interest rate or foreign currency exchange agreements;
o the establishment of one or more reserve funds; or
o any combination of the foregoing.
If and to the extent described in the related prospectus supplement,
any of the above forms of credit support may provide credit enhancement for
non-offered certificates, as well as offered certificates, or for more than one
series of certificates.
If you are the beneficiary of any particular form of credit support,
that credit support may not protect you against all risks of loss and will not
guarantee payment to you of all amounts to which you are entitled under your
certificates. If losses or shortfalls occur that exceed the amount covered by
that credit support or that are of a type not covered by that credit support,
you will bear your allocable share of deficiencies. Moreover, if that credit
support covers the offered certificates of more than one class or series and
total losses on the related mortgage assets exceed the amount of that credit
support, it is possible that the holders of offered certificates of other
classes and/or series will be disproportionately benefited by that credit
support to your detriment.
If you are the beneficiary of any particular form of credit support, we
will include in the related prospectus supplement a description of the
following:
o the nature and amount of coverage under that credit support;
o any conditions to payment not otherwise described in this prospectus;
o any conditions under which the amount of coverage under that credit
support may be reduced and under which that credit support may be
terminated or replaced; and o the material provisions relating to that
credit support.
Additionally, we will set forth in the related prospectus supplement
certain information with
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respect to the obligor, if any, under any instrument of credit support.
Subordinate Certificates
If and to the extent described in the related prospectus supplement,
one or more classes of certificates of any series may be subordinate to one or
more other classes of certificates of that series. If you purchase subordinate
certificates, your right to receive distributions out of collections and
advances on the related trust assets on any payment date will be subordinated to
the corresponding rights of the holders of the more senior classes of
certificates. If and to the extent described in the related prospectus
supplement, the subordination of a class of certificates may apply only in the
event of certain types of losses or shortfalls. In the related prospectus
supplement, we will set forth information concerning the method and amount of
subordination provided by a class or classes of subordinate certificates in a
series and the circumstances under which that subordination will be available.
If the mortgage assets in any trust are divided into separate groups,
each supporting a separate class or classes of certificates of the related
series, credit support may be provided by cross-support provisions requiring
that distributions be made on senior certificates evidencing interests in one
group of mortgage assets prior to distributions on subordinate certificates
evidencing interests in a different group of mortgage assets. We will describe
in the related prospectus supplement the manner and conditions for applying any
cross-support provisions.
Insurance or Guarantees with Respect to Mortgage Loans
The mortgage loans included in any trust may be covered for certain
default risks by insurance policies or guarantees. If so, we will describe in
the related prospectus supplement the nature of these default risks and the
extent of the coverage.
Arrangements Providing Interest Rate Protection
The trust assets for a series of offered certificates may include
guaranteed investment contracts pursuant to which moneys held in the funds and
accounts established for that series will be invested at a specified rate. The
trust assets may also include:
o interest rate exchange agreements;
o interest rate cap agreements;
o interest rate floor agreements; or
o other agreements or arrangements intended to reduce the effects of
interest rate fluctuations.
In the related prospectus supplement, we will describe any agreements
or other arrangements designed to protect the holders of a class of offered
certificates against shortfalls resulting from movements or fluctuations in
interest rates. If applicable, we will also identify any obligor under the
agreement or other arrangement.
Arrangements Providing Foreign Currency Protection
If any of the mortgage assets are payable in a foreign currency, the
trust assets for a series of offered certificates may include:
o foreign currency exchange agreements; or
o other agreements and arrangements designed to reduce the effects of
foreign currency fluctuations on the related mortgage assets or one or
more classes of offered certificates of the related series.
In the related prospectus supplement, we will describe any of these
agreements or other arrangements. If applicable, we will also identify any
obligor under the agreement or other arrangement.
Letter of Credit
If and to the extent described in the prospectus supplement,
deficiencies in amounts otherwise payable on a series of offered certificates or
certain classes of those certificates will be covered by one or more letters of
credit, issued by a bank or other financial institution specified in the related
prospectus supplement. Under a letter of credit, the issuing financial
institution will be obligated to honor draws under the letter of credit for a
total fixed dollar amount, net of unreimbursed payments under the letter of
credit, generally equal to a percentage of either:
o the total principal balance of some or all of the related mortgage assets
as of the date the related trust was formed; or
o the initial total principal balance of one or more classes of certificates
of the applicable series.
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This percentage will be specified in the related prospectus supplement.
The letter of credit may permit draws only in the event of certain types of
losses and shortfalls. The amount available under the letter of credit will, in
all cases, be reduced to the extent of the unreimbursed payments under the
letter of credit and may otherwise be reduced as described in the related
prospectus supplement. The obligations of the issuing financial institution
under the letter of credit for any series of offered certificates will expire at
the earlier of the date specified in the related prospectus supplement or the
termination of the related trust.
Certificate Insurance and Surety Bonds
If and to the extent described in the related prospectus supplement,
deficiencies in amounts otherwise payable on a series of offered certificates or
certain classes of those certificates will be covered by insurance policies or
surety bonds provided by one or more insurance companies or sureties. Those
instruments may cover, with respect to one or more classes of the offered
certificates of the related series, timely distributions of interest and
principal or timely distributions of interest and 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. We will describe in
the related prospectus supplement any limitations on the draws that may be made
under any such instrument.
Reserve Funds
If and to the extent described in the related prospectus supplement,
deficiencies in amounts otherwise payable on a series of offered certificates or
certain classes of those certificates will be covered, to the extent of
available funds, by one or more reserve funds in which cash, a letter of credit,
permitted investments, a demand note or a combination of the foregoing, will be
deposited, in the amounts specified in the related prospectus supplement. If and
to the extent described in the related prospectus supplement, the reserve fund
for the related series of offered certificates may also be funded over time.
Amounts on deposit in any reserve fund for a series of offered
certificates will be applied for the purposes, in the manner, and to the extent
specified in the related prospectus supplement. If and to the extent described
in the related prospectus supplement, reserve funds may be established to
provide protection only against certain types of losses and shortfalls.
Following each payment date for the related series of offered certificates,
amounts in a reserve fund in excess of any required balance may be released from
the reserve fund under the conditions and to the extent specified in the related
prospectus supplement.
Credit Support with Respect to MBS
If and to the extent described in the related prospectus supplement,
any mortgage-backed security included in one of the trusts and/or the mortgage
loans that back that security may be covered by one or more of the types of
credit support described in this prospectus. We will specify in the related
prospectus supplement, as to each form of credit support, the information
indicated above with respect to that mortgage-backed security, to the extent
that the information is material and available.
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS
Most, if not all, of the underlying mortgage loans will be secured by
multifamily and commercial properties in the United States. Some mortgage loans
underlying a series of offered certificates may be secured by multifamily and
commercial properties outside the United States.
The following discussion contains general summaries of certain legal
aspects of mortgage loans secured by multifamily and commercial properties in
the United States. Because these legal aspects are governed by applicable state
law and these laws may differ substantially, the summaries do not purport to
cover all applicable laws, to reflect the laws of any particular state or to
encompass the laws of all jurisdictions in which the security for the mortgage
loans underlying the offered certificates is situated. Accordingly, you should
be aware that the summaries are qualified in their entirety by reference to the
applicable laws of those states. See "Description of the Trust Assets--Mortgage
Loans."
If a significant percentage of mortgage loans underlying a series of
offered certificates are secured by properties in a particular state, we will
discuss the relevant state laws in the related prospectus supplement, to the
extent they vary materially from this discussion. For purposes of this
discussion, "mortgage loan" means a multifamily or commercial
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mortgage loan that directly or indirectly backs a series of offered
certificates.
Each mortgage loan will be evidenced by a note or bond and secured by
an instrument granting a security interest in real property. The instrument
granting a security interest in real property may be a mortgage, deed of trust
or a deed to secure debt, depending upon the prevailing practice and law in the
state in which the related mortgaged property is located. Mortgages, deeds of
trust and deeds to secure debt are called "mortgages" in this prospectus
supplement. A mortgage creates a lien upon, or grants a title interest in, the
covered real property, and represents the security for the repayment of the
indebtedness evidenced by the note or bond. The priority of this lien or
interest depends on the terms of the mortgage. The priority, in some cases, will
depend on:
o the terms of separate subordination agreements or inter-creditor
agreements with others that hold interests in the real property;
o the knowledge of the parties to the mortgage; and
o the order of recordation of the mortgage in the appropriate public
recording office.
However, the lien of a recorded mortgage will generally be subordinate
to later-arising liens for real estate taxes and assessments and other charges
imposed under governmental police powers.
Types of Mortgage Instruments
There are two parties to a mortgage-
o a mortgagor, who is the owner of the encumbered interest into the subject
property and usually the borrower; and
o a mortgagee, who is the lender.
In contrast, a deed of trust is a three-party instrument. The parties
to a deed of trust are-
o the trustor, the equivalent of a mortgagor;
o the trustee to whom the real property is conveyed; and
o the beneficiary, who is the lender.
Under a deed of trust, the trustor grants the property, irrevocably
until the debt is paid, in trust and generally with a power of sale, to the
trustee to secure repayment of the related note or bond.
A deed to secure debt typically has two parties. Pursuant to a deed to
secure debt, the grantor, who is the equivalent of a mortgagor, conveys title to
the real property to the grantee, who is the lender, generally with a power of
sale, until the debt is repaid.
If the borrower is a land trust, there would be an additional party
because legal title to the property is held by a land trustee under a land trust
agreement for the benefit of the borrower. At origination of a mortgage loan
involving a land trust, the borrower may execute a separate undertaking to make
payments on the mortgage note. In no event is the land trustee personally liable
for the mortgage note obligation.
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:
o the express provisions of the related instrument;
o the law of the state in which the real property is located;
o certain federal laws; and
o in some deed-of-trust transactions, the directions of the beneficiary.
Leases and Rents
Mortgages that encumber income-producing property often contain an
assignment of rents and leases and/or may be accompanied by a separate
assignment of rents and leases. Under an assignment of rents and leases, the
borrower assigns to the lender the borrower's rights under, and all income from,
each lease. The borrower generally retains a revocable license to directly
collect the rents until a default. If the borrower defaults, the license
terminates and the lender is entitled to collect the rents directly. Local law
may require that the lender take possession of the property, obtain a
court-appointed receiver and/or take other similar action before becoming
entitled to collect the rents.
Mortgages that encumber a hotel or motel generally require the borrower
to pledge room rates as additional security for the loan. In most states, these
rates are considered accounts receivable under the Uniform Commercial Code. In
general, the lender must file financing statements in order to perfect its
security interest in the room rates and must file continuation statements,
generally every five years, to maintain that perfection. Mortgage loans secured
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by hotels or motels may be included in one of the trusts even if the security
interest in the room rates was not perfected or the requisite Uniform Commercial
Code filings were allowed to lapse. A lender will generally be required to
commence a foreclosure action or otherwise take possession of the property in
order to enforce its rights to collect the room rates following a default, even
if the lender's security interest in room rates is perfected under applicable
non-bankruptcy law.
In the bankruptcy setting, the lender will be stayed from enforcing its
rights to collect hotel and motel room rates. However, the room rates will
constitute "cash collateral" and cannot be used by the bankrupt borrower without
a hearing or the lender's consent or unless the lender's interest in the room
rates is given adequate protection, such as a cash payment for otherwise
encumbered funds or a replacement lien on unencumbered property, in either case
equal in value to the amount of room rates that the bankrupt borrower proposes
to use. See "--Foreclosure--Bankruptcy Laws".
Personal Property
Certain types of mortgaged properties, such as hotels, motels and
nursing homes, may include personal property that may, to the extent owned by
the borrower and not previously pledged, constitute a significant portion of the
property's value as security. The creation and enforcement of liens on personal
property are governed by the Uniform Commercial Code. Accordingly, if a borrower
pledges personal property as security for a mortgage loan, the lender generally
must file Uniform Commercial Code financing statements in order to perfect its
security interest in the personal property and must file continuation
statements, generally every five years, to maintain that perfection. In certain
cases, mortgage loans secured in part by personal property may be included in
one of the trusts even if the security interest in the personal property was not
perfected or the requisite Uniform Commercial Code filings were allowed to
lapse.
Foreclosure
Foreclosure Procedures Vary From State to State
Foreclosure is a legal procedure that allows the lender to recover its
mortgage debt by enforcing its rights and available legal remedies under the
mortgage. If the borrower defaults in payment or performance of its obligations
under the note or mortgage, the lender has the right to institute foreclosure
proceedings to sell the real property at public auction to satisfy the
indebtedness.
The two primary methods of foreclosing a mortgage are:
o judicial foreclosure, involving court proceedings; and
o non-judicial foreclosure pursuant to a power of sale granted in the
mortgage instrument.
Other foreclosure procedures are available in some states, but they are
either infrequently used or available only in limited circumstances.
A foreclosure action is subject to most of the delays and expenses of
other lawsuits if defenses are raised or counterclaims are made. A foreclosure
action sometimes requires several years to complete.
Judicial Foreclosure
A judicial foreclosure proceeding is conducted in a court having
jurisdiction over the mortgaged property. Generally, the action is initiated by
the service of legal pleadings upon all parties having a recorded subordinate
interest in the real property and all parties in possession of the property,
under leases or otherwise, whose interests are subordinate to the mortgage.
Difficulties in locating defendants can delay proceedings. When the lender's
right to foreclose is contested, the legal proceedings can be time-consuming.
Upon a successful completion of the judicial foreclosure proceeding, the court
generally issues a judgment of foreclosure and appoints a referee or other
officer to conduct a public sale of the mortgaged property. The proceeds of the
public sale are used to satisfy the judgment. These sales are made in accordance
with procedures that vary from state to state.
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Equitable and Other Limitations on Enforceability of Certain Provisions
Courts have traditionally used general equitable principles to limit
the remedies available to lenders in foreclosure actions where the court viewed
the foreclosures as harsh or unfair. Relying on these principles, a court may:
o alter the specific terms of a loan as necessary to prevent or remedy an
injustice, undue oppression or overreaching;
o require the lender to determine the cause of the borrower's default and
the likelihood that the borrower will be able to reinstate the loan;
o require the lender to reinstate a loan or recast a payment schedule in
order to accommodate a borrower that is suffering from a temporary
financial disability; or
o limit the lender's foreclosure rights in the case of a non-monetary
default, such as a failure to adequately maintain the mortgaged property
or an impermissible further encumbrance of the mortgaged property.
Some courts have addressed the issue of whether federal or state
constitutional provisions reflecting due process concerns for adequate notice
require that a borrower receive notice in addition to statutorily-prescribed
minimum notice. For the most part, these cases have upheld the reasonableness of
the statutory notice provisions or have found that a public sale under a
mortgage providing for a power of sale does not involve sufficient state action
to trigger constitutional protections.
In addition, some states may have statutory protection such as the
right of the borrower to reinstate its mortgage loan after commencement of
foreclosure proceedings but prior to a foreclosure sale.
Nonjudicial Foreclosure/Power of Sale
In states permitting non-judicial foreclosure proceedings, foreclosure
of a deed of trust is generally accomplished by a non-judicial trustee's sale
pursuant to a power of sale typically granted in the deed of trust. A power of
sale may also be contained in any other type of mortgage instrument if
applicable law so permits. A power of sale under a deed of trust allows the
trustee to conduct a non-judicial public sale generally following a request from
the beneficiary/lender to sell the property after a default by the borrower if
notice of sale is given in accordance with the terms of the mortgage and
applicable state law.
In some states, prior to a non-judicial public sale, the trustee under
the deed of trust must record a notice of default and notice of sale and send a
copy to the borrower and to any other party who has recorded a request for a
copy of a notice of default and notice of sale. In addition, in some states, the
trustee must provide notice to any other party having an interest of record in
the real property, including junior lienholders. A notice of sale must be posted
in a public place and, in most states, published for a specified period of time
in one or more newspapers. The borrower 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 expenses incurred in
enforcing the obligation. In other states, the borrower or the junior lienholder
is not provided a period to reinstate the loan, but has only the right to pay
off the entire debt to prevent the foreclosure sale. Generally, state law
governs the procedure for public sale, the parties entitled to notice, the
method of giving notice and the applicable time periods.
Public Sale
A third party may be unwilling to purchase a mortgaged property at a
public sale because of:
o difficulty in determining the exact status of title to the property due
to, among other things, redemption rights that may exist; and
o possible physical deterioration of the property that may have occurred
during the foreclosure proceedings.
Therefore, it is common for the lender to purchase the mortgaged
property, subject to the borrower's right in some states to remain in possession
during a redemption period. In that case, the lender will have both the benefits
and burdens of ownership, including the obligation to:
o pay debt service on any senior mortgages;
o pay taxes;
o obtain casualty insurance; and
o make repairs necessary to render the property suitable for sale.
The costs of operating and maintaining a commercial or multifamily
residential property may be significant and may be greater than the income
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derived from that property. The lender also will commonly obtain the services of
a real estate broker and pay the broker's commission in connection with the sale
or lease of the property. Whether the ultimate proceeds of the sale of the
property equal the lender's investment in the property depends upon market
conditions. Moreover, because of the expenses associated with acquiring, owning
and selling a mortgaged property, a lender could realize an overall loss on a
mortgage loan even if the 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 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 have to
keep senior mortgage loans current in order to avoid foreclosure of its interest
in the property. In addition, if the foreclosure of a junior mortgage triggers
the enforcement of a "due-on-sale" clause contained in a senior mortgage, the
junior mortgagee could be required to pay the full amount of the senior mortgage
indebtedness or face foreclosure.
Rights of Redemption
The purposes of a foreclosure action are to enable the lender to
realize upon its security and to bar the borrower, and all persons who have
interests in the property that are subordinate to that of the foreclosing
lender, from exercising their "equity of redemption". The doctrine of equity of
redemption provides that, until the property encumbered by a mortgage has been
sold in accordance with a properly conducted foreclosure and foreclosure sale,
those having interests that are subordinate to that of the foreclosing lender
have the right to redeem the property by paying the entire debt with interest.
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 a common-law, non-statutory right that should
be distinguished from post-sale statutory rights of redemption. In some states,
the borrower and foreclosed junior lienholders are given a statutory period in
which to redeem the property after a foreclosure. In some states, statutory
redemption may occur only upon payment of the foreclosure sale price. In other
states, redemption may be permitted if the former borrower pays only a portion
of the sums due. A statutory right of redemption will diminish the ability of
the lender to sell the foreclosed property, because the exercise of a right of
redemption would defeat the title of any purchaser through a foreclosure.
Consequently, the practical effect of the redemption right is to force the
lender to own the property until the redemption period has expired. In some
states, a post-sale statutory right of redemption may exist following a judicial
foreclosure, but not following a trustee's sale under a deed of trust.
Anti-Deficiency Legislation
Some or all of the mortgage loans may be non-recourse loans. Recourse
after default on these loans will be limited to the related mortgaged property
and any other assets pledged to secure the related mortgage loan. However, even
if a mortgage loan provides for recourse to the borrower's other assets, a
lender's ability to realize upon those assets may be limited by state law. For
example, in some states, a lender cannot obtain a deficiency judgment against
the borrower following foreclosure or sale under a deed of trust. A deficiency
judgment is a personal judgment against the former borrower equal to the
difference between the net amount realized upon the public sale of the real
property and the amount due to the lender. Other states may require the lender
to exhaust the security afforded under a mortgage before bringing a personal
action against the borrower. In certain other states, the lender has the option
of bringing a personal action against the borrower on the debt without first
exhausting the security, but in doing so, the lender may be precluded from
foreclosing upon the security. Finally, other statutory provisions, designed to
protect borrowers from exposure to large deficiency judgments that might result
from bidding at below-market values at the foreclosure sale, limit any
deficiency judgment to the excess of the outstanding debt over the fair market
value of the property at the time of the sale.
Leasehold Considerations
Mortgage loans may be secured by a mortgage on the borrower's leasehold
interest under a ground lease. Leasehold mortgage loans are subject to certain
risks not associated with mortgage loans secured by a lien on the fee estate of
the borrower. The most significant of these risks is that if the borrower's
leasehold were to be terminated, the leasehold mortgagee would lose its
security. This risk may be lessened if the ground lease:
o requires the lessor to give the lender notices of lessee defaults and an
opportunity to cure them;
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o permits the leasehold estate to be assigned to and by the lender or the
purchaser at a foreclosure sale; and
o contains certain other protective provisions typically included in a
"mortgageable" ground lease.
