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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported): December 10, 1998
MERRILL LYNCH MORTGAGE INVESTORS, INC. MORTGAGE PASS-THROUGH
CERTIFICATES SERIES 1998-C1-CTL
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(Exact name of registrant as specified in its governing instruments)
52-2095939
52-2095940
New York 333-38073-03 52-2095942
- ---------------------------- ------------------------ -------------------
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
c/o Norwest Bank Minnesota, N.A.
7485 New Horizon Way
Frederick, Maryland 21703
---------------------------------------
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (301) 696-7900
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<PAGE>
Items 1 through 4, Item 6, and Items 8 and 9 are not included because they are
not applicable.
Item 5. Other Events.
On December 10, 1998, a solicitation of consent (the "Solicitation") was
mailed to the holders of Merrill Lynch Mortgage Investors, Inc. Mortgage
Pass-Through Certificates, Series 98-C1-CTL. The Solicitation is filed as an
exhibit hereto.
Item 7. Financial Statements and Exhibits
(a) Financial Statements - Not Applicable
(b) Pro Forma Financial Information - Not Applicable
(c) Exhibit
99.1 Soliciation of Consent dated December 10, 1998 mailed to the
holders of Merrill Lynch Mortgage Investors, Inc. Mortgage
Pass-Through Certificates, Series 98-C1-CTL.
-2-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MERRILL LYNCH MORTGAGE INVESTORS, INC.
MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-C1-CTL
By: Norwest Bank Minnesota, N.A., as Trustee
By: /s/ SHERRI SHARP
-------------------------------
Name: Sherri Sharp
Title: Vice President
Dated: December 18, 1998
-3-
<PAGE>
EXHIBIT INDEX
The following exhibit is being filed herewith:
Exhibit 99.1 Solicitation of Consent dated December 10, 1998 mailed to the
holders of Merrill Lynch Mortgage Investors, Inc. Mortgage
Pass-Through Certificates, Series 98-C1-CTL.
4
December 9 , 1998
To the Owners of the Merrill Lynch Mortgage Investors, Inc., Mortgage
Pass-Through Certificates, Series 1998-C1-CTL:
On July 27, 1998, Standard & Poor's Ratings Services, a division of The
McGraw Hill Companies, Inc. ("Standard & Poor's"), placed its ratings of the
nine classes of the Merrill Lynch Mortgage Investors, Inc., Mortgage
Pass-Through Certificates Series 1998-C1-CTL (the "CTL Certificates") that it
rated (the "Offered Certificates") on CreditWatch with negative implications. On
July 24, 1998, Moody's Investors Service Inc. ("Moody's") placed the Offered
Certificates on review for possible downgrade. On July 24, 1998, Duff & Phelps
Credit Rating Co. ("Duff & Phelps") placed the Class F, Class G, Class H and
Class J CTL Certificates on Rating Watch-Down. These listings followed the
downgrade of the credit ratings assigned to Allegheny General Hospital to "B"
from "A" by Standard & Poor's and from "Baa2" to "B1" and then to "Caa1" by
Moody's and the downgrade of the credit ratings assigned to Allegheny Hospital,
Centennial from "BB" to "CCC" by Standard & Poor's and from "B2" to "Caa2" and
then to "Caa3" by Moody's. The downgrade of these ratings followed the
commencement of bankruptcy cases under the Federal Bankruptcy Code on July 21,
1998 by Allegheny Health Education and Research Foundation ("AHERF") and certain
of its affiliates, including Allegheny Hospital, Centennial. Tenet HealthSystem
Philadelphia, Inc. ("Tenet") has purchased and assumed the liabilities in
connection with certain assets of AHERF and its subsidiaries that have commenced
chapter 11 cases, including the unexpired lease of Allegheny Centennial. The
purchase and assumption was approved by the United States Bankruptcy Court for
the Western District of Pennsylvania and Tenet will place the assets in newly
created limited liability corporations that are wholly-owned subsidiaries of
Tenet.
Allegheny General Hospital, which is a subsidiary of AHERF but has not
sought bankruptcy relief, is the lessee under credit tenant leases which support
two mortgage loans (the "AGH Loans") included in the trust (the "Trust")
relating to the CTL Certificates. As of November 1, 1998 (the "Amendment Cut-Off
Date")(1), the AGH Loans had an aggregate principal balance of approximately
$102,334,933 and comprised approximately 16.0% (by principal balance) of the
mortgage loans in the Trust. Allegheny Hospital, Centennial was the lessee under
a credit tenant lease that supports a mortgage loan (the "Centennial Loan")
which is also included in the Trust. As of the Amendment Cut-Off Date, the
Centennial Loan had an outstanding principal balance of approximately $9,185,913
and comprised approximately 1.4% by principal balance of the mortgage loans in
the Trust.
