<PAGE>
Filed pursuant to Rule 424(b)(3)
Registration No. 333-32019
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted without the delivery of a final form of this
prospectus supplement and the prospectus to which it relates. This prospectus
supplement and the prospectus to which it relates shall not constitute an offer
to sell or the solicitation of an offer to buy nor shall there be any sale of
these securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of any
such State.
SUBJECT TO COMPLETION, DATED JUNE 15, 1998.
PROSPECTUS SUPPLEMENT
(To Prospectus dated June 15, 1998)
$1,415,649,000
(Approximate)
DLJ Commercial Mortgage Corp.
Commercial Mortgage Pass-Through Certificates,
Series 1998-CG1
The Series 1998-CG1 Commercial Mortgage Pass-Through Certificates (the
"Certificates"), in the aggregate, will represent the entire beneficial
ownership interest in a trust (the "Trust") to be established by DLJ Commercial
Mortgage Corp. (the "Depositor"), the assets of which (such assets collectively,
the "Trust Fund") will consist primarily of a segregated pool (the "Mortgage
Pool") of approximately 301 multifamily and commercial mortgage loans (the
"Mortgage Loans"). As of June 1, 1998 (the "Cut-off Date"), the Mortgage Loans
had an aggregate unpaid principal balance of approximately $1,564,253,433 (the
"Initial Pool Balance"), after application of all payments due on or before such
date, whether or not received. The Depositor will acquire 117 Mortgage Loans,
representing approximately 52.3% of the Initial Pool Balance, from GE Capital
Access, Inc. and 184 Mortgage Loans, representing approximately 47.7% of the
Initial Pool Balance, from Column Financial, Inc.
The Certificates will consist of 20 classes (each, a "Class") to be
designated as: (i) the Class S Certificates; (ii) the Class A-1A, Class A-1B,
Class A-1C, Class A-2, Class A-3 and Class A-4 Certificates (collectively, the
"Class A Certificates"); (iii) the Class B-1, Class B-2, Class B-3, Class B-4,
Class B-5, Class B-6 and Class B-7 Certificates (collectively, the "Class B
Certificates"); (iv) the Class C Certificates (collectively with the Class S,
Class A and Class B Certificates, the "REMIC Regular Certificates"); (v) the
Class D-1 and Class D-2 Certificates (collectively, the "Grantor Trust
Certificates"); and (vi) the Class R-I, Class R-II and Class R-III Certificates
(collectively, the "REMIC Residual Certificates"). Only the Class S, Class A,
Class B-1, Class B-2 and Class B-3 Certificates (collectively, the "Offered
Certificates") are offered hereby. The respective Classes of Offered
Certificates will be issued in the aggregate principal amounts (each, a "Class
Principal Balance") or, in the case of the Class S Certificates, with the
aggregate notional amount (the "Class Notional Amount"), and will accrue
interest at the per annum rates (each, a "Pass-Through Rate"), set forth or
otherwise described in the table below or in the footnotes thereto.
<TABLE>
<CAPTION>
============================================================================================================================
Initial Rating
Initial Class Pass-Through Assumed Final (S&P and
Class Principal Balance(1) Rate(2) Distribution Date(3) Fitch)(4)(5)
- - ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class S...................... N/A(6) %(7) AAAr/AAA
Class A-1A................... $291,005,000 % AAA/AAA
Class A-1B.................. $835,257,000 % AAA/AAA
Class A-1C................... $39,106,000 % AA+/AAA
Class A-2.................... $39,106,000 % AA/AA
Class A-3.................... $78,213,000 % A/A
Class A-4.................... $23,464,000 % A-/A
Class B-1.................... $70,391,000 % BBB/BBB
Class B-2.................... $23,464,000 % BBB-/BBB-
Class B-3.................... $15,643,000 % NR/BBB-
============================================================================================================================
(Continued on page 2)
</TABLE>
----------
FOR A DISCUSSION OF CERTAIN RISK FACTORS TO BE CONSIDERED IN PURCHASING THE
OFFERED CERTIFICATES, SEE "RISK FACTORS" BEGINNING ON PAGE S-40 HERE1N AND ON
PAGE 16 IN THE PROSPECTUS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------
The Offered Certificates will be purchased from the Depositor by Donaldson,
Lufkin & Jenrette Securities Corporation (the "Underwriter") and will be offered
by the Underwriter from time to time in negotiated transactions or otherwise at
varying prices to be determined at the time of sale. Proceeds to the Depositor
from the sale of the Offered Certificates, before deducting expenses payable by
the Depositor, will be ___% of the initial aggregate Certificate Principal
Balance (as defined herein) of the Offered Certificates, plus accrued interest
on the Offered Certificates from June 1, 1998. The Offered Certificates are
offered by the Underwriter subject to prior sale, when, as and if delivered to
and accepted by the Underwriter and subject to certain other conditions. It is
expected that the Offered Certificates will be delivered to the Underwriter in
book-entry form through the Same-Day Funds Settlement System of DTC (as defined
herein) on or about June __, 1998, against payment therefor in immediately
available funds.
Donaldson, Lufkin & Jenrette
<PAGE>
Securities Corporation
The date of this Prospectus Supplement is June__, 1998.
S-1
<PAGE>
The footnotes to the table on the previous page are as follows:
- - ----------
(1) Subject to a variance of plus or minus 5%.
(2) The Pass-Through Rate for the Class S Certificates is variable and will, in
general, equal the weighted average of the Class S Strip Rates (as defined
herein) at which interest accrues on the respective components of the Class
Notional Amount of the Class S Certificates from time to time as described
herein. The Pass-Through Rates for the Class A-1A, Class A-1B, Class A-1C,
Class A-2, Class A-3 and Class A-4 Certificates are fixed at the respective
rates per annum specified in the table above. The Pass-Through Rates for
the Class B-1 and Class B-2 Certificates are subject to change and will, in
general, equal the lesser of the rate per annum specified in the foregoing
table with respect to such Class and the Weighted Average Net Mortgage Rate
(as defined herein). The Pass-Through Rate for the Class B-3 Certificates
is variable and will, in general, equal the Weighted Average Net Mortgage
Rate.
(3) The "Assumed Final Distribution Date" with respect to any Class of
Certificates is the Distribution Date (as defined herein) on which the
final distribution would occur for such Class of Certificates based upon
the assumptions that each ARD Loan (as defined herein) is paid in full on
its Anticipated Repayment Date (as defined herein) and that no Mortgage
Loan is otherwise prepaid prior to its stated maturity and, further, based
upon the Modeling Assumptions (as defined herein). The actual performance
and experience of the Mortgage Loans will likely differ from such
assumptions. See "Yield and Maturity Considerations" herein.
(4) It is a condition to their issuance that the respective Classes of Offered
Certificates be assigned ratings by Standard & Poor's Ratings Services, a
Division of the McGraw-Hill Companies, Inc. ("S&P") and Fitch IBCA, Inc.
("Fitch"; and together with S&P, the "Rating Agencies"), no less than those
set forth above. The "Rated Final Distribution Date" for each such Class is
the Distribution Date in ___________.
(5) The ratings on the Offered Certificates do not represent any assessment of
(i) the likelihood or frequency of principal prepayments, whether voluntary
or involuntary, on the Mortgage Loans, (ii) the degree to which such
prepayments might differ from those originally anticipated or (iii) whether
and to what extent Prepayment Premiums, Yield Maintenance Premiums,
Additional Interest and Default Interest (each as defined herein) will be
received. Also a security rating does not represent any assessment of the
yield to maturity that investors may experience or the possibility that the
holders of the Class S Certificates might not fully recover their initial
investments in the event of rapid prepayments of the Mortgage Loans
(including both voluntary and involuntary prepayments). See "Ratings"
herein.
(6) The Class S Certificates will not have a Class Principal Balance. The Class
S Certificates will accrue interest on a Class Notional Amount that is
equal to the aggregate of the Class Principal Balances of the Class A,
Class B and Class C Certificates outstanding from time to time.
(7) Approximate.
- - ----------
See "Index of Principal Definitions" herein for the location of meanings of
capitalized terms used and defined herein. See "Index of Principal Definitions"
in the Prospectus for the location of meanings of capitalized terms used but not
defined herein.
The Trust will be formed, and the Certificates will be issued, pursuant to
a Pooling and Servicing Agreement, to be dated as of June 1, 1998 (the "Pooling
Agreement"), among the Depositor, GE Capital Loan Services, Inc., as servicer
(in such capacity, the "Servicer"), Midland Loan Services, Inc., as special
servicer (in such capacity, the "Special Servicer") and Norwest Bank Minnesota,
National Association, as trustee (in such capacity, the "Trustee") and REMIC
administrator (in such capacity, the "REMIC Administrator").
Beginning in July 1998, distributions to holders of the Certificates
("Certificateholders") will be made, to the extent of available funds, on the
date (the "Distribution Date") each month that is the later of (i) the 10th day
of such month (or, if any such 10th day is not a business day, on the next
succeeding business day) and (ii) the fourth business day following the
Determination Date in such month. The "Determination Date" in each month,
commencing in July 1998, will be the 5th day of such month or, if such 5th day
is not a business day, the immediately preceding business day. As more fully
described herein, distributions allocable to interest accrued on each Class of
the Offered Certificates will be made on each Distribution Date based on the
Pass-Through Rate then applicable to such Class and the Class Principal Balance
or, in the case of the Class S Certificates, the Class Notional Amount of such
Class outstanding immediately prior to such Distribution Date. As more fully
described herein, distributions allocable to principal of the respective Classes
of Offered Certificates (other than the Class S Certificates) will be made in
the
S-3
<PAGE>
amounts and in accordance with the priorities described herein. The Class S
Certificates will not have a Class Principal Balance and will not entitle their
holders to distributions of principal. Prepayment Premiums and Yield Maintenance
Premiums (each as defined herein) actually collected on the Mortgage Loans will
be allocated among the holders of the respective Classes of REMIC Regular
Certificates as more fully described herein. The Trust is subject to
termination, and the Certificates are subject to early retirement, at the option
of the Servicer, the Special Servicer and certain specified Certificateholders
under the limited circumstances described herein. See "Description of the
Certificates--Distributions" and "--Termination" herein.
As and to the extent described herein, the Class A-1C, Class A-2, Class
A-3, Class A-4, Class B, Class C and REMIC Residual Certificates (collectively,
the "Subordinate Certificates") will be subordinate to the Class S, Class A-1A
and Class A-1B Certificates (collectively, the "Senior Certificates"); the Class
A-2, Class A-3, Class A-4, Class B, Class C and REMIC Residual Certificates will
be subordinated to the Class A-1C Certificates; the Class A-3, Class A-4, Class
B, Class C and REMIC Residual Certificates will be subordinate to the Class A-2
Certificates; the Class A-4, Class B, Class C and REMIC Residual Certificates
will be subordinated to the Class A-3 Certificates; the Class B, Class C and
REMIC Residual Certificates will be subordinate to the Class A-4 Certificates;
the Class B-2, Class B-3, Class B-4, Class B-5, Class B-6, Class B-7, Class C
and REMIC Residual Certificates will be subordinate to the Class B-1
Certificates; the Class B-3, Class B-4, Class B-5, Class B-6, Class B-7, Class C
and REMIC Residual Certificates will be subordinate to the Class B-2
Certificates; and the Class B-4, Class B-5, Class B-6, Class B-7, Class C and
REMIC Residual Certificates will be subordinate to the Class B-3 Certificates.
The Grantor Trust Certificates entitle the holders thereof to Additional
Interest in respect of the ARD Loans and, accordingly, are not necessarily
senior or subordinate to any other Class of Offered Certificates (except to the
extent that amounts received on the ARD Loans are applied first to pay amounts
other than Additional Interest thereon). See "Description of the
Certificates--Distributions" and "--Subordination; Allocation of Realized Losses
and Certain Expenses" herein.
The yield to maturity of each Class of Offered Certificates will depend on,
among other things, the rate and timing of principal payments (including by
reason of or as affected by prepayments, loan extensions, defaults and
liquidations) and losses on the Mortgage Loans. The yield to maturity of the
Class S Certificates will be highly sensitive to the rate and timing of
principal payments (including by reason of prepayments, defaults and
liquidations) and losses on the Mortgage Loans. Investors in the Class S
Certificates should fully consider the associated risks, including the risk that
an extremely rapid rate of amortization, prepayment or other liquidation of the
Mortgage Loans could result in the failure of such investors to recoup fully
their initial investments. See "Risk Factors" and "Yield and Maturity
Considerations" herein and in the Prospectus.
As described herein, three separate "real estate mortgage investment
conduit" ("REMIC") elections will be made with respect to the Trust Fund
(exclusive of any Additional Interest collected on the ARD Loans) for federal
income tax purposes (the REMICs formed thereby being herein referred to as
"REMIC I", "REMIC II" and "REMIC III", respectively). The Offered Certificates
will evidence "regular interests" in REMIC III. See "Certain Federal Income Tax
Consequences" herein and in the Prospectus.
There is currently no secondary market for the Offered Certificates. The
Underwriter currently intends to make a secondary market in the Offered
Certificates, but is not obligated to do so. There can be no assurance that a
secondary market for the Offered Certificates will develop or, if one does
develop, that it will continue. See "Risk Factors--Limited Liquidity" herein.
The Offered Certificates will not be listed on any securities exchange.
----------
THE OFFERED CERTIFICATES DO NOT REPRESENT OBLIGATIONS OF THE DEPOSITOR, THE
SERVICER, THE SPECIAL SERVICER, THE TRUSTEE, THE REMIC ADMINISTRATOR OR ANY OF
THEIR RESPECTIVE AFFILIATES, OFFICERS, DIRECTORS, TRUSTEES, BENEFICIARIES,
SHAREHOLDERS, EMPLOYEES OR AGENTS. NEITHER THE OFFERED CERTIFICATES NOR THE
MORTGAGE LOANS ARE INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR
INSTRUMENTALITY OR BY ANY OTHER PERSON. THE OFFERED CERTIFICATES ARE PAYABLE
S-4
<PAGE>
SOLELY FROM THE TRUST FUND, AND PROSPECTIVE INVESTORS SHOULD MAKE AN INVESTMENT
DECISION BASED UPON AN ANALYSIS OF THE SUFFICIENCY OF THE TRUST FUND.
THE CERTIFICATES OFFERED BY THIS PROSPECTUS SUPPLEMENT CONSTITUTE PART OF A
SEPARATE SERIES OF CERTIFICATES ISSUED BY THE DEPOSITOR AND ARE BEING OFFERED
PURSUANT TO ITS PROSPECTUS DATED JUNE 15, 1998, OF WHICH THIS PROSPECTUS
SUPPLEMENT IS A PART AND WHICH ACCOMPANIES THIS PROSPECTUS SUPPLEMENT. THE
PROSPECTUS CONTAINS IMPORTANT INFORMATION REGARDING THIS OFFERING THAT IS NOT
CONTAINED HEREIN, AND PROSPECTIVE INVESTORS ARE URGED TO READ THE PROSPECTUS AND
THIS PROSPECTUS SUPPLEMENT IN FULL. SALES OF THE OFFERED CERTIFICATES MAY NOT BE
CONSUMMATED UNLESS THE PURCHASER HAS RECEIVED BOTH THIS PROSPECTUS SUPPLEMENT
AND THE PROSPECTUS.
THROUGH AND INCLUDING SEPTEMBER __, 1998, ALL DEALERS EFFECTING
TRANSACTIONS IN THE OFFERED CERTIFICATES, WHETHER OR NOT PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS TO WHICH IT RELATES. THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE
OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS SUPPLEMENT AND PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS MAY BE USED BY
THE UNDERWRITER, AN AFFILIATE OF THE DEPOSITOR, IN CONNECTION WITH OFFERS AND
SALES RELATED TO MARKET-MAKING TRANSACTIONS IN THE CERTIFICATES. THE UNDERWRITER
MAY ACT AS PRINCIPAL OR AGENT IN SUCH TRANSACTIONS. SUCH SALES WILL BE MADE AT
PRICES RELATED TO PREVAILING MARKET PRICES AT THE TIME OF SALE.
S-5
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
TRANSACTION OVERVIEW ........................................................................... S-8
SUMMARY OF PROSPECTUS SUPPLEMENT ............................................................... S-9
RISK FACTORS ................................................................................... S-40
Limited Liquidity ..................................................................... S-40
Risks Associated with the Nature of the Mortgaged Properties .......................... S-40
Potential Liability to the Trust Relating to a Material Adverse Environmental Condition S-41
Exposure of the Mortgage Pool to Adverse Economic or Other Developments Based on
Geographic Concentration .............................................................. S-42
Risks Associated with Related Parties ................................................. S-42
Increased Risk of Loss Associated with Concentrations of Mortgage Loans ............... S-43
Increased Risk of Default Associated with Balloon Payments ............................ S-43
Extension Risk Associated With Modification of Mortgage Loans with Balloon Payments ... S-43
Limited Recourse ...................................................................... S-43
Risks Associated With Changes in Concentrations ....................................... S-44
Zoning Compliance ..................................................................... S-44
Uninsured Loss; Sufficiency of Insurance .............................................. S-44
Special Prepayment and Yield Considerations ........................................... S-44
Subordination of Subordinate Certificates ............................................. S-45
Potential Conflicts of Interest ....................................................... S-46
Certain Rights of the Controlling Class ............................................... S-46
ERISA Considerations .................................................................. S-46
Risk of Year 2000 ..................................................................... S-46
DESCRIPTION OF THE MORTGAGE POOL ............................................................... S-47
General ............................................................................... S-47
Property Assessments .................................................................. S-50
The Sellers and Column Third Party Originators ........................................ S-53
Representations and Warranties ........................................................ S-55
Cures, Repurchases and Substitutions .................................................. S-56
Additional Mortgage Loan Information .................................................. S-57
Cash Management and Certain Escrows and Reserves ...................................... S-61
Significant Concentrations ............................................................ S-62
Subordinate and Other Financing ....................................................... S-65
Prepayment Provisions ................................................................. S-65
Hazard, Liability and Other Insurance ................................................. S-66
SERVICING OF THE MORTGAGE LOANS ................................................................ S-67
General ............................................................................... S-67
The Servicer .......................................................................... S-70
The Special Servicer .................................................................. S-70
Servicing and Other Compensation and Payment of Expenses .............................. S-70
Modifications, Waivers, Amendments and Consents ....................................... S-73
The Controlling Class Representative .................................................. S-74
Sale of Defaulted Mortgage Loans ...................................................... S-76
</TABLE>
S-6
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Replacement of the Special Servicer ................................................... S-77
Due-On-Sale and Due-On-Encumbrance Provisions ......................................... S-78
Inspections; Collection of Operating Information ...................................... S-78
DESCRIPTION OF THE CERTIFICATES ................................................................ S-79
General ............................................................................... S-79
Registration and Denominations ........................................................ S-79
Class Principal Balances and Class Notional Amount .................................... S-80
Accrual of Interest ................................................................... S-81
Pass-Through Rates .................................................................... S-82
Distributions ......................................................................... S-83
Subordination; Allocation of Realized Losses and Certain Expenses ..................... S-91
P&I and Other Advances ................................................................ S-92
Appraisal Reductions .................................................................. S-93
Reports to Certificateholders; Certain Available Information .......................... S-94
Voting Rights ......................................................................... S-96
Termination ........................................................................... S-96
The Trustee ........................................................................... S-96
YIELD AND MATURITY CONSIDERATIONS .............................................................. S-97
Yield Considerations .................................................................. S-97
Weighted Average Life and Yield Sensitivity of Certain Sequential Pay Certificates .... S-100
Yield Sensitivity of the Class S Certificates ......................................... S-101
CERTAIN FEDERAL INCOME TAX CONSEQUENCES ........................................................ S-102
General ............................................................................... S-102
Discount and Premium; Prepayment Premiums ............................................. S-102
Characterization of Investments in Offered Certificates ............................... S-103
Possible Taxes on Income from Foreclosure Property and Other Taxes .................... S-104
Reporting and other Administrative Matters ............................................ S-105
METHOD OF DISTRIBUTION ......................................................................... S-105
LEGAL MATTERS .................................................................................. S-106
ERISA CONSIDERATIONS ........................................................................... S-106
LEGAL INVESTMENT ............................................................................... S-108
RATINGS ........................................................................................ S-109
INDEX OF PRINCIPAL DEFINITIONS ................................................................. S-111
</TABLE>
S-7
<PAGE>
<TABLE>
<CAPTION>
Page
----
EXHIBITS
<S> <C>
EXHIBIT A-1 CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS AND
MORTGAGED PROPERTIES ........................................................... A-1-1
EXHIBIT A-2 MORTGAGE POOL INFORMATION .......................................................... A-2-1
EXHIBIT B FORM OF TRUSTEE REPORT ............................................................. B-1
EXHIBIT C DECREMENT TABLES FOR CLASS A, CLASS B-1, CLASS B-2 AND
CLASS B-3 CERTIFICATES ............................................................ C-1
EXHIBIT D PRICE/YIELD TABLES FOR THE CLASS S CERTIFICATES .................................... D-1
</TABLE>
S-8
<PAGE>
- - --------------------------------------------------------------------------------
SUMMARY OF PROSPECTUS SUPPLEMENT
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus Supplement and in
the accompanying Prospectus. Certain capitalized terms that are used in this
Summary may be defined elsewhere in this Prospectus Supplement or in the
Prospectus. An Index of Principal Definitions is included at the end of both
this Prospectus Supplement and the Prospectus. Terms that are used but not
defined in this Prospectus Supplement will have the meanings specified in the
Prospectus.
Title of Certificates and
Designation of Classes ................. Mortgage Pass-Through Certificates,
Series 1998-CG1 (the
"Certificates"), to be issued in 20
classes (each, a "Class") to be
designated as: (i) the Class S
Certificates; (ii) the Class A- 1A,
Class A-1B, Class A-1C, Class A-2,
Class A-3 and Class A-4
Certificates (collectively, the
"Class A Certificates"); (iii) the
Class B-1, Class B-2, Class B-3,
Class B-4, Class B-5, Class B-6 and
Class B-7 Certificates
(collectively, the "Class B
Certificates"); (iv) the Class C
Certificates (collectively with the
Class S, Class A and Class B
Certificates, the "REMIC Regular
Certificates"); (v) the Class D-1
and Class D-2 Certificates
(collectively, the "Grantor Trust
Certificates"); and (vi) the Class
R-I, Class R-II and Class R-III
Certificates (collectively, the
"REMIC Residual Certificates").
Only the Class S, Class A, Class
B-1, Class B-2 and Class B-3
Certificates (collectively, the
"Offered Certificates") are offered
hereby.
The Class B-4, Class B-5, Class
B-6, Class B-7, Class C, Class D-1,
Class D-2, Class R-I, Class R-II
and Class R-III Certificates
(collectively, the "Private
Certificates") will not be
registered under the Securities Act
of 1933, as amended (the
"Securities Act") and are not
offered hereby. Accordingly, to the
extent this Prospectus Supplement
contains information regarding the
terms of the Private Certificates,
such information is provided
because of its potential relevance
to a prospective purchaser of an
Offered Certificate.
Trust..................................... A common law trust established by
the Depositor. The assets of the
Trust (such assets collectively,
the "Trust Fund") will consist
primarily of a segregated pool (the
"Mortgage Pool") of approximately
301 multifamily and commercial
mortgage loans (the "Mortgage
Loans") having the characteristics
described herein.
Depositor ................................ DLJ Commercial Mortgage Corp., a
Delaware corporation and an
affiliate of the Underwriter and
Column. See "The Depositor" in the
Prospectus.
Servicer ................................. GE Capital Loan Services, Inc., a
Delaware corporation ("GECLS") and
an affiliate of GECA. See
"Servicing of the Mortgage
Loans--The Servicer" herein.
- - --------------------------------------------------------------------------------
S-9
<PAGE>
- - --------------------------------------------------------------------------------
Special Servicer ......................... Midland Loan Services, Inc., a
Delaware corporation. See
"Servicing of the Mortgage
Loans--The Special Servicer"
herein.
Trustee and REMIC Administrator........... Norwest Bank Minnesota, National
Association, a national banking
association. See "Description of
the Certificates--The Trustee"
herein and "Certain Federal Income
Tax Consequences--REMICS--Reporting
and Other Administrative Matters"
in the Prospectus.
The Sellers............................... GE Capital Access, Inc., a Delaware
corporation ("GECA") that is
affiliated with the Servicer, and
Column Financial, Inc., a Delaware
corporation ("Column" and, together
with GECA, the "Sellers") that is
affiliated with the Depositor and
the Underwriter.
One hundred seventeen (117) of the
Mortgage Loans (the "GECA Mortgage
Loans"), representing 52.3% of the
Initial Pool Balance (as defined
below), will be acquired by the
Depositor from GECA, which acquired
such Mortgage Loans as a capital
contribution from General Electric
Capital Corporation ("GECC"). All
but one of the GECA Mortgage Loans
were originated by GECC (and one
GECA Mortgage Loan, representing
0.1% of the Initial Pool Balance,
was acquired by GECC in a secondary
market purchase). One hundred
eighty four (184) of the Mortgage
Loans (the "Column Mortgage
Loans"), representing 47.7% of the
Initial Pool Balance, will be
acquired by the Depositor from
Column, which either originated
such Mortgage Loans or, in the case
of 29 Column Mortgage Loans,
representing 5.0% of the Initial
Pool Balance, will have acquired
such Mortgage Loans on the Closing
Date from its corporate parent, DLJ
Mortgage Capital, Inc. ("DLJMCI").
The Column Mortgage Loans that are
to be acquired by Column from
DLJMCI were in turn acquired by
DLJMCI from certain third parties
described herein (each a "Column
Third Party Originator") that
originated such Mortgage Loans. All
of the Mortgage Loans were
generally originated in accordance
with the underwriting standards
described herein under "Description
of the Mortgage Pool--Property
Assessments".
On the Closing Date, (i) Column
will acquire the Column Mortgage
Loans that were originated by the
Column Third Party Originators,
(ii) each Seller will transfer its
Mortgage Loans to the Depositor and
(iii) the Depositor will transfer
all of the Mortgage Loans to the
Trustee on behalf of the holders of
the Certificates (the
"Certificateholders"). See
"Description of the Mortgage
Pool--Assignment of the Mortgage
Loans" herein and "Description of
the Pooling Agreements--Assignment
of Mortgage Assets" in the
Prospectus.
- - --------------------------------------------------------------------------------
S-10
<PAGE>
- - --------------------------------------------------------------------------------
Each Seller will make certain
representations and warranties with
respect to the Mortgage Loans sold
by it, except that the Column Third
Party Originators will make such
representations and warranties with
respect to the Mortgage Loans
originated by them, and all such
representations and warranties will
be assigned to the Trustee. In the
event that any such representation
or warranty is breached in respect
of any Mortgage Loan in a manner
that is material and adverse to the
value of such Mortgage Loan or the
interests of the
Certificateholders, the party that
made such representation or
warranty (the applicable
"Warranting Party") will be
required to cure the breach in all
material respects or, if it fails
or elects not to so cure the
breach, to repurchase or, at its
option, subject to certain
limitations described herein,
replace the affected Mortgage Loan.
If the applicable Warranting Party
fails to repurchase or replace any
such affected Mortgage Loan, none
of the Depositor, the Underwriter,
the Servicer, the Special Servicer,
the Trustee, the REMIC
Administrator or any other party
shall have any obligation to do so,
except that if a Column Third Party
Originator fails to repurchase or
replace a Mortgage Loan for which
it is the Warranting Party, Column
may be required to do so under the
circumstances described herein.
Each of the Sellers and the Column
Third Party Originators has only
limited assets with which to
fulfill any repurchase or
substitution obligations that may
arise in respect of breaches of its
representations and warranties.
Neither the Depositor nor the
Underwriter makes any
representations or warranties with
respect to the financial condition
of any Seller or Column Third Party
Originator, and there can be no
assurance that any such entity will
be able, or could be legally
compelled, to perform such
obligations. See "Description of
the Mortgage Pool--Representations
and Warranties" and "--Cures,
Repurchases and Substitutions"
herein and "Description of the
Pooling Agreements--Representations
and Warranties with respect to
Mortgage Assets; Repurchases and
Other Remedies" in the Prospectus.
Cut-off Date ............................. June 1, 1998.
Closing Date ............................. On or about June __, 1998.
Distribution Date......................... The day each month, commencing in
July 1998, that is the later of (i)
the 10th day of such month or, if
such 10th day is not a business
day, then the next succeeding
business day, and (ii) the fourth
business day following the
Determination Date in such month.
Collection Period......................... As to any Distribution Date, the
period commencing immediately
following the Determination Date in
the month immediately preceding the
month in which such Distribution
- - --------------------------------------------------------------------------------
S-11
<PAGE>
- - --------------------------------------------------------------------------------
Date occurs (or, in the case of the
initial Distribution Date,
commencing immediately following
the Cut-off Date) and ending on and
including the related Determination
Date.
Determination Date........................ The 5th day of each month,
beginning in July 1998, or if any
such 5th day is not a business day,
then the immediately preceding
business day.
Record Date............................... With respect to any Distribution
Date, the last business day of the
month immediately preceding the
month in which such Distribution
Date occurs.
Interest Accrual Period................... With respect to each Distribution
Date, the calendar month
immediately preceding the month in
which such Distribution Date
occurs.
Book-Entry Registration................... Each Class of Offered Certificates
will initially be issued in
book-entry form through the
facilities of DTC and, accordingly,
will constitute "Book-Entry
Certificates" within the meaning of
the Prospectus. No person acquiring
an interest in a Book- Entry
Certificate (any such person, a
"Certificate Owner") will be
entitled to receive a fully
registered physical certificate (a
"Definitive Certificate")
evidencing such interest, except
under the limited circumstances
described in the Prospectus. See
"Risk Factors--Book-Entry
Registration" and "Description of
the Certificates--Book-Entry
Registration and Definitive
Certificates" in the Prospectus and
"Description of the
Certificates--Registration and
Denominations" herein.
Denominations............................. The Class A-1A and Class A-1B
Certificates will each be issued in
minimum denominations of $10,000
initial principal balance and in
any whole dollar in excess thereof.
The Class S Certificates will each
be issued in minimum denominations
of $10,000 initial notional amount
and in any whole dollar in excess
thereof. The remaining Offered
Certificates will each be issued in
minimum denominations of $100,000
initial principal balance and in
any whole dollar in excess thereof.
The Mortgage Loans........................ The Mortgage Loans have an
aggregate Cut-off Date Balance of
approximately $1,564,253,433 (the
"Initial Pool Balance"). The
"Cut-off Date Balance" of each
Mortgage Loan is, in general, the
unpaid principal balance thereof as
of the Cut-off Date, after
application of all payments due on
or before such date, whether or not
received. All numerical information
provided herein with respect to the
Mortgage Loans is provided on an
approximate basis. All weighted
average information provided herein
with respect to the Mortgage Loans
reflects the weighting of the
Mortgage Loans by their respective
Cut-off Date Balances.
- - --------------------------------------------------------------------------------
S-12
<PAGE>
- - --------------------------------------------------------------------------------
In general, each Mortgage Loan is
evidenced by a note or bond (a
"Mortgage Note") and is secured by
a mortgage, deed of trust, deed to
secure debt or similar security
instrument (a "Mortgage") creating
a first mortgage lien on a fee
simple and/or leasehold interest in
real property used for commercial
or multifamily purposes (each, a
"Mortgaged Property") and security
interests in certain funds and
accounts and other collateral
described herein. In particular,
289 Mortgage Loans, representing
94.0% of the Initial Pool Balance,
are secured by the related
Mortgagor's fee simple interest in
the related Mortgaged Property; 10
Mortgage Loans, representing 3.4%
of the Initial Pool Balance, are
secured solely by the related
Mortgagor's leasehold interest in
the related Mortgaged Property; one
Mortgage Loan (the Resurgens Plaza
Loan described herein),
representing 2.1% of the Initial
Pool Balance, is secured by the
related Mortgagor's leasehold
interest in a portion of the
related Mortgaged Property and the
related Mortgagor's fee simple
interest in another portion of such
Mortgaged Property; and one
Mortgage Loan, representing 0.5% of
the Initial Pool Balance, is
secured by both the related
Mortgagor's leasehold interest and
the underlying fee simple interest
in the related Mortgaged Property.
Eleven separate groups of Mortgage
Loans (the "Cross-Collateralized
Mortgage Loans"; and each such
group, a "Cross-Collateralized
Group") are, solely as among the
Mortgage Loans in each such
particular group, cross-defaulted
and cross-collateralized with each
other. One of the
Cross-Collateralized Groups,
representing 1.4% of the Initial
Pool Balance, provides that the
applicable cross-collateralization
and cross-default features will
terminate upon satisfaction of
certain property performance
targets and/or minimum debt service
coverage ratio requirements.
Certain of the Cross-Collateralized
Groups (as well as certain
individual Mortgage Loans that are
secured by multiple parcels) permit
individual property releases upon
the satisfaction of certain
criteria and/or the payment of a
release price equal to between 100%
and 125% of the allocated loan
amount for the property to be
released. See, however, "Risk
Factors--Certain Factors Affecting
Delinquency, Foreclosure and Loss
of the Mortgage Loans--Limitations
on Enforceability of
Cross-Collateralization" in the
Prospectus. Except where otherwise
specifically indicated, statistical
information provided herein with
respect to the Cross-Collateralized
Mortgage Loans is so provided on an
individual Mortgage Loan basis
without regard to the
cross-collateralization, and each
Cross-Collateralized Mortgage Loan
will be deemed to be secured only
by a mortgage lien on the related
Primary Mortgaged Property (as
defined herein).
- - --------------------------------------------------------------------------------
S-13
<PAGE>
- - --------------------------------------------------------------------------------
Other than the Rivergate Loan
described herein, no individual
Mortgage Loan or
Cross-Collateralized Group
represents more than 3.3% of the
Initial Pool Balance.
The Mortgage Loans are, or should
be considered to be, non-recourse
obligations of the related
Mortgagors. No Mortgage Loan will
be insured or guaranteed by any
governmental entity or private
insurer or by any other person. Set
forth below are the number of
Mortgage Loans, and the approximate
percentage of the Initial Pool
Balance represented by such
Mortgage Loans, that are secured by
Mortgaged Properties located in the
five states with the highest
concentrations:
<TABLE>
<CAPTION>
Percentage
Number of of Initial
State Mortgage Loans Pool Balance
----- -------------- ------------
<S> <C> <C> <C>
California 43 14.8%
New York 16 11.9%
Florida 29 9.6%
Texas 36 7.7%
Georgia 16 6.1%
</TABLE>
The remaining Mortgaged Properties
are located throughout 28 other
states and the District of
Columbia.
Set forth below are the number of
Mortgage Loans, and the approximate
percentage of the Initial Pool
Balance represented by such
Mortgage Loans, that are secured by
Mortgaged Properties operated for
each indicated purpose:
<TABLE>
<CAPTION>
Number of Percentage
Property Mortgage of Initial
Type Loans Pool Balance
-------- ----- ------------
<S> <C> <C> <C>
Multifamily 104 38.7%
Retail 94 26.0%
Hotel 32 11.7%
Office 25 11.6%
Industrial 9 5.0%
Manufactured Housing 19 4.1%
Self-Storage 10 1.3%
Mixed Use/Other 8 1.5%
</TABLE>
Except as described below or in a
default scenario, each Mortgage
Loan bears interest at a rate per
annum (a "Mortgage Rate") that is
fixed for the remaining term of the
Mortgage Loan. As of the Cut-off
Date, the Mortgage Rates of the
Mortgage Loans will range from
6.650% to 8.860% per annum, and the
weighted average Mortgage Rate will
be 7.210% per annum. The Mortgage
Loans provide for scheduled
payments ("Monthly Payments") of
principal and
- - --------------------------------------------------------------------------------
S-14
<PAGE>
- - --------------------------------------------------------------------------------
interest to be due on the first day
of each month, or if such day is
not a business day, the next
succeeding business day (each, a
"Due Date"). Interest payable in
respect of any Mortgage Loan on any
Due Date will be the interest
accrued thereon during the most
recently ended calendar month.
Interest on 24 Mortgage Loans,
representing 14.1% of the Initial
Pool Balance, will be computed on
the basis of a 360-day year
consisting of twelve 30-day months.
Interest on the remaining 277
Mortgage Loans, representing 85.9%
of the Initial Pool Balance, will
be computed on the basis of the
actual number of days elapsed
during each calendar month and a
360-day year (Mortgage loans
accruing interest on this basis
being herein referred to as
"Non-30/360 Mortgage Loans"). The
Mortgage Loans identified as "ARD
Loans" on the table entitled
"Characteristics of the Mortgage
Loans on Exhibit A-1 (collectively,
the "ARD Loans") each: (1) has an
original term to maturity of, in
general, approximately 25 to 30
years; and (2) provides that, if
the Mortgage Loan is not repaid in
full by a specified date that is
generally 10 to 15 years after
origination (the "Anticipated
Repayment Date"), then thereafter,
until paid in full: (a) additional
interest (the "Additional
Interest") will accrue on such
Mortgage Loans at a rate (the
"Additional Interest Rate") (such
Additional Interest to be deferred
and paid after the outstanding
principal balance of such Mortgage
Loan is paid in full); and (b) in
general, certain excess cash flow
from the related Mortgaged Property
will be applied to amortize such
Mortgage Loan on an accelerated
basis. In general, the Additional
Interest Rate on the ARD Loans is
not less than 2.00% per annum.
One hundred sixty-six (166) of the
Mortgage Loans (the "Balloon
Mortgage Loans"), representing
40.7% of the Initial Pool Balance,
provide for monthly payments of
principal on each Due Date based on
amortization schedules longer than
the remaining terms of such
Mortgage Loans, thereby leaving
substantial amounts of principal
(each such payment thereof,
together with accrued interest to
the related maturity date, a
"Balloon Payment") due and payable
on their respective stated maturity
dates (each a "Maturity Date"). See
"Risk Factors--Increased Risk of
Default Associated with Balloon
Payments; Anticipated Repayment
Date Considerations" and
"--Extension Risk Associated with
Modification of Mortgage Loans with
Balloon Payments" herein and "Risk
Factors--Certain Factors Affecting
Delinquency, Foreclosure and Loss
of the Mortgage Loans--Increased
Risk of Default Associated with
Balloon Payments" in the
Prospectus. As stated above, 113
Mortgage Loans, representing 52.2%
of the Initial Pool Balance, are
ARD Loans. The remaining 22
Mortgage Loans, representing 7.1%
of the Initial Pool Balance, are
fully amortizing or substantially
fully amortizing.
- - --------------------------------------------------------------------------------
S-15
<PAGE>
- - --------------------------------------------------------------------------------
Substantially all of the Mortgage
Loans were originated between May
1997 and May 1998, inclusive.
No Mortgage Loan will be, as of the
Closing Date, 30 days or more
delinquent in the payment of
principal or interest.
In the case of 199 Mortgage Loans,
representing 71.4% of the Initial
Pool Balance, the related
Mortgagors are entitled (subject to
the satisfaction of certain
conditions) to "defease" their
Mortgage Loans with United States
Treasury obligations generally at
any time after two to three years
(or, in certain cases, a longer
period) following the Closing Date
(in each case notwithstanding any
Lockout Period (as defined below)).
As of their respective dates of
origination, all of the Mortgage
Loans imposed restrictions on
voluntary prepayments of principal
("Principal Prepayments"). In most
cases, such restrictions commenced
with a period (a "Lockout Period")
during which, with limited
exception, Principal Prepayments
are prohibited. In some such cases,
the Lockout Period will remain in
effect for all or substantially all
of the remaining term to maturity;
in other such cases, the Lockout
Period is followed by a period (a
"Premium Period") during which
Principal Prepayments are permitted
but are required to be accompanied
by an additional amount (the
"Additional Prepayment Amount")
that is either a specified
percentage of the amount being
prepaid (a "Prepayment Premium") or
a premium calculated on the basis
of a yield maintenance formula (a
"Yield Maintenance Premium"), and
then, commencing on a specified
date prior to maturity, by a period
(an "Open Period") during which
Principal Prepayments may be made
without payment of any Prepayment
Premium or Yield Maintenance
Premium; and, in the remaining such
cases, the Lockout Period is
followed directly by an Open
Period. In all other cases, such
restrictions commenced with a
Premium Period during which
Principal Prepayments are permitted
but are required to be accompanied
by a Prepayment Premium, which
period is followed by an Open
Period (generally commencing two
years prior to the stated
maturities of the respective
Mortgage Loans). In the case of
most Mortgage Loans that provide
for a Premium Period, the
applicable Additional Prepayment
Amount will equal the greater of a
Prepayment Premium (in general,
calculated at 1% of the amount
prepaid) and a Yield Maintenance
Premium. In the case of certain
Mortgage Loans, the security for
the Mortgage Loans includes pledged
funds which: (i) if certain leasing
or other economic conditions are
satisfied by a specified date, will
be released to the related
Mortgagor; and (ii) if such
conditions are not satisfied by
such date, will be applied to pay
down the Mortgage Loan during what
would
- - --------------------------------------------------------------------------------
S-16
<PAGE>
- - --------------------------------------------------------------------------------
otherwise be a Lockout Period. See
"Description of the Mortgage
Pool--Prepayment Provisions"
herein.
Set forth below is certain
information regarding the Mortgage
Loans and the Mortgaged Properties
expected to be applicable as of the
Cut-off Date (except as otherwise
indicated). Such information is
more fully described, and
additional information regarding
the Mortgage Loans and the
Mortgaged Properties is set forth,
in the tables on Exhibits A-1 and
A-2 hereto.
<TABLE>
<CAPTION>
<S> <C> <C>
Number of Mortgage Loans ............. 301
Initial Pool Balance ................. $1,564,253,433
Minimum Cut-off Date Balance ......... $573,042
Maximum Cut-off Date Balance ......... $94,602,208
Average Cut-off Date Balance ......... $5,196,855
Minimum Mortgage Rate ................ 6.650%
Maximum Mortgage Rate ................ 8.860%
Weighted Average Mortgage Rate ....... 7.210%
Minimum Cut-off Date LTV Ratio ....... 32.6%
Maximum Cut-off Date LTV Ratio ....... 82.7%
Weighted Average Cut-off Date LTV
Ratio ............................. 69.9%
Minimum Original Term to Maturity
(months)(1) ....................... 60
Maximum Original Term to Maturity
(months)(1) ....................... 300
Weighted Average Original Term to
Maturity (months)(1) .............. 135
Minimum Original Amortization Term
(months) .......................... 144
Maximum Original Amortization Term
(months) .......................... 360
Weighted Average Original Amortization
Term (months) ....................... 337
Minimum Remaining Term to Maturity
(months)(1) ....................... 55
Maximum Remaining Term to Maturity
(months)(1) ....................... 299
Weighted Average Remaining Term to
Maturity (months)(1) .............. 133
Minimum Remaining Amortization Term
(months) .......................... 128
</TABLE>
- - --------------------------------------------------------------------------------
S-17
<PAGE>
- - --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Maximum Remaining Amortization Term
(months) .......................... 360
Weighted Average Remaining
Amortization Term (months) ........ 334
Minimum Occupancy Rate at
Underwriting(2) ................... 64.0%
Maximum Occupancy Rate at
Underwriting(2) ................... 100.0%
Weighted Average Occupancy
Rate at Underwriting(2) ........... 96.5%
Minimum Underwriting DSCR ............ 1.20x
Maximum Underwriting DSCR ............ 2.69x
Weighted Average Underwriting
DSCR............................... 1.44x
</TABLE>
--------------------
(1) In the case of the ARD Loans,
assumes that maturity is at the
respective Anticipated Repayment
Dates. (2) Does not reflect
Mortgage Loans secured by hotel
properties.
"Cut-off Date LTV Ratio",
"Underwriting DSCR" and "Occupancy
Rate at Underwriting" are each
calculated as described under
"Description of the Mortgage
Pool--Additional Mortgage Loan
Information" herein.
See "Description of the Mortgage
Pool" herein.
Description of the
Certificates............................ The Certificates will be issued on
the Closing Date pursuant to a
Pooling and Servicing Agreement, to
be dated as of the Cut- off Date
(the "Pooling Agreement"), among
the Depositor, the Servicer, the
Special Servicer, the Trustee and
the REMIC Administrator, and will
represent in the aggregate the
entire beneficial ownership
interest of the Trust. See
"Description of the
Certificates--General" herein.
A. Class Principal Balances and
Class Notional Amount................ The Class A, Class B and Class C
Certificates (collectively, the
"Sequential Pay Certificates") are
the only Certificates that will
have principal balances. The
aggregate principal balance of any
Class of Sequential Pay
Certificates is herein referred to
as its "Class Principal Balance".
Upon initial issuance, the Class
A-1A, Class A-1B, Class A- 1C,
Class A-2, Class A-3, Class A-4,
Class B-1, Class B-2 and Class B-3
Certificates will have the
respective Class
- - --------------------------------------------------------------------------------
S-18
<PAGE>
- - --------------------------------------------------------------------------------
Principal Balances set forth on the
cover page hereof (in each case,
subject to a variance of plus or
minus 5%).
Upon initial issuance, the Class
B-4, Class B-5, Class B-6, Class
B-7 and Class C Certificates will
have the following Class Principal
Balances (in each case, subject to
a variance of plus or minus 5%):
Initial Class
Class Principal Balance
----- -----------------
Class B-4 $66,481,000
Class B-5 $15,642,000
Class B-6 $27,374,000
Class B-7 $15,643,000
Class C $23,464,433
The Class S Certificates will not
have principal balances; however,
for purposes of calculating Accrued
Certificate Interest (as defined
herein) in respect thereof, such
Class of Certificates will have an
aggregate notional amount (a "Class
Notional Amount") that is equal to
the aggregate of the Class
Principal Balances of the
respective Classes of Sequential
Pay Certificates outstanding from
time to time. The Class Principal
Balance of each Class of Sequential
Pay Certificates will constitute a
separate component (a "Component")
of the Class Notional Amount of the
Class S Certificates (such
Component to have the same
alphabetical and/or numerical
designation as the alphabetical
and/or numerical Class designation
for such Class of Sequential Pay
Certificates (e.g., the Class
Principal Balance of the Class A-1A
Certificates outstanding from time
to time will constitute Component
A-1A of the Class S Certificates)).
The Grantor Trust Certificates and
the REMIC Residual Certificates
will not have principal balances or
notional amounts.
See "Description of the
Certificates--Class Principal
Balances and Class Notional Amount"
herein.
B. Accrual of Interest.................... The respective Classes of REMIC
Regular Certificates will bear
interest (herein referred to as
"Accrued Certificate Interest").
With respect to each Class of REMIC
Regular Certificates, such interest
will commence accruing as of the
Cut-off Date and, during each
Interest Accrual Period, will
accrue at the applicable
Pass-Through Rate on the Class
Principal Balance or, in the case
of the Class S Certificates, the
Class Notional Amount of such Class
of Certificates outstanding
immediately prior to the related
Distribution
- - --------------------------------------------------------------------------------
S-19
<PAGE>
- - --------------------------------------------------------------------------------
Date. Accrued Certificate Interest
will be calculated on the basis of
a 360-day year consisting of twelve
30-day months.
The portion of the Accrued
Certificate Interest in respect of
any Class of REMIC Regular
Certificates that is distributable
thereon, subject to available funds
and the payment priorities
described herein, is herein
referred to as "Distributable
Certificate Interest". The
Distributable Certificate Interest
in respect of any Class of REMIC
Regular Certificates for any
Distribution Date will equal the
Accrued Certificate Interest in
respect of such Class of REMIC
Regular Certificates for the
related Interest Accrual Period,
reduced (to not less than zero) by
the product of (a) the Net
Aggregate Prepayment Interest
Shortfall (as defined herein), if
any, for such Distribution Date,
multiplied by (b) a fraction
(expressed as a percentage), the
numerator of which is the Accrued
Certificate Interest in respect of
such Class of REMIC Regular
Certificates for the related
Interest Accrual Period, and the
denominator of which is the
aggregate Accrued Certificate
Interest in respect of all the
Classes of REMIC Regular
Certificates for the related
Interest Accrual Period.
The Grantor Trust Certificates and
the REMIC Residual Certificates
will not bear interest, although
amounts (if any) distributable on
the Grantor Trust Certificates will
consist of Additional Interest.
C. Pass-Through Rates..................... The Pass-Through Rates applicable
to the respective Classes of
Offered Certificates for the
initial Interest Accrual Period are
set forth on the cover page hereof.
The Pass-Through Rates applicable
to the Class A-1A, Class A-1B,
Class A-1C, Class A-2, Class A-3
and Class A-4 Certificates are
fixed at the respective rates set
forth on the cover page hereof with
respect to such Classes of
Certificates.
The Pass-Through Rates applicable
to the Class B-1 and Class B-2
Certificates are subject to change
and, in the case of each such Class
of Certificates, for each Interest
Accrual Period subsequent to the
initial Interest Accrual Period,
will equal the lesser of (i) the
per annum rate set forth on the
cover page hereof with respect to
such Class of Certificates and (ii)
the Weighted Average Net Mortgage
Rate for such Interest Accrual
Period.
The Pass-Through Rate for the Class
B-3 Certificates is variable and,
for each Interest Accrual Period,
will equal the Weighted Average Net
Mortgage Rate for such Interest
Accrual Period.
The Pass-Through Rate applicable to
the Class S Certificates will also
be variable and for each Interest
Accrual Period
- - --------------------------------------------------------------------------------
S-20
<PAGE>
subsequent to the initial Interest
Accrual Period will equal the
weighted average of the Class S
Strip Rates at which interest
accrues on the respective
Components of the Class Notional
Amount of the Class S Certificates
during such Interest Accrual Period
(weighted on the basis of the
relative sizes of such Components
immediately prior to the related
Distribution Date). The "Class S
Strip Rate" in respect of any
Component of the Class Notional
Amount of the Class S Certificates
for any Interest Accrual Period
will equal the excess, if any, of
(i) the Weighted Average Net
Mortgage Rate for such Interest
Accrual Period, over (ii) the
Pass-Through Rate then applicable
to the Class of Sequential Pay
Certificates whose Class Principal
Balance constitutes such Component.
The Pass-Through Rate for the Class
B-4 Certificates is variable and,
for each Interest Accrual Period
will equal the Weighted Average Net
Mortgage Rate for such Interest
Accrual Period.
The respective Pass-Through Rates
applicable to the Class B- 5, Class
B-6, Class B-7 and Class C
Certificates for each Interest
Accrual Period will equal the
following fixed rates per annum:
Class Pass-Through Rate
----- -----------------
Class B-5 %
Class B-6 %
Class B-7 %
Class C %
The Grantor Trust Certificates and
the REMIC Residual Certificates
will not have Pass-Through Rates.
The "Weighted Average Net Mortgage
Rate" for any Interest Accrual
Period will equal the weighted
average of the Net Mortgage Rates
for the Mortgage Loans (weighted on
the basis of their respective
Stated Principal Balances (as
defined herein) outstanding
immediately following the
Distribution Date during such
Interest Accrual Period or, in the
case of the initial Interest
Accrual Period, weighted on the
basis of their respective Cutoff
Date Balances).
The "Net Mortgage Rate" for any
Mortgage Loan will, in general,
equal (i) the related Mortgage Rate
in effect as of the Closing Date
(without regard to any
modification, waiver or amendment
of the terms of such Mortgage Loan
subsequent to the Closing Date),
minus (ii) 6 basis points; provided
that, in the case of each Mortgage
Loan that does not accrue interest
on the basis of a 360-day year
consisting of twelve 30-day months
(which is the basis on which
interest accrues in respect of the
REMIC Regular
- - --------------------------------------------------------------------------------
S-21
<PAGE>
- - --------------------------------------------------------------------------------
Certificates), solely for the
purposes of calculating the
Weighted Average Net Mortgage Rate
for each Distribution Date, the
Mortgage Rate referred to in clause
(i) will, to the extent
appropriate, be adjusted from
Interest Accrual Period to Interest
Accrual Period as described herein
to compensate for such difference,
taking into account the number of
days in each calendar month and any
applicable Interest Reserve Amount
(as defined herein).
Distributions on the Certificates......... Distributions will be made by or on
behalf of the Trustee on each
Distribution Date to the
Certificateholders of record at the
close of business on the
immediately preceding Record Date
(or, in the case of the anticipated
final distribution on any Class of
Certificates, to the persons
presenting and surrendering such
Certificates as described herein).
All distributions made with respect
to any Class of Certificates will
be allocated pro rata among the
outstanding Certificates of such
Class based on the respective
Percentage Interests (as defined
herein) in such Class evidenced by
such Certificates.
A. Distributions of Interest
and Principal........................ On each Distribution Date, the
Available Distribution Amount (as
defined herein) for such date will
be distributed among the respective
Classes of Certificateholders for
the following purposes and in the
following order of priority:
(i) to make distributions of
interest to the holders
of the Class S, Class
A-1A and Class A-1B
Certificates, pro rata
based on entitlement, up
to an amount equal to all
Distributable Certificate
Interest in respect of
each such Class of
Certificates for such
Distribution Date and, to
the extent not previously
paid, for all prior
Distribution Dates;
(ii) to make distributions of
principal to the holders
of the Class A-1A and
Class A-1B Certificates,
allocable as between such
Classes of
Certificateholders as
described herein, up to
an amount equal to the
lesser of (a) the
aggregate of the then
outstanding Class
Principal Balances of the
Class A-1A and Class A-1B
Certificates and (b) the
Principal Distribution
Amount (as defined below)
for such Distribution
Date;
(iii) to reimburse the holders
of the Class A-1A and
Class A-1B Certificates,
pro rata based on
entitlement, up to an
amount equal to all
Realized Losses and
Additional Trust Fund
Expenses (each as defined
herein), if any,
previously allocated to
- - --------------------------------------------------------------------------------
S-22
<PAGE>
- - --------------------------------------------------------------------------------
each such Class of
Certificates and for
which no reimbursement
has previously been
received;
(iv) to make distributions of
interest to the holders
of the Class A-1C
Certificates, up to an
amount equal to all
Distributable Certificate
Interest in respect of
such Class of
Certificates for such
Distribution Date and, to
the extent not previously
paid, for all prior
Distribution Dates;
(v) after the Class Principal
Balances of the Class A-1A and
Class A-1B Certificates have
been reduced to zero, to make
distributions of principal to
the holders of the Class A-1C
Certificates, up to an amount
equal to the lesser of (a) the
then outstanding Class
Principal Balance of the Class
A-1C Certificates and (b) the
excess, if any, of the
Principal Distribution Amount
for such Distribution Date
over the amounts, if any,
distributed on such
Distribution Date pursuant to
clause (ii) above;
(vi) to reimburse the holders
of the Class A-1C
Certificates, up to an
amount equal to all
Realized Losses and
Additional Trust Fund
Expenses, if any,
previously allocated to
such Class of
Certificates and for
which no reimbursement
has previously been
received;
(vii) to make distributions of
interest to the holders
of the Class A-2
Certificates, up to an
amount equal to all
Distributable Certificate
Interest in respect of
such Class of
Certificates for such
Distribution Date and, to
the extent not previously
paid, for all prior
Distribution Dates;
(viii) after the Class Principal
Balances of the Class A-1A,
Class A-1B and Class A-1C
Certificates have been reduced
to zero, to make distributions
of principal to the holders of
the Class A-2 Certificates, up
to an amount equal to the
lesser of (a) the then
outstanding Class Principal
Balance of the Class A-2
Certificates and (b) the
excess, if any, of the
Principal Distribution Amount
for such Distribution Date
over the amounts, if any,
distributed on such
Distribution Date pursuant to
clauses (ii) and (v) above;
(ix) to reimburse the holders of
the Class A-2 Certificates, up
to an amount equal to all
Realized Losses and Additional
Trust Fund Expenses, if any,
previously allocated to such
Class of
- - --------------------------------------------------------------------------------
S-23
<PAGE>
- - --------------------------------------------------------------------------------
Certificates and for which no
reimbursement has previously
been received;
(x) to make distributions of
interest to the holders of the
Class A-3 Certificates, up to
an amount equal to all
Distributable Certificate
Interest in respect of such
Class of Certificates for such
Distribution Date and, to the
extent not previously paid,
for all prior Distribution
Dates;
(xi) after the Class Principal
Balances of the Class A-1A,
Class A-1B, Class A-1C and
Class A-2 Certificates have
been reduced to zero, to make
distributions of principal to
the holders of the Class A-3
Certificates, up to an amount
equal to the lesser of (a) the
then outstanding Class
Principal Balance of the Class
A-3 Certificates and (b) the
excess, if any, of the
Principal Distribution Amount
for such Distribution Date
over the amounts, if any,
distributed on such
Distribution Date pursuant to
clauses (ii), (v) and (viii)
above;
(xii) to reimburse the holders of
the Class A-3 Certificates, up
to an amount equal to all
Realized Losses and Additional
Trust Fund Expenses, if any,
previously allocated to such
Class of Certificates and for
which no reimbursement has
previously been received;
(xiii) to make distributions of
interest to the holders of the
Class A-4 Certificates, up to
an amount equal to all
Distributable Certificate
Interest in respect of such
Class of Certificates for such
Distribution Date and, to the
extent not previously paid,
for all prior Distribution
Dates;
(xiv) after the Class Principal
Balances of the Class A-1A,
Class A-1B, Class A-1C, Class
A-2 and Class A-3 Certificates
have been reduced to zero, to
make distributions of
principal to the holders of
the Class A-4 Certificates, up
to an amount equal to the
lesser of (a) the then
outstanding Class Principal
Balance of the Class A-4
Certificates and (b) the
excess, if any, of the
Principal Distribution Amount
for such Distribution Date
over the amounts, if any,
distributed on such
Distribution Date pursuant to
clauses (ii), (v), (viii) and
(xi) above;
- - --------------------------------------------------------------------------------
S-24
<PAGE>
- - --------------------------------------------------------------------------------
(xv) to reimburse the holders of
the Class A-4 Certificates, up
to an amount equal to all
Realized Losses and Additional
Trust Fund Expenses, if any,
previously allocated to such
Class of Certificates and for
which no reimbursement has
previously been received;
(xvi) to make distributions of
interest to the holders of the
Class B-1 Certificates, up to
an amount equal to all
Distributable Certificate
Interest in respect of such
Class of Certificates for such
Distribution Date and, to the
extent not previously paid,
for all prior Distribution
Dates;
(xvii) after the Class Principal
Balances of the Class A
Certificates have been reduced
to zero, to make distributions
of principal to the holders of
the Class B-1 Certificates, up
to an amount equal to the
lesser of (a) the then
outstanding Class Principal
Balance of the Class B-1
Certificates and (b) the
excess, if any, of the
Principal Distribution Amount
for such Distribution Date
over the amounts, if any,
distributed on such
Distribution Date pursuant to
clauses (ii), (v), (viii),
(xi) and (xiv) above;
(xviii) to reimburse the holders of
the Class B-1 Certificates, up
to an amount equal to all
Realized Losses and Additional
Trust Fund Expenses, if any,
previously allocated to such
Class of Certificates and for
which no reimbursement has
previously been received;
(xix) to make distributions of
interest to the holders of the
Class B-2 Certificates, up to
an amount equal to all
Distributable Certificate
Interest in respect of such
Class of Certificates for such
Distribution Date and, to the
extent not previously paid,
for all prior Distribution
Dates;
(xx) after the Class Principal
Balances of the Class A and
Class B-1 Certificates have
been reduced to zero, to make
distributions of principal to
the holders of the Class B-2
Certificates, up to an amount
equal to the lesser of (a) the
then outstanding Class
Principal Balance of the Class
B-2 Certificates and (b) the
excess, if any, of the
Principal Distribution Amount
for such Distribution Date
over the amounts, if any,
distributed on such
Distribution Date pursuant to
clauses (ii), (v), (viii),
(xi), (xiv) and (xvii) above;
- - --------------------------------------------------------------------------------
S-25
<PAGE>
- - --------------------------------------------------------------------------------
(xxi) to reimburse the holders of
the Class B-2 Certificates, up
to an amount equal to all
Realized Losses and Additional
Trust Fund Expenses, if any,
previously allocated to such
Class of Certificates and for
which no reimbursement has
previously been received;
(xxii) to make distributions of
interest to the holders of the
Class B-3 Certificates, up to
an amount equal to all
Distributable Certificate
Interest in respect of such
Class of Certificates for such
Distribution Date and, to the
extent not previously paid,
for all prior Distribution
Dates;
(xxiii) after the Class Principal
Balances of the Class A, Class
B-1 and Class B-2 Certificates
have been reduced to zero, to
make distributions of
principal to the holders of
the Class B-3 Certificates, up
to an amount equal to the
lesser of (a) the then
outstanding Class Principal
Balance of the Class B-3
Certificates and (b) the
excess, if any, of the
Principal Distribution Amount
for such Distribution Date
over the amounts, if any,
distributed on such
Distribution Date pursuant to
clauses (ii), (v), (viii),
(xi), (xiv), (xvii) above;
(xxiv) to reimburse the holders of
the Class B-3 Certificates, up
to an amount equal to all
Realized Losses and Additional
Trust Fund Expenses, if any,
previously allocated to such
Class of Certificates and for
which no reimbursement has
previously been received;
(xxv) to make distributions of
interest to the holders of the
Class B-4 Certificates, up to
an amount equal to all
Distributable Certificate
Interest in respect of such
Class of Certificates for such
Distribution Date and, to the
extent not previously paid,
for all prior Distribution
Dates;
(xxvi) after the Class Principal
Balances of the Class A, Class
B-1, Class B-2 and Class B-3
Certificates have been reduced
to zero, to make distributions
of principal to the holders of
the Class B-4 Certificates, up
to an amount equal to the
lesser of (a) the then
outstanding Class Principal
Balance of the Class B-4
Certificates and (b) the
excess, if any, of the
Principal Distribution Amount
for such Distribution Date
over the amounts, if any,
distributed on such
Distribution Date pursuant to
clauses (ii), (v), (viii),
(xi), (xiv), (xvii), (xx) and
(xxiii) above;
- - --------------------------------------------------------------------------------
S-26
<PAGE>
- - --------------------------------------------------------------------------------
(xxvii) to reimburse the holders of
the Class B-4 Certificates, up
to an amount equal to all
Realized Losses and Additional
Trust Fund Expenses, if any,
previously allocated to such
Class of Certificates and for
which no reimbursement has
previously been received;
(xxviii) to make distributions of
interest to the holders of the
Class B-5 Certificates, up to
an amount equal to all
Distributable Certificate
Interest in respect of such
Class of Certificates for such
Distribution Date and, to the
extent not previously paid,
for all prior Distribution
Dates;
(xxix) after the Class Principal
Balances of the Class A, Class
B-1, Class B-2, Class B-3 and
Class B-4 Certificates have
been reduced to zero, to make
distributions of principal to
the holders of the Class B-5
Certificates, up to an amount
equal to the lesser of (a) the
then outstanding Class
Principal Balance of the Class
B-5 Certificates and (b) the
excess, if any, of the
Principal Distribution Amount
for such Distribution Date
over the amounts, if any,
distributed on such
Distribution Date pursuant to
clauses (ii), (v), (viii),
(xi), (xiv), (xvii), (xx),
(xxiii) and (xxvi) above;
(xxx) to reimburse the holders of
the Class B-5 Certificates, up
to an amount equal to all
Realized Losses and Additional
Trust Fund Expenses, if any,
previously allocated to such
Class of Certificates and for
which no reimbursement has
previously been received;
(xxxi) to make distributions of
interest to the holders of the
Class B-6 Certificates, up to
an amount equal to all
Distributable Certificate
Interest in respect of such
Class of Certificates for such
Distribution Date and, to the
extent not previously paid,
for all prior Distribution
Dates;
(xxxii) after the Class Principal
Balances of the Class A, Class
B-1, Class B-2, Class B-3,
Class B-4 and Class B-5
Certificates have been reduced
to zero, to make distributions
of principal to the holders of
the Class B-6 Certificates, up
to an amount equal to the
lesser of (a) the then
outstanding Class Principal
Balance of the Class B-6
Certificates and (b) the
excess, if any, of the
Principal Distribution Amount
for such Distribution Date
over the amounts, if any,
distributed on such
Distribution
- - --------------------------------------------------------------------------------
S-27
<PAGE>
- - --------------------------------------------------------------------------------
Date pursuant to clauses
(ii), (v), (viii), (xi),
(xiv), (xvii), (xx), (xxiii)
(xxvi) and (xxix) above;
(xxxiii) to reimburse the holders
of the Class B-6 Certificates,
up to an amount equal to all
Realized Losses and Additional
Trust Fund Expenses, if any,
previously allocated to such
Class of Certificates and for
which no reimbursement has
previously been received;
(xxxiv) to make distributions of
interest to the holders of the
Class B-7 Certificates, up to
an amount equal to all
Distributable Certificate
Interest in respect of such
Class of Certificates for such
Distribution Date and, to the
extent not previously paid,
for all prior Distribution
Dates;
(xxxv) after the Class Principal
Balances of the Class A, Class
B-1, Class B-2, Class B-3,
Class B-4, Class B-5 and Class
B-6 Certificates have been
reduced to zero, to make
distributions of principal to
the holders of the Class B-7
Certificates, up to an amount
equal to the lesser of (a) the
then outstanding Class
Principal Balance of the Class
B-7 Certificates and (b) the
excess, if any, of the
Principal Distribution Amount
for such Distribution Date
over the amounts, if any,
distributed on such
Distribution Date pursuant to
clauses (ii), (v), (viii),
(xi), (xiv), (xvii), (xx),
(xxiii), (xxvi), (xxix) and
(xxxii) above;
(xxxvi) to reimburse the holders of
the Class B-7 Certificates, up
to an amount equal to all
Realized Losses and Additional
Trust Fund Expenses, if any,
previously allocated to such
Class of Certificates and for
which no reimbursement has
previously been received;
(xxxvii) to make distributions of
interest to the holders of the
Class C Certificates, up to an
amount equal to all
Distributable Certificate
Interest in respect of such
Class of Certificates for such
Distribution Date and, to the
extent not previously paid,
for all prior Distribution
Dates;
(xxxviii) after the Class Principal
Balances of the Class A and
Class B Certificates have been
reduced to zero, to make
distributions of principal to
the holders of the Class C
Certificates, up to an amount
equal to the lesser of (a) the
then outstanding Class
Principal Balance of the Class
C Certificates and (b) the
excess, if any, of the
- - --------------------------------------------------------------------------------
S-28
<PAGE>
- - --------------------------------------------------------------------------------
Principal Distribution Amount
for such Distribution Date
over the amounts, if any,
distributed on such
Distribution Date pursuant to
clauses (ii), (v), (viii),
(xi), (xiv), (xvii), (xx),
(xxiii), (xxvi), (xxix),
(xxxii) and (xxxv) above;
(xxxix) to reimburse the holders of
the Class C Certificates, up
to an amount equal to all
Realized Losses and Additional
Trust Fund Expenses, if any,
previously allocated to such
Class of Certificates and for
which no reimbursement has
previously been received; and
(xl) to make distributions to the
holders of the REMIC Residual
Certificates, up to an amount
equal to the excess, if any,
of (a) the Available
Distribution Amount for such
Distribution Date, over (b)
the aggregate distributions
made in respect of the REMIC
Regular Certificates on such
Distribution Date pursuant to
clauses (i) through (xxxix)
above;
provided that, on the final
Distribution Date in connection
with a termination of the Trust,
the distributions of principal to
be made pursuant to clauses (ii),
(v), (viii), (xi), (xiv), (xvii),
(xx), (xxiii), (xxvi), (xxix),
(xxxii), (xxxv) and (xxxviii) above
shall, in each such case, subject
to the then remaining portion of
the Available Distribution Amount
for such date, be made to the
holders of the relevant Class or
Classes of Sequential Pay
Certificates otherwise entitled to
distributions of principal pursuant
to such clause in an amount equal
to the entire then remaining Class
Principal Balance (or, in the case
of clause (ii) above, if
applicable, the entire aggregate of
the then remaining Class Principal
Balances) of such Class or Classes
of Certificates outstanding
immediately prior to such final
Distribution Date.
Except under the limited
circumstances described herein,
distributions of principal on the
Class A-1A and Class A-1B
Certificates as described in clause
(ii) above will be paid, first, to
the holders of the Class A-1A
Certificates, until the Class
Principal Balance of such Class of
Certificates is reduced to zero,
and thereafter, to the holders of
the Class A-1B Certificates, until
the Class Principal Balance of such
Class of Certificates is reduced to
zero. See "Description of the
Certificates--Distributions--
Application of the Available
Distribution Amount" herein.
The "Principal Distribution Amount"
for any Distribution Date will, in
general, equal the aggregate
(without duplication) of the
following:
- - --------------------------------------------------------------------------------
S-29
<PAGE>
- - --------------------------------------------------------------------------------
(a) all payments of principal
(other than Principal
Prepayments) received on the
Mortgage Loans during the
related Collection Period, in
each case net of any portion
of the particular payment that
represents a late collection
of principal for which a P&I
Advance (as defined below) was
previously made for a prior
Distribution Date or that
represents the principal
portion of a Monthly Payment
due on or before the Cut-off
Date or on a Due Date
subsequent to the related
Collection Period;
(b) the principal portions of all
Monthly Payments due in
respect of the Mortgage Loans
for their respective Due Dates
occurring during the related
Collection Period that were
received prior to the related
Collection Period;
(c) all Principal Prepayments
received on the Mortgage Loans
during the related Collection
Period;
(d) all other collections
(including Liquidation
Proceeds, Condemnation
Proceeds and Insurance
Proceeds (each as defined
herein)) that were received on
or in respect of the Mortgage
Loans during the related
Collection Period and that
were identified and applied by
the Servicer as recoveries of
principal thereof, in each
case net of any portion of
such collection that
represents a late collection
of principal due on or before
the Cut-off Date or for which
a P&I Advance was previously
made for a prior Distribution
Date; and
(e) the principal portion of all
P&I Advances made in respect
of the Mortgage Loans for such
Distribution Date.
B. Distributions of Prepayment Premiums
and Yield Maintenance Premiums...... If a Prepayment Premium is
collected with respect to any
Mortgage Loan during any particular
Collection Period, then 85% of such
Prepayment Premium will be
distributed on the Distribution
Date corresponding to such
Collection Period as additional
interest to the holders of the
Class S Certificates and 15% of
such Prepayment Premium will be
distributed on such Distribution
Date as additional interest to the
holders of the Class (or Classes)
of Sequential Pay Certificates then
entitled to distributions of
principal on such Distribution Date
(allocable among such Classes, if
more than one, on a pro rata basis
in accordance with the relative
amounts of such distributions of
principal).
- - --------------------------------------------------------------------------------
S-30
<PAGE>
- - --------------------------------------------------------------------------------
If a Yield Maintenance Premium is
collected with respect to any
Mortgage Loan during any particular
Collection Period, then such Yield
Maintenance Premium will be
distributed as additional interest
on the Distribution Date
corresponding to such Collection
Period as follows: The holders of
the Class (or Classes) of
Sequential Pay Certificates then
entitled to distributions of
principal on such Distribution Date
will be entitled to an aggregate
amount (allocable among such
Classes, if more than one, as
described below) equal to the
product of (1) the amount of such
Yield Maintenance Premium,
multiplied by (2) a fraction (not
greater than one or less than
zero), the numerator of which is
equal to the excess, if any, of the
Pass-Through Rate applicable to
such Class of Sequential Pay
Certificates (or, if two or more
Classes are involved, the
Pass-Through Rate applicable to
such of those Classes as has the
most senior right of payment and/or
the earliest Assumed Final
Distribution Date) for the
corresponding Interest Accrual
Period, over the relevant Discount
Rate, and the denominator of which
is equal to the excess, if any, of
the Mortgage Rate for the Mortgage
Loan that prepaid, over the
relevant Discount Rate. If there is
more than one Class of Sequential
Pay Certificates entitled to
distributions of principal on such
Distribution Date, the aggregate
amount described in the preceding
sentence will be allocated among
such Classes on a pro rata basis in
accordance with the relative
amounts of such distributions of
principal. Any portion of such
Yield Maintenance Premium that may
remain after such distributions on
the Sequential Pay Certificates
will be distributed to the holders
of the Class S Certificates.
For purposes of the foregoing, the
"Discount Rate" is the rate which,
when compounded monthly, is
equivalent to the Treasury Rate
when compounded semi-annually
(e.g., a 6% per annum Treasury Rate
would equate to a 5.9263% per annum
Discount Rate). The "Treasury Rate"
is 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 date of the relevant
principal prepayment, of U.S.
Treasury constant maturities with a
maturity date (one longer and one
shorter) most nearly approximating
(a) in the case of any GECA
Mortgage Loan, the weighted average
life (as described herein) of the
prepaid Mortgage Loan immediately
prior to the prepayment and (b) in
the case of any Column Mortgage
Loan, the maturity date of the
prepaid Mortgage Loan. If Release
H.15 is no longer published, the
Servicer will select a comparable
publication to determine the
Treasury Rate.
- - --------------------------------------------------------------------------------
S-31
<PAGE>
- - --------------------------------------------------------------------------------
Neither the Depositor nor the
Underwriter makes any
representation or warranty as to
the collectability of any
Prepayment Premium or Yield
Maintenance Premium or the
enforceability of any Mortgage Loan
provision requiring the payment of
any such amount. Furthermore,
Prepayment Premiums and Yield
Maintenance Premiums, even if
collected and distributable on any
Class of Certificates as additional
interest, may not be sufficient to
fully compensate the
Certificateholders of such Class
for any loss in yield experienced
by them in connection with the
related prepayments of principal.
See "Risk Factors--Special
Prepayment and Yield
Considerations" herein.
C. Distributions of Additional Interest... It is anticipated that the Class
D-1 Certificates will be delivered
to and initially retained by an
affiliate of the Servicer and GECA.
The Class D-1 Certificates will
entitle the holders thereof to all
amounts, if any, applied as
Additional Interest on the GECA
Mortgage Loans. It is also
anticipated that the Class D-2
Certificates will be delivered to
and initially retained by an entity
for which an affiliate of the
Special Servicer performs advisory
services. The Class D-2
Certificates will entitle the
holders thereof to all amounts, if
any, applied as Additional Interest
on the Column Mortgage Loans.
Subordination; Allocation of
Realized Losses and
Certain Expenses ....................... As and to the extent described
herein, the Class A-1C, Class A-2,
Class A-3, Class A-4, Class B,
Class C, Class R-I, Class R-II and
Class R-III Certificates
(collectively, the "Subordinate
Certificates") will be subordinate
to the Class S, Class A-1A and
Class A-1B Certificates
(collectively, the "Senior
Certificates"); the Class A-2,
Class A-3, Class A-4, Class B,
Class C, Class R-I, Class R-II and
Class R-III Certificates will be
subordinate to the Class A-1C
Certificates; the Class A-3, Class
A-4, Class B, Class C, Class R-I,
Class R-II and Class R- III
Certificates will be subordinate to
the Class A-2 Certificates; the
Class A-4, Class B, Class C, Class
R-I, Class R-II and Class R-III
Certificates will be subordinate to
the Class A-3 Certificates; the
Class B, Class C, Class R-I, Class
R-II and Class R-III Certificates
will be subordinate to the Class
A-4 Certificates; the Class B-2,
Class B-3, Class B-4, Class B-5,
Class B-6, Class B-7, Class C,
Class R-I, Class R-II and Class
R-III Certificates will be
subordinate to the Class B-1
Certificates; the Class B-3, Class
B-4, Class B-5, Class B- 6, Class
B-7, Class C, Class R-I, Class R-II
and Class R-III Certificates will
be subordinate to the Class B-2
Certificates; and the Class B-4,
Class B-5, Class B-6, Class B-7,
Class C, Class R-I, Class R-II and
Class R-III Certificates will be
subordinate to the Class B-3
Certificates. Such subordination
will, in general, be accomplished
by the
- - --------------------------------------------------------------------------------
S-32
<PAGE>
- - --------------------------------------------------------------------------------
application of the Available
Distribution Amount on each
Distribution Date in the order
described in this Summary under
"Distributions on the
Certificates--Distributions of
Interest and Principal" above and
by the allocation of Realized
Losses and Additional Trust Fund
Expenses as described in the next
paragraph. No other form of credit
support will be available for the
benefit of any Class of Offered
Certificateholders. The Grantor
Trust Certificates will entitle the
holders thereof to amounts applied
as Additional Interest in respect
of the ARD Loans. Accordingly, the
Grantor Trust Certificates are not
necessarily senior or subordinate
to any other Class of Certificates
(except to the extent that amounts
received on any particular ARD Loan
are applied first to pay amounts
other than Additional Interest).
If, following the distributions to
be made in respect of the
Certificates on any Distribution
Date, the aggregate Stated
Principal Balance of the Mortgage
Pool that will be outstanding
immediately following such
Distribution Date is less than the
then aggregate of the Class
Principal Balances of the
respective Classes of Sequential
Pay Certificates, the Class
Principal Balances of the Class C,
Class B-7, Class B-6, Class B-5,
Class B-4, Class B-3, Class B-2,
Class B-1, Class A-4, Class A-3,
Class A-2 and Class A-1C
Certificates will be reduced,
sequentially in that order, until
(in the case of each such Class)
such deficit (or the related Class
Principal Balance) is reduced to
zero (whichever occurs first). If
any portion of such deficit remains
at such time as the Class Principal
Balances of such Classes of
Certificates are reduced to zero,
then the respective Class Principal
Balances of the Class A-1A and
Class A-1B Certificates will be
reduced, pro rata in accordance
with the relative sizes of the
remaining Class Principal Balances
of such Classes of Certificates,
until such deficit (or each such
Class Principal Balance) is reduced
to zero. Any such deficit would, in
general, be the result of Realized
Losses incurred in respect of the
Mortgage Loans and/or Additional
Trust Fund Expenses. The foregoing
reductions in the Class Principal
Balances of the Sequential Pay
Certificates will constitute an
allocation of any such Realized
Losses and Additional Trust Fund
Expenses.
As more particularly described
herein, "Realized Losses" are
losses to the Trust arising from
the inability of the Servicer
and/or the Special Servicer to
collect all amounts due and owing
under any defaulted Mortgage Loan,
including by reason of the fraud or
bankruptcy of the related Mortgagor
or a casualty of any nature at the
related Mortgaged Property, to the
extent not covered by insurance.
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S-33
<PAGE>
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As more particularly described
herein, "Additional Trust Fund
Expenses" are, in general, any
expenses of the Trust not
specifically included in the
calculation of a "Realized Loss,"
that would result in the REMIC
Regular Certificateholders'
receiving less than the full amount
of principal and/or Distributable
Certificate Interest to which they
are entitled on any Distribution
Date.
See "Description of the
Certificates--Subordination;
Allocation of Realized Losses and
Certain Expenses" herein.
Treatment of REO Properties............... If any Mortgaged Property is
acquired on behalf of the
Certificateholders through
foreclosure, deed in lieu of
foreclosure or otherwise (upon
acquisition, an "REO Property"),
the related Mortgage Loan will, for
purposes of, among other things,
determining Pass-Through Rates of,
distributions on and allocations of
Realized Losses and Additional
Trust Fund Expenses to the
Certificates, as well as for
purposes of calculating Servicing
Fees, Special Servicing Fees and
Trustee Fees (each as defined
herein), generally be treated as
having remained outstanding until
such REO Property is liquidated. In
connection therewith, operating
revenues and other proceeds derived
from any REO Property (exclusive of
related operating costs, including
certain reimbursements payable to
the Servicer and/or Special
Servicer in connection with the
operation and disposition of such
REO Property) will be "applied" or
treated by the Servicer as
principal, interest and other
amounts "due" on the related
Mortgage Loan, and (subject to the
limitations described under
"Description of the
Certificates--P&I and Other
Advances" herein) the Servicer
(and, if necessary, the Trustee)
will be required to make P&I
Advances in respect of the related
Mortgage Loan, in all cases as if
such Mortgage Loan had remained
outstanding.
P&I Advances.............................. Subject to a recoverability
determination as described herein,
and further subject to the reduced
advancing obligations in respect of
certain Mortgage Loans as to which
the related Mortgaged Property has
declined in value as described
herein, the Servicer will be
required to make advances (each, a
"P&I Advance") with respect to each
Distribution Date in an amount that
is generally equal to the aggregate
of all Monthly Payments (other than
Balloon Payments) and any Assumed
Monthly Payments, net of related
Servicing Fees and Workout Fees (as
defined herein), due or deemed due,
as the case may be, on or in
respect of the Mortgage Loans
during the related Collection
Period, in each case to the extent
that such amount was not paid by or
on behalf of the related Mortgagor
or otherwise collected as of the
close of business on the last day
of the related Collection Period.
If the Servicer fails to make a
required P&I Advance, the Trustee
will be required to make such P&I
Advance.
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S-34
<PAGE>
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An "Assumed Monthly Payment" is an
amount deemed due in respect of:
(i) any Balloon Mortgage Loan that
is delinquent in respect of its
Balloon Payment beyond the first
Determination Date that follows its
most recent scheduled maturity date
and as to which no arrangements
have been agreed to for collection
of the delinquent amounts; or (ii)
any Mortgage Loan as to which the
related Mortgaged Property has been
acquired on behalf of the
Certificateholders through
foreclosure, deed in lieu of
foreclosure or otherwise. The
Assumed Monthly Payment deemed due
each month on any such Balloon
Mortgage Loan delinquent as to its
Balloon Payment, will equal the
Monthly Payment that would have
been due thereon on the Due Date in
such month if the related Balloon
Payment had not come due, but
rather such Mortgage Loan had
continued to amortize in accordance
with its amortization schedule, if
any, and had continued to accrue
interest in accordance with its
terms in effect immediately prior
to maturity. The Assumed Monthly
Payment deemed due each month on
any such Mortgage Loan as to which
the related Mortgaged Property has
become an REO Property, will equal
the Monthly Payment (or, in the
case of a Mortgage Loan delinquent
in respect of its Balloon Payment
as described in the prior sentence,
the Assumed Monthly Payment) due on
the last Due Date prior to the
acquisition of such REO Property.
As more fully described herein, the
Servicer and the Trustee will each
be entitled to interest on any P&I
Advance made by it, and the
Servicer, the Special Servicer and
the Trustee will each be entitled
to interest on certain reimbursable
servicing expenses incurred by it.
Such interest will, in general,
accrue from the date any such P&I
Advance is made or such servicing
expense is incurred at a rate per
annum equal to the "prime rate"
published in the "Money Rates"
section of The Wall Street Journal,
as such "prime rate" may change
from time to time (the
"Reimbursement Rate"), and will be
paid: (i) at any time, out of
Default Interest (as defined
herein) and late payment charges
collected in respect of the related
Mortgage Loan; and (ii) from time
to time, to the extent that such
P&I Advance or servicing expense is
being reimbursed, out of general
collections on the Mortgage Pool.
See "Description of the
Certificates--P&I and Other
Advances" herein.
Compensating Interest
Payments................................ To the extent of the aggregate of
its Servicing Fees (as defined
herein) for the related Collection
Period, plus any Prepayment
Interest Excesses received during
such Collection Period, the
Servicer will be required to make a
non-reimbursable payment (a
"Compensating Interest Payment")
with respect to each Distribution
Date to cover the aggregate of any
Prepayment Interest Shortfalls
incurred
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S-35
<PAGE>
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during such Collection Period. A
"Prepayment Interest Shortfall" is
a shortfall in the collection of a
full month's interest (net of
related Servicing Fees and, if
applicable, Additional Interest) on
any Mortgage Loan by reason of a
full or partial Principal
Prepayment being made prior to its
Due Date in any Collection Period.
A "Prepayment Interest Excess" is a
payment of interest (net of related
Servicing Fees and, if applicable,
Additional Interest) received in
connection with any full or partial
Principal Prepayment in respect of
a Mortgage Loan that is made after
its Due Date in any Collection
Period, which payment of interest
is intended to cover the period
from and after such Due Date to,
but not including, the date of
prepayment. The "Net Aggregate
Prepayment Interest Shortfall" for
any Distribution Date will be the
amount, if any, by which (a) the
aggregate of all Prepayment
Interest Shortfalls incurred during
the related Collection Period
exceeds (b) the Compensating
Interest Payment made by the
Servicer with respect to such
Distribution Date. See "Servicing
of the Mortgage Loans--Servicing
and Other Compensation and Payment
of Expenses" herein.
Controlling Class......................... The holder (or holders) of
Certificates representing a
majority interest in the
Controlling Class will have the
right, subject to certain
conditions described herein, to
replace the Special Servicer and,
further, to select a representative
(the "Controlling Class
Representative") that may advise
the Special Servicer on various
servicing matters, all as described
herein. As of any date of
determination, the "Controlling
Class" will, in general, be the
most subordinate Class of
Sequential Pay Certificates then
outstanding that has a then-
current Class Principal Balance
that is not less than 25% (or, in
the case of the Class C
Certificates, 20%) of such Class'
initial Class Principal Balance as
of the Closing Date. In addition,
as more particularly described
herein, any single holder of
Certificates representing a
majority interest in the
Controlling Class will have the
option of purchasing defaulted
Mortgage Loans from time to time.
See "Servicing of the Mortgage
Loans--Replacement of the Special
Servicer", "--The Controlling Class
Representative" and "--Sale of
Defaulted Mortgage Loans and REO
Properties" herein.
Optional Termination...................... The Servicer, the Special Servicer
or any single holder of
Certificates representing a
majority interest in the
Controlling Class, in that order,
will have an option to purchase all
of the Mortgage Loans and any REO
Properties, and thereby effect
termination of the Trust and early
retirement of the then outstanding
Certificates, on any Distribution
Date on which the aggregate Stated
Principal Balance of the Mortgage
Pool is less than 1% of the Initial
Pool Balance. See "Description of
the
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S-36
<PAGE>
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Certificates--Termination" herein
and "Risk Factors-- Termination" in
the Prospectus.
Certain Investment
Considerations ......................... The yield to maturity on any
Offered Certificate will be
affected by the rate and timing of
prepayments and other collections
of principal on or in respect of
the Mortgage Loans. An investor
should consider, in the case of any
Offered Certificate purchased at a
discount, the risk that a slower
than anticipated rate of
prepayments could result in a lower
than anticipated yield and, in the
case of any Class S Certificate or
any other Offered Certificate
purchased at a premium, the risk
that a faster than anticipated rate
of prepayments could result in a
lower than anticipated yield. In
addition, the yield to maturity on
the Class S Certificates will be
highly sensitive to the rate and
timing of principal prepayments and
other liquidations of the Mortgage
Loans, and investors in such
Certificates should fully consider
the associated risks, including the
risk that an extremely rapid rate
of prepayments and/or other
liquidations in respect of the
Mortgage Loans could result in the
failure of such investors to recoup
fully their initial investments.
The allocation to a Class of
Offered Certificates of any
Prepayment Premiums or Yield
Maintenance Premium as additional
interest, as and to the extent
described herein, may not be
sufficient to offset fully the
adverse effects on the anticipated
yield that may arise out of the
corresponding prepayment of
principal. See "Yield and Maturity
Considerations" herein and in the
Prospectus.
Certain Federal Income Tax
Consequences ........................... Three separate "real estate
mortgage investment conduit"
("REMIC") elections will be made
with respect to the Trust Fund
(exclusive of Additional Interest
collected on the ARD Loans) for
federal income tax purposes with
the resulting REMICs being herein
referred to as "REMIC I", "REMIC
II" and "REMIC III", respectively.
The assets of REMIC I will include
the Mortgage Loans, any REO
Properties acquired on behalf of
the Certificateholders and the
Certificate Account (as defined in
the Prospectus), but will exclude
any Additional Interest collected
on the ARD Loans. For federal
income tax purposes, (i) the
separate non-certificated regular
interests in REMIC I will be the
"regular interests" in REMIC I and
will constitute the assets of REMIC
II, (ii) the Class R-I Certificates
will evidence the sole class of
"residual interests" in REMIC I,
(iii) the separate non-certificated
regular interests in REMIC II will
be the "regular interests" in REMIC
II and will constitute the assets
of REMIC III, (iv) the Class R-II
Certificates will evidence the sole
class of "residual interests" in
REMIC II, (v) the REMIC Regular
Certificates will evidence the
"regular interests" in, and
generally will be treated as debt
- - --------------------------------------------------------------------------------
S-37
<PAGE>
- - --------------------------------------------------------------------------------
obligations of, REMIC III, and (vi)
the Class R-III Certificates will
evidence the sole class of
"residual interests" in REMIC III.
The Grantor Trust Certificates will
represent beneficial interests in
the portion of the Trust Fund
consisting of any amounts applied
as Additional Interest on the ARD
Loans, and each such portion will
be treated as a grantor trust for
federal income tax purposes.
If the method for computing
original issue discount described
herein results in a negative amount
for any period, a
Certificateholder, in particular a
Class S Certificateholder, will be
permitted to offset such amount
only against the future original
issue discount (if any) from such
Certificate.
The Class S and Class ___
Certificates will, the Class ___
Certificates may and the other
Classes of Offered Certificates
will not, be treated as having been
issued with original issue discount
for federal income tax reporting
purposes. The prepayment assumption
to be used for purposes of
computing the accrual of original
issue discount, market discount and
premium, if any, for federal income
tax purposes will be that the ARD
Loans are paid in full on their
respective Anticipated Repayment
Dates and that no Mortgage Loan is
otherwise voluntarily prepaid prior
to its Maturity Date. However, no
representation is made as to how
the Mortgage Loans will actually
prepay, if at all.
Generally, except to the extent
noted below, the Certificates will
be treated as "real estate assets"
within the meaning of Section
856(c)(4)(A) of the Internal
Revenue Code of 1986 (the "Code").
In addition, except to the extent
noted below, interest (including
original issue discount) on the
Offered Certificates will be
interest described in Section
856(c)(3)(B) of the Code. However,
the Offered Certificates will
generally only be considered assets
described in Section 7701(a)(19)(C)
of the Code to the extent that the
Mortgage Loans are secured by
residential property and,
accordingly, an investment in the
Offered Certificates may not be
suitable for some thrift
institutions. See "Description of
the Mortgage Pool" herein. To the
extent an Offered Certificate
represents ownership of an interest
in any Mortgage Loan that is
secured in part by the related
Mortgagor's interest in an account
containing any holdback of loan
proceeds, a portion of such
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
and the interest thereon may not
constitute "interest on obligations
secured by mortgages on real
property" within the meaning of
Section 856(c)(3)(B) of the Code.
However, if 95% or more of the
Mortgage Loans are treated as
assets described in the foregoing
sections of the Code, the
Certificates will be treated as
such assets in their entirety.
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S-38
<PAGE>
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The Offered Certificates will be
treated as "qualified mortgages"
for another REMIC under Section
860G(a)(3)(C) of the Code and as
"permitted assets" for a "financial
asset securitization investment
trust" under Section 860L(c) of the
Code.
For further information regarding
the Federal income tax consequences
of investing in the Offered
Certificates, see "Certain Federal
Income Tax Consequences" herein and
in the Prospectus.
ERISA Considerations...................... A fiduciary of any employee benefit
plan or other retirement
arrangement subject to the Employee
Retirement Income Security Act of
1974, as amended ("ERISA"), or
Section 4975 of the Code (a "Plan")
should review carefully with its
legal counsel 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 Code
or whether there exists any
statutory or administrative
exemption applicable to an
investment therein.
The U.S. Department of Labor has
issued to the Underwriter an
individual exemption, Prohibited
Transaction Exemption 90-83, which
generally exempts from the
application of certain of the
prohibited transaction provisions
of Section 406 of ERISA and the
excise taxes imposed on such
prohibited transactions by Section
4975(a) and (b) of the Code and
Section 502(i) of ERISA,
transactions relating to the
purchase, sale and holding of
pass-through certificates
underwritten or placed by the
Underwriter and the servicing and
operation of related asset pools,
provided that certain conditions
are satisfied.
To the extent described herein, the
Depositor expects that Prohibited
Transaction Exemption 90-83 will
generally apply to the Senior
Certificates, but it will not apply
to the other Offered Certificates.
Accordingly, the Class A-1C, Class
A-2, Class A-3, Class A-4, Class
B-1, Class B-2 and Class B-3
Certificates should not be acquired
by, on behalf of, or with assets of
a Plan, unless the purchase and
continued holding of any such
Certificate or interest therein, is
exempt from the prohibited
transaction provisions of Section
406 of ERISA and Section 4975 of
the Code under Sections I and III
of Prohibited Transaction Class
Exemption 95-60, which provides an
exemption from the prohibited
transaction rules for certain
transactions involving an insurance
company general account. See "ERISA
Considerations" herein and in the
Prospectus.
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S-39
<PAGE>
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Ratings .................................. It is a condition to their issuance
that the respective Classes of
Offered Certificates receive the
following credit ratings from
Standard & Poor's Ratings Services,
a Division of the McGraw-Hill
Companies, Inc. ("S&P") and Fitch
IBCA, Inc. ("Fitch"; and together
with S&P, the "Rating Agencies"):
Class S&P Fitch
----- --- -----
Class S AAAr AAA
Class A-1A AAA AAA
Class A-1B AAA AAA
Class A-1C AA+ AAA
Class A-2 AA AA
Class A-3 A A
Class A-4 A- A
Class B-1 BBB BBB
Class B-2 BBB- BBB-
Class B-3 NR BBB-
The foregoing ratings of the
Offered Certificates address the
timely payment thereon of interest
and, to the extent applicable, the
ultimate payment thereon of
principal on or before the Rated
Final Distribution Date. The
foregoing ratings of the Offered
Certificates do not address the tax
attributes of the Offered
Certificates or the Trust Fund. The
respective ratings of the Class S
Certificates do not address the
possibility that holders of such
Certificates might suffer a lower
than anticipated yield due to
prepayments on and/or other
liquidations of the Mortgage Loans
or that, as a consequence of a
rapid rate of prepayments and/or
liquidations of Mortgage Loans, the
holders of such Certificates may
not fully recover their initial
investments. The ratings of the
Offered Certificates do not address
certain other matters as described
under "Ratings" herein. There is no
assurance that any such rating will
not be lowered, qualified or
withdrawn by a Rating Agency, if,
in its judgment, circumstances so
warrant. There can be no assurance
whether any other rating agency
will rate any of the Offered
Certificates, or if one does, what
rating such agency would assign. 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. See
"Risk Factors--Limited Nature of
Ratings" and "Rating" in the
Prospectus.
Legal Investment ......................... The Offered Certificates will not
constitute "mortgage related
securities" for purposes of the
Secondary Mortgage Market
Enhancement Act of 1984 ("SMMEA").
As a result, the appropriate
characterization of the Offered
Certificates under various legal
investment restrictions, and thus
the ability of investors subject to
these restrictions to purchase the
Offered Certificates, is subject to
significant interpretive
- - --------------------------------------------------------------------------------
S-40
<PAGE>
- - --------------------------------------------------------------------------------
uncertainties. In addition,
institutions whose investment
activities are subject to review by
certain regulatory authorities may
be or may become subject to
restrictions on the investment by
such institutions in certain forms
of mortgage derivative securities.
Any such restrictions enacted or
adopted after the date hereof could
alter the extent to which such an
institution may continue to hold a
particular investment. Accordingly,
investors should consult their own
legal advisors to determine whether
and to what extent the Offered
Certificates may be purchased by
such investors. See "Legal
Investment" herein and in the
Prospectus.
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S-41
<PAGE>
<PAGE>
RISK FACTORS
Prospective purchasers of Offered Certificates should consider, among other
things, the following risk factors (as well as the risk factors set forth under
"Risk Factors" in the Prospectus) in connection with an investment therein.
Limited Liquidity
There is currently no secondary market for the Offered Certificates. The
Underwriter has indicated its current intention to make a secondary market in
the Offered Certificates, but it is not obligated to do so. There can be no
assurance that a secondary market for the Offered Certificates will develop or,
if one does develop, that it will provide holders of Offered Certificates with
liquidity of investment or that it will continue for the life of the Offered
Certificates. The Offered Certificates will not be listed on any securities
exchange and there are several factors that may limit the liquidity of such
Certificates. See "Risk Factors--Limited Liquidity of Offered Certificates" in
the Prospectus.
Risks Associated with the Nature of the Mortgaged Properties
General. The payment performance of the Offered Certificates will be
directly related to the payment performance of the Mortgage Loans. Each Mortgage
Loan is secured by a Mortgage on a multifamily or commercial property.
Multifamily and commercial lending is generally viewed as exposing a lender to a
greater risk of loss than one- to four-family residential lending. In addition,
there are certain risks inherent to multifamily and commercial lending that are
not present (or not present to the same degree) in one- to four-family lending.
In general, the ability of the Mortgagors to repay their Mortgage Loans and meet
their obligations in a timely manner will depend on a number of factors that
typically affect multifamily and commercial properties. See "Risk
Factors--Certain Factors Affecting Delinquency, Foreclosure and Loss of the
Mortgage Loans--General" in the Prospectus.
Dependence on Operations of the Mortgaged Properties. In the case of the
Mortgage Loans where the Mortgaged Properties are owner-occupied or occupied by
an affiliate, the ability of the related Mortgagors to repay their Mortgage
Loans will, in each case, depend in significant part on the success of the
particular Mortgagor's or affiliate's business. In other cases, the Mortgagors
will rely on periodic lease or rental payments from third party tenants to pay
for maintenance and other operating expenses of the related Mortgaged
Properties, to fund capital improvements and to service the related Mortgage
Loans and any other outstanding debt or obligations they may have. In several
such cases, a single tenant or a relatively small number of tenants account for
all or a disproportionately large share of the rentable space or rental income
of the related Mortgaged Property. A decline in the financial condition of a
significant or sole tenant (whether as a result of enhanced competition, a
general decline in the type of business in which such tenant engages or
otherwise), or the occurrence of other adverse circumstances with respect to
such tenant (such as bankruptcy or insolvency), will likely have a
disproportionately greater effect on the net operating income derived from any
such Mortgaged Property than would be the case if rentable space or rental
income were more evenly distributed among a greater number of tenants at the
property. See "Risk Factors--Certain Factors Affecting Delinquency, Foreclosure
and Loss of the Mortgage Loans--Dependence on Tenants", "--Property Location and
Condition", "--Competition", "--Changes in Laws" and "--Litigation" in the
Prospectus.
Dependence on Management. The Mortgaged Properties are generally managed by
a property manager (which may be the Mortgagor or an affiliate of the
Mortgagor), which is responsible for responding to changes in the local market
for the facilities offered at the property, planning and implementing the rental
or pricing structure, including staggering durations of leases and establishing
levels of rent payments, and causing maintenance and capital improvements to be
carried out in a timely fashion. Management errors may adversely affect the
long-term viability of a Mortgaged Property. Accordingly, concentration of
property management of the Mortgaged Properties increases the risk that the poor
performance of a single property manager will have a widespread effect on the
Mortgage Pool. See the table headed "Managers and Locations of the Mortgaged
Properties" on Exhibit A-1 hereto. See also "Risk Factors--Certain Factors
Affecting Delinquency, Foreclosure and Loss of the Mortgage Loans--Dependence on
Management" in the Prospectus.
S-42
<PAGE>
Risks Particular to Multifamily, Retail, Hotel, Office and Industrial
Properties. Ninety-three per cent (93.0%) of the Initial Pool Balance is secured
by Mortgages on Mortgaged Properties that constitute one of the following
property types: multifamily (104 Mortgaged Properties securing 38.7% of the
Initial Pool Balance); retail (94 Mortgaged Properties securing 26.0% of the
Initial Pool Balance); hotel (32 Mortgaged Properties securing 11.7% of the
Initial Pool Balance); office (25 Mortgaged Properties securing 11.6% of the
Initial Pool Balance); and industrial (9 Mortgage Properties securing 5.0% of
the Initial Pool Balance). See "Risk Factors--Certain Factors Affecting
Delinquency, Foreclosure and Loss of the Mortgage Loans--Risks Particular to
Multifamily Rental Properties", "--Risks Particular to Retail Properties",
"--Risks Particular to Hotel and Motel Properties", "--Risks Particular to
Office Properties" and "--Risks Particular to Industrial Properties" in the
Prospectus.
Potential Liability to the Trust Relating to a Material Adverse Environmental
Condition
A "Phase I" environmental site assessment of each Mortgaged Property was
performed in connection with the origination of the related Mortgage Loan. In
certain cases, environmental testing in addition to the "Phase I" assessment was
performed for the purpose of further assessing possible risks identified in the
"Phase I" assessment and determining whether and to what extent a Mortgagor
should be required to maintain environmental reserves or take remedial action.
No such assessment or review revealed any material adverse environmental
condition or circumstance at any Mortgaged Property, except as described under
"Description of the Mortgage Pool -- Property Assessments -- Environmental
Assessments" herein, and further except in those cases where (i) an operations
and maintenance plan (including, in some cases, in respect of
asbestos-containing materials, lead-based paint and/or radon) or periodic
monitoring of nearby properties was recommended and the Mortgagor agreed in the
Mortgage Loan documents to implement such a plan or (ii) the Mortgagor
established an escrow reserve to cover the estimated cost of remediation that
was recommended by the environmental consultant.
It is possible that the environmental assessments did not reveal all of the
hazardous substances present at the Mortgaged Properties or the full extent to
which such substances are present in any case. In some cases, testing was not
conducted for the presence of a particular hazardous substance, and there can be
no assurance that such testing (if conducted) would not have revealed the
presence of such substance. There may be material environmental liabilities of
which the Seller of the related Mortgage Loan or the related Column Third Party
Originator is not aware, and the environmental condition of the Mortgaged
Properties could in the future be affected by managers, tenants and occupants or
by third parties unrelated to the Mortgagors.
The Pooling Agreement will provide that neither the Servicer nor the
Special Servicer, acting on behalf of the Trust, may acquire, at foreclosure or
by deed in lieu thereof, title to a Mortgaged Property or take over its
operation unless:
(i) the Special Servicer has previously determined in accordance with
the Servicing Standard (as defined herein), based on a report prepared by a
person who regularly conducts environmental audits, that the Mortgaged
Property is in compliance with applicable environmental laws and
regulations and there are no circumstances or conditions present at the
Mortgaged Property that have resulted in any contamination for which
investigation, testing, monitoring, containment, clean-up or remediation
could be required under any applicable environmental laws and regulations;
or
(ii) in the event that the determination described in the immediately
preceding clause (i) above cannot be made, the Special Servicer has
previously determined in accordance with the Servicing Standard, on the
same basis as described in the immediately preceding clause (i) above, that
it would maximize the recovery to the Certificateholders on a present value
basis to acquire title to or possession of the Mortgaged Property and to
take such remedial, corrective and/or other further actions as are
necessary to bring the Mortgaged Property into compliance with applicable
environmental laws and regulations and to appropriately address any of the
circumstances and conditions referred to in the immediately preceding
clause (i) above.
S-43
<PAGE>
Such requirement precludes enforcement of the security for the related
Mortgage Loan until a satisfactory environmental site assessment is obtained (or
until any required remedial action is taken), but will decrease the likelihood
that the Trust will become liable for a material adverse environmental condition
at the Mortgaged Property. However, there can be no assurance that the
requirements of the Pooling Agreement will effectively insulate the Trust from
potential liability for a materially adverse environmental condition at any
Mortgaged Property. See "Description of the Pooling Agreements--Realization Upon
Defaulted Mortgage Loans" and "Certain Legal Aspects of Mortgage
Loans--Environmental Considerations" in the Prospectus.
Exposure of the Mortgage Pool to Adverse Economic or Other Developments Based on
Geographic Concentration
Repayments by the Mortgagors and the market value of the Mortgaged
Properties could be affected by economic conditions in regions where the
Mortgaged Properties are located, conditions in the real estate markets where
the Mortgaged Properties are located, and changes in governmental rules and
fiscal policies, acts of nature (which may result in uninsured losses), and
other factors particular to the locales of the respective Mortgaged Properties.
The Mortgaged Properties are located throughout 33 states and the District of
Columbia, with the largest concentrations in California (43 Mortgaged Properties
representing security for 14.8% of the Initial Pool Balance), New York (16
Mortgaged Properties representing security for 11.9% of the Initial Pool
Balance) and Florida (29 Mortgaged Properties representing security for 9.6% of
the Initial Pool Balance).
The economy of any state or region in which a Mortgaged Property is located
may be adversely affected to a greater degree than that of other areas of the
country by certain developments affecting industries concentrated in such state
or region. To the extent that general economic or other relevant conditions in
states or regions in which Mortgaged Properties securing significant portions of
the aggregate unpaid principal balance of the Mortgage Pool are located, decline
and result in a decrease in commercial property, housing or consumer demand in
the region, the income from and market value of such Mortgaged Properties may be
adversely affected. The real estate markets in many regions and locations of the
United States have experienced a general (and, in some areas, rapid)
strengthening in recent periods. Appraised Values of the Mortgaged Properties
generally reflect a general appreciation in market values of multifamily and
commercial real estate in the locations of such Mortgaged Properties and would
be expected to likewise reflect general declines in such market values (if such
declines were to occur). See "Risk Factors--Certain Factors Affecting
Delinquency, Foreclosure and Loss of the Mortgage Loans--Risks of Geographic
Concentration" and "--Lack of Insurance for Certain Special Hazard Losses" in
the Prospectus.
Risks Associated with Related Parties
Certain Mortgagors are affiliated or under common control with one another.
See "Description of the Mortgage Pool--Significant Concentrations" herein. In
addition, commercial tenants in certain Mortgaged Properties also may be tenants
in other Mortgaged Properties, and certain commercial tenants may be owned by
affiliates of the Mortgagors or otherwise related to or affiliated with a
Mortgagor. See the table titled "Major Tenants of the Commercial Mortgaged
Properties" on Exhibit A-1. In such circumstances, any adverse circumstances
relating to any such Mortgagor or commercial tenant or a respective affiliate
(in particular, the bankruptcy or insolvency of any such Mortgagors or tenants
or respective affiliates) 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 Mortgage Loans. For example, if a person that owns or directly or
indirectly controls several Mortgaged Properties experiences financial
difficulty at one Mortgaged Property, it could defer maintenance at one or more
other Mortgaged Properties in order to satisfy current expenses with respect to
the Mortgaged Property experiencing financial difficulty, or it could attempt to
avert foreclosure by filing a bankruptcy petition that might have the effect of
interrupting Monthly Payments for an indefinite period on all the related
Mortgage Loans. See "Certain Legal Aspects of Mortgage Loans--Bankruptcy Laws"
in the Prospectus. In addition, a number of the Mortgagors are limited or
general partnerships. Under certain circumstances, the bankruptcy of the general
partner in a partnership may result in the dissolution of such partnership. The
dissolution of a Mortgagor partnership, the winding-up of its affairs
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and the distribution of its assets could result in an acceleration of its
payment obligations under the related Mortgage Loan.
Increased Risk of Loss Associated with Concentrations of Mortgage Loans
Several of the individual Mortgage Loans and Cross-Collateralized Groups
have Cut-off Date Balances that are substantially higher than the average
Cut-off Date Balance. The largest Mortgage Loan in the Mortgage Pool, the
Rivergate Loan described herein, has a Cut-off Date Balance that represents 6.0%
of the Initial Pool Balance. The five largest Mortgage Loans and
Cross-Collateralized Groups have Cut-off Date Balances that represent in the
aggregate 14.9% of the Initial Pool Balance. In mortgage pools with
concentrations of loans having larger-than-average balances, adverse
circumstances relating to an individual loan or group of cross-collateralized
loans (such as a default or the occurrence of a material casualty event with
respect to a related mortgaged property) having a larger-than-average balance
can result in losses that are more severe, relative to the size of the pool,
than would be the case if the aggregate balance of such pool were more evenly
distributed.
Increased Risk of Default Associated with Balloon Payments; Anticipated
Repayment Date Considerations
One hundred sixty-six (166) Mortgage Loans, representing 40.7% of the
Initial Pool Balance, are Balloon Mortgage Loans that will have a substantial
payment (that is, a Balloon Payment) due on their respective stated maturity
dates unless prepaid prior thereto. In addition, 113 Mortgage Loans,
representing 52.2% of the Initial Pool Balance, are ARD Loans that will have
substantial scheduled principal balances outstanding as of their respective
Anticipated Repayment Dates, in each case unless the Mortgage Loan is previously
prepaid. Two hundred thirty-eight (238) of the Balloon Loans and the ARD Loans,
representing 79.3% of the Initial Pool Balance, will have Balloon Payments due
or Anticipated Repayment Dates scheduled, as the case may be, during the period
from and including December 2007 through and including June 2008. Mortgage Loans
with Balloon Payments involve a greater likelihood of default than
self-amortizing loans because the ability of a borrower to make a Balloon
Payment typically will depend upon its ability either to refinance the loan or
to sell the related mortgaged property. Similarly, the ability of a Mortgagor to
repay an ARD Loan on the Anticipated Repayment Date will depend on its ability
to either refinance the loan or sell the related Mortgaged Property. The ability
of a Mortgagor to accomplish either of these goals will be affected by a number
of factors occurring at the time of attempted refinancing or sale, including the
level of available mortgage rates, the fair market value of the property, the
Mortgagor's equity in the property, the Mortgagor's financial condition, the
operating history of the property, tax laws, prevailing economic conditions and
the availability of credit for multifamily and commercial properties. See "Risk
Factors--Certain Factors Affecting Delinquency, Foreclosure and Loss of the
Mortgage Loans--Increased Risk of Default Associated With Balloon Payments" in
the Prospectus.
Extension Risk Associated With Modification of Mortgage Loans with Balloon
Payments
In order to maximize recoveries on defaulted Mortgage Loans, the Pooling
Agreement enables the Special Servicer to extend (for up to three years past
stated maturity) and modify Mortgage Loans that are in material default or as to
which a payment default (including the failure to make a Balloon Payment) is
reasonably foreseeable; subject, however, to the limitations described under
"Servicing of the Mortgage Loans--Modifications, Waivers, Amendments and
Consents" herein. There can be no assurance, however, that any such extension or
modification will increase the present value of recoveries in a given case. Any
delay in collection of a Balloon Payment that would otherwise be distributable
in respect of a Class of Offered Certificates, whether such delay is due to
borrower default or to modification of the related Mortgage Loan by the Special
Servicer, will likely extend the weighted average life of such Class of Offered
Certificates. See "Yield and Maturity Considerations" herein and in the
Prospectus.
Limited Recourse
The Mortgage Loans are nonrecourse obligations of the Mortgagors and,
accordingly, in the case of default, recourse will be limited to the related
Mortgaged Property securing the defaulted Mortgage Loan. Consequently, payment
on each Mortgage Loan prior to maturity is dependent primarily on the
sufficiency of the net operating income
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of the related Mortgaged Property and, at maturity (whether at scheduled
maturity or, in the event of a default under the related Mortgage Loan, upon the
acceleration of such maturity), upon the then market value of the related
Mortgaged Property or the ability of the related borrower to refinance the
Mortgaged Property. Neither the Offered Certificates nor the Mortgage Loans are
insured or guaranteed by any governmental entity or private mortgage insurer or
by any other person. See "Risk Factors--Limited Assets" and "--Certain Factors
Affecting Delinquency, Foreclosure and Loss of the Mortgage Loans--Limited
Recourse Nature of the Mortgage Loans" in the Prospectus.
Risks Associated With Changes in Concentrations
If and as payments in respect of principal (including voluntary prepayments
and prepayments resulting from casualty or condemnation, defaults and
liquidations and from repurchases and substitutions due to breaches of
representations and warranties) are received with respect to the Mortgage Loans,
the remaining Mortgage Loans as a group may exhibit increased concentration with
respect to the type of properties, property characteristics, number of
Mortgagors and affiliated Mortgagors and geographic location. Because payments
(or advances in lieu thereof) and other collections of principal on the Mortgage
Loans are payable on the respective Classes of Sequential Pay Certificates in
sequential order, such Classes that have a lower sequential priority are
relatively more likely to be exposed to any risks associated with changes in
concentrations of loan or property characteristics.
Zoning Compliance
Due to, among other reasons, changes in applicable building and zoning
ordinances and codes ("Zoning Laws") affecting certain of the Mortgaged
Properties which have come into effect after the construction of improvements on
such Mortgaged Properties, certain improvements may not comply fully with
current Zoning Laws, including density, use, parking and set back requirements,
but qualify as permitted non-conforming uses and/or structures. Such changes may
limit the ability of the Mortgagor to rebuild the premises "as is" in the event
of a substantial casualty loss with respect thereto. See "Description of the
Mortgage Pool--Property Assessments--Zoning and Building Code Compliance"
herein.
Uninsured Loss; Sufficiency of Insurance
The Mortgagors are generally required to maintain comprehensive liability
insurance, "all-risk" fire, casualty and hazard insurance, flood insurance (if
required by applicable law) and rental income insurance with respect to the
Mortgaged Properties with policy specifications, limits and deductibles
customarily carried for similar properties. Certain types of losses, however,
may be either uninsurable or not economically insurable, such as losses due to
riots or acts of war or earthquakes. Should an uninsured loss occur, a Mortgagor
could lose both its investment in and its anticipated profits and cash flow from
its Mortgaged Property, which would adversely affect the Mortgagor's ability to
make payments under its Mortgage Loan. Although, in general, the Mortgagors have
covenanted to insure their respective Mortgaged Properties at levels generally
consistent with that carried by the applicable property type where the Mortgaged
Property is located, there is a possibility of casualty losses with respect to
the Mortgaged Property for which Insurance Proceeds may not be adequate.
Consequently, there can be no assurance that any loss incurred will not exceed
the limits of policies obtained. In addition, earthquake insurance is generally
not required to be maintained by a Mortgagor, even in respect of Mortgaged
Properties located in California.
Risks Particular to Ground Leases
Several of the Mortgage Loans are secured by first mortgage liens (i) on
both the related Mortgagor's leasehold interest and the underlying fee simple
interest in the related Mortgaged Property; (ii) on the related Mortgagor's
leasehold interest in a portion of the related Mortgaged Property and its fee
simple interest in another portion of such Mortgaged Property; or (iii) solely
on the related Mortgagor's leasehold interest in the related Mortgaged Property.
See "Certain Legal Aspects of Mortgage Loans -- Foreclosure -- Leasehold Risks"
in the Prospectus.
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Special Prepayment and Yield Considerations
The yield to maturity on any Offered Certificate will depend on, among
other things, the rate and timing of principal payments (including voluntary
prepayments and prepayments resulting from casualty or condemnation, defaults
and liquidations and repurchases due to breaches of representations and
warranties) on the Mortgage Loans and the allocation thereof to reduce the
Certificate Principal Balance or Certificate Notional Amount (each as defined
herein) of such Certificate. The Class S Certificates will be especially
sensitive to the rate and timing of such principal prepayments. In addition, in
the event of any repurchase of a Mortgage Loan from the Trust Fund due to a
material breach of representation or warranty, the repurchase price paid would
be passed through to the holders of the REMIC Regular Certificates with the same
effect as if such Mortgage Loan had been prepaid in full (except that no
Prepayment Premium or Yield Maintenance Premium would be payable with respect to
any such repurchase). No representation is made as to the anticipated rate of
prepayments on the Mortgage Loans or as to the anticipated yield to maturity of
any Certificate. See "Yield and Maturity Considerations" herein and in the
Prospectus and "Risk Factors--Effect of Prepayments on Average Life of
Certificates" and "--Effect of Prepayments on Yield of Certificates" in the
Prospectus.
If an Offered Certificate is purchased at a premium and distributions in
reduction of the Certificate Principal Balance or Certificate Notional Amount
thereof occur at a rate faster than anticipated at the time of purchase, then
the investor's actual yield to maturity may be lower than that assumed at the
time of purchase Conversely, if an Offered Certificate is purchased at a
discount and distributions in reduction of the Certificate Principal Balance
thereof occur at a rate slower than that assumed at the time of purchase, the
investor's actual yield to maturity may be lower than assumed at the time of
purchase.
Prepayment Premiums and Yield Maintenance Premiums, even if available and
distributable on any Class of Offered Certificates, may not be sufficient to
offset fully any loss in yield on such Class of Certificates attributable to the
related prepayments of the Mortgage Loans. Provisions requiring Prepayment
Premiums or Yield Maintenance Premiums may not be enforceable in some states and
under federal bankruptcy law, and may constitute interest for usury purposes.
Accordingly, no assurance can be given that the obligation to pay a Prepayment
Premium or Yield Maintenance Premium will be enforceable under applicable state
or federal law. In addition, even if such obligation is enforceable, no
assurance can be given that, in the event of a prepayment resulting from a
foreclosure of a Mortgage Loan, the Liquidation Proceeds will be sufficient to
make such payment.
The aggregate amount of distributions on the Offered Certificates, the
yield to maturity of the Offered Certificates, the rate of principal payments on
the Offered Certificates with Certificate Principal Balances and the weighted
average life of the Offered Certificates with Certificate Principal Balances
will be affected by the rate and the timing of delinquencies and defaults, and
by the rate, timing and magnitude of losses, on the Mortgage Loans. If a
purchaser of an Offered Certificate calculates its anticipated yield based on an
assumed rate of default and amount of losses on the Mortgage Loans that is lower
than the default rate and the amount of losses actually experienced, and such
additional losses are allocable in reduction of the Certificate Principal
Balance or Certificate Notional Amount, as the case may be, of such Certificate,
such purchaser's actual yield to maturity will be lower than that so calculated
and could, under certain extreme scenarios, be negative. In general, the earlier
a loss is borne by an investor, the greater is the effect on such investor's
yield to maturity.
Regardless of whether losses ultimately result, delinquencies and defaults
on the Mortgage Loans may significantly delay the receipt of payments by the
holder of an Offered Certificate (to the extent that P&I Advances or the
subordination of another Class of Certificates does not fully offset the effects
of any such delinquency or default), and interest accrued and payable to the
Servicer or Special Servicer in respect of Advances made thereby in connection
with such defaults and delinquencies will reduce amounts available for
distribution on one or more Classes of Certificates and may ultimately result in
the reduction of the Class Principal Balance or Class Notional Amount, as the
case may be, of any such Class. Following a default by a Mortgagor in payment of
a Mortgage Loan at maturity, the Special Servicer may, subject to certain
limitations, extend the maturity of such Mortgage Loan up to three years. The
obligation of the Servicer or the Trustee, as applicable, to make P&I Advances
in respect of a Mortgage Loan that is
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delinquent as to its Balloon Payment is limited to the extent described under
"Description of the Certificates--P&I and Other Advances" herein.
Subordination of Subordinate Certificates
As and to the extent described herein, the rights of the holders of the
respective Classes of Offered Certificates that are Subordinate Certificates to
receive distributions of amounts collected or advanced on or in respect of the
Mortgage Loans will be subordinated to those of the holders of each other Class
of Offered Certificates, including the Senior Certificates, with a higher
priority of payment. See "Description of the Certificates--Distributions--
Application of the Available Distribution Amount" and "--Subordination;
Allocation of Realized Losses and Certain Expenses" herein.
Potential Conflicts of Interest
As described herein and in the Prospectus, the Special Servicer will have
considerable latitude in determining whether to liquidate or modify defaulted
Mortgage Loans. See "Servicing of the Mortgage Loans" herein and "Description of
the Pooling Agreements" in the Prospectus. It is anticipated that certain of the
lower rated and unrated Certificates, including a significant portion of the
Class C Certificates, will be acquired by an entity for which an affiliate of
the Special Servicer performs advisory services. Investors should consider that,
although the Special Servicer will be obligated to act in accordance with the
Pooling Agreement, including the Servicing Standard set forth therein, it may
have interests when dealing with defaulted Mortgage Loans and REO Properties
that conflict with those of the holders of certain Classes of Certificates. Such
acquisition may not occur, however, and if it does, there is no assurance as to
how long the Special Servicer or its affiliate will hold such interest. See
"Risk Factors--Potential Conflicts of Interest" in the Prospectus.
Affiliates of the Servicer and GECA may acquire an interest in a portion of
certain classes of the Subordinate Certificates and all of the Class D-1
Certificates. An affiliate of the Servicer is the Mortgagor under the Mortgaged
Loan secured by the Mortgaged Property identified on Exhibit A-1 as White Pines
Plaza and another affiliate of the Servicer holds a limited partnership interest
(of approximately 90% ) in the Mortgagor under the Mortgage Loan secured by the
Mortgaged Property identified on Exhibit A-1 as Tower Square. Affiliates of the
Servicer may also have in the future additional financing relationships with
other Mortgagors or their affiliates. Investors should consider that, although
the Servicer will be obligated to act in accordance with the Pooling Agreement,
including the Servicing Standard set forth therein, it may have interests
(especially if it or its affiliates hold Certificates or have interests in or
other financial relationships with certain Mortgagors) that are in conflict with
those of holders of the other Certificates.
Certain Rights of the Controlling Class
The holder or holders of Certificates representing a majority interest in
the Controlling Class will have the right, subject to certain conditions
described herein, to replace the Special Servicer, as well as to elect a
Controlling Class Representative that may, subject to certain limitations
described herein, advise the Special Servicer in connection with servicing
Specially Serviced Mortgage Loans The holders of the Controlling Class and the
Controlling Class Representative may have interests that conflict with those of
the holders of certain other Classes of Certificates.
ERISA Considerations
Due to the complexity of regulations which govern pension and other
employee benefit plans subject to ERISA and plans and other retirement
arrangements subject to Section 4975(c) of the Code, prospective investors that
are using the assets of such plans or arrangements are urged to consult their
own counsel regarding consequences under ERISA and the Code of the acquisition,
ownership and disposition of the Offered Certificates. In particular, the
purchase or holding of the Class A-1C, Class A-2, Class A-3, Class A-4, Class
B-1, Class B-2 and Class B-3 Certificates by any such plan or arrangement may
result in a prohibited transaction or the imposition of excise taxes or civil
penalties. Accordingly, such Certificates should not be acquired by, on behalf
of, or with assets of any such plan or arrangement,
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unless the purchase and continued holding of any such Certificate or interest
therein, is exempt from the prohibited transaction provisions of Section 406 of
ERISA and Section 4975 of the Code under Sections I and III of Prohibited
Transaction Class Exemption 95-60, which provides an exemption from the
prohibited transaction rules for certain transactions involving an insurance
company general account. See "ERISA Considerations" herein and in the
Prospectus.
Risk of Year 2000
The transition from the year 1999 to the year 2000 may disrupt the ability
of computerized systems to process information. If the Servicer, the Special
Servicer or the Trustee do not have by the year 2000 computerized systems which
are year 2000 compliant, the ability of the Servicer, the Special Servicer or
the Trustee to service the Mortgage Loans (in the case of the Servicer and the
Special Servicer) and make distributions to the Certificateholders (in the case
of the Trustee) may be materially and adversely affected.
DESCRIPTION OF THE MORTGAGE POOL
General
The Mortgage Pool will consist primarily of 301 multifamily and commercial
mortgage loans (the "Mortgage Loans") with an aggregate Cut-off Date Balance of
approximately $1,564,253,433 (the "Initial Pool Balance"). See "Description of
the Trust Funds--General" and "--Mortgage Loans--General" in the Prospectus. The
"Cut-off Date Balance" of each Mortgage Loan is, in general, the unpaid
principal balance thereof as of June 1, 1998 (the "Cut-off Date"), after
application of all payments due on or before such date, whether or not received.
All numerical information provided herein with respect to the Mortgage Loans is
provided on an approximate basis. All weighted average information provided
herein with respect to the Mortgage Loans reflects the weighting of the Mortgage
Loans by their respective Cut-off Date Balances.
In general, each Mortgage Loan is evidenced by a note or bond (a "Mortgage
Note") and is secured by a mortgage, deed of trust or similar security
instrument (a "Mortgage") creating a first mortgage lien on the fee simple
and/or leasehold interest of the related mortgagor (the "Mortgagor") in real
property used for commercial or multifamily purposes (each, a "Mortgaged
Property") and security interests in certain funds and accounts and other
collateral described herein. In particular, 289 Mortgage Loans representing
94.0% of the Initial Pool Balance, are secured primarily by the related
Mortgagor's fee simple interest in the related Mortgaged Property; and 10
Mortgage Loans, representing 3.4% of the Initial Pool Balance, are secured
solely by the related Mortgagor's leasehold interest in the related Mortgaged
Property; one Mortgage Loan (the Resurgens Plaza Loan described herein),
representing 2.1% of the Initial Pool Balance, is secured by the related
Mortgagor's leasehold interest in a portion of the related Mortgaged Property
and the related Mortgagor's fee simple interest in another portion of such
Mortgaged Property; and one Mortgage Loan, representing 0.5% of the Initial Pool
Balance, are secured by both the related Mortgagor's leasehold interest and the
underlying fee simple interest in the related Mortgaged Property; See "Certain
Legal Aspects of Mortgage Loans--Foreclosure--Leasehold Considerations" in the
Prospectus.
The Mortgage Loans are not insured or guaranteed by the Depositor, the
Underwriter, either Seller, any Column Third Party Originator, the Servicer, the
Special Servicer, the Trustee, the REMIC Administrator or any of their
respective affiliates or by any governmental entity or private insurer. In
general, the Mortgage Loans are non-recourse loans.
Eleven separate groups of Mortgage Loans (the "Cross-Collateralized
Mortgage Loans"; and each such group, a "Cross-Collateralized Group") are,
solely as among the Mortgage Loans in each such particular group,
cross-defaulted and cross-collateralized with each other. See, however, "Risk
Factors--Certain Factors Affecting Delinquency, Foreclosure and Loss of the
Mortgage Loans--Limitations on Enforceability of Cross-Collateralization" in the
Prospectus. Those eleven Cross-Collateralized Groups are as follows: (i) the
Raritan Center Loans (as defined herein),
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which represent 3.3% of the Initial Pool Balance; (ii) the two Mortgage Loans
secured by the Mortgaged Properties identified on Exhibit A-1 as Royal Plaza
Hotel -Marlborough and Royal Plaza Hotel - Fitchburg, which represent 0.8% of
the Initial Pool Balance; (iii) the two Mortgage Loans secured by the Mortgaged
Properties identified on Exhibit A-1 as Flower Hill Professional Center and
Flower Hill McDonald's, which represent 0.4% of the Initial Pool Balance; (iv)
the two Mortgage Loans secured by the Mortgaged Properties identified on Exhibit
A-1 as Wyoming-Enzie Properties and Mesa Properties, which represent 0.3% of the
Initial Pool Balance; (v) the three Mortgage Loans secured by the Mortgaged
Properties identified on Exhibit A-1 as Tivoli Condominiums, Cross Creek
Apartments and Tamara Hills Townhomes, which represent 0.3% of the Initial Pool
Balance; (vi) the two Mortgage Loans secured by the Mortgaged Properties
identified on Exhibit A-1 as Cedarfield Plaza and Greece Mini Storage, which
represent 0.2% of the Initial Pool Balance; (vii) the two Mortgage Loans secured
by the Mortgaged Properties identified on Exhibit A-1 as Bridge Street Lodge and
P&R Building, which represent 0.2% of the Initial Pool Balance; (viii) the two
Mortgage Loans secured by the Mortgaged Properties identified on Exhibit A-1 as
Highland Pavilion Shopping Center and Highland Pavilion Cinema, which represent
0.8% of the Initial Pool Balance; (ix) the five Mortgage Loans secured by the
Mortgaged Properties identified on Exhibit A-1 as Courtyard by Marriott
- - -Pensacola, Courtyard by Marriott - Tuscaloosa, Fairfield Inn-Pensacola,
Fairfield Inn-Birmingham and Fairfield Inn-Tuscaloosa, which represent 1.1% of
the Initial Pool Balance; (x) the two Mortgage Loans secured by the Mortgaged
Properties identified on Exhibit A-1 as Holiday Inn-Jacksonville Airport and
Courtyard by Marriott-Jacksonville, which represent 1.4% of the Initial Pool
Balance and (xi) the two Mortgage Loans secured by the Mortgaged Properties
identified on Exhibit A-1 as Pellcare Nursing Home - Hickory and Pellcare
Nursing Home - Winston-Salem, which represent 0.3% of the Initial Pool Balance.
In the case of one of the Cross-Collateralized Groups, the Mortgaged Properties
securing each such Cross-Collateralized Group are located in multiple states.
One of the Cross-Collateralized Groups, which represents 1.4% of the Initial
Pool Balance, provides that the applicable cross-collateralization and
cross-default features will terminate upon satisfaction of certain property
performance targets and/or minimum debt service coverage ratio requirements.
Each Cross-Collateralized Mortgage Loan is identified on Exhibit A-1 as
corresponding to a particular Mortgaged Property (as to such Mortgage Loan, the
"Primary Mortgaged Property"); however, such Mortgaged Property, as of the
Closing Date, will secure each Mortgage Loan in the applicable
Cross-Collateralized Group. Unless the context otherwise requires, references
herein to "related Mortgaged Property" (or "related REO Property") are, in the
case of a Cross-Collateralized Mortgage Loan, references to the Mortgaged
Property that is (or the REO Property that was) designated as the Primary
Mortgaged Property for such Mortgage Loan, and references to "related Mortgage
Loan" or "related Cross-Collateralized Mortgage Loan" are, in the case of a
Mortgaged Property that secures (or an REO Property that secured) a
Cross-Collateralized Group, references to the Mortgage Loan in such
Cross-Collateralized Group as to which such Mortgaged Property has (or such REO
Property had) been designated as the Primary Mortgaged Property. Except where
otherwise specifically indicated, statistical information provided herein with
respect to the Cross-Collateralized Mortgage Loans is so provided on an
individual Mortgage Loan basis without regard to the cross-collateralization,
and each Cross-Collateralized Mortgage Loan will be deemed to be secured only by
a mortgage lien on the related Primary Mortgaged Property.
In certain cases, a single Mortgage Loan may be secured by mortgage liens
on two or more properties that are contiguous or otherwise in close proximity or
are operated jointly. For purposes hereof, all such properties will be
considered to constitute one Mortgaged Property.
Certain of the Cross-Collateralized Groups and the individual Mortgage
Loans that are secured by multiple parcels permit individual property releases
upon the satisfaction of certain criteria and/or the payment of a release price
equal to between 100% and 125% of the allocated loan amount for the property to
be released.
Other than the Rivergate Loan described herein, no individual Mortgage Loan
or Cross-Collateralized Group represents more than 3.3% of the Initial Pool
Balance.
In the case of 199 Mortgage Loans, representing 71.4% of the Initial Pool
Balance, the related Mortgagors are permitted to "defease" their respective
Mortgage Loans during the related Lockout Period but not earlier than two to
three years (or, in certain cases, a longer period) following the Closing Date.
In connection with any such defeasance, the related real property would be
released and the related Mortgagor would be required to deliver United States
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Treasury obligations that, by their terms, would generate cash flows sufficient
to make all scheduled Monthly Payments on the defeased Mortgage Loan. Additional
conditions to defeasance generally include the absence of any event of default
under the terms of the related Mortgage Loan, the payment by the Mortgagor of
all accrued and unpaid interest thereon and any costs and expenses incurred by
the mortgagee in connection with the release of the Mortgaged Property, the
delivery of a security agreement granting the Trust a first priority security
interest in the United States Treasury obligations pledged by the Mortgagor (and
an opinion of counsel to that effect) and, in some cases, the confirmation by
each Rating Agency that such defeasance will not in and of itself result in a
qualification, withdrawal or downgrade of any rating assigned by such Rating
Agency to any Class of Certificates. In cases where such confirmation by each
Rating Agency is a condition to defeasance, the Pooling Agreement will require
the Servicer to obtain such confirmation prior to accepting the defeasance.
Set forth below are the number of Mortgage Loans, and the approximate
percentage of the Initial Pool Balance represented by such Mortgage Loans, that
are secured by Mortgaged Properties located in the five states with the highest
concentrations:
Percentage
Number of of Initial
State Mortgage Loans Pool Balance
----- -------------- ------------
California 43 14.8%
New York 16 11.9%
Florida 29 9.6%
Texas 36 7.7%
Georgia 16 6.1%
The remaining Mortgaged Properties are located throughout 28 other states
and the District of Columbia.
Set forth below are the number of Mortgage Loans, and the approximate
percentage of the Initial Pool Balance represented by such Mortgage Loans, that
are secured by Mortgaged Properties operated for each indicated purpose:
Percentage
Property Number of of Initial
Type Mortgage Loans Pool Balance
-------- -------------- ------------
Multifamily 104 38.7%
Retail 94 26.0%
Hotel 32 11.7%
Office 25 11.6%
Industrial 9 5.0%
Manufactured Housing 19 4.1%
Self Storage 10 1.3%
Mixed Use/Other 8 1.5%
See "Description of the Trust Funds--Mortgage Loans--Mortgage Loans Secured
by Multifamily Rental Properties", "--Mortgage Loans Secured by Retail
Properties", "--Mortgage Loans Secured by Hotel and Motel Properties" and
"--Mortgage Loans Secured by Office Properties" and "--Mortgage Loans Secured by
Industrial Properties" in the Prospectus. Certain of the multifamily Mortgaged
Properties are subject to land use restrictive covenants or contractual
covenants that require all or a portion of the units to be rented to low income
tenants. Several of the multifamily Mortgaged Properties have concentrations of
student tenants.
Except as described below or in a default scenario, each Mortgage Loan
bears interest at a rate per annum (a "Mortgage Rate") that is fixed for the
remaining term of the Mortgage Loan. As of the Cut-off Date, the Mortgage Rates
of the Mortgage Loans will range from 6.650% to 8.860% per annum, and the
weighted average Mortgage Rate
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will be 7.210% per annum. The Mortgage Loans provide for scheduled payments
("Monthly Payments") of principal and interest to be due on the first day of
each month, or if such day is not a business day, the next succeeding business
day (each, a "Due Date"). Interest payable in respect of any Mortgage Loan on
any Due Date will be the interest accrued thereon during the most recently ended
calendar month. Interest on 24 Mortgage Loans, representing 14.1% of the Initial
Pool Balance, will be computed on the basis of a 360-day year consisting of
twelve 30-day months. Interest on the remaining 277 Mortgage Loans, representing
85.9% of the Initial Pool Balance, will be computed on the basis of the actual
number of days elapsed during such calendar month and a 360-day year (Mortgage
loans accruing interest on this basis being herein referred to as "Non-30/360
Mortgage Loans"). The Mortgage Loans identified as "ARD Loans" on the table
entitled "Characteristics of the Mortgage Loans on Exhibit A-1 (collectively,
the "ARD Loans") each: (1) has an original term to maturity of, in general,
approximately 25 to 30 years; and (2) provides that, if the Mortgage Loan is not
repaid in full by a specified date that is generally 10 to 15 years after
origination (the "Anticipated Repayment Date"), then thereafter, until paid in
full: (a) additional interest (the "Additional Interest") will accrue on such
Mortgage Loans (such Additional Interest to be deferred and paid after the
outstanding principal balance of such Mortgage Loan is paid in full); and (b) in
general, certain excess cash flow from the related Mortgaged Property will be
applied to amortize such Mortgage Loan on an accelerated basis. In general, the
Additional Interest Rates on the ARD Loans is not less than 2.00% per annum. The
ARD Loans represent 52.0% of the Initial Pool Balance. The ability of a
Mortgagor under an ARD Loan to repay its Mortgage Loan on the related
Anticipated Repayment Date will generally depend on its ability to either
refinance the Mortgage Loan or sell the related Mortgaged Property. If then
prevailing interest rates are relatively high, such Mortgagor may have less
incentive to repay its Mortgage Loan on the related Anticipated Repayment Date
than would otherwise be the case. Accordingly, there can be no assurance that
any ARD Loan will be paid in full as of its related Anticipated Repayment Date.
One hundred sixty-six (166) of the Mortgage Loans (the "Balloon Mortgage
Loans"), representing 40.7% of the Initial Pool Balance, provide for monthly
payments of principal on each Due Date based on amortization schedules longer
than the remaining terms of such Mortgage Loans, thereby leaving substantial
amounts of principal (each such payment thereof, together with accrued interest
to the related maturity date, a "Balloon Payment") due and payable on their
respective stated maturity dates (each a "Maturity Date"). As stated above, 113
Mortgage Loans, representing 52.2% of the Initial Pool Balance, are ARD Loans.
The remaining 22 Mortgage Loans, representing 7.1% of the Initial Pool Balance,
are generally fully or substantially amortizing. See "Risk Factors--Increased
Risk of Default Associated with Balloon Payments" and "--Extension Risk
Associated with Modification of Mortgage Loans with Balloon Payments" herein,
and "Risk Factors--Certain Factors Affecting Delinquency, Foreclosure and Loss
of the Mortgage Loans--Increased Risk of Default Associated with Balloon
Payments" in the Prospectus.
The original term to stated maturity (or, in the case of each ARD Loan, to
the Anticipated Repayment Date) of each Mortgage Loan is between 60 and 300
months. The original amortization schedules of the Mortgage Loans range from 144
to 360 months.
None of the Mortgage Loans will be 30 days or more delinquent as of the
Closing Date, and no Mortgage Loan has been 30 days or more delinquent during
the 12 months preceding the Closing Date or, if originated during such 12-month
period, since origination.
Property Assessments
In connection with the origination of the respective Mortgage Loans, the
Mortgaged Properties were evaluated in a manner generally consistent with the
standards described below. See also "Description of the Trust Funds--Mortgage
Loans--Default and Loss Considerations with Respect to the Mortgage Loans" in
the Prospectus.
Environmental Assessments. All of the Mortgaged Properties were subject to
"Phase I" environmental assessments or updates that were performed on or after
January 23, 1997, in each case in connection with the origination of the related
Mortgage Loan. In some cases, additional environmental testing was conducted.
Such environmental testing at any particular Mortgaged Property did not
necessarily cover all potential environmental issues. For example, tests for
radon and lead-based paint were performed solely in the case of multifamily
properties and only when the
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originator of the related Mortgage Loan believed such testing was warranted
under the circumstances. In each case where such environmental assessments or
updates revealed violations, such originator determined that any necessary
remediation was being undertaken in a satisfactory manner or required that it be
addressed post-closing and, in some instances, the Mortgagor was required to
establish reserves to cover the estimated cost of such remediation. In addition,
there can be no assurance in any particular case that the environmental
assessment identified all adverse or potentially adverse environmental
conditions at the related Mortgaged Property.
The most common recommendation in the resulting environmental reports
related to the establishment of an operation and maintenance program (an "O&M
Program") or the taking of other remedial action in respect of
asbestos-containing materials, lead-based paint and/or radon. However, in some
other cases, other environmental conditions were identified. In cases where the
environmental consultant recommended specific remediation, the Mortgagor was
generally required to effect such remediation and to deposit with the lender
cash in a sum sufficient (generally 100% to 125% of the estimated cost) to
accomplish the remediation.
The Raritan Center Properties described herein are located within Raritan
Center, which is part of a larger tract of land that was used by the United
States Army for military and industrial purposes from 1914 to 1964, portions of
which are a known hazardous waste location. The Raritan Center Properties are
located on sites identified as areas of environmental concern. In connection
with the origination of the Raritan Center Loans, an environmental consulting
firm performed a "Phase I" assessment of the Raritan Center Properties; another
environmental consulting firm reviewed that assessment and other assessments
conducted in prior years by consultants for the Army Corps of Engineers, which
has generally undertaken efforts to remediate certain types of contamination at
Raritan Center. Testing on the Raritan Center Properties detected the presence
of volatile organic compounds in groundwater, arsenic contamination of soil and
an underground plume of other volatile organic compounds, stemming in part from
the prior presence of a sewage treatment facility. However, Column's
environmental consultants concluded that any potential for these conditions to
pose an immediate threat to human health was diminished because of the levels of
concentration, the presence of municipal water supplies, the use of the Raritan
Center Properties for office and industrial purposes and the paving over of
portions of the real property. Liability for environmental conditions at Raritan
Center has not been asserted against the Mortgagor under the Raritan Center
Loans or its controlling persons, but if successfully asserted such liability
could adversely affect the Mortgagor and its operations. In addition, the
environmental conditions on the Raritan Center Properties could adversely affect
the ability of the owner to cost-effectively convert the properties to
alternative uses, construct additional improvements or engage in any subsurface
repairs. See "Certain Legal Aspects of Mortgage Loans--Environmental
Considerations" in the Prospectus.
In several cases, the environmental report for the Mortgaged Property
identified potential environmental problems at nearby properties but indicated
that the subject Mortgaged Property had not been affected (or had been minimally
affected), the potential for the problem to affect the subject Mortgaged
Property was limited and/or a person responsible for remediation had been
identified.
Property Condition Assessments. Inspections of all of the Mortgaged
Properties (or updates of previously conducted inspections) were conducted by
property inspection firms on or after November 4, 1996, in each case in
connection with the origination of the related Mortgage Loan. Such inspections
were generally commissioned to inspect the exterior walls, roofing, interior
construction, mechanical and electrical systems and general condition of the
site, buildings and other improvements located at a Mortgaged Property. With
respect to certain of the Mortgage Loans, the resulting reports indicated a
variety of deferred maintenance items and recommended capital improvements. The
estimated cost of the necessary repairs or replacements at a Mortgaged Property
was included in the related property condition assessment. In each such
instance, the related Mortgagor was required to undertake necessary repairs or
replacements, and in some instances the Mortgagor was required to establish
reserves, generally in the amount of 100% to 125% of the cost estimated in the
inspection report, to fund deferred maintenance or replacement items that the
reports characterized as in need of prompt attention. See the table titled
"Engineering Reserves and Recurring Replacement Reserves" on Exhibit A-1 hereto.
There can be no assurance that another inspector would not have discovered
additional maintenance problems or risks, or arrived at different, and perhaps
significantly different, judgments regarding the problems and risks disclosed by
the respective report.
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Appraisals and Market Studies. An appraisal of each of the Mortgaged
Properties was performed (or an existing appraisal updated) on or after January
10, 1997, in conjunction with the origination of the related Mortgage Loan(s),
by an independent MAI or state-certified appraiser to establish that the
appraised value of such Mortgaged Property exceeded the original principal
balance of the related Mortgage Loan (or, in the case of a group of related
Cross-Collateralized Mortgage Loans, that the appraised value of all the
Mortgaged Properties securing such Cross-Collateralized Group exceeded the
aggregate original principal balance of such Cross-Collateralized Group). No
representation is made as to whether such appraisals satisfied the requirements
of the Financial Institutions Relief, Recovery and Enforcement Act of 1989, as
amended. In general, such appraisals represent the analysis and opinions of the
respective appraisers at or before the origination of the respective Mortgage
Loans, have not been updated following origination and are not guarantees of,
and may not be indicative of, present or future value. In each case there can be
no assurance that another appraiser would not have arrived at a different
valuation, even if such appraiser used the same general approach to and same
method of appraising the property. In the case of certain Mortgage Loans that
constitute acquisition financing, the Mortgagor may have acquired the related
Mortgaged Property at a price less than the appraised value on which the
Mortgage Loan was underwritten. 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. Implicit in the
valuations set forth in each of the appraisals of the Mortgaged Properties
referred to above, is the consummation of a sale as of a specific date and the
passing of title from seller to buyer under conditions whereby:
(a) buyer and seller are typically motivated;
(b) both parties are well informed or well advised, and each is acting in
what he considers his own best interests;
(c) a reasonable time is allowed for exposure in the open market;
(d) payment is made in terms of cash in U.S. dollars or in terms of
financial arrangements comparable thereto; and
(e) the price represents the normal consideration for the property sold
unaffected by special or creative financing or sales concessions granted by
anyone associated with the sale.
Each appraisal involved a physical inspection of the related Mortgaged
Property and reflects a correlation of value based on indicated values by the
Sales Comparison Approach, the Income Approach and/or the Cost Approach. In the
"Sales Comparison Approach," the subject property is compared to similar
properties that have been sold recently or for which listing prices or offering
figures are known. Data for generally comparable properties are used and
comparisons are made to demonstrate a probable price at which the subject
property would sell if offered on the market. Under the "Income Approach",
market value is determined by using the "discounted cash flow" method of
valuation or by the "direct capitalization" method. The discounted cash flow
analysis is used in order to measure the return on a real estate investment and
to determine the present value of the future income stream expected to be
generated by the property. The future income of the property, as projected over
an anticipated holding period, and the resulting net operating incomes or cash
flows are then discounted to present value using an appropriate discount rate.
The direct capitalization method generally converts an estimate of a single
year's income expectancy (or, in some cases, a hypothetical stabilized single
years' income expectancy) into an indication of value by dividing the income
estimate by an appropriate capitalization rate. An applicable capitalization
method and appropriate capitalization rates are developed for use in
computations that lead to an indication of value. In utilizing the Income
Approach, the appraiser's method of determination of gross income, gross expense
and net operating income may vary from the method of determining Underwriting
NCF (as defined herein), resulting in variances in the related net operating
income values. Under the "Cost Approach" of valuing a property, the estimated
value of the land is added to an estimate of the current replacement cost of the
improvements less depreciation from all sources.
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Neither the Depositor nor the Underwriter has prepared or obtained a
separate independent appraisal or reappraisal or otherwise confirmed the values
of the respective Mortgaged Properties set forth in the appraisals obtained in
connection with the origination of the related Mortgaged Loans.
Zoning and Building Code Compliance. In connection with the origination of
each Mortgage Loan, steps were taken to determine whether the use and operation
of the related Mortgaged Properties were in compliance in all material respects
with all applicable zoning, land-use, environmental, building, fire and health
ordinances, rules, regulations and orders applicable to the related properties.
Evidence of such compliance may have been in the form of legal opinions,
certifications from government officials and/or representations by the related
Mortgagor. Where the use, operation and/or structure of the Mortgaged Property
constituted a permitted nonconforming use and/or structure, an analysis was
generally conducted as to (i) the likelihood that a material casualty would
occur that would prevent the Mortgaged Property from being rebuilt in its
current form and (ii) whether existing replacement cost hazard insurance would,
in the event of a material casualty, be sufficient to satisfy the entire
Mortgage Loan or, taking into account the cost of repair, be sufficient to pay
down the Mortgage Loan to a level that the remaining collateral would constitute
adequate security for the remaining loan amount.
Occupancy Statements, Operating Statements and Other Data. To the extent
available or applicable, rent rolls, leases, and related information or
statements of occupancy rates, census data, market data, financial data,
operating statements, tax returns, and receipts for insurance premiums were
reviewed in connection with the origination of each Mortgage Loan. In general,
credit reports or background checks were also obtained with respect to the
general partners or principals of Mortgagors in limited partnership or limited
liability company form or for principal officers of corporate Mortgagors. In the
case of office, retail and industrial properties, the Mortgagor was generally
required to furnish available historical operating statements and operating
budgets for the current year and provide a selection of major tenant leases and,
in the case of retail properties, the Mortgagor was generally required to
provide sales information for major and anchor tenants, if and to the extent
such information was available. In some cases tenant sales information consisted
of oral reports from the Mortgagors or tenants, and in some cases those oral
reports were general in nature (for example, identifying the sales of a
particular tenant as within a designated range). In the case of hotel
properties, the Mortgagor was required to furnish copies of any applicable
franchise agreement. The foregoing information was used in part to make
appropriate adjustments for purposes of considering the "Underwriting NCF" of
the property as described below. However, several Mortgage Loans either
constitute acquisition financing or are secured by Mortgaged Properties with
newly constructed improvements and, accordingly, there are only limited
operating results (and, in some cases, no financial statements) for the related
Mortgaged Properties.
The Sellers and Column Third Party Originators
General. One hundred seventeen (117) of the Mortgage Loans (the "GECA
Mortgage Loans"), representing 52.3% of the Initial Pool Balance, will be
acquired by the Depositor from GECA, which acquired such Mortgage Loans as a
capital contribution from General Electric Capital Corporation ("GECC"). All but
one of the GECA Mortgage Loans were originated by GECC (and one GECA Mortgage
Loan, representing 0.1% of the Initial Pool Balance, was acquired by GECC in a
secondary market purchase). One hundred eighty-four (184) of the Mortgage Loans
(the "Column Mortgage Loans"), representing 47.7% of the Initial Pool Balance,
will be acquired by the Depositor from Column, which either originated such
Mortgage Loans or, in the case of 29 Column Mortgage Loans, representing 5.0% of
the Initial Pool Balance, will have acquired such Mortgage Loans on the Closing
Date from its corporate parent, DLJ Mortgage Capital, Inc. ("DLJMCI"). The
Column Mortgage Loans that are to be acquired by Column from DLJMCI (such
Mortgage Loans, the "Column Third Party Originator Loans"), were in turn
acquired by DLJMCI from Union Capital Investments, LLC, a Georgia limited
liability company ("Union Capital"), ITLA Funding Corporation, a Delaware
corporation ("ITLA"), and ARCS Commercial Mortgage Co., L.P., a California
limited partnership ("ARCS"; and, together with Union Capital and ITLA, the
"Column Third Party Originators"), which originated such Mortgage Loans. All of
the Mortgage Loans were generally originated in accordance with the underwriting
standards described herein under "Description of the Mortgage Pool--Property
Assessments".
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The following information was provided by the respective Sellers and Column
Third Party Originators. Neither the Depositor nor the Initial Purchaser takes
any responsibility therefor or makes any representation or warranty as to the
accuracy thereof.
GE Capital Access, Inc. GECA is a wholly owned subsidiary of GECC. Since
its formation in 1996, GECA, through its affiliates, has originated or acquired
over $1.5 billion of commercial mortgage loans. Through its Real Estate
division, GECC has been lending and investing in the commercial real estate
industry for over 25 years and has a portfolio of approximately $12 billion of
assets. GECC originates and acquires commercial mortgage loans through
approximately 20 offices located throughout North America.
Column Financial, Inc. Column underwrites and closes multifamily and
commercial mortgage loans through its own origination offices and various
correspondents in local markets across the country. Loan underwriting and
quality control procedures are undertaken principally in nine regional offices
located in Atlanta, Georgia; Bethesda, Maryland; Dallas, Texas; Chicago,
Illinois; Denver, Colorado; Hollywood, Florida; Newport Beach, California;
Norwalk, Connecticut; and San Francisco, California. Column has closed more than
$3.9 billion of commercial and multifamily mortgage loans since beginning
operation in 1993. Column is a wholly-owned subsidiary of DLJ Mortgage Capital,
Inc., which in turn is a wholly-owned subsidiary of Donaldson, Lufkin &
Jenrette, Inc., the parent of the Depositor.
Column Third Party Originators
Union Capital Investments LLC. Union Capital is an Atlanta, Georgia
mortgage banking company, primarily involved in conduit lending which
originates, underwrites and closes first mortgage loans secured by all types of
multifamily and commercial real estate throughout the United States. The
principals of Union Capital have been involved in the conduit lending field
since January of 1993.
ITLA Funding Corporation. ITLA Funding Corporation is a national mortgage
bank headquartered in Encino, California. The company is a wholly-owned
subsidiary of ITLA Capital Corporation, a thrift holding company located in La
Jolla, California and is a sister company to Imperial Thrift and Loan
Association.
ARCS Commercial Mortgage Co., L.P. Created in 1995 and headquartered in
Calabasas Hills, California, ARCS originates, underwrites, closes, and services
all types of commercial property loans through a nationwide network of twelve
offices. ARCS is a significant originator under the FNMA DUS multifamily loan
program.