Certain mortgage loans, however, may be secured by ground leases that
do not contain these provisions.
Cooperative Shares
Mortgage loans may be secured by a security interest on the borrower's
ownership interest in shares, and the proprietary leases belonging to those
shares, allocable to cooperative dwelling units that may be vacant or occupied
by non-owner tenants. Loans secured in this manner are subject to certain risks
not associated with mortgage loans secured by a lien on a borrower's fee estate
in real property. The loan typically is subordinate to any mortgage on the
cooperative's building. This mortgage, if foreclosed, could extinguish the
equity in the building and the proprietary leases of the dwelling units derived
from ownership of the shares of the cooperative. Further, transfer of shares in
a cooperative is subject to various regulations as well as to restrictions under
the governing documents of the cooperative. The shares may be canceled in the
event that associated maintenance charges due under the related proprietary
leases are not paid. Typically, a recognition agreement between the lender and
the cooperative provides, among other things, that the lender may cure a default
under a proprietary lease.
Under the laws applicable in many states, "foreclosure" on cooperative
shares is accomplished by a sale in accordance with the provisions of Article 9
of the Uniform Commercial Code and the security agreement relating to the
shares. Article 9 of the Uniform Commercial Code requires that a sale be
conducted in a "commercially reasonable" manner, which may be dependent upon,
among other things, the notice given the debtor and the method, manner, time,
place and terms of the sale. Article 9 of the Uniform Commercial Code provides
that the proceeds of the sale will be applied first to pay the costs and
expenses of the sale and then to satisfy the indebtedness secured by the
lender's security interest. A recognition agreement, however, generally provides
that the lender's right to reimbursement is subject to the right of the
cooperative corporation to receive sums due under the proprietary leases.
Bankruptcy Laws
The U.S. bankruptcy code and state insolvency laws may interfere with
or affect a lender's ability to realize upon collateral and/or to enforce a
deficiency judgment. For example, under the U.S. bankruptcy code, virtually all
actions, including foreclosure actions and deficiency judgment proceedings,
affecting the debtor are automatically stayed upon the filing of the bankruptcy
petition. It is not unusual for the debtor to make no interest or principal
payments during the course of the bankruptcy case. The delay and the
consequences of the delay caused by an automatic stay can be significant. Also,
the filing of a petition in bankruptcy by or on behalf of a junior lienholder
may stay the senior lender from taking action to foreclose out the junior lien.
Under the U.S. bankruptcy code, the amount and terms of a mortgage loan
secured by a lien on property of the debtor may be modified under certain
circumstances, provided that substantive and procedural safeguards protective of
the lender are met. A bankruptcy court may, among other things:
o reduce the secured portion of the outstanding amount of the loan to the
then-current value of the property, which would leave the lender a general
unsecured creditor for the difference between the then-current value of
the property and the outstanding balance of the loan;
o reduce the amount of each scheduled payment, by means of a reduction in
the rate of interest and/or an alteration of the repayment schedule, with
or without affecting the unpaid principal balance of the loan;
o extend or shorten the term to maturity;
o permit the debtor to cure a mortgage loan default by paying the arrearage
over a number of years; or
o permit the debtor, through its rehabilitative plan, to reinstate a
mortgage loan payment schedule even if the lender has obtained a final
judgment of foreclosure prior to the filing of the debtor's petition.
Federal bankruptcy law may also have the effect of interfering with or
blocking the ability of a secured lender to enforce the borrower's assignment of
rents and leases related to the mortgaged property. Even if the lender is
ultimately allowed to enforce the assignment, the legal proceedings necessary to
resolve the issue could be time-consuming, and cause delays in the lender's
receipt of the rents
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The commencement of a bankruptcy case involving the tenant under a
lease of the related property may impair a borrower's ability to make payment on
a mortgage loan. Under the U.S. bankruptcy code, the filing of a petition in
bankruptcy by or on behalf of a tenant results in a stay in bankruptcy against
the commencement or continuation of any state court proceeding for past due
rent, for accelerated rent, for damages or for a summary eviction order with
respect to a default under the lease that occurred prior to the filing of the
tenant's bankruptcy petition. In addition, the U.S. bankruptcy code generally
provides that a trustee or debtor-in-possession may, subject to approval of the
court:
o assume the lease and retain it or assign it to a third party; or
o reject the lease.
If the lease is assumed, the trustee, 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. These remedies may be insufficient, and any assurances provided to
the lessor may be inadequate. If the debtor rejects the lease, the lessor will
be treated, except potentially to the extent of any security deposit, as an
unsecured creditor with respect to its claim for damages for termination of the
lease. The U.S. bankruptcy code also limits a lessor's damages for lease
rejection to:
o the rent under the lease without regard to acceleration for the greater of
one year, or 15%, not to exceed three years, of the remaining term of the
lease; plus
o unpaid rent to the earlier of the surrender of the property or the
tenant's bankruptcy filing.
Environmental Considerations
A lender may be subject to environmental risks when taking a security
interest in real property. Of particular concern may be properties that are or
have been used for industrial, manufacturing, military or disposal activity.
These environmental risks include the possible diminution of the value of a
contaminated property or, as discussed below, potential liability for clean-up
costs or other remedial actions. These remedial or clean-up costs could exceed
the value of the property or the amount of the lender's loan. In certain
circumstances, a lender may decide to abandon a contaminated mortgaged property
as collateral for its loan rather than foreclose and risk liability for clean-up
costs.
Superlien Laws
Under the laws of many states, contamination on a property may give
rise to a lien on the property for clean-up costs. In several states, such a
lien has priority over all existing liens, including those of existing
mortgages. In these states, the lien of a mortgage may lose its priority to such
a "superlien".
CERCLA
The federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, commonly referred to as "CERCLA", imposes strict
liability on present and past "owners" and "operators" of contaminated real
property for the costs of clean-up. A secured lender may be liable as an "owner"
or "operator" of a contaminated mortgaged property if agents or employees of the
lender have participated in the management of the mortgaged property or the
operations of the borrower. Liability may exist even if the lender did not cause
or contribute to the contamination and regardless of whether the lender has
actually taken possession of the mortgaged property through foreclosure, deed in
lieu of foreclosure or otherwise. Moreover, liability is not limited to the
original or unamortized principal balance of a loan or to the value of the
mortgaged property. Excluded from CERCLA's definition of "owner" or "operator",
however, is a person who, without participating in the management of the
facility, holds indicia of ownership primarily to protect his security interest.
This is the so-called "secured creditor exemption".
The Asset Conservation, Lender Liability and Deposit Insurance Act of
1996 amended, among other things, the provisions of CERCLA with respect to
lender liability and the secured creditor exemption. This Act offers substantial
protection to lenders by defining the activities in which a lender can engage
without losing the benefit of the secured creditor exemption. In order for a
lender to be deemed to have participated in the management of a mortgaged
property, the lender must actually participate in the operational affairs of the
property of the borrower. The Act provides that "merely having the capacity to
influence, or unexercised right to control" operations does not constitute
participation in management. A lender will lose the protection of the secured
creditor exemption only if:
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o it exercises decision-making control over the borrower's environmental
compliance and hazardous substance handling and disposal practices; or
o assumes day-to-day management of operational functions of the mortgaged
property.
The Act also provides that a lender will continue to have the benefit
of the secured creditor exemption even if it purchases a mortgaged property at a
foreclosure sale or accepts a deed-in-lieu of foreclosure, provided that the
lender seeks to sell the mortgaged property at the earliest practicable
commercially reasonable time on commercially reasonable terms.
Certain Other Federal and State Laws
Many states have statutes similar to CERCLA, and not all those statutes
provide for a secured creditor exemption. In addition, under federal law, there
is potential liability relating to hazardous wastes and underground storage
tanks under the federal Resource Conservation and Recovery Act.
Certain federal, state and local laws, regulations and ordinances
govern the management, removal, encapsulation or disturbance of
asbestos-containing materials. These laws, as well as common law standards, may
impose liability for releases of or exposure to asbestos-containing materials
and may permit third parties to seek recovery from owners or operators of real
properties for personal injuries associated with such releases.
Federal law requires owners of residential housing constructed prior to
1978 to disclose to potential residents or purchasers any known lead-based paint
hazards and imposes treble damages for any failure to disclose. In addition, the
ingestion of lead-based paint chips or dust particles by children can result in
lead poisoning. The owner of a property where these circumstances exist may be
held liable for injuries and for the costs of removal or encapsulation of the
lead-based paint.
In a few states, transfers of some types of properties are conditioned
upon cleanup of contamination prior to transfer. In these cases, a lender that
becomes the owner of a property through foreclosure, deed in lieu of foreclosure
or otherwise, may be required to clean up the contamination before selling or
otherwise transferring the property.
Beyond statute-based environmental liability, there exist common law
causes of action related to hazardous environmental conditions on a property,
such as actions based on nuisance or on toxic tort resulting in death, personal
injury or damage to property. Although it may be more difficult to hold a lender
liable under common law causes of action, unanticipated or uninsured liabilities
of the borrower may jeopardize the borrower's ability to meet its loan
obligations.
Federal, state and local environmental regulatory requirements change
often. It is possible that compliance with a new regulatory requirement could
impose significant compliance costs on a borrower. These costs may jeopardize
the borrower's ability to meet its loan obligations.
Additional Considerations
Remediating hazardous substance contamination at a property can be very
costly. If a lender becomes liable, it can bring an action for contribution
against the owner or operator who created the environmental hazard. However,
that individual or entity may be without substantial assets. Accordingly, it is
possible that the costs could become a liability of the related trust and
occasion a loss to the related certificateholders.
If the operations on a foreclosed property are subject to environmental
laws and regulations, the lender must operate the property in accordance with
those laws and regulations. This compliance may entail substantial expense,
especially in the case of industrial or manufacturing properties.
In addition, a lender may have to disclose environmental conditions on
a property to government entities and/or to prospective buyers, including
prospective buyers at a foreclosure sale or following foreclosure. This
disclosure may decrease the amount that prospective buyers are willing to pay
for the affected property, sometimes substantially.
Environmental Site Assessments
In most cases, an environmental site assessment of each mortgaged
property will have been performed in connection with the origination of the
related mortgage loan or at some time prior to the issuance of the related
series of offered certificates. Environmental site assessments, however, vary
considerably in their content, quality and cost. Even when adhering to good
professional practices,
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environmental consultants will sometimes not detect significant environmental
problems.
Due-on-Sale and Due-on-Encumbrance Provisions
Certain of the mortgage loans may contain "due-on-sale" and
"due-on-encumbrance" clauses that purport to permit the lender to accelerate the
maturity of the loan if the borrower transfers or encumbers the mortgaged
property. In recent years, court decisions and legislative actions placed
substantial restrictions on the right of lenders to enforce these clauses in
many states. However, the Garn-St. Germain Depository Institutions Act of 1982
generally preempts state laws that prohibit the enforcement of due-on-sale
clauses and permits lenders to enforce these clauses in accordance with their
terms, subject to certain limitations prescribed in that Act and the regulations
promulgated under the Act.
Junior Liens; Rights of Holders of Senior Liens
Any of the trusts may include mortgage loans secured by junior liens,
and the loans secured by the related senior liens may not be included in that
trust. The primary risk to holders of mortgage loans secured by junior liens is
the possibility that adequate funds will not be received in connection with a
foreclosure of the related senior liens to satisfy fully both the senior loans
and the junior loan.
In the event that a holder of a senior lien forecloses on a mortgaged
property, the proceeds of the foreclosure or similar sale will be applied in
accordance with the law of the state in which the property is located.
Generally, that order is as follows:
o first, to the payment of court costs and fees in connection with the
foreclosure;
o second, to real estate taxes;
o third, in satisfaction of all principal, interest, any prepayment or
acceleration penalties, and any other sums due and owing to the holder of
the senior liens; and
o last, in satisfaction of all principal, interest, any prepayment and
acceleration penalties and any other sums due and owing to the holder of
the junior mortgage loan.
Subordinate Financing
The terms of certain of the mortgage loans may not restrict the
borrower from using the mortgaged property as security for one or more
additional loans, or the restrictions may be unenforceable. If a borrower
encumbers a mortgaged property with one or more junior liens, the senior lender
is exposed to the following additional risks:
o the borrower may have difficulty servicing and repaying multiple loans;
o if the subordinate financing permits recourse to the borrower, as is
frequently the case, and the senior loan does not permit recourse, a
borrower may have more incentive to repay sums due on the subordinate
loan;
o acts of the senior lender that prejudice the junior lender or impair the
junior lender's security, such as the senior lender agreeing to an
increase in the principal amount of or the interest rate payable on the
senior loan, may create a superior priority in favor of the junior lender;
o if the borrower defaults on the senior loan and/or any junior loan or
loans, the existence of junior loans and actions taken by junior lenders
can impair the security available to the senior lender and can interfere
with or delay the taking of action by the senior lender; and
o the bankruptcy of a junior lender may operate to stay foreclosure or
similar proceedings by the senior lender.
Default Interest and Limitations on Prepayments
Notes and mortgages may contain provisions that require the borrower to
pay a late charge or additional interest if payments are late. They may also
contain provisions that prohibit prepayments for a specified period and/or
condition prepayments upon the borrower's payment of prepayment premium, fee or
charge. In certain states, there are or may be specific limitations on the late
charges that a lender may collect from a borrower for delinquent payments.
Certain states also limit the amounts that a lender may collect from a borrower
as an additional charge if the loan is prepaid. In addition, the enforceability
of provisions that provide for prepayment premiums, fees and charges upon an
involuntary prepayment is unclear under the laws of many states.
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Applicability of Usury Laws
Title V of the Depository Institutions Deregulation and Monetary
Control Act of 1980 provides that state usury limitations do not apply to
certain types of residential (including multifamily) first mortgage loans
originated by certain lenders after March 31, 1980. Title V authorized any state
to re-impose 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 rejected, any state may adopt a provision
limiting discount points or other charges on mortgage loans covered by Title V.
Certain states have taken action to re-impose interest rate limits and/or to
limit discount points or other charges.
Certain Laws and Regulations
Multifamily and commercial properties are subject to compliance with
various federal, state and local statutes and regulations. Failure to comply,
together with an inability to remedy any failure, could result in material
diminution in the value of a mortgaged property.
Americans with Disabilities Act
Under Title III of the Americans with Disabilities Act of 1990 and the
related rules, public accommodations, such as hotels, restaurants, shopping
centers, hospitals, schools and social service center establishments, must
remove architectural and communication barriers that are structural in nature
from existing places of public accommodation to the extent "readily achievable".
In addition, under the ADA, alterations to a place of public accommodation or a
commercial facility are to be made so that, to the maximum extent feasible, the
altered portions are readily accessible to and usable by disabled individuals.
The "readily achievable" standard takes into account, among other factors, the
financial resources of the affected site owner, landlord or other applicable
person. In addition to imposing a possible financial burden on the borrower in
its capacity as owner or landlord, the ADA may also impose requirements on a
foreclosing lender who succeeds to the interest of the borrower as owner or
landlord. Furthermore, since the "readily achievable" standard may vary
depending on the financial condition of the owner or landlord, a foreclosing
lender who is financially more capable than the borrower of complying with the
requirements of the ADA may be subject to more stringent requirements than those
to which the borrower is subject.
Soldiers' and Sailors' Civil Relief Act of 1940
Under the terms of the Soldiers' and Sailors' Civil Relief Act of 1940,
a borrower who enters military service after the origination of a loan,
including a borrower who was in reserve status and is called to active duty
after origination of the mortgage loan, may not be charged interest, including
fees and charges, above an annual rate of 6% during the period of the borrower's
active duty status, unless a court orders otherwise upon application of the
lender. The Act applies to individuals who are members of the Army, Navy, Air
Force, Marines, National Guard, Reserves, Coast Guard and officers of the U.S.
Public Health Service assigned to duty with the military. Because the Act
applies to individuals who enter military service, including reservists who are
called to active duty, after origination of the related mortgage loan, no
information can be provided as to the number of loans with individuals as
borrowers that may be affected by the Act.
Application of the Act would adversely affect, for an indeterminate
period of time, the ability of a master servicer or special servicer to collect
the full amount of interest on certain of the mortgage loans underlying the
offered certificates. Any shortfalls in interest collections resulting from the
application of the Act would result in a reduction of the amounts distributable
to the holders of certificates of the related series, and would not be covered
by advances or, unless otherwise specified in the related prospectus supplement,
any form of credit support provided in connection with the certificates. In
addition, the Act imposes limitations that would impair the ability of a master
servicer or special servicer to foreclose on an affected mortgage loan during
the borrower's period of active duty status and, under certain circumstances,
during an additional three-month period after the active duty status ceases.
Forfeitures in Drug and RICO Proceedings
Federal law provides that the government can seize property owned by
persons convicted of drug-related crimes or criminal violations of the Racketeer
Influenced and Corrupt Organizations, or "RICO" statute, if the property was
used in, or purchased with, the proceeds of those crimes. Under procedures
contained in the comprehensive Crime Control Act of 1984, the government may
seize the property even before conviction. The government must publish notice of
the forfeiture proceeding and
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give notice to all parties "known to have an alleged interest in the property",
including the holders of mortgage loans.
A lender may avoid forfeiture of its interest in the property if it
establishes that:
o its mortgage was executed and recorded before commission of the crime upon
which the forfeiture is based; or
o the lender was, at the time of execution of the mortgage, "reasonably
without cause to believe" that the property was used in, or purchased with
the proceeds of, illegal drug or RICO activities.
FEDERAL INCOME TAX CONSEQUENCES
This is a general discussion of the material federal income tax
consequences of owning the offered certificates. To the extent it relates to
matters of law or legal conclusions, it represents the opinion of our counsel,
subject to any qualifications as may be expressed in this discussion. Unless
otherwise specified in the related prospectus supplement, our counsel for each
series will be Morrison & Hecker L.L.P.
This discussion is directed to certificateholders that hold the offered
certificates as "capital assets" within the meaning of Section 1221 of the
Internal Revenue Code of 1986 (for purposes of this "Federal Income Tax
Consequences" section and the "ERISA Considerations" section, the "Code"). It
does not purport to discuss all federal income tax consequences that may be
relevant to owners of the offered certificates, particularly as to investors
subject to special treatment under the Code, such as:
o banks;
o insurance companies; and
o foreign investors.
Further, this discussion and the opinion referred to below are based on
authorities that can change, or be interpreted differently, with possible
retroactive effect. No rulings have been or will be sought from the Internal
Revenue Service with respect to any of the federal income tax consequences
discussed below. Accordingly, the IRS may take contrary positions.
Investors 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:
o 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
o is directly relevant to the determination of an entry on a tax return.
Accordingly, even if this discussion addresses an issue regarding the
tax treatment of the owner of certificates, investors should consult their own
tax advisors regarding that issue. Investors should do so not only as to federal
taxes, but also as to state and local taxes. See "State and Other Tax
Consequences".
The following discussion addresses securities of three general types:
o certificates representing interests in a trust, or a portion of a trust,
as to which a designated party under the related Governing Document (the
"REMIC Administrator") will make a real estate mortgage investment conduit
("REMIC") election under Sections 860A through 860G of the Code;
o certificates representing interests in a trust, or portion of a trust, as
to which a fixed asset securitization investment trust ("FASIT") election
is made under Section 860L of the Code; and
o certificates ("Grantor Trust Certificates") representing interests in a
trust or a portion of a trust (a "Grantor Trust Fund"), as to which no
REMIC or FASIT election will be made.
The prospectus supplement for each series 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. If so specified in the applicable prospectus
supplement, the portion of a trust fund as to which a REMIC election is not made
may be treated as either a grantor trust for federal income tax purposes or a
FASIT. For purposes of this tax discussion, references to a
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"certificateholder" or a "holder" are to the beneficial owner of a certificate.
The following discussion is limited in applicability to the offered
certificates. Moreover, this discussion applies only to the extent that mortgage
assets held by a trust consist solely of mortgage loans. To the extent that
other trust assets, including mortgage-backed securities and government
securities, are to be held by a trust, the tax consequences associated with the
inclusion of such assets will be disclosed 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 under such sections (the "OID
Regulations"). It is also based on the rules governing REMICs in Sections
860A-860G of the Code and in the Treasury regulations issued under those
statutes (the "REMIC Regulations"). The OID Regulations do not adequately
address certain issues relevant to, and in some instances provide that they are
not applicable to, securities such as the offered certificates.