As more fully described in the Solicitation of Consent, Daiwa Finance Corp.
("Daiwa Finance") has offered to transfer eight credit tenant lease loans (the
"New Loans") to the Trust in exchange for a new Certificate which entitles the
holder thereof to receive all payments in respect of the AGH Loans. As of the
Amendment Cut-Off Date, the New Loans had an approximate aggregate principal
balance of $102,741,048. The transfer of the New Loans to the Trust and the
issuance of the new Certificate require the amendment of the pooling and
servicing agreement relating to the CTL Certificates, dated as of March 1, 1998
(the "Pooling and Servicing Agreement"), by and among Merrill Lynch Mortgage
Investors, Inc. ("MLMI"), as depositor, GMAC Commercial Mortgage Corporation, as
master servicer (the "Master Servicer"), GMAC Commercial Mortgage Corporation,
as special servicer (the "Special Servicer") and Norwest Bank Minnesota,
National Association, as trustee (the "Trustee"). If the proposed transaction
and the corresponding amendments to the Pooling and Servicing Agreement are
approved by the CTL Certificateholders, the following actions are expected to be
taken:
- --------------
(1) All principal balances, rates and percentages set forth in this letter and
the Solicitation of Consent are approximate and were calculated based upon
date as of the mortgage loan payment dates of November 1, 19998 or November
10, 1998, as applicable.
<PAGE>
o Daiwa Finance will transfer the New Loans to MLMI for deposit in the
Trust.
o The outstanding Certificate Balance of the Class A-PO Certificates
will be increased from $1,457,634 to $1,714,285 to account for a New
Loan with a mortgage rate of less than 6.75%.
o Collections with respect to the AGH Loans will no longer be
distributed to holders of the existing CTL Certificates but would
instead be distributed to the holder of a new CTL Certificate (the
"Class P Certificate").
o Collections on the New Loans received after the Amendment Cut-Off Date
will be distributed to the holders of the CTL Certificates as
described in the Solicitation of Consent.
o The Class P Certificate and any new REMIC residual interests will be
delivered to Daiwa Finance in consideration its transfer of the New
Loans to the Trust.
o The CTL Certificates will represent interests in a new REMIC as
further described in the attached Solicitation of Consent under
"CERTAIN FEDERAL INCOME TAX CONSIDERATIONS", but, except as described
therein, will have the same features as they had prior to the
consummation of the proposed transaction.
Each beneficial owner of the CTL Certificates must provide its consent to
the undersigned by execution of a Certificate of Consent no later than December
18, 1998. Forms of the Certificate of Consent are attached to the Solicitation
of Consent as Exhibit A.
PRIOR TO EXECUTION OF A CERTIFICATE OF CONSENT EACH HOLDER OF CTL
CERTIFICATES SHOULD READ THE ATTACHED SOLICITATION OF CONSENT INCLUDING THE
SECTION ENTITLED "RISK FACTORS" ON PAGE 29 THEREOF.
If you have any questions about the proposed amendment to the Pooling and
Servicing Agreement, the New Loans or the matters discussed in the Solicitation
of Consent, please call Steve Sherwyn of Daiwa Finance at (212) 612-6905 or John
Gluszak of MLMI at (212) 602-7566.
<PAGE>
SOLICITATION OF CONSENT
RELATING TO
MERRILL LYNCH MORTGAGE INVESTORS, INC., MORTGAGE PASS-THROUGH
CERTIFICATES, SERIES 1998-C1-CTL
DATED: DECEMBER 9, 1998
Delivered to: [INSERT NAME OF HOLDER OF CTL CERTIFICATE]
The Merrill Lynch Mortgage Investors, Inc., Mortgage Pass-Through
Certificates, Series 1998-C1-CTL (the "CTL Certificates") were issued on March
31, 1998 pursuant to the pooling and servicing agreement, dated as of March 1,
1998 (the "Pooling and Servicing Agreement"), by and among Merrill Lynch
Mortgage Investors, Inc. ("MLMI"), as depositor, GMAC Commercial Mortgage
Corporation, as master servicer (the "Master Servicer"), GMAC Commercial
Mortgage Corporation, as special servicer (the "Special Servicer") and Norwest
Bank Minnesota, National Association, as trustee (the "Trustee"). This
Solicitation of Consent describes a proposed amendment to the Pooling and
Servicing Agreement (the "Proposed Amendment").