Assignment of the Mortgage Loans
On the Closing Date, (i) Column will acquire the Column Third Party
Originators Loans from DLJMCI, (ii) each Seller will transfer its Mortgage Loans
to the Depositor pursuant to a mortgage loan purchase and sale agreement (a
"Mortgage Loan Purchase and Sale Agreement") with such Seller and (iii) the
Depositor will transfer all of the Mortgage Loans to the Trustee on behalf of
the holders of the Certificates (the "Certificateholders"). See "Description of
the Pooling Agreements--Assignment of Mortgage Assets" in the Prospectus.
Pursuant to the terms of the related Mortgage Loan Purchase and Sale
Agreement, each Seller will be required to deliver or cause to be delivered to
the Trustee or to a document custodian appointed by the Trustee (a "Custodian"),
among other things, the following documents with respect to each Mortgage Loan
sold by such Seller (collectively, with respect to any Mortgage Loan, the
related "Mortgage File"): (i) the original Mortgage Note endorsed, without
recourse, to the order of the Trustee (or, if the original Mortgage Note has
been lost, a copy thereof, together with an affidavit of such Seller or a prior
holder of such Mortgage Note certifying that the original thereof has been
lost); (ii) the original or a copy of the Mortgage, together with originals or
copies of any intervening assignments of the Mortgage, in each case with (unless
not yet returned from the applicable recording office) evidence of recording
indicated thereon; (iii) the original or a copy of any related assignment of
leases and rents (if such item is a document separate from the
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Mortgage), together with originals or copies of any intervening assignments of
any such document, in each case with (unless not yet returned from the
applicable recording office) evidence of recording indicated thereon; (iv) an
assignment of the Mortgage and of any separate assignment of leases and rents,
in favor of the Trustee, in recordable form; (v) originals or copies of all
assumption, modification and substitution agreements in those instances where
the terms or provisions of the Mortgage or Mortgage Note have been modified or
the Mortgage Loan has been assumed; (vi) the original or a copy of the lender's
title insurance policy issued on the date of origination of such Mortgage Loan
(or a marked-up title insurance commitment or a pro forma policy subject to
delivery of the original title insurance policy upon issuance); and (vii) any
file copies of any UCC financing statements in the possession of such Seller;
provided that, if all or any portion of the Mortgage File for any Mortgage Loan
being sold by Column is held as of the Closing Date by an independent third
party, then, in lieu of so delivering to the Trustee or a Custodian appointed
thereby the portion of such Mortgage File so held by an independent third party,
Column may deliver to the Trustee on or before the Closing Date a trust receipt
or comparable instrument that unconditionally entitles the bearer thereof (and
only the bearer thereof) to claim, without payment of any outstanding debts, the
portion of such Mortgage File so held by an independent third party (which the
Trustee will be required to do promptly (and, in any event, within 15 days)
following the Closing Date, at the expense and with the cooperation of the
Depositor). The Trustee or a Custodian will hold all such Mortgage Loan
documents in trust for the benefit of the Certificateholders. The Trustee or a
Custodian will be required to review each Mortgage File within a specified
period following its receipt thereof. The scope of the Trustee's review of the
Mortgage Files is, in general, limited solely to confirming that the documents
in clauses (i) through (iv) and (vi) have been received. None of the Trustee,
the 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 any such document is valid, effective,
enforceable, in recordable form or otherwise appropriate for the represented
purpose.
The Pooling Agreement will require the Trustee, within a specified period
following the later of the Closing Date and the date on which all recording
information necessary to complete the subject document is received by the
Trustee, to cause each of the assignments described in clause (iv) of the
preceding paragraph to be submitted for recording in the real property records
of the jurisdiction in which the related Mortgaged Property is located. Because
the Mortgage Loans are, in general, newly originated, many such assignments
cannot be completed and recorded until the related Mortgage, reflecting the
necessary recording information, is returned from the applicable recording
office.
Representations and Warranties
With respect to each Mortgage Loan, the related Column Third Party
Originator (if such Mortgage Loan was originated by it), Column (if such
Mortgage Loan constitutes any other Column Mortgage Loan) or GECA (if such
Mortgage Loan constitutes a GECA Mortgage Loan), as appropriate, will make, as
of the Closing Date (or, in the case of each of ARCS and ITLA Funding, as of the
date the Mortgage Loan was originated and sold to DLJMCI, which in no event was
earlier than ___________), certain representations and warranties generally
to the effect listed below, and may make such other representations and
warranties as may be required by the Rating Agencies; provided that the
respective representations and warranties made by such parties may not be
entirely the same. The Column Third Party Originator or Seller, as applicable,
making such representations and warranties in respect of any Mortgage Loan will,
for purposes of this Prospectus Supplement and the Prospectus, constitute the
related "Warranting Party" with respect thereto. The representations and
warranties to be made in respect of each Mortgage Loan by the related Warranting
Party will include:
(i) certain information relating to such Mortgage Loan, substantially
similar to that set forth in the loan schedule attached to the Pooling
Agreement, will be accurate and complete in all material respects as of the
Cut-off Date;
(ii) immediately prior to its transfer and assignment of such Mortgage
Loan, such Warranting Party had good title to, and was the sole owner of,
such Mortgage Loan;
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(iii) the related Mortgage constitutes a valid and, subject to the
exceptions set forth in clause (x) below, enforceable first lien upon the
related Mortgaged Property, free and clear of all liens and encumbrances
other than certain permitted liens and encumbrances;
(iv) the related Mortgage has not been satisfied, canceled, rescinded
or subordinated;
(v) to such Warranting Party's knowledge, there is no proceeding
pending for the total or partial condemnation of the related Mortgaged
Property;
(vi) the lien of the related Mortgage is insured by an American Land
Title Association or equivalent form of lender's title insurance policy (or
there exists a marked up title insurance commitment to issue such a policy
or a pro forma policy on which the required premium has been paid) insuring
the related originator, its successors and assigns, as to the first
priority lien of the related Mortgage in the original principal amount of
such Mortgage Loan after all advances of principal, subject only to (A) the
lien of current real property taxes, ground rents, water charges, sewer
rents and assessments not yet due and payable and (B) such other exceptions
(general and specific) set forth in such policy;
(vii) the proceeds of such Mortgage Loan have been fully disbursed
(except in those cases where the full amount of the Mortgage Loan has been
made, but a portion thereof is being held back pending satisfaction of
certain leasing criteria with respect to the related Mortgaged property)
and there is no requirement for future advances thereunder;
(viii) if the related Mortgage is a deed of trust, a trustee, duly
qualified under applicable law to serve as such, has been properly
designated and currently so serves;
(ix) to such Warranting Party's knowledge, the related Mortgaged
Property is free and clear of any damage that would materially and
adversely affect its value as security for such Mortgage Loan; and
(x) each Mortgage Note, Mortgage and other agreement executed by or on
behalf of the related Mortgagor in connection with such Mortgage Loan is
the legal, valid and binding obligation of the related maker thereof
(subject to any non-recourse provisions contained in any of the foregoing
agreements and any applicable state anti-deficiency or market value limit
deficiency legislation), enforceable in accordance with its terms, except
as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the enforcement of
creditors' rights generally, or by general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or
at law).
The representations and warranties made by the Sellers and the Column Third
Party Originators as described above will be assigned by the Depositor to the
Trustee pursuant to the Pooling Agreement.
Cures, Repurchases and Substitutions
If there exists a breach of any of the representations and warranties made
with respect to any of the Mortgage Loans, as discussed under "--Representations
and Warranties" above, and such breach materially and adversely affects the
value of the affected Mortgage Loan or the interests of the Certificateholders
therein, then within a specified period, generally 90 days, following its being
notified of such breach, the related Warranting Party will be required either:
(a) to cure the breach in all material respects; or (b) subject to the
discussion in the following paragraph, to repurchase such Mortgage Loan at a
price (the "Purchase Price") generally equal to the sum of (i) the unpaid
principal balance of such Mortgage Loan, (ii) accrued and unpaid interest to but
not including the Due Date occurring in the Collection Period in which such
repurchase occurs and (iii) the amount of any related unreimbursed Servicing
Advances and, to the extent not otherwise included in such Servicing Advances,
the costs and expenses of enforcing such repurchase obligation (provided that,
in the case of a Column Third Party Mortgage Loan, a Column Third Party
Originator may be required to repurchase its Mortgage Loans at a lesser price
with Column to make up the difference). In addition, the related
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Warranting Party will be required to pay all accrued and unpaid interest at the
Reimbursement Rate in respect of Advances related to the affected Mortgage Loan
(provided that, in the case of a Column Third Party Mortgage Loan, Column may be
required to pay such amount). Notwithstanding the foregoing, if any such breach
of a representation or warranty is capable of being cured but not within such
90-day or other specified period and the applicable Warranting Party has
commenced and is diligently proceeding with such cure, then (with limited
exception) such party will have an additional 90 days to complete such cure.
If either Seller or any Column Third Party Originator is required to
repurchase any of its Mortgage Loans as a result of a material breach of any of
its representations and warranties, as contemplated by the preceding paragraph,
then such Seller or Column Third Party Originator may, at any time during the
three-month period commencing on the Closing Date (or at any time during the
two-year period commencing on the Closing Date if the affected Mortgage Loan is
a "defective obligation" within the meaning of Section 860G(a)(4)(B)(ii) of the
Code and Treasury Regulation Section 1.860G-2(f)), in lieu of repurchasing the
affected Mortgage Loan (but in no event later than such repurchase would have to
have been completed): (a) replace such Mortgage Loan with one or more substitute
mortgage loans (each, a "Replacement Mortgage Loan") that (i) has certain
payment terms comparable to the Mortgage Loan to be replaced and (ii) is
otherwise acceptable to the Controlling Class Representative (or, if none has
been appointed, to the holder(s) of Certificates representing a majority
interest in the Controlling Class); and (b) pay an amount (a "Substitution
Shortfall Amount") generally equal to the excess of the applicable Purchase
Price for the Mortgage Loan to be replaced (calculated as if it were to be
repurchased instead of replaced), over the unpaid principal balance of the
applicable Replacement Mortgage Loan(s) as of the date of substitution, after
application of all payments due on or before such date, whether or not received;
provided that no such substitution will be permitted unless, as confirmed in
writing by each Rating Agency, it would not result in a qualification, downgrade
or withdrawal of the rating then assigned to any Class of Certificates by any
Rating Agency. No Seller or Column Third Party Originator is obligated, however,
to replace (rather than repurchase) any Mortgage Loan as to which there is a
material breach of a representation or warranty made by it. Any such
substitution will be at the sole discretion of the responsible Seller or Column
Third Party Originator. Furthermore, the Certificateholders of the Controlling
Class and the Controlling Class Representative, as their representative, will
generally have a disincentive to find any prospective Replacement Mortgage Loan
acceptable.
If the applicable Warranting Party fails to repurchase or replace any
Mortgage Loan affected by a material breach of such Warranting Party's
representations and warranties, none of the Depositor, the Underwriter, the
Servicer, the Special Servicer, the Trustee, the REMIC Administrator or any
other Seller or Column Third Party Originator shall have any obligation to do
so, except as described in the succeeding paragraph.
Notwithstanding the foregoing, Column will make the same representations
and warranties (including those discussed under "--Representations and
Warranties" above) with respect to each Column Third Party Mortgage Loan as it
does with respect to each other Column Mortgage Loan and will have similar cure,
repurchase or replacement obligations in the event of material breaches thereof.
In general, however, if (i) there exists a breach of any such representation or
warranty and a breach of any representation or warranty made by the related
Column Third Party Originator with respect to such Column Third Party Mortgage
Loan, (ii) such breaches otherwise give rise to a cure, repurchase or
replacement obligation on the part of both Column and the related Column Third
Party Originator Agreement and (iii) the related Column Third Party Originator
fails to satisfy its cure, repurchase or replacement obligation within the
period provided therefor, then Column as the related Seller will be required to
cure its breach as to, or repurchase or replace, the affected Column Third Party
Mortgage Loan. For this purpose, the cure, repurchase or replacement period for
Column (as otherwise described in the third preceding paragraph) will be deemed
to commence only upon expiration of the cure, repurchase or replacement period
for the related Column Third Party Originator.
Each Seller and Column Third Party Originator may only have limited assets
with which to fulfill any repurchase/substitution obligations that may arise in
respect of breaches of its representations or warranties. There can be no
assurance that any such Seller or Column Third Party Originator has or will have
sufficient assets with which to fulfill any repurchase/substitution obligations
that may arise.
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Additional Mortgage Loan Information
The tables appearing on Exhibits A-1 and A-2 hereto set forth additional
information with respect to the Mortgage Loans and Mortgaged Properties. The
statistics in certain of such tables were derived primarily from information and
operating statements furnished by or on behalf of the respective Mortgagors.
Such information and operating statements were generally unaudited and have not
been independently verified by the Depositor, the Underwriter, the Sellers or
the Column Third Party Originators, by any of their respective affiliates or by
any other person. For purposes of such tables as well as elsewhere in this
Prospectus Supplement:
1. "Underwriting NCF" or "U/W NCF" as used herein with respect to any
Mortgaged Property means an estimate of the total cash flow anticipated to be
available for annual debt service on the related Mortgage Loan calculated as the
excess of Estimated Annual Revenues over Estimated Annual Operating Expenses,
each of which was generally derived in the following manner:
(i) "Estimated Annual Revenues" were generally assumed to be equal to
the annualized amounts of gross potential rents (in the case of multifamily
and manufactured housing community properties), or monthly contractual base
rents as reflected in the rent roll or leases, with vacant space at market
rental rates, plus tenant reimbursements (in the case of commercial
properties other than hotels ) or estimated average room sales (in the case
of hotels), except such revenues were generally modified by (a) adjusting
such revenues downwards by applying a combined vacancy and rent loss
(including concessions) adjustment that reflected then current occupancy
(or, in some cases, an occupancy that was itself adjusted for historical
trends or market rates of occupancy with consideration to competitive
properties), (b) adjusting such revenues upwards to reflect, in the case of
some tenants, increases in base rents scheduled to occur during the year,
(c) adjusting such revenues upwards for percentage rents based on
contractual requirements, sales history and historical trends and,
additionally, for other estimated income consisting of, among other items,
late fees, laundry income, application fees, cable television fees, storage
charges, electrical pass throughs, pet charges, janitorial services,
furniture rental and parking fees, (d) adjusting such revenues downwards,
in certain instances where rental rates were determined to be significantly
above market rates and the subject space was then currently leased to
tenants that did not have long-term leases or were believed to be unlikely
to renew their leases, and (e) adjusting such revenues upwards, in the case
of hotel properties, to include estimated revenues from food and beverage,
telephones and other hotel related income. In the case of owner-occupied
properties for which no leases exist, Estimated Annual Revenues were
derived from rental rate and vacancy information for the surrounding real
estate market.
(ii) "Estimated Annual Operating Expenses" were generally assumed to
be equal to historical expenses reflected in the operating statements,
appraisals and/or other information provided by the Mortgagor, except that
such expenses were generally modified by (a) assuming that a market rate
management fee (in most cases, approximately 3% to 5% of net rental
revenues) was payable to the property manager, (b) adjusting certain
historical expense items upwards or downwards to reflect inflation and/or
industry norms for the particular type of property, (c) including the
underwriting recurring replacement reserve amounts (the "UW Recurring
Replacement Reserves") specified on the table titled "Engineering Reserves
and Recurring Replacement Reserves" on Exhibit A-1, (d) adjusting such
expenses downwards by eliminating certain items which are considered
non-recurring in nature or which are considered capital improvements,
including recurring capital improvements, and (e) for hotel properties,
adjusting historical expenses to reflect reserves for furniture, fixtures
and equipment ("FF&E") of between 4% and 5%. The U/W Recurring Replacement
Reserves set forth on Exhibit A-1 are expressed as dollars per Unit for
multifamily and manufactured housing community properties, dollars per
Leasable Square Foot for retail, office, mixed-use, convenience store and
industrial properties and total departmental revenues for hotel properties.
In addition, in the case of certain office, retail and industrial
properties, adjustments were also made to account for stabilized tenant
improvements and leasing commissions at costs consistent with historical
trends or prevailing market conditions (however, for certain tenants with
longer than average lease terms or which were considered anchor tenants (in
the case of retail tenants), or in areas which were considered to not
require such improvements,
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adjustments were not made to reflect tenant improvements and leasing
commissions). The amount of any such adjustments for tenant improvements
and leasing commissions (the "U/W LC & TI") in respect of any Mortgaged
Property is set forth on the table titled "Engineering Reserves and
Recurring Replacement Reserves" on Exhibit A-1. In the case of hotel
properties, historical expenses may have been adjusted upward or downward
to result in an expense to room or total revenues ratio that approximate
historical or industry norms. In the case of owner-occupied properties for
which no leases exist, Estimated Annual Operating Expenses were determined
on the assumption that the Mortgaged Properties were "net leased" to a
single tenant, and that expenses consisted solely of management fees and
replacement reserves for expense or capital items generally not required to
be paid by a tenant under a net lease.
Estimated Annual Revenues generally include: (i) for multifamily and
manufactured housing community properties, rental and other revenues; (ii) for
retail, office mixed-use, convenience store and industrial properties, base
rent, percentage rent, expense reimbursements and other revenues; and (iii) for
the hotel properties, room, food and beverage, telephone and other revenues.
Estimated Annual Operating Expenses generally include salaries and wages,
the costs or fees of utilities, repairs and maintenance, replacement reserves,
marketing, insurance, management, landscaping, security (if provided at the
property) and the amount of taxes, general and administrative expenses, ground
lease payments and other costs, but without any deductions for debt service,
depreciation and amortization or capital expenditures or reserves therefor
(except as described above). In the case of office, industrial and retail
properties (and properties partially used for such purposes), Estimating Annual
Operating Expenses include both expenses that may be recovered from tenants and
those that are non-recoverable. In the case of certain retail, office and
industrial properties, Estimating Annual Operating Expenses may have included
leasing commissions and tenant improvement costs. In the case of the hotel
properties, Estimating Annual Operating Expenses include departmental expenses,
reserves for FF&E, management fees and (where applicable) franchise fees.
The historical expenses with respect to any Mortgaged Property were
generally obtained (i) from operating statements relating to a 12-month period
ended in 1995, 1996 or 1997, (ii) by annualizing the amount of expenses for
partial 1995, 1996 or 1997 periods for which operating statements were
available, with certain adjustments for items deemed inappropriate for
annualization, or (iii) calculating a stabilized estimate of operating expenses
which takes into consideration historical financial statements and material
changes in the operating position of the related Mortgaged Property (such as
newly signed leases and market data).
The management fees and reserves assumed in calculating Underwriting NCF
differ in many cases from actual management fees and reserves actually required
under the loan documents for the Mortgage Loans. Further, actual conditions at
the Mortgaged Properties will differ, and may differ substantially, from the
conditions assumed in calculating Underwriting NCF. In particular, in the case
of retail, office and industrial properties, the assumptions regarding tenant
vacancies, tenant improvements and leasing commissions, future rental rates,
future expenses and other conditions used in calculating Underwriting NCF may
differ substantially from actual conditions.
In addition, capital expenditures and leasing commissions and other
reletting costs are crucial to the operation of commercial and multifamily
properties. There can be no assurance that the actual costs of reletting and
capital improvements will not exceed those estimated or assumed in connection
with the origination of the Mortgage Loans.
No representation is made as to the future net cash flow of Mortgaged
Properties, or, in particular, that "Underwriting NCF" set forth herein
accurately represents such future net cash flow. In certain cases, Mortgaged
Properties, or commercial tenants at such properties, have been or are expected
to be subjected to new competition; however, the effects thereof may not be
fully reflected (if at all) in the Underwriting NCF for any such Mortgaged
Property.
Underwriting NCF and the revenues and expenditures used to determine
Underwriting NCF for each Mortgaged Property are derived from generally
unaudited information furnished by the respective Mortgagors. Audits
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or other verification of such information could result in changes thereto, which
could in turn result in the Underwriting NCF set forth herein being overstated.
Net income for a Mortgaged Property as determined under generally accepted
accounting principles ("GAAP") would not be the same as the stated Underwriting
NCF for such Mortgaged Property as set forth in the tables herein. In addition,
Underwriting NCF is not a substitute for or comparable to operating income as
determined in accordance with GAAP as a measure of the results of a property's
operations nor a substitute for cash flows from operating activities determined
in accordance with GAAP as a measure of liquidity.
2. "Appraised Value" means, for any Mortgaged Property, the "as is" (or, if
provided, the "as cured") value estimate reflected in the most recent appraisal.
The appraiser's "cured value", as stated in the appraisal, is generally
calculated as the sum of the "as is" value set forth in the related appraisal
plus the estimated costs (as of the date of appraisal of the related Mortgaged
Property), if any, of implementing any deferred maintenance required to be
undertaken immediately or in the short term under the terms of the Mortgage
Loan. In general, the amount of costs assumed by the appraiser for such purposes
is based on an estimate by the individual appraiser, an estimate by the related
Mortgagor, the estimate set forth in the property condition assessment conducted
in connection with the origination of the related Mortgage Loan or a combination
of such estimates.
3. "Annual Debt Service" means, for any Mortgage Loan, twelve times the
amount of the Monthly Payment under such Mortgage Loan as of the first Due Date
in respect thereof that follows the Cut-off Date.
4. "Underwriting Debt Service Coverage Ratio", "Underwriting DSCR" or "U/W
DSCR" means, with respect to any Mortgage Loan, (a) the Underwriting NCF for the
related Mortgaged Property, divided by (b) the Annual Debt Service for such
Mortgage Loan.
5. "Cut-off Date Loan-to-Value Ratio" or "Cut-off Date LTV Ratio" means,
with respect to any Mortgage Loan, the Cut-off Date Balance of such Mortgage
Loan divided by the Appraised Value of the related Mortgaged Property.
6. "Leasable Square Footage" or "S.F." or "Sq. Ft." means, in the case of a
Mortgaged Property operated, in whole or in part, for retail, office,
convenience store or industrial purposes, the square footage of the gross
leasable area utilized for such purposes.
7. "Units" means, (a) in the case of a Mortgaged Property operated, in
whole or in part, as multifamily housing, the number of apartments, regardless
of the size of or number of rooms in such apartments and (b) in the case of a
Mortgaged Property operated as a manufactured housing community, the number of
pads upon which a mobile home can be hooked up.
8. "Rooms" means, in the case of a Mortgaged Property operated as a hotel,
the number of hotel rooms and/or suites, without regard to the size of or number
of rooms in such hotel rooms or suites.
9. "Occupancy Rate at Underwriting" or "Occupancy Rate at U/W" generally
means the percentage of Leasable Square Footage (in the case of commercial
properties other than hotels) or Units (in the case of multifamily or
manufactured housing community properties) of the Mortgaged Property that were
occupied or leased as of the approximate date of the original underwriting of
the related Mortgage Loan (as updated, in certain cases when the Depositor
deemed appropriate and information was available, with more current occupancy
information). All information herein setting forth any weighted averages of
"Occupancy Rates at U/W" excludes those Mortgaged Properties improved by hotels
(which are security for Mortgage Loans that represent 11.7% of the Initial Pool
Balance) from the relevant calculations.
10. "Major Tenant" means a tenant of a commercial Mortgaged Property that
leases 10% or more of the net rentable area of such property.
11. "LC & TI" means, as to any Mortgaged Property, leasing commissions and
tenant improvements.
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12. "Year Built" means the year when construction of the Mortgaged Property
was principally completed. With respect to Mortgage Loans secured by multiple
properties or by properties built in phases, the Year Built or Year Renovated,
as the case may be, may relate to the earliest, latest or average year in which
such properties or phases were built/renovated, as the Depositor deems relevant.
13. "Most Recent DSCR" means, with respect to any Mortgage Loan, (a) the
Most Recent NOI for the related Mortgaged Property, divided by (b) the Annual
Debt Service for such Mortgage Loan.
14. "Most Recent End Date" means, with respect to each Mortgage Loan, the
date indicated on Exhibit A-1 as the "Most Recent End Date" with respect to such
Mortgage Loan, which date is generally the end date with respect to the period
covered by the latest available annual (or, in some cases, estimated or
annualized partial-year) operating statement.
15. "Most Recent NOI" means, with respect to any Mortgaged Property, the
NOI derived therefrom that was available for debt service, calculated as Most
Recent Revenues less Most Recent Expenses. (See also "NOI" below.) "Most Recent
Revenues" are the Revenues received (or annualized or estimated in certain
cases) in respect of a Mortgaged Property for the 12-month period ended as of
the Most Recent End Date, based upon the latest available annual operating
statement and other information furnished by the Mortgagor. "Most Recent
Expenses" are the Expenses incurred (or annualized or estimated in certain
cases) for a Mortgaged Property for the 12-month period ended as of the Most
Recent End Date, based upon the latest available annual operating statement and
other information furnished by the Mortgagor for its most recently ended fiscal
year.
16. "NOI" means with respect to any Mortgaged Property, the total cash flow
available for annual debt service on the related Mortgage Loan, generally
calculated as the excess of Revenues over Expenses. "Revenues" generally consist
of certain revenues received in respect of a Mortgaged Property, including, for
example, (i) for the multifamily and manufactured housing community properties,
rental and other revenues; (ii) for the commercial properties other than hotels,
base rent, percentage rent, expense reimbursements and other revenues; and (iii)
for the hotel properties, guest room rates, food and beverage charges, telephone
charges and other revenues. "Expenses" generally consist of all expenses
incurred for a Mortgaged Property, including, for example, salaries and wages,
the costs or fees of utilities, repairs and maintenance, marketing, insurance,
management, landscaping, security (if provided at the property) and the amount
of real estate taxes, general and administrative expenses, ground lease payments
and other costs but without any deductions for debt service, depreciation,
amortization, capital expenditures, LC & TI or FF&E. In the case of hotel
properties, Expenses include, for example, expenses relating to guest rooms,
food and beverage costs, telephone bills and rental and other expenses, and such
operating expenses as general administrative expenses, marketing expenses and
franchise fees.
The tables on Exhibits A-1 and A-2 set forth the indicated characteristics
of the Mortgage Loans and Mortgaged Properties. Due to rounding, percentages in
such tables may not add to 100% and amounts may not add to the indicated total.
Cash Management and Certain Escrows and Reserves
Cash Management. In the case of 116 of the Mortgage Loans, representing
approximately 59.8% of the Initial Pool Balance, a "cash management" system has
been implemented whereby the related Mortgagor or the manager of the related
Mortgaged Property is required to deposit property revenues into an account
under the joint control of the related Mortgagor and the Servicer, and such
Mortgagor is authorized to make withdrawals from such account from time to time
until the occurrence of an event of default under such Mortgage Loan, in which
case the Servicer or the Special Servicer would be entitled, under preexisting
instructions furnished to the depository institution at which such account is
maintained, to direct such depository institution to no longer honor payment
requests made by the Mortgagor. Under each of those Mortgage Loans, central
accounts ("Central Accounts") were established and, upon the Closing Date, will
be under the sole control of the Servicer, for the purpose of holding amounts
required to be on deposit as reserves for taxes and insurance, capital
improvements, FF&E and certain other purposes as applicable. In certain cases,
including
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the Camargue Loan described herein, the related Mortgagor established a lockbox
account that is under the sole control of the mortgagee. In general, in the case
of the ARD Loans, no later than the related Anticipated Repayment Date, the
Mortgagor under each ARD Loan will be required (if it has not previously done
so) to enter into a lockbox agreement whereby all revenue from the related
Mortgaged Property will be deposited directly into a designated account under
the sole control of the Servicer.
Tax and Insurance Escrows. For a majority of the Mortgage Loans, tax and
insurance escrows (the "Tax and Insurance Escrows") were established, either as
separate accounts or, if applicable, as sub-accounts of any related Central
Account, and each related Mortgagor is generally required to deposit on a
monthly basis an amount equal to one-twelfth of the annual real estate taxes and
assessments and one-twelfth of the annual premiums payable on insurance policies
that the Mortgagor is required to maintain. If an escrow was established, such
funds will generally be applied by the Servicer to pay for items such as taxes,
assessments and insurance premiums at the related Mortgaged Property. Under
certain other Mortgage Loans, the insurance carried by the Mortgagor is in the
form of a blanket policy. In such cases, the amount of the escrow is an estimate
of the pro rata share of the premium allocable to the related Mortgaged
Property, or the Mortgagor pays the premium directly. Under certain Mortgage
Loans, the related Mortgagor delivered letters of credit from third parties in
lieu of establishing and funding a deposit account for tax and insurance
escrows. Under certain Mortgage Loans, a tenant at the related Mortgaged
Property is responsible for paying all or a portion of the real estate taxes and
assessments directly. In such cases, escrows generally are not required.
Recurring Replacement Reserves. The table titled "Engineering Reserves and
Recurring Replacement Reserves" on Exhibit A-1 sets forth the replacement
reserve deposits that Mortgagors are, in each case, required to make into a
separate account or, if applicable, a sub-account of any related Central Account
for certain capital replacements, repairs, FF&E, tenant improvements and leasing
commissions on the related Mortgaged Property under the terms of the respective
Mortgage Loan (a "Contractual Recurring Replacement Reserve"). The Contractual
Recurring Replacement Reserves set forth in such table are expressed as dollars
per Unit for multifamily and manufactured housing community properties, dollars
per Leasable Square Foot for retail, office, mixed-use, convenience store and
industrial properties and total departmental revenues for hotel properties. The
Contractual Recurring Replacement Reserves set forth in such table for most of
the Mortgaged Properties are initial amounts and may vary over time. Such
amounts include both replacement reserves and/or reserves for tenant
improvements and leasing commissions. In such cases, the related Mortgage Note
and/or other related documents may provide for replacement reserve deposits to
cease upon achieving predetermined maximum amounts in the reserve account. In
addition, in some such cases, replacement reserves were determined for specific
tenant spaces, in which cases, the execution of a lease covering such space
could result in the termination and/or release of such reserve. Under certain
Mortgage Loans (including the Rivergate Loan, Resurgens Plaza Loan and Camargue
Loan described herein), the related Mortgagors are permitted to deliver letters
of credit from third parties in lieu of establishing and funding a deposit
account for replacement reserves.
Engineering Reserves. The table titled "Engineering Reserves and Recurring
Replacement Reserves" on Exhibit A-1 sets forth the reserves (the "Engineering
Reserves") established, either as a separate account (or, if applicable, as a
sub-account of any related Central Account), or in some cases in the form of a
letter of credit and pledged to the lender, as a result of the inspections of
certain Mortgaged Properties described above under "-- Property Assessments --
Property Condition Assessments". The repair/replacement items for which such
reserves were established are generally items identified by the property
inspection firm as in need of repair or replacement in order to restore the
Mortgaged Property to a condition generally consistent with competitive
properties of similar age and quality or to comply with regulatory requirements.
Because the Engineering Reserve for any Mortgaged Property set forth in the
table reflects only the cost estimate determined by the respective inspection
firm for items that the related Originator determined significant enough to
require a reserve (but is generally equal to 100% to 125% of such portion),
and/or because in some cases items identified in a report were corrected prior
to closing of the Mortgage Loan, the Engineering Reserve for certain Mortgage
Loans is less than the cost estimate set forth in the related report. The
Engineering Reserve for several Mortgage Properties was a significant amount and
substantially in excess of the cost estimate set forth in the related inspection
report because the related Seller required the Mortgagor to establish reserves
for the completion of major work that had been commenced. No Engineering Reserve
is required to be replenished. The amounts set forth in such table represent the
amounts of the Engineering Reserves required at the respective dates
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of origination of the Mortgage Loans, and there can be no assurance that the
work for which reserves were required will be completed in a timely manner or
that the reserved amount will be sufficient therefor.
Significant Concentrations
Each individual Mortgage Loan and Cross-Collateralized Group of Mortgage
Loans that has an aggregate Cut-off Date Principal Balance in excess of 1.9% of
the Initial Pool Balance is described below.
Rivergate Loan. The Mortgage Pool includes an individual Mortgage Loan (the
"Rivergate Loan") that is a GECA Mortgage Loan and has a Cut-off Date Balance of
$94,602,208, which represents 6.0% of the Initial Pool Balance. The Rivergate
Loan is evidenced by a promissory note and secured by, among other things, the
related Mortgagor's fee simple interest in the Rivergate Property. The Mortgagor
under the Rivergate Loan (the "Rivergate Mortgagor") is Rivergate LP, a
limited-purpose Delaware limited partnership.
The Rivergate Loan has a Mortgage Rate of 6.950% per annum and a Maturity
Date of January 1, 2028. The Rivergate Loan is an ARD Loan that has an
Anticipated Repayment Date of January 1, 2008 and an Additional Interest Rate of
2.00% following such date. Additional terms of the Rivergate Loan are described
on Exhibit A-1. The Rivergate Loan is a non-recourse loan with exceptions for
fraud, misrepresentation, misappropriation of funds and environmental
obligations.
The "Rivergate Property" is a 35-story multifamily apartment building
composed of 706 units and containing approximately 632,557 net rentable square
feet of multifamily apartment space, 19,938 net rentable square feet of office
space, 2000 square feet of retail space and 90 parking spaces. As of 1996, units
in the Rivergate Property that become vacant cease to be subject to New York
State's rent stabilization laws. As units have been vacated following that date,
the Rivergate Mortgagor has executed new leases, generally at higher rental
rates, that are not subject to the rent stabilization law.
In connection with the origination of the Rivergate Loan, the Rivergate
Mortgagor delivered a letter of credit in lieu of establishing a replacement
reserve account and added $150,000 thereto to secure the performance of certain
environmental remediation. The Rivergate Mortgagor will be required to establish
a cash management system upon the earlier of any occurrence of an event of
default under the Rivergate Loan and the occurrence of the Anticipated Repayment
Date.
The Rivergate Loan provides for a Lockout Period that expires three months
prior to the related Anticipated Repayment Date, which period is followed by an
Open Period. In addition, after the related Anticipated Repayment Date, certain
excess cash flow from the Rivergate Property is required to be applied monthly
to reduce the outstanding principal balance of the Rivergate Loan. The Rivergate
Mortgagor is entitled to defease the Rivergate Loan (and obtain a release of the
Rivergate Property) at any time following the second anniversary of the Closing
Date (and prior to the expiration of the related Lockout Period) upon the
satisfaction of certain conditions, including the confirmation by each Rating
Agency that such defeasance will not in and of itself result in a qualification,
downgrade or withdrawal of any rating assigned by such Rating Agency to any
Class of Certificates.
Raritan Center Loans. The Mortgage Pool includes two Mortgage Loans (the
"Raritan Center Loans") that were originated by Column and have Cut-off Date
Balances of $27,484,832 and $24,486,486, respectively, and an aggregate Cutoff
Date Balance of $51,971,318, which represents 3.3% of the Initial Pool Balance.
The Raritan Center Loans are cross-collateralized and cross-defaulted. Each
Raritan Center Loan is evidenced by a promissory note and secured by, among
other things, the related Mortgagor's fee simple interest in the related Raritan
Center Property. The Mortgagors under the Raritan Center Loans are Raritan Plaza
I Associates, L.P. and 305 Clearview Limited Partnership, each of which is an
affiliate of Summit Associates, Inc. Summit Associates, Inc. directly or
indirectly owns 27 buildings and 650 acres of land ( including the Raritan
Center Properties) in a 100-building development comprising 10,000,000 square
feet of industrial, office and hotel space and known as Raritan Center. Raritan
Center is located in Edison, New Jersey at the crossroads of the New Jersey
Turnpike, the Garden State Parkway and Interstate Route 287.
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Each of the Raritan Center Loans has a Mortgage Rate of 7.40% per annum and
a Maturity Date of May 1, 2008. Additional terms of the Raritan Center Loans are
described on Exhibit A-1. Each Raritan Center Loan is a non-recourse loan with
exceptions for fraud, misrepresentation, misappropriation of funds and
environmental obligations.
The "Raritan Center Properties" consists of an office building comprising
262,500 square feet of space and known as Raritan Plaza I and a group of nine
industrial buildings comprising, in the aggregate, 804,196 square feet of space.
Each Raritan Center Property is located within Raritan Center and is managed by
SAI Management Inc., an affiliate of the Raritan Center Mortgagors that manages
over 2.5 million square feet of space in 30 buildings.
Each of the Raritan Center Loans provides for a Lockout Period that expires
six months prior the related Maturity Date, which period is followed by an Open
Period. Each Raritan Center Mortgagor is entitled to defease the related
Mortgage Loan and obtain a release of the related Mortgaged Property (or, in the
case of the Raritan Center Loan secured by industrial properties, defease the
Mortgage Loan in part (or in whole) and obtain a release of any individual
Mortgaged Property (or all of the Mortgaged Properties)) at any time following
the second anniversary of the Closing Date upon the satisfaction of certain
conditions.
The Resurgens Plaza Loan. The Mortgage Pool includes an individual Mortgage
Loan (the "Resurgens Plaza Loan") that is a GECA Mortgage Loan and has a Cut-off
Date Balance of $32,859,589. The Resurgens Plaza Loan is evidenced by a deed to
secure debt, assignment of leases and rents and security agreement and secured
by, among other things, a Mortgage on the related Mortgagor's interest (which
consists in part of a fee interest and in part of a leasehold interest) in the
Resurgens Plaza Property described below. The Mortgagor under the Resurgens
Plaza Loan (the "Resurgens Plaza Mortgagor") is North Atlanta Realty Acquisition
Company, Inc., a special-purpose Delaware corporation. A commingled trust fund
advised by J.P. Morgan Investment Management, Inc. is a constituent member of
the Resurgens Plaza Mortgagor.
The Resurgens Plaza Loan is an ARD Loan with an Anticipated Repayment Date
of January 1, 2008 and a Maturity Date of January 1, 2028. The Mortgage Rate of
the Resurgens Plaza Loan is 6.65% and the Additional Interest Rate is 2.00%.
Additional terms of the Resurgens Plaza Loan are described on Exhibit A-1.
The "Resurgens Plaza Property" consists of a 27-story office building
located in Atlanta, Georgia. The property contains 388,119 net rentable square
feet of space. The property has 30 tenants. Insignia Commercial Group, Inc.,
which is not an affiliate of the Resurgens Plaza Mortgagor, manages the
Resurgens Plaza Property.
The interest of the Resurgens Plaza Mortgagor in the Resurgens Plaza
Property consists of a leasehold estate in the real property in the lower ten
floors of the building, which comprise a parking garage, and a fee interest in
the air rights and the 17 floors above the leasehold parcel where the office
space is located. The ground lease relating to the garage space provides for a
lease term expiring in 2044 and annual rental payments of approximately $163,000
with future escalation as set forth in the ground lease.
In connection with the origination of the Resurgens Plaza Loan, the
Resurgens Plaza Mortgagor and the manager of the Resurgens Plaza Property
entered into a lockbox agreement pursuant to which all rents from the Resurgens
Plaza Property are paid directly into a lockbox account from which the Resurgens
Plaza Mortgagor is entitled to make withdrawals until, in general, the
occurrence of an event of default under the Resurgens Plaza Loan, the occurrence
of the related Anticipated Repayment Date or the failure to maintain (as of the
last day of any quarter) a debt service coverage ratio at least equal to 1.4x.
In lieu of establishing a reserve for capital expenditures, tenant improvements
and ground rent (on the leasehold portion of the Resurgens Plaza Property), the
Resurgens Plaza Mortgagor delivered a letter of credit in the amount of $3
million.
The Resurgens Plaza Loan provides for a Lockout Period that expires three
months prior to the related Anticipated Repayment Date, which period is followed
by an Open Period during which Principal Prepayments may be made without payment
of any Prepayment Premium or Yield Maintenance Premium. In addition, after the
related Anticipated Repayment Date, certain excess cash flow from the Resurgens
Plaza Property is required to be applied
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monthly to reduce the outstanding principal balance of the Resurgens Plaza Loan.
The Resurgens Plaza Mortgagor is entitled to defease the Resurgens Plaza Loan
(and obtain a release of the Resurgens Plaza Property) at any time following the
second anniversary of the Closing Date (and prior to the expiration of the
related Lockout Period) upon the satisfaction of certain conditions, including
the confirmation by each Rating Agency that such defeasance will not in and of
itself result in a qualification, downgrade or withdrawal of any rating assigned
by such Rating Agency to any Class of Certificates.
The Camargue Loan. The Mortgage Pool includes an individual Mortgage Loan
(the "Camargue Loan") that is a GECA Mortgage Loan and has a Cut-off Date
Balance of $29,900,164. The Camargue Loan is evidenced by a promissory note and
secured by, among other things, a mortgage on the related Mortgagor's fee
interest in the Camargue Property described below. The Mortgagor under the
Camargue Plaza Loan (the "Camargue Mortgagor") is 303 East 83rd LLC, a
special-purpose New York limited liability company of which the managing member
is Partnership 94 L.P., a Delaware special-purpose limited partnership. The
Camargue Mortgagor is controlled by Lloyd Goldman and family.
The Camargue Loan is a substantially fully-amortizing loan with a Mortgage
Rate equal to 7.01% and a Maturity Date of March 1, 2023. Additional terms of
the Camargue Loan are described on Exhibit A-1.
The "Camargue Property" consists of a 32-story, 261-unit multifamily
apartment building located in New York City. It comprises 210,295 net rentable
square feet of multifamily apartment space and 5,275 net rentable square feet of
retail space. BLDG Management Co., Inc., an affiliate of the Camargue Mortgagor,
manages the Camargue Property.
In connection with the origination of the Camargue Loan, the Camargue
Mortgagor established a lockbox account into which the manager of the Camargue
Property is required to deposit all rental payments received from tenants and
from which the Camargue Mortgagor is entitled to monthly disbursements of all
amounts on deposit therein net of monthly debt service and any required monthly
deposits to the reserve accounts described below. The Camargue Mortgagor is
required to direct all tenants at the Camargue Property to deliver their rental
payments directly to the lockbox account following the occurrence of an event of
default under the Camargue Loan or the failure to maintain a debt service
coverage ratio at least equal to 1.15x. The Camargue Mortgagor has also
established an ongoing tax and insurance escrow account, an engineering reserve
account and a recurring replacement reserve account. The Camargue Mortgagor is
permitted to deliver a letter of credit satisfactory to the mortgagee in lieu of
making such deposits into such tax and insurance reserve account and/or
engineering reserve account.
The Camargue Loan provides for a Lockout Period that expires three months
prior to the related Maturity Date, which period is followed by an Open Period.
The Camargue Mortgagor is entitled to defease the Camargue Loan (and obtain a
release of the Camargue Property) at any time following the second anniversary
of the Closing Date (and prior to the expiration of the related Lockout Period)
upon the satisfaction of certain conditions, including the confirmation by each
Rating Agency that such defeasance will not in and of itself result in a
qualification, downgrade or withdrawal of any rating assigned by such Rating
Agency to any Class of Certificates.
Subordinate and Other Financing
In general, Mortgagors are prohibited from encumbering the related
Mortgaged Properties with subordinate financing, and the Depositor is not aware
of any Mortgaged Property being encumbered by Subordinate Debt. In certain
cases, the Mortgagor is permitted to encumber the related Mortgaged Property
with a limited amount of subordinate financing, provided (i) certain loan to
value ratio and debt service coverage ratios are satisfied and (ii) the
subordinate lender executes a subordination and standstill agreement. In
addition, certain of the Mortgage Loans limit the aggregate amount of
subordinate financing that will be allowed. Where a borrower encumbers a
mortgaged property with one or more junior liens, the senior lender is subjected
to additional risk.
A third party holds a loan secured by a pledge of the partnership interests
in the Mortgagor under the Mortgage Loan secured by the Mortgaged Property
identified on Exhibit A-1 as Plantation Village. The Depositor, however, is not
aware of any other similar debt affecting another Mortgagor.
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In addition, certain Mortgagors may have incurred unsecured indebtedness
for operating or similar purposes.
Prepayment Provisions
As of their respective dates of origination, all of the Mortgage Loans
imposed restrictions on voluntary prepayments of principal ("Principal
Prepayments"). In most cases, such restrictions commenced with a period (a
"Lockout Period") during which, with limited exception, Principal Prepayments
are prohibited. In some such cases, the Lockout Period will remain in effect for
all or substantially all of the remaining term to maturity; in other such cases,
the Lockout Period is followed by a period (a "Premium Period") during which
Principal Prepayments are permitted but are required to be accompanied by an
additional amount (the "Additional Prepayment Amount") that is either a
specified percentage of the amount being prepaid (a "Prepayment Premium") or a
premium calculated on the basis of a yield maintenance formula (a "Yield
Maintenance Premium"), and then, commencing on a specified date prior to
maturity, by a period (an "Open Period") during which Principal Prepayments may
be made without payment of any Prepayment Premium or Yield Maintenance Premium;
and, in the remaining such cases, the Lockout Period is followed directly by an
Open Period. In all other cases, such restrictions commenced with a Premium
Period during which Principal Prepayments are permitted but are required to be
accompanied by a Prepayment Premium, which period is followed by an Open Period
(generally commencing two years prior to the stated maturities of the respective
Mortgage Loans). In the case of most Mortgage Loans that provide for a Premium
Period, the applicable Additional Prepayment Amount will equal the greater of a
Prepayment Premium (in general, calculated at 1% of the amount prepaid) and a
Yield Maintenance Premium. In the case of 199 Mortgage Loans, representing 71.4%
of the Initial Pool Balance, the related Mortgagors are permitted to "defease"
their Mortgage Loans with United States Treasury obligations during the
applicable Lockout Period but not earlier than two to three years (or, in
certain cases, a longer period) following the Closing Date. In the case of
certain Mortgage Loans, the security for the Mortgage Loans includes pledged
funds which: (i) if certain leasing or other economic conditions are satisfied
by a specified date, will be released to the related Mortgagor; and (ii) if such
conditions are not satisfied by such date, will be applied to pay down the
Mortgage Loan during what would otherwise be a Lockout Period.
The table titled "Characteristics of the Mortgage Loans" on Exhibit A-1
sets forth the type of prepayment provision that corresponds to each Mortgage
Loan as of its respective date of origination. In addition, the table titled
"Prepayment Provisions as of the Cut-off Date" on Exhibit A-2 sets forth a
breakdown of the Mortgage Loans based on (i) remaining term to stated maturity
(or, in the case of the ARD Loans, the remaining term to the respective
Anticipated Repayment Date) and (ii) the remaining Lockout Period and/or Premium
Period applicable to each. The prepayment provisions relating to each Mortgage
Loan generally do not apply to prepayments arising out of a casualty or
condemnation of the related Mortgaged Property. The aggregate characteristics of
the prepayment provisions of the Mortgage Pool will vary over time as Lockout
Periods expire and Mortgage Loans enter periods during which a Prepayment
Premium or Yield Maintenance Premium may be required in connection with
Principal Prepayments and, thereafter, enter Open Periods, and as Mortgage Loans
are prepaid, repurchased, replaced or liquidated on account of default or
delinquency.
For purposes of such provisions, the amount of the Yield Maintenance
Premium in the case of any GECA Mortgage Loan, is generally equal to the sum of
the present value on the date of prepayment of the "monthly interest shortfalls"
for the remaining term of the Mortgage Loan discounted at a per annum rate equal
to the yield per annum on United States Treasury securities having a maturity
closest to the weighted average life of the Mortgage Loan immediately prior to
the prepayment. The "monthly interest shortfall" is calculated for each Due Date
and is the product of (a) the principal amount being prepaid divided by 12 and
(b) the excess, if any, of (i) the yield derived from compounding semi-annually
the Mortgage Rate of the Mortgage Loan minus (ii) the Treasury yield described
above. For purposes of determining such Treasury yield, the weighted average
life (expressed in years) of the Mortgage Loan is determined as of the
prepayment date by (i) multiplying the amount of the principal portion of each
monthly payment that would have been paid had the prepayment not occurred by the
number of months from the prepayment date to the related Due Date, (ii) adding
the results and (iii) dividing the sum by the product of the balance remaining
on the Mortgage Loan (after giving effect to the prepayment) multiplied by 12.
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For purposes of such provisions, the amount of the Yield Maintenance
Premium in the case of any Column Mortgage Loan, is generally equal to the
product of the principal amount being prepaid (expressed as a percentage of the
outstanding principal balance of the Mortgage Loan, prior to giving effect to
the prepayment) and the excess, if any, as of the date of determination, of (a)
the present value of all future payments of principal and interest of the
related Mortgage Loan (including the related Balloon Payment), as determined by
discounting at a rate per annum equal to the yield per annum on United States
Treasury securities having a maturity closest to the Maturity Date of the
related Mortgage Loan, plus, in some cases, a specified number of basis
points, over (b) the outstanding principal balance immediately prior to the
prepayment.
Prepayment Premiums and Yield Maintenance Premiums received on the Mortgage
Loans will be allocated and distributed in the manner described under
"Description of the Certificates--Distributions--Distributions of Prepayment
Premiums and Yield Maintenance Premiums" herein.
Limitations may exist under applicable state law on the enforceability of
the provisions of the Mortgage Loans that require payment of Prepayment Premiums
or Yield Maintenance Premiums. See "Certain Legal Aspects of Mortgage
Loans--Default Interest and Limitations on Prepayments" in the Prospectus.
Prepayment Premiums and Yield Maintenance Premiums are not payable in connection
with any repurchases or substitutions of Mortgage Loans by a Seller or a Column
Third Party Originator in connection with material breaches of representations
and warranties or in connection with a prepayment of a Mortgage Loan arising out
of a casualty or condemnation at the related Mortgaged Property.
Hazard, Liability and Other Insurance
The Mortgages generally require that each Mortgaged Property be insured by
a hazard insurance policy in an amount at least equal to the lesser of the
outstanding principal balance of the related Mortgage Loan and 100% of the full
replacement cost of the improvements located on the related Mortgaged Property,
and if applicable, the related hazard insurance policy contains appropriate
endorsements to avoid the application of co-insurance and does not permit
reduction in insurance proceeds for depreciation. In some cases, however, a
Mortgagor is permitted to self-insure its Mortgaged Property provided it
maintains a specified net worth. Such hazard insurance may provide for a
customary deductible. In addition, if any portion of a Mortgaged Property
securing any Mortgage Loan was, at the time of the origination of such Mortgage
Loan, in an area identified in the Federal Register by the Flood Emergency
Management Agency as having special flood hazards, and flood insurance was
available, a flood insurance policy meeting any requirements of the then current
guidelines of the Federal Insurance Administration is required to be in effect
with a generally acceptable insurance carrier, in an amount representing
coverage not less than the least of (1) the outstanding principal balance of
such Mortgage Loan, (2) except in some cases, the full insurable value of such
Mortgaged Property, and (3) the maximum amount of insurance available under the
National Flood Insurance Act of 1968, as amended. In general, the standard form
of hazard insurance policy covers physical damage to, or destruction of, the
improvements on the Mortgaged Property by fire, lightning, explosion, smoke,
windstorm and hail, riot or strike and civil commotion, subject to the
conditions and exclusions set forth in each policy. In general, however, the
Mortgaged Properties, including those in California, are not covered for
earthquake risk.
Each Mortgage generally also requires the related Mortgagor to maintain
comprehensive general liability insurance against claims for personal and bodily
injury, death or property damage occurring on, in or about the related Mortgaged
Property in an amount at least equal to $1 million per occurrence.
Each Mortgage generally further requires the related Mortgagor to maintain
business interruption insurance in an amount generally not less than 100% of the
projected rental income from the related Mortgaged Property for at least six
months.
The Pooling Agreement will require the Servicer to cause each Mortgagor
(including any Mortgagor under a Specially Serviced Mortgage Loan) to maintain
such insurance coverage as is required under the related Mortgage.
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Under the terms of the Mortgages for several of the Mortgage Loans, the
Mortgagor thereunder is required to keep its Mortgaged Property insured against
loss by fire, hazards, rent loss and such other hazards, casualties, liabilities
and contingencies as the Mortgagee determines to require in its discretion and
in such amounts and for such periods as the Mortgagee determines to require in
its discretion. Under the terms of the Pooling Agreement, the Servicer will
agree to use reasonable efforts consistent with the Servicing Standard to
require the Mortgagors under the Mortgage Loans to maintain insurance generally
in the amounts, type and scopes of coverage required under the other Mortgage
Loans as described above.
With limited exception, the Mortgage Loans generally provide that insurance
and condemnation proceeds are to be applied (i) to restore the related Mortgaged
Property or (ii) towards payment of the related Mortgage Loan.
The Pooling Agreement will require the Special Servicer to cause to be
maintained for each REO Property generally the same types of insurance policies
(to the extent available at commercially reasonable rates) providing coverages
in the same amounts as were previously required under the Mortgage that covered
such property.
The Pooling Agreement will also provide that the Servicer (or Special
Servicer) may satisfy its obligations regarding maintenance of the hazard
insurance policies referred to above by maintaining a blanket policy or master
force placed insurance policy insuring against hazard losses on all of the
related Mortgage Loans. If any such blanket or master policy contains a
deductible clause, the Servicer (or Special Servicer) will be required, in the
event of a casualty covered by such blanket or master policy, to deposit or
cause to be deposited in the Certificate Account all sums that would have been
deposited therein but for such deductible clause (but only to the extent such
sums would have been paid if an individual hazard insurance policy referred to
above had been in place). See "Description of the Pooling Agreements--Hazard
Insurance Policies" in the Prospectus.
The applicable originator and its successors and assigns are the
beneficiaries under separate title insurance policies with respect to each
Mortgage Loan. Each title insurer will enter into such co-insurance and
reinsurance arrangements with respect to the title insurance policy as are
customary in the title insurance industry. Subject to certain exceptions,
including standard exceptions regarding claims made in the context of insolvency
proceedings, the title insurance policy will provide coverage to the Trustee for
the benefit of Certificateholders for claims made against the Trustee regarding
the priority and validity of the Mortgagors' title to the Mortgaged Properties.
SERVICING OF THE MORTGAGE LOANS
General
The Servicer and the Special Servicer, either directly or through
sub-servicers, will be required to service and administer the Mortgage Loans,
for the benefit of the Certificateholders (as a collective whole), in accordance
with applicable law, the terms of the Pooling Agreement and the terms of the
respective Mortgage Loans and, to the extent consistent with the foregoing, in
accordance with the following standards (collectively, the "Servicing
Standard"): (a) with the higher of (i) the same care, skill, prudence and
diligence with which the Servicer or the Special Servicer, as the case may be,
generally services comparable mortgage loans for other third parties pursuant to
agreements similar to the Pooling Agreement, giving due consideration to
customary and usual standards of practice of prudent institutional commercial
mortgage lenders and loan servicers servicing their own mortgage loans, and (ii)
the same care, skill, prudence and diligence with which the Servicer or the
Special Servicer, as the case may be, generally services comparable mortgage
loans owned by it; (b) with a view to the timely collection of all scheduled
payments of principal and interest under the Mortgage Loans, the full collection
of all Prepayment Premiums and Yield Maintenance Premiums that may become
payable under the Mortgage Loans and, if a Mortgage Loan comes into and
continues in default and no satisfactory arrangements can be made for the
collection of the delinquent payments (including Prepayment Premiums and Yield
Maintenance Premiums), the maximization of the recovery on such Mortgage Loan to
Certificateholders (as a collective whole) on a present value basis; and (c)
without regard to: (i) any relationship that the Servicer or the Special
Servicer, as the case may be, or any of its affiliates may have with the related
Mortgagor or
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any other party to the Pooling Agreement; (ii) its ownership of any
Certificate by the Servicer or the Special Servicer, as the case may be, or by
any of its affiliates; (iii) any obligations of the Servicer or the Special
Servicer, as the case may be, to make Advances (as defined below); (iv) the
right of the Servicer or the Special Servicer, as the case may be, or any of its
affiliates to receive compensation for its services or reimbursement of costs
under the Pooling Agreement generally or with respect to any particular
transaction; (v) the ownership by the Servicer or the Special Servicer, as the
case may be, or any of its affiliates, of any other mortgage loans or real
property or of the right to service or manage for others any other mortgage
loans or real property; and (vi) any obligation of the Servicer or the Special
Servicer, as the case may be, or of any affiliate thereof, as a Seller, to pay
any indemnity with respect to or cure a breach of representation or warranty as
to, or repurchase or replace, any Mortgage Loan.
In general, the Servicer will initially be responsible for the servicing
and administration of the entire Mortgage Pool. However, the Special Servicer
will, except for certain limited duties, assume and be responsible for special
servicing and administration of any Mortgage Loan (each, a "Specially Serviced
Mortgage Loan") as to which any of the following events (each, a "Servicing
Transfer Event") occurs: (a) the related Mortgagor fails to make when due any
Balloon Payment, which failure continues unremedied, or the Servicer determines,
in its reasonable, good faith judgment, will continue unremedied, for 30 days;
(b) the related Mortgagor fails to make when due any other Monthly Payment or
any other payment required under the related Mortgage Note and Mortgage
(including any failure to make any material payment of taxes or insurance
premiums), which failure continues unremedied, or the Servicer determines, in
its reasonable, good faith judgment, will continue unremedied, for 60 days; (c)
if the Servicer or any of its affiliates owns an economic interest in the
related Mortgagor, such Mortgagor fails to make any Monthly Payment and the
Servicer is required to make a P&I Advance in respect thereof; (d) the Servicer
determines, in its reasonable, good faith judgment, that a default in making any
Monthly Payment (including a Balloon Payment) or any other payment required
under the related Mortgage Note and Mortgage has occurred or is likely to occur
within 30 days and either (i) the related Mortgagor has requested a material
modification of the related Mortgage Loan (other than the waiver of a
"due-on-sale" clause or the extension of the related maturity date) or (ii) such
default is likely to remain unremedied for at least 60 days or, in the case of a
Balloon Payment, for at least 30 days; (e) the Servicer determines, in its
reasonable, good faith judgment, that a default (other than as described in
clause (a) or (b) above) has occurred that may materially impair the value of
the related Mortgaged Property as security for the Mortgage Loan and such
default continues unremedied for the applicable cure period under the terms of
the Mortgage Loan (or, if no cure period is specified, for 30 days); (f) certain
events of insolvency, readjustment of debt, marshalling of assets and
liabilities, or similar proceedings occur in respect of the related Mortgagor or
the related Mortgaged Property, or the related Mortgagor takes certain actions
indicating its insolvency or its inability to pay its obligations; or (g) the
Servicer receives notice of the commencement of foreclosure or similar
proceedings with respect to the related Mortgaged Property. In addition, if
title to the related Mortgaged Property is acquired by the Trust (upon
acquisition, an "REO Property"), whether through foreclosure, deed in lieu of
foreclosure or otherwise, the Special Servicer will continue to be responsible
for the operation and management thereof.
A Mortgage Loan will cease to be a Specially Serviced Mortgage Loan (and
will become a "Corrected Mortgage Loan" as to which the Servicer will re-assume
servicing responsibilities) at such time as no circumstance identified in
clauses (a) through (g) of the preceding paragraph exists that would cause the
Mortgage Loan to continue to be characterized as a Specially Serviced Mortgage
Loan and such of the following as are applicable occur:
(w) with respect to the circumstances described in clauses (a), (b)
and (c) of the preceding paragraph, the related Mortgagor has made three
consecutive full and timely Monthly Payments under the terms of such
Mortgage Loan (as such terms may be changed or modified in connection with
a bankruptcy or similar proceeding involving the related Mortgagor or by
reason of a modification, waiver or amendment granted or agreed to by the
Servicer or the Special Servicer);
(x) with respect to the circumstances described in clauses (d) and (f)
of the preceding paragraph, such circumstances cease to exist in the
reasonable, good faith judgment of the Special Servicer;
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(y) with respect to the circumstances described in clause (e) of the
preceding paragraph, such default is cured; and
(z) with respect to the circumstances described in clause (g) of the
preceding paragraph, such proceedings are terminated.
The Servicer and Special Servicer will each be required to service and
administer each of the respective Cross-Collateralized Groups as a single
Mortgage Loan as and when it deems necessary and appropriate consistent with the
Servicing Standard. In connection with the transfer to the Special Servicer of a
Mortgage Loan that constitutes part of a Cross-Collateralized Group as a result
of a Servicing Transfer Event or the re-assumption of servicing responsibilities
by the Servicer with respect to any such Mortgage Loan upon the cessation of its
status as a Specially Serviced Mortgage Loan, the Servicer and the Special
Servicer shall each transfer to the other, as and when applicable, servicing of
all other Mortgage Loans constituting part of the same Cross-Collateralized
Group; provided that no Cross-Collateralized Mortgage Loan may become a
Corrected Mortgage Loan at any time that a continuing Servicing Transfer Event
exists with respect to another Cross-Collateralized Mortgage Loan in the same
Cross-Collateralized Group.
Set forth below is a description of certain pertinent provisions of the
Pooling Agreement relating to the servicing of the Mortgage Loans. Reference is
also made to the Prospectus, in particular to the section captioned "Description
of the Pooling Agreements", for additional important information regarding the
terms and conditions of the Pooling Agreement as such terms and conditions
relate to the rights and obligations of the Servicer and the Special Servicer
thereunder. For purposes of the Prospectus, the Servicer constitutes a "Master
Servicer" thereunder.
The Servicer
GE Capital Loan Services, Inc., a Delaware corporation ("GECLS"), will act
as Servicer with respect to the Mortgage Pool. GECLS is a wholly-owned
subsidiary of GECIA Holdings, Inc., which is itself a wholly-owned subsidiary of
GE Capital Services Corporation, which is itself a wholly-owned subsidiary of
the General Electric Company and an affiliate of GECA and GECC. The Servicer's
principal servicing offices are located at 363 N. Sam Houston Parkway E., Suite
1200, Houston, Texas 77060.
As of May 1, 1998, the Servicer serviced approximately 2,051 commercial and
multifamily loans, totaling approximately $13 billion in aggregate outstanding
principal amounts, including loans securitized in mortgage-backed securities
transactions.
The information set forth herein concerning GECLS has been provided by it,
and neither the Depositor nor the Underwriter makes any representation or
warranty as to the accuracy or completeness of such information.
The Special Servicer
Midland Loan Services, Inc., a Delaware corporation ("Midland"), will act
as Special Servicer with respect to the Mortgage Pool. Midland is a real estate
financial services company which provides loan servicing and asset management
for large pools of commercial and multifamily real estate assets and which
originates commercial real estate loans. Midland is a wholly-owned subsidiary of
PNC Bank, National Association. Midland's address is 210 West 10th Street, 6th
Floor, Kansas City, Missouri 64105.
As of April 30, 1998, Midland was responsible for the servicing of
approximately 12,000 commercial and multifamily loans with an aggregate
principal balance of approximately$26.3 billion, the collateral for which is
located in 50 states, Puerto Rico and the District of Columbia. Approximately
10,400 of those loans, having an aggregate principal balance of approximately
$18.7 billion, underlie commercial and multifamily mortgage-backed securities.
Property type concentrations within the portfolio include multifamily, office,
retail, hotel/motel and other types of income producing properties. Midland also
provides commercial loan servicing for newly-originated loans and loans
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acquired in the secondary market on behalf of issuers of commercial and
multifamily mortgage-backed securities, financial institutions and private
investors.
The information set forth herein concerning Midland has been provided by
it, and neither the Depositor nor the Underwriter makes any representation or
warranty as to the accuracy or completeness of such information.
Servicing and Other Compensation and Payment of Expenses
The principal compensation to be paid to the Servicer in respect of its
servicing activities will be the Servicing Fee. The "Servicing Fee" will be
payable monthly on a loan-by-loan basis from amounts received in respect of
interest on each Mortgage Loan (including Specially Serviced Mortgage Loans and
Mortgage Loans as to which the related Mortgaged Property has become an REO
Property) and will accrue from time to time (on the basis of a 360-day year
consisting of twelve 30-day months) at 0.057% per annum (the "Servicing Fee
Rate") on the same principal amount as interest accrues or is deemed to accrue
from time to time on the Mortgage Loan. As additional servicing compensation,
the Servicer will be entitled to: (x) any Prepayment Interest Excesses (as
defined below) actually collected on the Mortgage Loans; and (y) any "Default
Interest" (that is, interest in excess of interest at the related Mortgage Rate
accrued in respect of any Mortgage Loan as a result of a default thereunder) and
late payment charges actually collected on the Mortgage Loans (other than
Specially Serviced Mortgage Loans and Mortgage Loans as to which the related
Mortgaged Property has become an REO Property), but only to the extent that any
such Default Interest is not allocable to pay any portion of a Workout Fee or
Liquidation Fee (each as defined below) payable to the Special Servicer with
respect to the related Mortgage Loan and that any such Default Interest and late
payment charges are not allocable to cover interest payable to the Servicer, the
Special Servicer or the Trustee with respect to any Advances made in respect of
the related Mortgage Loan. In addition, the Servicer will be authorized to
invest or direct the investment of funds held in those accounts maintained by it
that constitute part of the Certificate Account (as defined in the Prospectus)
in certain government securities and other obligations specified in the Pooling
Agreement and meeting the criteria of the Rating Agencies ("Permitted
Investments"), and the Servicer will be entitled to retain any interest or other
income earned on such funds, but will be required to cover any losses in respect
of such investments (other than losses of income earned thereon) from its own
funds without any right to reimbursement.
If a borrower prepays a Mortgage Loan in whole or in part prior to its Due
Date in any Collection Period, the amount of interest (net of related Servicing
Fees and, if applicable, Additional Interest) that accrues on the amount of the
Principal Prepayment will be less (such shortfall, a "Prepayment Interest
Shortfall") than the corresponding amount of Trustee Fees and interest accruing
on the REMIC Regular Certificates. If such a Principal Prepayment is made after
the prepaid Mortgage Loan's Due Date in any Collection Period, the amount of
interest (net of related Servicing Fees and, if applicable, Additional Interest)
that accrues on the amount of such Principal Prepayment will exceed (such
excess, a "Prepayment Interest Excess") the corresponding amount of Trustee Fees
and interest accruing on the REMIC Regular Certificates. Any Prepayment Interest
Excesses collected will be paid to the Servicer as additional servicing
compensation. However, with respect to each Distribution Date, the Servicer will
be required to remit to the Trustee for deposit into the Distribution Account
(such remittance, a "Compensating Interest Payment"), without any right of
reimbursement therefor, an amount equal to the lesser of (i) the aggregate of
its Servicing Fees for the related Collection Period, plus any Prepayment
Interest Excesses received during such Collection Period, and (ii) the aggregate
of any Prepayment Interest Shortfalls experienced during the related Collection
Period. The Servicer is not required to make Compensating Interest Payments to
cover shortfalls in Mortgage Loan interest accruals that result from any
liquidation of a defaulted Mortgage Loan or any REO Property acquired in respect
thereof or any other action related to special servicing. If the aggregate of
any Prepayment Interest Shortfalls experienced during any Collection Period
exceeds the Compensating Interest Payment made in respect thereof, the
difference will constitute the "Net Aggregate Prepayment Interest Shortfall" for
the related Distribution Date.
The principal compensation to be paid to the Special Servicer in respect of
its special servicing activities will consist of the Special Servicing Fee, the
Workout Fee and the Liquidation Fee. As to each Specially Serviced Mortgage Loan
and each Mortgage Loan as to which the related Mortgaged Property has become an
REO Property, the "Special Servicing Fee" will accrue from time to time (on the
basis of a 360-day year consisting of twelve 30-day months) at a
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rate equal to 0.25% per annum on the same principal amount as interest accrues
or is deemed to accrue from time to time on any such Mortgage Loan. The Special
Servicing Fee with respect to any Specially Serviced Mortgage Loan will cease to
accrue if such Mortgage Loan is liquidated or becomes a Corrected Mortgage Loan.
Earned but unpaid Special Servicing Fees will be payable monthly out of general
collections on the Mortgage Loans and any REO Properties on deposit in the
Certificate Account. A "Workout Fee" will generally be payable with respect to
each Corrected Mortgage Loan. As to each Corrected Mortgage Loan, the Workout
Fee will be payable out of, and will be calculated by application of a "Workout
Fee Rate" of 1.00% to, each collection of interest and principal (in each case
net of any portion of such collection payable to the Servicer, the Special
Servicer or the Trustee to cover related unpaid or unreimbursed Servicing Fees,
Special Servicing Fees, Advances and interest on Advances) received on such
Mortgage Loan for so long as it remains a Corrected Mortgage Loan. The Workout
Fee with respect to any Corrected Mortgage Loan will cease to be payable if such
Mortgage Loan again becomes a Specially Serviced Mortgage Loan or if the related
Mortgaged Property becomes an REO Property; provided that a new Workout Fee will
become payable if and when such Mortgage Loan again becomes a Corrected Mortgage
Loan. If the Special Servicer is terminated other than for cause or resigns, it
shall retain the right to receive any and all Workout Fees payable in respect of
Mortgage Loans that became Corrected Mortgage Loans during the period that it
acted as Special Servicer and that were still Corrected Mortgage Loans at the
time of such termination or resignation (and the successor Special Servicer
shall not be entitled to any portion of such Workout Fees), in each case until
the Workout Fee for any such Mortgage Loan ceases to be payable in accordance
with the preceding sentence. A "Liquidation Fee" will be payable with respect to
each Specially Serviced Mortgage Loan or REO Property as to which the Special
Servicer receives any full or discounted payoff from the related Mortgagor or
any Liquidation Proceeds, Condemnation Proceeds or Insurance Proceeds (other
than as a result of the repurchase or substitution of any such Specially
Serviced Mortgage Loan or REO Property by a Seller or a Column Third Party
Originator in connection with a material breach of representation or warranty or
as a result of any purchase thereof by the Special Servicer, the Servicer or any
Certificateholder with a majority interest in the Controlling Class). As to each
such Specially Serviced Mortgage Loan or REO Property, the Liquidation Fee shall
be payable out of, and shall be calculated by application of a "Liquidation Fee
Rate" of 1.00% to, such full or discounted payoff, Liquidation Proceeds,
Condemnation Proceeds and/or Insurance Proceeds (in each case net of any portion
of such payment or proceeds payable or reimbursable to the Servicer, the Special
Servicer or the Trustee to cover related unpaid or unreimbursed Servicing Fees,
Advances, Special Servicing Fees, interest on Advances and/or late payment
charges) received or collected with respect to such Specially Serviced Mortgage
Loan or REO Property. The Liquidation Fee with respect to any such Specially
Serviced Mortgage Loan will not be payable if such Mortgage Loan becomes a
Corrected Mortgage Loan. Notwithstanding anything herein to the contrary, no
Liquidation Fee will be payable out of, or in connection with the receipt of,
Liquidation Proceeds collected as a result of the repurchase or substitution of
any Specially Serviced Mortgage Loan or REO Property by a Seller or a Column
Third Party Originator in connection with a material breach of representation or
warranty or as a result of any purchase thereof by the Special Servicer, the
Servicer or any Certificateholder with a majority interest in the Controlling
Class. As additional servicing compensation, the Special Servicer will be
entitled to Default Interest and late payment charges actually collected on or
in respect of the Specially Serviced Mortgage Loans and/or any Mortgage Loans as
to which the related Mortgaged Property has become an REO Property, but only to
the extent that any such Default Interest is not allocable to pay any portion of
a Workout Fee or Liquidation Fee payable to the Special Servicer with respect to
the related Mortgage Loan and that any such Default Interest and late payment
charges are not allocable to cover interest payable to the Servicer, the Special
Servicer or the Trustee with respect to any Advances made in respect of the
related Mortgage Loan. In addition, the Special Servicer will be authorized to
invest or direct the investment of funds in those accounts maintained by it that
constitute part of the Certificate Account, in Permitted Investments, and the
Special Servicer will be entitled to retain any interest or other income earned
on such funds as additional servicing compensation, but will be required to
cover any losses in respect of such investments (other than losses of income
earned thereon) from its own funds without any right to reimbursement.
Assumption fees, assumption application fees, modification fees, extension
fees and other loan processing fees actually collected on or with respect to the
Mortgage Loans will be allocated between the Servicer and the Special Servicer
as provided in the Pooling Agreement and will be paid to each as additional
servicing compensation.
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The Servicer and the Special Servicer will, in general, each be required to
pay, out of its own funds, all ordinary expenses incurred by it in connection
with its servicing activities under the Pooling Agreement, including the fees of
any sub-servicers retained by it, and will not be entitled to reimbursement
therefor except as expressly provided in the Pooling Agreement. In general,
customary, reasonable and necessary "out of pocket" costs and expenses required
to be incurred by the Servicer or Special Servicer in connection with the
servicing of a Mortgage Loan after a default, delinquency or other unanticipated
event, or in connection with the administration of any REO Property, will
constitute "Servicing Advances" (Servicing Advances and P&I Advances,
collectively, "Advances") and, in all cases, will be reimbursable from future
payments and other collections, including in the form of Insurance Proceeds,
Condemnation Proceeds and Liquidation Proceeds, received on or in respect of the
related Mortgage Loan or REO Property ("Related Proceeds"). Notwithstanding the
foregoing, the Servicer and the Special Servicer will each be permitted to pay,
or to direct the payment of, certain servicing expenses directly out of the
Certificate Account, and at times without regard to the relationship between the
expense and the funds from which it is being paid.
No more frequently than once per calendar month, the Special Servicer may
require the Servicer, and the Servicer shall be obligated, out of the Servicer's
own funds, to reimburse the Special Servicer for any Servicing Advances made by
but not previously reimbursed to the Special Servicer, together with interest
thereon at the Reimbursement Rate from the date made to, but not including, the
date of reimbursement. Such reimbursement and any accompanying payment of
interest shall be made within ten (10) days of the request therefor. Upon such
reimbursement, the Servicer will be deemed for all purposes of the Pooling
Agreement to have made the related Servicing Advance at the same time that the
Special Servicer actually made such Servicing Advance.
In addition, the Servicer will be required to make Servicing Advances to
cover certain items in respect of Specially Serviced Mortgage Loans and REO
Properties at the direction of the Special Servicer, and, if the Special
Servicer is required under the Pooling Agreement to make any Servicing Advance
but does not desire to do so, the Special Servicer may, in its sole discretion,
request that the Servicer make such Servicing Advance, such request to be made
in writing and in a timely manner that does not adversely affect the interests
of any Certificateholder; provided, however, that the Special Servicer shall not
be entitled to make such a request (other than for emergency advances) more
frequently than once per calendar month (and such request may relate to more
than one Servicing Advance). If the Servicer is required to make any Servicing
Advance at the direction of the Special Servicer, the Special Servicer will be
required to provide the Servicer with such information and documentation
regarding the subject Servicing Advance as the Servicer may reasonably request.
The Servicer will be required to make any such Servicing Advance that it is so
requested by the Special Servicer to make within ten (10) days of the Servicer's
receipt of such request. The Special Servicer will be relieved of any
obligations with respect to any Servicing Advance that it so requests the
Servicer to make (regardless of whether or not the Servicer makes that Servicing
Advance).
If the Servicer or the Special Servicer, as the case may be, is required
under the Pooling Agreement to make a Servicing Advance, but fails to do so
within 15 days after such Servicing Advance is required to be made, then the
Trustee will be required: (i) if it has actual knowledge of such failure, to
give the defaulting party notice of such failure; and (ii) if such failure
continues for three more business days, to make such Servicing Advance.
The Servicer, the Special Servicer and the Trustee will be obligated to
make Servicing Advances only to the extent that such Servicing Advances are, in
the reasonable, good faith judgment of the Servicer, the Special Servicer or the
Trustee, as the case may be, ultimately recoverable from Related Proceeds. With
respect to any Servicing Advance, the Trustee will be entitled to conclusively
rely on the non-recoverability determination made by the Servicer or Special
Servicer.
As and to the extent described herein, the Servicer, the Special Servicer
and the Trustee are each entitled to receive interest at the Reimbursement Rate
on Servicing Advances made thereby. See "Description of the Certificates--P&I
and Other Advances" herein.
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Modifications, Waivers, Amendments and Consents
The Special Servicer and, to the limited extent described below, the
Servicer each may (consistent with the Servicing Standard) agree to any
modification, waiver or amendment of any term of, extend the maturity of,
forgive interest (including, without limitation, Default Interest and Additional
Interest) on and principal of, forgive Prepayment Premiums, Yield Maintenance
Premiums and late payment charges on, defer the payment of interest on, permit
the release, addition or substitution of collateral securing, and/or permit the
release, addition or substitution of the Mortgagor on or any guarantor of, any
Mortgage Loan it is required to service and administer, subject, however to each
of the following limitations, conditions and restrictions:
(i) with limited exception, the Servicer may not agree to any
modification, waiver or amendment of any term of, or take any of the other
above-referenced actions with respect to, any Mortgage Loan without the
consent of the Special Servicer (which consent (i) is not to be
unreasonably withheld, (ii) is to be withheld or granted by the Special
Servicer in accordance with the Servicing Standard, and (iii) shall be
deemed to have been granted if not expressly denied within 10 business days
following the Special Servicer's receipt from the Servicer of all
information reasonably requested thereby in order to make an informed
decision);
(ii) with limited exception, the Special Servicer may not agree to (or
consent to the Servicer's agreeing to) any modification, waiver or
amendment of any term of, or take (or consent to the Servicer's taking) any
of the other above-referenced actions with respect to, any Mortgage Loan
that would affect the amount or timing of any related payment of principal,
interest or other amount payable thereunder or, in the Special Servicer's
good faith judgment, would materially impair the security for such Mortgage
Loan or reduce the likelihood of timely payment of amounts due thereon,
unless a material default on such Mortgage Loan has occurred or, in the
Special Servicer's good faith judgment, a default in respect of payment on
such Mortgage Loan is reasonably foreseeable, and such modification,
waiver, amendment or other action is reasonably likely to produce a greater
recovery to Certificateholders on a present value basis than would
liquidation;
(iii) the Special Servicer may not extend (or consent to the
Servicer's extending) the date on which any Balloon Payment is scheduled to
be due on any Specially Serviced Mortgage Loan to a date beyond the
earliest of (A) the third anniversary of such Mortgage Loan's original
stated maturity date, (B) two years prior to the Rated Final Distribution
Date and (C) if such Mortgage Loan is secured by a Mortgage solely or
primarily on the related Mortgagor's leasehold interest in the related
Mortgaged Property, ten years prior to the end of the then current term of
the related ground lease; and, furthermore, the Special Servicer may not
grant (or consent to the Servicer's granting) any such extension unless (A)
the Special Servicer's recovery determination contemplated by the
immediately preceding clause (ii) is supported by an appraisal performed
within the preceding twelve-month period and (B) the related Mortgagor
agrees, among other things, to deliver to the Special Servicer, the
Controlling Class Representative and the Trustee quarterly operating
statements with respect to the related Mortgaged Property;
(iv) neither the Servicer nor the Special Servicer may make or permit
any modification, waiver or amendment of any term of, or take any of the
other above referenced actions with respect to, any Mortgage Loan that
would cause any of REMIC I, REMIC II or REMIC III to fail to qualify as a
REMIC under the Code or result in the imposition of any tax on "prohibited
transactions" or "contributions" after the startup date of any such REMIC
under the REMIC Provisions (as defined herein);
(v) the Special Servicer may not permit (or consent to the Servicer's
permitting) any Mortgagor to add or substitute any collateral for its
Mortgage Loan, unless the Special Servicer shall have first (A) determined,
in its reasonable, good faith judgment, based upon an environmental
assessment prepared by an independent person who regularly conducts
environmental assessments, at the expense of the Mortgagor, that such
additional or substitute collateral is in compliance with applicable
environmental laws and regulations and that there are no circumstances or
conditions present with respect to such new collateral relating to the use,
management or disposal of any hazardous materials for which investigation,
testing, monitoring, containment,
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clean-up or remediation would be required under any then applicable
environmental laws and/or regulations and (B) received confirmation from
each Rating Agency that such addition or substitution of collateral will
not result in a qualification, downgrade or withdrawal of any rating then
assigned by such Rating Agency to a Class of Certificates; and
(vi) subject to limited exceptions, the Special Servicer may not
release (or consent to the Servicer's releasing) any collateral securing an
outstanding Mortgage Loan (other than in accordance with the terms of, or
upon satisfaction of, a Mortgage Loan);
provided that (x) the limitations, conditions and restrictions set forth in
clauses (i) through (vi) above will not apply to any of the acts referenced in
this "--Modifications, Waivers, Amendments and Consents" section with respect to
any Mortgage Loan that is required under the terms of such Mortgage Loan in
effect on the Closing Date (or, in the case of a Replacement Mortgage Loan, on
the related date of substitution) or that is solely within the control of the
related Mortgagor; and (y) notwithstanding clauses (i) through (vi) above,
neither the Servicer nor the Special Servicer will be required to oppose the
confirmation of a plan in any bankruptcy or similar proceeding involving a
Mortgagor if in its reasonable good faith judgment such opposition would not
ultimately prevent the confirmation of such plan or one substantially similar.
Notwithstanding the provisions described above, after the Anticipated
Repayment Date of any ARD Loan with a "First Payment Date" that is not later
than March 1, 1998 (as set forth on the table titled "Characteristics of the
Mortgage Loans" on Exhibit A-1) , the Servicer (with respect to Mortgage Loans
other than Specially Serviced Mortgage Loans) or the Special Servicer (with
respect to Specially Serviced Mortgage Loans) will be permitted, in its
discretion, to waive all or any portion of accrued Additional Interest if, prior
to the related maturity date, the related Mortgagor has requested the right to
prepay such ARD Loan in full together with all payments required by the related
loan documents in connection with such prepayment except for accrued Additional
Interest, provided that the Servicer's or Special Servicer's, as the case may
be, determination to waive the right to such accrued Additional Interest is
reasonably likely to produce a greater payment to Certificateholders on a
present value basis than a refusal to waive the right to such Additional
Interest. Neither the Servicer nor the Special Servicer will have any liability
to the Trust, the Certificateholders or any other person for any such
determination that is made in accordance with the Servicing Standard. The
Pooling Agreement will also limit the Servicer's and the Special Servicer's
ability to institute an enforcement action solely for the collection of
Additional Interest.
All modifications, waivers and amendments entered into in respect of the
Mortgage Loans are to be in writing. Each of the Servicer and the Special
Servicer is to deliver to the Trustee or the related Custodian for deposit in
the related Mortgage File, an original counterpart of the agreement relating to
each such modification, waiver or amendment agreed to thereby, promptly
following the execution thereof.
The Controlling Class Representative
Election, Resignation and Removal. The Certificateholders (or, in the case
of Book-Entry Certificates, the Certificate Owners) of the Controlling Class
whose Certificates represent more than 50% of the related Class Principal
Balance will be entitled in accordance with the Pooling Agreement to select a
representative (the "Controlling Class Representative") having certain rights
and powers described below or to replace an existing Controlling Class
Representative. Upon (i) the receipt by the Trustee of written requests for the
selection of a Controlling Class Representative from the Certificateholders (or,
in the case of Book-Entry Certificates, the Certificate Owners) of the
Controlling Class whose Certificates represent more than 50% of the related
Class Principal Balance, (ii) the resignation or removal of the person acting as
Controlling Class Representative or (iii) a determination by the Trustee that
the Controlling Class has changed, the Trustee will be required to promptly
notify the Certificateholders (or, in the case of Book-Entry Certificates, to
the extent actually known to certain designated officers (each, a "Responsible
Officer") of the Trustee, the Certificate Owners) of the Controlling Class that
they may select a Controlling Class Representative. Such notice is to set forth
the process established by the Trustee in order to select a Controlling Class
Representative, which process may include the designation of the Controlling
Class Representative by any Certificateholder with a
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majority interest in the Controlling Class by a writing delivered to the
Trustee. No appointment of any person as a Controlling Class Representative will
be effective until such person provides the Trustee with written confirmation of
its acceptance of such appointment, an address and telecopy number for the
delivery of notices and other correspondence and a list of officers or employees
of such person with whom the parties to the Pooling Agreement may deal
(including their names, titles, work addresses and telecopy numbers).
As of any date of determination, the "Controlling Class" will be the most
subordinate Class of Sequential Pay Certificates then outstanding (the Class
A-1A and Class A-1B Certificates being treated as a single Class for this
purpose) that has a then-current Class Principal Balance that is not less than
25% (or, in the case of the Class C Certificates, 20%) of such Class' initial
Class Principal Balance as of the Closing Date; provided that if no Class of
Sequential Pay Certificates has a Class Principal Balance that satisfies such
requirement, then the "Controlling Class" will be the Class of Sequential Pay
Certificates with the largest Class Principal Balance then outstanding.
The Controlling Class Representative may at any time resign as such by
giving written notice to the Trustee and to each Certificateholder (or, in the
case of Book-Entry Certificates, Certificate Owner) of the Controlling Class.
The Certificateholders (or, in the case of Book-Entry Certificates, the
Certificate Owners) of the Controlling Class whose Certificates represent more
than 50% of the related Class Principal Balance shall be entitled to remove any
existing Controlling Class Representative by giving written notice to the
Trustee and to each other Certificateholder (or, in the case of Book-Entry
Certificates, Certificate Owner) of the Controlling Class.
Certain Rights and Powers. Prior to taking any of the following actions,
the Special Servicer will notify the Controlling Class Representative of its
intent to take such action and provide the Controlling Class Representative with
copies of documentation relating to its proposed action, will afford the
Controlling Class Representative a 10-business day period following such notice
within which to discuss such action and will provide the Controlling Class
Representative with all reasonably requested information relating to such
action:
(i) any foreclosure upon or comparable conversion (which may include
acquisitions of an REO Property) of the ownership of properties securing
such of the Specially Serviced Mortgage Loans as come into and continue in
default;
(ii) any modification of a Specially Serviced Mortgage Loan;
(iii) any proposed sale of a defaulted Mortgage Loan or REO Property
(other than in connection with the termination of the Trust Fund as
described under "Description of the Certificates-- Termination" herein);
(iv) any acceptance of a discounted payoff;
(v) any determination to bring an REO Property into compliance with
applicable environmental laws or to otherwise address hazardous materials
located at an REO Property;
(vi) any release of collateral (other than in accordance with the
terms of, or upon satisfaction of, a Mortgage Loan);
(vii) any acceptance of substitute or additional collateral for a
Mortgage Loan;
(viii) any determination to seek a deficiency judgment against the
Mortgagor under any Specially Serviced Mortgage Loan; and
(ix) the appointment of any subservicer with respect to any Specially
Serviced Mortgage Loan or REO Property.
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In addition, the Controlling Class Representative may advise the Special
Servicer to take, or to refrain from taking, such actions as the Controlling
Class Representative may deem advisable or as to which provision is otherwise
made in the Pooling Agreement.
The foregoing notwithstanding, the Special Servicer will not be required to
follow any advice given by the Controlling Class Representative and will, in all
cases, remain obligated to service and administer the Specially Serviced
Mortgage Loans and REO Properties in accordance with the Pooling Agreement,
including the Special Servicer's obligation thereunder to act in accordance with
the Servicing Standard.
Liability. Any and all expenses of the Controlling Class Representative are
to be borne by the Certificateholders (or, if applicable, the Certificate
Owners) of the Controlling Class, pro rata according to their respective
Percentage Interests in such Class, and not by the Trust. Notwithstanding the
foregoing, if a claim is made against the Controlling Class Representative by a
Mortgagor with respect to the Pooling Agreement or any particular Mortgage Loan,
the Controlling Class Representative is to immediately notify the Trustee, the
Servicer and the Special Servicer, whereupon (if the Special Servicer or the
Trust are also named parties to the same action and, in the sole judgment of the
Special Servicer, the Controlling Class Representative had with regard to the
particular matter acted in good faith, without negligence or willful misconduct,
and there is no potential for the Special Servicer or the Trust to be an adverse
party in such action as regards the Controlling Class Representative) the
Special Servicer on behalf of the Trust will, subject to the discussion under
"--Certain Matters Regarding the Master Servicer, the Special Servicer, the
REMIC Administrator, the Manager and the Depositor" in the Prospectus, assume
the defense of any such claim against the Controlling Class Representative.
The Controlling Class Representative will have no liability to the Trust or
the Certificateholders for any action taken, or for refraining from the taking
of any action, in good faith pursuant to the Pooling Agreement, or for errors in
judgment; provided, however, that the Controlling Class Representative will not
be protected against any liability which would otherwise be imposed by reason of
its willful misfeasance, bad faith or negligence in the performance of duties or
by reason of reckless disregard of its obligations or duties. Each
Certificateholder acknowledges and agrees, by its acceptance of its
Certificates, that the Controlling Class Representative may have special
relationships and interests that conflict with those of holders of one or more
Classes of Certificates, that the Controlling Class Representative may act
solely in the interests of the holders of the Controlling Class, that the
Controlling Class Representative does not have any duties to the holders of any
Class of Certificates other than the Controlling Class, that the Controlling
Class Representative may take actions that favor the interests of the holders of
the Controlling Class over the interests of the holders of one or more other
Classes, that the Controlling Class Representative will not be deemed to have
been negligent or reckless, or to have acted in bad faith or engaged in willful
misconduct by reason of its having acted solely in the interests of the
Controlling Class, and that the Controlling Class Representative will have no
liability whatsoever for having so acted, and no Certificateholder may take any
action whatsoever against the Controlling Class Representative for having so
acted. With limited exception, Special Servicer will be required by the Pooling
Agreement to keep confidential all advice, directions, recommendations and/or
objections received from the Controlling Class Representatives.
Sale of Defaulted Mortgage Loans
The Pooling Agreement grants to the Servicer, the Special Servicer and any
holder of Certificates evidencing a majority interest in the Controlling Class a
right to purchase (or designate an affiliate thereof to purchase) from the Trust
certain defaulted Mortgage Loans in the priority described below. If the Special
Servicer has determined, in its reasonable, good faith judgment, that any
defaulted Mortgage Loan will become subject to foreclosure proceedings and that
the sale of such Mortgage Loan under the circumstances described below is in
accordance with the Servicing Standard, the Special Servicer will be required to
promptly so notify in writing the Trustee and the Servicer, and the Trustee will
be required, within five days after receipt of such notice, to notify any holder
of Certificates evidencing a majority interest in the Controlling Class. Such
Certificateholder may at its option purchase (or designate an affiliate thereof
to purchase) from the Trust, at a cash price equal to the applicable Purchase
Price, any such defaulted Mortgage Loan. If such Certificateholder has not
purchased such defaulted Mortgage Loan within 30 days of its having received
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notice in respect thereof, either the Special Servicer or the Servicer, in that
order of priority, may at its option purchase such defaulted Mortgage Loan from
the Trust at a cash price equal to the applicable Purchase Price. The Special
Servicer may offer to sell any such defaulted Mortgage Loan not otherwise
purchased as described in the two preceding sentences, if and when the Special
Servicer determines, consistent with the Servicing Standard, that such a sale
would be in the best economic interests of the Certificateholders (as a
collective whole). Such offer will be required to be made in a commercially
reasonable manner for a period of not less than ten days. Subject to the
discussion in the next paragraph, the Special Servicer will be required to
accept the highest cash bid received from any person that constitutes a "fair
price" (determined in accordance with the Pooling Agreement) for such Mortgage
Loan.
Notwithstanding any of the foregoing, the Special Servicer will not be
obligated to accept the highest cash bid if the Special Servicer determines, in
accordance with the Servicing Standard, that rejection of such bid would be in
the best interests of the Certificateholders (as a collective whole); and the
Special Servicer may accept a lower cash bid (from any person or entity other
than itself or an affiliate) if it determines, in accordance with the Servicing
Standard, that acceptance of such bid would be in the best interests of the
Certificateholders (as a collective whole) (for example, if the prospective
buyer making the lower bid is more likely to perform its obligations or the
terms (other than the price) offered by the prospective buyer making the lower
bid are more favorable).
Neither the Trustee, in its individual capacity, nor any of its affiliates
may bid for or purchase any defaulted Mortgage Loan or any REO Property.
In connection with the sale of any defaulted Mortgage Loan, the Special
Servicer may charge prospective bidders, and may retain, fees that approximate
the Special Servicer's actual costs in the preparation and delivery of
information pertaining to such sales or evaluating bids without obligation to
deposit such amounts into the Certificate Account.
If a defaulted Mortgage Loan is neither sold as described above in this
"--Sale of Defaulted Mortgage Loans" section nor modified as contemplated under
"--Modifications, Waivers, Amendments and Consents", the Special Servicer is to
proceed with respect thereto as described under "Description of the Pooling
Agreements--Realization Upon Defaulted Mortgage Loans" in the Prospectus.
Replacement of the Special Servicer
The Pooling Agreement will permit the holder (or holders) of the majority
of the Voting Rights allocated to the Controlling Class to terminate an existing
Special Servicer and to appoint a successor thereto. Any such appointment of a
successor Special Servicer will be subject to, among other things, (i) written
confirmation from each of the Rating Agencies that the appointment will not
result in a qualification, downgrade or withdrawal of any of the ratings then
assigned thereby to any Class of Certificates, and (ii) the written agreement of
the proposed Special Servicer to be bound by the terms and conditions of the
Pooling Agreement, together with an opinion of counsel regarding, among other
things, the enforceability of the Pooling Agreement against the proposed Special
Servicer. Subject to the foregoing, any Certificateholder or affiliate thereof
may be appointed as Special Servicer. If the termination of an existing Special
Servicer was without cause, the costs and expenses of any related transfer of
servicing duties are to be paid by the successor Special Servicer or the holders
of the Controlling Class that voted to remove the terminated Special Servicer,
as such parties may agree. Any terminated Special Servicer will be obligated to
pay all amounts accrued and owing by it, and will be entitled to receive all
amounts accrued and owed to it, under the Pooling Agreement on or prior to the
effective date of the termination and will be entitled to the indemnification
rights set forth in the Pooling Agreement in respect of its servicing activities
conducted prior to such effective date.
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Due-On-Sale and Due-On-Encumbrance Provisions
Each of the Mortgage Loans generally contains a due-on-sale clause that,
subject in many cases to a one-time (or, in some cases, a multiple-time) right
to transfer in accordance with the requirements of the related Mortgage Loan
documents, entitles the lender to accelerate payment of the Mortgage Loan upon
any sale or other transfer of the related Mortgaged Property made without the
lender's consent. Each of the Mortgage Loans also generally contains a
due-on-encumbrance clause that, subject to certain limited exceptions, entitles
the lender to accelerate the maturity of the Mortgage Loan upon the creation of
any other lien or encumbrance upon the Mortgaged Property effected without the
lender's consent. See, however, "Risk Factors--Certain Factors Affecting
Delinquency, Foreclosure and Loss of the Mortgage Loans--Limitations on
Enforceability of Due-on-Sale and Debt-Acceleration Clauses" and "Certain Legal
Aspects of Mortgage Loans--Due-on-Sale and Due-on-Encumbrance Provisions" in the
Prospectus. The Servicer or the Special Servicer, on behalf of the Trustee as
the mortgagee of record, will be required to evaluate any right to transfer and
enforce the restrictions contained in the related Mortgage on transfers or
further encumbrances of the related Mortgaged Property and on transfers of
interests in the related Mortgagor, unless the Servicer or the Special Servicer,
as appropriate, has determined, in its reasonable, good faith judgment, that
waiver of such restrictions would be in accordance with the Servicing Standard;
provided that neither the Servicer nor the Special Servicer may waive any right
it has, or grant any consent that it is otherwise entitled to withhold, under
any related "due-on-encumbrance" clause (or, if it involves any Mortgage Loan
that, together with all other Mortgage Loans, if any, with which it is
cross-collateralized or that have the same or affiliated Mortgagors, under any
related "due-on-sale" clause) until it has received written confirmation from
each Rating Agency that such action would not result in the qualification,
downgrade or withdrawal of the rating then assigned by such Rating Agency to any
Class of Certificates. Notwithstanding the foregoing, neither the Servicer nor
the Special Servicer may (to the extent it is within the control thereof to
prohibit such event) consent to the transfer of any Mortgaged Property which
secures a Cross-Collateralized Group unless all of the Mortgaged Properties
securing such Cross-Collateralized Group are transferred simultaneously by the
respective Mortgagor.
Inspections; Collection of Operating Information
The Special Servicer will be required to inspect or cause an inspection of
the related Mortgaged Property as soon as practicable after any Mortgage Loan
becomes a Specially Serviced Mortgage Loan. In addition, beginning in 1999, the
Servicer will be required to inspect or cause an inspection of each Mortgaged
Property at least once per calendar year (or, in the case of each Mortgage Loan
with a Stated Principal Balance of under $2,000,000, once every two years) if
the Special Servicer has not already done so in that period as described in the
preceding sentence. The Servicer and Special Servicer will each be required to
prepare a written report of each such inspection performed by it that generally
describes the condition of the Mortgaged Property and that specifies (i) any
sale, transfer or abandonment of the property of which the Servicer or the
Special Servicer is aware or (ii) any change in the property's condition,
occupancy or value that the Servicer or the Special Servicer, as the case may
be, considers in accordance with the Servicing Standard to be material. The
reasonable out of pocket expenses incurred by the Special Servicer in connection
with any property inspections that are required to be performed by it will
constitute reimbursable Servicing Advances.
The Special Servicer, in the case of any Specially Serviced Mortgage Loans,
and the Servicer, in the case of all other Mortgage Loans, is also required to
use reasonable efforts to collect from the related Mortgagor and review the
annual operating statements, budgets and rent rolls of the related Mortgaged
Property, and the financial statements of such Mortgagor, and the Special
Servicer is required to cause quarterly and annual operating statements, budgets
and rent rolls to be prepared for each REO Property. However, there can be no
assurance that any operating statements required to be delivered will in fact be
delivered, nor is the Servicer or Special Servicer likely to have any practical
means of compelling such delivery.
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DESCRIPTION OF THE CERTIFICATES
General
The Depositor is forming a trust (the "Trust") for the purpose of issuing
its Series 1998-CG1 Commercial Mortgage Pass-Through Certificates (the
"Certificates"). The Trust will be formed, and the Certificates will be issued,
on or about June __, 1998 (the "Closing Date") pursuant to a Pooling and
Servicing Agreement dated as of the Cut-off Date (the "Pooling Agreement") among
the Depositor, the Servicer, the Special Servicer, the REMIC Administrator and
the Trustee. The Certificates will represent in the aggregate the entire
beneficial ownership interest in the Trust, the assets of which (such assets,
collectively, the "Trust Fund") will consist primarily of: (i) the Mortgage
Loans and all payments and other collections in respect of the Mortgage Loans
received or due after the Cut-off Date (exclusive of scheduled payments of
principal and interest due on or before the Cut-off Date or, in the case of a
Replacement Mortgage Loan, on or before the related date of substitution); (ii)
any REO Property acquired on behalf of the Trust; (iii) such funds or assets as
from time to time are deposited in the Certificate Account (see "Description of
the Pooling Agreements--Certificate Account" in the Prospectus); and (iv)
certain rights incidental to the representations and warranties made by the
Sellers and the Column Third Party Originators as described under "Description
of the Mortgage Pool--Representations and Warranties" and "--Cures, Repurchases
and Substitutions" herein.
The Certificates will consist of 20 classes (each, a "Class") to be
designated as: (i) the Class S Certificates; (ii) the Class A-1A Certificates,
the Class A-1B Certificates, the Class A-1C Certificates, the Class A-2
Certificates, the Class A-3 Certificates and the Class A-4 Certificates
(collectively, the "Class A Certificates"); (iii) the Class B-1 Certificates,
the Class B-2 Certificates, the Class B-3 Certificates, the Class B-4
Certificates, the Class B-5 Certificates, the Class B-6 and the Class B-7
Certificates (collectively, the "Class B Certificates"); (iv) the Class C
Certificates (collectively with the Class S, Class A and Class B Certificates,
the "REMIC Regular Certificates"); (v) the Class D-1 and Class D-2 Certificates
(collectively, the "Grantor Trust Certificates"); and (vi) the Class R-I
Certificates, the Class R-II Certificates and the Class R-III Certificates
(collectively, the "REMIC Residual Certificates"). The Class S Certificates, the
Class A Certificates, the Class B-1 Certificates and the Class B-2 Certificates
(collectively, the "Offered Certificates") are the only securities offered
hereby.
The Class B-4, Class B-5, Class B-6, Class B-7, Class C, Class D-1, Class
D-2, Class R-I, Class R-II and Class R-III Certificates (collectively, the
"Private Certificates") will not be registered under the Securities Act of 1933,
as amended (the "Securities Act") and are not offered hereby. Accordingly, to
the extent this Prospectus Supplement contains information regarding the terms
of the Private Certificates, such information is provided because of its
potential relevance to a prospective purchaser of an Offered Certificate.
Registration and Denominations
The Class A-1A and Class A-1B Certificates will be issued in denominations
of not less than $10,000 initial principal balance (initial "Certificate
Principal Balance") and in any whole dollar denomination in excess thereof. The
Class S Certificates will be issued in denominations of not less than $10,000
initial notional amount (initial "Certificate Notional Amount") and in any whole
dollar denomination in excess thereof. The remaining Offered Certificates will
be issued in denominations of not less than $100,000 initial Certificate
Principal Balance and in any whole dollar denomination in excess thereof.
Each Class of Offered Certificates will initially be issued in book-entry
form through the facilities of The Depositary Trust Company ("DTC") and,
accordingly, will constitute Book-Entry Certificates within the meaning of the
Prospectus. In connection therewith, each Class of Offered Certificates will
initially be represented by one or more fully registered physical certificates
registered in the name of the nominee of DTC. The Depositor has been informed by
DTC that DTC's nominee will be Cede & Co. No beneficial owner of a Book Entry
Certificate (each, a "Certificate Owner") will be entitled to receive a fully
registered physical certificate (a "Definitive Certificate") representing its
interest in such Certificate, except under the limited circumstances described
under "Description of the Certificates--Book-Entry Registration and Definitive
Certificates" in the Prospectus. Unless and until Definitive
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Certificates are issued in respect of the Offered Certificates, beneficial
ownership interests in each such Class of Certificates will be maintained and
transferred on the book-entry records of DTC and its participating organizations
(the "DTC Participants"), and all references to actions by holders of each such
Class of Certificates will refer to actions taken by DTC upon instructions
received from the related Certificate Owners through the DTC Participants in
accordance with DTC procedures, and all references herein to payments, notices,
reports and statements to the holders of each such Class of Certificates will
refer to payments, notices, reports and statements to DTC or Cede & Co., as the
registered holder thereof, for distribution to the related Certificate Owners
through its Participants in accordance with DTC procedures. The form of such
payments and transfers may result in certain delays in receipt of payments by an
investor and may restrict an investor's ability to pledge its securities. See
"Description of the Certificates--Book-Entry Registration and Definitive
Certificates" and "Risk Factors--Book-Entry Registration" in the Prospectus.
The Trustee will initially serve as registrar (in such capacity, the
"Certificate Registrar") for purposes of recording and otherwise providing for
the registration of the Offered Certificates and, if and to the extent
Definitive Certificates are issued in respect thereof, of transfers and
exchanges of the Offered Certificates.
Class Principal Balances and Class Notional Amount
Only the Class A, Class B and Class C Certificates (collectively, the
"Sequential Pay Certificates") will have Certificate Principal Balances. The
Certificate Principal Balance of any Sequential Pay Certificate, as of any date
of determination, will equal the product of (i) the initial Certificate
Principal Balance of such Certificate as of the Closing Date, as specified on
the face thereof, multiplied by (ii) a fraction, the numerator of which is the
Class Principal Balance of the related Class then outstanding, and the
denominator of which is the initial Class Principal Balance of the related Class
as of the Closing Date.
The "Class Principal Balance" of any Class of Sequential Pay Certificates
is the aggregate principal balance thereof outstanding from time to time and
represents the maximum amount that the holders thereof are entitled to receive
(subject to available funds and the payment priorities described herein) as
distributions allocable to principal from the cash flow on the Mortgage Loans
and the other assets constituting the Trust Fund. The Class Principal Balance of
each Class of Sequential Pay Certificates will be reduced on each Distribution
Date by: (i) any distributions of principal actually made on such Class of
Certificates on such Distribution Date; and (ii) any Realized Losses and
Additional Trust Fund Expenses allocated to such Class of Certificates on such
Distribution Date. See "--Distributions" and "--Subordination; Allocation of
Realized Losses and Certain Expenses" herein.
Upon initial issuance, the respective Classes of Sequential Pay
Certificates will have the Class Principal Balances set forth below (in each
case, subject to a variance of plus or minus 5%):
<TABLE>
<CAPTION>
Approximate
Initial Class Percentage of
Class Principal Balance Initial Pool Balance
- - ----- ----------------- --------------------
<S> <C> <C>
Class A-1A ......................... $291,005,000 18.60%
Class A-1B ......................... $835,257,000 53.40%
Class A-1C ......................... $ 39,106,000 2.50%
Class A-2 .......................... $ 39,106,000 2.50%
Class A-3 .......................... $ 78,213,000 5.00%
Class A-4 .......................... $ 23,464,000 1.50%
Class B-1 .......................... $ 70,391,000 4.50%
Class B-2 .......................... $ 23,464,000 1.50%
Class B-3 .......................... $ 15,643,000 1.00%
Class B-4 .......................... $ 66,481,000 4.25%
Class B-5 .......................... $ 15,642,000 1.00%
Class B-6 .......................... $ 27,374,000 1.75%
Class B-7 .......................... $ 15,643,000 1.00%
</TABLE>
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<PAGE>
Class C ............................ $ 23,464,433 1.50%
The Class S Certificates will not have Certificate Principal Balances or
entitle the holders thereof to distributions of principal. However, each such
Certificate will accrue interest as described herein on its Certificate Notional
Amount. The Certificate Notional Amount of any Class S Certificate, as of any
date of determination, will equal the product of (i) the initial Certificate
Notional Amount of such Certificate as of the Closing Date, as specified on the
face thereof, multiplied by (ii) a fraction, the numerator of which is the Class
Notional Amount of the Class S Certificates then outstanding, and the
denominator of which is the initial Class Notional Amount of the Class S
Certificates as of the Closing Date.
The notional amount (the "Class Notional Amount") of the Class S
Certificates used for purposes of calculating Accrued Certificate Interest in
respect of such Class of Certificates will equal the aggregate of the Class
Principal Balances of the respective Classes of Sequential Pay Certificates
outstanding from time to time. Each such Class Principal Balance will constitute
a separate component (a "Component") of the Class Notional Amount of the Class S
Certificates (such Component to have the same alphabetical and/or numerical
designation as the alphabetical and/or numerical Class designation for the
related Class of Sequential Pay Certificates (e.g., the Class Principal Balance
of the Class A-1A Certificates outstanding from time to time will constitute
Component A-1A of the Class Notional Amount of the Class S Certificates)).
The Grantor Trust Certificates and the REMIC Residual Certificates will not
have Certificate Principal Balances or Certificate Notional Amounts.
Accrual of Interest
The respective Classes of REMIC Regular Certificates will bear interest
(herein referred to as "Accrued Certificate Interest"). With respect to each
Class of REMIC Regular Certificates, such interest will commence accruing as of
the Cut-off Date and, during each Interest Accrual Period, will accrue at the
applicable Pass-Through Rate on the Class Principal Balance or, in the case of
the Class S Certificates, the Class Notional Amount of such Class of
Certificates outstanding immediately prior to the related Distribution Date.
The portion of the Accrued Certificate Interest in respect of any Class of
REMIC Regular Certificates that is distributable thereon, subject to available
funds and the payment priorities described herein, is herein referred to as
"Distributable Certificate Interest". The Distributable Certificate Interest in
respect of any Class of REMIC Regular Certificates for any Distribution Date
will equal the Accrued Certificate Interest in respect of such Class of REMIC
Regular Certificates for the related Interest Accrual Period, reduced (to not
less than zero) by the product of (a) the Net Aggregate Prepayment Interest
Shortfall, if any, for such Distribution Date, multiplied by (b) a fraction
(expressed as a percentage), the numerator of which is the Accrued Certificate
Interest in respect of such Class of REMIC Regular Certificates for the related
Interest Accrual Period, and the denominator of which is the aggregate Accrued
Certificate Interest in respect of all the Classes of REMIC Regular Certificates
for the related Interest Accrual Period.
The Grantor Trust Certificates and the REMIC Residual Certificates will not
bear interest, although amounts (if any) distributable on the Grantor Trust
Certificates will consist of Additional Interest.
The "Interest Accrual Period" with respect to any Distribution Date will be
the calendar month immediately preceding the month in which such Distribution
Date occurs.
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Pass-Through Rates
General. The Pass-Through Rates applicable to the respective Classes of
Sequential Pay Certificates for the initial Interest Accrual Period will equal
the per annum rates set forth below:
Class Pass-Through Rate
- - ----- -----------------
Class A-1A................................... %
Class A-1B................................... %
Class A-1C................................... %
Class A-2.................................... %
Class A-3.................................... %
Class A-4.................................... %
Class B-1.................................... %
Class B-2.................................... %
Class B-3.................................... %
Class B-4.................................... %
Class B-5.................................... %
Class B-6.................................... %
Class B-7.................................... %
Class C...................................... %
The Pass-Through Rates applicable to the Class A-1A, Class A-1B, Class
A-1C, Class A-2, Class A-3 and Class A-4 Certificates will, in the case of each
such Class of Certificates, remain fixed at the per annum rate set forth above
with respect to such Class of Certificates. The Pass-Through Rates applicable to
the Class B-1 and Class B-2 Certificates are subject to change and, in the case
of each such Class of Certificates, for each Interest Accrual Period subsequent
to the initial Interest Accrual Period, will equal the lesser of (i) the per
annum rate set forth above with respect to such Class of Certificates and (ii)
the Weighted Average Net Mortgage Rate for such Interest Accrual Period. The
Pass-Through Rate for the Class B-3 Certificates is variable and, for each
Interest Accrual Period subsequent to the initial Interest Accrual Period, will
equal the Weighted Average Net Mortgage Rate for such Interest Accrual Period.
The Pass-Through Rate applicable to the Class S Certificates for the
initial Interest Accrual Period will equal approximately ___% per annum. The
Pass-Through Rate applicable to the Class S Certificates for each Interest
Accrual Period subsequent to the initial Interest Accrual Period will equal the
weighted average of the Class S Strip Rates at which interest accrues on the
respective Components of the Class Notional Amount of the Class S Certificates
during such Interest Accrual Period (weighted on the basis of the relative sizes
of such Components immediately prior to the related Distribution Date). The
"Class S Strip Rate" in respect of any Component of the Class Notional Amount of
the Class S Certificates for any Interest Accrual Period will equal the excess,
if any, of (i) the Weighted Average Net Mortgage Rate for such Interest Accrual
Period, over (ii) the Pass-Through Rate then applicable to the Class of
Sequential Pay Certificates whose Class Principal Balance constitutes such
Component.
The Pass-Through Rate for the Class B-4 Certificates is also variable and,
for each Interest Accrual Period subsequent to the initial Interest Accrual
Period, will equal the Weighted Average Net Mortgage Rate for such Interest
Accrual Period. The Pass-Through Rates for the Class B-5, Class B-6, Class B-7
and Class C Certificates will, in the case of each such Class of Certificates,
remain fixed at the per annum rate set forth above with respect to such Class of
Certificates.
The Grantor Trust Certificates and the REMIC Residual Certificates will not
have Pass-Through Rates.
The "Weighted Average Net Mortgage Rate" for any Interest Accrual Period
will equal the weighted average of the Net Mortgage Rates for the Mortgage Loans
(weighted on the basis of their respective Stated Principal Balances outstanding
immediately following the Distribution Date during such Interest Accrual Period
or, in the case of the initial Interest Accrual Period, weighted on the basis of
their respective Cut-off Date Balances).
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The "Net Mortgage Rate" for any Mortgage Loan will, in general, equal (i)
the related Mortgage Rate in effect as of the Closing Date (without regard to
any modification, waiver or amendment of the terms of such Mortgage Loan
subsequent to the Closing Date), minus (ii) 6 basis points. Notwithstanding the
foregoing, if any Mortgage Loan does not accrue interest on the basis of a
360-day year consisting of twelve 30-day months (which is the basis on which
interest accrues in respect of the REMIC Regular Certificates), then, for
purposes of calculating the Weighted Average Net Mortgage Rate for each
Distribution Date, the Mortgage Rate of such Mortgage Loan in effect for any
Interest Accrual Period will be deemed to be the annualized rate at which
interest would have to accrue in respect of such loan on the basis of a 360-day
year consisting of twelve 30-day months in order to derive the aggregate amount
of interest (other than Additional Interest and Default Interest) actually
accrued in respect of such loan during the calendar month constituting such
Interest Accrual Period; provided, however, that, with respect to each Interest
Reserve Loan (as defined herein), (a) the Mortgage Rate in effect during (i)
December of each year that does not immediately precede a leap year and (ii)
January of each year, will be determined net of the applicable Interest Reserve
Amounts and (b) the Mortgage Rate in effect during February of each year will be
determined after taking into account the addition of the applicable Interest
Reserve Amounts.
The "Stated Principal Balance" of each Mortgage Loan will generally equal
the Cut-off Date Balance thereof (or, in the case of a Replacement Mortgage
Loan, the unpaid principal balance thereof as of the related date of
substitution, after application of all payments of principal due thereon on or
before such date, whether or not received), permanently reduced on each
subsequent Distribution Date (to not less than zero) by (i) that portion, if
any, of the Principal Distribution Amount for such Distribution Date
attributable to such Mortgage Loan, and (ii) the principal portion of any
Realized Loss incurred in respect of such Mortgage Loan during the related
Collection Period.
The "Collection Period" with respect to any Distribution Date will be the
period commencing immediately following the Determination Date in the calendar
month immediately preceding the month in which such Distribution Date occurs
(or, in the case of the initial Distribution Date, commencing immediately
following the Closing Date) and ending on and including the Determination Date
in the month in which such Distribution Date occurs.
The "Determination Date" during each calendar month, commencing in July
1998, will be the 5th day of such month or, if such 5th day is not a business
day, then the immediately preceding business day.
Interest Reserve Account. The Servicer will establish and maintain an
"Interest Reserve Account" in the name of the Trustee for the benefit of the
holders of the Certificates. With respect to each Distribution Date occurring in
February and each Distribution Date occurring in any January which occurs in a
year that is not a leap year, there will be deposited, in respect of each
Non-30/360 Mortgage Loan (the "Interest Reserve Loans"), an amount generally
equal to one day's interest at the related Mortgage Rate on its Stated Principal
Balance as of the Due Date in the month in which such Distribution Date occurs,
to the extent a Monthly Payment or P&I Advance is timely made in respect thereof
for such Due Date (the amount so deposited in any consecutive January (if
applicable) and February in respect of each Interest Reserve Loan, the "Interest
Reserve Amount"). With respect to each Distribution Date occurring in March, an
amount is required to be withdrawn from the Interest Reserve Account in respect
of each Interest Reserve Loan equal to the related Interest Reserve Amounts from
the preceding January (if applicable) and February, if any, and such withdrawn
amount is to be included as part of the Available Distribution Amount for such
Distribution Date.
Distributions
General. Beginning in July 1998, distributions on the Certificates will be
made by or on behalf of the Trustee, to the extent of available funds, on that
date (the "Distribution Date") each month that is the later of (i) the 10th day
of such month or, if any such 10th day is not a business day, on the next
succeeding business day, and (ii) the fourth business day following the
Determination Date in such month. Except as described below, all such
distributions will be made to the persons in whose names the Certificates are
registered (the "Certificateholders") at the close of business on the last
business day of the month preceding the month in which the related Distribution
Date occurs (each, a "Record Date"). As to each such person, such distributions
will be made by wire transfer in immediately available funds to the account
specified by the Certificateholder at a bank or other entity having appropriate
facilities therefor, if such
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<PAGE>
Certificateholder has provided the Trustee in writing with wiring instructions
no less than five business days prior to the related Record Date, or otherwise
by check mailed to such Certificateholder. Until Definitive Certificates are
issued in respect thereof, Cede & Co. will be the registered holder of the
Book-Entry Certificates. See "--Registration and Denominations" above. The final
distribution on any Certificate (determined, in the case of a Sequential Pay
Certificate, without regard to any possible future reimbursement of any Realized
Loss or Additional Trust Fund Expense previously deemed allocated to such
Certificate) will be made only upon presentation and surrender of such
Certificate at the location that will be specified in a notice of the pendency
of such final distribution. Any distribution that is to be made with respect to
a Sequential Pay Certificate in reimbursement of a Realized Loss or Additional
Trust Fund Expense previously allocated thereto, which reimbursement is to occur
after the date on which such Certificate is surrendered as contemplated by the
preceding sentence (the likelihood of any such distribution being remote), will
be made by check mailed to the Certificateholder that surrendered such
Certificate. All distributions made with respect to a Class of Certificates will
be allocated pro rata among the outstanding Certificates of such Class based on
their respective Percentage Interests in such Class. The "Percentage Interest"
in the related Class evidenced by any Offered Certificate will be a fraction,
expressed as a percentage, the numerator of which is the initial Certificate
Principal Balance or Certificate Notional Amount, as the case may be, of such
Certificate on the Closing Date as set forth on the face thereof, and the
denominator of which is the initial Class Principal Balance or Class Notional
Amount, as the case may be, of the related Class on the Closing Date.
The Available Distribution Amount. With respect to any Distribution Date,
distributions of Distributable Certificate Interest and principal on the
Certificates will be made from the Available Distribution Amount for such date.
The "Available Distribution Amount" for any Distribution Date will, in general,
equal (a) all amounts on deposit in the Certificate Account (see "Description of
the Pooling Agreements--Certificate Account" in the Prospectus) as of the close
of business on the related Determination Date, exclusive of any portion thereof
that represents one or more of the following:
(i) Monthly Payments collected but due on a Due Date subsequent to the
related Collection Period;
(ii) Prepayment Premiums and Yield Maintenance Premiums (which are
distributable to the holders of the REMIC Regular Certificates separate
from the Available Distribution Amount);
(iii) Additional Interest on the ARD Loans (which is distributable to
the holders of the Grantor Trust Certificates);
(iv) amounts that are payable or reimbursable to any person other than
the Certificateholders (including amounts payable to the Servicer, the
Special Servicer, any sub-servicers or the Trustee as compensation
(including Trustee Fees, Servicing Fees, Special Servicing Fees, Workout
Fees, Liquidation Fees, Default Interest and late payment charges (to the
extent not otherwise applied to cover interest on Advances), and assumption
fees, assumption application fees, modification fees and extension fees),
amounts payable in reimbursement of outstanding Advances, together with
interest thereon, and amounts payable in respect of other Additional Trust
Fund Expenses);
(v) if such Distribution Date occurs during February of any year or
during January of any year that is not a leap year, the Interest Reserve
Amounts with respect to the Interest Reserve Loans to be deposited in the
Interest Reserve Account and held for future distribution; and
(vi) amounts deposited in the Certificate Account in error; plus
(b) to the extent not already included in clause (a), any P&I Advances and/or
Compensating Interest Payment made in respect of such Distribution Date; plus
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<PAGE>
(c) if such Distribution Date occurs during March of any year, the aggregate of
the Interest Reserve Amounts then on deposit in the Interest Reserve Account in
respect of each Interest Reserve Loan.
Application of the Available Distribution Amount. On each Distribution
Date, the Available Distribution Amount for such date will be distributed to the
Certificateholders for the following purposes and in the following order of
priority:
(i) to make distributions of interest to the holders of the Class S,
Class A-1A and Class A-1B Certificates, pro rata based on entitlement, up
to an amount equal to all Distributable Certificate Interest in respect of
each such Class of Certificates for such Distribution Date and, to the
extent not previously paid, for all prior Distribution Dates;
(ii) to make distributions of principal to the holders of the Class
A-1A and Class A-1B Certificates, allocable as between such Classes of
Certificateholders as described herein, up to an amount equal to the lesser
of (a) the aggregate of the then outstanding Class Principal Balances of
the Class A-1A and Class A-1B Certificates and (b) the Principal
Distribution Amount (as defined below) for such Distribution Date;
(iii) to reimburse the holders of the Class A-1A and Class A-1B
Certificates, pro rata based on entitlement, up to an amount equal to all
Realized Losses and Additional Trust Fund Expenses (each as defined
herein), if any, previously allocated to each such Class of Certificates
and for which no reimbursement has previously been received;
(iv) to make distributions of interest to the holders of the Class
A-1C Certificates, up to an amount equal to all Distributable Certificate
Interest in respect of such Class of Certificates for such Distribution
Date and, to the extent not previously paid, for all prior Distribution
Dates;
(v) after the Class Principal Balances of the Class A-1A and Class
A-1B Certificates have been reduced to zero, to make distributions of
principal to the holders of the Class A-1C Certificates, up to an amount
equal to the lesser of (a) the then outstanding Class Principal Balance of
the Class A-1C Certificates and (b) the excess, if any, of the Principal
Distribution Amount for such Distribution Date over the amounts, if any,
distributed on such Distribution Date pursuant to clause (ii) above;
(vi) to reimburse the holders of the Class A-1C Certificates, up to an
amount equal to all Realized Losses and Additional Trust Fund Expenses, if
any, previously allocated to such Class of Certificates and for which no
reimbursement has previously been received;
(vii) to make distributions of interest to the holders of the Class
A-2 Certificates, up to an amount equal to all Distributable Certificate
Interest in respect of such Class of Certificates for such Distribution
Date and, to the extent not previously paid, for all prior Distribution
Dates;
(viii) after the Class Principal Balances of the Class A-1A, Class
A-1B and Class A-1C Certificates have been reduced to zero, to make
distributions of principal to the holders of the Class A-2 Certificates, up
to an amount equal to the lesser of (a) the then outstanding Class
Principal Balance of the Class A-2 Certificates and (b) the excess, if any,
of the Principal Distribution Amount for such Distribution Date over the
amounts, if any, distributed on such Distribution Date pursuant to clauses
(ii) and (v) above;
(ix) to reimburse the holders of the Class A-2 Certificates, up to an
amount equal to all Realized Losses and Additional Trust Fund Expenses, if
any, previously allocated to such Class of Certificates and for which no
reimbursement has previously been received;
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(x) to make distributions of interest to the holders of the Class A-3
Certificates, up to an amount equal to all Distributable Certificate
Interest in respect of such Class of Certificates for such Distribution
Date and, to the extent not previously paid, for all prior Distribution
Dates;
(xi) after the Class Principal Balances of the Class A-1A, Class A-1B,
Class A-1C and Class A-2 Certificates have been reduced to zero, to make
distributions of principal to the holders of the Class A-3 Certificates, up
to an amount equal to the lesser of (a) the then outstanding Class
Principal Balance of the Class A-3 Certificates and (b) the excess, if any,
of the Principal Distribution Amount for such Distribution Date over the
amounts, if any, distributed on such Distribution Date pursuant to clauses
(ii), (v) and (viii) above;
(xii) to reimburse the holders of the Class A-3 Certificates, up to an
amount equal to all Realized Losses and Additional Trust Fund Expenses, if
any, previously allocated to such Class of Certificates and for which no
reimbursement has previously been received;
(xiii) to make distributions of interest to the holders of the Class
A-4 Certificates, up to an amount equal to all Distributable Certificate
Interest in respect of such Class of Certificates for such Distribution
Date and, to the extent not previously paid, for all prior Distribution
Dates;
(xiv) after the Class Principal Balances of the Class A-1A, Class
A-1B, Class A-1C, Class A-2 and Class A-3 Certificates have been reduced to
zero, to make distributions of principal to the holders of the Class A-4
Certificates, up to an amount equal to the lesser of (a) the then
outstanding Class Principal Balance of the Class A-4 Certificates and (b)
the excess, if any, of the Principal Distribution Amount for such
Distribution Date over the amounts, if any, distributed on such
Distribution Date pursuant to clauses (ii), (v), (viii) and (xi) above;
(xv) to reimburse the holders of the Class A-4 Certificates, up to an
amount equal to all Realized Losses and Additional Trust Fund Expenses, if
any, previously allocated to such Class of Certificates and for which no
reimbursement has previously been received;
(xvi) to make distributions of interest to the holders of the Class
B-1 Certificates, up to an amount equal to all Distributable Certificate
Interest in respect of such Class of Certificates for such Distribution
Date and, to the extent not previously paid, for all prior Distribution
Dates;
(xvii) after the Class Principal Balances of the Class A Certificates
have been reduced to zero, to make distributions of principal to the
holders of the Class B-1 Certificates, up to an amount equal to the lesser
of (a) the then outstanding Class Principal Balance of the Class B-1
Certificates and (b) the excess, if any, of the Principal Distribution
Amount for such Distribution Date over the amounts, if any, distributed on
such Distribution Date pursuant to clauses (ii), (v), (viii), (xi) and
(xiv) above;
(xviii) to reimburse the holders of the Class B-1 Certificates, up to
an amount equal to all Realized Losses and Additional Trust Fund Expenses,
if any, previously allocated to such Class of Certificates and for which no
reimbursement has previously been received;
(xix) to make distributions of interest to the holders of the Class
B-2 Certificates, up to an amount equal to all Distributable Certificate
Interest in respect of such Class of Certificates for such Distribution
Date and, to the extent not previously paid, for all prior Distribution
Dates;
(xx) after the Class Principal Balances of the Class A and Class B-1
Certificates have been reduced to zero, to make distributions of principal
to the holders of the Class B-2 Certificates, up to an amount equal to the
lesser of (a) the then outstanding Class Principal Balance of the Class B-2
Certificates and (b) the excess, if any, of the Principal Distribution
Amount for such Distribution Date over the amounts, if any, distributed on
such Distribution Date pursuant to clauses (ii), (v), (viii), (xi), (xiv)
and (xvii) above;
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(xxi) to reimburse the holders of the Class B-2 Certificates, up to an
amount equal to all Realized Losses and Additional Trust Fund Expenses, if
any, previously allocated to such Class of Certificates and for which no
reimbursement has previously been received;
(xxii) to make distributions of interest to the holders of the Class
B-3 Certificates, up to an amount equal to all Distributable Certificate
Interest in respect of such Class of Certificates for such Distribution
Date and, to the extent not previously paid, for all prior Distribution
Dates;
(xxiii) after the Class Principal Balances of the Class A, Class B-1
and Class B-2 Certificates have been reduced to zero, to make distributions
of principal to the holders of the Class B-3 Certificates, up to an amount
equal to the lesser of (a) the then outstanding Class Principal Balance of
the Class B-3 Certificates and (b) the excess, if any, of the Principal
Distribution Amount for such Distribution Date over the amounts, if any,
distributed on such Distribution Date pursuant to clauses (ii), (v),
(viii), (xi), (xiv), (xvii) above;
(xxiv) to reimburse the holders of the Class B-3 Certificates, up to
an amount equal to all Realized Losses and Additional Trust Fund Expenses,
if any, previously allocated to such Class of Certificates and for which no
reimbursement has previously been received;
(xxv) to make distributions of interest to the holders of the Class
B-4 Certificates, up to an amount equal to all Distributable Certificate
Interest in respect of such Class of Certificates for such Distribution
Date and, to the extent not previously paid, for all prior Distribution
Dates;
(xxvi) after the Class Principal Balances of the Class A, Class B-1,
Class B-2 and Class B-3 Certificates have been reduced to zero, to make
distributions of principal to the holders of the Class B-4 Certificates, up
to an amount equal to the lesser of (a) the then outstanding Class
Principal Balance of the Class B-4 Certificates and (b) the excess, if any,
of the Principal Distribution Amount for such Distribution Date over the
amounts, if any, distributed on such Distribution Date pursuant to clauses
(ii), (v), (viii), (xi), (xiv), (xvii), (xx) and (xxiii) above;
(xxvii) to reimburse the holders of the Class B-4 Certificates, up to
an amount equal to all Realized Losses and Additional Trust Fund Expenses,
if any, previously allocated to such Class of Certificates and for which no
reimbursement has previously been received;
(xxviii) to make distributions of interest to the holders of the Class
B-5 Certificates, up to an amount equal to all Distributable Certificate
Interest in respect of such Class of Certificates for such Distribution
Date and, to the extent not previously paid, for all prior Distribution
Dates;
(xxix) after the Class Principal Balances of the Class A, Class B-1,
Class B-2, Class B-3 and Class B-4 Certificates have been reduced to zero,
to make distributions of principal to the holders of the Class B-5
Certificates, up to an amount equal to the lesser of (a) the then
outstanding Class Principal Balance of the Class B-5 Certificates and (b)
the excess, if any, of the Principal Distribution Amount for such
Distribution Date over the amounts, if any, distributed on such
Distribution Date pursuant to clauses (ii), (v), (viii), (xi), (xiv),
(xvii), (xx), (xxiii) and (xxvi) above;
(xxx) to reimburse the holders of the Class B-5 Certificates, up to an
amount equal to all Realized Losses and Additional Trust Fund Expenses, if
any, previously allocated to such Class of Certificates and for which no
reimbursement has previously been received;
(xxxi) to make distributions of interest to the holders of the Class
B-6 Certificates, up to an amount equal to all Distributable Certificate
Interest in respect of such Class of Certificates for such Distribution
Date and, to the extent not previously paid, for all prior Distribution
Dates;
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(xxxii) after the Class Principal Balances of the Class A, Class B-1,
Class B-2, Class B-3, Class B-4 and Class B-5 Certificates have been
reduced to zero, to make distributions of principal to the holders of the
Class B-6 Certificates, up to an amount equal to the lesser of (a) the then
outstanding Class Principal Balance of the Class B-6 Certificates and (b)
the excess, if any, of the Principal Distribution Amount for such
Distribution Date over the amounts, if any, distributed on such
Distribution Date pursuant to clauses (ii), (v), (viii), (xi), (xiv),
(xvii), (xx), (xxiii) (xxvi) and (xxix) above;
(xxxiii) to reimburse the holders of the Class B-6 Certificates, up to
an amount equal to all Realized Losses and Additional Trust Fund Expenses,
if any, previously allocated to such Class of Certificates and for which no
reimbursement has previously been received;
(xxxiv) to make distributions of interest to the holders of the Class
B-7 Certificates, up to an amount equal to all Distributable Certificate
Interest in respect of such Class of Certificates for such Distribution
Date and, to the extent not previously paid, for all prior Distribution
Dates;
(xxxv) after the Class Principal Balances of the Class A, Class B-1,
Class B-2, Class B-3, Class B-4, Class B-5 and Class B-6 Certificates have
been reduced to zero, to make distributions of principal to the holders of
the Class B-7 Certificates, up to an amount equal to the lesser of (a) the
then outstanding Class Principal Balance of the Class B-7 Certificates and
(b) the excess, if any, of the Principal Distribution Amount for such
Distribution Date over the amounts, if any, distributed on such
Distribution Date pursuant to clauses (ii), (v), (viii), (xi), (xiv),
(xvii), (xx), (xxiii) (xxvi), (xxix) and (xxxii) above;
(xxxvi) to reimburse the holders of the Class B-7 Certificates, up to
an amount equal to all Realized Losses and Additional Trust Fund Expenses,
if any, previously allocated to such Class of Certificates and for which no
reimbursement has previously been received;
(xxxvii) to make distributions of interest to the holders of the Class
C Certificates, up to an amount equal to all Distributable Certificate
Interest in respect of such Class of Certificates for such Distribution
Date and, to the extent not previously paid, for all prior Distribution
Dates;
(xxxviii) after the Class Principal Balances of the Class A and Class
B Certificates have been reduced to zero, to make distributions of
principal to the holders of the Class C Certificates, up to an amount equal
to the lesser of (a) the then outstanding Class Principal Balance of the
Class C Certificates and (b) the excess, if any, of the Principal
Distribution Amount for such Distribution Date over the amounts, if any,
distributed on such Distribution Date pursuant to (ii), (v), (viii), (xi),
(xiv), (xvii), (xx), (xxiii), (xxvi), (xxix), (xxxii) and (xxxv) above;
(xxxix) to reimburse the holders of the Class C Certificates, up to an
amount equal to all Realized Losses and Additional Trust Fund Expenses, if
any, previously allocated to such Class of Certificates and for which no
reimbursement has previously been received; and
(xl) to make distributions to the holders of the REMIC Residual
Certificates, up to an amount equal to the excess, if any, of (a) the
Available Distribution Amount for such Distribution Date, over (b) the
aggregate distributions made in respect of the REMIC Regular Certificates
on such Distribution Date pursuant to clauses (i) through (xxxix) above;
provided that, on the final Distribution Date in connection with a termination
of the Trust, the distributions of principal to be made pursuant to clauses
(ii), (v), (viii), (xi), (xiv), (xvii), (xx), (xxiii), (xxvi), (xxix), (xxxii),
(xxxv) and (xxxviii) above shall, in each such case, subject to the then
remaining portion of the Available Distribution Amount for such date, be made to
the holders of the relevant Class or Classes of Sequential Pay Certificates
otherwise entitled to distributions of principal pursuant to such clause in an
amount equal to the entire then remaining Class Principal Balance (or, in the
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case of clause (ii) above, if applicable, the entire aggregate of the then
remaining Class Principal Balances) of such Class or Classes of Certificates
outstanding immediately prior to such final Distribution Date.
On each Distribution Date prior to the earlier of (i) the Senior Principal
Distribution Cross-Over Date and (ii) the final Distribution Date in connection
with the termination of the Trust, all distributions of principal on the Class
A-1A and Class A-1B Certificates will be paid, first, to the holders of the
Class A-1A Certificates, until the Class Principal Balance of such Class of
Certificates is reduced to zero, and thereafter, to the holders of the Class
A-1B Certificates, until the Class Principal Balance of such Class of
Certificates is reduced to zero. On each Distribution Date coinciding with and
following the Senior Principal Distribution Cross-Over Date, and in any event on
the final Distribution Date in connection with the termination of the Trust,
distributions of principal on the Class A-1A and Class A-1B Certificates will be
paid to the holders of such two Classes of Certificates, pro rata, in accordance
with their respective Class Principal Balances outstanding immediately prior to
such Distribution Date, until the Class Principal Balance of each such Class of
Certificates is reduced to zero. The "Senior Principal Distribution Cross-Over
Date" will be the first Distribution Date as of which the aggregate Class
Principal Balance of the Class A-1A and Class A-1B Certificates outstanding
immediately prior thereto equals or exceeds the sum of (a) the aggregate Stated
Principal Balance of the Mortgage Pool that will be outstanding immediately
following such Distribution Date, plus (b) the lesser of (i) the Principal
Distribution Amount for such Distribution Date and (ii) the portion of the
Available Distribution Amount for such Distribution Date that will remain after
the distributions of Distributable Certificate Interest to be made on the Senior
Certificates on such Distribution Date have been so made.
The "Principal Distribution Amount" for any Distribution Date will, in
general, equal the aggregate (without duplication) of the following:
(a) all payments of principal (other than Principal Prepayments) received
on the Mortgage Loans during the related Collection Period, in each
case net of any portion of the particular payment that represents a
late collection of principal for which a P&I Advance was previously
made for a prior Distribution Date or that represents the principal
portion of a Monthly Payment due on or before the Cut-off Date or on a
Due Date subsequent to the related Collection Period;
(b) the principal portions of all Monthly Payments due in respect of the
Mortgage Loans for their respective Due Dates occurring during the
related Collection Period that were received prior to the related
Collection Period;
(c) all Principal Prepayments received on the Mortgage Loans during the
related Collection Period;
(d) all other collections (including Liquidation Proceeds, Condemnation
Proceeds and Insurance Proceeds (each as defined herein)) that were
received on or in respect of the Mortgage Loans during the related
Collection Period and that were identified and applied by the Servicer
as recoveries of principal thereof, in each case net of any portion of
such collection that represents a late collection of principal due on
or before the Cut-off Date or for which a P&I Advance was previously
made for a prior Distribution Date; and
(e) the principal portion of all P&I Advances made in respect of the
Mortgage Loans with respect to such Distribution Date.
Distributions of Prepayment Premiums and Yield Maintenance Premiums. If a
Prepayment Premium is collected with respect to any Mortgage Loan during any
particular Collection Period, then 85% of such Prepayment Premium will be
distributed on the Distribution Date corresponding to such Collection Period as
additional interest to the holders of the Class S Certificates and 15% of such
Prepayment Premium will be distributed on such Distribution Date as additional
interest to the holders of the Class (or Classes) of Sequential Pay Certificates
then entitled to
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distributions of principal on such Distribution Date (allocable among such
Classes, if more than one, on a pro rata basis in accordance with the relative
amounts of such distributions of principal).
If a Yield Maintenance Premium is collected with respect to any Mortgage
Loan during any particular Collection Period, then such Yield Maintenance
Premium will be distributed as additional interest on the Distribution Date
corresponding to such Collection Period as follows: The holders of the Class (or
Classes) of Sequential Pay Certificates then entitled to distributions of
principal on such Distribution Date will be entitled to an aggregate amount
(allocable among such Classes, if more than one, as described below) equal to
the product of (1) the amount of such Yield Maintenance Premium, multiplied by
(2) a fraction (not greater than one or less than zero), the numerator of which
is equal to the excess, if any, of the Pass-Through Rate applicable to such
Class of Sequential Pay Certificates (or, if two or more Classes are involved,
the Pass-Through Rate applicable to such of those Classes as has the most senior
right of payment and/or the earliest Assumed Final Distribution Date) for the
corresponding Interest Accrual Period, over the relevant Discount Rate, and the
denominator of which is equal to the excess, if any, of the Mortgage Rate for
the Mortgage Loan that prepaid, over the relevant Discount Rate. If there is
more than one Class of Sequential Pay Certificates entitled to distributions of
principal on such Distribution Date, the aggregate amount described in the
preceding sentence will be allocated among such Classes on a pro rata basis in
accordance with the relative amounts of such distributions of principal. Any
portion of such Yield Maintenance Premium that may remain after such
distributions on the Sequential Pay Certificates will be distributed to the
holders of the Class S Certificates.
For purposes of the foregoing, the relevant "Discount Rate" is the rate
which, when compounded monthly, is equivalent to the Treasury Rate when
compounded semi-annually (e.g., a 6% per annum Treasury Rate would equate to a
5.9263% per annum Discount Rate). The "Treasury Rate" is 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 date of the relevant principal prepayment, of U.S. Treasury constant
maturities with a maturity date (one longer and one shorter) most nearly
approximating (a) in the case of any GECA Mortgage Loan, the weighted average
life (as described under "Description of the Mortgage Pool--Prepayment
Provisions") of the prepaid Mortgage Loan immediately prior to the prepayment
and (b) in the case of any Column Mortgage Loan, the maturity date of the
prepaid Mortgage Loan. If Release H.15 is no longer published, the Servicer will
select a comparable publication to determine the Treasury Rate.
Neither the Depositor nor the Underwriter makes any representation or
warranty as to the collectability of any Prepayment Premium or Yield Maintenance
Premium or the enforceability of any Mortgage Loan provision requiring the
payment of any such amount. Furthermore, Prepayment Premiums and Yield
Maintenance Premiums, even if collected and distributable on any Class of
Certificates as additional interest, may not be sufficient to fully compensate
the Certificateholders of such Class for any loss in yield experienced by them
in connection with the related prepayments of principal. See "Risk
Factors--Special Prepayment and Yield Considerations" herein.
Distributions of Additional Interest. It is anticipated that the Class D-1
Certificates will be delivered to and retained by an affiliate of GECA. The
Class D-1 Certificates entitle the holders thereof to all amounts, if any,
applied as Additional Interest on the GECA Mortgage Loans. It is also
anticipated that the Class D-2 Certificates will be delivered to and retained by
Column. The Class D-2 Certificates entitle the holders thereof to all amounts,
if any, applied as Additional Interest on the Column Mortgage Loans.
Treatment of REO Properties. If any Mortgaged Property may be acquired as
part of the Trust Fund through foreclosure, deed in lieu of foreclosure or
otherwise, the related Mortgage Loan will, for purposes of, among other things,
determining Pass-Through Rates of, distributions on and allocations of Realized
Losses and Additional Trust Fund Expenses to the Certificates, as well as the
amount of Servicing Fees, Special Servicing Fees and Trustee Fees payable under
the Pooling Agreement, be treated as having remained outstanding until such REO
Property is liquidated. In connection therewith, operating revenues and other
proceeds derived from such REO Property (exclusive of related operating costs)
will be "applied" by the Servicer as principal, interest and other amounts "due"
on such Mortgage Loan; and (subject to the limitations set forth under "--P&I
and Other Advances" below), the Servicer (and, if necessary, the Trustee)will be
required to make P&I Advances in respect of such Mortgage Loan, in all cases as
if such Mortgage Loan
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had remained outstanding. In particular, references to "Mortgage Loan" and
"Mortgage Loans" in the definitions of "Principal Distribution Amount" and
"Weighted Average Net Mortgage Rate" are intended to include any Mortgage Loan
or Mortgage Loans as to which the related Mortgaged Property has become an REO
Property.
Subordination; Allocation of Realized Losses and Certain Expenses
As and to the extent described herein, the Class A-1C, Class A-2, Class
A-3, Class A-4, Class B, Class C, Class R-I, Class R-II and Class R-III
Certificates (collectively, the "Subordinate Certificates") will be subordinate
to the Class S, Class A-1A and Class A-1B Certificates (collectively, the
"Senior Certificates"); the Class A-2, Class A-3, Class A-4, Class B, Class C,
Class R-I, Class R-II and Class R-III Certificates will be subordinate to the
Class A-1C Certificates; the Class A-3, Class A-4, Class B, Class C, Class R-I,
Class R-II and Class R-III Certificates will be subordinate to the Class A-2
Certificates; the Class A-4, the Class B, Class C, Class R-I, Class R-II and
Class R-III Certificates will be subordinate to the Class A-3 Certificates; the
Class B, Class C, Class R-I, Class R-II and Class R-III Certificates will be
subordinate to the Class A-4 Certificates; the Class B-2, Class B-3, Class B-4,
Class B-5, Class B-6, Class B-7, Class C, Class R-I, Class R-II and Class R-III
Certificates will be subordinate to the Class B-1 Certificates; the Class B-3,
Class B-4, Class B-5, Class B-6, Class B-7, Class C, Class R-I, Class R-II and
Class R-III Certificates will be subordinate to the Class B-2 Certificates; and
the Class B-4, Class B-5, Class B-6, Class B-7, Class C, Class R-I, Class R-II
and Class R-III Certificates will be subordinate to the Class B-3 Certificates.
This subordination is intended to enhance the likelihood of timely receipt by
the holders of the Senior Certificates of the full amount of Distributable
Certificate Interest payable in respect of such Classes of Certificates on each
Distribution Date, and the ultimate receipt by the holders of the Class A-1A and
Class A-1B Certificates of principal in an amount equal to the entire respective
Class Principal Balances thereof. Similarly, but to decreasing degrees, this
subordination is also intended to enhance the likelihood of timely receipt by
the holders of the other Classes of Offered Certificates of the full amount of
Distributable Certificate Interest payable in respect of such Classes of
Certificates on each Distribution Date, and the ultimate receipt by the holders
of such Classes of Certificates of principal equal to the entire respective
Class Principal Balances thereof. This subordination will be accomplished by the
application of the Available Distribution Amount on each Distribution Date in
accordance with the order of priority described under "--Distributions--
Application of the Available Distribution Amount" above and the allocation of
Realized Losses and Additional Trust Fund Expenses in accordance with the order
of priority described below. No other form of credit support will be available
for the benefit of any Class of Offered Certificateholders. The Grantor Trust
Certificates entitle the holders thereof only to amounts applied as Additional
Interest in respect of the ARD Loans. Accordingly, the Grantor Trust
Certificates are not necessarily senior or subordinate to any other Class of
Certificates (except to the extent that amounts received on any particular ARD
Loan are applied first to pay amounts other than Additional Interest).
If, following the distributions to be made in respect of the Certificates
on any Distribution Date, the aggregate Stated Principal Balance of the Mortgage
Pool that will be outstanding immediately following such Distribution Date is
less than the then aggregate of the Class Principal Balances of the respective
Classes of Sequential Pay Certificates, the Class Principal Balances of the
Class C, Class B-7, Class B-6, Class B-5, Class B-4, Class B-3, Class B-2, Class
B-1, Class A-4, Class A-3, Class A-2 and Class A-1C Certificates will be
reduced, sequentially in that order, in the case of each such Class until such
deficit (or the related Class Principal Balance) is reduced to zero (whichever
occurs first). If any portion of such deficit remains at such time as the Class
Principal Balances of such Classes of Certificates are reduced to zero, then the
respective Class Principal Balances of the Class A-1A and Class A-1B
Certificates will be reduced, pro rata in accordance with the relative sizes of
the remaining Class Principal Balances of such Classes of Certificates, until
such deficit (or each such Class Principal Balance) is reduced to zero. Any such
deficit will, in general, be the result of Realized Losses incurred in respect
of the Mortgage Loans and/or Additional Trust Fund Expenses. The foregoing
reductions in the Class Principal Balances of the Sequential Pay Certificates
will constitute an allocation of any such Realized Losses and Additional Trust
Fund Expenses.
"Realized Losses" are losses to the Trust arising from the inability of the
Servicer and Special Servicer to collect all amounts due and owing under any
defaulted Mortgage Loan, including by reason of fraud or bankruptcy of the
related mortgagor or a casualty of any nature at the related Mortgaged Property,
to the extent not covered by insurance. The Realized Loss, if any, in respect of
a liquidated Mortgage Loan (or related REO Property) will generally
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equal the excess, if any, of (a) the outstanding principal balance of such
Mortgage Loan as of the date of liquidation, together with all accrued and
unpaid interest thereon at the related Mortgage Rate through the Due Date in the
Collection Period of liquidation (exclusive, however, of any portion of such
accrued and unpaid interest that constitutes Additional Interest), over (b) the
aggregate amount of Liquidation Proceeds, if any, recovered in connection with
such liquidation (net of any portion of such Liquidation Proceeds that is
payable or reimbursable in respect of related unpaid liquidation expenses and
unreimbursed Servicing Advances). If the Mortgage Rate on any Mortgage Loan is
reduced or a portion of the debt due under any Mortgage Loan is forgiven,
whether in connection with a modification, waiver or amendment granted or agreed
to by the Special Servicer or in connection with a bankruptcy or similar
proceeding involving the related Mortgagor, the resulting reduction in interest
(other than Additional Interest and Default Interest) paid or the amount of
interest (other than Additional Interest and Default Interest) and/or principal
so forgiven, as the case may be, also will be treated as a Realized Loss.
"Additional Trust Fund Expenses" are any expenses of the Trust Fund not
specifically included in the calculation of a "Realized Loss," that would result
in the REMIC Regular Certificateholders' receiving less than the full amount of
the principal and/or Distributable Certificate Interest to which they are
entitled on any Distribution Date. Additional Trust Fund Expenses include, among
other things: (a) any interest paid to the Servicer, Special Servicer and/or
Trustee in respect of unreimbursed Advances (to the extent not paid out of late
payment charges and Default Interest actually collected on the related Mortgage
Loan); (b) all Special Servicing Fees, Workout Fees and Liquidation Fees payable
to the Special Servicer; (c) any of certain unanticipated, non-Mortgage Loan
specific expenses of the Trust, including, but not limited to, (i) certain
reimbursements and indemnification to the Trustee and certain related persons
described under "Description of the Pooling Agreements--Certain Matters
Regarding the Trustee" in the Prospectus, (ii) certain reimbursements and
indemnification to the Depositor, the Servicer, the Special Servicer, the REMIC
Administrator and certain related persons described under "Description of the
Pooling Agreements--Certain Matters Regarding the Master Servicer, the Special
Servicer, the REMIC Administrator, the Manager and the Depositor" in the
Prospectus, (iii) certain taxes payable from the Trust Fund and described under
"Certain Federal Income Tax Consequences--Possible Taxes on Income from
Foreclosure Property and Other Taxes" herein and "Certain Federal Income Tax
Consequences--REMICs--Prohibited Transactions Tax and Other Taxes" in the
Prospectus, (iv) the costs and expenses of any tax audits with respect to the
Trust and certain other tax-related expenses and (v) the cost of various
opinions of counsel required to be obtained in connection with the servicing of
the Mortgage Loans and administration of the Trust Fund; and (d) any other
expense of the Trust not specifically included in the calculation of "Realized
Loss" for which there is no corresponding collection from a Mortgagor.
P&I and Other Advances
On or about each Distribution Date, the Servicer will be obligated, subject
to the recoverability determination described in the next paragraph, to make
advances (each, a "P&I Advance") out of its own funds or, subject to the
replacement thereof as provided in the Pooling Agreement, from funds held in the
Certificate Account that are not required to be distributed to
Certificateholders on such Distribution Date, in an amount that is generally
equal to the aggregate of all Monthly Payments (other than Balloon Payments) and
any Assumed Monthly Payments, net of related Servicing Fees and Workout Fees,
due or deemed due, as the case may be, in respect of the Mortgage Loans during
the related Collection Period, in each case to the extent such amount was not
paid by or on behalf of the related Mortgagor or otherwise collected as of the
close of business on the related Determination Date. Notwithstanding the
foregoing, if it is determined that an Appraisal Reduction Amount exists with
respect to any Required Appraisal Mortgage Loan (as defined below), then, with
respect to the Distribution Date immediately following the date of such
determination and with respect to each subsequent Distribution Date for so long
as such Appraisal Reduction Amount exists, the interest portion of any P&I
Advance required to be made in respect of such Mortgage Loan will be reduced (no
reduction to be made in the principal portion, however) to equal to the product
of (i) the amount of the interest portion of such P&I Advance that would
otherwise be required to be made for such Distribution Date without regard to
this sentence, multiplied by (ii) a fraction (expressed as a percentage), the
numerator of which will equal the Stated Principal Balance of such Mortgage
Loan, net of such Appraisal Reduction Amount, and the denominator of which will
equal the Stated Principal Balance of such Mortgage Loan. See "--Appraisal
Reductions" below.
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An "Assumed Monthly Payment" is an amount deemed due in respect of: (i) any
Balloon Mortgage Loan that is delinquent in respect of its Balloon Payment
beyond the first Determination Date that follows its most recent scheduled
maturity date and as to which no arrangements have been agreed to for collection
of the delinquent amounts; or (ii) any Mortgage Loan as to which the related
Mortgaged Property has been acquired on behalf of the Certificateholders through
foreclosure, deed in lieu of foreclosure or otherwise. The Assumed Monthly
Payment deemed due each month on any such Balloon Mortgage Loan delinquent as to
its Balloon Payment, will equal the Monthly Payment that would have been due
thereon on the Due Date in such month if the related Balloon Payment had not
come due, but rather such Mortgage Loan had continued to amortize in accordance
with its amortization schedule, if any, and had continued to accrue interest in
accordance with its terms, in effect immediately prior to maturity. The Assumed
Monthly Payment deemed due each month on any such Mortgage Loan as to which the
related Mortgaged Property has become an REO Property, will equal the Monthly
Payment (or, in the case of a Mortgage Loan delinquent in respect of its Balloon
Payment as described in the prior sentence, the Assumed Monthly Payment) due on
the last Due Date prior to the acquisition of such REO Property.
If the full amount of all P&I Advances, if any, required to be made in
respect of any Distribution Date is not deposited in the Distribution Account,
then the Trustee will be required to make the portion of such P&I Advances that
was required to be, but was not, made by the Servicer. See "--The Trustee"
below.