REMICs
Classification of REMICs
With respect to each series as to which the REMIC Administrator will
make a REMIC election, our counsel will deliver its opinion generally to the
effect that, assuming compliance with all provisions of the related Governing
Document and certain other documents, and subject to certain assumptions set
forth therein, the related trust, or each applicable portion of the trust, will
qualify as a REMIC and the REMIC Certificates offered with respect thereto will
be considered to evidence ownership of "regular interests" (such certificates,
the "REMIC Regular Certificates") or the sole class of "residual interests"
(such certificates, the "REMIC Residual Certificates") in that REMIC within the
meaning of sections 860A-860G of the Code.
Qualification as a REMIC
In order for the trust to qualify as a REMIC, there must be ongoing
compliance on the part of the trust with the requirements set forth in the Code.
The trust 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 total adjusted basis of the nonqualified
assets is less than 1% of the total 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 Governing
Document for each series will contain provisions intended to assure that the
asset and reasonable arrangements tests will be met at all times that the
Certificates are outstanding. See "--Taxation of Owners of REMIC Residual
Certificates--Tax and Restrictions on Transfer of REMIC Residual Certificates to
Certain Organizations."
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 after that
date pursuant to a fixed-price contract in effect on the Startup Day. Qualified
mortgages include whole mortgage loans if, in general:
o the fair market value of the real property security (including buildings
and structural components) 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
o 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 the first bullet point 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
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mortgage if it were transferred to the REMIC pool on the
Startup Day and that is received either:
o in exchange for any qualified mortgage within a three-month period
thereafter; or
o in exchange for a "defective obligation" within a two-year period
thereafter.
A "defective obligation" includes:
o a mortgage in default or as to which default is reasonably foreseeable;
o a mortgage as to which a customary representation or warranty made at the
time of transfer to the REMIC pool has been breached;
o a mortgage that was fraudulently procured by the mortgagor; and
o 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 the last bullet
point and 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 discussion, 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 to 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 the property is acquired, with
extensions granted by the IRS.
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 may lose its status as a REMIC
for that year and thereafter. In that event, such entity may be taxable as a
corporation, and the related REMIC Certificates may not be accorded the status
or given the tax treatment described below. 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 related trust's income
for the period in which the requirements for the status are not satisfied. The
Governing Document with respect to each REMIC will include provisions designed
to maintain the related trust's status as a REMIC under the Code. It is not
anticipated that the status of any trust as a REMIC will be inadvertently
terminated.
Characterization of Investments in REMIC Certificates
If 95% or more of the assets of the REMIC qualify for any of the
following characterizations at all times during a calendar year, the REMIC
Certificates will qualify for the corresponding status in their entirety for
that calendar year:
o "real estate assets" within the meaning of Section 856(c)(5)(B) of the
Code, and
o assets described in Section 7701(a)(19)(C) of the Code (to the extent that
the REMIC assets constitute mortgages on property not used for residential
or certain other prescribed purposes, the REMIC Certificates will not be
treated as assets qualifying under Section 7701(a)(19)(C)).
Interest (including original issue discount) on the REMIC Regular
Certificates and income allocated to the REMIC Residual Certificates will be
interest described in Section 856(c)(3)(B) of the Code to the extent that such
certificates are treated as "real estate assets" within the meaning of Section
856(c)(5)(B) of the Code. If less than 95% of the REMIC's assets consist of
assets described the preceding paragraph, then a REMIC certificate will qualify
for the corresponding tax treatment in such categories in the proportion that
such REMIC assets are qualifying assets.
In addition, the REMIC Regular Certificates will be:
o "qualified mortgages" within the meaning of Section 860G(a)(3) of the Code
in the hands of another REMIC, and
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o "permitted assets" under Section 860L(c)(1)(G) for a "financial asset
securitization investment trust" or "FASIT".
The REMIC Administrator will determine the percentage of the REMIC's
assets that constitute assets described in the foregoing sections of the Code
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
REMIC Administrator will report those determinations to certificateholders in
the manner and at the times required by applicable Treasury regulations.
The assets of the REMIC will include, in addition to mortgage loans,
payments on mortgage loans held pending distribution on the REMIC Certificates
and any property acquired by foreclosure held pending sale, and may include
amounts in reserve accounts. It is unclear whether property acquired by
foreclosure held pending sale, and amounts in reserve accounts would be
considered to be part of the mortgage loans, or whether those assets, to the
extent not invested in assets described in the foregoing sections of the Code,
otherwise would receive the same treatment as the mortgage loans for purposes of
all of the foregoing sections of the Code. In addition, in some instances
mortgage loans may not be treated entirely as assets described in the foregoing
sections of the Code. If so, we will describe in the related prospectus
supplement the mortgage loans that may not be so treated. Treasury regulations
do provide, however, that cash received from payments on mortgage loans held
pending distribution is considered part of the mortgage loans for purposes of
Section 856(c)(4)(A) of the Code.
To the extent an offered certificate represents ownership of an
interest in any mortgage loan that is secured in part by the related borrower's
interest in an account containing any holdback of loan proceeds, a portion of
the certificate may not represent ownership of assets described in Section
7701(a)(19)(C) of the Code and "real estate assets" under Section 856(c)(4)(A)
of the Code. Also the interest on the certificate may not constitute "interest
on obligations secured by mortgages on real property" within the meaning of
Section 856(c)(3)(B) of the Code.
Finally, holders of REMIC Certificates should be aware that:
o REMIC Certificates held by a regulated investment company will not
constitute "government securities" within the meaning of Code Section
851(b)(3)(A)(i); and
o REMIC 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).
Tiered REMIC Structures
For certain series of REMIC Certificates, two or more separate
elections may be made to treat designated portions of the related trust as
separate REMICs ("Tiered REMICs") for federal income tax purposes. As to each
such series of REMIC Certificates, assuming compliance with all provisions of
the related Governing Document, the Tiered REMICs will each qualify as a REMIC,
and the REMIC Certificates issued by the Tiered REMICs will be considered
"regular interests" or the sole class of "residual interests" to evidence
ownership of REMIC Regular Certificates or REMIC Residual Certificates in the
related REMIC within the meaning of the Code.
Solely for purposes of determining whether the REMIC Certificates will
be "real estate assets" within the meaning of Section 856(c)(5)(B) 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, the Tiered REMICs will be treated as one
REMIC.
Taxation of Owners of REMIC Regular Certificates
Except as otherwise stated in this discussion, REMIC Regular
Certificates will be treated for federal income tax purposes as debt instruments
issued by the REMIC and not as ownership interests in the REMIC or its assets.
Unless otherwise provided herein, interest on the REMIC Regular Certificates
will be taxed as ordinary income to the holders of such Certificates using the
accrual method of accounting, regardless of the certificateholder's normal
methods of accounting.
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Original Issue Discount
Certain REMIC Regular Certificates may be issued with "original issue
discount" within the meaning of Section 1273(a) of the Code. Any holders of
REMIC Regular Certificates issued with original issue discount generally will be
required to include original issue discount in income as it accrues, in
accordance with the "constant yield" method described below, in advance of the
receipt of the cash attributable to such income. In addition, Section 1272(a)(6)
of the Code provides special rules applicable to REMIC Regular Certificates and
certain other debt instruments issued with original issue discount. Regulations
have not been issued under that section. Further, the application of the OID
Regulations to the REMIC Regular Certificates remains unclear in other respects
because the OID Regulations either do not address, or are subject to varying
interpretation with regard to, several relevant issues.
The Code requires that a reasonable prepayment assumption be used with
respect to mortgage loans held by a REMIC in computing the accrual of original
issue discount on REMIC Regular Certificates issued by that REMIC, and that
adjustments be made in the amount and rate of accrual of such discount to
reflect differences between the actual prepayment rate and the prepayment
assumption. The prepayment assumption is to be determined in a manner prescribed
in Treasury regulations that have not yet been issued. The Conference Committee
Report accompanying the Tax Reform Act of 1986 (the "Committee Report")
indicates that Congress intended that the regulations will provide that the
prepayment assumption used with respect to a REMIC Regular Certificate will be
the same as that used in pricing the initial offering of such REMIC Regular
Certificate. The prepayment assumption used in reporting original issue discount
for each series of REMIC Regular Certificates will be consistent with this
standard and will be disclosed in the related prospectus supplement. However,
neither we nor any other person will make any representation that the mortgage
loans will in fact prepay at a rate conforming to the prepayment assumption or
at any other rate or that the prepayment assumption will not be challenged by
the IRS on audit.
The original issue discount, if any, on a REMIC Regular Certificate
will be the excess of its stated redemption price at maturity over its issue
price.
The issue price of a particular class of REMIC Regular Certificates
will be the first cash price at which a substantial amount of REMIC Regular
Certificates of that class is sold to the public (excluding sales to bond
houses, brokers and underwriters). If less than a substantial amount of a
particular class of REMIC Regular Certificates is sold for cash on or prior to
the related date of initial issuance, the issue price for such class will be its
fair market value on the related issue date. The issue price of a REMIC Regular
Certificate also includes the amount paid by an initial certificateholder for
accrued interest that relates to a period prior to the issue date of the REMIC
Regular Certificate.
Under the OID Regulations, the stated redemption price of a REMIC
Regular Certificate is equal to the total of all payments to be made on such
certificate other than "qualified stated interest". "Qualified stated interest"
is interest that is unconditionally payable at least annually during the entire
term of the instrument, at:
o a "single fixed rate";
o a "qualified floating rate";
o an "objective rate";
o a combination of a single fixed rate and one or more "qualified floating
rates" or one "qualified inverse floating rate"; or o a combination of
"qualified floating rates" that can reasonably be expected to have
approximately the same values throughout the term of the
instrument.
In the case of REMIC Regular Certificates bearing adjustable interest
rates, the determination of the total amount of original issue discount and the
timing of the inclusion thereof will vary according to the characteristics of
such REMIC Regular Certificates. If the original issue discount rules apply to
such certificates, we will describe in the related prospectus supplement the
manner in which these rules will be applied with respect to those certificates
in preparing information returns to the certificateholders and the IRS.
Certain classes of the REMIC Regular Certificates may provide for the
first interest payment with respect to those certificates to be made more than
one month after the date of issuance, a period which is longer than the
subsequent monthly intervals between interest payments. Assuming the "accrual
period" (as defined below) for original issue discount is each monthly period
that ends on a payment date, in some cases, as a consequence of this "long first
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accrual period", some or all interest payments may be required to be included in
the stated redemption price of the REMIC Regular Certificate and accounted for
as original issue discount. Because interest on REMIC Regular Certificates must
in any event be accounted for under an accrual method, applying this analysis
would result in only a slight difference in the timing of the inclusion in
income of the yield on the REMIC Regular Certificates.
In addition, if the accrued interest to be paid on the first payment
date is computed with respect to a period that begins prior to the related issue
date, a portion of the purchase price paid for a REMIC Regular Certificate will
reflect such accrued interest. In such cases, information returns provided to
the certificateholders and the IRS will be based on the position that the
portion of the purchase price paid for the interest accrued with respect to
periods prior to the related issue date is treated as part of the overall cost
of that REMIC Regular Certificate, and not as a separate asset the cost of which
is recovered entirely out of interest received on the next payment date, and
that portion of the interest paid on the first payment date in excess of
interest accrued for a number of days corresponding to the number of days from
the related issue date to the first payment date should be included in the
stated redemption price of that REMIC Regular Certificate. However, the OID
Regulations state that all or some portion of such accrued interest may be
treated as a separate asset the cost of which is recovered entirely out of
interest paid on the first payment date. It is unclear how an election to do so
would be made under the OID Regulations and whether that election could be made
unilaterally by a certificateholder.
Notwithstanding the general definition, original issue discount on a
REMIC Regular Certificate will be considered zero if it is less than a de
minimis amount determined under the Code. Original issue discount on a REMIC
Regular Certificate will be considered to be de minimis if it is less than 0.25%
of the stated redemption price of the REMIC Regular Certificate multiplied by
its weighted average maturity. For this purpose, the weighted average maturity
of the REMIC Regular Certificate is computed as the sum of the amounts
determined, as to each payment included in the stated redemption price of such
REMIC Regular Certificate, by multiplying:
o the number of complete years, rounding down for partial years, from the
issue date until such payment is expected to be made, presumably taking
into account the relevant prepayment assumption, by
o a fraction, the numerator of which is the amount of the payment, and the
denominator of which is the stated redemption price at maturity of such
REMIC Regular Certificate.
Under the OID Regulations, original issue discount of only a de minimis
amount, other than de minimis original issue discount attributable to a
so-called "teaser" interest rate or an initial interest holiday, will be
included in income as each payment of stated principal is made, based on the
product of:
o the total amount of such de minimis original issue discount; and
o a fraction, the numerator of which is the amount of such principal payment
and the denominator of which is the outstanding stated principal amount of
the REMIC Regular Certificate.
The OID Regulations also would permit a certificateholder to elect to
accrue de minimis original issue discount into income currently based on a
constant yield method. See "--Taxation of Owners of REMIC Regular
Certificates--Market Discount" below for a description of this election under
the OID Regulations.
If original issue discount on a REMIC Regular Certificate is in excess
of a de minimis amount, the holder of that certificate must include in ordinary
gross income the sum of the "daily portions" of original issue discount for each
day during its taxable year on which it held the REMIC Regular Certificate,
including the purchase date but excluding the disposition date. In the case of
an original holder of a REMIC Regular Certificate, the daily portions of
original issue discount will be determined as follows.
As to each "accrual period", a calculation will be made of the portion
of the original issue discount that accrued during such accrual period. Unless
we state otherwise in the related prospectus supplement, each accrual period
will begin on a date that corresponds to a payment date, or in the case of the
first period, begins on the issue date, and ends on the day preceding the
immediately following payment date. The portion of original issue discount that
accrues in any accrual period will equal the excess, if any, of:
o the sum of:
(A) the present value, as of the end of the accrual period, of all of
the distributions
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remaining to be made on the REMIC Regular Certificate, if any, in
future periods; and
(B) the distributions made on such REMIC Regular Certificate during the
accrual period of amounts included in the stated redemption price,
over the adjusted issue price of such REMIC Regular Certificate at
the beginning of the accrual period.
The present value of the remaining distributions referred to in the
preceding sentence will be calculated:
o assuming that distributions on the REMIC Regular Certificate will be
received in future periods based on the mortgage loans being prepaid at a
rate equal to the applicable prepayment assumption;
o using a discount rate equal to the original yield to maturity of the
certificate; and
o taking into account events, including actual prepayments, that have
occurred before the close of the accrual period.
For these purposes, the original yield to maturity of the certificate
will be calculated based on its issue price and assuming that distributions on
the certificate will be made in all accrual periods based on the mortgage loans
being prepaid at a rate equal to the applicable prepayment assumption. The
adjusted issue price of a REMIC Regular Certificate at the beginning of any
accrual period will equal the issue price of the certificate, increased by the
total amount of original issue discount that accrued with respect to the
certificate in prior accrual periods, and reduced by the amount of any
distributions made on the certificate in prior accrual periods other than
amounts of qualified stated interest. The original issue discount accruing
during any accrual period, computed as described above, will be allocated
ratably to each day during the accrual period to determine the daily portion of
original issue discount for such day. Although original issue discount will be
reported to certificateholders based on the applicable prepayment assumption,
there is no assurance that the mortgage loans will be prepaid at that rate and
no representation is made to the certificateholders that mortgage loans will be
prepaid at that rate or at any other rate.
A subsequent purchaser of a REMIC Regular Certificate that purchases
the certificate at a cost, excluding any portion of that cost attributable to
accrued qualified stated interest, less than its remaining stated redemption
price will also be required to include in gross income the daily portions of any
original issue discount with respect to the certificate. However, each daily
portion will be reduced, if that cost is in excess of its "adjusted issue
price", in proportion to the ratio such excess bears to the total original issue
discount remaining to be accrued on the REMIC Regular Certificate. The adjusted
issue price of a REMIC Regular Certificate on any given day between payment
dates equals the sum of:
o the adjusted issue price, or, in the case of the first accrual period, the
issue price, of that certificate at the beginning of the accrual period
which includes such day; plus
o the daily portions of original issue discount for all days during the
accrual period prior to such day.
A holder who pays an acquisition premium instead may elect to accrue
original issue discount by treating the purchase as a purchase at original
issue.
If the foregoing method for computing original issue discount results
in a negative amount of original issue discount as to any accrual period with
respect to a REMIC Regular Certificate, the amount of original issue discount
allocable to that accrual period will be zero. That is, no current deduction of
the negative amount will be allowed to the holder of the certificate. The holder
will instead only be permitted to offset the negative amount against future
positive original issue discount, if any, attributable to that certificate.
Although not free from doubt, it is possible that a certificateholder may be
permitted to deduct a loss to the extent his or her basis in the certificate
exceeds the maximum amount of payments the certificateholder could ever receive
with respect to the certificate. However, any such loss may be a capital loss,
which is limited in its deductibility. The foregoing considerations are
particularly relevant to Stripped Interest Certificates, which can have negative
yields under certain circumstances that are not default related. A "Stripped
Interest Certificate" is a certificate that entitles the holder to payment of
interest, with disproportionate, little or no payments of principal.
Market Discount
A certificateholder that purchases a REMIC Regular Certificate at a
market discount, other than a de minimis amount, in the case of a REMIC Regular
Certificate issued without original issue discount, at a purchase price less
than its remaining stated principal
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amount, or in the case of a REMIC Regular Certificate issued with original issue
discount, at a purchase price less than its adjusted issue price, will recognize
gain upon receipt of each distribution representing some or all of the stated
redemption price. In particular, under Section 1276 of the Code such a
certificateholder generally must allocate the portion of each distribution
representing some or all of the stated redemption price first to accrued market
discount not previously included in income, and to recognize ordinary income to
that extent. A certificateholder may elect to include market discount in income
currently as it accrues rather than including it on a deferred basis in
accordance with the foregoing. If made, this election will apply to all market
discount bonds acquired by the certificateholder on or after the first day of
the first taxable year to which the election applies.
The OID Regulations also permit a certificateholder to elect to accrue
all interest and discount, including de minimis market or original issue
discount, in income as interest, and to amortize premium, based on a constant
yield method. If a certificateholder makes this election with respect to a REMIC
Regular Certificate with market discount, the certificateholder would be deemed
to have made an election to include currently market discount in income with
respect to all other debt instruments having market discount that the
certificateholder acquires during the taxable year of the election or
thereafter, and possibly previously acquired instruments. Similarly, a
certificateholder that made this election for a certificate that is acquired at
a premium would be deemed to have made an election to amortize bond premium with
respect to all debt instruments having amortizable bond premium that the
certificateholder owns or acquires. See "--Taxation of Owners of REMIC Regular
Certificates--Premium" below. Each of the elections in this and the preceding
paragraph to accrue interest, discount and premium with respect to a certificate
on a constant yield method or as interest would be irrevocable except with the
approval of the IRS.
However, market discount with respect to a REMIC Regular Certificate
will be considered to be zero for purposes of Section 1276 of the Code if the
market discount is less than 0.25% of the remaining stated redemption price of
that REMIC Regular Certificate multiplied by the number of complete years to
maturity remaining after the date of its purchase. In interpreting a similar
rule with respect to original issue discount on obligations payable in
installments, the OID Regulations refer to the weighted average maturity of
obligations. It is likely that the IRS would apply the same rule with respect to
market discount, presumably taking into account the applicable prepayment
assumption. If market discount is treated as de minimis under this rule, it
appears that the actual discount would be treated in a manner similar to
original issue discount of a de minimis amount. See "--Taxation of Owners of
REMIC Regular Certificates--Original Issue Discount" above. Such treatment would
result in discount being included in income at a slower rate than discount would
be required to be included in income using the method described above.
Section 1276(b)(3) of the Code specifically authorizes the Treasury
Department to issue regulations providing for the method for accruing market
discount on debt instruments, the principal of which is payable in more than one
installment. The Treasury Department has not yet issued treasury regulations
implementing the market discount rules; therefore, you should consult your own
tax advisors regarding the application of these rules and the advisability of
making any of the elections allowed under Code Sections 1276 through 1278. Until
the Treasury Department issues regulations, certain rules described in the
Committee Report apply. The Committee Report indicates that in each accrual
period market discount on REMIC Regular Certificates should accrue, at the
certificateholder's option:
o on the basis of a constant yield method;
o in the case of a REMIC Regular Certificate issued without original issue
discount, in an amount that bears the same ratio to the total remaining
market discount as the stated interest paid in the accrual period bears to
the total amount of stated interest remaining to be paid on the REMIC
Regular Certificate as of the beginning of the accrual period; or
o in the case of a REMIC Regular Certificate issued with original issue
discount, in an amount that bears the same ratio to the total remaining
market discount as the original issue discount accrued in the accrual
period bears to the total original issue discount remaining on the REMIC
Regular Certificate at the beginning of the accrual period.