In order to accomplish the transactions contemplated by this Solicitation
of Consent, each holder of the CTL Certificates must provide its consent to the
Trustee by execution of a Certificate of Consent no later than December 18, 1998
or such later date as is determined by MLMI and Daiwa Finance in their sole
discretion. Forms of the Certificate of Consent are attached hereto as Exhibit
A. In the event that the requisite consents of Certificateholders are not
received by such date, the transactions described herein will not be consummated
and no change to the Pooling and Servicing Agreement or the Trust Fund will be
made.
PRIOR TO EXECUTION OF A CERTIFICATE OF CONSENT, EACH HOLDER OF A CTL
CERTIFICATE SHOULD READ THIS SOLICITATION OF CONSENT, INCLUDING THE SECTION
ENTITLED "RISK FACTORS" ON PAGE 29 HEREOF.
THERE IS NO OBLIGATION OF MLMI OR DAIWA FINANCE TO CONSUMMATE THE
TRANSACTIONS CONTEMPLATED HEREIN AND EACH OF MLMI AND DAIWA FINANCE RESERVES THE
RIGHT TO ALTER, MODIFY OR REFRAIN FROM ENTERING INTO THE TRANSACTION
CONTEMPLATED HEREBY AT ANY TIME WITHOUT NOTICE TO THE HOLDERS OF THE CTL
CERTIFICATES.
THIS SOLICITATION OF CONSENT ONLY SUMMARIZES THE PROPOSED AMENDMENT AND THE
TRANSACTIONS RELATING THERETO AND DOES NOT OTHERWISE PURPORT TO DESCRIBE THE
POOLING AND SERVICING
<PAGE>
AGREEMENT, THE MORTGAGE LOANS OR THE RISKS ASSOCIATED WITH AN INVESTMENT IN THE
CTL CERTIFICATES.
THE OBLIGATIONS OF THE PARTIES TO THE TRANSACTIONS REFERRED TO HEREIN ARE
SET FORTH IN, AND WILL BE GOVERNED BY, CERTAIN DOCUMENTS REFERRED TO HEREIN.
THIS SOLICITATION OF CONSENT CONTAINS SUMMARIES OF SUCH DOCUMENTS THAT DO NOT
PURPORT TO BE COMPLETE AND ARE SUBJECT TO, AND QUALIFIED IN THEIR ENTIRETY BY
REFERENCE TO, ALL OF THE PROVISIONS OF SUCH DOCUMENTS. FOR A COMPLETE
DESCRIPTION OF THE RIGHTS AND OBLIGATIONS SUMMARIZED HEREIN, REFERENCE IS HEREBY
MADE TO THE ACTUAL DOCUMENTS.
THIS SOLICITATION OF CONSENT HAS BEEN PREPARED FROM INFORMATION FURNISHED
BY MLMI, DAIWA FINANCE AND OTHER SOURCES. HOWEVER, NEITHER MLMI NOR DAIWA
FINANCE MAKES ANY REPRESENTATION OR WARRANTY AS TO THE ACCURACY OR COMPLETENESS
OF THE INFORMATION CONTAINED IN THIS SOLICITATION OF CONSENT OR IN ANY OTHER
WRITTEN OR ORAL COMMUNICATION TRANSMITTED TO HOLDERS OF THE CTL CERTIFICATES.
NOTHING HEREIN SHALL BE DEEMED TO CONSTITUTE SUCH A REPRESENTATION OR WARRANTY
OR A PROMISE OR REPRESENTATION AS TO THE FUTURE PERFORMANCE OF THE MORTGAGE
LOANS, THE TRUST OR THE CTL CERTIFICATES.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS SOLICITATION OF CONSENT AND,
IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATION MUST NOT BE RELIED
UPON. THIS SOLICITATION OF CONSENT SUPERSEDES IN ITS ENTIRETY ANY PRELIMINARY
TRANSACTION SUMMARY OR OTHER INFORMATION HERETOFORE DELIVERED TO HOLDERS OF THE
CTL CERTIFICATES. THE DELIVERY OF THIS SOLICITATION OF CONSENT AT ANY TIME DOES
NOT IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY DATE OTHER THAN THE
DATE SPECIFIED HEREIN OR, IF NO DATE IS SPECIFIED, AS OF ANY TIME SUBSEQUENT TO
THE DATE OF THIS SOLICITATION OF CONSENT.