The Servicer and the Trustee will each be entitled to recover any P&I
Advance made out of its own funds from any Related Proceeds collected in respect
of the Mortgage Loan as to which such P&I Advance was made; provided that
neither the Servicer nor the Trustee will be obligated to make any P&I Advance
that it determines, in its reasonable, good faith judgment, would, if made,
constitute a Nonrecoverable Advance, and the Servicer and the Trustee will each
be entitled to recover any P&I Advance made by it that it later determines to be
a Nonrecoverable Advance out of general funds on deposit in the Certificate
Account. With respect to any P&I Advance, the Trustee will be entitled to
conclusively rely on the non-recoverability determination made by the Servicer.
The Servicer and the Trustee will each be entitled, with respect to any
Advance made thereby, and the Special Servicer will be entitled, with respect to
any Servicing Advance made thereby, to interest accrued on the amount of such
Advance for so long as it is outstanding at a per annum rate (the "Reimbursement
Rate") equal to the "prime rate" published in the "Money Rates" section of The
Wall Street Journal, as such "prime rate" may change from time to time. Such
interest on any Advance will be payable to the Servicer, the Special Servicer or
the Trustee, as the case may be: (i) at any time, out of Default Interest and
late payment charges actually collected in respect of the related Mortgage Loan;
and (ii) from time to time, to the extent that such Advance is being reimbursed,
out of any amounts then on deposit in the Certificate Account. To the extent not
offset by Default Interest and late payment charges collected in respect of any
defaulted Mortgage Loan, interest accrued on outstanding Advances made in
respect thereof will result in a reduction in amounts payable on the
Certificates.
In addition to the foregoing, the Trustee will be required to advance, to
the extent known to it, any amounts collected on or in respect of the Mortgage
Pool that the Servicer is required but fails to remit to the Trustee by a
specified time on or about the related Distribution Date. The Trustee will be
entitled to interest at the Reimbursement Rate accrued on the amount of such
advance for so long as it is outstanding.
Appraisal Reductions
Promptly following the earliest of (i) the date on which any Mortgage Loan
becomes a Modified Mortgage Loan (as defined below), (ii)(A) the 60th day after
the occurrence of any uncured delinquency in Monthly Payments with respect to
any Mortgage Loan or (B) in the case of a Modified Mortgage Loan or Mortgage
Loan as to which the related Mortgagor has been the subject of a bankruptcy or
insolvency proceeding since the Closing Date, the 30th day after the occurrence
of any uncured delinquency in Monthly Payments with respect to any Mortgage
Loan, (iii) the date on which a receiver is appointed and continues in such
capacity in respect of the Mortgaged Property securing any Mortgage Loan and
(iv) the date on which the Mortgaged Property securing any Mortgage Loan becomes
an REO Property (each such Mortgage Loan, a "Required Appraisal Loan"), the
Special Servicer will be required to obtain an
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appraisal of the related Mortgaged Property from an independent MAI-designated
appraiser and provide a copy thereof to the Servicer, the Trustee and the
Controlling Class Representative, unless such an appraisal had previously been
obtained within the prior twelve months. The cost of such appraisal is to be
covered by, and reimbursable as, a Servicing Advance. As a result of any such
appraisal, it may be determined that an Appraisal Reduction Amount exists with
respect to the related Required Appraisal Loan. The "Appraisal Reduction Amount"
for any Required Appraisal Loan will, in general, be an amount, determined as of
the Determination Date immediately succeeding the date on which the appraisal is
obtained (or, if determined based on an earlier appraisal, as of the
Determination Date immediately succeeding the earliest of the relevant dates
described in the first sentence of this paragraph), equal to the excess, if any,
of (a) the sum of (i) the Stated Principal Balance of such Required Appraisal
Loan, (ii) to the extent not previously advanced by the Servicer or the Trustee,
all unpaid interest on the Required Appraisal Loan at the related Mortgage Rate
through the most recent Due Date prior to such Determination Date (net of
related Servicing Fees and, if and to the extent applicable, Additional
Interest), (iii) all accrued but unpaid Servicing Fees and Special Servicing
Fees in respect of such Required Appraisal Loan, (iv) all related unreimbursed
Advances made by or on behalf of the Servicer, the Special Servicer or the
Trustee with respect to such Required Appraisal Loan, together with interest
accrued thereon at the Reimbursement Rate, and (v) all currently due and unpaid
real estate taxes and assessments, insurance premiums, and, if applicable,
ground rents in respect of the related Mortgaged Property or REO Property, net
of any escrow reserves held by the Servicer or the Special Servicer with respect
to any such item, over (b) 90% of an amount equal to the appraised value (as is)
of the related Mortgaged Property or REO Property as determined by the most
recent relevant appraisal, net of any mortgage liens that are prior to the lien
of such Mortgage Loan. Notwithstanding the foregoing, if an appraisal is not
obtained from an independent MAI-designated appraiser within the earlier of (x)
60 days following the date described in clause (ii)(A) of the first sentence of
this paragraph and (y) 90 days following the earliest of the dates described in
clauses (i), (ii)(B), (iii) and (iv) of the first sentence of this paragraph,
then until such appraisal is obtained the Appraisal Reduction Amount will equal
25% of the Stated Principal Balance of the related Required Appraisal Loan. Upon
receipt of an appraisal from an independent MAI-designated appraiser, however,
the Appraisal Reduction Amount for such Required Appraisal Loan will be
recalculated in accordance with the second preceding sentence.
With respect to each Required Appraisal Loan (unless such Mortgage Loan has
become a Corrected Mortgage Loan and has remained current for twelve consecutive
Monthly Payments, and no other Servicing Transfer Event has occurred with
respect thereto during such twelve-month period, in which case it will cease to
be a Required Appraisal Loan), the Special Servicer is required, within 30 days
of each anniversary of such loan's becoming a Required Appraisal Loan, to order
an update of the prior appraisal (the cost of which is to be covered by, and
reimbursable as, a Servicing Advance). Based upon such appraisal, the Special
Servicer will be required to redetermine and report to the Trustee the then
applicable Appraisal Reduction Amount, if any, with respect to such Required
Appraisal Loan.
At any time that an Appraisal Reduction Amount exists with respect to any
Required Appraisal Loan, the Controlling Class Representative will be entitled,
at its own expense, to obtain and deliver to the Servicer and the Trustee an
appraisal that satisfies certain specified requirements and, upon the written
request of the Controlling Class Representative, the Special Servicer will be
required to recalculate the Appraisal Reduction Amount in respect of such
Required Appraisal Loan based on such appraisal and notify the Trustee, the
Servicer and the Controlling Class Representative of the recalculated Appraisal
Reduction Amount.
A "Modified Mortgage Loan" is any Mortgage Loan as to which any Servicing
Transfer Event has occurred and which has been modified by the Special Servicer
in a manner that: (A) affects the amount or timing of any payment of principal
or interest due thereon (other than, or in addition to, bringing current Monthly
Payments with respect to such Mortgage Loan); (B) except as expressly
contemplated by the related Mortgage, results in a release of the lien of the
Mortgage on any material portion of the related Mortgaged Property without a
corresponding Principal Prepayment in an amount not less than the fair market
value (as is) of the property to be released; or (C) in the reasonable, good
faith judgment of the Special Servicer, otherwise materially impairs the
security for such Mortgage Loan or reduces the likelihood of timely payment of
amounts due thereon.
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Reports to Certificateholders; Certain Available Information
Trustee Reports. Based solely on information provided in monthly reports
prepared by the Servicer and the Special Servicer and delivered to the Trustee,
the Trustee will prepare and forward on each Distribution Date to each
Certificateholder a statement (the "Trustee Report") substantially in the form
of Exhibit B hereto, detailing the distributions on such Distribution Date and
the performance, both in the aggregate and individually to the extent available,
of the Mortgage Loans and Mortgaged Properties.
Book-Entry Certificates. Until such time as Definitive Certificates are
issued in respect of the Offered Certificates, the foregoing information will be
available to the Certificate Owners through DTC and the DTC Participants. Any
Certificate Owner of a Book-Entry Certificate who does not receive information
through DTC or the DTC Participants may request that Trustee Reports be mailed
directly to it (at its cost) by written request (accompanied by verification of
such Certificate Owner's ownership interest) to the Trustee at the Trustee's
corporate trust office primarily responsible for administering the Trust Fund
(the "Corporate Trust Office"). The manner in which notices and other
communications are conveyed by DTC to DTC Participants, and by DTC Participants
to the Certificate Owners of Book-Entry Certificates, will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time. The Servicer, the Special Servicer, the
Trustee, the REMIC Administrator and the Depositor are required to recognize as
Certificateholders only those persons in whose names the Certificates are
registered on the books and records of the Certificate Registrar.
Information Available Electronically. Upon the consent of the Depositor,
the Trustee will make available each month, to any interested party, the Trustee
Report via the Trustee's Internet Website, electronic bulletin board and
fax-on-demand service. In addition, upon the consent of the Depositor, the
Trustee will also make certain Mortgage Loan information as presented in the
CSSA loan setup file and CSSA loan periodic update file formats available to any
Certificateholder, any Certificate Owner, the Rating Agencies, the parties to
the Pooling Agreement or any other interested party via the Trustee's Internet
Website. The Trustee's Internet Website will be located at
"www.securitieslink.net/cmbs". The Trustee's electronic bulletin board may be
accessed by calling (301) 815-6620, and its fax-on-demand service may be
accessed by calling (301) 815-6610. For assistance with regard to the
above-mentioned services, investors may call (301) 815-6600. The Trustee will
also make available, as a convenience for interested parties (and not in
furtherance of the distribution of the Prospectus or the Prospectus Supplement
under the securities laws) the Pooling Agreement, the Prospectus and the
Prospectus Supplement via the Trustee's Internet Website.
The Trustee will make no representations or warranties as to the accuracy
or completeness of such documents and will assume no responsibility therefor. In
addition, the Trustee may disclaim responsibility for any information made
available by the Trustee for which it is not the original source.
In connection with providing access to the Trustee's electronic bulletin
board and Trustee's Internet Website, the Trustee may require registration and
the acceptance of a disclaimer. The Trustee shall not be liable for the
dissemination of information in accordance with the Pooling Agreement.
Other Information. The Pooling Agreement requires that the Trustee make
available at its offices, during normal business hours, upon reasonable advance
written notice, for review by any holder or Certificate Owner of an Offered
Certificate or any person identified to the Trustee by any such holder or
Certificate Owner as a prospective transferee of an Offered Certificate or any
interest therein, subject to the discussion in the following paragraph,
originals or copies of, among other things, the following items: (a) the Pooling
Agreement and any amendments thereto; (b) all Trustee Reports delivered to
holders of the relevant Class of Offered Certificates since the Closing Date;
(c) all officer's certificates delivered to the Trustee by the Servicer and/or
Special Servicer since the Closing Date as described under "Description of the
Pooling Agreements--Evidence as to Compliance" in the Prospectus; (d) all
accountant's reports delivered to the Trustee in respect of the Servicer and/or
Special Servicer since the Closing Date as described under "Description of the
Pooling Agreements--Evidence as to Compliance" in the Prospectus; (e) the most
recent inspection report in respect of each Mortgaged Property prepared by the
Servicer or the Special Servicer and delivered to the
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Trustee as described under "Servicing of the Mortgage Loans--Inspections;
Collection of Operating Information" herein; (f) the most recent appraisal, if
any, with respect to each Mortgaged Property obtained by the Servicer or the
Special Servicer and delivered to the Trustee (see "--Appraisal Reductions"
above); (g) the most recent quarterly and annual operating statement and rent
roll for each Mortgaged Property and financial statements of the related
Mortgagor collected by the Servicer or the Special Servicer and delivered to the
Trustee as described under "Servicing of the Mortgage Loans--Inspections;
Collection of Operating Information" herein; and (h) the Mortgage Files,
including all documents (e.g. modifications, waivers and amendments of the
Mortgage Loans) that are to be added thereto from time to time. Copies of any
and all of the foregoing items will be available from the Trustee upon request;
however, the Trustee will be permitted to require payment of a sum sufficient to
cover the reasonable costs and expenses of providing such services.
The Trustee will make available, upon reasonable advance written notice and
at the expense of the requesting party, copies of the items referred to in the
prior paragraph that are maintained thereby, to Certificateholders, Certificate
Owners and prospective purchasers of Certificates and interests therein;
provided that the Trustee may require (a) in the case of a Certificate Owner, a
written confirmation executed by the requesting person or entity in the form
attached to the Pooling Agreement or otherwise reasonably acceptable to the
Trustee, generally to the effect that such person or entity is a beneficial
owner of Offered Certificates, is requesting the information solely for use in
evaluating such person's or entity's investment in such Certificates and will
otherwise keep such information confidential and (b) in the case of a
prospective purchaser, confirmation executed by the requesting person or entity,
in the form attached to the Pooling Agreement and otherwise reasonably
acceptable to the Trustee, generally to the effect that such person or entity is
a prospective purchaser of Offered Certificates or an interest therein, is
requesting the information solely for use in evaluating a possible investment in
such Certificates and will otherwise keep such information confidential.
Certificateholders, by the acceptance of their Certificates, will be deemed to
have agreed to keep such information confidential. Notwithstanding the
foregoing, however, no Certificateholder, Certificate Owner or prospective
Certificateholder or Certificate Owner will be required to keep confidential any
information received from the Trustee as described above that has previously
been made available via the Trustee's Internet Website or has previously been
filed with the Securities and Exchange Commission (the "SEC"), and the Trustee
will not be required to obtain either of the confirmations referred to in the
second preceding sentence in connection with providing any information that has
previously been made available via the Trustee's Internet Website or has
previously been filed with the SEC.
Voting Rights
At all times during the term of the Pooling Agreement, 99% of the voting
rights for the series offered hereby (the "Voting Rights") will be allocated
among the respective Classes of Sequential Pay Certificates in proportion to the
Class Principal Balances thereof, and 1% of the Voting Rights will be allocated
to the Class S Certificates. Voting Rights allocated to a Class of Certificates
will be allocated among such Certificates in proportion to the Percentage
Interests in such Class evidenced thereby.
Termination
The obligations created by the Pooling Agreement will terminate following
the earliest of (i) the final payment (or advance in respect thereof) or other
liquidation of the last Mortgage Loan or related REO Property remaining in the
Trust Fund, and (ii) the purchase of all of the Mortgage Loans and REO
Properties remaining in the Trust Fund by the Servicer, the Special Servicer or
any single holder of Certificates representing a majority interest in the
Controlling Class (in that order of preference). Written notice of termination
of the Pooling Agreement will be given to each Certificateholder, and the final
distribution with respect to each Certificate will be made only upon surrender
and cancellation of such Certificate at the office of the Certificate Registrar
or at such other location specified in such notice of termination.
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Any such purchase by the Servicer, the Special Servicer or a majority
holder of the Controlling Class of all of the Mortgage Loans and REO Properties
remaining in the Trust Fund is required to be made at a price equal to (a) the
sum of (i) the aggregate Purchase Price of all of the Mortgage Loans then
included in the Trust Fund (other than any Mortgage Loans as to which the
related Mortgaged Property has become an REO Property) and (ii) the fair market
value of all REO Properties then included in the Trust Fund, as determined by an
appraiser mutually agreed upon by the Servicer and the Trustee, minus (b)
(solely in the case of a purchase by the Servicer or the Special Servicer) the
aggregate of all amounts payable or reimbursable to the party effecting the
purchase under the Pooling Agreement. Such purchase will effect early retirement
of the then outstanding Certificates, but the right of the Servicer, the Special
Servicer or any majority holder of the Controlling Class to effect such
termination is subject to the requirement that the then aggregate Stated
Principal Balance of the Mortgage Pool be less than 1% of the Initial Pool
Balance. The purchase price paid by the Servicer, the Special Servicer or a
majority holder of the Controlling Class, exclusive of any portion thereof
payable or reimbursable (as if such purchase price constituted Liquidation
Proceeds) to any person other than the Certificateholders, will constitute part
of the Available Distribution Amount for the final Distribution Date.
The Trustee
Norwest Bank Minnesota, National Association ("Norwest Bank") will act as
Trustee pursuant to the Pooling Agreement. Norwest Bank, a direct, wholly owned
subsidiary of Norwest Corporation, is a national banking association originally
chartered in 1872 and is engaged in a wide range of activities typical of a
national bank. Norwest Bank's principal office is located at Norwest Center,
Sixth and Marquette, Minneapolis, Minnesota 55479-0113. Certificate transfer
services are conducted at Norwest Bank's offices in Minneapolis. Norwest Bank
otherwise conducts its trustee and securities administration services at its
offices in Columbia, Maryland. Its address there is 11000 Broken Land Parkway,
Columbia, Maryland 21044-3562. In addition, Norwest Bank maintains a trust
office in New York located at 3 New York Plaza, New York, New York 10004.
Certificateholders and other interested parties should direct their inquiries to
the New York office. The telephone number is (212) 509-7900.
The Trustee is at all times required to be a corporation, bank, trust
company or association organized and doing business under the laws of the United
States of America or any State thereof or the District of Columbia, authorized
under such laws to exercise trust powers, having a combined capital and surplus
of at least $50,000,000 and subject to supervision or examination by federal or
state authority. If such corporation, bank, trust company or association
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of the foregoing, the combined capital and surplus of such corporation,
bank, trust company or association shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so published.
The Depositor, the Servicer, the Special Servicer and their respective
affiliates may from time to time enter into normal banking and trustee
relationships with the Trustee and its affiliates. The Trustee and any of its
respective affiliates may hold Certificates in their own names. In addition, for
purposes of meeting the legal requirements of certain local jurisdictions, the
Servicer and the Trustee acting jointly shall have the power to appoint a
co-trustee or separate trustee of all or any part of the Trust Fund. All rights,
powers, duties and obligations conferred or imposed upon the Trustee will be
conferred or imposed upon the Trustee and such separate trustee or co-trustee
jointly, or, in any jurisdiction in which the Trustee shall be incompetent or
unqualified to perform certain acts, singly upon such separate trustee or
co-trustee who shall exercise and perform such rights, powers, duties and
obligations solely at the direction of the Trustee.
Pursuant to the Pooling Agreement, the Trustee will be entitled to receive
a monthly fee (the "Trustee Fee") generally equal to one month's interest in
respect of each Mortgage Loan (including each Mortgage Loan as to which the
related Mortgaged Property has become an REO Property) accrued (on the basis of
a 360-day year consisting of twelve 30- day months) at 0.003% per annum (the
"Trustee Fee Rate") on the Stated Principal Balance of such Mortgage Loan from
time to time.
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For so long as the same entity acts as Trustee and REMIC Administrator,
such entity will be entitled, in its capacity as REMIC Administrator, to the
same limitations on liability and rights to reimbursement and indemnification as
it has in its capacity as Trustee.
See also "Description of the Pooling Agreements--The Trustee", "--Duties of
the Trustee", "--Certain Matters Regarding the Trustee" and "--Resignation and
Removal of the Trustee" in the Prospectus.
YIELD AND MATURITY CONSIDERATIONS
Yield Considerations
General. The yield on any Offered Certificate will depend on (a) the price
at which such Certificate is purchased by an investor and (b) the rate, timing
and amount of distributions on such Certificate. The rate, timing and amount of
distributions on any Offered Certificate will in turn depend on, among other
things, (i) the Pass-Through Rate for such Certificate, (ii) the rate and timing
of principal payments (including Principal Prepayments) and other principal
collections on the Mortgage Loans and the extent to which such amounts are to be
applied or otherwise result in reduction of the Certificate Principal Balance or
Certificate Notional Amount of such Certificate, (iii) the rate, timing and
severity of Realized Losses and Additional Trust Fund Expenses and the extent to
which such losses and shortfalls are allocable in reduction of the Certificate
Principal Balance or Certificate Notional Amount of such Certificate, and (iv)
the timing and severity of any Net Aggregate Prepayment Interest Shortfalls and
the extent to which such shortfalls are allocable in reduction of the
Distributable Certificate Interest payable on such Certificate.
Pass-Through Rates. The Pass-Through Rate applicable to the Class S
Certificates will be variable and will equal the weighted average of the Class S
Strip Rates at which interest accrues on the respective Components of the
related Class Notional Amount from time to time. Each such strip rate (as well
as the Pass-Through Rate for each other Class of Offered Certificates) will, in
turn, be calculated based on the Weighted Average Net Mortgage Rate from time to
time. Accordingly, the yield on each Class of Offered Certificates will be
sensitive to changes in the relative composition of the Mortgage Pool as a
result of scheduled amortization, voluntary prepayments and liquidations of
Mortgage Loans following default. In addition, the Pass-Through Rate for Class S
Certificates will vary with changes in the relative sizes of the Class Principal
Balances of the respective Classes of Sequential Pay Certificates. See
"Description of the Certificates--Pass-Through Rates" and "Description of the
Mortgage Pool" herein and "--Rate and Timing of Principal Payments" below.
Rate and Timing of Principal Payments. The yield to holders of the Class S
Certificates will be extremely sensitive to, and the yield to holders of any
other Offered Certificates purchased at a discount or premium will be affected
by, the rate and timing of principal payments made in reduction of the
Certificate Principal Balances or Certificate Notional Amounts of such
Certificates. In turn, the rate and timing of principal payments that are
distributed or otherwise result in reduction of the Class Principal Balance or
Class Notional Amount, as the case may be, of each Class of Offered Certificates
will be directly related to the rate and timing of principal payments on or in
respect of the Mortgage Loans, which will be affected by the amortization
schedules thereof, the dates on which Balloon Payments are due and the rate and
timing of principal prepayments and other unscheduled collections thereon
(including for this purpose, collections made in connection with liquidations of
Mortgage Loans due to defaults, casualties or condemnations affecting the
Mortgaged Properties, or purchases or other removals of Mortgage Loans out of
the Trust Fund). Prepayments and, assuming the respective Maturity Dates
therefor have not occurred, liquidations of the Mortgage Loans will result in
distributions on the Sequential Pay Certificates of amounts that would otherwise
be distributed over the remaining terms of the Mortgage Loans and will tend to
shorten the weighted average lives of those Certificates. Defaults on the
Mortgage Loans, particularly at or near their Maturity Dates, may result in
significant delays in payments of principal on the Mortgage Loans (and,
accordingly, on the Sequential Pay Certificates) while work-outs are negotiated
or foreclosures are completed, and such delays will tend to lengthen the
weighted average lives of those Certificates. See "Servicing of The Mortgage
Loans--Modifications, Waivers and Amendments" herein. Furthermore, the ability
of a Mortgagor under an ARD Loan to repay its Mortgage Loan on the related
Anticipated
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Repayment Date will generally depend on its ability to either refinance the
Mortgage Loan or sell the related Mortgaged Property. In addition, such
Mortgagor may have little incentive to repay its Mortgage Loan on the related
Anticipated Repayment Date if then prevailing interest rates are relatively
high. Accordingly, there can be no assurance that any ARD Loan will be paid in
full as of its related Anticipated Repayment Date.
The extent to which the yield to maturity of any Class of Offered
Certificates may vary from the anticipated yield will depend upon the degree to
which such Certificates are purchased at a discount or premium and when, and to
what degree, payments of principal on the Mortgage Loans are in turn distributed
or otherwise result in a reduction of the Class Principal Balance or Class
Notional Amount of such Certificates. An investor should consider, in the case
of any Offered Certificate purchased at a discount, the risk that a slower than
anticipated rate of principal payments on the Mortgage Loans could result in an
actual yield to such investor that is lower than the anticipated yield and, in
the case of any Class S Certificate or any other Offered Certificate purchased
at a premium, the risk that a faster than anticipated rate of principal payments
on the Mortgage Loans could result in an actual yield to such investor that is
lower than the anticipated yield. In general, the earlier a payment of principal
on the Mortgage Loans is distributed or otherwise results in reduction of the
Certificate Notional Amount of a Class S Certificate or the Certificate
Principal Balance of any other Offered Certificate purchased at a discount or
premium, the greater will be the effect on an investor's yield to maturity. As a
result, the effect on an investor's yield of principal payments on the Mortgage
Loans occurring at a rate higher (or lower) than the rate anticipated by the
investor during any particular period would not be fully offset by a subsequent
like reduction (or increase) in the rate of such principal payments. Investors
in the Class S Certificates should fully consider the risk that an extremely
rapid rate of principal payments on the Mortgage Loans could result in the
failure of such investors to fully recoup their initial investments. 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), no assurance can be
given 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 mortgage loans comparable to 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 any losses or shortfalls on the Mortgage Loans. Losses and other
shortfalls on the Mortgage Loans will, with the exception of any Net Aggregate
Prepayment Interest Shortfalls, generally be applied to reduce the Class
Principal Balances of the Sequential Pay Certificates in the following order:
first, to the Class C Certificates until the Class Principal Balance thereof has
been reduced to zero; then to the Class B-7, Class B-6, Class B-5, Class B-4,
Class B-3, Class B-2 and Class B-1 Certificates, in that order, until the
remaining Class Principal Balance of each such Class of Certificates has been
reduced to zero; then to the Class A-4, Class A-3, Class A-2 and Class A-1C
Certificates, in that order, until the remaining Class Principal Balance of each
such Class of Certificates has been reduced to zero; and finally to the Class
A-1A and Class A-1B Certificates, pro rata in accordance with their respective
remaining Class Principal Balances, until the remaining Class Principal Balance
of each such Class of Certificates is reduced to zero. Any Realized Loss or
Additional Trust Fund Expense so allocated to the Sequential Pay Certificates
will cause a corresponding reduction of the Class Notional Amount of the Class S
Certificates. As described herein, any Net Aggregate Prepayment Interest
Shortfalls will, in general, be allocated in reduction of the Distributable
Certificate Interest for the respective Classes of REMIC Regular Certificates on
a pro rata basis.
Certain Relevant Factors. 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, prevailing interest rates, the
terms of the Mortgage Loans (for example, provisions requiring Lockout Periods,
provisions requiring the payment of Prepayment Premiums and/or Yield Maintenance
Premiums, amortization terms that require Balloon Payments and, in the case of
ARD Loans, provisions requiring hyperamortization and an increase in the rate at
which interest accrues after the Anticipated Repayment Date), the demographics
and relative economic vitality of the areas in which the Mortgaged Properties
are located and the general supply and demand for rental units or other
comparable residential or commercial space, as applicable, in such areas, the
quality of management of the Mortgaged Properties, the servicing of the Mortgage
Loans, possible changes in tax laws and other opportunities for investment. See
"Risk Factors" herein and in the Prospectus.
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The rate of prepayment on the Mortgage Pool is likely to be affected by
prevailing market interest rates for mortgage loans of a comparable type, term
and risk level. When the prevailing market interest rate is below a Mortgage
Rate, the related Mortgagor has an incentive to refinance its Mortgage Loan. A
requirement that a prepayment be accompanied by a Prepayment Premium or Yield
Maintenance Premium may not provide a sufficient economic disincentive to deter
a Mortgagor from refinancing at a more favorable interest rate.
Depending on prevailing market interest rates, the outlook for market
interest rates and economic conditions generally, some mortgagors may sell or
refinance Mortgaged Properties in order to realize their equity therein, to meet
cash flow needs or to make other investments. In addition, some mortgagors may
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.
The Depositor makes no representation as to the particular factors that
will affect the rate and timing of prepayments and defaults on the Mortgage
Loans, as to the relative importance of such factors, as to the percentage of
the principal balance of the Mortgage Loans that will be prepaid or as to which
a default will have occurred as of any date or as to the overall rate of
prepayment or default on the Mortgage Loans.
CPR Model. Prepayments on mortgage loans are commonly measured relative to
a prepayment standard or model. The prepayment model used in this Prospectus
Supplement is the "constant prepayment rate" ("CPR") model, which represents an
assumed constant rate of prepayment each month (which is quoted on a per annum
basis) relative to the then outstanding principal balance of a pool of mortgage
loans for the life of such mortgage loans. The CPR model does not purport to be
either an historical description of the prepayment experience of any pool of
mortgage loans or a prediction of the anticipated rate of prepayment of any pool
of mortgage loans, including the Mortgage Pool. The Depositor does not make any
representations about the appropriateness of the CPR model.
Unpaid Distributable Certificate Interest. As described under "Description
of the Certificates--Distributions--Application of the Available Distribution
Amount" herein, if the portion of the Available Distribution Amount
distributable in respect of interest on any Class of Offered Certificates on any
Distribution Date is less than the Distributable Certificate Interest then
payable for such Class, the shortfall will be distributable to holders of such
Class of Certificates on subsequent Distribution Dates, to the extent of
available funds. Any such shortfall will not bear interest, however, and will
therefore negatively affect the yield to maturity of such Class of Certificates
for so long as it is outstanding.
Weighted Average Life and Yield Sensitivity of Certain Sequential Pay
Certificates
For purposes hereof, weighted average life refers to the average amount of
time that will elapse from the date of issuance of a security until each dollar
of principal of such security will be repaid to the investor (assuming no
losses). For purposes of this "Yield and Maturity Considerations" section and
Exhibit C to this Prospectus Supplement, the weighted average life of a
Sequential Pay Certificate (such as a Class A, Class B-1, Class B-2 or Class B-3
Certificate) is determined by (i) multiplying the amount of each principal
distribution thereon by the number of years from the Assumed Settlement Date (as
defined below) to the related Distribution Date, (ii) summing the results and
(iii) dividing the sum by the aggregate amount of the reductions in the
Certificate Principal Balance of such Sequential Pay Certificate. The weighted
average life of any Sequential Pay Certificate will be influenced by, among
other things, the rate at which principal of the Mortgage Loans is paid, which
may be in the form of scheduled amortization, Balloon Payments, prepayments or
liquidations and any extensions or modifications made by the Special Servicer
with respect to Specially Serviced Mortgage Loans as described herein. The
weighted average life of any Sequential Pay Certificate may also be affected to
the extent that additional distributions in reduction of the Certificate
Principal Balance of such Certificate occur as a result of the purchase of a
Mortgage Loan from the Trust or the optional termination of the Trust as
described under "Description of the Certificates--Termination" herein. Such a
purchase from the Trust will have the same effect on distributions to the
holders of Certificates as if the related Mortgage Loan(s) had prepaid in full,
except that no Prepayment Premiums or Yield Maintenance Premiums are made in
respect thereof.
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The tables set forth on Exhibit C hereto have been prepared on the basis of
the following assumptions (the "Modeling Assumptions") regarding the
characteristics of the Certificates and the Mortgage Loans and the performance
thereof: (i) as of the date of issuance of the Certificates, the Mortgage Loans
have the terms identified in the table titled "Characteristics of the Mortgage
Loans" in Exhibit A-1; (ii) the monthly cash flow of each Mortgage Loan (except
for the Balloon Payment) is the monthly payment of principal and interest set
forth in the table titled "Characteristics of the Mortgage Loans" in Exhibit
A-1; (iii) each ARD Loan is paid in full on its Anticipated Repayment Date, no
Mortgage Loan is prepaid during its Lockout Period, during its Premium Period or
during any period that defeasance thereof may be required and, otherwise, each
Mortgage Loan is assumed to prepay at the specified CPR; (iv) the Mortgage Loans
secured by the Mortgaged Properties identified on Exhibit A-1 as Summer Cove
Apartments and Ultra Plaza Shopping Center accrue interest for their entire term
on the basis of the actual number of days elapsed each month in a 360-day year,
notwithstanding that such Mortgage Loans provide for interest to accrue during
the initial two years of their terms on the basis of a 360-day year consisting
of twelve 30-day months and during the remainder of their terms on the basis of
the actual number of days elapsed each month in a 360-day year, (v) no Mortgage
Loan is repurchased or replaced as a result of a material breach of a
representation or warranty, and none of the Servicer, the Special Servicer or
any holder of Certificates evidencing a majority interest in the Controlling
Class exercises its option to purchase the Mortgage Loans and thereby cause a
termination of the Trust; (vi) there are no delinquencies or Realized Losses on
the Mortgage Loans, and there is no extension of the Maturity Date of any
Mortgage Loan; (vii) payments on the Certificates will be made on the 10th day
of each month, commencing in July 1998; (viii) payments on the Mortgage Loans
earn no reinvestment return; (ix) there are no additional ongoing Trust expenses
payable out of the Trust Fund other than the Servicing Fee and the Trustee Fee
(which will accrue at a combined rate of 0.06% per annum), and there are no
Additional Trust Fund Expenses; (x) the respective Classes of REMIC Regular
Certificates will, in each such case, be issued with the initial Class Principal
Balance or Class Notional Amount set forth in the tables on pages S-___ and
S-___ hereof; (xi) the Pass-Through Rates for the respective Classes of REMIC
Regular Certificates will be as set forth herein; and (xii) the Certificates
will be settled on June , 1998 (the "Assumed Settlement Date").
The actual characteristics and performance of the Mortgage Loans will
differ from the Modeling Assumptions used in calculating the tables set forth on
Exhibit C hereto, which is hypothetical in nature and are provided only to give
a general sense of how the principal cash flows might behave under the assumed
prepayment and loss scenarios. Any difference between such assumptions and the
actual characteristics and performance of the Mortgage Loans, or actual
prepayment or loss experience, will affect the percentages of initial Class
Principal Balances outstanding over time and the weighted average lives of the
respective Classes of Sequential Pay Certificates.
Subject to the foregoing discussion and assumptions, the tables set forth
on Exhibit C hereto indicate the respective weighted average lives of those
Classes of the Offered Certificates with Class Principal Balances, and set forth
the percentages of the respective initial Class Principal Balances of such
Classes of Offered Certificates that would be outstanding after each of the
Distribution Dates shown.
Yield Sensitivity of the Class S Certificates
The yield to investors on the Class S Certificates will be highly sensitive
to the rate and timing of principal payments (including prepayments) on the
Mortgage Loans. Investors in the Class S Certificates should fully consider the
associated risks, including the risk that an extremely rapid rate of prepayment
on and/or liquidation of the Mortgage Loans could result in the failure of such
investors to fully recoup their initial investments.
The tables set forth on Exhibit D hereto show pre-tax corporate bond
equivalent ("CBE") yields for the Class S Certificates based on the Modeling
Assumptions and assuming the specified purchase prices and the indicated
prepayment scenarios. Assumed purchase prices are, in the case of each such
Class, expressed in 32nds (e.g., means %) as a percentage of the related initial
Class Notional Amount and exclusive of accrued interest.
The yields set forth in the tables on Exhibit D hereto were calculated by
determining the monthly discount rates that, when applied to the assumed stream
of cash flows to be paid on the Class S Certificates, would cause the
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discounted present value of each assumed stream of cash flows to equal the
assumed aggregate purchase prices of such Class of Certificates, plus accrued
interest at the initial Pass-Through Rate for such Class of Certificates from
and including the Cutoff Date to but excluding the Assumed Settlement Date, and
converting such monthly rates to corporate bond equivalent rates. Such
calculations do not take into account variations that may occur in the interest
rates at which investors may be able to reinvest funds received by them as
distributions on the Class S Certificates and consequently do not purport to
reflect the return on any investment on such Class of Certificates when such
reinvestment rates are considered.
There can be no assurance that the Mortgage Loans will prepay in accordance
with the assumptions used in preparing the tables on Exhibit D hereto, that the
Mortgage Loans will prepay as assumed at any of the rates shown in such tables,
that the Mortgage Loans will not experience losses, that Mortgage Loans will not
be liquidated during any applicable Lockout Period, that the ARD Loans will be
paid in full on their respective Anticipated Repayment Dates, that the cash
flows on the Class S Certificates will correspond to the cash flows shown herein
or that the aggregate purchase price of the Class S Certificates will be as
assumed. It is unlikely that the Mortgage Loans will prepay as assumed at any of
the specified percentages of CPR until maturity or that all of the Mortgage
Loans will so prepay at the same rate. Actual yields to maturity for investors
in the Class S Certificates may be materially different than those indicated on
Exhibit D and, under certain circumstances, could be negative. Timing of changes
in rate of prepayments and other liquidations may significantly affect the
actual yield to maturity to investors, even if the average rate of principal
prepayments and other liquidations is consistent with the expectations of
investors. Investors must make their own decisions as to the appropriate
prepayment, liquidation and loss assumptions to be used in deciding whether to
purchase any Class S Certificates.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
General
Upon the issuance of the Certificates, Sidley & Austin, counsel to the
Depositor, will deliver its opinion generally to the effect that, assuming
compliance with the Pooling Agreement (and subject to certain other assumptions
set forth in such opinion), the portions of the Trust Fund designated as "REMIC
I", "REMIC II" and "REMIC III", respectively, will each qualify as a REMIC under
the Code. The assets of REMIC I will include the Mortgage Loans, any REO
Properties acquired on behalf of the Certificateholders and the Certificate
Account (as defined in the Prospectus). For federal income tax purposes, (a) the
separate non-certificated regular interests in REMIC I will be the "regular
interests" in REMIC I and will constitute the assets of REMIC II, (b) the Class
R-I Certificates will evidence the sole class of "residual interests" in REMIC
I, (c) the separate non-certificated regular interests in REMIC II will be the
"regular interests" in REMIC II and will constitute the assets of REMIC III, (d)
the Class R-II Certificates will evidence the sole class of "residual interests"
in REMIC II, (e) the REMIC Regular Certificates will constitute (or, in the case
of the Class S Certificates, will evidence the ownership of) the "regular
interests" in, and will generally be treated as debt obligations of, REMIC III,
and (f) the Class R-III Certificates will evidence the sole class of "residual
interests" in REMIC III. The Grantor Trust Certificates will represent
beneficial interests in the portion of the Trust Fund consisting of any amounts
applied as Additional Interest on the ARD Loans, and such portion will be
treated as a grantor trust for federal income tax purposes.
Discount and Premium; Prepayment Premiums
For federal income tax reporting purposes, it is anticipated that the Class
S and Class Certificates will, the Class Certificates may and the other Classes
of Offered Certificates will not, be treated as having been issued with original
issue discount. The prepayment assumption that will be used in determining the
rate of accrual of market discount and premium, if any, for federal income tax
purposes will be based on the assumption (the "Prepayment Assumption") that
subsequent to the date of any determination the ARD Loans will be paid in full
on their respective Anticipated Repayment Dates, no Mortgage Loan will otherwise
be prepaid prior to maturity and there will be no extensions of maturity for any
Mortgage Loan. However, no representation is made as to the actual rate at which
the
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Mortgage Loans will prepay, if at all. See "Certain Federal Income Tax
Consequences--REMICs--Taxation of Owners of REMIC Regular Certificates" in the
Prospectus.
The Internal Revenue Service (the "IRS") has issued regulations (the "OID
Regulations") under Sections 1271 to 1275 of the Code generally addressing the
treatment of debt instruments issued with original issue discount. Purchasers of
the Offered Certificates should be aware that the OID Regulations and Section
1272(a)(6) of the Code do not adequately address certain issues relevant to, or
are not applicable to, prepayable securities such as the Offered Certificates.
Prospective purchasers of the Offered Certificates are advised to consult their
tax advisors concerning the tax treatment of such Certificates.
If the method for computing original issue discount described in the
Prospectus results in a negative amount for any period with respect to a
Certificateholder, a possibility of particular relevance to a Class S
Certificateholder, the amount of original issue discount allocable to such
period would be zero and such Certificateholder will be permitted to offset such
negative amount only against future original issue discount (if any)
attributable to such Certificates. Although the matter is not free from doubt, a
holder of a Class S Certificate may be permitted to deduct a loss to the extent
that his or her respective remaining basis in such Certificate exceeds the
maximum amount of future payments to which such Certificateholder is entitled,
assuming no further prepayments of the Mortgage Loans. Any such loss might be
treated as a capital loss.
The OID regulations provide in general that original issue discount with
respect to debt instruments issued in connection with the same or related
transactions are treated as a single debt instrument for purposes of computing
the accrual of original issue discount with respect to such debt instruments.
This aggregation rule ordinarily is only to be applied when single debt
instruments are issued by a single issuer to a single holder. Although it is not
clear that this aggregation rule technically applies to REMIC regular interests
or other instruments subject to Section 1272(a)(6) of the Code, information
reports or returns sent to Certificateholders and the IRS with respect to the
Class S Certificates, which evidence the ownership of multiple regular
interests, will be based on such aggregate method of computing the yield on the
related regular interests. Prospective purchasers of the Class S Certificates
are advised to consult their tax advisors about the use of this methodology and
the potential consequences of being required to report original issue discount
separately with respect to each of the regular interests, ownership of which is
evidenced by the Class S Certificates.
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 such Certificateholder's purchase price
and the distributions remaining to be made on such Certificate at the time of
its acquisition by such Certificateholder. Holders of such Classes of
Certificates should consult their own tax advisors regarding the possibility of
making an election to amortize such premium. See "Certain Federal Income Tax
Consequences--REMICs--Taxation of Owners of REMIC Regular Certificates--Premium"
in the Prospectus.
Prepayment Premiums and Yield Maintenance Premiums actually collected on
the Mortgage Loans will be distributed to the holders of each Class of
Certificates entitled thereto as described herein. It is not entirely clear
under the Code when the amount of a Prepayment Premium or Yield Maintenance
Premium should be taxed to the holder of a Class of Certificates entitled
thereto. For federal income tax reporting purposes, Prepayment Premiums or Yield
Maintenance Premiums will be treated as income to the holders of a Class of
Certificates entitled thereto only after the Servicer's actual receipt thereof.
The IRS may nevertheless seek to require that an assumed amount of Prepayment
Premiums and Yield Maintenance Premiums be included in distributions projected
to be made on the Certificates and that taxable income be reported based on the
projected constant yield to maturity of the Certificates, including such
projected Prepayment Premiums and Yield Maintenance Premiums prior to their
actual receipt. If such projected Prepayment Premiums and Yield Maintenance
Premiums were not actually received, presumably the holder of a Certificate
would be allowed to claim a deduction or reduction in gross income at the time
such unpaid Prepayment Premiums and Yield Maintenance Premiums had been
projected to be received. Moreover, it appears that Prepayment Premiums and
Yield Maintenance Premiums are to be treated as ordinary income rather than
capital gain. However,
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the correct characterization of such income is not entirely clear and
Certificateholders should consult their own tax advisors concerning the
treatment of Prepayment Premiums and Yield Maintenance Premiums.
Constructive Sales of Class S Certificates
The Taxpayer Relief Act of 1997 added a provision to the Code that requires
the recognition of gain upon the "constructive sale of an appreciated financial
position." A constructive sale of a financial position occurs if a taxpayer
enters into certain transactions or series of such transactions that have the
effect of substantially eliminating the taxpayer's risk of loss and opportunity
for gain with respect to the financial instrument. Debt instruments that (a)
entitle the holder to a specified principal amount, (b) pay interest at a fixed
or variable rate and (c) are not convertible into the stock of the issuer or a
related party cannot be the subject of a constructive sale for this purpose.
Accordingly, only Class S Certificates, which do not have a principal balance,
could be subject to this provision and only if a holder of a Class S Certificate
engages in a constructive sale transaction.
Characterization of Investments in Offered Certificates
In general, except to the extent noted below, the Offered Certificates will
be "real estate assets" within the meaning of Section 856(c)(4)(A) of the Code
in the same proportion that the assets of the Trust would be so treated. The
Offered Certificates will generally be considered assets described in Section
7701(a)(19)(C) of the Code only to the extent that the Mortgage Loans are
secured by residential property and, accordingly, investment in the Offered
Certificates may not be suitable for certain thrift institutions. Moreover, if
95% or more of the assets of the Trust qualify for any of the foregoing
characterizations at all times during a calendar year, the Offered Certificates
will qualify for the corresponding status in their entirety for that calendar
year. Interest (including original issue discount) on the Offered Certificates
will be interest described in Section 856(c)(3)(B) of the Code to the extent
that such Certificates are treated as "real estate assets" within the meaning of
Section 856(c)(4)(A) of the Code. The determination as to the percentage of the
Trust Fund that constitutes assets described in the foregoing sections of the
Code will be made with respect to each calendar quarter based on the average
adjusted basis of each category of the assets included in the Trust Fund during
such calendar quarter. In addition, the Offered Certificates will be "qualified
mortgages" for another REMIC within the meaning of Section 860G(a)(3) of the
Code and "permitted assets" for a "financial asset securitization investment
trust" under Section 860L(c) of the Code.
However, the Trust Fund will include, in addition to the Mortgage Loans,
payments on Mortgage Loans held pending distribution on the Certificates,
certain amounts in reserve accounts and property acquired by foreclosure held
pending sale. It is unclear whether property acquired by foreclosure held
pending sale, would be considered to be part of the Mortgage Loans, or whether
such 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, to
the extent an Offered Certificate represents ownership of an interest in any
Mortgage Loan which is secured in part by the related Mortgagor's interest in an
account containing a holdback of loan proceeds, a portion of such 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 and the
interest thereon may not constitute "interest on obligations secured by
mortgages on real property" within the meaning of Section 856(c)(3)(B) of the
Code. The REMIC Regulations (as defined in the Prospectus) do provide, however,
that cash received from payments on Mortgage Loans held pending distribution are
considered part of the Mortgage Loans for purposes of Section 856(c)(4)(A) of
the Code.
See "Description of the Mortgage Pool" herein and "Certain Federal Income
Tax Consequences --REMICs--Characterization of Investments of REMIC
Certificates" in the Prospectus.
Possible Taxes on Income from Foreclosure Property and Other Taxes
In general, the Special Servicer will be obligated to operate and manage
any Mortgaged Property acquired as REO Property in a manner that would, to the
extent commercially reasonable, maximize the Trust's net after-tax
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proceeds from such property, without causing such REO Property to cease to be
treated as "foreclosure property" within the meaning of the REMIC Provisions.
After the Special Servicer reviews the operation of such property and consults
with the REMIC Administrator to determine the Trust's federal income tax
reporting position with respect to income it is anticipated that the Trust would
derive from such property, the Special Servicer could determine that it would
not be commercially reasonable to manage and operate such property in a manner
that would avoid the imposition of a tax on "net income from foreclosure
property" (generally, income not derived from renting or selling real property)
within the meaning of the REMIC Regulations or a tax on "prohibited
transactions" under Section 860F of the Code (either such tax referred to herein
as an "REO Tax"). To the extent that income the Trust receives from an REO
Property is subject to (i) a tax on "net income from foreclosure property", such
income would be subject to federal tax at the highest marginal corporate tax
rate (currently 35%), and (ii) a tax on "prohibited transactions", such income
would be subject to federal tax at a 100% rate. The determination as to whether
income from an REO Property would be subject to an REO Tax will depend on the
specific facts and circumstances relating to the management and operation of
each REO Property. Generally, income from an REO Property that is directly
operated by the Special Servicer would be apportioned and classified as
"service" or "non-service" income. The "service" portion of such income could be
subject to federal tax either at the highest marginal corporate tax rate or at
the 100% rate on "prohibited transactions", and the "non-service" portion of
such income could be subject to federal tax at the highest marginal corporate
tax rate or, although it appears unlikely, at the 100% rate applicable to
"prohibited transactions". These considerations will be of particular relevance
with respect to any hotels that become REO Property. However, unless otherwise
required by expressly applicable authority, it is anticipated that the Trust
will take the position that no income from foreclosure property will be subject
to the 100% "prohibited transactions" tax. Any REO Tax imposed on the Trust's
income from an REO Property would reduce the amount available for distribution
to Certificateholders. Certificateholders are advised to consult their own tax
advisors regarding the possible imposition of REO Taxes in connection with the
operation of commercial REO Properties by REMICs. The Special Servicer and REMIC
Administrator will each be entitled, at the expense of the Trust, to consult
with attorneys and tax accountants in respect of the foregoing.
To the extent permitted by then applicable laws, any Prohibited
Transactions Tax (as defined in the Prospectus), Contributions Tax (also as
defined in the Prospectus) or tax on "net income from foreclosure property" that
may be imposed on REMIC I, REMIC II or REMIC III will be borne by the REMIC
Administrator, the Trustee, the Servicer or the Special Servicer, in any case
out of its own funds, provided that such person has sufficient assets to do so,
and provided further that such tax arises out of a breach of such person's
obligations under certain provisions of the Pooling Agreement. Any such tax not
borne by the REMIC Administrator, the Trustee, the Servicer or the Special
Servicer will be charged against the Trust Fund resulting in a reduction in
amounts available for distribution to the Certificateholders. See "Certain
Federal Income Tax Consequences--REMICs--Prohibited Transactions Tax and Other
Taxes" in the Prospectus.
Reporting and other Administrative Matters
Reporting of interest income, including any original issue discount, if
any, with respect to the 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
Certificates and the IRS; holders of REMIC Regular Certificates that are
corporations, trusts, securities dealers and 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 Trust must
also comply with rules requiring a 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.
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
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holder's purchase price that the Trust may not have, such regulations only
require that information pertaining to the appropriate proportionate method of
accruing market discount be provided.
For further information regarding the federal income tax consequences of
investing in the Offered Certificates, see "Certain Federal Income Tax
Consequences--REMICs" in the Prospectus.
METHOD OF DISTRIBUTION
Subject to the terms and conditions set forth in an Underwriting Agreement
dated June __, 1998 (the "Underwriting Agreement") between the Depositor and the
Underwriter, the Underwriter has agreed to purchase from the Depositor and the
Depositor has agreed to sell to the Underwriter each Class of the Offered
Certificates. It is expected that delivery of the Certificates will be made to
the Underwriter in book-entry form through the Same Day Funds Settlement System
of DTC on or about June __, 1998, against payment therefor in immediately
available funds.
The Underwriting Agreement provides that the obligation of the Underwriter
to pay for and accept delivery of the Offered Certificates is subject to, among
other things, the receipt of certain legal opinions and to the conditions, among
others, that no stop order suspending the effectiveness of the Depositor's
Registration Statement shall be in effect, and that no proceedings for such
purpose shall be pending before or threatened by the Commission.
The distribution of the Offered Certificates by the Underwriter may be
effected from time to time in one or more negotiated transactions, or otherwise,
at varying prices to be determined at the time of sale. Proceeds to the
Depositor from the sale of the Offered Certificates, before deducting expenses
payable by the Depositor, will be approximately % of the aggregate Certificate
Principal Balance of the Offered Certificates plus accrued interest thereon from
the Cut-off Date. The Underwriter may effect such transactions by selling the
Offered Certificates to or through dealers, and such dealers may receive
compensation in the form of underwriting discounts, concessions or commissions
from the Underwriter for whom they act as agent. In connection with the sale of
the Offered Certificates, the Underwriter may be deemed to have received
compensation from the Depositor in the form of underwriting compensation. The
Underwriter and any dealers that participate with such Underwriter in the
distribution of the Offered Certificates may be deemed to be underwriters and
any profit on the resale of the Offered Certificates positioned by them may be
deemed to be underwriting discounts and commissions under the Securities Act.
The Underwriting Agreement provides that the Depositor will indemnify the
Underwriter, and that under limited circumstances the Underwriter will indemnify
the Depositor, against certain civil liabilities under the Securities Act or
contribute to payments required to be made in respect thereof.
Affiliates of the Servicer and GECA may purchase a portion of certain
Classes of Offered Certificates from the Underwriter in a negotiated
transaction. To the extent that the Underwriter offers a portion of such Classes
to other purchasers, such offering may be made at different prices than those
offered to such affiliates of the Servicer and GECA.
The Depositor has also been advised by the Underwriter that the Underwriter
presently intends to make a market in the Offered Certificates; however, the
Underwriter has no obligation to do so, any market making may be discontinued at
any time and there can be no assurance that an active public market for the
Offered Certificates will develop. See "Risk Factors--Limited Liquidity" herein
and "Risk Factors--Limited Liquidity of Offered Certificates" in the Prospectus.
If and to the extent required by applicable law or regulation, this
Prospectus Supplement and the Prospectus will be used by the Underwriter in
connection with offers and sales related to market-making transactions in the
Offered Certificates with respect to which the Underwriter acts as principal.
The Underwriter may also act as agent in such transactions. Sales may be made at
negotiated prices determined at the time of sale.
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LEGAL MATTERS
Certain legal matters relating to the Certificates will be passed upon for
each of the Depositor and the Underwriter by Sidley & Austin, New York, New
York.
ERISA CONSIDERATIONS
A fiduciary of any employee benefit plan or other retirement plan or
arrangement, including individual retirement accounts and annuities, Keogh plans
and collective investment funds and separate accounts in which such plans,
accounts or arrangements are invested, including insurance company general
accounts, that is subject to ERISA or Section 4975 of the Code (each, a "Plan"),
should review with its legal advisors whether the purchase or holding of Offered
Certificates could give rise to a transaction that is prohibited or is not
otherwise permitted either under ERISA or Section 4975 of the Code or whether
there exists any statutory or administrative exemption applicable thereto.
The DOL issued an individual administrative exemption, Prohibited
Transaction Exemption 90-83 (the "Exemption"), to the Underwriter, which
generally exempts from the application of the prohibited transaction provisions
of Section 406 of ERISA, and the excise taxes imposed on such prohibited
transactions pursuant to Section 4975 (a) and (b) of the Code, certain
transactions, among others, relating to the servicing and operation of mortgage
pools and the purchase, sale and holding of mortgage pass-through certificates
underwritten or placed by (i) the Underwriter, (ii) any person directly or
indirectly, through one or more intermediaries, controlling, controlled by or
under common control with the Underwriter and (iii) any member of the
underwriting syndicate or selling group of which the Underwriter or a person
described in clause (ii) is a manager or co-manager with respect to a Class of
Offered Certificates, provided that certain conditions set forth in the
Exemption are satisfied (each such person, an "Exemption-Favored Party").
The Exemption sets forth six general conditions which must be satisfied for
a transaction involving the purchase, sale and holding of Offered Certificates
to be eligible for exemptive relief thereunder. First, the acquisition of
Offered Certificates by a Plan must be on terms that are at least as favorable
to the Plan as they would be in an arm's-length transaction with an unrelated
party. Second, the Exemption only applies to Offered Certificates evidencing
rights and interests not subordinated to the rights and interests evidenced by
the other Offered Certificates of the same series. Third, the Offered
Certificates at the time of acquisition by the Plan must be rated in one of the
three highest generic rating categories by S&P, Fitch, Moody's Investors
Service, Inc. ("Moody's") or Duff & Phelps Credit Rating Co. ("DCR"). Fourth,
the Trustee cannot be an affiliate of any other member of the "Restricted
Group", which, in addition to the Trustee, consists of any Exemption-Favored
Party, the Depositor, the Servicer, the Special Servicer, any sub-servicer,
either Seller, any Column Third Party Originator, the provider of any credit
support, any Mortgagor with respect to Mortgage Loans constituting more than 5%
of the aggregate unamortized principal balance of the Mortgage Loans as of the
date of initial issuance of the Offered Certificates and any affiliates of the
foregoing parties. Fifth, the sum of all payments made to and retained by the
Exemption-Favored Parties in connection with the sale of Certificates must
represent not more than reasonable compensation for underwriting the Offered
Certificates; the sum of all payments made to and retained by the Depositor
pursuant to the assignment of the Mortgage Loans to the Trust Fund must
represent not more than the fair market value of such obligations; and the sum
of all payments made to and retained by the Servicer, the Special Servicer and
any sub-servicer must represent not more than reasonable compensation for such
person's services under the Pooling Agreement and reimbursement of such person's
reasonable expenses in connection therewith. Sixth, the investing Plan must be
an accredited investor as defined in Rule 501(a)(1) of Regulation D of the
Commission under the Securities Act.
Because the Senior Certificates are not subordinated to any other Class of
Offered Certificates, the second general condition set forth above is satisfied
with respect to such Certificates. It is a condition of their issuance that the
Class A-1A and Class A-1B Certificates be rated not lower than "AAA" by each
Rating Agency, and that the Class S Certificates be rated not lower than "AAAr"
by S&P and "AAA" by Fitch. Accordingly, upon initial issuance, the third general
condition set forth above will be satisfied with respect to the Senior
Certificates. As of the Closing Date, the
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<PAGE>
fourth general condition set forth above will be satisfied with respect to the
Senior Certificates. A fiduciary of a Plan contemplating purchasing a Senior
Certificate in the secondary market must make its own determination that, at the
time of such purchase, such Certificate continues to satisfy the second, third
and fourth general conditions set forth above. In addition, a fiduciary of a
Plan contemplating the purchase of a Senior Certificate, whether in the initial
issuance of such Certificate or in the secondary market, must make its own
determination that the first, fifth and sixth general conditions set forth above
will be satisfied with respect to such Certificate.
The Exemption also requires that the Trust Fund meet the following
requirements: (i) the Trust Fund must consist solely of assets of the type that
have been included in other investment pools; (ii) certificates in such other
investment pools must have been rated in one of the three highest generic
categories of S&P, Fitch, Moody's or DCR for at least one year prior to the
Plan's acquisition of Senior Certificates; and (iii) certificates in such other
investment pools must have been purchased by investors other than Plans for at
least one year prior to any Plan's acquisition of Senior Certificates.
If the general conditions of the Exemption are satisfied, the Exemption may
provide an exemption from the restrictions imposed by Sections 406(a) and 407(a)
of ERISA (as well as the excise taxes imposed by Sections 4975(a) and (b) of the
Code by reason of Sections 4975(c)(1)(A) through (D) of the Code) in connection
with (i) the direct or indirect sale, exchange or transfer of Senior
Certificates acquired by a Plan upon initial issuance from the Depositor or an
Exemption-Favored Party when the Depositor, either Seller, the Servicer, the
Special Servicer, the Trustee or any Column Third Party Originator,
sub-servicer, provider of credit support, Exemption-Favored Party or Mortgagor
is a Party in Interest (as defined in the Prospectus) with respect to the
investing Plan, (ii) the direct or indirect acquisition or disposition in the
secondary market of Senior Certificates by a Plan and (iii) the continued
holding of Senior Certificates by a Plan. However, no exemption is provided from
the restrictions of Sections 406(a)(1)(E), 406(a)(2) and 407 of ERISA for the
acquisition or holding of a Senior Certificate on behalf of an "Excluded Plan"
(as defined in the following sentence) by any person who has discretionary
authority or renders investment advice with respect to the assets of such
Excluded Plan. For purposes hereof, an Excluded Plan is a Plan sponsored by any
member of the Restricted Group.
Moreover, if the general conditions of the Exemption, as well as certain
other conditions set forth in the Exemption, are satisfied, the Exemption may
also provide an exemption from the restrictions imposed by Sections 406(b)(1)
and (b)(2) of ERISA and the taxes imposed by Section 4975(c)(1)(E) of the Code
in connection with (i) the direct or indirect sale, exchange or transfer of
Senior Certificates in the initial issuance of Senior Certificates between the
Depositor or an Exemption-Favored Party and a Plan when the person who has
discretionary authority or renders investment advice with respect to the
investment of Plan assets in such Certificates is (a) a Mortgagor with respect
to 5% or less of the fair market value of the Mortgage Loans or (b) an affiliate
of such a person, (ii) the direct or indirect acquisition or disposition in the
secondary market of Senior Certificates by a Plan and (iii) the holding of
Senior Certificates by a Plan.
Further, if the general conditions of the Exemption, as well as certain
other conditions set forth in the Exemption, are satisfied, the Exemption 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
Code by reason of Section 4975(c) of the Code for transactions in connection
with the servicing, management and operation of the Trust Fund.
Lastly, if the general conditions of the Exemption are satisfied, the
Exemption also may provide an exemption from the restrictions imposed by
Sections 406(a) and 407(a) of ERISA, and the taxes imposed by Section 4975(a)
and (b) of the Code by reason of Sections 4975(c)(1)(A) through (D) of the Code
if such restrictions are deemed to otherwise apply merely because a person is
deemed to be a Party in Interest with respect to an investing Plan by virtue of
providing services to the Plan (or by virtue of having certain specified
relationships to such a person) solely as a result of the Plan's ownership of
Senior Certificates.
S-111
<PAGE>
Before purchasing a Senior Certificate, a fiduciary of a Plan should itself
confirm (i) that the Senior Certificates constitute "certificates" for purposes
of the Exemption and (ii) that the general and other conditions set forth in the
Exemption and the other requirements set forth in the Exemption would be
satisfied at the time of such purchase.
In addition to making its own determination as to the availability of the
exemptive relief provided in the Exemption, the Plan fiduciary considering an
investment in Senior Certificates should consider the availability of any other
prohibited transaction exemptions. See "ERISA Considerations" in the Prospectus.
There can be no assurance that any such class exemptions will apply with respect
to any particular Plan investment in Senior Certificates or, even if it were
deemed to apply, that any exemption would apply to all prohibited transactions
that may occur in connection with such investment. A purchaser of Senior
Certificates should be aware, however, that even if the conditions specified in
one or more exemptions are satisfied, the scope of relief provided by an
exemption may not cover all acts which might be construed as prohibited
transactions.
Because the characteristics of the Class A-2, Class A-3, Class B-1 and
Class B-2 Certificates do not meet the requirements of the Exemption, the
purchase or holding of such Certificates by a Plan may result in a prohibited
transaction or the imposition of excise taxes or civil penalties. As a result,
no transfer of a Class A-2, Class A-3, Class B-1 or Class B-2 Certificate or any
interest therein may be made to a Plan or to any person who is directly or
indirectly purchasing such Certificate or interest therein on behalf of, as
named fiduciary of, as trustee of, or with assets of a Plan unless the purchase
and continued holding of such Certificate or interest therein is exempt from the
prohibited transaction provisions of Section 406 of ERISA and Section 4975 of
the Code under Sections I and III of Prohibited Transaction Class Exemption
95-60, which provides an exemption from the prohibited transaction rules for
certain transactions involving an insurance company general account. Any person
to whom a transfer of any such Certificate or interest therein is made shall be
deemed to have represented to the Depositor, the Underwriter, the Servicer, the
Special Servicer and the Trustee that either (i) it is not a Plan and is not
directly or indirectly purchasing such Certificate or interest therein on behalf
of, as named fiduciary of, as trustee of, or with assets of a Plan or (ii) the
purchase and continued holding of such Certificate or interest therein is so
exempt on the basis of Sections I and III of Prohibited Transaction Class
Exemption 95-60.
Any Plan fiduciary considering whether to purchase an Offered Certificate
on behalf of a Plan should consult with its counsel regarding the applicability
of the fiduciary responsibility and prohibited transaction provisions of ERISA
and the Code to such investment.
LEGAL INVESTMENT
The Offered Certificates will not be "mortgage related securities" for
purposes of SMMEA. As a result, the appropriate characterization of such Offered
Certificates under various legal investment restrictions, and thus the ability
of investors subject to these restrictions to purchase such Offered
Certificates, is subject to significant interpretive uncertainties.
The Depositor makes no representation as to the ability of particular
investors to purchase any of the Offered Certificates under applicable legal
investment or other restrictions. All institutions whose investment activities
are subject to legal investment laws and regulations, regulatory capital
requirements or review by regulatory authorities should consult with their own
legal advisors in determining whether and to what extent the Offered
Certificates constitute legal investments for them or are subject to investment,
capital or other restrictions.
All depository institutions considering an 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.
S-112
<PAGE>
The foregoing does not take into consideration the applicability of
statutes, rules, regulations, orders, guidelines or agreements generally
governing investments made by a particular investor, including, but not limited
to, "prudent investor" provisions, percentage-of-assets limits and provisions
which may restrict or prohibit investment in securities which are not "interest
bearing" or "income paying".
There may be other restrictions on the ability of certain investors,
including depository institutions, either to purchase Offered Certificates or to
purchase Offered Certificates representing more than a specified percentage of
the investor's assets. Investors should consult their own legal advisors in
determining whether and to what extent the Offered Certificates constitute legal
investments for such investors.
See "Legal Investment" in the Prospectus.
RATINGS
It is a condition to the issuance of the Certificates that the respective
Classes of Offered Certificates receive the following credit ratings from
Standard & Poor's Ratings Services, a Division of the McGraw-Hill Companies,
Inc. ("S&P") and Fitch IBCA, Inc. ("Fitch" and, together with S&P, the "Rating
Agencies"):
Class S&P Fitch
-------------- ----- -----
Class S AAAr AAA
Class A-1A AAA AAA
Class A-1B AAA AAA
Class A-1C AA+ AAA
Class A-2 AA AA
Class A-3 A A
Class A-4 A- A
Class B-1 BBB BBB
Class B-2 BBB- BBB-
Class B-3 NR BBB-
The ratings on the Offered Certificates address the likelihood of the
timely receipt by holders thereof of all payments of interest to which they are
entitled on each Distribution Date and, in the case of the Class A, Class B-1,
Class B-2 and Class B-3 Certificates, the ultimate receipt by the holders
thereof of all payments of principal to which they are entitled on or before the
Distribution Date in (the "Rated Final Distribution Date"). The Rated Final
Distribution Date is set at the first Distribution Date following the third
anniversary of the end of the amortization term for the Mortgage Loan with the
longest remaining amortization term as of the Closing Date. The ratings take
into consideration the credit quality of the Mortgage Pool, structural and legal
aspects associated with the Offered Certificates, and the extent to which the
payment stream from the Mortgage Pool is adequate to make payments of interest
and/or principal required under the Offered Certificates. The ratings on the
respective Classes of Offered Certificates do not represent any assessment of
(i) the likelihood or frequency of principal prepayments, whether voluntary or
involuntary, on the Mortgage Loans, (ii) the degree to which such prepayments
might differ from those originally anticipated or (iii) whether and to what
extent Prepayment Premiums, Yield Maintenance Premiums, Default Interest and/or
Additional Interest will be received. Also a security rating does not represent
any assessment of the yield to maturity that investors may experience or the
possibility that the Class S Certificateholders might not fully recover their
investment in the event of rapid prepayments and/or other liquidations of the
Mortgage Loans. In general, the ratings thus address credit risk and not
prepayment risk. As described herein, the amounts payable with respect to the
Class S Certificates consist only of interest (and, to the extent described
herein, may consist of a portion of the Yield Maintenance Premiums and
Prepayment Premiums actually collected on the Mortgage Loans). If the entire
pool were to prepay in the initial month, with the result that the Class S
Certificateholders receive only a single month's Distributable Certificate
Interest and thus suffer a nearly complete loss of their investment, all amounts
"due" to such Certificateholders will nevertheless have been paid, and such
result is consistent with the respective ratings received
S-113
<PAGE>
on the Class S Certificates. The Class Notional Amount of the Class S
Certificates is subject to reduction by the payment of principal on, and the
allocation of Realized Losses and Additional Trust Fund Expenses to, some or all
of the respective Classes of Sequential Pay Certificates as described herein.
The ratings of the Class S Certificates do not address the timing or magnitude
of reduction of the Class Notional Amount of such Certificates, but only the
obligation to pay interest timely on such Class Notional Amount as so reduced
from time to time. Accordingly, the ratings of the Class S Certificates should
be evaluated independently from similar ratings on other types of securities.
There can be no assurance as to whether any rating agency not requested to
rate the Offered Certificates will nonetheless issue a rating to any Class
thereof and, if so, what such rating would be. A rating assigned to any Class of
Offered Certificates by a rating agency that has not been requested by the
Depositor to do so may be lower than the rating assigned thereto by either
Rating Agency.
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 organization. Each security
rating should be evaluated independently of any other security rating. See "Risk
Factors--Limited Nature of Ratings" in the Prospectus.
S-114
<PAGE>
INDEX OF PRINCIPAL DEFINITIONS
Accrued Certificate Interest ....................... S-20, S-80
Additional Interest ................................. S-15, S-50
Additional Trust Fund Expenses ...................... S-32, S-90
Advances ............................................ S-72
Annual Debt Service ................................. S-59
Anticipated Repayment Date .......................... S-15, S-50
Appraisal Reduction Amount .......................... S-91
Appraised Value ..................................... S-59
ARCS ................................................ S-53
ARD Loans ........................................... S-15, S-50
Assumed Final Distribution Date ..................... S-2
Assumed Monthly Payment ............................. S-33, S-90
Assumed Settlement Date ............................. S-98
Available Distribution Amount ....................... S-83
Balloon Mortgage Loans .............................. S-16, S-50
Balloon Payment ..................................... S-16, S-50
Book-Entry Certificates ............................. S-12
Camargue Mortgagor .................................. S-64
CBE ................................................. S-99
Central Accounts .................................... S-61
Certificate Notional Amount ......................... S-78
Certificate Owner ................................... S-12, S-78
Certificate Principal Balance ....................... S-78
Certificate Registrar ............................... S-79
Certificateholders .................................. S-2, S-10, S-54, S-82
Certificates ........................................ S-1, S-9, S-78
Class ............................................... S-1, S-9, S-78
Class A Certificates ................................ S-1, S-9, S-78
Class B Certificates ................................ S-1, S-9, S-78
Class Notional Amount ............................... S-1, S-20, S-80
Class Principal Balance ............................. S-1, S-19, S-79
Class S Strip Rate .................................. S-21, S-81
Closing Date ........................................ S-11, S-78
Code ................................................ S-36
Collection Period ................................... S-11, S-82
Column .............................................. S-10
Column Mortgage Loans ............................... S-10, S-53
Compensating Interest Payment ....................... S-34, S-70
Component ........................................... S-20, S-80
Contractual Recurring Replacement Reserve ........... S-61
Controlling Class ................................... S-34, S-74
Controlling Class Representative .................... S-34, S-74
Corporate Trust Office .............................. S-92
Corrected Mortgage Loan ............................. S-68
Cost Approach ....................................... S-52
CPR ................................................. S-97
Cross-Collateralized Group .......................... S-13, S-47
Cross-Collateralized Mortgage Loans ................. S-13, S-47
Custodian ........................................... S-54
Cut-off Date ........................................ S-1, S-11, S-47
Cut-off Date Balance ................................ S-12, S-47
Cut-off Date Loan-to-Value Ratio .................... S-59
Cut-off Date LTV Ratio .............................. S-59
DCR ................................................. S-104
Default Interest .................................... S-70
Definitive Certificate .............................. S-12, S-79
Depositor ........................................... S-1, S-9
Determination Date .................................. S-12, S-82
Discount Rate ....................................... S-30, S-88
Distributable Certificate Interest .................. S-20, S-80
Distribution Date ................................... S-11
DLJMCI .............................................. S-10, S-53
DTC ................................................. S-78
DTC Participants .................................... S-79
Due Date ............................................ S-15, S-49
Engineering Reserves ................................ S-61
ERISA ............................................... S-37
Estimated Annual Operating Expenses ................. S-58
Estimated Annual Revenues ........................... S-57
Exemption ........................................... S-104
Exemption-Favored Party ............................. S-104
FF&E ................................................ S-58
Fitch ............................................... S-2, S-38, S-107
GAAP ................................................ S-59
GECA ................................................ S-10
GECA Mortgage Loans ................................. S-10, S-53
GECC ................................................ S-10, S-53
GECLS ............................................... S-9
Income Approach ..................................... S-52
Initial Pool Balance ................................ S-1, S-12, S-47
Interest Accrual Period ............................. S-12, S-81
Interest Reserve Amount ............................. S-82
IRS ................................................. S-100
ITLA ................................................ S-53
LC & TI ............................................. S-60
Leasable Square Footage ............................. S-59
Liquidation Fee ..................................... S-71
Liquidation Fee Rate ................................ S-71
Lockout Period ...................................... S-16, S-65
Major Tenant ........................................ S-60
Maturity Date ....................................... S-16, S-50
Modeling Assumptions ................................ S-98
Modified Mortgage Loan .............................. S-92
Monthly Payments .................................... S-15, S-49
Mortgage ............................................ S-13, S-47
Mortgage File ....................................... S-54
S-115
<PAGE>
Mortgage Loans ...................................... S-1, S-9, S-47
Mortgage Note ....................................... S-12, S-47
Mortgage Pool ....................................... S-1, S-9
Mortgage Rate ....................................... S-15, S-49
Mortgaged Property .................................. S-13, S-47
Mortgagor ........................................... S-47
Net Aggregate Prepayment Interest Shortfall ......... S-34, S-70
Net Mortgage Rate ................................... S-22, S-82
Non-30/360 Mortgage Loans ........................... S-15, S-49
Norwest Bank ........................................ S-94
O&M Program ......................................... S-51
Occupancy Rate at U/W ............................... S-60
Occupancy Rate at Underwriting ...................... S-60
Offered Certificates ................................ S-1, S-9, S-78
OID Regulations ..................................... S-100
Open Period ......................................... S-17, S-65
Originators ......................................... S-10
P&I Advance ......................................... S-33, S-90
Pass-Through Rate ................................... S-1
Percentage Interest ................................. S-83
Permitted Investments ............................... S-70
Plan ................................................ S-37, S-104
Pooling Agreement ................................... S-2, S-19, S-78
Premium Period ...................................... S-17, S-65
Prepayment Assumption ............................... S-100
Prepayment Interest Excess .......................... S-34, S-70
Prepayment Interest Shortfall ....................... S-34, S-70
Prepayment Premium .................................. S-17, S-65
Primary Mortgaged Property .......................... S-48
Principal Distribution Amount ....................... S-28, S-87
Principal Prepayments ............................... S-16, S-65
Private Certificates ................................ S-9, S-78
Purchase Price ...................................... S-56
Rated Final Distribution Date ....................... S-2, S-107
Rating Agencies ..................................... S-2, S-38, S-107
Realized Losses ..................................... S-32, S-89
Record Date ......................................... S-12, S-82
Reimbursement Rate .................................. S-34, S-91
Related Proceeds .................................... S-72
REMIC ............................................... S-3, S-36
REMIC Administrator ................................. S-2, S-10
REMIC I ............................................. S-3, S-36, S-99
REMIC II ............................................ S-3, S-36, S-99
REMIC III ........................................... S-3, S-36, S-99
REMIC Regular Certificates .......................... S-1, S-9, S-78
REMIC Residual Certificates ......................... S-1, S-9, S-78
REO Property ........................................ S-32, S-68
REO Tax ............................................. S-102
Replacement Mortgage Loan ........................... S-56
Required Appraisal Loan ............................. S-91
Responsible Officer ................................. S-74
Restricted Group .................................... S-104
Resurgens Plaza Loan ................................ S-63
Resurgens Plaza Mortgagor ........................... S-63
Rivergate Loan ...................................... S-62
Rivergate Mortgagor ................................. S-62
Rooms ............................................... S-60
S F ................................................. S-59
S&P ................................................. S-2, S-38, S-107
Sales Comparison Approach ........................... S-52
SEC ................................................. S-94
Securities Act ...................................... S-9, S-78
Sellers ............................................. S-10
Senior Certificates ................................. S-3, S-31, S-89
Senior Principal Distribution Cross-Over Date ....... S-87
Sequential Pay Certificates ......................... S-19, S-79
Servicer ............................................ S-2, S-9
Servicing Advances .................................. S-72
Servicing Fee ....................................... S-70
Servicing Fee Rate .................................. S-70
Servicing Standard .................................. S-67
Servicing Transfer Event ............................ S-68
SMMEA ............................................... S-39
Special Servicer .................................... S-2, S-10
Special Servicing Fee ............................... S-70
Specially Serviced Mortgage Loan .................... S-68
Sq Ft .............................................. S-59
Stated Principal Balance ............................ S-82
Subordinate Certificates ............................ S-3, S-31, S-89
Substitution Shortfall Amount ....................... S-56
Tax and Insurance Escrows ........................... S-61
Third Party Originators ............................. S-10, S-53
Treasury Rate ....................................... S-30, S-88
Trust ............................................... S-1, S-9, S-78
Trust Fund .......................................... S-1, S-9, S-78
Trustee ............................................. S-2, S-10
Trustee Fee ......................................... S-95
Trustee Fee Rate .................................... S-95
Trustee Report ...................................... S-92
U/W DSCR ............................................ S-59
U/W LC & TI ......................................... S-58
U/W NOI ............................................. S-57
Underwriter ......................................... S-1
Underwriting Agreement .............................. S-103
Underwriting Debt Service Coverage Ratio ............ S-59
Underwriting DSCR ................................... S-59
Underwriting NOI .................................... S-57
Union Capital ....................................... S-53
Units ............................................... S-59
UW Recurring Replacement Reserves ................... S-58
Voting Rights ....................................... S-94
Warranting Party .................................... S-11
Weighted Average Net Mortgage Rate .................. S-22, S-81
Workout Fee ......................................... S-71
S-116
<PAGE>
Workout Fee Rate .................................... S-71
Year Built .......................................... S-60
Yield Maintenance Premium ........................... S-17, S-65
Zoning Laws ......................................... S-44
S-117
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<PAGE>
EXHIBIT A-1
CERTAIN CHARACTERISTICS OF THE
MORTGAGE LOANS AND MORTGAGED PROPERTIES
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
Managers and Locations of the Mortgaged Properties
<TABLE>
<CAPTION>
# Property Name Manager
-- ------------- -------
<S> <C> <C>
1 The Rivergate Apartments Mr. Donald Zucker
2 Raritan Plaza I (1A) SAI Management, Inc.
3 Raritan Center Industrial Portfolio (1A) SAI Management, Inc.
4 Resurgens Plaza Insignia Financial Group, Inc.
5 The Camargue BLDG Management Co., Inc.
6 Casa Arroyo Apartments Owner Managed
7 Ballena Village Apartments Sequoia Equities, Incorporated
8 Holiday Inn - Jacksonville Airport (1B) Mississippi Management, Inc.
9 Courtyard by Marriott (1B) Mississippi Management, Inc.
10 Magnolia Lake Apartments Lane Company
11 Park Terrace Summit Management Company
12 Autumn Chase Apartments First Realty Corp.
13 Embassy Square Suites Auger Management
14 101 Commerce Drive American Real Estate Partners, L.P.
15 Courtyard by Marriott - Pensacola (1C) Larry Blumberg & Associates, Inc.
16 Courtyard by Marriott - Tuscaloosa (1C) Larry Blumberg & Associates, Inc.
17 Fairfield Inn - Pensacola (1C) Larry Blumberg & Associates, Inc.
18 Fairfield Inn - Birmingham (1C) Larry Blumberg & Associates, Inc.
19 Fairfield Inn - Tuscaloosa (1C) Larry Blumberg & Associates, Inc.
20 Doctors Medical Complex Little Rock Medical Associates, Ltd.
21 Chandler Place Apartments Magellan Residential LLC
22 Summer Cove Apartments (2) Realty Management Corp., d/b/a Lane Company
23 Lake & Racquet Apartments First Realty Company
24 Stone Ends Apartments Keith Properties, Inc.
25 Canyon Club Apartments Wasatch Property Management, Inc.
26 BLN Office Park II LaSalle Management Group, LTD
27 Royal Plaza Hotel - Marlborough (1D) AJL Marlborough, Inc.
28 Royal Plaza Hotel - Fitchburg (1D) AJL Fitchburg, Inc.
29 Hannaford Plaza AKA Rotterdam Mall Nigro Companies
<CAPTION>
# Property Name Address City County
-- ------------- ------- ---- ------
<S> <C> <C> <C> <C>
1 The Rivergate Apartments 401 E. 34th Street New York New York
2 Raritan Plaza I (1A) 100 Fieldcrest Avenue Edison Middlesex
3 Raritan Center Industrial Portfolio (1A) Various Locations Within Raritan Center Edison Middlesex
4 Resurgens Plaza 945 East Paces Ferry Road Atlanta Fulton
5 The Camargue 303 E. 83rd Street New York New York
6 Casa Arroyo Apartments 405 Rancho Arroyo Parkway Fremont Alameda
7 Ballena Village Apartments 1375 Ballena Boulevard Alameda Alameda
8 Holiday Inn - Jacksonville Airport (1B) 14670 Duval Raod Jacksonville Duval
9 Courtyard by Marriott (1B) 14668 Duval Road Jacksonville Duval
10 Magnolia Lake Apartments 2401 Windy Hill Road Atlanta Cobb
11 Park Terrace 7400 Sugar Bend Drive Orlando Orange
12 Autumn Chase Apartments 725 Bode Circle Hoffman Estates Cook
13 Embassy Square Suites 2000 N. Street, N.W. Washington DC
14 101 Commerce Drive 101 Commerce Drive Silver Spring Cumberland
15 Courtyard by Marriott - Pensacola (1C) 451 Creighton Road Pensacola Escambia
16 Courtyard by Marriott - Tuscaloosa (1C) 4115 Courtney Drive Tuscaloosa Tuscaloosa
17 Fairfield Inn - Pensacola (1C) 7325 North Davis Highway Pensacola Escambia
18 Fairfield Inn - Birmingham (1C) 707 Key Drive Birmingham Shelby
19 Fairfield Inn - Tuscaloosa (1C) 4101 Courtney Drive Tuscaloosa Tuscaloosa
20 Doctors Medical Complex 500 S. University Avenue Little Rock Pulaski
21 Chandler Place Apartments 2222 N. McQueen Road Chandler Maricopa
22 Summer Cove Apartments (2) 7887 North Lockwood Ridge Road Sarasota Manatee
23 Lake & Racquet Apartments 6165 East Iliff Avenue Denver Denver
24 Stone Ends Apartments 55 Wheeler Circle Stoughton Norfolk
25 Canyon Club Apartments 420 Activity Way Oceanside San Diego
26 BLN Office Park II 2051 Killebrew Drive Bloomington Hennepin
27 Royal Plaza Hotel - Marlborough (1D) 181 Boston Post Road Marlborough Middlesex
28 Royal Plaza Hotel - Fitchburg (1D) 150 Royal Plaza Drive Fitchburg Worcester
29 Hannaford Plaza AKA Rotterdam Mall 1400 Altomount Avenue Rotterdam Schenectady
<CAPTION>
Zip
# Property Name State Code
-- ------------- ----- ----
<S> <C> <C> <C>
1 The Rivergate Apartments NY 10016
2 Raritan Plaza I (1A) NJ 08818
3 Raritan Center Industrial Portfolio (1A) NJ 08818
4 Resurgens Plaza GA 30303
5 The Camargue NY 10028
6 Casa Arroyo Apartments CA 94536
7 Ballena Village Apartments CA 94501
8 Holiday Inn - Jacksonville Airport (1B) FL 32218
9 Courtyard by Marriott (1B) FL 32218
10 Magnolia Lake Apartments GA 30067
11 Park Terrace FL 32819
12 Autumn Chase Apartments IL 60194
13 Embassy Square Suites DC 20036
14 101 Commerce Drive PA 17055
15 Courtyard by Marriott - Pensacola (1C) FL 32504
16 Courtyard by Marriott - Tuscaloosa (1C) AL 35405
17 Fairfield Inn - Pensacola (1C) FL 32504
18 Fairfield Inn - Birmingham (1C) AL 35242
19 Fairfield Inn - Tuscaloosa (1C) AL 35405
20 Doctors Medical Complex AR 72205
21 Chandler Place Apartments AZ 85225
22 Summer Cove Apartments (2) FL 34243
23 Lake & Racquet Apartments CO 80222
24 Stone Ends Apartments MA 02072
25 Canyon Club Apartments CA 92054
26 BLN Office Park II MN 55425
27 Royal Plaza Hotel - Marlborough (1D) MA 01752
28 Royal Plaza Hotel - Fitchburg (1D) MA 01420
29 Hannaford Plaza AKA Rotterdam Mall NY 12303
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<TABLE>
<CAPTION>
# Property Name Manager
-- ------------- -------
<S> <C> <C>
30 Highland Pavilion Shopping Center (1E) Schlosser Development Corporation
31 Highland Pavilion Cinema (1E) Schlosser Development Corporation
32 Plumtree Apartments Owner Managed
33 Ventura Libbit Building Gilbert Associates, Inc.
34 Carroll Park Industrial Center Carroll Industrial Development Group, LC
35 Randall Ln, Park Pl I & II and Park Newport Apart. Southern Management Corporation
36 Plaza Mobile Village Mobile Community Management
37 Town & Country Shopping Center Owner Managed
38 Golden Triangle Shopping Center Brentway Management, LLC
39 Jasper Mall Shopping Center Aronov Realty Management, Inc.
40 Lincoln Village Shopping Center S.C. Commercial Management, Inc.
41 Dominick's Food Store & Multi-Tenant Retail Owner Managed
42 Suncrest Plaza Shopping Center Roberts Management & Development Co.
43 Fabyan Crossing Shopping Center Industrial Building and Development Company
44 Forest Glen Apartments Continental American Partners, Ltd.
45 Legacy Drive Village Shopping Center Cencor Realty Services Inc.
46 Friendly Village MHC The Choice Group, Inc.
47 Breckenridge Apartments Graywood Properties
48 Days Inn - Inner Harbor Beck Summit Hotel Management Group
49 Courtyard by Marriott Richmond Pacific Hotel Management, LLC
50 Barnes Crossing Ashley Development
51 Elmwood Regal Center Benderson Development Company, Inc.
52 520 Franklin Avenue Medical Building Ray Polley Management, Inc.
53 Holiday Inn & Suites Reisman Management Services, Inc.
54 Aspen Ridge Apartments Quantum Residential Inc.
55 Parkway Towers Apartments Mid America Management, Corp.
56 BLN Office Park I LaSalle Management Group, LTD
57 Garden Plaza Shopping Center Latco Property Management, Inc.
58 One Phillips Drive American Real Estate Partners, L.P.
59 Comfort Inn - Hollywood Stirling Hotel Management, Inc.
60 Ideal Professional Park Paragano Associates LLC
61 Cypress Pointe Apartments Guardian Management, Inc.
62 The Shops at Lionville Station Metropolitan Management Corporation
63 Cabot Lodge - Gainesville Mississippi Management, Inc.
64 Hampton Inn & Suites Stirling Hospitality, Inc.
65 Mercado Del Rancho Shopping Center Westwood Financial Corporation
66 Bancroft Hall Apartments Great Atlantic Management Company
<CAPTION>
# Property Name Address
-- ------------- -------
<S> <C> <C>
30 Highland Pavilion Shopping Center (1E) 6700 Middle Fiskville Road
31 Highland Pavilion Cinema (1E) 6700 Middle Fiskville Road
32 Plumtree Apartments 229 Parkwood Drive
33 Ventura Libbit Building 16311 Ventura Boulevard
34 Carroll Park Industrial Center 1900 - 2100 Washington Boulevard
35 Randall Ln, Park Pl I & II and Park Newport Apart. 3700-3900 Seven Mile Lane/7219 Park Park Heights Avenue
36 Plaza Mobile Village 3101 South Fairview
37 Town & Country Shopping Center 2301-2445 South MacArthur Boulevard
38 Golden Triangle Shopping Center West side of Lititz Pike at the intersection of Oregon Pike
39 Jasper Mall Shopping Center 300 U. S. Highway # 78
40 Lincoln Village Shopping Center 6406 North Interstate Highway 35
41 Dominick's Food Store & Multi-Tenant Retail 111, 261-289 N. Randall Road
42 Suncrest Plaza Shopping Center 8141-8182 Sunset Boulevard
43 Fabyan Crossing Shopping Center 1900 - 2000 S Randall Road
44 Forest Glen Apartments 493 Beaumont Glen
45 Legacy Drive Village Shopping Center 7000-7224 Independence Parkway
46 Friendly Village MHC 27696 Oregon Road
47 Breckenridge Apartments 1699 Shanley Drive
48 Days Inn - Inner Harbor 100 Hopkins Place
49 Courtyard by Marriott Richmond 3150 Garrity Way
50 Barnes Crossing 4300 Mall Drive
51 Elmwood Regal Center 1963-2023 Elmwood Avenue
52 520 Franklin Avenue Medical Building 520 Franklin Avenue
53 Holiday Inn & Suites 707 Route 46 East
54 Aspen Ridge Apartments 13719 SE 18th Street
55 Parkway Towers Apartments 7171 W Gunniso Street
56 BLN Office Park I 2001 Killebrew Drive
57 Garden Plaza Shopping Center 217 and 219 Gutierrez Street
58 One Phillips Drive 1 Phillips Drive
59 Comfort Inn - Hollywood 2520 Stirling Road
60 Ideal Professional Park 2333 Morris Avenue
61 Cypress Pointe Apartments 4861 College Acres Drive
62 The Shops at Lionville Station 501 East Uwchlan Avenue
63 Cabot Lodge - Gainesville 3726 SW 40th Boulevard
64 Hampton Inn & Suites 2500 Stirling Road
65 Mercado Del Rancho Shopping Center 10315 North 92nd Street
66 Bancroft Hall Apartments 1870 Enterprise Court
<CAPTION>
Zip
# Property Name City County State Code
-- ------------- ---- ------ ----- ----
<S> <C> <C> <C> <C> <C>
30 Highland Pavilion Shopping Center (1E) Austin Travis TX 78752
31 Highland Pavilion Cinema (1E) Austin Travis TX 78752
32 Plumtree Apartments Lansing Eaton MI 48917
33 Ventura Libbit Building Encino Los Angeles CA 91436
34 Carroll Park Industrial Center Baltimore Baltimore MD 21230
35 Randall Ln, Park Pl I & II and Park Newport Apart. Baltimore Baltimore MD 21208
36 Plaza Mobile Village Santa Ana Orange CA 92704
37 Town & Country Shopping Center Springfield Sangamon IL 62704
38 Golden Triangle Shopping Center Manheim Township Lancaster PA 17601
39 Jasper Mall Shopping Center Jasper Walker AL 35501
40 Lincoln Village Shopping Center Austin Travis TX 78752
41 Dominick's Food Store & Multi-Tenant Retail Lake in the Hills McHenry IL 60102
42 Suncrest Plaza Shopping Center Los Angeles Los Angeles CA 90046
43 Fabyan Crossing Shopping Center Geneva Kane IL 60134
44 Forest Glen Apartments Escondido San Diego CA 92026
45 Legacy Drive Village Shopping Center Plano Collin TX 75025
46 Friendly Village MHC Perrysburg Wood OH 46551
47 Breckenridge Apartments Columbus Franklin OH 43224
48 Days Inn - Inner Harbor Baltimore Baltimore MD 21201
49 Courtyard by Marriott Richmond Richmond Contra Costa CA 94806
50 Barnes Crossing Tupelo Lee MS 38801
51 Elmwood Regal Center Buffalo Erie NY 14207
52 520 Franklin Avenue Medical Building Garden City Nassau NY 11530
53 Holiday Inn & Suites Parsippany-Troy Hills Morris NJ 07054
54 Aspen Ridge Apartments Vancouver Clark WA 98684
55 Parkway Towers Apartments Harwood Heights Cook IL 60656
56 BLN Office Park I Bloomington Henneoin MN 55425
57 Garden Plaza Shopping Center Santa Barbara Santa Barbara CA 93101
58 One Phillips Drive Wright Luzerne PA 18707
59 Comfort Inn - Hollywood Holllywood Broward FL 33020
60 Ideal Professional Park Union Union NJ 07083
61 Cypress Pointe Apartments Wilmington New Hanover NC 28403
62 The Shops at Lionville Station Uwchlan Chester PA 19341
63 Cabot Lodge - Gainesville Gainesville Alachua FL 32618
64 Hampton Inn & Suites Hollywood Broward FL 33020
65 Mercado Del Rancho Shopping Center Scottsdale Maricopa AZ 85258
66 Bancroft Hall Apartments Virginia Beach N/A VA 23454
</TABLE>
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<TABLE>
<CAPTION>
# Property Name Manager
-- ------------- -------
<S> <C> <C>
67 Padonia Commerce Building Hill Management
68 Anaheim Shores Estates Newport Pacific Capital Company, Inc.
69 Tower Square Shopping Center M & J Wilkow, Ltd.
70 West Garrett Place Hyatt Real Estate
71 Elmonica Court Apartments Randall Realty Corporation
72 Chesterfield Commons Richard Canvasser
73 Plum Tree Apartments Sequoia Equities
74 Meadow Central Market Cencor Realty Services, Inc.
75 Mount Kisco Square Shopping Center Mosbacher Properties Group, LLC
76 Las Brisas Apartments Wasatch Property Management, Inc.
77 Freedom Village Shopping Center DeChiaro Limited Partnership
78 Waldan Pond & Waldan Chase Apts Owner Managed
79 Aspen Park Apartments Wasatch Properties
80 Young Circle Shopping Center CF Properties Corp.
81 Sherwood Knoll Comfort Inn Mr. Ellis
82 Bridgepoint Apartments BH Management Services, Inc.
83 Holiday Inn Center City GF Management
84 Rainbow Design Center Owner Managed
85 Flower Hill Professional Center (1F) Pettit & Griffin, Inc.
86 Flower Hill McDonald's (1F) Pettit & Griffin, Inc.
87 Blue Ash Hotel & Conference Center Sachs Management Corp
88 Ultra Plaza Shopping Center (3) Infinity Property Management Corporation
89 Sinagua Plaza Rich Development Company
90 Holiday Plaza Robert Shallcross
91 Olde Mill Shopping Center Columbia Properties Incorporated
92 Regal Cinemas Center-Lancaster Benderson Development Company, Inc.
93 Temescal Business Center Orbit Property Corporation
94 Houston Centre Helms-Roark, Inc.
95 Pellcare Nursing Home - Winston-Salem (1G) Pellcare Corp.
96 Pellcare Nursing Home - Hickory (1G) Pellcare Corp.
97 Vista Mar Apartments Landmark Redevelopment, Inc.
98 Cherokee Shopping Center Kotansky Guggenheim Commercial, Inc.
99 Super 8 Geary Street Owner Managed
100 Cabot Lodge - Tallahassee Mississippi Management, Inc.
101 Kessel Foods Kessel RCD, LLC
102 South Pointe Apartments InterSouth Management, Inc.
103 Wyoming-Enzie Properties (1H) Greco Rentals Management Company, LLC
<CAPTION>
# Property Name Address
-- ------------- -------
<S> <C> <C>
67 Padonia Commerce Building 9603 Deereco Road
68 Anaheim Shores Estates 1919 Coronet Avenue
69 Tower Square Shopping Center 566-582 Prairie Center Drive
70 West Garrett Place 275 West Street
71 Elmonica Court Apartments 1120 SW Kiley Way
72 Chesterfield Commons 34720-35000 23 Mile Road
73 Plum Tree Apartments 1097 Maywood Court
74 Meadow Central Market 10455 North Central Expressway
75 Mount Kisco Square Shopping Center 360 North Bedford Road
76 Las Brisas Apartments 150 - 210 Chambers Street
77 Freedom Village Shopping Center SWC Liberty Road & Georgetown Boulevard
78 Waldan Pond & Waldan Chase Apts 450 Waldan Circle & 150 Dupree Road
79 Aspen Park Apartments 5152 Mack Road
80 Young Circle Shopping Center 1701 - 1735 East Young Circle
81 Sherwood Knoll Comfort Inn 500 Centerville Road
82 Bridgepoint Apartments 2200 Brown Street
83 Holiday Inn Center City 230 North College Street
84 Rainbow Design Center 1200 to 1250 South Rainbow Boulevard
85 Flower Hill Professional Center (1F) Route 124 & Flower Hill Way
86 Flower Hill McDonald's (1F) Route 124 and Flower Hill Way
87 Blue Ash Hotel & Conference Center 5901 Pfeiffer Road
88 Ultra Plaza Shopping Center (3) 8401-8501 Indianapolis Boulevard
89 Sinagua Plaza 320 N. Highway 89A
90 Holiday Plaza 2256 N. Haverhill Road
91 Olde Mill Shopping Center Old Canton Road & NWC Upper Roswell Road
92 Regal Cinemas Center-Lancaster 2262 Transit & Wehrle Drive
93 Temescal Business Center 2810 - 2850 7th Street & 745 - 829 Heinz Avenue
94 Houston Centre 3850 West Main Street
95 Pellcare Nursing Home - Winston-Salem (1G) 5941 Old Walkertown Road
96 Pellcare Nursing Home - Hickory (1G) 1125 10th Street Boulevard N.W.
97 Vista Mar Apartments 8514 Lazy Acres Circle
98 Cherokee Shopping Center 430-580 Cherokee Lane
99 Super 8 Geary Street 1015 Geary Street
100 Cabot Lodge - Tallahassee 2735 N. Monroe Street
101 Kessel Foods 5249 Corunna, 1906 Davison, 3838 Richfield
102 South Pointe Apartments 6220 Murray Drive
103 Wyoming-Enzie Properties (1H) Wyoming Avenue & Enzie Drive
<CAPTION>
Zip
# Property Name City County State Code
-- ------------- ---- ------ ----- ----
<S> <C> <C> <C> <C> <C>
67 Padonia Commerce Building Timonium Baltimore MD 21093
68 Anaheim Shores Estates Anaheim Orange CA 92801
69 Tower Square Shopping Center Eden Prairie Hennepin MN 55344
70 West Garrett Place Annapolis Anne Arundel MD 21401
71 Elmonica Court Apartments Beaverton Washington OR 97006
72 Chesterfield Commons Chesterfield Township Macomb MI 48047
73 Plum Tree Apartments Martinez Contra Costa CA 94553
74 Meadow Central Market Dallas Dallas TX 75231
75 Mount Kisco Square Shopping Center Mount Kisco Mid-Westchester NY 10549
76 Las Brisas Apartments El Cajon San Diego CA 92020
77 Freedom Village Shopping Center Eldersburg Caroll MD 21784
78 Waldan Pond & Waldan Chase Apts Acworth & Woodstock Cherokee GA 30188
79 Aspen Park Apartments Sacramento Sacramento CA 94203
80 Young Circle Shopping Center Hollywood Broward FL 33020
81 Sherwood Knoll Comfort Inn Lancaster Lancaster PA 17601
82 Bridgepoint Apartments Waxahachie Ellis TX 75165
83 Holiday Inn Center City Charlotte Mecklenburg NC 28202
84 Rainbow Design Center Las Vegas Clark NV 89102
85 Flower Hill Professional Center (1F) Gaithersburg Montgomery MD 20879
86 Flower Hill McDonald's (1F) Gaithersburg Montgomery MD 20879
87 Blue Ash Hotel & Conference Center Blue Ash Hamilton OH 45242
88 Ultra Plaza Shopping Center (3) Highland Lake IN 46112
89 Sinagua Plaza Sedona Coconino AZ 86336
90 Holiday Plaza West Palm Beach Palm Beach FL 33417
91 Olde Mill Shopping Center Marietta Cobb GA 30062
92 Regal Cinemas Center-Lancaster Lancaster Erie NY 14221
93 Temescal Business Center Berkeley Alameda CA 94707
94 Houston Centre Dothan Houston AL 36622
95 Pellcare Nursing Home - Winston-Salem (1G) Winston-Salem Forsyth NC 27105
96 Pellcare Nursing Home - Hickory (1G) Hickory Catawba NC 28601
97 Vista Mar Apartments Dallas Dallas TX 75240
98 Cherokee Shopping Center Lodi San Joaquin CA 95240
99 Super 8 Geary Street San Francisco San Francisco CA 94124
100 Cabot Lodge - Tallahassee Tallahassee Leon FL 32303
101 Kessel Foods Flint Genesee MI Various
102 South Pointe Apartments Hanahan Berkeley SC 29406
103 Wyoming-Enzie Properties (1H) Las Cruces Dona Ana NM 88001
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<CAPTION>
# Property Name Manager
-- ------------- -------
<S> <C> <C>
104 Mesa Properties (1H) Greco Rentals Management Company, LLC
105 Mervyn's Plaza ACF Property Management, Inc.
106 Bartlett Commons Management Marketing Services, Inc.
107 Crowley Village Shopping Center Action Financials, Inc.
108 Tivoli Condominiums (1I) Wimberly & Daniel, Inc.
109 Cross Creek Apartments (1I) Wimberly & Daniel, Inc.
110 Tamara Hills Townhomes (1I) Wimberly & Daniel, Inc.
111 The Bell Rock Inn Samoth Hospitality Group, Inc.
112 Howard Johnson Hotel Tramz Hotels, Inc.
113 Camelot Apartments Wesley Realty Group, Inc.
114 Canyon Ridge MHP WillMax Capital Management Corp.
115 Westlake Crossing Shopping Center Bestheda Management Company
116 Days Hotel Timonium Hill Management Services, Inc.
117 Heritage Square Apartments AAA Properties
118 Constitution Square Wareham Property Group, Inc.
119 Oxford Square HHH Management Inc.
120 Spring Villas Wasatch Property Management, Inc.
121 Sierra Point Apartments DMJ Management, Inc.
122 Menlo Avenue Office Building Arnell Enterprises, Inc.
123 Henderson Marketplace Chase Development Company
124 Stone Creek Apartments Owner Managed
125 Florida Avenue Apartments Premier Investors, Inc.
126 Homewood Village Shopping Center David H. Poer Company
127 Common Wealth Avenue Apartments The Hamilton Company
128 Sunrise Square Shopping Center Latco Property Management, Inc.
129 Stein Mart Plaza Ahmad Khoshnoudi
130 1500 Plaza Office Building Norris, Beggs & Simpson NW L.P. NBS Mang. NW, Inc.
131 New West Village Apartments REM Properties, Inc.
132 Brookside Apartments Wasatch Properties
133 Vinyard Gardens Dalewood Properties, LLC
134 Hidden Bay Village Apartments Harbor Group Management Company
135 Raintree Apartments Harbor Group Management Company
136 The Office Centre at Dunwoody Village DECK Leasing and Management, Inc.
137 Seminary Plaza R.A. Management, Inc.
138 Longbranch Apartments Stephenson & Moore
139 The Market at Merrill Shopping Center Bailey Corporation
140 Comfort Inn - Dothan H. Leslie Blumberg
<CAPTION>
# Property Name Address
-- ------------- -------
<S> <C> <C>
104 Mesa Properties (1H) 2301 Kent,1132 &1430 Mesa, 2520 Hagarty, 1125 & 1135 M. Vista
105 Mervyn's Plaza 3333 184th Street S.W.
106 Bartlett Commons NWC Route 59 & Stearns Road
107 Crowley Village Shopping Center 2008 North Parkerson Avenue
108 Tivoli Condominiums (1I) 285 Scandia Circle
109 Cross Creek Apartments (1I) 600 Riverbend Parkway
110 Tamara Hills Townhomes (1I) 102-110 and 119-142 Tamara Court
111 The Bell Rock Inn 6246 Highway 179
112 Howard Johnson Hotel 2401 West Hundred Road
113 Camelot Apartments 2840 Robinson Road
114 Canyon Ridge MHP 5150 Airport Road
115 Westlake Crossing Shopping Center 10301 Westlake Drive
116 Days Hotel Timonium 9615 & 9635 Deereco Road
117 Heritage Square Apartments 9111 White Bluff Road
118 Constitution Square 2186 Shattuck Avenue
119 Oxford Square 246 SR-436
120 Spring Villas 8768 Jamacha Road
121 Sierra Point Apartments 3800 Portland Street
122 Menlo Avenue Office Building 800 - 830 Menlo Avenue
123 Henderson Marketplace 901 Beckford Drive
124 Stone Creek Apartments 11500 Huebner Road
125 Florida Avenue Apartments 1107 - 1209 E. Flordia Avenue
126 Homewood Village Shopping Center 2415 Jefferson Road
127 Common Wealth Avenue Apartments 1114-1132 Common Wealth Avenue
128 Sunrise Square Shopping Center 6721 North Blackstone Avenue
129 Stein Mart Plaza 300 Grapevine Highway
130 1500 Plaza Office Building 1500 NE Irving Street
131 New West Village Apartments 238 East Oates Road
132 Brookside Apartments 6131 W. Thomas Road
133 Vinyard Gardens 160 Dalewood Drive
134 Hidden Bay Village Apartments 1485 Ash Circle
135 Raintree Apartments 3500 Fernandina Road
136 The Office Centre at Dunwoody Village 1530 - 1536 Dunwoody Village Parkway
137 Seminary Plaza 2807-2851 Homer Adams Parkway
138 Longbranch Apartments 2175 62nd Street North
139 The Market at Merrill Shopping Center 1506 Merrill Drive
140 Comfort Inn - Dothan 3593 Ross Clark Circle
<CAPTION>
Zip
# Property Name City County State Code
-- ------------- ---- ------ ----- ----
<S> <C> <C> <C> <C> <C>
104 Mesa Properties (1H) Las Cruces Dona Ana NM 88001
105 Mervyn's Plaza Lynnwood Snohomish WA 98037
106 Bartlett Commons Bartlett DuPage IL 60103
107 Crowley Village Shopping Center Crowley Acardia LA 70527
108 Tivoli Condominiums (1I) Athens Clarke GA 30605
109 Cross Creek Apartments (1I) Athens Clarke GA 30605
110 Tamara Hills Townhomes (1I) Athens Clarke GA 30606
111 The Bell Rock Inn Sedona Yavapai AZ 86351
112 Howard Johnson Hotel Chester Chesterfield VA 23831
113 Camelot Apartments Jackson Hinds MS 39209
114 Canyon Ridge MHP Colorado Springs El Paso CO 80916
115 Westlake Crossing Shopping Center Bethesda Montgomery MD 20817
116 Days Hotel Timonium Timonium Baltimore MD 21030
117 Heritage Square Apartments Savannah Chatham GA 31406
118 Constitution Square Berkley Alameda CA 94704
119 Oxford Square Casselberry Seminole FL 32707
120 Spring Villas Spring Valley San Diego CA 91977
121 Sierra Point Apartments Irving Dallas TX 75038
122 Menlo Avenue Office Building Menlo Park San Mateo CA 94025
123 Henderson Marketplace Henderson Vance NC 27536
124 Stone Creek Apartments San Antonio Bexar TX 78230
125 Florida Avenue Apartments Urbana Champaign IL 61801
126 Homewood Village Shopping Center Athens Clarke GA 30607
127 Common Wealth Avenue Apartments Allston Suffolk MA 02134
128 Sunrise Square Shopping Center Fresno Fresno CA 93710
129 Stein Mart Plaza Hurst Tarrant TX 76054
130 1500 Plaza Office Building Portland Multnomah OR 97232
131 New West Village Apartments Garland Dallas TX 75043
132 Brookside Apartments Phoenix Maricopa AZ 85033
133 Vinyard Gardens Winston Salem Forsyth NC 27104
134 Hidden Bay Village Apartments Casselberry Seminole FL 32707
135 Raintree Apartments Columbia Lexington SC 29210
136 The Office Centre at Dunwoody Village Atlanta DeKalb GA 30338
137 Seminary Plaza Alton Madison IL 62002
138 Longbranch Apartments Clearwater Pinellas FL 34608
139 The Market at Merrill Shopping Center Little Rock Pulaski AR 72211
140 Comfort Inn - Dothan Dothan Houston AL 36303
</TABLE>
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<CAPTION>
# Property Name Manager
-- ------------- -------
<S> <C> <C>
141 Wind River Office Building H. C. Bailey Company
142 Pass Christian Village The Mitchell Company
143 Marriott Courtyard - Dothan Larry Blumberg & Associates, Inc.
144 Tivoli Apartments Harbor Group Management Company
145 Sun Plaza Shopping Center Tenny Tsai
146 Holiday Inn Express - Washington Sterling Management, Ltd.
147 Mariner Crossing Shopping Center CB Commerical Real Estate Group, Inc.
148 Mt. Dora Marketplace HHH Management Inc.
149 Aspen Village Apartments Meridian Management Corporation
150 Sherman Oaks VDA Management Services, Inc.
151 South Plains Apartments Westmark Management Company
152 Royal Oaks Apartments FEIT Management Company
153 Northwinds Apartment Complex Owner Managed
154 The Park Shopping Center HHH Management, Inc.
155 Lloyd Office Plaza Norris, Beggs & Simpson NW L.P. NBS Mang. NW, Inc.
156 Bridge Street Lodge (1J) Christiana Management Company
157 P & R Building (1J) Owner Managed
158 Holiday Inn - Dothan Larry Blumberg & Associates, Inc.
159 Hampton North Townhomes & Apartments The Hayman Company
160 Holiday Inn - Lake Havasu Zenith Management Co.
161 University Shoppes Samuel Susi
162 Galleria Mall Swisher Realty Company
163 Park 219 Business Park CTL Management
164 One Energy Square Center Management Company
165 Orchard Plaza Shopping Center Center Management Company
166 The Mark Mobile Home Park Cunning Management, Inc.
167 Rivershores Apartments Sterling Management, Ltd.
168 Perry Hall Mini-Storage Hill Management
169 Governor's Palace, Ridgmar Americana & Ridgmar W. Apart. REM Properties, Inc.
170 Brookhollow Apartments Lumacorp., Inc.
171 Cedarfield Plaza (1K) Richard Gollel Companies, Inc.
172 Greece Mini Storage (1K) Richard Gollel Companies, Inc.
173 Gander Mountain / JoAnn Fabrics Center Michigan Realty Company
174 The Colonnade at Turtle Creek Apartments Bender Property Management, Inc.
175 601 Franklin Avenue Medical Building Ray Polley Management, Inc.
176 Valdosta Storage Rollup Owner Managed
177 All Aboard Mini-Storage Management Enterprises, Inc.
<CAPTION>
# Property Name Address
-- ------------- -------
<S> <C> <C>
141 Wind River Office Building 405 Briarwood Drive
142 Pass Christian Village US Hwy 90
143 Marriott Courtyard - Dothan 3040 Ross Clark Circle
144 Tivoli Apartments 1029 Tivoli Cresecent
145 Sun Plaza Shopping Center 2549-2569 South King Road
146 Holiday Inn Express - Washington 9220 E. Mission Avenue
147 Mariner Crossing Shopping Center 4221 Mariner Boulevard
148 Mt. Dora Marketplace SWC US Highway 441-and SR-44B
149 Aspen Village Apartments 3510 Kebil Drive
150 Sherman Oaks 14144 Ventura Boulevard
151 South Plains Apartments 5520 58th Street
152 Royal Oaks Apartments 5420 N.W. 27th Street
153 Northwinds Apartment Complex 2561 Fassitt Road
154 The Park Shopping Center 2141 Loch Rane Boulevard
155 Lloyd Office Plaza 1425 NE Irving Street
156 Bridge Street Lodge (1J) 278 Hanson Ranch Road
157 P & R Building (1J) 228 Bridge Street
158 Holiday Inn - Dothan 2195 Ross Clark Circle
159 Hampton North Townhomes & Apartments 12324 Starcrest Drive
160 Holiday Inn - Lake Havasu 245 London Bridge Road
161 University Shoppes 4938-4998 North University Drive
162 Galleria Mall 1208 & 1214 South University Avenue
163 Park 219 Business Park 2900 SW 219th Avenue
164 One Energy Square 3100-3300 Andrews Highway
165 Orchard Plaza Shopping Center East Main Street/ Highway 550 & Farmington Avenue
166 The Mark Mobile Home Park 3200 13th Street
167 Rivershores Apartments 1305 W. Vistula
168 Perry Hall Mini-Storage 7750 Rossville Boulevard
169 Governor's Palace, Ridgmar Americana & Ridgmar W. Apart. Ridgmar Boulevard North of IH-30 (West Freeway)
170 Brookhollow Apartments 1431 David Avenue
171 Cedarfield Plaza (1K) 496 Long Pond Road and Cedarfield Commons
172 Greece Mini Storage (1K) 45 Cedarfield Commons
173 Gander Mountain / JoAnn Fabrics Center 14100 & 14110 Pardee Road
174 The Colonnade at Turtle Creek Apartments 3311 Blackburn Street
175 601 Franklin Avenue Medical Building 601 Franklin Avenue
176 Valdosta Storage Rollup 412 Connell Road & 1416 Baytree Road
177 All Aboard Mini-Storage 2801 Thornton Avenue
<CAPTION>
Zip
# Property Name City County State Code
-- ------------- ---- ------ ----- ----
<S> <C> <C> <C> <C> <C>
141 Wind River Office Building Jackson Hinds MS 39206
142 Pass Christian Village Pass Christian Harrison MS 39571
143 Marriott Courtyard - Dothan Dothan Houston AL 36302
144 Tivoli Apartments Virginia Beach N/A VA 23456
145 Sun Plaza Shopping Center San Jose Santa Clara CA 95122
146 Holiday Inn Express - Washington Spokane Spokane WA 99206
147 Mariner Crossing Shopping Center Spring Hill Hernando FL 34609
148 Mt. Dora Marketplace Mt. Dora Lake FL 32757
149 Aspen Village Apartments Indianapolis Marion IN 46224
150 Sherman Oaks Los Angeles Los Angeles CA 91403
151 South Plains Apartments Lubbock Lubbock TX 79414
152 Royal Oaks Apartments Lauderhill Broward FL 33313
153 Northwinds Apartment Complex North Charleston Charleston SC 29406
154 The Park Shopping Center Orange Park Clay FL 32073
155 Lloyd Office Plaza Portland Multnomah OR 97232
156 Bridge Street Lodge (1J) Vail Eagle CO 81657
157 P & R Building (1J) Vail Eagle CO 81657
158 Holiday Inn - Dothan Dothan Houston AL 36302
159 Hampton North Townhomes & Apartments San Antonio Bexar TX 78216
160 Holiday Inn - Lake Havasu Lake Havasu City Mohave AZ 86403
161 University Shoppes Lauderhill Broward FL 33321
162 Galleria Mall Ann Arbor Washtenaw MI 48104
163 Park 219 Business Park Hillsboro Washington OR 97123
164 One Energy Square Odessa Ector TX 79762
165 Orchard Plaza Shopping Center Farmington Farmington NM 87401
166 The Mark Mobile Home Park St. Cloud Osceola FL 34769
167 Rivershores Apartments Bristol Elkhart IN 46507
168 Perry Hall Mini-Storage Baltimore Baltimore MD 21236
169 Governor's Palace, Ridgmar Americana & Ridgmar W. Apart. Fort Worth Tarrant TX 76116
170 Brookhollow Apartments Desoto Dallas TX 75115
171 Cedarfield Plaza (1K) Rochester Monroe NY 14612
172 Greece Mini Storage (1K) Rochester Monroe NY 14612
173 Gander Mountain / JoAnn Fabrics Center Taylor Wayne MI 48180
174 The Colonnade at Turtle Creek Apartments Dallas Dallas TX 75204
175 601 Franklin Avenue Medical Building Garden City Nassau NY 11530
176 Valdosta Storage Rollup Valdosta Lowndes GA 31602
177 All Aboard Mini-Storage Burbank Los Angeles CA 91504
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
# Property Name Manager
-- ------------- -------
<S> <C> <C>
178 Brea Center Westwood Financial Corporation
179 Holiday Inn Express Owner Managed
180 Seaport Villas Owner Managed
181 Park Central Office Park Cabot Realty Corporation
182 Drug Emporium Shopping Center Albert Minoofar
183 Langley Place Peter Elliot, LLC
184 Red Lion Apartments AAA Properties
185 The Woodlands Shopping Center Trammell Crow Central Texas, Ltd.
186 St. Marys Plaza Wessex Management Company
187 Mountain Park Pavilions II CB Commercial Real Estate Group, Inc.
188 Shady Banks Shopping Center Divaris Property Management Corp.
189 Pavilion in the Park Shopping Center Bailey Properties, LLC
190 Riverview Business Plaza Wellington Management, Inc.
191 Cumberland Station Shopping Center Infinity Property Management Corporation
192 509-511 Amsterdam Avenue Shore Assets, Inc.
193 Westover Pointe Center Owner Managed
194 Towne East Village Apartments Pinnacle Realty Management Corporation
195 Super Crown Books & LaJolla Patio Owner Managed
196 Bent Oak Apartments Harbor Group Management Company
197 Summit Apartments Carlisle Apartments, Inc.
198 Jefferson Square Mall Northern Pacific Securities, Inc.
199 Sandalwood Center The Real Estaters Realty & Investments
200 Encino Village Center Warden-Hasselkus
201 Willamette Terrace CTL Management
202 4 Hartwell Place Levco, Inc.
203 79 Worth Street Certified Servicing Associates
204 Stewart Creek Shopping Center RMF Properties, Ltd.
205 Plantation Village Shopping Center Fuller-Macfarlan Management
206 Lookout Ridge Apartments Paskin Properties
207 Orangethorpe Beach Shopping Center Roseland Financial
208 Orchard Supply Triad Investment Group
209 Waterford Village Shopping Center Owner Managed
210 Governor's Terrace Owner Managed
211 Esplanade Mini-Storage Epic Group
212 Sterling Industrial Park Capital Property Resources
213 Mabelvale Plaza Shopping Center Conservative Development Company
214 Woodlawn Village Shopping Center Harbor Group Management Company
<CAPTION>
# Property Name Address
-- ------------- -------
<S> <C> <C>
178 Brea Center 720-796 N. Brea Boulevard
179 Holiday Inn Express 2532 Castro Valley Blvd
180 Seaport Villas 180 Canyon Drive
181 Park Central Office Park 110, 130, 150 & 190 Linden Oaks
182 Drug Emporium Shopping Center 9912-9952 Katella/11101-3 Brookhurst
183 Langley Place 10 Langley Road
184 Red Lion Apartments 6100 Waters Avenue
185 The Woodlands Shopping Center 13492 Research Boulevard
186 St. Marys Plaza 1529 West Street Mary's Road
187 Mountain Park Pavilions II 3820 East Ray Road
188 Shady Banks Shopping Center 2900 Hampton Highway
189 Pavilion in the Park Shopping Center 8201 Cantrell Road
190 Riverview Business Plaza 276 -294, 314-330, 334-346 Chester Street
191 Cumberland Station Shopping Center 768 South Jefferson Avenue
192 509-511 Amsterdam Avenue 509-511 Amsterdam Avenue
193 Westover Pointe Center 2700 Dawson Road
194 Towne East Village Apartments 9060 F.M. 78
195 Super Crown Books & LaJolla Patio 1092 El Camino Real
196 Bent Oak Apartments 200 Old Boiling Springs Road
197 Summit Apartments 1348 Thorpe Lane
198 Jefferson Square Mall 2704-2900 South Sixth Street
199 Sandalwood Center 2400 S. Jones Boulevard
200 Encino Village Center 16650-16664 Ventura Boulevard
201 Willamette Terrace 1709 S.W. Blankenship Road
202 4 Hartwell Place 4 Hartwell Place
203 79 Worth Street 79 Worth Street
204 Stewart Creek Shopping Center 6803 Preston Road
205 Plantation Village Shopping Center 401 This Way Street
206 Lookout Ridge Apartments 201 Lookout Ridge Boulevard
207 Orangethorpe Beach Shopping Center 7802-7814 Orangethorpe Avenue
208 Orchard Supply 360 Cherokee Lane
209 Waterford Village Shopping Center 5570-5640 Dixie Highway
210 Governor's Terrace 1401 P Street
211 Esplanade Mini-Storage 2180 Craig Drive
212 Sterling Industrial Park 201 Davis Drive
213 Mabelvale Plaza Shopping Center 10101 Mabelvale Plaza Drive
214 Woodlawn Village Shopping Center 282 Deacon Road
<CAPTION>
Zip
# Property Name City County State Code
-- ------------- ---- ------ ----- ----
<S> <C> <C> <C> <C> <C>
178 Brea Center Brea Orange CA 92621
179 Holiday Inn Express Castro Valley Alameda CA 94546
180 Seaport Villas Oceanside San Diego CA 92054
181 Park Central Office Park Pittsford Monroe NY 14625
182 Drug Emporium Shopping Center Garden Grove Orange CA 92641
183 Langley Place Newton Middlesex MA 02159
184 Red Lion Apartments Savannah Chatham GA 31406
185 The Woodlands Shopping Center Austin Williamson TX 78750
186 St. Marys Plaza Tucson Pima AZ 85745
187 Mountain Park Pavilions II Phoenix Maricopa AZ 85044
188 Shady Banks Shopping Center Yorktown York VA 23693
189 Pavilion in the Park Shopping Center Little Rock Pulaski AR 72227
190 Riverview Business Plaza St Paul Ramsey MN 55107
191 Cumberland Station Shopping Center Cookeville Putnam TN 38501
192 509-511 Amsterdam Avenue New York Manhattan NY 10024
193 Westover Pointe Center Albany Dougherty GA 31707
194 Towne East Village Apartments Converse Bexar TX 78109
195 Super Crown Books & LaJolla Patio Encinitas San Diego CA 92024
196 Bent Oak Apartments Greenville Greenville SC 29650
197 Summit Apartments San Marcos Hays TX 78666
198 Jefferson Square Mall Klamath Falls Klamath OR 97603
199 Sandalwood Center Las Vegas Clark NV 89102
200 Encino Village Center Encino Los Angeles CA 91436
201 Willamette Terrace West Linn Clackamas OR 97203
202 4 Hartwell Place Lexington Middlesex MA 02173
203 79 Worth Street New York New York NY 10013
204 Stewart Creek Shopping Center Frisco Collin TX 75034
205 Plantation Village Shopping Center Lake Jackson Brazoria TX 77566
206 Lookout Ridge Apartments Harker Heights Bell TX 76548
207 Orangethorpe Beach Shopping Center Buena Park Orange CA 90621
208 Orchard Supply Lodi San Joaquin CA 95240
209 Waterford Village Shopping Center Waterford Twp. Oakland MI 48329
210 Governor's Terrace Sacramento Sacramento CA 95814
211 Esplanade Mini-Storage Oxnard Ventura CA 93003
212 Sterling Industrial Park Sterling Loudoun VA 20164
213 Mabelvale Plaza Shopping Center Little Rock Pulaski AR 72209
214 Woodlawn Village Shopping Center Fredricksburg Stafford VA 22405
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
# Property Name Manager
-- ------------- -------
<S> <C> <C>
215 Bolton-Moore's Mill Shopping Center Infinity Property Management Corp.
216 Omni Plaza Shopping Center Inter Capital Realty Corp.
217 Shield Street Plaza Sierra Management Corp.
218 Viewmont Estates Mobile Home Park Owner Managed
219 1731, 1741 and 1751 Washington Street Samia Companies
220 Penninsula Professional Building Harbor Group Management Company
221 Creekside Mobile Estates John D. Petshow
222 Alexandria Square Carnegie Management and Development Corp.
223 Advo Building Owner Managed
224 White Pines Plaza Lat Purser & Associates, Inc.
225 North Shore Estates Dolphin Real Estate Group Investments, Inc.
226 River's Edge Apartments Triangle Management, Inc.
227 109-111 Grant Avenue Robert A. Mead & Associates, Inc.
228 Royal Oaks Senior Community Park Pamela Young Haggarty and Michael Young
229 Parker Marketplace Phase II Custom Management Group, Inc.
230 Summer Creek Apartments Harbor Group Management Company
231 Robarts Mobile Home Park Owner Managed
232 Woodcrest Townhome Apartments Sigma Commercial Real Estate, Inc.
233 Planters Trace Apartments Intersouth Management
234 Stone Oak Apartments Eaglestar Group
235 Hidden Hills Mobile Home Park Cunning Management, Inc.
236 Tiger Mart Owner Managed
237 Quail Hollow Business Park Easlan Capital of Charlotte
238 Campus Square Apartments Hardin Properties, Inc.
239 Bridgeport Professional Building Katica Properties, Inc.
240 Park Lane Terrace Apartments Westmark Management Company
241 Brigham's Landing Shopping Center CB Commerical Real Estate Group, Inc.
242 Boulevard Shoppes II Samuel Susi
243 The Clusters Apartments Somerset Management Services, Inc.
244 Fairfield Inn - Dothan Larry Blumberg & Associates, Inc.
245 Valley Manor Karin A. Marshall
246 Sunrise Village Apartments Owner Managed
247 Ridgewood Apartments Bailey Properties Management, LLC
248 Bella Vista Terrace Rocky Raymond
249 Ramada Limited Owner Managed
250 Secluded Oaks Villas Apartments Encore Capital Management, Inc.
251 Colonial Mobile Home Park Owner Managed
<CAPTION>
# Property Name Address
-- ------------- -------
<S> <C> <C>
215 Bolton-Moore's Mill Shopping Center 2271-2581 Marietta Boulevard
216 Omni Plaza Shopping Center 2815-35 Jerusalem Avenue
217 Shield Street Plaza 138-162 Shield Street
218 Viewmont Estates Mobile Home Park 1120 South 25th Street
219 1731, 1741 and 1751 Washington Street 1731, 1741 and 1751 Washington Street
220 Penninsula Professional Building 11818 Rock Landing Drive
221 Creekside Mobile Estates 5101 NE 121st Avenue
222 Alexandria Square 949-59 East Aurora Road
223 Advo Building 102 South Wynstone Park Drive
224 White Pines Plaza 100 East Main Street
225 North Shore Estates 3777 Addy Street
226 River's Edge Apartments 1425 LeForge
227 109-111 Grant Avenue 109 -111 Grant Avenue
228 Royal Oaks Senior Community Park 750 Wood Sorrell Drive
229 Parker Marketplace Phase II 18721 - 18741 East Ponderosa Drive
230 Summer Creek Apartments 5055 Harbour Lake Drive
231 Robarts Mobile Home Park 2000 Maine Street
232 Woodcrest Townhome Apartments 1628 Woodcrest Drive
233 Planters Trace Apartments 2222 Ashley River Road
234 Stone Oak Apartments 3151 Jennings Road
235 Hidden Hills Mobile Home Park 4190 North Spring Garden Avenue
236 Tiger Mart 1001 Highway 67
237 Quail Hollow Business Park 6548 Carmel Road & 7523 Little Avenue
238 Campus Square Apartments 316 Fry Street
239 Bridgeport Professional Building 7424 Bridgeport Way West
240 Park Lane Terrace Apartments 6830 Larmanda Street
241 Brigham's Landing Shopping Center 200 West University Parkway
242 Boulevard Shoppes II 5200-5400 North University Drive
243 The Clusters Apartments 3130; 3220-46 Webb Chapel Ext., 3203-03 Norwalk Ave. & 3222 Community Dr.
244 Fairfield Inn - Dothan 3038 Ross Clark Circle
245 Valley Manor 856 S. Central Avenue
246 Sunrise Village Apartments 48 West 2nd South
247 Ridgewood Apartments 2190 Higdon Ferry Road
248 Bella Vista Terrace 500-510 E. Los Angeles Dr. & 415 E. Indian Rock Rd.
249 Ramada Limited 21598 Foothill Boulevard
250 Secluded Oaks Villas Apartments 8642 Fredericksburg Road
251 Colonial Mobile Home Park 2600 East Division Street
<CAPTION>
Zip
# Property Name City County State Code
-- ------------- ---- ------ ----- ----
<S> <C> <C> <C> <C> <C>
215 Bolton-Moore's Mill Shopping Center Atlanta Fulton GA 30318
216 Omni Plaza Shopping Center North Bellmore Nassau NY 11710
217 Shield Street Plaza West Hartford Hartford CT 06110
218 Viewmont Estates Mobile Home Park Mt. Vernon Skagit WA 98273
219 1731, 1741 and 1751 Washington Street Braintree Norfolk MA 02184
220 Penninsula Professional Building Newport News Newport News VA 23612
221 Creekside Mobile Estates Vancouver Clark WA 98682
222 Alexandria Square Macedonia Summit OH 44056
223 Advo Building North Barrington Lake IL 60010
224 White Pines Plaza Cherryville Gaston NC 28021
225 North Shore Estates Washougal Clark WA 98671
226 River's Edge Apartments Ypsilanti Washtenaw MI 48198
227 109-111 Grant Avenue Endicott Broome NY 13760
228 Royal Oaks Senior Community Park Petaluma Sonoma CA 94952
229 Parker Marketplace Phase II Parker Douglas CO 80134
230 Summer Creek Apartments Goose Creek Berkeley SC 29445
231 Robarts Mobile Home Park Frostproof Polk FL 33843
232 Woodcrest Townhome Apartments Daytona Beach Volusia FL 32119
233 Planters Trace Apartments Charleston Charleston SC 29414
234 Stone Oak Apartments Independence Jackson MO 64055
235 Hidden Hills Mobile Home Park DeLand Volusia FL 32720
236 Tiger Mart Alvarado Johnson TX 76009
237 Quail Hollow Business Park Charlotte Mecklenburg NC 28226
238 Campus Square Apartments Denton Denton TX 76201
239 Bridgeport Professional Building Tacoma Pierce WA 98467
240 Park Lane Terrace Apartments Dallas Dallas TX 75231
241 Brigham's Landing Shopping Center Provo Utah UT 84604
242 Boulevard Shoppes II Lauderhill Broward FL 33351
243 The Clusters Apartments Dallas Dallas TX 75220
244 Fairfield Inn - Dothan Dothan Houston AL 36302
245 Valley Manor Kent King WA 98032
246 Sunrise Village Apartments Rexburg Madison ID 83440
247 Ridgewood Apartments Hot Springs Garland AR 71913
248 Bella Vista Terrace Vista San Diego CA 92084
249 Ramada Limited Hayward Alameda CA 94541
250 Secluded Oaks Villas Apartments San Antonio Bexar TX 78240
251 Colonial Mobile Home Park Mt. Vernon Skagit WA 98274
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
# Property Name Manager
-- ------------- -------
<S> <C> <C>
252 Plaza North Medical Building Pebworth Properties, Inc.
253 Camelot Apartments Great Atlantic Company
254 Northlake Quadrangle Spiva/Hill Management, Co.
255 Gordon Street Apartments Samia Ventures, Inc.
256 Northgate Apartments CTL Management
257 Sepulveda Crest Apartments G.H. Cooper Properties, Inc.
258 Morningstar Mini-Storage Morningstar Group, Inc.
259 Chateaux Verde Apartments F&F Properties
260 Homestead Corner Shopping Center Providence Realty(Minnesota), Inc.
261 Lake Villa Apartments Financial Advisors, Inc.
262 F & H Warehouse Owner Managed
263 Avian Plaza Shopping Center Myron Buchman
264 Port Orchard Mini Storage Kevin Howard Real Estate
265 Sequoia Grove Apartments Alliance Management, Inc.
266 The Miller Center Owner Managed
267 Emerald Park Apartments S&S Property Management, Inc.
268 Rancho San Diego Town & Country Marc Lantzman
269 French Quarters East Apartments Maxus Properties, Inc.
270 The Forest Apartments Harbor Group Management Company
271 Oakhill Apartments InterSouth Management, Inc.
272 STOR-N-LOCK Pogoda Management Co.
273 Autumn Ridge Apartments APA Management, LCC
274 701 Franklin Center Mitch Cox Properties
275 Savoy Condominiums Hurt & Stell Management, LLC
276 Meriden East Apartments APA Mangement Services
277 Hyde Park Mobile Estates Mr. Prescott
278 Courtyard Plaza JEDA Management
279 Tradewinds Apartments Harbor Group Management Company
280 Regency Manor Apartments Carlisle Apartments, Inc.
281 Hood Chalet Mobile Estates Owner Managed
282 Mauna Kea Apartments L'Abri Management Inc.
283 Deer Creek Apartments Mather Capital Corporation
284 Evergreen Place Condominiums Owner Managed
285 Autumn Creek Apartments Ernest E. Tschannen
286 Midtown at Main Owner Managed
287 Park Place Center Mitch Cox Properties, LLC
288 International Self Storage Owner Managed
<CAPTION>
# Property Name Address
-- ------------- -------
<S> <C> <C>
252 Plaza North Medical Building 3385 Burns Road
253 Camelot Apartments 1 Guenevere Court
254 Northlake Quadrangle 2200 Northlake Parkway
255 Gordon Street Apartments 91-99 Gordon Street
256 Northgate Apartments 5801-5939 North Fessenden Street
257 Sepulveda Crest Apartments 6640 Sepulveda Boulevard
258 Morningstar Mini-Storage 920 West Chatham Street
259 Chateaux Verde Apartments 13050 West Cedar Drive
260 Homestead Corner Shopping Center 13540 - 13670 Grove Drive
261 Lake Villa Apartments 3500 Watkins Lake Road
262 F & H Warehouse 470 Commack Road
263 Avian Plaza Shopping Center SWC Evesham Road & Brendenwood Drive
264 Port Orchard Mini Storage 3282 SE Lund Avenue
265 Sequoia Grove Apartments 13001 SE 28th Place
266 The Miller Center 1224 Ellis Avenue
267 Emerald Park Apartments 2200 Flower Tree Circle
268 Rancho San Diego Town & Country 12098 Fury Lane
269 French Quarters East Apartments 808 East 100th Terrace
270 The Forest Apartments 6756 103rd Street
271 Oakhill Apartments 825 Beaty Street
272 STOR-N-LOCK 7840 Wayne Road
273 Autumn Ridge Apartments 90 Gerrish Avenue
274 701 Franklin Center 701 State of Franklin Road
275 Savoy Condominiums 303 Detroit Avenue
276 Meriden East Apartments 657 East Main Street
277 Hyde Park Mobile Estates 2934 W. 1st Street
278 Courtyard Plaza 349 - 351 North Main Street
279 Tradewinds Apartments 5717 Timuquana Road
280 Regency Manor Apartments 5042 Wildflower
281 Hood Chalet Mobile Estates 17655 S. Bluff Road
282 Mauna Kea Apartments 3601 W. Orange Avenue
283 Deer Creek Apartments 950 North Allumbaugh Street
284 Evergreen Place Condominiums 3860 Evergreen Street
285 Autumn Creek Apartments 10749 - 10765 East Northwest Highway
286 Midtown at Main 1100 Main Avenue
287 Park Place Center State of Franklin Road at Sells Avenue
288 International Self Storage 6119 Oakdale Road
<CAPTION>
Zip
# Property Name City County State Code
-- ------------- ---- ------ ----- ----
<S> <C> <C> <C> <C> <C>
252 Plaza North Medical Building Palm Beach Gardens Palm Beach FL 33410
253 Camelot Apartments Newport News Newport News VA 23602
254 Northlake Quadrangle Atlanta DeKalb GA 30084
255 Gordon Street Apartments Allston Suffolk MA 02134
256 Northgate Apartments Portland Washington OR 97203
257 Sepulveda Crest Apartments Los Angeles Los Angeles CA 91411
258 Morningstar Mini-Storage Cary Wake NC 27511
259 Chateaux Verde Apartments Lakewood Jefferson CO 80228
260 Homestead Corner Shopping Center Maple Grove Hennepin MN 55369
261 Lake Villa Apartments Waterford Oakland MI 48328
262 F & H Warehouse Deer Park Suffolk NY 11729
263 Avian Plaza Shopping Center Voorhees Township Camden NJ 08003
264 Port Orchard Mini Storage Port Orchard Kitsap WA 98366
265 Sequoia Grove Apartments Bellevue King WA 98005
266 The Miller Center Jackson Hinds MS 39209
267 Emerald Park Apartments Melbourne Brevard FL 32935
268 Rancho San Diego Town & Country Rancho San Diego San Diego CA 92019
269 French Quarters East Apartments Kansas City Jackson MO 64131
270 The Forest Apartments Jacksonville Duval FL 32210
271 Oakhill Apartments Davidson Mecklenburg NC 28036
272 STOR-N-LOCK Westland Wayne MI 48185
273 Autumn Ridge Apartments East Haven New Haven CT 06512
274 701 Franklin Center Johnson City Washington TN 37604
275 Savoy Condominiums Lubbock Lubbock TX 79415
276 Meriden East Apartments Meriden New Haven CT 06450
277 Hyde Park Mobile Estates Santa Ana Orange CA 92702
278 Courtyard Plaza Andover Essex MA 01810
279 Tradewinds Apartments Jacksonville Duval FL 32210
280 Regency Manor Apartments San Antonio Bexar TX 78228
281 Hood Chalet Mobile Estates Sandy Clackamas OR 97055
282 Mauna Kea Apartments Anaheim Orange CA 92804
283 Deer Creek Apartments Boise Ada ID 83704
284 Evergreen Place Condominiums Irving Dallas TX 75061
285 Autumn Creek Apartments Dallas Dallas TX 75238
286 Midtown at Main Moorhead Clay MN 56560
287 Park Place Center Johnson City Washington TN 37604
288 International Self Storage Riverbank Stanislaus CA 95367
</TABLE>
<PAGE>
<TABLE>
# Property Name Manager
-- ------------- -------
<S> <C> <C>
289 Villa Catalina Apartments MJW Investments, Inc.
290 Loc-'N-Stor Self-Storage Georgia Johnson Family Trust
291 Rancho Villa Owner Managed
292 Timberline Mobile Home Park Owner Managed
293 Timberland Ridge Apartments Fransen Real Estate, Inc.
294 Leewood Apartments Owner Managed
295 Glen Mark Apartments Hughes Management, Inc.
296 Pinecroft Mobile Home Park Owner Managed
297 Eckerds Drugstore Owner Managed
298 Eastern Promenade Apartments Baxter Property Management
299 Belle Meade Apartments Zidell Properties
300 Riverview Plaza II Tri-Kell Investments, Inc.
301 Westmoreland Warehouse Adveric Holdings, Inc.
<CAPTION>
# Property Name Address
-- ------------- -------
<S> <C> <C>
289 Villa Catalina Apartments 440 South Catalina Street
290 Loc-'N-Stor Self-Storage 1020 Lakeville Street
291 Rancho Villa 10302 Lakeview Avenue S.W.
292 Timberline Mobile Home Park 19625 East Wellesley
293 Timberland Ridge Apartments 7501 & 7511 Greenfield Avenue
294 Leewood Apartments 1000 Northwood Drive
295 Glen Mark Apartments 1709 Martin Bluff Road
296 Pinecroft Mobile Home Park 11920 East Mansfield Avenue
297 Eckerds Drugstore 5120 34th Street and Slide Road
298 Eastern Promenade Apartments 250 - 256 Eastern Promenade
299 Belle Meade Apartments 2930 Fountainview Drive
300 Riverview Plaza II 3200 Cobb Parkway
301 Westmoreland Warehouse 4803 - 4809 S. Westmoreland Road
<CAPTION>
Zip
# Property Name City County State Code
-- ------------- ---- ------ ----- ----
<S> <C> <C> <C> <C> <C>
289 Villa Catalina Apartments Los Angeles Los Angeles CA 90020
290 Loc-'N-Stor Self-Storage Petaluma Sonoma CA 94952
291 Rancho Villa Lakewood Pierce WA 98499
292 Timberline Mobile Home Park Otis Ochards Spokane WA 99027
293 Timberland Ridge Apartments Mounds View Ramsey MN 55112
294 Leewood Apartments Houston Harris TX 77521
295 Glen Mark Apartments Gautier Jackson MS 39553
296 Pinecroft Mobile Home Park Spokane Spokane WA 99206
297 Eckerds Drugstore Lubbock Lubbock TX 79414
298 Eastern Promenade Apartments Portland Cumberland ME 04101
299 Belle Meade Apartments Houston Harris TX 75231
300 Riverview Plaza II Atlanta Cobb GA 30339
301 Westmoreland Warehouse Dallas Dallas TX 75237
</TABLE>
(1A) The Mortgage Loans secured by Raritan Plaza I and Raritan Center Industrial
Portfolio, respectively, are cross-collateralized and cross-defaulted.
(1B) The Mortgage Loans secured by Holiday Inn - Jacksonville Airport and
Courtyard by Marriott, respectively, are cross-collateralized and
cross-defaulted.
(1C) The Mortgage Loans secured by Courtyard by Marriott - Pensacola, Courtyard
by Marriott - Tuscaloosa, Fairfield Inn - Pensacola, Fairfield Inn -
Birmingham and Fairfield Inn - Tuscaloosa, respectively, are
cross-collateralized and cross-defaulted.
(1D) The Mortgage Loans secured by Royal Plaza Hotel - Marlborough and Royal
Plaza Hotel- Fitchburg, respectively, are cross-collateralized and
cross-defaulted.
(1E) The Mortgage Loans secured by Highland Pavilion Shopping Center and
Highland Pavilion Cinema, respectively, are cross-collateralized and
cross-defaulted.
(1F) The Mortgage Loans secured by Flower Hill Professional Center and Flower
Hill McDonald's, respectively, are cross-collateralized and
cross-defaulted.
(1G) The Mortgage Loans secured by Pellcare Nursing Home - Winston-Salem and
Pellcare Nursing Home - Hickory, respectively, are cross-collateralized and
cross-defaulted.
(1H) The Mortgage Loans secured by Wyoming-Enzie Properties and Mesa Properties,
respectively, are cross-collateralized and cross-defaulted.
(1I) The Mortgage Loans secured by Tivoli Condominiums, Cross Creek Apartments
and Tamara Hills Townhomes, respectively, are cross-collateralized and
cross-defaulted.
(1J) The Mortgage Loans secured by Bridge Street Lodge and P&R Building,
respectively, are cross-collateralized and cross-defaulted.
(1K) The Mortgage Loans secured by Cedarfield Plaza and Greece Mini Storage,
respectively, are cross-collateralized and cross-defaulted.
(2) Summer Cove Apartments has an interest only period of 24 months and
will begin to amortize over a 336 month term.
(3) Ultra Plaza Shopping Center has an interest only period of 24 months
and will begin to amortize over a 336 month term.