The prepayment assumption used in calculating the accrual of original
issue discount is also used in calculating the accrual of market discount. To
the extent that REMIC Regular Certificates provide for monthly or other periodic
distributions throughout their term, the effect of these rules may be to require
market discount to be
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includible in income at a rate that is not significantly slower than the rate at
which that discount would accrue if it were original issue discount. Moreover,
in any event a holder of a REMIC Regular Certificate generally will be required
to treat a portion of any gain on the sale or exchange of that certificate as
ordinary income to the extent of the market discount accrued to the date of
disposition under one of the foregoing methods, less any accrued market discount
previously reported as ordinary income.
Further, under Section 1277 of the Code a holder of a REMIC Regular
Certificate may be required to defer a portion of its interest deductions for
the taxable year attributable to any indebtedness incurred or continued to
purchase or carry a REMIC Regular Certificate purchased with market discount.
For these purposes, the de minimis rule referred to above applies. Any such
deferred interest expense would not exceed the market discount that accrues
during that taxable year and is, in general, allowed as a deduction not later
than the year in which the market discount is includible in income. If a holder,
however, has elected to include market discount in income currently as it
accrues, the interest deferral rule described above would not apply.
Premium
A REMIC Regular Certificate purchased at a cost that is greater than
its remaining stated redemption price at maturity will be considered to be
purchased at a premium. For the purposes of the preceding sentence, any portion
of that cost attributable to accrued qualified stated interest at maturity is
excluded. The holder of such a REMIC Regular Certificate may elect under Section
171 of the Code to amortize this premium under the constant yield method over
the life of the certificate. If a holder elects to amortize the premium, that
premium would be amortized on a constant yield method and would be applied as an
offset against qualified stated interest (and not as a separate deduction item).
If made, such an election will apply to all debt instruments having amortizable
bond premium that the holder owns or subsequently acquires. The OID Regulations
also permit certificateholders to elect to include all interest, discount and
premium in income based on a constant yield method, further treating the
certificateholder as having made the election to amortize premium generally. See
"--Taxation of Owners of REMIC Regular Certificates--Market Discount" above. The
Committee report states that the same rules that apply to accrual of market
discount will also apply in amortizing bond premium under Section 171 of the
Code. These rules will require use of a Prepayment Assumption in accruing market
discount with respect to REMIC Regular Certificates without regard to whether
those certificates have original issue discount.
The Treasury Department issued final Treasury regulations in December
1997 which address the amortization of bond premiums (the "Premium Amortization
Regulations"). The preamble to the Premium Amortization 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
Amortization 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 Amortization 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 Amortization 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.
Realized Losses
Under Section 166 of the Code, both corporate holders of the REMIC
Regular Certificates and noncorporate holders of the REMIC Regular Certificates
that acquire the certificates in connection with a trade or business should be
allowed to deduct, as ordinary losses, any losses sustained during a taxable
year in which their certificates become wholly or partially worthless as the
result of one or more realized losses on the mortgage loans. However, it appears
that a noncorporate holder that does not acquire a REMIC Regular Certificate in
connection with a trade or business will not be entitled to deduct a loss under
Section 166 of the Code until that holder's certificate becomes wholly worthless
(that is, until its principal balance has been reduced to zero), and that the
loss will be characterized as a short-term capital loss.
Each holder of a REMIC Regular Certificate will be required to accrue
interest and original issue
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discount with respect to that certificate, without giving effect to any
reductions in distributions attributable to defaults or delinquencies on the
related mortgage loans, until it can be established that any such reduction
ultimately will not be recoverable. As a result, the amount of taxable income
reported in any period by the holder of a REMIC Regular Certificate could exceed
the amount of economic income actually realized by the holder in that period.
Although the holder of a REMIC Regular Certificate eventually will recognize a
loss or reduction in income attributable to previously accrued and included
income that, as the result of a realized loss, ultimately will not be realized,
the law is unclear with respect to the timing and character of that loss or
reduction in income.
Taxation of Owners of REMIC Residual Certificates
General
Although a REMIC is a separate entity for federal income tax purposes,
a REMIC generally is not subject to entity-level taxation, except with regard to
income from prohibited transactions and certain other transactions. See
"-Prohibited Transactions Tax and Other Taxes" below. Rather, the taxable income
or net loss of a REMIC is generally taken into account by the holder of the
REMIC Residual Certificates. Accordingly, the REMIC Residual Certificates will
be subject to tax rules that differ significantly from those that would apply if
the REMIC Residual Certificates were treated for federal income tax purposes as
direct ownership interests in the mortgage loans or as debt instruments issued
by the REMIC.
A holder of a REMIC Residual Certificate generally will be required to
report its daily portion of the taxable income or, subject to the limitations
noted in this discussion, the net loss of the REMIC for each day during a
calendar quarter that such holder owned such REMIC Residual Certificate. For
this purpose, the taxable income or net loss of the REMIC will be allocated to
each day in the calendar quarter ratably using a "30 days per month/90 days per
quarter/360 days per year" convention unless otherwise disclosed in the related
prospectus supplement. The daily amounts so allocated will then be allocated
among the REMIC Residual Certificateholders in proportion to their respective
ownership interests on that day. Any amount included in the gross income or
allowed as a loss of any REMIC Residual Certificateholder by virtue of this
paragraph will be treated as ordinary income or loss. Ordinary income derived
from the REMIC Residual Certificates will be "portfolio income" for taxpayers
subject to the Code Section 469 limitation or the deductibility of "passive
losses." The taxable income of the REMIC will be determined under the rules
described below in "--Taxable Income of the REMIC" and will be taxable to the
REMIC Residual Certificateholders without regard to the timing or amount of cash
distributions by the REMIC until the REMIC's termination.
A holder of a REMIC Residual Certificate that purchased the certificate
from a prior holder also will be required to report on its federal income tax
return amounts representing its daily share of the taxable income or net loss of
the REMIC for each day that it holds that REMIC Residual Certificate. Those
daily amounts generally will equal the amounts of taxable income or net loss
determined as described above. The Committee Report indicates that certain
modifications of the general rules may be made, by regulations, legislation or
otherwise to reduce or increase the income of a REMIC Residual Certificateholder
that purchased that REMIC Residual Certificate from a prior holder of that
certificate at a price greater than (or less than) the adjusted basis (as
defined below) such REMIC Residual Certificate would have had in the hands of an
original holder of the certificate. The REMIC Regulations, however, do not
provide for any such modifications.
Any payments received by a holder of a REMIC Residual Certificate from
the seller of that certificate in connection with the acquisition of that REMIC
Residual Certificate will be taken into account in determining the income of
that holder for federal income tax purposes. Although it appears likely that any
such payment would be includible in income immediately upon its receipt, the IRS
might assert that the payment should be included in income over time according
to an amortization schedule or according to some other method. Because of the
uncertainty concerning the treatment of these payments, it is recommended that
holders of REMIC Residual Certificates consult their tax advisors concerning the
treatment of these payments for income tax purposes.
The amount of income REMIC Residual Certificateholders must report, or
the tax liability associated with that income, may exceed the amount of cash
distributions received from the REMIC for the corresponding period.
Consequently, REMIC Residual Certificateholders should have other sources of
funds sufficient to pay any federal income taxes
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due as a result of their ownership of REMIC Residual Certificates or unrelated
deductions against which income may be offset, subject to the rules relating to
"excess inclusions", residual interests without "significant value" and
"non-economic" residual interests discussed below. The fact that the tax
liability associated with the income allocated to REMIC Residual
Certificateholders may exceed the cash distributions received by those REMIC
Residual Certificateholders for the corresponding period may significantly
adversely affect those REMIC Residual Certificateholders' after-tax rate of
return. This disparity between income and distributions may not be offset by
corresponding losses or reductions of income attributable to the REMIC Residual
Certificateholder until subsequent tax years and, then, may not be completely
offset due to changes in the Code, tax rates or character of the income or loss.
REMIC Residual Certificates may in some instances have negative "value". See
"Risk Factors--Residual Interests in a `Real Estate Mortgage Investment Conduit'
Have Adverse Tax Consequences".
Taxable Income of the REMIC
The taxable income of the REMIC will equal:
o the income from the mortgage loans and other assets of the REMIC; plus
o any cancellation of indebtedness income due to the allocation of realized
losses to REMIC Regular Certificates; less
o the sum of:
1. the deductions allowed to the REMIC for interest, including
original issue discount;
2. stated interest for Regular Certificates;
3. amortization of any premium with respect to mortgage loans; and
4. servicing fees and other expenses (except as otherwise stated in
this prospectus).
For purposes of determining its taxable income, the REMIC will have an
initial total basis in its assets equal to the sum of the issue prices of all
REMIC Certificates, or, if a class of REMIC Certificates is not sold initially,
their fair market values. Such total basis will be allocated among the mortgage
loans and the other assets of the REMIC in proportion to their respective fair
market values.
The issue price of any REMIC Certificates offered by this prospectus
will be determined in the manner described above under "-Taxation of Owners of
REMIC Regular Certificates-Original Issue Discount". The issue price of a REMIC
Certificate received in exchange for an interest in the mortgage loans or other
property will equal the fair market value of those interests in the mortgage
loans or other property. Accordingly, if one or more classes of REMIC
Certificates are retained initially rather than sold, the REMIC Administrator
may be required to estimate the fair market value of those interests in order to
determine the basis of the REMIC in the mortgage loans and other property held
by the REMIC.
Subject to possible application of the de minimis rules, the method of
accrual by the REMIC of original issue discount income and market discount
income with respect to mortgage loans that it holds will be equivalent to the
method for accruing original issue discount income for holders of REMIC Regular
Certificates, that is, under the constant yield method taking into account the
applicable prepayment assumption. However, a REMIC that acquires loans at a
market discount must include such market discount in income currently, as it
accrues, on a constant yield basis. See "--Taxation of Owners of REMIC Regular
Certificates" above, which describes a method for accruing this discount income
that is analogous to that required to be used by a REMIC for mortgage loans with
market discount that it holds.
A mortgage loan will be deemed to have been acquired with discount (or
premium) to the extent that the REMIC's basis in the mortgage loan, determined
as described in the preceding paragraph, is less than (or greater than) its
stated redemption price. Any such discount will be includible in the income of
the REMIC as it accrues, in advance of receipt of the cash attributable to that
income, under a method similar to the method described above for accruing
original issue discount on the REMIC Regular Certificates. It is anticipated
that each REMIC will elect under Section 171 of the Code to amortize any premium
on the mortgage loans. Premium on any mortgage loan to which that election
applies may be amortized under a constant yield method, presumably taking into
account the applicable prepayment assumption.
A REMIC will be allowed deductions for interest, including original
issue discount, on the REMIC Regular Certificates equal to the deductions that
would be allowed if the REMIC Regular Certificates were indebtedness of the
REMIC. Original issue discount will be considered to accrue for this purpose as
described above under "-Taxation
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of Owners of REMIC Regular Certificates-Original Issue Discount", except that
the de minimis rule and the adjustments for subsequent holders of REMIC Regular
Certificates described in that section will not apply.
If a class of REMIC Regular Certificates is issued at a price in excess
of the stated redemption price of that class (such excess, "Issue Premium"), the
net amount of interest deductions that are allowed the REMIC in each taxable
year with respect to the REMIC Regular Certificates of that class will be
reduced by an amount equal to the portion of the Issue Premium that is
considered to be amortized or repaid in that year. Although the matter is not
entirely certain, it is likely that Issue Premium would be amortized under a
constant yield method in a manner analogous to the method of accruing original
issue discount described above under "-Taxation of Owners of REMIC Regular
Certificates-Original Issue Discount".
As a general rule, a REMIC will determine its taxable income in the
same manner as if it were an individual having the calendar year as its taxable
year and using the accrual method of accounting. However, the REMIC may not take
into account any item of income, gain, loss or deduction allocable to a
prohibited transaction. See "-Prohibited Transactions Tax and Other Taxes"
below. Further, the limitation on miscellaneous itemized deductions imposed on
individuals by Section 67 of the Code will not be applied at the REMIC level. As
a result, the REMIC will be allowed deductions for servicing, administrative and
other non-interest expenses in determining its taxable income. All these
expenses will be allocated as a separate item to the holders of REMIC
Certificates, subject to the limitation of Section 67 of the Code. See
"--Pass-Through of Non-Interest Expenses of the REMIC as Itemized Deductions"
below. If the deductions allowed to the REMIC exceed its gross income for a
calendar quarter, that excess will be the net loss for the REMIC for that
calendar quarter.
Basis Rules, Net Losses and Distributions
The adjusted basis of a REMIC Residual Certificate will be equal to the
amount paid for that REMIC Residual Certificate, increased by amounts included
in the income of the holder of a REMIC Residual Certificate and decreased, but
not below zero, by distributions made, and by net losses allocated, to that
holder.
A holder of a REMIC Residual Certificate may not take into account any
net loss for any calendar quarter to the extent the net loss exceeds the
holder's adjusted basis in its REMIC Residual Certificate as of the close of
such calendar quarter, determined without regard to that net loss. Any loss that
is not currently deductible by reason of this limitation may be carried forward
indefinitely to future calendar quarters and, subject to the same limitation,
may be used only to offset income from the REMIC Residual Certificate. The
ability of the holders of REMIC Residual Certificates to deduct net losses may
be subject to additional limitations under the Code. We recommend that you
consult your tax advisors as to these limitations.
Any distribution on a REMIC Residual Certificate will be treated as a
nontaxable return of capital to the extent it does not exceed the holder's
adjusted basis in the REMIC Residual Certificate. To the extent a distribution
on a REMIC Residual Certificate exceeds such adjusted basis, it will be treated
as gain from the sale of that REMIC Residual Certificate. Holders of certain
REMIC Residual Certificates may be entitled to distributions early in the term
of the related REMIC under circumstances in which their bases in those REMIC
Residual Certificates will not be sufficiently large that such distributions
will be treated as nontaxable returns of capital. Their bases in those REMIC
Residual Certificates will initially equal the amount paid for the REMIC
Residual Certificates and will be increased by their allocable shares of taxable
income of the REMIC. However, such bases increases may not occur until the end
of the calendar quarter, or perhaps the end of the calendar year, with respect
to which such REMIC taxable income is allocated to the REMIC Residual
Certificateholders. To the extent such REMIC Residual Certificateholders'
initial bases are less than the distributions to such REMIC Residual
Certificateholders (and increases in such initial bases either occur after such
distributions or, together with their initial bases, are less than the amount of
such distributions), gain will be recognized to such REMIC Residual
Certificateholders on such distributions and will be treated as gain from the
sale of their REMIC Residual Certificates.
The effect of these rules is that a holder of a REMIC Residual
Certificate may not amortize its basis in a REMIC Residual Certificate, but may
only recover its basis through distributions, through the deduction of any net
losses of the REMIC or upon the sale of its REMIC Residual Certificate. See
"-Sales of REMIC Certificates" below. For a
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discussion of possible modifications of these rules that may require adjustments
to income of a holder of a REMIC Residual Certificate other than an original
holder in order to reflect any difference between the cost of such REMIC
Residual Certificate to that holder and the adjusted basis such REMIC Residual
Certificate would have in the hands of an original holder see "--Taxation of
Owners of REMIC Residual Certificates--General" above.
Excess Inclusions
Any "excess inclusions" with respect to a REMIC Residual Certificate
will be subject to federal income tax in all events. For holders of REMIC
Residual Certificates, excess inclusions:
o will not be permitted to be offset by deductions, losses or loss
carryovers from other activities;
o will be treated as "unrelated business taxable income" to an otherwise
tax-exempt organization; and
o will not be eligible for any rate reduction or exemption under any
applicable tax treaty with respect to the 30% United States withholding
tax imposed on distributions to REMIC Residual Certificateholders that are
foreign investors. See, however "-Foreign Investors in REMIC Certificates"
below.
Furthermore, for purposes of the alternative minimum tax:
o excess inclusions will not be permitted to be offset by the alternative
tax net operating loss deduction; and
o alternative minimum taxable income may not be less than the taxpayer's
excess inclusions.
This last rule has the effect of preventing non-refundable tax credits
from reducing the taxpayer's income tax to an amount lower than the alternative
minimum tax on excess inclusions.
In general, the "excess inclusions" with respect to a REMIC Residual
Certificate for any calendar quarter will be the excess, if any, of:
o the daily portions of REMIC taxable income allocable to that REMIC
Residual Certificate,
over
o the sum of the "daily accruals" (as defined below) for each day during
that quarter that the REMIC Residual Certificate was held by the REMIC
Residual Certificateholder.
The daily accruals of a REMIC Residual Certificateholder will be
determined by allocating to each day during a calendar quarter its ratable
portion of the product of the "adjusted issue price" of the REMIC Residual
Certificate at the beginning of the calendar quarter and 120% of the "long-term
Federal rate" in effect on the issue date. For this purpose, the adjusted issue
price of a REMIC Residual Certificate as of the beginning of any calendar
quarter will be equal to:
o the issue price of the REMIC Residual Certificate;
o increased by the sum of the daily accruals for all prior quarters; and
o decreased, but not below zero, by any distributions made with respect to
that REMIC Residual Certificate before the beginning of that quarter.
The issue price of a REMIC Residual Certificate is the initial offering
price to the public, excluding bond houses and brokers, at which a substantial
amount of the REMIC Residual Certificates were sold. The "long-term Federal
rate" is an average of current yields on Treasury securities with a remaining
term of greater than nine years, computed and published monthly by the IRS.
Although it has not done so, the Treasury Department also has
authority to issue regulations that would treat the entire amount of income
accruing on a REMIC Residual Certificate as an excess inclusion if the REMIC
Residual Certificates are considered not to have "significant value".
The REMIC Regulations provide that in order to be treated as having
significant value, the REMIC Residual Certificates must have:
o a total issue price at least equal to 2% of the total issue prices of all
of the related REMIC's regular and residual interests; and
o the anticipated weighted average life of the REMIC Residual Certificates
must equal or exceed 20% of the anticipated weighted average life of the
REMIC, based on the Prepayment Assumption and on any required or permitted
clean up calls or required liquidation provided for in the REMIC's
organizational documents.
In the related prospectus supplement we will disclose whether offered
REMIC Residual Certificates may be considered to have "significant value" under
the REMIC Regulations. Any disclosure
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that a REMIC Residual Certificate will have "significant value" will be based
upon certain assumptions, and we will make no representation that a REMIC
Residual Certificate will have "significant value" for purposes of the
above-described rules.
In the case of any REMIC Residual Certificates held by a real estate
investment trust, the total excess inclusions with respect to those REMIC
Residual Certificates, reduced, but not below zero, by the real estate
investment trust taxable income, within the meaning of Section 857(b)(2) of the
Code, excluding any net capital gain, will be allocated among the shareholders
of that trust in proportion to the dividends received by those shareholders from
that trust, and any amount so allocated will be treated as an excess inclusion
with respect to a REMIC Residual Certificate as if held directly by such
shareholder. Regulated investment companies, common trust funds and certain
cooperatives are subject to similar rules.
The Small Business Job Protection Act of 1996 has eliminated the
special rule permitting Section 593 institutions ("thrift institutions") to use
net operating losses and other allowable deductions to offset their excess
inclusion income from REMIC Residual Certificates that have "significant value"
within the meaning of the REMIC Regulations, effective for taxable years
beginning after December 31, 1995, except with respect to REMIC Residual
Certificates continuously held by a thrift institution since November 1, 1995.