THIS SOLICITATION OF CONSENT IS FURNISHED TO THE PERSON NAMED ON THE COVER
HEREOF ON A CONFIDENTIAL BASIS SOLELY FOR THE PURPOSE OF EVALUATING THE
TRANSACTIONS DESCRIBED HEREIN. THE INFORMATION CONTAINED HEREIN MAY NOT BE
REPRODUCED OR USED IN WHOLE OR IN PART FOR ANY OTHER PURPOSE.
THE CONTENTS OF THIS SOLICITATION OF CONSENT ARE NOT TO BE CONSTRUED AS
INVESTMENT, LEGAL OR TAX ADVICE. EACH HOLDER OF A CTL CERTIFICATE SHOULD CONSULT
ITS OWN BUSINESS, LEGAL AND TAX ADVISORS AS TO INVESTMENT, LEGAL OR TAX ADVICE
PRIOR TO CONSENTING
2
<PAGE>
TO THE PROPOSED AMENDMENT AND DELIVERY OF A CERTIFICATE OF CONSENT.
Table of Contents
Page
INTRODUCTION...................................................................1
TRANSACTION HISTORY............................................................1
THE PROPOSED TRANSACTION.......................................................3
PROPOSED AMENDMENT TO THE POOLING AND SERVICING AGREEMENT......................7
Certificate Balances and Notional Amounts..................................7
Pass-Through Rates.........................................................8
Collections................................................................8
Distributions..............................................................8
Subordination; Allocation of Losses and Additional Trust Fund Expenses.....9
Servicing..................................................................9
THE NEW LOANS..................................................................9
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS.....................................34
RISK FACTORS..................................................................35
No Assurance of the Ratings...............................................35
Concentration Risk........................................................35
Bankruptcy Risk...........................................................35
RATINGS.......................................................................36
LEGAL MATTERS.................................................................36
Exhibit A New Loan Schedule
Exhibit B Form of Certificate of Consent
3
<PAGE>
INTRODUCTION
THIS SOLICITATION OF CONSENT IS INTENDED ONLY TO SUMMARIZE TRANSACTIONS
CONTEMPLATED BY THE PROPOSED AMENDMENT TO THE POOLING AND SERVICING AGREEMENT
REFERRED TO BELOW (THE "PROPOSED AMENDMENT"), AND IS QUALIFIED IN ITS ENTIRETY
BY THE ACTUAL PROVISIONS SET FORTH IN THE PROPOSED AMENDMENT. THIS SOLICITATION
OF CONSENT DOES NOT OTHERWISE PURPORT TO DESCRIBE THE POOLING AND SERVICING
AGREEMENT, THE MORTGAGE LOANS OR THE RISKS ASSOCIATED WITH AN INVESTMENT IN THE
CTL CERTIFICATES, EXCEPT TO THE EXTENT SPECIFICALLY DESCRIBED HEREIN. ALL THE
CAPITALIZED TERMS USED HEREIN HAVE THE MEANINGS ASCRIBED TO THEM IN THE POOLING
AND SERVICING AGREEMENT.
TRANSACTION HISTORY
On March 31, 1998 (the "Closing Date"), Daiwa Finance Corp. ("Daiwa
Finance") sold all of its right, title and interest in and to 105 fixed rate
mortgage loans (the "Original Loans"), each of which is secured by a first
mortgage lien on the related borrower's interest in one or more income-producing
real properties (the "Original Properties"), to Merrill Lynch Mortgage
Investors, Inc. ("MLMI"). On the Closing Date, MLMI deposited each of the
Original Loans in a trust (the "Trust") created pursuant to the pooling and
servicing agreement, dated as of March 1, 1998 (the "Pooling and Servicing
Agreement"), by and among MLMI (in such capacity, the "Depositor"), GMAC
Commercial Mortgage Corporation, as master servicer (the "Master Servicer"),
GMAC Commercial Mortgage Corporation, as special servicer (the Special
Servicer") and Norwest Bank Minnesota, National Association, as trustee (the
"Trustee").