<PAGE>
Descriptions of the Mortgaged Properties
<TABLE>
<CAPTION>
Units/
Rooms/ Fee Simple/ Year
# Property Name (1) Property Type Sq. Ft. Leasehold Built
--- ----------------- ------------- ------- --------- -----
<S> <C> <C> <C> <C> <C>
1 The Rivergate Apartments Multifamily 706 Fee 1985
2 Raritan Plaza I (1A) Office 262,500 Fee 1985
3 Raritan Center Industrial Portfolio (1A) Industrial 804,196 Fee 1984
4 Resurgens Plaza Office 388,119 Fee/Leasehold 1988
5 The Camargue Multifamily 261 Fee 1979
6 Casa Arroyo Apartments Multifamily 394 Fee 1973
7 Ballena Village Apartments Multifamily 392 Fee 1973
8 Holiday Inn - Jacksonville Airport (1B) Hotel 489 Fee 1969
9 Courtyard by Marriott (1B) Hotel 81 Fee 1996
10 Magnolia Lake Apartments Multifamily 486 Fee 1971
11 Park Terrace Multifamily 304 Fee 1986
12 Autumn Chase Apartments Multifamily 550 Fee 1969
13 Embassy Square Suites Hotel 265 Fee 1967
14 101 Commerce Drive Industrial 597,100 Fee 1991
15 Courtyard by Marriott - Pensacola (1C) Hotel 90 Fee 1997
16 Courtyard by Marriott - Tuscaloosa (1C) Hotel 78 Leasehold 1996
17 Fairfield Inn - Pensacola (1C) Hotel 63 Fee 1995
18 Fairfield Inn - Birmingham (1C) Hotel 63 Fee 1995
19 Fairfield Inn - Tuscaloosa (1C) Hotel 63 Leasehold 1996
20 Doctors Medical Complex Office 397,588 Fee 1963
21 Chandler Place Apartments Multifamily 320 Fee 1996
22 Summer Cove Apartments (2) Multifamily 224 Fee 1997
23 Lake & Racquet Apartments Multifamily 426 Fee 1973
24 Stone Ends Apartments Multifamily 276 Fee 1972
25 Canyon Club Apartments Multifamily 336 Fee 1990
26 BLN Office Park II Office 201,311 Fee 1985
27 Royal Plaza Hotel - Marlborough (1D) Hotel 314 Fee 1985
28 Royal Plaza Hotel - Fitchburg (1D) Hotel 245 Fee 1989
29 Hannaford Plaza AKA Rotterdam Mall Retail 224,091 Fee 1972
<CAPTION>
Later of Occupancy
Year Year Built/ Rate at Appraised
# Property Name (1) Renovated Year Renovated U/W (4) Value
--- ----------------- --------- -------------- ------- -----
<S> <C> <C> <C> <C> <C>
1 The Rivergate Apartments N/A 1985 97.0% $151,800,000
2 Raritan Plaza I (1A) N/A 1985 99.0% $37,000,000
3 Raritan Center Industrial Portfolio (1A) N/A 1984 94.0% $34,120,000
4 Resurgens Plaza N/A 1988 96.0% $72,000,000
5 The Camargue N/A 1979 99.0% $44,700,000
6 Casa Arroyo Apartments N/A 1973 99.0% $33,000,000
7 Ballena Village Apartments N/A 1973 95.0% $35,100,000
8 Holiday Inn - Jacksonville Airport (1B) 1997 1997 N/A $27,100,000
9 Courtyard by Marriott (1B) N/A 1996 N/A $6,700,000
10 Magnolia Lake Apartments 1995 1995 95.0% $26,500,000
11 Park Terrace 1995 1995 98.0% $25,900,000
12 Autumn Chase Apartments 1995 1995 97.0% $26,000,000
13 Embassy Square Suites 1995 1995 N/A $39,500,000
14 101 Commerce Drive N/A 1991 100.0% $25,000,000
15 Courtyard by Marriott - Pensacola (1C) N/A 1997 N/A $7,500,000
16 Courtyard by Marriott - Tuscaloosa (1C) N/A 1996 N/A $5,060,000
17 Fairfield Inn - Pensacola (1C) N/A 1995 N/A $4,800,000
18 Fairfield Inn - Birmingham (1C) N/A 1995 N/A $3,200,000
19 Fairfield Inn - Tuscaloosa (1C) N/A 1996 N/A $2,590,000
20 Doctors Medical Complex 1997 1997 98.0% $24,000,000
21 Chandler Place Apartments N/A 1996 96.0% $23,000,000
22 Summer Cove Apartments (2) N/A 1997 93.0% $18,600,000
23 Lake & Racquet Apartments 1990 1990 98.0% $19,500,000
24 Stone Ends Apartments 1980 1980 100.0% $17,800,000
25 Canyon Club Apartments N/A 1990 97.0% $21,000,000
26 BLN Office Park II N/A 1985 99.0% $19,700,000
27 Royal Plaza Hotel - Marlborough (1D) 1987 1987 N/A $20,400,000
28 Royal Plaza Hotel - Fitchburg (1D) 1990 1990 N/A $4,300,000
29 Hannaford Plaza AKA Rotterdam Mall 1995 1995 98.0% $17,000,000
<CAPTION>
Cut-off Date U/W U/W
# Property Name (1) LTV Ratio NCF (5) DSCR (6)
--- ----------------- --------- ------- --------
<S> <C> <C> <C> <C>
1 The Rivergate Apartments 62.3% $13,177,773 1.75 x
2 Raritan Plaza I (1A) 74.3% $2,932,602 1.28 x
3 Raritan Center Industrial Portfolio (1A) 71.8% $2,490,405 1.22 x
4 Resurgens Plaza 45.6% $5,342,566 2.10 x
5 The Camargue 66.9% $3,508,202 1.38 x
6 Casa Arroyo Apartments 72.7% $2,549,628 1.34 x
7 Ballena Village Apartments 62.5% $2,461,929 1.40 x
8 Holiday Inn - Jacksonville Airport (1B) 64.1% $2,749,868 1.83 x
9 Courtyard by Marriott (1B) 68.5% $619,297 1.56 x
10 Magnolia Lake Apartments 77.4% $2,113,019 1.31 x
11 Park Terrace 77.1% $2,106,560 1.33 x
12 Autumn Chase Apartments 74.9% $2,115,970 1.35 x
13 Embassy Square Suites 45.3% $2,265,082 1.42 x
14 101 Commerce Drive 67.8% $2,110,934 1.55 x
15 Courtyard by Marriott - Pensacola (1C) 69.3% $657,868 1.45 x
16 Courtyard by Marriott - Tuscaloosa (1C) 76.4% $567,020 1.68 x
17 Fairfield Inn - Pensacola (1C) 64.9% $382,449 1.40 x
18 Fairfield Inn - Birmingham (1C) 74.3% $300,682 1.44 x
19 Fairfield Inn - Tuscaloosa (1C) 74.4% $224,225 1.33 x
20 Doctors Medical Complex 66.6% $1,694,604 1.25 x
21 Chandler Place Apartments 68.2% $1,631,180 1.31 x
22 Summer Cove Apartments (2) 82.0% $1,488,116 1.37 x
23 Lake & Racquet Apartments 76.8% $1,634,330 1.33 x
24 Stone Ends Apartments 79.9% $1,431,208 1.27 x
25 Canyon Club Apartments 64.6% $1,377,380 1.31 x
26 BLN Office Park II 68.8% $1,533,099 1.39 x
27 Royal Plaza Hotel - Marlborough (1D) 51.4% $1,620,925 1.73 x
28 Royal Plaza Hotel - Fitchburg (1D) 60.3% $304,543 1.31 x
29 Hannaford Plaza AKA Rotterdam Mall 76.4% $1,333,573 1.22 x
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Units/
Rooms/ Fee Simple/ Year
# Property Name (1) Property Type Sq. Ft. Leasehold Built
--- ----------------- ------------- ------- --------- -----
<S> <C> <C> <C> <C> <C>
30 Highland Pavilion Shopping Center (1E) Retail 121,964 Fee 1988
31 Highland Pavilion Cinema (1E) Retail 43,480 Fee 1987
32 Plumtree Apartments Multifamily 406 Fee 1970
33 Ventura Libbit Building Office 151,776 Leasehold 1981
34 Carroll Park Industrial Center Industrial 630,000 Fee 1960
35 Randall Ln., Park Pl. I & II and Park Newport Apart. Multifamily 391 Fee 1972
36 Plaza Mobile Village Manufactured Housing 237 Fee 1970
37 Town & Country Shopping Center Retail 242,750 Fee 1961
38 Golden Triangle Shopping Center Retail 222,644 Fee 1959
39 Jasper Mall Shopping Center Retail 228,909 Fee 1982
40 Lincoln Village Shopping Center Retail 178,700 Leasehold 1984
41 Dominick's Food Store & Multi-Tenant Retail Retail 89,105 Fee 1997
42 Suncrest Plaza Shopping Center Retail 74,517 Fee 1960
43 Fabyan Crossing Shopping Center Retail 86,782 Fee 1996
44 Forest Glen Apartments Multifamily 184 Fee 1987
45 Legacy Drive Village Shopping Center Retail 138,169 Fee 1994
46 Friendly Village MHC Manufactured Housing 815 Fee 1970
47 Breckenridge Apartments Multifamily 604 Fee 1968
48 Days Inn - Inner Harbor Hotel 250 Fee 1984
49 Courtyard by Marriott Richmond Hotel 149 Fee 1989
50 Barnes Crossing Retail 149,964 Fee 1996
51 Elmwood Regal Center Retail 102,851 Fee/Leasehold 1997
52 520 Franklin Avenue Medical Building Office 68,200 Fee 1955
53 Holiday Inn & Suites Hotel 178 Fee 1972
54 Aspen Ridge Apartments Multifamily 240 Fee 1985
55 Parkway Towers Apartments Mixed Use 281 Fee 1964
56 BLN Office Park I Office 134,983 Fee 1980
57 Garden Plaza Shopping Center Retail 50,000 Fee 1997
58 One Phillips Drive Industrial 400,000 Fee 1992
59 Comfort Inn - Hollywood Hotel 191 Fee 1988
60 Ideal Professional Park Office 83,053 Fee 1982
61 Cypress Pointe Apartments Multifamily 196 Fee 1985
62 The Shops at Lionville Station Retail 82,451 Fee 1996
63 Cabot Lodge - Gainesville Hotel 208 Fee 1986
64 Hampton Inn & Suites Hotel 104 Fee 1996
65 Mercado Del Rancho Shopping Center Retail 86,464 Fee 1985
66 Bancroft Hall Apartments Multifamily 244 Fee 1972
<CAPTION>
Later of Occupancy
Year Year Built/ Rate at Appraised
# Property Name (1) Renovated Year Renovated U/W (4) Value
--- ----------------- --------- -------------- ------- -----
<S> <C> <C> <C> <C> <C>
30 Highland Pavilion Shopping Center (1E) N/A 1988 97.0% $8,950,000
31 Highland Pavilion Cinema (1E) N/A 1987 100.0% $7,650,000
32 Plumtree Apartments N/A 1970 98.0% $15,700,000
33 Ventura Libbit Building N/A 1981 97.0% $18,250,000
34 Carroll Park Industrial Center 1994 1994 100.0% $16,000,000
35 Randall Ln., Park Pl. I & II and Park Newport Apart. N/A 1972 93.0% $15,000,000
36 Plaza Mobile Village N/A 1970 98.0% $14,340,000
37 Town & Country Shopping Center 1985 1985 100.0% $14,600,000
38 Golden Triangle Shopping Center 1997 1997 98.0% $13,500,000
39 Jasper Mall Shopping Center 1991 1991 99.0% $13,350,000
40 Lincoln Village Shopping Center N/A 1984 98.0% $14,700,000
41 Dominick's Food Store & Multi-Tenant Retail N/A 1997 100.0% $13,000,000
42 Suncrest Plaza Shopping Center 1987 1987 92.0% $13,800,000
43 Fabyan Crossing Shopping Center N/A 1996 100.0% $12,300,000
44 Forest Glen Apartments N/A 1987 97.0% $12,800,000
45 Legacy Drive Village Shopping Center 1997 1997 99.0% $15,520,000
46 Friendly Village MHC N/A 1970 91.0% $12,100,000
47 Breckenridge Apartments N/A 1968 92.0% $12,700,000
48 Days Inn - Inner Harbor N/A 1984 N/A $20,500,000
49 Courtyard by Marriott Richmond 1996 1996 N/A $12,700,000
50 Barnes Crossing N/A 1996 92.0% $10,650,000
51 Elmwood Regal Center N/A 1997 100.0% $12,100,000
52 520 Franklin Avenue Medical Building 1990 1990 99.0% $11,150,000
53 Holiday Inn & Suites 1998 1998 N/A $14,500,000
54 Aspen Ridge Apartments N/A 1985 94.0% $10,275,000
55 Parkway Towers Apartments N/A 1964 99.0% $10,800,000
56 BLN Office Park I N/A 1980 98.0% $12,750,000
57 Garden Plaza Shopping Center N/A 1997 100.0% $10,150,000
58 One Phillips Drive N/A 1992 100.0% $10,850,000
59 Comfort Inn - Hollywood N/A 1988 N/A $11,240,000
60 Ideal Professional Park N/A 1982 90.0% $9,000,000
61 Cypress Pointe Apartments N/A 1985 98.0% $9,000,000
62 The Shops at Lionville Station N/A 1996 96.0% $8,750,000
63 Cabot Lodge - Gainesville 1997 1997 N/A $12,100,000
64 Hampton Inn & Suites N/A 1996 N/A $10,000,000
65 Mercado Del Rancho Shopping Center N/A 1985 97.0% $9,000,000
66 Bancroft Hall Apartments 1985 1985 96.0% $9,000,000
<CAPTION>
Cut-off Date U/W U/W
# Property Name (1) LTV Ratio NCF (5) DSCR (6)
--- ----------------- --------- ------- --------
<S> <C> <C> <C> <C>
30 Highland Pavilion Shopping Center (1E) 70.7% $673,102 1.29 x
31 Highland Pavilion Cinema (1E) 81.7% $645,472 1.25 x
32 Plumtree Apartments 79.6% $1,272,425 1.28 x
33 Ventura Libbit Building 66.7% $1,497,008 1.27 x
34 Carroll Park Industrial Center 74.4% $1,301,286 1.32 x
35 Randall Ln., Park Pl. I & II and Park Newport Apart. 76.4% $1,144,639 1.21 x
36 Plaza Mobile Village 78.9% $1,162,416 1.24 x
37 Town & Country Shopping Center 76.3% $1,202,211 1.29 x
38 Golden Triangle Shopping Center 79.8% $1,218,037 1.28 x
39 Jasper Mall Shopping Center 78.9% $1,154,816 1.35 x
40 Lincoln Village Shopping Center 71.1% $1,124,465 1.29 x
41 Dominick's Food Store & Multi-Tenant Retail 79.4% $1,116,505 1.32 x
42 Suncrest Plaza Shopping Center 72.2% $1,327,610 1.62 x
43 Fabyan Crossing Shopping Center 79.9% $1,053,809 1.31 x
44 Forest Glen Apartments 76.1% $968,350 1.27 x
45 Legacy Drive Village Shopping Center 62.6% $1,379,900 1.77 x
46 Friendly Village MHC 78.5% $1,039,756 1.35 x
47 Breckenridge Apartments 73.6% $1,160,216 1.29 x
48 Days Inn - Inner Harbor 45.5% $1,982,048 2.48 x
49 Courtyard by Marriott Richmond 70.0% $1,160,062 1.47 x
50 Barnes Crossing 79.8% $913,101 1.26 x
51 Elmwood Regal Center 69.8% $1,261,035 1.32 x
52 520 Franklin Avenue Medical Building 74.4% $890,741 1.31 x
53 Holiday Inn & Suites 57.2% $1,121,636 1.54 x
54 Aspen Ridge Apartments 78.6% $822,585 1.26 x
55 Parkway Towers Apartments 73.9% $908,507 1.42 x
56 BLN Office Park I 62.5% $1,194,341 1.84 x
57 Garden Plaza Shopping Center 74.6% $790,528 1.21 x
58 One Phillips Drive 68.9% $976,172 1.63 x
59 Comfort Inn - Hollywood 65.1% $967,028 1.50 x
60 Ideal Professional Park 80.0% $816,978 1.36 x
61 Cypress Pointe Apartments 79.9% $812,319 1.40 x
62 The Shops at Lionville Station 80.0% $758,047 1.34 x
63 Cabot Lodge - Gainesville 57.7% $1,278,114 2.12 x
64 Hampton Inn & Suites 69.8% $910,685 1.51 x
65 Mercado Del Rancho Shopping Center 77.5% $716,154 1.29 x
66 Bancroft Hall Apartments 77.3% $814,855 1.31 x
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Units/
Rooms/ Fee Simple/ Year
# Property Name (1) Property Type Sq. Ft. Leasehold Built
--- ----------------- ------------- ------- --------- -----
<S> <C> <C> <C> <C> <C>
67 Padonia Commerce Building Industrial 180,719 Fee 1966
68 Anaheim Shores Estates Manufactured Housing 264 Leasehold 1978
69 Tower Square Shopping Center Retail 70,690 Fee 1988
70 West Garrett Place Office 68,901 Fee 1988
71 Elmonica Court Apartments Multifamily 144 Fee 1997
72 Chesterfield Commons Retail 93,054 Fee 1989
73 Plum Tree Apartments Multifamily 116 Fee 1986
74 Meadow Central Market Retail 107,094 Fee 1973
75 Mount Kisco Square Shopping Center Retail 33,946 Fee 1990
76 Las Brisas Apartments Multifamily 178 Fee 1985
77 Freedom Village Shopping Center Retail 119,874 Fee 1988
78 Waldan Pond & Waldan Chase Apts Multifamily 184 Fee 1986
79 Aspen Park Apartments Multifamily 280 Fee 1985
80 Young Circle Shopping Center Retail 65,488 Fee 1962
81 Sherwood Knoll Comfort Inn Hotel 166 Fee 1970
82 Bridgepoint Apartments Multifamily 200 Fee 1986
83 Holiday Inn Center City Hotel 298 Leasehold 1989
84 Rainbow Design Center Retail 64,318 Fee 1988
85 Flower Hill Professional Center (1F) Office 80,770 Fee 1988
86 Flower Hill McDonald's (1F) Retail 4,143 Fee 1987
87 Blue Ash Hotel & Conference Center Hotel 217 Fee 1969
88 Ultra Plaza Shopping Center (3) Retail 139,795 Fee 1961
89 Sinagua Plaza Retail 32,338 Fee 1990
90 Holiday Plaza Manufactured Housing 266 Fee 1968
91 Olde Mill Shopping Center Retail 91,400 Fee 1985
92 Regal Cinemas Center-Lancaster Retail 113,259 Fee 1997
93 Temescal Business Center Mixed Use 196,177 Fee 1929
94 Houston Centre Retail 75,264 Fee 1997
95 Pellcare Nursing Home - Winston-Salem (1G) Healthcare 217 Fee 1948
96 Pellcare Nursing Home - Hickory (1G) Healthcare 120 Fee 1972
97 Vista Mar Apartments Multifamily 242 Fee 1963
98 Cherokee Shopping Center Retail 123,736 Fee 1981
99 Super 8 Geary Street Hotel 101 Fee 1925
100 Cabot Lodge - Tallahassee Hotel 160 Fee 1984
101 Kessel Foods Retail 118,252 Fee 1955
102 South Pointe Apartments Multifamily 256 Fee 1970
103 Wyoming-Enzie Properties (1H) Multifamily 103 Fee 1992
<CAPTION>
Later of Occupancy
Year Year Built/ Rate at Appraised
# Property Name (1) Renovated Year Renovated U/W (4) Value
--- ----------------- --------- -------------- ------- -----
<S> <C> <C> <C> <C> <C>
67 Padonia Commerce Building N/A 1966 100.0% $10,100,000
68 Anaheim Shores Estates N/A 1978 100.0% $9,650,000
69 Tower Square Shopping Center N/A 1988 100.0% $9,000,000
70 West Garrett Place N/A 1988 98.0% $9,400,000
71 Elmonica Court Apartments N/A 1997 97.0% $9,325,000
72 Chesterfield Commons N/A 1989 95.0% $8,500,000
73 Plum Tree Apartments N/A 1986 99.0% $9,120,000
74 Meadow Central Market 1989 1989 97.0% $9,530,000
75 Mount Kisco Square Shopping Center N/A 1990 100.0% $8,800,000
76 Las Brisas Apartments N/A 1985 94.0% $9,600,000
77 Freedom Village Shopping Center 1995 1995 91.0% $8,800,000
78 Waldan Pond & Waldan Chase Apts N/A 1986 96.0% $8,550,000
79 Aspen Park Apartments N/A 1985 100.0% $7,777,000
80 Young Circle Shopping Center 1997 1997 100.0% $7,650,000
81 Sherwood Knoll Comfort Inn 1997 1997 N/A $9,000,000
82 Bridgepoint Apartments N/A 1986 97.0% $7,500,000
83 Holiday Inn Center City N/A 1989 N/A $11,900,000
84 Rainbow Design Center N/A 1988 100.0% $8,000,000
85 Flower Hill Professional Center (1F) N/A 1988 96.0% $6,700,000
86 Flower Hill McDonald's (1F) N/A 1987 100.0% $1,400,000
87 Blue Ash Hotel & Conference Center 1980 1980 N/A $11,000,000
88 Ultra Plaza Shopping Center (3) 1993 1993 100.0% $7,100,000
89 Sinagua Plaza N/A 1990 100.0% $9,100,000
90 Holiday Plaza N/A 1968 93.0% $6,900,000
91 Olde Mill Shopping Center N/A 1985 96.0% $8,000,000
92 Regal Cinemas Center-Lancaster N/A 1997 100.0% $7,900,000
93 Temescal Business Center 1994 1994 80.0% $10,700,000
94 Houston Centre N/A 1997 100.0% $6,560,000
95 Pellcare Nursing Home - Winston-Salem (1G) 1973 1973 89.0% $4,520,000
96 Pellcare Nursing Home - Hickory (1G) N/A 1972 95.0% $3,140,000
97 Vista Mar Apartments 1997 1997 97.0% $6,600,000
98 Cherokee Shopping Center N/A 1981 90.0% $7,500,000
99 Super 8 Geary Street 1995 1995 N/A $7,400,000
100 Cabot Lodge - Tallahassee 1997 1997 N/A $8,100,000
101 Kessel Foods 1997 1997 100.0% $6,750,000
102 South Pointe Apartments 1997 1997 87.0% $6,150,000
103 Wyoming-Enzie Properties (1H) N/A 1992 100.0% $4,058,000
<CAPTION>
Cut-off Date U/W U/W
# Property Name (1) LTV Ratio NCF (5) DSCR (6)
--- ----------------- --------- ------- --------
<S> <C> <C> <C> <C>
67 Padonia Commerce Building 68.8% $864,306 1.39 x
68 Anaheim Shores Estates 72.0% $946,808 1.71 x
69 Tower Square Shopping Center 77.1% $832,170 1.47 x
70 West Garrett Place 72.8% $731,256 1.32 x
71 Elmonica Court Apartments 72.9% $667,060 1.24 x
72 Chesterfield Commons 79.9% $760,561 1.39 x
73 Plum Tree Apartments 73.4% $685,327 1.29 x
74 Meadow Central Market 69.1% $731,691 1.27 x
75 Mount Kisco Square Shopping Center 74.8% $761,704 1.35 x
76 Las Brisas Apartments 68.4% $699,901 1.37 x
77 Freedom Village Shopping Center 73.8% $809,264 1.57 x
78 Waldan Pond & Waldan Chase Apts 75.4% $684,669 1.32 x
79 Aspen Park Apartments 79.6% $628,264 1.25 x
80 Young Circle Shopping Center 79.6% $669,987 1.39 x
81 Sherwood Knoll Comfort Inn 66.9% $755,615 1.40 x
82 Bridgepoint Apartments 80.0% $650,033 1.34 x
83 Holiday Inn Center City 50.4% $801,609 1.52 x
84 Rainbow Design Center 73.1% $668,361 1.39 x
85 Flower Hill Professional Center (1F) 74.6% $573,924 1.35 x
86 Flower Hill McDonald's (1F) 57.1% $118,267 1.52 x
87 Blue Ash Hotel & Conference Center 52.2% $845,606 1.68 x
88 Ultra Plaza Shopping Center (3) 80.0% $661,004 1.59 x
89 Sinagua Plaza 62.1% $756,471 1.62 x
90 Holiday Plaza 81.1% $602,313 1.31 x
91 Olde Mill Shopping Center 68.6% $714,998 1.50 x
92 Regal Cinemas Center-Lancaster 69.2% $764,103 1.36 x
93 Temescal Business Center 49.8% $602,246 1.37 x
94 Houston Centre 79.3% $542,525 1.32 x
95 Pellcare Nursing Home - Winston-Salem (1G) 67.7% $383,826 1.41 x
96 Pellcare Nursing Home - Hickory (1G) 67.7% $274,426 1.45 x
97 Vista Mar Apartments 78.7% $571,077 1.35 x
98 Cherokee Shopping Center 68.5% $592,324 1.31 x
99 Super 8 Geary Street 68.9% $777,170 1.56 x
100 Cabot Lodge - Tallahassee 61.6% $788,933 1.83 x
101 Kessel Foods 73.4% $636,339 1.45 x
102 South Pointe Apartments 80.0% $542,277 1.34 x
103 Wyoming-Enzie Properties (1H) 76.4% $369,519 1.48 x
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Units/
Rooms/ Fee Simple/ Year
# Property Name (1) Property Type Sq. Ft. Leasehold Built
--- ----------------- ------------- ------- --------- -----
<S> <C> <C> <C> <C> <C>
104 Mesa Properties (1H) Multifamily 80 Fee 1988
105 Mervyn's Plaza Retail 42,830 Fee 1986
106 Bartlett Commons Retail 81,926 Fee 1990
107 Crowley Village Shopping Center Retail 106,157 Leasehold 1979
108 Tivoli Condominiums (1I) Multifamily 95 Fee 1972
109 Cross Creek Apartments (1I) Multifamily 35 Fee 1989
110 Tamara Hills Townhomes (1I) Multifamily 40 Fee 1988
111 The Bell Rock Inn Hotel 96 Fee 1970
112 Howard Johnson Hotel Hotel 166 Fee 1966
113 Camelot Apartments Multifamily 287 Fee 1961
114 Canyon Ridge MHP Manufactured Housing 250 Fee 1972
115 Westlake Crossing Shopping Center Retail 24,969 Fee 1997
116 Days Hotel Timonium Hotel 146 Fee 1989
117 Heritage Square Apartments Multifamily 168 Fee 1972
118 Constitution Square Retail 31,975 Fee 1911
119 Oxford Square Retail 59,238 Fee 1987
120 Spring Villas Multifamily 136 Fee 1985
121 Sierra Point Apartments Multifamily 212 Fee 1972
122 Menlo Avenue Office Building Office 27,771 Fee 1965
123 Henderson Marketplace Retail 89,100 Fee 1991
124 Stone Creek Apartments Multifamily 210 Fee 1981
125 Florida Avenue Apartments Multifamily 144 Fee 1968
126 Homewood Village Shopping Center Retail 116,878 Fee 1971
127 Common Wealth Avenue Apartments Multifamily 106 Fee 1899
128 Sunrise Square Shopping Center Retail 38,465 Fee 1985
129 Stein Mart Plaza Retail 60,006 Fee 1995
130 1500 Plaza Office Building Office 62,611 Fee 1965
131 New West Village Apartments Multifamily 200 Fee 1980
132 Brookside Apartments Multifamily 204 Fee 1984
133 Vinyard Gardens Multifamily 137 Fee 1969
134 Hidden Bay Village Apartments Multifamily 184 Fee 1972
135 Raintree Apartments Multifamily 138 Fee 1974
136 The Office Centre at Dunwoody Village Office 80,158 Fee 1974
137 Seminary Plaza Retail 146,840 Fee 1978
138 Longbranch Apartments Multifamily 184 Fee 1984
139 The Market at Merrill Shopping Center Retail 122,204 Fee 1987
140 Comfort Inn - Dothan Hotel 122 Fee 1990
<CAPTION>
Later of Occupancy
Year Year Built/ Rate at Appraised
# Property Name (1) Renovated Year Renovated U/W (4) Value
--- ----------------- --------- -------------- ------- -----
<S> <C> <C> <C> <C> <C>
104 Mesa Properties (1H) N/A 1988 99.0% $2,364,500
105 Mervyn's Plaza N/A 1986 100.0% $6,800,000
106 Bartlett Commons N/A 1990 100.0% $7,200,000
107 Crowley Village Shopping Center 1997 1997 100.0% $6,000,000
108 Tivoli Condominiums (1I) N/A 1972 100.0% $2,625,000
109 Cross Creek Apartments (1I) N/A 1989 100.0% $1,850,000
110 Tamara Hills Townhomes (1I) N/A 1988 98.0% $1,775,000
111 The Bell Rock Inn 1996 1996 N/A $6,500,000
112 Howard Johnson Hotel 1997 1997 N/A $6,760,000
113 Camelot Apartments 1995 1995 98.0% $6,250,000
114 Canyon Ridge MHP 1996 1996 97.0% $6,400,000
115 Westlake Crossing Shopping Center N/A 1997 92.0% $7,600,000
116 Days Hotel Timonium N/A 1989 N/A $8,800,000
117 Heritage Square Apartments 1995 1995 99.0% $5,500,000
118 Constitution Square 1984 1984 89.0% $6,050,000
119 Oxford Square N/A 1987 97.0% $5,600,000
120 Spring Villas N/A 1985 100.0% $5,450,000
121 Sierra Point Apartments 1995 1995 90.0% $5,800,000
122 Menlo Avenue Office Building 1997 1997 100.0% $6,400,000
123 Henderson Marketplace N/A 1991 94.0% $5,840,000
124 Stone Creek Apartments N/A 1981 89.0% $5,400,000
125 Florida Avenue Apartments N/A 1968 95.0% $6,000,000
126 Homewood Village Shopping Center 1996 1996 86.0% $5,500,000
127 Common Wealth Avenue Apartments N/A 1899 100.0% $6,600,000
128 Sunrise Square Shopping Center N/A 1985 100.0% $5,610,000
129 Stein Mart Plaza 1996 1996 100.0% $5,200,000
130 1500 Plaza Office Building 1991 1991 100.0% $6,400,000
131 New West Village Apartments N/A 1980 91.0% $5,500,000
132 Brookside Apartments N/A 1984 91.0% $5,100,000
133 Vinyard Gardens 1996 1996 100.0% $5,100,000
134 Hidden Bay Village Apartments 1994 1994 99.0% $5,000,000
135 Raintree Apartments 1994 1994 94.0% $5,000,000
136 The Office Centre at Dunwoody Village 1992 1992 97.0% $5,625,000
137 Seminary Plaza 1997 1997 100.0% $5,500,000
138 Longbranch Apartments 1995 1995 97.0% $5,600,000
139 The Market at Merrill Shopping Center N/A 1987 93.0% $6,700,000
140 Comfort Inn - Dothan N/A 1990 N/A $8,350,000
<CAPTION>
Cut-off Date U/W U/W
# Property Name (1) LTV Ratio NCF (5) DSCR (6)
--- ----------------- --------- ------- --------
<S> <C> <C> <C> <C>
104 Mesa Properties (1H) 76.1% $210,925 1.37 x
105 Mervyn's Plaza 71.8% $537,611 1.37 x
106 Bartlett Commons 67.3% $579,604 1.41 x
107 Crowley Village Shopping Center 79.9% $532,345 1.39 x
108 Tivoli Condominiums (1I) 80.0% $251,642 1.47 x
109 Cross Creek Apartments (1I) 80.0% $163,919 1.36 x
110 Tamara Hills Townhomes (1I) 60.2% $117,272 1.35 x
111 The Bell Rock Inn 71.3% $584,509 1.42 x
112 Howard Johnson Hotel 68.0% $572,736 1.39 x
113 Camelot Apartments 73.5% $512,563 1.39 x
114 Canyon Ridge MHP 71.6% $477,175 1.27 x
115 Westlake Crossing Shopping Center 59.0% $611,049 1.70 x
116 Days Hotel Timonium 50.2% $865,693 2.29 x
117 Heritage Square Apartments 80.0% $445,000 1.22 x
118 Constitution Square 72.6% $460,944 1.23 x
119 Oxford Square 78.4% $489,361 1.39 x
120 Spring Villas 79.9% $430,582 1.27 x
121 Sierra Point Apartments 74.7% $576,246 1.61 x
122 Menlo Avenue Office Building 67.1% $454,967 1.29 x
123 Henderson Marketplace 73.5% $502,874 1.26 x
124 Stone Creek Apartments 79.0% $497,327 1.47 x
125 Florida Avenue Apartments 69.9% $474,298 1.40 x
126 Homewood Village Shopping Center 76.1% $431,913 1.24 x
127 Common Wealth Avenue Apartments 63.3% $563,679 1.58 x
128 Sunrise Square Shopping Center 74.5% $500,484 1.33 x
129 Stein Mart Plaza 79.9% $451,963 1.36 x
130 1500 Plaza Office Building 63.8% $497,625 1.47 x
131 New West Village Apartments 74.3% $421,954 1.25 x
132 Brookside Apartments 79.6% $465,868 1.41 x
133 Vinyard Gardens 78.8% $421,259 1.33 x
134 Hidden Bay Village Apartments 80.0% $411,812 1.30 x
135 Raintree Apartments 80.0% $417,482 1.32 x
136 The Office Centre at Dunwoody Village 71.1% $460,090 1.41 x
137 Seminary Plaza 72.6% $475,992 1.42 x
138 Longbranch Apartments 71.3% $491,719 1.56 x
139 The Market at Merrill Shopping Center 59.0% $494,863 1.41 x
140 Comfort Inn - Dothan 46.6% $690,557 2.02 x
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Units/
Rooms/ Fee Simple/ Year
# Property Name (1) Property Type Sq. Ft. Leasehold Built
--- ----------------- ------------- ------- --------- -----
<S> <C> <C> <C> <C> <C>
141 Wind River Office Building Office 87,717 Fee 1986
142 Pass Christian Village Retail 65,324 Fee 1995
143 Marriott Courtyard - Dothan Hotel 78 Fee 1996
144 Tivoli Apartments Multifamily 140 Fee 1972
145 Sun Plaza Shopping Center Retail 31,617 Fee 1995
146 Holiday Inn Express - Washington Hotel 103 Fee 1996
147 Mariner Crossing Shopping Center Retail 74,789 Fee 1989
148 Mt. Dora Marketplace Retail 78,762 Fee 1987
149 Aspen Village Apartments Multifamily 220 Fee 1972
150 Sherman Oaks Office 48,526 Fee 1982
151 South Plains Apartments Multifamily 144 Fee 1978
152 Royal Oaks Apartments Multifamily 181 Fee 1974
153 Northwinds Apartment Complex Multifamily 287 Fee 1992
154 The Park Shopping Center Retail 82,542 Fee 1986
155 Lloyd Office Plaza Office 56,369 Fee 1964
156 Bridge Street Lodge (1J) Retail 5,970 Fee 1996
157 P & R Building (1J) Mixed Use 4,310 Fee 1965
158 Holiday Inn - Dothan Hotel 144 Fee 1973
159 Hampton North Townhomes & Apartments Multifamily 127 Fee 1982
160 Holiday Inn - Lake Havasu Hotel 162 Fee 1973
161 University Shoppes Retail 50,797 Fee 1979
162 Galleria Mall Retail 44,340 Fee 1957
163 Park 219 Business Park Industrial 94,672 Fee 1991
164 One Energy Square Retail 127,799 Fee 1957
165 Orchard Plaza Shopping Center Retail 100,751 Fee 1978
166 The Mark Mobile Home Park Manufactured Housing 325 Fee 1965
167 Rivershores Apartments Multifamily 128 Fee 1967
168 Perry Hall Mini-Storage Self Storage 100,700 Fee 1990
169 Governor's Palace, Ridgmar Americana & Ridgmar W. Apart. Multifamily 160 Fee 1963
170 Brookhollow Apartments Multifamily 160 Fee 1971
171 Cedarfield Plaza (1K) Retail 31,402 Fee 1987
172 Greece Mini Storage (1K) Self Storage 62,956 Fee 1985
173 Gander Mountain / JoAnn Fabrics Center Retail 57,658 Fee 1992
174 The Colonnade at Turtle Creek Apartments Multifamily 55 Fee 1983
175 601 Franklin Avenue Medical Building Office 25,427 Fee 1931
176 Valdosta Storage Rollup Self Storage 95,800 Fee 1983
177 All Aboard Mini-Storage Self Storage 47,731 Fee 1994
<CAPTION>
Later of Occupancy
Year Year Built/ Rate at Appraised
# Property Name (1) Renovated Year Renovated U/W (4) Value
--- ----------------- --------- -------------- ------- -----
<S> <C> <C> <C> <C> <C>
141 Wind River Office Building N/A 1986 90.0% $5,250,000
142 Pass Christian Village N/A 1995 100.0% $5,100,000
143 Marriott Courtyard - Dothan N/A 1996 N/A $5,200,000
144 Tivoli Apartments 1994 1994 91.0% $4,750,000
145 Sun Plaza Shopping Center N/A 1995 100.0% $6,800,000
146 Holiday Inn Express - Washington N/A 1996 N/A $6,500,000
147 Mariner Crossing Shopping Center N/A 1989 92.0% $5,200,000
148 Mt. Dora Marketplace N/A 1987 96.0% $4,600,000
149 Aspen Village Apartments 1996 1996 96.0% $4,800,000
150 Sherman Oaks 1997 1997 85.0% $6,000,000
151 South Plains Apartments 1995 1995 98.0% $4,590,000
152 Royal Oaks Apartments 1996 1996 98.0% $4,400,000
153 Northwinds Apartment Complex N/A 1992 88.0% $4,695,000
154 The Park Shopping Center N/A 1986 91.0% $4,400,000
155 Lloyd Office Plaza 1991 1991 100.0% $5,725,000
156 Bridge Street Lodge (1J) N/A 1996 100.0% $4,150,000
157 P & R Building (1J) 1984 1984 100.0% $1,675,000
158 Holiday Inn - Dothan 1992 1992 N/A $4,900,000
159 Hampton North Townhomes & Apartments N/A 1982 95.0% $4,300,000
160 Holiday Inn - Lake Havasu 1997 1997 N/A $4,300,000
161 University Shoppes N/A 1979 95.0% $4,470,000
162 Galleria Mall 1989 1989 100.0% $5,050,000
163 Park 219 Business Park N/A 1991 98.0% $5,050,000
164 One Energy Square 1996 1996 92.0% $4,350,000
165 Orchard Plaza Shopping Center 1995 1995 98.0% $4,100,000
166 The Mark Mobile Home Park 1985 1985 95.0% $6,700,000
167 Rivershores Apartments 1998 1998 93.0% $4,230,000
168 Perry Hall Mini-Storage N/A 1990 92.0% $7,500,000
169 Governor's Palace, Ridgmar Americana & Ridgmar W. Apart. 1996 1996 89.0% $4,200,000
170 Brookhollow Apartments 1996 1996 93.0% $4,200,000
171 Cedarfield Plaza (1K) N/A 1987 81.0% $2,060,000
172 Greece Mini Storage (1K) 1995 1995 92.0% $1,930,000
173 Gander Mountain / JoAnn Fabrics Center 1995 1995 100.0% $4,100,000
174 The Colonnade at Turtle Creek Apartments 1996 1996 100.0% $3,875,000
175 601 Franklin Avenue Medical Building 1991 1991 100.0% $4,150,000
176 Valdosta Storage Rollup 1991 1991 82.0% $3,790,000
177 All Aboard Mini-Storage N/A 1994 95.0% $4,000,000
<CAPTION>
Cut-off Date U/W U/W
# Property Name (1) LTV Ratio NCF (5) DSCR (6)
--- ----------------- --------- ------- --------
<S> <C> <C> <C> <C>
141 Wind River Office Building 73.8% $412,171 1.27 x
142 Pass Christian Village 75.1% $447,212 1.31 x
143 Marriott Courtyard - Dothan 71.2% $456,855 1.41 x
144 Tivoli Apartments 77.9% $381,917 1.30 x
145 Sun Plaza Shopping Center 54.1% $611,016 1.48 x
146 Holiday Inn Express - Washington 56.1% $464,078 1.41 x
147 Mariner Crossing Shopping Center 69.1% $387,618 1.34 x
148 Mt. Dora Marketplace 78.1% $393,963 1.38 x
149 Aspen Village Apartments 74.8% $392,625 1.24 x
150 Sherman Oaks 59.8% $362,253 1.27 x
151 South Plains Apartments 76.5% $424,275 1.50 x
152 Royal Oaks Apartments 79.7% $427,734 1.46 x
153 Northwinds Apartment Complex 74.5% $430,999 1.37 x
154 The Park Shopping Center 79.5% $374,150 1.31 x
155 Lloyd Office Plaza 60.9% $411,724 1.42 x
156 Bridge Street Lodge (1J) 61.1% $363,655 1.28 x
157 P & R Building (1J) 53.4% $140,287 1.40 x
158 Holiday Inn - Dothan 69.2% $425,642 1.43 x
159 Hampton North Townhomes & Apartments 78.8% $358,416 1.33 x
160 Holiday Inn - Lake Havasu 78.6% $466,365 1.54 x
161 University Shoppes 74.6% $430,523 1.33 x
162 Galleria Mall 65.2% $400,489 1.27 x
163 Park 219 Business Park 65.1% $371,514 1.31 x
164 One Energy Square 73.3% $377,002 1.35 x
165 Orchard Plaza Shopping Center 77.7% $352,095 1.26 x
166 The Mark Mobile Home Park 47.5% $641,602 2.19 x
167 Rivershores Apartments 75.1% $354,079 1.40 x
168 Perry Hall Mini-Storage 41.9% $694,521 2.31 x
169 Governor's Palace, Ridgmar Americana & Ridgmar W. Apart. 73.7% $349,323 1.37 x
170 Brookhollow Apartments 73.5% $334,789 1.30 x
171 Cedarfield Plaza (1K) 75.1% $181,684 1.42 x
172 Greece Mini Storage (1K) 77.6% $175,675 1.34 x
173 Gander Mountain / JoAnn Fabrics Center 74.1% $378,918 1.29 x
174 The Colonnade at Turtle Creek Apartments 78.1% $316,279 1.31 x
175 601 Franklin Avenue Medical Building 72.3% $311,981 1.27 x
176 Valdosta Storage Rollup 79.1% $375,549 1.40 x
177 All Aboard Mini-Storage 74.9% $370,864 1.41 x
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Units/
Rooms/ Fee Simple/ Year
# Property Name (1) Property Type Sq. Ft. Leasehold Built
--- ----------------- ------------- ------- --------- -----
<S> <C> <C> <C> <C> <C>
178 Brea Center Retail 56,945 Fee 1967
179 Holiday Inn Express Hotel 61 Fee 1987
180 Seaport Villas Multifamily 100 Fee 1970
181 Park Central Office Park Office 54,908 Fee 1988
182 Drug Emporium Shopping Center Retail 44,065 Fee 1980
183 Langley Place Mixed Use 32,938 Fee 1880
184 Red Lion Apartments Multifamily 102 Fee 1970
185 The Woodlands Shopping Center Retail 31,958 Fee 1982
186 St. Marys Plaza Retail 78,148 Fee 1980
187 Mountain Park Pavilions II Retail 30,741 Fee 1997
188 Shady Banks Shopping Center Retail 51,270 Fee 1989
189 Pavilion in the Park Shopping Center Retail 65,658 Fee 1985
190 Riverview Business Plaza Industrial 85,075 Fee 1979
191 Cumberland Station Shopping Center Retail 43,751 Fee 1993
192 509-511 Amsterdam Avenue Multifamily 24 Fee 1896
193 Westover Pointe Center Retail 64,074 Fee 1986
194 Towne East Village Apartments Multifamily 100 Fee 1983
195 Super Crown Books & LaJolla Patio Retail 30,000 Fee 1997
196 Bent Oak Apartments Multifamily 120 Fee 1980
197 Summit Apartments Multifamily 112 Fee 1985
198 Jefferson Square Mall Retail 124,457 Fee 1980
199 Sandalwood Center Retail 40,886 Fee 1987
200 Encino Village Center Retail 29,220 Fee 1955
201 Willamette Terrace Multifamily 76 Fee 1977
202 4 Hartwell Place Office 47,823 Fee 1974
203 79 Worth Street Multifamily 9 Leasehold 1859
204 Stewart Creek Shopping Center Retail 22,028 Fee 1997
205 Plantation Village Shopping Center Retail 57,525 Fee 1985
206 Lookout Ridge Apartments Multifamily 143 Fee 1985
207 Orangethorpe Beach Shopping Center Retail 20,266 Fee 1982
208 Orchard Supply Retail 42,132 Fee 1992
209 Waterford Village Shopping Center Retail 65,965 Fee 1976
210 Governor's Terrace Multifamily 44 Leasehold 1997
211 Esplanade Mini-Storage Self Storage 73,660 Fee 1984
212 Sterling Industrial Park Industrial 72,800 Fee 1985
213 Mabelvale Plaza Shopping Center Retail 40,020 Fee 1995
214 Woodlawn Village Shopping Center Retail 54,144 Fee 1986
<CAPTION>
Later of Occupancy
Year Year Built/ Rate at Appraised
# Property Name (1) Renovated Year Renovated U/W (4) Value
--- ----------------- --------- -------------- ------- -----
<S> <C> <C> <C> <C> <C>
178 Brea Center 1992 1992 100.0% $5,100,000
179 Holiday Inn Express N/A 1987 N/A $4,600,000
180 Seaport Villas 1995 1995 95.0% $4,160,000
181 Park Central Office Park N/A 1988 100.0% $4,075,000
182 Drug Emporium Shopping Center N/A 1980 95.0% $3,800,000
183 Langley Place 1982 1982 96.0% $4,100,000
184 Red Lion Apartments N/A 1970 100.0% $3,600,000
185 The Woodlands Shopping Center 1997 1997 93.0% $3,750,000
186 St. Marys Plaza N/A 1980 100.0% $4,560,000
187 Mountain Park Pavilions II N/A 1997 92.0% $3,945,000
188 Shady Banks Shopping Center N/A 1989 100.0% $3,500,000
189 Pavilion in the Park Shopping Center N/A 1985 100.0% $3,750,000
190 Riverview Business Plaza 1996 1996 91.0% $3,675,000
191 Cumberland Station Shopping Center N/A 1993 94.0% $3,550,000
192 509-511 Amsterdam Avenue 1997 1997 100.0% $3,700,000
193 Westover Pointe Center N/A 1986 97.0% $3,375,000
194 Towne East Village Apartments N/A 1983 94.0% $3,400,000
195 Super Crown Books & LaJolla Patio N/A 1997 100.0% $4,500,000
196 Bent Oak Apartments 1994 1994 86.0% $3,525,000
197 Summit Apartments N/A 1985 100.0% $3,312,000
198 Jefferson Square Mall N/A 1980 87.0% $4,000,000
199 Sandalwood Center N/A 1987 95.0% $4,550,000
200 Encino Village Center 1974 1974 99.0% $4,900,000
201 Willamette Terrace N/A 1977 100.0% $3,200,000
202 4 Hartwell Place 1986 1986 100.0% $3,900,000
203 79 Worth Street 1997 1997 100.0% $3,200,000
204 Stewart Creek Shopping Center N/A 1997 92.0% $3,400,000
205 Plantation Village Shopping Center N/A 1985 79.0% $3,950,000
206 Lookout Ridge Apartments N/A 1985 96.0% $3,700,000
207 Orangethorpe Beach Shopping Center N/A 1982 100.0% $3,500,000
208 Orchard Supply N/A 1992 100.0% $5,000,000
209 Waterford Village Shopping Center 1996 1996 100.0% $3,350,000
210 Governor's Terrace N/A 1997 100.0% $3,430,000
211 Esplanade Mini-Storage N/A 1984 91.0% $3,900,000
212 Sterling Industrial Park N/A 1985 100.0% $3,500,000
213 Mabelvale Plaza Shopping Center N/A 1995 100.0% $3,100,000
214 Woodlawn Village Shopping Center N/A 1986 98.0% $2,900,000
<CAPTION>
Cut-off Date U/W U/W
# Property Name (1) LTV Ratio NCF (5) DSCR (6)
--- ----------------- --------- ------- --------
<S> <C> <C> <C> <C>
178 Brea Center 58.7% $368,179 1.46 x
179 Holiday Inn Express 65.0% $404,772 1.50 x
180 Seaport Villas 70.9% $340,718 1.44 x
181 Park Central Office Park 72.3% $335,514 1.38 x
182 Drug Emporium Shopping Center 76.3% $358,840 1.53 x
183 Langley Place 70.6% $333,561 1.40 x
184 Red Lion Apartments 79.9% $319,272 1.26 x
185 The Woodlands Shopping Center 75.7% $296,219 1.24 x
186 St. Marys Plaza 62.1% $373,322 1.59 x
187 Mountain Park Pavilions II 71.0% $385,456 1.25 x
188 Shady Banks Shopping Center 80.0% $321,287 1.40 x
189 Pavilion in the Park Shopping Center 74.0% $341,756 1.39 x
190 Riverview Business Plaza 74.8% $305,893 1.29 x
191 Cumberland Station Shopping Center 77.4% $308,954 1.32 x
192 509-511 Amsterdam Avenue 74.3% $321,366 1.47 x
193 Westover Pointe Center 80.0% $323,807 1.41 x
194 Towne East Village Apartments 79.1% $280,885 1.25 x
195 Super Crown Books & LaJolla Patio 59.4% $368,583 1.25 x
196 Bent Oak Apartments 75.2% $269,724 1.28 x
197 Summit Apartments 78.7% $303,043 1.42 x
198 Jefferson Square Mall 65.0% $325,697 1.41 x
199 Sandalwood Center 57.0% $309,767 1.32 x
200 Encino Village Center 52.8% $429,110 1.85 x
201 Willamette Terrace 79.7% $265,364 1.33 x
202 4 Hartwell Place 65.3% $315,701 1.41 x
203 79 Worth Street 79.5% $282,879 1.41 x
204 Stewart Creek Shopping Center 74.7% $289,648 1.32 x
205 Plantation Village Shopping Center 64.2% $312,492 1.33 x
206 Lookout Ridge Apartments 67.6% $318,181 1.58 x
207 Orangethorpe Beach Shopping Center 71.4% $283,687 1.35 x
208 Orchard Supply 49.9% $405,938 1.50 x
209 Waterford Village Shopping Center 74.4% $300,297 1.37 x
210 Governor's Terrace 71.9% $241,210 1.22 x
211 Esplanade Mini-Storage 62.6% $315,641 1.47 x
212 Sterling Industrial Park 68.6% $284,543 1.35 x
213 Mabelvale Plaza Shopping Center 77.4% $269,117 1.30 x
214 Woodlawn Village Shopping Center 80.0% $241,238 1.29 x
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Units/
Rooms/ Fee Simple/ Year
# Property Name (1) Property Type Sq. Ft. Leasehold Built
--- ----------------- ------------- ------- --------- -----
<S> <C> <C> <C> <C> <C>
215 Bolton-Moore's Mill Shopping Center Retail 78,916 Fee 1962
216 Omni Plaza Shopping Center Retail 36,328 Fee 1950
217 Shield Street Plaza Retail 72,572 Fee 1981
218 Viewmont Estates Mobile Home Park Manufactured Housing 97 Fee 1990
219 1731, 1741 and 1751 Washington Street Multifamily 48 Fee 1958
220 Penninsula Professional Building Office 29,885 Fee 1989
221 Creekside Mobile Estates Manufactured Housing 116 Fee 1985
222 Alexandria Square Retail 39,522 Fee 1995
223 Advo Building Office 18,865 Fee 1991
224 White Pines Plaza Retail 48,000 Fee 1989
225 North Shore Estates Manufactured Housing 91 Fee 1991
226 River's Edge Apartments Multifamily 160 Fee 1968
227 109-111 Grant Avenue Office 34,570 Fee 1964
228 Royal Oaks Senior Community Park Manufactured Housing 94 Fee 1983
229 Parker Marketplace Phase II Retail 20,555 Fee 1997
230 Summer Creek Apartments Multifamily 120 Fee 1987
231 Robarts Mobile Home Park Manufactured Housing 267 Fee 1971
232 Woodcrest Townhome Apartments Multifamily 78 Fee 1979
233 Planters Trace Apartments Multifamily 96 Fee 1972
234 Stone Oak Apartments Multifamily 95 Fee 1974
235 Hidden Hills Mobile Home Park Manufactured Housing 220 Fee 1983
236 Tiger Mart Convenience Store 6,534 Fee 1987
237 Quail Hollow Business Park Office 42,012 Fee 1980
238 Campus Square Apartments Multifamily 194 Fee 1964
239 Bridgeport Professional Building Office 26,621 Fee 1978
240 Park Lane Terrace Apartments Multifamily 152 Fee 1968
241 Brigham's Landing Shopping Center Retail 38,885 Fee 1989
242 Boulevard Shoppes II Retail 40,508 Fee 1986
243 The Clusters Apartments Multifamily 282 Fee 1986
244 Fairfield Inn - Dothan Hotel 63 Fee 1993
245 Valley Manor Manufactured Housing 96 Fee 1967
246 Sunrise Village Apartments Multifamily 48 Fee 1966
247 Ridgewood Apartments Multifamily 88 Fee 1987
248 Bella Vista Terrace Multifamily 78 Fee 1969
249 Ramada Limited Hotel 72 Fee 1970
250 Secluded Oaks Villas Apartments Multifamily 52 Fee 1985
251 Colonial Mobile Home Park Manufactured Housing 123 Fee 1977
<CAPTION>
Later of Occupancy
Year Year Built/ Rate at Appraised
# Property Name (1) Renovated Year Renovated U/W (4) Value
--- ----------------- --------- -------------- ------- -----
<S> <C> <C> <C> <C> <C>
215 Bolton-Moore's Mill Shopping Center N/A 1962 88.0% $2,900,000
216 Omni Plaza Shopping Center 1995 1995 96.0% $3,500,000
217 Shield Street Plaza N/A 1981 89.0% $4,000,000
218 Viewmont Estates Mobile Home Park N/A 1990 100.0% $3,400,000
219 1731, 1741 and 1751 Washington Street 1997 1997 96.0% $2,750,000
220 Penninsula Professional Building N/A 1989 100.0% $2,800,000
221 Creekside Mobile Estates N/A 1985 99.0% $3,415,000
222 Alexandria Square N/A 1995 100.0% $3,355,000
223 Advo Building N/A 1991 91.0% $2,800,000
224 White Pines Plaza N/A 1989 100.0% $2,700,000
225 North Shore Estates 1994 1994 100.0% $3,050,000
226 River's Edge Apartments 1997 1997 100.0% $3,075,000
227 109-111 Grant Avenue 1996 1996 99.0% $3,050,000
228 Royal Oaks Senior Community Park N/A 1983 97.0% $3,640,000
229 Parker Marketplace Phase II N/A 1997 91.0% $2,950,000
230 Summer Creek Apartments 1995 1995 99.0% $2,575,000
231 Robarts Mobile Home Park 1994 1994 93.0% $2,720,000
232 Woodcrest Townhome Apartments N/A 1979 100.0% $2,700,000
233 Planters Trace Apartments N/A 1972 89.0% $2,500,000
234 Stone Oak Apartments N/A 1974 96.0% $2,600,000
235 Hidden Hills Mobile Home Park N/A 1983 94.0% $3,025,000
236 Tiger Mart 1996 1996 100.0% $2,425,000
237 Quail Hollow Business Park N/A 1980 96.0% $2,700,000
238 Campus Square Apartments 1992 1992 95.0% $2,900,000
239 Bridgeport Professional Building N/A 1978 93.0% $2,850,000
240 Park Lane Terrace Apartments 1997 1997 97.0% $2,600,000
241 Brigham's Landing Shopping Center N/A 1989 100.0% $3,800,000
242 Boulevard Shoppes II N/A 1986 95.0% $2,910,000
243 The Clusters Apartments N/A 1986 98.0% $5,000,000
244 Fairfield Inn - Dothan N/A 1993 N/A $3,000,000
245 Valley Manor N/A 1967 100.0% $2,620,000
246 Sunrise Village Apartments N/A 1966 100.0% $2,925,000
247 Ridgewood Apartments N/A 1987 93.0% $2,400,000
248 Bella Vista Terrace 1994 1994 100.0% $2,600,000
249 Ramada Limited 1996 1996 N/A $3,150,000
250 Secluded Oaks Villas Apartments N/A 1985 75.0% $2,680,000
251 Colonial Mobile Home Park N/A 1977 100.0% $3,100,000
<CAPTION>
Cut-off Date U/W U/W
# Property Name (1) LTV Ratio NCF (5) DSCR (6)
--- ----------------- --------- ------- --------
<S> <C> <C> <C> <C>
215 Bolton-Moore's Mill Shopping Center 79.3% $249,606 1.29 x
216 Omni Plaza Shopping Center 65.7% $260,943 1.38 x
217 Shield Street Plaza 57.2% $269,686 1.32 x
218 Viewmont Estates Mobile Home Park 66.1% $263,547 1.46 x
219 1731, 1741 and 1751 Washington Street 80.0% $243,168 1.29 x
220 Penninsula Professional Building 78.5% $243,501 1.34 x
221 Creekside Mobile Estates 64.3% $251,092 1.42 x
222 Alexandria Square 64.6% $289,280 1.21 x
223 Advo Building 76.7% $236,948 1.32 x
224 White Pines Plaza 78.4% $249,526 1.48 x
225 North Shore Estates 68.8% $233,806 1.39 x
226 River's Edge Apartments 68.2% $272,878 1.57 x
227 109-111 Grant Avenue 68.7% $204,873 1.20 x
228 Royal Oaks Senior Community Park 57.5% $273,070 1.60 x
229 Parker Marketplace Phase II 70.5% $238,292 1.39 x
230 Summer Creek Apartments 80.0% $217,491 1.33 x
231 Robarts Mobile Home Park 75.3% $206,146 1.27 x
232 Woodcrest Townhome Apartments 74.1% $230,965 1.25 x
233 Planters Trace Apartments 79.9% $206,811 1.33 x
234 Stone Oak Apartments 76.8% $230,595 1.46 x
235 Hidden Hills Mobile Home Park 66.0% $204,041 1.30 x
236 Tiger Mart 82.3% $502,037 2.10 x
237 Quail Hollow Business Park 73.9% $261,191 1.47 x
238 Campus Square Apartments 68.8% $255,596 1.45 x
239 Bridgeport Professional Building 70.0% $229,344 1.31 x
240 Park Lane Terrace Apartments 76.7% $245,062 1.55 x
241 Brigham's Landing Shopping Center 52.4% $322,608 1.83 x
242 Boulevard Shoppes II 68.4% $247,494 1.28 x
243 The Clusters Apartments 39.8% $413,919 1.93 x
244 Fairfield Inn - Dothan 66.1% $244,932 1.41 x
245 Valley Manor 74.3% $232,050 1.31 x
246 Sunrise Village Apartments 66.4% $257,221 1.50 x
247 Ridgewood Apartments 79.2% $221,498 1.44 x
248 Bella Vista Terrace 73.0% $194,612 1.28 x
249 Ramada Limited 60.3% $241,252 1.41 x
250 Secluded Oaks Villas Apartments 70.8% $203,052 1.31 x
251 Colonial Mobile Home Park 61.0% $214,528 1.29 x
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Units/
Rooms/ Fee Simple/ Year
# Property Name (1) Property Type Sq. Ft. Leasehold Built
--- ----------------- ------------- ------- --------- -----
<S> <C> <C> <C> <C> <C>
252 Plaza North Medical Building Office 23,478 Fee 1979
253 Camelot Apartments Multifamily 100 Fee 1969
254 Northlake Quadrangle Retail 77,621 Fee 1974
255 Gordon Street Apartments Multifamily 55 Fee 1920
256 Northgate Apartments Multifamily 72 Fee 1973
257 Sepulveda Crest Apartments Multifamily 71 Fee 1972
258 Morningstar Mini-Storage Self Storage 112,619 Fee 1992
259 Chateaux Verde Apartments Multifamily 66 Fee 1972
260 Homestead Corner Shopping Center Retail 19,075 Fee 1988
261 Lake Villa Apartments Multifamily 64 Fee 1986
262 F & H Warehouse Industrial 180,383 Fee 1965
263 Avian Plaza Shopping Center Retail 24,776 Fee 1985
264 Port Orchard Mini Storage Self Storage 41,785 Fee 1985
265 Sequoia Grove Apartments Multifamily 34 Fee 1970
266 The Miller Center Retail 67,401 Fee 1962
267 Emerald Park Apartments Multifamily 62 Fee 1990
268 Rancho San Diego Town & Country Retail 10,259 Fee 1997
269 French Quarters East Apartments Multifamily 70 Fee 1980
270 The Forest Apartments Multifamily 113 Fee 1966
271 Oakhill Apartments Multifamily 73 Fee 1975
272 STOR-N-LOCK Self Storage 61,200 Fee 1977
273 Autumn Ridge Apartments Multifamily 116 Fee 1973
274 701 Franklin Center Retail 22,869 Fee 1994
275 Savoy Condominiums Multifamily 62 Fee 1984
276 Meriden East Apartments Multifamily 66 Fee 1972
277 Hyde Park Mobile Estates Manufactured Housing 118 Leasehold 1965
278 Courtyard Plaza Retail 15,620 Fee 1985
279 Tradewinds Apartments Multifamily 84 Fee 1963
280 Regency Manor Apartments Multifamily 97 Fee 1984
281 Hood Chalet Mobile Estates Manufactured Housing 82 Fee 1973
282 Mauna Kea Apartments Multifamily 30 Fee 1964
283 Deer Creek Apartments Multifamily 48 Fee 1992
284 Evergreen Place Condominiums Multifamily 54 Fee 1984
285 Autumn Creek Apartments Multifamily 82 Fee 1969
286 Midtown at Main Retail 26,146 Fee 1958
287 Park Place Center Retail 21,791 Fee 1992
288 International Self Storage Self Storage 49,625 Fee 1995
<CAPTION>
Later of Occupancy
Year Year Built/ Rate at Appraised
# Property Name (1) Renovated Year Renovated U/W (4) Value
--- ----------------- --------- -------------- ------- -----
<S> <C> <C> <C> <C> <C>
252 Plaza North Medical Building N/A 1979 77.0% $2,460,000
253 Camelot Apartments 1996 1996 86.0% $2,400,000
254 Northlake Quadrangle N/A 1974 71.0% $2,600,000
255 Gordon Street Apartments N/A 1920 98.0% $2,800,000
256 Northgate Apartments 1979 1979 97.0% $3,030,000
257 Sepulveda Crest Apartments 1996 1996 90.0% $2,260,000
258 Morningstar Mini-Storage N/A 1992 64.0% $3,850,000
259 Chateaux Verde Apartments 1994 1994 99.0% $2,600,000
260 Homestead Corner Shopping Center N/A 1988 100.0% $2,320,000
261 Lake Villa Apartments N/A 1986 97.0% $2,270,000
262 F & H Warehouse 1976 1976 100.0% $4,200,000
263 Avian Plaza Shopping Center N/A 1985 100.0% $2,300,000
264 Port Orchard Mini Storage 1993 1993 86.0% $2,380,000
265 Sequoia Grove Apartments 1994 1994 100.0% $2,250,000
266 The Miller Center N/A 1962 100.0% $2,300,000
267 Emerald Park Apartments N/A 1990 97.0% $2,000,000
268 Rancho San Diego Town & Country N/A 1997 100.0% $2,200,000
269 French Quarters East Apartments N/A 1980 94.0% $1,875,000
270 The Forest Apartments 1993 1993 89.0% $2,000,000
271 Oakhill Apartments N/A 1975 92.0% $1,900,000
272 STOR-N-LOCK 1981 1981 85.0% $2,155,000
273 Autumn Ridge Apartments N/A 1973 93.0% $2,000,000
274 701 Franklin Center N/A 1994 100.0% $1,950,000
275 Savoy Condominiums N/A 1984 97.0% $2,960,000
276 Meriden East Apartments N/A 1972 95.0% $2,000,000
277 Hyde Park Mobile Estates N/A 1965 92.0% $2,730,000
278 Courtyard Plaza N/A 1985 100.0% $2,400,000
279 Tradewinds Apartments 1994 1994 85.0% $1,775,000
280 Regency Manor Apartments 1994 1994 94.0% $2,280,000
281 Hood Chalet Mobile Estates 1996 1996 96.0% $2,475,000
282 Mauna Kea Apartments N/A 1964 97.0% $1,795,000
283 Deer Creek Apartments N/A 1992 94.0% $1,990,000
284 Evergreen Place Condominiums N/A 1984 98.0% $1,650,000
285 Autumn Creek Apartments 1991 1991 97.0% $1,675,000
286 Midtown at Main 1984 1984 100.0% $1,650,000
287 Park Place Center N/A 1992 94.0% $1,860,000
288 International Self Storage N/A 1995 78.0% $2,140,000
<CAPTION>
Cut-off Date U/W U/W
# Property Name (1) LTV Ratio NCF (5) DSCR (6)
--- ----------------- --------- ------- --------
<S> <C> <C> <C> <C>
252 Plaza North Medical Building 74.1% $201,800 1.28 x
253 Camelot Apartments 75.4% $179,386 1.20 x
254 Northlake Quadrangle 69.2% $245,081 1.52 x
255 Gordon Street Apartments 64.2% $186,145 1.30 x
256 Northgate Apartments 59.3% $209,870 1.38 x
257 Sepulveda Crest Apartments 79.4% $182,123 1.26 x
258 Morningstar Mini-Storage 45.3% $295,754 1.79 x
259 Chateaux Verde Apartments 67.0% $226,701 1.50 x
260 Homestead Corner Shopping Center 73.6% $194,701 1.32 x
261 Lake Villa Apartments 74.8% $185,763 1.35 x
262 F & H Warehouse 40.1% $350,483 1.85 x
263 Avian Plaza Shopping Center 71.7% $185,033 1.31 x
264 Port Orchard Mini Storage 69.3% $203,098 1.39 x
265 Sequoia Grove Apartments 72.3% $169,207 1.33 x
266 The Miller Center 69.5% $229,279 1.46 x
267 Emerald Park Apartments 79.9% $172,386 1.35 x
268 Rancho San Diego Town & Country 72.5% $205,531 1.53 x
269 French Quarters East Apartments 82.7% $183,615 1.47 x
270 The Forest Apartments 77.0% $166,005 1.36 x
271 Oakhill Apartments 80.0% $194,150 1.61 x
272 STOR-N-LOCK 69.5% $196,547 1.52 x
273 Autumn Ridge Apartments 74.6% $195,380 1.50 x
274 701 Franklin Center 74.6% $177,063 1.37 x
275 Savoy Condominiums 48.0% $206,022 1.76 x
276 Meriden East Apartments 70.8% $173,383 1.39 x
277 Hyde Park Mobile Estates 51.4% $248,903 1.24 x
278 Courtyard Plaza 58.3% $212,905 1.76 x
279 Tradewinds Apartments 78.9% $146,173 1.32 x
280 Regency Manor Apartments 61.4% $159,935 1.39 x
281 Hood Chalet Mobile Estates 56.5% $156,212 1.28 x
282 Mauna Kea Apartments 77.8% $148,726 1.29 x
283 Deer Creek Apartments 66.8% $141,705 1.27 x
284 Evergreen Place Condominiums 79.7% $147,137 1.36 x
285 Autumn Creek Apartments 75.7% $142,531 1.30 x
286 Midtown at Main 74.8% $157,624 1.34 x
287 Park Place Center 65.9% $155,990 1.43 x
288 International Self Storage 56.0% $159,023 1.51 x
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Units/
Rooms/ Fee Simple/ Year
# Property Name (1) Property Type Sq. Ft. Leasehold Built
--- ----------------- ------------- ------- --------- -----
<S> <C> <C> <C> <C> <C>
289 Villa Catalina Apartments Multifamily 42 Fee 1964
290 Loc-'N-Stor Self-Storage Self Storage 26,480 Fee 1977
291 Rancho Villa Manufactured Housing 55 Fee 1960
292 Timberline Mobile Home Park Manufactured Housing 108 Fee 1975
293 Timberland Ridge Apartments Multifamily 46 Fee 1970
294 Leewood Apartments Multifamily 88 Fee 1971
295 Glen Mark Apartments Multifamily 72 Fee 1976
296 Pinecroft Mobile Home Park Manufactured Housing 142 Fee 1968
297 Eckerds Drugstore Retail 11,200 Fee 1996
298 Eastern Promenade Apartments Multifamily 32 Fee 1942
299 Belle Meade Apartments Multifamily 40 Fee 1971
300 Riverview Plaza II Retail 15,631 Fee 1988
301 Westmoreland Warehouse Mixed Use 46,510 Fee 1969
Total/Weighted Average:
Maximum:
Minimum:
<CAPTION>
Later of Occupancy
Year Year Built/ Rate at Appraised
# Property Name (1) Renovated Year Renovated U/W (4) Value
--- ----------------- --------- -------------- ------- -----
<S> <C> <C> <C> <C> <C>
289 Villa Catalina Apartments N/A 1964 100.0% $1,560,000
290 Loc-'N-Stor Self-Storage 1987 1987 98.0% $1,630,000
291 Rancho Villa N/A 1960 100.0% $1,475,000
292 Timberline Mobile Home Park N/A 1975 100.0% $1,770,000
293 Timberland Ridge Apartments N/A 1970 100.0% $1,520,000
294 Leewood Apartments 1996 1996 99.0% $1,500,000
295 Glen Mark Apartments 1996 1996 96.0% $1,425,000
296 Pinecroft Mobile Home Park N/A 1968 100.0% $2,370,000
297 Eckerds Drugstore N/A 1996 100.0% $3,050,000
298 Eastern Promenade Apartments N/A 1942 94.0% $1,200,000
299 Belle Meade Apartments 1997 1997 90.0% $1,275,000
300 Riverview Plaza II N/A 1988 100.0% $1,650,000
301 Westmoreland Warehouse N/A 1969 100.0% $1,000,000
Total/Weighted Average: 1988 96.5% $2,283,791,500
================================================
Maximum: 1998 100.0% $151,800,000
Minimum: 1899 64.0% $1,000,000
<CAPTION>
Cut-off Date U/W U/W
# Property Name (1) LTV Ratio NCF (5) DSCR (6)
--- ----------------- --------- ------- --------
<S> <C> <C> <C> <C>
289 Villa Catalina Apartments 75.0% $133,099 1.41 x
290 Loc-'N-Stor Self-Storage 69.0% $144,197 1.44 x
291 Rancho Villa 74.6% $124,548 1.28 x
292 Timberline Mobile Home Park 62.1% $166,075 1.75 x
293 Timberland Ridge Apartments 72.2% $146,163 1.56 x
294 Leewood Apartments 73.1% $123,805 1.37 x
295 Glen Mark Apartments 71.9% $127,380 1.54 x
296 Pinecroft Mobile Home Park 42.2% $178,114 2.06 x
297 Eckerds Drugstore 32.6% $255,665 2.56 x
298 Eastern Promenade Apartments 79.8% $109,569 1.33 x
299 Belle Meade Apartments 68.9% $98,588 1.37 x
300 Riverview Plaza II 47.5% $180,343 2.69 x
301 Westmoreland Warehouse 57.3% $76,620 1.38 x
Total/Weighted Average: 69.9% $188,993,532 1.44 x
======================================
Maximum: 82.7% $13,177,773 2.69 x
Minimum: 32.6% $76,620 1.20 x
</TABLE>
<PAGE>
(1A) The Mortgage Loans secured by Raritan Plaza I and Raritan Center Industrial
Portfolio, respectively, are cross-collateralized and cross-defaulted.
(1B) The Mortgage Loans secured by Holiday Inn - Jacksonville Airport and
Courtyard by Marriott, respectively, are cross-collateralized and
cross-defaulted.
(1C) The Mortgage Loans secured by Courtyard by Marriott - Pensacola, Courtyard
by Marriott - Tuscaloosa, Fairfield Inn - Pensacola, Fairfield Inn -
Birmingham and Fairfield Inn - Tuscaloosa, respectively, are
cross-collateralized and cross-defaulted.
(1D) The Mortgage Loans secured by Royal Plaza Hotel - Marlborough and Royal
Plaza Hotel- Fitchburg, respectively, are cross-collateralized and
cross-defaulted.
(1E) The Mortgage Loans secured by Highland Pavilion Shopping Center and
Highland Pavilion Cinema, respectively, are cross-collateralized and
cross-defaulted.
(1F) The Mortgage Loans secured by Flower Hill Professional Center and Flower
Hill McDonald's, respectively, are cross-collateralized and
cross-defaulted.
(1G) The Mortgage Loans secured by Pellcare Nursing Home - Winston-Salem and
Pellcare Nursing Home - Hickory, respectively, are cross-collateralized and
cross-defaulted.
(1H) The Mortgage Loans secured by Wyoming-Enzie Properties and Mesa Properties,
respectively, are cross-collateralized and cross-defaulted.
(1I) The Mortgage Loans secured by Tivoli Condominiums, Cross Creek Apartments
and Tamara Hills Townhomes, respectively, are cross-collateralized and
cross-defaulted.
(1J) The Mortgage Loans secured by Bridge Street Lodge and P&R Building,
respectively, are cross-collateralized and cross-defaulted.
(1K) The Mortgage Loans secured by Cedarfield Plaza and Greece Mini Storage,
respectively, are cross-collateralized and cross-defaulted.
(2) Summer Cove Apartments has an interest only period of 24 months and
will begin to amortize over a 336 month term.
(3) Ultra Plaza Shopping Center has an interest only period of 24 months
and will begin to amortize over a 336 month term.
(4) Does not include any Mortgage Loans secured by hotel properties.
(5) Underwriting NCF reflects the Net Cash Flow after U/W Replacement
Reserves, U/W LC's and TI's and FF&E.
(6) In the case of Summer Cove Apartments and Ultra Plaza Shopping Center
the U/W DSCR is based on the amount of the monthly payments in effect
during the interest only period.
<PAGE>
Characteristics of the Mortgage Loans
<TABLE>
<CAPTION>
Percentage of
Mortgage Loan Cut-off Date Initial
# Property Name (1) Seller Balance (4) Pool Balance
--- ----------------- ------ ----------- ------------
<S> <C> <C> <C> <C>
1 The Rivergate Apartments GE Capital Access $94,602,208 6.0%
2 Raritan Plaza I (1A) Column $27,484,832 1.8%
3 Raritan Center Industrial Portfolio (1A) Column $24,486,486 1.6%
4 Resurgens Plaza GE Capital Access $32,859,589 2.1%
5 The Camargue GE Capital Access $29,900,164 1.9%
6 Casa Arroyo Apartments GE Capital Access $23,984,720 1.5%
7 Ballena Village Apartments GE Capital Access $21,954,541 1.4%
8 Holiday Inn - Jacksonville Airport (1B) Column $17,361,592 1.1%
9 Courtyard by Marriott (1B) Column $4,589,846 0.3%
10 Magnolia Lake Apartments GE Capital Access $20,500,000 1.3%
11 Park Terrace GE Capital Access $19,966,398 1.3%
12 Autumn Chase Apartments GE Capital Access $19,472,137 1.2%
13 Embassy Square Suites Column $17,899,848 1.1%
14 101 Commerce Drive Column $16,944,006 1.1%
15 Courtyard by Marriott - Pensacola (1C) Column $5,194,990 0.3%
16 Courtyard by Marriott - Tuscaloosa (1C) Column $3,866,230 0.2%
17 Fairfield Inn - Pensacola (1C) Column $3,116,994 0.2%
18 Fairfield Inn - Birmingham (1C) Column $2,377,707 0.2%
19 Fairfield Inn - Tuscaloosa (1C) Column $1,928,120 0.1%
20 Doctors Medical Complex GE Capital Access $15,991,795 1.0%
21 Chandler Place Apartments GE Capital Access $15,690,004 1.0%
22 Summer Cove Apartments (2) Column $15,250,000 1.0%
23 Lake & Racquet Apartments GE Capital Access $14,979,511 1.0%
24 Stone Ends Apartments GE Capital Access $14,219,052 0.9%
25 Canyon Club Apartments GE Capital Access $13,558,248 0.9%
26 BLN Office Park II Column $13,548,266 0.9%
27 Royal Plaza Hotel - Marlborough (1D) Column $10,478,542 0.7%
28 Royal Plaza Hotel - Fitchburg (1D) Column $2,594,687 0.2%
29 Hannaford Plaza AKA Rotterdam Mall GE Capital Access $12,993,015 0.8%
<CAPTION>
Original Remaining Original Remaining
Amortization Amortization Term to Stated Term to Stated
Term Term Maturity Maturity Mortgage
# Property Name (1) (months) (months) (months) (5) (months) (5) Rate
--- ----------------- -------- -------- ------------ -------------- ------
<S> <C> <C> <C> <C> <C> <C>
1 The Rivergate Apartments 360 355 120 115 6.950%
2 Raritan Plaza I (1A) 360 359 120 119 7.400%
3 Raritan Center Industrial Portfolio (1A) 360 359 120 119 7.400%
4 Resurgens Plaza 360 355 120 115 6.650%
5 The Camargue 300 297 300 297 7.010%
6 Casa Arroyo Apartments 360 359 120 119 6.940%
7 Ballena Village Apartments 360 357 120 117 7.030%
8 Holiday Inn - Jacksonville Airport (1B) 300 298 120 118 7.180%
9 Courtyard by Marriott (1B) 300 298 120 118 7.180%
10 Magnolia Lake Apartments 360 360 120 120 6.860%
11 Park Terrace 360 358 120 118 6.890%
12 Autumn Chase Apartments 360 358 180 178 7.060%
13 Embassy Square Suites 300 295 120 115 7.500%
14 101 Commerce Drive 360 356 120 116 7.030%
15 Courtyard by Marriott - Pensacola (1C) 300 299 120 119 7.350%
16 Courtyard by Marriott - Tuscaloosa (1C) 300 299 120 119 7.300%
17 Fairfield Inn - Pensacola (1C) 300 299 120 119 7.350%
18 Fairfield Inn - Birmingham (1C) 300 299 120 119 7.350%
19 Fairfield Inn - Tuscaloosa (1C) 300 299 120 119 7.300%
20 Doctors Medical Complex 360 359 180 179 7.620%
21 Chandler Place Apartments 360 359 120 119 6.940%
22 Summer Cove Apartments (2) 336 336 120 114 7.130%
23 Lake & Racquet Apartments 360 358 180 178 7.240%
24 Stone Ends Apartments 360 358 120 118 6.940%
25 Canyon Club Apartments 360 359 120 119 6.720%
26 BLN Office Park II 360 355 180 175 7.180%
27 Royal Plaza Hotel - Marlborough (1D) 300 298 120 118 7.590%
28 Royal Plaza Hotel - Fitchburg (1D) 300 298 120 118 7.590%
29 Hannaford Plaza AKA Rotterdam Mall 360 359 120 119 7.480%
<CAPTION>
First
Monthly Payment Maturity
# Property Name (1) Payment Date Date ARD (6)
--- ----------------- ------- ---- ---- -------
<S> <C> <C> <C> <C> <C>
1 The Rivergate Apartments $628,851 2/1/98 1/1/28 1/1/08
2 Raritan Plaza I (1A) $190,404 6/1/98 5/1/08
3 Raritan Center Industrial Portfolio (1A) $169,633 6/1/98 5/1/08
4 Resurgens Plaza $211,848 2/1/98 1/1/28 1/1/08
5 The Camargue $212,225 4/1/98 3/1/23
6 Casa Arroyo Apartments $158,707 6/1/98 5/1/28 5/1/08
7 Ballena Village Apartments $146,810 4/1/98 3/1/28 3/1/08
8 Holiday Inn - Jacksonville Airport (1B) $124,985 5/1/98 4/1/23 4/1/08
9 Courtyard by Marriott (1B) $33,042 5/1/98 4/1/23 4/1/08
10 Magnolia Lake Apartments $134,465 7/1/98 6/1/28 6/1/08
11 Park Terrace $131,586 5/1/98 4/1/28 4/1/08
12 Autumn Chase Apartments $130,521 5/1/98 4/1/28 4/1/13
13 Embassy Square Suites $133,018 2/1/98 1/1/23 1/1/08
14 101 Commerce Drive $113,445 3/1/98 2/1/08
15 Courtyard by Marriott - Pensacola (1C) $37,922 6/1/98 5/1/08
16 Courtyard by Marriott - Tuscaloosa (1C) $28,097 6/1/98 5/1/08
17 Fairfield Inn - Pensacola (1C) $22,753 6/1/98 5/1/08
18 Fairfield Inn - Birmingham (1C) $17,356 6/1/98 5/1/08
19 Fairfield Inn - Tuscaloosa (1C) $14,012 6/1/98 5/1/08
20 Doctors Medical Complex $113,192 6/1/98 5/1/28 5/1/13
21 Chandler Place Apartments $103,821 6/1/98 5/1/28 5/1/08
22 Summer Cove Apartments (2) $104,949 1/1/98 12/1/07
23 Lake & Racquet Apartments $102,216 5/1/98 4/1/28 4/1/13
24 Stone Ends Apartments $94,166 5/1/98 4/1/28 4/1/08
25 Canyon Club Apartments $87,744 6/1/98 5/1/28 5/1/08
26 BLN Office Park II $92,131 2/1/98 1/1/13
27 Royal Plaza Hotel - Marlborough (1D) $78,210 5/1/98 4/1/23 4/1/08
28 Royal Plaza Hotel - Fitchburg (1D) $19,366 5/1/98 4/1/23 4/1/08
29 Hannaford Plaza AKA Rotterdam Mall $90,720 6/1/98 5/1/28 5/1/08
<CAPTION>
Defeasance
Prepayment Provision Option
# Property Name (1) as of Origination (Yes/No)(7)
--- ----------------- ----------------- -----------
<S> <C> <C> <C>
1 The Rivergate Apartments L (9.75), O (0.25) Yes
2 Raritan Plaza I (1A) L (9.5), O (0.5) Yes
3 Raritan Center Industrial Portfolio (1A) L (9.5), O (0.5) Yes
4 Resurgens Plaza L (9.75), O (0.25) Yes
5 The Camargue L (24.75), O (0.25) Yes
6 Casa Arroyo Apartments 3% (2.92), 2% (3), 1% (2), O (2.08) No
7 Ballena Village Apartments L (9.75), O (0.25) Yes
8 Holiday Inn - Jacksonville Airport (1B) L (9.5), O (0.5) Yes
9 Courtyard by Marriott (1B) L (9.5), O (0.5) Yes
10 Magnolia Lake Apartments L (9.67), O (0.33) Yes
11 Park Terrace L (9.75), O (0.25) Yes
12 Autumn Chase Apartments L (14.67), O (0.33) Yes
13 Embassy Square Suites L (9.5), O (0.5) Yes
14 101 Commerce Drive L (10) Yes
15 Courtyard by Marriott - Pensacola (1C) L (9.5), O (0.5) Yes
16 Courtyard by Marriott - Tuscaloosa (1C) L (9.5), O (0.5) Yes
17 Fairfield Inn - Pensacola (1C) L (9.5), O (0.5) Yes
18 Fairfield Inn - Birmingham (1C) L (9.5), O (0.5) Yes
19 Fairfield Inn - Tuscaloosa (1C) L (9.5), O (0.5) Yes
20 Doctors Medical Complex L (9.92), YM 1% (4.83), O (0.25) No
21 Chandler Place Apartments L (9.75), O (0.25) Yes
22 Summer Cove Apartments (2) L (9.5), O (0.5) Yes
23 Lake & Racquet Apartments L (14.67), O (0.33) Yes
24 Stone Ends Apartments L (3.92), YM 1% (5.75), O (0.33) No
25 Canyon Club Apartments 5% (3.92), 4% (1), 3% (1), 2% (1), 1% (1), O (2.08) No
26 BLN Office Park II L (14.5), O (0.5) Yes
27 Royal Plaza Hotel - Marlborough (1D) L (9.5), O (0.5) Yes
28 Royal Plaza Hotel - Fitchburg (1D) L (9.5), O (0.5) Yes
29 Hannaford Plaza AKA Rotterdam Mall L (9.67), O (0.33) Yes
</TABLE>
<PAGE>
Characteristics of the Mortgage Loans
<TABLE>
<CAPTION>
Percentage of
Mortgage Loan Cut-off Date Initial
# Property Name (1) Seller Balance (4) Pool Balance
--- ----------------- ------ ----------- ------------
<S> <C> <C> <C> <C>
30 Highland Pavilion Shopping Center (1E) GE Capital Access $6,332,000 0.4%
31 Highland Pavilion Cinema (1E) GE Capital Access $6,250,000 0.4%
32 Plumtree Apartments GE Capital Access $12,500,000 0.8%
33 Ventura Libbit Building Column $12,180,479 0.8%
34 Carroll Park Industrial Center Column $11,905,000 0.8%
35 Randall Ln., Park Pl. I & II and Park Newport Apart. Column $11,464,221 0.7%
36 Plaza Mobile Village GE Capital Access $11,308,631 0.7%
37 Town & Country Shopping Center Column $11,135,647 0.7%
38 Golden Triangle Shopping Center GE Capital Access $10,777,077 0.7%
39 Jasper Mall Shopping Center GE Capital Access $10,535,181 0.7%
40 Lincoln Village Shopping Center GE Capital Access $10,456,137 0.7%
41 Dominick's Food Store & Multi-Tenant Retail Column $10,317,352 0.7%
42 Suncrest Plaza Shopping Center Column $9,968,518 0.6%
43 Fabyan Crossing Shopping Center Column $9,826,481 0.6%
44 Forest Glen Apartments GE Capital Access $9,743,548 0.6%
45 Legacy Drive Village Shopping Center GE Capital Access $9,711,786 0.6%
46 Friendly Village MHC GE Capital Access $9,494,274 0.6%
47 Breckenridge Apartments Column $9,347,127 0.6%
48 Days Inn - Inner Harbor GE Capital Access $9,329,684 0.6%
49 Courtyard by Marriott Richmond GE Capital Access $8,891,690 0.6%
50 Barnes Crossing GE Capital Access $8,500,000 0.5%
51 Elmwood Regal Center Column $8,450,782 0.5%
52 520 Franklin Avenue Medical Building Column $8,300,000 0.5%
53 Holiday Inn & Suites GE Capital Access $8,300,000 0.5%
54 Aspen Ridge Apartments GE Capital Access $8,074,631 0.5%
55 Parkway Towers Apartments Column $7,980,251 0.5%
56 BLN Office Park I Column $7,969,568 0.5%
57 Garden Plaza Shopping Center Column $7,571,963 0.5%
58 One Phillips Drive Column $7,475,299 0.5%
59 Comfort Inn - Hollywood Column $7,317,234 0.5%
60 Ideal Professional Park GE Capital Access $7,196,080 0.5%
61 Cypress Pointe Apartments GE Capital Access $7,189,837 0.5%
62 The Shops at Lionville Station GE Capital Access $6,995,755 0.4%
63 Cabot Lodge - Gainesville Column $6,984,548 0.4%
64 Hampton Inn & Suites Column $6,977,329 0.4%
65 Mercado Del Rancho Shopping Center Column $6,976,628 0.4%
66 Bancroft Hall Apartments GE Capital Access $6,953,647 0.4%
<CAPTION>
Original Remaining Original Remaining
Amortization Amortization Term to Stated Term to Stated
Term Term Maturity Maturity
# Property Name (1) (months) (months) (months) (5) (months) (5)
--- ----------------- -------- -------- ------------ --------------
<S> <C> <C> <C> <C> <C>
30 Highland Pavilion Shopping Center (1E) 360 360 180 180
31 Highland Pavilion Cinema (1E) 360 360 180 180
32 Plumtree Apartments 360 360 120 120
33 Ventura Libbit Building 240 239 240 239
34 Carroll Park Industrial Center 360 360 120 120
35 Randall Ln., Park Pl. I & II and Park Newport Apart. 360 356 120 116
36 Plaza Mobile Village 360 355 84 79
37 Town & Country Shopping Center 360 358 120 118
38 Golden Triangle Shopping Center 300 298 120 118
39 Jasper Mall Shopping Center 360 358 120 118
40 Lincoln Village Shopping Center 360 354 120 114
41 Dominick's Food Store & Multi-Tenant Retail 360 356 120 116
42 Suncrest Plaza Shopping Center 360 356 120 116
43 Fabyan Crossing Shopping Center 360 358 180 178
44 Forest Glen Apartments 360 359 120 119
45 Legacy Drive Village Shopping Center 360 355 120 115
46 Friendly Village MHC 360 359 120 119
47 Breckenridge Apartments 360 346 120 106
48 Days Inn - Inner Harbor 300 294 120 114
49 Courtyard by Marriott Richmond 300 299 120 119
50 Barnes Crossing 300 300 120 120
51 Elmwood Regal Center 180 178 180 178
52 520 Franklin Avenue Medical Building 360 360 120 120
53 Holiday Inn & Suites 300 300 120 120
54 Aspen Ridge Apartments 360 356 120 116
55 Parkway Towers Apartments 360 357 120 117
56 BLN Office Park I 360 355 180 175
57 Garden Plaza Shopping Center 330 326 120 116
58 One Phillips Drive 360 356 120 116
59 Comfort Inn - Hollywood 300 297 120 117
60 Ideal Professional Park 360 359 120 119
61 Cypress Pointe Apartments 360 358 120 118
62 The Shops at Lionville Station 360 359 120 119
63 Cabot Lodge - Gainesville 300 298 120 118
64 Hampton Inn & Suites 300 297 120 117
65 Mercado Del Rancho Shopping Center 360 356 120 116
66 Bancroft Hall Apartments 300 299 120 119
<CAPTION>
First
Mortgage Monthly Payment Maturity
# Property Name (1) Rate Payment Date Date ARD (6)
--- ----------------- -------- ------- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C>
30 Highland Pavilion Shopping Center (1E) 7.330% $43,540 7/1/98 6/1/28 6/1/13
31 Highland Pavilion Cinema (1E) 7.330% $42,976 7/1/98 6/1/28 6/1/13
32 Plumtree Apartments 6.960% $82,827 7/1/98 6/1/28 6/1/08
33 Ventura Libbit Building 7.490% $98,208 6/1/98 5/1/18
34 Carroll Park Industrial Center 7.400% $82,428 7/1/98 6/1/08
35 Randall Ln., Park Pl. I & II and Park Newport Apart. 7.320% $78,997 3/1/98 2/1/08
36 Plaza Mobile Village 7.380% $78,433 2/1/98 1/1/28 1/1/05
37 Town & Country Shopping Center 7.480% $77,810 5/1/98 4/1/08
38 Golden Triangle Shopping Center 7.390% $79,040 5/1/98 4/1/23 4/1/08
39 Jasper Mall Shopping Center 7.130% $71,113 5/1/98 4/1/28 4/1/08
40 Lincoln Village Shopping Center 7.420% $72,843 1/1/98 12/1/27 12/1/07
41 Dominick's Food Store & Multi-Tenant Retail 7.250% $70,605 3/1/98 2/1/08
42 Suncrest Plaza Shopping Center 7.260% $68,285 3/1/98 2/1/08
43 Fabyan Crossing Shopping Center 7.220% $66,926 5/1/98 4/1/13
44 Forest Glen Apartments 6.810% $63,628 6/1/98 5/1/28 5/1/08
45 Legacy Drive Village Shopping Center 7.040% $65,129 2/1/98 1/1/28 1/1/08
46 Friendly Village MHC 7.120% $63,971 6/1/98 5/1/28 5/1/08
47 Breckenridge Apartments 8.860% $74,888 5/1/97 4/1/07
48 Days Inn - Inner Harbor 7.030% $66,617 1/1/98 12/1/22 12/1/07
49 Courtyard by Marriott Richmond 7.490% $65,712 6/1/98 5/1/08
50 Barnes Crossing 7.060% $60,402 7/1/98 6/1/23 6/1/08
51 Elmwood Regal Center 7.610% $79,328 5/1/98 4/1/13
52 520 Franklin Avenue Medical Building 7.270% $56,733 7/1/98 6/1/08
53 Holiday Inn & Suites 7.370% $60,636 7/1/98 6/1/23 6/1/08
54 Aspen Ridge Apartments 7.090% $54,387 3/1/98 2/1/28 2/1/08
55 Parkway Towers Apartments 7.010% $53,278 4/1/98 3/1/08
56 BLN Office Park I 7.180% $54,195 2/1/98 1/1/13
57 Garden Plaza Shopping Center 7.530% $54,622 3/1/98 2/1/08
58 One Phillips Drive 7.030% $50,049 3/1/98 2/1/08
59 Comfort Inn - Hollywood 7.370% $53,623 4/1/98 3/1/23 3/1/08
60 Ideal Professional Park 7.440% $50,048 6/1/98 5/1/28 5/1/08
61 Cypress Pointe Apartments 7.110% $48,435 5/1/98 4/1/28 4/1/08
62 The Shops at Lionville Station 7.100% $47,042 6/1/98 5/1/28 5/1/08
63 Cabot Lodge - Gainesville 7.180% $50,281 5/1/98 4/1/23 4/1/08
64 Hampton Inn & Suites 7.150% $50,146 4/1/98 3/1/23 3/1/08
65 Mercado Del Rancho Shopping Center 6.960% $46,383 3/1/98 2/1/08
66 Bancroft Hall Apartments 7.590% $51,842 6/1/98 5/1/23 5/1/08
<CAPTION>
Defeasance
Prepayment Provision Option
# Property Name (1) as of Origination (Yes/No)(7)
--- ----------------- ----------------- -----------
<S> <C> <C> <C>
30 Highland Pavilion Shopping Center (1E) L (7.92), YM 1% (6.83), O (0.25) No
31 Highland Pavilion Cinema (1E) L (7.92), YM 1% (6.83), O (0.25) No
32 Plumtree Apartments L (9.67), O (0.33) Yes
33 Ventura Libbit Building L (19), O (1) Yes
34 Carroll Park Industrial Center L (9.5), O (0.5) Yes
35 Randall Ln., Park Pl. I & II and Park Newport Apart. L (9.5), O (0.5) Yes
36 Plaza Mobile Village L (1.92), YM 1% (4.58), O (0.5) No
37 Town & Country Shopping Center L (9.5), O (0.5) Yes
38 Golden Triangle Shopping Center L (9.75), O (0.25) Yes
39 Jasper Mall Shopping Center L (4.92), YM 1% (4.83), O (0.25) No
40 Lincoln Village Shopping Center L (2.92), YM 1% (6.58), O (0.5) No
41 Dominick's Food Store & Multi-Tenant Retail L (9.5), O (0.5) Yes
42 Suncrest Plaza Shopping Center L (9.5), O (0.5) Yes
43 Fabyan Crossing Shopping Center L (14), O (1) Yes
44 Forest Glen Apartments L (9), O (1) Yes
45 Legacy Drive Village Shopping Center L (2.92), YM 1% (6.58), O (0.5) No
46 Friendly Village MHC L (9.5), O (0.5) Yes
47 Breckenridge Apartments L (5), YM 1% (4.5), O (0.5) No
48 Days Inn - Inner Harbor L (9.75), O (0.25) Yes
49 Courtyard by Marriott Richmond L (9.75), O (0.25) Yes
50 Barnes Crossing L (2.92), YM 1% (6.75), O (0.33) No
51 Elmwood Regal Center L (14.5), O (0.5) Yes
52 520 Franklin Avenue Medical Building L (9.5), O (0.5) Yes
53 Holiday Inn & Suites L (9.67), O (0.33) Yes
54 Aspen Ridge Apartments L (4.92), YM 1% (4.83), O (0.25) No
55 Parkway Towers Apartments L (9.5), O (0.5) Yes
56 BLN Office Park I L (14.5), O (0.5) Yes
57 Garden Plaza Shopping Center L (9.5), O (0.5) Yes
58 One Phillips Drive L (10) Yes
59 Comfort Inn - Hollywood L (9.5), O (0.5) Yes
60 Ideal Professional Park L (9.67), O (0.33) Yes
61 Cypress Pointe Apartments L (2.92), YM 1% (6.83), O (0.25) No
62 The Shops at Lionville Station L (6.92), YM 1% (2.83), O (0.25) No
63 Cabot Lodge - Gainesville L (9.5), O (0.5) Yes
64 Hampton Inn & Suites L (9.5), O (0.5) Yes
65 Mercado Del Rancho Shopping Center L (9.5), O (0.5) Yes
66 Bancroft Hall Apartments L (9.75), O (0.25) Yes
</TABLE>
<PAGE>
Characteristics of the Mortgage Loans
<TABLE>
<CAPTION>
Percentage of
Mortgage Loan Cut-off Date Initial
# Property Name (1) Seller Balance (4) Pool Balance
--- ----------------- ------ ----------- ------------
<S> <C> <C> <C> <C>
67 Padonia Commerce Building GE Capital Access $6,951,446 0.4%
68 Anaheim Shores Estates GE Capital Access $6,945,641 0.4%
69 Tower Square Shopping Center GE Capital Access $6,939,016 0.4%
70 West Garrett Place Column $6,840,307 0.4%
71 Elmonica Court Apartments GE Capital Access $6,795,592 0.4%
72 Chesterfield Commons GE Capital Access $6,790,307 0.4%
73 Plum Tree Apartments GE Capital Access $6,695,709 0.4%
74 Meadow Central Market GE Capital Access $6,585,700 0.4%
75 Mount Kisco Square Shopping Center Column $6,585,159 0.4%
76 Las Brisas Apartments GE Capital Access $6,564,310 0.4%
77 Freedom Village Shopping Center GE Capital Access $6,495,849 0.4%
78 Waldan Pond & Waldan Chase Apts GE Capital Access $6,446,089 0.4%
79 Aspen Park Apartments GE Capital Access $6,192,234 0.4%
80 Young Circle Shopping Center Column $6,086,963 0.4%
81 Sherwood Knoll Comfort Inn GE Capital Access $6,017,066 0.4%
82 Bridgepoint Apartments GE Capital Access $5,996,406 0.4%
83 Holiday Inn Center City GE Capital Access $5,994,245 0.4%
84 Rainbow Design Center GE Capital Access $5,846,572 0.4%
85 Flower Hill Professional Center (1F) Column $5,000,000 0.3%
86 Flower Hill McDonald's (1F) Column $800,000 0.1%
87 Blue Ash Hotel & Conference Center GE Capital Access $5,736,510 0.4%
88 Ultra Plaza Shopping Center (3) Column $5,680,000 0.4%
89 Sinagua Plaza GE Capital Access $5,646,823 0.4%
90 Holiday Plaza GE Capital Access $5,596,800 0.4%
91 Olde Mill Shopping Center Column $5,487,972 0.4%
92 Regal Cinemas Center-Lancaster Column $5,466,243 0.3%
93 Temescal Business Center Column $5,330,124 0.3%
94 Houston Centre Column $5,200,000 0.3%
95 Pellcare Nursing Home - Winston-Salem (1G) Column $3,061,017 0.2%
96 Pellcare Nursing Home - Hickory (1G) Column $2,127,148 0.1%
97 Vista Mar Apartments Column $5,192,803 0.3%
98 Cherokee Shopping Center GE Capital Access $5,139,049 0.3%
99 Super 8 Geary Street Column $5,100,000 0.3%
100 Cabot Lodge - Tallahassee Column $4,988,963 0.3%
101 Kessel Foods Column $4,951,913 0.3%
102 South Pointe Apartments GE Capital Access $4,917,198 0.3%
103 Wyoming-Enzie Properties (1H) Column $3,100,000 0.2%
<CAPTION>
Original Remaining Original Remaining
Amortization Amortization Term to Stated Term to Stated
Term Term Maturity Maturity
# Property Name (1) (months) (months) (months) (5) (months) (5)
--- ----------------- -------- -------- ------------ --------------
<S> <C> <C> <C> <C> <C>
67 Padonia Commerce Building 300 294 300 294
68 Anaheim Shores Estates 360 359 120 119
69 Tower Square Shopping Center 360 358 120 118
70 West Garrett Place 360 358 120 118
71 Elmonica Court Apartments 360 359 120 119
72 Chesterfield Commons 360 358 120 118
73 Plum Tree Apartments 360 359 120 119
74 Meadow Central Market 300 298 300 298
75 Mount Kisco Square Shopping Center 300 298 120 118
76 Las Brisas Apartments 360 359 120 119
77 Freedom Village Shopping Center 360 359 60 59
78 Waldan Pond & Waldan Chase Apts 360 359 144 143
79 Aspen Park Apartments 360 354 120 114
80 Young Circle Shopping Center 360 357 120 117
81 Sherwood Knoll Comfort Inn 300 299 180 179
82 Bridgepoint Apartments 360 359 120 119
83 Holiday Inn Center City 300 299 120 119
84 Rainbow Design Center 360 356 120 116
85 Flower Hill Professional Center (1F) 360 360 120 120
86 Flower Hill McDonald's (1F) 240 240 120 120
87 Blue Ash Hotel & Conference Center 300 298 120 118
88 Ultra Plaza Shopping Center (3) 336 336 120 120
89 Sinagua Plaza 360 359 120 119
90 Holiday Plaza 360 359 120 119
91 Olde Mill Shopping Center 300 298 240 238
92 Regal Cinemas Center-Lancaster 216 213 216 213
93 Temescal Business Center 360 355 120 115
94 Houston Centre 360 360 120 120
95 Pellcare Nursing Home - Winston-Salem (1G) 300 298 120 118
96 Pellcare Nursing Home - Hickory (1G) 300 298 120 118
97 Vista Mar Apartments 360 358 120 118
98 Cherokee Shopping Center 300 298 300 298
99 Super 8 Geary Street 240 240 240 240
100 Cabot Lodge - Tallahassee 300 298 120 118
101 Kessel Foods 300 295 120 115
102 South Pointe Apartments 360 359 120 119
103 Wyoming-Enzie Properties (1H) 360 360 180 180
<CAPTION>
First
Mortgage Monthly Payment Maturity
# Property Name (1) Rate Payment Date Date ARD (6)
--- ----------------- -------- ------- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C>
67 Padonia Commerce Building 7.510% $51,775 1/1/98 12/1/22
68 Anaheim Shores Estates 6.990% $46,192 6/1/98 5/1/08
69 Tower Square Shopping Center 7.200% $47,176 5/1/98 4/1/28 4/1/08
70 West Garrett Place 7.100% $46,034 5/1/98 4/1/08
71 Elmonica Court Apartments 6.880% $44,694 6/1/98 5/1/28 5/1/08
72 Chesterfield Commons 7.070% $45,561 5/1/98 4/1/28 4/1/08
73 Plum Tree Apartments 6.920% $44,216 6/1/98 5/1/28 5/1/08
74 Meadow Central Market 7.280% $47,833 5/1/98 4/1/23
75 Mount Kisco Square Shopping Center 7.080% $46,985 5/1/98 4/1/08
76 Las Brisas Apartments 6.720% $42,482 6/1/98 5/1/28 5/1/08
77 Freedom Village Shopping Center 6.930% $42,940 6/1/98 5/1/03
78 Waldan Pond & Waldan Chase Apts 7.100% $43,346 6/1/98 5/1/28 5/1/10
79 Aspen Park Apartments 7.130% $41,926 1/1/98 12/1/27 12/1/07
80 Young Circle Shopping Center 6.900% $40,175 4/1/98 3/1/08
81 Sherwood Knoll Comfort Inn 7.620% $44,977 6/1/98 5/1/23 5/1/13
82 Bridgepoint Apartments 7.140% $40,484 6/1/98 5/1/28 5/1/08
83 Holiday Inn Center City 7.370% $43,833 6/1/98 5/1/23 5/1/08
84 Rainbow Design Center 7.270% $40,089 3/1/98 2/1/28 2/1/08
85 Flower Hill Professional Center (1F) 7.610% $35,338 7/1/98 6/1/08
86 Flower Hill McDonald's (1F) 7.610% $6,499 7/1/98 6/1/08
87 Blue Ash Hotel & Conference Center 7.340% $41,895 5/1/98 4/1/23 4/1/08
88 Ultra Plaza Shopping Center (3) 7.300% $39,731 7/1/98 6/1/08
89 Sinagua Plaza 7.340% $38,888 6/1/98 5/1/28 5/1/08
90 Holiday Plaza 7.290% $38,354 6/1/98 5/1/28 5/1/08
91 Olde Mill Shopping Center 7.230% $39,684 5/1/98 4/1/18
92 Regal Cinemas Center-Lancaster 7.610% $46,834 4/1/98 3/1/16
93 Temescal Business Center 7.290% $36,642 2/1/98 1/1/08
94 Houston Centre 6.930% $34,352 7/1/98 6/1/08
95 Pellcare Nursing Home - Winston-Salem (1G) 7.530% $22,732 5/1/98 4/1/08
96 Pellcare Nursing Home - Hickory (1G) 7.530% $15,797 5/1/98 4/1/08
97 Vista Mar Apartments 7.190% $35,262 5/1/98 4/1/08
98 Cherokee Shopping Center 7.380% $37,657 5/1/98 4/1/23
99 Super 8 Geary Street 7.660% $41,586 7/1/98 6/1/18
100 Cabot Lodge - Tallahassee 7.180% $35,915 5/1/98 4/1/23 4/1/08
101 Kessel Foods 7.420% $36,543 2/1/98 1/1/08
102 South Pointe Apartments 7.300% $33,730 6/1/98 5/1/28 5/1/08
103 Wyoming-Enzie Properties (1H) 7.110% $20,854 7/1/98 6/1/13
<CAPTION>
Defeasance
Prepayment Provision Option
# Property Name (1) as of Origination (Yes/No)(7)
--- ----------------- ----------------- -----------
<S> <C> <C> <C>
67 Padonia Commerce Building L (24.75), O (0.25) Yes
68 Anaheim Shores Estates L (2.92), YM 1% (6.58), O (0.5) No
69 Tower Square Shopping Center L (2.92), YM 1% (6.83), O (0.25) No
70 West Garrett Place L (9.5), O (0.5) Yes
71 Elmonica Court Apartments L (9.75), O (0.25) Yes
72 Chesterfield Commons L (9.67), O (0.33) Yes
73 Plum Tree Apartments L (9.75), O (0.25) Yes
74 Meadow Central Market L (11.92), YM 1% (12.58), O (0.5) No
75 Mount Kisco Square Shopping Center L (9.5), O (0.5) Yes
76 Las Brisas Apartments 5% (3.92), 4% (1), 3% (1), 2% (1), 1% (1), O (2.08) No
77 Freedom Village Shopping Center L (2.92), 3% (1), 1% (0.75), O (0.33) No
78 Waldan Pond & Waldan Chase Apts L (2.92), YM 1% (8.83), O (0.25) No
79 Aspen Park Apartments 5% (3.92), 4% (1), 3% (1), 2% (1), 1% (1), O (2.08) No
80 Young Circle Shopping Center L (9.5), O (0.5) Yes
81 Sherwood Knoll Comfort Inn L (9.92), YM 1% (4.83), O (0.25) No
82 Bridgepoint Apartments L (2.08), YM 1% (7.42), O (0.5) No
83 Holiday Inn Center City L (2.92), YM 1% (6.58), O (0.5) No
84 Rainbow Design Center L (4.92), YM 1% (4.83), O (0.25) No
85 Flower Hill Professional Center (1F) L (5), YM 1% (4.5), O (0.5) No
86 Flower Hill McDonald's (1F) L (5), YM 1% (4.5), O (0.5) No
87 Blue Ash Hotel & Conference Center L (9.67), O (0.33) Yes
88 Ultra Plaza Shopping Center (3) L (10) Yes
89 Sinagua Plaza L (3.92), YM 1% (5.83), O (0.25) No
90 Holiday Plaza L (2.92), YM 1% (6.83), O (0.25) No
91 Olde Mill Shopping Center L (19.5), O (0.5) Yes
92 Regal Cinemas Center-Lancaster L (17.5), O (0.5) Yes
93 Temescal Business Center L (9.5), O (0.5) Yes
94 Houston Centre L (9.5), O (0.5) Yes
95 Pellcare Nursing Home - Winston-Salem (1G) L (9.5), O (0.5) Yes
96 Pellcare Nursing Home - Hickory (1G) L (9.5), O (0.5) Yes
97 Vista Mar Apartments L (9.5), O (0.5) Yes
98 Cherokee Shopping Center L (3.92), YM 1% (20.75), O (0.33) No
99 Super 8 Geary Street L (19.5), O (0.5) Yes
100 Cabot Lodge - Tallahassee L (9.5), O (0.5) Yes
101 Kessel Foods L (9.5), O (0.5) Yes
102 South Pointe Apartments L (2.92), YM 1% (6.83), O (0.25) No
103 Wyoming-Enzie Properties (1H) L (14.5), O (0.5) Yes
</TABLE>
<PAGE>
Characteristics of the Mortgage Loans
<TABLE>
<CAPTION>
Percentage of
Mortgage Loan Cut-off Date Initial
# Property Name (1) Seller Balance (4) Pool Balance
--- ----------------- ------ ----------- ------------
<S> <C> <C> <C> <C>
104 Mesa Properties (1H) Column $1,800,000 0.1%
105 Mervyn's Plaza GE Capital Access $4,883,862 0.3%
106 Bartlett Commons Column $4,847,504 0.3%
107 Crowley Village Shopping Center Column $4,792,990 0.3%
108 Tivoli Condominiums (1I) Column $2,098,758 0.1%
109 Cross Creek Apartments (1I) Column $1,479,124 0.1%
110 Tamara Hills Townhomes (1I) Column $1,069,367 0.1%
111 The Bell Rock Inn Column $4,635,918 0.3%
112 Howard Johnson Hotel Column $4,595,859 0.3%
113 Camelot Apartments Column $4,593,379 0.3%
114 Canyon Ridge MHP GE Capital Access $4,582,726 0.3%
115 Westlake Crossing Shopping Center GE Capital Access $4,482,137 0.3%
116 Days Hotel Timonium GE Capital Access $4,416,712 0.3%
117 Heritage Square Apartments GE Capital Access $4,397,549 0.3%
118 Constitution Square Column $4,392,205 0.3%
119 Oxford Square GE Capital Access $4,390,837 0.3%
120 Spring Villas GE Capital Access $4,356,224 0.3%
121 Sierra Point Apartments Column $4,331,319 0.3%
122 Menlo Avenue Office Building Column $4,297,527 0.3%
123 Henderson Marketplace Column $4,292,570 0.3%
124 Stone Creek Apartments Column $4,263,734 0.3%
125 Florida Avenue Apartments Column $4,191,479 0.3%
126 Homewood Village Shopping Center GE Capital Access $4,187,035 0.3%
127 Common Wealth Avenue Apartments GE Capital Access $4,179,055 0.3%
128 Sunrise Square Shopping Center Column $4,177,220 0.3%
129 Stein Mart Plaza GE Capital Access $4,157,391 0.3%
130 1500 Plaza Office Building Column $4,084,996 0.3%
131 New West Village Apartments Column $4,084,931 0.3%
132 Brookside Apartments GE Capital Access $4,061,787 0.3%
133 Vinyard Gardens GE Capital Access $4,017,864 0.3%
134 Hidden Bay Village Apartments Column $4,000,000 0.3%
135 Raintree Apartments Column $4,000,000 0.3%
136 The Office Centre at Dunwoody Village Column $3,997,648 0.3%
137 Seminary Plaza Column $3,994,825 0.3%
138 Longbranch Apartments GE Capital Access $3,993,973 0.3%
139 The Market at Merrill Shopping Center GE Capital Access $3,950,000 0.3%
140 Comfort Inn - Dothan Column $3,891,660 0.2%
<CAPTION>
Original Remaining Original Remaining
Amortization Amortization Term to Stated Term to Stated
Term Term Maturity Maturity
# Property Name (1) (months) (months) (months) (5) (months) (5)
--- ----------------- -------- -------- ------------ --------------
<S> <C> <C> <C> <C> <C>
104 Mesa Properties (1H) 300 300 180 180
105 Mervyn's Plaza 360 356 120 116
106 Bartlett Commons 360 359 180 179
107 Crowley Village Shopping Center 360 358 120 118
108 Tivoli Condominiums (1I) 360 359 120 119
109 Cross Creek Apartments (1I) 360 359 120 119
110 Tamara Hills Townhomes (1I) 360 359 120 119
111 The Bell Rock Inn 300 297 120 117
112 Howard Johnson Hotel 300 299 120 119
113 Camelot Apartments 360 358 120 118
114 Canyon Ridge MHP 360 355 120 115
115 Westlake Crossing Shopping Center 360 355 180 175
116 Days Hotel Timonium 300 294 120 114
117 Heritage Square Apartments 360 359 300 299
118 Constitution Square 324 322 120 118
119 Oxford Square 360 357 120 117
120 Spring Villas 360 359 120 119
121 Sierra Point Apartments 360 354 120 114
122 Menlo Avenue Office Building 360 359 120 119
123 Henderson Marketplace 240 239 120 119
124 Stone Creek Apartments 360 358 120 118
125 Florida Avenue Apartments 360 357 120 117
126 Homewood Village Shopping Center 360 356 120 116
127 Common Wealth Avenue Apartments 300 296 120 116
128 Sunrise Square Shopping Center 300 295 120 115
129 Stein Mart Plaza 360 359 120 119
130 1500 Plaza Office Building 360 355 120 115
131 New West Village Apartments 360 355 84 79
132 Brookside Apartments 360 354 120 114
133 Vinyard Gardens 360 359 120 119
134 Hidden Bay Village Apartments 360 360 120 120
135 Raintree Apartments 360 360 120 120
136 The Office Centre at Dunwoody Village 360 359 120 119
137 Seminary Plaza 360 358 120 118
138 Longbranch Apartments 360 358 120 118
139 The Market at Merrill Shopping Center 300 300 240 240
140 Comfort Inn - Dothan 300 298 120 118
<CAPTION>
First
Mortgage Monthly Payment Maturity
# Property Name (1) Rate Payment Date Date ARD (6)
--- ----------------- -------- ------- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C>
104 Mesa Properties (1H) 7.110% $12,849 7/1/98 6/1/13
105 Mervyn's Plaza 7.030% $32,699 3/1/98 2/1/28 2/1/08
106 Bartlett Commons 7.610% $34,278 6/1/98 5/1/13
107 Crowley Village Shopping Center 6.970% $31,838 5/1/98 4/1/08
108 Tivoli Condominiums (1I) 7.180% $14,226 6/1/98 5/1/08
109 Cross Creek Apartments (1I) 7.180% $10,026 6/1/98 5/1/08
110 Tamara Hills Townhomes (1I) 7.180% $7,249 6/1/98 5/1/08
111 The Bell Rock Inn 7.490% $34,333 4/1/98 3/1/23 3/1/08
112 Howard Johnson Hotel 7.650% $34,444 6/1/98 5/1/23 5/1/08
113 Camelot Apartments 7.030% $30,697 5/1/98 4/1/08
114 Canyon Ridge MHP 7.240% $31,349 2/1/98 1/1/28 1/1/08
115 Westlake Crossing Shopping Center 6.980% $29,878 2/1/98 1/1/28 1/1/13
116 Days Hotel Timonium 7.030% $31,537 1/1/98 12/1/22 12/1/07
117 Heritage Square Apartments 7.370% $30,375 6/1/98 5/1/23
118 Constitution Square 7.340% $31,246 5/1/98 4/1/08
119 Oxford Square 7.000% $29,273 4/1/98 3/1/28 3/1/08
120 Spring Villas 6.720% $28,192 6/1/98 5/1/28 5/1/08
121 Sierra Point Apartments 7.300% $29,822 1/1/98 12/1/07
122 Menlo Avenue Office Building 7.270% $29,392 6/1/98 5/1/08
123 Henderson Marketplace 6.990% $33,312 6/1/98 5/1/08
124 Stone Creek Apartments 6.950% $28,265 5/1/98 4/1/08
125 Florida Avenue Apartments 7.100% $28,225 4/1/98 3/1/08
126 Homewood Village Shopping Center 7.360% $28,965 3/1/98 2/1/28 2/1/08
127 Common Wealth Avenue Apartments 7.000% $29,685 3/1/98 2/1/23 2/1/08
128 Sunrise Square Shopping Center 7.650% $31,449 2/1/98 1/1/08
129 Stein Mart Plaza 6.990% $27,649 6/1/98 5/1/28 5/1/08
130 1500 Plaza Office Building 7.360% $28,276 2/1/98 1/1/08
131 New West Village Apartments 7.340% $28,220 2/1/98 1/1/05
132 Brookside Apartments 7.130% $27,501 1/1/98 12/1/27 12/1/07
133 Vinyard Gardens 6.890% $26,460 6/1/98 5/1/28 5/1/08
134 Hidden Bay Village Apartments 6.940% $26,451 7/1/98 6/1/08
135 Raintree Apartments 6.940% $26,451 7/1/98 6/1/08
136 The Office Centre at Dunwoody Village 7.200% $27,152 6/1/98 5/1/08
137 Seminary Plaza 7.460% $27,859 5/1/98 4/1/08
138 Longbranch Apartments 6.840% $26,184 5/1/98 4/1/28 4/1/08
139 The Market at Merrill Shopping Center 7.520% $29,242 7/1/98 6/1/23 6/1/18
140 Comfort Inn - Dothan 7.350% $28,441 5/1/98 4/1/08
<CAPTION>
Defeasance
Prepayment Provision Option
# Property Name (1) as of Origination (Yes/No)(7)
--- ----------------- ----------------- -----------
<S> <C> <C> <C>
104 Mesa Properties (1H) L (14.5), O (0.5) Yes
105 Mervyn's Plaza L (3.92), YM 1% (5.83), O (0.25) No
106 Bartlett Commons L (14.5), O (0.5) Yes
107 Crowley Village Shopping Center L (9.5), O (0.5) Yes
108 Tivoli Condominiums (1I) L (9.5), O (0.5) Yes
109 Cross Creek Apartments (1I) L (9.5), O (0.5) Yes
110 Tamara Hills Townhomes (1I) L (9.5), O (0.5) Yes
111 The Bell Rock Inn L (9.5), O (0.5) Yes
112 Howard Johnson Hotel L (9.5), O (0.5) Yes
113 Camelot Apartments L (9.5), O (0.5) Yes
114 Canyon Ridge MHP L (2.92), YM 1% (6.83), O (0.25) No
115 Westlake Crossing Shopping Center L (2.92), YM 1% (11.58), O (0.5) No
116 Days Hotel Timonium L (9.75), O (0.25) Yes
117 Heritage Square Apartments L (24.75), O (0.25) Yes
118 Constitution Square L (9.5), O (0.5) Yes
119 Oxford Square L (2.92), YM 1% (6.83), O (0.25) No
120 Spring Villas 5% (3.92), 4% (1), 3% (1), 2% (1), 1% (1), O (2.08) No
121 Sierra Point Apartments L (9.5), O (0.5) Yes
122 Menlo Avenue Office Building L (9.5), O (0.5) Yes
123 Henderson Marketplace L (9.5), O (0.5) Yes
124 Stone Creek Apartments L (9.5), O (0.5) Yes
125 Florida Avenue Apartments L (9.5), O (0.5) Yes
126 Homewood Village Shopping Center L (2.92), YM 1% (6.75), O (0.33) No
127 Common Wealth Avenue Apartments L (9.75), O (0.25) Yes
128 Sunrise Square Shopping Center L (9.5), O (0.5) Yes
129 Stein Mart Plaza L (2.92), YM 1% (6.83), O (0.25) No
130 1500 Plaza Office Building L (9.5), O (0.5) Yes
131 New West Village Apartments L (6.5), O (0.5) Yes
132 Brookside Apartments 5% (3.92), 4% (1), 3% (1), 2% (1), 1% (1), O (2.08) No
133 Vinyard Gardens L (2.92), YM 1% (6.83), O (0.25) No
134 Hidden Bay Village Apartments L (5), YM 1% (4.42), O (0.58) Both
135 Raintree Apartments L (5), YM 1% (4.42), O (0.58) Both
136 The Office Centre at Dunwoody Village L (9.5), O (0.5) Yes
137 Seminary Plaza L (9.5), O (0.5) Yes
138 Longbranch Apartments L (2.92), YM 1% (6.58), O (0.5) No
139 The Market at Merrill Shopping Center L (9.92), YM 1% (9.83), O (0.25) No
140 Comfort Inn - Dothan L (9.5), O (0.5) Yes
</TABLE>
<PAGE>
Characteristics of the Mortgage Loans
<TABLE>
<CAPTION>
Percentage of
Mortgage Loan Cut-off Date Initial
# Property Name (1) Seller Balance (4) Pool Balance
--- ----------------- ------ ----------- ------------
<S> <C> <C> <C> <C>
141 Wind River Office Building Column $3,875,000 0.2%
142 Pass Christian Village GE Capital Access $3,828,469 0.2%
143 Marriott Courtyard - Dothan Column $3,702,066 0.2%
144 Tivoli Apartments Column $3,700,000 0.2%
145 Sun Plaza Shopping Center GE Capital Access $3,678,412 0.2%
146 Holiday Inn Express - Washington Column $3,646,752 0.2%
147 Mariner Crossing Shopping Center Column $3,592,658 0.2%
148 Mt. Dora Marketplace GE Capital Access $3,592,405 0.2%
149 Aspen Village Apartments GE Capital Access $3,590,501 0.2%
150 Sherman Oaks Column $3,587,886 0.2%
151 South Plains Apartments Column $3,513,458 0.2%
152 Royal Oaks Apartments Column $3,506,589 0.2%
153 Northwinds Apartment Complex Column $3,500,000 0.2%
154 The Park Shopping Center GE Capital Access $3,497,949 0.2%
155 Lloyd Office Plaza Column $3,487,192 0.2%
156 Bridge Street Lodge (1J) Column $2,534,536 0.2%
157 P & R Building (1J) Column $894,542 0.1%
158 Holiday Inn - Dothan Column $3,392,729 0.2%
159 Hampton North Townhomes & Apartments Column $3,386,446 0.2%
160 Holiday Inn - Lake Havasu Column $3,381,338 0.2%
161 University Shoppes GE Capital Access $3,333,091 0.2%
162 Galleria Mall Column $3,294,578 0.2%
163 Park 219 Business Park GE Capital Access $3,289,375 0.2%
164 One Energy Square Column $3,187,768 0.2%
165 Orchard Plaza Shopping Center Column $3,185,813 0.2%
166 The Mark Mobile Home Park Column $3,182,250 0.2%
167 Rivershores Apartments Column $3,175,356 0.2%
168 Perry Hall Mini-Storage GE Capital Access $3,138,857 0.2%
169 Governor's Palace, Ridgmar Americana & Ridgmar W. Apart Column $3,095,825 0.2%
170 Brookhollow Apartments Column $3,088,680 0.2%
171 Cedarfield Plaza (1K) Column $1,547,923 0.1%
172 Greece Mini Storage (1K) Column $1,496,774 0.1%
173 Gander Mountain / JoAnn Fabrics Center Column $3,039,569 0.2%
174 The Colonnade at Turtle Creek Apartments Column $3,025,575 0.2%
175 601 Franklin Avenue Medical Building Column $3,000,000 0.2%
176 Valdosta Storage Rollup GE Capital Access $2,997,249 0.2%
177 All Aboard Mini-Storage GE Capital Access $2,996,503 0.2%
<CAPTION>
Original Remaining Original Remaining
Amortization Amortization Term to Stated Term to Stated
Term Term Maturity Maturity
# Property Name (1) (months) (months) (months) (5) (months) (5)
--- ----------------- -------- -------- ------------ --------------
<S> <C> <C> <C> <C> <C>
141 Wind River Office Building 360 360 120 120
142 Pass Christian Village 300 295 120 115
143 Marriott Courtyard - Dothan 300 298 120 118
144 Tivoli Apartments 360 360 120 120
145 Sun Plaza Shopping Center 180 178 180 178
146 Holiday Inn Express - Washington 300 299 120 119
147 Mariner Crossing Shopping Center 360 357 120 117
148 Mt. Dora Marketplace 360 357 120 117
149 Aspen Village Apartments 360 351 120 111
150 Sherman Oaks 360 356 120 116
151 South Plains Apartments 360 356 84 80
152 Royal Oaks Apartments 360 355 120 115
153 Northwinds Apartment Complex 300 300 120 120
154 The Park Shopping Center 360 359 120 119
155 Lloyd Office Plaza 360 355 120 115
156 Bridge Street Lodge (1J) 180 178 180 178
157 P & R Building (1J) 180 178 180 178
158 Holiday Inn - Dothan 300 298 120 118
159 Hampton North Townhomes & Apartments 360 355 120 115
160 Holiday Inn - Lake Havasu 300 295 120 115
161 University Shoppes 240 237 240 237
162 Galleria Mall 240 239 120 119
163 Park 219 Business Park 300 297 120 117
164 One Energy Square 354 353 114 113
165 Orchard Plaza Shopping Center 360 353 120 113
166 The Mark Mobile Home Park 240 237 84 81
167 Rivershores Apartments 360 358 120 118
168 Perry Hall Mini-Storage 240 234 120 114
169 Governor's Palace, Ridgmar Americana & Ridgmar W. Apart 360 358 120 118
170 Brookhollow Apartments 360 355 120 115
171 Cedarfield Plaza (1K) 360 358 120 118
172 Greece Mini Storage (1K) 300 298 120 118
173 Gander Mountain / JoAnn Fabrics Center 240 238 120 118
174 The Colonnade at Turtle Creek Apartments 360 358 120 118
175 601 Franklin Avenue Medical Building 360 360 120 120
176 Valdosta Storage Rollup 300 299 120 119
177 All Aboard Mini-Storage 300 299 120 119
<CAPTION>
First
Mortgage Monthly Payment Maturity
# Property Name (1) Rate Payment Date Date ARD (6)
--- ----------------- -------- ------- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C>
141 Wind River Office Building 7.470% $27,015 7/1/98 6/1/08
142 Pass Christian Village 7.470% $28,376 2/1/98 1/1/23 1/1/08
143 Marriott Courtyard - Dothan 7.350% $27,056 5/1/98 4/1/08
144 Tivoli Apartments 6.940% $24,467 7/1/98 6/1/08
145 Sun Plaza Shopping Center 7.530% $34,363 5/1/98 4/1/13
146 Holiday Inn Express - Washington 7.700% $27,450 6/1/98 5/1/08
147 Mariner Crossing Shopping Center 7.080% $24,145 4/1/98 3/1/08
148 Mt. Dora Marketplace 6.950% $23,830 4/1/98 3/1/28 3/1/08
149 Aspen Village Apartments 7.980% $26,461 10/1/97 9/1/27 9/1/07
150 Sherman Oaks 6.920% $23,758 3/1/98 2/1/08
151 South Plains Apartments 7.060% $23,594 3/1/98 2/1/05
152 Royal Oaks Apartments 7.430% $24,444 2/1/98 1/1/08
153 Northwinds Apartment Complex 7.640% $26,184 7/1/98 6/1/08
154 The Park Shopping Center 7.210% $23,781 6/1/98 5/1/28 5/1/08
155 Lloyd Office Plaza 7.360% $24,138 2/1/98 1/1/08
156 Bridge Street Lodge (1J) 7.490% $23,624 5/1/98 4/1/13
157 P & R Building (1J) 7.490% $8,338 5/1/98 4/1/13
158 Holiday Inn - Dothan 7.350% $24,795 5/1/98 4/1/08
159 Hampton North Townhomes & Apartments 6.960% $22,529 2/1/98 1/1/08
160 Holiday Inn - Lake Havasu 7.580% $25,303 2/1/98 1/1/23 1/1/08
161 University Shoppes 7.480% $26,946 4/1/98 3/1/18
162 Galleria Mall 7.320% $26,223 6/1/98 5/1/08
163 Park 219 Business Park 7.180% $23,704 4/1/98 3/1/23 3/1/08
164 One Energy Square 7.890% $23,256 6/1/98 11/1/07
165 Orchard Plaza Shopping Center 7.910% $23,280 12/1/97 11/1/07
166 The Mark Mobile Home Park 6.810% $24,446 4/1/98 3/1/05
167 Rivershores Apartments 6.970% $21,093 5/1/98 4/1/08
168 Perry Hall Mini-Storage 7.220% $25,037 1/1/98 12/1/17 12/1/07
169 Governor's Palace, Ridgmar Americana & Ridgmar W. Apart 7.300% $21,253 5/1/98 4/1/08
170 Brookhollow Apartments 7.370% $21,400 2/1/98 1/1/08
171 Cedarfield Plaza (1K) 7.320% $10,647 5/1/98 4/1/08
172 Greece Mini Storage (1K) 7.320% $10,910 5/1/98 4/1/08
173 Gander Mountain / JoAnn Fabrics Center 7.490% $24,552 5/1/98 4/1/08
174 The Colonnade at Turtle Creek Apartments 6.970% $20,098 5/1/98 4/1/08
175 601 Franklin Avenue Medical Building 7.270% $20,506 7/1/98 6/1/08
176 Valdosta Storage Rollup 7.570% $22,307 6/1/98 5/1/23 5/1/08
177 All Aboard Mini-Storage 7.360% $21,897 6/1/98 5/1/23 5/1/08
<CAPTION>
Defeasance
Prepayment Provision Option
# Property Name (1) as of Origination (Yes/No)(7)
--- ----------------- ----------------- -----------
<S> <C> <C> <C>
141 Wind River Office Building L (9.5), O (0.5) Yes
142 Pass Christian Village L (2.92), YM 1% (6.83), O (0.25) No
143 Marriott Courtyard - Dothan L (9.5), O (0.5) Yes
144 Tivoli Apartments L (5), YM 1% (4.42), O (0.58) Both
145 Sun Plaza Shopping Center L (3.92), YM 1% (10.83), O (0.25) No
146 Holiday Inn Express - Washington L (9.5), O (0.5) Yes
147 Mariner Crossing Shopping Center L (9.5), O (0.5) Yes
148 Mt. Dora Marketplace L (2.92), YM 1% (6.83), O (0.25) No
149 Aspen Village Apartments L (2.92), YM 1% (6.83), O (0.25) No
150 Sherman Oaks L (9.5), O (0.5) Yes
151 South Plains Apartments L (5), O (2) Yes
152 Royal Oaks Apartments L (9.5), O (0.5) Yes
153 Northwinds Apartment Complex L (9.5), O (0.5) Yes
154 The Park Shopping Center L (2.92), YM 1% (6.83), O (0.25) No
155 Lloyd Office Plaza L (9.5), O (0.5) Yes
156 Bridge Street Lodge (1J) L (14.5), O (0.5) Yes
157 P & R Building (1J) L (14.5), O (0.5) Yes
158 Holiday Inn - Dothan L (9.5), O (0.5) Yes
159 Hampton North Townhomes & Apartments L (9.5), O (0.5) Yes
160 Holiday Inn - Lake Havasu L (9.5), O (0.5) Yes
161 University Shoppes L (6.92), YM 1% (12.83), O (0.25) No
162 Galleria Mall L (9.5), O (0.5) Yes
163 Park 219 Business Park L (3.92), YM 1% (5.83), O (0.25) No
164 One Energy Square L (4.5), YM 1% (4.5), O (0.5) No
165 Orchard Plaza Shopping Center L (5), YM 1% (4.5), O (0.5) No
166 The Mark Mobile Home Park L (6.5), O (0.5) Yes
167 Rivershores Apartments L (9.5), O (0.5) Yes
168 Perry Hall Mini-Storage L (9.75), O (0.25) Yes
169 Governor's Palace, Ridgmar Americana & Ridgmar W. Apart L (9.5), O (0.5) Yes
170 Brookhollow Apartments L (9.5), O (0.5) Yes
171 Cedarfield Plaza (1K) L (9.5), O (0.5) Yes
172 Greece Mini Storage (1K) L (9.5), O (0.5) Yes
173 Gander Mountain / JoAnn Fabrics Center L (9.42), O (0.58) Yes
174 The Colonnade at Turtle Creek Apartments L (9.5), O (0.5) Yes
175 601 Franklin Avenue Medical Building L (9.5), O (0.5) Yes
176 Valdosta Storage Rollup L (4.92), YM 1% (4.83), O (0.25) No
177 All Aboard Mini-Storage L (4.92), YM 1% (4.83), O (0.25) No
</TABLE>
<PAGE>
Characteristics of the Mortgage Loans
<TABLE>
<CAPTION>
Percentage of
Mortgage Loan Cut-off Date Initial
# Property Name (1) Seller Balance (4) Pool Balance
--- ----------------- ------ ----------- ------------
<S> <C> <C> <C> <C>
178 Brea Center Column $2,994,596 0.2%
179 Holiday Inn Express Column $2,991,274 0.2%
180 Seaport Villas GE Capital Access $2,948,178 0.2%
181 Park Central Office Park Column $2,944,341 0.2%
182 Drug Emporium Shopping Center GE Capital Access $2,898,252 0.2%
183 Langley Place Column $2,892,843 0.2%
184 Red Lion Apartments GE Capital Access $2,877,238 0.2%
185 The Woodlands Shopping Center Column $2,839,795 0.2%
186 St. Marys Plaza Column $2,831,233 0.2%
187 Mountain Park Pavilions II Column $2,800,000 0.2%
188 Shady Banks Shopping Center Column $2,798,390 0.2%
189 Pavilion in the Park Shopping Center GE Capital Access $2,775,000 0.2%
190 Riverview Business Plaza Column $2,748,656 0.2%
191 Cumberland Station Shopping Center Column $2,748,609 0.2%
192 509-511 Amsterdam Avenue GE Capital Access $2,748,244 0.2%
193 Westover Pointe Center Column $2,698,620 0.2%
194 Towne East Village Apartments Column $2,690,205 0.2%
195 Super Crown Books & LaJolla Patio Column $2,674,866 0.2%
196 Bent Oak Apartments Column $2,650,000 0.2%
197 Summit Apartments Column $2,606,458 0.2%
198 Jefferson Square Mall Column $2,600,000 0.2%
199 Sandalwood Center GE Capital Access $2,594,767 0.2%
200 Encino Village Center GE Capital Access $2,585,729 0.2%
201 Willamette Terrace GE Capital Access $2,551,182 0.2%
202 4 Hartwell Place Column $2,547,543 0.2%
203 79 Worth Street GE Capital Access $2,544,466 0.2%
204 Stewart Creek Shopping Center Column $2,541,450 0.2%
205 Plantation Village Shopping Center GE Capital Access $2,536,796 0.2%
206 Lookout Ridge Apartments Column $2,500,000 0.2%
207 Orangethorpe Beach Shopping Center Column $2,498,679 0.2%
208 Orchard Supply GE Capital Access $2,492,636 0.2%
209 Waterford Village Shopping Center Column $2,492,246 0.2%
210 Governor's Terrace GE Capital Access $2,464,481 0.2%
211 Esplanade Mini-Storage GE Capital Access $2,442,371 0.2%
212 Sterling Industrial Park Column $2,400,000 0.2%
213 Mabelvale Plaza Shopping Center GE Capital Access $2,400,000 0.2%
214 Woodlawn Village Shopping Center Column $2,318,602 0.1%
<CAPTION>
Original Remaining Original Remaining
Amortization Amortization Term to Stated Term to Stated
Term Term Maturity Maturity
# Property Name (1) (months) (months) (months) (5) (months) (5)
--- ----------------- -------- -------- ------------ --------------
<S> <C> <C> <C> <C> <C>
178 Brea Center 360 357 120 117
179 Holiday Inn Express 300 297 120 117
180 Seaport Villas 360 359 120 119
181 Park Central Office Park 360 357 120 117
182 Drug Emporium Shopping Center 360 359 120 119
183 Langley Place 336 333 120 117
184 Red Lion Apartments 300 299 300 299
185 The Woodlands Shopping Center 360 355 120 115
186 St. Marys Plaza 360 356 120 116
187 Mountain Park Pavilions II 180 180 180 180
188 Shady Banks Shopping Center 360 359 120 119
189 Pavilion in the Park Shopping Center 300 300 240 240
190 Riverview Business Plaza 360 359 120 119
191 Cumberland Station Shopping Center 360 359 120 119
192 509-511 Amsterdam Avenue 360 359 120 119
193 Westover Pointe Center 360 359 120 119
194 Towne East Village Apartments 360 355 120 115
195 Super Crown Books & LaJolla Patio 180 177 180 177
196 Bent Oak Apartments 360 360 120 120
197 Summit Apartments 360 358 120 118
198 Jefferson Square Mall 300 300 120 120
199 Sandalwood Center 300 298 120 118
200 Encino Village Center 300 295 120 115
201 Willamette Terrace 360 356 120 116
202 4 Hartwell Place 300 299 120 119
203 79 Worth Street 360 357 120 117
204 Stewart Creek Shopping Center 360 355 180 175
205 Plantation Village Shopping Center 300 295 84 79
206 Lookout Ridge Apartments 360 360 120 120
207 Orangethorpe Beach Shopping Center 360 359 120 119
208 Orchard Supply 180 179 180 179
209 Waterford Village Shopping Center 300 297 120 117
210 Governor's Terrace 360 359 180 179
211 Esplanade Mini-Storage 300 297 120 117
212 Sterling Industrial Park 300 300 120 120
213 Mabelvale Plaza Shopping Center 300 300 120 120
214 Woodlawn Village Shopping Center 360 359 120 119
<CAPTION>
First
Mortgage Monthly Payment Maturity
# Property Name (1) Rate Payment Date Date ARD (6)
--- ----------------- -------- ------- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C>
178 Brea Center 7.540% $21,059 4/1/98 3/1/08
179 Holiday Inn Express 7.690% $22,542 4/1/98 3/1/23 3/1/08
180 Seaport Villas 7.040% $19,706 6/1/98 4/30/28 5/1/08
181 Park Central Office Park 7.310% $20,244 4/1/98 3/1/08
182 Drug Emporium Shopping Center 7.120% $19,528 6/1/98 5/1/28 5/1/08
183 Langley Place 7.080% $19,862 4/1/98 3/1/08
184 Red Lion Apartments 7.370% $21,040 6/1/98 5/1/23
185 The Woodlands Shopping Center 7.460% $19,850 2/1/98 1/1/08
186 St. Marys Plaza 7.360% $19,586 3/1/98 2/1/08
187 Mountain Park Pavilions II 7.340% $25,702 7/1/98 6/1/13
188 Shady Banks Shopping Center 7.270% $19,139 6/1/98 5/1/08
189 Pavilion in the Park Shopping Center 7.520% $20,543 7/1/98 6/1/23 6/1/18
190 Riverview Business Plaza 7.760% $19,720 6/1/98 5/1/08
191 Cumberland Station Shopping Center 7.660% $19,531 6/1/98 5/1/08
192 509-511 Amsterdam Avenue 6.930% $18,167 6/1/98 5/1/23 5/1/08
193 Westover Pointe Center 7.630% $19,120 6/1/98 5/1/08
194 Towne East Village Apartments 7.400% $18,694 2/1/98 1/1/08
195 Super Crown Books & LaJolla Patio 7.260% $24,663 4/1/98 3/1/13
196 Bent Oak Apartments 6.940% $17,524 7/1/98 6/1/08
197 Summit Apartments 7.270% $17,840 5/1/98 4/1/08
198 Jefferson Square Mall 7.540% $19,281 7/1/98 6/1/08
199 Sandalwood Center 7.670% $19,502 5/1/98 4/1/23 4/1/08
200 Encino Village Center 7.580% $19,349 2/1/98 1/1/23 1/1/08
201 Willamette Terrace 6.800% $16,689 3/1/98 2/1/28 2/1/08
202 4 Hartwell Place 7.350% $18,596 6/1/98 5/1/08
203 79 Worth Street 6.840% $16,692 4/1/98 3/1/28 3/1/08
204 Stewart Creek Shopping Center 7.760% $18,286 2/1/98 1/1/13
205 Plantation Village Shopping Center 7.920% $19,546 2/1/98 1/1/23 1/1/05
206 Lookout Ridge Apartments 7.100% $16,801 7/1/98 6/1/08
207 Orangethorpe Beach Shopping Center 7.530% $17,532 6/1/98 5/1/08
208 Orchard Supply 7.050% $22,541 6/1/98 5/1/13
209 Waterford Village Shopping Center 7.370% $18,264 4/1/98 3/1/08
210 Governor's Terrace 7.050% $16,492 6/1/98 5/1/13
211 Esplanade Mini-Storage 7.350% $17,867 4/1/98 3/1/23 3/1/08
212 Sterling Industrial Park 7.370% $17,533 7/1/98 6/1/08
213 Mabelvale Plaza Shopping Center 7.230% $17,316 7/1/98 6/1/23 6/1/08
214 Woodlawn Village Shopping Center 7.120% $15,622 6/1/98 5/1/08
<CAPTION>
Defeasance
Prepayment Provision Option
# Property Name (1) as of Origination (Yes/No)(7)
--- ----------------- ----------------- -----------
<S> <C> <C> <C>
178 Brea Center L (9.5), O (0.5) Yes
179 Holiday Inn Express L (9.5), O (0.5) Yes
180 Seaport Villas L (9.75), O (0.25) Yes
181 Park Central Office Park L (9.5), O (0.5) Yes
182 Drug Emporium Shopping Center L (3.92), YM 1% (5.83), O (0.25) No
183 Langley Place L (9.5), O (0.5) Yes
184 Red Lion Apartments L (24.75), O (0.25) Yes
185 The Woodlands Shopping Center L (9.5), O (0.5) Yes
186 St. Marys Plaza L (9.5), O (0.5) Yes
187 Mountain Park Pavilions II L (14.5), O (0.5) Yes
188 Shady Banks Shopping Center L (5), YM 1% (4.42), O (0.58) Both
189 Pavilion in the Park Shopping Center L (9.92), YM 1% (9.83), O (0.25) No
190 Riverview Business Plaza L (9.5), O (0.5) Yes
191 Cumberland Station Shopping Center L (9.5), O (0.5) Yes
192 509-511 Amsterdam Avenue L (3.92), YM 1% (5.75), O (0.33) No
193 Westover Pointe Center L (9.5), O (0.5) Yes
194 Towne East Village Apartments L (9.5), O (0.5) Yes
195 Super Crown Books & LaJolla Patio L (14.5), O (0.5) Yes
196 Bent Oak Apartments L (5), YM 1% (4.42), O (0.58) Both
197 Summit Apartments L (9.5), O (0.5) Yes
198 Jefferson Square Mall L (9.5), O (0.5) Yes
199 Sandalwood Center L (3.92), YM 1% (5.83), O (0.25) No
200 Encino Village Center L (3.92), YM 1% (5.83), O (0.25) No
201 Willamette Terrace L (4.92), YM 1% (4.83), O (0.25) No
202 4 Hartwell Place L (9.5), O (0.5) Yes
203 79 Worth Street L (4.92), YM 1% (4.83), O (0.25) No
204 Stewart Creek Shopping Center L (8), YM 1% (4), O (3) No
205 Plantation Village Shopping Center L (2.92), YM 1% (3.83), O (0.25) No
206 Lookout Ridge Apartments L (9.5), O (0.5) Yes
207 Orangethorpe Beach Shopping Center L (9.5), O (0.5) Yes
208 Orchard Supply L (3.92), YM 1% (10.75), O (0.33) No
209 Waterford Village Shopping Center L (9.5), O (0.5) Yes
210 Governor's Terrace L (3.92), YM 1% (10.83), O (0.25) No
211 Esplanade Mini-Storage L (3.92), YM 1% (5.83), O (0.25) No
212 Sterling Industrial Park L (9.5), O (0.5) Yes
213 Mabelvale Plaza Shopping Center L (2.92), YM 1% (6.78), O (0.33) No
214 Woodlawn Village Shopping Center L (5), YM 1% (4.42), O (0.58) Both
</TABLE>
<PAGE>
Characteristics of the Mortgage Loans
<TABLE>
<CAPTION>
Percentage of
Mortgage Loan Cut-off Date Initial
# Property Name (1) Seller Balance (4) Pool Balance
--- ----------------- ------ ----------- ------------
<S> <C> <C> <C> <C>
215 Bolton-Moore's Mill Shopping Center Column $2,298,796 0.1%
216 Omni Plaza Shopping Center Column $2,298,698 0.1%
217 Shield Street Plaza Column $2,287,333 0.1%
218 Viewmont Estates Mobile Home Park GE Capital Access $2,248,614 0.1%
219 1731, 1741 and 1751 Washington Street GE Capital Access $2,200,000 0.1%
220 Penninsula Professional Building Column $2,198,775 0.1%
221 Creekside Mobile Estates Column $2,196,864 0.1%
222 Alexandria Square Column $2,167,012 0.1%
223 Advo Building Column $2,148,841 0.1%
224 White Pines Plaza GE Capital Access $2,115,925 0.1%
225 North Shore Estates GE Capital Access $2,098,711 0.1%
226 River's Edge Apartments Column $2,096,004 0.1%
227 109-111 Grant Avenue Column $2,095,796 0.1%
228 Royal Oaks Senior Community Park Column $2,093,271 0.1%
229 Parker Marketplace Phase II Column $2,078,819 0.1%
230 Summer Creek Apartments Column $2,060,000 0.1%
231 Robarts Mobile Home Park GE Capital Access $2,046,984 0.1%
232 Woodcrest Townhome Apartments Column $2,000,000 0.1%
233 Planters Trace Apartments GE Capital Access $1,998,661 0.1%
234 Stone Oak Apartments Column $1,997,044 0.1%
235 Hidden Hills Mobile Home Park Column $1,995,626 0.1%
236 Tiger Mart Column $1,995,037 0.1%
237 Quail Hollow Business Park Column $1,993,967 0.1%
238 Campus Square Apartments Column $1,993,907 0.1%
239 Bridgeport Professional Building Column $1,993,797 0.1%
240 Park Lane Terrace Apartments Column $1,993,270 0.1%
241 Brigham's Landing Shopping Center Column $1,990,665 0.1%
242 Boulevard Shoppes II GE Capital Access $1,989,905 0.1%
243 The Clusters Apartments Column $1,987,627 0.1%
244 Fairfield Inn - Dothan Column $1,983,803 0.1%
245 Valley Manor Column $1,946,172 0.1%
246 Sunrise Village Apartments Column $1,940,855 0.1%
247 Ridgewood Apartments GE Capital Access $1,900,000 0.1%
248 Bella Vista Terrace GE Capital Access $1,898,826 0.1%
249 Ramada Limited Column $1,898,305 0.1%
250 Secluded Oaks Villas Apartments Column $1,897,403 0.1%
251 Colonial Mobile Home Park Column $1,891,033 0.1%
<CAPTION>
Original Remaining Original Remaining
Amortization Amortization Term to Stated Term to Stated
Term Term Maturity Maturity
# Property Name (1) (months) (months) (months) (5) (months) (5)
--- ----------------- -------- -------- ------------ --------------
<S> <C> <C> <C> <C> <C>
215 Bolton-Moore's Mill Shopping Center 360 359 120 119
216 Omni Plaza Shopping Center 360 359 120 119
217 Shield Street Plaza 300 295 120 115
218 Viewmont Estates Mobile Home Park 360 359 180 179
219 1731, 1741 and 1751 Washington Street 300 300 120 120
220 Penninsula Professional Building 360 359 120 119
221 Creekside Mobile Estates 360 358 120 118
222 Alexandria Square 180 178 120 118
223 Advo Building 360 359 120 119
224 White Pines Plaza 360 356 120 116
225 North Shore Estates 360 359 120 119
226 River's Edge Apartments 360 357 120 117
227 109-111 Grant Avenue 360 357 120 117
228 Royal Oaks Senior Community Park 360 356 120 116
229 Parker Marketplace Phase II 360 359 120 119
230 Summer Creek Apartments 360 360 120 120
231 Robarts Mobile Home Park 360 358 120 118
232 Woodcrest Townhome Apartments 240 240 120 120
233 Planters Trace Apartments 360 359 120 119
234 Stone Oak Apartments 360 358 120 118
235 Hidden Hills Mobile Home Park 360 357 120 117
236 Tiger Mart 180 179 180 179
237 Quail Hollow Business Park 300 297 120 117
238 Campus Square Apartments 300 297 180 177
239 Bridgeport Professional Building 300 297 120 117
240 Park Lane Terrace Apartments 360 356 84 80
241 Brigham's Landing Shopping Center 300 296 120 116
242 Boulevard Shoppes II 240 237 240 237
243 The Clusters Apartments 180 178 120 118
244 Fairfield Inn - Dothan 300 297 120 117
245 Valley Manor 300 298 120 118
246 Sunrise Village Apartments 300 296 120 116
247 Ridgewood Apartments 360 360 240 240
248 Bella Vista Terrace 360 359 120 119
249 Ramada Limited 300 299 120 119
250 Secluded Oaks Villas Apartments 360 358 120 118
251 Colonial Mobile Home Park 300 296 120 116
<CAPTION>
First
Mortgage Monthly Payment Maturity
# Property Name (1) Rate Payment Date Date ARD (6)
--- ----------------- -------- ------- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C>
215 Bolton-Moore's Mill Shopping Center 7.560% $16,177 6/1/98 5/1/08
216 Omni Plaza Shopping Center 7.320% $15,799 6/1/98 5/1/08
217 Shield Street Plaza 7.560% $17,087 2/1/98 1/1/08
218 Viewmont Estates Mobile Home Park 7.050% $15,045 6/1/98 5/1/28 5/1/13
219 1731, 1741 and 1751 Washington Street 7.080% $15,662 7/1/98 6/1/23 6/1/08
220 Penninsula Professional Building 7.370% $15,187 6/1/98 5/1/08
221 Creekside Mobile Estates 7.070% $14,740 5/1/98 4/1/08
222 Alexandria Square 7.310% $19,974 5/1/98 4/1/08
223 Advo Building 7.470% $14,989 6/1/98 5/1/08
224 White Pines Plaza 6.970% $14,082 3/1/98 2/1/28 2/1/08
225 North Shore Estates 7.060% $14,056 6/1/98 5/1/28 5/1/08
226 River's Edge Apartments 7.340% $14,454 4/1/98 3/1/08
227 109-111 Grant Avenue 7.150% $14,184 4/1/98 3/1/08
228 Royal Oaks Senior Community Park 7.170% $14,212 3/1/98 2/1/08
229 Parker Marketplace Phase II 7.310% $14,274 6/1/98 5/1/08
230 Summer Creek Apartments 6.940% $13,622 7/1/98 6/1/08
231 Robarts Mobile Home Park 6.940% $13,556 5/1/98 4/1/28 4/1/08
232 Woodcrest Townhome Apartments 6.950% $15,446 7/1/98 6/1/08
233 Planters Trace Apartments 6.770% $12,999 6/1/98 5/1/28 5/1/08
234 Stone Oak Apartments 6.920% $13,199 5/1/98 4/1/08
235 Hidden Hills Mobile Home Park 6.810% $13,052 4/1/98 3/1/08
236 Tiger Mart 8.670% $19,895 6/1/98 5/1/13
237 Quail Hollow Business Park 7.510% $14,793 4/1/98 3/1/08
238 Campus Square Apartments 7.460% $14,728 4/1/98 3/1/13
239 Bridgeport Professional Building 7.370% $14,611 4/1/98 3/1/08
240 Park Lane Terrace Apartments 6.920% $13,199 3/1/98 2/1/05
241 Brigham's Landing Shopping Center 7.420% $14,676 3/1/98 2/1/08
242 Boulevard Shoppes II 7.480% $16,087 4/1/98 3/1/18
243 The Clusters Apartments 6.910% $17,876 5/1/98 4/1/08
244 Fairfield Inn - Dothan 7.350% $14,512 4/1/98 3/1/08
245 Valley Manor 7.800% $14,793 5/1/98 4/1/08
246 Sunrise Village Apartments 7.390% $14,271 3/1/98 2/1/08
247 Ridgewood Apartments 7.170% $12,858 7/1/98 6/1/28 6/1/18
248 Bella Vista Terrace 7.040% $12,692 6/1/98 4/30/28 5/1/08
249 Ramada Limited 7.690% $14,276 6/1/98 5/1/23 5/1/08
250 Secluded Oaks Villas Apartments 7.240% $12,948 5/1/98 4/1/08
251 Colonial Mobile Home Park 7.350% $13,856 3/1/98 2/1/08
<CAPTION>
Defeasance
Prepayment Provision Option
# Property Name (1) as of Origination (Yes/No)(7)
--- ----------------- ----------------- -----------
<S> <C> <C> <C>
215 Bolton-Moore's Mill Shopping Center L (9.5), O (0.5) Yes
216 Omni Plaza Shopping Center L (9.5), O (0.5) Yes
217 Shield Street Plaza L (9.5), O (0.5) Yes
218 Viewmont Estates Mobile Home Park L (3.92), YM 1% (10.83), O (0.25) No
219 1731, 1741 and 1751 Washington Street L (9.75), O (0.25) Yes
220 Penninsula Professional Building L (5), YM 1% (4.42), O (0.58) Both
221 Creekside Mobile Estates L (9.5), O (0.5) Yes
222 Alexandria Square L (5), YM 1% (4.5), O (0.5) No
223 Advo Building L (9.5), O (0.5) Yes
224 White Pines Plaza L (2.92), YM 1% (6.83), O (0.25) No
225 North Shore Estates L (3.92), YM 1% (5.75), O (0.33) No
226 River's Edge Apartments L (5), YM 1% (4.5), O (0.5) No
227 109-111 Grant Avenue L (9.5), O (0.5) Yes
228 Royal Oaks Senior Community Park L (9.5), O (0.5) Yes
229 Parker Marketplace Phase II L (9.5), O (0.5) Yes
230 Summer Creek Apartments L (5), YM 1% (4.42), O (0.58) Both
231 Robarts Mobile Home Park L (4.92), YM 1% (4.83), O (0.25) No
232 Woodcrest Townhome Apartments L (9.5), O (0.5) Yes
233 Planters Trace Apartments L (2.92), YM 1% (6.75), O (0.33) No
234 Stone Oak Apartments L (9.5), O (0.5) Yes
235 Hidden Hills Mobile Home Park L (9.5), O (0.5) Yes
236 Tiger Mart L (9.5), O (5.5) Yes
237 Quail Hollow Business Park L (9.5), O (0.5) Yes
238 Campus Square Apartments L (14.5), O (0.5) Yes
239 Bridgeport Professional Building L (9.5), O (0.5) Yes
240 Park Lane Terrace Apartments L (5), O (2) Yes
241 Brigham's Landing Shopping Center L (9.5), O (0.5) Yes
242 Boulevard Shoppes II L (6.92), YM 1% (12.83), O (0.25) No
243 The Clusters Apartments L (3), YM 1% (6.5), O (0.5) No
244 Fairfield Inn - Dothan L (9.5), O (0.5) Yes
245 Valley Manor L (9.5), O (0.5) Yes
246 Sunrise Village Apartments L (2.33), YM 1% (7.17), O (0.5) No
247 Ridgewood Apartments L (19.75), O (0.25) Yes
248 Bella Vista Terrace L (9.75), O (0.25) Yes
249 Ramada Limited L (9.5), O (0.5) Yes
250 Secluded Oaks Villas Apartments L (9.5), O (0.5) Yes
251 Colonial Mobile Home Park L (9.5), O (0.5) Yes
</TABLE>
<PAGE>
Characteristics of the Mortgage Loans
<TABLE>
<CAPTION>
Percentage of
Mortgage Loan Cut-off Date Initial
# Property Name (1) Seller Balance (4) Pool Balance
--- ----------------- ------ ----------- ------------
<S> <C> <C> <C> <C>
252 Plaza North Medical Building Column $1,823,190 0.1%
253 Camelot Apartments GE Capital Access $1,808,982 0.1%
254 Northlake Quadrangle Column $1,797,991 0.1%
255 Gordon Street Apartments GE Capital Access $1,797,346 0.1%
256 Northgate Apartments GE Capital Access $1,795,862 0.1%
257 Sepulveda Crest Apartments Column $1,794,060 0.1%
258 Morningstar Mini-Storage GE Capital Access $1,743,781 0.1%
259 Chateaux Verde Apartments Column $1,741,516 0.1%
260 Homestead Corner Shopping Center Column $1,707,952 0.1%
261 Lake Villa Apartments Column $1,697,606 0.1%
262 F & H Warehouse Column $1,685,255 0.1%
263 Avian Plaza Shopping Center Column $1,648,718 0.1%
264 Port Orchard Mini Storage GE Capital Access $1,648,445 0.1%
265 Sequoia Grove Apartments GE Capital Access $1,626,426 0.1%
266 The Miller Center Column $1,597,515 0.1%
267 Emerald Park Apartments Column $1,597,369 0.1%
268 Rancho San Diego Town & Country GE Capital Access $1,594,320 0.1%
269 French Quarters East Apartments Column $1,550,000 0.1%
270 The Forest Apartments Column $1,540,000 0.1%
271 Oakhill Apartments GE Capital Access $1,520,000 0.1%
272 STOR-N-LOCK Column $1,498,503 0.1%
273 Autumn Ridge Apartments GE Capital Access $1,491,294 0.1%
274 701 Franklin Center GE Capital Access $1,454,307 0.1%
275 Savoy Condominiums Column $1,419,683 0.1%
276 Meriden East Apartments GE Capital Access $1,416,840 0.1%
277 Hyde Park Mobile Estates GE Capital Access $1,403,387 0.1%
278 Courtyard Plaza Column $1,400,000 0.1%
279 Tradewinds Apartments Column $1,400,000 0.1%
280 Regency Manor Apartments Column $1,399,208 0.1%
281 Hood Chalet Mobile Estates GE Capital Access $1,398,630 0.1%
282 Mauna Kea Apartments Column $1,395,627 0.1%
283 Deer Creek Apartments GE Capital Access $1,329,283 0.1%
284 Evergreen Place Condominiums Column $1,315,730 0.1%
285 Autumn Creek Apartments Column $1,267,850 0.1%
286 Midtown at Main Column $1,234,417 0.1%
287 Park Place Center GE Capital Access $1,225,099 0.1%
288 International Self Storage GE Capital Access $1,197,443 0.1%
<CAPTION>
Original Remaining Original Remaining
Amortization Amortization Term to Stated Term to Stated
Term Term Maturity Maturity
# Property Name (1) (months) (months) (months) (5) (months) (5)
--- ----------------- -------- -------- ------------ --------------
<S> <C> <C> <C> <C> <C>
252 Plaza North Medical Building 300 299 120 119
253 Camelot Apartments 360 359 120 119
254 Northlake Quadrangle 300 299 120 119
255 Gordon Street Apartments 360 358 120 118
256 Northgate Apartments 300 298 120 118
257 Sepulveda Crest Apartments 360 356 120 116
258 Morningstar Mini-Storage 240 238 240 238
259 Chateaux Verde Apartments 300 296 180 176
260 Homestead Corner Shopping Center 360 358 180 178
261 Lake Villa Apartments 360 358 120 118
262 F & H Warehouse 180 177 180 177
263 Avian Plaza Shopping Center 324 323 120 119
264 Port Orchard Mini Storage 300 299 120 119
265 Sequoia Grove Apartments 360 357 120 117
266 The Miller Center 240 239 120 119
267 Emerald Park Apartments 360 358 120 118
268 Rancho San Diego Town & Country 360 355 144 139
269 French Quarters East Apartments 360 360 120 120
270 The Forest Apartments 360 360 120 120
271 Oakhill Apartments 360 360 120 120
272 STOR-N-LOCK 300 299 120 119
273 Autumn Ridge Apartments 300 295 60 55
274 701 Franklin Center 300 295 120 115
275 Savoy Condominiums 360 355 120 115
276 Meriden East Apartments 300 295 60 55
277 Hyde Park Mobile Estates 144 128 144 128
278 Courtyard Plaza 300 300 120 120
279 Tradewinds Apartments 360 360 120 120
280 Regency Manor Apartments 360 359 120 119
281 Hood Chalet Mobile Estates 300 299 180 179
282 Mauna Kea Apartments 360 356 120 116
283 Deer Creek Apartments 360 359 300 299
284 Evergreen Place Condominiums 360 358 120 118
285 Autumn Creek Apartments 360 357 120 117
286 Midtown at Main 252 249 120 117
287 Park Place Center 300 295 120 115
288 International Self Storage 300 298 120 118
<CAPTION>
First
Mortgage Monthly Payment Maturity
# Property Name (1) Rate Payment Date Date ARD (6)
--- ----------------- -------- ------- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C>
252 Plaza North Medical Building 7.220% $13,156 6/1/98 5/1/08
253 Camelot Apartments 7.340% $12,458 6/1/98 5/1/28 5/1/08
254 Northlake Quadrangle 7.630% $13,454 6/1/98 5/1/08
255 Gordon Street Apartments 6.930% $11,891 5/1/98 4/1/28 4/1/08
256 Northgate Apartments 6.960% $12,676 5/1/98 4/1/23 4/1/08
257 Sepulveda Crest Apartments 7.020% $12,000 3/1/98 1/14/08
258 Morningstar Mini-Storage 7.210% $13,789 5/1/98 4/1/18
259 Chateaux Verde Apartments 7.180% $12,570 3/1/98 2/1/13
260 Homestead Corner Shopping Center 7.760% $12,262 5/1/98 4/1/13
261 Lake Villa Apartments 7.120% $11,447 5/1/98 4/1/08
262 F & H Warehouse 7.530% $15,788 4/1/98 3/1/13
263 Avian Plaza Shopping Center 7.360% $11,739 6/1/98 5/1/08
264 Port Orchard Mini Storage 7.450% $12,140 6/1/98 5/1/23 5/1/08
265 Sequoia Grove Apartments 6.800% $10,626 4/1/98 3/1/08
266 The Miller Center 7.680% $13,066 6/1/98 5/1/08
267 Emerald Park Apartments 7.000% $10,645 5/1/98 4/1/08
268 Rancho San Diego Town & Country 7.500% $11,187 2/1/98 1/1/28 1/1/10
269 French Quarters East Apartments 7.070% $10,385 7/1/98 6/1/08
270 The Forest Apartments 6.940% $10,184 7/1/98 6/1/08
271 Oakhill Apartments 6.930% $10,041 7/1/98 6/1/28 6/1/08
272 STOR-N-LOCK 7.190% $10,784 6/1/98 5/1/08
273 Autumn Ridge Apartments 7.250% $10,842 2/1/98 1/1/23 1/1/03
274 701 Franklin Center 7.460% $10,770 2/1/98 1/1/23 1/1/08
275 Savoy Condominiums 7.270% $9,740 2/1/98 12/23/07
276 Meriden East Apartments 7.330% $10,374 2/1/98 1/1/23 1/1/03
277 Hyde Park Mobile Estates 8.370% $16,699 3/1/97 2/1/09
278 Courtyard Plaza 7.220% $10,092 7/1/98 6/1/08
279 Tradewinds Apartments 6.940% $9,258 7/1/98 6/1/08
280 Regency Manor Apartments 7.320% $9,617 6/1/98 5/1/08
281 Hood Chalet Mobile Estates 7.280% $10,146 6/1/98 5/1/23 5/1/13
282 Mauna Kea Apartments 7.300% $9,598 3/1/98 2/1/08
283 Deer Creek Apartments 7.470% $9,272 6/1/98 5/1/23
284 Evergreen Place Condominiums 7.310% $9,041 5/1/98 4/1/08
285 Autumn Creek Apartments 7.760% $9,107 4/1/98 3/1/08
286 Midtown at Main 7.550% $9,824 4/1/98 3/1/08
287 Park Place Center 7.460% $9,072 2/1/98 1/1/23 1/1/08
288 International Self Storage 7.370% $8,767 5/1/98 4/1/23 4/1/08
<CAPTION>
Defeasance
Prepayment Provision Option
# Property Name (1) as of Origination (Yes/No)(7)
--- ----------------- ----------------- -----------
<S> <C> <C> <C>
252 Plaza North Medical Building L (9.5), O (0.5) Yes
253 Camelot Apartments L (9.75), O (0.25) Yes
254 Northlake Quadrangle L (9.5), O (0.5) Yes
255 Gordon Street Apartments L (9.75), O (0.25) Yes
256 Northgate Apartments L (3.92), YM 1% (5.83), O (0.25) No
257 Sepulveda Crest Apartments L (9.5), O (0.5) Yes
258 Morningstar Mini-Storage L (2.92), YM 1% (16.83), O (0.25) No
259 Chateaux Verde Apartments L (14.5), O (0.5) Yes
260 Homestead Corner Shopping Center L (14.25), O (0.75) Yes
261 Lake Villa Apartments L (9.5), O (0.5) Yes
262 F & H Warehouse L (14.5), O (0.5) Yes
263 Avian Plaza Shopping Center L (9.5), O (0.5) Yes
264 Port Orchard Mini Storage L (3.92), YM 1% (5.83), O (0.25) No
265 Sequoia Grove Apartments L (4.92), YM 1% (4.58), O (0.5) No
266 The Miller Center L (9.5), O (0.5) Yes
267 Emerald Park Apartments L (9.5), O (0.5) Yes
268 Rancho San Diego Town & Country L (3.92), YM 1% (7.83), O (0.25) No
269 French Quarters East Apartments L (9.5), O (0.5) Yes
270 The Forest Apartments L (5), YM 1% (4.42), O (0.58) Both
271 Oakhill Apartments L (2.92), YM 1% (6.75), O (0.33) No
272 STOR-N-LOCK L (9.5), O (0.5) Yes
273 Autumn Ridge Apartments L (2.92), YM 1% (1.83), O (0.25) No
274 701 Franklin Center L (2.92), YM 1% (6.75), O (0.33) No
275 Savoy Condominiums L (9.5), O (0.5) Yes
276 Meriden East Apartments L (2.92), YM 1% (1.83), O (0.25) No
277 Hyde Park Mobile Estates L (9.92), YM 1% (1.83), O (0.25) No
278 Courtyard Plaza L (9.5), O (0.5) Yes
279 Tradewinds Apartments L (5), YM 1% (4.42), O (0.58) Both
280 Regency Manor Apartments L (9.5), O (0.5) Yes
281 Hood Chalet Mobile Estates L (3.92), YM 1% (10.83), O (0.25) No
282 Mauna Kea Apartments L (9.5), O (0.5) Yes
283 Deer Creek Apartments L (3.92), YM 1% (20.83), O (0.25) No
284 Evergreen Place Condominiums L (9.5), O (0.5) Yes
285 Autumn Creek Apartments L (9.5), O (0.5) Yes
286 Midtown at Main L (9.5), O (0.5) Yes
287 Park Place Center L (2.92), YM 1% (6.75), O (0.33) No
288 International Self Storage L (4.92), YM 1% (4.83), O (0.25) No
</TABLE>
<PAGE>
Characteristics of the Mortgage Loans
<TABLE>
<CAPTION>
Percentage of
Mortgage Loan Cut-off Date Initial
# Property Name (1) Seller Balance (4) Pool Balance
--- ----------------- ------ ----------- ------------
<S> <C> <C> <C> <C>
289 Villa Catalina Apartments Column $1,170,000 0.1%
290 Loc-'N-Stor Self-Storage GE Capital Access $1,123,969 0.1%
291 Rancho Villa Column $1,100,000 0.1%
292 Timberline Mobile Home Park Column $1,100,000 0.1%
293 Timberland Ridge Apartments Column $1,097,522 0.1%
294 Leewood Apartments Column $1,095,913 0.1%
295 Glen Mark Apartments Column $1,024,376 0.1%
296 Pinecroft Mobile Home Park Column $1,000,000 0.1%
297 Eckerds Drugstore Column $993,623 0.1%
298 Eastern Promenade Apartments Column $957,861 0.1%
299 Belle Meade Apartments Column $878,803 0.1%
300 Riverview Plaza II Column $783,232 0.1%
301 Westmoreland Warehouse Column $573,042 0.0%
Total/Weighted Average: $1,564,253,433 100.0%
====================================
Maximum: $94,602,208 6.0%
Minimum: $573,042 0.0%
<CAPTION>
Original Remaining Original Remaining
Amortization Amortization Term to Stated Term to Stated
Term Term Maturity Maturity
# Property Name (1) (months) (months) (months) (5) (months) (5)
--- ----------------- -------- -------- ------------ --------------
<S> <C> <C> <C> <C> <C>
289 Villa Catalina Apartments 360 360 120 120
290 Loc-'N-Stor Self-Storage 300 299 120 119
291 Rancho Villa 300 300 120 120
292 Timberline Mobile Home Park 300 300 120 120
293 Timberland Ridge Apartments 300 298 120 118
294 Leewood Apartments 360 355 120 115
295 Glen Mark Apartments 360 359 120 119
296 Pinecroft Mobile Home Park 300 300 120 120
297 Eckerds Drugstore 216 213 216 213
298 Eastern Promenade Apartments 300 298 120 118
299 Belle Meade Apartments 360 358 120 118
300 Riverview Plaza II 300 298 120 118
301 Westmoreland Warehouse 240 238 120 118
Total/Weighted Average: 336.6825011 334.185467 135.0666032 132.5110747
==============================================================
Maximum: 360 360 300 299
Minimum: 144 128 60 55
<CAPTION>
First
Mortgage Monthly Payment Maturity
# Property Name (1) Rate Payment Date Date ARD (6)
--- ----------------- -------- ------- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C>
289 Villa Catalina Apartments 7.120% $7,879 7/1/98 6/1/08
290 Loc-'N-Stor Self-Storage 7.570% $8,365 6/1/98 5/1/23 5/1/08
291 Rancho Villa 7.480% $8,115 7/1/98 6/1/08
292 Timberline Mobile Home Park 7.210% $7,923 7/1/98 6/1/08
293 Timberland Ridge Apartments 7.070% $7,824 5/1/98 4/1/08
294 Leewood Apartments 7.290% $7,534 2/1/98 1/1/08
295 Glen Mark Apartments 7.090% $6,881 6/1/98 5/1/08
296 Pinecroft Mobile Home Park 7.210% $7,202 7/1/98 6/1/08
297 Eckerds Drugstore 7.300% $8,331 4/1/98 3/1/16
298 Eastern Promenade Apartments 7.130% $6,865 5/1/98 4/1/08
299 Belle Meade Apartments 7.260% $6,009 5/1/98 4/1/08
300 Riverview Plaza II 7.070% $5,583 5/1/98 4/1/08
301 Westmoreland Warehouse 7.520% $4,639 5/1/98 4/1/08
Total/Weighted Average: 7.210% $10,952,801 4/14/98 11/29/18
===============================================
Maximum: 8.860% $628,851 7/1/98 6/1/28
Minimum: 6.650% $4,639 3/1/97 5/1/03
<CAPTION>
Defeasance
Prepayment Provision Option
# Property Name (1) as of Origination (Yes/No)(7)
--- ----------------- ----------------- -----------
<S> <C> <C> <C>
289 Villa Catalina Apartments L (9.5), O (0.5) Yes
290 Loc-'N-Stor Self-Storage L (3.92), YM 1% (5.83), O (0.25) No
291 Rancho Villa L (9.5), O (0.5) Yes
292 Timberline Mobile Home Park L (9.5), O (0.5) Yes
293 Timberland Ridge Apartments L (9.5), O (0.5) Yes
294 Leewood Apartments L (9.5), O (0.5) Yes
295 Glen Mark Apartments L (9.5), O (0.5) Yes
296 Pinecroft Mobile Home Park L (9.5), O (0.5) Yes
297 Eckerds Drugstore L (17.5), O (0.5) Yes
298 Eastern Promenade Apartments L (9.5), O (0.5) Yes
299 Belle Meade Apartments L (9.5), O (0.5) Yes
300 Riverview Plaza II L (9.5), O (0.5) Yes
301 Westmoreland Warehouse L (9.5), O (0.5) Yes
</TABLE>
<PAGE>
(1A) The Mortgage Loans secured by Raritan Plaza I and Raritan Center Industrial
Portfolio, respectively, are cross-collateralized and cross-defaulted.