Noneconomic REMIC Residual Certificates
Under the REMIC Regulations, transfers of "non-economic" REMIC Residual
Certificates will be disregarded for all federal income tax purposes if "a
significant purpose of the transfer was to enable the transferor to impede the
assessment or collection of tax". If a transfer is disregarded, the purported
transferor will continue to remain liable for any taxes due with respect to the
income on that "non-economic" REMIC Residual Certificate. The REMIC Regulations
provide that a REMIC Residual Certificate is non-economic unless, based on the
Prepayment Assumption and on any required or permitted clean up call or required
liquidation provided for in the REMIC's organizational documents:
1. the present value of the expected future distributions, 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 REMIC Residual Certificate, which rate is computed and
published monthly by the IRS, on the REMIC Residual Certificate equals at
least the present value of the expected tax on the anticipated excess
inclusions; and
2. the transferor reasonably expects that the transferee will receive
distributions with respect to the REMIC Residual Certificate at or after
the time the taxes accrue on the anticipated excess inclusions in an
amount sufficient to satisfy the accrued taxes.
Accordingly, all transfers of REMIC Residual Certificates that may
constitute non-economic residual interests will be subject to certain
restrictions under the terms of the related Governing Document that are intended
to reduce the possibility of any such transfer being disregarded. These
restrictions will require each party to a transfer to provide an affidavit that
no purpose of the transfer is to impede the assessment or collection of tax,
including certain representations as to the financial condition of the
prospective transferee as well as the prospective transferee's acknowledgement
that it understands that it may incur tax liabilities in excess of any cash flow
generated by the REMIC Residual Interest. In addition, the transferor will also
be required to make a reasonable investigation to determine the transferee's
historic payment of its debts and ability to continue to pay its debts as they
come due in the future. Prior to purchasing a REMIC Residual Certificate,
prospective purchasers should consider the possibility that a purported transfer
of that REMIC Residual Certificate by such a purchaser to another purchaser at
some future date may be disregarded in accordance with the above-described rules
which would result in the retention of tax liability by the first purchaser.
We will disclose in the related prospectus supplement whether offered
REMIC Residual Certificates may be considered "non-economic" residual interests
under the REMIC Regulations. Any disclosure that a REMIC Residual Certificate
will not be considered "non-economic" will be based upon certain assumptions,
and we will make no representation that a REMIC Residual Certificate will not be
considered "non-economic" for purposes of the above-described rules. See
"-Foreign Investors in REMIC Certificates" below for additional restrictions
applicable to transfers of certain REMIC Residual Certificates to foreign
persons.
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Mark-to-Market Rules
The IRS recently released regulations under Section 475 of the Code
(the "Mark-to-Market Regulations") relating to the requirement that a securities
dealer mark to market securities held for sale to customers. This mark-to-market
requirement applies to all securities owned by a dealer, except to the extent
that the dealer has specifically identified a security as held for investment.
The Mark-to-Market Regulations provide that for purposes of this mark-to-market
requirement, a REMIC Residual Certificate is not treated as a security for
purposes of Section 475 of the Code, and thus is not subject to the
mark-to-market rules. It is recommended that prospective purchasers of a REMIC
Residual Certificate consult their tax advisors regarding the Mark-to-Market
Regulations.
Foreign Investors
The REMIC Regulations provide that the transfer of a REMIC Residual
Certificate that has a "tax avoidance potential" to a "foreign person" will be
disregarded for federal income tax purposes. This rule appears to apply to a
transferee who is not a U.S. Person (as defined below in "--Foreign Investors in
REMIC Certificates") unless the transferee's income in respect of the REMIC
Residual Certificate is effectively connected with the conduct of a United
States trade or business. A REMIC Residual Certificate is deemed to have a tax
avoidance potential unless, at the time of transfer, the transferor reasonably
expects that the REMIC will distribute to the transferee amounts that will equal
at least 30% of each excess inclusion, and that these amounts will be
distributed at or after the time the excess inclusion accrues and not later than
the end of the calendar year following the year of accrual. If the non-U.S.
Person transfers the REMIC Residual Certificate to a U.S. Person, the transfer
will be disregarded, and the foreign transferor will continue to be treated as
the owner, if the transfer has the effect of allowing the transferor to avoid
tax on accrued excess inclusions.
Any attempted transfer or pledge in violation of the transfer
restrictions will be absolutely null and void and will vest no rights in any
purported transferee. Investors in REMIC Residual Certificates are advised to
consult their own tax advisors with respect to transfers of the REMIC Residual
Certificates and, in addition, pass-through entities are advised to consult
their own tax advisors with respect to any tax that may be imposed on a
pass-through entity.
Unless we state otherwise in the related prospectus supplement,
transfers of REMIC Residual Certificates to investors that are not United States
Persons (as defined below in "-Foreign Investors in REMIC Certificates") will be
prohibited under the related Governing Document. If transfers of REMIC Residual
Certificates to investors that are not United States Persons are permitted
pursuant to the related Governing Document, we will describe in the related
prospectus supplement any additional restrictions applicable to transfers of
certain REMIC Residual Certificates to those persons.
Pass-Through of Non-Interest Expenses of the REMIC as Itemized Deductions
A REMIC will generally allocate its fees and expenses to the holders of
the related REMIC Residual Certificates. Temporary Treasury regulations
indicate, however, that in the case of a REMIC that is similar to a single class
grantor trust, such fees and expenses and a matching amount of additional income
will be allocated among holders of the related REMIC Regular and Residual
Certificates on a daily basis in proportion to the relative amounts of income
accruing to each Certificateholder on that day. Unless we state otherwise in the
related prospectus supplement, such fees and expenses will be allocated to
holders of the related REMIC Residual Certificates in their entirety and not to
the holders of the related REMIC Regular Certificates.
A holder of a REMIC Residual Certificates or REMIC Regular
Certificates, who receives an allocation of fees and expenses in accordance with
the preceding discussion, and who is an individual, estate or trust, or a
"pass-through entity" beneficially owned by one or more individuals, estates or
trusts will:
o add an amount equal to that individual's, estate's or trust's share of
those fees and expenses to that holder's gross income; and
o treat that individual's, estate's or trust's share of those fees and
expenses as a miscellaneous itemized deduction allowable subject to the
limitation of Section 67 of the Code, which permits such deductions only
to the extent they, together with other miscellaneous itemized deductions
of the holder, exceed 2% of such taxpayer's adjusted gross income.
In addition, Section 68 of the Code provides that the amount of
itemized deductions otherwise allowable for an individual whose adjusted gross
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income exceeds a specified amount will be reduced by the lesser of:
o 3% of the excess of the individual's adjusted gross income over that
amount; and
o 80% of the amount of itemized deductions otherwise allowable for the
taxable year.
The amount of additional taxable income reportable by REMIC
Certificateholders that are subject to the limitations of either Section 67 or
Section 68 of the Code may be substantial. As a result, these certificateholders
may have total taxable income in excess of the total amount of cash received on
the 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 a holder of a REMIC Certificate 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 that holder's
allocable portion of servicing fees and other miscellaneous itemized deductions
of the REMIC, even though an amount equal to the amount of these fees and other
deductions will be included in the holder's gross income. Accordingly, REMIC
Residual Certificates will generally not be appropriate investments for:
o individuals;
o estates or trusts; or
o pass-through entities beneficially owned by one or more individuals,
estates or trusts.
It is recommended that these prospective investors consult with their
tax advisors prior to making an investment in such certificates.
Sales of REMIC Certificates
If a REMIC Certificate is sold, the selling certificateholder will
recognize gain or loss equal to the difference between the amount realized on
the sale and its adjusted basis in the REMIC Certificate. The adjusted basis of
a REMIC Regular Certificate generally will equal:
o the cost of the REMIC Regular Certificate to the certificateholder;
o increased by income reported by such certificateholder with respect to the
REMIC Regular Certificate (including original issue discount and market
discount income); and
o reduced (but not below zero) by distributions (other than qualified stated
interest) on that REMIC Regular Certificate received by that
certificateholder and by any amortized premium.
The adjusted basis of a REMIC Residual Certificate will be determined
as described above under "--Taxation of Owners of REMIC Residual
Certificates--Basis Rules, Net Losses and Distributions". Except as described
below, any gain or loss will be capital gain or loss, provided the REMIC
Certificate is held as a capital asset (generally, property held for investment)
within the meaning of Section 1221 of the Code. However, REMIC Certificates will
be "evidences of indebtedness" within the meaning of Section 582(c)(1) of the
Code, so that a bank or thrift institution's gain or loss recognized from the
sale of a REMIC Certificate to which this Section applies will be ordinary
income or loss. 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. In addition, the distinction between
a capital gain or loss and ordinary income or loss remains relevant for other
purposes.
Gain from the sale of a REMIC Regular Certificate that might otherwise
be a capital gain will be treated as ordinary income to the extent of the gain
that does not exceed the excess, if any, of:
o the amount that would have been includible in the seller's income with
respect to such REMIC Regular Certificate assuming that income had accrued
on the certificate at a rate equal to 110% of the "applicable Federal
rate" (generally, a rate based on an average of current yields on Treasury
securities having a maturity comparable to that of the certificate based
on the application of the Prepayment Assumption to such certificate),
determined as of the date of purchase of the REMIC Regular Certificate;
over
o the amount of ordinary income actually includible in the seller's income
prior to the sale.
In addition, gain recognized on the sale of a REMIC Regular Certificate
by a seller who purchased the REMIC Regular Certificate at a market discount
will be taxable as ordinary income in an amount not exceeding the portion of
such discount that accrued during the period the REMIC Certificate was held by
that holder, reduced by any market discount included in income under the rules
described
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above under "--Taxation of Owners of REMIC Regular Certificates--Market
Discount" and "--Premium".
A portion of any gain from the sale of a REMIC Regular Certificate that
might otherwise be capital gain may be treated as ordinary income to the extent
that the certificate is held as part of a "conversion transaction" within the
meaning of Section 1258 of the Code. A conversion transaction generally is one
in which the taxpayer has taken two or more positions in the same or similar
property that reduce or eliminate market risk, if substantially all of the
taxpayer's return is attributable to the time value of the taxpayer's net
investment in such transaction. The amount of gain so realized in a conversion
transaction that is recharacterized as ordinary income generally will not exceed
the amount of interest that would have accrued on the taxpayer's net investment
at 120% of the appropriate "applicable Federal rate" at the time the taxpayer
enters into the conversion transaction, subject to appropriate reduction for
prior inclusion of interest and other ordinary income items from the
transaction.
Finally, a non-corporate taxpayer may elect to have net capital gain
taxed at ordinary income rates rather than capital gains rates in order to
include the net capital gain in total net investment income for the taxable
year, 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.
Except as may be provided in Treasury regulations yet to be issued, if
the seller of a REMIC Residual Certificate reacquires that REMIC Residual
Certificate, or acquires any other residual interest in a REMIC or any similar
interest in a "taxable mortgage pool" (as defined in Section 7701(i) of the
Code) during the period beginning six months before, and ending six months
after, the date of a sale, that sale will be subject to the "wash sale" rules of
Section 1091 of the Code. In that event, any loss realized by the REMIC Residual
Certificateholder on the sale will not be deductible, but instead will be added
to the REMIC Residual Certificateholder's adjusted basis in the newly-acquired
asset.
Prohibited Transactions Tax and Other Taxes
The Code imposes a tax on REMICs equal to 100% of the net income
derived from "prohibited transactions" (a "Prohibited Transactions Tax"). In
general, subject to certain specified exceptions a prohibited transaction means:
o the disposition of a mortgage loan;
o the receipt of income from a source other than a mortgage loan or certain
other permitted investments;
o the receipt of compensation for services; or
o gain from the disposition of an asset purchased with the payments on the
mortgage loans for temporary investment pending distribution on the REMIC
Certificates.
It is not anticipated that any REMIC will engage in any prohibited
transactions as to which it would be subject to a material Prohibited
Transaction Tax.
In addition, certain contributions to a REMIC made after the day on
which the REMIC issues all of its interests could result in the imposition of a
tax on the REMIC equal to 100% of the value of the contributed property (a
"Contributions Tax"). Each Governing Document will include provisions designed
to prevent the acceptance of any contributions that would be subject to this
tax.
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. "Net income from foreclosure
property" generally means income from foreclosure property other than qualifying
rents and other qualifying income for a real estate investment trust. Under
certain circumstances, the special servicer may be authorized to conduct
activities with respect to a real property acquired by a trust that causes the
trust to incur this tax if doing so would, in the reasonable discretion of the
special servicer, maximize the net after-tax proceeds to certificateholders.
However, under no circumstance will the special servicer cause the acquired real
property to cease to be a "permitted investment" under Section 860G(a)(5) of the
Code.
Unless otherwise disclosed in the related prospectus supplement, it is
not anticipated that any material state or local income or franchise tax will be
imposed on any REMIC.
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Unless we state otherwise 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 REMIC Administrator, master servicer, special servicer, manager or
trustee, in any case out of its own funds, if the person has sufficient assets
to do so, and the tax arises out of a breach of that person's obligations under
the related Governing Document. Any such tax not borne by a REMIC Administrator,
master servicer, special servicer, manager or trustee would be charged against
the related trust resulting in a reduction in amounts payable to holders of the
related REMIC Certificates.
Tax and Restrictions on Transfers of REMIC
Residual Certificates to Certain Organizations
An entity will not qualify as a REMIC unless there are reasonable
arrangements designed to ensure that;
o residual interests in the entity are not held by disqualified
organizations; and
o information necessary for the application of the tax described in this
prospectus will be made available.
Restrictions on the transfer of REMIC Residual Certificates and certain
other provisions that are intended to meet this requirement will be included in
each Governing Document, and will be discussed in any prospectus supplement
relating to the offering of any REMIC Residual Certificate.
If a REMIC Residual Certificate is transferred to a "disqualified
organization" (as defined below), a tax would be imposed on the transfer of that
REMIC Residual Certificate in an amount (determined under the REMIC Regulations)
equal to the product of:
o the present value of the total anticipated excess inclusions with respect
to such REMIC Residual Certificate for periods after the transfer; and
o the highest marginal federal income tax rate applicable to corporations.
The present value will be calculated using a discount rate equal to 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 REMIC Residual Certificate.
The anticipated excess inclusions must be determined as of the date
that the REMIC Residual Certificate is transferred and must be based on:
o events that have occurred up to the time of the transfer;
o the Prepayment Assumption; and
o any required or permitted clean up calls or required liquidation provided
for in the REMIC's organizational documents.
This tax generally would be imposed on the transferor of the REMIC
Residual Certificate. However, if the transfer is through an agent for a
disqualified organization, the tax would instead be imposed on the agent. A
transferor of a REMIC Residual Certificate would in no event be liable for this
tax 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 this affidavit is
false.
In addition, if a Disqualified Organization is the record holder of an
interest in a pass-through entity that owns a Residual Certificate, the
pass-through entity must pay tax equal to the product of (1) the amount of
excess inclusion income of the REMIC for that taxable year allocable to the
interest held by the Disqualified Organization; multiplied by (2) the highest
marginal federal income tax rate imposed on corporations by Code Section
11(b)(1).
A pass-through entity will not be subject to this tax for any period,
however, if each record holder of an interest in the pass-through entity
furnishes to the pass-through entity:
o the holder's social security number and a statement under penalties of
perjury that the social security number is that of the record holder; or
o a statement under penalties of perjury that the record holder is not a
disqualified organization.
For taxable years beginning on or after January 1, 1998, if an
"electing large partnership" holds a REMIC Residual Certificate, all interests
in the electing large partnership are treated as held by disqualified
organizations for purposes of the tax imposed upon a pass-through entity by
Section
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860E(c) of the Code. An exception to this tax, otherwise available to a
pass-through entity that is furnished certain affidavits by record holders of
interests in the entity and that does not know such affidavits are false, is not
available to an electing large partnership.
For these purposes, a "disqualified organization" means:
o the United States, any State or political subdivision thereof, any foreign
government, any international organization, or any agency or
instrumentality of the foregoing (but would not include an instrumentality
if all of its activities are subject to tax and, except for the Federal
Home Loan Mortgage Corporation, a majority of its board of directors is
not selected by any such governmental agency);
o any organization (other than certain farmers' cooperatives described in
Section 521 of the Code) that is exempt from federal income tax, unless it
is subject to the tax or "unrelated business taxable income" imposed by
Section 511 of the Code; or
o a rural electric or telephone cooperative.
For these purposes, a "pass-through entity" means any regulated
investment company, real estate investment trust, trust, partnership or certain
other entities described in Section 860E(e)(6) of the Code. An "electing large
partnership" means any partnership having more than 100 members during the
preceding tax year (other than certain service partnerships and commodity
pools), which elect to apply simplified reporting provisions under the Code. In
addition, a person holding an interest in a pass-through entity as a nominee for
another person will, with respect to that interest, be treated as a pass-through
entity.
Liquidation and Termination
A REMIC will terminate after the payment date following the REMIC's
receipt of the final payment in respect of the mortgage loans or upon the
REMIC's sale of its assets following its adoption of a plan of complete
liquidation. If the REMIC adopts a plan of complete liquidation, within the
meaning of Code Section 860F(a)(4)(A)(i), which may be accomplished by
designating in the REMIC's final tax return a date on which such adoption is
deemed to occur, and sells all of its assets other than cash within a 90-day
period beginning on that date, the REMIC will not be subject to any Prohibited
Transaction Tax. The REMIC must credit or distribute in liquidation all of the
sale proceeds plus its cash, other than the amounts retained to meet claims, to
holders of Regular and REMIC Residual Certificates within the 90-day period. The
last distribution on a REMIC Regular Certificate will be treated as a payment in
retirement of a debt instrument. In the case of a REMIC Residual Certificate, if
the last distribution on the REMIC Residual Certificate is less than the REMIC
Residual Certificateholder's adjusted basis in that certificate, the REMIC
Residual Certificateholder should (but may not) be treated as realizing a
capital loss equal to the amount of this difference.
Reporting and Other Administrative Matters
Solely for purposes of the administrative provisions of the Code, the
REMIC will be treated as a partnership and REMIC Residual Certificateholders
will be treated as partners. Unless otherwise stated in the related prospectus
supplement, the REMIC Administrator will file REMIC federal income tax returns
on behalf of the related REMIC, and will be designated as and will act as the
"tax matters person" with respect to the REMIC in all respects. Tax information
reports will be furnished quarterly to each REMIC Residual Certificateholder who
holds a REMIC Residual Certificate on any day in the prior calendar quarter as
discussed below.
As the tax matters person, the REMIC Administrator, subject to certain
notice requirements and various restrictions and limitations, generally will
have the authority to act on behalf of the REMIC and the holders of REMIC
Residual Certificates 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. Holders of REMIC Residual Certificates generally will be
required to report these 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 REMIC Administrator, as tax matters person, and
the IRS concerning any of these REMIC items. Adjustments made to the REMIC's tax
return may require a holder of a REMIC Residual Certificate 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 the
return of a holder of a REMIC Residual Certificate.
No REMIC will be registered as a tax shelter pursuant to Section 6111
of the Code because it is not
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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 REMIC 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 that person and other information.
Reporting of interest income, including any original issue discount,
with respect to REMIC Regular Certificates is required annually, and may be
required more frequently under Treasury regulations. These information reports
generally are required to be sent to individual holders of REMIC Regular
Interests and the IRS. Holders of REMIC Regular Certificates that are:
o corporations;
o trusts;
o securities dealers; and
o certain other non-individuals;
will be provided interest and original issue discount income information and the
information set forth in the following paragraph upon request in accordance with
the requirements of the applicable regulations. The information must be provided
by the later of 30 days after the end of the quarter for which the information
was requested, or two weeks after the receipt of the request. The REMIC must
also comply with rules requiring a privately placed REMIC Regular Certificate
issued with original issue discount to disclose on its face the amount of
original issue discount and the issue date, and requiring such information to be
reported to the IRS. Reporting with respect to REMIC Residual Certificates,
including:
o income;
o excess inclusions;
o investment expenses; and
o relevant information regarding qualification of the REMIC's assets;
will be made as required under the Treasury regulations, generally on a
quarterly basis.
As applicable, the REMIC Regular Certificate information reports will
include a statement of the adjusted issue price of the REMIC Regular Certificate
at the beginning of each accrual period. In addition, the reports will include
information required by regulations with respect to computing the accrual of any
market discount. Because exact computation of the accrual of market discount on
a constant yield method would require information relating to the holder's
purchase price that the REMIC may not have, these regulations only require that
information pertaining to the appropriate proportionate method of accruing
market discount be provided. See "--Taxation of Owners of REMIC Regular
Certificates--Market Discount".
Unless we state otherwise in the related prospectus supplement, the
REMIC Administrator will have the responsibility for complying with the
foregoing reporting rules.