On the Closing Date, the Trustee issued and delivered to the Depositor the
Merrill Lynch Mortgage Investors Inc., Mortgage Pass-Through Certificates,
Series 1998-C1-CTL (the "CTL Certificates"), which consist of Class A-1
Certificates, Class A-2 Certificates, Class A-3 Certificates, Class A-PO
Certificates, Class B Certificates, Class C Certificates, Class D Certificates,
Class E Certificates and Class IO Certificates (collectively, the "Offered
Certificates"), as well as Class F Certificates, Class G Certificates, Class H
Certificates, Class J Certificates, Class K Certificates, Class R-I Certificate,
Class R-II Certificate and Class R-III Certificate (collectively, the "Private
Certificates" and, together with the Offered Certificates, the "CTL
Certificates") in exchange for the Original Loans. The Depositor sold the
Offered Certificates through several underwriters, and the Private Certificates
through several placement agents, to investors.
As of the Closing Date, each Original Property was subject to a lease (a
"Credit Lease") to a single tenant (each a "Tenant") which met, or whose parent
or affiliate which guaranteed the lease obligations (each, a "Guarantor") met,
the credit criteria of the originator of the loan. On July 27, 1998, Standard &
Poor's Ratings Services, a division of The McGraw Hill Companies, Inc.
("Standard & Poor's"), placed its ratings of the Offered Certificates on
CreditWatch with negative implications. On July 24, 1998, Moody's Investors
Service Inc. ("Moody's") placed the Offered Certificates on review for possible
downgrade. On July 24, 1998, Duff & Phelps Credit Rating Co. ("Duff & Phelps")
placed the Class F, Class G, Class H and Class J CTL Certificates on Rating
Watch-Down. These listings followed the downgrade of the credit ratings assigned
to Allegheny General Hospital to "B"
<PAGE>
from "A" by Standard & Poor's and from "Baa2" to "B1" and then to "Caa1" by
Moody's and the downgrade of the credit ratings assigned to Allegheny Hospital,
Centennial from "BB" to "CCC" by Standard & Poor's and from "B2" to "Caa2" and
then to "Caa3" by Moody's. The downgrade of these ratings followed the
commencement of bankruptcy cases under the Federal Bankruptcy Code on July 21,
1998 by Allegheny Health Education and Research Foundation ("AHERF") and certain
of its affiliates, including Allegheny Hospital, Centennial. Tenet HealthSystem
Philadelphia, Inc. ("Tenet") has purchased and assumed the liabilities in
connection with certain assets of AHERF and its subsidiaries that have commenced
chapter 11 cases, including the unexpired lease of Allegheny Centennial. The
purchase and assumption was approved by the United States Bankruptcy Court for
the Western District of Pennsylvania and Tenet will place the assets in newly
created limited liability corporations that are wholly-owned subsidiaries of
Tenet.
Allegheny General Hospital, which is a subsidiary of AHERF but has not
sought bankruptcy relief, is the lessee under Credit Leases that provide the
credit for two of the Original Loans (the "AGH Loans"). As of November 1, 1998
(the "Amendment Cut-Off Date"), the AGH Loans had an aggregate principal balance
of approximately $102,334,933 and comprised approximately 16.0% (by principal
balance) of the Original Loans. As of November 1, 1998 the Trust has collected
all scheduled payments of principal and interest on the AGH Loans. Allegheny
Hospital, Centennial is the lessee under a Credit Lease that provides the credit
for another Original Loan (the "Centennial Loan") which is also included in the
Trust. As of the Amendment Cut-Off Date, the Centennial Loan had an outstanding
principal balance of approximately $9,185,913 and comprised approximately 1.4%
of the Original Loans. The Centennial Loan is not a part of the proposed
transaction described herein and will remain as one of the Mortgage Loans
backing the CTL Certificates (exclusive of the Class P Certificate).
Set forth in the table below is the summary of the AGH Loans which on the
Amendment Closing Date, will become collateral for the Class P Certificate
referred to below.
<TABLE>
<CAPTION>
SUMMARY OF AGH LOANS
ORIGINAL/CURRENT
CREDIT RATINGS
CONTROL LEASE ---------------- MORTGAGE AMENDMENT CUT-
NO. TENANT/GUARANTOR CITY STATE TYPE S&P MOODY'S RATE OFF DATE BALANCE
- ------- ---------------- ---- -- ----- --- ------- -------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
3 Allegheny General Pittsburgh PA Bondable A/B A3/Caa1 6.890% $ 67,170,088
Hospital
2 Allegheny General Pittsburgh PA Bondable A/B A3/Caa1 7.030% $ 35,164,845
Hospital
------------
TOTAL: $102,334,933
</TABLE>
On December 7, 1998, the Trustee notified Daiwa Finance that the Master
Servicer has claimed the existence of material breaches of representations and
warranties relating to the AGH Loans and the Centennial Loan. The Pooling and
Servicing Agreement
2
<PAGE>
provides that if a breach of a representation or warranty exists which
materially and adversely affects the value of the related Mortgage Loan or the
interests of the Certificateholders therein, which breach is not cured within a
specified period, then the Mortgage Loan Seller is obligated to repurchase such
Mortgage Loan at the applicable Purchase Price. Daiwa Finance has advised the
Trustee that it does not believe that any material breach of a representation or
warranty with respect to the AGH Loans or the Centennial Loan has occurred. No
assurance can be given that any such breach will ultimately be proven to exist
or that if one does, whether or when a repurchase of the affected Mortgage Loan
may occur.