(1B) The Mortgage Loans secured by Holiday Inn - Jacksonville Airport and
Courtyard by Marriott, respectively, are cross-collateralized and
cross-defaulted.
(1C) The Mortgage Loans secured by Courtyard by Marriott - Pensacola, Courtyard
by Marriott - Tuscaloosa, Fairfield Inn - Pensacola, Fairfield Inn -
Birmingham and Fairfield Inn - Tuscaloosa, respectively, are
cross-collateralized and cross-defaulted.
(1D) The Mortgage Loans secured by Royal Plaza Hotel - Marlborough and Royal
Plaza Hotel- Fitchburg, respectively, are cross-collateralized and
cross-defaulted.
(1E) The Mortgage Loans secured by Highland Pavilion Shopping Center and
Highland Pavilion Cinema, respectively, are cross-collateralized and
cross-defaulted.
(1F) The Mortgage Loans secured by Flower Hill Professional Center and Flower
Hill McDonald's, respectively, are cross-collateralized and
cross-defaulted.
(1G) The Mortgage Loans secured by Pellcare Nursing Home - Winston-Salem and
Pellcare Nursing Home - Hickory, respectively, are cross-collateralized and
cross-defaulted.
(1H) The Mortgage Loans secured by Wyoming-Enzie Properties and Mesa Properties,
respectively, are cross-collateralized and cross-defaulted.
(1I) The Mortgage Loans secured by Tivoli Condominiums, Cross Creek Apartments
and Tamara Hills Townhomes, respectively, are cross-collateralized and
cross-defaulted.
(1J) The Mortgage Loans secured by Bridge Street Lodge and P&R Building,
respectively, are cross-collateralized and cross-defaulted.
(1K) The Mortgage Loans secured by Cedarfield Plaza and Greece Mini Storage,
respectively, are cross-collateralized and cross-defaulted.
(2) Summer Cove Apartments has an interest only period of 24 months and will
begin to amortize over a 336 month term.
(3) Ultra Plaza Shopping Center has an interest only period of 24 months and
will begin to amortize over a 336 month term.
(4) Assumes a Cut-off Date of June 1, 1998.
(5) In the case of the Anticipated Repayment Date loans, the Anticipated
Repayment Date is assumed to be the maturity date for the purposes of the
indicated column.
(6) Anticipated Repayment Date.
(7) In the case of South Plains Apartments and Park Lane Apartments the Lockout
Only provision is assumed to be defeasance.
<PAGE>
<TABLE>
<CAPTION>
Engineering Reserves and Recurring Replacement Reserves
Engineering
Property Reserve at
# Property Name (1) Type Origination
- ----------------- ---- -----------
<S> <C> <C> <C>
1 The Rivergate Apartments Multifamily $6,875
2 Raritan Plaza I (1A) Office $6,250
3 Raritan Center Industrial Portfolio (1A) Industrial N/A
4 Resurgens Plaza Office N/A
5 The Camargue Multifamily $81,250
6 Casa Arroyo Apartments Multifamily $733,713
7 Ballena Village Apartments Multifamily $301,000
8 Holiday Inn - Jacksonville Airport (1B) Hotel $60,031
9 Courtyard by Marriott (1B) Hotel N/A
10 Magnolia Lake Apartments Multifamily $95,931
11 Park Terrace Multifamily $78,250
12 Autumn Chase Apartments Multifamily $23,481
13 Embassy Square Suites Hotel $360,375
14 101 Commerce Drive Industrial $8,750
15 Courtyard by Marriott - Pensacola (1C) Hotel N/A
16 Courtyard by Marriott - Tuscaloosa (1C) Hotel N/A
17 Fairfield Inn - Pensacola (1C) Hotel N/A
18 Fairfield Inn - Birmingham (1C) Hotel $2,125
19 Fairfield Inn - Tuscaloosa (1C) Hotel N/A
20 Doctors Medical Complex Office $139,625
21 Chandler Place Apartments Multifamily $11,268
22 Summer Cove Apartments (2) Multifamily N/A
23 Lake & Racquet Apartments Multifamily $16,438
24 Stone Ends Apartments Multifamily $146,331
25 Canyon Club Apartments Multifamily $102,600
26 BLN Office Park II Office N/A
27 Royal Plaza Hotel - Marlborough (1D) Hotel $40,500
28 Royal Plaza Hotel - Fitchburg (1D) Hotel $10,688
29 Hannaford Plaza AKA Rotterdam Mall Retail N/A
<CAPTION>
Contractual U/W
Recurring Recurring U/W
Replacement Replacement LC&TI
# Property Name (1) Reserve Reserve Per Sq. Ft.
- ----------------- ------- ------- -----------
<S> <C> <C> <C> <C>
1 The Rivergate Apartments N/A $250 N/A
2 Raritan Plaza I (1A) N/A $0.15 $2.13
3 Raritan Center Industrial Portfolio (1A) N/A $0.15 $0.26
4 Resurgens Plaza $0.21 $0.20 $2.30
5 The Camargue $370 $370 N/A
6 Casa Arroyo Apartments $200 $200 N/A
7 Ballena Village Apartments $298 $290 N/A
8 Holiday Inn - Jacksonville Airport (1B) 4.00% 4.00% N/A
9 Courtyard by Marriott (1B) 4.00% 4.00% N/A
10 Magnolia Lake Apartments $208 $208 N/A
11 Park Terrace $295 $302 N/A
12 Autumn Chase Apartments $204 $204 N/A
13 Embassy Square Suites 4.00% 5.00% N/A
14 101 Commerce Drive N/A $0.10 N/A
15 Courtyard by Marriott - Pensacola (1C) 4.00% 4.00% N/A
16 Courtyard by Marriott - Tuscaloosa (1C) 4.00% 4.00% N/A
17 Fairfield Inn - Pensacola (1C) 4.00% 4.00% N/A
18 Fairfield Inn - Birmingham (1C) 4.00% 4.00% N/A
19 Fairfield Inn - Tuscaloosa (1C) 4.00% 4.00% N/A
20 Doctors Medical Complex N/A $0.28 $0.75
21 Chandler Place Apartments $200 $200 N/A
22 Summer Cove Apartments (2) $250 $250 N/A
23 Lake & Racquet Apartments $200 $253 N/A
24 Stone Ends Apartments $250 $250 N/A
25 Canyon Club Apartments N/A $203 N/A
26 BLN Office Park II $0.18 $0.18 $1.39
27 Royal Plaza Hotel - Marlborough (1D) 4.00% 4.00% N/A
28 Royal Plaza Hotel - Fitchburg (1D) 4.00% 4.00% N/A
29 Hannaford Plaza AKA Rotterdam Mall $0.15 $0.18 $0.37
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Engineering
Property Reserve at
# Property Name (1) Type Origination
- ----------------- ---- -----------
<S> <C> <C> <C>
30 Highland Pavilion Shopping Center (1E) Retail $38,125
31 Highland Pavilion Cinema (1E) Retail $16,875
32 Plumtree Apartments Multifamily $169,280
33 Ventura Libbit Building Office $14,325
34 Carroll Park Industrial Center Industrial $29,525
35 Randall Lane, Park Place I & II and Park Newport
Apartments Multifamily $5,000
36 Plaza Mobile Village Manufactured Housing N/A
37 Town & Country Shopping Center Retail $418,750
38 Golden Triangle Shopping Center Retail N/A
39 Jasper Mall Shopping Center Retail $62,938
40 Lincoln Village Shopping Center Retail $21,700
41 Dominick's Food Store & Multi-Tenant Retail Retail N/A
42 Suncrest Plaza Shopping Center Retail $5,675
43 Fabyan Crossing Shopping Center Retail N/A
44 Forest Glen Apartments Multifamily $48,038
45 Legacy Drive Village Shopping Center Retail $35,000
46 Friendly Village MHC Manufactured Housing $89,125
47 Breckenridge Apartments Multifamily $634,075
48 Days Inn - Inner Harbor Hotel N/A
49 Courtyard by Marriott Richmond Hotel $3,813
50 Barnes Crossing Retail N/A
51 Elmwood Regal Center Retail N/A
52 520 Franklin Avenue Medical Building Office $12,750
53 Holiday Inn & Suites Hotel $3,750
54 Aspen Ridge Apartments Multifamily $14,579
55 Parkway Towers Apartments Mixed Use $127,500
56 BLN Office Park I Office $2,100,000
57 Garden Plaza Shopping Center Retail N/A
58 One Phillips Drive Industrial N/A
59 Comfort Inn - Hollywood Hotel N/A
60 Ideal Professional Park Office N/A
61 Cypress Pointe Apartments Multifamily $426,150
62 The Shops at Lionville Station Retail $4,031
63 Cabot Lodge - Gainesville Hotel N/A
64 Hampton Inn & Suites Hotel N/A
65 Mercado Del Rancho Shopping Center Retail $20,000
66 Bancroft Hall Apartments Multifamily $500,274
<CAPTION>
Contractual U/W
Recurring Recurring U/W
Replacement Replacement LC&TI
# Property Name (1) Reserve Reserve Per Sq. Ft.
- ----------------- ------- ------- -----------
<S> <C> <C> <C> <C>
30 Highland Pavilion Shopping Center (1E) $0.21 $0.21 $0.59
31 Highland Pavilion Cinema (1E) $0.21 $0.21 $0.68
32 Plumtree Apartments $300 $402 N/A
33 Ventura Libbit Building N/A $0.27 $1.83
34 Carroll Park Industrial Center $0.40 $0.10 N/A
35 Randall Lane, Park Place I & II and Park Newport
Apartments $251 $251 N/A
36 Plaza Mobile Village N/A $25 N/A
37 Town & Country Shopping Center N/A $0.15 $0.55
38 Golden Triangle Shopping Center $0.15 $0.15 $0.30
39 Jasper Mall Shopping Center $0.17 $0.20 $0.24
40 Lincoln Village Shopping Center $0.15 $0.24 $0.84
41 Dominick's Food Store & Multi-Tenant Retail N/A $0.15 $0.14
42 Suncrest Plaza Shopping Center N/A $0.15 $0.76
43 Fabyan Crossing Shopping Center N/A $0.11 $0.10
44 Forest Glen Apartments $250 $250 N/A
45 Legacy Drive Village Shopping Center $0.15 $0.15 $0.53
46 Friendly Village MHC $34 $50 N/A
47 Breckenridge Apartments $250 $250 N/A
48 Days Inn - Inner Harbor 5.00% 5.00% N/A
49 Courtyard by Marriott Richmond 4.00% 4.00% N/A
50 Barnes Crossing $0.13 $0.15 $0.21
51 Elmwood Regal Center N/A $0.10 N/A
52 520 Franklin Avenue Medical Building N/A $0.15 $1.34
53 Holiday Inn & Suites 4.00% 5.00% N/A
54 Aspen Ridge Apartments $225 $225 N/A
55 Parkway Towers Apartments $250 $250 N/A
56 BLN Office Park I $0.20 $0.20 $1.39
57 Garden Plaza Shopping Center N/A $0.10 $0.42
58 One Phillips Drive N/A $0.10 $0.15
59 Comfort Inn - Hollywood 4.00% 4.00% N/A
60 Ideal Professional Park $0.17 $0.15 $2.13
61 Cypress Pointe Apartments $337 $337 N/A
62 The Shops at Lionville Station $0.17 $0.17 $0.29
63 Cabot Lodge - Gainesville 4.00% 4.00% N/A
64 Hampton Inn & Suites 4.00% 4.00% N/A
65 Mercado Del Rancho Shopping Center $0.18 $0.15 $0.65
66 Bancroft Hall Apartments $325 $325 N/A
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Engineering
Property Reserve at
# Property Name (1) Type Origination
- ----------------- ---- -----------
<S> <C> <C> <C>
67 Padonia Commerce Building Industrial N/A
68 Anaheim Shores Estates Manufactured Housing $45,969
69 Tower Square Shopping Center Retail N/A
70 West Garrett Place Office N/A
71 Elmonica Court Apartments Multifamily N/A
72 Chesterfield Commons Retail $11,125
73 Plum Tree Apartments Multifamily $53,856
74 Meadow Central Market Retail $14,750
75 Mount Kisco Square Shopping Center Retail $9,156
76 Las Brisas Apartments Multifamily $6,004
77 Freedom Village Shopping Center Retail $14,375
78 Waldan Pond & Waldan Chase Apts Multifamily $29,250
79 Aspen Park Apartments Multifamily $8,906
80 Young Circle Shopping Center Retail N/A
81 Sherwood Knoll Comfort Inn Hotel $117,882
82 Bridgepoint Apartments Multifamily $31,250
83 Holiday Inn Center City Hotel $45,375
84 Rainbow Design Center Retail $16,563
85 Flower Hill Professional Center (1F) Office N/A
86 Flower Hill McDonald's (1F) Retail N/A
87 Blue Ash Hotel & Conference Center Hotel $41,094
88 Ultra Plaza Shopping Center (3) Retail N/A
89 Sinagua Plaza Retail $8,125
90 Holiday Plaza Manufactured Housing N/A
91 Olde Mill Shopping Center Retail $36,875
92 Regal Cinemas Center-Lancaster Retail $750,000
93 Temescal Business Center Mixed Use N/A
94 Houston Centre Retail N/A
95 Pellcare Nursing Home - Winston-Salem (1G) Healthcare $5,875
96 Pellcare Nursing Home - Hickory (1G) Healthcare $2,000
97 Vista Mar Apartments Multifamily $115,125
98 Cherokee Shopping Center Retail $7,125
99 Super 8 Geary Street Hotel N/A
100 Cabot Lodge - Tallahassee Hotel N/A
101 Kessel Foods Retail $47,063
102 South Pointe Apartments Multifamily $140,375
103 Wyoming-Enzie Properties (1H) Multifamily $1,563
<CAPTION>
Contractual U/W
Recurring Recurring U/W
Replacement Replacement LC&TI
# Property Name (1) Reserve Reserve Per Sq. Ft.
- ----------------- ------- ------- -----------
<S> <C> <C> <C> <C>
67 Padonia Commerce Building $0.20 $0.16 $0.31
68 Anaheim Shores Estates $25 $25 N/A
69 Tower Square Shopping Center $0.20 $0.20 $0.88
70 West Garrett Place N/A $0.21 $1.03
71 Elmonica Court Apartments $200 $200 N/A
72 Chesterfield Commons $0.15 $0.15 $0.30
73 Plum Tree Apartments $258 $258 N/A
74 Meadow Central Market N/A $0.27 $0.72
75 Mount Kisco Square Shopping Center N/A $0.18 $0.75
76 Las Brisas Apartments $225 $225 N/A
77 Freedom Village Shopping Center $1.44 $0.21 $0.53
78 Waldan Pond & Waldan Chase Apts $225 $325 N/A
79 Aspen Park Apartments N/A $234 N/A
80 Young Circle Shopping Center $0.15 $0.15 $0.39
81 Sherwood Knoll Comfort Inn 4.00% 4.80% N/A
82 Bridgepoint Apartments $200 $200 N/A
83 Holiday Inn Center City 5.00% 6.00% N/A
84 Rainbow Design Center $0.22 $0.22 $0.66
85 Flower Hill Professional Center (1F) N/A $0.15 $1.09
86 Flower Hill McDonald's (1F) N/A N/A N/A
87 Blue Ash Hotel & Conference Center 4.00% 5.00% N/A
88 Ultra Plaza Shopping Center (3) $0.15 $0.19 N/A
89 Sinagua Plaza $0.20 $0.20 $0.84
90 Holiday Plaza $39 $39 N/A
91 Olde Mill Shopping Center N/A $0.15 $0.39
92 Regal Cinemas Center-Lancaster N/A $0.10 $0.26
93 Temescal Business Center N/A $0.15 $0.45
94 Houston Centre N/A $0.15 $0.34
95 Pellcare Nursing Home - Winston-Salem (1G) $250 $250 N/A
96 Pellcare Nursing Home - Hickory (1G) $250 $250 N/A
97 Vista Mar Apartments $250 $250 N/A
98 Cherokee Shopping Center $0.15 $0.15 $0.46
99 Super 8 Geary Street 3.70% 5.00% N/A
100 Cabot Lodge - Tallahassee 4.00% 4.00% N/A
101 Kessel Foods N/A $0.18 $0.06
102 South Pointe Apartments $220 $220 N/A
103 Wyoming-Enzie Properties (1H) $250 $250 N/A
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Engineering
Property Reserve at
# Property Name (1) Type Origination
- ----------------- ---- -----------
<S> <C> <C> <C>
104 Mesa Properties (1H) Multifamily $4,813
105 Mervyn's Plaza Retail $3,625
106 Bartlett Commons Retail N/A
107 Crowley Village Shopping Center Retail $10,000
108 Tivoli Condominiums (1I) Multifamily $47,328
109 Cross Creek Apartments (1I) Multifamily $2,875
110 Tamara Hills Townhomes (1I) Multifamily $6,813
111 The Bell Rock Inn Hotel $38,330
112 Howard Johnson Hotel Hotel $68,788
113 Camelot Apartments Multifamily $142,125
114 Canyon Ridge MHP Manufactured Housing $42,188
115 Westlake Crossing Shopping Center Retail N/A
116 Days Hotel Timonium Hotel N/A
117 Heritage Square Apartments Multifamily $6,938
118 Constitution Square Retail $6,250
119 Oxford Square Retail $28,125
120 Spring Villas Multifamily $6,113
121 Sierra Point Apartments Multifamily N/A
122 Menlo Avenue Office Building Office N/A
123 Henderson Marketplace Retail N/A
124 Stone Creek Apartments Multifamily $23,150
125 Florida Avenue Apartments Multifamily $20,685
126 Homewood Village Shopping Center Retail $54,818
127 Common Wealth Avenue Apartments Multifamily $51,289
128 Sunrise Square Shopping Center Retail N/A
129 Stein Mart Plaza Retail $7,175
130 1500 Plaza Office Building Office N/A
131 New West Village Apartments Multifamily $185,000
132 Brookside Apartments Multifamily $61,224
133 Vinyard Gardens Multifamily $1,200
134 Hidden Bay Village Apartments Multifamily $2,250
135 Raintree Apartments Multifamily $14,438
136 The Office Centre at Dunwoody Village Office $140,755
137 Seminary Plaza Retail $136,000
138 Longbranch Apartments Multifamily $7,313
139 The Market at Merrill Shopping Center Retail $41,000
140 Comfort Inn - Dothan Hotel N/A
<CAPTION>
Contractual U/W
Recurring Recurring U/W
Replacement Replacement LC&TI
# Property Name (1) Reserve Reserve Per Sq. Ft.
- ----------------- ------- ------- -----------
<S> <C> <C> <C> <C>
104 Mesa Properties (1H) $247 $247 N/A
105 Mervyn's Plaza $0.20 $0.19 $0.97
106 Bartlett Commons N/A $0.15 $0.56
107 Crowley Village Shopping Center N/A $0.19 $0.19
108 Tivoli Condominiums (1I) $304 $304 N/A
109 Cross Creek Apartments (1I) $250 $250 N/A
110 Tamara Hills Townhomes (1I) $300 $300 N/A
111 The Bell Rock Inn 4.00% 5.00% N/A
112 Howard Johnson Hotel 4.00% 4.00% N/A
113 Camelot Apartments $250 $250 N/A
114 Canyon Ridge MHP $25 $25 N/A
115 Westlake Crossing Shopping Center N/A $0.15 $0.94
116 Days Hotel Timonium 5.00% 5.00% N/A
117 Heritage Square Apartments $256 $256 N/A
118 Constitution Square N/A $0.44 $1.38
119 Oxford Square $0.25 $0.25 N/A
120 Spring Villas N/A $205 N/A
121 Sierra Point Apartments $250 $250 N/A
122 Menlo Avenue Office Building N/A $0.42 $1.33
123 Henderson Marketplace N/A $0.15 $0.53
124 Stone Creek Apartments $250 $250 N/A
125 Florida Avenue Apartments $285 $285 N/A
126 Homewood Village Shopping Center $0.25 $0.25 $0.51
127 Common Wealth Avenue Apartments $300 $300 N/A
128 Sunrise Square Shopping Center N/A $0.23 $1.05
129 Stein Mart Plaza $0.10 $0.15 $0.41
130 1500 Plaza Office Building N/A $0.15 $1.84
131 New West Village Apartments $250 $250 N/A
132 Brookside Apartments N/A $200 N/A
133 Vinyard Gardens $297 $296 N/A
134 Hidden Bay Village Apartments $250 $250 N/A
135 Raintree Apartments $250 $250 N/A
136 The Office Centre at Dunwoody Village N/A $0.34 $0.97
137 Seminary Plaza $0.15 $0.15 N/A
138 Longbranch Apartments $200 $200 N/A
139 The Market at Merrill Shopping Center N/A $0.22 $0.89
140 Comfort Inn - Dothan 4.00% 4.00% N/A
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Engineering
Property Reserve at
# Property Name (1) Type Origination
- ----------------- ---- -----------
<S> <C> <C> <C>
141 Wind River Office Building Office $9,250
142 Pass Christian Village Retail N/A
143 Marriott Courtyard - Dothan Hotel N/A
144 Tivoli Apartments Multifamily $8,250
145 Sun Plaza Shopping Center Retail $3,750
146 Holiday Inn Express - Washington Hotel N/A
147 Mariner Crossing Shopping Center Retail $11,250
148 Mt. Dora Marketplace Retail $9,600
149 Aspen Village Apartments Multifamily $400,000
150 Sherman Oaks Office $469
151 South Plains Apartments Multifamily $34,031
152 Royal Oaks Apartments Multifamily $54,300
153 Northwinds Apartment Complex Multifamily $5,375
154 The Park Shopping Center Retail $43,400
155 Lloyd Office Plaza Office N/A
156 Bridge Street Lodge (1J) Retail N/A
157 P & R Building (1J) Mixed Use N/A
158 Holiday Inn - Dothan Hotel $26,875
159 Hampton North Townhomes & Apartments Multifamily N/A
160 Holiday Inn - Lake Havasu Hotel N/A
161 University Shoppes Retail N/A
162 Galleria Mall Retail N/A
163 Park 219 Business Park Industrial $13,469
164 One Energy Square Retail $1,875
165 Orchard Plaza Shopping Center Retail N/A
166 The Mark Mobile Home Park Manufactured Housing N/A
167 Rivershores Apartments Multifamily $5,688
168 Perry Hall Mini-Storage Self Storage N/A
169 Governor's Palace, Ridgmar Americana & Ridgmar West Apartments Multifamily $85,000
170 Brookhollow Apartments Multifamily $16,563
171 Cedarfield Plaza (1K) Retail $3,960
172 Greece Mini Storage (1K) Self Storage $28,000
173 Gander Mountain / JoAnn Fabrics Center Retail N/A
174 The Colonnade at Turtle Creek Apartments Multifamily N/A
175 601 Franklin Avenue Medical Building Office $30,313
176 Valdosta Storage Rollup Self Storage $8,625
177 All Aboard Mini-Storage Self Storage N/A
<CAPTION>
Contractual U/W
Recurring Recurring U/W
Replacement Replacement LC&TI
# Property Name (1) Reserve Reserve Per Sq. Ft.
- ----------------- ------- ------- -----------
<S> <C> <C> <C> <C>
141 Wind River Office Building N/A $0.24 $1.12
142 Pass Christian Village $0.15 $0.15 $0.21
143 Marriott Courtyard - Dothan 4.00% 4.00% N/A
144 Tivoli Apartments $250 $250 N/A
145 Sun Plaza Shopping Center $0.15 $0.15 $1.31
146 Holiday Inn Express - Washington 4.00% 4.00% N/A
147 Mariner Crossing Shopping Center N/A $0.15 $0.63
148 Mt. Dora Marketplace $0.25 $0.25 $0.45
149 Aspen Village Apartments $263 $263 N/A
150 Sherman Oaks $0.26 $0.32 N/A
151 South Plains Apartments $250 $250 N/A
152 Royal Oaks Apartments $220 $250 N/A
153 Northwinds Apartment Complex $150 $150 N/A
154 The Park Shopping Center $0.30 $0.30 $0.47
155 Lloyd Office Plaza N/A $0.15 $1.82
156 Bridge Street Lodge (1J) N/A $0.16 N/A
157 P & R Building (1J) N/A $0.18 N/A
158 Holiday Inn - Dothan 4.00% 4.00% N/A
159 Hampton North Townhomes & Apartments $250 $250 N/A
160 Holiday Inn - Lake Havasu 4.00% 4.00% N/A
161 University Shoppes $0.15 $0.15 $0.69
162 Galleria Mall N/A $0.15 $0.70
163 Park 219 Business Park $0.27 $0.17 $0.27
164 One Energy Square $0.15 $0.15 $0.30
165 Orchard Plaza Shopping Center $0.15 $0.18 $0.31
166 The Mark Mobile Home Park N/A $50 N/A
167 Rivershores Apartments $250 $250 N/A
168 Perry Hall Mini-Storage $0.20 $0.15 N/A
169 Governor's Palace, Ridgmar Americana & Ridgmar West Apartments $250 $250 N/A
170 Brookhollow Apartments $250 $250 N/A
171 Cedarfield Plaza (1K) $0.20 $0.32 $0.68
172 Greece Mini Storage (1K) $0.13 $0.15 N/A
173 Gander Mountain / JoAnn Fabrics Center N/A $0.15 $0.42
174 The Colonnade at Turtle Creek Apartments $250 $260 N/A
175 601 Franklin Avenue Medical Building $0.50 $0.20 $1.20
176 Valdosta Storage Rollup N/A $0.15 N/A
177 All Aboard Mini-Storage N/A $0.15 N/A
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Engineering
Property Reserve at
# Property Name (1) Type Origination
- ----------------- ---- -----------
<S> <C> <C> <C>
178 Brea Center Retail N/A
179 Holiday Inn Express Hotel $3,000
180 Seaport Villas Multifamily $12,500
181 Park Central Office Park Office $2,500
182 Drug Emporium Shopping Center Retail $32,250
183 Langley Place Mixed Use $11,638
184 Red Lion Apartments Multifamily $26,313
185 The Woodlands Shopping Center Retail N/A
186 St. Marys Plaza Retail N/A
187 Mountain Park Pavilions II Retail N/A
188 Shady Banks Shopping Center Retail $1,875
189 Pavilion in the Park Shopping Center Retail $129,750
190 Riverview Business Plaza Industrial $45,633
191 Cumberland Station Shopping Center Retail $3,000
192 509-511 Amsterdam Avenue Multifamily N/A
193 Westover Pointe Center Retail $2,125
194 Towne East Village Apartments Multifamily $35,450
195 Super Crown Books & LaJolla Patio Retail N/A
196 Bent Oak Apartments Multifamily $4,188
197 Summit Apartments Multifamily $10,625
198 Jefferson Square Mall Retail $154,000
199 Sandalwood Center Retail $4,668
200 Encino Village Center Retail $13,581
201 Willamette Terrace Multifamily $25,375
202 4 Hartwell Place Office N/A
203 79 Worth Street Multifamily $11,063
204 Stewart Creek Shopping Center Retail N/A
205 Plantation Village Shopping Center Retail $85,000
206 Lookout Ridge Apartments Multifamily N/A
207 Orangethorpe Beach Shopping Center Retail N/A
208 Orchard Supply Retail $2,750
209 Waterford Village Shopping Center Retail $4,250
210 Governor's Terrace Multifamily N/A
211 Esplanade Mini-Storage Self Storage N/A
212 Sterling Industrial Park Industrial N/A
213 Mabelvale Plaza Shopping Center Retail $25,000
214 Woodlawn Village Shopping Center Retail $2,500
<CAPTION>
Contractual U/W
Recurring Recurring U/W
Replacement Replacement LC&TI
# Property Name (1) Reserve Reserve Per Sq. Ft.
- ----------------- ------- ------- -----------
<S> <C> <C> <C> <C>
178 Brea Center $0.22 $0.22 $0.70
179 Holiday Inn Express 4.00% 4.00% N/A
180 Seaport Villas $250 $250 N/A
181 Park Central Office Park N/A $0.15 $0.68
182 Drug Emporium Shopping Center $0.15 $0.06 $0.78
183 Langley Place N/A $0.15 $1.23
184 Red Lion Apartments $279 $279 N/A
185 The Woodlands Shopping Center $0.15 $0.15 $0.70
186 St. Marys Plaza N/A $0.15 $0.37
187 Mountain Park Pavilions II N/A $0.15 $0.72
188 Shady Banks Shopping Center $0.15 $0.17 $0.15
189 Pavilion in the Park Shopping Center N/A $0.20 $1.14
190 Riverview Business Plaza N/A $0.15 $0.30
191 Cumberland Station Shopping Center $0.15 $0.15 $0.85
192 509-511 Amsterdam Avenue $250 $250 N/A
193 Westover Pointe Center $0.15 $0.15 $0.93
194 Towne East Village Apartments $250 $250 N/A
195 Super Crown Books & LaJolla Patio N/A $0.10 $1.00
196 Bent Oak Apartments $250 $250 N/A
197 Summit Apartments $250 $250 N/A
198 Jefferson Square Mall $0.07 $0.20 $0.46
199 Sandalwood Center $0.15 $0.15 $0.95
200 Encino Village Center $0.25 $0.25 $1.24
201 Willamette Terrace $250 $250 N/A
202 4 Hartwell Place $0.15 $0.15 N/A
203 79 Worth Street $561 $1,272 N/A
204 Stewart Creek Shopping Center N/A $0.15 $1.17
205 Plantation Village Shopping Center $0.40 $0.40 $0.84
206 Lookout Ridge Apartments $250 $250 N/A
207 Orangethorpe Beach Shopping Center $0.15 $0.15 $1.13
208 Orchard Supply N/A $0.15 N/A
209 Waterford Village Shopping Center N/A $0.15 $0.42
210 Governor's Terrace $200 $200 N/A
211 Esplanade Mini-Storage $0.20 $0.20 N/A
212 Sterling Industrial Park N/A $0.22 $0.50
213 Mabelvale Plaza Shopping Center $0.25 $0.15 $0.77
214 Woodlawn Village Shopping Center $0.15 $0.24 $0.15
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Engineering
Property Reserve at
# Property Name (1) Type Origination
- ----------------- ---- -----------
<S> <C> <C> <C>
215 Bolton-Moore's Mill Shopping Center Retail $200,000
216 Omni Plaza Shopping Center Retail $3,563
217 Shield Street Plaza Retail $19,000
218 Viewmont Estates Mobile Home Park Manufactured Housing N/A
219 1731, 1741 and 1751 Washington Street Multifamily N/A
220 Penninsula Professional Building Office N/A
221 Creekside Mobile Estates Manufactured Housing N/A
222 Alexandria Square Retail N/A
223 Advo Building Office $1,813
224 White Pines Plaza Retail $34,375
225 North Shore Estates Manufactured Housing $17,094
226 River's Edge Apartments Multifamily $137,169
227 109-111 Grant Avenue Office $4,250
228 Royal Oaks Senior Community Park Manufactured Housing N/A
229 Parker Marketplace Phase II Retail $5,250
230 Summer Creek Apartments Multifamily N/A
231 Robarts Mobile Home Park Manufactured Housing $47,538
232 Woodcrest Townhome Apartments Multifamily $28,375
233 Planters Trace Apartments Multifamily $148,522
234 Stone Oak Apartments Multifamily $6,875
235 Hidden Hills Mobile Home Park Manufactured Housing N/A
236 Tiger Mart Convenience Store $4,960
237 Quail Hollow Business Park Office $29,375
238 Campus Square Apartments Multifamily $26,250
239 Bridgeport Professional Building Office $27,500
240 Park Lane Terrace Apartments Multifamily $128,125
241 Brigham's Landing Shopping Center Retail N/A
242 Boulevard Shoppes II Retail N/A
243 The Clusters Apartments Multifamily N/A
244 Fairfield Inn - Dothan Hotel N/A
245 Valley Manor Manufactured Housing $28,750
246 Sunrise Village Apartments Multifamily $11,438
247 Ridgewood Apartments Multifamily $47,063
248 Bella Vista Terrace Multifamily $7,035
249 Ramada Limited Hotel $2,500
250 Secluded Oaks Villas Apartments Multifamily $100,000
251 Colonial Mobile Home Park Manufactured Housing $5,000
<CAPTION>
Contractual U/W
Recurring Recurring U/W
Replacement Replacement LC&TI
# Property Name (1) Reserve Reserve Per Sq. Ft.
- ----------------- ------- ------- -----------
<S> <C> <C> <C> <C>
215 Bolton-Moore's Mill Shopping Center $0.15 $0.15 $0.52
216 Omni Plaza Shopping Center $0.10 $0.10 $0.49
217 Shield Street Plaza $0.31 $0.31 $0.39
218 Viewmont Estates Mobile Home Park $41 $51 N/A
219 1731, 1741 and 1751 Washington Street $225 $225 N/A
220 Penninsula Professional Building $0.27 $0.15 N/A
221 Creekside Mobile Estates N/A $0.00 N/A
222 Alexandria Square N/A $0.10 $0.52
223 Advo Building N/A $0.15 $1.44
224 White Pines Plaza $0.26 $0.26 $0.19
225 North Shore Estates $34 $34 N/A
226 River's Edge Apartments $250 $250 N/A
227 109-111 Grant Avenue N/A $0.20 $1.13
228 Royal Oaks Senior Community Park $31 $50 N/A
229 Parker Marketplace Phase II N/A $0.15 $0.92
230 Summer Creek Apartments $250 $250 N/A
231 Robarts Mobile Home Park $25 $25 N/A
232 Woodcrest Townhome Apartments $250 $250 N/A
233 Planters Trace Apartments $255 $255 N/A
234 Stone Oak Apartments $250 $250 N/A
235 Hidden Hills Mobile Home Park N/A $50 N/A
236 Tiger Mart N/A N/A N/A
237 Quail Hollow Business Park N/A $0.19 $1.10
238 Campus Square Apartments $250 $300 N/A
239 Bridgeport Professional Building $0.20 $0.20 $1.30
240 Park Lane Terrace Apartments $260 $260 N/A
241 Brigham's Landing Shopping Center N/A $0.15 $1.07
242 Boulevard Shoppes II $0.26 $0.26 $0.58
243 The Clusters Apartments $250 $250 N/A
244 Fairfield Inn - Dothan 4.00% 4.00% N/A
245 Valley Manor N/A $50 N/A
246 Sunrise Village Apartments $565 $565 N/A
247 Ridgewood Apartments N/A $208 N/A
248 Bella Vista Terrace $250 $200 N/A
249 Ramada Limited 4.00% 4.00% N/A
250 Secluded Oaks Villas Apartments $250 $250 N/A
251 Colonial Mobile Home Park N/A $50 N/A
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Engineering
Property Reserve at
# Property Name (1) Type Origination
- ----------------- ---- -----------
<S> <C> <C> <C>
252 Plaza North Medical Building Office N/A
253 Camelot Apartments Multifamily $50,688
254 Northlake Quadrangle Retail $156,500
255 Gordon Street Apartments Multifamily $26,869
256 Northgate Apartments Multifamily $67,813
257 Sepulveda Crest Apartments Multifamily $9,000
258 Morningstar Mini-Storage Self Storage N/A
259 Chateaux Verde Apartments Multifamily $1,875
260 Homestead Corner Shopping Center Retail N/A
261 Lake Villa Apartments Multifamily $45,350
262 F & H Warehouse Industrial $31,613
263 Avian Plaza Shopping Center Retail $5,825
264 Port Orchard Mini Storage Self Storage $1,875
265 Sequoia Grove Apartments Multifamily $5,900
266 The Miller Center Retail $100,000
267 Emerald Park Apartments Multifamily $32,125
268 Rancho San Diego Town & Country Retail N/A
269 French Quarters East Apartments Multifamily $37,319
270 The Forest Apartments Multifamily $18,875
271 Oakhill Apartments Multifamily $57,875
272 STOR-N-LOCK Self Storage $55,875
273 Autumn Ridge Apartments Multifamily $16,250
274 701 Franklin Center Retail N/A
275 Savoy Condominiums Multifamily $8,981
276 Meriden East Apartments Multifamily $19,500
277 Hyde Park Mobile Estates Manufactured Housing $109,638
278 Courtyard Plaza Retail $8,750
279 Tradewinds Apartments Multifamily $875
280 Regency Manor Apartments Multifamily $9,625
281 Hood Chalet Mobile Estates Manufactured Housing N/A
282 Mauna Kea Apartments Multifamily $2,250
283 Deer Creek Apartments Multifamily $6,400
284 Evergreen Place Condominiums Multifamily $12,938
285 Autumn Creek Apartments Multifamily $20,000
286 Midtown at Main Retail N/A
287 Park Place Center Retail $3,750
288 International Self Storage Self Storage N/A
<CAPTION>
Contractual U/W
Recurring Recurring U/W
Replacement Replacement LC&TI
# Property Name (1) Reserve Reserve Per Sq. Ft.
- ----------------- ------- ------- -----------
<S> <C> <C> <C> <C>
252 Plaza North Medical Building N/A $0.19 $1.24
253 Camelot Apartments $200 $200 N/A
254 Northlake Quadrangle $0.15 $0.15 $0.77
255 Gordon Street Apartments $300 $300 N/A
256 Northgate Apartments $316 $316 N/A
257 Sepulveda Crest Apartments $250 $250 N/A
258 Morningstar Mini-Storage $0.15 $0.15 N/A
259 Chateaux Verde Apartments $250 $250 N/A
260 Homestead Corner Shopping Center N/A $0.23 $0.81
261 Lake Villa Apartments $250 $250 N/A
262 F & H Warehouse N/A $0.15 $0.17
263 Avian Plaza Shopping Center N/A $0.30 $1.01
264 Port Orchard Mini Storage N/A $0.24 N/A
265 Sequoia Grove Apartments $251 $251 N/A
266 The Miller Center N/A $0.21 $0.29
267 Emerald Park Apartments $250 $250 N/A
268 Rancho San Diego Town & Country N/A $0.15 $0.54
269 French Quarters East Apartments $250 $270 N/A
270 The Forest Apartments $250 $250 N/A
271 Oakhill Apartments $334 $334 N/A
272 STOR-N-LOCK $0.22 $0.22 N/A
273 Autumn Ridge Apartments $250 $250 N/A
274 701 Franklin Center $0.15 $0.15 $0.61
275 Savoy Condominiums $300 $300 N/A
276 Meriden East Apartments $248 $248 N/A
277 Hyde Park Mobile Estates N/A $25 N/A
278 Courtyard Plaza $0.27 $0.18 $1.01
279 Tradewinds Apartments $250 $250 N/A
280 Regency Manor Apartments $250 $250 N/A
281 Hood Chalet Mobile Estates $82 $106 N/A
282 Mauna Kea Apartments $250 $250 N/A
283 Deer Creek Apartments $259 $259 N/A
284 Evergreen Place Condominiums $250 $255 N/A
285 Autumn Creek Apartments $250 $250 N/A
286 Midtown at Main N/A $0.15 $0.50
287 Park Place Center $0.15 $0.15 $0.74
288 International Self Storage $0.15 $0.15 N/A
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Engineering
Property Reserve at
# Property Name (1) Type Origination
- ----------------- ---- -----------
<S> <C> <C> <C>
289 Villa Catalina Apartments Multifamily $1,238
290 Loc-'N-Stor Self-Storage Self Storage $18,875
291 Rancho Villa Manufactured Housing $9,875
292 Timberline Mobile Home Park Manufactured Housing N/A
293 Timberland Ridge Apartments Multifamily N/A
294 Leewood Apartments Multifamily $30,363
295 Glen Mark Apartments Multifamily $13,875
296 Pinecroft Mobile Home Park Manufactured Housing $7,500
297 Eckerds Drugstore Retail N/A
298 Eastern Promenade Apartments Multifamily $10,794
299 Belle Meade Apartments Multifamily $14,406
300 Riverview Plaza II Retail $7,750
301 Westmoreland Warehouse Mixed Use $4,250
=============
Total: $13,311,195
=============
<CAPTION>
Contractual U/W
Recurring Recurring U/W
Replacement Replacement LC&TI
# Property Name (1) Reserve Reserve Per Sq. Ft.
- ----------------- ------- ------- -----------
<S> <C> <C> <C> <C>
289 Villa Catalina Apartments $250 $250 N/A
290 Loc-'N-Stor Self-Storage $0.15 $0.15 N/A
291 Rancho Villa N/A $50 N/A
292 Timberline Mobile Home Park N/A $50 N/A
293 Timberland Ridge Apartments $250 $250 N/A
294 Leewood Apartments $250 $250 N/A
295 Glen Mark Apartments $250 $250 N/A
296 Pinecroft Mobile Home Park N/A $50 N/A
297 Eckerds Drugstore N/A $0.15 N/A
298 Eastern Promenade Apartments $250 $250 N/A
299 Belle Meade Apartments $250 $250 N/A
300 Riverview Plaza II N/A $0.15 $1.04
301 Westmoreland Warehouse N/A $0.15 $0.23
</TABLE>
(1A) The Mortgage Loans secured by Raritan Plaza I and Raritan Center
Industrial Portfolio, respectively, are cross-collateralized and
cross-defaulted.
(1B) The Mortgage Loans secured by Holiday Inn - Jacksonville Airport and
Courtyard by Marriott, respectively, are cross-collateralized and
cross-defaulted.
(1C) The Mortgage Loans secured by Courtyard by Marriott - Pensacola,
Courtyard by Marriott - Tuscaloosa, Fairfield Inn - Pensacola, Fairfield
Inn - Birmingham and Fairfield Inn - Tuscaloosa, respectively, are
cross-collateralized and cross-defaulted.
(1D) The Mortgage Loans secured by Royal Plaza Hotel - Marlborough and Royal
Plaza Hotel- Fitchburg, respectively, are cross-collateralized and
cross-defaulted.
(1E) The Mortgage Loans secured by Highland Pavilion Shopping Center and
Highland Pavilion Cinema, respectively, are cross-collateralized and
cross-defaulted.
(1F) The Mortgage Loans secured by Flower Hill Professional Center and Flower
Hill McDonald's, respectively, are cross-collateralized and
cross-defaulted. (1G)The Mortgage Loans secured by Pellcare Nursing Home
- Winston-Salem and Pellcare Nursing Home - Hickory, respectively, are
cross-collateralized and cross-defaulted.
(1H) The Mortgage Loans secured by Wyoming-Enzie Properties and Mesa
Properties, respectively, are cross-collateralized and cross-defaulted.
(1I) The Mortgage Loans secured by Tivoli Condominiums, Cross Creek Apartments
and Tamara Hills Townhomes, respectively, are cross-collateralized and
cross-defaulted.
(1J) The Mortgage Loans secured by Bridge Street Lodge and P&R Building,
respectively, are cross-collateralized and cross-defaulted.
(1K) The Mortgage Loans secured by Cedarfield Plaza and Greece Mini Storage,
respectively, are cross-collateralized and cross-defaulted.
(2) Summer Cove Apartments has an interest only period of 24 months and will
begin to amortize over a 336 month term.
(3) Ultra Plaza Shopping Center has an interest only period of 24 months and
will begin to amortize over a 336 month term.
<PAGE>
<TABLE>
<CAPTION>
Major Tenants of the Commercial Mortgaged Properties(1)
Property Property
Property Name Type Type Sq. Ft.
------------- ---- ---- -------
<S> <C> <C> <C> <C>
2 Raritan Plaza I (1A) Commercial Office 262,500
3 Raritan Center Industrial Portfolio (1A) Commercial Industrial 804,196
4 Resurgens Plaza Commercial Office 388,119
14 101 Commerce Drive Commercial Industrial 597,100
20 Doctors Medical Complex Commercial Office 397,588
26 BLN Office Park II Commercial Office 201,311
29 Hannaford Plaza AKA Rotterdam Mall Commercial Retail 224,091
30 Highland Pavilion Shopping Center (1E) Commercial Retail 121,964
31 Highland Pavilion Cinema (1E) Commercial Retail 43,480
33 Ventura Libbit Building Commercial Office 151,776
34 Carroll Park Industrial Center Commercial Industrial 630,000
37 Town & Country Shopping Center Commercial Retail 242,750
38 Golden Triangle Shopping Center Commercial Retail 222,644
39 Jasper Mall Shopping Center Commercial Retail 228,909
40 Lincoln Village Shopping Center Commercial Retail 178,700
41 Dominick's Food Store & Multi-Tenant Retail Commercial Retail 89,105
42 Suncrest Plaza Shopping Center Commercial Retail 74,517
43 Fabyan Crossing Shopping Center Commercial Retail 86,782
45 Legacy Drive Village Shopping Center Commercial Retail 138,169
50 Barnes Crossing Commercial Retail 149,964
51 Elmwood Regal Center Commercial Retail 102,851
52 520 Franklin Avenue Medical Building Commercial Office 68,200
56 BLN Office Park I Commercial Office 134,983
57 Garden Plaza Shopping Center Commercial Retail 50,000
58 One Phillips Drive Commercial Industrial 400,000
60 Ideal Professional Park Commercial Office 83,053
62 The Shops at Lionville Station Commercial Retail 82,451
65 Mercado Del Rancho Shopping Center Commercial Retail 86,464
67 Padonia Commerce Building Commercial Industrial 180,719
69 Tower Square Shopping Center Commercial Retail 70,690
70 West Garrett Place Commercial Office 68,901
72 Chesterfield Commons Commercial Retail 93,054
74 Meadow Central Market Commercial Retail 107,094
75 Mount Kisco Square Shopping Center Commercial Retail 33,946
77 Freedom Village Shopping Center Commercial Retail 119,874
80 Young Circle Shopping Center Commercial Retail 65,488
84 Rainbow Design Center Commercial Retail 64,318
85 Flower Hill Professional Center (1F) Commercial Office 80,770
86 Flower Hill McDonald's (1F) Commercial Retail 4,143
88 Ultra Plaza Shopping Center (3) Commercial Retail 139,795
89 Sinagua Plaza Commercial Retail 32,338
91 Olde Mill Shopping Center Commercial Retail 91,400
92 Regal Cinemas Center-Lancaster Commercial Retail 113,259
93 Temescal Business Center Commercial Mixed Use 196,177
94 Houston Centre Commercial Retail 75,264
98 Cherokee Shopping Center Commercial Retail 123,736
101 Kessel Foods Commercial Retail 118,252
105 Mervyn's Plaza Commercial Retail 42,830
106 Bartlett Commons Commercial Retail 81,926
107 Crowley Village Shopping Center Commercial Retail 106,157
<CAPTION>
Major Tenant #1 Major Tenant #1 Major Tenant #1
Property Name Name Sq. Ft. Lease Expiration Date
------------- ---- ------- ---------------------
<S> <C> <C> <C> <C>
2 Raritan Plaza I (1A) Prudential Mutual Fund Services 152,842 8/1/03
3 Raritan Center Industrial Portfolio (1A) North American Van Line 116,127 8/1/03
4 Resurgens Plaza Colonial Pipeline Company 60,668 8/31/02
14 101 Commerce Drive Hershey Foods Corporation 597,100 12/31/12
20 Doctors Medical Complex Sears, Roebuck and Co. 174,570 8/13/03
26 BLN Office Park II United Companies Funding Corp. 33,706 12/1/02
29 Hannaford Plaza AKA Rotterdam Mall Shop N Save 63,409 6/30/13
30 Highland Pavilion Shopping Center (1E) Wal-Mart 89,964 5/28/08
31 Highland Pavilion Cinema (1E) General Cinema 43,480 10/31/07
33 Ventura Libbit Building N/A N/A N/A
34 Carroll Park Industrial Center Quaker State Corporation 630,000 3/31/13
37 Town & Country Shopping Center Burlington Coat Factory 62,574 1/1/15
38 Golden Triangle Shopping Center Hills Department Store 82,291 1/31/14
39 Jasper Mall Shopping Center K-Mart Corporation 84,800 8/31/06
40 Lincoln Village Shopping Center Lincoln Theatre VI 28,926 11/26/10
41 Dominick's Food Store & Multi-Tenant Retail Dominick's Foods 72,385 5/31/17
42 Suncrest Plaza Shopping Center Metropolitan Art Storage 27,625 3/31/02
43 Fabyan Crossing Shopping Center Dominick's Finer Foods, Inc. 71,569 10/31/16
45 Legacy Drive Village Shopping Center Kroger 58,904 2/28/20
50 Barnes Crossing Hobby Lobby 45,732 12/31/17
51 Elmwood Regal Center Regal Cinemas 65,066 12/31/17
52 520 Franklin Avenue Medical Building N/A N/A N/A
56 BLN Office Park I Harmon Ltd. 40,398 4/30/03
57 Garden Plaza Shopping Center OfficeMax 30,000 3/14/13
58 One Phillips Drive North American Phillips Corporation 400,000 12/31/07
60 Ideal Professional Park N/A N/A N/A
62 The Shops at Lionville Station SuperFresh 45,676 2/26/16
65 Mercado Del Rancho Shopping Center ABCO 37,415 12/31/17
67 Padonia Commerce Building N/A N/A N/A
69 Tower Square Shopping Center Paper Warehouse 8,500 3/1/05
70 West Garrett Place Telecommunications Systems, Inc. 23,399 9/1/02
72 Chesterfield Commons Kroger Food Stores 43,664 2/28/11
74 Meadow Central Market Tom Thumb/Randall's 27,906 11/30/02
75 Mount Kisco Square Shopping Center CVS 11,240 10/1/05
77 Freedom Village Shopping Center Martin's Food (Giant) 51,278 2/29/08
80 Young Circle Shopping Center Publix Supermarkets 23,124 11/30/16
84 Rainbow Design Center Krause's 10,078 3/31/03
85 Flower Hill Professional Center (1F) Harvey Health, Inc. 12,675 10/01/07
86 Flower Hill McDonald's (1F) McDonald's 4,143 12/22/07
88 Ultra Plaza Shopping Center (3) Ultra Foods 115,378 12/30/08
89 Sinagua Plaza Rosebuds Restaurant 4,246 10/1/08
91 Olde Mill Shopping Center Winn Dixie 45,500 8/1/14
92 Regal Cinemas Center-Lancaster Regal Cinemas 83,758 12/1/17
93 Temescal Business Center Powis Parker Inc. 52,203 10/31/99
94 Houston Centre Winn Dixie 44,984 4/30/17
98 Cherokee Shopping Center K Mart 83,516 12/31/06
101 Kessel Foods Kessel Food Markets, Inc. 107,532 12/31/17
105 Mervyn's Plaza Hayek's Leather Furniture 4,871 1/14/01
106 Bartlett Commons Joe's Finer Foods 36,737 6/1/12
107 Crowley Village Shopping Center Winn Dixie 48,918 6/1/17
</TABLE>
<TABLE>
<CAPTION>
Major Tenant #2 Major Tenant #2 Major Tenant #2
Property Name Name Sq. Ft. Lease Expiration Date
------------- ---- ------- ---------------------
<S> <C> <C> <C> <C>
2 Raritan Plaza I (1A) K. Hovnanian Companies 27,390 10/1/98
3 Raritan Center Industrial Portfolio (1A) Officemate International Corp. 101,813 12/1/00
4 Resurgens Plaza Interstate/Johnson Lane Corp. 50,313 7/31/05
14 101 Commerce Drive N/A N/A N/A
20 Doctors Medical Complex N/A N/A N/A
26 BLN Office Park II Norwest Mortgage 27,736 1/1/02
29 Hannaford Plaza AKA Rotterdam Mall Staples 24,069 4/30/08
30 Highland Pavilion Shopping Center (1E) N/A N/A N/A
31 Highland Pavilion Cinema (1E) N/A N/A N/A
33 Ventura Libbit Building N/A N/A N/A
34 Carroll Park Industrial Center N/A N/A N/A
37 Town & Country Shopping Center Blue Cross/Blue Shield 40,926 1/1/03
38 Golden Triangle Shopping Center Weis Markets 33,868 2/29/00
39 Jasper Mall Shopping Center J.C. Penney Company, Inc. 55,955 8/31/06
40 Lincoln Village Shopping Center Drexel Heritage 18,876 6/30/01
41 Dominick's Food Store & Multi-Tenant Retail N/A N/A N/A
42 Suncrest Plaza Shopping Center Great Western Bank 20,172 5/30/10
43 Fabyan Crossing Shopping Center Super Crown Books Corporation 15,053 4/30/07
45 Legacy Drive Village Shopping Center N/A N/A N/A
50 Barnes Crossing TJ Maxx 29,498 10/31/06
51 Elmwood Regal Center Office Depot 30,585 12/31/12
52 520 Franklin Avenue Medical Building N/A N/A N/A
56 BLN Office Park I Internal Revenue Service 22,318 12/31/00
57 Garden Plaza Shopping Center Smart & Final 20,000 12/31/17
58 One Phillips Drive N/A N/A N/A
60 Ideal Professional Park N/A N/A N/A
62 The Shops at Lionville Station N/A N/A N/A
65 Mercado Del Rancho Shopping Center Chompie's 10,000 4/30/04
67 Padonia Commerce Building N/A N/A N/A
69 Tower Square Shopping Center Anchor Bank, N.A. 8,000 9/1/10
70 West Garrett Place Chesapeake Computer Consultants 12,069 12/1/00
72 Chesterfield Commons Arbor Drugs 10,220 3/31/11
74 Meadow Central Market Eckerd Drugs 15,000 11/30/02
75 Mount Kisco Square Shopping Center Videos of Mt. Kisco 6,200 3/1/00
77 Freedom Village Shopping Center N/A N/A N/A
80 Young Circle Shopping Center Walgreen Co. 19,260 3/31/08
84 Rainbow Design Center La Z Boy 14,900 5/31/02
85 Flower Hill Professional Center (1F) N/A N/A N/A
86 Flower Hill McDonald's (1F) N/A N/A N/A
88 Ultra Plaza Shopping Center (3) N/A N/A N/A
89 Sinagua Plaza N/A N/A N/A
91 Olde Mill Shopping Center N/A N/A N/A
92 Regal Cinemas Center-Lancaster National Tires 11,885 11/1/17
93 Temescal Business Center Polymer Technology Group 28,825 10/31/06
94 Houston Centre CVS Pharmacy 9,240 3/31/12
98 Cherokee Shopping Center N/A N/A N/A
101 Kessel Foods N/A N/A N/A
105 Mervyn's Plaza N/A N/A N/A
106 Bartlett Commons Sears Roebuck and Company 21,440 7/1/07
107 Crowley Village Shopping Center Helig-Meyers Furniture 23,249 3/1/07
<CAPTION>
Major Tenant #3 Major Tenant #3 Major Tenant #3
Property Name Name Sq. Ft. Lease Expiration Date
------------- ---- ------- -------------------
<S> <C> <C> <C> <C>
2 Raritan Plaza I (1A) N/A N/A N/A
3 Raritan Center Industrial Portfolio (1A) N/A N/A N/A
4 Resurgens Plaza Fisher & Phillips 47,245 7/31/00
14 101 Commerce Drive N/A N/A N/A
20 Doctors Medical Complex N/A N/A N/A
26 BLN Office Park II N/A N/A N/A
29 Hannaford Plaza AKA Rotterdam Mall N/A N/A N/A
30 Highland Pavilion Shopping Center (1E) N/A N/A N/A
31 Highland Pavilion Cinema (1E) N/A N/A N/A
33 Ventura Libbit Building N/A N/A N/A
34 Carroll Park Industrial Center N/A N/A N/A
37 Town & Country Shopping Center N/A N/A N/A
38 Golden Triangle Shopping Center Dunhams 30,000 1/31/05
39 Jasper Mall Shopping Center N/A N/A N/A
40 Lincoln Village Shopping Center World Gym 18,121 7/31/03
41 Dominick's Food Store & Multi-Tenant Retail N/A N/A N/A
42 Suncrest Plaza Shopping Center N/A N/A N/A
43 Fabyan Crossing Shopping Center N/A N/A N/A
45 Legacy Drive Village Shopping Center N/A N/A N/A
50 Barnes Crossing Office Max 23,500 11/30/11
51 Elmwood Regal Center N/A N/A N/A
52 520 Franklin Avenue Medical Building N/A N/A N/A
56 BLN Office Park I N/A N/A N/A
57 Garden Plaza Shopping Center N/A N/A N/A
58 One Phillips Drive N/A N/A N/A
60 Ideal Professional Park N/A N/A N/A
62 The Shops at Lionville Station N/A N/A N/A
65 Mercado Del Rancho Shopping Center N/A N/A N/A
67 Padonia Commerce Building N/A N/A N/A
69 Tower Square Shopping Center N/A N/A N/A
70 West Garrett Place N/A N/A N/A
72 Chesterfield Commons N/A N/A N/A
74 Meadow Central Market N/A N/A N/A
75 Mount Kisco Square Shopping Center Kinko's 4,528 7/1/07
77 Freedom Village Shopping Center N/A N/A N/A
80 Young Circle Shopping Center N/A N/A N/A
84 Rainbow Design Center N/A N/A N/A
85 Flower Hill Professional Center (1F) N/A N/A N/A
86 Flower Hill McDonald's (1F) N/A N/A N/A
88 Ultra Plaza Shopping Center (3) N/A N/A N/A
89 Sinagua Plaza N/A N/A N/A
91 Olde Mill Shopping Center N/A N/A N/A
92 Regal Cinemas Center-Lancaster N/A N/A N/A
93 Temescal Business Center N/A N/A N/A
94 Houston Centre N/A N/A N/A
98 Cherokee Shopping Center N/A N/A N/A
101 Kessel Foods N/A N/A N/A
105 Mervyn's Plaza N/A N/A N/A
106 Bartlett Commons North Suburban Clinic 10,200 5/1/01
107 Crowley Village Shopping Center K & B Drugs 15,000 6/1/07
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Property Property
Property Name Type Type Sq. Ft.
------------- ---- ---- -------
<S> <C> <C> <C> <C>
115 Westlake Crossing Shopping Center Commercial Retail 24,969
118 Constitution Square Commercial Retail 31,975
119 Oxford Square Commercial Retail 59,238
122 Menlo Avenue Office Building Commercial Office 27,771
123 Henderson Marketplace Commercial Retail 89,100
126 Homewood Village Shopping Center Commercial Retail 116,878
128 Sunrise Square Shopping Center Commercial Retail 38,465
129 Stein Mart Plaza Commercial Retail 60,006
130 1500 Plaza Office Building Commercial Office 62,611
136 The Office Centre at Dunwoody Village Commercial Office 80,158
137 Seminary Plaza Commercial Retail 146,840
139 The Market at Merrill Shopping Center Commercial Retail 122,204
141 Wind River Office Building Commercial Office 87,717
142 Pass Christian Village Commercial Retail 65,324
145 Sun Plaza Shopping Center Commercial Retail 31,617
147 Mariner Crossing Shopping Center Commercial Retail 74,789
148 Mt. Dora Marketplace Commercial Retail 78,762
150 Sherman Oaks Commercial Office 48,526
154 The Park Shopping Center Commercial Retail 82,542
155 Lloyd Office Plaza Commercial Office 56,369
156 Bridge Street Lodge (1J) Commercial Retail 5,970
157 P & R Building (1J) Commercial Mixed Use 4,310
161 University Shoppes Commercial Retail 50,797
162 Galleria Mall Commercial Retail 44,340
163 Park 219 Business Park Commercial Industrial 94,672
164 One Energy Square Commercial Retail 127,799
165 Orchard Plaza Shopping Center Commercial Retail 100,751
168 Perry Hall Mini-Storage Commercial Self Storage 100,700
171 Cedarfield Plaza (1K) Commercial Retail 31,402
172 Greece Mini Storage (1K) Commercial Self Storage 62,956
173 Gander Mountain / JoAnn Fabrics Center Commercial Retail 57,658
175 601 Franklin Avenue Medical Building Commercial Office 25,427
176 Valdosta Storage Rollup Commercial Self Storage 95,800
177 All Aboard Mini-Storage Commercial Self Storage 47,731
178 Brea Center Commercial Retail 56,945
181 Park Central Office Park Commercial Office 54,908
182 Drug Emporium Shopping Center Commercial Retail 44,065
183 Langley Place Commercial Mixed Use 32,938
185 The Woodlands Shopping Center Commercial Retail 31,958
186 St. Marys Plaza Commercial Retail 78,148
187 Mountain Park Pavilions II Commercial Retail 30,741
188 Shady Banks Shopping Center Commercial Retail 51,270
189 Pavilion in the Park Shopping Center Commercial Retail 65,658
190 Riverview Business Plaza Commercial Industrial 85,075
191 Cumberland Station Shopping Center Commercial Retail 43,751
193 Westover Pointe Center Commercial Retail 64,074
195 Super Crown Books & LaJolla Patio Commercial Retail 30,000
198 Jefferson Square Mall Commercial Retail 124,457
199 Sandalwood Center Commercial Retail 40,886
200 Encino Village Center Commercial Retail 29,220
202 4 Hartwell Place Commercial Office 47,823
204 Stewart Creek Shopping Center Commercial Retail 22,028
205 Plantation Village Shopping Center Commercial Retail 57,525
207 Orangethorpe Beach Shopping Center Commercial Retail 20,266
208 Orchard Supply Commercial Retail 42,132
209 Waterford Village Shopping Center Commercial Retail 65,965
211 Esplanade Mini-Storage Commercial Self Storage 73,660
212 Sterling Industrial Park Commercial Industrial 72,800
<CAPTION>
Major Tenant #1 Major Tenant #1 Major Tenant #1
Property Name Name Sq. Ft. Lease Expiration Date
------------- ---- ------- ---------------------
<S> <C> <C> <C> <C>
115 Westlake Crossing Shopping Center Blockbuster Video, Inc. 5,400 12/31/01
118 Constitution Square Molecular Science Institute 8,000 11/30/02
119 Oxford Square Eckerds Drugs 10,356 4/1/06
122 Menlo Avenue Office Building Data Xel, Inc./Aqueduct 2,945 1/31/99
123 Henderson Marketplace Lowe's Food Stores, Inc. 28,050 4/1/06
126 Homewood Village Shopping Center Winn-Dixie 44,000 5/1/16
128 Sunrise Square Shopping Center Charlie Rose Fresno L.L.C. 4,060 2/14/00
129 Stein Mart Plaza Stein Mart, Inc. 36,320 5/31/10
130 1500 Plaza Office Building Nationwide Insurance 12,124 11/1/00
136 The Office Centre at Dunwoody Village N/A N/A N/A
137 Seminary Plaza K-Mart 84,180 10/1/03
139 The Market at Merrill Shopping Center Market Street Bargain Cinema 13,626 3/31/03
141 Wind River Office Building Bureau of Land Mgmt. 11,983 7/1/99
142 Pass Christian Village Delchamps, Inc. 45,490 6/1/15
145 Sun Plaza Shopping Center Sun Market 4,992 1/31/06
147 Mariner Crossing Shopping Center Food Lion 29,000 1/1/10
148 Mt. Dora Marketplace Winn Dixie 44,000 6/1/06
150 Sherman Oaks Tri West Insurance Services, Inc. 17,851 7/31/04
154 The Park Shopping Center Consolidated Stores 22,500 1/1/01
155 Lloyd Office Plaza SOSCF 27,848 5/1/01
156 Bridge Street Lodge (1J) Vista Bahn Ski Rentals 2,442 9/1/03
157 P & R Building (1J) Nick's 2,750 12/1/02
161 University Shoppes N/A N/A N/A
162 Galleria Mall Tower Records 16,675 4/1/03
163 Park 219 Business Park N/A N/A N/A
164 One Energy Square Consolidated Stores 25,000 1/1/08
165 Orchard Plaza Shopping Center Furr's Inc. 42,635 5/1/04
168 Perry Hall Mini-Storage N/A N/A N/A
171 Cedarfield Plaza (1K) Town of Greece 5,750 3/1/01
172 Greece Mini Storage (1K) N/A N/A N/A
173 Gander Mountain / JoAnn Fabrics Center Gander Mountain 40,938 6/1/10
175 601 Franklin Avenue Medical Building Urological Surgeons of L.I./ Varriale, M. 8,466 1/1/08
176 Valdosta Storage Rollup N/A N/A N/A
177 All Aboard Mini-Storage N/A N/A N/A
178 Brea Center Vons #326 23,000 10/1/07
181 Park Central Office Park David M. Fitzpatrick Realty 19,286 10/1/99
182 Drug Emporium Shopping Center Drug Emporium 27,750 3/31/99
183 Langley Place ANC Inc. 6,000 12/1/02
185 The Woodlands Shopping Center Lone Star Cafe, Inc. 7,500 5/31/00
186 St. Marys Plaza Safeway 36,953 11/30/00
187 Mountain Park Pavilions II Tijuana Country Club, L.L.C. 6,000 12/31/12
188 Shady Banks Shopping Center Food Lion 29,000 7/16/08
189 Pavilion in the Park Shopping Center N/A N/A N/A
190 Riverview Business Plaza Heritage Doorcraft 13,916 2/1/02
191 Cumberland Station Shopping Center Fashion Bug 9,600 1/31/04
193 Westover Pointe Center Alltel 22,813 2/16/01
195 Super Crown Books & LaJolla Patio Super Crown Books 15,000 1/31/08
198 Jefferson Square Mall Payless Drug Store 38,872 2/28/10
199 Sandalwood Center Bunker Dance Studio 4,524 9/30/00
200 Encino Village Center Kinko's 7,575 3/31/04
202 4 Hartwell Place Hughes Danbury Optical Systems 47,823 10/31/01
204 Stewart Creek Shopping Center Chief Auto Parts 5,400 10/1/02
205 Plantation Village Shopping Center 2 Day Video Inc. 7,500 12/31/02
207 Orangethorpe Beach Shopping Center Fuddruckers, Inc. 6,600 11/30/07
208 Orchard Supply Orchard Supply Hardware 42,132 1/31/18
209 Waterford Village Shopping Center Big Lots 32,270 8/1/02
211 Esplanade Mini-Storage N/A N/A N/A
212 Sterling Industrial Park N/A N/A N/A
</TABLE>
<TABLE>
<CAPTION>
Major Tenant #2 Major Tenant #2 Major Tenant #2
Property Name Name Sq. Ft. Lease Expiration Date
------------- ---- ------- ---------------------
<S> <C> <C> <C> <C>
115 Westlake Crossing Shopping Center Corner Bakery Store # 86 3,830 6/30/07
118 Constitution Square Princeton Review Operations 6,438 3/31/05
119 Oxford Square Woodworking Unlimited 8,100 5/1/99
122 Menlo Avenue Office Building N/A N/A N/A
123 Henderson Marketplace N/A N/A N/A
126 Homewood Village Shopping Center N/A N/A N/A
128 Sunrise Square Shopping Center N/A N/A N/A
129 Stein Mart Plaza Lonnigan's Grill & Sports 8,300 10/31/02
130 1500 Plaza Office Building Western Pcs 10,627 8/1/03
136 The Office Centre at Dunwoody Village N/A N/A N/A
137 Seminary Plaza Schnuck Markets, Inc. 56,160 11/1/99
139 The Market at Merrill Shopping Center W.L.R., Inc. 12,602 10/31/06
141 Wind River Office Building N/A N/A N/A
142 Pass Christian Village Big B Inc. 8,470 6/1/10
145 Sun Plaza Shopping Center N/A N/A N/A
147 Mariner Crossing Shopping Center N/A N/A N/A
148 Mt. Dora Marketplace N/A N/A N/A
150 Sherman Oaks Weller/Grossman Productions, Inc. 11,354 4/30/02
154 The Park Shopping Center Gold's Gym 13,400 2/1/05
155 Lloyd Office Plaza American Heart Association 11,575 8/1/03
156 Bridge Street Lodge (1J) Justus of Steamboat 1,419 9/1/03
157 P & R Building (1J) Vail Valley Associates 967 9/1/99
161 University Shoppes N/A N/A N/A
162 Galleria Mall Pinball Pete's 9,368 9/1/06
163 Park 219 Business Park N/A N/A N/A
164 One Energy Square C.R. Anthony's 22,000 7/1/99
165 Orchard Plaza Shopping Center N/A N/A N/A
168 Perry Hall Mini-Storage N/A N/A N/A
171 Cedarfield Plaza (1K) Childtime Childcare, Inc. 5,363 7/1/99
172 Greece Mini Storage (1K) N/A N/A N/A
173 Gander Mountain / JoAnn Fabrics Center JoAnn Fabrics 16,720 1/1/06
175 601 Franklin Avenue Medical Building Metropolitan Diagnostic 4,530 6/1/02
176 Valdosta Storage Rollup N/A N/A N/A
177 All Aboard Mini-Storage N/A N/A N/A
178 Brea Center Video Palace 5,800 10/1/02
181 Park Central Office Park Jay Incorporated 16,034 3/1/07
182 Drug Emporium Shopping Center Fabric City 6,115 2/28/01
183 Langley Place F.L. Putnam Investment Management Co. 4,539 12/1/99
185 The Woodlands Shopping Center Half Price Books, Records, Magazines, Inc. 7,160 6/30/02
186 St. Marys Plaza Walgreens 12,080 01/31/10
187 Mountain Park Pavilions II Kimberly Lewis Schools of Dance, Inc. 6,000 1/31/03
188 Shady Banks Shopping Center Rite Aid 6,720 7/16/00
189 Pavilion in the Park Shopping Center N/A N/A N/A
190 Riverview Business Plaza Ramsey County 12,862 12/1/04
191 Cumberland Station Shopping Center Hibbett Sporting Goods, Inc. 7,200 9/30/02
193 Westover Pointe Center Gold's Gym 15,000 12/31/00
195 Super Crown Books & LaJolla Patio La Jolla Patio & Mattress 15,000 10/31/07
198 Jefferson Square Mall The Emporium, Inc. 33,405 2/28/05
199 Sandalwood Center N/A N/A N/A
200 Encino Village Center Jerry's Famous Deli 5,600 6/15/07
202 4 Hartwell Place N/A N/A N/A
204 Stewart Creek Shopping Center Art & Frame 2,500 10/1/02
205 Plantation Village Shopping Center Laredo Cafe Inc. 6,297 11/30/00
207 Orangethorpe Beach Shopping Center Thuy's International, Inc. 4,400 12/31/01
208 Orchard Supply N/A N/A N/A
209 Waterford Village Shopping Center Shifman's Menswear 8,820 10/1/07
211 Esplanade Mini-Storage N/A N/A N/A
212 Sterling Industrial Park N/A N/A N/A
<CAPTION>
Major Tenant #3 Major Tenant #3 Major Tenant #3
Property Name Name Sq. Ft. Lease Expiration Date
------------- ---- ------- -------------------
<S> <C> <C> <C> <C>
115 Westlake Crossing Shopping Center First Union National Bank 3,000 1/31/07
118 Constitution Square Public Health Institute 5,243 9/30/00
119 Oxford Square Pet Supermarket 7,522 7/15/99
122 Menlo Avenue Office Building N/A N/A N/A
123 Henderson Marketplace N/A N/A N/A
126 Homewood Village Shopping Center N/A N/A N/A
128 Sunrise Square Shopping Center N/A N/A N/A
129 Stein Mart Plaza N/A N/A N/A
130 1500 Plaza Office Building N/A N/A N/A
136 The Office Centre at Dunwoody Village N/A N/A N/A
137 Seminary Plaza N/A N/A N/A
139 The Market at Merrill Shopping Center N/A N/A N/A
141 Wind River Office Building N/A N/A N/A
142 Pass Christian Village N/A N/A N/A
145 Sun Plaza Shopping Center N/A N/A N/A
147 Mariner Crossing Shopping Center N/A N/A N/A
148 Mt. Dora Marketplace N/A N/A N/A
150 Sherman Oaks International Parking Design, Inc. 10,735 5/31/97
154 The Park Shopping Center N/A N/A N/A
155 Lloyd Office Plaza Auto Item Management 7,825 2/1/04
156 Bridge Street Lodge (1J) Surefoot 1,292 9/1/03
157 P & R Building (1J) Office 520 12/1/02
161 University Shoppes N/A N/A N/A
162 Galleria Mall N/A N/A N/A
163 Park 219 Business Park N/A N/A N/A
164 One Energy Square N/A N/A N/A
165 Orchard Plaza Shopping Center N/A N/A N/A
168 Perry Hall Mini-Storage N/A N/A N/A
171 Cedarfield Plaza (1K) Vasilios & Ioannis Tegas 3,500 1/1/02
172 Greece Mini Storage (1K) N/A N/A N/A
173 Gander Mountain / JoAnn Fabrics Center N/A N/A N/A
175 601 Franklin Avenue Medical Building N/A N/A N/A
176 Valdosta Storage Rollup N/A N/A N/A
177 All Aboard Mini-Storage N/A N/A N/A
178 Brea Center N/A N/A N/A
181 Park Central Office Park The Cabot Group 7,176 3/1/07
182 Drug Emporium Shopping Center N/A N/A N/A
183 Langley Place N/A N/A N/A
185 The Woodlands Shopping Center N/A N/A N/A
186 St. Marys Plaza N/A N/A N/A
187 Mountain Park Pavilions II Sunrise Preschools 5,000 1/31/03
188 Shady Banks Shopping Center N/A N/A N/A
189 Pavilion in the Park Shopping Center N/A N/A N/A
190 Riverview Business Plaza BW Systems 12,247 7/1/02
191 Cumberland Station Shopping Center On Cue, Inc. 4,951 1/31/06
193 Westover Pointe Center N/A N/A N/A
195 Super Crown Books & LaJolla Patio N/A N/A N/A
198 Jefferson Square Mall N/A N/A N/A
199 Sandalwood Center N/A N/A N/A
200 Encino Village Center California Wok 3,000 11/30/00
202 4 Hartwell Place N/A N/A N/A
204 Stewart Creek Shopping Center N/A N/A N/A
205 Plantation Village Shopping Center N/A N/A N/A
207 Orangethorpe Beach Shopping Center Richard McFarland and William Feeney 3,000 2/28/03
208 Orchard Supply N/A N/A N/A
209 Waterford Village Shopping Center N/A N/A N/A
211 Esplanade Mini-Storage N/A N/A N/A
212 Sterling Industrial Park N/A N/A N/A
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Property Property
Property Name Type Type Sq. Ft.
------------- ---- ---- -------
<S> <C> <C> <C> <C>
213 Mabelvale Plaza Shopping Center Commercial Retail 40,020
214 Woodlawn Village Shopping Center Commercial Retail 54,144
215 Bolton-Moore's Mill Shopping Center Commercial Retail 78,916
216 Omni Plaza Shopping Center Commercial Retail 36,328
217 Shield Street Plaza Commercial Retail 72,572
220 Penninsula Professional Building Commercial Office 29,885
222 Alexandria Square Commercial Retail 39,522
223 Advo Building Commercial Office 18,865
224 White Pines Plaza Commercial Retail 48,000
227 109-111 Grant Avenue Commercial Office 34,570
229 Parker Marketplace Phase II Commercial Retail 20,555
236 Tiger Mart Commercial Convenience Store 6,534
237 Quail Hollow Business Park Commercial Office 42,012
239 Bridgeport Professional Building Commercial Office 26,621
241 Brigham's Landing Shopping Center Commercial Retail 38,885
242 Boulevard Shoppes II Commercial Retail 40,508
252 Plaza North Medical Building Commercial Office 23,478
254 Northlake Quadrangle Commercial Retail 77,621
258 Morningstar Mini-Storage Commercial Self Storage 112,619
260 Homestead Corner Shopping Center Commercial Retail 19,075
262 F & H Warehouse Commercial Industrial 180,383
263 Avian Plaza Shopping Center Commercial Retail 24,776
264 Port Orchard Mini Storage Commercial Self Storage 41,785
266 The Miller Center Commercial Retail 67,401
268 Rancho San Diego Town & Country Commercial Retail 10,259
272 STOR-N-LOCK Commercial Self Storage 61,200
274 701 Franklin Center Commercial Retail 22,869
278 Courtyard Plaza Commercial Retail 15,620
286 Midtown at Main Commercial Retail 26,146
287 Park Place Center Commercial Retail 21,791
288 International Self Storage Commercial Self Storage 49,625
290 Loc-'N-Stor Self-Storage Commercial Self Storage 26,480
297 Eckerds Drugstore Commercial Retail 11,200
300 Riverview Plaza II Commercial Retail 15,631
301 Westmoreland Warehouse Commercial Mixed Use 46,510
<CAPTION>
Major Tenant #1 Major Tenant #1 Major Tenant #1
Property Name Name Sq. Ft. Lease Expiration Date
------------- ---- ------- ---------------------
<S> <C> <C> <C> <C>
213 Mabelvale Plaza Shopping Center Aarons Rental Purchase 7,000 5/31/01
214 Woodlawn Village Shopping Center Food Lion 32,744 6/14/06
215 Bolton-Moore's Mill Shopping Center A&P 20,550 12/31/00
216 Omni Plaza Shopping Center Genovese Drug Stores, Inc. 20,880 6/5/00
217 Shield Street Plaza A. Dong Oriental Grocery & Gift, Inc. 32,817 3/1/08
220 Penninsula Professional Building Gannett Fleming Inc. 12,070 10/31/98
222 Alexandria Square Sears #5210 24,992 10/21/05
223 Advo Building Wamberg Organization 9,391 12/1/09
224 White Pines Plaza Harris - Teeter 33,000 6/30/09
227 109-111 Grant Avenue Olsen/Kimberly 11,936 8/31/01
229 Parker Marketplace Phase II Pier 1 8,000 3/1/07
236 Tiger Mart Owner Occupied 6,534 N/A
237 Quail Hollow Business Park Coldwell Banker 8,988 10/1/98
239 Bridgeport Professional Building Diagnostic Imaging Northwest 6,280 11/30/99
241 Brigham's Landing Shopping Center Apollo Burger 4,112 2/28/11
242 Boulevard Shoppes II Lynn Dinettes 8,200 5/31/03
252 Plaza North Medical Building Phy Choice, Inc. 3,747 8/1/02
254 Northlake Quadrangle Georgia Motor Club 9,786 3/31/99
258 Morningstar Mini-Storage N/A N/A N/A
260 Homestead Corner Shopping Center Zaph Enterprises Ltd. 5,000 12/1/02
262 F & H Warehouse P.C. Richard & Son Long Island Corp. 180,383 8/31/07
263 Avian Plaza Shopping Center Rite Aid of New Jersey, Inc. 7,630 4/1/05
264 Port Orchard Mini Storage N/A N/A N/A
266 The Miller Center Missippi Library Commission 43,561 6/30/01
268 Rancho San Diego Town & Country Hollywood Entertainment Corp. dba Hollywood Video 7,000 8/19/07
272 STOR-N-LOCK N/A N/A N/A
274 701 Franklin Center Superior 8,000 2/28/99
278 Courtyard Plaza Cataract N. Shore Management 5,570 8/1/04
286 Midtown at Main Walgreens 13,047 8/31/24
287 Park Place Center Royal Beauty 2,315 9/30/01
288 International Self Storage N/A N/A N/A
290 Loc-'N-Stor Self-Storage N/A N/A N/A
297 Eckerds Drugstore Eckerd Corporation 11,200 4/1/16
300 Riverview Plaza II Tanner's Vinings, Inc. 2,530 6/30/98
301 Westmoreland Warehouse Yaquinton Printing Co., Inc. 46,510 9/30/00
</TABLE>
<TABLE>
<CAPTION>
Major Tenant #2 Major Tenant #2 Major Tenant #2
Property Name Name Sq. Ft. Lease Expiration Date
------------- ---- ------- ---------------------
<S> <C> <C> <C> <C>
213 Mabelvale Plaza Shopping Center Concentra Medical Centers 6,560 6/30/04
214 Woodlawn Village Shopping Center CVS(Revco) 9,100 6/30/01
215 Bolton-Moore's Mill Shopping Center CVS 12,173 7/31/07
216 Omni Plaza Shopping Center N/A N/A N/A
217 Shield Street Plaza The Salvation Army 10,100 5/1/02
220 Penninsula Professional Building CH2M Hill 5,214 1/31/99
222 Alexandria Square Parts America 8,000 12/31/01
223 Advo Building Advo, Inc. 5,181 2/24/01
224 White Pines Plaza TAS Drugs 6,000 8/31/02
227 109-111 Grant Avenue Sieba, Ltd. 10,672 4/30/06
229 Parker Marketplace Phase II Leo's Meat Market 2,490 4/1/07
236 Tiger Mart N/A N/A N/A
237 Quail Hollow Business Park N/A N/A N/A
239 Bridgeport Professional Building Dr. David Sparling 3,619 9/30/98
241 Brigham's Landing Shopping Center Wild Burrow 4,000 8/31/01
242 Boulevard Shoppes II China Teipei Restaurant 6,560 6/30/98
252 Plaza North Medical Building Adult Pediatric Urology Clinic, P.A. 3,018 10/1/02
254 Northlake Quadrangle N/A N/A N/A
258 Morningstar Mini-Storage N/A N/A N/A
260 Homestead Corner Shopping Center Jerry's Floor Store 2,293 11/1/98
262 F & H Warehouse N/A N/A N/A
263 Avian Plaza Shopping Center WaWa, Inc. 3,146 3/1/00
264 Port Orchard Mini Storage N/A N/A N/A
266 The Miller Center American Veterans Post 1, Inc. 13,890 3/31/99
268 Rancho San Diego Town & Country Baskin Robbins USA, Co. dba Baskin Robbins 1,629 11/1/07
272 STOR-N-LOCK N/A N/A N/A
274 701 Franklin Center Suntan City 3,180 12/31/99
278 Courtyard Plaza Letourneau's Pharmacy, Inc. 4,650 8/1/02
286 Midtown at Main China Garden 3,581 1/31/02
287 Park Place Center N/A N/A N/A
288 International Self Storage N/A N/A N/A
290 Loc-'N-Stor Self-Storage N/A N/A N/A
297 Eckerds Drugstore N/A N/A N/A
300 Riverview Plaza II Excel Temporary Serv 1,976 6/30/00
301 Westmoreland Warehouse N/A N/A N/A
<CAPTION>
Major Tenant #3 Major Tenant #3 Major Tenant #3
Property Name Name Sq. Ft. Lease Expiration Date
------------- ---- ------- -------------------
<S> <C> <C> <C> <C>
213 Mabelvale Plaza Shopping Center Cato Fashions 6,300 1/31/01
214 Woodlawn Village Shopping Center N/A N/A N/A
215 Bolton-Moore's Mill Shopping Center Family Dollar 8,500 12/31/98
216 Omni Plaza Shopping Center N/A N/A N/A
217 Shield Street Plaza N/A N/A N/A
220 Penninsula Professional Building Prudential Insurance 4,298 1/31/00
222 Alexandria Square N/A N/A N/A
223 Advo Building CPRi 2,599 6/14/02
224 White Pines Plaza N/A N/A N/A
227 109-111 Grant Avenue EM Associates 4,972 3/31/02
229 Parker Marketplace Phase II Veldcamps Flowers 2,138 7/1/07
236 Tiger Mart N/A N/A N/A
237 Quail Hollow Business Park N/A N/A N/A
239 Bridgeport Professional Building N/A N/A N/A
241 Brigham's Landing Shopping Center N/A N/A N/A
242 Boulevard Shoppes II Bennett Auto Supply 5,724 6/30/98
252 Plaza North Medical Building N/A N/A N/A
254 Northlake Quadrangle N/A N/A N/A
258 Morningstar Mini-Storage N/A N/A N/A
260 Homestead Corner Shopping Center N/A N/A N/A
262 F & H Warehouse N/A N/A N/A
263 Avian Plaza Shopping Center N/A N/A N/A
264 Port Orchard Mini Storage N/A N/A N/A
266 The Miller Center N/A N/A N/A
268 Rancho San Diego Town & Country Alan Lafo dba Radio Shack 1,629 10/20/07
272 STOR-N-LOCK N/A N/A N/A
274 701 Franklin Center N/A N/A N/A
278 Courtyard Plaza Dunkin Donuts 1,950 3/31/05
286 Midtown at Main Midtown Laundry 2,713 7/31/98
287 Park Place Center N/A N/A N/A
288 International Self Storage N/A N/A N/A
290 Loc-'N-Stor Self-Storage N/A N/A N/A
297 Eckerds Drugstore N/A N/A N/A
300 Riverview Plaza II N/A N/A N/A
301 Westmoreland Warehouse N/A N/A N/A
</TABLE>
(1) Only those tenants which occupy 10% or more of the property area.
<PAGE>
<TABLE>
<CAPTION>
Additional Mortgage Loan Information
Cut-off Date Property Hotel
# Property Name (1) Balance (4) Type Franchise
- ----------------- ----------- ---- ---------
<S> <C> <C> <C> <C>
1 The Rivergate Apartments $94,602,208 Multifamily
2 Raritan Plaza I (1A) $27,484,832 Office
3 Raritan Center Industrial Portfolio (1A) $24,486,486 Industrial
4 Resurgens Plaza $32,859,589 Office
5 The Camargue $29,900,164 Multifamily
6 Casa Arroyo Apartments $23,984,720 Multifamily
7 Ballena Village Apartments $21,954,541 Multifamily
8 Holiday Inn - Jacksonville Airport (1B) $17,361,592 Hotel Holiday Inn
9 Courtyard by Marriott (1B) $4,589,846 Hotel Courtyard by Marriott
10 Magnolia Lake Apartments $20,500,000 Multifamily
11 Park Terrace $19,966,398 Multifamily
12 Autumn Chase Apartments $19,472,137 Multifamily
13 Embassy Square Suites $17,899,848 Hotel Embassy Suites
14 101 Commerce Drive $16,944,006 Industrial
15 Courtyard by Marriott - Pensacola (1C) $5,194,990 Hotel Courtyard by Marriott
16 Courtyard by Marriott - Tuscaloosa (1C) $3,866,230 Hotel Courtyard by Marriott
17 Fairfield Inn - Pensacola (1C) $3,116,994 Hotel Fairfield Inn
18 Fairfield Inn - Birmingham (1C) $2,377,707 Hotel Fairfield Inn
19 Fairfield Inn - Tuscaloosa (1C) $1,928,120 Hotel Fairfield Inn
20 Doctors Medical Complex $15,991,795 Office
21 Chandler Place Apartments $15,690,004 Multifamily
22 Summer Cove Apartments (2) $15,250,000 Multifamily
23 Lake & Racquet Apartments $14,979,511 Multifamily
24 Stone Ends Apartments $14,219,052 Multifamily
25 Canyon Club Apartments $13,558,248 Multifamily
26 BLN Office Park II $13,548,266 Office
27 Royal Plaza Hotel - Marlborough (1D) $10,478,542 Hotel Best Western
28 Royal Plaza Hotel - Fitchburg (1D) $2,594,687 Hotel Best Western
29 Hannaford Plaza AKA Rotterdam Mall $12,993,015 Retail
30 Highland Pavilion Shopping Center (1E) $6,332,000 Retail
31 Highland Pavilion Cinema (1E) $6,250,000 Retail
32 Plumtree Apartments $12,500,000 Multifamily
33 Ventura Libbit Building $12,180,479 Office
34 Carroll Park Industrial Center $11,905,000 Industrial
35 Randall Lane, Park Place I & II and Park Newport Apartments $11,464,221 Multifamily
36 Plaza Mobile Village $11,308,631 Manufactured Housing
37 Town & Country Shopping Center $11,135,647 Retail
38 Golden Triangle Shopping Center $10,777,077 Retail
39 Jasper Mall Shopping Center $10,535,181 Retail
40 Lincoln Village Shopping Center $10,456,137 Retail
41 Dominick's Food Store & Multi-Tenant Retail $10,317,352 Retail
42 Suncrest Plaza Shopping Center $9,968,518 Retail
43 Fabyan Crossing Shopping Center $9,826,481 Retail
44 Forest Glen Apartments $9,743,548 Multifamily
<CAPTION>
Most Recent
Occupancy Date of Operating Most
Rate at Occupancy Statement Recent
# Property Name (1) Underwriting(5) Rate Date Revenue
- ----------------- ---------------- ---- ---- -------
<S> <C> <C> <C> <C>
1 The Rivergate Apartments 97.0% 3/3/98 12/31/97 $20,140,590
2 Raritan Plaza I (1A) 99.0% 4/16/98 12/31/97 $6,384,832
3 Raritan Center Industrial Portfolio (1A) 94.0% 4/1/98 12/31/97 $4,373,384
4 Resurgens Plaza 96.0% 12/29/97 10/31/97 $9,827,387
5 The Camargue 99.0% 1/19/98 9/30/97 $5,763,050
6 Casa Arroyo Apartments 99.0% 3/15/98 12/31/97 $3,744,523
7 Ballena Village Apartments 95.0% 2/11/98 12/31/97 $3,823,379
8 Holiday Inn - Jacksonville Airport (1B) N/A 1/21/98 11/30/97 $10,851,488
9 Courtyard by Marriott (1B) N/A 12/31/97 12/31/97 $2,172,598
10 Magnolia Lake Apartments 95.0% 1/15/98 2/28/98 $3,661,717
11 Park Terrace 98.0% 2/28/98 1/31/98 $3,309,852
12 Autumn Chase Apartments 97.0% 10/1/97 9/30/97 $4,386,442
13 Embassy Square Suites N/A 1/1/98 11/30/97 $7,356,244
14 101 Commerce Drive 100.0% 1/5/98 1/4/98 $2,469,610
15 Courtyard by Marriott - Pensacola (1C) N/A 10/31/97 2/28/98 $1,831,113
16 Courtyard by Marriott - Tuscaloosa (1C) N/A 10/15/97 12/31/97 $1,678,131
17 Fairfield Inn - Pensacola (1C) N/A 9/30/97 12/31/97 $1,190,719
18 Fairfield Inn - Birmingham (1C) N/A 8/31/97 9/30/97 $988,627
19 Fairfield Inn - Tuscaloosa (1C) N/A 10/15/97 12/31/97 $817,344
20 Doctors Medical Complex 98.0% 12/1/97 10/31/97 $4,200,991
21 Chandler Place Apartments 96.0% 3/25/98 2/28/98 $2,325,775
22 Summer Cove Apartments (2) 93.0% 10/23/97 3/31/98 $1,986,796
23 Lake & Racquet Apartments 98.0% 10/27/97 9/30/97 $2,805,321
24 Stone Ends Apartments 100.0% 1/14/98 12/31/97 $2,604,097
25 Canyon Club Apartments 97.0% 4/8/98 3/31/98 $2,527,672
26 BLN Office Park II 99.0% 12/31/97 12/31/97 $3,269,077
27 Royal Plaza Hotel - Marlborough (1D) N/A 10/14/97 8/27/97 $9,218,824
28 Royal Plaza Hotel - Fitchburg (1D) N/A 10/14/97 8/29/97 $3,680,442
29 Hannaford Plaza AKA Rotterdam Mall 98.0% 2/1/98 12/31/97 $1,924,794
30 Highland Pavilion Shopping Center (1E) 97.0% 4/3/98 12/31/97 $1,025,560
31 Highland Pavilion Cinema (1E) 100.0% 4/3/98 12/31/97 $785,799
32 Plumtree Apartments 98.0% 3/20/98 12/31/97 $2,682,258
33 Ventura Libbit Building 97.0% 10/6/97 12/31/97 $3,836,234
34 Carroll Park Industrial Center 100.0% 1/5/98 2/20/98 $1,621,620
35 Randall Lane, Park Place I & II and Park Newport Apartments 93.0% 4/21/98 9/30/97 $2,634,213
36 Plaza Mobile Village 98.0% 2/28/98 2/28/98 $1,684,209
37 Town & Country Shopping Center 100.0% 4/15/98 4/30/98 $1,931,454
38 Golden Triangle Shopping Center 98.0% 11/25/97 12/31/97 $1,875,449
39 Jasper Mall Shopping Center 99.0% 10/30/97 9/30/97 $1,664,479
40 Lincoln Village Shopping Center 98.0% 3/1/98 12/31/97 $2,432,607
41 Dominick's Food Store & Multi-Tenant Retail 100.0% 12/1/97 4/30/98 $1,362,106
42 Suncrest Plaza Shopping Center 92.0% 1/1/98 12/31/97 $1,889,218
43 Fabyan Crossing Shopping Center 100.0% 3/1/98 12/31/98 $1,282,694
44 Forest Glen Apartments 97.0% 3/16/98 2/28/98 $1,523,844
<CAPTION>
Most Most Most
Recent Recent Recent U/W
# Property Name (1) Expenses NOI DSCR NCF
- ----------------- -------- --- ---- ---
<S> <C> <C> <C> <C> <C>
1 The Rivergate Apartments $8,520,634 $11,619,956 1.54 x $13,177,773
2 Raritan Plaza I (1A) $2,355,634 $4,029,198 1.76 x $2,932,602
3 Raritan Center Industrial Portfolio (1A) $1,459,705 $2,913,679 1.43 x $2,490,405
4 Resurgens Plaza $3,358,889 $6,468,498 2.54 x $5,342,566
5 The Camargue $2,535,844 $3,227,206 1.27 x $3,508,202
6 Casa Arroyo Apartments $1,280,138 $2,464,385 1.29 x $2,549,628
7 Ballena Village Apartments $1,357,122 $2,466,257 1.40 x $2,461,929
8 Holiday Inn - Jacksonville Airport (1B) $7,352,280 $3,499,208 2.33 x $2,749,868
9 Courtyard by Marriott (1B) $1,435,897 $736,701 1.86 x $619,297
10 Magnolia Lake Apartments $1,704,714 $1,957,003 1.21 x $2,113,019
11 Park Terrace $954,205 $2,355,647 1.49 x $2,106,560
12 Autumn Chase Apartments $2,108,649 $2,277,793 1.45 x $2,115,970
13 Embassy Square Suites $4,693,261 $2,662,983 1.67 x $2,265,082
14 101 Commerce Drive $49,390 $2,420,220 1.78 x $2,110,934
15 Courtyard by Marriott - Pensacola (1C) $1,084,492 $746,621 1.64 x $657,868
16 Courtyard by Marriott - Tuscaloosa (1C) $1,068,642 $609,489 1.81 x $567,020
17 Fairfield Inn - Pensacola (1C) $683,767 $506,952 1.86 x $382,449
18 Fairfield Inn - Birmingham (1C) $613,046 $375,581 1.80 x $300,682
19 Fairfield Inn - Tuscaloosa (1C) $555,379 $261,965 1.56 x $224,225
20 Doctors Medical Complex $2,145,483 $2,055,508 1.51 x $1,694,604
21 Chandler Place Apartments $1,005,733 $1,320,042 1.06 x $1,631,180
22 Summer Cove Apartments (2) $745,320 $1,241,476 1.14 x $1,488,116
23 Lake & Racquet Apartments $923,190 $1,882,131 1.53 x $1,634,330
24 Stone Ends Apartments $1,059,554 $1,544,543 1.37 x $1,431,208
25 Canyon Club Apartments $1,033,033 $1,494,640 1.42 x $1,377,380
26 BLN Office Park II $1,458,345 $1,810,732 1.64 x $1,533,099
27 Royal Plaza Hotel - Marlborough (1D) $7,114,641 $2,104,183 2.24 x $1,620,925
28 Royal Plaza Hotel - Fitchburg (1D) $3,219,017 $461,425 1.99 x $304,543
29 Hannaford Plaza AKA Rotterdam Mall $703,932 $1,220,862 1.12 x $1,333,573
30 Highland Pavilion Shopping Center (1E) $250,644 $774,916 1.48 x $673,102
31 Highland Pavilion Cinema (1E) $33,543 $752,256 1.46 x $645,472
32 Plumtree Apartments $1,194,901 $1,487,357 1.50 x $1,272,425
33 Ventura Libbit Building $1,888,417 $1,947,817 1.65 x $1,497,008
34 Carroll Park Industrial Center $193,663 $1,427,957 1.44 x $1,301,286
35 Randall Lane, Park Place I & II and Park Newport Apartments $1,481,164 $1,153,049 1.22 x $1,144,639
36 Plaza Mobile Village $529,900 $1,154,309 1.23 x $1,162,416
37 Town & Country Shopping Center $499,882 $1,431,572 1.53 x $1,202,211
38 Golden Triangle Shopping Center $465,243 $1,410,206 1.49 x $1,218,037
39 Jasper Mall Shopping Center $441,396 $1,223,083 1.43 x $1,154,816
40 Lincoln Village Shopping Center $1,160,825 $1,271,782 1.45 x $1,124,465
41 Dominick's Food Store & Multi-Tenant Retail $83,928 $1,278,178 1.51 x $1,116,505
42 Suncrest Plaza Shopping Center $433,266 $1,455,952 1.78 x $1,327,610
43 Fabyan Crossing Shopping Center $269,444 $1,013,250 1.26 x $1,053,809
44 Forest Glen Apartments $508,953 $1,014,891 1.33 x $968,350
<CAPTION>
Tax &
U/W Insurance
# Property Name (1) DSCR Escrows
- ----------------- ---- -------
<S> <C> <C> <C>
1 The Rivergate Apartments 1.75 x Both
2 Raritan Plaza I (1A) 1.28 x Tax
3 Raritan Center Industrial Portfolio (1A) 1.22 x Both
4 Resurgens Plaza 2.10 x None
5 The Camargue 1.38 x Both
6 Casa Arroyo Apartments 1.34 x Both
7 Ballena Village Apartments 1.40 x Insurance
8 Holiday Inn - Jacksonville Airport (1B) 1.83 x Both
9 Courtyard by Marriott (1B) 1.56 x Both
10 Magnolia Lake Apartments 1.31 x Tax
11 Park Terrace 1.33 x Tax
12 Autumn Chase Apartments 1.35 x None
13 Embassy Square Suites 1.42 x Both
14 101 Commerce Drive 1.55 x None
15 Courtyard by Marriott - Pensacola (1C) 1.45 x Both
16 Courtyard by Marriott - Tuscaloosa (1C) 1.68 x Both
17 Fairfield Inn - Pensacola (1C) 1.40 x Both
18 Fairfield Inn - Birmingham (1C) 1.44 x Both
19 Fairfield Inn - Tuscaloosa (1C) 1.33 x Both
20 Doctors Medical Complex 1.25 x Tax
21 Chandler Place Apartments 1.31 x Both
22 Summer Cove Apartments (2) 1.37 x Both
23 Lake & Racquet Apartments 1.33 x None
24 Stone Ends Apartments 1.27 x Both
25 Canyon Club Apartments 1.31 x Tax
26 BLN Office Park II 1.39 x Both
27 Royal Plaza Hotel - Marlborough (1D) 1.73 x Both
28 Royal Plaza Hotel - Fitchburg (1D) 1.31 x Both
29 Hannaford Plaza AKA Rotterdam Mall 1.22 x Tax
30 Highland Pavilion Shopping Center (1E) 1.29 x Both
31 Highland Pavilion Cinema (1E) 1.25 x Insurance
32 Plumtree Apartments 1.28 x Both
33 Ventura Libbit Building 1.27 x Both
34 Carroll Park Industrial Center 1.32 x Both
35 Randall Lane, Park Place I & II and Park Newport Apartments 1.21 x Both
36 Plaza Mobile Village 1.24 x Tax
37 Town & Country Shopping Center 1.29 x Both
38 Golden Triangle Shopping Center 1.28 x Both
39 Jasper Mall Shopping Center 1.35 x None
40 Lincoln Village Shopping Center 1.29 x Both
41 Dominick's Food Store & Multi-Tenant Retail 1.32 x Both
42 Suncrest Plaza Shopping Center 1.62 x Both
43 Fabyan Crossing Shopping Center 1.31 x Both
44 Forest Glen Apartments 1.27 x Both
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Cut-off Date Property Hotel
# Property Name (1) Balance (4) Type Franchise
- ----------------- ----------- ---- ---------
<S> <C> <C> <C> <C>
45 Legacy Drive Village Shopping Center $9,711,786 Retail
46 Friendly Village MHC $9,494,274 Manufactured Housing
47 Breckenridge Apartments $9,347,127 Multifamily
48 Days Inn - Inner Harbor $9,329,684 Hotel Days Inn
49 Courtyard by Marriott Richmond $8,891,690 Hotel Courtyard by Marriott
50 Barnes Crossing $8,500,000 Retail
51 Elmwood Regal Center $8,450,782 Retail
52 520 Franklin Avenue Medical Building $8,300,000 Office
53 Holiday Inn & Suites $8,300,000 Hotel Holiday Inn & Suites
54 Aspen Ridge Apartments $8,074,631 Multifamily
55 Parkway Towers Apartments $7,980,251 Mixed Use
56 BLN Office Park I $7,969,568 Office
57 Garden Plaza Shopping Center $7,571,963 Retail
58 One Phillips Drive $7,475,299 Industrial
59 Comfort Inn - Hollywood $7,317,234 Hotel Comfort Inn
60 Ideal Professional Park $7,196,080 Office
61 Cypress Pointe Apartments $7,189,837 Multifamily
62 The Shops at Lionville Station $6,995,755 Retail
63 Cabot Lodge - Gainesville $6,984,548 Hotel Cabot Lodge
64 Hampton Inn & Suites $6,977,329 Hotel Hampton Inn
65 Mercado Del Rancho Shopping Center $6,976,628 Retail
66 Bancroft Hall Apartments $6,953,647 Multifamily
67 Padonia Commerce Building $6,951,446 Industrial
68 Anaheim Shores Estates $6,945,641 Manufactured Housing
69 Tower Square Shopping Center $6,939,016 Retail
70 West Garrett Place $6,840,307 Office
71 Elmonica Court Apartments $6,795,592 Multifamily
72 Chesterfield Commons $6,790,307 Retail
73 Plum Tree Apartments $6,695,709 Multifamily
74 Meadow Central Market $6,585,700 Retail
75 Mount Kisco Square Shopping Center $6,585,159 Retail
76 Las Brisas Apartments $6,564,310 Multifamily
77 Freedom Village Shopping Center $6,495,849 Retail
78 Waldan Pond & Waldan Chase Apts $6,446,089 Multifamily
79 Aspen Park Apartments $6,192,234 Multifamily
80 Young Circle Shopping Center $6,086,963 Retail
81 Sherwood Knoll Comfort Inn $6,017,066 Hotel Comfort Inn
82 Bridgepoint Apartments $5,996,406 Multifamily
83 Holiday Inn Center City $5,994,245 Hotel Holiday Inn
84 Rainbow Design Center $5,846,572 Retail
85 Flower Hill Professional Center (1F) $5,000,000 Office
86 Flower Hill McDonald's (1F) $800,000 Retail
87 Blue Ash Hotel & Conference Center $5,736,510 Hotel Best Western
88 Ultra Plaza Shopping Center (3) $5,680,000 Retail
89 Sinagua Plaza $5,646,823 Retail
90 Holiday Plaza $5,596,800 Manufactured Housing
91 Olde Mill Shopping Center $5,487,972 Retail
92 Regal Cinemas Center-Lancaster $5,466,243 Retail
93 Temescal Business Center $5,330,124 Mixed Use
94 Houston Centre $5,200,000 Retail
95 Pellcare Nursing Home - Winston-Salem (1G) $3,061,017 Healthcare
96 Pellcare Nursing Home - Hickory (1G) $2,127,148 Healthcare
97 Vista Mar Apartments $5,192,803 Multifamily
<CAPTION>
Most Recent
Occupancy Date of Operating Most
Rate at Occupancy Statement Recent
# Property Name (1) Underwriting(5) Rate Date Revenue
- ----------------- ---------------- ---- ---- -------
<S> <C> <C> <C> <C> <C>
45 Legacy Drive Village Shopping Center 99.0% 3/30/98 12/31/97 $1,616,043
46 Friendly Village MHC 91.0% 9/30/97 9/30/97 $2,079,437
47 Breckenridge Apartments 92.0% 3/20/98 3/31/98 $2,686,336
48 Days Inn - Inner Harbor N/A 8/31/97 8/31/97 $6,296,488
49 Courtyard by Marriott Richmond N/A 12/31/97 12/31/97 $3,582,618
50 Barnes Crossing 92.0% 3/3/98 12/31/97 $737,778
51 Elmwood Regal Center 100.0% 12/31/97 1/1/98 $1,607,319
52 520 Franklin Avenue Medical Building 99.0% 12/1/97 12/31/97 $1,681,828
53 Holiday Inn & Suites N/A 12/31/97 12/31/97 $3,374,067
54 Aspen Ridge Apartments 94.0% 11/20/97 10/31/97 $1,422,140
55 Parkway Towers Apartments 99.0% 12/31/97 12/31/97 $2,482,873
56 BLN Office Park I 98.0% 12/31/97 12/31/97 $2,328,739
57 Garden Plaza Shopping Center 100.0% 2/1/98 10/7/97 $900,000
58 One Phillips Drive 100.0% 1/5/98 12/31/97 $1,140,000
59 Comfort Inn - Hollywood N/A 12/31/97 9/30/97 $4,012,207
60 Ideal Professional Park 90.0% 10/31/97 9/30/97 $1,542,079
61 Cypress Pointe Apartments 98.0% 8/31/97 6/30/97 $1,351,993
62 The Shops at Lionville Station 96.0% 2/25/98 12/31/97 $1,058,318
63 Cabot Lodge - Gainesville N/A 12/31/97 11/30/97 $3,647,327
64 Hampton Inn & Suites N/A 12/31/97 12/31/97 $3,099,709
65 Mercado Del Rancho Shopping Center 97.0% 12/9/97 12/31/97 $858,099
66 Bancroft Hall Apartments 96.0% 3/24/98 12/31/97 $1,579,514
67 Padonia Commerce Building 100.0% 10/17/97 8/31/97 $1,366,804
68 Anaheim Shores Estates 100.0% 2/24/98 12/31/97 $2,342,703
69 Tower Square Shopping Center 100.0% 2/23/98 12/31/97 $1,449,419
70 West Garrett Place 98.0% 12/1/97 11/30/97 $1,255,027
71 Elmonica Court Apartments 97.0% 3/25/98 3/31/98 $935,111
72 Chesterfield Commons 95.0% 1/29/98 12/31/97 $1,007,027
73 Plum Tree Apartments 99.0% 2/23/98 2/28/98 $1,069,122
74 Meadow Central Market 97.0% 1/14/98 12/31/97 $1,114,114
75 Mount Kisco Square Shopping Center 100.0% 10/1/97 9/30/97 $943,797
76 Las Brisas Apartments 94.0% 3/9/98 2/28/98 $1,328,158
77 Freedom Village Shopping Center 91.0% 12/1/97 12/31/97 $1,228,176
78 Waldan Pond & Waldan Chase Apts 96.0% 3/17/98 2/28/98 $1,272,968
79 Aspen Park Apartments 100.0% 4/20/98 3/31/98 $1,394,507
80 Young Circle Shopping Center 100.0% 9/30/97 9/30/97 $990,411
81 Sherwood Knoll Comfort Inn N/A 12/31/97 7/31/97 $4,292,452
82 Bridgepoint Apartments 97.0% 3/11/98 12/31/97 $1,256,411
83 Holiday Inn Center City N/A 9/30/97 12/31/97 $6,279,993
84 Rainbow Design Center 100.0% 1/20/98 11/30/97 $898,139
85 Flower Hill Professional Center (1F) 96.0% 12/5/97 10/31/97 $937,976
86 Flower Hill McDonald's (1F) 100.0% 1/21/98 10/31/97 $152,831
87 Blue Ash Hotel & Conference Center N/A 12/31/97 12/31/97 $4,795,191
88 Ultra Plaza Shopping Center (3) 100.0% 1/1/98 12/31/97 $1,054,094
89 Sinagua Plaza 100.0% 2/1/98 1/31/98 $1,087,541
90 Holiday Plaza 93.0% 2/10/98 12/31/97 $799,958
91 Olde Mill Shopping Center 96.0% 1/1/98 12/31/97 $895,464
92 Regal Cinemas Center-Lancaster 100.0% 12/31/97 8/21/97 $1,016,370
93 Temescal Business Center 80.0% 10/31/97 10/31/97 $930,400
94 Houston Centre 100.0% 3/1/98 3/31/98 $723,146
95 Pellcare Nursing Home - Winston-Salem (1G) 89.0% 1/7/98 9/30/97 $5,573,524
96 Pellcare Nursing Home - Hickory (1G) 95.0% 1/6/98 9/30/97 $3,873,127
97 Vista Mar Apartments 97.0% 3/2/98 2/28/98 $1,536,240
<CAPTION>
Most Most Most
Recent Recent Recent U/W
# Property Name (1) Expenses NOI DSCR NCF
- ----------------- -------- --- ---- ---
<S> <C> <C> <C> <C> <C>
45 Legacy Drive Village Shopping Center $441,127 $1,174,916 1.50 x $1,379,900
46 Friendly Village MHC $925,231 $1,154,206 1.50 x $1,039,756
47 Breckenridge Apartments $1,250,340 $1,435,996 1.60 x $1,160,216
48 Days Inn - Inner Harbor $3,631,859 $2,664,629 3.33 x $1,982,048
49 Courtyard by Marriott Richmond $2,200,437 $1,382,541 1.75 x $1,160,062
50 Barnes Crossing $75,735 $662,043 .91 x $913,101
51 Elmwood Regal Center $320,366 $1,286,953 1.35 x $1,261,035
52 520 Franklin Avenue Medical Building $712,318 $969,510 1.42 x $890,741
53 Holiday Inn & Suites $2,284,415 $1,089,652 1.50 x $1,121,636
54 Aspen Ridge Apartments $497,144 $924,996 1.42 x $822,585
55 Parkway Towers Apartments $1,470,164 $1,012,709 1.58 x $908,507
56 BLN Office Park I $947,393 $1,381,346 2.12 x $1,194,341
57 Garden Plaza Shopping Center $9,000 $891,000 1.36 x $790,528
58 One Phillips Drive $34,200 $1,105,800 1.84 x $976,172
59 Comfort Inn - Hollywood $2,706,856 $1,305,351 2.03 x $967,028
60 Ideal Professional Park $556,513 $985,566 1.64 x $816,978
61 Cypress Pointe Apartments $495,461 $856,532 1.47 x $812,319
62 The Shops at Lionville Station $203,941 $854,377 1.51 x $758,047
63 Cabot Lodge - Gainesville $2,081,874 $1,565,453 2.59 x $1,278,114
64 Hampton Inn & Suites $1,894,685 $1,205,024 2.00 x $910,685
65 Mercado Del Rancho Shopping Center $384,969 $473,130 .85 x $716,154
66 Bancroft Hall Apartments $679,963 $899,551 1.45 x $814,855
67 Padonia Commerce Building $312,331 $1,054,473 1.70 x $864,306
68 Anaheim Shores Estates $1,135,984 $1,206,719 2.18 x $946,808
69 Tower Square Shopping Center $537,757 $911,662 1.61 x $832,170
70 West Garrett Place $458,215 $796,812 1.44 x $731,256
71 Elmonica Court Apartments $286,264 $648,847 1.21 x $667,060
72 Chesterfield Commons $207,648 $799,379 1.46 x $760,561
73 Plum Tree Apartments $371,758 $697,364 1.31 x $685,327
74 Meadow Central Market $420,039 $694,076 1.21 x $731,691
75 Mount Kisco Square Shopping Center $286,525 $657,272 1.17 x $761,704
76 Las Brisas Apartments $602,874 $725,283 1.42 x $699,901
77 Freedom Village Shopping Center $282,223 $945,953 1.84 x $809,264
78 Waldan Pond & Waldan Chase Apts $577,019 $695,949 1.34 x $684,669
79 Aspen Park Apartments $716,097 $678,410 1.35 x $628,264
80 Young Circle Shopping Center $293,858 $696,553 1.44 x $669,987
81 Sherwood Knoll Comfort Inn $3,280,726 $1,011,726 1.87 x $755,615
82 Bridgepoint Apartments $583,126 $673,285 1.39 x $650,033
83 Holiday Inn Center City $5,119,774 $1,160,219 2.21 x $801,609
84 Rainbow Design Center $204,120 $694,020 1.44 x $668,361
85 Flower Hill Professional Center (1F) $230,890 $707,086 1.67 x $573,924
86 Flower Hill McDonald's (1F) $35,699 $117,132 1.50 x $118,267
87 Blue Ash Hotel & Conference Center $3,843,563 $951,628 1.89 x $845,606
88 Ultra Plaza Shopping Center (3) $295,074 $759,020 1.83 x $661,004
89 Sinagua Plaza $211,397 $876,144 1.88 x $756,471
90 Holiday Plaza $269,793 $530,165 1.15 x $602,313
91 Olde Mill Shopping Center $195,984 $699,480 1.47 x $714,998
92 Regal Cinemas Center-Lancaster $237,418 $778,952 1.39 x $764,103
93 Temescal Business Center $230,108 $700,292 1.59 x $602,246
94 Houston Centre $109,957 $613,189 1.49 x $542,525
95 Pellcare Nursing Home - Winston-Salem (1G) $5,132,806 $440,718 1.62 x $383,826
96 Pellcare Nursing Home - Hickory (1G) $3,566,865 $306,262 1.62 x $274,426
97 Vista Mar Apartments $698,291 $837,949 1.98 x $571,077
<CAPTION>
Tax &
U/W Insurance
# Property Name (1) DSCR Escrows
- ----------------- ---- -------
<S> <C> <C> <C>
45 Legacy Drive Village Shopping Center 1.77 x Tax
46 Friendly Village MHC 1.35 x Both
47 Breckenridge Apartments 1.29 x Both
48 Days Inn - Inner Harbor 2.48 x Both
49 Courtyard by Marriott Richmond 1.47 x Both
50 Barnes Crossing 1.26 x Tax
51 Elmwood Regal Center 1.32 x Both
52 520 Franklin Avenue Medical Building 1.31 x Both
53 Holiday Inn & Suites 1.54 x Both
54 Aspen Ridge Apartments 1.26 x Both
55 Parkway Towers Apartments 1.42 x Both
56 BLN Office Park I 1.84 x Both
57 Garden Plaza Shopping Center 1.21 x Both
58 One Phillips Drive 1.63 x None
59 Comfort Inn - Hollywood 1.50 x Both
60 Ideal Professional Park 1.36 x Both
61 Cypress Pointe Apartments 1.40 x Both
62 The Shops at Lionville Station 1.34 x Insurance
63 Cabot Lodge - Gainesville 2.12 x Both
64 Hampton Inn & Suites 1.51 x Both
65 Mercado Del Rancho Shopping Center 1.29 x Both
66 Bancroft Hall Apartments 1.31 x Both
67 Padonia Commerce Building 1.39 x Both
68 Anaheim Shores Estates 1.71 x Both
69 Tower Square Shopping Center 1.47 x Tax
70 West Garrett Place 1.32 x Both
71 Elmonica Court Apartments 1.24 x Tax
72 Chesterfield Commons 1.39 x None
73 Plum Tree Apartments 1.29 x Both
74 Meadow Central Market 1.27 x Both
75 Mount Kisco Square Shopping Center 1.35 x Both
76 Las Brisas Apartments 1.37 x Tax
77 Freedom Village Shopping Center 1.57 x Both
78 Waldan Pond & Waldan Chase Apts 1.32 x None
79 Aspen Park Apartments 1.25 x Tax
80 Young Circle Shopping Center 1.39 x Both
81 Sherwood Knoll Comfort Inn 1.40 x Both
82 Bridgepoint Apartments 1.34 x Both
83 Holiday Inn Center City 1.52 x Tax
84 Rainbow Design Center 1.39 x Both
85 Flower Hill Professional Center (1F) 1.35 x Both
86 Flower Hill McDonald's (1F) 1.52 x Both
87 Blue Ash Hotel & Conference Center 1.68 x Both
88 Ultra Plaza Shopping Center (3) 1.59 x Both
89 Sinagua Plaza 1.62 x Tax
90 Holiday Plaza 1.31 x Both
91 Olde Mill Shopping Center 1.50 x Both
92 Regal Cinemas Center-Lancaster 1.36 x Both
93 Temescal Business Center 1.37 x Both
94 Houston Centre 1.32 x Both
95 Pellcare Nursing Home - Winston-Salem (1G) 1.41 x Both
96 Pellcare Nursing Home - Hickory (1G) 1.45 x Both
97 Vista Mar Apartments 1.35 x Both
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Cut-off Date Property Hotel
# Property Name (1) Balance (4) Type Franchise
- - - ----------------- ----------- ---- ---------
<S> <C> <C> <C> <C>
98 Cherokee Shopping Center $5,139,049 Retail
99 Super 8 Geary Street $5,100,000 Hotel Super 8
100 Cabot Lodge - Tallahassee $4,988,963 Hotel Cabot Lodge
101 Kessel Foods $4,951,913 Retail
102 South Pointe Apartments $4,917,198 Multifamily
103 Wyoming-Enzie Properties (1H) $3,100,000 Multifamily
104 Mesa Properties (1H) $1,800,000 Multifamily
105 Mervyn's Plaza $4,883,862 Retail
106 Bartlett Commons $4,847,504 Retail
107 Crowley Village Shopping Center $4,792,990 Retail
108 Tivoli Condominiums (1I) $2,098,758 Multifamily
109 Cross Creek Apartments (1I) $1,479,124 Multifamily
110 Tamara Hills Townhomes (1I) $1,069,367 Multifamily
111 The Bell Rock Inn $4,635,918 Hotel None
112 Howard Johnson Hotel $4,595,859 Hotel Howard Johnson
113 Camelot Apartments $4,593,379 Multifamily
114 Canyon Ridge MHP $4,582,726 Manufactured Housing
115 Westlake Crossing Shopping Center $4,482,137 Retail
116 Days Hotel Timonium $4,416,712 Hotel Days Hotel
117 Heritage Square Apartments $4,397,549 Multifamily
118 Constitution Square $4,392,205 Retail
119 Oxford Square $4,390,837 Retail
120 Spring Villas $4,356,224 Multifamily
121 Sierra Point Apartments $4,331,319 Multifamily
122 Menlo Avenue Office Building $4,297,527 Office
123 Henderson Marketplace $4,292,570 Retail
124 Stone Creek Apartments $4,263,734 Multifamily
125 Florida Avenue Apartments $4,191,479 Multifamily
126 Homewood Village Shopping Center $4,187,035 Retail
127 Common Wealth Avenue Apartments $4,179,055 Multifamily
128 Sunrise Square Shopping Center $4,177,220 Retail
129 Stein Mart Plaza $4,157,391 Retail
130 1500 Plaza Office Building $4,084,996 Office
131 New West Village Apartments $4,084,931 Multifamily
132 Brookside Apartments $4,061,787 Multifamily
133 Vinyard Gardens $4,017,864 Multifamily
134 Hidden Bay Village Apartments $4,000,000 Multifamily
135 Raintree Apartments $4,000,000 Multifamily
136 The Office Centre at Dunwoody Village $3,997,648 Office
137 Seminary Plaza $3,994,825 Retail
138 Longbranch Apartments $3,993,973 Multifamily
139 The Market at Merrill Shopping Center $3,950,000 Retail
140 Comfort Inn - Dothan $3,891,660 Hotel Comfort Inn
141 Wind River Office Building $3,875,000 Office
142 Pass Christian Village $3,828,469 Retail
143 Marriott Courtyard - Dothan $3,702,066 Hotel Courtyard by Marriott
144 Tivoli Apartments $3,700,000 Multifamily
145 Sun Plaza Shopping Center $3,678,412 Retail
146 Holiday Inn Express - Washington $3,646,752 Hotel Holiday Inn Express
147 Mariner Crossing Shopping Center $3,592,658 Retail
148 Mt. Dora Marketplace $3,592,405 Retail
149 Aspen Village Apartments $3,590,501 Multifamily
150 Sherman Oaks $3,587,886 Office
<CAPTION>
Most Recent
Occupancy Date of Operating Most
Rate at Occupancy Statement Recent
# Property Name (1) Underwriting(5) Rate Date Revenue
- ----------------- ---------------- ---- ---- -------
<S> <C> <C> <C> <C> <C>
98 Cherokee Shopping Center 90.0% 2/3/98 12/31/97 $896,427
99 Super 8 Geary Street N/A 12/17/97 10/31/97 $1,909,931
100 Cabot Lodge - Tallahassee N/A 12/31/97 11/30/97 $2,525,359
101 Kessel Foods 100.0% 8/19/97 10/17/97 $714,460
102 South Pointe Apartments 87.0% 4/30/98 2/9/98 $1,258,550
103 Wyoming-Enzie Properties (1H) 100.0% 5/7/98 12/31/97 $575,397
104 Mesa Properties (1H) 99.0% 3/25/98 12/31/97 $354,846
105 Mervyn's Plaza 100.0% 1/15/98 10/31/97 $755,497
106 Bartlett Commons 100.0% 12/31/97 12/31/97 $609,980
107 Crowley Village Shopping Center 100.0% 1/1/98 12/31/98 $727,006
108 Tivoli Condominiums (1I) 100.0% 12/1/97 11/30/97 $545,772
109 Cross Creek Apartments (1I) 100.0% 12/31/97 11/30/97 $282,497
110 Tamara Hills Townhomes (1I) 98.0% 12/1/97 11/30/97 $289,970
111 The Bell Rock Inn N/A 12/31/97 12/31/97 $2,573,213
112 Howard Johnson Hotel N/A 12/31/97 2/28/98 $2,937,450
113 Camelot Apartments 98.0% 12/31/97 12/31/97 $1,211,620
114 Canyon Ridge MHP 97.0% 10/30/97 10/31/97 $707,403
115 Westlake Crossing Shopping Center 92.0% 2/25/98 12/31/97 $534,071
116 Days Hotel Timonium N/A 8/1/97 8/31/97 $2,373,944
117 Heritage Square Apartments 99.0% 3/4/98 12/31/97 $932,983
118 Constitution Square 89.0% 1/1/98 12/31/97 $457,490
119 Oxford Square 97.0% 12/1/97 12/31/97 $785,867
120 Spring Villas 100.0% 4/8/98 2/28/98 $885,254
121 Sierra Point Apartments 90.0% 12/25/97 12/31/97 $1,509,408
122 Menlo Avenue Office Building 100.0% 2/1/98 11/30/97 $756,299
123 Henderson Marketplace 94.0% 12/1/97 11/30/97 $693,973
124 Stone Creek Apartments 89.0% 12/17/97 12/31/97 $1,055,233
125 Florida Avenue Apartments 95.0% 5/15/98 4/30/98 $876,272
126 Homewood Village Shopping Center 86.0% 8/7/97 12/31/97 $670,142
127 Common Wealth Avenue Apartments 100.0% 1/21/98 7/31/97 $996,909
128 Sunrise Square Shopping Center 100.0% 3/1/98 12/31/97 $697,637
129 Stein Mart Plaza 100.0% 2/28/98 12/31/97 $564,438
130 1500 Plaza Office Building 100.0% 11/1/97 10/31/97 $936,127
131 New West Village Apartments 91.0% 11/11/97 3/31/98 $939,216
132 Brookside Apartments 91.0% 12/31/97 12/31/97 $1,017,037
133 Vinyard Gardens 100.0% 1/7/98 12/31/97 $819,337
134 Hidden Bay Village Apartments 99.0% 3/17/98 2/28/98 $949,137
135 Raintree Apartments 94.0% 3/17/98 2/28/98 $842,813
136 The Office Centre at Dunwoody Village 97.0% 3/5/98 12/31/97 $964,159
137 Seminary Plaza 100.0% 1/22/98 12/31/97 $808,387
138 Longbranch Apartments 97.0% 11/18/97 12/31/97 $975,299
139 The Market at Merrill Shopping Center 93.0% 2/10/98 11/30/97 $863,458
140 Comfort Inn - Dothan N/A 12/31/97 9/30/97 $1,835,340
141 Wind River Office Building 90.0% 1/1/98 12/31/97 $982,618
142 Pass Christian Village 100.0% 9/8/97 8/31/97 $601,579
143 Marriott Courtyard - Dothan N/A 9/30/97 9/30/97 $1,392,287
144 Tivoli Apartments 91.0% 3/17/98 2/28/98 $827,436
145 Sun Plaza Shopping Center 100.0% 2/1/98 9/30/97 $851,748
146 Holiday Inn Express - Washington N/A 10/17/97 10/31/97 $1,422,135
147 Mariner Crossing Shopping Center 92.0% 1/1/98 12/31/98 $716,670
148 Mt. Dora Marketplace 96.0% 1/1/98 9/30/97 $619,002
149 Aspen Village Apartments 96.0% 5/9/97 12/31/97 $1,049,823
150 Sherman Oaks 85.0% 11/3/97 11/30/97 $613,152
<CAPTION>
Most Most Most
Recent Recent Recent U/W
# Property Name (1) Expenses NOI DSCR NCF
- ----------------- -------- --- ---- ---
<S> <C> <C> <C> <C> <C>
98 Cherokee Shopping Center $190,269 $706,158 1.56 x $592,324
99 Super 8 Geary Street $1,012,913 $897,018 1.80 x $777,170
100 Cabot Lodge - Tallahassee $1,509,321 $1,016,038 2.36 x $788,933
101 Kessel Foods $21,433 $693,027 1.58 x $636,339
102 South Pointe Apartments $642,657 $615,893 1.52 x $542,277
103 Wyoming-Enzie Properties (1H) $131,966 $443,431 1.77 x $369,519
104 Mesa Properties (1H) $86,491 $268,355 1.74 x $210,925
105 Mervyn's Plaza $129,470 $626,027 1.60 x $537,611
106 Bartlett Commons $235,275 $374,705 .91 x $579,604
107 Crowley Village Shopping Center $150,120 $576,886 1.51 x $532,345
108 Tivoli Condominiums (1I) $234,159 $311,613 1.83 x $251,642
109 Cross Creek Apartments (1I) $74,964 $207,533 1.72 x $163,919
110 Tamara Hills Townhomes (1I) $118,713 $171,257 1.97 x $117,272
111 The Bell Rock Inn $1,786,389 $786,824 1.91 x $584,509
112 Howard Johnson Hotel $2,188,111 $749,339 1.81 x $572,736
113 Camelot Apartments $597,989 $613,631 1.67 x $512,563
114 Canyon Ridge MHP $253,508 $453,895 1.21 x $477,175
115 Westlake Crossing Shopping Center $185,757 $348,314 .97 x $611,049
116 Days Hotel Timonium $988,111 $1,385,833 3.66 x $865,693
117 Heritage Square Apartments $427,258 $505,725 1.39 x $445,000
118 Constitution Square $248,166 $209,324 .56 x $460,944
119 Oxford Square $218,148 $567,719 1.62 x $489,361
120 Spring Villas $440,027 $445,227 1.32 x $430,582
121 Sierra Point Apartments $961,260 $548,148 1.53 x $576,246
122 Menlo Avenue Office Building $262,160 $494,139 1.40 x $454,967
123 Henderson Marketplace $137,335 $556,638 1.39 x $502,874
124 Stone Creek Apartments $540,437 $514,796 1.52 x $497,327
125 Florida Avenue Apartments $358,297 $517,975 1.53 x $474,298
126 Homewood Village Shopping Center $117,419 $552,723 1.59 x $431,913
127 Common Wealth Avenue Apartments $413,862 $583,047 1.64 x $563,679
128 Sunrise Square Shopping Center $108,897 $588,740 1.56 x $500,484
129 Stein Mart Plaza $174,380 $390,058 1.18 x $451,963
130 1500 Plaza Office Building $336,508 $599,619 1.77 x $497,625
131 New West Village Apartments $633,798 $305,418 .90 x $421,954
132 Brookside Apartments $529,342 $487,695 1.48 x $465,868
133 Vinyard Gardens $378,644 $440,694 1.39 x $421,259
134 Hidden Bay Village Apartments $497,294 $451,843 1.42 x $411,812
135 Raintree Apartments $385,364 $457,449 1.44 x $417,482
136 The Office Centre at Dunwoody Village $422,779 $541,380 1.66 x $460,090
137 Seminary Plaza $295,174 $513,213 1.54 x $475,992
138 Longbranch Apartments $467,061 $508,238 1.62 x $491,719
139 The Market at Merrill Shopping Center $243,849 $619,609 1.77 x $494,863
140 Comfort Inn - Dothan $1,049,332 $786,008 2.30 x $690,557
141 Wind River Office Building $442,622 $539,996 1.67 x $412,171
142 Pass Christian Village $129,349 $472,229 1.39 x $447,212
143 Marriott Courtyard - Dothan $862,938 $529,349 1.63 x $456,855
144 Tivoli Apartments $398,174 $429,262 1.46 x $381,917
145 Sun Plaza Shopping Center $170,502 $681,246 1.65 x $611,016
146 Holiday Inn Express - Washington $871,313 $550,822 1.67 x $464,078
147 Mariner Crossing Shopping Center $257,834 $458,836 1.58 x $387,618
148 Mt. Dora Marketplace $188,253 $430,749 1.51 x $393,963
149 Aspen Village Apartments $600,242 $449,581 1.42 x $392,625
150 Sherman Oaks $327,984 $285,168 1.00 x $362,253
<CAPTION>
Tax &
U/W Insurance
# Property Name (1) DSCR Escrows
- ----------------- ---- -------
<S> <C> <C> <C>
98 Cherokee Shopping Center 1.31 x None
99 Super 8 Geary Street 1.56 x Both
100 Cabot Lodge - Tallahassee 1.83 x Both
101 Kessel Foods 1.45 x Both
102 South Pointe Apartments 1.34 x Both
103 Wyoming-Enzie Properties (1H) 1.48 x Both
104 Mesa Properties (1H) 1.37 x Both
105 Mervyn's Plaza 1.37 x Both
106 Bartlett Commons 1.41 x Both
107 Crowley Village Shopping Center 1.39 x Both
108 Tivoli Condominiums (1I) 1.47 x Both
109 Cross Creek Apartments (1I) 1.36 x Both
110 Tamara Hills Townhomes (1I) 1.35 x Both
111 The Bell Rock Inn 1.42 x Both
112 Howard Johnson Hotel 1.39 x Both
113 Camelot Apartments 1.39 x Both
114 Canyon Ridge MHP 1.27 x Both
115 Westlake Crossing Shopping Center 1.70 x Both
116 Days Hotel Timonium 2.29 x Both
117 Heritage Square Apartments 1.22 x Both
118 Constitution Square 1.23 x Both
119 Oxford Square 1.39 x Both
120 Spring Villas 1.27 x Tax
121 Sierra Point Apartments 1.61 x Both
122 Menlo Avenue Office Building 1.29 x Both
123 Henderson Marketplace 1.26 x Both
124 Stone Creek Apartments 1.47 x Both
125 Florida Avenue Apartments 1.40 x Both
126 Homewood Village Shopping Center 1.24 x Both
127 Common Wealth Avenue Apartments 1.58 x Both
128 Sunrise Square Shopping Center 1.33 x Both
129 Stein Mart Plaza 1.36 x Insurance
130 1500 Plaza Office Building 1.47 x Both
131 New West Village Apartments 1.25 x Both
132 Brookside Apartments 1.41 x Tax
133 Vinyard Gardens 1.33 x Both
134 Hidden Bay Village Apartments 1.30 x Both
135 Raintree Apartments 1.32 x Both
136 The Office Centre at Dunwoody Village 1.41 x Both
137 Seminary Plaza 1.42 x Both
138 Longbranch Apartments 1.56 x Both
139 The Market at Merrill Shopping Center 1.41 x None
140 Comfort Inn - Dothan 2.02 x Both
141 Wind River Office Building 1.27 x Both
142 Pass Christian Village 1.31 x Both
143 Marriott Courtyard - Dothan 1.41 x Both
144 Tivoli Apartments 1.30 x Both
145 Sun Plaza Shopping Center 1.48 x Insurance
146 Holiday Inn Express - Washington 1.41 x Both
147 Mariner Crossing Shopping Center 1.34 x Both
148 Mt. Dora Marketplace 1.38 x Both
149 Aspen Village Apartments 1.24 x Both
150 Sherman Oaks 1.27 x Both
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Cut-off Date Property Hotel
# Property Name (1) Balance (4) Type Franchise
- ----------------- ----------- ---- ---------
<S> <C> <C> <C> <C>
151 South Plains Apartments $3,513,458 Multifamily
152 Royal Oaks Apartments $3,506,589 Multifamily
153 Northwinds Apartment Complex $3,500,000 Multifamily
154 The Park Shopping Center $3,497,949 Retail
155 Lloyd Office Plaza $3,487,192 Office
156 Bridge Street Lodge (1J) $2,534,536 Retail
157 P & R Building (1J) $894,542 Mixed Use
158 Holiday Inn - Dothan $3,392,729 Hotel Holiday Inn
159 Hampton North Townhomes & Apartments $3,386,446 Multifamily
160 Holiday Inn - Lake Havasu $3,381,338 Hotel Holiday Inn
161 University Shoppes $3,333,091 Retail
162 Galleria Mall $3,294,578 Retail
163 Park 219 Business Park $3,289,375 Industrial
164 One Energy Square $3,187,768 Retail
165 Orchard Plaza Shopping Center $3,185,813 Retail
166 The Mark Mobile Home Park $3,182,250 Manufactured Housing
167 Rivershores Apartments $3,175,356 Multifamily
168 Perry Hall Mini-Storage $3,138,857 Self Storage
169 Governor's Palace, Ridgmar Americana & Ridgmar West Apartments $3,095,825 Multifamily
170 Brookhollow Apartments $3,088,680 Multifamily
171 Cedarfield Plaza (1K) $1,547,923 Retail
172 Greece Mini Storage (1K) $1,496,774 Self Storage
173 Gander Mountain / JoAnn Fabrics Center $3,039,569 Retail
174 The Colonnade at Turtle Creek Apartments $3,025,575 Multifamily
175 601 Franklin Avenue Medical Building $3,000,000 Office
176 Valdosta Storage Rollup $2,997,249 Self Storage
177 All Aboard Mini-Storage $2,996,503 Self Storage
178 Brea Center $2,994,596 Retail
179 Holiday Inn Express $2,991,274 Hotel Holiday Inn Express
180 Seaport Villas $2,948,178 Multifamily
181 Park Central Office Park $2,944,341 Office
182 Drug Emporium Shopping Center $2,898,252 Retail
183 Langley Place $2,892,843 Mixed Use
184 Red Lion Apartments $2,877,238 Multifamily
185 The Woodlands Shopping Center $2,839,795 Retail
186 St. Marys Plaza $2,831,233 Retail
187 Mountain Park Pavilions II $2,800,000 Retail
188 Shady Banks Shopping Center $2,798,390 Retail
189 Pavilion in the Park Shopping Center $2,775,000 Retail
190 Riverview Business Plaza $2,748,656 Industrial
191 Cumberland Station Shopping Center $2,748,609 Retail
192 509-511 Amsterdam Avenue $2,748,244 Multifamily
193 Westover Pointe Center $2,698,620 Retail
194 Towne East Village Apartments $2,690,205 Multifamily
195 Super Crown Books & LaJolla Patio $2,674,866 Retail
196 Bent Oak Apartments $2,650,000 Multifamily
197 Summit Apartments $2,606,458 Multifamily
198 Jefferson Square Mall $2,600,000 Retail
199 Sandalwood Center $2,594,767 Retail
200 Encino Village Center $2,585,729 Retail
201 Willamette Terrace $2,551,182 Multifamily
202 4 Hartwell Place $2,547,543 Office
203 79 Worth Street $2,544,466 Multifamily
<CAPTION>
Most Recent
Occupancy Date of Operating Most
Rate at Occupancy Statement Recent
# Property Name (1) Underwriting(5) Rate Date Revenue
- ----------------- ---------------- ---- ---- -------
<S> <C> <C> <C> <C> <C>
151 South Plains Apartments 98.0% 12/31/97 12/31/97 $929,022
152 Royal Oaks Apartments 98.0% 4/9/98 9/30/97 $1,148,789
153 Northwinds Apartment Complex 88.0% 1/21/98 12/31/97 $769,853
154 The Park Shopping Center 91.0% 4/1/98 12/31/97 $508,394
155 Lloyd Office Plaza 100.0% 11/1/97 10/31/97 $783,405
156 Bridge Street Lodge (1J) 100.0% 9/25/97 10/31/97 $435,281
157 P & R Building (1J) 100.0% 9/25/97 9/30/97 $83,272
158 Holiday Inn - Dothan N/A 9/30/97 9/30/97 $2,565,662
159 Hampton North Townhomes & Apartments 95.0% 12/1/97 12/31/97 $769,864
160 Holiday Inn - Lake Havasu N/A 10/26/97 10/31/97 $2,828,933
161 University Shoppes 95.0% 8/16/97 7/31/97 $645,790
162 Galleria Mall 100.0% 1/1/98 12/31/97 $670,848
163 Park 219 Business Park 98.0% 12/22/97 12/31/97 $596,688
164 One Energy Square 92.0% 6/1/97 12/31/97 $472,775
165 Orchard Plaza Shopping Center 98.0% 5/31/97 12/31/97 $530,098
166 The Mark Mobile Home Park 95.0% 2/1/98 12/31/97 $947,500
167 Rivershores Apartments 93.0% 1/19/98 12/31/97 $685,728
168 Perry Hall Mini-Storage 92.0% 10/17/97 8/31/97 $999,610
169 Governor's Palace, Ridgmar Americana & Ridgmar West Apartments 89.0% 3/1/98 12/31/97 $833,144
170 Brookhollow Apartments 93.0% 11/30/97 4/30/98 $910,798
171 Cedarfield Plaza (1K) 81.0% 12/1/97 11/30/97 $335,143
172 Greece Mini Storage (1K) 92.0% 1/9/98 11/30/97 $319,948
173 Gander Mountain / JoAnn Fabrics Center 100.0% 12/1/97 10/31/97 $623,245
174 The Colonnade at Turtle Creek Apartments 100.0% 2/1/98 12/31/97 $524,192
175 601 Franklin Avenue Medical Building 100.0% 12/1/97 12/31/97 $712,573
176 Valdosta Storage Rollup 82.0% 2/23/98 12/31/97 $543,508
177 All Aboard Mini-Storage 95.0% 1/31/98 12/31/97 $533,990
178 Brea Center 100.0% 8/31/97 9/30/97 $538,639
179 Holiday Inn Express N/A 8/1/97 12/31/97 $1,314,182
180 Seaport Villas 95.0% 2/25/98 12/31/97 $581,175
181 Park Central Office Park 100.0% 10/14/97 8/30/97 $539,899
182 Drug Emporium Shopping Center 95.0% 12/31/97 9/30/97 $475,674
183 Langley Place 96.0% 1/7/98 8/31/97 $667,342
184 Red Lion Apartments 100.0% 2/9/98 12/31/97 $588,643
185 The Woodlands Shopping Center 93.0% 10/15/97 9/30/97 $342,310
186 St. Marys Plaza 100.0% 11/30/97 12/31/97 $638,198
187 Mountain Park Pavilions II 92.0% 3/12/98 12/23/97 $549,421
188 Shady Banks Shopping Center 100.0% 1/14/98 2/28/98 $429,659
189 Pavilion in the Park Shopping Center 100.0% 12/31/97 12/31/97 $769,474
190 Riverview Business Plaza 91.0% 12/31/97 12/31/97 $363,865
191 Cumberland Station Shopping Center 94.0% 1/1/98 1/31/98 $396,037
192 509-511 Amsterdam Avenue 100.0% 1/31/98 12/31/97 $493,929
193 Westover Pointe Center 97.0% 12/31/97 12/31/97 $538,575
194 Towne East Village Apartments 94.0% 10/22/97 9/30/97 $571,547
195 Super Crown Books & LaJolla Patio 100.0% 4/15/98 11/5/97 $542,520
196 Bent Oak Apartments 86.0% 3/17/98 2/28/98 $603,684
197 Summit Apartments 100.0% 1/31/98 12/31/97 $632,097
198 Jefferson Square Mall 87.0% 2/15/98 12/15/97 $674,161
199 Sandalwood Center 95.0% 10/1/97 8/31/97 $459,264
200 Encino Village Center 99.0% 10/28/97 8/31/97 $740,075
201 Willamette Terrace 100.0% 10/2/97 10/31/97 $477,060
202 4 Hartwell Place 100.0% 2/18/98 12/31/97 $409,853
203 79 Worth Street 100.0% 2/18/98 8/31/97 $590,828
<CAPTION>
Most Most Most
Recent Recent Recent U/W
# Property Name (1) Expenses NOI DSCR NCF
- ----------------- -------- --- ---- ---
<S> <C> <C> <C> <C> <C>
151 South Plains Apartments $444,182 $484,840 1.71 x $424,275
152 Royal Oaks Apartments $687,186 $461,603 1.57 x $427,734
153 Northwinds Apartment Complex $278,052 $491,801 1.57 x $430,999
154 The Park Shopping Center $174,981 $333,413 1.17 x $374,150
155 Lloyd Office Plaza $327,274 $456,131 1.57 x $411,724
156 Bridge Street Lodge (1J) $55,302 $379,979 1.34 x $363,655
157 P & R Building (1J) $38,471 $44,801 .45 x $140,287
158 Holiday Inn - Dothan $1,988,600 $577,062 1.94 x $425,642
159 Hampton North Townhomes & Apartments $380,998 $388,866 1.44 x $358,416
160 Holiday Inn - Lake Havasu $2,146,751 $682,182 2.25 x $466,365
161 University Shoppes $188,800 $456,990 1.41 x $430,523
162 Galleria Mall $319,654 $351,194 1.12 x $400,489
163 Park 219 Business Park $142,237 $454,451 1.60 x $371,514
164 One Energy Square $137,477 $335,298 1.20 x $377,002
165 Orchard Plaza Shopping Center $91,231 $438,867 1.57 x $352,095
166 The Mark Mobile Home Park $300,750 $646,750 2.20 x $641,602
167 Rivershores Apartments $297,029 $388,699 1.54 x $354,079
168 Perry Hall Mini-Storage $221,088 $778,522 2.59 x $694,521
169 Governor's Palace, Ridgmar Americana & Ridgmar West Apartments $440,916 $392,228 1.54 x $349,323
170 Brookhollow Apartments $615,523 $295,275 1.15 x $334,789
171 Cedarfield Plaza (1K) $135,872 $199,271 1.56 x $181,684
172 Greece Mini Storage (1K) $136,224 $183,724 1.40 x $175,675
173 Gander Mountain / JoAnn Fabrics Center $137,290 $485,955 1.65 x $378,918
174 The Colonnade at Turtle Creek Apartments $210,493 $313,699 1.30 x $316,279
175 601 Franklin Avenue Medical Building $346,483 $366,090 1.49 x $311,981
176 Valdosta Storage Rollup $116,378 $427,130 1.60 x $375,549
177 All Aboard Mini-Storage $161,433 $372,557 1.42 x $370,864
178 Brea Center $142,940 $395,699 1.57 x $368,179
179 Holiday Inn Express $721,021 $593,161 2.19 x $404,772
180 Seaport Villas $192,987 $388,188 1.64 x $340,718
181 Park Central Office Park $145,873 $394,026 1.62 x $335,514
182 Drug Emporium Shopping Center $101,702 $373,972 1.60 x $358,840
183 Langley Place $273,811 $393,531 1.65 x $333,561
184 Red Lion Apartments $230,721 $357,922 1.42 x $319,272
185 The Woodlands Shopping Center $110,838 $231,472 .97 x $296,219
186 St. Marys Plaza $259,189 $379,009 1.61 x $373,322
187 Mountain Park Pavilions II $119,274 $430,147 1.39 x $385,456
188 Shady Banks Shopping Center $94,176 $335,483 1.46 x $321,287
189 Pavilion in the Park Shopping Center $358,062 $411,412 1.67 x $341,756
190 Riverview Business Plaza $193,168 $170,697 .72 x $305,893
191 Cumberland Station Shopping Center $123,338 $272,699 1.16 x $308,954
192 509-511 Amsterdam Avenue $156,594 $337,335 1.55 x $321,366
193 Westover Pointe Center $78,462 $460,113 2.01 x $323,807
194 Towne East Village Apartments $260,426 $311,121 1.39 x $280,885
195 Super Crown Books & LaJolla Patio $116,706 $425,814 1.44 x $368,583
196 Bent Oak Apartments $288,599 $315,085 1.50 x $269,724
197 Summit Apartments $307,953 $324,144 1.51 x $303,043
198 Jefferson Square Mall $278,201 $395,960 1.71 x $325,697
199 Sandalwood Center $149,817 $309,447 1.32 x $309,767
200 Encino Village Center $203,425 $536,651 2.31 x $429,110
201 Willamette Terrace $176,056 $301,004 1.50 x $265,364
202 4 Hartwell Place $141,729 $268,124 1.20 x $315,701
203 79 Worth Street $197,921 $392,907 1.96 x $282,879
<CAPTION>
Tax &
U/W Insurance
# Property Name (1) DSCR Escrows
- ----------------- ---- -------
<S> <C> <C> <C>
151 South Plains Apartments 1.50 x Both
152 Royal Oaks Apartments 1.46 x Both
153 Northwinds Apartment Complex 1.37 x Both
154 The Park Shopping Center 1.31 x Both
155 Lloyd Office Plaza 1.42 x Both
156 Bridge Street Lodge (1J) 1.28 x Both
157 P & R Building (1J) 1.40 x Both
158 Holiday Inn - Dothan 1.43 x Both
159 Hampton North Townhomes & Apartments 1.33 x Both
160 Holiday Inn - Lake Havasu 1.54 x Both
161 University Shoppes 1.33 x Both
162 Galleria Mall 1.27 x Both
163 Park 219 Business Park 1.31 x Tax
164 One Energy Square 1.35 x Both
165 Orchard Plaza Shopping Center 1.26 x Both
166 The Mark Mobile Home Park 2.19 x Both
167 Rivershores Apartments 1.40 x Both
168 Perry Hall Mini-Storage 2.31 x Both
169 Governor's Palace, Ridgmar Americana & Ridgmar West Apartments 1.37 x Both
170 Brookhollow Apartments 1.30 x Both
171 Cedarfield Plaza (1K) 1.42 x Both
172 Greece Mini Storage (1K) 1.34 x Both
173 Gander Mountain / JoAnn Fabrics Center 1.29 x Both
174 The Colonnade at Turtle Creek Apartments 1.31 x Both
175 601 Franklin Avenue Medical Building 1.27 x Both
176 Valdosta Storage Rollup 1.40 x Both
177 All Aboard Mini-Storage 1.41 x Tax
178 Brea Center 1.46 x Both
179 Holiday Inn Express 1.50 x Both
180 Seaport Villas 1.44 x Both
181 Park Central Office Park 1.38 x Both
182 Drug Emporium Shopping Center 1.53 x Both
183 Langley Place 1.40 x Both
184 Red Lion Apartments 1.26 x Both
185 The Woodlands Shopping Center 1.24 x Both
186 St. Marys Plaza 1.59 x Both
187 Mountain Park Pavilions II 1.25 x Both
188 Shady Banks Shopping Center 1.40 x Both
189 Pavilion in the Park Shopping Center 1.39 x None
190 Riverview Business Plaza 1.29 x Both
191 Cumberland Station Shopping Center 1.32 x Both
192 509-511 Amsterdam Avenue 1.47 x Tax
193 Westover Pointe Center 1.41 x Both
194 Towne East Village Apartments 1.25 x Both
195 Super Crown Books & LaJolla Patio 1.25 x Both
196 Bent Oak Apartments 1.28 x Both
197 Summit Apartments 1.42 x Both
198 Jefferson Square Mall 1.41 x Both
199 Sandalwood Center 1.32 x Both
200 Encino Village Center 1.85 x Both
201 Willamette Terrace 1.33 x Tax
202 4 Hartwell Place 1.41 x Both
203 79 Worth Street 1.41 x Both
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Cut-off Date Property Hotel
# Property Name (1) Balance (4) Type Franchise
- ----------------- ----------- ---- ---------
<S> <C> <C> <C> <C>
204 Stewart Creek Shopping Center $2,541,450 Retail
205 Plantation Village Shopping Center $2,536,796 Retail
206 Lookout Ridge Apartments $2,500,000 Multifamily
207 Orangethorpe Beach Shopping Center $2,498,679 Retail
208 Orchard Supply $2,492,636 Retail
209 Waterford Village Shopping Center $2,492,246 Retail
210 Governor's Terrace $2,464,481 Multifamily
211 Esplanade Mini-Storage $2,442,371 Self Storage
212 Sterling Industrial Park $2,400,000 Industrial
213 Mabelvale Plaza Shopping Center $2,400,000 Retail
214 Woodlawn Village Shopping Center $2,318,602 Retail
215 Bolton-Moore's Mill Shopping Center $2,298,796 Retail
216 Omni Plaza Shopping Center $2,298,698 Retail
217 Shield Street Plaza $2,287,333 Retail
218 Viewmont Estates Mobile Home Park $2,248,614 Manufactured Housing
219 1731, 1741 and 1751 Washington Street $2,200,000 Multifamily
220 Penninsula Professional Building $2,198,775 Office
221 Creekside Mobile Estates $2,196,864 Manufactured Housing
222 Alexandria Square $2,167,012 Retail
223 Advo Building $2,148,841 Office
224 White Pines Plaza $2,115,925 Retail
225 North Shore Estates $2,098,711 Manufactured Housing
226 River's Edge Apartments $2,096,004 Multifamily
227 109-111 Grant Avenue $2,095,796 Office
228 Royal Oaks Senior Community Park $2,093,271 Manufactured Housing
229 Parker Marketplace Phase II $2,078,819 Retail
230 Summer Creek Apartments $2,060,000 Multifamily
231 Robarts Mobile Home Park $2,046,984 Manufactured Housing
232 Woodcrest Townhome Apartments $2,000,000 Multifamily
233 Planters Trace Apartments $1,998,661 Multifamily
234 Stone Oak Apartments $1,997,044 Multifamily
235 Hidden Hills Mobile Home Park $1,995,626 Manufactured Housing
236 Tiger Mart $1,995,037 Convenience Store
237 Quail Hollow Business Park $1,993,967 Office
238 Campus Square Apartments $1,993,907 Multifamily
239 Bridgeport Professional Building $1,993,797 Office
240 Park Lane Terrace Apartments $1,993,270 Multifamily
241 Brigham's Landing Shopping Center $1,990,665 Retail
242 Boulevard Shoppes II $1,989,905 Retail
243 The Clusters Apartments $1,987,627 Multifamily
244 Fairfield Inn - Dothan $1,983,803 Hotel Fairfield Inn
245 Valley Manor $1,946,172 Manufactured Housing
246 Sunrise Village Apartments $1,940,855 Multifamily
247 Ridgewood Apartments $1,900,000 Multifamily
248 Bella Vista Terrace $1,898,826 Multifamily
249 Ramada Limited $1,898,305 Hotel Ramada Limited
250 Secluded Oaks Villas Apartments $1,897,403 Multifamily
251 Colonial Mobile Home Park $1,891,033 Manufactured Housing
252 Plaza North Medical Building $1,823,190 Office
253 Camelot Apartments $1,808,982 Multifamily
254 Northlake Quadrangle $1,797,991 Retail
255 Gordon Street Apartments $1,797,346 Multifamily
256 Northgate Apartments $1,795,862 Multifamily
<CAPTION>
Most Recent
Occupancy Date of Operating Most
Rate at Occupancy Statement Recent
# Property Name (1) Underwriting(5) Rate Date Revenue
- ----------------- ---------------- ---- ---- -------
<S> <C> <C> <C> <C> <C>
204 Stewart Creek Shopping Center 92.0% 11/1/97 11/5/97 $475,000
205 Plantation Village Shopping Center 79.0% 11/25/97 9/30/97 $503,262
206 Lookout Ridge Apartments 96.0% 3/3/98 2/21/98 $763,118
207 Orangethorpe Beach Shopping Center 100.0% 1/13/98 12/31/97 $451,945
208 Orchard Supply 100.0% 2/3/98 12/31/97 $485,151
209 Waterford Village Shopping Center 100.0% 10/1/97 8/31/97 $361,826
210 Governor's Terrace 100.0% 2/6/98 12/31/97 $101,881
211 Esplanade Mini-Storage 91.0% 10/22/97 10/31/97 $529,084
212 Sterling Industrial Park 100.0% 3/1/98 2/28/98 $458,313
213 Mabelvale Plaza Shopping Center 100.0% 12/19/97 12/31/97 $378,778
214 Woodlawn Village Shopping Center 98.0% 3/1/98 2/28/98 $391,566
215 Bolton-Moore's Mill Shopping Center 88.0% 1/1/98 1/31/98 $357,061
216 Omni Plaza Shopping Center 96.0% 3/31/98 12/31/97 $440,537
217 Shield Street Plaza 89.0% 10/1/97 8/31/97 $569,806
218 Viewmont Estates Mobile Home Park 100.0% 1/31/98 12/31/97 $406,914
219 1731, 1741 and 1751 Washington Street 96.0% 4/15/98 12/31/97 $332,698
220 Penninsula Professional Building 100.0% 1/1/98 12/31/97 $462,639
221 Creekside Mobile Estates 99.0% 2/27/98 7/31/97 $471,001
222 Alexandria Square 100.0% 5/1/98 12/31/97 $458,497
223 Advo Building 91.0% 2/25/98 12/31/97 $386,163
224 White Pines Plaza 100.0% 1/15/98 4/30/98 $165,204
225 North Shore Estates 100.0% 2/9/98 12/31/97 $324,989
226 River's Edge Apartments 100.0% 3/31/98 12/31/97 $720,884
227 109-111 Grant Avenue 99.0% 1/1/98 7/31/97 $373,256
228 Royal Oaks Senior Community Park 97.0% 1/12/98 12/31/97 $442,953
229 Parker Marketplace Phase II 91.0% 3/5/98 12/31/98 $356,192
230 Summer Creek Apartments 99.0% 3/17/98 2/28/98 $532,840
231 Robarts Mobile Home Park 93.0% 1/1/98 12/31/97 $364,854
232 Woodcrest Townhome Apartments 100.0% 5/1/98 1/31/98 $418,409
233 Planters Trace Apartments 89.0% 1/31/98 12/31/97 $489,760
234 Stone Oak Apartments 96.0% 1/1/98 12/31/97 $481,143
235 Hidden Hills Mobile Home Park 94.0% 2/1/98 12/31/97 $475,021
236 Tiger Mart 100.0% 5/14/98 12/31/97 $809,751
237 Quail Hollow Business Park 96.0% 11/1/97 10/31/97 $561,588
238 Campus Square Apartments 95.0% 4/1/98 12/31/97 $790,351
239 Bridgeport Professional Building 93.0% 2/12/98 12/31/97 $470,507
240 Park Lane Terrace Apartments 97.0% 3/1/98 2/28/98 $668,236
241 Brigham's Landing Shopping Center 100.0% 9/30/97 12/31/97 $486,301
242 Boulevard Shoppes II 95.0% 10/2/97 7/31/97 $432,219
243 The Clusters Apartments 98.0% 12/15/97 12/31/97 $1,229,232
244 Fairfield Inn - Dothan N/A 2/28/98 9/30/97 $826,893
245 Valley Manor 100.0% 12/23/97 2/12/98 $383,199
246 Sunrise Village Apartments 100.0% 3/1/98 8/31/97 $529,189
247 Ridgewood Apartments 93.0% 3/3/98 2/28/98 $428,795
248 Bella Vista Terrace 100.0% 4/5/98 12/31/97 $448,686
249 Ramada Limited N/A 1/28/98 12/31/97 $812,984
250 Secluded Oaks Villas Apartments 75.0% 3/2/98 12/31/97 $433,936
251 Colonial Mobile Home Park 100.0% 11/1/97 8/31/97 $410,717
252 Plaza North Medical Building 77.0% 3/1/98 12/31/97 $413,239
253 Camelot Apartments 86.0% 3/30/98 12/31/97 $486,232
254 Northlake Quadrangle 71.0% 10/1/97 12/31/97 $769,926
255 Gordon Street Apartments 98.0% 3/1/98 9/30/97 $411,684
256 Northgate Apartments 97.0% 12/22/97 12/31/97 $416,308
<CAPTION>
Most Most Most
Recent Recent Recent U/W
# Property Name (1) Expenses NOI DSCR NCF
- ----------------- -------- --- ---- ---
<S> <C> <C> <C> <C> <C>
204 Stewart Creek Shopping Center $133,691 $341,309 1.56 x $289,648
205 Plantation Village Shopping Center $86,823 $416,439 1.78 x $312,492
206 Lookout Ridge Apartments $351,773 $411,345 2.04 x $318,181
207 Orangethorpe Beach Shopping Center $122,181 $329,764 1.57 x $283,687
208 Orchard Supply $70,992 $414,159 1.53 x $405,938
209 Waterford Village Shopping Center $96,309 $265,517 1.21 x $300,297
210 Governor's Terrace $83,815 $18,066 .09 x $241,210
211 Esplanade Mini-Storage $197,549 $331,535 1.55 x $315,641
212 Sterling Industrial Park $134,928 $323,385 1.54 x $284,543
213 Mabelvale Plaza Shopping Center $45,716 $333,062 1.60 x $269,117
214 Woodlawn Village Shopping Center $94,616 $296,950 1.58 x $241,238
215 Bolton-Moore's Mill Shopping Center $102,908 $254,153 1.31 x $249,606
216 Omni Plaza Shopping Center $229,890 $210,647 1.11 x $260,943
217 Shield Street Plaza $273,467 $296,339 1.45 x $269,686
218 Viewmont Estates Mobile Home Park $100,667 $306,247 1.70 x $263,547
219 1731, 1741 and 1751 Washington Street $161,029 $171,669 .91 x $243,168
220 Penninsula Professional Building $152,411 $310,228 1.70 x $243,501
221 Creekside Mobile Estates $188,425 $282,576 1.60 x $251,092
222 Alexandria Square $140,635 $317,862 1.33 x $289,280
223 Advo Building $115,205 $270,958 1.51 x $236,948
224 White Pines Plaza $27,667 $137,537 .81 x $249,526
225 North Shore Estates $96,012 $228,977 1.36 x $233,806
226 River's Edge Apartments $377,091 $343,793 1.98 x $272,878
227 109-111 Grant Avenue $200,455 $172,801 1.02 x $204,873
228 Royal Oaks Senior Community Park $158,198 $284,755 1.67 x $273,070
229 Parker Marketplace Phase II $96,863 $259,329 1.51 x $238,292
230 Summer Creek Apartments $272,635 $260,205 1.59 x $217,491
231 Robarts Mobile Home Park $84,247 $280,607 1.72 x $206,146
232 Woodcrest Townhome Apartments $155,437 $262,972 1.42 x $230,965
233 Planters Trace Apartments $271,782 $217,978 1.40 x $206,811
234 Stone Oak Apartments $215,810 $265,333 1.68 x $230,595
235 Hidden Hills Mobile Home Park $263,136 $211,885 1.35 x $204,041
236 Tiger Mart $229,189 $580,562 2.43 x $502,037
237 Quail Hollow Business Park $207,558 $354,030 1.99 x $261,191
238 Campus Square Apartments $472,686 $317,665 1.80 x $255,596
239 Bridgeport Professional Building $177,813 $292,694 1.67 x $229,344
240 Park Lane Terrace Apartments $423,429 $244,807 1.55 x $245,062
241 Brigham's Landing Shopping Center $106,601 $379,700 2.16 x $322,608
242 Boulevard Shoppes II $143,260 $288,959 1.50 x $247,494
243 The Clusters Apartments $728,890 $500,342 2.33 x $413,919
244 Fairfield Inn - Dothan $538,616 $288,277 1.66 x $244,932
245 Valley Manor $124,164 $259,035 1.46 x $232,050
246 Sunrise Village Apartments $165,124 $364,065 2.13 x $257,221
247 Ridgewood Apartments $202,440 $226,355 1.47 x $221,498
248 Bella Vista Terrace $230,128 $218,558 1.44 x $194,612
249 Ramada Limited $513,236 $299,748 1.75 x $241,252
250 Secluded Oaks Villas Apartments $217,576 $216,360 1.39 x $203,052
251 Colonial Mobile Home Park $142,377 $268,340 1.61 x $214,528
252 Plaza North Medical Building $111,295 $301,944 1.91 x $201,800
253 Camelot Apartments $252,595 $233,637 1.56 x $179,386
254 Northlake Quadrangle $446,940 $322,986 2.00 x $245,081
255 Gordon Street Apartments $217,375 $194,309 1.36 x $186,145
256 Northgate Apartments $170,990 $245,318 1.61 x $209,870
<CAPTION>
Tax &
U/W Insurance
# Property Name (1) DSCR Escrows
- ----------------- ---- -------
<S> <C> <C> <C>
204 Stewart Creek Shopping Center 1.32 x Both
205 Plantation Village Shopping Center 1.33 x Both
206 Lookout Ridge Apartments 1.58 x Both
207 Orangethorpe Beach Shopping Center 1.35 x Both
208 Orchard Supply 1.50 x None
209 Waterford Village Shopping Center 1.37 x Both
210 Governor's Terrace 1.22 x Both
211 Esplanade Mini-Storage 1.47 x Both
212 Sterling Industrial Park 1.35 x Both
213 Mabelvale Plaza Shopping Center 1.30 x Tax
214 Woodlawn Village Shopping Center 1.29 x Both
215 Bolton-Moore's Mill Shopping Center 1.29 x Both
216 Omni Plaza Shopping Center 1.38 x Both
217 Shield Street Plaza 1.32 x Both
218 Viewmont Estates Mobile Home Park 1.46 x Both
219 1731, 1741 and 1751 Washington Street 1.29 x Both
220 Penninsula Professional Building 1.34 x Both
221 Creekside Mobile Estates 1.42 x Both
222 Alexandria Square 1.21 x Both
223 Advo Building 1.32 x Both
224 White Pines Plaza 1.48 x Both
225 North Shore Estates 1.39 x Tax
226 River's Edge Apartments 1.57 x Both
227 109-111 Grant Avenue 1.20 x Both
228 Royal Oaks Senior Community Park 1.60 x Both
229 Parker Marketplace Phase II 1.39 x Both
230 Summer Creek Apartments 1.33 x Both
231 Robarts Mobile Home Park 1.27 x Both
232 Woodcrest Townhome Apartments 1.25 x Both
233 Planters Trace Apartments 1.33 x Both
234 Stone Oak Apartments 1.46 x Both
235 Hidden Hills Mobile Home Park 1.30 x Both
236 Tiger Mart 2.10 x Both
237 Quail Hollow Business Park 1.47 x Both
238 Campus Square Apartments 1.45 x Both
239 Bridgeport Professional Building 1.31 x Both
240 Park Lane Terrace Apartments 1.55 x Both
241 Brigham's Landing Shopping Center 1.83 x Both
242 Boulevard Shoppes II 1.28 x Both
243 The Clusters Apartments 1.93 x Both
244 Fairfield Inn - Dothan 1.41 x Both
245 Valley Manor 1.31 x Both
246 Sunrise Village Apartments 1.50 x Both
247 Ridgewood Apartments 1.44 x None
248 Bella Vista Terrace 1.28 x Both
249 Ramada Limited 1.41 x Both
250 Secluded Oaks Villas Apartments 1.31 x Both
251 Colonial Mobile Home Park 1.29 x Both
252 Plaza North Medical Building 1.28 x Both
253 Camelot Apartments 1.20 x Both
254 Northlake Quadrangle 1.52 x Both
255 Gordon Street Apartments 1.30 x Both
256 Northgate Apartments 1.38 x Tax
<PAGE>
Cut-off Date Property Hotel
# Property Name (1) Balance (4) Type Franchise
- ----------------- ----------- ---- ---------
<S> <C> <C> <C> <C>
257 Sepulveda Crest Apartments $1,794,060 Multifamily
258 Morningstar Mini-Storage $1,743,781 Self Storage
259 Chateaux Verde Apartments $1,741,516 Multifamily
260 Homestead Corner Shopping Center $1,707,952 Retail
261 Lake Villa Apartments $1,697,606 Multifamily
262 F & H Warehouse $1,685,255 Industrial
263 Avian Plaza Shopping Center $1,648,718 Retail
264 Port Orchard Mini Storage $1,648,445 Self Storage
265 Sequoia Grove Apartments $1,626,426 Multifamily
266 The Miller Center $1,597,515 Retail
267 Emerald Park Apartments $1,597,369 Multifamily
268 Rancho San Diego Town & Country $1,594,320 Retail
269 French Quarters East Apartments $1,550,000 Multifamily
270 The Forest Apartments $1,540,000 Multifamily
271 Oakhill Apartments $1,520,000 Multifamily
272 STOR-N-LOCK $1,498,503 Self Storage
273 Autumn Ridge Apartments $1,491,294 Multifamily
274 701 Franklin Center $1,454,307 Retail
275 Savoy Condominiums $1,419,683 Multifamily
276 Meriden East Apartments $1,416,840 Multifamily
277 Hyde Park Mobile Estates $1,403,387 Manufactured Housing
278 Courtyard Plaza $1,400,000 Retail
279 Tradewinds Apartments $1,400,000 Multifamily
280 Regency Manor Apartments $1,399,208 Multifamily
281 Hood Chalet Mobile Estates $1,398,630 Manufactured Housing
282 Mauna Kea Apartments $1,395,627 Multifamily
283 Deer Creek Apartments $1,329,283 Multifamily
284 Evergreen Place Condominiums $1,315,730 Multifamily
285 Autumn Creek Apartments $1,267,850 Multifamily
286 Midtown at Main $1,234,417 Retail
287 Park Place Center $1,225,099 Retail
288 International Self Storage $1,197,443 Self Storage
289 Villa Catalina Apartments $1,170,000 Multifamily
290 Loc-'N-Stor Self-Storage $1,123,969 Self Storage
291 Rancho Villa $1,100,000 Manufactured Housing
292 Timberline Mobile Home Park $1,100,000 Manufactured Housing
293 Timberland Ridge Apartments $1,097,522 Multifamily
294 Leewood Apartments $1,095,913 Multifamily
295 Glen Mark Apartments $1,024,376 Multifamily
296 Pinecroft Mobile Home Park $1,000,000 Manufactured Housing
297 Eckerds Drugstore $993,623 Retail
298 Eastern Promenade Apartments $957,861 Multifamily
299 Belle Meade Apartments $878,803 Multifamily
300 Riverview Plaza II $783,232 Retail
301 Westmoreland Warehouse $573,042 Mixed Use
------------------------
Total/Weighted Average: $1,564,253,433
========================
Maximum: $94,602,208
Minimum: $573,042
<CAPTION>
Most Recent
Occupancy Date of Operating Most
Rate at Occupancy Statement Recent
# Property Name (1) Underwriting(5) Rate Date Revenue
- ----------------- ---------------- ---- ---- -------
<S> <C> <C> <C> <C> <C>
257 Sepulveda Crest Apartments 90.0% 12/11/97 10/31/97 $424,985
258 Morningstar Mini-Storage 64.0% 10/29/97 9/30/97 $520,205
259 Chateaux Verde Apartments 99.0% 3/1/98 12/31/97 $448,568
260 Homestead Corner Shopping Center 100.0% 1/30/98 12/31/97 $410,724
261 Lake Villa Apartments 97.0% 12/31/97 12/31/97 $353,237
262 F & H Warehouse 100.0% 10/23/97 10/31/97 $762,163
263 Avian Plaza Shopping Center 100.0% 11/11/97 9/30/97 $403,092
264 Port Orchard Mini Storage 86.0% 1/27/98 12/31/97 $328,418
265 Sequoia Grove Apartments 100.0% 11/21/97 12/31/97 $266,224
266 The Miller Center 100.0% 1/1/98 12/31/97 $391,960
267 Emerald Park Apartments 97.0% 1/7/98 12/31/97 $324,684
268 Rancho San Diego Town & Country 100.0% 9/23/97 9/30/97 $254,062
269 French Quarters East Apartments 94.0% 3/9/98 12/31/97 $352,631
270 The Forest Apartments 89.0% 3/17/98 2/28/98 $516,111
271 Oakhill Apartments 92.0% 12/31/97 12/31/97 $365,399
272 STOR-N-LOCK 85.0% 1/31/98 12/31/97 $399,947
273 Autumn Ridge Apartments 93.0% 8/14/97 12/30/96 $524,661
274 701 Franklin Center 100.0% 9/8/97 8/31/97 $262,226
275 Savoy Condominiums 97.0% 11/26/97 12/31/97 $482,442
276 Meriden East Apartments 95.0% 7/28/97 8/31/97 $398,973
277 Hyde Park Mobile Estates 92.0% 10/31/97 12/31/97 $540,040
278 Courtyard Plaza 100.0% 4/8/98 12/10/97 $290,909
279 Tradewinds Apartments 85.0% 3/17/98 2/28/98 $384,490
280 Regency Manor Apartments 94.0% 2/26/98 12/31/97 $430,969
281 Hood Chalet Mobile Estates 96.0% 1/1/98 12/31/97 $292,374
282 Mauna Kea Apartments 97.0% 2/28/98 2/28/98 $271,929
283 Deer Creek Apartments 94.0% 12/8/97 12/31/97 $267,744
284 Evergreen Place Condominiums 98.0% 1/25/98 12/31/97 $333,246
285 Autumn Creek Apartments 97.0% 7/23/97 12/31/97 $384,905
286 Midtown at Main 100.0% 11/3/97 12/31/97 $253,249
287 Park Place Center 94.0% 9/25/97 8/31/97 $230,806
288 International Self Storage 78.0% 1/2/98 12/31/97 $226,050
289 Villa Catalina Apartments 100.0% 4/20/98 12/31/97 $260,581
290 Loc-'N-Stor Self-Storage 98.0% 11/29/97 12/31/97 $275,207
291 Rancho Villa 100.0% 1/1/98 12/31/97 $201,325
292 Timberline Mobile Home Park 100.0% 12/4/97 11/30/97 $274,441
293 Timberland Ridge Apartments 100.0% 2/1/98 12/31/97 $287,142
294 Leewood Apartments 99.0% 3/1/98 12/31/97 $442,863
295 Glen Mark Apartments 96.0% 4/16/98 12/31/97 $331,029
296 Pinecroft Mobile Home Park 100.0% 1/27/98 11/30/97 $374,253
297 Eckerds Drugstore 100.0% 10/31/97 11/6/97 $279,268
298 Eastern Promenade Apartments 94.0% 3/5/98 12/31/97 $213,585
299 Belle Meade Apartments 90.0% 2/12/98 12/31/97 $252,023
300 Riverview Plaza II 100.0% 3/19/98 12/31/97 $291,247
301 Westmoreland Warehouse 100.0% 11/27/97 12/31/97 $137,672
------------------------ ------------
Total/Weighted Average: 96.5% 01/11/98 $391,628,675
======================== ============
Maximum: 100.0% 05/15/98 $20,140,590
Minimum: 64.0% 05/09/97 $83,272
<CAPTION>
Most Most Most
Recent Recent Recent U/W
# Property Name (1) Expenses NOI DSCR NCF
- ----------------- -------- --- ---- ---
<S> <C> <C> <C> <C> <C>
257 Sepulveda Crest Apartments $248,480 $176,505 1.23 x $182,123
258 Morningstar Mini-Storage $188,912 $331,293 2.00 x $295,754
259 Chateaux Verde Apartments $210,285 $238,283 1.58 x $226,701
260 Homestead Corner Shopping Center $166,212 $244,512 1.66 x $194,701
261 Lake Villa Apartments $162,642 $190,595 1.39 x $185,763
262 F & H Warehouse $248,612 $513,551 2.71 x $350,483
263 Avian Plaza Shopping Center $151,855 $251,237 1.78 x $185,033
264 Port Orchard Mini Storage $89,667 $238,751 1.64 x $203,098
265 Sequoia Grove Apartments $84,069 $182,155 1.43 x $169,207
266 The Miller Center $94,221 $297,739 1.90 x $229,279
267 Emerald Park Apartments $120,802 $203,882 1.60 x $172,386
268 Rancho San Diego Town & Country $42,948 $211,114 1.57 x $205,531
269 French Quarters East Apartments $150,229 $202,402 1.62 x $183,615
270 The Forest Apartments $337,990 $178,121 1.46 x $166,005
271 Oakhill Apartments $129,228 $236,171 1.96 x $194,150
272 STOR-N-LOCK $141,159 $258,788 2.00 x $196,547
273 Autumn Ridge Apartments $313,899 $210,762 1.62 x $195,380
274 701 Franklin Center $37,063 $225,163 1.74 x $177,063
275 Savoy Condominiums $212,991 $269,451 2.31 x $206,022
276 Meriden East Apartments $216,739 $182,234 1.46 x $173,383
277 Hyde Park Mobile Estates $285,232 $254,808 1.27 x $248,903
278 Courtyard Plaza $17,279 $273,630 2.26 x $212,905
279 Tradewinds Apartments $215,820 $168,670 1.52 x $146,173
280 Regency Manor Apartments $270,851 $160,118 1.39 x $159,935
281 Hood Chalet Mobile Estates $104,135 $188,239 1.55 x $156,212
282 Mauna Kea Apartments $77,478 $194,451 1.69 x $148,726
283 Deer Creek Apartments $105,564 $162,180 1.46 x $141,705
284 Evergreen Place Condominiums $172,610 $160,636 1.48 x $147,137
285 Autumn Creek Apartments $230,780 $154,125 1.41 x $142,531
286 Midtown at Main $58,187 $195,062 1.65 x $157,624
287 Park Place Center $35,902 $194,904 1.79 x $155,990
288 International Self Storage $62,786 $163,265 1.55 x $159,023
289 Villa Catalina Apartments $84,644 $175,937 1.86 x $133,099
290 Loc-'N-Stor Self-Storage $97,553 $177,655 1.77 x $144,197
291 Rancho Villa $72,139 $129,186 1.33 x $124,548
292 Timberline Mobile Home Park $79,019 $195,422 2.06 x $166,075
293 Timberland Ridge Apartments $124,144 $162,998 1.74 x $146,163
294 Leewood Apartments $313,980 $128,883 1.43 x $123,805
295 Glen Mark Apartments $174,070 $156,959 1.90 x $127,380
296 Pinecroft Mobile Home Park $164,221 $210,032 2.43 x $178,114
297 Eckerds Drugstore $8,378 $270,890 2.71 x $255,665
298 Eastern Promenade Apartments $71,549 $142,036 1.72 x $109,569
299 Belle Meade Apartments $143,365 $108,658 1.51 x $98,588
300 Riverview Plaza II $83,102 $208,145 3.11 x $180,343
301 Westmoreland Warehouse $35,227 $102,445 1.84 x $76,620
------------------------------------------------------
Total/Weighted Average: $184,291,224 $207,337,816 1.58 x $188,993,532
======================================================
Maximum: $8,520,634 $11,619,956 3.66 x $13,177,773
Minimum: $8,378 $18,066 .09 x $76,620
<CAPTION>
Tax &
U/W Insurance
# Property Name (1) DSCR Escrows
- ----------------- ---- -------
<S> <C> <C> <C>
257 Sepulveda Crest Apartments 1.26 x Both
258 Morningstar Mini-Storage 1.79 x Both
259 Chateaux Verde Apartments 1.50 x Both
260 Homestead Corner Shopping Center 1.32 x Both
261 Lake Villa Apartments 1.35 x Both
262 F & H Warehouse 1.85 x Both
263 Avian Plaza Shopping Center 1.31 x Both
264 Port Orchard Mini Storage 1.39 x Tax
265 Sequoia Grove Apartments 1.33 x Both
266 The Miller Center 1.46 x Both
267 Emerald Park Apartments 1.35 x Both
268 Rancho San Diego Town & Country 1.53 x Both
269 French Quarters East Apartments 1.47 x Both
270 The Forest Apartments 1.36 x Both
271 Oakhill Apartments 1.61 x Both
272 STOR-N-LOCK 1.52 x Both
273 Autumn Ridge Apartments 1.50 x Both
274 701 Franklin Center 1.37 x Both
275 Savoy Condominiums 1.76 x Both
276 Meriden East Apartments 1.39 x Both
277 Hyde Park Mobile Estates 1.24 x Tax
278 Courtyard Plaza 1.76 x Both
279 Tradewinds Apartments 1.32 x Both
280 Regency Manor Apartments 1.39 x Both
281 Hood Chalet Mobile Estates 1.28 x Both
282 Mauna Kea Apartments 1.29 x Both
283 Deer Creek Apartments 1.27 x Both
284 Evergreen Place Condominiums 1.36 x Both
285 Autumn Creek Apartments 1.30 x Both
286 Midtown at Main 1.34 x Both
287 Park Place Center 1.43 x Both
288 International Self Storage 1.51 x Both
289 Villa Catalina Apartments 1.41 x Both
290 Loc-'N-Stor Self-Storage 1.44 x Both
291 Rancho Villa 1.28 x Both
292 Timberline Mobile Home Park 1.75 x Both
293 Timberland Ridge Apartments 1.56 x Both
294 Leewood Apartments 1.37 x Both
295 Glen Mark Apartments 1.54 x Both
296 Pinecroft Mobile Home Park 2.06 x Both
297 Eckerds Drugstore 2.56 x None
298 Eastern Promenade Apartments 1.33 x Both
299 Belle Meade Apartments 1.37 x Both
300 Riverview Plaza II 2.69 x Both
301 Westmoreland Warehouse 1.38 x Both
-------
Total/Weighted Average: $1.44 x
=======
Maximum: 2.69 x
Minimum: 1.20 x
</TABLE>
<PAGE>
(1A) The Mortgage Loans secured by Raritan Plaza I and Raritan Center Industrial
Portfolio, respectively, are cross-collateralized and cross-defaulted.