Backup Withholding with Respect to REMIC Certificates
Payments of interest and principal, as well as payments of proceeds
from the sale of REMIC Certificates, may be subject to the "backup withholding
tax" under Section 3406 of the Code at a rate of 31% if recipients of these
payments fail to furnish to the payor certain information, including their
taxpayer identification numbers, or otherwise fail to establish an exemption
from this tax. Any amounts deducted and withheld from a distribution to a
recipient would be allowed as a credit against that recipient's federal income
tax. Furthermore, the IRS may impose certain penalties on a recipient of
payments that is required to supply information but does not do so in the proper
manner.
Foreign Investors in REMIC Certificates
Unless we stated otherwise in the related prospectus supplement, a
holder of a REMIC Regular Certificate that is not a "United States Person" (as
defined below) and is not subject to federal income tax as a result of any
direct or indirect connection to the United States in addition to its ownership
of a REMIC Regular Certificate generally will not be subject to United States
federal income or withholding tax in respect of a distribution on a REMIC
Regular Certificate if the holder complies to the extent necessary with certain
identification requirements. These requirements include delivery of a statement,
signed by the certificateholder under penalties of perjury, certifying that the
certificateholder is not a United State Person and providing the name and
address of the certificateholder. If a non-United States Person's REMIC Regular
Certificate is effectively connected with the conduct by the Certificateholder
of a trade or business within the United States, then the income realized on the
certificate will be subject to U.S. income tax at regular graduated income tax
rates.
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For these purposes, "United States Person" means:
o a citizen or resident of the United States;
o a corporation, partnership or other entity created or organized in, or
under the laws of, the United States or any political subdivision of the
United States;
o an estate whose income from sources outside the United States is
includible in gross income for United States federal income tax purposes
regardless of its connection with the conduct of a trade or business
within the United States; or
o a trust as to which (1) a court in the United States is able to exercise
primary supervision over the administration of the trust and (2) one or
more United States Persons have the authority to control all substantial
decisions of the trust.
It is possible that the IRS may assert that the foregoing tax exemption
should not apply with respect to a REMIC Regular Certificate held by a holder of
a REMIC Residual Certificate that owns directly or indirectly a 10% or greater
interest in the certificates. If the holder does not qualify for exemption,
distributions of interest to that holder, including distributions in respect of
accrued original issue discount, may be subject to a tax rate of 30%, subject to
reduction under any applicable tax treaty.
It is possible, under regulations promulgated under Section 881 of the
Code concerning conduit financing transactions, that the exemption from
withholding taxes described above may not be available to a holder who is not a
United States person and (1) owns 10% or more of one or more underlying
borrowers or (2) if the holder is a controlled foreign corporation, is related
to one or more borrowers.
Further, it appears that a REMIC Regular Certificate would not be
included in the estate of a nonresident alien individual and would not be
subject to United States estate taxes. However, it is recommended that
certificateholders who are nonresident alien individuals consult their tax
advisors concerning this question.
Unless we state otherwise in the related prospectus supplement,
transfers of REMIC Residual Certificates will be prohibited under the related
Governing Document to any investor that is:
o a foreign person; or
o a United States Person, if classified as a partnership under the Code,
unless all of its beneficial owners are United States Persons.
Grantor Trust Funds
Classification of Grantor Trust Funds
With respect to each series of certificates as to which no REMIC
election will be made, our counsel will deliver its opinion to the effect that,
assuming compliance with all provisions of the related Governing Document, the
related Grantor Trust Fund will be classified as a grantor trust under subpart
E, part I of subchapter J of the Code and not as a partnership or an association
taxable as a corporation.
For purposes of the following discussion, a certificate representing an
undivided equitable ownership interest in the principal of the mortgage loans
constituting the related Grantor Trust Fund, together with interest thereon at a
pass-through rate, will be referred to as a "Grantor Trust Fractional Interest
Certificate". A certificate representing ownership of all or a portion of the
difference between interest paid on the mortgage loans constituting the related
Grantor Trust Fund (net of normal administration fees) and interest paid to the
holders of Grantor Trust Fractional Interest Certificates issued with respect to
the Grantor Trust Fund will be referred to as a "Grantor Trust Strip
Certificate". A Grantor Trust Strip Certificate may also evidence a nominal
ownership interest in the principal of the mortgage loans constituting the
related Grantor Trust Fund.
Characterization of Investments in Grantor Trust Certificates
Grantor Trust Fractional Interest Certificates
In the case of Grantor Trust Fractional Interest Certificates, unless
we state otherwise in the related prospectus supplement, our counsel will
deliver an opinion that, in general, Grantor Trust Fractional Interest
Certificates will represent interests in:
o "loans secured by an interest in real property" within the meaning of
Section 7701(a)(19)(C)(v) of the Code, but generally only to the extent
that the underlying mortgage loans have been made with respect to property
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that is used for residential or certain other prescribed purposes;
o "obligation[s] (including any participation or certificate of beneficial
ownership therein) which . . . [are] principally secured by an interest in
real property" within the meaning of Section 860G(a)(3) of the Code;
o "permitted assets" within the meaning of Section 860L(a)(1)(C) of the
Code; and
o "real estate assets" within the meaning of Section 856(c)(5)(B) of the
Code.
In addition, our counsel will deliver an opinion that interest on
Grantor Trust Fractional Interest Certificates will to the same extent be
considered "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.
Grantor Trust Strip Certificates
Even if Grantor Trust Strip Certificates evidence an interest in a
Grantor Trust Fund:
o consisting of mortgage loans that are "loans secured by an interest in
real property" within the meaning of Section 7701(a)(19)(C)(v) of the
Code;
o consisting of mortgage loans that are "real estate assets" within the
meaning of Section 856(c)(5)(B) of the Code; and
o interest on which is "interest on obligations secured by mortgages on real
property" within the meaning of Section 856(c)(3)(A) of the Code;
o it is unclear whether the Grantor Trust Strip Certificates, and the income
therefrom, will be so characterized. Our counsel will not deliver any
opinion on these questions. We recommend that prospective purchasers to
which the characterization of an investment in Grantor Trust Strip
Certificates is material consult their tax advisors regarding whether the
Grantor Trust Strip Certificates, and the income therefrom, will be so
characterized.
The Grantor Trust Strip Certificates will be:
o "obligation[s] (including any participation or certificate of beneficial
ownership therein) which [are] principally secured by an interest in real
property" within the meaning of Section 860G(a)(3)(A) of the Code; and,
o in general, "permitted assets" within the meaning of Section 860L(a)(1)(C)
of the Code.
Taxation of Owners of Grantor Trust Fractional Interest Certificates
Holders of a particular series of Grantor Trust Fractional Interest
Certificates generally will be:
o required to report on their federal income tax returns their shares of the
entire income from the mortgage loans, including amounts used to pay
reasonable servicing fees and other expenses, in accordance with their
method of accounting; and
o will be entitled to deduct their shares of any such reasonable servicing
fees and other expenses subject to the limitations discussed below.
Because of stripped interests, market or original issue discount, or premium,
the amount includible in income on account of a Grantor Trust Fractional
Interest Certificate may differ significantly from the amount distributable
thereon representing interest on the mortgage loans.
Under Section 67 of the Code, an individual, estate or trust holding a
Grantor Trust Fractional Interest Certificate directly or through certain
pass-through entities will be allowed a deduction for these reasonable servicing
fees and expenses only to the extent that the total of that holder's
miscellaneous itemized deductions exceeds 2% of that holder's adjusted gross
income. In addition, Section 68 of the Code provides that the amount of itemized
deductions otherwise allowable for an individual whose adjusted gross income
exceeds a specified amount will be reduced by the lesser of:
o 3% of the excess of the individual's adjusted gross income over such
amount; or
o 80% of the amount of itemized deductions otherwise allowable for the
taxable year.
The amount of additional taxable income reportable by holders of
Grantor Trust Fractional Interest Certificates who are subject to the
limitations of either Section 67 or Section 68 of the Code may be substantial.
Further, certificateholders (other than corporations) subject to the alternative
minimum tax may not deduct miscellaneous itemized deductions in determining such
holder's alternative minimum taxable income.
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Although it is not entirely clear, it appears that in transactions in
which multiple classes of Grantor Trust Certificates (including Grantor Trust
Strip Certificates) are issued, these fees and expenses should be allocated
among the classes of Grantor Trust Certificates using a method that recognizes
that each such class benefits from the related services. In the absence of
statutory or administrative clarification as to the method to be used, we
currently expect that information returns or reports to the IRS and
certificateholders will be based on a method that allocates such expenses among
classes of Grantor Trust Certificates with respect to each period based on the
distributions made to each such class during that period.
The federal income tax treatment of Grantor Trust Fractional Interest
Certificates of any series will depend on whether they are subject to the
"stripped bond" rules of 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 resume some or all of the principal payments
creates "stripped bonds" with respect to principal payments and stripped coupons
with respect to interest payments. Grantor Trust Fractional Interest
Certificates may be subject to those rules if:
o a class of Grantor Trust Strip Certificates is issued as part of the same
series; or
o we or any of our affiliates retains (for our or their own account or for
purposes of resale) a right to receive a specified portion of the interest
payable on a mortgage asset.
Further, the IRS has ruled that an unreasonably high servicing fee
retained by a seller or servicer will be treated as a retained ownership
interest in mortgages that constitutes a stripped coupon. We will include in the
related prospectus supplement information regarding servicing fees paid to a
master servicer, a special servicer, any sub-servicer or their respective
affiliates.
If Stripped Bond Rules Apply
If the stripped bond rules apply, each Grantor Trust Fractional
Interest Certificate will be treated as having been issued with "original issue
discount" within the meaning of Section 1273(a) of the Code. This is subject,
however, to the discussion below regarding:
o the treatment of certain stripped bonds as market discount bonds; and
o de minimis market discount.
See "--REMICs--Taxation of Owners of Grantor Trust Fractional Interest
Certificates--Market Discount" below.
Under the stripped bond rules, the holder of a Grantor Trust Fractional
Interest Certificate (whether a cash or accrual method taxpayer) will be
required to report original issue discount from its Grantor Trust Fractional
Interest Certificate for each month in an amount equal to the income that
accrues on the certificate in that month calculated under a constant yield
method, in accordance with the rules of the Code relating to original issue
discount. This economic accrual of income includible in the income of the
Grantor Trust Fractional Interest Certificateholder in any taxable year may
exceed amounts actually received during the year.
The original issue discount on a Grantor Trust Fractional Interest
Certificate will be the excess of the certificate's stated redemption price over
its issue price. The issue price of a Grantor Trust Fractional Interest
Certificate as to any purchaser will be equal to the price paid by the purchaser
of the Grantor Trust Fractional Interest Certificate. The stated redemption
price of a Grantor Trust Fractional Interest Certificate will be:
o the sum of all payments to be made on such certificate, other than
"qualified stated interest", if any;
o the certificate's share of reasonable servicing fees and other expenses.
See "--Taxation of Owners of Grantor Trust Fractional Interest
Certificates--If Stripped Bond Rules Do Not Apply" below for a definition of
"qualified stated interest". In general, the amount of such income that accrues
in any month would equal the product of:
o the holder's adjusted basis in the Grantor Trust Fractional Interest
Certificate at the beginning of that month (see "--Taxation of Owners of
Grantor Trust Fractional Interest Certificates--Sales of Grantor Trust
Certificates" below); and
o the yield of the Grantor Trust Fractional Interest Certificate to the
holder.
The yield would be computed as the rate (compounded based on the
regular interval between
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payment dates) that, if used to discount the holder's share of future payments
on the mortgage loans, would cause the present value of those future payments to
equal the price at which the holder purchased the certificate. In computing
yield under the stripped bond rules, a certificateholder's share of future
payments on the mortgage loans will not include any payments made in respect of
any ownership interest in the mortgage loans retained by us, a master servicer,
a special servicer, any sub-servicer or their respective affiliates, but will
include such certificateholder's share of any reasonable servicing fees and
other expenses.
Section 1272(a)(6) of the Code requires:
o the use of a reasonable prepayment assumption in accruing original issue
discount; and
o adjustments in the accrual of original issue discount when prepayments do
not conform to the prepayment assumption, with respect to certain
categories of debt instruments.
Legislation in 1997 extended the scope of that section to any pool of
debt instruments the yield on which may be affected by reason of prepayments.
The precise application of the new legislation is unclear in certain respects.
For example, it is uncertain whether:
o a prepayment assumption will be applied
1) collectively to all a taxpayer's investments in pools of debt
instruments; or
2) on an investment-by-investment basis; and
o the assumed prepayment rate is to be determined based on conditions:
1) at the time of the first sale of the Grantor Trust Fractional Interest
Certificate or,
2) with respect to any holder, at the time of purchase of the Grantor
Trust Fractional Interest Certificate by that holder.
It is recommended that certificateholders consult their tax advisors
concerning reporting original issue discount with respect to Grantor Trust
Fractional Interest Certificates.
In the case of a Grantor Trust Fractional Interest Certificate acquired
at a price equal to the principal amount of the mortgage loans allocable to that
certificate, the use of a prepayment assumption generally would not have any
significant effect on the yield used in calculating accruals of interest income.
In the case, however, of a Grantor Trust Fractional Interest Certificate
acquired at a discount or premium (that is, at a price less than or greater than
such principal amount, respectively), the use of a reasonable prepayment
assumption would increase or decrease the yield, and thus accelerate or
decelerate, respectively, the reporting of income.
In the absence of statutory or administrative clarification, we
currently expect that information reports or returns to the IRS and
certificateholders will be based on:
o a prepayment assumption determined when certificates are offered and sold
hereunder; and
o on a constant yield computed using a representative initial offering price
for each class of certificates.
However, neither we nor any other person will make any representation
that:
o the mortgage loans will in fact prepay at a rate conforming to the
applicable prepayment assumption or any other rate or
o the applicable prepayment assumption will not be challenged by the IRS on
audit.
Certificateholders also should bear in mind that the use of a
representative initial offering price will mean that the information returns or
reports, even if otherwise accepted as accurate by the IRS, will in any event be
accurate only as to the initial certificateholders of each series who bought at
that price.
Under Treasury Regulation Section 1.1286-1, certain stripped bonds are
to be treated as market discount bonds and, accordingly, any purchaser of such a
bond is to account for any discount on the bond as market discount rather than
original issue discount. This treatment only applies, however, if immediately
after the most recent disposition of the bond by a person stripping one or more
coupons from the bond and disposing of the bond or coupon:
o there is no original issue discount or only a de minimis amount of
original issue discount; or
o the annual stated rate of interest payable on the original bond is no more
than one percentage point lower than the gross interest rate payable on
the original mortgage loan, before subtracting any servicing fee or any
stripped coupon.
If interest payable on a Grantor Trust Fractional Interest Certificate
is more than one
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percentage point lower than the gross interest rate payable on the mortgage
loans, we will disclose that fact in the related prospectus supplement. If the
original issue discount or market discount on a Grantor Trust Fractional
Interest Certificate determined under the stripped bond rules is less than the
product of:
o 0.25% of the stated redemption price; and
o the weighted average years to maturity of the mortgage loans,
then such original issue discount or market discount will be considered to be de
minimis. Original issue discount or market discount of only a de minimis amount
will be included in income in the same manner as de minimis original issue
discount and market discount described in "--Taxation of Owners of Grantor Trust
Fractional Interest Certificates--If Stripped Bond Rules Do Not Apply" and
"--Market Discount" below.
If Stripped Bond Rules Do Not Apply
Subject to the discussion below on original issue discount, if the
stripped bond rules do not apply to a Grantor Trust Fractional Interest
Certificate, the certificateholder will be required to report its share of the
interest income on the mortgage loans in accordance with the certificateholder's
normal method of accounting. In that case, the original issue discount rules
will apply, even if the stripped bond rules do not apply, to a Grantor Trust
Fractional Interest Certificate to the extent it evidences an interest in
mortgage loans issued with original issue discount.
The original issue discount, if any, on the mortgage loans will equal
the difference between the stated redemption price of such mortgage loans and
their issue price. For a definition of "stated redemption price", see
"--REMICs--Taxation of Owners of REMIC Regular Certificates--Original Issue
Discount" above. In general, the issue price of a mortgage loan will be the
amount received by the borrower from the lender under the terms of the mortgage
loan, less any "points" paid by the borrower. The stated redemption price of a
mortgage loan will equal its principal amount, unless the mortgage loan provides
for an initial "teaser", or below-market interest rate. The determination as to
whether original issue discount will be considered to be de minimis will be
calculated using the same test as in the REMIC discussion. See
"--REMICs--Taxation of Owners of REMIC Regular Certificates--Original Issue
Discount" above.
In the case of mortgage loans bearing adjustable or variable interest
rates, we will describe in the related prospectus supplement the manner in which
such rules will be applied with respect to those mortgage loans by the trustee
or master servicer, as applicable, in preparing information returns to the
certificateholders and the IRS.
If original issue discount is in excess of a de minimis amount, all
original issue discount with respect to a mortgage loan will be required to be
accrued and reported in income each month, based on a constant yield. Under
recent legislation, Section 1272(a)(6) of the Code requires that a prepayment
assumption be used in computing yield with respect to any pool of debt
instruments, the yield on which may be affected by prepayments. The precise
application of the new legislation is unclear in certain respects. For example,
it is uncertain:
o whether a prepayment assumption will be applied:
(1) collectively to all a taxpayer's investments in pools of debt
instruments; or
(2) on an investment-by-investment basis.
o as to investments in Grantor Trust Fractional Interest Certificates,
whether the assumed prepayment rate is to be determined based on
conditions:
(1) at the time of the first sale of the Grantor Trust Fractional Interest
Certificate or,
(2) with respect to any holder, at the time of that holder's purchase of
the Grantor Trust Fractional Interest Certificate.
We recommend that certificateholders consult their own tax advisors
concerning reporting original issue discount with respect to Grantor Trust
Fractional Interest Certificates and refer to the related prospectus supplement
with respect to each series to determine whether and in what manner the original
issue discount rules will apply to mortgage loans in such series.
A purchaser of a Grantor Trust Fractional Interest Certificate that
purchases such Grantor Trust Fractional Interest Certificate at a cost less than
the certificate's allocable portion of the total remaining stated redemption
price of the mortgage loans held in the related trust must also include in gross
income the certificate's daily portions of any original issue discount with
respect to the mortgage loans. However, each such daily portion will be reduced,
if the cost of the Grantor Trust Fractional Interest Certificate to the
purchaser is in excess of the certificate's allocable portion of the total
"adjusted
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issue prices" of the mortgage loans held in the related trust, approximately in
proportion to the ratio the excess bears to the certificate's allocable portion
of the total original issue discount remaining to be accrued on the mortgage
loans.
The adjusted issue price of a mortgage loan on any given day equals the
sum of:
o the adjusted issue price (or, in the case of the first accrual period, the
issue price) of the mortgage loan at the beginning of the accrual period
that includes that day; and
o the daily portions of original issue discount for all days during the
accrual period prior to that day.
The adjusted issue price of a mortgage loan at the beginning of any
accrual period will equal the issue price of the mortgage loan, increased by:
o the total amount of original issue discount with respect to such mortgage
loan that accrued in prior accrual periods, and reduced by
o the amount of any payments made on the mortgage loan in prior accrual
periods of amounts included in its stated redemption price.
In the absence of statutory or administrative clarification, we
currently expect that information reports or returns to the IRS and
certificateholders will be based on:
o a prepayment assumption determined when certificates are offered and sold
hereunder and disclosed in the related prospectus supplement; and
o a constant yield computed using a representative initial offering price
for each class of certificates.
However, neither we nor any other person will make any representation
that:
o the mortgage loans will in fact prepay at a rate conforming to the
applicable prepayment assumption or any other rate; or
o the applicable prepayment assumption will not be challenged by the IRS on
audit.
Certificateholders also should bear in mind that the use of a
representative initial offering price will mean that the information returns or
reports, even if otherwise accepted as accurate by the IRS, will in any event be
accurate only as to the initial certificateholders of each series who bought at
that price.
Market Discount
If the stripped bond rules do not apply to a Grantor Trust Fractional
Interest Certificate, a certificateholder may be subject to the market discount
rules of Sections 1276 through 1278 of the Code to the extent an interest in a
mortgage loan is considered to have been purchased at a "market discount". That
is:
o in the case of a mortgage loan issued without original issue discount, at
a purchase price less than its remaining stated redemption price (as
defined above); or
o in the case of a mortgage loan issued with original issue discount, at a
purchase price less than its adjusted issue price (as defined above).