(1B) The Mortgage Loans secured by Holiday Inn - Jacksonville Airport and
Courtyard by Marriott, respectively, are cross-collateralized and
cross-defaulted.
(1C) The Mortgage Loans secured by Courtyard by Marriott - Pensacola, Courtyard
by Marriott - Tuscaloosa, Fairfield Inn - Pensacola, Fairfield Inn -
Birmingham and Fairfield Inn - Tuscaloosa, respectively, are
cross-collateralized and cross-defaulted.
(1D) The Mortgage Loans secured by Royal Plaza Hotel - Marlborough and Royal
Plaza Hotel- Fitchburg, respectively, are cross-collateralized and
cross-defaulted.
(1E) The Mortgage Loans secured by Highland Pavilion Shopping Center and
Highland Pavilion Cinema, respectively, are cross-collateralized and
cross-defaulted.
(1F) The Mortgage Loans secured by Flower Hill Professional Center and Flower
Hill McDonald's, respectively, are cross-collateralized and
cross-defaulted.
(1G) The Mortgage Loans secured by Pellcare Nursing Home - Winston-Salem and
Pellcare Nursing Home - Hickory, respectively, are cross-collateralized and
cross-defaulted.
(1H) The Mortgage Loans secured by Wyoming-Enzie Properties and Mesa Properties,
respectively, are cross-collateralized and cross-defaulted.
(1I) The Mortgage Loans secured by Tivoli Condominiums, Cross Creek Apartments
and Tamara Hills Townhomes, respectively, are cross-collateralized and
cross-defaulted.
(1J) The Mortgage Loans secured by Bridge Street Lodge and P&R Building,
respectively, are cross-collateralized and cross-defaulted.
(1K) The Mortgage Loans secured by Cedarfield Plaza and Greece Mini Storage,
respectively, are cross-collateralized and cross-defaulted.
(2) Summer Cove Apartments has an interest only period of 24 months and will
begin to amortize over a 336 month term.
(3) Ultra Plaza Shopping Center has an interest only period of 24 months and
will begin to amortize over a 336 month term.
(4) Assumes a Cut-off Date of June 1, 1998.
(5) Does not include any mortgage Loans secured by hotel properties.
<PAGE>
<TABLE>
<CAPTION>
Multifamily Schedule
Utilities Subject Subject Subject
Cut-off Date Tenant Elevator Studio Studio 1 BR
# Property Name (1) Balance (3) Pays (Y/N) Units Avg. Rent Units
- ----------------- ----------- ---- ----- ----- --------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
1 The Rivergate Apartments $94,602,208 Electric Yes 0 $0 447
5 The Camargue $29,900,164 Electric Yes 0 $0 203
6 Casa Arroyo Apartments $23,984,720 Electric No 3 $755 290
7 Ballena Village Apartments $21,954,541 Electric Yes 0 $0 270
10 Magnolia Lake Apartments $20,500,000 Electric No 0 $0 104
11 Park Terrace $19,966,398 Electric/Water No 0 $0 0
12 Autumn Chase Apartments $19,472,137 Electric No 33 $589 319
21 Chandler Place Apartments $15,690,004 Electric No 0 $0 96
22 Summer Cove Apartments (2) $15,250,000 Electric/Water/Sewer No 0 $0 64
23 Lake & Racquet Apartments $14,979,511 Electric Yes 0 $0 319
24 Stone Ends Apartments $14,219,052 Gas/Water No 0 $0 176
25 Canyon Club Apartments $13,558,248 Electric No 0 $0 160
32 Plumtree Apartments $12,500,000 Electric No 0 $0 64
35 Randall Lane, Park Place I
& II and Park Newport Apartments $11,464,221 Electric/Gas Yes 0 $0 88
44 Forest Glen Apartments $9,743,548 Electric No 0 $0 56
47 Breckenridge Apartments $9,347,127 Electric No 0 $0 284
54 Aspen Ridge Apartments $8,074,631 Electric No 0 $0 114
55 Parkway Towers Apartments $7,980,251 Electric/Gas/Water Yes 127 $617 149
61 Cypress Pointe Apartments $7,189,837 Water/Sewer No 0 $0 80
66 Bancroft Hall Apartments $6,953,647 Electric No 0 $0 28
71 Elmonica Court Apartments $6,795,592 Electric/Water No 0 $0 36
73 Plum Tree Apartments $6,695,709 Electric No 0 $0 64
76 Las Brisas Apartments $6,564,310 Electric No 0 $0 60
78 Waldan Pond & Waldan Chase Apts $6,446,089 Electric No 0 $0 40
79 Aspen Park Apartments $6,192,234 Electric No 0 $0 112
82 Bridgepoint Apartments $5,996,406 Electric No 24 $480 104
97 Vista Mar Apartments $5,192,803 None No 0 $0 83
102 South Pointe Apartments $4,917,198 Electric No 0 $0 28
103 Wyoming-Enzie Properties (1H) $3,100,000 Electric/Gas No 0 $0 39
104 Mesa Properties (1H) $1,800,000 Electric/Gas No 0 $0 80
108 Tivoli Condominiums (1I) $2,098,758 Electric/Water/Sewer No 0 $0 16
109 Cross Creek Apartments (1I) $1,479,124 Electric/Gas/Water No 0 $0 0
110 Tamara Hills Townhomes (1I) $1,069,367 Electric/Water/Sewer No 0 $0 0
113 Camelot Apartments $4,593,379 Electric No 0 $0 178
117 Heritage Square Apartments $4,397,549 Electric No 0 $0 96
120 Spring Villas $4,356,224 Electric No 0 $0 24
121 Sierra Point Apartments $4,331,319 Electric/Gas/Water No 0 $0 70
124 Stone Creek Apartments $4,263,734 Electric No 16 $520 162
125 Florida Avenue Apartments $4,191,479 Electric/Gas No 0 $0 0
127 Commonwealth Avenue Apartments $4,179,055 Electric No 33 $616 45
131 New West Village Apartments $4,084,931 Electric No 0 $0 32
132 Brookside Apartments $4,061,787 Electric No 18 $324 92
133 Vinyard Gardens $4,017,864 Electric No 0 $0 22
134 Hidden Bay Village Apartments $4,000,000 Electric/Gas No 0 $0 152
135 Raintree Apartments $4,000,000 Electric/Gas No 0 $0 32
138 Longbranch Apartments $3,993,973 Electric No 0 $0 0
144 Tivoli Apartments $3,700,000 Electric/Gas No 0 $0 72
149 Aspen Village Apartments $3,590,501 Electric No 0 $0 48
151 South Plains Apartments $3,513,458 Electric No 16 $308 24
152 Royal Oaks Apartments $3,506,589 Electric No 1 $375 40
153 Northwinds Apartment Complex $3,500,000 Electric No 0 $0 144
<CAPTION>
Subject Subject Subject Subject Subject Subject Subject
1 BR 2 BR 2 BR 3 BR 3 BR 4 BR 4 BR
# Property Name (1) Avg. Rent Units Avg. Rent Units Avg. Rent Units Avg. Rent
- ----------------- --------- ----- --------- ----- --------- ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 The Rivergate Apartments $2,296 258 $3,201 0 $0 0 $0
5 The Camargue $1,770 58 $2,634 0 $0 0 $0
6 Casa Arroyo Apartments $828 101 $980 0 $0 0 $0
7 Ballena Village Apartments $917 122 $1,190 0 $0 0 $0
10 Magnolia Lake Apartments $640 310 $673 72 $860 0 $0
11 Park Terrace $0 229 $976 75 $1,068 0 $0
12 Autumn Chase Apartments $682 198 $768 0 $0 0 $0
21 Chandler Place Apartments $710 176 $825 48 $1,030 0 $0
22 Summer Cove Apartments (2) $708 128 $882 32 $1,000 0 $0
23 Lake & Racquet Apartments $532 107 $680 0 $0 0 $0
24 Stone Ends Apartments $750 100 $839 0 $0 0 $0
25 Canyon Club Apartments $697 176 $779 0 $0 0 $0
32 Plumtree Apartments $468 254 $570 88 $680 0 $0
35 Randall Lane, Park Place I
& II and Park Newport Apartments $571 303 $666 0 $0 0 $0
44 Forest Glen Apartments $665 96 $785 32 $885 0 $0
47 Breckenridge Apartments $366 233 $421 87 $531 0 $0
54 Aspen Ridge Apartments $436 126 $592 0 $0 0 $0
55 Parkway Towers Apartments $772 5 $999 0 $0 0 $0
61 Cypress Pointe Apartments $581 116 $710 0 $0 0 $0
66 Bancroft Hall Apartments $485 154 $543 57 $684 5 $740
71 Elmonica Court Apartments $590 84 $668 24 $820 0 $0
73 Plum Tree Apartments $831 52 $950 0 $0 0 $0
76 Las Brisas Apartments $625 118 $730 0 $0 0 $0
78 Waldan Pond & Waldan Chase Apts $590 144 $683 0 $0 0 $0
79 Aspen Park Apartments $391 168 $479 0 $0 0 $0
82 Bridgepoint Apartments $543 72 $686 0 $0 0 $0
97 Vista Mar Apartments $529 116 $645 43 $704 0 $0
102 South Pointe Apartments $409 196 $455 32 $499 0 $0
103 Wyoming-Enzie Properties (1H) $395 64 $578 0 $0 0 $0
104 Mesa Properties (1H) $314 0 $0 0 $0 0 $0
108 Tivoli Condominiums (1I) $400 62 $498 17 $601 0 $0
109 Cross Creek Apartments (1I) $0 16 $530 11 $750 8 $940
110 Tamara Hills Townhomes (1I) $0 36 $582 0 $0 4 $980
113 Camelot Apartments $338 101 $428 8 $496 0 $0
117 Heritage Square Apartments $475 72 $575 0 $0 0 $0
120 Spring Villas $529 112 $595 0 $0 0 $0
121 Sierra Point Apartments $492 102 $611 40 $805 0 $0
124 Stone Creek Apartments $463 32 $638 0 $0 0 $0
125 Florida Avenue Apartments $0 144 $518 0 $0 0 $0
127 Commonwealth Avenue Apartments $760 27 $1,093 0 $0 0 $0
131 New West Village Apartments $408 76 $536 92 $625 0 $0
132 Brookside Apartments $390 94 $506 0 $0 0 $0
133 Vinyard Gardens $495 60 $574 0 $0 0 $0
134 Hidden Bay Village Apartments $450 32 $560 0 $0 0 $0
135 Raintree Apartments $503 106 $578 0 $0 0 $0
138 Longbranch Apartments $0 184 $490 0 $0 0 $0
144 Tivoli Apartments $480 68 $560 0 $0 0 $0
149 Aspen Village Apartments $354 148 $452 24 $550 0 $0
151 South Plains Apartments $397 72 $517 32 $738 0 $0
152 Royal Oaks Apartments $500 140 $610 0 $0 0 $0
153 Northwinds Apartment Complex $367 0 $0 0 $0 0 $0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Utilities Subject Subject Subject
Cut-off Date Tenant Elevator Studio Studio 1 BR
# Property Name (1) Balance (3) Pays (Y/N) Units Avg. Rent Units
- ----------------- ----------- ---- ----- ----- --------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
159 Hampton North Townhomes & Apartments $3,386,446 Electric No 0 $0 93
167 Rivershores Apartments $3,175,356 Electric No 0 $0 18
169 Governor's Palace, Ridgmar Americana
& Ridgmar West Apartments $3,095,825 Electric No 5 $377 67
170 Brookhollow Apartments $3,088,680 Electric No 0 $0 24
174 The Colonnade at Turtle Creek Apartments $3,025,575 Electric Yes 0 $0 46
180 Seaport Villas $2,948,178 Electric No 0 $0 20
184 Red Lion Apartments $2,877,238 Electric No 0 $0 48
192 509-511 Amsterdam Avenue $2,748,244 Electric No 0 $0 8
194 Towne East Village Apartments $2,690,205 Electric No 0 $0 60
196 Bent Oak Apartments $2,650,000 Electric/Gas No 0 $0 60
197 Summit Apartments $2,606,458 Electric No 0 $0 72
201 Willamette Terrace $2,551,182 Electric No 0 $0 19
203 79 Worth Street $2,544,466 Electric Yes 0 $0 0
206 Lookout Ridge Apartments $2,500,000 Electric No 0 $0 96
210 Governor's Terrace $2,464,481 Electric Yes 3 $617 29
219 1731, 1741 and 1751 Washington Street $2,200,000 Electric No 0 $0 11
226 River's Edge Apartments $2,096,004 Electric No 0 $0 113
230 Summer Creek Apartments $2,060,000 Electric/Gas No 0 $0 0
232 Woodcrest Townhome Apartments $2,000,000 Electric No 0 $0 0
233 Planters Trace Apartments $1,998,661 Electric No 0 $0 36
234 Stone Oak Apartments $1,997,044 Electric/Gas/Water/Sewer No 0 $0 40
238 Campus Square Apartments $1,993,907 None No 149 $324 42
240 Park Lane Terrace Apartments $1,993,270 None No 0 $0 51
243 The Clusters Apartments $1,987,627 Electric No 0 $0 282
246 Sunrise Village Apartments $1,940,855 None No 0 $0 0
247 Ridgewood Apartments $1,900,000 None No 0 $0 44
248 Bella Vista Terrace $1,898,826 Electric/Gas/Water No 0 $0 50
250 Secluded Oaks Villas Apartments $1,897,403 Electric No 0 $0 0
253 Camelot Apartments $1,808,982 Electric No 0 $0 12
255 Gordon Street Apartments $1,797,346 Gas No 24 $597 30
256 Northgate Apartments $1,795,862 Electric No 0 $0 9
257 Sepulveda Crest Apartments $1,794,060 Electric No 8 $438 49
259 Chateaux Verde Apartments $1,741,516 Electric/Gas No 0 $0 12
261 Lake Villa Apartments $1,697,606 Electric No 0 $0 16
265 Sequoia Grove Apartments $1,626,426 Electric No 0 $0 25
267 Emerald Park Apartments $1,597,369 Electric/Water/Sewer No 0 $0 0
269 French Quarters East Apartments $1,550,000 Electric/Gas No 0 $0 35
270 The Forest Apartments $1,540,000 Electric No 7 $340 28
271 Oakhill Apartments $1,520,000 Electric No 0 $0 48
273 Autumn Ridge Apartments $1,491,294 Electric No 116 $395 0
275 Savoy Condominiums $1,419,683 Electric/Water/Sewer No 0 $0 20
276 Meriden East Apartments $1,416,840 Electric Yes 0 $0 32
279 Tradewinds Apartments $1,400,000 Electric/Gas No 2 $400 45
280 Regency Manor Apartments $1,399,208 Electric No 0 $0 5
282 Mauna Kea Apartments $1,395,627 Electric No 0 $0 0
283 Deer Creek Apartments $1,329,283 Electric No 0 $0 0
284 Evergreen Place Condominiums $1,315,730 Electric No 0 $0 28
285 Autumn Creek Apartments $1,267,850 Electric No 0 $0 38
289 Villa Catalina Apartments $1,170,000 Electric/Gas Yes 14 $400 19
293 Timberland Ridge Apartments $1,097,522 Electric No 0 $0 22
294 Leewood Apartments $1,095,913 Electric No 0 $0 24
295 Glen Mark Apartments $1,024,376 Electric No 0 $0 34
298 Eastern Promenade Apartments $957,861 Electric No 0 $0 20
299 Belle Meade Apartments $878,803 None No 0 $0 24
<CAPTION>
Subject Subject Subject Subject Subject Subject Subject
1 BR 2 BR 2 BR 3 BR 3 BR 4 BR 4 BR
# Property Name (1) Avg. Rent Units Avg. Rent Units Avg. Rent Units Avg. Rent
- ----------------- --------- ----- --------- ----- --------- ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
159 Hampton North Townhomes & Apartments $524 34 $659 0 $0 0 $0
167 Rivershores Apartments $422 102 $479 8 $610 0 $0
169 Governor's Palace, Ridgmar Americana
& Ridgmar West Apartments $441 88 $574 0 $0 0 $0
170 Brookhollow Apartments $450 88 $514 48 $650 0 $0
174 The Colonnade at Turtle Creek Apartments $854 9 $986 0 $0 0 $0
180 Seaport Villas $473 80 $573 0 $0 0 $0
184 Red Lion Apartments $475 54 $575 0 $0 0 $0
192 509-511 Amsterdam Avenue $538 16 $1,611 0 $0 0 $0
194 Towne East Village Apartments $473 40 $610 0 $0 0 $0
196 Bent Oak Apartments $448 60 $525 0 $0 0 $0
197 Summit Apartments $463 40 $587 0 $0 0 $0
201 Willamette Terrace $465 41 $525 19 $625 0 $0
203 79 Worth Street $0 9 $5,096 0 $0 0 $0
206 Lookout Ridge Apartments $473 47 $600 0 $0 0 $0
210 Governor's Terrace $710 18 $890 0 $0 0 $0
219 1731, 1741 and 1751 Washington Street $653 37 $764 0 $0 0 $0
226 River's Edge Apartments $410 39 $480 8 $635 0 $0
230 Summer Creek Apartments $0 120 $415 0 $0 0 $0
232 Woodcrest Townhome Apartments $0 78 $525 0 $0 0 $0
233 Planters Trace Apartments $425 48 $508 12 $580 0 $0
234 Stone Oak Apartments $419 55 $485 0 $0 0 $0
238 Campus Square Apartments $422 3 $653 0 $0 0 $0
240 Park Lane Terrace Apartments $343 83 $462 18 $573 0 $0
243 The Clusters Apartments $382 0 $0 0 $0 0 $0
246 Sunrise Village Apartments $0 0 $0 48 $1,475 0 $0
247 Ridgewood Apartments $399 44 $475 0 $0 0 $0
248 Bella Vista Terrace $469 28 $578 0 $0 0 $0
250 Secluded Oaks Villas Apartments $0 52 $888 0 $0 0 $0
253 Camelot Apartments $411 76 $463 12 $588 0 $0
255 Gordon Street Apartments $677 1 $1,000 0 $0 0 $0
256 Northgate Apartments $430 59 $495 4 $595 0 $0
257 Sepulveda Crest Apartments $555 14 $718 0 $0 0 $0
259 Chateaux Verde Apartments $495 45 $640 9 $725 0 $0
261 Lake Villa Apartments $470 48 $560 0 $0 0 $0
265 Sequoia Grove Apartments $625 9 $712 0 $0 0 $0
267 Emerald Park Apartments $0 62 $509 0 $0 0 $0
269 French Quarters East Apartments $420 35 $480 0 $0 0 $0
270 The Forest Apartments $380 64 $440 14 $535 0 $0
271 Oakhill Apartments $430 24 $480 0 $0 0 $0
273 Autumn Ridge Apartments $0 0 $0 0 $0 0 $0
275 Savoy Condominiums $568 42 $790 0 $0 0 $0
276 Meriden East Apartments $500 34 $600 0 $0 0 $0
279 Tradewinds Apartments $380 37 $459 0 $0 0 $0
280 Regency Manor Apartments $378 92 $495 0 $0 0 $0
282 Mauna Kea Apartments $0 30 $725 0 $0 0 $0
283 Deer Creek Apartments $0 36 $481 12 $571 0 $0
284 Evergreen Place Condominiums $488 26 $640 0 $0 0 $0
285 Autumn Creek Apartments $374 40 $485 4 $725 0 $0
289 Villa Catalina Apartments $500 9 $650 0 $0 0 $0
293 Timberland Ridge Apartments $450 24 $550 0 $0 0 $0
294 Leewood Apartments $349 52 $491 12 $661 0 $0
295 Glen Mark Apartments $365 38 $425 0 $0 0 $0
298 Eastern Promenade Apartments $530 16 $602 0 $0 0 $0
299 Belle Meade Apartments $518 15 $561 1 $1,100 0 $0
</TABLE>
(1H) The Mortgage Loans secured by Wyoming-Enzie Properties and Mesa Properties,
respectively, are cross-collateralized and cross-defaulted.
(1I) The Mortgage Loans secured by Tivoli Condominiums, Cross Creek Apartments
and Tamara Hills Townhomes, respectively, are cross-collateralized and
cross-defaulted.
(2) Summer Cove Apartments has an interest only period of 24 months and will
begin to amortize over a 336 month term.
(3) Assumes a Cut-off Date of June 1, 1998.
<PAGE>
[THIS PAGE INTENTONALLY LEFT BLANK]
<PAGE>
EXHIBIT A-2
MORTGAGE POOL INFORMATION
<PAGE>
[THIS PAGE INTENTONALLY LEFT BLANK]
<PAGE>
Mortgage Rates
<TABLE>
<CAPTION>
Weighted Weighted
Aggregate Percentage of Aggregate Average Weighted Average
Range of Number Cut-off Date Initial Appraised Cut-off Date Aggregate Average Year Built/
Mortgage Rates of Loans Balance (1) Pool Balance Value LTV Ratio U/W NCF (2) U/W DSCR Renovated (3)
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
6.650% - 6.999% 54 $ 413,759,922 26.5% $ 613,650,000 69.2% $ 49,699,475 1.51 x 1987
7.000% - 7.249% 85 459,904,467 29.4% 660,699,500 70.9% 56,237,161 1.48 1987
7.250% - 7.499% 106 473,319,834 30.3% 673,077,000 71.3% 55,261,521 1.36 1988
7.500% - 7.749% 44 181,810,701 11.6% 287,620,000 65.0% 23,285,182 1.41 1989
7.750% - 7.999% 9 22,712,957 1.5% 30,890,000 73.7% 2,599,037 1.30 1991
8.000% - 8.499% 1 1,403,387 0.1% 2,730,000 51.4% 248,903 1.24 1965
8.500% - 8.860% 2 11,342,165 0.7% 15,125,000 75.1% 1,662,253 1.43 1973
----------------------------------------------------------------------------------------------------------
Total/Weighted Average: 301 $ 1,564,253,433 100.0% $ 2,283,791,500 69.9% $ 188,993,532 1.44 x 1988
==========================================================================================================
</TABLE>
Maximum Mortgage Rate: 8.860% per annum
Minimum Mortgage Rate: 6.650% per annum
Wtd. Avg. Mortgage Rate: 7.210% per annum
(1) Assumes a Cut-off Date of June 1, 1998.
(2) Underwriting NCF reflects Net Cash Flow after U/W Replacement Reserves, U/W
LC's and TI's and FF&E.
(3) Year Built/Renovated reflects the later of the Year Built or the Year
Renovated.
<PAGE>
Cut-off Date Balances
<TABLE>
<CAPTION>
Weighted Weighted
Aggregate Percentage of Aggregate Average Weighted Average
Range of Number Cut-off Date Initial Appraised Cut-off Date Aggregate Average Year Built/
Cut-off Date Balances of Loans Balance (1) Pool Balance Value LTV Ratio U/W NCF (2) U/W DSCR Renovated(3)
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 573,042 - 1,499,999 35 $ 41,885,450 2.7% $ 65,540,000 66.4% $ 5,504,845 1.49 x 1983
1,500,000 - 2,499,999 71 141,121,351 9.0% 205,819,500 70.1% 17,314,027 1.41 1986
2,500,000 - 3,499,999 54 157,742,107 10.1% 227,995,000 70.5% 19,409,807 1.41 1989
3,500,000 - 4,499,999 40 159,771,106 10.2% 228,170,000 71.3% 19,165,337 1.43 1989
4,500,000 - 5,499,999 20 99,491,338 6.4% 142,470,000 70.6% 12,179,624 1.42 1994
5,500,000 - 6,499,999 14 84,317,556 5.4% 119,877,000 72.0% 9,851,770 1.42 1988
6,500,000 - 7,499,999 19 131,759,545 8.4% 181,965,000 72.9% 15,731,136 1.44 1987
7,500,000 - 9,999,999 16 141,460,303 9.0% 204,795,000 70.6% 17,974,225 1.49 1987
10,000,000 - 14,999,999 16 192,356,358 12.3% 263,840,000 73.8% 21,124,323 1.32 1985
15,000,000 - 24,999,999 12 229,501,527 14.7% 337,820,000 69.4% 25,777,295 1.38 1990
25,000,000 - 39,999,999 3 90,244,585 5.8% 153,700,000 61.4% 11,783,370 1.61 1984
40,000,000 - $94,602,208 1 94,602,208 6.0% 151,800,000 62.3% 13,177,773 1.75 1985
------------------------------------------------------------------------------------------------------
Total/Weighted Average: 301 $ 1,564,253,433 100.0% $ 2,283,791,500 69.9% $ 188,993,532 1.44 x 1988
======================================================================================================
</TABLE>
Maximum Cut-off Date Balance: $ 94,602,208
Minimum Cut-off Date Balance: $ 573,042
Average Cut-off Date Balance: $ 5,196,855
(1) Assumes a Cut-off Date of June 1, 1998.
(2) Underwriting NCF reflects Net Cash Flow after U/W Replacement Reserves, U/W
LC's and TI's and FF&E.
(3) Year Built/Renovated reflects the later of the Year Built or the Year
Renovated.
<PAGE>
Original Amortization Terms
<TABLE>
<CAPTION>
Range of Weighted Weighted
Original Aggregate Percentage of Aggregate Average Weighted Average
Amortization Number Cut-off Date Initial Appraised Cut-off Date Aggregate Average Year Built/
Terms (Months) of Loans Balance (1) Pool Balance Value LTV Ratio U/W NCF (2) U/W DSCR Renovated (3)
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
144 - 216 14 $ 39,223,957 2.5% $ 66,830,000 61.4% $ 6,360,360 1.46 x 1993
240 - 264 15 47,500,054 3.0% 75,120,000 65.2% 6,679,108 1.47 1986
300 - 311 93 381,258,301 24.4% 598,089,500 65.4% 50,447,106 1.51 1988
312 - 360 179 1,096,271,119 70.1% 1,543,752,000 72.1% 125,506,958 1.42 1987
-------------------------------------------------------------------------------------------------------------
Total/Weighted Average: 301 $1,564,253,433 100.0% $2,283,791,500 69.9% $188,993,532 1.44 x 1988
=============================================================================================================
</TABLE>
Maximum Original Amortization Term (Months): 360
Minimum Original Amortization Term (Months): 144
Wtd. Avg. Original Amortization Term (Months): 337
(1) Assumes a Cut-off Date of June 1, 1998.
(2) Underwriting NCF reflects Net Cash Flow after U/W Replacement Reserves, U/W
LC's and TI's and FF&E.
(3) Year Built/Renovated reflects the later of the Year Built or the Year
Renovated.
<PAGE>
Original Terms to Stated Maturity (1)
<TABLE>
<CAPTION>
Weighted Weighted
Range of Aggregate Percentage of Aggregate Average Weighted Average
Original Terms Number Cut-off Date Initial Appraised Cut-off Date Aggregate Average Year Built/
to Maturity (Months) of Loans Balance (2) Pool Balance Value LTV Ratio U/W NCF (3) U/W DSCR Renovated (4)
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
60 - 84 9 $ 36,023,321 2.3% $ 50,480,000 72.8% $ 4,385,828 1.45 x 1982
96 - 120 242 1,260,766,714 80.6% 1,841,839,000 70.0% 151,737,725 1.45 1988
132 - 179 3 9,443,796 0.6% 13,480,000 71.3% 1,139,103 1.34 1985
180 - 300 47 258,019,602 16.5% 377,992,500 69.2% 31,730,876 1.38 1989
-------------------------------------------------------------------------------------------------------------
Total/Weighted Average: 301 $1,564,253,433 100.0% $2,283,791,500 69.9% $188,993,532 1.44 x 1988
=============================================================================================================
</TABLE>
Maximum Original Term to Maturity (Months): 300
Minimum Original Term to Maturity (Months): 60
Wtd. Avg. Original Term to Maturity (Months): 135
(1) In the case of the Anticipated Repayment Date loans, the Anticipated
Repayment Date is assumed to be the maturity date for the purposes of the
table.
(2) Assumes a Cut-off Date of June 1, 1998.
(3) Underwriting NCF reflects Net Cash Flow after U/W Replacement Reserves, U/W
LC's and TI's and FF&E.
(4) Year Built/Renovated reflects the later of the Year Built or the Year
Renovated.
<PAGE>
Remaining Amortization Terms
<TABLE>
<CAPTION>
Weighted Weighted
Range of Aggregate Percentage of Aggregate Average Weighted Average
Remaining Amort. Number Cut-off Date Initial Appraised Cut-off Date Aggregate Average Year Built/
Terms (Months) of Loans Balance (1) Pool Balance Value LTV Ratio U/W NCF (2) U/W DSCR Renovated (3)
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
120 - 179 11 $ 29,964,091 1.9% $ 51,935,000 60.0% $ 4,955,136 1.46 x 1992
180 - 239 14 47,625,503 3.0% 76,865,000 64.4% 6,800,306 1.47 1987
240 - 275 4 9,134,417 0.6% 13,150,000 69.8% 1,284,026 1.46 1989
276 - 299 79 338,233,301 21.6% 534,065,000 64.9% 45,129,659 1.52 1987
300 - 335 18 59,530,728 3.8% 86,624,500 70.0% 7,087,513 1.37 1990
336 - 347 3 30,277,127 1.9% 38,400,000 79.0% 3,309,336 1.39 1987
348 - 360 172 1,049,488,264 67.1% 1,482,752,000 71.8% 120,427,556 1.42 1987
-------------------------------------------------------------------------------------------------------------
Total/Weighted Average: 301 $1,564,253,433 100.0% $2,283,791,500 69.9% $188,993,532 1.44 x 1988
=============================================================================================================
</TABLE>
Maximum Remaining Amortization Term (Months): 360
Minimum Remaining Amortization Term (Months): 128
Wtd. Avg. Remaining Amortization Term (Months): 334
(1) Assumes a Cut-off Date of June 1, 1998.
(2) Underwriting NCF reflects Net Cash Flow after U/W Replacement Reserves, U/W
LC's and TI's and FF&E.
(3) Year Built/Renovated reflects the later of the Year Built or the Year
Renovated.
<PAGE>
Remaining Terms to Stated Maturity (1)
<TABLE>
<CAPTION>
Range of Weighted Weighted
Remaining Terms Aggregate Percentage of Aggregate Average Weighted Average
to Stated Number Cut-off Date Initial Appraised Cut-off Date Aggregate Average Year Built/
Maturity (Months) of Loans Balance (2) Pool Balance Value LTV Ratio U/W NCF (3) U/W DSCR Renovated (4)
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
48 - 83 9 $ 36,023,321 2.3% $ 50,480,000 72.8% $ 4,385,828 1.45 x 1982
84 - 119 209 1,121,416,714 71.7% 1,653,759,000 69.4% 136,199,865 1.46 1987
120 - 155 36 148,793,796 9.5% 201,560,000 74.6% 16,676,963 1.36 1989
156 - 179 24 135,637,080 8.7% 199,425,000 69.0% 16,803,070 1.40 1993
180 - 300 23 122,382,522 7.8% 178,567,500 69.4% 14,927,806 1.37 1984
-------------------------------------------------------------------------------------------------------------
Total/Weighted Average: 301 $1,564,253,433 100.0% $2,283,791,500 69.9% $188,993,532 1.44 x 1988
=============================================================================================================
</TABLE>
Maximum Remaining Term to Maturity (Months): 299
Minimum Remaining Term to Maturity (Months): 55
Wtd. Avg. Remaining Term to Maturity (Months): 133
(1) In the case of the Anticipated Repayment Date loans, the Anticipated
Repayment Date is assumed to be the maturity date for the purposes of the
table.
(2) Assumes a Cut-off Date of June 1, 1998.
(3) Underwriting NCF reflects Net Cash Flow after U/W Replacement Reserves, U/W
LC's and TI's and FF&E.
(4) Year Built/Renovated reflects the later of the Year Built or the Year
Renovated.
<PAGE>
Years Built/Years Renovated (1)
<TABLE>
<CAPTION>
Weighted Weighted
Range of Aggregate Percentage of Aggregate Average Weighted Average
Years Number Cut-off Date Initial Appraised Cut-off Date Aggregate Average Year Built/
Built/Renovated of Loans Balance (2) Pool Balance Value LTV Ratio U/W NCF (3) U/W DSCR Renovated (1)
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1899 - 1950 3 $ 6,934,262 0.4% $ 10,600,000 65.8% $ 859,393 1.47 x 1910
1951 - 1960 1 1,100,000 0.1% 1,475,000 74.6% 124,548 1.28 1960
1961 - 1970 19 84,670,164 5.4% 113,960,000 75.1% 9,703,290 1.34 1968
1971 - 1980 33 176,400,691 11.3% 258,000,000 69.3% 20,890,336 1.42 1976
1981 - 1990 104 626,094,254 40.0% 946,663,500 67.9% 77,727,557 1.50 1986
1991 - 1998 141 669,054,062 42.8% 953,093,000 71.4% 79,688,408 1.41 1995
-------------------------------------------------------------------------------------------------------------------
Total/Weighted 301 $ 1,564,253,433 100.0% $ 2,283,791,500 69.9% $ 188,993,532 1.44 x 1988
Average: ===================================================================================================================
</TABLE>
Most Recent Year Built/Renovated: 1998
Oldest Year Built/Renovated: 1899
Wtd. Avg. Year Built/Renovated: 1988
(1) Year Built/Renovated reflects the later of the Year Built or the Year
Renovated.
(2) Assumes a Cut-off Date of June 1, 1998.
(3) Underwriting NCF reflects Net Cash Flow after U/W Replacement Reserves,
U/W LC's and TI's and FF&E.
<PAGE>
Occupancy Rates at Underwriting (1)
<TABLE>
<CAPTION>
Weighted Weighted
Range of Aggregate Percentage of Aggregate Average Weighted Average
Occupancy Number Cut-off Date Initial Appraised Cut-off Date Aggregate Average Year Built/
Rates at U/W of Loans Balance (2) Pool Balance Value LTV Ratio U/W NCF (3) U/W DSCR Renovated (4)
- - -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
60.0% - 69.9% 1 $ 1,743,781 0.1% $ 3,850,000 45.3% $ 295,754 1.79 x 1992
70.0% - 79.9% 5 9,252,823 0.6% 13,830,000 67.4% 1,121,448 1.38 1983
80.0% - 89.9% 21 60,610,916 3.9% 86,700,000 71.3% 6,831,074 1.34 1988
90.0% - 100.0% 242 1,309,063,672 83.7% 1,867,761,500 71.3% 154,247,400 1.42 1987
------------------------------------------------------------------------------------------------------------
Total/Weighted 269 $ 1,380,671,192 88.3% $ 1,972,141,500 71.2% $ 162,495,676 1.41 x 1987
Average: ============================================================================================================
</TABLE>
Maximum Occupancy Rate at Underwriting: 100.0%
Minimum Occupancy Rate at Underwriting: 64.0%
Wtd. Avg. Occupancy Rate at Underwriting: 96.5%
(1) Does not include any Mortgage Loans secured by hotel properties.
(2) Assumes a Cut-off Date of June 1, 1998.
(3) Underwriting NCF reflects Net Cash Flow after U/W Replacement Reserves,
U/W LC's and TI's and FF&E.
<PAGE>
<TABLE>
<CAPTION>
Underwriting Debt Service Coverage Ratios
Weighted Weighted
Aggregate Percentage of Aggregate Average Weighted Average
Range of Number Cutoff Date Initial Appraised Cutoff Date Aggregate Average Year Built/
U/W DSCRs of Loans Balance (1) Pool Balance Value LTV Ratio U/W NCF (2) U/W DSCR Renovated (3)
--------- -------- ----------- ------------ ----- --------- ----------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1.200 x - 1.290 66 $ 379,466,509 24.3% $ 514,572,000 74.1% $ 40,677,594 1.26 x 1986
1.300 - 1.390 109 556,409,089 35.6% 757,659,500 73.9% 61,806,499 1.34 1989
1.400 - 1.490 60 228,770,701 14.6% 343,135,000 68.2% 27,819,411 1.43 1987
1.500 - 1.590 31 119,940,796 7.7% 180,030,000 67.5% 15,695,950 1.54 1988
1.600 - 1.690 8 40,637,969 2.6% 61,150,000 67.6% 5,516,345 1.63 1988
1.700 - 1.790 9 131,883,778 8.4% 215,950,000 61.4% 18,617,211 1.75 1986
1.800 - 1.890 6 36,581,771 2.3% 60,850,000 60.9% 5,835,343 1.83 1990
1.900 - 1.990 1 1,987,627 0.1% 5,000,000 39.8% 413,919 1.93 1986
2.000 - 2.690 x 11 68,575,193 4.4% 145,445,000 47.9% 12,611,260 2.19 1989
--------------------------------------------------------------------------------------------------------------
Total/Weighed 301 $ 1,564,253,433 100.0% $ 2,283,791,500 69.9% $ 188,993,532 1.44 x 1988
Average: ==============================================================================================================
</TABLE>
Maximum Underwriting DSCR: 2.69 x
Minimum Underwriting DSCR: 1.20 x
Wtd. Avg. Underwriting DSCR: 1.44 x
(1) Assumes a Cutoff Date of June 1, 1998.
(2) Underwriting NCF reflects Net Cash Flow after U/W Replacement Reserves,
U/W LC's and TI's and FF&E. `
(3) Year Built/Renovated reflects the later of the Year Built or the Year
Renovated.
<PAGE>
<TABLE>
<CAPTION>
Cut-off Date Loan-to-Value Ratios
Weighted Weighted
Range of Aggregate Percentage of Aggregate Aggregate Weighted Average
Cut-off Date Number Cut-off Date Initial Appraised Cut-off Date Aggregate Average Year Built/
LTV Ratios of Loans Balance (1) Pool Balance Value LTV Ratio U/W NCF (2) U/W DSCR Renovated (3)
---------- -------- ----------- ------------ ----- --------- ----------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
32.60% - 49.99% 15 $ 87,737,850 5.6% $ 193,330,000 45.5% $ 14,504,860 1.94 x 1989
50.00% - 59.99% 26 87,939,875 5.6% 159,640,000 55.3% 12,739,932 1.62 1990
60.00% - 69.99% 79 492,004,434 31.5% 752,115,000 65.5% 62,365,055 1.50 1986
70.00% - 74.99% 79 388,688,996 24.8% 531,800,000 73.1% 44,114,276 1.35 1987
75.00% - 79.99% 81 416,883,958 26.7% 533,981,500 78.1% 45,188,521 1.33 1988
80.00% - 82.75% 21 90,998,319 5.8% 112,925,000 80.6% 10,080,888 1.37 1990
----------------------------------------------------------------------------------------------------------------
Total/Weighted 301 $ 1,564,253,433 100.0% $ 2,283,791,500 69.9% $ 188,993,532 1.44 x 1988
Average:
================================================================================================================
</TABLE>
Maximum Cut-off Date LTV Ratio: 82.7%
Minimum Cut-off Date LTV Ratio: 32.6%
Wtd. Avg. Cut-off Date LTV Ratio: 69.9%
(1) Assumes a Cut-off Date of June 1, 1998.
(2) Underwriting NCF reflects Net Cash Flow after U/W Replacement Reserves, U/W
LC's and TI's and FF&E.
(3) Year Built/Renovated reflects the later of the Year Built or the Year
Renovated.
<PAGE>
Mortgage Loans by State
<TABLE>
<CAPTION>
Aggregate Percentage of Aggregate
Number Cut-off Date Initial Appraised
State of Loans Balance (1) Pool Balance Value
- - ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
California 1 43 $ 231,175,652 14.8% $ 339,792,000
New York 1 16 186,659,066 11.9% 283,315,000
Florida 1 29 150,914,483 9.6% 212,150,000
Texas 1 36 121,185,759 7.7% 170,372,000
Georgia 1 16 95,976,258 6.1% 155,840,000
Illinois 1 9 73,914,517 4.7% 98,200,000
Maryland 1 11 70,824,213 4.5% 111,800,000
New Jersey 1 5 69,116,116 4.4% 96,920,000
Pennsylvania 1 5 48,209,203 3.1% 67,100,000
Arizona 1 8 46,023,731 2.9% 65,505,000
Massachusetts 1 9 42,309,067 2.7% 65,050,000
Michigan 1 9 38,360,727 2.5% 50,950,000
Alabama 1 9 36,877,496 2.4% 52,210,000
Washington 1 14 35,455,306 2.3% 52,255,000
Minnesota 1 7 35,245,396 2.3% 50,615,000
North Carolina 1 10 34,056,355 2.2% 50,650,000
Arkansas 1 5 27,016,795 1.7% 39,950,000
Colorado 1 6 26,811,650 1.7% 37,275,000
Virginia 1 8 26,774,255 1.7% 35,610,000
Ohio 1 4 26,744,923 1.7% 39,155,000
Oregon 1 8 26,002,830 1.7% 39,205,000
Mississippi 1 6 23,418,740 1.5% 30,975,000
South Carolina 1 6 19,125,858 1.2% 24,445,000
District of Columbia 1 1 17,899,848 1.1% 39,500,000
Indiana 1 3 12,445,857 0.8% 16,130,000
Nevada 1 2 8,441,339 0.5% 12,550,000
New Mexico 1 3 8,085,813 0.5% 10,522,500
Tennessee 1 3 5,428,015 0.3% 7,360,000
Connecticut 1 3 5,195,467 0.3% 8,000,000
<CAPTION>
Weighted Weighted
Average Weighted Average
Cut-off Date Aggregate Average Year Built/
State LTV Ratio U/W NCF (2) U/W DSCR Renovated (3)
- - -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
California 68.9% $ 26,865,275 1.37 x 1984
New York 66.4% 24,122,529 1.55 1987
Florida 72.2% 18,844,710 1.50 1992
Texas 72.6% 14,513,751 1.42 1990
Georgia 65.4% 12,418,746 1.61 1988
Illinois 75.4% 8,163,844 1.35 1989
Maryland 66.1% 9,696,253 1.62 1985
New Jersey 71.9% 7,546,654 1.30 1986
Pennsylvania 72.3% 5,818,805 1.45 1994
Arizona 70.7% 5,379,325 1.40 1992
Massachusetts 67.1% 5,211,835 1.45 1973
Michigan 75.6% 4,404,217 1.36 1985
Alabama 72.4% 4,607,254 1.47 1993
Washington 69.0% 4,089,683 1.38 1985
Minnesota 70.0% 4,363,991 1.50 1985
North Carolina 69.7% 4,196,934 1.44 1986
Arkansas 68.1% 3,021,838 1.31 1993
Colorado 72.5% 3,080,440 1.33 1992
Virginia 75.5% 3,039,463 1.33 1990
Ohio 70.0% 3,334,858 1.39 1973
Oregon 66.9% 2,905,066 1.35 1990
Mississippi 75.8% 2,641,706 1.32 1992
South Carolina 78.3% 2,084,784 1.33 1992
District of Columbia 45.3% 2,265,082 1.42 1995
Indiana 77.2% 1,407,708 1.44 1995
Nevada 68.2% 978,128 1.37 1988
New Mexico 76.8% 932,539 1.37 1992
Tennessee 74.1% 642,007 1.36 1993
Connecticut 65.9% 638,449 1.39 1976
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Aggregate Percentage of Aggregate
Number Cut-off Date Initial Appraised
State of Loans Balance (1) Pool Balance Value
- - -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Louisiana 1 1 4,792,990 0.3% 6,000,000
Missouri 1 2 3,547,044 0.2% 4,475,000
Idaho 1 2 3,270,138 0.2% 4,915,000
Utah 1 1 1,990,665 0.1% 3,800,000
Maine 1 1 957,861 0.1% 1,200,000
=========================================================
Total/Weighted Average: 28 301 $1,564,253,433 100.0% $ 2,283,791,500
=========================================================
<CAPTION>
Weighted Weighted
Average Weighted Average
Cut-off Date Aggregate Average Year Built/
State LTV Ratio U/W NCF (2) U/W DSCR Renovated (3)
- - -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Louisiana 79.9% 532,345 1.39 1997
Missouri 79.4% 414,210 1.46 1977
Idaho 66.6% 398,926 1.41 1977
Utah 52.4% 322,608 1.83 1989
Maine 79.8% 109,569 1.33 1942
==========================================================
Total/Weighted Average: 69.9% $188,993,532 1.44 x 1988
==========================================================
</TABLE>
(1) Assumes a Cut-off Date of June 1, 1998.
(2) Underwriting NCF reflects Net Cash Flow after U/W Replacement Reserves,
U/W LC's and TI's and FF&E.
(3) Year Built/Renovated reflects the later of the Year Built or the Year
Renovated.
<PAGE>
Mortgage Loans by Property Type
<TABLE>
<CAPTION>
Weighted Weighted
Aggregate Percentage of Aggregate Average Weighted Average
Number Cut-off Date Initial Appraised Cut-off Date Aggregate Average Year Built/
Property Type of Loans Balance (1) Pool Balance Value LTV Ratio U/W NCF (2) U/W DSCR Renovated (3)
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Multifamily 104 $ 605,424,514 38.7% $ 845,531,500 72.3% $ 69,123,251 1.41x 1985
Retail 94 407,146,225 26.0% 566,465,000 72.8% 48,395,506 1.38 1991
Hotel 32 183,582,241 11.7% 311,650,000 60.6% 26,497,856 1.64 1993
Office 25 181,447,416 11.6% 284,135,000 65.9% 22,146,802 1.48 1988
Industrial 9 77,885,522 5.0% 112,495,000 69.8% 9,055,536 1.39 1987
Manufactured Housing 19 63,629,615 4.1% 91,880,000 71.0% 7,622,202 1.42 1977
Mixed Use / Other 8 24,854,004 1.6% 38,360,000 66.6% 3,221,510 1.46 1978
Self Storage 10 20,283,895 1.3% 33,275,000 64.3% 2,930,869 1.60 1990
=====================================================================================================
Total/Weighted Average: 301 $ 1,564,253,433 100.0% $ 2,283,791,500 69.9% $ 188,993,532 1.44 x 1988
=====================================================================================================
</TABLE>
(1) Assumes a Cut-off Date of June 1, 1998.
(2) Underwriting NCF reflects Net Cash Flow after U/W Replacement Reserves,
U/W LC's and TI's and FF&E.
(3) Year Built/Renovated reflects the later of the Year Built or the Year
Renovated.
<PAGE>
Mortgage Loan Seller
<TABLE>
<CAPTION>
Aggregate Percentage Aggregate
Number Cut-off Date of Initial Appraised
Mortgage Loan Seller of Loans Balance (1) Pool Balance Value
- - -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
GE Capital Access 117 $ 818,436,244 52.3% $ 1,202,602,000
Column 184 745,817,189 47.7% 1,081,189,500
---------------------------------------------------------
Total or Weighted Average: 301 $1,564,253,433 100.0% $ 2,283,791,500
=========================================================
<CAPTION>
Weighted Weighted
Average Weighted Average
Cut-off Date Aggregate Average Year Built/
Mortgage Loan Seller LTV Ratio U/W NCF (2) U/W DSCR Renovated(3)
- - --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
GE Capital Access 69.6% $ 98,257,669 1.46 1986
Column 70.3% 90,735,863 1.42 1989
----------------------------------------------------------
Total or Weighted Average: 69.9% $188,993,532 1.44 x 1988
==========================================================
</TABLE>
(1) Assumes a Cut-off Date of June 1, 1998.
(2) Underwriting NCF reflects Net Cash Flow after U/W Replacement Reserves
and U/W LC's and TI's.
(3) Year Built/Renovated reflects the later of the Year Built or the Year
Renovated.
<PAGE>
Prepayment Option
<TABLE>
<CAPTION>
Aggregate Percentage of Aggregate
Number Cut-off Date Initial Appraised
Prepayment Option of Loans Balance (1) Pool Balance Value
- - --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Defeasance 199 $ 1,117,533,641 71.4% $ 1,658,814,500
Yield Maintenance 85 354,840,653 22.7% 500,425,000
Prepayment Penalty 7 65,213,372 4.2% 90,727,000
Defeasance / Yield Maintenance 10 26,665,766 1.7% 33,825,000
------------------------------------------------------------
Total/Weighted Average: 301 $ 1,564,253,433 100.0% $ 2,283,791,500
============================================================
<CAPTION>
Weighted Weighted
Average Weighted Average
Cut-off Date Aggregate Average Year Built/
Prepayment Option LTV Ratio U/W NCF (2) U/W DSCR Renovated (3)
- - -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Defeasance 68.9% $ 137,710,584 1.47 x 1988
Yield Maintenance 72.1% 41,505,431 1.38 1988
Prepayment Penalty 72.3% 6,960,887 1.35 1983
Defeasance / Yield Maintenance 78.9% 2,816,630 1.32 1992
-----------------------------------------------------------
Total/Weighted Average: 69.9% $ 188,993,532 1.44 x 1988
===========================================================
</TABLE>
(1) Assumes a Cut-off Date of June 1, 1998.
(2) Underwriting NCF reflects Net Cash Flow after U/W Replacement Reserves
and U/W LC's and TI's.
(3) Year Built/Renovated reflects the later of the Year Built or the Year
Renovated.
<PAGE>
Prepayment Provision as of the Cut-off Date
<TABLE>
<CAPTION>
Weighted Weighted Weighted
Average Average Average
Remaining Remaining Remaining Weighted
Range of Aggregate Percentage Lockout Lockout Lockout Plus Average
Remaining Terms to Number of Cut-off Date of Initial Period Plus YM Premium Period Maturity
Stated Maturity(years)(1) Loans Balance(2) Pool Balance (years) Period(years) (years) (years)
- - -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
4.0 - 4.9 3 $ 9,403,984 0.6% 2.7 3.3 4.5 4.8
6.0 - 6.9 6 26,619,337 1.7% 3.5 5.8 5.8 6.6
8.0 - 8.9 1 9,347,127 0.6% 3.8 8.3 8.3 8.8
9.0 - 9.9 208 1,112,069,587 71.1% 7.7 8.9 9.3 9.8
10.0 - 10.9 34 140,753,387 9.0% 8.2 9.6 9.6 10.0
11.0 - 11.9 2 8,040,409 0.5% 3.0 11.6 11.6 11.9
14.0 - 14.9 24 135,637,080 8.7% 12.0 14.2 14.2 14.8
15.0 - 15.9 5 20,282,000 1.3% 10.4 14.7 14.7 15.0
17.0 - 17.9 2 6,459,866 0.4% 17.3 17.3 17.3 17.8
19.0 - 19.9 5 24,735,227 1.6% 15.2 19.2 19.2 19.9
20.0 - 20.9 4 13,725,000 0.9% 14.8 19.7 19.7 20.0
24.0 - 24.9 7 57,180,429 3.7% 20.7 24.5 24.5 24.8
---------------------------------------------------------------------------------------------
Total/Weighted Average: 301 $1,564,253,433 100.0% 8.7 10.3 10.6 11.0
=============================================================================================
</TABLE>
(1) In the case of the Anticipated Repayment Date loans, the Anticipated
Repayment Date is assumed to be the maturity date for the purposes of
the table.
(2) Assumes a Cut-off Date of June 1, 1998.
<PAGE>
Mortgage Pool Prepayment Profile
<TABLE>
<CAPTION>
Prepayment Provision % of Pool % of Pool % of Pool % of Pool % of Pool
As of Cut-off Date Jun-98 Jun-99 Jun-00 Jun-01 Jun-02
- - --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Lock out 96.2% 96.2% 95.5% 85.8% 80.8%
Yield Maint.Premium 0.0% 0.0% 0.7% 10.0% 15.0%
1% to 5% Prepayment Premium 3.8% 3.8% 3.8% 4.2% 4.2%
Other 0.0% 0.0% 0.0% 0.0% 0.0%
Open Period 0.0% 0.0% 0.0% 0.0% 0.0%
--------------------------------------------------------------
Total: 100.0% 100.0% 100.0% 100.0% 100.0%
==============================================================
Outstanding
Balance (mm): $1,564.3 $1,546.6 $1,527.8 $1,507.1 $1,484.9
Number of Loans: 301 301 301 301 301
<CAPTION>
Mortgage Pool Prepayment Profile
Prepayment Provision % of Pool % of Pool % of Pool % of Pool % of Pool
As of Cut-off Date Jun-03 Jun-04 Jun-05 Jun-06 Jun-07
- - --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Lock out 77.2% 75.5% 75.6% 74.5% 74.3%
Yield Maint.Premium 18.6% 20.3% 20.5% 21.6% 20.7%
1% to 5% Prepayment Premium 3.8% 3.8% 3.9% 0.0% 0.0%
Other 0.0% 0.0% 0.0% 0.0% 0.0%
Open Period 0.4% 0.4% 0.0% 3.9% 5.1%
--------------------------------------------------------------
Total: 100.0% 100.0% 100.0% 100.0% 100.0%
==============================================================
Outstanding
Balance (mm): $1,452.2 $1,426.9 $1,375.4 $1,346.3 $1,306.7
Number of Loans: 298 298 292 292 291
<CAPTION>
Mortgage Pool Prepayment Profile
Prepayment Provision % of Pool % of Pool % of Pool % of Pool % of Pool
As of Cut-off Date Jun-08 Jun-09 Jun-10 Jun-11 Jun-12
- - --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Lock out 67.6% 67.5% 67.1% 67.0% 62.1%
Yield Maint.Premium 32.0% 32.1% 31.4% 31.6% 31.8%
1% to 5% Prepayment Premium 0.0% 0.0% 0.0% 0.0% 0.0%
Other 0.0% 0.0% 0.0% 0.0% 0.0%
Open Period 0.5% 0.4% 1.5% 1.5% 6.1%
--------------------------------------------------------------
Total: 100.0% 100.0% 100.0% 100.0% 100.0%
==============================================================
Outstanding
Balance (mm): $210.1 $201.7 $186.1 $176.7 $166.6
Number of Loans: 50 49 47 47 47
<CAPTION>
Mortgage Pool Prepayment Profile
Prepayment Provision % of Pool % of Pool % of Pool % of Pool % of Pool
As of Cut-off Date Jun-13 Jun-14 Jun-15 Jun-16 Jun-17
- - ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Lock out 72.8% 72.6% 72.3% 72.0% 67.9%
Yield Maint.Premium 27.2% 27.4% 27.7% 28.0% 28.0%
1% to 5% Prepayment Premium 0.0% 0.0% 0.0% 0.0% 0.0%
Other 0.0% 0.0% 0.0% 0.0% 0.0%
Open Period 0.0% 0.0% 0.0% 0.0% 4.1%
------------------------------------------------------------
Total: 100.0% 100.0% 100.0% 100.0% 100.0%
============================================================
Outstanding
Balance (mm): $58.1 $53.0 $47.6 $41.7 $36.1
Number of Loans: 18 18 18 16 16
</TABLE>
<PAGE>
EXHIBIT B
FORM OF TRUSTEE REPORT
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
[LOGO OF NORWEST BANKS] For Additional Information,
Norwest Bank Minnesota, N.A. please contact
Corporate Trust Services Leslie Gaskill
3 New York Plaza, 15th Floor (212) 509-1630
New York, NY 10004 Reports Available on the
World Wide Web
@www.securitieslink.net/cmbs
Payment Date: 7/10/98
Record Date: 6/30/98
DLJ Commercial Mortgage Corp.
Commercial Mortgage Pass-Through Certificates
Series 1998-CG1
TRUSTEE REPORT
Table of Contents
STATEMENT SECTIONS PAGE(s)
------------------ -------
Certificate Distribution Detail 2
Certificate Factor Detail 3
Reconciliation Detail 4
Other Required Information 5
Ratings Detail 6
Current Mortgage Loan and Property Stratification Tables 7-9
Mortgage Loan Detail 10
Principal Prepayment Detail 11
Historical Detail 12
Delinquency Loan Detail 13
Specially Serviced Loan Detail 14-15
Modified Loan Detail 16
Liquidated Loan Detail 17
Underwriter Servicer
Donaldson, Lufkin & Jenrette GE Capital Loan Services Inc.
Securities Corporation 363 North Sam Houston Parkway, East
277 Park Avenue Suite 1200
New York, NY 10172 Houston, TX 77060
Contact: N. Dante LaRocca Contact: Stephanie M. Petosa
Phone Number: (212) 892-3000 Phone Number: (281) 405-7064
Special Servicer
Midland Loan Services, Inc.
210 West 10th Street
Kansas City, MO 64105
Contact: Brad Hauger
Phone Number: (816) 435-5175
This report has been compiled from information provided to Norwest by various
third parties, which may include the Servicer, Master Servicer, Special Servicer
and others. Norwest has not independently confirmed the accuracy of information
received from these third parties and assumes no duty to do so. Norwest
expressly disclaims any responsibility for the accuracy or completeness of
information furnished by third parties.
Copyright 1997, Norwest Bank Minnesota, N.A. Page 1 of 17
<PAGE>
[LOGO OF NORWEST BANKS] For Additional Information,
Norwest Bank Minnesota, N.A. please contact
Corporate Trust Services Leslie Gaskill
3 New York Plaza, 15th Floor (212) 509-1630
New York, NY 10004 Reports Available on the
World Wide Web
@www.securitieslink.net/cmbs
Payment Date: 7/10/98
Record Date: 6/30/98
DLJ Commercial Mortgage Corp.
Commercial Mortgage Pass-Through Certificates
Series 1998-CG1
Certificate Distribution Detail
Pass-Through Original Beginning Principal Interest
Class CUSIP Rate Balance Balance Distribution Distribution
- - ----- ----- ------------ -------- --------- ------------ ------------
A-1A 0.000000% 0.00 0.00 0.00 0.00
A-1B 0.000000% 0.00 0.00 0.00 0.00
A-2 0.000000% 0.00 0.00 0.00 0.00
A-3 0.000000% 0.00 0.00 0.00 0.00
B-1 0.000000% 0.00 0.00 0.00 0.00
B-2 0.000000% 0.00 0.00 0.00 0.00
B-3 0.000000% 0.00 0.00 0.00 0.00
B-4 0.000000% 0.00 0.00 0.00 0.00
B-5 0.000000% 0.00 0.00 0.00 0.00
B-6 0.000000% 0.00 0.00 0.00 0.00
C 0.000000% 0.00 0.00 0.00 0.00
D-1 0.000000% 0.00 0.00 0.00 0.00
D-2 0.000000% 0.00 0.00 0.00 0.00
R-I 0.000000% 0.00 0.00 0.00 0.00
R-II 0.000000% 0.00 0.00 0.00 0.00
R-III 0.000000% 0.00 0.00 0.00 0.00
- - -----------------------------------------------------------------------------
Totals 0.00 0.00 0.00 0.00
=============================================================================
Realized Loss/ Current
Prepayment Additional Trust Total Ending Subordination
Class Penalties Fund Expenses Distribution Balance Level(1)
- - ----- ---------- ---------------- ------------ ------- -------------
A-1A 0.00 0.00 0.00 0.00 0.00%
A-1B 0.00 0.00 0.00 0.00 0.00%
A-2 0.00 0.00 0.00 0.00 0.00%
A-3 0.00 0.00 0.00 0.00 0.00%
B-1 0.00 0.00 0.00 0.00 0.00%
B-2 0.00 0.00 0.00 0.00 0.00%
B-3 0.00 0.00 0.00 0.00 0.00%
B-4 0.00 0.00 0.00 0.00 0.00%
B-5 0.00 0.00 0.00 0.00 0.00%
B-6 0.00 0.00 0.00 0.00 0.00%
C 0.00 0.00 0.00 0.00 0.00%
D-1 0.00 0.00 0.00 0.00 0.00%
D-2 0.00 0.00 0.00 0.00 0.00%
R-I 0.00 0.00 0.00 0.00 0.00%
R-II 0.00 0.00 0.00 0.00 0.00%
R-III 0.00 0.00 0.00 0.00 0.00%
- - -----------------------------------------------------------------------------
Totals 0.00 0.00 0.00
=============================================================================
<TABLE>
<CAPTION>
Pass- Original Beginning Ending
Through Notional Notional Interest Prepayment Total Notional
Class CUSIP Rate Amount Amount Distribution Penalties Distribution Amount
- - ----- ----- --------- -------- --------- ------------ ---------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
S 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
</TABLE>
(1) Calculated by taking (A) the sum of the ending certificate balance of all
classes less (B) the sum of (i) the ending certificate balance of the designated
class and (ii) the ending certificate balance of all classes which are not
subordinate to the designated class and dividing the result by (A).
Copyright 1997, Norwest Bank Minnesota, N.A. Page 2 of 17
<PAGE>
[LOGO OF NORWEST BANKS] For Additional Information,
Norwest Bank Minnesota, N.A. please contact
Corporate Trust Services Leslie Gaskill
3 New York Plaza, 15th Floor (212) 509-1630
New York, NY 10004 Reports Available on the
World Wide Web
@www.securitieslink.net/cmbs
Payment Date: 7/10/98
Record Date: 6/30/98
DLJ Commercial Mortgage Corp.
Commercial Mortgage Pass-Through Certificates
Series 1998-CG1
Certificate Factor Detail
<TABLE>
<CAPTION>
Realized Loss/
Additional
Beginning Principal Interest Prepayment Trust Fund Ending
Class CUSIP Balance Distribution Distribution Penalties Expenses Balance
- - ----- ------ ---------- ------------ ------------ --------- -------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
A-1A 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
A-1B 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
A-2 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
A-3 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
B-1 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
B-2 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
B-3 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
B-4 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
B-5 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
B-6 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
C 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
D-1 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
D-2 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
R-I 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
R-II 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
R-III 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
</TABLE>
Beginning Ending
Notional Interest Prepayment Notional
Class CUSIP Amount Distribution Penalties Amount
- - ------- ----- ---------- ------------ ---------- ----------
S 0.00000000 0.00000000 0.00000000 0.00000000
Copyright 1997, Norwest Bank Minnesota, N.A. Page 3 of 17
<PAGE>
[LOGO OF NORWEST BANKS] For Additional Information,
Norwest Bank Minnesota, N.A. please contact
Corporate Trust Services Leslie Gaskill
3 New York Plaza, 15th Floor (212) 509-1630
New York, NY 10004 Reports Available on the
World Wide Web
@www.securitieslink.net/cmbs
Payment Date: 7/10/98
Record Date: 6/30/98
DLJ Commercial Mortgage Corp.
Commercial Mortgage Pass-Through Certificates
Series 1998-CG1
Reconciliation Detail
Advance Summary Servicing Fee Breakdowns
P & I Advances Outstanding 0.00 Current Period Accrued Servicing Fees 0.00
Servicing Advances Outstanding 0.00 Less Delinquent Servicing Fees 0.00
Reimbursement for Interest on Less Reductions to Servicing Fees 0.00
Advances paid from general Plus Servicing Fees for Delinquent
collections 0.00 Payments Received 0.00
Plus Adjustments for Prior Servicing
Calculation 0.00
Total Servicing Fees Collected 0.00
Certificate Interest Reconciliation
<TABLE>
<CAPTION>
Accrued Net Aggregate Distributable Distributable Additional Remaining Unpaid
Certificate Prepayment Certificate Certificate Interest Trust Fund Interest Distributable
Class Interest Interest Shortfall Interest Adjustment Expenses Distribution Certificate Interest
- - ----- ----------- ------------------ ------------- -------------------- ---------- ------------ --------------------
<S> <C> <C> <C> <C> <C> <C> <C>
S 0.00 0.00 0.00 0.00 0.00 0.00 0.00
A-1A 0.00 0.00 0.00 0.00 0.00 0.00 0.00
A-1B 0.00 0.00 0.00 0.00 0.00 0.00 0.00
A-2 0.00 0.00 0.00 0.00 0.00 0.00 0.00
A-3 0.00 0.00 0.00 0.00 0.00 0.00 0.00
B-1 0.00 0.00 0.00 0.00 0.00 0.00 0.00
B-2 0.00 0.00 0.00 0.00 0.00 0.00 0.00
B-3 0.00 0.00 0.00 0.00 0.00 0.00 0.00
B-4 0.00 0.00 0.00 0.00 0.00 0.00 0.00
B-5 0.00 0.00 0.00 0.00 0.00 0.00 0.00
B-6 0.00 0.00 0.00 0.00 0.00 0.00 0.00
C 0.00 0.00 0.00 0.00 0.00 0.00 0.00
- - -----------------------------------------------------------------------------------------------------------------------------------
Total 0.00 0.00 0.00 0.00 0.00 0.00 0.00
===================================================================================================================================
</TABLE>
Copyright 1997, Norwest Bank Minnesota, N.A. Page 4 of 17
<PAGE>
[LOGO OF NORWEST BANKS] For Additional Information,
Norwest Bank Minnesota, N.A. please contact
Corporate Trust Services Leslie Gaskill
3 New York Plaza, 15th Floor (212) 509-1630
New York, NY 10004 Reports Available on the
World Wide Web
@www.securitieslink.net/cmbs
Payment Date: 7/10/98
Record Date: 6/30/98
DLJ Commercial Mortgage Corp.
Commercial Mortgage Pass-Through Certificates
Series 1998-CG1
Other Required Information
Available Distribution Amount 0.00
Aggregate Number of Outstanding Loans 0
Aggregate Unpaid Principal Balance of Loans 0.00
Aggregate Amount of Servicing Fee 0.00
Aggregate Amount of Special Servicing Fee 0.00
Aggregate Amount of Trustee Fee 0.00
Aggregate Trust Fund Expenses 0.00
Specially Serviced Loans not Delinquent
Number of Outstanding Loans 0
Aggregate Unpaid Principal Balance 0.00
Appraisal Reduction Amount
Appraisal Date Appraisal
Loan Reduction Reduction
Number Amount Effected
- - ------ --------- --------------
- - -----------------------------------------------------
Total
=====================================================
Copyright 1997, Norwest Bank Minnesota, N.A. Page 5 of 17
<PAGE>
[LOGO OF NORWEST BANKS] For Additional Information,
Norwest Bank Minnesota, N.A. please contact
Corporate Trust Services Leslie Gaskill
3 New York Plaza, 15th Floor (212) 509-1630
New York, NY 10004 Reports Available on the
World Wide Web
@www.securitieslink.net/cmbs
Payment Date: 7/10/98
Record Date: 6/30/98
DLJ Commercial Mortgage Corp.
Commercial Mortgage Pass-Through Certificates
Series 1998-CG1
Ratings Detail
Original Ratings Current Ratings (1)
----------------------------- ------------------------------
Class CUSIP DCR Fitch Moody's S & P DCR Fitch Moody's S & P
- - ----- ----- --- ----- ------- ----- --- ----- ------- -----
S
A-1A
A-1B
A-2
A-3
B-1
B-2
B-3
B-4
B-5
B-6
C
D-1
D-2
NR - Designates that the class was not rated by the above agency at the
time of original issuance.
X - Designates that the above rating agency did not rate any classes
in this transaction at the time of original issuance.
N/A - Data not available this period.
1) For any class not rated at the time of original issuance by any particular
rating agency, no request has been made subsequent to issuance to obtain rating
information, if any, from such rating agency. The current ratings were obtained
directly from the applicable rating agency within 30 days of the payment date
listed above. The ratings may have changed since they were obtained. Because the
ratings may have changed, you may want to obtain current ratings directly from
the rating agencies.
Duff & Phelps Credit Rating Co. Fitch IBCA, Inc.
55 East Monroe Street One State Street Plaza
Chicago, Illinois 60603 New York, New York 10004
(312) 368-3100 (212) 908-0500
Moody's Investors Service Standard & Poor's Rating Services
99 Church Street 26 Broadway
New York, New York 10007 New York, New York 10004
(212) 553-0300 (212) 208-8000
Copyright 1997, Norwest Bank Minnesota, N. A. Page 6 of 17
<PAGE>
[LOGO OF NORWEST BANKS] For Additional Information,
Norwest Bank Minnesota, N.A. please contact
Corporate Trust Services Leslie Gaskill
3 New York Plaza, 15th Floor (212) 509-1630
New York, NY 10004 Reports Available on the
World Wide Web
@www.securitieslink.net/cmbs
Payment Date: 7/10/98
Record Date: 6/30/98
DLJ Commercial Mortgage Corp.
Commercial Mortgage Pass-Through Certificates
Series 1998-CG1
Current Mortgage Loan and Property Stratification Tables
Scheduled Balance
% of
# of Scheduled Agg. WAM Weighted
Scheduled Balance Loans Balance Bal. (2) WAC Avg DSCR(1)
- - ----------------- ------ --------- ----- ---- --- -----------
- - --------------------------------------------------------------------------
Totals
==========================================================================
State (3)
% of
# of Scheduled Agg. WAM Weighted
State Props. Balance Bal. (2) WAC Avg DSCR(1)
- - ----- ------ ---------- ---- ---- --- -----------
- - --------------------------------------------------------------------------------
Totals
================================================================================
See footnotes on last page of this section.
Copyright 1997, Norwest Bank Minnesota, N.A. Page 7 of 17
<PAGE>
[LOGO OF NORWEST BANKS] For Additional Information,
Norwest Bank Minnesota, N.A. please contact
Corporate Trust Services Leslie Gaskill
3 New York Plaza, 15th Floor (212) 509-1630
New York, NY 10004 Reports Available on the
World Wide Web
@www.securitieslink.net/cmbs
Payment Date: 7/10/98
Record Date: 6/30/98
DLJ Commercial Mortgage Corp.
Commercial Mortgage Pass-Through Certificates
Series 1998-CG1
Current Mortgage Loan and Property Stratification Tables
<TABLE>
<CAPTION>
Debt Service Coverage Ratio
% of
Debt Service # of Scheduled Agg. WAM Weighted
Coverage Ratio Loans Balance Bal. (2) WAC Avg DSCR (1)
-------------- ----- --------- ----- --- --- ------------
<S> <C> <C> <C> <C> <C> <C>
- - ------------------------------------------------------------------------------------------------------------
Totals
============================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Property Type (3)
% of
# of Scheduled Agg. WAM Weighted
Property Type Loans Balance Bal. (2) WAC Avg DSCR (1)
------------- ----- --------- ----- --- --- ------------
<S> <C> <C> <C> <C> <C> <C>
- - -------------------------------------------------------------------------------------------------------------
Totals
=============================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Note Rate
% of
# of Scheduled Agg. WAM Weighted
Note Rate Loans Balance Bal. (2) WAC Avg DSCR (1)
--------- ----- --------- ----- --- --- ------------
<S> <C> <C> <C> <C> <C> <C>
- - -------------------------------------------------------------------------------------------------------------
Totals
=============================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Seasoning
% of
# of Scheduled Agg. WAM Weighted
Seasoning Loans Balance Bal. (2) WAC Avg DSCR (1)
--------- ----- --------- ---- --- --- ------------
<S> <C> <C> <C> <C> <C> <C>
- - -----------------------------------------------------------------------------------------------------------
Totals
===========================================================================================================
</TABLE>
See footnotes on last page of this section.
Copyright 1997, Norwest Bank Minnesota, N.A. Page 8 of 17
<PAGE>
[LOGO OF NORWEST BANKS] For Additional Information,
Norwest Bank Minnesota, N.A. please contact
Corporate Trust Services Leslie Gaskill
3 New York Plaza, 15th Floor (212) 509-1630
New York, NY 10004 Reports Available on the
World Wide Web
@www.securitieslink.net/cmbs
Payment Date: 7/10/98
Record Date: 6/30/98
DLJ Commercial Mortgage Corp.
Commercial Mortgage Pass-Through Certificates
Series 1998-CG1
Current Mortgage Loan and Property Stratification Tables
<TABLE>
<CAPTION>
Anticipated Remaining Term (ARD and Balloon Loans)
% of
Anticipated Remaining # of Scheduled Agg. WAM Weighted
Term (2) Loans Balance Bal. (2) WAC Avg DSCR (1)
- - -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- - -----------------------------------------------------------------------------------------------------------------
Totals
=================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Remaining Stated Term (Fully Amortizing Loans)
% of
Remaining Stated # of Scheduled Agg. WAM Weighted
Term Loans Balance Bal. (2) WAC Avg DSCR (1)
- - -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- - -----------------------------------------------------------------------------------------------------------------
Totals
=================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Remaining Amortization Term (ARD and Balloon Loans)
% of
Remaining Amortization # of Scheduled Agg. WAM Weighted
Term Loans Balance Bal. (2) WAC Avg DSCR (1)
- - -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- - -------------------------------------------------------------------------------------------------------------------
Totals
===================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Age of Most Recent NOI
% of
Age of Most # of Scheduled Agg. WAM Weighted
Recent NOI Loans Balance Bal. (2) WAC Avg DSCR (1)
- - -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- - -----------------------------------------------------------------------------------------------------------------
Totals
=================================================================================================================
</TABLE>
(1) Debt Service Coverage Ratios are calculated as described in the prospectus,
values are updated periodically as new NOI figures become available from
borrowers on an asset level. The Trustee makes no representations as to the
accuracy of the data provided by the borrower for this calculation.
(2) Anticipated Remaining Term and WAM are each calculated based upon the term
from the current month to the earlier of the Anticipated Repayment Date, if
applicable, and the maturity date
(3) Data in this table was calculated by allocating pro-rata the current loan
information to the properties based upon the Cut-off Date Balance of the
related mortgage loan as disclosed in the offering document.
Note: (i) "Scheduled Balance" has the meaning assigned thereto in the CSSA
Standard Information Package.
(ii) An ARD Loan constitutes a "Hyper-Amortization Loan" as defined in the
offering document.
Copyright 1997, Norwest Bank Minnesota, N.A. Page 9 of 17
<PAGE>
[LOGO OF NORWEST BANKS] For Additional Information,
Norwest Bank Minnesota, N.A. please contact
Corporate Trust Services Leslie Gaskill
3 New York Plaza, 15th Floor (212) 509-1630
New York, NY 10004 Reports Available on the
World Wide Web
@www.securitieslink.net/cmbs
Payment Date: 7/10/98
Record Date: 6/30/98
DLJ Commercial Mortgage Corp.
Commercial Mortgage Pass-Through Certificates
Series 1998-CG1
Mortgage Loan Detail
<TABLE>
<CAPTION>
Anticipated
Loan Property Interest Principal Gross Repayment Maturity
Number ODCR Type(1) City State Payment Payment Coupon Date Date
- - ------- ---- ------- ---- ----- -------- ----------- ------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- - -----------------------------------------------------------------------------------------------------------------------------------
Totals
===================================================================================================================================
<CAPTION>
Neg. Beginning Ending Paid Appraisal Appraisal Res. Mod.
Loan Amort Scheduled Scheduled Thru Reduction Reduction Strat. Code
Number (Y/N) Balance Balance Date Date Amount (2) (3)
- - ------- ------- ---------- --------- ------ ------------ ----------- -------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- - --------------------------------------------------------------------------------------------------------------------------
Totals
==========================================================================================================================
</TABLE>
(1) Property Type Code
----------------------
MF - Multi-Family OF - Office
RT - Retail MU - Mixed Use
HC - Health Care LO - Lodging
IN - Industrial SS - Self Storage
WH - Warehouse OT - Other
MH - Mobile Home Park
(2) Resolution Strategy Code
----------------------------
1 - Modification 7 - REO
2 - Foreclosure 8 - Resolved
3 - Bankruptcy 9 - Pending Return
4 - Extension to Master Servicer
5 - Note Sale 10 - Deed In Lieu Of
6 - DPO Foreclosure
(3) Modification Code
---------------------
1 - Maturity Date Extension
2 - Amortization Change
3 - Principal Write-Off
4 - Combination
Copyright 1997, Norwest Bank Minnesota, N.A. Page 10 of 17
<PAGE>
[LOGO OF NORWEST BANKS] For Additional Information,
Norwest Bank Minnesota, N.A. please contact
Corporate Trust Services Leslie Gaskill
3 New York Plaza, 15th Floor (212) 509-1630
New York, NY 10004 Reports Available on the
World Wide Web
@www.securitieslink.net/cmbs
Payment Date: 7/10/98
Record Date: 6/30/98
DLJ Commercial Mortgage Corp.
Commercial Mortgage Pass-Through Certificates
Series 1998-CG1
Principal Prepayment Detail
<TABLE>
<CAPTION>
Principal Prepayment Amount Prepayment Penalties
Offering Document ------------------------------------- -----------------------------------------------
Loan Number Cross-Reference Payoff Amount Curtailment Amount Prepayment Premium Yield Maintenance Premium
- - ----------- ------------------ ------------- ------------------ ------------------ -------------------------
<S> <C> <C> <C> <C> <C>
- - -----------------------------------------------------------------------------------------------------------------------------
Totals
=============================================================================================================================
</TABLE>
Copyright 1997, Norwest Bank Minnesota, N.A. Page 11 of 17
<PAGE>
[LOGO OF NORWEST BANKS] For Additional Information,
Norwest Bank Minnesota, N.A. please contact
Corporate Trust Services Leslie Gaskill
3 New York Plaza, 15th Floor (212) 509-1630
New York, NY 10004 Reports Available on the
World Wide Web
@www.securitieslink.net/cmbs
Payment Date: 7/10/98
Record Date: 6/30/98
DLJ Commercial Mortgage Corp.
Commercial Mortgage Pass-Through Certificates
Series 1998-CG1
Historical Detail
<TABLE>
<CAPTION>
Delinquencies
-------------------------------------------------------------------------------------------------------------
Distribution 30-59 Days 60-89 Days 90 Days or More Foreclosure REO Modifications
Date # Balance # Balance # Balance # Balance # Balance # Balance
- - ------------ ------------- ------------- --------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
<CAPTION>
Prepayments Rate and Maturities
------------------------------------------- -----------------------------------------------
Distribution Curtailments Payoff Next Weighted Avg.
Date # Amount # Amount Coupon Remit WAM
- - ------------ ---------------- ------------------ ----------------------------- --------
<S> <C> <C> <C> <C>
</TABLE>
Note: Foreclosure and REO Totals are excluded from the delinquencies aging
categories.
Copyright 1997, Norwest Bank Minnesota, N.A. Page 12 of 17
<PAGE>
[LOGO OF NORWEST BANKS] For Additional Information,
Norwest Bank Minnesota, N.A. please contact
Corporate Trust Services Leslie Gaskill
3 New York Plaza, 15th Floor (212) 509-1630
New York, NY 10004 Reports Available on the
World Wide Web
@www.securitieslink.net/cmbs
Payment Date: 7/10/98
Record Date: 6/30/98
DLJ Commercial Mortgage Corp.
Commercial Mortgage Pass-Through Certificates
Series 1998-CG1
Delinquency Loan Detail
<TABLE>
<CAPTION>
Offering # of Current Outstanding Status of Resolution
Document Months Paid Through P & I P & I Mortgage Strategy Servicing Foreclosure
Loan Number Cross-Reference Delinq. Date Advances Advances** Loan (1) Code (2) Transfer Date Date
- - ----------- --------------- ------- ------------- -------- ------------ ---------- -------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- - -----------------------------------------------------------------------------------------------------------------------------------
Totals
===================================================================================================================================
<CAPTION>
Current Outstanding
Servicing Servicing REO
Loan Number Advances Advances Bankruptcy Date Date
- - ----------- ----------- ------------ ----------------- -------
<S> <C> <C> <C> <C>
- - -----------------------------------------------------------------------
Totals
=======================================================================
</TABLE>
(1) Status of Mortgage Loan
---------------------------
A - Payment Not Received 2 - Two Months Delinquent
But Still in Grace Period 3 - Three Or More Months Delinquent
B - Late Payment But Less 4 - Assumed Scheduled Payment
Than 1 Month Delinquent (Performing Matured Balloon)
0 - Current 7 - Foreclosure
1 - One Month Delinquent 9 - REO
(2) Resolution Strategy Code
----------------------------
1 - Modification 7 - REO
2 - Foreclosure 8 - Resolved
3 - Bankruptcy 9 - Pending Return
4 - Extension to Master Servicer
5 - Note Sale 10 - Deed In Lieu Of
6 - DPO Foreclosure
** Outstanding P & I Advances include the current period advance
Copyright 1997, Norwest Bank Minnesota, N.A. Page 13 of 17
<PAGE>
[LOGO OF NORWEST BANKS] For Additional Information,
Norwest Bank Minnesota, N.A. please contact
Corporate Trust Services Leslie Gaskill
3 New York Plaza, 15th Floor (212) 509-1630
New York, NY 10004 Reports Available on the
World Wide Web
@www.securitieslink.net/cmbs
Payment Date: 7/10/98
Record Date: 6/30/98
DLJ Commercial Mortgage Corp.
Commercial Mortgage Pass-Through Certificates
Series 1998-CG1
Specially Serviced Loan Detail - Part 1
<TABLE>
<CAPTION>
Offering Servicing Resolution
Distribution Loan Document Transfer Strategy Scheduled Property
Date Number Cross-Reference Date Code(1) Balance Type(2) State
- - ------------- ------ --------------- ---------- ----------- ---------- -------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
<CAPTION>
Net Remaining
Distribution Interest Actual Operating NOI Note Maturity Amortization
Date Rate Balance Income Date DSCR Date Date Term
- - ------------ -------- -------- ---------- ----- ---- ------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
(1) Resolution Strategy Code
----------------------------
1 - Modification 7 - REO
2 - Foreclosure 8 - Resolved
3 - Bankruptcy 9 - Pending Return
4 - Extension to Master Servicer
5 - Note Sale 10 - Deed In Lieu Of
6 - DPO Foreclosure
(2) Property Type Code
----------------------
MF - Multi-Family OF - Office
RT - Retail MU - Mixed Use
HC - Health Care LO - Lodging
IN - Industrial SS - Self Storage
WH - Warehouse OT - Other
MH - Mobile Home Park
Copyright 1997, Norwest Bank Minnesota, N. A. Page 14 of 17
<PAGE>
[LOGO OF NORWEST BANKS] For Additional Information,
Norwest Bank Minnesota, N.A. please contact
Corporate Trust Services Leslie Gaskill
3 New York Plaza, 15th Floor (212) 509-1630
New York, NY 10004 Reports Available on the
World Wide Web
@www.securitieslink.net/cmbs
Payment Date: 7/10/98
Record Date: 6/30/98
DLJ Commercial Mortgage Corp.
Commercial Mortgage Pass-Through Certificates
Series 1998-CG1
Specially Serviced Loan Detail - Part 2
<TABLE>
<CAPTION>
Offering Resolution Site
Distribution Loan Document Strategy Inspection Phase 1 Appraisal Appraisal Other REO
Date Number Cross-Reference Code (1) Date Date Date Value Property Revenue Comment
- - ------------ ------ --------------- ---------- ---------- ------- --------- --------- ---------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
(1) Resolution Strategy Code
----------------------------
1 - Modification 7 - REO
2 - Foreclosure 8 - Resolved
3 - Bankruptcy 9 - Pending Return
4 - Extension to Master Servicer
5 - Note Sale 10 - Deed In Lieu Of
6 - DPO Foreclosure
Copyright 1997, Norwest Bank Minnesota, N.A. Page 15 of 17
<PAGE>
[LOGO OF NORWEST BANKS] For Additional Information,
Norwest Bank Minnesota, N.A. please contact
Corporate Trust Services Leslie Gaskill
3 New York Plaza, 15th Floor (212) 509-1630
New York, NY 10004 Reports Available on the
World Wide Web
@www.securitieslink.net/cmbs
Payment Date: 7/10/98
Record Date: 6/30/98
DLJ Commercial Mortgage Corp.
Commercial Mortgage Pass-Through Certificates
Series 1998-CG1
Modified Loan Detail
Offering
Loan Document Pre-Modification Modification Modification
Number Cross-Reference Balance Date Description
- - ------ --------------- ---------------- ------------ -------------
- - ------------------------------------------------------------------------------
Total
==============================================================================
Copyright 1997, Norwest Bank Minnesota, N.A. Page 16 of 17
<PAGE>
[LOGO OF NORWEST BANKS] For Additional Information,
Norwest Bank Minnesota, N.A. please contact
Corporate Trust Services Leslie Gaskill
3 New York Plaza, 15th Floor (212) 509-1630
New York, NY 10004 Reports Available on the
World Wide Web
@www.securitieslink.net/cmbs
Payment Date: 7/10/98
Record Date: 6/30/98
DLJ Commercial Mortgage Corp.
Commercial Mortgage Pass-Through Certificates
Series 1998-CG1
Liquidated Loan Detail
<TABLE>
<CAPTION>
Gross
Final Proceeds
Recovery Offering as a % of
Loan Determination Document Appraisal Appraisal Actual Gross Actual
Number Date Cross-Reference Date Value Balance Proceeds Balance
- - ------ ------------- --------------- --------- --------- ------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
- - ------------------------------------------------------------------------------------------------------------------------------
Current Total
- - ------------------------------------------------------------------------------------------------------------------------------
Cumulative Total
==============================================================================================================================
<CAPTION>
Aggregate Net Net Proceeds Repurchased
Loan Liquidation Liquidation as a % of Realized by Seller
Number Expenses* Proceeds Actual Balance Loss (Y/N)
------ ----------- ----------- -------------- -------- -----------
<S> <C> <C> <C> <C> <C>
- - -----------------------------------------------------------------------------------
Current Total
- - -----------------------------------------------------------------------------------
Cumulative Total
===================================================================================
</TABLE>
* Aggregate liquidation expenses also include outstanding P & I advances and
unpaid fees (servicing, trustee, etc.).
Copyright 1997, Norwest Bank Minnesota, N.A. Page 17 of 17
<PAGE>
EXHIBIT C
DECREMENT TABLES FOR CLASS A, CLASS B-1,
CLASS B-2 AND CLASS B-3 CERTIFICATES
Percentage of Initial Class Principal Balance Outstanding For:
Class A-1A Certificates
<TABLE>
<CAPTION>
Distribution Date 0.00% CPR 25.00% CPR 50.00% CPR 75.00% CPR 100.00% CPR
--------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Closing Date.......................... 100% 100% 100% 100% 100%
June 10, 1999......................... % % % % %
June 10, 2000......................... % % % % %
June 10, 2001......................... % % % % %
June 10, 2002......................... % % % % %
June 10, 2003......................... % % % % %
June 10, 2004......................... % % % % %
June 10, 2005......................... % % % % %
June 10, 2006......................... % % % % %
June 10, 2007 and thereafter.......... % % % % %
Wtd. Avg. Life (yrs):.................
</TABLE>
Class A-1B Certificates
<TABLE>
<CAPTION>
Distribution Date 0.00% CPR 25.00% CPR 50.00% CPR 75.00% CPR 100.00% CPR
--------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Closing Date.......................... 100% 100% 100% 100% 100%
June 10, 1999......................... % % % % %
June 10, 2000......................... % % % % %
June 10, 2001......................... % % % % %
June 10, 2002......................... % % % % %
June 10, 2003......................... % % % % %
June 10, 2004......................... % % % % %
June 10, 2005......................... % % % % %
June 10, 2006......................... % % % % %
June 10, 2007......................... % % % % %
June 10, 2008 and thereafter.......... % % % % %
Wtd. Avg. Life (yrs):.................
</TABLE>
<PAGE>
Percentage of Initial Class Principal Balance Outstanding For:
Class A-1C Certificates
<TABLE>
<CAPTION>
Distribution Date 0.00% CPR 25.00% CPR 50.00% CPR 75.00% CPR 100.00% CPR
--------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Closing Date.......................... 100% 100% 100% 100% 100%
June 10, 1999......................... % % % % %
June 10, 2000......................... % % % % %
June 10, 2001......................... % % % % %
June 10, 2002......................... % % % % %
June 10, 2003......................... % % % % %
June 10, 2004......................... % % % % %
June 10, 2005......................... % % % % %
June 10, 2006......................... % % % % %
June 10, 2007 and thereafter.......... % % % % %
Wtd. Avg. Life (yrs):.................
</TABLE>
Class A-2 Certificates
<TABLE>
<CAPTION>
Distribution Date 0.00% CPR 25.00% CPR 50.00% CPR 75.00% CPR 100.00% CPR
--------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Closing Date......................... 100% 100% 100% 100% 100%
June 10, 1999........................ % % % % %
June 10, 2000........................ % % % % %
June 10, 2001........................ % % % % %
June 10, 2002........................ % % % % %
June 10, 2003........................ % % % % %
June 10, 2004........................ % % % % %
June 10, 2005........................ % % % % %
June 10, 2006........................ % % % % %
June 10, 2007........................ % % % % %
June 10, 2008 and thereafter......... % % % % %
Wtd. Avg. Life (yrs):................
</TABLE>
<PAGE>
Percentage of Initial Class Principal Balance Outstanding For:
Class A-3 Certificates
<TABLE>
<CAPTION>
Distribution Date 0.00% CPR 25.00% CPR 50.00% CPR 75.00% CPR 100.00% CPR
--------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Closing Date......................... 100% 100% 100% 100% 100%
June 10, 1999........................ % % % % %
June 10, 2000........................ % % % % %
June 10, 2001........................ % % % % %
June 10, 2002........................ % % % % %
June 10, 2003........................ % % % % %
June 10, 2004........................ % % % % %
June 10, 2005........................ % % % % %
June 10, 2006........................ % % % % %
June 10, 2007........................ % % % % %
June 10, 2008 and thereafter......... % % % % %
Wtd. Avg. Life (yrs):................
</TABLE>
Class A-4 Certificates
<TABLE>
<CAPTION>
Distribution Date 0.00% CPR 25.00% CPR 50.00% CPR 75.00% CPR 100.00% CPR
--------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Closing Date.......................... 100% 100% 100% 100% 100%
June 10, 1999......................... % % % % %
June 10, 2000......................... % % % % %
June 10, 2001......................... % % % % %
June 10, 2002......................... % % % % %
June 10, 2003......................... % % % % %
June 10, 2004......................... % % % % %
June 10, 2005......................... % % % % %
June 10, 2006......................... % % % % %
June 10, 2007 and thereafter.......... % % % % %
Wtd. Avg. Life (yrs):.................
</TABLE>
<PAGE>
Percentage of Initial Class Principal Balance Outstanding For:
Class B-1 Certificates
<TABLE>
<CAPTION>
Distribution Date 0.00% CPR 25.00% CPR 50.00% CPR 75.00% CPR 100.00% CPR
--------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Closing Date.......................... 100% 100% 100% 100% 100%
June 10, 1999......................... % % % % %
June 10, 2000......................... % % % % %
June 10, 2001......................... % % % % %
June 10, 2002......................... % % % % %
June 10, 2003......................... % % % % %
June 10, 2004......................... % % % % %
June 10, 2005......................... % % % % %
June 10, 2006......................... % % % % %
June 10, 2007......................... % % % % %
June 10, 2008......................... % % % % %
June 10, 2009......................... % % % % %
June 10, 2010 and thereafter.......... % % % % %
Wtd. Avg. Life (yrs):.................
</TABLE>
Class B-2 Certificates
<TABLE>
<CAPTION>
Distribution Date 0.00% CPR 25.00% CPR 50.00% CPR 75.00% CPR 100.00% CPR
--------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Closing Date.......................... 100% 100% 100% 100% 100%
June 10, 1999......................... % % % % %
June 10, 2000......................... % % % % %
June 10, 2001......................... % % % % %
June 10, 2002......................... % % % % %
June 10, 2003......................... % % % % %
June 10, 2004......................... % % % % %
June 10, 2005......................... % % % % %
June 10, 2006......................... % % % % %
June 10, 2007......................... % % % % %
June 10, 2008......................... % % % % %
June 10, 2009......................... % % % % %
June 10, 2010 and thereafter.......... % % % % %
Wtd. Avg. Life (yrs):.................
</TABLE>
<PAGE>
Percentage of Initial Class Principal Balance Outstanding For:
Class B-3 Certificates
<TABLE>
<CAPTION>
Distribution Date 0.00% CPR 25.00% CPR 50.00% CPR 75.00% CPR 100.00% CPR
--------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Closing Date.......................... 100% 100% 100% 100% 100%
June 10, 1999........................ % % % % %
June 10, 2000........................ % % % % %
June 10, 2001........................ % % % % %
June 10, 2002........................ % % % % %
June 10, 2003........................ % % % % %
June 10, 2004........................ % % % % %
June 10, 2005........................ % % % % %
June 10, 2006........................ % % % % %
June 10, 2007 and thereafter......... % % % % %
Wtd. Avg. Life (yrs):.................
</TABLE>
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
EXHIBIT D
PRICE/YIELD TABLES FOR THE CLASS S CERTIFICATES
Corporate Bond Equivalent(CBE) Yield of the Class S Certificates at Various CPRs
% Initial Pass-Through Rate
Initial Class Notional Amount $
<TABLE>
<CAPTION>
Price (32nds)* 0.00% CPR 25.00% CPR 50.00% CPR 75.00% CPR 100.00% CPR
-------------- --------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
CBE CBE CBE CBE CBE
Yield % Yield % Yield % Yield % Yield %
------- ------- ------- ------- -------
</TABLE>
- - --------------------
* Exclusive of accrued interest.
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
DLJ COMMERCIAL MORTGAGE CORP.
Mortgage Pass-Through Certificates
The mortgage pass-through certificates offered hereby (the "Offered
Certificates") and by the supplements hereto (each, a "Prospectus Supplement")
will be offered from time to time in series (each, a "Series"). The Offered
Certificates of any Series, together with any other mortgage pass-through
certificates of such Series, are collectively referred to herein as the
"Certificates". Each Series will consist of one or more classes (each, a
"Class") of Certificates.
Each Series will represent in the aggregate the entire beneficial ownership
interest in a trust fund (with respect to any Series, the "Trust Fund") to be
formed by DLJ Commercial Mortgage Corp. (the "Depositor") and including a
segregated pool (a "Mortgage Asset Pool") of various types of multifamily and
commercial mortgage loans ("Mortgage Loans"), mortgage-backed securities ("MBS")
that evidence interests in, or that are secured by pledges of, one or more of
various types of multifamily or commercial mortgage loans, or a combination of
Mortgage Loans and MBS (collectively, "Mortgage Assets"). The Mortgage Loans in
(and the mortgage loans underlying the MBS in) any Trust Fund will be secured by
first or junior liens on, or security interests in, fee and/or leasehold estates
in one or more of the following types of real property: (i) residential
properties consisting of multiple rental or cooperatively-owned dwelling units
and mobile home parks; (ii) commercial properties consisting of office
buildings, retail facilities related to the sales of products and goods and
facilities related to providing entertainment, recreation or personal services,
hotels and motels, casinos, health care-related facilities, recreational vehicle
parks, warehouse facilities, mini-warehouse facilities, self-storage facilities,
industrial facilities, parking lots and restaurants; and (iii) mixed use
properties (that is, any combination of the foregoing) and unimproved land.
Retail properties, multifamily properties consisting of multiple rental or
cooperatively owned dwellings, office properties and hotel and motel properties
will represent security for a material concentration of the Mortgage Loans (and
the mortgage loans underlying the MBS) constituting the Trust Fund for any
Series, based on principal balance at the time such Series is issued. If so
specified in the related Prospectus Supplement, the Trust Fund for a Series may
also include letters of credit, surety bonds, insurance policies, guarantees,
reserve funds, guaranteed investment contracts, interest rate exchange
agreements, interest rate cap or floor agreements, or other agreements designed
to reduce the effects of interest rate fluctuations on the Mortgage Assets. See
"Description of the Trust Funds", "Description of the Certificates" and
"Description of Credit Support".
The yield on each Class of a Series will be affected by, among other
things, the rate of payment of principal (including prepayments) on the Mortgage
Assets in the related Trust Fund and the timing of receipt of such payments as
described herein and in the related Prospectus Supplement. See "Yield and
Maturity Considerations". A Trust Fund may be subject to early termination under
the circumstances described herein and in the related Prospectus Supplement. See
"Description of the Certificates--Termination; Retirement of the Certificates".
(cover continued on next page)
--------
PROCEEDS OF THE ASSETS IN THE RELATED TRUST FUND WILL BE THE SOLE SOURCE OF
PAYMENTS ON THE OFFERED CERTIFICATES. THE OFFERED CERTIFICATES WILL NOT
REPRESENT AN INTEREST IN OR OBLIGATION OF THE DEPOSITOR, DONALDSON, LUFKIN &
JENRETTE SECURITIES CORPORATION, THE MASTER SERVICER, THE SPECIAL SERVICER, THE
TRUSTEE, THE REMIC ADMINISTRATOR OR ANY OF THEIR RESPECTIVE AFFILIATES,
OFFICERS, DIRECTORS, TRUSTEES, BENEFICIARIES, SHAREHOLDERS, EMPLOYEES OR AGENTS.
NEITHER THE OFFERED CERTIFICATES NOR THE MORTGAGE ASSETS WILL BE GUARANTEED OR
INSURED BY THE DEPOSITOR OR ANY OF ITS AFFILIATES OR, UNLESS OTHERWISE SPECIFIED
IN THE RELATED PROSPECTUS SUPPLEMENT, BY ANY GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
--------
Prospective investors should review the information appearing on page 16
herein under the caption "Risk Factors" and such information as may be set forth
under the caption "Risk Factors" in the related Prospectus Supplement before
purchasing any Offered Certificate.
The Offered Certificates of any Series may be offered through one or more
different methods, including offerings through underwriters, as described herein
under "Method of Distribution" and in the related Prospectus Supplement.
There will be no secondary market for the Offered Certificates of any
Series prior to the offering thereof. There can be no assurance that a secondary
market for any Offered Certificates will develop or, if one does develop, that
it will continue. Unless otherwise provided in the related Prospectus
Supplement, the Certificates will not be listed on any securities exchange.
Retain this Prospectus for future reference. This Prospectus may not be
used to consummate sales of the Offered Certificates of any Series unless
accompanied by the Prospectus Supplement for such Series.
-----------
The date of this Prospectus is June 15, 1998.
<PAGE>
(cover continued from prior page)
As described in the related Prospectus Supplement, the Certificates of each
Series, including the Offered Certificates of such Series, may consist of one or
more Classes of Certificate that: (i) provide for the accrual of interest
thereon based on a fixed, variable or adjustable interest rate; (ii) are senior
or subordinate to one or more other Classes of Certificates in entitlement to
certain distributions on the Certificates; (iii) are entitled to distributions
of principal, with disproportionate, nominal or no distributions of interest;
(iv) are entitled to distributions of interest, with disproportionate, nominal
or no distributions of principal; (v) provide for distributions of interest
thereon or principal thereof that commence only following the occurrence of
certain events, such as the retirement of one or more other Classes of
Certificates of such Series; (vi) provide for distributions of principal thereof
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 Mortgage Assets in the related Trust Fund; or
(vii) provide for distributions of principal thereof to be made, subject to
available funds, based on a specified principal payment schedule or other
methodology. Distributions in respect of the Certificates of each Series will be
made on a monthly, quarterly, semi-annual, annual or other periodic basis as
specified in the related Prospectus Supplement. See "Description of the
Certificates".
If so provided in the related Prospectus Supplement, one or more elections
may be made to treat the related Trust Fund or a designated portion thereof as a
"real estate mortgage investment conduit" (each, a "REMIC") for federal income
tax purposes. If applicable, the Prospectus Supplement for the Offered
Certificates of any Series will specify which Class or Classes of Certificates
of such Series will be considered to be regular interests in the related REMIC
and which Class of Certificates of such Series or other interests will be
designated as the residual interest in the related REMIC. See "Certain Federal
Income Tax Consequences".
An Index of Principal Definitions is included at the end of this Prospectus
specifying the location of definitions of important or frequently used defined
terms.
PROSPECTUS SUPPLEMENT
As more particularly described herein, the Prospectus Supplement relating
to the Offered Certificates of each Series will, among other things, set forth,
as and to the extent appropriate: (i) a description of the Class or Classes of
such Offered Certificates, including the payment provisions with respect to each
such Class, the aggregate principal amount, if any, of each such Class, the rate
at which interest accrues from time to time, if at all, with respect to each
such Class or the method of determining such rate, and whether interest with
respect to each such Class will accrue from time to time on its aggregate
principal amount, if any, or on a specified notional amount, if at all; (ii)
information with respect to any other Classes of Certificates of the same
Series; (iii) the respective dates on which distributions are to be made; (iv)
information as to the assets, including the Mortgage Assets, constituting the
related Trust Fund (all such assets, with respect to any Series, the "Trust
Assets"); (v) the circumstances, if any, under which the related Trust Fund may
be subject to early termination; (vi) additional information with respect to the
method of distribution of such Offered Certificates; (vii) whether one or more
REMIC elections will be made and, if so, the designation of the "regular
interests" and "residual interests" in each REMIC to be created and the identity
of the REMIC Administrator (as defined herein) responsible for the various
tax-related duties in respect of each REMIC to be created; (viii) information
concerning the Trustee (as defined herein) of the related Trust Fund; (ix) if
the related Trust Fund includes Mortgage Loans, information concerning the
Master Servicer and any Special Servicer (each as defined herein) of such
Mortgage Loans and the circumstances under which all or a portion, as specified,
of the servicing of a Mortgage Loan would transfer from the Master Servicer to
the Special Servicer; (x) information as to the nature and extent of
subordination of any Class of Certificates of such Series, including a Class of
Offered Certificates; and (xi) whether such Offered Certificates will be
initially issued in definitive or book-entry form.
-2-
<PAGE>
AVAILABLE INFORMATION
The Depositor has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (of which this Prospectus forms a part)
under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the Offered Certificates. This Prospectus and the Prospectus
Supplement relating to the Offered Certificates of each Series will contain
summaries of the material terms of the documents referred to herein and therein,
but do not contain all of the information set forth in the Registration
Statement pursuant to the rules and regulations of the Commission. For further
information, reference is made to such Registration Statement and the exhibits
thereto. Such Registration Statement and exhibits can be inspected and copied at
prescribed rates at the public reference facilities maintained by the Commission
at its Public Reference Section, 450 Fifth Street, N.W., Washington, D.C. 20549,
and at its Regional Offices located as follows: Chicago Regional Office, 500
West Madison, 14th Floor, Chicago, Illinois 60661; New York Regional Office,
Seven World Trade Center, New York, New York 10048. Copies of such material can
also be obtained from the Public Reference Section of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates and electronically
through the Commission's Electronic Data Gathering, Analysis and Retrieval
system at the Commission's Web site (http://www.sec.gov).
No dealer, salesman, or other person has been authorized to give any
information, or to make any representations, other than those contained in this
Prospectus or any related Prospectus Supplement, and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Depositor or any other person. Neither the delivery of this Prospectus or
any related Prospectus Supplement nor any sale made hereunder or thereunder
shall under any circumstances create an implication that there has been no
change in the information herein since the date hereof or therein since the date
thereof. This Prospectus and any related Prospectus Supplement are not an offer
to sell or a solicitation of an offer to buy any security in any jurisdiction in
which it is unlawful to make such offer or solicitation.
The Master Servicer, the Trustee or another specified person will cause to
be provided to registered holders of the Offered Certificates of each Series
periodic unaudited reports concerning the related Trust Fund. If beneficial
interests in a Class or Series of Offered Certificates are being held and
transferred in book-entry format through the facilities of The Depository Trust
Company ("DTC") as described herein, then unless otherwise provided in the
related Prospectus Supplement, such reports will be sent on behalf of the
related Trust Fund to a nominee of DTC as the registered holder of the Offered
Certificates. Conveyance of notices and other communications by DTC to its
participating organizations, and directly or indirectly through such
participating organizations to the beneficial owners of the applicable Offered
Certificates, will be governed by arrangements among them, subject to any
statutory or regulatory requirements as may be in effect from time to time. See
"Description of the Certificates--Reports to Certificateholders" and
"--Book-Entry Registration and Definitive Certificates".
The Depositor will file or cause to be filed with the Commission such
periodic reports with respect to each Trust Fund as are required under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations of the Commission thereunder. The Depositor intends to make a
written request to the staff of the Commission that the staff either (i) issue
an order pursuant to Section 12(h) of the Exchange Act exempting the Depositor
from certain reporting requirements under the Exchange Act with respect to each
Trust Fund or (ii) state that the staff will not recommend that the Commission
take enforcement action if the Depositor fulfills its reporting obligations as
described in its written request. If such request is granted, the Depositor will
file or cause to be filed with the Commission as to each Trust Fund the periodic
unaudited reports to holders of the Offered Certificates referenced in the
preceding paragraph; however, because of the nature of the Trust Funds, it is
unlikely that any significant additional information will be filed. In addition,
because of the limited number of Certificateholders expected for each Series,
the Depositor anticipates that a significant portion of such reporting
requirements will be permanently suspended following the first fiscal year for
the related Trust Fund.
-3-
<PAGE>
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
There are incorporated herein by reference all documents and reports filed
or caused to be filed by the Depositor with respect to a Trust Fund pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination
of an offering of Offered Certificates evidencing interests therein. The
Depositor will provide or cause to be provided without charge to each person to
whom this Prospectus is delivered in connection with the offering of one or more
Classes of Offered Certificates, upon written or oral request of such person, a
copy of any or all documents or reports incorporated herein by reference, in
each case to the extent such documents or reports relate to one or more of such
Classes of such Offered Certificates, other than the exhibits to such documents
(unless such exhibits are specifically incorporated by reference in such
documents). Such requests to the Depositor should be directed in writing to the
Depositor at 277 Park Avenue, 9th Floor, New York, New York 10172, Attention: N.
Dante LaRocca, or by telephone at (212) 892-3000.
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TABLE OF CONTENTS
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SUMMARY OF PROSPECTUS.............................................................................................8
RISK FACTORS.....................................................................................................16
Limited Liquidity of Offered Certificates...............................................................16
Limited Assets..........................................................................................16
Credit Support Limitations..............................................................................17
Effect of Prepayments on Average Life of Certificates...................................................17
Effect of Prepayments on Yield of Certificates..........................................................18
Limited Nature of Ratings...............................................................................19
Certain Factors Affecting Delinquency, Foreclosure and Loss of the Mortgage Loans.......................19
Inclusion of Delinquent and Nonperforming Mortgage Loans in a Mortgage Asset Pool.......................26
Certain Federal Tax Considerations Regarding REMIC Residual Certificates................................26
Book-Entry Registration.................................................................................26
Potential Conflicts of Interest.........................................................................27
Termination.............................................................................................27
DESCRIPTION OF THE TRUST FUNDS...................................................................................27
General.................................................................................................27
Mortgage Loans..........................................................................................28
MBS.....................................................................................................35
Undelivered Mortgage Assets.............................................................................36
Certificate Accounts....................................................................................36
Credit Support..........................................................................................36
Cash Flow Agreements....................................................................................36
YIELD AND MATURITY CONSIDERATIONS................................................................................37
General.................................................................................................37
Pass-Through Rate.......................................................................................37
Payment Delays..........................................................................................37
Certain Shortfalls in Collections of Interest...........................................................37
Yield and Prepayment Considerations.....................................................................38
Weighted Average Life and Maturity......................................................................39
Other Factors Affecting Yield, Weighted Average Life and Maturity.......................................40
THE DEPOSITOR....................................................................................................41
DESCRIPTION OF THE CERTIFICATES..................................................................................42
General.................................................................................................42
Distributions...........................................................................................42
Distributions of Interest on the Certificates...........................................................43
Distributions of Principal of the Certificates..........................................................44
Distributions on the Certificates in Respect of Prepayment Premiums or in Respect of
Equity Participations...................................................................................45
Allocation of Losses and Shortfalls.....................................................................45
Advances in Respect of Delinquencies....................................................................45
Reports to Certificateholders...........................................................................46
Voting Rights...........................................................................................46
Termination.............................................................................................46
Book-Entry Registration and Definitive Certificates.....................................................47
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DESCRIPTION OF THE POOLING AGREEMENTS............................................................................48
General.................................................................................................48
Assignment of Mortgage Assets...........................................................................49
Representations and Warranties with respect to Mortgage Assets; Repurchases and Other Remedies..........50
Collection and Other Servicing Procedures with respect to Mortgage Loans................................51
Sub-Servicers...........................................................................................53
Collection of Payments on MBS...........................................................................53
Certificate Account.....................................................................................53
Modifications, Waivers and Amendments of Mortgage Loans.................................................56
Realization Upon Defaulted Mortgage Loans...............................................................57
Hazard Insurance Policies...............................................................................58
Due-on-Sale and Due-on-Encumbrance Provisions...........................................................59
Servicing Compensation and Payment of Expenses..........................................................59
Evidence as to Compliance...............................................................................60
Certain Matters Regarding the Master Servicer, the Special Servicer, the REMIC Administrator,
the Manager and the Depositor...........................................................................60
Events of Default.......................................................................................61
Rights Upon Event of Default............................................................................62
Amendment...............................................................................................63
List of Certificateholders..............................................................................63
The Trustee.............................................................................................64
Duties of the Trustee...................................................................................64
Certain Matters Regarding the Trustee...................................................................64
Resignation and Removal of the Trustee..................................................................64
DESCRIPTION OF CREDIT SUPPORT....................................................................................65
General.................................................................................................65
Subordinate Certificates................................................................................65
Insurance or Guarantees with Respect to Mortgage Loans..................................................66
Letter of Credit........................................................................................66
Certificate Insurance and Surety Bonds..................................................................66
Reserve Funds...........................................................................................66
Credit Support with Respect to MBS......................................................................67
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS..........................................................................67
General.................................................................................................67
Types of Mortgage Instruments...........................................................................67
Leases and Rents........................................................................................68
Personalty..............................................................................................68
Foreclosure.............................................................................................68
Bankruptcy Laws.........................................................................................71
Environmental Considerations............................................................................72
Due-on-Sale and Due-on-Encumbrance Provisions...........................................................74
Junior Liens; Rights of Holders of Senior Liens.........................................................74
Subordinate Financing...................................................................................74
Default Interest and Limitations on Prepayments.........................................................75
Applicability of Usury Laws.............................................................................75
Certain Laws and Regulations............................................................................75
Americans with Disabilities Act.........................................................................75
Soldiers' and Sailors' Civil Relief Act of 1940.........................................................76
Forfeitures in Drug and RICO Proceedings................................................................76
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES..........................................................................76
General.................................................................................................76
REMICs..................................................................................................77
Grantor Trust Funds.....................................................................................92
STATE AND OTHER TAX CONSEQUENCES.................................................................................99
ERISA CONSIDERATIONS............................................................................................100
General................................................................................................100
Plan Asset Regulations.................................................................................100
Prohibited Transaction Exemptions......................................................................101
Insurance Company General Accounts.....................................................................101
Consultation With Counsel..............................................................................102
Tax Exempt Investors...................................................................................102
LEGAL INVESTMENT................................................................................................102
USE OF PROCEEDS.................................................................................................104
METHOD OF DISTRIBUTION..........................................................................................104
LEGAL MATTERS...................................................................................................105
FINANCIAL INFORMATION...........................................................................................105
RATING..........................................................................................................106
INDEX OF PRINCIPAL DEFINITIONS..................................................................................107
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SUMMARY OF PROSPECTUS
The following summary of certain pertinent information is qualified in its
entirety by reference to the more detailed information appearing elsewhere in
this Prospectus and by reference to the information with respect to each Series
of Certificates contained in the Prospectus Supplement to be prepared and
delivered in connection with the offering of Offered Certificates of such
Series. An Index of Principal Definitions is included at the end of this
Prospectus.
Securities Offered................... Mortgage pass-through certificates.
Depositor............................ DLJ Commercial Mortgage Corp., a
Delaware corporation. See "The
Depositor".
Trustee.............................. The trustee (the "Trustee") for each
Series will be named in the related
Prospectus Supplement. See "Description
of the Pooling Agreements--The Trustee".
Master Servicer...................... If a Trust Fund includes Mortgage Loans,
then the master servicer (the "Master
Servicer") for the corresponding Series
will be named in the related Prospectus
Supplement. See "Description of the
Pooling Agreements--Certain Matters
Regarding the Master Servicer, the
Special Servicer, the REMIC
Administrator, the Manager and the
Depositor".
Special Servicer..................... If a Trust Fund includes Mortgage Loans,
then the special servicer (the "Special
Servicer") for the corresponding Series
will be named, or the circumstances
under which a Special Servicer may be
appointed will be described, in the
related Prospectus Supplement. See
"Description of the Pooling Agreements--
Collection and Other Servicing
Procedures with respect to Mortgage
Loans".
MBS Administrator.................... If a Trust Fund includes MBS, then the
entity responsible for administering
such MBS (the "MBS Administrator") will
be named in the related Prospectus
Supplement. If an entity other than the
Trustee or the Master Servicer is the
MBS Administrator, such entity will be
referred to herein as the "Manager".
REMIC Administrator.................. The person (the "REMIC Administrator")
responsible for the various tax-related
administration duties for a Series as to
which one or more REMIC elections have
been made will be named in the related
Prospectus Supplement. See "Certain
Federal Income Tax
Consequences--REMICs--Reporting and
Other Administrative Matters".
The Mortgage Assets.................. The Mortgage Assets will be the primary
assets of any Trust Fund. The Mortgage
Assets with respect to each Series will,
in general, consist of a pool of
mortgage loans ("Mortgage Loans")
secured by first or junior liens on, or
security interests in, fee and/or
leasehold estates in one or more of the
following types of real property: (i)
residential properties consisting of
multiple rental or cooperatively- owned
dwelling units in high-rise, mid-rise or
garden apartment
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buildings or other residential
structures, and mobile home parks; (ii)
commercial properties consisting of
office buildings, retail shopping
facilities (such as shopping centers,
malls, automotive sales centers and
individual stores, shops and businesses
related to sales of products and goods),
facilities related to providing
entertainment, recreation or personal
services (such as movie theaters,
fitness centers, bowling alleys, salons,
dry cleaners and automotive service
centers), hotels and motels, casinos,
health care-related facilities (such as
hospitals, skilled nursing facilities,
nursing homes, congregate care
facilities and senior housing),
recreational vehicle parks, warehouse
facilities, warehouses, warehouse
facilities, self-storage facilities,
industrial facilities, parking lots and
restaurants; and (iii) mixed use
properties (that is, any combination of
the foregoing) and unimproved land. The
Mortgage Loans will not be guaranteed or
insured by the Depositor or any of its
affiliates or, unless otherwise provided
in the related Prospectus Supplement, by
any governmental agency or
instrumentality or by any other person.
If so specified in the related
Prospectus Supplement, some Mortgage
Loans may be delinquent or nonperforming
as of the date the related Trust Fund is
formed.
As and to the extent described in the
related Prospectus Supplement, a
Mortgage Loan (i) may provide for no
accrual of interest or for accrual of
interest thereon at an interest rate (a
"Mortgage Rate") that is fixed over its
term or that adjusts from time to time,
or that may be converted at the
borrower's election from an adjustable
to a fixed Mortgage Rate, or from a
fixed to an adjustable Mortgage Rate,
(ii) may provide for level payments to
maturity or for payments that adjust
from time to time to accommodate changes
in the Mortgage Rate or to reflect the
occurrence of certain events, and may
permit negative amortization, (iii) may
be fully amortizing or may be partially
amortizing or nonamortizing, with a
balloon payment due on its stated
maturity date, (iv) may prohibit over
its term or for a certain period
prepayments and/or require payment of a
premium or a yield maintenance payment
in connection with certain prepayments
and (v) may provide for payments of
principal, interest or both, on due
dates that occur monthly, quarterly,
semi-annually or at such other interval
as is specified in the related
Prospectus Supplement. Each Mortgage
Loan will have had an original term to
maturity of not more than approximately
40 years. No Mortgage Loan will have
been originated by the Depositor. See
"Description of the Trust
Funds--Mortgage Loans".
If any Mortgage Loan, or group of
related Mortgage Loans (by reason of
cross-collateralization, common borrower
or affiliation of borrowers),
constitutes a material concentration of
credit risk, financial statements or
other financial information with respect
to the related Mortgaged Property or
Mortgaged Properties will be included in
the related Prospectus Supplement. See
"Description of the Trust
Funds--Mortgage Loans--Mortgage Loan
Information in Prospectus Supplements".
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If and to the extent specified in the
related Prospectus Supplement, the
Mortgage Assets with respect to a Series
may also include, or consist of,
mortgage participations, mortgage
pass-through certificates,
collateralized mortgage obligations
and/or other mortgage-backed securities
(collectively, "MBS"), that evidence an
interest in, or are secured by a pledge
of, one or more mortgage loans that
conform to the descriptions of the
Mortgage Loans contained herein and
which may or may not be issued, insured
or guaranteed by the United States or an
agency or instrumentality thereof. See
"Description of the Trust Funds--MBS".
Unless otherwise specified in the
related Prospectus Supplement, the
aggregate outstanding principal balance
of a Mortgage Asset Pool as of the date
it is formed (the "Cut-off Date") will
equal or exceed the aggregate
outstanding principal balance of the
related Series as of the date the
Certificates of such Series are
initially issued (the "Closing Date").
In the event that the Mortgage Assets
initially delivered do not have an
aggregate outstanding principal balance
as of the related Cut-off Date at least
equal to the aggregate outstanding
principal balance of the related Series
as of the related Closing Date, the
Depositor may deposit cash or Permitted
Investments (as defined herein) on an
interim basis with the Trustee for such
Series on the related Closing Date in
lieu of delivering Mortgage Assets (the
"Undelivered Mortgage Assets") with an
aggregate outstanding principal balance
as of the related Cut-off Date equal to
the shortfall amount. During the 90-day
period following the related Closing
Date, the Depositor will be entitled to
obtain a release of such cash or
Permitted Investments to the extent that
the Depositor delivers a corresponding
amount of the Undelivered Mortgage
Assets. If and to the extent that all
the Undelivered Mortgage Assets are not
delivered during the 90-day period
following the related Closing Date, such
cash or, following liquidation, such
Permitted Investments will be applied to
pay a corresponding amount of principal
of the Certificates of such Series to
the extent set forth, and on the dates
specified, in the related Prospectus
Supplement.
The Certificates..................... Each Series will be issued in one or
more Classes of Certificates pursuant to
a pooling and servicing agreement or
other agreement specified in the related
Prospectus Supplement (in any case, a
"Pooling Agreement") and will represent
in the aggregate the entire beneficial
ownership interest in the related Trust
Fund.
As described in the related Prospectus
Supplement, the Certificates of each
Series, including the Offered
Certificates of such Series, may consist
of one or more Classes of Certificates
that, among other things: (i) are senior
(collectively, "Senior Certificates") or
subordinate (collectively, "Subordinate
Certificates") to one or more other
Classes of Certificates of the same
Series in entitlement to certain
distributions on the Certificates; (ii)
are entitled to distributions of
principal, with disproportionate,
nominal or no
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distributions of interest (collectively,
"Stripped Principal Certificates");
(iii) are entitled to distributions of
interest, with disproportionate, nominal
or no distributions of principal
(collectively, "Stripped Interest
Certificates"); (iv) provide for
distributions of interest thereon or
principal thereof that commence only
after the occurrence of certain events,
such as the retirement of one or more
other Classes of Certificates of such
Series; (v) provide for distributions of
principal thereof 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 Mortgage Assets in the related Trust
Fund; (vi) provide for distributions of
principal thereof to be made, subject to
available funds, based on a specified
principal payment schedule or other
methodology; or (vii) provide for
distributions based on collections on
the Mortgage Assets in the related Trust
Fund attributable to prepayment
premiums, yield maintenance payments or
equity participations.
If so specified in the related
Prospectus Supplement, a Series may
include one or more "Controlled
Amortization Classes", which will
entitle the holders thereof to receive
principal distributions according to a
specified principal payment schedule.
Although prepayment risk cannot be
eliminated entirely for any Class of
Certificates, a Controlled Amortization
Class will generally provide a
relatively stable cash flow so long as
the actual rate of prepayment on the
Mortgage Loans in the related Trust Fund
remains relatively constant at the rate,
or within the range of rates, of
prepayment used to establish the
specific principal payment schedule for
such Certificates. Prepayment risk with
respect to a given Mortgage Asset Pool
does not disappear, however, and the
stability afforded to a Controlled
Amortization Class comes at the expense
of one or more other Classes of
Certificates of the same Series, any of
which other Classes of Certificates may
also be a Class of Offered Certificates.
See "Risk Factors--Effect of Prepayments
on Average Life of Certificates" and
"--Effect of Prepayments on Yield of
Certificates".
Each Certificate, other than certain
Stripped Interest Certificates and
certain REMIC Residual Certificates (as
defined herein), will have an initial
stated principal amount (a "Certificate
Principal Balance"); and each
Certificate, other than certain Stripped
Principal Certificates and certain REMIC
Residual Certificates, will accrue
interest on its Certificate Principal
Balance or, in the case of certain
Stripped Interest Certificates, on a
notional amount (a "Certificate Notional
Amount"), based on a fixed, variable or
adjustable interest rate (a
"Pass-Through Rate"). The related
Prospectus Supplement will specify the
aggregate Certificate Principal Balance,
aggregate Certificate Notional Amount
and/or Pass-Through Rate (or, in the
case of a variable or adjustable
Pass-Through Rate, the method for
determining such rate), as applicable,
for each Class of Offered Certificates.
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If so specified in the related
Prospectus Supplement, a Class of
Offered Certificates may have two or
more component parts, each having
characteristics that are otherwise
described herein as being attributable
to separate and distinct Classes.
The Certificates will not be guaranteed
or insured by the Depositor or any of
its affiliates, by any governmental
agency or instrumentality or by any
other person or entity, unless otherwise
provided in the related Prospectus
Supplement. See "Risk Factors--Limited
Assets".
Distributions of Interest on
the Certificates................... Interest on each Class of Offered
Certificates (other than certain Classes
of Stripped Principal Certificates and
certain Classes of REMIC Residual
Certificates) of each Series will accrue
at the applicable Pass-Through Rate on
the aggregate Certificate Principal
Balance or, in the case of certain
Classes of Stripped Interest
Certificates, the aggregate Certificate
Notional Amount thereof outstanding from
time to time and will be distributed to
Certificateholders as provided in the
related Prospectus Supplement (each of
the specified dates on which
distributions are to be made, a
"Distribution Date"). Distributions of
interest with respect to one or more
Classes of Certificates (collectively,
"Accrual Certificates") may not commence
until the occurrence of certain events,
such as the retirement of one or more
other Classes of Certificates, and
interest accrued with respect to a Class
of Accrual Certificates prior to the
occurrence of such an event will either
be added to the Certificate Principal
Balance thereof or otherwise deferred as
described in the related Prospectus
Supplement. Distributions of interest
with respect to one or more Classes of
Certificates may be reduced to the
extent of certain delinquencies, losses
and other contingencies described herein
and in the related Prospectus
Supplement. See "Risk Factors--Effect of
Prepayments on Average Life of
Certificates" and "--Effect of
Prepayments on Yield of Certificates",
"Yield and Maturity
Considerations--Certain Shortfalls in
Collections of Interest" and
"Description of the
Certificates--Distributions of Interest
on the Certificates".
Distributions of Principal of the
Certificates....................... Each Class of Certificates of each
Series (other than certain Classes of
Stripped Interest Certificates and
certain Classes of REMIC Residual
Certificates) will have an aggregate
Certificate Principal Balance. The
aggregate Certificate Principal Balance
of a Class of Certificates outstanding
from time to time will represent the
maximum amount that the holders thereof
are then entitled to receive in respect
of principal from future cash flow on
the assets in the related Trust Fund.
Unless otherwise specified in the
related Prospectus Supplement, the
initial aggregate Certificate Principal
Balance of all Classes of a Series will
not be greater than the outstanding
principal balance of the related
Mortgage Assets as of the related
Cut-off Date. As and to the extent
described in each Prospectus Supplement,
distributions of principal with respect
to
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the related Series will be made on each
Distribution Date to the holders of the
Class or Classes of Certificates of such
Series then entitled thereto until the
Certificate Principal Balances of such
Certificates have been reduced to zero.
Distributions of principal with respect
to one or more Classes of Certificates:
(i) may be made 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 Mortgage
Assets in the related Trust Fund; (ii)
may not commence until the occurrence of
certain events, such as the retirement
of one or more other Classes of
Certificates of the same Series; (iii)
may be made, subject to certain
limitations, based on a specified
principal payment schedule; or (iv) may
be contingent on the specified principal
payment schedule for another Class of
the same Series and the rate at which
payments and other collections of
principal on the Mortgage Assets in the
related Trust Fund are received. Unless
otherwise specified in the related
Prospectus Supplement, distributions of
principal of any Class of Offered
Certificates will be made on a pro rata
basis among all of the Certificates of
such Class. See "Description of the
Certificates--Distributions of Principal
of the Certificates".
Credit Support and Cash
Flow Agreements................... If so provided in the related Prospectus
Supplement, partial or full protection
against certain defaults and losses on
the Mortgage Assets in the related Trust
Fund may be provided to one or more
Classes of Certificates of the related
Series in the form of subordination of
one or more other Classes of
Certificates of such Series, which other
Classes may include one or more Classes
of Offered Certificates, or by one or
more other types of credit support,
which may include a letter of credit, a
surety bond, an insurance policy, a
guarantee, a reserve fund, or a
combination thereof (any such coverage
with respect to the Certificates of any
Series, "Credit Support"). If so
provided in the related Prospectus
Supplement, a Trust Fund may include:
(i) guaranteed investment contracts
pursuant to which moneys held in the
funds and accounts established for the
related Series will be invested at a
specified rate; or (ii) interest rate
exchange agreements, interest rate cap
or floor agreements, or other agreements
designed to reduce the effects of
interest rate fluctuations on the
Mortgage Assets or on one or more
Classes of Certificates (any such
agreement, in the case of clause (i) or
(ii), a "Cash Flow Agreement"). Certain
relevant information regarding any
Credit Support or Cash Flow Agreement
applicable to the Offered Certificates
of any Series will be set forth in the
related Prospectus Supplement. See "Risk
Factors--Credit Support Limitations",
"Description of the Trust Funds--Credit
Support" and "--Cash Flow Agreements"
and "Description of Credit Support".
Advances............................. If and to the extent provided in the
related Prospectus Supplement, if a
Trust Fund includes Mortgage Loans, the
Master Servicer, the Special Servicer,
the Trustee, any provider of Credit
Support and/or any other specified
person may be obligated to make, or
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have the option of making, certain
advances with respect to delinquent
scheduled payments of principal and/or
interest on such Mortgage Loans. Any
such advances made with respect to a
particular Mortgage Loan will be
reimbursable from subsequent recoveries
in respect of such Mortgage Loan and
otherwise to the extent described herein
and in the related Prospectus
Supplement. See "Description of the
Certificates--Advances in Respect of
Delinquencies". If and to the extent
provided in the Prospectus Supplement
for the Offered Certificates of any
Series, any entity making such advances
may be entitled to receive interest
thereon for a specified period during
which certain or all of such advances
are outstanding, payable from amounts in
the related Trust Fund. See "Description
of the Certificates--Advances in Respect
of Delinquencies". If a Trust Fund
includes MBS, any comparable advancing
obligation of a party to the related
Pooling Agreement, or of a party to the
related MBS Agreement, will be described
in the related Prospectus Supplement.
Optional Termination................. If so specified in the related
Prospectus Supplement, a Trust Fund may
be subject to optional early termination
through the repurchase of the Mortgage
Assets included in such Trust Fund by
the party or parties specified in such
Prospectus Supplement, under the
circumstances and in the manner set
forth therein, thereby resulting in
early retirement for the Certificates of
the related Series. If so provided in
the related Prospectus Supplement, upon
the reduction of the aggregate
Certificate Principal Balance of a
specified Class or Classes of
Certificates by a specified percentage
or amount or upon a specified date, a
party specified therein may be
authorized or required to solicit bids
for the purchase of all of the Mortgage
Assets of the related Trust Fund, or of
a sufficient portion of such Mortgage
Assets to retire such Class or Classes,
under the circumstances and in the
manner set forth therein. See
"Description of the
Certificates--Termination".
Certain Federal Income Tax
Consequences...................... The Certificates of each Series will
constitute or evidence ownership of
either (i) "regular interests" ("REMIC
Regular Certificates") and "residual
interests" ("REMIC Residual
Certificates") in a Trust Fund, or a
designated portion thereof, treated as a
REMIC under Sections 860A through 860G
of the Internal Revenue Code of 1986
(the "Code"), or (ii) interests
("Grantor Trust Certificates") in a
Trust Fund treated as a grantor trust
under applicable provisions of the Code.
Investors are advised to consult their
tax advisors concerning the specific tax
consequences to them of the purchase,
ownership and disposition of the Offered
Certificates and to review "Certain
Federal Income Tax Consequences" herein
and in the related Prospectus
Supplement.
ERISA Considerations................. Fiduciaries of employee benefit plans
and certain other retirement plans and
arrangements, including individual
retirement accounts, annuities, Keogh
plans, and collective investment funds
and separate accounts in which such
plans, accounts, annuities or
- - --------------------------------------------------------------------------------
-14-
<PAGE>
- - --------------------------------------------------------------------------------
arrangements are invested, that are
subject to the Employee Retirement
Income Security Act of 1974, as amended
("ERISA"), or Section 4975 of the Code,
should review with their legal advisors
whether the purchase or holding of
Offered Certificates could give rise to
a transaction that is prohibited or is
not otherwise permissible either under
ERISA or Section 4975 of the Code. See
"ERISA Considerations" herein and in the
related Prospectus Supplement.
Legal Investment..................... The Offered Certificates will constitute
"mortgage related securities" for
purposes of the Secondary Mortgage
Market Enhancement Act of 1984, as
amended ("SMMEA"), only if so specified
in the related Prospectus Supplement.
Investors whose investment authority is
subject to legal restrictions should
consult their legal advisors to
determine whether and to what extent the
Offered Certificates constitute legal
investments for them. See "Legal
Investment" herein and in the related
Prospectus Supplement.
Rating............................... At their respective dates of issuance,
each Class of Offered Certificates will
be rated not lower than investment grade
by one or more nationally recognized
statistical rating agencies (each, a
"Rating Agency"). See "Rating" herein
and in the related Prospectus
Supplement.
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RISK FACTORS
In considering an investment in the Offered Certificates of any Series,
investors should consider, among other things, the following risk factors and
any other factors set forth under the heading "Risk Factors" in the related
Prospectus Supplement. In general, to the extent that the factors discussed
below pertain to or are influenced by the characteristics or behavior of
Mortgage Loans included in a particular Trust Fund, they would similarly pertain
to and be influenced by the characteristics or behavior of the mortgage loans
underlying any MBS included in such Trust Fund.
Limited Liquidity of Offered Certificates
General. The Offered Certificates of any Series may have limited or no
liquidity. Accordingly, an investor may be forced to bear the risk of its
investment in any Offered Certificates for an indefinite period of time.
Furthermore, except to the extent described herein and in the related Prospectus
Supplement, Certificateholders will have no redemption rights, and the Offered
Certificates of each Series are subject to early retirement only under certain
specified circumstances described herein and in the related Prospectus
Supplement. See "Description of the Certificates--Termination".
Lack of a Secondary Market. There can be no assurance that a secondary
market for the Offered Certificates of any Series will develop or, if it does
develop, that it will provide holders with liquidity of investment or that it
will continue for as long as such Certificates remain outstanding. The
Prospectus Supplement for the Offered Certificates of any Series may indicate
that an underwriter specified therein intends to establish a secondary market in
such Offered Certificates; however, no underwriter will be obligated to do so.
Any such secondary market may provide less liquidity to investors than any
comparable market for securities that evidence interests in single-family
mortgage loans. Unless otherwise provided in the related Prospectus Supplement,
the Certificates will not be listed on any securities exchange.
Limited Nature of Ongoing Information. The primary source of ongoing
information regarding the Offered Certificates of any Series, including
information regarding the status of the related Mortgage Assets and any Credit
Support for such Certificates, will be the periodic reports to
Certificateholders to be delivered pursuant to the related Pooling Agreement as
described herein under the heading "Description of the Certificates--Reports to
Certificateholders". There can be no assurance that any additional ongoing
information regarding the Offered Certificates of any Series will be available
through any other source. The limited nature of such information in respect of
the Offered Certificates of any Series may adversely affect the liquidity
thereof, even if a secondary market for such Certificates does develop.
Sensitivity to Fluctuations in Prevailing Interest Rates. Insofar as a
secondary market does develop with respect to Offered Certificates of any Series
or with respect to any Class thereof, the market value of such Certificates will
be affected by several factors, including the perceived liquidity thereof, the
anticipated cash flow thereon (which may vary widely depending upon the
prepayment and default assumptions applied in respect of the underlying Mortgage
Loans) and prevailing interest rates. The price payable at any given time in
respect of certain Classes of Offered Certificates (in particular, a Class with
a relatively long average life, a Companion Class (as defined herein) or a Class
of Stripped Interest Certificates or Stripped Principal Certificates) may be
extremely sensitive to small fluctuations in prevailing interest rates; and the
relative change in price for an Offered Certificate in response to an upward or
downward movement in prevailing interest rates may not necessarily equal the
relative change in price for such Offered Certificate in response to an equal
but opposite movement in such rates. Accordingly, the sale of Offered
Certificates by a holder in any secondary market that may develop may be at a
discount from the price paid by such holder. The Depositor is not aware of any
source through which price information about the Offered Certificates will be
generally available on an ongoing basis.
Limited Assets
Unless otherwise specified in the related Prospectus Supplement, neither
the Offered Certificates of any Series nor the Mortgage Assets in the related
Trust Fund will be guaranteed or insured by the Depositor or any of its
affiliates, by any governmental agency or instrumentality or by any other person
or entity; and no Offered Certificate of any Series will represent a claim
against or security interest in the Trust Fund for any other Series.
Accordingly, if the related Trust Fund has insufficient assets to make payments
on a Series of Offered Certificates, no other assets will be available for
payment
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of the deficiency, and the holders of one or more Classes of such Offered
Certificates will be required to bear the consequent loss. Furthermore, certain
amounts on deposit from time to time in certain funds or accounts constituting
part of a Trust Fund, including the Certificate Account (as defined herein) and
any accounts maintained as Credit Support, may be withdrawn under certain
conditions, if and to the extent described in the related Prospectus Supplement,
for purposes other than the payment of principal of or interest on the
Certificates of the related Series. If and to the extent so provided in the
Prospectus Supplement relating to a Series consisting of one or more Classes of
Subordinate Certificates, on any Distribution Date in respect of which losses or
shortfalls in collections on the Mortgage Assets have been incurred, all or a
portion of the amount of such losses or shortfalls will be borne first by one or
more Classes of the Subordinate Certificates, and, thereafter, by the remaining
Classes of Certificates, in the priority and manner and subject to the
limitations specified in such Prospectus Supplement.
Credit Support Limitations
Limitations Regarding Types of Losses Covered. The Prospectus Supplement
for the Offered Certificates of any Series will describe any Credit Support
provided with respect thereto. Use of Credit Support will be subject to the
conditions and limitations described herein and in the related Prospectus
Supplement. Moreover, such Credit Support may not cover all potential losses;
for example, Credit Support may or may not cover loss by reason of fraud or
negligence by a mortgage loan originator or other parties. Any such losses not
covered by Credit Support may, at least in part, be allocated to one or more
Classes of Offered Certificates.
Disproportionate Benefits to Certain Classes and Series. A Series may
include one or more Classes of Subordinate Certificates (which may include
Offered Certificates), if so provided in the related Prospectus Supplement.
Although subordination is intended to reduce the likelihood of temporary
shortfalls and ultimate losses to holders of Senior Certificates, the amount of
subordination will be limited and may decline under certain circumstances. In
addition, if principal payments on one or more Classes of Offered Certificates
of a Series are made in a specified order of priority, any related Credit
Support may be exhausted before the principal of the later paid Classes of
Offered Certificates of such Series has been repaid in full. As a result, the
impact of losses and shortfalls experienced with respect to the Mortgage Assets
may fall primarily upon those Classes of Offered Certificates having a later
right of payment. Moreover, if a form of Credit Support covers the Offered
Certificates of more than one Series and losses on the related Mortgage Assets
exceed the amount of such Credit Support, it is possible that the holders of
Offered Certificates of one (or more) such Series will be disproportionately
benefited by such Credit Support to the detriment of the holders of Offered
Certificates of one (or more) other such Series.
Limitations Regarding the Amount of Credit Support. The amount of any
applicable Credit Support supporting one or more Classes of Offered
Certificates, including the subordination of one or more other Classes of
Certificates, will be determined on the basis of criteria established by each
Rating Agency rating such Classes of Certificates based on an assumed level of
defaults, delinquencies and losses on the underlying Mortgage Assets and certain
other factors. There can, however, be no assurance that the loss experience on
the related Mortgage Assets will not exceed such assumed levels. See
"Description of the Certificates--Allocation of Losses and Shortfalls" and
"Description of Credit Support". If the losses on the related Mortgage Assets do
exceed such assumed levels, the holders of one or more Classes of Offered
Certificates will be required to bear such additional losses.
Effect of Prepayments on Average Life of Certificates
As a result of prepayments on the Mortgage Loans in any Trust Fund, the
amount and timing of distributions of principal and/or interest on the Offered
Certificates of the related Series may be highly unpredictable. Prepayments on
the Mortgage Loans in any Trust Fund will result in a faster rate of principal
payments on one or more Classes of Certificates of the related Series than if
payments on such Mortgage Loans were made as scheduled. Thus, the prepayment
experience on the Mortgage Loans in a Trust Fund may affect the average life of
one or more Classes of Certificates of the related Series, including a Class of
Offered Certificates. The rate of principal payments on pools of mortgage loans
varies among pools and from time to time is influenced by a variety of economic,
demographic, geographic, social, tax and legal factors. For example, if
prevailing interest rates fall significantly below the Mortgage Rates borne by
the Mortgage Loans included in
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a Trust Fund, then, subject to the particular terms of the Mortgage Loans (e.g.,
provisions that prohibit voluntary prepayments during specified periods or
impose penalties in connection therewith) and the ability of borrowers to obtain
new financing, principal prepayments on such Mortgage Loans are likely to be
higher than if prevailing interest rates remain at or above the rates borne by
those Mortgage Loans. Conversely, if prevailing interest rates rise
significantly above the Mortgage Rates borne by the Mortgage Loans included in a
Trust Fund, then principal prepayments on such Mortgage Loans are likely to be
lower than if prevailing interest rates remain at or below the Mortgage Rates
borne by those Mortgage Loans. There can be no assurance as to the actual rate
of prepayment on the Mortgage Loans in any Trust Fund or that such rate of
prepayment will conform to any model described herein or in any Prospectus
Supplement. As a result, depending on the anticipated rate of prepayment for the
Mortgage Loans in any Trust Fund, the retirement of any Class of Certificates of
the related Series could occur significantly earlier or later, and the average
life thereof could be significantly shorter or longer, than expected.
The extent to which prepayments on the Mortgage Loans in any Trust Fund
ultimately affect the average life of any Class of Certificates of the related
Series will depend on the terms and provisions of such Certificates. A Class of
Certificates, including a Class of Offered Certificates, may provide that on any
Distribution Date the holders of such Certificates are entitled to a pro rata
share of the prepayments on the Mortgage Loans in the related Trust Fund that
are distributable on such date, to a disproportionately large share (which, in
some cases, may be all) of such prepayments, or to a disproportionately small
share (which, in some cases, may be none) of such prepayments. A Class of
Certificates that entitles the holders thereof to a disproportionately large
share of the prepayments on the Mortgage Loans in the related Trust Fund
increases the likelihood of early retirement of such Class ("Call Risk") if the
rate of prepayment is relatively fast; while a Class of Certificates that
entitles the holders thereof to a disproportionately small share of the
prepayments on the Mortgage Loans in the related Trust Fund increases the
likelihood of an extended average life of such Class ("Extension Risk") if the
rate of prepayment is relatively slow. As and to the extent described in the
related Prospectus Supplement, the respective entitlements of the various
Classes of Certificateholders of any Series to receive payments (and, in
particular, prepayments) of principal of the Mortgage Loans in the related Trust
Fund may vary based on the occurrence of certain events (e.g., the retirement of
one or more Classes of Certificates of such Series) or subject to certain
contingencies (e.g., prepayment and default rates with respect to such Mortgage
Loans).
A Series may include one or more Controlled Amortization Classes, which
will entitle the holders thereof to receive principal distributions according to
a specified principal payment schedule. Although prepayment risk cannot be
eliminated entirely for any Class of Certificates, a Controlled Amortization
Class will generally provide a relatively stable cash flow so long as the actual
rate of prepayment on the Mortgage Loans in the related Trust Fund remains
relatively constant at the rate, or within the range of rates, of prepayment
used to establish the specific principal payment schedule for such Certificates.
Prepayment risk with respect to a given Mortgage Asset Pool does not disappear,
however, and the stability afforded to a Controlled Amortization Class comes at
the expense of one or more Companion Classes of the same Series, any of which
Companion Classes may also be a Class of Offered Certificates. In general, and
as more specifically described in the related Prospectus Supplement, a Companion
Class may entitle the holders thereof to a disproportionately large share of
prepayments on the Mortgage Loans in the related Trust Fund when the rate of
prepayment is relatively fast, and/or may entitle the holders thereof to a
disproportionately small share of prepayments on the Mortgage Loans in the
related Trust Fund when the rate of prepayment is relatively slow. As and to the
extent described in the related Prospectus Supplement, a Companion Class absorbs
some (but not all) of the Call Risk and/or Extension Risk that would otherwise
belong to the related Controlled Amortization Class if all payments of principal
of the Mortgage Loans in the related Trust Fund were allocated on a pro rata
basis.
Effect of Prepayments on Yield of Certificates
A Series may include one or more Classes of Offered Certificates offered at
a premium or discount. Yields on such Classes of Certificates will be sensitive,
and in some cases extremely sensitive, to prepayments on the Mortgage Loans in
the related Trust Fund and, where the amount of interest payable with respect to
a Class is disproportionately large, as compared to the amount of principal, as
with certain Classes of Stripped Interest Certificates, a holder might fail to
recover its original investment under some prepayment scenarios. The extent to
which the yield to maturity of any Class of Offered Certificates may vary from
the anticipated yield will depend upon the degree to which such Certificates are
purchased at a
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discount or premium and the amount and timing of distributions thereon. An
investor should consider, in the case of any Offered Certificate purchased at a
discount, the risk that a slower than anticipated rate of principal payments on
the Mortgage Loans could result in an actual yield to such investor that is
lower than the anticipated yield and, in the case of any Offered Certificate
purchased at a premium, the risk that a faster than anticipated rate of
principal payments could result in an actual yield to such investor that is
lower than the anticipated yield. See "Yield and Maturity Considerations".
Limited Nature of Ratings
Any rating assigned by a Rating Agency to a Class of Offered Certificates
will reflect only its assessment of the likelihood that holders of such Offered
Certificates will receive payments to which such Certificateholders are entitled
under the related Pooling Agreement. Such rating will not constitute an
assessment of the likelihood that principal prepayments on the related Mortgage
Loans will be made, the degree to which the rate of such prepayments might
differ from that originally anticipated or the likelihood of early optional
termination of the related Trust Fund. Furthermore, such rating will not address
the possibility that prepayment of the related Mortgage Loans at a higher or
lower rate than anticipated by an investor may cause such investor to experience
a lower than anticipated yield or that an investor that purchases an Offered
Certificate at a significant premium might fail to recover its initial
investment under certain prepayment scenarios. Hence, a rating assigned by a
Rating Agency does not guarantee or ensure the realization of any anticipated
yield on a Class of Offered Certificates.
The amount, type and nature of Credit Support, if any, provided with
respect to a Series will be determined on the basis of criteria established by
each Rating Agency rating one or more Classes of the Certificates of such
Series. Those criteria are sometimes based upon an actuarial analysis of the
behavior of mortgage loans in a larger group. However, there can be no assurance
that the historical data supporting any such actuarial analysis will accurately
reflect future experience, or that the data derived from a large pool of
mortgage loans will accurately predict the delinquency, foreclosure or loss
experience of any particular pool of Mortgage Loans. In other cases, such
criteria may be based upon determinations of the values of the Mortgaged
Properties that provide security for the Mortgage Loans. However, no assurance
can be given that those values will not decline in the future. As a result, the
Credit Support required in respect of the Offered Certificates of any Series may
be insufficient to fully protect the holders thereof from losses on the related
Mortgage Asset Pool. See "Description of Credit Support" and "Rating".
Certain Factors Affecting Delinquency, Foreclosure and Loss of the Mortgage
Loans
General. The payment performance of the Offered Certificates of any Series
will be directly related to the payment performance of the underlying Mortgage
Loans. Set forth below is a discussion of certain factors that will affect the
full and timely payment of the Mortgage Loans in any Trust Fund. In addition, a
description of certain material considerations associated with investments in
mortgage loans is included herein under "Certain Legal Aspects of Mortgage
Loans".
The Offered Certificates will be directly or indirectly backed by mortgage
loans secured by multifamily and/or commercial properties. Mortgage loans made
on the security of multifamily or commercial property may have a greater
likelihood of delinquency and foreclosure, and a greater likelihood of loss in
the event thereof, than loans made on the security of an owner-occupied
single-family property. See "Description of the Trust Funds--Mortgage
Loans--Default and Loss Considerations with Respect to the Mortgage Loans". The
ability of a borrower to repay a loan secured by an income-producing property
typically is dependent primarily upon the successful operation of such property
rather than upon the existence of independent income or assets of the borrower;
thus, the value of an income-producing property is directly related to the net
operating income derived from such property. If the net operating income of the
property is reduced (for example, if rental or occupancy rates decline or real
estate tax rates or other operating expenses increase), the borrower's ability
to repay the loan may be impaired. A number of the Mortgage Loans may be secured
by liens on owner-occupied Mortgaged Properties or on Mortgaged Properties
leased to a single tenant or a small number of significant tenants. Accordingly,
a decline in the financial condition of the borrower or a significant tenant, as
applicable, may have a disproportionately greater effect on the net operating
income from such Mortgaged Properties than would be the case with respect to
Mortgaged Properties with multiple tenants. Furthermore, the value of any
Mortgaged Property may be adversely affected by factors generally incident to
interests in real property, including changes in general or local economic
conditions and/or specific
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industry segments; declines in real estate values; declines in rental or
occupancy rates; increases in interest rates, real estate tax rates and other
operating expenses; changes in governmental rules, regulations and fiscal
policies, including environmental legislation; natural disasters and civil
disturbances such as earthquakes, hurricanes, floods, eruptions or riots; and
other circumstances, conditions or events beyond the control of a Master
Servicer or a Special Servicer.
Additional considerations may be presented by the type and use of a
particular Mortgaged Property. For instance, Mortgaged Properties that operate
as hospitals, nursing homes and other health care-related facilities, as well as
casinos, may present special risks to lenders due to the significant
governmental regulation of the ownership, operation, maintenance and/or
financing of such properties. Hotel, motel and restaurant properties are often
operated pursuant to franchise, management or operating agreements, which may be
terminable by the franchisor or operator. Moreover, the transferability of a
hotel's or restaurant's operating, liquor and other licenses upon a transfer of
the hotel or restaurant, as the case may be, whether through purchase or
foreclosure, is subject to local law requirements. Properties used as gas
stations, drycleaners and industrial facilities may be more likely to have
environmental issues. If any specific type of Mortgaged Property secures or
underlies 10% or more of the Mortgage Assets included in any Trust Fund (based
on aggregate principal balance of the Mortgage Assets in such Trust Fund at the
time it is formed), the related Prospectus Supplement will include as part of
the "Risk Factors" section therein a discussion of the risks particular to such
type of property.
In addition, the concentration of default, foreclosure and loss risks in
individual Mortgage Loans in a particular Trust Fund will generally be greater
than for pools of single-family loans because Mortgage Loans in a Trust Fund
will generally consist of a smaller number of higher balance loans than would a
pool of single-family loans of comparable aggregate unpaid principal balance.
Risks Particular to Retail Properties. In addition to risks generally
associated with real estate, Mortgage Loans secured by retail properties are
also affected significantly by adverse changes in consumer spending patterns,
local competitive conditions (such as the supply of retail space or the
existence or construction of new competitive shopping centers or shopping
malls), alternative forms of retailing (such as direct mail, video shopping
networks and selling through the Internet, which reduce the need for retail
space by retail companies), the quality and management philosophy of management,
the attractiveness of the properties and the surrounding neighborhood to tenants
and their customers, the public perception of the safety of customers (at
shopping malls and shopping centers, for example) and the need to make major
repairs or improvements to satisfy the needs of major tenants.
Retail properties may be adversely affected if an anchor or other
significant tenant ceases operations at such locations (which may occur on
account of a voluntary decision not to renew a lease, bankruptcy or insolvency
of such tenant, such tenant's general cessation of business activities or for
other reasons). Significant tenants at a retail property play an important part
in generating customer traffic and making a retail property a desirable location
for other tenants at such property. In addition, certain tenants at retail
properties may be entitled to terminate their leases if an anchor tenant ceases
operations at such property. In such cases, there can be no assurance that any
such anchor or other significant tenants will continue to occupy space at the
related property.
Risks Particular to Multifamily Rental Properties. Adverse economic
conditions, either local, regional or national, may limit the amount of rent
that can be charged for rental units, may adversely affect tenants' ability to
pay rent and may result in a reduction in timely rent payments or a reduction in
occupancy levels without a corresponding decrease in expenses. Occupancy and
rent levels may also be affected by construction of additional housing units,
local military base closings, company relocations and closings and national and
local politics, including current or future rent stabilization and rent control
laws and agreements. Multifamily apartment units are typically leased on a
short-term basis, and consequently, the occupancy rate of a multifamily rental
property may be subject to rapid decline, including for some of the foregoing
reasons. In addition, the level of mortgage interest rates may encourage tenants
in multifamily rental properties to purchase single-family housing rather than
continue to lease housing or the characteristics of the neighborhood in which a
multifamily rental property is located may change over time or in relation to
newer developments. Further, the cost of operating a multifamily rental property
may increase, including the cost of utilities and the costs of required capital
expenditures. Also, multifamily rental properties may be subject to rent control
laws which could impact the future cash flows of such properties.
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Certain multifamily rental properties are eligible to receive low-income
housing tax credits pursuant to Section 42 of the Code ("Section 42
Properties"). However, rent limitations associated therewith may adversely
affect the ability of the applicable borrowers to increase rents to maintain
such Mortgaged Properties in proper condition during periods of rapid inflation
or declining market value of such Mortgaged Properties. In addition, the income
restrictions on tenants imposed by Section 42 of the Code may reduce the number
of eligible tenants in such Mortgaged Properties and result in a reduction in
occupancy rates applicable thereto. Furthermore, some eligible tenants may not
find any differences in rents between the Section 42 Properties and other
multifamily rental properties in the same area to be a sufficient economic
incentive to reside at a Section 42 Property, which may have fewer amenities or
otherwise be less attractive as a residence. All of these conditions and events
may increase the possibility that a borrower may be unable to meet its
obligations under its Mortgage Loan.
Risks Particular to Cooperatively-Owned Apartment Buildings. Generally, a
tenant-shareholder of a cooperative corporation must make a monthly maintenance
payment to the cooperative corporation that owns the subject apartment building
representing such tenant-shareholder's pro rata share of the corporation's
payments in respect of the Mortgage Loan secured by, and all real property
taxes, maintenance expenses and other capital and ordinary expenses with respect
to, such property, less any other income that the cooperative corporation may
realize. Adverse economic conditions, either local regional or national, may
adversely affect tenant-shareholders' ability to make required maintenance
payments, either because such adverse economic conditions have impaired the
individual financial conditions of such tenant-shareholders or their ability to
sub-let the subject apartments. To the extent that a large number of
tenant-shareholders in a cooperatively-owned apartment building rely on
sub-letting their apartments to make maintenance payments, the lender on any
mortgage loan secured by such building will be subject to all the risks that it
would have in connection with lending on the security of a multifamily rental
property. See "--Risks Particular to Multifamily Rental Properties" above. In
addition, if in connection with any cooperative conversion of an apartment
building, the sponsor holds the shares allocated to a large number of the
apartment units, any lender secured by a mortgage on such building will be
subject to a risk associated with such sponsor's creditworthiness.
Risks Particular to Office Properties. In addition to risks generally
associated with real estate, Mortgage Loans secured by office properties are
also affected significantly by adverse changes in population and employment
growth (which generally creates demand for office space), local competitive
conditions (such as the supply of office space or the existence or construction
of new competitive office buildings), the quality and management philosophy of
management, the attractiveness of the properties to tenants and their customers
or clients, the attractiveness of the surrounding neighborhood and the need to
make major repairs or improvements to satisfy the needs of major tenants. Office
properties that are not equipped to accommodate the needs of modern business may
become functionally obsolete and thus noncompetitive. In addition, office
properties may be adversely affected by an economic decline in the businesses
operated by their tenants. Such decline may result in one or more significant
tenants ceasing operations at such locations (which may occur on account of a
voluntary decision not to renew a lease, bankruptcy or insolvency of such
tenants, such tenants' general cessation of business activities or for other
reasons). 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.
Risks Particular to Hotel and Motel Properties. Hotel and motel properties
are subject to operating risks common to the lodging industry. These risks
include, among other things, a high level of continuing capital expenditures to
keep necessary furniture, fixtures and equipment updated, competition from other
hotels and motels, increases in operating costs (which increases may not
necessarily in the future be offset by increased room rates), dependence on
business and commercial travelers and tourism, increases in energy costs and
other expenses of travel and adverse effects of general and local economic
conditions. These factors could adversely affect the related borrower's ability
to make payments on the related Mortgage Loans. Since limited service hotels and
motels are relatively quick and inexpensive to construct and may quickly reflect
a positive value, an over-building of such hotels and motels could occur in any
given region, which would likely adversely affect occupancy and daily room
rates. Further, because hotel and motel rooms are generally rented for short
periods of time, hotel and motel properties tend to be more sensitive to adverse
economic conditions and competition than many other commercial properties.
Additionally, the revenues of certain hotels and motels, particularly those
located in regions whose economies depend upon tourism, may be highly seasonal
in nature.
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A hotel or motel property may present additional risks as compared to other
commercial property types in that: (i) hotels and motels may be operated
pursuant to franchise, management and operating agreements that may be
terminable by the franchisor, the manager or the operator; (ii) the
transferability of any operating, liquor and other licenses to the entity
acquiring such hotel or motel (either through purchase or foreclosure) is
subject to local law requirements; (iii) it may be difficult to terminate an
ineffective operator of a hotel or motel property subsequent to a foreclosure of
such property; and (iv) future occupancy rates may be adversely affected by,
among other factors, any negative perception of a hotel or motel based upon its
historical reputation.
Hotel and motel properties may be operated pursuant to franchise
agreements. The continuation of franchises 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 hotel or motel property to maintain such standards
or adhere to such 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 related
borrower determines are too expensive or are otherwise unwarranted in light of
general economic conditions or the operating results or prospects of the
affected hotels. In that event, the related borrower may elect to allow the
franchise license to lapse. In any case, if the franchise is terminated, the
related borrower may seek to obtain a suitable replacement franchise or to
operate such hotel or motel property independently of a franchise license. The
loss of a franchise license could have a material adverse effect upon the
operations or the underlying value of the hotel or motel covered by the
franchise because of the loss of associated name recognition, marketing support
and centralized reservation systems provided by the franchisor.
Risks Particular to 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 slow-down in the
economy, and 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. Furthermore, industrial
properties may be adversely affected by the availability of labor sources or a
change in the proximity of supply sources. Because industrial properties
frequently have a single tenant, any such property is heavily dependent on the
success of such tenant's business.
Limited Recourse Nature of the Mortgage Loans. It is anticipated that some
or all of the Mortgage Loans included in any Trust Fund will be nonrecourse
loans or loans for which recourse may be restricted or unenforceable. As to any
such Mortgage Loan, recourse in the event of borrower default will be limited to
the specific real property and other assets, if any, that were pledged to secure
the Mortgage Loan. However, even with respect to those Mortgage Loans that
provide for recourse against the borrower and its assets generally, there can be
no assurance that enforcement of such recourse provisions will be practicable,
or that the assets of the borrower will be sufficient to permit a recovery in
respect of a defaulted Mortgage Loan in excess of the liquidation value of the
related Mortgaged Property. See "Certain Legal Aspects of Mortgage
Loans-Foreclosure--Anti-Deficiency Legislation".
Dependence on Management. In general, a Mortgaged Property will be managed
by a manager (which may be the borrower or an affiliate of the borrower), which
is responsible for responding to changes in the local market for the facilities
offered at the property, planning and implementing the rental or pricing
structure, including staggering durations of leases and establishing levels of
rent payments, and causing maintenance and capital improvements to be carried
out in a timely fashion. Management errors may adversely affect the long-term
viability of a Mortgaged Property. In the case of certain Trust Funds, multiple
Mortgaged Properties may be managed by the same property manager. A
concentration of property management of Mortgaged Properties securing or
underlying the Mortgage Assets in any Trust Fund will increase the risk that the
poor performance of a single property manager will have widespread effect on the
related Mortgage Asset Pool.
Dependence on Tenants. In most cases, the Mortgaged Properties will be
subject to leases, and the related borrowers will rely on periodic lease or
rental payments from tenants to pay for maintenance and other operating expenses
of such Mortgaged Properties, to fund capital improvements at such Mortgaged
Properties and to service the related Mortgage Loans and any other outstanding
debt or obligations they may have outstanding. Generally, there will be existing
leases that expire during the term of the related Mortgage Loans. There can be
no guaranty that tenants will renew leases
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upon expiration or, in the case of a commercial tenant, that it will continue
operations throughout the term of its lease. Such borrowers' income would be
adversely affected if tenants were unable to pay rent, if space were unable to
be rented on favorable terms or at all, or if a significant tenant were to
become a debtor in a bankruptcy case under the United States Bankruptcy Code.
For example, if any such borrower were to relet or renew the existing leases for
a significant amount of retail or office space at rental rates significantly
lower than expected rates, then such borrower's funds from operations may be
adversely affected. Changes in payment patterns by tenants may result from a
variety of social, legal and economic factors, including, without limitation,
the rate of inflation and unemployment levels and may be reflected in the rental
rates offered for comparable space. In addition, upon reletting or renewing
existing leases at commercial properties, borrowers will likely be required to
pay leasing commissions and tenant improvement costs which may adversely affect
cash flow from the related Mortgaged Property. There can be no assurances
whether, or to what extent, economic, legal or social factors will affect future
rental or repayment patterns.
In the case of Mortgaged Properties used for certain commercial purposes,
the performance and liquidation value of such properties may be dependent upon
the business operated by tenants, the creditworthiness of such tenants and/or
the number of tenants. In some cases, a single tenant or a relatively small
number of tenants may account for all or a disproportionately large share of the
rentable space or rental income of a Mortgaged Property. Accordingly, a decline
in the financial condition of a significant or sole tenant, as the case may be,
or other adverse circumstances of such a tenant (such as bankruptcy or
insolvency), may have a disproportionately greater effect on the net operating
income derived from such property than would be the case if rentable space or
rental income were more evenly distributed among a greater number of tenants at
such property.
Property Location and Condition. The location and construction quality of a
particular Mortgaged Property may affect the occupancy level as well as the
rents that may be charged. The characteristics of an area or neighborhood in
which a Mortgaged Property is located may change over time or in relation to
competing facilities. The effects of poor construction quality will increase
over time in the form of increased maintenance and capital improvements. Even
good construction will deteriorate over time if the management company does not
schedule and perform adequate maintenance in a timely fashion. Although the
Master Servicer or the Special Servicer, as applicable, generally will be
required to inspect the related Mortgaged Properties (but not mortgaged
properties securing mortgage loans underlying MBS) periodically, there can be no
assurance that such inspections will detect damage or prevent a default.
Competition. Other comparable multifamily/commercial properties located in
the same areas will compete with the Mortgaged Properties to attract residents,
retail sellers, tenants, customers, patients and/or guests. The leasing of real
estate is highly competitive. The principal means of competition are price,
location and the nature and condition of the facility to be leased. A mortgagor
competes with all lessors and developers of comparable types of real estate in
the area in which the related Mortgaged Property is located. Such lessors or
developers could have lower rents, lower operating costs, more favorable
locations or better facilities. While a mortgagor may renovate, refurbish or
expand the related Mortgaged Property to maintain such Mortgaged Property and
remain competitive, such renovation, refurbishment or expansion may itself
entail significant risks. Increased competition could adversely affect income
from and the market value of the Mortgaged Properties. In addition, the business
conducted at each Mortgaged Property may face competition from other industries
and industry segments.
Changes in Laws. Increases in income, service or other taxes (other than
real estate taxes) in respect of a Mortgaged Property generally are not passed
through to tenants under leases and may adversely affect the related mortgagor's
funds from operations. Similarly, changes in laws increasing the potential
liability for environmental conditions existing on a Mortgaged Property or
increasing the restrictions on discharges or other conditions may result in
significant unanticipated expenditures, which could adversely affect the related
mortgagor's funds from operations. See "--Risks of Liability Arising From
Environmental Conditions" herein. In the case of properties used as casinos,
gambling could become prohibited in the relevant jurisdiction.
Litigation. There may be legal proceedings pending and, from time to time,
threatened against certain mortgagors under the Mortgage Loans, managers of the
Mortgaged Properties and their respective affiliates arising out of the ordinary
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business of such mortgagors, managers and affiliates. There can be no assurance
that such litigation may not have a material adverse effect on distributions to
Certificateholders of the related Trust Fund.
Limitations on Enforceability of Assignments of Leases and Rents. In
general, any Mortgage Loan that is secured by a Mortgaged Property subject to
leases, will be secured by an assignment of leases and rents pursuant to which
the borrower assigns to the lender its right, title and interest as landlord
under the leases of the related Mortgaged Property, and the income derived
therefrom, as further security for the related Mortgage Loan, while retaining a
license to collect rents for so long as there is no default. If the borrower
defaults, the license terminates and the lender is entitled to collect rents.
Some state laws may require that the lender take possession of the Mortgaged
Property and obtain a judicial appointment of a receiver before becoming
entitled to collect the rents. In addition, if bankruptcy or similar proceedings
are commenced by or in respect of the borrower, the lender's ability to collect
the rents may be adversely affected. See "Certain Legal Aspects of Mortgage
Loans--Leases and Rents".
Limitations on Enforceability of Cross-Collateralization. A Mortgage Asset
Pool may include groups of Mortgage Loans which are cross-collateralized and
cross-defaulted. These arrangements are designed primarily to ensure that all of
the collateral pledged to secure the respective Mortgage Loans in a
cross-collateralized group, and the cash flows generated thereby, are available
to support debt service on, and ultimate repayment of, the aggregate
indebtedness evidenced by those Mortgage Loans. These arrangements thus seek to
reduce the risk that the inability of one or more of the Mortgaged Properties
securing any such group of Mortgage Loans to generate net operating income
sufficient to pay debt service will result in defaults and ultimate losses.
There may not be complete identity of ownership of the Mortgaged Properties
securing a group of cross-collateralized Mortgage Loans. In such an instance,
creditors of one or more of the related borrowers could challenge the
cross-collateralization arrangement as a fraudulent conveyance. Generally, under
federal and state fraudulent conveyance statutes, the incurring of an obligation
or the transfer of property by a person will be subject to avoidance under
certain circumstances if the person did not receive fair consideration or
reasonably equivalent value in exchange for such obligation or transfer and was
then insolvent or was rendered insolvent by such obligation or transfer.
Accordingly, a creditor seeking to realize against a Mortgaged Property subject
to such cross-collateralization to repay such creditor's claim against the
related borrower could assert (i) that such borrower was insolvent at the time
the cross-collateralized Mortgage Loans were made and (ii) that such borrower
did not, when it allowed its property to be encumbered by a lien securing the
indebtedness represented by the other Mortgage Loans in the group of
cross-collateralized Mortgage Loans, receive fair consideration or reasonably
equivalent value for, in effect, "guaranteeing" the performance of the other
borrowers. Although the borrower making such "guarantee" will be receiving
"guarantees" from each of the other borrowers in return, there can be no
assurance that such exchanged "guarantees" would be found to constitute fair
consideration or be of reasonably equivalent value, and no unqualified legal
opinion to that effect will be obtained.
The cross-collateralized Mortgage Loans constituting any group thereof may
be secured by mortgage liens on Mortgaged Properties located in different
states. Because of various state laws governing foreclosure or the exercise of a
power of sale, and because, in general, foreclosure actions are brought in state
court, and the courts of one state cannot exercise jurisdiction over property in
another state, it may be necessary upon a default under any such Mortgage Loan
to foreclose on the related Mortgaged Properties in a particular order rather
than simultaneously in order to ensure that the lien of the related Mortgages is
not impaired or released.
Increased Risk of Default Associated With Balloon Payments. Certain of the
Mortgage Loans included in a Trust Fund may be nonamortizing or only partially
amortizing over their terms to maturity and, thus, will require substantial
payments of principal and interest (that is, balloon payments) at their stated
maturity. Mortgage Loans of this type involve a greater likelihood of default
than self-amortizing loans because the ability of a borrower to make a balloon
payment typically will depend upon its ability either to refinance the loan or
to sell the related Mortgaged Property. The ability of a borrower to accomplish
either of these goals will be affected by a number of factors, including the
value of the related Mortgaged Property, the level of available mortgage rates
at the time of sale or refinancing, the borrower's equity in the related
Mortgaged Property, the financial condition and operating history of the
borrower and the related Mortgaged Property, tax laws, rent control laws (with
respect to certain residential properties), Medicaid and Medicare reimbursement
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rates (with respect to hospitals and nursing homes), prevailing general economic
conditions and the availability of credit for loans secured by multifamily or
commercial, as the case may be, real properties generally. Neither the Depositor
nor any of its affiliates will be required to refinance any Mortgage Loan.
If and to the extent described herein and in the related Prospectus
Supplement, in order to maximize recoveries on defaulted Mortgage Loans, the
Master Servicer or the Special Servicer will be permitted (within prescribed
limits) to extend and modify Mortgage Loans that are in default or as to which a
payment default is imminent. See "Description of the Pooling
Agreements--Realization Upon Defaulted Mortgage Loans". While the Master
Servicer or the Special Servicer generally will be required to determine that
any such extension or modification is reasonably likely to produce a greater
recovery than liquidation, taking into account the time value of money, there
can be no assurance that any such extension or modification will in fact
increase the present value of receipts from or proceeds of the affected Mortgage
Loans.
Limitations on Enforceability of Due-on-Sale and Debt-Acceleration Clauses.
Mortgages may contain a due-on-sale clause, which permits the lender to
accelerate the maturity of the Mortgage Loan if the borrower sells, transfers or
conveys the related Mortgaged Property or its interest in the Mortgaged
Property. Mortgages also may include a debt-acceleration clause, which permits
the lender to accelerate the debt upon a monetary or nonmonetary default of the
mortgagor. Such clauses are generally enforceable subject to certain exceptions.
The courts of all states will enforce clauses providing for acceleration in the
event of a material payment default. The equity courts of any state, however,
may refuse the foreclosure of a mortgage or deed of trust when an acceleration
of the indebtedness would be inequitable or unjust or the circumstances would
render the acceleration unconscionable.
Risk of Liability Arising From Environmental Conditions. Under the laws of
certain states, contamination of real property may give rise to a lien on the
property to assure the costs of cleanup. In several states, such a lien has
priority over an existing mortgage lien on such property. In addition, under the
laws of some states and under the federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, a lender may be liable, as
an "owner" or "operator", for costs of addressing releases or threatened
releases of hazardous substances at a property, if agents or employees of the
lender have become sufficiently involved in the operations of the borrower,
regardless of whether the environmental damage or threat was caused by the
borrower or a prior owner. A lender also risks such liability on foreclosure of
the mortgage. Unless otherwise specified in the related Prospectus Supplement,
if a Trust Fund includes Mortgage Loans, then the related Pooling Agreement will
contain provisions generally to the effect that neither the Master Servicer nor
the Special Servicer may, on behalf of the Trust Fund, acquire title to a
Mortgaged Property or assume control of its operation unless the Special
Servicer, based upon a report prepared by a person who regularly conducts
environmental site assessments, has made the determination that it is
appropriate to do so, as described under "Description of the Pooling
Agreements--Realization Upon Defaulted Mortgage Loans". See "Certain Legal
Aspects of Mortgage Loans-- Environmental Considerations".
Lack of Insurance Coverage for Certain Special Hazard Losses. Unless
otherwise specified in a Prospectus Supplement, the Master Servicer and Special
Servicer for the related Trust Fund will be required to cause the borrower on
each Mortgage Loan in such Trust Fund to maintain such insurance coverage in
respect of the related Mortgaged Property as is required under the related
Mortgage, including hazard insurance; provided that, as and to the extent
described herein and in the related Prospectus Supplement, each of the Master
Servicer and the Special Servicer may satisfy its obligation to cause hazard
insurance to be maintained with respect to any Mortgaged Property through
acquisition of a blanket policy. In general, the standard form of fire and
extended coverage policy covers physical damage to or destruction of the
improvements of the property by fire, lightning, explosion, smoke, windstorm and
hail, and riot, strike and civil commotion, subject to the conditions and
exclusions specified in each policy. Although the policies covering the
Mortgaged Properties will be underwritten by different insurers under different
state laws in accordance with different applicable state forms, and therefore
will not contain identical terms and conditions, most such policies typically do
not cover any physical damage resulting from war, revolution, governmental
actions, floods and other water-related causes, earth movement (including
earthquakes, landslides and mudflows), wet or dry rot, vermin, domestic animals
and certain other kinds of risks. Unless the related Mortgage specifically
requires the mortgagor to insure against physical damage arising from such
causes, then, to the extent any consequent losses are not covered by Credit
Support, such losses may be borne, at least in part, by the
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holders of one or more Classes of Offered Certificates of the related Series.
See "Description of the Pooling Agreements--Hazard Insurance Policies".
Risks of Geographic Concentration. Certain geographic regions of the United
States from time to time will experience weaker regional economic conditions and
housing markets, and, consequently, will experience higher rates of loss and
delinquency than will be experienced on mortgage loans generally. For example, a
region's economic condition and housing market may be directly, or indirectly,
adversely affected by natural disasters or civil disturbances such as
earthquakes, hurricanes, floods, eruptions or riots. The economic impact of any
of these types of events may also be felt in areas beyond the region immediately
affected by the disaster or disturbance. The Mortgage Loans underlying certain
Series may be concentrated in these regions, and such concentration may present
risk considerations in addition to those generally present for similar
mortgage-backed securities without such concentration.
Inclusion of Delinquent and Nonperforming Mortgage Loans in a Mortgage Asset
Pool
If so provided in the related Prospectus Supplement, the Trust Fund for a
particular Series may include Mortgage Loans that are past due or are
nonperforming. If so specified in the related Prospectus Supplement, the
servicing of such Mortgage Loans will be performed by the Special Servicer;
however, the same entity may act as both Master Servicer and Special Servicer.
Credit Support provided with respect to a particular Series may not cover all
losses related to such delinquent or nonperforming Mortgage Loans, and investors
should consider the risk that the inclusion of such Mortgage Loans in the Trust
Fund may adversely affect the rate of defaults and prepayments in respect of the
subject Mortgage Asset Pool and the yield on the Offered Certificates of such
Series. See "Description of the Trust Funds--Mortgage Loans--General".
Certain Federal Tax Considerations Regarding REMIC Residual Certificates
Holders of REMIC Residual Certificates will be required to report on their
federal income tax returns as ordinary income their pro rata share of the
taxable income of the related REMIC, regardless of the amount or timing of their
possible receipt of cash payments, if any, from such REMIC, as described under
"Certain Federal Income Tax Consequences-- REMICs". REMIC Residual Certificates
may have "phantom income" associated with them. That is, taxable income may be
reportable with respect to a REMIC Residual Certificate early in the term of the
related REMIC with a corresponding amount of tax losses reportable in later
years of that REMIC's term. Under these circumstances, the present value of the
tax detriments with respect to the related REMIC Residual Certificate may
significantly exceed the present value of the related tax benefits accruing
later. Therefore, the after-tax yield on a REMIC Residual Certificate may be
significantly less than that of a corporate bond or stripped instrument having
similar cash flow characteristics, and certain REMIC Residual Certificates may
have a negative "value". The requirement that holders of REMIC Residual
Certificates report their pro rata share of the taxable income and net loss of
the related REMIC will continue until the Certificate Principal Balances of all
Certificates of the related Series have been reduced to zero. All or a portion
of such Certificateholder's share of the related REMIC's taxable income may be
treated as "excess inclusion" income to such holder, which (i) generally will
not be subject to offset by losses from other activities, (ii) for a tax-exempt
holder, will be treated as unrelated business taxable income and (iii) for a
foreign holder, will not qualify for exemption from withholding tax. Moreover,
because an amount of gross income equal to the fees and non-interest expenses of
each REMIC will be allocated to the REMIC Residual Certificates, but such
expenses will be deductible by holders of REMIC Residual Certificates who are
individuals only as miscellaneous itemized deductions, REMIC Residual
Certificates will generally not be appropriate investments for individuals,
estates or trusts or for pass-through entities (including partnerships and S
corporations) beneficially owned by, or having as partners or shareholders, one
or more individuals, estates or trusts. In addition, REMIC Residual Certificates
are subject to certain restrictions on transfer, including, but not limited to
prohibition on transfers to investors that are not U.S. persons.
Book-Entry Registration
If so provided in the related Prospectus Supplement, one or more Classes of
the Offered Certificates of any Series will be issued as Book-Entry
Certificates. Each Class of Book-Entry Certificates will be initially
represented by one or more Certificates registered in the name of a nominee for
DTC. As a result, unless and until corresponding Definitive Certificates
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are issued, the Certificate Owners with respect to any Class of Book-Entry
Certificates will be able to exercise the rights of Certificateholders only
indirectly through DTC and its participating organizations ("DTC Participants").
In addition, the access of Certificate Owners to information regarding the
Book-Entry Certificates in which they hold interests may be limited. Conveyance
of notices and other communications by DTC to DTC Participants, and directly and
indirectly through such DTC Participants to Certificate Owners, will be governed
by arrangements among them, subject to any statutory or regulatory requirements
as may be in effect from time to time. Furthermore, as described herein,
Certificate Owners may suffer delays in the receipt of payments on the
Book-Entry Certificates, and the ability of any Certificate Owner to pledge or
otherwise take actions with respect to its interest in the Book-Entry
Certificates may be limited due to the lack of physical certificate evidencing
such interest. See "Description of the Certificates--Book-Entry Registration and
Definitive Certificates".
Potential Conflicts of Interest
If so specified in the related Prospectus Supplement, the Master Servicer
may also perform the duties of Special Servicer, and the Master Servicer, the
Special Servicer or the Trustee may also perform the duties of REMIC
Administrator and/or MBS Administrator, as applicable. If so specified in the
related Prospectus Supplement, an affiliate of the Depositor, or the Mortgage
Asset Seller or an affiliate thereof, may perform the functions of Master
Servicer, Special Servicer, REMIC Administrator and/or MBS Administrator, as
applicable. In addition, any party to a Pooling Agreement or any affiliate
thereof may own Certificates. Investors in the Offered Certificates should
consider that any resulting conflicts of interest could affect the performance
of duties under the related Pooling Agreement. For example, if the Master
Servicer or Special Servicer for any Trust Fund owns a significant portion of
any Class of Certificates of the related Series, then, notwithstanding the
applicable servicing standard imposed by the related Pooling Agreement, such
fact could influence servicing decisions in respect of the Mortgage Loans in
such Trust Fund. Also, if specified in the related Prospectus Supplement, the
holders of a specified Class or Classes of Subordinate Certificates may have the
ability to replace the Special Servicer or direct the Special Servicer's actions
in connection with liquidating or modifying defaulted Mortgage Loans. Investors
in such specified Class or Classes of Subordinate Certificates may have
interests when dealing with defaulted Mortgage Loans that are in conflict with
those of the holders of the Offered Certificates of the same Series.
Termination
If so provided in the related Prospectus Supplement, upon a specified date
or upon the reduction of the aggregate Certificate Principal Balance of a
specified Class or Classes of Certificates to a specified amount, a party
designated therein may be authorized or required to solicit bids for the
purchase of all the Mortgage Assets of the related Trust Fund, or of a
sufficient portion of such Mortgage Assets to retire such Class or Classes,
under the circumstances and in the manner set forth therein. The solicitation of
bids will be conducted in a commercially reasonable manner and, generally,
assets will be sold at their fair market value. In addition, if so specified in
the related Prospectus Supplement, upon the reduction of the aggregate principal
balance of some or all of the Mortgage Assets to a specified amount, a party or
parties designated therein may be authorized to purchase such Mortgage Assets,
generally at a price equal to, in the case of any Mortgage Asset, the unpaid
principal balance thereof plus accrued interest (or, in some cases, at fair
market value). However, circumstances may arise in which such fair market value
may be less than the unpaid balance of the related Mortgage Assets sold or
purchased, together with interest thereon, and therefore, as a result of such a
sale or purchase, the Certificateholders of one or more Classes of Certificates
may receive an amount less than the aggregate Certificate Principal Balance of,
and accrued unpaid interest on, their Certificates. See "Description of the
Certificates--Termination".
DESCRIPTION OF THE TRUST FUNDS
General
The primary assets of each Trust Fund will consist of (i) various types of
multifamily or commercial mortgage loans ("Mortgage Loans"), (ii) mortgage
participations, pass-through certificates, collateralized mortgage obligations
or other mortgage-backed securities ("MBS") that evidence interests in, or that
are secured by pledges of, one or more of various
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types of multifamily or commercial mortgage loans or (iii) a combination of
Mortgage Loans and MBS (collectively, "Mortgage Assets"). Each Trust Fund will
be established by the Depositor. Each Mortgage Asset will be selected by the
Depositor for inclusion in a Trust Fund from among those purchased, either
directly or indirectly, from a prior holder thereof (a "Mortgage Asset Seller"),
which prior holder may or may not be the originator of such Mortgage Loan or the
issuer of such MBS. The Mortgage Assets will not be guaranteed or insured by the
Depositor or any of its affiliates or, unless otherwise provided in the related
Prospectus Supplement, by any governmental agency or instrumentality or by any
other person. The discussion below under the heading "--Mortgage Loans", unless
otherwise noted, applies equally to mortgage loans underlying any MBS included
in a particular Trust Fund.
Mortgage Loans
General. The Mortgage Loans will be evidenced by promissory notes (the
"Mortgage Notes") secured by mortgages, deeds of trust or similar security
instruments (the "Mortgages") that create first or junior liens on fee or
leasehold estates in properties (the "Mortgaged Properties") consisting of one
or more of the following types of real property: (i) residential properties
("Multifamily Properties") consisting of multiple rental or cooperatively-owned
dwelling units in high-rise, mid-rise or garden apartment buildings or other
residential structures, and mobile home parks; (ii) commercial properties
("Commercial Properties") consisting of office buildings, retail shopping
facilities (such as shopping centers, malls, automotive sales centers and
individual stores, shops and businesses related to sales of products and goods),
facilities related to providing entertainment, recreation and personal services
(such as movie theaters, fitness centers, bowling alleys, salons, drycleaners
and automotive service centers), hotels or motels, casinos, health care-related
facilities (such as hospitals, skilled nursing facilities, nursing homes,
congregate care facilities and senior housing), recreational vehicle parks,
warehouse facilities, mini-warehouse facilities, self-storage facilities,
industrial facilities, parking lots and restaurants; and (iii) mixed use
properties (that is, any combination of the foregoing) and unimproved land. The
Multifamily Properties may include mixed commercial and residential structures
and apartment buildings owned by private cooperative housing corporations
("Cooperatives"). Unless otherwise specified in the related Prospectus
Supplement, each Mortgage will create a first priority mortgage lien on a fee
estate in a Mortgaged Property. If a Mortgage creates a lien on a borrower's
leasehold estate in a property, then, unless otherwise specified in the related
Prospectus Supplement, the term of any such leasehold will exceed the term of
the Mortgage Note by at least ten years. Unless otherwise specified in the
related Prospectus Supplement, each Mortgage Loan will have been originated by a
person (the "Originator") other than the Depositor.
If so provided in the related Prospectus Supplement, Mortgage Assets for a
Series may include Mortgage Loans secured by junior liens, and the loans secured
by the related senior liens ("Senior Liens") may not be included in the Mortgage
Asset Pool. 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
Liens and the Mortgage 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 first to the payment of court costs and fees in connection
with the foreclosure, second to real estate taxes, third in satisfaction of all
principal, interest, prepayment or acceleration penalties, if any, and any other
sums due and owing to the holder of the Senior Liens. The claims of the holders
of the Senior Liens will be satisfied in full out of proceeds of the liquidation
of the related Mortgaged Property, if such proceeds are sufficient, before the
Trust Fund as holder of the junior lien receives any payments in respect of the
Mortgage Loan. If the Master Servicer were to foreclose on any Mortgage Loan, it
would do so subject to any related Senior Liens. In order for the debt related
to such Mortgage Loan to be paid in full at such sale, a bidder at the
foreclosure sale of such Mortgage Loan would have to bid an amount sufficient to
pay off all sums due under the Mortgage Loan and any Senior Liens or purchase
the Mortgaged Property subject to such Senior Liens. In the event that such
proceeds from a foreclosure or similar sale of the related Mortgaged Property
are insufficient to satisfy all Senior Liens and the Mortgage Loan in the
aggregate, the Trust Fund, as the holder of the junior lien, and, accordingly,
holders of one or more Classes of the Certificates of the related Series bear
(i) the risk of delay in distributions while a deficiency judgment against the
borrower is obtained and (ii) the risk of loss if the deficiency judgment is not
obtained and satisfied. Moreover, deficiency judgments may not be available in
certain jurisdictions, or the particular Mortgage Loan may be a nonrecourse
loan, which means that, absent special facts, recourse in the case of default
will be limited to the Mortgaged Property and such other assets, if any, that
were pledged to secure repayment of the Mortgage Loan.
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If so specified in the related Prospectus Supplement, the Mortgage Assets
for a particular Series may include Mortgage Loans that are delinquent or
nonperforming as of the date such Certificates are issued. In that case, the
related Prospectus Supplement will set forth, as to each such Mortgage Loan,
available information as to the period of such delinquency or nonperformance,
any forbearance arrangement then in effect, the condition of the related
Mortgaged Property and the ability of the Mortgaged Property to generate income
to service the mortgage debt.
Mortgage Loans Secured by Retail Properties. Retail properties generally
derive all or a substantial percentage of their income from lease payments from
commercial tenants. Income from and the market value of retail properties is
dependent on various factors including, but not limited to, the ability to lease
space in such properties, the ability of tenants to meet their lease
obligations, the possibility of a significant tenant becoming bankrupt or
insolvent, as well as fundamental aspects of real estate such as location and
market demographics.
The correlation between the success of tenant businesses and property value
is more direct with respect to retail properties than other types of commercial
property because a significant component of the total rent paid by retail
tenants is often tied to a percentage of gross sales. Declines in tenant sales
will likely cause a corresponding decline in percentage rents and may cause such
tenants to become unable to pay their rent or other occupancy costs. The default
by a tenant under its lease could result in delays and costs in enforcing the
lessor's rights. Repayment of the related mortgage loans will be affected by the
expiration of space leases and the ability of the respective borrowers to renew
or relet the space on comparable terms. Even if vacated space is successfully
relet, the costs associated with reletting, including tenant improvements,
leasing commissions and free rent, could be substantial and could reduce cash
flow from the retail properties. The correlation between the success of tenant
businesses and property value is increased when the property is a single tenant
property.
Whether a retail property is "anchored" or "unanchored" is also an
important distinction. Anchor tenants in shopping centers traditionally have
been a major factor in the public's perception of a shopping center. The anchor
tenants at a shopping center play an important part in generating customer
traffic and making a center a desirable location for other tenants of the
center. The failure of an anchor tenant to renew its leases, the termination of
an anchor tenant's lease, the bankruptcy or economic decline of an anchor
tenant, or the cessation of the business of an anchor tenant (notwithstanding
any continued payment of rent) can have a material negative effect on the
economic performance of a retail property. Furthermore, the correlation between
the success of tenant businesses and property value is increased when the
property is a single tenant property.
Unlike certain other types of commercial properties, retail properties also
face competition from sources outside a given real estate market. Catalogue
retailers, home shopping networks, telemarketing, selling through the Internet,
and outlet centers all compete with more traditional retail properties for
consumer dollars. Continued growth of these alternative retail outlets (which
are often characterized by lower operating costs) could adversely affect the
rents collectible at retail properties.
Mortgage Loans Secured by Multifamily Rental Properties. Significant
factors determining the value and successful operation of a multifamily rental
property are the location of the property, the number of competing residential
developments in the local market (such as apartment buildings, manufactured
housing communities and site-built single family homes), the physical attributes
of the multifamily building (such as its age and appearance) and state and local
regulations affecting such property. In addition, the successful operation of an
apartment building will depend upon other factors such as its reputation, the
ability of management to provide adequate maintenance and insurance, and the
types of services it provides.
Certain states regulate the relationship of an owner and its tenants.
Commonly, these laws require a written lease, good cause for eviction,
disclosure of fees, and notification to residents of changed land use, while
prohibiting unreasonable rules, retaliatory evictions, and restrictions on a
resident's choice of unit vendors. 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. A few states offer more significant protection. For
example,
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there are provisions that limit the basis on which a landlord may terminate a
tenancy or increase its rent or prohibit a landlord from terminating a tenancy
solely by reason of the sale of the owner's building.
In addition to state regulation of the landlord-tenant relationship,
numerous counties and municipalities impose rent control on apartment buildings.
These ordinances may limit rent increases to fixed percentages, to percentages
of increases in the consumer price index, to increases set or approved by a
governmental agency, or to 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
borrower's ability to raise property rents may impair such borrower's ability to
repay its Mortgage Loan from its net operating income or the proceeds of a sale
or refinancing of the related Mortgaged Property.
Adverse economic conditions, either local, regional or national, may limit
the amount of rent that can be charged, may adversely affect tenants' ability to
pay rent and may result in a reduction in timely rent payments or a reduction in
occupancy levels. Occupancy and rent levels may also be affected by construction
of additional housing units, local military base closings, company relocations
and closings and national and local politics, including current or future rent
stabilization and rent control laws and agreements. Multifamily apartment units
are typically leased on a short-term basis, and consequently, the occupancy rate
of a multifamily rental property may be subject to rapid decline, including for
some of the foregoing reasons. In addition, the level of mortgage interest rates
may encourage tenants to purchase single-family housing rather than continue to
lease housing. The location and construction quality of a particular building
may affect the occupancy level as well as the rents that may be charged for
individual units. The characteristics of a neighborhood may change over time or
in relation to newer developments.
Mortgage Loans Secured by Cooperatively-Owned Apartment Buildings. A
cooperative apartment building and the land under the building are owned or
leased by a non-profit cooperative corporation. The cooperative corporation is
in turn owned by tenant-shareholders who, through ownership of stock, shares or
membership certificates in the corporation, receive proprietary leases or
occupancy agreements which confer exclusive rights to occupy specific apartments
or units. Generally, a tenant-shareholder of a cooperative corporation must make
a monthly maintenance payment to the corporation representing such
tenant-shareholder's pro rata share of the corporation's payments in respect of
any mortgage loan secured by, and all real property taxes, maintenance expenses
and other capital and ordinary expenses with respect to, the real property owned
by such cooperative corporation, less any other income that the cooperative
corporation may realize. Such payments to the cooperative corporation are in
addition to any payments of principal and interest the tenant-shareholder must
make on any loans of the tenant-shareholder secured by its shares in the
corporation.
A cooperative corporation is directly responsible for building management
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 the real property owned by such corporation, as well as all
other operating expenses of such property, is dependent primarily upon the
receipt of maintenance payments from the tenant-shareholders, together with any
rental income from units or commercial space that the cooperative corporation
might control. Unanticipated expenditures may in some cases have to be paid by
special assessments on the tenant-shareholders. A cooperative corporation's
ability to pay the amount of any balloon payment due at the maturity of a
mortgage loan secured by the real property owned by such cooperative corporation
depends primarily on its ability to refinance the mortgage loan. Neither the
Depositor nor any other person will have any obligation to provide refinancing
for any of the Mortgage Loans.
In a typical cooperative conversion plan, the owner of a rental apartment
building contracts to sell the building to a newly formed cooperative
corporation. Shares are allocated to each apartment unit by the owner or
sponsor, and the current tenants have a certain period to subscribe at prices
discounted from the prices to be offered to the public after such period. As
part of the consideration for the sale, the owner or sponsor receives all the
unsold shares of the cooperative corporation. The sponsor usually also controls
the corporation's board of directors and management for a limited period of
time.
Each purchaser of shares in the cooperative corporation generally enters
into a long-term proprietary lease which provides the shareholder with the right
to occupy a particular apartment unit. However, many cooperative conversion
plans
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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 from the owner of the shares allocated to such apartment unit.
Any applicable rent control or rent stabilization laws would continue to be
applicable to such subtenancy, and the subtenant may be entitled to renew its
lease for an indefinite number of times, with continued protection from rent
increases above those permitted by any applicable rent control and rent
stabilization laws. The shareholder is responsible for the maintenance payments
to the cooperative without regard to its receipt or non-receipt of rent from the
subtenant, which may be lower than maintenance payments on the unit.
Newly-formed cooperative corporations typically have the greatest concentration
of non-tenant shareholders.
Mortgage Loans Secured by Office Properties. Significant factors affecting
the value of office properties include, without limitation, the quality of the
tenants in the building, the physical attributes of the building in relation to
competing buildings, the location of the building with respect to the central
business district or population centers, demographic trends within the
metropolitan area to move away from or towards the central business district,
social trends combined with space management trends (which may change towards
options such as telecommuting or hoteling to satisfy space needs), tax
incentives offered to businesses by cities or suburbs adjacent to or near the
city where the building is located and the strength and stability of the market
area as a desirable business location. Office properties may be adversely
affected by an economic decline in the businesses operated by their tenants. 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. Competition is affected by a building's age,
condition, design (including floor sizes and layout), access to transportation,
availability of parking and ability to offer certain amenities to its tenants
(including sophisticated building systems, such as fiberoptic cables, satellite
communications or other base building technological features). Office properties
that are not equipped to accommodate the needs of modern business may become
functionally obsolete and thus non-competitive.
The success of an office property also depends on the local economy. A
company's decision to locate office headquarters in a given area, for example,
may be affected by such factors as labor cost and quality, tax environment and
quality of life matters, such as schools and cultural amenities. A central
business district may have a substantially different economy from that of a
suburb. The local economy will affect an office property's ability to attract
stable tenants on a consistent basis. In addition, the cost of refitting office
space for a new tenant is often higher than for other property types.
Mortgage Loans Secured by Hotel and Motel Properties. Hotel and motel
properties may involve different types of hotels and motels, including full
service hotels, resort hotels with many amenities, limited service hotels,
hotels and motels associated with national franchise chains, hotels and motels
associated with regional franchise chains and hotels that are not affiliated
with any franchise chain but may have their own brand identity. Various factors,
including location, quality and franchise affiliation affect the economic
performance of a hotel or motel. Adverse economic conditions, either local,
regional or national, may limit the amount that can be charged for a room and
may result in a reduction in occupancy levels. The construction of competing
hotels and motels can have similar effects. To meet competition in the industry
and to maintain economic values, continuing expenditures must be made for
modernizing, refurbishing, and maintaining existing facilities prior to the
expiration of their anticipated useful lives. Because hotel and motel rooms
generally are rented for short periods of time, hotels and motels tend to
respond more quickly to adverse economic conditions and competition than do
other commercial properties. Furthermore, the financial strength and
capabilities of the owner and operator of a hotel or motel may have an impact on
such hotel's or motel's quality of service and economic performance.
Additionally, the lodging industry, in certain locations, is seasonal in nature
and this seasonality can be expected to cause periodic fluctuations in room and
other revenues, occupancy levels, room rates and operating expenses. The demand
for particular accommodations may also be affected by changes in travel patterns
caused by changes in energy prices, strikes, relocation of highways, the
construction of additional highways and other factors.
The viability of any hotel or motel property that is part of a national or
regional hotel or motel chain depends in part on the continued existence and
financial strength of the franchisor, the public perception of the franchise
service mark and the duration of the franchise licensing agreement. The
transferability of franchise license agreements may be restricted and, in the
event of a foreclosure on any such hotel or motel property, the consent of the
franchisor for the continued use the
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franchise license by the hotel or motel property would be required. 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 hotel or
motel property, it is unlikely that the purchaser of such hotel or motel
property (or the trustee, servicer or special servicer, as the case may be)
would be entitled to the rights under any associated liquor license, and such
party would be required to apply in its own right for such license. There can be
no assurance that a new license could be obtained or that it could be obtained
promptly.
Mortgage Loans Secured by Industrial Properties. Significant factors that
affect the value of industrial properties are the quality of tenants, building
design and adaptability, the functionality of the finish-out and the location of
the property. 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 slow-down in the economy, and 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.
Furthermore, industrial properties may be adversely affected by the availability
of labor sources or a change in the proximity of supply sources. Because
industrial properties frequently have a single tenant, any such property is
heavily dependent on the success of such tenant's business.
Aspects of building site, design and adaptability affect the value of an
industrial property. Site characteristics which are valuable to an industrial
property include clear heights, column spacing, number of bays and bay depths,
divisibility, floor loading capacities, truck turning radius and overall
functionality and accessibility. Nevertheless, site characteristics of an
industrial property suitable for one tenant may not be appropriate for other
potential tenants, which may make it difficult to relet the property.
Location is also important because an industrial property requires the
availability of labor sources, proximity to supply sources and customers and
accessibility to rail lines, major roadways and other distribution channels.
Further, industrial properties may be adversely affected by economic declines in
the industry segment of their tenants.
Default and Loss Considerations with Respect to the Mortgage Loans.
Mortgage loans secured by liens on income-producing properties are substantially
different from loans made on the security of owner-occupied single-family homes.
The repayment of a loan secured by a lien on an income-producing property is
typically dependent upon the successful operation of such property (that is, its
ability to generate income). Moreover, as noted above, some or all of the
Mortgage Loans included in a particular Trust Fund may be nonrecourse loans.
Lenders typically look to the Debt Service Coverage Ratio of a loan secured
by income-producing property as an important factor in evaluating the likelihood
of default on such a loan. Unless otherwise defined in the related Prospectus
Supplement, the "Debt Service Coverage Ratio" of a Mortgage Loan at any given
time is the ratio of (i) the Net Operating Income derived from the related
Mortgaged Property for a twelve-month period to (ii) the annualized scheduled
payments of principal and/or interest on the Mortgage Loan and any other loans
senior thereto that are secured by the related Mortgaged Property. Unless
otherwise defined in the related Prospectus Supplement, "Net Operating Income"
means, for any given period, the total operating revenues derived from a
Mortgaged Property during such period, minus the total operating expenses
incurred in respect of such Mortgaged Property during such period other than (i)
noncash items such as depreciation and amortization, (ii) capital expenditures
and (iii) debt service on the related Mortgage Loan or on any other loans that
are secured by such Mortgaged Property. The Net Operating Income of a Mortgaged
Property will generally fluctuate over time and may or may not be sufficient to
cover debt service on the related Mortgage Loan at any given time. As the
primary source of the operating revenues of a nonowner-occupied,
income-producing property, rental income (and, with respect to a Mortgage Loan
secured by a Cooperative apartment building, maintenance payments from
tenant-stockholders of a Cooperative) may be affected by the condition of the
applicable real estate market and/or area economy. In addition, properties
typically 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, tend to be affected more rapidly by
changes in market or business conditions than do properties typically leased for
longer periods, such as warehouses, retail stores, office buildings and
industrial facilities. Commercial Properties may be owner-occupied or leased to
a small number of tenants. Thus, the Net Operating Income of such a Mortgaged
Property may depend substantially on the financial
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condition of the borrower or a tenant, and Mortgage Loans secured by liens on
such properties may pose a greater likelihood of default and loss than loans
secured by liens on Multifamily Properties or on multi-tenant Commercial
Properties.
Increases in operating expenses due to the general economic climate or
economic conditions in a locality or industry segment, such as increases in
interest rates, real estate tax rates, energy costs, labor costs and other
operating expenses, and/or to changes in governmental rules, regulations and
fiscal policies, may also affect the likelihood of default on a Mortgage Loan.
As may be further described in the related Prospectus Supplement, in some cases
leases of Mortgaged Properties may provide that the lessee, rather than the
borrower/landlord, is responsible for payment of operating expenses ("Net
Leases"). However, the existence of such "net of expense" provisions will result
in stable Net Operating Income to the borrower/landlord only to the extent that
the lessee is able to absorb operating expense increases while continuing to
make 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 must be liquidated following
a default. Unless otherwise defined in the related Prospectus Supplement, the
"Loan-to-Value Ratio" of a Mortgage Loan at any given time is the ratio
(expressed as a percentage) of (i) the then outstanding principal balance of the
Mortgage Loan and any other loans senior thereto that are secured by the related
Mortgaged Property to (ii) the Value of the related Mortgaged Property. Unless
otherwise specified in the related Prospectus Supplement, the "Value" of a
Mortgaged Property will be its fair market value as determined by an appraisal
of such property conducted by or on behalf of the Originator in connection with
the origination of such loan. The lower the Loan-to-Value Ratio, the greater the
percentage of the borrower's equity in a Mortgaged Property, and thus (a) the
greater the incentive of the borrower to perform under the terms of the related
Mortgage Loan (in order to protect such equity) and (b) the greater the cushion
provided to the lender against loss on liquidation following a default.
Loan-to-Value Ratios will not necessarily constitute an accurate measure of
the likelihood of liquidation loss in a pool of Mortgage Loans. For example, the
Value of a Mortgaged Property as of the date of initial issuance of the
Certificates of the related Series may be less than the Value determined at loan
origination, and will likely continue to fluctuate from time to time based upon
certain factors including changes in economic conditions and the real estate
market. Moreover, even when current, an appraisal is not necessarily a reliable
estimate of value. Appraised values of income-producing properties are generally
based on the market comparison method (recent resale value of comparable
properties at the date of the appraisal), the cost replacement method (the cost
of replacing the property at such date), the income capitalization method (a
projection of value based upon the property's projected net cash flow), or upon
a selection from or interpolation of the values derived from such methods. Each
of these appraisal methods can present analytical difficulties. It is often
difficult to find truly comparable properties that have recently been sold; the
replacement cost of a property may have little to do with its current market
value; and income capitalization is inherently based on inexact projections of
income and expense and the selection of an appropriate capitalization rate and
discount rate. Where more than one of these appraisal methods are used and
provide significantly different results, an accurate determination of value and,
correspondingly, a reliable analysis of the likelihood of default and loss, is
even more difficult.
Although there may be multiple methods for determining the Value of a
Mortgaged Property, Value will in all cases be affected by property performance.
As a result, if a Mortgage Loan defaults because the income generated by the
related Mortgaged Property is insufficient to cover operating costs and expenses
and pay debt service, then the Value of the Mortgaged Property will reflect such
and a liquidation loss may occur.
While the Depositor believes that the foregoing considerations are
important factors that generally distinguish loans secured by liens on
income-producing real estate from single-family mortgage loans, there can be no
assurance that all of such factors will in fact have been prudently considered
by the Originators of the Mortgage Loans, or that, for a particular Mortgage
Loan, they are complete or relevant. See "Risk Factors--Certain Factors
Affecting Delinquency, Foreclosure and Loss of the Mortgage Loans--General" and
"--Certain Factors Affecting Delinquency, Foreclosure and Loss of the Mortgage
Loans--Increased Risk of Default Associated With Balloon Payments".
Payment Provisions of the Mortgage Loans. All of the Mortgage Loans will
(i) have had original terms to maturity of not more than approximately 40 years
and (ii) provide for scheduled payments of principal, interest or both, to be
made
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on specified dates ("Due Dates") that occur monthly, quarterly, semi-annually or
annually. A Mortgage Loan (i) may provide for no accrual of interest or for
accrual of interest thereon at a Mortgage Rate that is fixed over its term or
that adjusts from time to time, or that may be converted at the borrower's
election from an adjustable to a fixed Mortgage Rate, or from a fixed to an
adjustable Mortgage Rate, (ii) may provide for level payments to maturity or for
payments that adjust from time to time to accommodate changes in the Mortgage
Rate or to reflect the occurrence of certain events, and may permit negative
amortization, (iii) may be fully amortizing or may be partially amortizing or
nonamortizing, with a balloon payment due on its stated maturity date, and (iv)
may prohibit over its term or for a certain period prepayments (the period of
such prohibition, a "Lock-out Period" and its date of expiration, a "Lock-out
Date") and/or require payment of a premium or a yield maintenance payment (a
"Prepayment Premium") in connection with certain prepayments, in each case as
described in the related Prospectus Supplement. A Mortgage Loan may also contain
a provision that entitles the lender to a share of appreciation of the related
Mortgaged Property, or profits realized from the operation or disposition of
such Mortgaged Property or the benefit, if any, resulting from the refinancing
of the Mortgage Loan (any such provision, an "Equity Participation"), as
described in the related Prospectus Supplement.
Mortgage Loan Information in Prospectus Supplements. Each Prospectus
Supplement will contain certain information pertaining to the Mortgage Loans in
the related Trust Fund, which, to the extent then applicable, will generally
include the following: (i) the aggregate outstanding principal balance and the
largest, smallest and average outstanding principal balance of the Mortgage
Loans, (ii) the type or types of property that provide security for repayment of
the Mortgage Loans, (iii) the earliest and latest origination date and maturity
date of the Mortgage Loans, (iv) the original and remaining terms to maturity of
the Mortgage Loans, or the respective ranges thereof, and the weighted average
original and remaining terms to maturity of the Mortgage Loans, (v) the
Loan-to-Value Ratios of the Mortgage Loans (either at origination or as of a
more recent date), or the range thereof, and the weighted average of such
Loan-to-Value Ratios, (vi) the Mortgage Rates borne by the Mortgage Loans, or
the range thereof, and the weighted average Mortgage Rate borne by the Mortgage
Loans, (vii) with respect to Mortgage Loans with adjustable Mortgage Rates ("ARM
Loans"), the index or indices upon which such adjustments are based, the
adjustment dates, the range of gross margins and the weighted average gross
margin, and any limits on Mortgage Rate adjustments at the time of any
adjustment and over the life of the ARM Loan, (viii) information regarding the
payment characteristics of the Mortgage Loans, including, without limitation,
balloon payment and other amortization provisions, Lock-out Periods and
Prepayment Premiums, (ix) the Debt Service Coverage Ratios of the Mortgage Loans
(either at origination or as of a more recent date), or the range thereof, and
the weighted average of such Debt Service Coverage Ratios, and (x) the
geographic distribution of the Mortgaged Properties on a state-by-state basis.
In appropriate cases, the related Prospectus Supplement will also contain
certain information available to the Depositor that pertains to the provisions
of leases and the nature of tenants of the Mortgaged Properties. If the
Depositor is unable to provide the specific information described above at the
time Offered Certificates of a Series are initially offered, more general
information of the nature described above will be provided in the related
Prospectus Supplement, and specific information will be set forth in a report
which will be available to purchasers of those Certificates at or before the
initial issuance thereof and will be filed as part of a Current Report on Form
8-K with the Commission within fifteen days following such issuance.
If any Mortgage Loan, or group of related Mortgage Loans, constitutes a
concentration of credit risk, financial statements or other financial
information with respect to the related Mortgaged Property or Mortgaged
Properties will be included in the related Prospectus Supplement.
If and to the extent available and relevant to an investment decision in
the Offered Certificates of the related Series, information regarding the
prepayment experience of a Master Servicer's multifamily and/or commercial
mortgage loan servicing portfolio will be included in the related Prospectus
Supplement. However, many servicers do not maintain records regarding such
matters or, at least, not in a format that can be readily aggregated. In
addition, the relevant characteristics of a Master Servicer's servicing
portfolio may be so materially different from those of the related Mortgage
Asset Pool that such prepayment experience would not be meaningful to an
investor. For example, differences in geographic dispersion, property type
and/or loan terms (e.g., mortgage rates, terms to maturity and/or prepayment
restrictions) between the two pools of loans could render the Master Servicer's
prepayment experience irrelevant. Because of the nature of the assets to be
serviced and administered by a Special Servicer, no comparable prepayment
information will be presented with respect to the Special Servicer's multifamily
and/or commercial mortgage loan servicing portfolio.
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MBS
MBS may include (i) private-label (that is, not issued, insured or
guaranteed by the United States or any agency or instrumentality thereof)
mortgage participations, mortgage pass-through certificates, collateralized
mortgage obligations or other mortgage-backed securities or (ii) certificates
issued and/or insured or guaranteed by the Federal Home Loan Mortgage
Corporation ("FHLMC"; and such certificates issued and/or insured or guaranteed
thereby, "FHLMC Certificates"), the Federal National Mortgage Association
("FNMA"; and such certificates issued and/or insured or guaranteed thereby,
"FNMA Certificates"), the Governmental National Mortgage Association ("GNMA";
and such certificates issued and/or insured or guaranteed thereby, "GNMA
Certificates") or the Federal Agricultural Mortgage Corporation ("FAMC"; and
such certificates issued and/or insured or guaranteed thereby, "FAMC
Certificates"), provided that, unless otherwise specified in the related
Prospectus Supplement, each MBS will evidence an interest in, or will be secured
by a pledge of, mortgage loans that conform to the descriptions of the Mortgage
Loans contained herein.
Except in the case of a pro rata mortgage participation in a single
mortgage loan or a pool of mortgage loans, each MBS included in a Mortgage Asset
Pool: (a) either will (i) have been acquired (other than from the Depositor or
an affiliate thereof) in bona fide secondary market transactions or (ii) if so
specified in the related Prospectus Supplement, be part of the Depositor's (or
an affiliate's) unsold allotments from the Depositor's (or an affiliate's)
previous offerings; and (b) unless it was issued by the Depositor or a trust
established thereby, will either (i) have been previously registered under the
Securities Act, (ii) be exempt from such registration requirements or (iii) have
been held for at least the holding period specified in Rule 144(k) under the
Securities Act.
Any MBS will have been issued pursuant to a participation and servicing
agreement, a pooling and servicing agreement, an indenture or similar agreement
(an "MBS Agreement"). The issuer of the MBS (the "MBS Issuer") and/or the
servicer of the underlying mortgage loans (the "MBS Servicer") will be parties
to the MBS Agreement, generally together with a trustee (the "MBS Trustee") or,
in the alternative, with the original purchaser or purchasers of the MBS.
The MBS may have been issued in one or more classes with characteristics
similar to the Classes of Certificates described herein. Distributions in
respect of the MBS will be made by the MBS Issuer, the MBS Servicer or the MBS
Trustee on the dates specified in the related Prospectus Supplement. The MBS
Issuer or the MBS Servicer or another person specified in the related Prospectus
Supplement may have the right or obligation to repurchase or substitute assets
underlying the MBS after a certain date or under other circumstances specified
in the related Prospectus Supplement.
Reserve funds, subordination or other credit support similar to that
described for the Certificates under "Description of Credit Support" may have
been provided with respect to the MBS. The type, characteristics and amount of
such credit support, if any, will be a function of the characteristics of the
underlying mortgage loans and other factors and generally will have been
established on the basis of the requirements of any rating agency that may have
assigned a rating to the MBS, or by the initial purchasers of the MBS.
The Prospectus Supplement for a Series that evidence interests in MBS will
specify: (i) the aggregate approximate initial and outstanding principal
amount(s) and type of the MBS to be included in the Trust Fund, (ii) the
original and remaining term(s) to stated maturity of the MBS, if applicable,
(iii) the pass-through or bond rate(s) of the MBS or the formula for determining
such rate(s), (iv) the payment characteristics of the MBS, (v) the MBS Issuer,
MBS Servicer and MBS Trustee, as applicable, of each of the MBS, (vi) a
description of the related credit support, if any, (vii) the circumstances under
which the related underlying mortgage loans, or the MBS themselves, may be
purchased prior to their maturity, (viii) the terms on which mortgage loans may
be substituted for those originally underlying the MBS, (ix) the type of
mortgage loans underlying the MBS and, to the extent appropriate under the
circumstances, such other information in respect of the underlying mortgage
loans described under "--Mortgage Loans--Mortgage Loan Information in Prospectus
Supplements", and (x) the characteristics of any cash flow agreements that
relate to the MBS.
The Depositor will provide the same information regarding the MBS in any
Trust Fund in its reports filed under the Exchange Act with respect to such
Trust Fund as was provided by the related MBS Issuer in its own such reports if
such
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MBS was publicly offered or the reports the related MBS Issuer provides the
related MBS Trustee if such MBS was privately issued.
Undelivered Mortgage Assets
Unless otherwise specified in the related Prospectus Supplement, the
aggregate outstanding principal balance of a Mortgage Asset Pool as of the
related Cut-off Date will equal or exceed the aggregate Certificate Principal
Balance of the related Series as of the related Closing Date. In the event that
Mortgage Assets initially delivered do not have an aggregate outstanding
principal balance as of the related Cut-off Date at least equal to the aggregate
Certificate Principal Balance of the related Series as of the related Closing
Date, the Depositor may deposit cash or Permitted Investments on an interim
basis with the Trustee for such Series on the related Closing Date in lieu of
delivering Mortgage Assets with an aggregate outstanding principal balance as of
the related Cut-off Date equal to the shortfall amount. During the 90-day period
following the related Closing Date, the Depositor will be entitled to obtain a
release of such cash or Permitted Investments to the extent that the Depositor
delivers a corresponding amount of the Undelivered Mortgage Assets. If and to
the extent all the Undelivered Mortgage Assets are not delivered during the
90-day period following the related Closing Date, such cash or, following
liquidation, such Permitted Investments will be applied to pay a corresponding
amount of principal of the Certificates of such Series to the extent set forth,
and on the dates specified, in the related Prospectus Supplement.
Certificate Accounts
Each Trust Fund will include a Certificate Account consisting of one or
more accounts established and maintained on behalf of the Certificateholders
into which all payments and collections received or advanced with respect to the
Mortgage Assets and other assets in the Trust Fund will be deposited to the
extent described herein and in the related Prospectus Supplement. See
"Description of the Pooling Agreements--Certificate Account".
Credit Support
If so provided in the Prospectus Supplement for the Offered Certificates of
any Series, partial or full protection against certain defaults and losses on
the Mortgage Assets in the related Trust Fund may be provided to one or more
Classes of Certificates of such Series in the form of subordination of one or
more other Classes of Certificates of such Series or by one or more other types
of Credit Support, which may include a letter of credit, a surety bond, an
insurance policy, a guarantee, a reserve fund or any combination thereof. The
amount and types of such Credit Support, the identity of the entity providing it
(if applicable) and related information with respect to each type of Credit
Support, if any, will be set forth in the Prospectus Supplement for the Offered
Certificate of any Series. See "Risk Factors--Credit Support Limitations" and
"Description of Credit Support".
Cash Flow Agreements
If so provided in the Prospectus Supplement for the Offered Certificates of
any Series, the related Trust Fund may include guaranteed investment contracts
pursuant to which moneys held in the funds and accounts established for such
Series will be invested at a specified rate. The Trust Fund may also include
interest rate exchange agreements, interest rate cap or floor agreements, or
other agreements designed to reduce the effects of interest rate fluctuations on
the Mortgage Assets on one or more Classes of Certificates. The principal terms
of any such Cash Flow Agreement, including, without limitation, provisions
relating to the timing, manner and amount of payments thereunder and provisions
relating to the termination thereof, will be described in the related Prospectus
Supplement. The related Prospectus Supplement will also identify the obligor
under the Cash Flow Agreement.
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YIELD AND MATURITY CONSIDERATIONS
General
The yield on any Offered Certificate will depend on the price paid by the
Certificateholder, the Pass-Through Rate of the Certificate and the amount and
timing of distributions on the Certificate. See "Risk Factors--Effect of
Prepayments on Average Life of Certificates". The following discussion
contemplates a Trust Fund that consists solely of Mortgage Loans. While the
characteristics and behavior of mortgage loans underlying an MBS can generally
be expected to have the same effect on the yield to maturity and/or weighted
average life of a Class of Certificates as will the characteristics and behavior
of comparable Mortgage Loans, the effect may differ due to the payment
characteristics of the MBS. If a Trust Fund includes MBS, the related Prospectus
Supplement will discuss the effect, if any, that the payment characteristics of
the MBS may have on the yield to maturity and weighted average lives of the
Offered Certificates of the related Series.
Pass-Through Rate
The Certificates of any Class within a Series may have a fixed, variable or
adjustable Pass-Through Rate, which may or may not be based upon the interest
rates borne by the Mortgage Loans in the related Trust Fund. The Prospectus
Supplement with respect to the Offered Certificates of any Series will specify
the Pass-Through Rate for each Class of such Offered Certificates or, in the
case of a Class of Offered Certificates with a variable or adjustable
Pass-Through Rate, the method of determining the Pass-Through Rate; the effect,
if any, of the prepayment of any Mortgage Loan on the Pass-Through Rate of one
or more Classes of such Offered Certificates; and whether the distributions of
interest on any Class of such Offered Certificates will be dependent, in whole
or in part, on the performance of any obligor under a Cash Flow Agreement.
Payment Delays
With respect to any Series, a period of time will elapse between the date
upon which payments on the Mortgage Loans in the related Trust Fund are due and
the Distribution Date on which such payments are passed through to
Certificateholders. That delay will effectively reduce the yield that would
otherwise be produced if payments on such Mortgage Loans were distributed to
Certificateholders on the date they were due.
Certain Shortfalls in Collections of Interest
When a principal prepayment in full or in part is made on a Mortgage Loan,
the borrower is generally charged interest on the amount of such prepayment only
through the date of such prepayment, instead of through the Due Date for the
next succeeding scheduled payment. However, interest accrued on the Offered
Certificates of any Series and distributable thereon on any Distribution Date
will generally correspond to interest accrued on the Mortgage Loans to their
respective Due Dates during the related Due Period. A "Due Period" will be a
specified time period (generally corresponding in length to the period between
Distribution Dates) and all scheduled payments on the Mortgage Loans in the
related Trust Fund that are due during a given Due Period will, to the extent
received the related Determination Date (as defined herein) or otherwise
advanced by the related Master Servicer, Special Servicer or other specified
person, be distributed to the holders of the Certificates of such Series on the
next succeeding Distribution Date. Consequently, if a prepayment on any Mortgage
Loan is distributable to Certificateholders on a particular Distribution Date,
but such prepayment is not accompanied by interest thereon to the Due Date for
such Mortgage Loan in the related Due Period, then the interest charged to the
borrower (net of servicing and administrative fees) may be less (such shortfall,
a "Prepayment Interest Shortfall") than the corresponding amount of interest
accrued and otherwise payable on the Certificates of the related Series. If and
to the extent that any such shortfall is allocated to a Class of Offered
Certificates, the yield thereon will be adversely affected. The Prospectus
Supplement for the Offered Certificates of each Series will describe the manner
in which any such shortfalls will be allocated among the respective Classes of
Certificates of such Series. The related Prospectus Supplement will also
describe any amounts available to offset such shortfalls.
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Yield and Prepayment Considerations
A Certificate's yield to maturity will be affected by the rate of principal
payments on the Mortgage Loans in the related Trust Fund and the allocation
thereof to reduce the Certificate Principal Balance (or the Certificate Notional
Amount, if applicable) of such Certificate. The rate of principal payments on
the Mortgage Loans in any Trust Fund will in turn be affected by the
amortization schedules thereof (which, in the case of ARM Loans, may change
periodically to accommodate adjustments to the Mortgage Rates thereon), the
dates on which any balloon payments are due, and the rate of principal
prepayments thereon (including for this purpose, voluntary prepayments by
borrowers and also prepayments resulting from liquidations of Mortgage Loans due
to defaults, casualties or condemnations affecting the related Mortgaged
Properties, or purchases of Mortgage Loans out of the related Trust Fund).
Because the rate of principal prepayments on the Mortgage Loans in any Trust
Fund will depend on future events and a variety of factors (as described below),
no assurance can be given as to such rate.
The extent to which the yield to maturity of a Class of Offered
Certificates of any Series may vary from the 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 in the related Trust
Fund are in turn distributed on such Certificates (or, in the case of a Class of
Stripped Interest Certificates, result in the reduction of the aggregate
Certificate Notional Amount thereof). An investor should consider, in the case
of any Offered Certificate purchased at a discount, the risk that a slower than
anticipated rate of principal payments on the Mortgage Loans in the related
Trust Fund could result in an actual yield to such investor that is lower than
the anticipated yield and, in the case of any Offered Certificate purchased at a
premium, the risk that a faster than anticipated rate of principal payments on
such Mortgage Loans could result in an actual yield to such investor that is
lower than the anticipated yield. In addition, if an investor purchases an
Offered Certificate at a discount (or premium), and principal payments are made
in reduction of the Certificate Principal Balance or Certificate Notional Amount
of such investor's Offered Certificate at a rate slower (or faster) than the
rate anticipated by the investor during any particular period, any consequent
adverse effects on such investor's yield would not be fully offset by a
subsequent like increase (or decrease) in the rate of principal payments.
In general, the aggregate Certificate Notional Amount of a Class of
Stripped Interest Certificates will either (i) be based on the principal
balances of some or all of the Mortgage Assets in the related Trust Fund or (ii)
equal the aggregate Certificate Principal Balance of one or more of the other
Classes of Certificates of the same Series. Accordingly, the yield on such
Stripped Interest Certificates will be inversely related to the rate at which
payments and other collections of principal are received on such Mortgage Assets
or distributions are made in reduction of the aggregate Certificate Principal
Balance of such Class or Classes of Certificates, as the case may be.
Consistent with the foregoing, if a Class of Certificates of any Series
consists of Stripped Interest Certificates or Stripped Principal Certificates, a
lower than anticipated rate of principal prepayments on the Mortgage Loans in
the related Trust Fund will negatively affect the yield to investors in Stripped
Principal Certificates, and a higher than anticipated rate of principal
prepayments on such Mortgage Loans will negatively affect the yield to investors
in Stripped Interest Certificates. If the Offered Certificates of a Series
include any such Certificates, the related Prospectus Supplement will include a
table showing the effect of various constant assumed levels of prepayment on
yields on such Certificates. Such tables will be intended to illustrate the
sensitivity of yields to various constant assumed prepayment rates and will not
be intended to predict, or to provide information that will enable investors to
predict, yields or prepayment rates.
The extent of prepayments of principal of the Mortgage Loans in any Trust
Fund may be affected by a number of factors, including, without limitation, the
availability of mortgage credit, the relative economic vitality of the area in
which the Mortgaged Properties are located, the quality of management of the
Mortgaged Properties, the servicing of the Mortgage Loans, possible changes in
tax laws and other opportunities for investment. In general, those factors which
increase the attractiveness of selling a Mortgaged Property or refinancing a
Mortgage Loan or which enhance a borrower's ability to do so, as well as those
factors which increase the likelihood of default under a Mortgage Loan, would be
expected to cause the rate of prepayment in respect of any Mortgage Asset Pool
to accelerate. In contrast, those factors having an opposite effect would be
expected to cause the rate of prepayment of any Mortgage Asset Pool to slow.
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The rate of principal payments on the Mortgage Loans in any Trust Fund may
also be affected by the existence of Lock-out Periods and requirements that
principal prepayments be accompanied by Prepayment Premiums, and by the extent
to which such provisions may be practicably enforced. To the extent enforceable,
such provisions could constitute either an absolute prohibition (in the case of
a Lock-out Period) or a disincentive (in the case of a Prepayment Premium) to a
borrower's voluntarily prepaying its Mortgage Loan, thereby slowing the rate of
prepayments.
The rate of prepayment on a pool of mortgage loans is likely to be affected
by prevailing market interest rates for mortgage loans of a comparable type,
term and risk level. When the prevailing market interest rate is below a
mortgage coupon, a borrower may have an increased incentive to refinance its
mortgage loan. Even in the case of ARM Loans, as prevailing market interest
rates decline, and without regard to whether the Mortgage Rates on such ARM
Loans decline in a manner consistent therewith, the related borrowers may have
an increased incentive to refinance for purposes of either (i) converting to a
fixed rate loan and thereby "locking in" such rate or (ii) taking advantage of a
different index, margin or rate cap or floor on another adjustable rate mortgage
loan. Therefore, as prevailing market interest rates decline, prepayment speeds
would be expected to accelerate.
Depending on prevailing market interest rates, the outlook for market
interest rates and economic conditions generally, some borrowers may sell
Mortgaged Properties in order to realize their equity therein, to meet cash flow
needs or to make other investments. In addition, some borrowers may 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. The Depositor
makes no representation as to the particular factors that will affect the
prepayment of the Mortgage Loans in any Trust Fund, as to the relative
importance of such factors, as to the percentage of the principal balance of
such Mortgage Loans that will be paid as of any date or as to the overall rate
of prepayment on such Mortgage Loans.
Weighted Average Life and Maturity
The rate at which principal payments are received on the Mortgage Loans in
any Trust Fund will affect the ultimate maturity and the weighted average life
of one or more Classes of the Certificates of the related Series. Unless
otherwise specified in the related Prospectus Supplement, 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 such instrument is
repaid to the investor.
The weighted average life and maturity of a Class of Certificates of any
Series will be influenced by the rate at which principal on the related Mortgage
Loans, whether in the form of scheduled amortization or prepayments (for this
purpose, the term "prepayment" includes voluntary prepayments by borrowers and
also prepayments resulting from liquidations of Mortgage Loans due to default,
casualties or condemnations affecting the related Mortgaged Properties and
purchases of Mortgage Loans out of the related Trust Fund), is paid to such
Class. Prepayment rates on loans are commonly measured relative to a prepayment
standard or model, such as the Constant Prepayment Rate ("CPR") prepayment model
or the Standard Prepayment Assumption ("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 such 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 assumes prepayment rates of 0.2%
per annum of the then outstanding principal balance of such 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 assumes a
constant prepayment rate of 6% per annum each month.
Neither CPR nor SPA nor any other prepayment model or assumption purports
to be a historical description of prepayment experience or a prediction of the
anticipated rate of prepayment of any particular pool of mortgage loans.
Moreover, the CPR and SPA models were developed based upon historical prepayment
experience for single-family mortgage loans. Thus, it is unlikely that the
prepayment experience of the Mortgage Loans included in any Trust Fund will
conform to any particular level of CPR or SPA.
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The Prospectus Supplement with respect to the Offered Certificates of any
Series will contain tables, if applicable, setting forth the projected weighted
average life of each Class of Offered Certificates of such Series with an
aggregate Certificate Principal Balance, and the percentage of the initial
aggregate Certificate Principal Balance of each such Class that would be
outstanding on specified Distribution Dates, based on the assumptions stated in
such Prospectus Supplement, including assumptions that prepayments on the
related Mortgage Loans are made at rates corresponding to various percentages of
CPR or SPA, or at such other rates specified in such Prospectus Supplement. Such
tables and assumptions will illustrate the sensitivity of the weighted average
lives of the Certificates to various assumed prepayment rates and will not be
intended to predict, or to provide information that will enable investors to
predict, the actual weighted average lives of the Certificates.
Other Factors Affecting Yield, Weighted Average Life and Maturity
Balloon Payments; Extensions of Maturity. Some or all of the Mortgage Loans
included in a particular Trust Fund may require that balloon payments be made at
maturity. Because the ability of a borrower to make a balloon payment typically
will depend upon its ability either to refinance the loan or to sell the related
Mortgaged Property, there is a possibility that Mortgage Loans that require
balloon payments may default at maturity, or that the maturity of such a
Mortgage Loan may be extended in connection with a workout. In the case of
defaults, recovery of proceeds may be delayed by, among other things, bankruptcy
of the borrower or adverse conditions in the market where the property is
located. In order to minimize losses on defaulted Mortgage Loans, the Master
Servicer or the Special Servicer, to the extent and under the circumstances set
forth herein and in the related Prospectus Supplement, may be authorized to
modify Mortgage Loans that are in default or as to which a payment default is
imminent. Any defaulted balloon payment or modification that extends the
maturity of a Mortgage Loan may delay distributions of principal on a Class of
Offered Certificates and thereby extend the weighted average life of such
Certificates and, if such Certificates were purchased at a discount, reduce the
yield thereon.
Negative Amortization. The weighted average life of a Class of Certificates
can be affected by Mortgage Loans that permit negative amortization to occur
(that is, Mortgage Loans that provide for the current payment of interest
calculated at a rate lower than the rate at which interest accrues thereon, with
the unpaid portion of such interest being added to the related principal
balance). Negative amortization on one or more Mortgage Loans in any Trust Fund
may result in negative amortization on the Offered Certificates of the related
Series. The related Prospectus Supplement will describe, if applicable, the
manner in which negative amortization in respect of the Mortgage Loans in any
Trust Fund is allocated among the respective Classes of Certificates of the
related Series. The portion of any Mortgage Loan negative amortization allocated
to a Class of Certificates may result in a deferral of some or all of the
interest payable thereon, which deferred interest may be added to the aggregate
Certificate Principal Balance thereof. In addition, an ARM Loan that permits
negative amortization would be expected during a period of increasing interest
rates to amortize at a slower rate (and perhaps not at all) than if interest
rates were declining or were remaining constant. Such slower rate of Mortgage
Loan amortization would correspondingly be reflected in a slower rate of
amortization for one or more Classes of Certificates of the related Series.
Accordingly, the weighted average lives of Mortgage Loans that permit negative
amortization (and that of the Classes of Certificates to which any such negative
amortization would be allocated or that would bear the effects of a slower rate
of amortization on such Mortgage Loans) may increase as a result of such
feature.
Negative amortization may occur in respect of an ARM Loan that (i) limits
the amount by which its scheduled payment may adjust in response to a change in
its Mortgage Rate, (ii) provides that its scheduled payment will adjust less
frequently than its Mortgage Rate or (iii) provides for constant scheduled
payments notwithstanding adjustments to its Mortgage Rate. Accordingly, during a
period of declining interest rates, the scheduled payment on such a 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
Rate, thereby resulting in the accelerated amortization of such Mortgage Loan.
Any such acceleration in amortization of its principal balance will shorten the
weighted average life of such Mortgage Loan and, correspondingly, the weighted
average lives of those Classes of Certificates entitled to a portion of the
principal payments on such Mortgage Loan.
The extent to which the yield on any Offered Certificate will be affected
by the inclusion in the related Trust Fund of Mortgage Loans that permit
negative amortization, will depend upon (i) whether such Offered Certificate was
purchased
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at a premium or a discount and (ii) the extent to which the payment
characteristics of such Mortgage Loans delay or accelerate the distributions of
principal on such Certificate (or, in the case of a Stripped Interest
Certificate, delay or accelerate the reduction of the Certificate Notional
Amount thereof). See "--Yield and Prepayment Considerations" above.
Foreclosures and Payment Plans. The number of foreclosures and the
principal amount of the Mortgage Loans that are foreclosed in relation to the
number and principal amount of Mortgage Loans that are repaid in accordance with
their terms will affect the weighted average lives of those Mortgage Loans and,
accordingly, the weighted average lives of and yields on the Certificates of the
related Series. Servicing decisions made with respect to the Mortgage Loans,
including the use of payment plans prior to a demand for acceleration and the
restructuring of Mortgage Loans in bankruptcy proceedings or otherwise, may also
have an effect upon the payment patterns of particular Mortgage Loans and thus
the weighted average lives of and yields on the Certificates of the related
Series.
Losses and Shortfalls on the Mortgage Assets. The yield to holders of the
Offered Certificates of any Series will directly depend on the extent to which
such holders are required to bear the effects of any losses or shortfalls in
collections arising out of defaults on the Mortgage Loans in the related Trust
Fund and the timing of such losses and shortfalls. In general, the earlier that
any such loss or shortfall occurs, the greater will be the negative effect on
yield for any Class of Certificates that is required to bear the effects
thereof.
The amount of any losses or shortfalls in collections on the Mortgage
Assets in any Trust Fund (to the extent not covered or offset by draws on any
reserve fund or under any instrument of Credit Support) will be allocated among
the respective 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, such allocations
may be effected by (i) a reduction in the entitlements to interest and/or the
aggregate Certificate Principal Balances of one or more such Classes of
Certificates and/or (ii) establishing a priority of payments among such Classes
of Certificates.
The yield to maturity on a Class of Subordinate Certificates may be
extremely sensitive to losses and shortfalls in collections on the Mortgage
Loans in the related Trust Fund.
Additional Certificate Amortization. In addition to entitling the holders
thereof to a specified portion (which may during specified periods range from
none to all) of the principal payments received on the Mortgage Assets in the
related Trust Fund, one or more Classes of Certificates of any Series, including
one or more Classes of Offered Certificates of such Series, may provide for
distributions of principal thereof from (i) amounts attributable to interest
accrued but not currently distributable on one or more Classes of Accrual
Certificates, (ii) Excess Funds or (iii) any other amounts described in the
related Prospectus Supplement. Unless otherwise specified in the related
Prospectus Supplement, "Excess Funds" will, in general, represent that portion
of the amounts distributable in respect of the Certificates of any Series on any
Distribution Date that represent (i) interest received or advanced on the
Mortgage Assets in the related Trust Fund that is in excess of the interest
currently accrued on the Certificates of such Series, or (ii) Prepayment
Premiums, payments from Equity Participations or any other amounts received on
the Mortgage Assets in the related Trust Fund that do not constitute interest
thereon or principal thereof.
The amortization of any Class of Certificates out of the sources described
in the preceding paragraph would shorten the weighted average life of such
Certificates and, if such Certificates were purchased at a premium, reduce the
yield thereon. The related Prospectus Supplement will discuss the relevant
factors to be considered in determining whether distributions of principal of
any Class of Certificates out of such sources is likely to have any material
effect on the rate at which such Certificates are amortized and the consequent
yield with respect thereto.
THE DEPOSITOR
The Depositor was incorporated in the State of Delaware on July 10, 1997
and is a wholly-owned subsidiary of Donaldson, Lufkin & Jenrette Inc., a
Delaware corporation. The Depositor was organized, among other things, for the
purposes of issuing debt securities and establishing trusts, selling beneficial
interests therein and acquiring and selling
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mortgage assets to such trusts. The principal executive offices of the Depositor
are located at 277 Park Avenue, New York, New York 10172. Its telephone number
is (212) 892-3000. The Depositor does not have and is not expected to have any
significant assets.
DESCRIPTION OF THE CERTIFICATES
General
Each Series will represent the entire beneficial ownership interest in the
Trust Fund created pursuant to the related Pooling Agreement. As described in
the related Prospectus Supplement, the Certificates of each Series, including
the Offered Certificates of such Series, may consist of one or more Classes of
Certificates that, among other things: (i) provide for the accrual of interest
on the aggregate Certificate Principal Balance or Certificate Notional Amount
thereof at a fixed, variable or adjustable rate; (ii) constitute Senior
Certificates or Subordinate Certificates; (iii) constitute Stripped Interest
Certificates or Stripped Principal Certificates; (iv) provide for distributions
of interest thereon or principal thereof that commence only after the occurrence
of certain events, such as the retirement of one or more other Classes of
Certificates of such Series; (v) provide for distributions of principal thereof
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 Mortgage Assets in the related Trust Fund; (vi)
provide for distributions of principal thereof to be made, subject to available
funds, based on a specified principal payment schedule or other methodology; or
(vii) provide for distributions based on collections on the Mortgage Assets in
the related Trust Fund attributable to Prepayment Premiums and Equity
Participations.
If so specified in the related Prospectus Supplement, a Class of Offered
Certificates may have two or more component parts, each having characteristics
that are otherwise described herein as being attributable to separate and
distinct Classes. For example, a Class of Offered Certificates may have an
aggregate Certificate Principal Balance on which it accrues interest at a fixed,
variable or adjustable rate. Such Class of Offered Certificates may also have
certain characteristics attributable to Stripped Interest Certificates insofar
as it may also entitle the holders thereof to distributions of interest accrued
on an aggregate Certificate Notional Amount at a different fixed, variable or
adjustable rate. In addition, a Class of Certificates may accrue interest on one
portion of its aggregate Certificate Principal Balance or Certificate Notional
Amount at one fixed, variable or adjustable rate and on another portion of its
aggregate Certificate Principal Balance or Certificate Notional Amount at a
different fixed, variable or adjustable rate.
Each Class of Offered Certificates of a Series will be issued in minimum
denominations corresponding to the Certificate Principal Balances or, in case of
certain Classes of Stripped Interest Certificates or REMIC Residual
Certificates, Certificate Notional Amounts or percentage interests, specified in
the related Prospectus Supplement. As provided in the related Prospectus
Supplement, one or more Classes of Offered Certificates of any Series may be
issued in fully registered, definitive form (such Certificates, "Definitive
Certificates") or may be offered in book-entry format (such Certificates,
"Book-Entry Certificates") through the facilities of DTC. The Offered
Certificates of each Series (if issued as Definitive Certificates) 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, other than
any tax or other governmental charge payable in connection therewith. Interests
in a Class of Book-Entry Certificates will be transferred on the book-entry
records of DTC and its participating organizations. If so specified in the
related Prospectus Supplement, arrangements may be made for clearance and
settlement through CEDEL, S.A. or the Euroclear System, if they are participants
in DTC.
Distributions
Distributions on the Certificates of each Series will be made on each
Distribution Date from the Available Distribution Amount for such Series and
such Distribution Date. Unless otherwise provided in the related Prospectus
Supplement, the "Available Distribution Amount" for any Series and any
Distribution Date will refer to the total of all payments or other collections
(or advances in lieu thereof) on, under or in respect of the Mortgage Assets and
any other
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assets included in the related Trust Fund that are available for distribution to
the holders of Certificates of such Series on such date. The particular
components of the Available Distribution Amount for any Series and Distribution
Date will be more specifically described in the related Prospectus Supplement.
In general, the Distribution Date for a Series will be the 25th day of each
month (or, if any such 25th day is not a business day, the next succeeding
business day), commencing in the month immediately following the month in which
such Series is issued.
Except as otherwise specified in the related Prospectus Supplement,
distributions on the Certificates of each Series (other than the final
distribution in retirement of any such Certificate) will be made to the persons
in whose names such Certificates are registered at the close of business on the
last business day of the month preceding the month in which the applicable
Distribution Date occurs (the "Record Date"), and the amount of each
distribution will be determined as of the close of business on the date (the
"Determination Date") specified in the related Prospectus Supplement. All
distributions with respect to each Class of Certificates on each Distribution
Date will be allocated pro rata among the outstanding Certificates in such Class
in proportion to the respective Percentage Interests evidenced thereby unless
otherwise specified in the related Prospectus Supplement. Payments will be made
either by wire transfer in immediately available funds to the account of a
Certificateholder at a bank or other entity having appropriate facilities
therefor, if such Certificateholder has provided the person required to make
such payments with wiring instructions no later than the related Record Date or
such other date specified in the related Prospectus Supplement (and, if so
provided in the related Prospectus Supplement, such Certificateholder holds
Certificates in the requisite amount or denomination specified therein), or by
check mailed to the address of such Certificateholder as it appears on the
Certificate Register; provided, however, that the final distribution in
retirement of any Class of Certificates (whether Definitive Certificates or
Book-Entry Certificates) will be made only upon presentation and surrender of
such Certificates at the location specified in the notice to Certificateholders
of such final distribution. The undivided percentage interest (the "Percentage
Interest") in any particular Class of Offered Certificates represented by any
Certificate of such Class will be equal to the percentage obtained by dividing
the initial Certificate Principal Balance or Certificate Notional Amount, as
applicable, of such Certificate by the initial aggregate Certificate Principal
Balance or Certificate Notional Amount, as the case may be, of such Class.
Distributions of Interest on the Certificates
Each Class of Certificates of each Series (other than certain Classes of
Stripped Principal Certificates and certain Classes of REMIC Residual
Certificates that have no Pass-Through Rate) may have a different Pass-Through
Rate, which in each case may be fixed, variable or adjustable. The related
Prospectus Supplement will specify the Pass-Through Rate or, in the case of a
variable or adjustable Pass-Through Rate, the method for determining the
Pass-Through Rate, for each Class of Offered Certificates. Unless otherwise
specified in the related Prospectus Supplement, interest on the Certificates of
each Series will be calculated on the basis of a 360-day year consisting of
twelve 30-day months.
Distributions of interest in respect of any Class of Certificates (other
than a Class of Accrual Certificates, which will be entitled to distributions of
accrued interest commencing only on the Distribution Date, or under the
circumstances, specified in the related Prospectus Supplement, and other than
any Class of Stripped Principal Certificates or REMIC Residual Certificates that
is not entitled to any distributions of interest) will be made on each
Distribution Date based on the Accrued Certificate Interest for such Class and
such Distribution Date, subject to the sufficiency of that portion, if any, of
the Available Distribution Amount allocable to such Class on such Distribution
Date. Prior to the time interest is distributable on any Class of Accrual
Certificates, the amount of Accrued Certificate Interest otherwise distributable
on such Class will be added to the aggregate Certificate Principal Balance
thereof on each Distribution Date or otherwise deferred as described in the
related Prospectus Supplement. With respect to each Class of Certificates (other
than certain Classes of Stripped Interest Certificates and certain Classes of
REMIC Residual Certificates), the "Accrued Certificate Interest" for each
Distribution Date will be equal to interest at the applicable Pass-Through Rate
accrued for a specified period (generally the most recently ended calendar
month) on the aggregate Certificate Principal Balance of such Class of
Certificates outstanding immediately prior to such Distribution Date. Unless
otherwise provided in the related Prospectus Supplement, the Accrued Certificate
Interest for each Distribution Date with respect to a Class of Stripped Interest
Certificates will be similarly calculated except that it will accrue on an
aggregate Certificate Notional Amount that, in general, will either be (i) based
on the principal balances of some or all of the Mortgage Assets in the related
Trust Fund or (ii) equal to the aggregate Certificate Principal Balances of one
or more other Classes of Certificates of the same Series. Reference to a
Certificate
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Notional Amount with respect to a Stripped Interest Certificate is solely for
convenience in making certain calculations and does not represent the right to
receive any distributions of principal. If so specified in the related
Prospectus Supplement, the amount of Accrued Certificate Interest that is
otherwise distributable on (or, in the case of Accrual Certificates, that may
otherwise be added to the aggregate Certificate Principal Balance of) one or
more Classes of the Certificates of a Series may be reduced to the extent that
any Prepayment Interest Shortfalls, as described under "Yield and Maturity
Considerations--Certain Shortfalls in Collections of Interest", exceed the
amount of any sums that are applied to offset the amount of such shortfalls. The
particular manner in which such shortfalls will be allocated among some or all
of the Classes of Certificates of that Series will be specified in the related
Prospectus Supplement. The related Prospectus Supplement will also describe the
extent to which the amount of Accrued Certificate Interest that is otherwise
distributable on (or, in the case of Accrual Certificates, that may otherwise be
added to the aggregate Certificate Principal Balance of) a Class of Offered
Certificates may be reduced as a result of any other contingencies, including
delinquencies, losses and deferred interest on or in respect of the Mortgage
Assets in the related Trust Fund. Unless otherwise provided in the related
Prospectus Supplement, any reduction in the amount of Accrued Certificate
Interest otherwise distributable on a Class of Certificates by reason of the
allocation to such Class of a portion of any deferred interest on or in respect
of the Mortgage Assets in the related Trust Fund will result in a corresponding
increase in the aggregate Certificate Principal Balance of such Class. See "Risk
Factors--Effect of Prepayments on Average Life of Certificates" and "--Effect of
Prepayments on Yield of Certificates" and "Yield and Maturity
Considerations--Certain Shortfalls in Collections of Interest".
Distributions of Principal of the Certificates
Each Class of Certificates of each Series (other than certain Classes of
Stripped Interest Certificates and certain Classes of REMIC Residual
Certificates) will have an aggregate Certificate Principal Balance, which, at
any time, will equal the then maximum amount that the holders of Certificates of
such Class will be entitled to receive as principal out of the future cash flow
on the Mortgage Assets and other assets included in the related Trust Fund. The
aggregate outstanding Certificate Principal Balance of a Class of Certificates
will be reduced by distributions of principal made thereon from time to time
and, if and to the extent so provided in the related Prospectus Supplement,
further by any losses incurred in respect of the related Mortgage Assets
allocated thereto from time to time. In turn, the outstanding aggregate
Certificate Principal Balance of a Class of Certificates may be increased as a
result of any deferred interest on or in respect of the related Mortgage Assets
being allocated thereto from time to time, and will be increased, in the case of
a Class of Accrual Certificates prior to the Distribution Date on which
distributions of interest thereon are required to commence, by the amount of any
Accrued Certificate Interest in respect thereof (reduced as described above).
Unless otherwise specified in the related Prospectus Supplement, the initial
aggregate Certificate Principal Balance of all Classes of a Series will not be
greater than the aggregate outstanding principal balance of the related Mortgage
Assets as of the related Cut-off Date. The initial aggregate Certificate
Principal Balance of each Class of Offered Certificates will be specified in the
related Prospectus Supplement. As and to the extent described in the related
Prospectus Supplement, distributions of principal with respect to a Series will
be made on each Distribution Date to the holders of the Class or Classes of
Certificates of such Series entitled thereto until the Certificate Principal
Balances of such Certificates have been reduced to zero. Distributions of
principal with respect to one or more Classes of Certificates may be made at a
rate that is faster (and, in some cases, substantially faster) than the rate at
which payments or other collections of principal are received on the Mortgage
Assets in the related Trust Fund. Distributions of principal with respect to one
or more Classes of Certificates may not commence until the occurrence of certain
events, such as the retirement of one or more other Classes of Certificates of
the same Series, or may be made at a rate that is slower (and, in some cases,
substantially slower) than the rate at which payments or other collections of
principal are received on the Mortgage Assets in the related Trust Fund.
Distributions of principal with respect to one or more Classes of Certificates
(each such Class, a "Controlled Amortization Class") may be made, subject to
available funds, based on a specified principal payment schedule. Distributions
of principal with respect to one or more other Classes of Certificates (each
such Class, a "Companion Class") may be contingent on the specified principal
payment schedule for a Controlled Amortization Class of the same Series and the
rate at which payments and other collections of principal on the Mortgage Assets
in the related Trust Fund are received. Unless otherwise specified in the
related Prospectus Supplement, distributions of principal of any Class of
Offered Certificates will be made on a pro rata basis among all of the
Certificates of such Class.
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Distributions on the Certificates in Respect of Prepayment Premiums or in
Respect of Equity Participations
If so provided in the related Prospectus Supplement, Prepayment Premiums or
payments in respect of Equity Participations received on or in connection with
the Mortgage Assets in any Trust Fund will be distributed on each Distribution
Date to the holders of the Class of Certificates of the related Series entitled
thereto in accordance with the provisions described in such Prospectus
Supplement. Alternatively, such items may be retained by the Depositor or any of
its affiliates or by any other specified person and/or may be excluded as Trust
Assets.
Allocation of Losses and Shortfalls
The amount of any losses or shortfalls in collections on the Mortgage
Assets in any Trust Fund (to the extent not covered or offset by draws on any
reserve fund or under any instrument of Credit Support) will be allocated among
the respective 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, such allocations
may be effected by (i) a reduction in the entitlements to interest and/or the
aggregate Certificate Principal Balances of one or more such Classes of
Certificates and/or (ii) establishing a priority of payments among such Classes
of Certificates. See "Description of Credit Support".
Advances in Respect of Delinquencies
If and to the extent provided in the related Prospectus Supplement, if a
Trust Fund includes Mortgage Loans, the Master Servicer, the Special Servicer,
the Trustee, any provider of Credit Support and/or any other specified person
may be obligated to advance, or have the option of advancing, on or before each
Distribution Date, from its or their own funds or from excess funds held in the
related Certificate Account that are not part of the Available Distribution
Amount for the related Series for such Distribution Date, an amount up to the
aggregate of any payments of principal (other than the principal portion of any
balloon payments) and interest that were due on or in respect of such Mortgage
Loans during the related Due Period and were delinquent on the related
Determination Date.
Advances are intended to maintain a regular flow of scheduled interest and
principal payments to holders of the Class or Classes of Certificates entitled
thereto, rather than to guarantee or insure against losses. Accordingly, all
advances made out of a specific entity's own funds will be reimbursable out of
related recoveries on the Mortgage Loans (including amounts drawn under any fund
or instrument constituting Credit Support) with respect to which such advances
were made (as to any Mortgage Loan, "Related Proceeds") and such other specific
sources as may be identified in the related Prospectus Supplement, including, in
the case of a Series that includes one or more Classes of Subordinate
Certificates, if so identified, collections on other Mortgage Assets in the
related Trust Fund that would otherwise be distributable to the holders of one
or more Classes of such Subordinate Certificates. No advance will be required to
be made by a Master Servicer, Special Servicer or Trustee if, in the judgment of
the Master Servicer, Special Servicer or Trustee, as the case may be, such
advance would not be recoverable from Related Proceeds or another specifically
identified source (any such advance, a "Nonrecoverable Advance"); and, if
previously made by a Master Servicer, Special Servicer or Trustee, a
Nonrecoverable Advance will be reimbursable thereto from any amounts in the
related Certificate Account prior to any distributions being made to the related
Series of Certificateholders.
If advances have been made by a Master Servicer, Special Servicer, Trustee
or other entity from excess funds in a Certificate Account, such Master
Servicer, Special Servicer, Trustee or other entity, as the case may be, will be
required to replace such funds in such Certificate Account on or prior to any
future Distribution Date to the extent that funds in such Certificate Account on
such Distribution Date are less than payments required to be made to the related
Series of Certificateholders on such date. If so specified in the related
Prospectus Supplement, the obligation of a Master Servicer, Special Servicer,
Trustee or other entity to make advances may be secured by a cash advance
reserve fund or a surety bond. If applicable, information regarding the
characteristics of, and the identity of any obligor on, any such surety bond,
will be set forth in the related Prospectus Supplement.
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If and to the extent so provided in the related Prospectus Supplement, any
entity making advances will be entitled to receive interest on certain or all of
such advances for a specified period during which such advances are outstanding
at the rate specified in such Prospectus Supplement, and such entity will be
entitled to payment of such interest periodically from general collections on
the Mortgage Loans in the related Trust Fund prior to any payment to the related
Series of Certificateholders or as otherwise provided in the related Pooling
Agreement and described in such Prospectus Supplement.
The Prospectus Supplement for the Offered Certificates of any Series
evidencing an interest in a Trust Fund that includes MBS will describe any
comparable advancing obligation of a party to the related Pooling Agreement or
of a party to the related MBS Agreement.
Reports to Certificateholders
On each Distribution Date, together with the distribution to the holders of
each Class of the Offered Certificates of a Series, a Master Servicer, Manager
or Trustee, as provided in the related Prospectus Supplement, will forward to
each such holder, a statement (a "Distribution Date Statement") substantially in
the form, or specifying the information, set forth in the related Prospectus
Supplement. In general, the Distribution Date Statement for each Distribution
Date will detail the distributions on the Certificates of the related Series on
such Distribution Date and the performance of the Mortgage Assets in the related
Trust Fund.
Within a reasonable period of time after the end of each calendar year, the
Master Servicer, Manager or Trustee, as the case may be, for a Series will be
required to furnish to each person who at any time during the calendar year was
a holder of an Offered Certificate of such Series a statement containing
information regarding the principal, interest and other distributions on the
applicable Class of Offered Certificates, aggregated for such calendar year or
the applicable portion thereof during which such person was a Certificateholder.
Such obligation will be deemed to have been satisfied to the extent that
substantially comparable information is provided pursuant to any requirements of
the Code as are from time to time in force. See, however, "--Book-Entry
Registration and Definitive Certificates" below.
If the Trust Fund for a Series includes MBS, the ability of the related
Master Servicer, Manager or Trustee, as the case may be, to include in any
Distribution Date Statement information regarding the mortgage loans underlying
such MBS will depend on the reports received with respect to such MBS. In such
cases, the related Prospectus Supplement will describe the loan-specific
information to be included in the Distribution Date Statements that will be
forwarded to the holders of the Offered Certificates of that Series in
connection with distributions made to them.
Voting Rights
The voting rights evidenced by each Series (as to such Series, the "Voting
Rights") will be allocated among the respective Classes of Certificates of such
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 related Pooling Agreement and as otherwise
specified in the related Prospectus Supplement. See "Description of the Pooling
Agreements--Amendment". The holders of specified amounts of Certificates of a
particular Series will have the right to act as a group to remove the related
Trustee and also upon the occurrence of certain events which if continuing would
constitute an Event of Default on the part of the related Master Servicer,
Special Servicer or REMIC Administrator. See "Description of the Pooling
Agreements--Events of Default", "--Rights Upon Event of Default" and
"--Resignation and Removal of the Trustee".
Termination
The obligations created by the Pooling Agreement for each Series will
terminate following (i) the final payment or other liquidation of the last
Mortgage Asset subject thereto or the disposition of all property acquired upon
foreclosure of any Mortgage Loan subject thereto and (ii) the payment (or
provision for payment) to the Certificateholders of that Series of all amounts
required to be paid to them pursuant to such Pooling Agreement. Written notice
of termination of a Pooling
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Agreement will be given to each Certificateholder of the related Series, and the
final distribution will be made only upon presentation and surrender of the
Certificates of such Series at the location to be specified in the notice of
termination.
If so specified in the related Prospectus Supplement, the Certificates of
any Series may be subject to optional early retirement through the repurchase of
the Mortgage Assets in the related Trust Fund by the party or parties specified
therein, under the circumstances and in the manner set forth therein.
In addition, if so provided in the related Prospectus Supplement, upon the
reduction of the aggregate Certificate Principal Balance of a specified Class or
Classes of Certificates by a specified percentage or amount or upon a specified
date, a party designated therein may be authorized or required to solicit bids
for the purchase of all the Mortgage Assets of the related Trust Fund, or of a
sufficient portion of such Mortgage Assets to retire such Class or Classes of
Certificates, under the circumstances and in the manner set forth therein. The
solicitation of bids will be conducted in a commercially reasonable manner and,
generally, assets will be sold at their fair market value. Circumstances may
arise in which such fair market value may be less than the unpaid balance of the
Mortgage Loans sold and therefore, as a result of such a sale, the
Certificateholders of one or more Classes of Certificates may receive an amount
less than the aggregate Certificate Principal Balance of, and accrued unpaid
interest on, their Certificates.
Book-Entry Registration and Definitive Certificates
If so provided in the Prospectus Supplement for the Offered Certificates of
any Series, one or more Classes of such Offered Certificates will be offered in
book-entry format through the facilities of DTC, and each such Class will be
represented by one or more global Certificates registered in the name of DTC or
its nominee. If so provided in the Prospectus Supplement, arrangements may be
made for clearance and settlement through the Euroclear System or CEDEL, S.A.,
if they are participants in DTC.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking corporation" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
was created to hold securities for DTC Participants and facilitate the clearance
and settlement of securities transactions between DTC Participants through
electronic computerized book-entry changes in their accounts, thereby
eliminating 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 as account with DTC. The rules applicable to DTC
and DTC Participants are on file with the Commission.
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 such purpose.
In turn, the Financial Intermediary's ownership of such Certificates will be
recorded on the records of DTC (or of a participating firm that acts as agent
for the Financial Intermediary, whose interest will in turn be recorded on the
records of DTC, if the beneficial owner's Financial Intermediary is not a DTC
Participant). Therefore, the beneficial owner must rely on the foregoing
procedures to evidence its beneficial ownership of such Certificates. The
beneficial ownership interest of the owner of a Book-Entry Certificate (a
"Certificate Owner") may only be transferred by compliance with the rules,
regulations and procedures of such Financial Intermediaries and DTC
Participants.
DTC has no knowledge of the actual Certificate Owners; DTC's records
reflect only the identity of the DTC Participants to whose accounts such
Certificates are credited, which may or may not be the Certificate Owners. The
DTC Participants will remain responsible for keeping account of their holdings
on behalf of their customers.
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Conveyance of notices and other communications by DTC to DTC Participants
and by DTC Participants to Financial Intermediaries and Certificate Owners will
be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Distributions on the Book-Entry Certificates will be made to DTC. DTC's
practice is to credit DTC Participants' accounts on the related Distribution
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 such date.
Disbursement of such distributions by DTC Participants to Financial
Intermediaries and Certificate Owners will be 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", and will be the
responsibility of each such DTC Participant (and not of DTC, the Depositor or
any Trustee, Master Servicer, Special Servicer or Manager), subject to any
statutory or regulatory requirements as may be in effect from time to time.
Accordingly, under a book-entry system, Certificate Owners may receive payments
after the related Distribution Date.
Unless otherwise provided in the related Prospectus Supplement, the only
"Certificateholder" (as such term is used in the related Pooling Agreement) of
Book-Entry Certificates will be the nominee of DTC, and the Certificate Owners
will not be recognized as Certificateholders under the Pooling Agreement.
Certificate Owners will be permitted to exercise the rights of
Certificateholders under the related Pooling Agreement only indirectly through
the DTC Participants who in turn will exercise their rights through DTC. The
Depositor has been informed that DTC will take action permitted to be taken by a
Certificateholder under a Pooling Agreement only at the direction of one or more
DTC Participants to whose account with DTC interests in the Book-Entry
Certificates are credited. DTC may take conflicting actions with respect to the
Book-Entry Certificates to the extent that such actions are taken on behalf of
Financial Intermediaries whose holdings include such Certificates.
Because DTC can act only on behalf of DTC Participants, who in turn act on
behalf of Financial Intermediaries and certain Certificate Owners, the ability
of a Certificate Owner to pledge its interest in Book-Entry Certificates to
persons or entities that do not participate in the DTC system, or otherwise take
actions in respect of its interest in Book-Entry Certificates, may be limited
due to the lack of a physical certificate evidencing such interest.
Unless otherwise specified in the related Prospectus Supplement,
Certificates initially issued in book-entry form will be issued as Definitive
Certificates to Certificate Owners or their nominees, rather than to DTC or its
nominee, only if (i) the Depositor advises the Trustee in writing that DTC is no
longer willing or able to discharge properly its responsibilities as depository
with respect to such Certificates and the Depositor is unable to locate a
qualified successor or (ii) the Depositor, at its option, elects to terminate
the book-entry system through DTC with respect to such Certificates. Upon the
occurrence of either of the events described in the preceding sentence, DTC will
be required to notify all DTC Participants of the availability through DTC of
Definitive Certificates. Upon surrender by DTC of the certificate or
certificates representing a Class of Book-Entry Certificates, together with
instructions for registration, the Trustee for the related Series or other
designated party will be required to issue to the Certificate Owners identified
in such instructions the Definitive Certificates to which they are entitled, and
thereafter the holders of such Definitive Certificates will be recognized as
"Certificateholders" under and within the meaning of the related Pooling
Agreement.
DESCRIPTION OF THE POOLING AGREEMENTS
General
The Certificates of each Series will be issued pursuant to a Pooling
Agreement. In general, the parties to a Pooling Agreement will include the
Depositor, the Trustee, the Master Servicer, the Special Servicer and, if one or
more REMIC elections have been made with respect to the Trust Fund, the REMIC
Administrator. However, a Pooling Agreement that relates to a Trust Fund that
includes MBS may include a Manager as a party, but may not include a Master
Servicer, Special Servicer or other servicer as a party. All parties to each
Pooling Agreement under which Certificates of a Series are issued will be
identified in the related Prospectus Supplement. If so specified in the related
Prospectus Supplement, the Mortgage Asset Seller or an affiliate thereof may
perform the functions of Master Servicer, Special Servicer, Manager or REMIC
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Administrator. If so specified in the related Prospectus Supplement, the Master
Servicer may also perform the duties of Special Servicer, and the Master
Servicer, the Special Servicer or the Trustee may also perform the duties of
REMIC Administrator. Any party to a Pooling Agreement or any affiliate thereof
may own Certificates issued thereunder; however, except in limited circumstances
(including with respect to required consents to certain amendments to a Pooling
Agreement), Certificates issued thereunder that are held by the Master Servicer
or Special Servicer for the related Series will not be allocated Voting Rights.
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 each Pooling Agreement will vary depending upon the nature of the
Certificates to be issued thereunder and the nature of the related Trust Fund.
The following summaries describe certain provisions that may appear in a Pooling
Agreement. The Prospectus Supplement for the Offered Certificates of any Series
will describe any provision of the related Pooling Agreement that materially
differs from the description thereof contained in this Prospectus. The summaries
herein do not purport to be complete and are subject to, and are qualified in
their entirety by reference to, all of the provisions of the Pooling Agreement
for each Series and the description of such provisions in the related Prospectus
Supplement. The Depositor will provide a copy of the Pooling Agreement (without
exhibits) that relates to any Series without charge upon written request of a
holder of a Certificate of such Series addressed to it at its principal
executive offices specified herein under "The Depositor".
Assignment of Mortgage Assets
General. At the time of initial issuance of any Series, the Depositor will
assign (or cause to be assigned) to the designated Trustee the Mortgage Assets
to be included in the related Trust Fund, together with, unless otherwise
specified in the related Prospectus Supplement, all principal and interest to be
received on or with respect to such Mortgage Assets after the related Cut-off
Date, other than principal and interest due on or before the related Cut-off
Date. The Trustee will, concurrently with such assignment, deliver the
Certificates of such Series to or at the direction of the Depositor in exchange
for the Mortgage Assets and the other assets to be included in the related Trust
Fund. Each Mortgage Asset will be identified in a schedule appearing as an
exhibit to the related Pooling Agreement. Such schedule generally will include
detailed information that pertains to each Mortgage Asset included in the
related Trust Fund, which information will typically include: (i) in the case of
a Mortgage Loan, the address of the related Mortgaged Property and type of such
property, the Mortgage Rate (and, if applicable, the applicable index, gross
margin, adjustment date and any rate cap information), the original and
remaining term to maturity, the amortization term, and the original and
outstanding principal balance; and (ii) in the case of an MBS, the outstanding
principal balance and the pass-through rate or coupon rate.
Delivery of Mortgage Loans. In addition, unless otherwise specified in the
related Prospectus Supplement, the Depositor will, as to each Mortgage Loan to
be included in a Trust Fund, deliver, or cause to be delivered, to the related
Trustee (or to a custodian appointed by the Trustee as described below) the
Mortgage Note endorsed, without recourse, either in blank or to the order of
such Trustee (or its nominee), the Mortgage with evidence of recording indicated
thereon (except for any Mortgage not returned from the public recording office),
an assignment of the Mortgage in blank or to the Trustee (or its nominee) in
recordable form, together with any intervening assignments of the Mortgage with
evidence of recording thereon (except for any such assignment not returned from
the public recording office), and, if applicable, any riders or modifications to
such Mortgage Note and Mortgage, together with certain other documents at such
times as set forth in the related Pooling Agreement. Such assignments may be
blanket assignments covering Mortgages on Mortgaged Properties located in the
same county, if permitted by law. Notwithstanding the foregoing, a Trust Fund
may include Mortgage Loans where the original Mortgage Note is not delivered to
the Trustee if the Depositor delivers, or causes to be delivered, to the related
Trustee (or such custodian) a copy or a duplicate original of the Mortgage Note,
together with an affidavit of the Depositor or a prior holder of such Mortgage
Note certifying that the original thereof has been lost or destroyed. In
addition, if the Depositor cannot deliver, with respect to any Mortgage Loan,
the Mortgage or any intervening assignment with evidence of recording thereon
concurrently with the execution and delivery of the related Pooling Agreement
because of a delay caused by the public recording office, the Depositor will
deliver, or cause to be delivered, to the related Trustee (or such custodian) a
true and correct photocopy of such Mortgage or assignment as submitted for
recording. The Depositor will deliver, or cause to be delivered, to the related
Trustee (or such custodian) such Mortgage or assignment with evidence of
recording indicated thereon after receipt thereof from the public recording
office. If the Depositor cannot deliver,
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with respect to any Mortgage Loan, the Mortgage or any intervening assignment
with evidence of recording thereon concurrently with the execution and delivery
of the related Pooling Agreement because such Mortgage or assignment has been
lost, the Depositor will deliver, or cause to be delivered, to the related
Trustee (or such custodian) a true and correct photocopy of such Mortgage or
assignment with evidence of recording thereon. Unless otherwise specified in the
related Prospectus Supplement, assignments of Mortgage to the Trustee (or its
nominee) will be recorded in the appropriate public recording office, except in
states where, in the opinion of counsel acceptable to the Trustee, such
recording is not required to protect the Trustee's interests in the Mortgage
Loan against the claim of any subsequent transferee or any successor to or
creditor of the Depositor or the originator of such Mortgage Loan.
The Trustee (or a custodian appointed by the Trustee) for a Series will be
required to review the Mortgage Loan documents delivered to it within a
specified period of days after receipt thereof, and the Trustee (or such
custodian) will hold such documents in trust for the benefit of the
Certificateholders of such Series.
The Trustee will be authorized at any time to appoint one or more
custodians pursuant to a custodial agreement to hold title to the Mortgage Loans
in any Trust Fund and to maintain possession of and, if applicable, to review
the documents relating to such Mortgage Loans, in any case as the agent of the
Trustee.
Delivery of MBS. Unless otherwise specified in the related Prospectus
Supplement, the related Pooling Agreement will provide that such steps will be
taken as will be necessary to cause the Trustee to become the registered owner
of each MBS which is included in a Trust Fund and to provide for all
distributions on each such MBS to be made either directly to the Trustee or to
an MBS Administrator other than the Trustee, if any.
Representations and Warranties with respect to Mortgage Assets; Repurchases and
Other Remedies
Unless otherwise provided in the Prospectus Supplement for the Offered
Certificates of any Series, the Depositor will, with respect to each Mortgage
Asset in the related Trust Fund, make or assign, or cause to be made or
assigned, certain representations and warranties (the person making such
representations and warranties, the "Warranting Party") covering, by way of
example: (i) the accuracy of the information set forth for such Mortgage Asset
on the schedule of Mortgage Loans appearing as an exhibit to the related Pooling
Agreement; (ii) the Warranting Party's title to the Mortgage Loan and the
authority of the Warranting Party to sell the Mortgage Loan; and (iii) in the
case of a Mortgage Loan, the enforceability of the related Mortgage Note and
Mortgage, the existence of title insurance insuring the lien priority of the
related Mortgage, the payment status of the Mortgage Loan and the delivery of
all documents required to be delivered with respect to the Mortgage Loan as
contemplated under "--Assignment of Mortgage Assets--Delivery of Mortgage Loans"
above. It is expected that in most cases the Warranting Party will be the
Mortgage Asset Seller; however, the Warranting Party may also be the Depositor,
an affiliate of the Mortgage Asset Seller or the Depositor, the Master Servicer,
the Special Servicer or another person acceptable to the Depositor. The
Warranting Party, if other than the Mortgage Asset Seller, will be identified in
the related Prospectus Supplement.
Unless otherwise provided in the related Prospectus Supplement, each
Pooling Agreement will provide that the Master Servicer and/or Trustee will be
required to notify promptly any Warranting Party of any breach of any
representation or warranty made by it in respect of a Mortgage Asset that
materially and adversely affects the interests of the Certificateholders of the
related Series. If such Warranting Party cannot cure such breach within a
specified period following the date on which it was notified of such breach,
then, unless otherwise provided in the related Prospectus Supplement, it will be
obligated to repurchase such Mortgage Asset from the Trustee at a price not less
than the unpaid principal balance of such Mortgage Asset as of the date of
purchase, together with interest thereon at the related Mortgage Rate (or, in
the case of an MBS, at the related pass-through rate or coupon rate) to a date
on or about the date of purchase (in any event, the "Purchase Price"). If so
provided in the Prospectus Supplement for the Offered Certificates of any
Series, in lieu of repurchasing a Mortgage Asset as to which a breach has
occurred, a Warranting Party will have the option, exercisable upon certain
conditions and/or within a specified period after initial issuance of such
Series, to replace such Mortgage Asset with one or more other mortgage loans or
mortgage-backed securities that conform to the description of "Mortgage Asset"
herein, in accordance with standards that will be described in the Prospectus
Supplement. Unless otherwise specified in the related Prospectus Supplement,
this repurchase or substitution obligation will constitute the sole remedy
available to holders of the
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Certificates of any Series or to the related Trustee on their behalf for a
breach of representation and warranty by a Warranting Party, and no other person
or entity will be obligated to purchase or replace a Mortgage Asset if a
Warranting Party defaults on its obligation to do so.
In some cases, representations and warranties will have been made in
respect of a Mortgage Asset as of a date prior to the date upon which the
related Series is initially issued, and thus may not address events that may
occur following the date as of which they were made. The date as of which the
representations and warranties regarding the Mortgage Assets in any Trust Fund
were made will be specified in the related Prospectus Supplement.
Collection and Other Servicing Procedures with respect to Mortgage Loans
Unless otherwise specified in the related Prospectus Supplement, the Master
Servicer and the Special Servicer for any Mortgage Asset Pool, directly or
through Sub-Servicers, will each be obligated under the related Pooling
Agreement to service and administer the Mortgage Loans in such Mortgage Asset
Pool for the benefit of the related Certificateholders, in accordance with
applicable law and further in accordance with the terms of such Pooling
Agreement, such Mortgage Loans and any instrument of Credit Support included in
the related Trust Fund. 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 such servicing and administration that it may deem
necessary and desirable.
As part of its servicing duties, each of the Master Servicer and the
Special Servicer will be required to make reasonable efforts to collect all
payments called for under the terms and provisions of the Mortgage Loans that it
services and will be obligated to follow such collection procedures as it would
follow with respect to mortgage loans that are comparable to such Mortgage Loans
and held for its own account, provided (i) such procedures are consistent with
the terms of the related Pooling Agreement and (ii) do not impair recovery under
any instrument of Credit Support included in the related Trust Fund. Consistent
with the foregoing, the Master Servicer and the Special Servicer will each be
permitted, in its discretion, unless otherwise specified in the related
Prospectus Supplement, to waive any Prepayment Premium, late payment charge or
other charge in connection with any Mortgage Loan.