If market discount is in excess of a de minimis amount (as described
below), the holder generally will be required to include in income in each month
the amount of such discount that has accrued (under the rules described in the
next paragraph) through that month that has not previously been included in
income, but limited, in the case of the portion of such discount that is
allocable to any mortgage loan, to the payment of stated redemption price on the
mortgage loan that is received by (or, in the case of accrual basis
certificateholders, due to) the trust in that month. A certificateholder may
elect to include market discount in income currently as it accrues (under a
constant yield method based on the yield of the certificate to such holder)
rather than including it on a deferred basis in accordance with the foregoing
under rules similar to those described in "--REMICs--Taxation of Owners of REMIC
Regular Interests--Market Discount" above.
Section 1276(b)(3) of the Code authorizes the Treasury Department to
issue regulations providing for the method for accruing market discount on debt
instruments, the principal of which is payable in more than one installment.
Until regulations are issued by the Treasury Department, certain rules described
in the Committee Report apply. Under those rules, in each accrual period market
discount on the mortgage loans should accrue, at the holder's option:
o on the basis of a constant yield method;
o in the case of a mortgage loan issued without original issue discount, in
an amount that bears
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the same ratio to the total remaining market discount as the
stated interest paid in the accrual period bears to the total stated
interest remaining to be paid on the mortgage loan as of the beginning
of the accrual period; or
o in the case of a mortgage loan issued with original issue discount, in an
amount that bears the same ratio to the total remaining market discount as
the original issue discount accrued in the accrual period bears to the
total original issue discount remaining at the beginning of the accrual
period.
Under recent legislation, Section 1272(a)(6) of the Code requires that
a prepayment assumption be used in computing the accrual of original issue
discount with respect to any pool of debt instruments, the yield on which may be
affected by prepayments. Because the mortgage loans will be such a pool, it
appears that the prepayment assumption used (or that would be used) in
calculating the accrual of original issue discount, if any, is also to be used
in calculating the accrual of market discount. However, the precise application
of the new legislation is unclear in certain respects. For example, it is
uncertain whether:
o a prepayment assumption will be applied:
(1) collectively to all of a taxpayer's investments in pools of debt
instruments, or
(2) on an investment-by-investment basis; and
o the assumed prepayment rate is to be determined:
(1) at the time of the first sale of the Grantor Trust Fractional Interest
Certificate, or
(2) with respect to any holder, at the time of that holder's purchase of
the Grantor Trust Fractional Interest Certificate.
Moreover, because regulations clarifying the legislation referred to in
the preceding paragraph have not been issued, it is not possible to predict what
effect these regulations might have on the tax treatment of a mortgage loan
purchased at a discount in the secondary market. We recommend that
certificateholders consult their own tax advisors concerning accrual of market
discount with respect to Grantor Trust Fractional Interest Certificates.
Certificateholders should also refer to the related prospectus supplement with
respect to each series to determine whether and in what manner the market
discount will apply to mortgage loans in that series purchased at a market
discount.
To the extent that the mortgage loans provide for periodic payments of
stated redemption price, market discount may be required to be included in
income at a rate that is not significantly slower than the rate at which the
discount would be included in income if it were original issue discount.
Market discount with respect to mortgage loans may be considered to be
de minimis and, if so, will be includible in income under de minimis rules
similar to those described above in "--REMICs--Taxation of Owners of REMIC
Regular Certificates --Original Issue Discount" above.
Further, under the rules described above in "--REMICs--Taxation of
Owners of REMIC Regular Certificates--Market Discount", any discount that is not
original issue discount and exceeds a de minimis amount may require the deferral
of interest expense deductions attributable to accrued market discount not yet
includible in income, unless an election has been made to report market discount
currently as it accrues. This rule applies without regard to the origination
dates of the mortgage loans. If such an election is made to accrue market
discount on a Grantor Trust Fractional Interest Certificate on a constant yield
basis, such election is deemed made with respect to all other debt instruments
with market discount which the certificateholder acquires during the year of
election or thereafter.
Premium
If a certificateholder is treated as acquiring the underlying mortgage
loans at a premium, that is, at a price in excess of their remaining stated
redemption price, the certificateholder may elect under Section 171 of the Code
to amortize using a constant yield method the portion of such premium allocable
to mortgage loans originated after September 27, 1985. Amortizable premium is
treated as an offset to interest income on the related debt instrument, rather
than as a separate interest deduction. However, premium allocable to mortgage
loans originated before September 28, 1985 or to mortgage loans for which an
amortization election is not made, should be:
o allocated among the payments of stated redemption price on the mortgage
loan; and
o allowed as a deduction as such payments are made (or, for a
certificateholder using the accrual method of accounting, when such
payments of stated redemption price are due).
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A certificateholder that makes this election for a mortgage loan or any
other debt instrument that is acquired at a premium will be deemed to have made
an election to amortize bond premium with respect to all debt instruments having
amortizable bond premium that the certificateholder acquires during the year of
the election or thereafter.
It is not clear whether a prepayment assumption should be used in
computing amortization of premium allowable under Section 171 of the Code
similar to that described for calculating the accrual of market discount of
Grantor Trust Fractional Interest Certificates. See "--Taxation of Owners of
Grantor Trust Fractional Interest Certificates--Market Discount", above.
If a premium is not subject to amortization using a reasonable
prepayment assumption, the holder of a Grantor Trust Fractional Interest
Certificate representing an interest in a mortgage loan acquired at a premium
should recognize a loss if a mortgage loan with respect to an asset prepays in
full, equal to the difference between:
o the portion of the prepaid principal amount of the mortgage loan or
underlying mortgage loan that is allocable to the certificate; and
o the portion of the adjusted basis of the certificate that is allocable to
the mortgage loan or underlying mortgage loan.
If a reasonable prepayment assumption is used to amortize the premium,
it appears that such a loss would be available, if at all, only if prepayments
have occurred at a rate faster than the reasonable assumed prepayment rate. It
is not clear whether any other adjustments would be required to reflect
differences between an assumed prepayment rate and the actual rate of
prepayments.
The IRS has issued Premium Amortization Regulations. The Premium
Amortization Regulations specifically do not apply to pre-payable debt
instruments or any pool of debt instruments the yield on which may be affected
by prepayments, such as the trust fund, which are subject to Section 1272(a)(6)
of the Code. Absent further guidance from the IRS and to the extent set forth in
the related prospectus supplement, the trustee will account for amortizable bond
premium in the manner described in this section. Prospective purchasers should
consult their tax advisors regarding amortizable bond premium and the Premium
Amortization Regulations.
Taxation of Owners of Grantor Trust Strip Certificates
The "stripped coupon" rules of Section 1286 of the Code will apply to
the Grantor Trust Strip Certificates. Except as described above in "--Taxation
of Owners of Grantor Trust Fractional Interest Certificates--If Stripped Bond
Rules Apply", no regulations or published rulings under Section 1286 of the Code
have been issued and some uncertainty exists as to how it will be applied to
securities such as the Grantor Trust Strip Certificates. Accordingly, we
recommend that holders of Grantor Trust Strip Certificates consult their tax
advisors concerning the method to be used in reporting income or loss with
respect to these certificates.
The OID Regulations do not apply to "stripped coupons", although they
provide general guidance as to how the original issue discount sections of the
Code will be applied.
Under the stripped coupon rules, it appears that original issue
discount will be required to be accrued in each month on the Grantor Trust Strip
Certificates based on a constant yield method. In effect, each holder of Grantor
Trust Strip Certificates would include as interest income in each month an
amount equal to the product of the holder's adjusted basis in the Grantor Trust
Strip Certificate at the beginning of that month and the yield of the Grantor
Trust Strip Certificate to the holder. This yield would be calculated based on:
o the price paid for that Grantor Trust Strip Certificate by its holder; and
o the payments remaining to be made thereon at the time of the purchase;
o plus an allocable portion of the servicing fees and expenses to be paid
with respect to the mortgage loans.
See "--Taxation of Owners of Grantor Trust Fractional Interest
Certificates--If Stripped Bond Rules Apply" above.
As noted above, Section 1272(a)(6) of the Code requires that:
o a prepayment assumption be used in computing the accrual of original issue
discount with respect to certain categories of debt instruments; and
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o adjustments be made in the amount and rate of accrual of such discount
when prepayments do not conform to such prepayment assumption.
It appears that those provisions would apply to Grantor Trust Strip
Certificates. It is uncertain whether the assumed prepayment rate would be
determined based on conditions:
o at the time of the first sale of the Grantor Trust Strip Certificate or,
o with respect to any subsequent holder, at the time of purchase of the
Grantor Trust Strip Certificate by that holder.
If the method for computing original issue discount under Section
1272(a)(6) results in a negative amount of original issue discount as to any
accrual period with respect to a REMIC Regular Certificate, the amount of
original issue discount allocable to that accrual period will be zero. That is,
no current deduction of the negative amount will be allowed to the holder of the
certificate. The holder will instead only be permitted to offset the negative
amount against future positive original issue discount (if any) attributable to
the certificate. Although not free from doubt, it is possible that a
certificateholder may be permitted to deduct a loss to the extent his or her
basis in the certificate exceeds the maximum amount of payments the
certificateholder could ever receive with respect to the certificate. However,
any such loss may be a capital loss, which is limited in its deductibility. The
foregoing considerations are particularly relevant to Stripped Interest
Certificates, which can have negative yields under circumstances that are not
default related.
The accrual of income on the Grantor Trust Strip Certificates will be
significantly slower using a prepayment assumption than if yield is computed
assuming no prepayments. In the absence of statutory or administrative
clarification, we currently expect that information returns or reports to the
IRS and certificateholders will be based on:
o the applicable prepayment assumption disclosed in the related prospectus
supplement; and o a constant yield computed using a representative initial
offering price for each class of certificates.
However, neither we nor any other person will make any representation
that:
o the mortgage loans will in fact prepay at a rate conforming to the
applicable prepayment assumption or at any other rate; or
o the applicable prepayment assumption will not be challenged by the IRS on
audit.
Certificateholders also should bear in mind that the use of a
representative initial offering price will mean that the information returns or
reports, even if otherwise accepted as accurate by the IRS, will in any event be
accurate only as to the initial certificateholders of each series who bought at
that price. We recommend that prospective purchasers of the Grantor Trust Strip
Certificates consult their tax advisors regarding the use of the applicable
prepayment assumption.
Sales of Grantor Trust Certificates
Any gain or loss, equal to the difference between the amount realized
on the sale or exchange of a Grantor Trust Certificate and its adjusted basis,
recognized on the sale or exchange of a Grantor Trust Certificate by an investor
who holds the Grantor Trust Certificate as a capital asset, will be capital gain
or loss, except as described below.
The adjusted basis of a Grantor Trust Certificate generally will equal
its cost:
o increased by any income reported by the seller, including original issue
discount and market discount income; and
o reduced (but not below zero) by any:
(1) previously reported losses;
(2) amortized premium; and
(3) distributions with respect to such Grantor Trust Certificate.
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. In addition, the distinction between a
capital gain or loss and ordinary income or loss remains relevant for other
purposes.
Gain or loss from the sale of a Grantor Trust Certificate may be
partially or wholly ordinary and not capital in certain circumstances. Gain
attributable to accrued and unrecognized market discount will be treated as
ordinary income, as will gain or loss recognized by banks and other financial
institutions subject to Section 582(c) of the Code.
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Furthermore, a portion of any gain that might otherwise be capital gain
may be treated as ordinary income to the extent that the Grantor Trust
Certificate is held as part of a "conversion transaction" within the meaning of
Section 1258 of the Code. A conversion transaction generally is one in which the
taxpayer has taken two or more positions in the same or similar property that
reduce or eliminate market risk, if substantially all of the taxpayer's return
is attributable to the time value of the taxpayer's net investment in such
transaction. The amount of gain realized in a conversion transaction that is
recharacterized as ordinary income generally will not exceed the amount of
interest that would have accrued on the taxpayer's net investment at 120% of the
appropriate "applicable Federal rate" at the time the taxpayer enters into the
conversion transaction, subject to appropriate reduction for prior inclusion of
interest and other ordinary income items from the transaction. The "applicable
Federal rate" is computed and published monthly by the IRS.
Finally, a taxpayer may elect to have net capital gain taxed at
ordinary income rates rather than capital gains rates in order to include the
net capital gain in total net investment income for that taxable year, 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.
Grantor Trust Reporting
Unless we state otherwise in the related prospectus supplement, the
trustee will furnish to each holder of a Grantor Trust Certificate with each
distribution a statement setting forth the amount of the distribution allocable
to:
o principal on the underlying mortgage loans; and
o interest thereon at the related pass-through rate.
In addition, the trustee will furnish, within a reasonable time after
the end of each calendar year, to each holder of a Grantor Trust Certificate who
was such a holder at any time during the year:
o information regarding the amount of servicing compensation received by the
master servicer, the special servicer or any sub-servicer; and
o such other customary factual information as the trustee deems necessary or
desirable to enable holders of Grantor Trust Certificates to prepare
their tax returns.
The trustee will furnish comparable information to the IRS as and when
required by law to do so. Because the rules for accruing discount and amortizing
premium with respect to the Grantor Trust Certificates are uncertain in various
respects, we can give no assurance that the IRS will agree with the trustee's
information reports of such items of income and expense. Moreover, these
information reports, even if otherwise accepted as accurate by the IRS, will in
any event be accurate only as to the initial certificateholders that bought
their certificates at the representative initial offering price used in
preparing the reports.
On August 13, 1998, the IRS published proposed regulations, which will,
when effective, establish a reporting framework for interests in "widely held
fixed investment trusts" similar to that for regular interests in REMICs. A
widely-held fixed investment trust is defined as any entity classified as a
"trust" under Treasury Regulation Section 301.7701-4(c) in which any interest is
held by a middleman. A middleman would include, but is not limited to:
o a custodian of a person's account;
o a nominee; and
o a broker holding an interest for a customer in street name.
These regulations are proposed to be effective for calendar years
beginning on or after the date that the final regulations are published in the
Federal Register.
Backup Withholding
In general, the rules described above in "--REMICs--Backup Withholding
with Respect to REMIC Certificates" will also apply to Grantor Trust
Certificates.
Foreign Investors
In general, the discussion with respect to REMIC Regular Certificates
in "--REMICs--Foreign Investors in REMIC Certificates" above applies to Grantor
Trust Certificates. However, unless we state otherwise in the related prospectus
supplement, Grantor Trust Certificates will be eligible for exemption from U.S.
withholding tax, subject to the conditions described in such discussion, only to
the extent the related mortgage loans were originated after July 18, 1984.
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To the extent that interest on a Grantor Trust Certificate would be
exempt under Sections 871(h)(1) and 881(c) of the Code from United States
withholding tax, and the Grantor Trust Certificate is not held in connection
with a certificateholder's trade or business in the United States, the Grantor
Trust Certificate will not be subject to United States estate taxes in the
estate of a nonresident alien individual.
FASITs
If and to the extent set forth in the prospectus supplement relating to
a particular series of certificates, an election may be made to treat the
related trust fund or one or more segregated pools of assets therein as one or
more financial asset securitization investment trusts, or FASITs, within the
meaning of the Code Section 860L(a). Qualification as a FASIT requires ongoing
compliance with certain conditions. With respect to each series of FASIT
certificates, our counsel will advise us that in such firm's opinion, assuming:
o the making of such an election;
o compliance with the pooling agreement; and
o compliance with any changes in the law, including any amendments to the
Code or applicable Treasury Regulations thereunder,
each FASIT pool will qualify as a FASIT. In that case, the regular certificates
will be considered to be "regular interests" in the FASIT and will be treated
for federal income tax purposes as if they were newly originated debt
instruments, and the residual certificate will be considered to be "ownership
interest" in the FASIT pool. The prospectus supplement for each series of
certificates will indicate whether one or more FASIT elections will be made with
respect to the related trust fund.
FASIT treatment has become available pursuant to recently enacted
legislation, and no Treasury regulations have as yet been issued detailing the
circumstances under which a FASIT election may be made or the consequences of
such an election. If a FASIT election is made with respect to any trust fund or
as to any segregated pool of assets therein, the related prospectus supplement
will describe the federal income tax consequences of the election.
STATE AND OTHER TAX CONSEQUENCES
In addition to the federal income tax consequences described in
"Federal Income Tax Consequences", potential investors should consider the state
and local tax consequences of the acquisition, ownership, and disposition of the
offered certificates. State tax law may differ substantially from the
corresponding federal law, and the discussion above does not purport to describe
any aspect of the tax laws of any state or other jurisdiction. Therefore, we
recommend that prospective investors consult their tax advisors with respect to
the various tax consequences of investments in the offered certificates.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended
("ERISA") and Section 4975 of the Code impose certain requirements on certain
employee benefit plans, and on other retirement plans and arrangements,
including:
o individual retirement accounts and annuities,
o Keogh plans,
o collective investment funds,
o separate accounts, and
o insurance company general accounts,
o as well as on funds or entities in which these plans, accounts or
arrangements are invested.
ERISA and the Code also impose certain requirements on fiduciaries of
these plans, accounts or arrangements, in connection with the investment of the
assets of the related plan, account or arrangement.
Some employee benefit plans, such as governmental plans, and church
plans which have not made an election under the Code are not subject to ERISA
requirements. Accordingly, assets of these plans may be invested in the offered
certificates without regard to the ERISA considerations described below, subject
to the provisions of other applicable federal and state laws. Any such plan
which is qualified and exempt from taxation under Sections 401(a) and 501(a) of
the Code, however, is subject to the prohibited transaction rules in Section 503
of the Code.
ERISA imposes certain general fiduciary requirements on fiduciaries,
including:
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o investment prudence and diversification; and
o the investment of the assets of the related plan, account or arrangement
in accordance with the documents governing the plan, account or
arrangement.
Section 406 of ERISA and Section 4975 of the Code also prohibit a broad
range of transactions involving assets of a plan, account or arrangement and
persons who have certain specified relationships to the plan, account or
arrangement, unless a statutory or administrative exemption is available. The
types of transactions that are prohibited include:
o sales, exchanges or leases of property;
o loans or other extensions of credit; and
o the furnishing of goods and services.
Certain persons that participate in a prohibited transaction may be
subject to an excise tax imposed under Section 4975 of the Code and/or a penalty
imposed under Section 502(i) of ERISA, unless a statutory or administrative
exemption is available. In addition, the persons involved in the prohibited
transaction may have to cancel the transaction and pay an amount to the plan,
account or arrangement for any losses realized by the plan, account or
arrangement for any profits realized by these persons. In addition, individual
retirement accounts involved in the prohibited transaction may be disqualified
which would result in adverse tax consequences to the owner of the account.
Regulation of Assets Included in a Plan, Account or Arrangement
A fiduciary's investment of the assets of a plan, account or
arrangement in offered certificates may cause the underlying mortgage assets and
other trust assets to be deemed assets of the plan, account or arrangement.
Section 2510.3-101 of the United States Department of Labor regulations provides
that when a plan, account or arrangement acquires an equity interest in an
entity, the assets of the plan, account or arrangement include both the equity
interest and an undivided interest in each of the underlying assets of the
entity, unless an exception applies. The underlying assets will not be included
if the equity participation in the entity is not "significant". Equity
participation by benefit plan investors will be "significant" if, on any date,
25% or more of the value of any class of equity interests in the entity is held
by benefit plan investors, which include benefit plans such as governmental
plans, church plans and other plans not subject to ERISA. The percentage owned
by benefit plan investors is determined by excluding the investments of persons:
o with discretionary authority or control over the assets of the entity;
o who provide investment advice directly or indirectly for a fee with
respect to the assets; and
o who are affiliates of the these persons.
In the case of a trust, investments by us or by the related trustee,
master servicer, special servicer, any other party with discretionary authority
over the trust assets and the affiliates of these persons will be excluded.
Because the availability of this exemption 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.
A fiduciary of an investing plan is any person who in connection with
the assets of the plan, account or arrangement:
o has discretionary authority or control over the management or disposition
of assets; or
o provides investment advice for a fee.