The Master Servicer and the Special Servicer for any Trust Fund, either
separately or jointly, directly or through Sub-Servicers, will also be required
to perform as to the Mortgage Loans in such Trust Fund various other customary
functions of a servicer of comparable loans, including maintaining escrow or
impound accounts, if required under the related Pooling Agreement, for payment
of taxes, insurance premiums, ground rents and similar items, or otherwise
monitoring the timely payment of those items; attempting to collect delinquent
payments; supervising foreclosures; negotiating modifications; conducting
property inspections on a periodic or other basis; managing (or overseeing the
management of) Mortgaged Properties acquired on behalf of such Trust Fund
through foreclosure, deed-in-lieu of foreclosure or otherwise (each, an "REO
Property"); and maintaining servicing records relating to such Mortgage Loans.
The related Prospectus Supplement will specify when and the extent to which
servicing of a Mortgage Loan is to be transferred from the Master Servicer to
the Special Servicer. In general, and subject to the discussion in the related
Prospectus Supplement, a Special Servicer will be responsible for the servicing
and administration of: (i) Mortgage Loans that are delinquent in respect of a
specified number of scheduled payments; (ii) 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 (iii) REO Properties. If so specified in the related Prospectus
Supplement, a Pooling Agreement also may provide that if a default on a Mortgage
Loan 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 thereof, in whole or in part, to the related Special
Servicer. Unless otherwise provided in the related Prospectus Supplement, when
the circumstances no longer warrant a Special Servicer's continuing to service a
particular Mortgage Loan (e.g., the related borrower is paying in accordance
with the forbearance arrangement entered into between the Special Servicer and
such borrower), the Master Servicer will resume the servicing duties with
respect thereto. If and to the extent provided in the related Pooling Agreement
and described in the related Prospectus Supplement, a Special Servicer may
perform certain limited duties in respect of Mortgage Loans for which the Master
Servicer is primarily responsible (including, if so specified, performing
property inspections and evaluating financial statements); and a Master Servicer
may perform certain limited
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duties in respect of any Mortgage Loan for which the Special Servicer is
primarily responsible (including, if so specified, continuing to receive
payments on such Mortgage Loan (including amounts collected by the Special
Servicer), making certain calculations with respect to such Mortgage Loan and
making remittances and preparing certain reports to the Trustee and/or
Certificateholders with respect to such Mortgage Loan. Unless otherwise
specified in the related Prospectus Supplement, the Master Servicer will be
responsible for filing and settling claims in respect of particular Mortgage
Loans under any applicable instrument of Credit Support. See "Description of
Credit Support".
A mortgagor's failure to make required Mortgage Loan payments may mean that
operating income 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 mortgagor 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 Mortgaged Property. In general, the related Special Servicer will be
required to monitor any Mortgage Loan that is in default, evaluate whether the
causes of the default can be corrected over a reasonable period without
significant impairment of the value of the related Mortgaged Property, initiate
corrective action in cooperation with the mortgagor if cure is likely, inspect
the related Mortgaged Property and take such other actions as it deems necessary
and appropriate. A significant period of time may elapse before the Special
Servicer is able to assess the success of any such corrective action or the need
for additional initiatives. The time within which the 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 Mortgaged Property in
lieu of foreclosure) on behalf of the Certificateholders of the related Series
may vary considerably depending on the particular Mortgage Loan, the Mortgaged
Property, the mortgagor, the presence of an acceptable party to assume the
Mortgage Loan and the laws of the jurisdiction in which the Mortgaged Property
is located. If a mortgagor files a bankruptcy petition, the Special Servicer may
not be permitted to accelerate the maturity of the Mortgage Loan or to foreclose
on the related Mortgaged Property for a considerable period of time. See
"Certain Legal Aspects of Mortgage Loans--Bankruptcy Laws".
Mortgagors may, from time to time, request partial releases of the
Mortgaged Properties, easements, consents to alteration or demolition and other
similar matters. In general, the Master Servicer may approve such a request if
it has determined, exercising its business judgment in accordance with the
applicable servicing standard, that such approval will not adversely affect the
security for, or the timely and full collectability of, the related Mortgage
Loan. Any fee collected by the Master Servicer for processing such request will
be retained by the Master Servicer as additional servicing compensation.
In the case of Mortgage Loans secured by junior liens on the related
Mortgaged Properties, unless otherwise provided in the related Prospectus
Supplement, the Master Servicer will be required to file (or cause to be filed)
of record a request for notice of any action by a superior lienholder under the
Senior Lien for the protection of the related Trustee's interest, where
permitted by local law and whenever applicable state law does not require that a
junior lienholder be named as a party defendant in foreclosure proceedings in
order to foreclose such junior lienholder's equity of redemption. Unless
otherwise specified in the related Prospectus Supplement, the Master Servicer
also will be required to notify any superior lienholder in writing of the
existence of the Mortgage Loan and request notification of any action (as
described below) to be taken against the mortgagor or the Mortgaged Property by
the superior lienholder. If the Master Servicer is notified that any superior
lienholder has accelerated or intends to accelerate the obligations secured by
the related Senior Lien, or has declared or intends to declare a default under
the mortgage or the promissory note secured thereby, or has filed or intends to
file an election to have the related Mortgaged Property sold or foreclosed,
then, unless otherwise specified in the related Prospectus Supplement, the
Master Servicer and the Special Servicer will each be required to take, on
behalf of the related Trust Fund, whatever actions are necessary to protect the
interests of the related Certificateholders and/or to preserve the security of
the related Mortgage Loan, subject to the application of the REMIC Provisions
(as defined herein). Unless otherwise specified in the related Prospectus
Supplement, the Master Servicer or Special Servicer, as applicable, will be
required to advance the necessary funds to cure the default or reinstate the
Senior Lien, if such advance is in the best interests of the related
Certificateholders and the Master Servicer or Special Servicer, as applicable,
determines such advances are recoverable out of payments on or proceeds of the
related Mortgage Loan.
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Sub-Servicers
A Master Servicer or Special Servicer may delegate its servicing
obligations in respect of the Mortgage Loans serviced thereby to one or more
third-party servicers (each, a "Sub-Servicer"); provided that, unless otherwise
specified in the related Prospectus Supplement, such Master Servicer or Special
Servicer will remain obligated under the related Pooling Agreement. Unless
otherwise provided in the related Prospectus Supplement, each sub-servicing
agreement between a Master Servicer or Special Servicer, as applicable, and a
Sub-Servicer (a "Sub-Servicing Agreement") must provide for servicing of the
applicable Mortgage Loans consistent with the related Pooling Agreement. The
Master Servicer and Special Servicer in respect of any Mortgage Asset Pool will
each be required to monitor the performance of Sub-Servicers retained by it and
will have the right to remove a Sub-Servicer retained by it at any time it
considers such removal to be in the best interests of Certificateholders.
Unless otherwise provided in the related Prospectus Supplement, a Master
Servicer or Special Servicer will be solely liable for all fees owed by it to
any Sub-Servicer, irrespective of whether the Master Servicer's or Special
Servicer's compensation pursuant to the related Pooling Agreement is sufficient
to pay such fees. Each Sub-Servicer will be reimbursed by the Master Servicer or
Special Servicer, as the case may be, that retained it for certain expenditures
which it makes, generally to the same extent such Master Servicer or Special
Servicer would be reimbursed under a Pooling Agreement. See "--Certificate
Account" and "--Servicing Compensation and Payment of Expenses".
Collection of Payments on MBS
Unless otherwise specified in the related Prospectus Supplement, the MBS,
if any, included in the Trust Fund for any Series will be registered in the name
of the Trustee. All distributions thereon will be made either directly to the
Trustee or to an MBS Administrator other than the Trustee, if any. Unless
otherwise specified in the related Prospectus Supplement, the related Pooling
Agreement will provide that, if the Trustee or such other MBS Administrator, as
applicable, has not received a distribution with respect to any MBS by a
specified day after the date on which such distribution was due and payable
pursuant to the terms of such MBS, the Trustee or such other MBS Administrator,
as applicable, is to request the issuer or guarantor, if any, of such MBS to
make such payment as promptly as possible and legally permitted and is to take
such legal action against such issuer or guarantor as the Trustee or such other
MBS Administrator, as applicable, deems appropriate under the circumstances,
including the prosecution of any claims in connection therewith. The reasonable
legal fees and expenses incurred by the Trustee or such other MBS Administrator,
as applicable, in connection with the prosecution of any such legal action will
be reimbursable thereto (with interest) out of the proceeds of any such action
and will be retained by the Trustee or such other MBS Administrator, as
applicable, prior to the deposit of any remaining proceeds in the Certificate
Account pending distribution thereof to Certificateholders of the affected
Series. In the event that the Trustee or such other MBS Administrator, as
applicable, has reason to believe that the proceeds of any such legal action may
be insufficient to reimburse it (with interest) for its projected legal fees and
expenses, the Trustee or such other MBS Administrator, as applicable, will
notify the Certificateholders of the affected Series that it is not obligated to
pursue any such available remedies unless adequate indemnity for its legal fees
and expenses is provided by such Certificateholders.
Certificate Account
General. The related Trustee and any related Master Servicer, Special
Servicer and/or Manager, as applicable, will establish and maintain, or cause to
be established and maintained, in respect of each Trust Fund, one or more
accounts (collectively, the "Certificate Account"), which will be established so
as to comply with the standards of each Rating Agency that has rated any one or
more Classes of Certificates of the related Series. A Certificate Account may be
maintained as an interest-bearing or a noninterest-bearing account and the funds
held therein may be invested pending each succeeding Distribution Date in United
States government securities and other obligations that are acceptable to each
Rating Agency that has rated any one or more Classes of Certificates of the
related Series ("Permitted Investments"). Unless otherwise provided in the
related Prospectus Supplement, any interest or other income earned on funds in a
Certificate Account will be paid to the related Trustee, Master Servicer,
Special Servicer and/or Manager, as applicable, as additional compensation. A
Certificate Account may be maintained with the related Trustee, Master Servicer,
Special Servicer, Manager or Mortgage Asset Seller or with a depository
institution that is an affiliate of any of the foregoing or of the Depositor,
provided that it
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complies with applicable Rating Agency standards. If permitted by the applicable
Rating Agency or Agencies, a Certificate Account may contain funds relating to
more than one series of mortgage pass-through certificates and may contain other
funds representing payments on mortgage assets owned by the related Master
Servicer or Special Servicer or serviced by either on behalf of others.
Deposits. Unless otherwise provided in the related Pooling Agreement and
described in the related Prospectus Supplement, the following payments and
collections in respect of the Trust Assets included in any Trust Fund, that are
received or made by the Trustee, the Master Servicer, the Special Servicer, the
MBS Administrator or the Manager, as applicable, subsequent to the Cut-off Date
(other than payments due on or before the Cut-off Date), are to be deposited in
the Certificate Account for such Trust Fund within a certain period following
receipt (in the case of collections on or in respect of the Trust Assets) or
otherwise as provided in the related Pooling Agreement:
(i) if such Trust Fund includes Mortgage Loans, all payments on
account of principal, including principal prepayments, on such Mortgage
Loans;
(ii) if such Trust Fund includes Mortgage Loans, all payments on
account of interest on such Mortgage Loans, including any default interest
collected, in each case net of any portion thereof retained by the Master
Servicer or the Special Servicer as its servicing compensation or as
compensation to the Trustee;
(iii) if such Trust Fund includes Mortgage Loans, all proceeds
received under any hazard, title or other insurance policy that provides
coverage with respect to a Mortgaged Property or the related Mortgage Loan
or in connection with the full or partial condemnation of a Mortgaged
Property (other than proceeds applied to the restoration of the property or
released to the related borrower) ("Insurance Proceeds" and "Condemnation
Proceeds", respectively) and all other amounts received and retained in
connection with the liquidation of defaulted Mortgage Loans or property
acquired in respect thereof, by foreclosure or otherwise (such amounts,
together with those amounts listed in clause (vii) below, "Liquidation
Proceeds"), together with the net operating income (less reasonable
reserves for future expenses) derived from the operation of any Mortgaged
Properties acquired by the Trust Fund through foreclosure or otherwise;
(iv) any amounts paid under any instrument or drawn from any fund that
constitutes Credit Support for the related Series;
(v) if such Trust Fund includes Mortgage Loans, any advances made with
respect to delinquent scheduled payments of principal and interest on such
Mortgage Loans;
(vi) any amounts paid under any Cash Flow Agreement for the related
Series;
(vii) if such Trust Fund includes Mortgage Loans, all proceeds of the
purchase of any Mortgage Loan, or property acquired in respect thereof, by
the Depositor, any Mortgage Asset Seller or any other specified person as
described under "--Representations and Warranties with respect to Mortgage
Assets; Repurchases and Other Remedies", all proceeds of the purchase of
any defaulted Mortgage Loan as described under "--Realization Upon
Defaulted Mortgage Loans", and all proceeds of any Mortgage Loan purchased
as described under "Description of the Certificates--Termination";
(viii) if such Trust Fund includes Mortgage Loans, and to the extent
that any such item does not constitute additional servicing compensation to
the Master Servicer or the Special Servicer and is not otherwise retained
by the Depositor or another specified person, any payments on account of
modification or assumption fees, late payment charges, Prepayment Premiums
or Equity Participations with respect to the Mortgage Loans;
(ix) if such Trust Fund includes Mortgage Loans, all payments required
to be deposited in the Certificate Account with respect to any deductible
clause in any blanket insurance policy as described under "--Hazard
Insurance Policies";
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(x) any amount required to be deposited by the Master Servicer, the
Special Servicer, the Manager or the Trustee in connection with losses
realized on investments for the benefit of the Master Servicer, the Special
Servicer, the Manager or the Trustee, as the case may be, of funds held in
the Certificate Account;
(xi) if such Trust Fund includes MBS, all payments on such MBS;
(xii) if such Trust Fund includes MBS, all proceeds of the purchase of
any MBS by the Depositor or any other specified person as described under
"--Representations and Warranties with respect to Mortgage Assets;
Repurchases and Other Remedies" and all proceeds of any MBS purchased as
described under "Description of the Certificates--Termination";
(xiii) any other amounts received on or in respect of the Mortgage
Assets required to be deposited in the Certificate Account as provided in
the related Pooling Agreement and described in the related Prospectus
Supplement.
Withdrawals. Unless otherwise provided in the related Pooling Agreement and
described in the related Prospectus Supplement, a Trustee, Master Servicer,
Special Servicer or Manager, as applicable, in respect of any Trust Fund may
make withdrawals from the Certificate Account for such Trust Fund for any of the
following purposes:
(i) to make distributions to the Certificateholders on each
Distribution Date;
(ii) if such Trust Fund includes Mortgage Loans, then as and to the
extent, and from the sources, described in the related Prospectus
Supplement, to pay the related Master Servicer or Special Servicer any
servicing fees and other compensation to which it is entitled in respect of
such Mortgage Loans and that was not previously retained thereby;
(iii) if such Trust Fund includes Mortgage Loans, to reimburse the
related Master Servicer, the related Special Servicer or any other
specified person for unreimbursed advances of delinquent scheduled payments
of principal and interest made by it, and certain unreimbursed servicing
expenses incurred by it, with respect to such Mortgage Loans and any
properties acquired in respect thereof, such reimbursement to be made out
of amounts that represent late payments collected on the particular
Mortgage Loans, Liquidation Proceeds, Insurance Proceeds and Condemnation
Proceeds collected on the particular Mortgage Loans and properties, and net
operating income collected on the particular properties, with respect to
which such advances were made or such expenses were incurred or out of
amounts drawn under any form of Credit Support with respect to such
Mortgage Loans and properties, or if in the judgment of the Master
Servicer, the Special Servicer or such other person, as applicable, such
advances and/or expenses will not be recoverable from such amounts, such
reimbursement to be made from amounts collected on other Mortgage Assets in
the same Trust Fund or, if and to the extent so provided by the related
Pooling Agreement and described in the related Prospectus Supplement, only
from that portion of amounts collected on such other Mortgage Assets that
is otherwise distributable on one or more Classes of Subordinate
Certificates of the related Series;
(iv) if and to the extent, and from the sources, described in the
related Prospectus Supplement, to pay the related Master Servicer, the
related Special Servicer or any other specified person interest accrued on
the advances and servicing expenses, if any, described in clause (iii)
above made or incurred by it while such advances and servicing expenses
remain outstanding and unreimbursed;
(v) if such Trust Fund includes Mortgage Loans, to pay any servicing
expenses not otherwise required to be advanced by the related Master
Servicer, the related Special Servicer or any other specified person,
including, if applicable, costs and expenses incurred by the Trust Fund for
environmental site assessments performed with respect to Mortgaged
Properties that constitute security for defaulted Mortgage Loans, and for
any
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containment, clean-up or remediation of hazardous wastes and materials
present on such Mortgaged Properties, as described under "--Realization
Upon Defaulted Mortgage Loans";
(vi) to reimburse the Depositor, the related Trustee, any related
Master Servicer, Special Servicer, REMIC Administrator or Manager and/or
any of their respective directors, officers, employees and agents, as the
case may be, for certain expenses, costs and liabilities incurred thereby,
as and to the extent described under "--Certain Matters Regarding the
Master Servicer, the Special Servicer, the REMIC Administrator, the Manager
and the Depositor" and "--Certain Matters Regarding the Trustee";
(vii) if and to the extent, and from the sources, described in the
related Prospectus Supplement, to pay the fees of the related Trustee and
of any related REMIC Administrator, Manager, provider of Credit Support and
obligor on a Cash Flow Agreement;
(viii) if and to the extent, and from the sources, described in the
related Prospectus Supplement, to reimburse prior draws on any form of
Credit Support in respect of the related Series;
(ix) to pay the related Master Servicer, the related Special Servicer,
the related Manager and/or the related Trustee, as appropriate, interest
and investment income earned in respect of amounts held in the Certificate
Account as additional compensation;
(x) if one or more elections have been made to treat such Trust Fund
or designated portions thereof as a REMIC, to pay any federal, state or
local taxes imposed on the Trust Fund or its assets or transactions, as and
to the extent described under "Certain Federal Income Tax
Consequences--REMICs--Prohibited Transactions Tax and Other Taxes";
(xi) to pay for the cost of various opinions of counsel obtained
pursuant to the related Pooling Agreement for the benefit of
Certificateholders or otherwise in connection with the servicing or
administration of the related Trust Assets;
(xii) to make any other withdrawals permitted by the related Pooling
Agreement and described in the related Prospectus Supplement; and
(xiii) to clear and terminate the Certificate Account upon the
termination of the Trust Fund.
Modifications, Waivers and Amendments of Mortgage Loans
Unless otherwise specified in the related Prospectus Supplement, the Master
Servicer and the Special Servicer may each agree to modify, waive or amend any
term of any Mortgage Loan serviced by it in a manner consistent with the
applicable servicing standard to be described in the related Prospectus
Supplement; provided that the modification, waiver or amendment (i) will not
affect the amount or timing of any scheduled payments of principal or interest
on the Mortgage Loan, and (ii) will not, in the judgment of the Master Servicer
or the Special Servicer, as the case may be, materially impair the security for
the Mortgage Loan or reduce the likelihood of timely payment of amounts due
thereon. Unless otherwise provided in the related Prospectus Supplement, the
Special Servicer also may agree to any other modification, waiver or amendment
if, in its judgment (i) a material default on the Mortgage Loan has occurred or
a payment default is reasonably foreseeable, (ii) such modification, waiver or
amendment is reasonably likely to produce a greater recovery with respect to the
Mortgage Loan, taking into account the time value of money, than would
liquidation and (iii) such modification, waiver or amendment will not adversely
affect the coverage under any applicable instrument of Credit Support.
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Realization Upon Defaulted Mortgage Loans
If a default on a Mortgage Loan has occurred or, in the Special Servicer's
judgment, a payment default is imminent, the Special Servicer, on behalf of the
Trustee, may at any time institute foreclosure proceedings, exercise any power
of sale contained in the related Mortgage, obtain a deed in lieu of foreclosure,
or otherwise acquire title to the related Mortgaged Property, by operation of
law or otherwise. Unless otherwise specified in the related Prospectus
Supplement, the Special Servicer may not, however, acquire title to any
Mortgaged Property, have a receiver of rents appointed with respect to any
Mortgaged Property or take any other action with respect to any Mortgaged
Property that would cause the Trustee, for the benefit of the related Series of
Certificateholders, or any other specified person to be considered to hold title
to, to be a "mortgagee-in-possession" of, or to be an "owner" or an "operator"
of such Mortgaged Property within the meaning of certain federal environmental
laws, unless the Special Servicer has previously received a report prepared by a
person who regularly conducts environmental audits (which report will be an
expense of the Trust Fund) and either:
(i) such report indicates that (a) the Mortgaged Property is in
compliance with applicable environmental laws and regulations and (b) there
are no circumstances or conditions present at the Mortgaged Property that
have resulted in any contamination for which investigation, testing,
monitoring, containment, clean-up or remediation could be required under
any applicable environmental laws and regulations; or
(ii) the Special Servicer, based solely (as to environmental matters
and related costs) on the information set forth in such report, determines
that taking such actions as are necessary to bring the Mortgaged Property
into compliance with applicable environmental laws and regulations and/or
taking the actions contemplated by clause (i)(b) above, is reasonably
likely to produce a greater recovery, taking into account the time value of
money, than not taking such actions. See "Certain Legal Aspects of Mortgage
Loans--Environmental Considerations".
A Pooling Agreement may grant to the Master Servicer, the Special Servicer,
a provider of Credit Support and/or the holder or holders of certain Classes of
Certificates of the related Series a right of first refusal to purchase from the
Trust Fund, at a predetermined price (which, if less than the Purchase Price
specified herein, will be specified in the related Prospectus Supplement), any
Mortgage Loan as to which a specified number of scheduled payments are
delinquent. In addition, unless otherwise specified in the related Prospectus
Supplement, the Special Servicer may offer to sell any defaulted Mortgage Loan
if and when the Special Servicer determines, consistent with its normal
servicing procedures, that such a sale would produce a greater recovery, taking
into account the time value of money, than would liquidation of the related
Mortgaged Property. In the absence of any such sale, the Special Servicer will
generally be required to proceed against the related Mortgaged Property, subject
to the discussion above.
Unless otherwise provided in the related Prospectus Supplement, if title to
any Mortgaged Property is acquired by a Trust Fund as to which a REMIC election
has been made, the Special Servicer, on behalf of the Trust Fund, will be
required to sell the Mortgaged Property prior to the close of the third taxable
year following the taxable year in which the Trust Fund acquires such Mortgaged
Property, unless (i) the IRS grants an extension of time to sell such property
or (ii) the Trustee receives an opinion of independent counsel to the effect
that the holding of the property by the Trust Fund thereafter will not result in
the imposition of a tax on the Trust Fund or cause the Trust Fund (or any
designated portion thereof) to fail to qualify as a REMIC under the Code at any
time that any Certificate is outstanding. Subject to the foregoing and any other
tax-related limitations, the Special Servicer will generally be required to
attempt to sell any Mortgaged Property so acquired on the same terms and
conditions it would if it were the owner. Unless otherwise provided in the
related Prospectus Supplement, if title to any Mortgaged Property is acquired by
a Trust Fund as to which a REMIC election has been made, the Special Servicer
will also be required to ensure that the Mortgaged Property is administered so
that it constitutes "foreclosure property" within the meaning of Code Section
860G(a)(8) at all times. If the Trust Fund acquires title to any Mortgaged
Property, the Special Servicer, on behalf of the Trust Fund, may retain an
independent contractor to manage and operate such property. The retention of an
independent contractor, however, will not relieve the Special Servicer of its
obligation to manage such Mortgaged Property as required under the related
Pooling Agreement. The Special Servicer may be authorized to allow the Trust
Fund to incur a federal income or other tax if doing so would, in the reasonable
discretion of the Special Servicer, maximize the net after-tax proceeds to
Certificateholders.
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If Liquidation Proceeds collected with respect to a defaulted Mortgage Loan
are less than the outstanding principal balance of the defaulted Mortgage Loan
plus interest accrued thereon plus the aggregate amount of reimbursable expenses
incurred by the Special Servicer and/or the Master Servicer in connection with
such Mortgage Loan, then, to the extent that such shortfall is not covered by
any instrument or fund constituting Credit Support, the Trust Fund will realize
a loss in the amount of such shortfall. The Special Servicer and/or the Master
Servicer will be entitled to reimbursement out of the Liquidation Proceeds
recovered on any defaulted Mortgage Loan, prior to the distribution of such
Liquidation Proceeds to Certificateholders, any and all amounts that represent
unpaid servicing compensation in respect of the Mortgage Loan, unreimbursed
servicing expenses incurred with respect to the Mortgage Loan and any
unreimbursed advances of delinquent payments made with respect to the Mortgage
Loan. In addition, if and to the extent set forth in the related Prospectus
Supplement, amounts otherwise distributable on the Certificates may be further
reduced by interest payable to the Master Servicer and/or Special Servicer on
such servicing expenses and advances.
If any Mortgaged Property suffers damage such that the proceeds, if any, of
the related hazard insurance policy are insufficient to restore fully the
damaged property, neither the Special Servicer nor the Master Servicer will be
required to expend its own funds to effect such restoration unless (and to the
extent not otherwise provided in the related Prospectus Supplement) it
determines (i) that such restoration will increase the proceeds to
Certificateholders on liquidation of the Mortgage Loan after reimbursement of
the Special Servicer or the Master Servicer, as the case may be, for its
expenses and (ii) that such expenses will be recoverable by it from related
Insurance Proceeds, Condemnation Proceeds, Liquidation Proceeds and/or amounts
drawn on any instrument or fund constituting Credit Support.
Hazard Insurance Policies
Unless otherwise specified in the related Prospectus Supplement, if a Trust
Fund includes Mortgage Loans, the related Pooling Agreement will require the
Master Servicer (or the Special Servicer with respect to Mortgage Loans serviced
thereby) to use reasonable efforts to cause each Mortgage Loan borrower to
maintain a hazard insurance policy that provides for such coverage as is
required under the related Mortgage or, if the Mortgage permits the holder
thereof to dictate to the borrower the insurance coverage to be maintained on
the related Mortgaged Property, such coverage as is consistent with the Master
Servicer's (or Special Servicer's) normal servicing procedures. Unless otherwise
specified in the related Prospectus Supplement, such coverage generally will be
in an amount equal to the lesser of the principal balance owing on such Mortgage
Loan and the replacement cost of the related Mortgaged Property. The ability of
a Master Servicer (or Special Servicer) to assure that hazard insurance proceeds
are appropriately applied may be dependent upon its being named as an additional
insured under any hazard insurance policy and under any other insurance policy
referred to below, or upon the extent to which information concerning covered
losses is furnished by borrowers. All amounts collected by a Master Servicer (or
Special Servicer) under any such policy (except for amounts to be applied to the
restoration or repair of the Mortgaged Property or released to the borrower in
accordance with the Master Servicer's (or Special Servicer's) normal servicing
procedures and/or to the terms and conditions of the related Mortgage and
Mortgage Note) will be deposited in the related Certificate Account. The Master
Servicer (or Special Servicer) may satisfy its obligation to cause each borrower
to maintain such a hazard insurance policy by maintaining a blanket policy
insuring against hazard losses on the Mortgage Loans in a Trust Fund. If such
blanket policy contains a deductible clause, the Master Servicer (or Special
Servicer) will be required, in the event of a casualty covered by such blanket
policy, to deposit in the related Certificate Account all additional sums that
would have been deposited therein under an individual policy but were not
because of such deductible clause.
In general, the standard form of fire and extended coverage policy covers
physical damage to or destruction of the improvements of the property by fire,
lightning, explosion, smoke, windstorm and hail, and riot, strike and civil
commotion, subject to the conditions and exclusions specified in each policy.
Although the policies covering the Mortgaged Properties will be underwritten by
different insurers under different state laws in accordance with different
applicable state forms, and therefore will not contain identical terms and
conditions, most such policies typically do not cover any physical damage
resulting from war, revolution, governmental actions, floods and other
water-related causes, earth movement (including earthquakes, landslides and
mudflows), wet or dry rot, vermin and domestic animals. Accordingly, a Mortgaged
Property may not be insured for losses arising from any such cause unless the
related Mortgage specifically requires, or permits the holder thereof to
require, such coverage.
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The hazard insurance policies covering the Mortgaged Properties will
typically contain co-insurance clauses that in effect require an insured at all
times to carry insurance of a specified percentage (generally 80% to 90%) of the
full replacement value of the improvements on the property in order to recover
the full amount of any partial loss. If the insured's coverage falls below this
specified percentage, such clauses generally provide that the insurer's
liability in the event of partial loss does not exceed the lesser of (i) the
replacement cost of the improvements less physical depreciation and (ii) such
proportion of the loss as the amount of insurance carried bears to the specified
percentage of the full replacement cost of such improvements.
Due-on-Sale and Due-on-Encumbrance Provisions
Certain of the Mortgage Loans may contain a due-on-sale clause that
entitles the lender to accelerate payment of the Mortgage Loan upon any sale or
other transfer of the related Mortgaged Property made without the lender's
consent. Certain of the Mortgage Loans may also contain a due-on-encumbrance
clause that entitles the lender to accelerate the maturity of the Mortgage Loan
upon the creation of any other lien or encumbrance upon the Mortgaged Property.
Unless otherwise provided in the related Prospectus Supplement, the Master
Servicer (or Special Servicer) will determine whether to exercise any right the
Trustee may have under any such provision in a manner consistent with the Master
Servicer's (or Special Servicer's) normal servicing procedures. Unless otherwise
specified in the related Prospectus Supplement, the Master Servicer or Special
Servicer, as applicable, will be entitled to retain as additional servicing
compensation any fee collected in connection with the permitted transfer of a
Mortgaged Property. See "Certain Legal Aspects of Mortgage Loans-Due-on-Sale and
Due-on-Encumbrance Provisions".
Servicing Compensation and Payment of Expenses
Unless otherwise specified in the related Prospectus Supplement, a Master
Servicer's primary servicing compensation with respect to a Series will come
from the periodic payment to it of a specified portion of the interest payments
on each Mortgage Loan in the related Trust Fund, including Mortgage Loans
serviced by the related Special Servicer. If and to the extent described in the
related Prospectus Supplement, a Special Servicer's primary compensation with
respect to a Series may consist of any or all of the following components: (i) a
specified portion of the interest payments on each Mortgage Loan in the related
Trust Fund, whether or not serviced by it; (ii) an additional specified portion
of the interest payments on each Mortgage Loan then currently serviced by it;
and (iii) subject to any specified limitations, a fixed percentage of some or
all of the collections and proceeds received with respect to each Mortgage Loan
which was at any time serviced by it, including Mortgage Loans for which
servicing was returned to the Master Servicer. Insofar as any portion of the
Master Servicer's or Special Servicer's compensation consists of a specified
portion of the interest payments on a Mortgage Loan, such compensation will
generally be based on a percentage of the principal balance of such Mortgage
Loan outstanding from time to time and, accordingly, will decrease with the
amortization of the Mortgage Loan. As additional compensation, a Master Servicer
or Special Servicer may be entitled to retain all or a portion of late payment
charges, Prepayment Premiums, modification fees and other fees collected from
borrowers and any interest or other income that may be earned on funds held in
the related Certificate Account. A more detailed description of each Master
Servicer's and Special Servicer's compensation will be provided in the related
Prospectus Supplement. Any Sub-Servicer will receive as its sub-servicing
compensation a portion of the servicing compensation to be paid to the Master
Servicer or Special Servicer that retained such Sub-Servicer.
In addition to amounts payable to any Sub-Servicer, a Master Servicer or
Special Servicer may be required, to the extent provided in the related
Prospectus Supplement, to pay from amounts that represent its servicing
compensation certain expenses incurred in connection with the administration of
the related Trust Fund, including, without limitation, payment of the fees and
disbursements of independent accountants, payment of fees and disbursements of
the Trustee and any custodians appointed thereby and payment of expenses
incurred in connection with distributions and reports to Certificateholders.
Certain other expenses, including certain expenses related to Mortgage Loan
defaults and liquidations and, to the extent so provided in the related
Prospectus Supplement, interest on such expenses at the rate specified therein,
may be required to be borne by the Trust Fund.
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Evidence as to Compliance
Unless otherwise specified in the related Prospectus Supplement, if a Trust
Fund includes Mortgage Loans, the related Master Servicer and Special Servicer
will each be required, at its expense, to cause a firm of independent public
accountants to furnish to the Trustee, on or before a specified date in each
year, beginning the first such date that is at least a specified number of
months after the Cut-off Date, a statement generally to the effect that such
firm has examined such documents and records as it has deemed necessary and
appropriate relating to the Master Servicer's or Special Servicer's as the case
may be, servicing of the Mortgage Loans under the Pooling Agreement or servicing
of mortgage loans similar to the Mortgage Loans under substantially similar
agreements for the preceding calendar year (or during the period from the date
of commencement of the Master Servicer's or Special Servicer's, as the case may
be, duties under the Pooling Agreement until the end of such preceding calendar
year in the case of the first such statement) and that the assertion of the
management of the Master Servicer or Special Servicer, as the case may be, that
it maintained an effective internal control system over servicing of the
Mortgage Loans or similar mortgage loans is fairly stated in all material
respects, based upon established criteria, which statement meets the standards
applicable to accountants' reports intended for general distribution. In
rendering its report such firm may rely, as to the matters relating to the
direct servicing of commercial and multifamily mortgage loans by sub-servicers,
upon comparable reports of firms of independent public accountants rendered on
the basis of examinations conducted in accordance the same standards (rendered
within one year of such report) with respect to those sub-servicers. The
Prospectus Supplement may provide that additional reports of independent
certified public accountants relating to the servicing of mortgage loans may be
required to be delivered to the Trustee.
If a Trust Fund includes Mortgage Loans, the related Pooling Agreement will
also provide that, on or before a specified date in each year, beginning the
first such date that is at least a specified number of months after the Cut-off
Date, the Master Servicer and Special Servicer shall each deliver to the related
Trustee an annual statement signed by one or more officers of the Master
Servicer or the Special Servicer, as the case may be, to the effect that, to the
best knowledge of each such officer, the Master Servicer or the Special
Servicer, as the case may be, has fulfilled in all material respects its
obligations under the Pooling Agreement throughout the preceding year or, if
there has been a material default in the fulfillment of any such obligation,
such statement shall specify each such known default and the nature and status
thereof. Such statement may be provided as a single form making the required
statements as to more than one Pooling Agreement.
Unless otherwise specified in the related Prospectus Supplement, copies of
the annual accountants' statement and the annual statement of officers of a
Master Servicer or Special Servicer may be obtained by Certificateholders upon
written request to the Trustee.
Certain Matters Regarding the Master Servicer, the Special Servicer, the REMIC
Administrator, the Manager and the Depositor
Unless otherwise specified in the Prospectus Supplement for a Series, the
related Pooling Agreement will permit any related Master Servicer, Special
Servicer, REMIC Administrator or Manager to resign from its obligations in such
capacity thereunder only upon (a) the appointment of, and the acceptance of such
appointment by, a successor thereto and receipt by the Trustee of written
confirmation from each applicable Rating Agency that such resignation and
appointment will not have an adverse effect on the rating assigned by such
Rating Agency to any Class of Certificates of such Series or (b) a determination
that such 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 it. No such resignation will become effective until the Trustee or other
successor has assumed the obligations and duties of the resigning Master
Servicer, Special Servicer, REMIC Administrator or Manager, as the case may be,
under the related Pooling Agreement. Each Master Servicer, Special Servicer and,
if it receives distributions on MBS, Manager for a Trust Fund 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 certain limitations as to amount of coverage, deductible amounts,
conditions, exclusions and exceptions permitted by the related Pooling
Agreement.
Unless otherwise specified in the related Prospectus Supplement, each
Pooling Agreement will further provide that none of the Depositor, any related
Master Servicer, Special Servicer, REMIC Administrator or Manager, or any
director,
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officer, employee or agent of any of them will be under any liability to the
related Trust Fund or Certificateholders for any action taken, or not taken, in
good faith pursuant to such Pooling Agreement or for errors in judgment;
provided, however, that no such person or entity will be protected against any
liability that would otherwise be imposed by reason of willful misfeasance, bad
faith or gross negligence in the performance of obligations or duties thereunder
or by reason of reckless disregard of such obligations and duties. Unless
otherwise specified in the related Prospectus Supplement, each Pooling Agreement
will further provide that the Depositor, any related Master Servicer, Special
Servicer, REMIC Administrator and Manager, and any director, officer, employee
or agent of any of them will be entitled to indemnification by the related Trust
Fund against any loss, liability or expense incurred in connection with any
legal action that relates to such Pooling Agreement or the related Series;
provided, however, that such indemnification will not extend to any loss,
liability or expense incurred by reason of willful misfeasance, bad faith or
gross negligence in the performance of obligations or duties under such Pooling
Agreement, or by reason of reckless disregard of such obligations or duties. In
addition, each Pooling Agreement will provide that neither the Depositor nor any
related Master Servicer, Special Servicer, REMIC Administrator or Manager will
be under any obligation to appear in, prosecute or defend any legal action that
is not incidental to its respective responsibilities under the Pooling Agreement
and that in its opinion may involve it in any expense or liability. However, any
such party may be permitted, in the exercise of its discretion, to undertake any
such action that it may deem necessary or desirable with respect to the
enforcement and/or protection of the rights and duties of the parties to the
Pooling Agreement and the interests of the related Series of Certificateholders
thereunder. In such event, the legal expenses and costs of such action, and any
liability resulting therefrom, will be expenses, costs and liabilities of the
related Series of Certificateholders, and the Depositor, the Master Servicer,
the Special Servicer, the REMIC Administrator or the Manager, as the case may
be, will be entitled to charge the related Certificate Account therefor.
Any person into which a Master Servicer, a Special Servicer, a REMIC
Administrator, a Manager or the Depositor may be merged or consolidated, or any
person resulting from any merger or consolidation to which a Master Servicer, a
Special Servicer, a REMIC Administrator, a Manager or the Depositor is a party,
or any person succeeding to the business of a Master Servicer, a Special
Servicer, a REMIC Administrator, a Manager or the Depositor, will be the
successor of the Master Servicer, the Special Servicer, the REMIC Administrator,
the Manager or the Depositor, as the case may be, under the related Pooling
Agreement.
Unless otherwise specified in the related Prospectus Supplement, a REMIC
Administrator will be entitled to perform any of its duties under the related
Pooling Agreement either directly or by or through agents or attorneys, and the
REMIC Administrator will not be responsible for any willful misconduct or gross
negligence on the part of any such agent or attorney appointed by it with due
care.
Events of Default
Unless otherwise provided in the Prospectus Supplement for the Offered
Certificates of any Series, "Events of Default" under the related Pooling
Agreement will include, without limitation, (i) any failure by a Master Servicer
or a Manager to distribute or cause to be distributed to the Certificateholders
of such Series, or to remit to the related Trustee for distribution to such
Certificateholders, any amount required to be so distributed or remitted, which
failure continues unremedied for five days after written notice thereof has been
given to the Master Servicer or the Manager, as the case may be, by any other
party to the related Pooling Agreement, or to the Master Servicer or the
Manager, as the case may be, with a copy to each other party to the related
Pooling Agreement, by Certificateholders entitled to not less than 25% (or such
other percentage specified in the related Prospectus Supplement) of the Voting
Rights for such Series; (ii) any failure by a Special Servicer to remit to the
related Master Servicer or Trustee, as applicable, any amount required to be so
remitted, which failure continues unremedied for five days after written notice
thereof has been given to the Special Servicer by any other party to the related
Pooling Agreement, or to the Special Servicer, with a copy to each other party
to the related Pooling Agreement, by the Certificateholders entitled to not less
than 25% (or such other percentage specified in the related Prospectus
Supplement) of the Voting Rights of such Series; (iii) any failure by a Master
Servicer, a Special Servicer or a Manager duly to observe or perform in any
material respect any of its other covenants or obligations under the related
Pooling Agreement, which failure continues unremedied for sixty days after
written notice thereof has been given to the Master Servicer, the Special
Servicer or the Manager, as the case may be, by any other party to the related
Pooling Agreement, or to the Master Servicer, the Special Servicer or the
Manager, as the case may be, with a copy to each other
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party to the related Pooling Agreement, by Certificateholders entitled to not
less than 25% (or such other percentage specified in the related Prospectus
Supplement) of the Voting Rights for such Series; (iv) any failure by a REMIC
Administrator duly to observe or perform in any material respect any of its
covenants or obligations under the related Pooling Agreement, which failure
continues unremedied for sixty days after written notice thereof has been given
to the REMIC Administrator by any other party to the related Pooling Agreement,
or to the REMIC Administrator, with a copy to each other party to the related
Pooling Agreement, by Certificateholders entitled to not less than 25% (or such
other percentage specified in the related Prospectus Supplement) of the Voting
Rights for such Series; and (v) certain events of insolvency, readjustment of
debt, marshalling of assets and liabilities, or similar proceedings in respect
of or relating to a Master Servicer, a Special Servicer, a Manager or a REMIC
Administrator, and certain actions by or on behalf of any such party indicating
its insolvency or inability to pay its obligations. Material variations to the
foregoing Events of Default (other than to add thereto or shorten cure periods
or eliminate notice requirements) will be specified in the related Prospectus
Supplement.
Rights Upon Event of Default
If an Event of Default occurs with respect to a Master Servicer, a Special
Servicer, a Manager or a REMIC Administrator (other than the Trustee) under a
Pooling Agreement, then, in each and every such case, so long as the Event of
Default remains unremedied, and unless otherwise specified in the related
Prospectus Supplement, the Depositor or the Trustee will be authorized, and at
the direction of Certificateholders of the related Series entitled to not less
than 25% (or such other percentage specified in the related Prospectus
Supplement) of the Voting Rights for such Series, the Trustee will be required,
to terminate all of the rights and obligations of the defaulting party as Master
Servicer, Special Servicer, MBS Administrator or REMIC Administrator, as
applicable, under the Pooling Agreement, whereupon the Trustee (except under the
circumstances contemplated in the next paragraph) will succeed to all of the
responsibilities, duties and liabilities of the defaulting party as Master
Servicer, Special Servicer, Manager or REMIC Administrator, as applicable, under
the Pooling Agreement (except that if the defaulting party is required to make
advances thereunder regarding delinquent Mortgage Loans, but the Trustee is
prohibited by law from obligating itself to make such advances, or if the
related Prospectus Supplement so specifies, the Trustee will not be obligated to
make such advances) and will be entitled to similar compensation arrangements.
Unless otherwise specified in the related Prospectus Supplement, if the Trustee
is unwilling or unable so to act, it may (or, at the written request of
Certificateholders of the related Series entitled to not less than 51% (or such
other percentage specified in the related Prospectus Supplement) of the Voting
Rights for such Series, it will be required to) appoint, or petition a court of
competent jurisdiction to appoint, a loan servicing institution or other
appropriate entity that (unless otherwise provided in the related Prospectus
Supplement) is acceptable to each applicable Rating Agency to act as successor
to the Master Servicer, Special Servicer, Manager or REMIC Administrator, as the
case may be, under the Pooling Agreement. Pending such appointment, the Trustee
will be obligated to act in such capacity.
Notwithstanding the foregoing, if the same entity is acting as both Trustee
and REMIC Administrator, it may be removed in both such capacities as described
under "--Resignation and Removal of the Trustee" below.
No Certificateholder will have any right under a Pooling Agreement to
institute any proceeding with respect to such Pooling Agreement unless such
holder previously has given to the Trustee written notice of default and the
continuance thereof and unless the holders of Certificates of the related Series
entitled to not less than 25% of the Voting Rights for such Series have made
written request upon the Trustee to institute such proceeding in its own name as
Trustee thereunder and have offered to the Trustee reasonable indemnity and the
Trustee for sixty days after receipt of such request and indemnity has neglected
or refused to institute any such proceeding. However, the Trustee will be under
no obligation to exercise any of the trusts or powers vested in it by the
Pooling Agreement or to institute, conduct or defend any litigation thereunder
or in relation thereto at the request, order or direction of any of the holders
of Certificates covered by such Pooling Agreement, unless such
Certificateholders have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which may be incurred therein or
thereby.
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Amendment
Except as otherwise specified in the related Prospectus Supplement, each
Pooling Agreement may be amended by the parties thereto, without the consent of
any of the holders of Certificates covered by such Pooling Agreement: (i) to
cure any ambiguity; (ii) to correct, modify or supplement any provision therein
which may be inconsistent with any other provision therein or to correct any
error; (iii) to add any other provisions with respect to matters or questions
arising thereunder which shall not be inconsistent with the provisions thereof;
(iv) if a REMIC election has been made with respect to any portion of the
related Trust Fund, to relax or eliminate any requirement thereunder imposed by
the provisions of the Code relating to REMICs if such provisions are amended or
clarified such that any such requirement may be relaxed or eliminated; (v) to
relax or eliminate any requirement thereunder imposed by the Securities Act or
the rules thereunder if the Securities Act or such rules are amended or
clarified such that any requirement may be relaxed or eliminated; (vi) if a
REMIC election has been made with respect to any portion of the related Trust
Fund, and if such amendment, as evidenced by an opinion of counsel delivered to
the related Trustee and REMIC Administrator, is reasonably necessary to comply
with any requirements imposed by the Code or any successor or amendatory statute
or any temporary or final regulation, revenue ruling, revenue procedure or other
written official announcement or interpretation relating to federal income tax
laws or any such proposed action which, if made effective, would apply
retroactively to any REMIC created under such Pooling Agreement at least from
the effective date of such amendment, or would be necessary to avoid the
occurrence of a prohibited transaction or to reduce the incidence of any tax
that would arise from any actions taken with respect to the operation of any
REMIC created under such Pooling Agreement; (vii) if a REMIC election has been
made with respect to any portion of the related Trust Fund, to modify, add to or
eliminate certain transfer restrictions relating to REMIC Residual Certificates;
or (viii) for any other purpose; provided that such amendment of a Pooling
Agreement (other than any amendment for any of the specific purposes described
in clauses (vi) and (vii) above) may not, as evidenced by an opinion of counsel
obtained by or delivered to the Trustee, adversely affect in any material
respect the interests of any holder of Certificates of the related Series; and
provided further that any amendment covered solely by clause (viii) above may
not adversely affect the then current rating assigned to any Class of
Certificates of the related Series by any Rating Agency, as evidenced by written
confirmation to such effect from each applicable Rating Agency obtained by or
delivered to the Trustee.
Except as otherwise specified in the related Prospectus Supplement, each
Pooling Agreement may also be amended by the parties thereto, with the consent
of the holders of Certificates of the respective Classes affected thereby
evidencing, in the aggregate, not less than 66-2/3% (or such other percentage
specified in the related Prospectus Supplement) of the Voting Rights allocated
to such Classes, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of such Pooling Agreement or of
modifying in any manner the rights of the holders of Certificates covered by
such Pooling Agreement, except that no such amendment of a Pooling Agreement may
(i) reduce in any manner the amount of, or delay the timing of, payments
received on the related Mortgage Assets which are required to be distributed on
a Certificate of the related Series without the consent of the holder of such
Certificate, (ii) adversely affect in any material respect the interests of the
holders of any Class of Certificates of the related Series in a manner other
than as described in the immediately preceding clause (i) without the consent of
the holders of all Certificates of such Class or (iii) modify the provisions of
such Pooling Agreement relating to amendments thereof without the consent of the
holders of all Certificates of the related Series then outstanding.
Notwithstanding the foregoing, if a REMIC election has been made with
respect to the related Trust Fund, the Trustee will not be required to consent
to any amendment to a Pooling Agreement without having first received an opinion
of counsel to the effect that such amendment or the exercise of any power
granted to any party to such Pooling Agreement or any other specified person in
accordance with such amendment will not result in the imposition of a tax on the
related Trust Fund or cause such Trust Fund (or any designated portion thereof)
to fail to qualify as a REMIC.
List of Certificateholders
Unless otherwise specified in the related Prospectus Supplement, upon
written request of three or more Certificateholders of record made for purposes
of communicating with other holders of Certificates of the same Series with
respect to their rights under the related Pooling Agreement, the Trustee or
other specified person will afford such Certificateholders access during normal
business hours to the most recent list of Certificateholders of that Series held
by such
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person. If such list is as of a date more than 90 days prior to the date of
receipt of such Certificateholders' request, then such person, if not the
registrar for the Certificates of such Series, will be required to request from
such registrar a current list and to afford such requesting Certificateholders
access thereto promptly upon receipt.
The Trustee
The Trustee under each Pooling Agreement will be named in the related
Prospectus Supplement. The commercial bank, national banking association,
banking corporation or trust company that serves as Trustee may have typical
banking relationships with the Depositor and its affiliates and with any Master
Servicer, Special Servicer or REMIC Administrator and its affiliates.
Duties of the Trustee
The Trustee for each Series will make no representation as to the validity
or sufficiency of the related Pooling Agreement, the Certificates of such Series
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
Pooling Agreement of any funds paid to such party in respect of the Certificates
or the 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 Pooling Agreement. However, upon receipt
of any of the various certificates, reports or other instruments required to be
furnished to it pursuant to the related Pooling Agreement, a Trustee will be
required to examine such documents and to determine whether they conform to the
requirements of such agreement.
Certain Matters Regarding the Trustee
As and to the extent described in the related Prospectus Supplement, the
fees and normal disbursements of any Trustee may be the expense of the related
Master Servicer or other specified person or may be required to be borne by the
related Trust Fund.
Unless otherwise specified in the related Prospectus Supplement, the
Trustee for each Series will be entitled to indemnification, from amounts held
in the Certificate Account for such Series, for any loss, liability or expense
incurred by the Trustee in connection with the Trustee's acceptance or
administration of its trusts under the related Pooling Agreement; provided,
however, that such indemnification will not extend to any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or gross negligence
on the part of the Trustee in the performance of its obligations and duties
thereunder, or by reason of its reckless disregard of such obligations or
duties.
Unless otherwise specified in the related Prospectus Supplement, the
Trustee for each Series will be entitled to execute any of its trusts or powers
under the related Pooling Agreement or perform any of this duties thereunder
either directly or by or through agents or attorneys, and the Trustee will not
be responsible for any willful misconduct or gross 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 may resign at any time, in which event the
Depositor will be obligated to appoint a successor Trustee. The Depositor may
also remove the Trustee for any Series if such Trustee ceases to be eligible to
continue as such under the related Pooling Agreement or if such Trustee becomes
insolvent. Upon becoming aware of such circumstances, the Depositor will be
obligated to appoint a successor Trustee. Unless otherwise specified in the
related Prospectus Supplement, a Trustee may also be removed at any time by the
holders of Certificates of the applicable Series evidencing not less than 51%
(or such other percentage specified in the related Prospectus Supplement) of the
Voting Rights for such Series; provided that if such removal was without cause,
the Certificateholders effecting such 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. Notwithstanding anything herein to the contrary, if any entity is
acting as both Trustee
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and REMIC Administrator for any Series, then any resignation or removal of such
entity as Trustee will also constitute the resignation or removal of such entity
as REMIC Administrator, and the successor Trustee will also serve as the
successor REMIC Administrator as well.
DESCRIPTION OF CREDIT SUPPORT
General
Credit Support may be provided with respect to one or more Classes of the
Certificates of any Series or with respect to the related Mortgage Assets.
Credit Support may be in the form of a letter of credit, the subordination of
one or more other Classes of Certificates, the use of a surety bond, an
insurance policy or a guarantee, the establishment of one or more reserve funds,
or any combination of the foregoing. If and to the extent so provided in the
related Prospectus Supplement, any of the foregoing forms of Credit Support may
provide credit enhancement for more than one Series.
The Credit Support may not provide protection against all risks of loss and
will not guarantee payment to Certificateholders of all amounts to which they
are entitled under the related Pooling Agreement. If losses or shortfalls occur
that exceed the amount covered by the related Credit Support or that are of a
type not covered by such Credit Support, Certificateholders will bear their
allocable share of deficiencies. Moreover, if a form of Credit Support covers
the Offered Certificates of more than one Series and losses on the related
Mortgage Assets exceed the amount of such Credit Support, it is possible that
the holders of Offered Certificates of one (or more) such Series will be
disproportionately benefited by such Credit Support to the detriment of the
holders of Offered Certificates of one (or more) other such Series.
If Credit Support is provided with respect to one or more Classes of
Certificates of a Series, or with respect to the related Mortgage Assets, the
related Prospectus Supplement will include a description of (i) the nature and
amount of coverage under such Credit Support, (ii) any conditions to payment
thereunder not otherwise described herein, (iii) the conditions (if any) under
which the amount of coverage under such Credit Support may be reduced and under
which such Credit Support may be terminated or replaced and (iv) the material
provisions relating to such Credit Support. Additionally, the related Prospectus
Supplement will set forth certain information with respect to the obligor, if
any, under any instrument of Credit Support. See "Risk Factors--Credit Support
Limitations".
Subordinate Certificates
If so specified in the related Prospectus Supplement, one or more Classes
of Certificates of a Series may be Subordinate Certificates. To the extent
specified in the related Prospectus Supplement, the rights of the holders of
Subordinate Certificates to receive distributions from the Certificate Account
on any Distribution Date will be subordinated to the corresponding rights of the
holders of Senior Certificates. If so provided 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. The related Prospectus
Supplement 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 such subordination will be available.
If the Mortgage Assets in any Trust Fund 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 within the Trust
Fund. The Prospectus Supplement for a Series that includes a cross-support
provision will describe the manner and conditions for applying such provisions.
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Insurance or Guarantees with Respect to Mortgage Loans
If so provided in the related Prospectus Supplement, Mortgage Loans
included in any Trust Fund will be covered for certain default risks by
insurance policies or guarantees. The related Prospectus Supplement will
describe the nature of such default risks and the extent of such coverage.
Letter of Credit
If so provided in the Prospectus Supplement for a Series, deficiencies in
amounts otherwise payable on such Certificates or certain Classes thereof will
be covered by one or more letters of credit, issued by a bank or other financial
institution specified in such Prospectus Supplement (the "Letter of Credit
Bank"). Under a letter of credit, the Letter of Credit Bank will be obligated to
honor draws thereunder in an aggregate fixed dollar amount, net of unreimbursed
payments thereunder, generally equal to a percentage specified in the related
Prospectus Supplement of the aggregate principal balance of some or all of the
related Mortgage Assets on the related Cut-off Date or of the initial aggregate
Certificate Principal Balance of one or more Classes of Certificates. If so
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 thereunder and may otherwise be reduced as
described in the related Prospectus Supplement. The obligations of the Letter of
Credit Bank under the letter of credit for any Series will expire at the earlier
of the date specified in the related Prospectus Supplement or the termination of
the related Trust Fund.
Certificate Insurance and Surety Bonds
If so provided in the Prospectus Supplement for a Series, deficiencies in
amounts otherwise payable on such Certificates or certain Classes thereof will
be covered by insurance policies or surety bonds provided by one or more
insurance companies or sureties. Such instruments may cover, with respect to one
or more Classes of Certificates of the related Series, timely distributions of
interest or 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. The related Prospectus Supplement will describe any
limitations on the draws that may be made under any such instrument.
Reserve Funds
If so provided in the Prospectus Supplement for a Series, deficiencies in
amounts otherwise payable on such Certificates or certain Classes thereof 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 thereof will be deposited, in the amounts specified in such
Prospectus Supplement. If so specified in the related Prospectus Supplement, the
reserve fund for a Series may also be funded over time by a specified amount of
certain collections received on the related Mortgage Assets.
Amounts on deposit in any reserve fund for a Series will be applied for the
purposes, in the manner, and to the extent specified in the related Prospectus
Supplement. If so specified in the related Prospectus Supplement, reserve funds
may be established to provide protection only against certain types of losses
and shortfalls. Following each Distribution Date, amounts in a reserve fund in
excess of any amount required to be maintained therein may be released from the
reserve fund under the conditions and to the extent specified in the related
Prospectus Supplement.
If so specified in the related Prospectus Supplement, amounts deposited in
any reserve fund will be invested in Permitted Investments. Unless otherwise
specified in the related Prospectus Supplement, any reinvestment income or other
gain from such investments will be credited to the related reserve fund for such
Series, and any loss resulting from such investments will be charged to such
reserve fund. However, such income may be payable to any related Master Servicer
or another service provider as additional compensation for its services. The
reserve fund, if any, for a Series will not be a part of the Trust Fund unless
otherwise specified in the related Prospectus Supplement.
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Credit Support with Respect to MBS
If so provided in the Prospectus Supplement for a Series, any MBS included
in the related Trust Fund and/or the related underlying mortgage loans may be
covered by one or more of the types of Credit Support described herein. The
related Prospectus Supplement will specify, as to each such form of Credit
Support, the information indicated above with respect thereto, to the extent
such information is material and available.
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS
The following discussion contains general summaries of certain legal
aspects of mortgage loans secured by commercial and multifamily residential
properties. Because such legal aspects are governed by applicable state law
(which laws may differ substantially), the summaries do not purport to be
complete, to reflect the laws of any particular state, or to encompass the laws
of all states in which the security for the Mortgage Loans (or mortgage loans
underlying any MBS) is situated. Accordingly, the summaries are qualified in
their entirety by reference to the applicable laws of those states. See
"Description of the Trust Funds--Mortgage Loans". If a significant percentage of
Mortgage Loans (or mortgage loans underlying MBS), by balance, are secured by
properties in a particular state, relevant state laws, to the extent they vary
materially from this discussion, will be discussed in the Prospectus Supplement.
For purposes of the following discussion, "Mortgage Loan" includes a mortgage
loan underlying an MBS.
General
Each Mortgage Loan will be evidenced by a note or bond and secured by an
instrument granting a security interest in real property, which 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 herein
collectively referred to as "mortgages". A mortgage creates a lien upon, or
grants a title interest in, the real property covered thereby, and represents
the security for the repayment of the indebtedness customarily evidenced by a
promissory note. The priority of the lien created or interest granted will
depend on the terms of the mortgage and, in some cases, on the terms of separate
subordination agreements or intercreditor agreements with others that hold
interests in the real property, the knowledge of the parties to the mortgage
and, generally, 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: a mortgagor (the borrower and usually
the owner of the subject property) and a mortgagee (the lender). In contrast, a
deed of trust is a three-party instrument, among a trustor (the equivalent of a
borrower), a trustee to whom the real property is conveyed, and a beneficiary
(the lender) for whose benefit the conveyance is made. 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
indebtedness evidenced by the related note. A deed to secure debt typically has
two parties, pursuant to which the borrower, or grantor, conveys title to the
real property to the grantee, or lender, generally with a power of sale, until
such time as the debt is repaid. In a case where the borrower is a land trust,
there would be an additional party because legal title to the property is held
by a land trustee under a land trust agreement for the benefit of the borrower.
At origination of a mortgage loan involving a land trust, the borrower may
execute a separate undertaking to make payments on the mortgage note. In no
event is the land trustee personally liable for the mortgage note obligation.
The mortgagee's authority under a mortgage, the trustee's authority under a deed
of trust and the grantee's authority under a deed to secure debt are governed by
the express provisions of the related instrument, the law of the state in which
the real property is located, certain federal laws and, in some deed of trust
transactions, the directions of the beneficiary.
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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, pursuant to which the borrower assigns to the
lender the borrower's right, title and interest as landlord under each lease and
the income derived therefrom, while (unless rents are to be paid directly to the
lender) retaining a revocable license to collect the rents for so long as there
is no default. If the borrower defaults, the license terminates and the lender
is entitled to collect the rents. Local law may require that the lender take
possession of the property and/or obtain a court-appointed receiver before
becoming entitled to collect the rents.
In most states, hotel and motel room rates are considered accounts
receivable under the Uniform Commercial Code ("UCC"); in cases where hotels or
motels constitute loan security, the rates are generally pledged by the borrower
as additional security for the loan. 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 perfection
of such security interest. In certain cases, Mortgage Loans secured by hotels or
motels may be included in a Trust Fund even if the security interest in the room
rates was not perfected or the requisite UCC filings were allowed to lapse. Even
if the lender's security interest in room rates is perfected under applicable
nonbankruptcy law, it 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. In the bankruptcy setting,
however, the lender will be stayed from enforcing its rights to collect room
rates, but those room rates (in light of certain revisions to the Bankruptcy
Code which are effective for all bankruptcy cases commenced on or after October
22, 1994) constitute "cash collateral" and therefore cannot be used by the
bankruptcy debtor without a hearing or lender's consent and unless the lender's
interest in the room rates is given adequate protection (e.g., 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 debtor proposes
to use, or other similar relief). See "--Bankruptcy Laws".
Personalty
In the case of certain types of mortgaged properties, such as hotels,
motels and nursing homes, personal property (to the extent owned by the borrower
and not previously pledged) may constitute a significant portion of the
property's value as security. The creation and enforcement of liens on personal
property are governed by the UCC. Accordingly, if a borrower pledges personal
property as security for a mortgage loan, the lender generally must file UCC
financing statements in order to perfect its security interest therein, 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 a Trust Fund even if the security interest in such
personal property was not perfected or the requisite UCC filings were allowed to
lapse.
Foreclosure
General. 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.
Foreclosure procedures vary from state to state. Two primary methods of
foreclosing a mortgage are judicial foreclosure, involving court proceedings,
and nonjudicial 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 interposed, and 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
subordinate interest of record in the real property and all parties in
possession of the property, under leases or otherwise, whose interests
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are subordinate to the mortgage. Delays in completion of the foreclosure may
occasionally result from difficulties in locating defendants. When the lender's
right to foreclose is contested, the legal proceedings can be time-consuming.
Upon successful completion of a judicial foreclosure proceeding, the court
generally issues a judgment of foreclosure and appoints a referee or other
officer to conduct a public sale of the mortgaged property, the proceeds of
which are used to satisfy the judgment. Such sales are made in accordance with
procedures that vary from state to state.
Equitable and Other Limitations on Enforceability of Certain Provisions.
United States courts have traditionally imposed general equitable principles to
limit the remedies available to lenders in foreclosure actions. These principles
are generally designed to relieve borrowers from the effects of mortgage
defaults perceived as harsh or unfair. Relying on such principles, a court may
alter the specific terms of a loan to the extent it considers necessary to
prevent or remedy an injustice, undue oppression or overreaching, or may require
the lender to undertake affirmative actions to determine the cause of the
borrower's default and the likelihood that the borrower will be able to
reinstate the loan. In some cases, courts have substituted their judgment for
the lender's and have required that lenders reinstate loans or recast payment
schedules in order to accommodate borrowers who are suffering from a temporary
financial disability. In other cases, courts have limited the right of the
lender to foreclose in the case of a nonmonetary default, such as a failure to
adequately maintain the mortgaged property or an impermissible further
encumbrance of the mortgaged property. Finally, 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 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 mortgage loans after commencement of foreclosure
proceedings but prior to a foreclosure sale.
Nonjudicial Foreclosure/Power of Sale. In states permitting nonjudicial
foreclosure proceedings, foreclosure of a deed of trust is generally
accomplished by a nonjudicial 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 a nonjudicial public sale to be conducted
generally following a request from the beneficiary/lender to the trustee to sell
the property upon default by the borrower and after notice of sale is given in
accordance with the terms of the mortgage and applicable state law. In some
states, prior to such 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 the difficulty in determining the exact
status of title to the property (due to, among other things, redemption rights
that may exist) and because of the possibility that physical deterioration of
the property may have occurred during the foreclosure proceedings. Therefore, it
is common for the lender to purchase the mortgaged property for an amount equal
to the secured indebtedness and accrued and unpaid interest plus the expenses of
foreclosure, in which event the borrower's debt will be extinguished, or for a
lesser amount in order to preserve its right to seek a deficiency judgment if
such is available under state law and under the terms of the Mortgage Loan
documents. (The Mortgage Loans, however, may be nonrecourse. See "Risk
Factors--Certain Factors Affecting Delinquency, Foreclosure and Loss of the
Mortgage Loans--Limited Recourse Nature of the Mortgage Loans".) Thereafter,
subject to the borrower's right in some states to remain in possession during a
redemption period, the lender will become the owner of the property and have
both the benefits and burdens of ownership, including the obligation to pay debt
service on any senior mortgages, to pay taxes, to obtain casualty insurance and
to make
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such repairs as are 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 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. Depending upon market conditions, the ultimate proceeds of the
sale of the property may not equal the lender's investment in the property.
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 be
obliged to keep senior mortgage loans current in order to avoid foreclosure of
its interest in the property. In addition, if the foreclosure of a junior
mortgage triggers the enforcement of a "due-on-sale" clause contained in a
senior mortgage, the junior mortgagee could be required to pay the full amount
of the senior mortgage indebtedness or face foreclosure.
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 exercise of 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 an equity of redemption and may 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.
The equity of redemption is a common-law (nonstatutory) right which should
be distinguished from post-sale statutory rights of redemption. In some states,
after sale pursuant to a deed of trust or foreclosure of a mortgage, the
borrower and foreclosed junior lienors are given a statutory period in which to
redeem the property. 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. The effect
of a statutory right of redemption is to 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 maintain the
property and pay the expenses of ownership until the redemption period has
expired. In some states, a post-sale statutory right of redemption may exist
following a judicial foreclosure, but not following a trustee's sale under a
deed of trust.
Anti-Deficiency Legislation. Some or all of the Mortgage Loans may be
nonrecourse loans, as to which recourse in the case of default will be limited
to the Mortgaged Property and such other assets, if any, that were pledged to
secure the Mortgage Loan. However, even if a mortgage loan by its terms 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 statutes 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 such security;
however, in some of those states, the lender, following judgment on such
personal action, may be deemed to have elected a remedy and thus may be
precluded from foreclosing upon the security. Consequently, lenders in those
states where such an election of remedy provision exists will usually proceed
first against 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 in 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
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terminated upon a lease default, the leasehold mortgagee would lose its
security. This risk may be lessened if the ground lease requires the lessor to
give the leasehold mortgagee notices of lessee defaults and an opportunity to
cure them, permits the leasehold estate to be assigned to and by the leasehold
mortgagee or the purchaser at a foreclosure sale, and contains certain other
protective provisions typically included in a "mortgageable" ground lease.
Certain Mortgage Loans, however, may be secured by ground leases which 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
appurtenant thereto, allocable to cooperative dwelling units that may be vacant
or occupied by nonowner tenants. Such loans are subject to certain risks not
associated with mortgage loans secured by a lien on the fee estate of a borrower
in real property. Such a loan typically is subordinate to the mortgage, if any,
on the Cooperative's building which, 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 are subject to various regulations as well as to restrictions under
the governing documents of the Cooperative, and 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, the lender with an opportunity to
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 UCC and the security agreement relating to the shares. Article 9 of the
UCC 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 UCC
provides that the proceeds of the sale will be applied first to pay the costs
and expenses of the sale and then to satisfy the indebtedness secured by the
lender's security interest. A recognition agreement, however, generally provides
that the lender's right to reimbursement is subject to the right of the
Cooperative to receive sums due under the proprietary leases.
Bankruptcy Laws
Operation of the Bankruptcy Code and related state laws may interfere with
or affect the ability of a lender to realize upon collateral and/or to enforce a
deficiency judgment. For example, under the Bankruptcy Code, virtually all
actions (including foreclosure actions and deficiency judgment proceedings) to
collect a debt are automatically stayed upon the filing of the bankruptcy
petition and, often, no interest or principal payments are made during the
course of the bankruptcy case. The delay and the consequences thereof caused by
such automatic stay can be significant. Also, under the Bankruptcy Code, the
filing of a petition in bankruptcy by or on behalf of a junior lienor may stay
the senior lender from taking action to foreclose out such junior lien.
Under the Bankruptcy Code, provided certain substantive and procedural
safeguards protective of the lender are met, the amount and terms of a mortgage
loan secured by a lien on property of the debtor may be modified under certain
circumstances. For example, the outstanding amount of the loan may be reduced to
the then-current value of the property (with a corresponding partial reduction
of the amount of lender's security interest) pursuant to a confirmed plan or
lien avoidance proceeding, thus leaving the lender a general unsecured creditor
for the difference between such value and the outstanding balance of the loan.
Other modifications may include the reduction in the amount of each scheduled
payment, 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), and/or by an extension (or shortening) of the term to maturity.
Some bankruptcy courts have approved plans, based on the particular facts of the
reorganization case, that effected the cure of a mortgage loan default by paying
arrearages over a number of years. Also, a bankruptcy court may permit a 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
affecting the ability of a secured lender to enforce the borrower's assignment
of rents and leases related to the mortgaged property. Under the Bankruptcy
Code, a lender may be stayed from enforcing the assignment, and the legal
proceedings necessary to resolve the issue could be time-consuming, with
resulting delays in the lender's receipt of the rents. Recent amendments to the
Bankruptcy code, however,
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may minimize the impairment of the lender's ability to enforce the borrower's
assignment of rents and leases. In addition to the inclusion of hotel revenues
within the definition of "cash collateral" as noted previously in the section
entitled "--Leases and Rents", the amendments provide that a pre-petition
security interest in rents or hotel revenues is designed to overcome those cases
holding that a security interest in rents is unperfected under the laws of
certain states until the lender has taken some further action, such as
commencing foreclosure or obtaining a receiver prior to activation of the
assignment of rents.
If a borrower's ability to make payment on a mortgage loan is dependent on
its receipt of rent payments under a lease of the related property, that ability
may be impaired by the commencement of a bankruptcy case relating to a lessee
under such lease. Under the Bankruptcy Code, the filing of a petition in
bankruptcy by or on behalf of a lessee 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
lessee's petition. In addition, the Bankruptcy Code generally provides that a
trustee or debtor-in-possession may, subject to approval of the court, (i)
assume the lease and retain it or assign it to a third party or (ii) reject the
lease. If the lease is assumed, the trustee or debtor-in-possession (or
assignee, if applicable) must cure any defaults under the lease, compensate the
lessor for its losses and provide the lessor with "adequate assurance" of future
performance. Such remedies may be insufficient, and any assurances provided to
the lessor may, in fact, be inadequate. If the lease is rejected, the lessor
will be treated as an unsecured creditor (except potentially to the extent of
any security deposit) with respect to its claim for damages for termination of
the lease. The Bankruptcy Code also limits a lessor's damages for lease
rejection to (a) the rent reserved by 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 (b) unpaid rent to the earlier of the surrender of the
property or the lessee's bankruptcy filing.
Environmental Considerations
General. 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. Such 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 that 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, as amended ("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 such mortgaged property or the operations of
the borrower. Such 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 a mortgaged property through foreclosure, deed in
lieu of foreclosure or otherwise. Moreover, such liability is not limited to the
original or unamortized principal balance of a loan or to the value of the
property securing a loan. 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
(the "Lender Liability Act") amended, among other things, the provisions of
CERCLA with respect to lender liability and the secured creditor exemption. The
Lender Liability Act offers substantial protection to lenders by defining the
activities in which a lender can engage and still have 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
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borrower. The Lender Liability 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 it exercises decision-making control over the
borrower's environmental compliance and hazardous substance handling and
disposal practices, or assumes day-to-day management of operational functions of
the mortgaged property. The Lender Liability Act also provides that a lender
will continue to have the benefit of the secured creditor exemption even if it
forecloses on a mortgaged property, purchases it 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 ("ACMs"). Such laws, as well as common law standards, may impose
liability for releases of or exposure to ACMs and may provide for third parties
to seek recovery from owners or operators of real properties for personal
injuries associated with such releases.
Recent federal legislation will in the future require owners of residential
housing constructed prior to 1978 to disclose to potential residents or
purchasers any known lead-based paint hazards and will impose treble damages for
any failure to so notify. In addition, the ingestion of lead-based paint chips
or dust particles by children can result in lead poisoning, and the owner of a
property where such circumstances exist may be held liable for such injuries and
for the costs of removal or encapsulation of the lead-based paint. Testing for
lead-based paint or lead in the water was conducted with respect to certain of
the Mortgaged Properties, generally based on the age and/or condition thereof.
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 (for example, actions based on nuisance or on toxic tort resulting in
death, personal injury or damage to property) related to hazardous environmental
conditions on a property. While it may be more difficult to hold a lender liable
in such cases, 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. Such costs may jeopardize the
borrower's ability to meet its loan obligations.
Additional Considerations. The cost of remediating hazardous substance
contamination at a property can be substantial. If a lender becomes liable, it
can bring an action for contribution against the owner or operator who created
the environmental hazard, but that individual or entity may be without
substantial assets. Accordingly, it is possible that such costs could become a
liability of the Trust Fund and occasion a loss to the Certificateholders.
To reduce the likelihood of such a loss, unless otherwise specified in the
related Prospectus Supplement, the Pooling Agreement will provide that neither
the Master Servicer nor the Special Servicer, acting on behalf of the Trustee,
may acquire title to a Mortgaged Property or take over its operation unless the
Special Servicer, based solely (as to environmental matters) on a report
prepared by a person who regularly conducts environmental audits, has made the
determination that certain conditions relating to environmental matters, as
described under "Description of the Pooling Agreements-Realization Upon
Defaulted Mortgage Loans", have been satisfied.
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If a lender forecloses on a mortgage secured by a property, the operations
on which are subject to environmental laws and regulations, the lender will be
required to operate the property in accordance with those laws and regulations.
Such compliance may entail substantial expense, especially in the case of
industrial or manufacturing properties.
In addition, a lender may be obligated to disclose environmental conditions
on a property to government entities and/or to prospective buyers (including
prospective buyers at a foreclosure sale or following foreclosure). Such
disclosure may decrease the amount that prospective buyers are willing to pay
for the affected property, sometimes substantially, and thereby decrease the
ability of the lender to recoup its investment in a loan upon foreclosure.
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 Certificates. Environmental site assessments, however,
vary considerably in their content, quality and cost. Even when adhering to good
professional practices, environmental consultants will sometimes not detect
significant environmental problems because to do an exhaustive environmental
assessment would be far too costly and time-consuming to be practical.
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 related
Mortgaged Property. In recent years, court decisions and legislative actions
placed substantial restrictions on the right of lenders to enforce such clauses
in many states. However, the Garn-St Germain Depository Institutions Act of 1982
(the "Garn Act") 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 as set forth in the Garn Act
and the regulations promulgated thereunder. Accordingly, a Master Servicer may
nevertheless have the right to accelerate the maturity of a Mortgage Loan that
contains a "due-on-sale" provision upon transfer of an interest in the property,
without regard to the Master Servicer's ability to demonstrate that a sale
threatens its legitimate security interest.
Junior Liens; Rights of Holders of Senior Liens
If so provided in the related Prospectus Supplement, the Mortgage Assets
for a Series may include Mortgage Loans secured by junior liens, and the loans
secured by the related Senior Liens may not be included in the Mortgage Asset
Pool. 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 Liens
and the Mortgage 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 first to the payment of court costs and fees in connection with the
foreclosure, second to real estate taxes, third in satisfaction of all
principal, interest, prepayment or acceleration penalties, if any, and any other
sums due and owing to the holder of the Senior Liens. The claims of the holders
of the Senior Liens will be satisfied in full out of proceeds of the liquidation
of the related Mortgaged Property, if such proceeds are sufficient, before the
Trust Fund as holder of the junior lien receives any payments in respect of the
Mortgage Loan. In the event that such proceeds from a foreclosure or similar
sale of the related Mortgaged Property are insufficient to satisfy all Senior
Liens and the Mortgage Loan in the aggregate, the Trust Fund, as the holder of
the junior lien, and, accordingly, holders of one or more Classes of the
Certificates of the related Series bear (i) the risk of delay in distributions
while a deficiency judgment against the borrower is obtained and (ii) the risk
of loss if the deficiency judgment is not realized upon. Moreover, deficiency
judgments may not be available in certain jurisdictions or the Mortgage Loan may
be nonrecourse.
Subordinate Financing
The terms of certain of the Mortgage Loans may not restrict the ability of
the borrower to use the Mortgaged Property as security for one or more
additional loans, or such restrictions may be unenforceable. Where a borrower
encumbers a mortgaged property with one or more junior liens, the senior lender
is subjected to additional risk. First, the borrower may have difficulty
servicing and repaying multiple loans. Moreover, if the subordinate financing
permits recourse
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to the borrower (as is frequently the case) and the senior loan does not, a
borrower may have more incentive to repay sums due on the subordinate loan.
Second, acts of the senior lender that prejudice the junior lender or impair the
junior lender's security may create a superior equity in favor of the junior
lender. For example, if the borrower and the senior lender agree to an increase
in the principal amount of or the interest rate payable on the senior loan, the
senior lender may lose its priority to the extent any existing junior lender is
harmed or the borrower is additionally burdened. Third, 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. Moreover, 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 obligate the borrower to
pay a late charge or additional interest if payments are not timely made, and in
some circumstances, may prohibit prepayments for a specified period and/or
condition prepayments upon the borrower's payment of prepayment fees or yield
maintenance penalties. In certain states, there are or may be specific
limitations upon the late charges which 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 fees or
penalties upon an involuntary prepayment is unclear under the laws of many
states.
Applicability of Usury Laws
Title V of the Depository Institutions Deregulation and Monetary Control
Act of 1980 ("Title V") provides that state usury limitations shall 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 reimpose interest rate limits by adopting, before April 1, 1983, a law or
constitutional provision that expressly rejects application of the federal law.
In addition, even where Title V is not so rejected, any state is authorized by
the law to adopt a provision limiting discount points or other charges on
mortgage loans covered by Title V. Certain states have taken action to reimpose
interest rate limits and/or to limit discount points or other charges.
No Mortgage Loan originated in any state in which application of Title V
has been expressly rejected or a provision limiting discount points or other
charges has been adopted, will (if originated after that rejection or adoption)
be eligible for inclusion in a Trust Fund unless (i) such Mortgage Loan provides
for such interest rate, discount points and charges as are permitted in such
state or (ii) such Mortgage Loan provides that the terms thereof are to be
construed in accordance with the laws of another state under which such interest
rate, discount points and charges would not be usurious and the borrower's
counsel has rendered an opinion that such choice of law provision would be given
effect.
Certain Laws and Regulations
The Mortgaged Properties will be subject to compliance with various
federal, state and local statutes and regulations. Failure to comply (together
with an inability to remedy any such failure) could result in material
diminution in the value of a Mortgaged Property which could, together with the
possibility of limited alternative uses for a particular Mortgaged Property
(i.e., a nursing or convalescent home or hospital), result in a failure to
realize the full principal amount of the related Mortgage Loan.
Americans with Disabilities Act
Under Title III of the Americans with Disabilities Act of 1990 and rules
promulgated thereunder (collectively, the "ADA"), in order to protect
individuals with disabilities, public accommodations (such as hotels,
restaurants, shopping centers, hospitals, schools and social service center
establishments) must remove architectural and communication barriers which are
structural in nature from existing places of public accommodation to the extent
"readily achievable". In addition, under the ADA, alterations to a place of
public accommodation or a commercial facility are to be made so that, to the
maximum extent feasible, such altered portions are readily accessible to and
usable by disabled individuals. The "readily
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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 such 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, as
amended (the "Relief Act"), a borrower who enters military service after the
origination of such borrower's mortgage 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 such borrower's active duty status, unless a
court orders otherwise upon application of the lender. The Relief 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 Relief 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 Relief Act. Application of the Relief Act would adversely
affect, for an indeterminate period of time, the ability of a Master Servicer or
Special Servicer to collect full amounts of interest on certain of the Mortgage
Loans. Any shortfalls in interest collections resulting from the application of
the Relief Act would result in a reduction of the amounts distributable to the
holders of the related Series, and would not be covered by advances or, unless
otherwise specified in the related Prospectus Supplement, any form of Credit
Support provided in connection with such Certificates. In addition, the Relief
Act imposes limitations that would impair the ability of the 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 thereafter.
Forfeitures in Drug and RICO Proceedings
Federal law provides that property owned by persons convicted of
drug-related crimes or of criminal violations of the Racketeer Influenced and
Corrupt Organizations ("RICO") statute can be seized by the government if the
property was used in, or purchased with the proceeds of, such crimes. Under
procedures contained in the comprehensive Crime Control Act of 1984 (the "Crime
Control Act"), the government may seize the property even before conviction. The
government must publish notice of the forfeiture proceeding and may give notice
to all parties "known to have an alleged interest in the property", including
the holders of mortgage loans.
A lender may avoid forfeiture of its interest in the property if it
establishes that: (i) its mortgage was executed and recorded before commission
of the crime upon which the forfeiture is based, or (ii) the lender was, at the
time of execution of the mortgage, "reasonably without cause to believe" that
the property was used in, or purchased with the proceeds of, illegal drug or
RICO activities.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
General
The following general discussion of the anticipated material federal income
tax consequences of the purchase, ownership and disposition of Offered
Certificates of any Series, to the extent it relates to matters of law or legal
conclusions with respect thereto, represents the opinion of counsel to the
Depositor with respect to that Series on the material matters associated with
such consequences, subject to any qualifications set forth herein. Unless
otherwise specified in the related Prospectus Supplement, counsel to the
Depositor for each Series will be Sidley & Austin. This discussion is directed
to Certificateholders that hold the Certificates as "capital assets" within the
meaning of Section 1221 of the Code and does not purport to discuss all federal
income tax consequences that may be applicable to the individual circumstances
of particular
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investors, some of which (such as banks, insurance companies and foreign
investors) may be subject to special treatment under the Code. Further, the
authorities on which this discussion, and the opinion referred to below, are
based are subject to change or differing interpretations, which could apply
retroactively. Prospective investors should note that no rulings have been or
will be sought from the IRS with respect to any of the federal income tax
consequences discussed below, and no assurance can be given the IRS will not
take contrary positions. Taxpayers and preparers of tax returns (including those
filed by any REMIC or other issuer) should be aware that under applicable
Treasury regulations a provider of advice on specific issues of law is not
considered an income tax return preparer unless the advice (i) is given with
respect to events that have occurred at the time the advice is rendered and is
not given with respect to the consequences of contemplated actions, and (ii) is
directly relevant to the determination of an entry on a tax return. Accordingly,
taxpayers should consult their tax advisors and tax return preparers regarding
the treatment of any item on their tax returns, even where the anticipated tax
consequences have been discussed herein. In addition to the federal income tax
consequences described herein, potential investors are advised to consult their
tax advisors concerning the state, local or other tax consequences to them of
the purchase, ownership and disposition of Offered Certificates. See "State and
Other Tax Consequences".
The following discussion addresses securities of two general types: (i)
certificates ("REMIC Certificates") representing interests in a Trust Fund, or a
portion thereof, that the REMIC Administrator will elect to have treated as a
real estate mortgage investment conduit ("REMIC") under Sections 860A through
860G (the "REMIC Provisions") of the Code, and (ii) Grantor Trust Certificates
representing interests in a Trust Fund ("Grantor Trust Fund") as to which no
such 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 Fund and, if such an election is to be made, will identify all "regular
interests" and "residual interests" in the REMIC. For purposes of this tax
discussion, references to a "Certificateholder" or a "holder" are to the
beneficial owner of a Certificate.
The following discussion is limited in applicability to Offered
Certificates. Moreover, this discussion applies only to the extent that Mortgage
Assets held by a Trust Fund consist solely of Mortgage Loans. To the extent that
other Mortgage Assets, including REMIC certificates and mortgage pass-through
certificates, are to be held by a Trust Fund, the tax consequences associated
with the inclusion of such assets will be disclosed in the related Prospectus
Supplement. In addition, if Cash Flow Agreements other than guaranteed
investment contracts are included in a Trust Fund, the anticipated material tax
consequences associated with such Cash Flow Agreements also will be discussed in
the related Prospectus Supplement. See "Description of the Trust Funds--Cash
Flow Agreements".
The following discussion is based in part upon the rules governing original
issue discount that are set forth in Sections 1271-1273 and 1275 of the Code and
in the Treasury regulations issued thereunder (the "OID Regulations"), and in
part upon the REMIC Provisions and the Treasury regulations issued thereunder
(the "REMIC Regulations"). The OID Regulations do not adequately address certain
issues relevant to, and in some instances provide that they are not applicable
to, securities such as the Certificates.
REMICs
Classification of REMICs. With respect to each Series of REMIC
Certificates, counsel to the Depositor will deliver its opinion generally to the
effect that, assuming compliance with all provisions of the related Pooling
Agreement and certain other documents (and subject to certain assumptions set
forth therein), the related Trust Fund (or each applicable portion thereof) will
qualify as a REMIC and the REMIC Certificates offered with respect thereto will
be considered to evidence ownership of REMIC Regular Certificates or REMIC
Residual Certificates in that REMIC within the meaning of the REMIC Provisions.
The following general discussion of the anticipated federal income tax
consequences of the purchase, ownership and disposition of REMIC Certificates,
to the extent it relates to matters of law or legal conclusions with respect
thereto, represents the opinion of counsel to the Depositor for the applicable
Series as specified in the related Prospectus Supplement, subject to any
qualifications set forth herein. In addition, counsel to the Depositor have
prepared or reviewed the statements in this Prospectus under the heading
"Certain Federal Income Tax Consequences--REMICs", and are of the opinion that
such statements are correct in all material respects. Such statements are
intended as an explanatory discussion of the possible effects of the
classification of any Trust Fund (or applicable portion thereof) as a REMIC for
federal income tax purposes on investors generally and of related tax matters
affecting investors generally, but do not purport to furnish
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information in the level of detail or with the attention to an investor's
specific tax circumstances that would be provided by an investor's own tax
advisor. Accordingly, each investor is advised to consult its own tax advisors
with regard to the tax consequences to it of investing in REMIC Certificates.
If an entity electing to be treated as a REMIC fails to comply with one or
more of the ongoing requirements of the Code for such status during any taxable
year, the Code provides that the entity may lose its status as a REMIC for such
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 Trust Fund's income for the period in
which the requirements for such status are not satisfied. The Pooling Agreement
with respect to each REMIC will include provisions designed to maintain the
Trust Fund's status as a REMIC under the REMIC Provisions. It is not anticipated
that the status of any Trust Fund as a REMIC will be inadvertently terminated.
Characterization of Investments in REMIC Certificates. In general, unless
otherwise provided in the related Prospectus Supplement, the REMIC Certificates
will be "real estate assets" within the meaning of Section 856(c)(4)(A) of the
Code and assets described in Section 7701(a)(19)(C) of the Code in the same
proportion that the assets of the REMIC underlying such Certificates would be so
treated. However, 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). Moreover, if 95% or more of the assets of the REMIC qualify for
any of the foregoing characterizations at all times during a calendar year, the
REMIC Certificates will qualify for the corresponding status in their entirety
for that calendar year. 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)(4)(A) of the Code. In addition, the REMIC Regular
Certificates will be "qualified mortgages" within the meaning of Section
860G(a)(3) of the Code in the hands of another REMIC, and will be "permitted
assets" under Section 860L(c)(1)(G) for a "financial asset securitization
investment trust" or FASIT. The determination as to the percentage of the
REMIC's assets that constitute assets described in the foregoing sections of the
Code will be made with respect to each calendar quarter based on the average
adjusted basis of each category of the assets held by the REMIC during such
calendar quarter. The 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 such 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, the related Prospectus Supplement will describe 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.
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 Fund as separate REMICs ("Tiered REMICs") for federal income tax purposes.
As to each such Series of REMIC Certificates, in the opinion of counsel to the
Depositor, assuming compliance with all provisions of the related Pooling
Agreement, the Tiered REMICs will each qualify as a REMIC and the REMIC
Certificates issued by the Tiered REMICs, will be considered to evidence
ownership of REMIC Regular Certificates or REMIC Residual Certificates in the
related REMIC within the meaning of the REMIC Provisions.
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Solely for purposes of determining whether the REMIC Certificates will be
"real estate assets" within the meaning of Section 856(c)(4)(A) of the Code, and
"loans secured by an interest in real property" under Section 7701(a)(19)(C) of
the Code, and whether the income on such Certificates is interest described in
Section 856(c)(3)(B) of the Code, the Tiered REMICs will be treated as one
REMIC.
Taxation of Owners of REMIC Regular Certificates.
General. Except as otherwise stated in this discussion, REMIC Regular
Certificates will be treated for federal income tax purposes as debt instruments
issued by the REMIC and not as ownership interests in the REMIC or its assets.
Moreover, holders of REMIC Regular Certificates that otherwise report income
under the cash method of accounting will be required to report income with
respect to REMIC Regular Certificates under the accrual method.
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.
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 the regulations will provide that the prepayment assumption used
with respect to a REMIC Regular Certificate must be the same as that used in
pricing the initial offering of such REMIC Regular Certificate. The prepayment
assumption (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 the Depositor 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 such Prepayment Assumption
will not be challenged by the Internal Revenue Service (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 (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 Closing Date, the issue
price for such Class will be the fair market value of such Class on such Closing
Date. 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 a single fixed rate, or at a "qualified floating rate", an
"objective rate", a combination of a single fixed rate and one or more
"qualified floating rates" or one "qualified inverse floating rate", or at a
combination of "qualified floating rates" that does not operate in a manner that
accelerates or defers interest payments on such REMIC Regular Certificate.
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, the related Prospectus Supplement will describe the manner in
which such 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 such Certificates to be made more than one
month after the date of issuance, a period which is longer than the subsequent
monthly
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intervals between interest payments. Assuming the "accrual period" (as defined
below) for original issue discount is each monthly period that ends on a
Distribution Date, in some cases, as a consequence of this "long first 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 Distribution
Date is computed with respect to a period that begins prior to the Closing 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 Closing Date is treated as part of the overall cost of such
REMIC Regular Certificate (and not as a separate asset the cost of which is
recovered entirely out of interest received on the next Distribution Date) and
that portion of the interest paid on the first Distribution Date in excess of
interest accrued for a number of days corresponding to the number of days from
the Closing Date to the first Distribution Date should be included in the stated
redemption price of such 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 Distribution Date. It is unclear how an election to do so would be
made under the OID Regulations and whether such an election could be made
unilaterally by a Certificateholder.
Notwithstanding the general definition of original issue discount, 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
(i) 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 Prepayment Assumption) by (ii) 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 the total amount of such de minimis
original issue discount and 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 such 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 such 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 such 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", that is, unless otherwise stated in the
related Prospectus Supplement, each period that begins on a date that
corresponds to a Distribution Date (or in the case of the first such period,
begins on the Closing Date) and ends on the day preceding the immediately
following Distribution Date, a calculation will be made of the portion of the
original issue discount that accrued during such accrual period. The portion of
original issue discount that accrues in any accrual period will equal the
excess, if any, of (i) the sum of (a) the present value, as of the end of the
accrual period, of all of the distributions 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 (ii) 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 (i) 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 Prepayment Assumption, (ii) using a discount rate equal to the
original yield to maturity of the Certificate and
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(iii) 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 Prepayment Assumption. The adjusted issue price of a REMIC Regular
Certificate at the beginning of any accrual period will equal the issue price of
such Certificate, increased by the aggregate amount of original issue discount
that accrued with respect to such Certificate in prior accrual periods, and
reduced by the amount of any distributions made on such REMIC Regular
Certificate in prior accrual periods of amounts included in the stated
redemption price. 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.
A subsequent purchaser of a REMIC Regular Certificate that purchases such
Certificate at a cost (excluding any portion of such 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 such Certificate. However, each such
daily portion will be reduced, if such cost is in excess of its "adjusted issue
price", in proportion to the ratio such excess bears to the aggregate original
issue discount remaining to be accrued on such REMIC Regular Certificate. The
adjusted issue price of a REMIC Regular Certificate on any given day equals the
sum of (i) the adjusted issue price (or, in the case of the first accrual
period, the issue price) of such Certificate at the beginning of the accrual
period which includes such day and (ii) the daily portions of original issue
discount for all days during such accrual period prior to such day.
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 such accrual period will be zero. That is, no current deduction of such
negative amount will be allowed to the holder of such Certificate. The holder
will instead only be permitted to offset such negative amount against future
positive original issue discount (if any) attributable to such a 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 such Certificateholder could ever receive
with respect to such 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. See "Risk
Factors -- Effect of Prepayments on Yield of Certificates" herein.
Market Discount. A Certificateholder that purchases a REMIC Regular
Certificate at a market discount (other than a de minimis amount), that is, in
the case of a REMIC Regular Certificate issued without original issue discount,
at a purchase price less than its remaining stated principal 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 stated redemption price. In
particular, under Section 1276 of the Code such a Certificateholder generally
will be required to allocate the portion of each such distribution representing
some of 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, such election will apply to all market discount bonds
acquired by such Certificateholder on or after the first day of the first
taxable year to which such election applies.
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 such an election were made 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 such 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 such 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.
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However, market discount with respect to a REMIC Regular Certificate will
be considered to be de minimis for purposes of Section 1276 of the Code if such
market discount is less than 0.25% of the remaining stated redemption price of
such 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, and it is likely that the same rule will be applied with respect to
market discount, presumably taking into account the 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. Until regulations are issued by the Treasury Department, 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: (i) on the basis of a constant yield
method, (ii) 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 (iii) 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. Moreover, the Prepayment Assumption used in calculating the
accrual of original issue discount is also used in calculating the accrual of
market discount. Because the regulations referred to in this paragraph have not
been issued, it is not possible to predict what effect such regulations might
have on the tax treatment of a REMIC Regular Certificate purchased at a discount
in the secondary market.
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 includible in income at a rate that is not
significantly slower than the rate at which such 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 such 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 such taxable year and is, in general, allowed as a deduction not later
than the year in which such market discount is includible in income. If such
holder, 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 (excluding any
portion of such cost attributable to accrued qualified stated interest) greater
than its remaining stated redemption price will be considered to be purchased at
a premium. On June 27, 1996, the IRS published in the Federal Register proposed
regulations on the amortization of bond premium. Under those regulations, if a
holder elects to amortize bond premium, bond premium would be amortized on a
constant yield method and would be applied against qualified stated interest.
The proposed regulations generally would be effective for Certificates acquired
on or after the date 60 days after the date final regulations are published in
the Federal Register. Holders of each such Class of Certificates should consult
their tax advisors regarding the possibility of making an election to amortize
such premium. 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 (which rules will require
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use of a Prepayment Assumption in accruing market discount with respect to REMIC
Regular Certificates without regard to whether such Certificates have original
issue discount) will also apply in amortizing bond premium under Section 171 of
the Code.
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 such 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 such holder's Certificate
becomes wholly worthless (i.e., until its Certificate 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 discount with respect to such Certificate, without
giving effect to any reductions in distributions attributable to defaults or
delinquencies on the Mortgage Loans or the Underlying Certificates 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 such 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 such 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 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 such 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. 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. Ordinary income derived from REMIC Residual Certificates
will be "portfolio income" for purposes of the taxation of taxpayers subject to
limitations under Section 469 of the Code on the deductibility of "passive
losses".
A holder of a REMIC Residual Certificate that purchased such Certificate
from a prior holder of such Certificate 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 such 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 such REMIC Residual Certificate from a prior
holder of such 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 such Certificate. The REMIC Regulations, however,
do not provide for any such modifications.
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Any payments received by a holder of a REMIC Residual Certificate from the
seller of such Certificate in connection with the acquisition of such REMIC
Residual Certificate will be taken into account in determining the income of
such 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 such 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 such payments, holders of REMIC Residual
Certificates should consult their tax advisors concerning the treatment of such
payments for income tax purposes.
The amount of income REMIC Residual Certificateholders will be required to
report (or the tax liability associated with such 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 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 "noneconomic" 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 such REMIC Residual Certificateholders for the
corresponding period may significantly adversely affect such REMIC Residual
Certificateholders' after-tax rate of return. Such 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--Certain Federal Tax
Considerations Regarding REMIC Residual Certificates".
Taxable Income of the REMIC. The taxable income of the REMIC will equal the
income from the Mortgage Loans and other assets of the REMIC plus any
cancellation of indebtedness income due to the allocation of realized losses to
REMIC Regular Certificates, less the deductions allowed to the REMIC for
interest (including original issue discount and reduced by any premium on
issuance) on the REMIC Regular Certificates (and any other Class of REMIC
Certificates constituting "regular interests" in the REMIC not offered hereby),
for amortization of any premium on the Mortgage Loans, for bad debt losses with
respect to the Mortgage Loans and, except as described below, for servicing,
administrative and other expenses.
For purposes of determining its taxable income, the REMIC will have an
initial aggregate 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 aggregate 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 hereby 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 such
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 such
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
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 such discount income
that is analogous to that required to be used by a REMIC as to 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 therein, 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 such income, under a
method similar to the method described above for accruing original issue
discount on the REMIC
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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 such election applies may be amortized under a constant
yield method, presumably taking into account a Prepayment Assumption.
A REMIC will be allowed deductions for interest (including original issue
discount) on the REMIC Regular Certificates (including any other Class of REMIC
Certificates constituting "regular interests" in the REMIC not offered hereby)
equal to the deductions that would be allowed if the REMIC Regular Certificates
(including any other Class of REMIC Certificates constituting "regular
interests" in the REMIC not offered hereby) were indebtedness of the REMIC.
Original issue discount will be considered to accrue for this purpose as
described above under "--Taxation 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 (including any
other Class of REMIC Certificates constituting "regular interests" in the REMIC
not offered hereby) described therein will not apply.
If a Class of REMIC Regular Certificates is issued at a price in excess of
the stated redemption price of such 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 such 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, the taxable income of a REMIC will be determined in the
same manner as if the REMIC were an individual having the calendar year as its
taxable year and using the accrual method of accounting. However, no item of
income, gain, loss or deduction allocable to a prohibited transaction will be
taken into account. See "--Prohibited Transactions Tax and Other Taxes" below.
Further, the limitation on miscellaneous itemized deductions imposed on
individuals by Section 67 of the Code (which allows such deductions only to the
extent they exceed in the aggregate two percent of the taxpayer's adjusted gross
income) will not be applied at the REMIC level so that the REMIC will be allowed
deductions for servicing, administrative and other noninterest expenses in
determining its taxable income. All such 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 "--Possible Pass-Through of Miscellaneous Itemized
Deductions" below. If the deductions allowed to the REMIC exceed its gross
income for a calendar quarter, such 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 such REMIC Residual
Certificate, increased by amounts included in the income of the REMIC Residual
Certificateholder and decreased (but not below zero) by distributions made, and
by net losses allocated, to such REMIC Residual Certificateholder.
A REMIC Residual Certificateholder is not allowed to take into account any
net loss for any calendar quarter to the extent such net loss exceeds such REMIC
Residual Certificateholder's adjusted basis in its REMIC Residual Certificate as
of the close of such calendar quarter (determined without regard to such 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 REMIC Residual Certificateholders to deduct net
losses may be subject to additional limitations under the Code, as to which
REMIC Residual Certificateholders should consult their tax advisors.
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 such 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 such 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 such REMIC
Residual Certificates will not be sufficiently large that such distributions
will be treated as nontaxable returns of capital. Their bases in such REMIC
Residual Certificates will initially equal the amount paid for such 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
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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 REMIC Residual Certificateholder 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 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 such REMIC Residual
Certificateholder 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.
In general, the "excess inclusions" with respect to a REMIC Residual
Certificate for any calendar quarter will be the excess, if any, of (i) the
daily portions of REMIC taxable income allocable to such REMIC Residual
Certificate over (ii) the sum of the "daily accruals" (as defined below) for
each day during such quarter that such REMIC Residual Certificate was held by
such 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 Closing 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 the issue price of the REMIC Residual
Certificate, increased by the sum of the daily accruals for all prior quarters
and decreased (but not below zero) by any distributions made with respect to
such REMIC Residual Certificate before the beginning of such 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 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 an aggregate issue price at least equal to two percent of
the aggregate issue prices of all of the related REMIC's regular and residual
interests. In addition, based on the Prepayment Assumption, the anticipated
weighted average life of the REMIC Residual Certificates must equal or exceed 20
percent 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. The
related Prospectus Supplement will disclose whether offered REMIC Residual
Certificates may be considered to have "significant value" under the REMIC
Regulations; provided, however, that any disclosure that a REMIC Residual
Certificate will have "significant value" will be based upon certain
assumptions, and the Depositor will make no representation that a REMIC Residual
Certificate will have "significant value" for purposes of the above-described
rules.
For REMIC Residual Certificateholders, an excess inclusion (i) will not be
permitted to be offset by deductions, losses or loss carryovers from other
activities, (ii) will be treated as "unrelated business taxable income" to an
otherwise tax-exempt organization and (iii) 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.
In the case of any REMIC Residual Certificates held by a real estate
investment trust, the aggregate excess inclusions with respect to such REMIC
Residual Certificates, reduced (but not below zero) by the real estate
investment trust
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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 such trust in
proportion to the dividends received by such shareholders from such trust, and
any amount so allocated will be treated as an excess inclusion with respect to a
REMIC Residual Certificate as if held directly by such shareholder. Treasury
regulations yet to be issued could apply a similar rule to regulated investment
companies, common trust funds and certain cooperatives; the REMIC Regulations
currently do not address this subject.
Noneconomic REMIC Residual Certificates. Under the REMIC Regulations,
transfers of "noneconomic" 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 such
transfer is disregarded, the purported transferor will continue to remain liable
for any taxes due with respect to the income on such "noneconomic" REMIC
Residual Certificate. The REMIC Regulations provide that a REMIC Residual
Certificate is noneconomic unless, 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, (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
noneconomic residual interests will be subject to certain restrictions under the
terms of the related Pooling Agreement that are intended to reduce the
possibility of any such transfer being disregarded. Such restrictions will
require each party to a transfer to provide an affidavit that no purpose of such
transfer is to impede the assessment or collection of tax, including certain
representations as to the financial condition of the prospective transferee, as
to which the transferor is also required to make a reasonable investigation to
determine such 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 such 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 such purchaser.
The related Prospectus Supplement will disclose whether offered REMIC
Residual Certificates may be considered "noneconomic" residual interests under
the REMIC Regulations; provided, however, that any disclosure that a REMIC
Residual Certificate will not be considered "noneconomic" will be based upon
certain assumptions, and the Depositor will make no representation that a REMIC
Residual Certificate will not be considered "noneconomic" 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.
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. Prospective purchasers of a REMIC Residual Certificate
should consult their tax advisors regarding the Mark-to-Market Regulations.
Possible Pass-Through of Miscellaneous Itemized Deductions. Fees and
expenses of a REMIC generally will be allocated to the holders of the related
REMIC Residual Certificates. The applicable Treasury regulations indicate,
however, that in the case of a REMIC that is similar to a single class grantor
trust, all or a portion of such fees and expenses should be allocated to the
holders of the related REMIC Regular Certificates. Unless otherwise stated 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.
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With respect to REMIC Residual Certificates or REMIC Regular Certificates
the holders of which receive an allocation of fees and expenses in accordance
with the preceding discussion, if any holder thereof is an individual, estate or
trust, or a "pass-through entity" beneficially owned by one or more individuals,
estates or trusts, (i) an amount equal to such individual's, estate's or trust's
share of such fees and expenses will be added to the gross income of such holder
and (ii) such individual's, estate's or trust's share of such fees and expenses
will be treated 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 exceed in the aggregate 2% of a 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 income exceeds a
specified amount will be reduced by the lesser of (i) 3% of the excess of the
individual's adjusted gross income over such amount or (ii) 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. Furthermore, in determining the alternative minimum taxable income
of such 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 such holder's allocable
portion of servicing fees and other miscellaneous itemized deductions of the
REMIC, even though an amount equal to the amount of such fees and other
deductions will be included in such holder's gross income. Accordingly, such
REMIC Certificates may not be appropriate investments for individuals, estates,
or trusts, or pass-through entities beneficially owned by one or more
individuals, estates or trusts. Such prospective investors should consult with
their tax advisors prior to making an investment in such Certificates.
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 the cost
of such REMIC Regular Certificate to such Certificateholder, increased by income
reported by such Certificateholder with respect to such REMIC Regular
Certificate (including original issue discount and market discount income) and
reduced (but not below zero) by distributions on such REMIC Regular Certificate
received by such 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 such gain or loss will
be capital gain or loss, provided such REMIC Certificate is held as a capital
asset (generally, property held for investment) within the meaning of Section
1221 of the Code. The Code as of the date of this Prospectus provides for lower
rates as to mid-term capital gains, and still 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 such gain does not
exceed the excess, if any, of (i) the amount that would have been includible in
the seller's income with respect to such REMIC Regular Certificate assuming that
income had accrued thereon 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 such REMIC Regular Certificate, over (ii) the amount of
ordinary income actually includible in the seller's income prior to such sale.
In addition, gain recognized on the sale of a REMIC Regular Certificate by a
seller who purchased such 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 such REMIC Certificate was held by such
holder, reduced by any market discount included in income under the rules
described above under "--Taxation of Owners of REMIC Regular
Certificates--Market Discount" and "--Premium".
REMIC Certificates will be "evidences of indebtedness" within the meaning
of Section 582(c)(1) of the Code, so that gain or loss recognized from the sale
of a REMIC Certificate by a bank or thrift institution to which such Section
applies will be ordinary income or loss.
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 such 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
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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 taxpayer may elect to have net capital gain taxed at ordinary
income rates rather than capital gains rates in order to include such 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 such 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 such sale, such 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 such 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 the disposition of a Mortgage Loan,
the receipt of income from a source other than a Mortgage Loan or certain other
permitted investments, the receipt of compensation for services, or gain from
the disposition of an asset purchased with the payments on the Mortgage 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 Pooling Agreement will include provisions designed to
prevent the acceptance of any contributions that would be subject to such 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 incur a tax if
doing so would, in the reasonable discretion of the Special Servicer, maximize
the net after-tax proceeds to Certificateholders.
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.
Unless otherwise stated in the related Prospectus Supplement, and to the
extent permitted by then applicable laws, any Prohibited Transactions Tax,
Contributions Tax, tax on "net income from foreclosure property" or state or
local income or franchise tax that may be imposed on the REMIC will be borne by
the related REMIC Administrator, Master Servicer, Special Servicer, Manager or
Trustee, in any case out of its own funds, provided that such person has
sufficient assets to do so, and provided further that such tax arises out of a
breach of such person's obligations under the related Pooling Agreement. Any
such tax not borne by a REMIC Administrator, Master Servicer, Special Servicer,
Manager or Trustee would be charged against the related Trust Fund 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. If a REMIC Residual Certificate is transferred to a "disqualified
organization" (as defined below), a tax would be imposed in an amount
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(determined under the REMIC Regulations) equal to the product of (i) the present
value (discounted using the "applicable Federal rate" for obligations whose term
ends on the close of the last quarter in which excess inclusions are expected to
accrue with respect to the REMIC Residual Certificate) of the total anticipated
excess inclusions with respect to such REMIC Residual Certificate for periods
after the transfer and (ii) the highest marginal federal income tax rate
applicable to corporations. The anticipated excess inclusions must be determined
as of the date that the REMIC Residual Certificate is transferred and must be
based on events that have occurred up to the time of such transfer, the
Prepayment Assumption and any required or permitted clean up calls or required
liquidation provided for in the REMIC's organizational documents. Such a tax
generally would be imposed on the transferor of the REMIC Residual Certificate,
except that where such transfer is through an agent for a disqualified
organization, the tax would instead be imposed on such agent. However, a
transferor of a REMIC Residual Certificate would in no event be liable for such
tax with respect to a transfer if the transferee furnishes to the transferor an
affidavit that the transferee is not a disqualified organization and, as of the
time of the transfer, the transferor does not have actual knowledge that such
affidavit is false. Moreover, an entity will not qualify as a REMIC unless there
are reasonable arrangements designed to ensure that (i) residual interests in
such entity are not held by disqualified organizations and (ii) information
necessary for the application of the tax described herein 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 Pooling Agreement, and will be discussed in any Prospectus
Supplement relating to the offering of any REMIC Residual Certificate.
In addition, if a "pass-through entity" (as defined below) includes in
income excess inclusions with respect to a REMIC Residual Certificate, and a
disqualified organization is the record holder of an interest in such entity,
then a tax will be imposed on such entity equal to the product of (i) the amount
of excess inclusions on the REMIC Residual Certificate that are allocable to the
interest in the pass-through entity held by such disqualified organization and
(ii) the highest marginal federal income tax rate imposed on corporations. A
pass-through entity will not be subject to this tax for any period, however, if
each record holder of an interest in such pass-through entity furnishes to such
pass-through entity (i) such holder's social security number and a statement
under penalties of perjury that such social security number is that of the
record holder or (ii) a statement under penalties of perjury that such record
holder is not a disqualified organization.
For these purposes, a "disqualified organization" means (i) 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 instrumentalities described in Section 168(h)(2)(D) of
the Code or the Federal Home Loan Mortgage Corporation), (ii) any organization
(other than a cooperative described in Section 521 of the Code) that is exempt
from federal income tax, unless it is subject to the tax imposed by Section 511
of the Code or (iii) any organization described in Section 1381(a)(2)(C) of the
Code. 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. In addition, a person
holding an interest in a pass-through entity as a nominee for another person
will, with respect to such interest, be treated as a pass-through entity.
Termination. A REMIC will terminate immediately after the Distribution Date
following receipt by the REMIC of the final payment in respect of the Mortgage
Loans or upon a sale of the REMIC's assets following the adoption by the REMIC
of a plan of complete liquidation. 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 such REMIC
Residual Certificate is less than the REMIC Residual Certificateholder's
adjusted basis in such Certificate, such REMIC Residual Certificateholder should
(but may not) be treated as realizing a capital loss equal to the amount of such
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, which generally will hold at least a nominal amount of REMIC
Residual Certificates, 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.
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 REMIC Residual
Certificateholders
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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.
REMIC Residual Certificateholders generally will be required to report such
REMIC items consistently with their treatment on the related REMIC's tax return
and may in some circumstances be bound by a settlement agreement between the
REMIC Administrator, as tax matters person, and the IRS concerning any such
REMIC item. Adjustments made to the REMIC's tax return may require a REMIC
Residual Certificateholder to make corresponding adjustments on its return, and
an audit of the REMIC's tax return, or the adjustments resulting from such an
audit, could result in an audit of a REMIC Residual Certificateholder's return.
No REMIC will be registered as a tax shelter pursuant to Section 6111 of the
Code because it is not anticipated that any REMIC will have a net loss for any
of the first five taxable years of its existence. Any person that holds a 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 such 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 corporations, trusts,
securities dealers and certain other nonindividuals 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 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 income, excess inclusions, investment
expenses and 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, such 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 otherwise specified in the related Prospectus Supplement, the
responsibility for complying with the foregoing reporting rules will be borne by
the REMIC Administrator.
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 such payments fail to furnish to
the payor certain information, including their taxpayer identification numbers,
or otherwise fail to establish an exemption from such tax. Any amounts deducted
and withheld from a distribution to a recipient would be allowed as a credit
against such recipient's federal income tax. Furthermore, certain penalties may
be imposed by the IRS on a recipient of payments that is required to supply
information but that does not do so in the proper manner.
Foreign Investors in REMIC Certificates. A REMIC Regular Certificateholder
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 will
not, unless otherwise disclosed in the related Prospectus Supplement, be subject
to United States federal income or withholding tax in respect of a distribution
on a REMIC Regular Certificate, provided that the holder complies to the extent
necessary with certain identification requirements (including delivery of a
statement, signed by the Certificateholder under penalties of perjury,
certifying that such Certificateholder is not a United States Person and
providing the name and address of such Certificateholder). For these purposes,
"United States Person" means a citizen or resident of the United States, a
corporation, partnership or other entity created or organized
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in, or under the laws of, the United States or any political subdivision
thereof, an estate whose income from sources without 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 a trust as to which (i) a court in the United States is able to
exercise primary supervision over the administration of the trust and (ii) one
or more United States fiduciaries have the right 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 REMIC Residual Certificateholder that owns directly or
indirectly a 10% or greater interest in the REMIC Residual Certificates. If the
holder does not qualify for exemption, distributions of interest, including
distributions in respect of accrued original issue discount, to such holder may
be subject to a tax rate of 30%, subject to reduction under any applicable tax
treaty.
In addition, the foregoing rules will not apply to exempt a United States
shareholder of a controlled foreign corporation from taxation on such United
States shareholder's allocable portion of the interest income received by such
controlled foreign corporation.
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, Certificateholders who are nonresident
alien individuals should consult their tax advisors concerning this question.
Unless otherwise stated in the related Prospectus Supplement, transfers of
REMIC Residual Certificates to investors that are not United States Persons will
be prohibited under the related Pooling Agreement.
Grantor Trust Funds
Classification of Grantor Trust Funds. With respect to each Series of
Grantor Trust Certificates, counsel to the Depositor will deliver its opinion to
the effect that, assuming compliance with all provisions of the related Pooling
Agreement, 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. The following general discussion of the
anticipated federal income tax consequences of the purchase, ownership and
disposition of Grantor Trust Certificates, to the extent it relates to matters
of law or legal conclusions with respect thereto, represents the opinion of
counsel to the Depositor for the applicable Series as specified in the related
Prospectus Supplement, subject to any qualifications set forth herein. In
addition, counsel to the Depositor have prepared or reviewed the statements in
this Prospectus under the heading "Certain Federal Income Tax
Consequences--Grantor Trust Funds", and are of the opinion that such statements
are correct in all material respects. Such statements are intended as an
explanatory discussion of the possible effects of the classification of any
Grantor Trust Fund as a grantor trust for federal income tax purposes on
investors generally and of related tax matters affecting investors generally,
but do not purport to furnish information in the level of detail or with the
attention to an investor's specific tax circumstances that would be provided by
an investor's own tax advisor. Accordingly, each investor is advised to consult
its own tax advisors with regard to the tax consequences to it of investing in
Grantor Trust Certificates.
For purposes of the following discussion, a Grantor Trust 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 Grantor Trust 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 such 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 otherwise disclosed in the
related Prospectus Supplement, counsel to the Depositor will deliver an opinion
that, in general, Grantor Trust Fractional Interest Certificates will represent
interests in (i) "loans . . . secured by an interest in real
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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 that is used for residential or certain other
prescribed purposes); (ii) "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; (iii) "permitted assets" within the meaning of Section
860L(a)(1)(C) of the Code; and (iv) "real estate assets" within the meaning of
Section 856(c)(4)(A) of the Code. In addition, counsel to the Depositor 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 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 and "real estate assets" within the
meaning of Section 856(c)(4)(A) of the Code, and the 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, it is unclear whether the Grantor
Trust Strip Certificates, and the income therefrom, will be so characterized.
Counsel to the Depositor will not deliver any opinion on these questions.
Prospective purchasers to which such characterization of an investment in
Grantor Trust Strip Certificates is material should 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 "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, 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.
General. Holders of a particular Series of Grantor Trust Fractional
Interest Certificates generally will be 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) and
will be entitled to deduct their shares of any such reasonable servicing fees
and other expenses. 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 such reasonable servicing fees and
expenses only to the extent that the aggregate of such holder's miscellaneous
itemized deductions exceeds two percent of such 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 (i) 3% of the excess
of the individual's adjusted gross income over such amount or (ii) 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. 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, such 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, it currently is intended to base information returns or
reports to the IRS and Certificateholders 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. Grantor Trust Fractional
Interest Certificates may be subject to those rules if (i) a Class of Grantor
Trust Strip Certificates is issued as part of the same Series or (ii) the
Depositor or any of its affiliates retains (for its 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
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retained by a seller or servicer will be treated as a retained ownership
interest in mortgages that constitutes a stripped coupon. The related Prospectus
Supplement will include 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, subject, however, to the discussion below regarding the treatment of
certain stripped bonds as market discount bonds and the discussion regarding de
minimis market discount. See "--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 interest income from its
Grantor Trust Fractional Interest Certificate for each month in an amount equal
to the income that accrues on such Certificate in that month calculated under a
constant yield method, in accordance with the rules of the Code relating to
original issue discount.
The original issue discount on a Grantor Trust Fractional Interest
Certificate will be the excess of such 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 such
purchaser of the Grantor Trust Fractional Interest Certificate. The stated
redemption price of a Grantor Trust Fractional Interest Certificate will be the
sum of all payments to be made on such Certificate, other than "qualified stated
interest", if any, as well as such 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" for a definition of
"qualified stated interest". In general, the amount of such income that accrues
in any month would equal the product of such holder's adjusted basis in such
Grantor Trust Fractional Interest Certificate at the beginning of such month
(see "--Sales of Grantor Trust Certificates" below) and the yield of such
Grantor Trust Fractional Interest Certificate to such holder. Such yield would
be computed as the rate (compounded based on the regular interval between
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 such 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 the Depositor, the
Master Servicer, the 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 (i) the use of a reasonable
prepayment assumption in accruing original issue discount and (ii) 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 enacted on August 5, 1997 extends the scope of that section to any
pool of debt instruments the yield on which may be affected by reason of
prepayments, effective for taxable years beginning after enactment. The precise
application of the new legislation is unclear in certain respects. For example,
it is uncertain whether a prepayment assumption will be applied collectively to
all a taxpayer's investments in pools of debt instruments or will be applied on
an investment-by-investment basis. Similarly, as to investments in Grantor Trust
Fractional Interest Certificates, it is not clear whether the assumed prepayment
rate is to be determined based on conditions at the time of the first sale of
the Grantor Trust Fractional Interest Certificate or, with respect to any
holder, at the time of purchase of the Grantor Trust Fractional Interest
Certificate by that holder. Certificateholders are advised to 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 such
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 such yield, and thus accelerate or
decelerate, respectively, the reporting of income.
In the absence of statutory or administrative clarification, it is
currently intended that information reports or returns to the IRS and
Certificateholders will be based on a prepayment assumption (the "Prepayment
Assumption") determined
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when Certificates are offered and sold hereunder and disclosed in the related
Prospectus Supplement, and on a constant yield computed using a representative
initial offering price for each Class of Certificates. However, neither the
Depositor nor any other person will make any representation that the Mortgage
Loans will in fact prepay at a rate conforming to such Prepayment Assumption or
any other rate or that the 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 such 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 1.1286-1T, 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 (i) there is no
original issue discount (or only a de minimis amount of original issue discount)
or (ii) 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 percentage point lower than the gross interest rate payable on
the Mortgage Loans, the related Prospectus Supplement will disclose that fact.
If the original issue discount or market discount on a Grantor Trust Fractional
Interest Certificate determined under the stripped bond rules is less than 0.25%
of the stated redemption price multiplied by the weighted average 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
such 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 "--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, and 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 "--Taxation of Owners of
REMIC Regular Certificates--Original Issue Discount" above.
In the case of Mortgage Loans bearing adjustable or variable interest
rates, the related Prospectus Supplement will describe 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
legislation enacted on August 5, 1997, 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,
effective for taxable years beginning after enactment. The precise application
of the new legislation is unclear in certain respects. For example, it is
uncertain whether a prepayment assumption will be applied collectively to all a
taxpayer's investments in pools of debt instruments or will be applied on an
investment-by-investment basis. Similarly, as to investments in Grantor Trust
Fractional Interest Certificates, it is not clear whether the assumed prepayment
rate is to be determined at the time of the first sale of the Grantor Trust
Fractional Interest Certificate or, with respect to any holder, at the time of
that holder's purchase of the
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Grantor Trust Fractional Interest Certificate. Certificateholders should consult
their own tax advisors concerning reporting original issue discount with respect
to Grantor Trust Fractional Interest Certificates and should 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
such Certificate's allocable portion of the aggregate remaining stated
redemption price of the Mortgage Loans held in the related Trust Fund will also
be required to include in gross income such Certificate's daily portions of any
original issue discount with respect to such Mortgage Loans. However, each such
daily portion will be reduced, if the cost of such Grantor Trust Fractional
Interest Certificate to such purchaser is in excess of such Certificate's
allocable portion of the aggregate "adjusted issue prices" of the Mortgage Loans
held in the related Trust Fund, approximately in proportion to the ratio such
excess bears to such Certificate's allocable portion of the aggregate original
issue discount remaining to be accrued on such Mortgage Loans. The adjusted
issue price of a Mortgage Loan on any given day equals the sum of (i) the
adjusted issue price (or, in the case of the first accrual period, the issue
price) of such Mortgage Loan at the beginning of the accrual period that
includes such day and (ii) the daily portions of original issue discount for all
days during such accrual period prior to such day. The adjusted issue price of a
Mortgage Loan at the beginning of any accrual period will equal the issue price
of such Mortgage Loan, increased by the aggregate amount of original issue
discount with respect to such Mortgage Loan that accrued in prior accrual
periods, and reduced by the amount of any payments made on such Mortgage Loan in
prior accrual periods of amounts included in its stated redemption price.
In the absence of statutory or administrative clarification, it is
currently intended that information reports or returns to the IRS and
Certificateholders will be based on a prepayment assumption (the "Prepayment
Assumption") determined when Certificates are offered and sold hereunder and
disclosed in the related Prospectus Supplement, and on a constant yield computed
using a representative initial offering price for each Class of Certificates.
However, neither the Depositor nor any other person will make any representation
that the Mortgage Loans will in fact prepay at a rate conforming to such
Prepayment Assumption or any other rate or that the 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 such
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, 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 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 such 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
such Mortgage Loan that is received by (or, in the case of accrual basis
Certificateholders, due to) the Trust Fund 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 "--Taxation of Owners of REMIC Regular
Interests--Market Discount" above.
Section 1276(b)(3) of the Code authorized 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 such time as 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: (i) on the basis of a constant yield method, (ii) in the case
of a Mortgage Loan 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 stated interest remaining
to be paid on the Mortgage Loan as of the beginning of the accrual period, or
(iii) 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
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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. 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. The effect of using a prepayment
assumption could be to accelerate the reporting of such discount income. Because
the regulations referred to in this paragraph have not been issued, it is not
possible to predict what effect such regulations might have on the tax treatment
of a Mortgage Loan purchased at a discount in the secondary market.
Because the Mortgage Loans will 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 such 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.
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, such 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 allocated among
the payments of stated redemption price on the Mortgage Loan and be 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).
Under legislation enacted on August 5, 1997, it appears that a prepayment
assumption should be used in computing amortization of premium allowable under
Section 171 of the Code, effective for taxable years beginning after enactment.
If so, premium amortization would be accounted for under a method similar to
that described for taking account of premium on REMIC Regular Certificates. See
"--REMICs--Taxation of Owners of REMIC Regular Certificates--Premium" above.
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, holders of Grantor Trust
Strip Certificates should consult their tax advisors concerning the method to be
used in reporting income or loss with respect to such 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 such holder's adjusted basis in such Grantor
Trust Strip Certificate at the beginning of such month and the yield of such
Grantor Trust Strip Certificate to such holder. Such yield would be calculated
based on the price paid for that Grantor Trust Strip Certificate by its holder
and the payments remaining to be made thereon at the time of the purchase, plus
an allocable portion of the servicing fees
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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 a prepayment
assumption be used in computing the accrual of original issue discount with
respect to certain categories of debt instruments, and that 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 at the time of the first
sale of the Grantor Trust Strip Certificate or, 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 such accrual period will be zero. That is,
no current deduction of such negative amount will be allowed to the holder of
such Certificate. The holder will instead only be permitted to offset such
negative amount against future positive original issue discount (if any)
attributable to such a 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 such
Certificateholder could ever receive with respect to such 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. See "Risk Factors--Effect of Prepayments on Yield of
Certificates" herein.
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, it currently is intended to base information returns or reports
to the IRS and Certificateholders on the Prepayment Assumption disclosed in the
related Prospectus Supplement and on a constant yield computed using a
representative initial offering price for each Class of Certificates. However,
neither the Depositor 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. Certificateholders also should bear in mind that
the use of a representative initial offering price will mean that such
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. Prospective purchasers of the Grantor
Trust Strip Certificates should consult their tax advisors regarding the use of
the 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 such sale or exchange of
a Grantor Trust Certificate by an investor who holds such Grantor Trust
Certificate as a capital asset, will be capital gain or loss, except to the
extent of accrued and unrecognized market discount, which will be treated as
ordinary income, and (in the case of banks and other financial institutions)
except as provided under Section 582(c) of the Code. The adjusted basis of a
Grantor Trust Certificate generally will equal its cost, increased by any income
reported by the seller (including original issue discount and market discount
income) and reduced (but not below zero) by any previously reported losses, any
amortized premium and by any distributions with respect to such Grantor Trust
Certificate. The Code as of the date of this Prospectus provides for lower rates
as to mid-term capital gains, and still 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. 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
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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" (which rate is computed and
published monthly by the IRS) 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 taxpayer may elect to have net capital gain taxed at ordinary
income rates rather than capital gains rates in order to include such 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 otherwise provided in the related
Prospectus Supplement, the Trustee or Master Servicer, as applicable, will
furnish to each holder of a Grantor Trust Certificate with each distribution a
statement setting forth the amount of such distribution allocable to principal
on the underlying Mortgage Loans and to interest thereon at the related
Pass-Through Rate. In addition, the Trustee or Master Servicer, as applicable,
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 such year, information regarding the amount of servicing compensation
received by the Master Servicer, the Special Servicer or any Sub-Servicer, and
such other customary factual information as the Depositor or the reporting party
deems necessary or desirable to enable holders of Grantor Trust Certificates to
prepare their tax returns and 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, there is no assurance the IRS will agree with the Trustee's
or Master Servicer's, as the case may be, information reports of such items of
income and expense. Moreover, such 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 such reports.
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 except that Grantor Trust Certificates
will, unless otherwise disclosed in the related Prospectus Supplement, 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.
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, such Grantor Trust
Certificate will not be subject to United States estate taxes in the estate of a
nonresident alien individual.
STATE AND OTHER TAX CONSEQUENCES
In addition to the federal income tax consequences described in "Certain
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,
prospective investors should consult their tax advisors with respect to the
various tax consequences of investments in the Offered Certificates.
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ERISA CONSIDERATIONS
General
ERISA and the Code impose certain requirements on employee benefit plans,
and on certain other retirement plans and arrangements, including individual
retirement accounts and annuities, Keogh plans and collective investment funds
and separate accounts (and as applicable, insurance company general accounts) in
which such plans, accounts or arrangements are invested that are subject to the
fiduciary responsibility provisions of ERISA and Section 4975 of the Code
("Plans"), and on persons who are fiduciaries with respect to such Plans, in
connection with the investment of Plan assets. Certain employee benefit plans,
such as governmental plans (as defined in ERISA Section 3(32)), and, if no
election has been made under Section 410(d) of the Code, church plans (as
defined in Section 3(33) of ERISA) are not subject to ERISA requirements.
Accordingly, assets of such plans may be invested in Offered Certificates
without regard to the ERISA considerations described below, subject to the
provisions of other applicable federal and state law. 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 set forth in Section 503
of the Code.
ERISA generally imposes on Plan fiduciaries certain general fiduciary
requirements, including those of investment prudence and diversification and the
requirement that a Plan's investments be made in accordance with the documents
governing the Plan. In addition, Section 406 of ERISA and Section 4975 of the
Code prohibit a broad range of transactions involving assets of a Plan and
persons ("parties in interest" within the meaning of ERISA and "disqualified
persons" within the meaning of the Code; collectively, "Parties in Interest")
who have certain specified relationships to the Plan, unless a statutory or
administrative exemption is available. The types of transactions between Plans
and Parties in Interest that are prohibited include: (a) sales, exchanges or
leases of property, (b) loans or other extensions of credit and (c) the
furnishing of goods and services. Certain Parties in Interest that participate
in a prohibited transaction may be subject to an excise tax imposed pursuant to
Section 4975 of the Code or a penalty imposed pursuant to 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 rescind the
transaction and pay an amount to the Plan for any losses realized by the Plan or
profits realized by such persons, individual retirement accounts involved in the
transaction may be disqualified resulting in adverse tax consequences to the
owner of such account and certain other liabilities could result that would have
a significant adverse effect on such person.
Plan Asset Regulations
A Plan's investment in Offered Certificates may cause the underlying
Mortgage Assets and other assets included in a related Trust Fund to be deemed
assets of such Plan. Section 2510.3-101 of the regulations (the "Plan Asset
Regulations") of the United States Department of Labor (the "DOL") provides that
when a Plan acquires an equity interest in an entity, the Plan's assets include
both such equity interest and an undivided interest in each of the underlying
assets of the entity, unless certain exceptions apply, including that the equity
participation in the entity by "benefit plan investors" (i.e., Plans and certain
employee benefit plans not subject to ERISA) is not "significant", both as
defined therein. For this purpose, in general, equity participation by benefit
plan investors will be "significant" on any date if 25% or more of the value of
any class of equity interests in the entity is held by benefit plan investors
(determined by not including the investments of persons with discretionary
authority or control over the assets of such entity, of any person who provides
investment advice for a fee (direct or indirect) with respect to such assets,
and "affiliates" (as defined in the DOL regulations relating to Plan assets) of
such persons). Equity participation in a Trust Fund will be significant on any
date if immediately after the most recent acquisition of any Certificate, 25% or
more of any Class of Certificates is held by benefit plan investors (determined
by not including the investments of the Depositor, the Trustee, the Master
Servicer, the Special Servicer, any other parties with discretionary authority
over the assets of a Trust Fund and their respective affiliates).
Any person who has discretionary authority or control respecting the
management or disposition of Plan assets, and any person who provides investment
advice with respect to such assets for a fee, is a fiduciary of the investing
Plan. If the Mortgage Assets and other assets included in a Trust Fund
constitute Plan assets, then any party exercising management or discretionary
control regarding those assets, such as a Master Servicer, a Special Servicer,
any Sub-Servicer, a Trustee, the obligor under any related credit enhancement
mechanism, or certain affiliates thereof may be deemed to be a Plan "fiduciary"
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with respect to the investing Plan and thus subject to the fiduciary
responsibility provisions of ERISA. In addition, if the underlying assets of a
Trust Fund constitute Plan assets, the Depositor, any related REMIC
Administrator, any related Manager, any mortgagor with respect to a related
Mortgage Loan or a mortgage loan underlying a related MBS, as well as each of
the parties described in the preceding sentence, may become Parties in Interest
with respect to an investing Plan (or of a Plan holding an interest in an
investing entity). Thus, if the Mortgage Assets and other assets included in a
Trust Fund constitute Plan assets, the operation of the Trust Fund, may involve
a prohibited transaction under ERISA or the Code. For example, if a person who
is a Party in Interest with respect to an investing Plan is a mortgagor with
respect to a Mortgage Loan included in a Trust Fund, the purchase of
Certificates by the Plan could constitute a prohibited loan between a Plan and a
Party in Interest.
The Plan Asset Regulations provide that where a Plan acquires a "guaranteed
governmental mortgage pool certificate", the Plan's assets include such
certificate but do not solely by reason of the Plan's holdings of such
certificate include any of the mortgages underlying such certificate. The Plan
Asset Regulations include in the definition of a "guaranteed governmental
mortgage pool certificate" certain FHLMC Certificates, GNMA Certificates and
FNMA Certificates, but do not include FAMC Certificates. Accordingly, even if
such types of MBS (other than FAMC Certificates) included in a Trust Fund were
deemed to be assets of Plan investors, the mortgages underlying such MBS (other
than FAMC Certificates) would not be treated as assets of such Plans. Thus, the
prohibited transaction described in the preceding paragraph (regarding a
prohibited loan) would not occur with respect to such types of MBS (other than
FAMC Certificates) held in a Trust Fund, even if such MBS were treated as assets
of Plans. Private label mortgage participations, mortgage pass-through
certificates, FAMC Certificates or other mortgage-backed securities are not
"guaranteed governmental mortgage pool certificates" within the meaning of the
Plan Asset Regulations.
In addition, and without regard to whether the Mortgage Assets and other
assets included in a Trust Fund constitute Plan assets, the acquisition or
holding of Offered Certificates by or on behalf of a Plan could give rise to a
prohibited transaction if the Depositor, the related Trustee or any related
Underwriter, Master Servicer, Special Servicer, Sub-Servicer, REMIC
Administrator, Manager, mortgagor or obligor under any credit enhancement
mechanism, or any of certain affiliates thereof, is or becomes a Party in
Interest with respect to an investing Plan. Accordingly, potential Plan
investors should consult their counsel and review the ERISA discussion in the
related Prospectus Supplement before purchasing any such Certificates.
Prohibited Transaction Exemptions
In considering an investment in the Offered Certificates, a Plan fiduciary
should consider the availability of prohibited transaction exemptions
promulgated by the DOL including, among others, Prohibited Transaction Class
Exemption ("PTCE") 75-1, which exempts certain transactions involving Plans and
certain broker-dealers, reporting dealers and banks; PTCE 90-1, which exempts
certain transactions between insurance company separate accounts and Parties in
Interest; PTCE 91-38, which exempts certain transactions between bank collective
investment funds and Parties in Interest; PTCE 84-14, which exempts certain
transactions effected on behalf of a Plan by a "qualified professional asset
manager"; PTCE 95-60, which exempts certain transactions between insurance
company general accounts and Parties in Interest; and PTCE 96-23, which exempts
certain transactions effected on behalf of a Plan by an "in-house asset
manager". There can be no assurance that any of these class exemptions will
apply with respect to any particular Plan investment in the Certificates or,
even if it were deemed to apply, that any exemption would apply to all
transactions that may occur in connection with such investment. The Prospectus
Supplement with respect to the Offered Certificates of any Series may contain
additional information regarding the availability of other exemptions with
respect to such Offered Certificates.
Insurance Company General Accounts
In addition to any exemption that may be available under PTCE 95-60 for the
purchase and holding of Offered Certificates by an insurance company general
account, 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 Code, including the
prohibited transaction restrictions imposed by ERISA and the related excise
taxes imposed by the Code, for transactions involving an insurance company
general account. Pursuant to Section 401(c) of ERISA, the DOL
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is required to issue final regulations ("401(c) Regulations") no later than
December 31, 1997, which are to provide guidance for the purpose of determining,
in cases where insurance policies supported by an insurer's general account are
issued to or for the benefit of a Plan on or before December 31, 1998, which
general account assets constitute Plan assets. Section 401(c) of ERISA generally
provides that, until the date which is 18 months after the 401(c) 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 Plan assets, unless (i) as
otherwise provided by the Secretary of Labor in the 401(c) Regulations to
prevent avoidance of the regulations or (ii) 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 after December 31, 1998 or issued to Plans 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 Offered
Certificates should consult with their legal counsel with respect to the
applicability of Section 401(c) of ERISA, including the general account's
ability to continue to hold such Certificates after the date which is 18 months
after the date the 401(c) Regulations become final.
Consultation With Counsel
Any Plan fiduciary which proposes to purchase Offered Certificates on
behalf of or with assets of a Plan should consider its general fiduciary
obligations under ERISA and should consult with its counsel with respect to the
potential applicability of ERISA and the Code to such investment and the
availability of any prohibited transaction exemption in connection therewith.
Tax Exempt Investors
A Plan that is exempt from federal income taxation pursuant to Section 501
of the Code (a "Tax Exempt Investor") nonetheless will be subject to federal
income taxation to the extent that its income is "unrelated business taxable
income" ("UBTI") 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 Investor will be considered UBTI and thus will be subject to federal
income tax. See "Certain Federal Income Tax Consequences--REMICs--Taxation of
Owners of REMIC Residual Certificates-Excess Inclusions".
LEGAL INVESTMENT
If and to the extent so specified in the related Prospectus Supplement, the
Offered Certificates of any Series will constitute "mortgage related securities"
for purposes of 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 agency or
instrumentality thereof constitute legal investments for persons, trusts,
corporations, partnerships, associations, business trusts and business entities
(including depository institutions, insurance companies and pension funds
created pursuant to or existing under the laws of the United States or of any
state), the authorized investments of which are subject to state regulation.
Prior to December 31, 1996, only Classes of Offered Certificates that (i)
were rated in one of the two highest rating categories by one or more Rating
Agencies and (ii) were part of a Series evidencing interests in a Trust Fund
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, would
be "mortgage related securities" for purposes of SMMEA. Furthermore, under SMMEA
as originally enacted, if a state enacted legislation prior to October 3, 1991
that specifically limited the legal investment authority of any the 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 such legislation only to the extent provided
in such legislation.
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Effective December 31, 1996, the definition of "mortgage related
securities" was modified to include among the types of loans to which such
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: federal savings and loan associations and
federal savings banks may invest in, sell or otherwise deal with "mortgage
related securities" without limitation as to the percentage of their assets
represented thereby, federal credit unions may invest in such securities, and
national banks may purchase such securities for their own account without regard
to the limitations generally applicable to investment securities set forth in 12
U.S.C. 24 (Seventh), subject in each case to such regulations as the applicable
federal regulatory authority may prescribe. In this connection, effective
December 31, 1996, the Office of the Comptroller of the Currency (the "OCC")
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 so 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 OCC 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. Federal credit unions should
review NCUA Letter to Credit Unions No. 96, as modified by Letter to Credit
Unions No. 108, which includes guidelines to assist federal credit unions in
making investment decisions for mortgage related securities. The NCUA has
adopted rules, codified as 12 C.F.R. Section 703.5(f)- (k), which prohibit
federal credit unions from investing in certain mortgage related securities
(including securities such as certain Classes of Offered Certificates), except
under limited circumstances.
The Federal Financial Institutions Examination Council has issued a
supervisory policy statement (the "Policy Statement") applicable to all
depository institutions, setting forth guidelines for and significant
restrictions on investments in "high-risk mortgage securities". The Policy
Statement has been adopted by the Federal Reserve Board, the Office of the
Comptroller of the Currency, the FDIC and the OTS (as defined herein). The
Policy Statement generally indicates that a mortgage derivative product will be
deemed to be high risk if it exhibits greater price volatility than a standard
fixed rate thirty-year mortgage security. According to the Policy Statement,
prior to purchase, a depository institution will be required to determine
whether a mortgage derivative product that it is considering acquiring is
high-risk, and if so that the proposed acquisition would reduce the
institution's overall interest rate risk. Reliance on analysis and documentation
obtained from a securities dealer or other outside party without internal
analysis by the institution would be unacceptable. There can be no assurance as
to which Classes of Certificates, including Offered Certificates, will be
treated as high-risk under the Policy Statement.
The predecessor to the Office of Thrift Supervision (the "OTS") issued a
bulletin, entitled "Mortgage Derivative Products and Mortgage Swaps", which is
applicable to thrift institutions regulated by the OTS. The bulletin established
guidelines for the investment by savings institutions in certain "high-risk"
mortgage derivative securities and limitations on the use of such securities by
insolvent, undercapitalized or otherwise "troubled" institutions. According to
the bulletin, such "high-risk" mortgage derivative securities include securities
having certain specified characteristics, which may include certain Classes of
Offered Certificates. In addition, the National Credit Union Administration has
issued regulations governing federal credit union investments which prohibit
investment in certain specified types of securities, which may include certain
Classes of Offered Certificates. Similar policy statements have been issued by
regulators having jurisdiction over other types of depository institutions.
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<PAGE>
There may be other restrictions on the ability of certain investors either
to purchase certain Classes of Offered Certificates or to purchase any Class of
Offered Certificates representing more than a specified percentage of the
investor's assets. The Depositor makes no representations as to the proper
characterization of any Class of Offered Certificates for legal investment or
other purposes, or 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, all investors whose investment activities are subject
to legal investment laws and regulations, regulatory capital requirements or
review by regulatory authorities should consult with their legal advisors 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 Certificates of any Series will be
applied by the Depositor to the purchase of Trust Assets or will be used by the
Depositor to cover expenses related thereto. The Depositor expects to sell the
Certificates from time to time, but the timing and amount of offerings of
Certificates will depend on a number of factors, including the volume of
Mortgage Assets acquired by the Depositor, prevailing interest rates,
availability of funds and general market conditions.
METHOD OF DISTRIBUTION
The Certificates offered hereby and by 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 such Offered
Certificates and will state the net proceeds to the Depositor from the sale of
such Offered Certificates.
The Depositor intends 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:
1. By negotiated firm commitment or best efforts underwriting and public
offering by one or more underwriters specified in the related
Prospectus Supplement;
2. By placements by the Depositor with institutional investors through
dealers; and
3. By direct placements by the Depositor 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 Trust Fund for such
Certificates.
If underwriters are used in a sale of any Offered Certificates (other than
in connection with an underwriting on a best efforts basis), such Certificates
will be acquired by the underwriters for their own account and 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 set forth on the cover of
the Prospectus Supplement relating to such Series and the members of the
underwriting syndicate, if any, will be named in such Prospectus Supplement.
In connection with the sale of Offered Certificates, underwriters may
receive compensation from the Depositor or from purchasers of the Offered
Certificates in the form of discounts, concessions or commissions. Underwriters
and dealers
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<PAGE>
participating in the distribution of the Offered Certificates may be deemed to
be underwriters in connection with such Certificates, and any discounts or
commissions received by them from the Depositor and any profit on the resale of
Offered Certificates by them may be deemed to be underwriting discounts and
commissions under the Securities Act.
It is anticipated that the underwriting agreement pertaining to the sale of
the Offered Certificates of any Series will provide that the obligations of the
underwriters will be subject to certain conditions precedent, that the
underwriters will be obligated to purchase all such Certificates if any are
purchased (other than in connection with an underwriting on a best efforts
basis) and that, in limited circumstances, the Depositor will indemnify the
several underwriters and the underwriters will indemnify the Depositor against
certain civil liabilities, including liabilities under the Securities Act, or
will contribute to payments required to be made in respect thereof.
The Prospectus Supplement with respect to any Series offered by placements
through dealers will contain information regarding the nature of such offering
and any agreements to be entered into between the Depositor and purchasers of
Offered Certificates of such Series.
The Depositor anticipates 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 such
purchases, be deemed to be "underwriters" within the meaning of the Securities
Act in connection with reoffers and sales by them of Offered Certificates.
Holders of Offered Certificates should consult with their legal advisors in this
regard prior to any such reoffer or sale.
As to any Series, only those Classes rated in an investment grade rating
category by any Rating Agency will be offered hereby. Any unrated Class may be
initially retained by the Depositor, and may be sold by the Depositor at any
time to one or more institutional investors.
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 the Depositor
by Sidley & Austin.
FINANCIAL INFORMATION
A new Trust Fund will be formed with respect to each Series, and no Trust
Fund 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 Fund will be included in this Prospectus or
in the related Prospectus Supplement. The Depositor has determined that its
financial statements will not be material to the offering of any Offered
Certificates.
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<PAGE>
RATING
It is a condition to the issuance of any Class of Offered Certificates that
they shall have been rated not lower than investment grade, that is, in one of
the four highest rating categories, by at least one Rating Agency.
Ratings on mortgage pass-through certificates address the likelihood of
receipt by the holders thereof of all collections on the underlying mortgage
assets to which such holders are entitled. These ratings address the structural,
legal and issuer-related aspects associated with such certificates, the nature
of the underlying mortgage assets and the credit quality of the guarantor, if
any. Ratings on mortgage pass-through certificates do not represent any
assessment of the likelihood of principal prepayments by borrowers or of the
degree by which such prepayments might differ from those originally anticipated.
As a result, Certificateholders might suffer a lower than anticipated yield,
and, in addition, holders of Stripped Interest Certificates might, in certain
cases fail to recoup their initial investments. Furthermore, ratings on mortgage
pass-through certificates do not address the price of such certificates or the
suitability of such certificates to the investor.
A security rating is not a recommendation to buy, sell or hold securities
and may be subject to revision or withdrawal at any time by the assigning rating
organization. Each security rating should be evaluated independently of any
other security rating.
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INDEX OF PRINCIPAL DEFINITIONS
401(c) Regulations...........................................................102
Accrual Certificates..........................................................12
ACMs .........................................................................73
ADA...........................................................................75
ARM Loans ....................................................................34
Book-Entry Certificates.......................................................42
Call Risk.....................................................................18
Cash Flow Agreement...........................................................13
CERCLA........................................................................72
Certificate Account...........................................................53
Certificate Notional Amount...................................................11
Certificate Owner ............................................................47
Certificate Principal Balance.................................................11
Class ........................................................................1
Closing Date .................................................................10
Code..........................................................................14
Commission.....................................................................3
Committee Report..............................................................79
Companion Class ..............................................................44
Contributions Tax ............................................................89
Controlled Amortization Class.................................................44
Cooperatives .................................................................28
CPR ..........................................................................39
Credit Support ..............................................................13
Crime Control Act ............................................................76
Cut-off Date .................................................................10
Definitive Certificates.......................................................42
Depositor .....................................................................1
Distribution Date ............................................................12
Distribution Date Statement...................................................46
DOL .........................................................................100
DTC ...........................................................................3
DTC Participants..............................................................27
Due Dates ....................................................................34
Equity Participation..........................................................34
ERISA .......................................................................15
etermination Date ............................................................43
Exchange Act ..................................................................3
Extension Risk ..............................................................18
FAMC..........................................................................35
FAMC Certificates ............................................................35
FHLMC .......................................................................35
FHLMC Certificates............................................................35
Financial Intermediary........................................................47
FNMA..........................................................................35
FNMA Certificates ............................................................35
Garn Act ....................................................................74
GNMA..........................................................................35
GNMA Certificates ............................................................35
Grantor Trust Certificates............................................14, 15, 18
Grantor Trust Fund............................................................77
IRS ..........................................................................79
Issue Premium.................................................................85
Lender Liability Act..........................................................72
Letter of Credit Bank.........................................................66
Liquidation Proceeds..........................................................54
Lock-out Date.................................................................34
Lock-out Period ..............................................................34
Mark-to-Market Regulations....................................................87
Master Servicer ...............................................................8
MBS ...................................................................1, 10, 27
MBS Administrator .............................................................8
MBS Agreement.................................................................35
MBS Issuer....................................................................35
MBS Servicer .................................................................35
MBS Trustee .................................................................35
Mortgage Asset Pool............................................................1
Mortgage Assets ...............................................................1
Mortgage Loans ........................................................1, 8, 27
Mortgage Rate..................................................................9
Mortgages ....................................................................28
Net Leases....................................................................33
Nonrecoverable Advance........................................................45
OCC .........................................................................103
Offered Certificates...........................................................1
OID Regulations ..............................................................77
Originator....................................................................28
OTS .........................................................................103
Parties in Interest..........................................................100
Pass-Through Rate ............................................................11
Percentage Interest...........................................................43
Permitted Investments.........................................................53
Plan Asset Regulations.......................................................100
Plans ......................................................................100
Policy Statement.............................................................103
Pooling Agreement ............................................................10
Prepayment Assumption.................................................79, 94, 96
Prepayment Interest Shortfall.................................................37
Prepayment Premium............................................................34
Prohibited Transactions Tax...................................................89
Prospectus Supplement..........................................................1
PTCE.........................................................................101
Purchase Price ..............................................................50
Rating Agency.............................................................15, 15
Record Date .................................................................43
Related Proceeds..............................................................45
Relief Act....................................................................76
REMIC ....................................................................2, 77
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REMIC Administrator...........................................................8
REMIC Certificates...........................................................77
REMIC Provisions.............................................................77
REMIC Regular Certificates...................................................14
REMIC Regulations ...........................................................77
REMIC Residual Certificates..................................................14
REO Property.................................................................51
RICO.........................................................................76
Section 42 Properties........................................................21
Securities Act ..............................................................3
Senior Certificates..........................................................10
Series .......................................................................1
SMMEA ......................................................................15
SPA .........................................................................39
Special Servicer..............................................................8
Stripped Interest Certificates...............................................11
Sub-Servicer ................................................................53
Sub-Servicing Agreement......................................................53
Subordinate Certificates.....................................................10
Tax Exempt Investor.........................................................102
Tiered REMICs................................................................78
Title V......................................................................75
Trust Assets .................................................................2
Trust Fund....................................................................1
Trustee.......................................................................8
UBTI........................................................................102
UCC .........................................................................68
Undelivered Mortgage Assets..................................................10
Voting Rights................................................................46
Warranting Party.............................................................50
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<PAGE>
The attached diskette contains one spreadsheet file (the "Spreadsheet File")
that can be put on a user-specified hard drive or network drive. This file is
"DLJ98CGI.XLS". The file "DLJ98CGI.XLS" is a Microsoft Excel(1), Version 5.0
spreadsheet. The file provides, in electronic format, certain statistical
inlbrmation that appears under the caption "Description of the Mortgage Pool" in
and on Exhibits A-I and A-2 to the Prospectus Supplement. Defined terms used in
the Spreadsheet File but not otherwise defined therein shall have the respective
meanings assigned to them in the Prospectus Supplement. All the information
contained in the Spreadsheet File is subject to the same limitations and
qualifications contained in the Prospectus Supplement. Prospective Investors are
strongly urged to read the Prospectus Supplement and accompanying Prospectus in
its entirety prior to accessing the Spreadsheet File.
- - ----------
(1) Microsoft Excel is a registered trademark of Microsoft Corporation.
<PAGE>
No dealer, salesman or other person has been authorized to give any information
or to make any representations not contained in this Prospectus Supplement and
the Prospectus and, if given or made, such information or representations must
not be relied upon as having been authorized by the Depositor or by the
Underwriter. This Prospectus Supplement and the Prospectus do not constitute an
offer to sell, or a solicitation of an offer to buy, the securities offered
hereby to anyone in any jurisdiction in which the person making such offer or
solicitation is not qualified to do so or to anyone to whom it is unlawful to
make any such offer or solicitation. Neither the delivery of this Prospectus
Supplement and the Prospectus nor any sale made hereunder shall, under any
circumstances, create an implication that information herein or therein is
correct as of any time since the date of this Prospectus Supplement or the
Prospectus.
TABLE OF CONTENTS
Page
Prospectus Supplement
Table of Contents............................................................S-5
Transaction Overview.........................................................S-8
Summary of Prospectus Supplement.............................................S-9
Risk Factors................................................................S-40
Description of the Mortgage Pool............................................S-47
Servicing of the Mortgage Loans.............................................S-67
Description of the Certificates.............................................S-79
Yield and Maturity Considerations...........................................S-97
Certain Federal Income Tax Consequences.....................................S-99
Method of Distribution.....................................................S-105
Legal Matters..............................................................S-106
Erisa Considerations.......................................................S-106
Legal Investment...........................................................S-108
Ratings ..................................................................S-109
Index of Principal Definitions.............................................S-111
Exhibit A-1................................................................A-1-1
Exhibit A-2................................................................A-2-1
Exhibit B....................................................................B-1
Exhibit C....................................................................C-1
Exhibit D....................................................................D-1
Prospectus
Prospectus Supplement..........................................................2
Available Information..........................................................3
Incorporation of Certain Information by Reference..............................4
Table of Contents..............................................................5
Summary of Prospectus..........................................................8
Risk Factors..................................................................16
Description of the Trust Funds................................................28
Yield and Maturity Considerations.............................................37
The Depositor.................................................................42
Description of the Certificates...............................................42
Description of the Pooling Agreements.........................................49
Description of Credit Support.................................................65
Certain Legal Aspects of Mortgage Loans.......................................67
Certain Federal Income Tax Consequences.......................................77
State and Other Tax Consequences.............................................100
ERISA Considerations.........................................................100
Legal Investment.............................................................102
Use of Proceeds..............................................................104
Method of Distribution.......................................................104
Legal Matters................................................................105
Financial Information........................................................105
Rating.......................................................................106
Index of Principal Definitions...............................................107
DLJ COMMERCIAL MORTGAGE CORP.
(Depositor)
$1,415,649,000
(Approximate)
Commercial Mortgage Pass-Through
Certificates, Series 1998-CG1
Class S, Class A-1A, Class A-1B, Class A-1C,
Class A-2, Class A-3, Class A-4
Class B-1, Class B-2 and Class B-3
----------
PROSPECTUS SUPPLEMENT
----------
Donaldson, Lufkin & Jenrette
Securities Corporation
Dated June ____, 1998