If the mortgage loans and other trust assets constitute assets of a
plan, account or arrangement, then any party exercising management or
discretionary control regarding those assets, such as the related trustee,
master servicer or special servicer, any sub-servicer or affiliates of these
parties may be deemed to be a "fiduciary" with respect to the investing plan,
account or arrangement and be subject to the fiduciary responsibility provisions
of ERISA. In addition, if the trust assets constitute assets of a plan, account
or arrangement, transactions involving the trust assets may involve prohibited
transactions under ERISA or the Code. For example, if a person who has a
relationship to a plan, account or arrangement is a borrower under a mortgage
loan included in the trust assets, the purchase of certificates by the plan,
account or arrangement could constitute a prohibited loan between the plan,
account or arrangement and the party in interest.
The Department of Labor regulations provide that where a plan, account
or arrangement purchases a "guaranteed governmental mortgage pool certificate",
the assets of the plan, account or arrangement include the certificate but do
not include any of the mortgages underlying the certificate. The
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regulations include in the definition of a "guaranteed governmental mortgage
pool certificate" certain certificates issued or guaranteed by the federal Home
Loan Mortgage Corporation, the Government National Mortgage Association or the
Federal National Mortgage Association but do not include certificates issued or
guaranteed by the Federal Agricultural Mortgage Corporation. Accordingly, even
if these types of mortgaged-backed securities, other than Federal Agricultural
Mortgage Corporation certificates, included in the trust assets were deemed to
be assets of the investors of a plan, account or arrangement, the underlying
mortgages, other than the mortgages underlying any Federal Agricultural Mortgage
Corporation certificates, would not be treated as assets of the plan, account or
arrangement. Private label mortgage participations, mortgage pass-through
certificates, Federal Agricultural Mortgage Corporation certificates or other
mortgage-backed securities are not "guaranteed governmental mortgage pool
certificates" within the meaning of the regulations.
In addition, the acquisition or holding of offered certificates by or
on behalf of a plan, account or arrangement could give rise to a prohibited
transaction if we or the related trustee, master servicer or special servicer or
any related underwriter, sub-servicer, REMIC administrator, manager, borrower or
obligor under any credit enhancement mechanism, or certain of their affiliates,
has, or acquires, a relationship to an investing plan, account or arrangement.
If you invest on behalf of a plan, account or arrangement, you should
consult your legal counsel and review the ERISA discussion in the related
prospectus supplement before purchasing any certificates.
Prohibited Transaction Exemptions
If you are a fiduciary of a plan, account or arrangement, before
purchasing any offered certificates, you should consider the availability of one
of the Department of Labor's prohibited transaction exemptions, such as
prohibited transaction class exemption 75-1, which exempts certain transactions
involving plans, accounts and arrangements and certain broker-dealers, reporting
dealers and banks.
We cannot provide any assurance that such a class exemption will apply
with respect to any particular investment on behalf of a plan, account or
arrangement in the certificates or, even if it were deemed to apply, that the
exemption would apply to all transactions that may occur in connection with the
investment. The prospectus supplement with respect to the offered certificates
of any series may contain additional information regarding the availability of
other exemptions, such as the one discussed below.
Underwriters Exemptions
The Department of Labor has issued individual prohibited transaction
exemptions to most of the underwriters that we would use. Each of these
individual prohibited transaction exemptions generally exempt from the
application of the prohibited transaction provisions of ERISA and the Code
certain transactions relating to, among other things:
o the servicing and operation of certain trust assets pools, and
o the purchase, sale and holding of certain certificates that are
underwritten by that underwriter, or any person under common control with
that underwriter.
In order for these exemptions to apply, certain requirements must be
satisfied, including:
o the acquisition of the certificate by a plan, account or arrangement must
be on terms that are at least as favorable to the plan, account or
arrangement as they would be in an arm's-length transaction with an
unrelated party;
o the rights and interests evidenced by the certificates must not be
subordinated to the rights and interests evidenced by the other
certificates evidencing interests in the same mortgage asset pool;
o at the time of its acquisition by the plan, account or arrangement, the
certificate must be rated in one of the three highest generic rating
categories of any nationally recognized statistical rating organization;
o the trustee cannot be an affiliate of us, the servicer and certain other
persons;
o the sum of all payments made to and retained by the trustee, the servicer
and certain other persons must represent not more than reasonable
compensation for underwriting the certificates;
o the sum of all payments made to and retained by us must represent not more
than the fair market value of obligations deposited in the trust;
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o the sum of all payments made to and retained by the master servicer, the
special servicer and any sub-servicer must represent not more than
reasonable compensation for such person's services and reimbursement of
such person's reasonable expenses in connection therewith; and
o the investing plan, account or arrangement must be an accredited investor.
The prospectus supplement with respect to the offered certificates of
any series may contain additional information regarding the availability of
these exemptions.
Insurance Company General Accounts
The Small Business Job Protection Act of 1996 added a new Section
401(c) to ERISA, which provides relief from the fiduciary and prohibited
transaction provisions of ERISA and the Code 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.
Pursuant to Section 401(c) of ERISA, the Department of Labor was
required to issue final regulations no later than December 31, 1997, providing
guidance for determining, in cases where insurance policies supported by an
insurer's general account are issued to or for the benefit of a plan, account or
arrangement on or before December 31, 1998, which general account assets
constitute assets of the plan, account or arrangement. The Department of Labor
has not yet issued such final regulations. Section 401(c) of ERISA generally
provides that, until the date which is 18 months after those final regulations
become final, no person shall be subject to liability under Part 4 of Title I of
ERISA and Section 4975 of the Code on the basis of a claim that the assets of an
insurance company general account constitute assets of a plan, account or
arrangement, unless:
o as otherwise provided by the Secretary of Labor in those final 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.
Any assets of an insurance company general account which support
insurance policies issued to a plan, account or arrangement after December 31,
1998 or issued to a plan, account or arrangement on or before December 31, 1998
for which the insurance company does not comply with the final regulations under
section 401(c) of ERISA may be treated as assets of the plan, account or
arrangement. In addition, because Section 401(c) of ERISA does not relate to
insurance company separate accounts, separate account assets are still treated
as assets of any plan, account or arrangement invested in the separate account.
If you are contemplating the investment of general account assets in offered
certificates, you should consult your legal counsel as to the applicability of
Section 401(c) of ERISA and the availability of exemptive relief under
prohibited transaction class exemption 95-60.
Consultation With Counsel
If you are a plan fiduciary which proposes to purchase offered
certificates on behalf of or with assets of a plan, account or arrangement, you
should consider your general fiduciary obligations under ERISA and you should
consult with your legal counsel as to the potential applicability of ERISA and
the Code to any investment and the availability of any prohibited transaction
exemption in connection with any investment.
Tax Exempt Investors
A plan, account or arrangement that is exempt from federal income
taxation pursuant to Section 501 of the Code will be subject to federal income
taxation to the extent that its income is "unrelated business taxable income"
within the meaning of Section 512 of the Code. All "excess inclusions" of a
REMIC allocated to a REMIC residual certificate held by a tax-exempt plan,
account or arrangement will be considered "unrelated business taxable income"
and will be subject to federal income tax.
See "Federal Income Tax Consequences--REMICs--Taxation of Owners of
REMIC Residual Certificates-Excess Inclusions" in this prospectus.
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LEGAL INVESTMENT
If and to the extent specified in the related prospectus supplement,
the offered certificates of any series will constitute "mortgage related
securities" for purposes of the Secondary Mortgage Market Enhancement Act of
1984 ("SMMEA"). "Mortgage related securities" are legal investments to the same
extent that, under applicable law, obligations issued by or guaranteed as to
principal and interest by the United States or any of its agencies or
instrumentalities constitute legal investments for entities, the authorized
investments of which are subject to state regulation.
Prior to December 31, 1996, classes of offered certificates would be
"mortgage related securities" for purposes of SMMEA only if they:
o were rated in one of the two highest rating categories by at least one
nationally recognized statistical rating organization; and
o were part of a series evidencing interests in a trust asset consisting of
loans directly secured by a first lien on a single parcel of real estate
upon which is located a dwelling or mixed residential and commercial
structure, and originated by the types of originators specified in SMMEA.
Further, under SMMEA as originally enacted, if a state enacted
legislation prior to October 3, 1991 that specifically limited the legal
investment authority of any entities referred to in the preceding paragraph with
respect to "mortgage related securities" under such definition, offered
certificates would constitute legal investments for entities subject to the
legislation only to the extent provided in that legislation.
Effective December 31, 1996, the definition of "mortgage related
securities" was modified to include among the types of loans to which the
securities may relate, loans secured by "one or more parcels of real estate upon
which is located one or more commercial structures". In addition, the related
legislative history states that this expanded definition includes multifamily
loans secured by more than one parcel of real estate upon which is located more
than one structure. Until September 23, 2001, any state may enact legislation
limiting the extent to which "mortgage related securities" under this expanded
definition would constitute legal investments under that state's laws.
SMMEA also amended the legal investment authority of federally
chartered depository institutions as follows:
o federal savings and loan associations and federal savings banks may invest
in, sell or otherwise deal with "mortgage related securities" without
limitation as to the percentage of their assets represented by those
securities; and
o federal credit unions may invest in "mortgage related securities" and
national banks may purchase "mortgage related securities" for their own
account without regard to the limitations generally applicable to
investment securities prescribed in 12 U.S.C. 24 (Seventh),
subject in each case to the regulations that the applicable federal regulatory
authority may prescribe.
Effective December 31, 1996, the Office of the Comptroller of the
Currency amended 12 C.F.R. Part 1 to authorize national banks to purchase and
sell for their own account, without limitation as to a percentage of the bank's
capital and surplus (but subject to compliance with certain general standards
concerning "safety and soundness" and retention of credit information in 12
C.F.R. Section 1.5), certain "Type IV securities", defined in 12 C.F.R. Section
1.2(1) to include certain "commercial mortgage-related securities" and
"residential mortgage-related securities". As defined, "commercial
mortgage-related security" and "residential mortgage-related security" mean, in
relevant part, "mortgage related security" within the meaning of SMMEA, provided
that, in the case of a "commercial mortgage-related security," it "represents
ownership of a promissory note or certificate of interest or participation that
is directly secured by a first lien on one or more parcels of real estate upon
which one or more commercial structures are located and that is fully secured by
interests in a pool of loans to numerous obligors." In the absence of any rule
or administrative interpretation by the Office of the Comptroller of the
Currency defining the term "numerous obligors," no representation is made as to
whether any class of offered certificates will qualify as "commercial
mortgage-related securities", and thus as "Type IV securities", for investment
by national banks.
The National Credit Union Administration has adopted rules, codified at
12 C.F.R. Part 703,
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which permit federal credit unions to invest in "mortgage related securities"
under certain limited circumstances, other than stripped mortgage related
securities, residual interests in mortgage related securities, and commercial
mortgage related securities, unless the credit union has obtained written
approval from the National Credit Union Administration to participate in the
"investment pilot program" described in 12 C.F.R. Section 703.140. The Office of
Thrift Supervision has issued Thrift Bulletin 13a (December 1, 1998),
"Management of Interest Rate Risk, Investment Securities, and Derivatives
Activities", which thrift institutions subject to the jurisdiction of the Office
of Thrift Supervision should consider before investing in any of the offered
certificates.
All depository institutions considering an investment in the offered
certificates should review the "Supervisory Policy Statement on Investment
Securities and End-User Derivatives Activities" of the Federal Financial
Institutions Examination Council, which has been adopted by the Board of
Governors of the Federal Reserve System, the Federal Deposit Insurance
Corporation, the Office of Thrift Supervision and the Office of the Comptroller
of the Currency effective May 26, 1998, and by the National Credit Union
Administration effective October 1, 1998. The policy statement sets forth
general guidelines which depository institutions must follow in managing risks,
including market, credit, liquidity, operational (transaction), and legal risks,
applicable to all securities, including mortgage pass-through securities and
mortgage-derivative products used for investment purposes.
There may be other restrictions on your ability either to purchase
certain classes of offered certificates or to purchase any class of offered
certificates representing more than a specified percentage of your assets. We
make no representations as to the proper characterization of any class of
offered certificates for legal investment or other purposes. Also, we make no
representations as to the ability of particular investors to purchase any class
of offered certificates under applicable legal investment restrictions. These
uncertainties may adversely affect the liquidity of any class of offered
certificates. Accordingly, if your investment activities are subject to legal
investment laws and regulations, regulatory capital requirements or review by
regulatory authorities you should consult with your legal advisor in determining
whether and to what extent the offered certificates of any class and series
constitute legal investments or are subject to investment, capital or other
restrictions.
USE OF PROCEEDS
Unless otherwise specified in the related prospectus supplement, the
net proceeds to be received from the sale of the offered certificates of any
series will be applied by us to the purchase of assets for the related trust or
will be used by us to cover expenses related to these purchases. We expect to
sell the certificates from time to time, but the timing and amount of offerings
of certificates will depend on a number of factors, including the volume of
mortgage assets acquired by us, prevailing interest rates, availability of funds
and general market conditions.
METHOD OF DISTRIBUTION
The certificates offered by this prospectus and the related prospectus
supplements will be offered in series through one or more of the methods
described below. The prospectus supplement prepared for the offered certificates
of each series will describe the method of offering being utilized for the
offered certificates and will state the net proceeds to us from the sale of the
offered certificates.
We intend that offered certificates will be offered through the
following methods from time to time and that offerings may be made concurrently
through more than one of these methods or that an offering of the offered
certificates of a particular series may be made through a combination of two or
more of these methods. Such methods are as follows:
o by negotiated firm commitment or best efforts underwriting and public
offering by one or more underwriters specified in the related prospectus
supplement;
o by placements by us with institutional investors through dealers; and
o by direct placements by us with institutional investors.
In addition, if specified in the related prospectus supplement, the
offered certificates of a series may be offered in whole or in part to the
seller of the related mortgage assets that would comprise the related trust
assets for the certificates. Furthermore, the related trust assets for one
series of
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offered certificates may include offered certificates from other series.
If underwriters are used in a sale of any offered certificates, other
than in connection with an underwriting on a best efforts basis, the offered
certificates will be acquired by the underwriters for their own account. These
certificates may be resold from time to time in one or more transactions,
including negotiated transactions, at fixed public offering prices or at varying
prices to be determined at the time of sale or at the time of commitment
therefor. The managing underwriter or underwriters with respect to the offer and
sale of offered certificates of a particular series will be described on the
cover of the prospectus supplement relating to the series and the members of the
underwriting syndicate, if any, will be named in the relevant prospectus
supplement.
Underwriters may receive compensation from us or from purchasers of the
offered certificates in the form of discounts, concessions or commissions.
Underwriters and dealers participating in the distribution of the offered
certificates may be deemed to be underwriters in connection with the
certificates, and any discounts or commissions received by them from us and any
profit on the resale of offered certificates by them may be deemed to be
underwriting discounts and commissions under the Securities Act of 1933.
It is anticipated that the underwriting agreement pertaining to the
sale of the offered certificates of any series will provide that:
o the obligations of the underwriters will be subject to certain conditions
precedent;
o the underwriters will be obligated to purchase all the certificates if any
are purchased (other than in connection with an underwriting on a best
efforts basis); and
o in limited circumstances, we will indemnify the several underwriters and
the underwriters will indemnify us against certain civil liabilities,
including liabilities under the Securities Act of 1933, or will contribute
to payments required to be made in respect of any liabilities.
The prospectus supplement with respect to any series offered by
placements through dealers will contain information regarding the nature of the
offering and any agreements to be entered into between us and purchasers of
offered certificates of the series.
We anticipate that the offered certificates will be sold primarily to
institutional investors. Purchasers of offered certificates, including dealers,
may, depending on the facts and circumstances of the purchases, be deemed to be
"underwriters" within the meaning of the Securities Act of 1933 in connection
with re-offers and sales by them of offered certificates. Holders of offered
certificates should consult with their legal advisors in this regard prior to
any reoffer or sale.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission a
registration statement under the Securities Act of 1933 with respect to the
certificates offered by this prospectus. This prospectus forms a part of the
registration statement. This prospectus and the related prospectus supplement do
not contain all of the information with respect to an offering that is contained
in the registration statement. For further information regarding the documents
referred to in this prospectus and the related prospectus supplement, you should
refer to the registration statement and its exhibits.
You can inspect the registration statement and its exhibits, and make
copies of these documents at prescribed rates, at the public reference
facilities maintained by the SEC at its Public Reference Section:
450 Fifth Street, N.W.
Washington, D.C. 20549,
and at its Regional Offices located as follows:
Chicago Regional Office:
500 West Madison
14th Floor
Chicago, Illinois 60661
New York Regional Office
Seven World Trade Center
New York, New York 10048.
You can also obtain copies of these materials electronically through
the SEC's Web site at www.sec.gov.
In connection with each series of offered certificates, we will file or
arrange to have filed with
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the SEC with respect to the related trust any periodic reports that are required
under the Securities Exchange Act of 1934. All documents and reports that are so
filed for any particular trust prior to the termination of an offering of
certificates are incorporated by reference into, and should be considered a part
of, this prospectus. Upon request, we will provide without charge to each person
receiving this prospectus in connection with an offering, a copy of any or all
documents or reports that are so incorporated by reference. All requests should
be directed to us in writing at:
210 West 10th Street
6th Floor
Kansas City, Missouri 64105
Attention: Lawrence D. Ashley
or by telephone at (816) 435-5000.
LEGAL MATTERS
Unless otherwise specified in the related prospectus supplement,
certain legal matters in connection with the certificates of each series,
including certain federal income tax consequences, will be passed upon for us by
Morrison & Hecker L.L.P., our counsel.
FINANCIAL INFORMATION
A new trust will be formed with respect to each series, and no trust
will engage in any business activities or have any assets or obligations prior
to the issuance of the related series. Accordingly, no financial statements with
respect to any trust will be included in this prospectus or in the related
prospectus supplement. We have determined that our financial statements will not
be material to the offering of any offered certificates.
RATINGS
It is a condition to the issuance of any class of offered certificates
that they will have been rated not lower than investment grade, that is, in one
of the four highest rating categories, by at least one nationally recognized
statistical rating organization.
Ratings on mortgage pass-through certificates address the likelihood of
receipt by the holders of the certificates of all collections on the underlying
mortgage assets to which the holders are entitled. These ratings address:
o the structural, legal and issuer-related aspects associated with the
certificates;
o the nature of the underlying mortgage assets; and
o 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 borrowers or of the
degree by which the prepayments might differ from those originally anticipated.
As a result, if you purchase any offered certificates, you might suffer a lower
than anticipated yield. In addition, if you purchase Stripped Interest
Certificates you might, in certain cases, fail to recoup your initial
investment. Furthermore, ratings on mortgage pass-through certificates do not
address the price of the certificates or the suitability of the certificates to
you as an investment.
In particular, ratings on the offered certificates of any series will
not represent any assessment of:
o the tax attributes of those certificates or of the related trust;
o whether or to what extent prepayments of principal may be received on the
underlying mortgage loans;
o the likelihood or frequency of prepayments of principal on the underlying
mortgage loans;
o the degree to which the amount or frequency of prepayments on the
underlying mortgage loans might differ from those originally anticipated;
o whether or to what extent the interest distributable on any class of
offered certificates may be reduced in connection with interest shortfalls
resulting from the timing of voluntary prepayments;
o the likelihood that prepayment premiums, fees and charges or interest in
excess of interest at the related mortgage interest rates will be received
with respect to the underlying mortgage loans; or
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o whether the holders of any Stripped Interest Certificates, despite
receiving all distributions of interest to which they are entitled, would
or would not ultimately recover their initial investments in those
certificates.
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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Prospective investors are advised to read carefully, and should rely solely on,
the Prospectus Supplement dated May 30, 2000 and accompanying Prospectus dated
May 30, 2000 (together, the "Prospectus") relating to the Certificates referred
to below in making their investment decision.
This diskette accompanies and is a part of the Prospectus Supplement relating to
the Commercial Mortgage Pass - Through Certificates Series 2000-C1 (the
"Certificates"). The information set forth on this diskette is an electronic
copy of the information set forth in Appendix II "Certain Characteristics of the
Mortgage Loans" in the Prospectus. This diskette should be reviewed only in
conjunction with the entire Prospectus. This diskette does not contain all
relevant information relating to the Certificates. Such information is described
elsewhere in the Prospectus.
Methodologies used in deriving certain information contained on this diskette
are more fully described elsewhere in the Prospectus. The information on this
diskette should not be viewed as projections, forecasts, predictions or opinions
with respect to value. Prior to making any investment decision, a prospective
investor must receive and should carefully review the Prospectus. NOTHING IN
THIS DISKETTE SHOULD BE CONSIDERED AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY CERTIFICATES.