THE PROPOSED TRANSACTION
If the Proposed Amendment is approved, on or about December 18, 1998 (the
"Amendment Closing Date"), Daiwa Finance will transfer all of its right, title
and interest (subject to a retained participation interest in the Columbus Rite
Aid Loan referred to below) in and to eight fixed rate mortgage loans (the "New
Loans" and, together with all of the Original Loans other than the AGH Loans,
the "Mortgage Loans") to the Depositor pursuant to the First Supplement to the
Mortgage Loan Purchase Agreement, dated as of November 1, 1998 (the "First
Supplement") in exchange for a new certificate ("Class P Certificate"), which
will entitle the holder thereof to receive all payments on the AGH Loans. See
"PROPOSED AMENDMENT TO THE POOLING AND SERVICING AGREEMENT" herein. The
"Amendment Cut-Off Date Balance" of any New Loan is expected to equal the unpaid
principal balance thereof as of the Amendment Cut-Off Date after reduction of
all payments of principal due on or before such date, whether or not received.
The aggregate Amendment Cut-Off Date Balance of the New Loans is $102,741,048
and the aggregate Amendment Cut-Off Date Balance of the AGH Loans is
$102,334,933. Daiwa Finance, as Mortgage Loan Seller under the First Supplement,
will make representations and warranties with respect to the New Loans that are
substantially similar to the representations and warranties that Daiwa Finance
made in respect of the Original Loans. On the Amendment Closing Date, the
Depositor will deposit the New Loans and assign the rights and remedies
thereunder (including the transferor representations and warranties) into the
Trust.
Set forth in the table below is summary information, as of the Amendment
Cut-Off Date, with respect to each New Loan:
3
<PAGE>
<TABLE>
<CAPTION>
SUMMARY OF NEW LOANS
CURRENT
CREDIT RATINGS
CONTROL LEASE --------------- AMENDMENT CUT-
NO. TENANT/GUARANTOR CITY STATE TYPE S&P MOODY'S RATE OFF DATE BALANCE
- ------- ---------------- ---- ----- ----- --- ------- ---- -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
N1 Georgia Power Atlanta GA Bondable A+ A1 6.800% $ 77,805,504
Company
N2 Tops Market/ Jamestown NY Bondable A A3 6.620% 9,991,663
Koninklijke
Ahold, N.V.
N3 Rite Aid Spotswood NJ Bondable BBB+ Baa1 7.070% 3,103,512
Corporation
N4 Rite Aid North OH Bondable BBB+ Baa1 7.070% 2,985,954
Corporation Royalton
N5 Rite Aid Columbus OH Bondable BBB+ Baa1 7.070% 2,680,306
Corporation
N6 Rite Aid East CT Bondable BBB+ Baa1 7.070% 2,257,100
Corporation Haven
N7 Rite Aid Hurricane WV Bondable BBB+ Baa1 7.070% 2,012,581
Corporation
N8 Rite Aid Seaford DE Bondable BBB+ Baa1 7.070% 1,904,428
Corporation ------------
Total: $102,741,048
</TABLE>
The following tables set forth in summary form certain characteristics of
the Mortgage Loans (not including the AGH Loans) which will support all Classes
of CTL Certificates (other than the Class P Certificate) following the
consummation of the Proposed Transaction (See "TABLE DEFINITIONS" herein for
definitions of certain column headings in the following tables).
4
<PAGE>
ALL MORTGAGE LOANS
PROPERTY TYPES
AGGREGATE % OF AGGREGATE
AMENDMENT AMENDMENT
NUMBER OF CUT-OFF CUT-OFF
MORTGAGED DATE DATE
PROPERTY TYPE PROPERTIES BALANCE BALANCE
- ------------- ---------- --------- --------------
Retail
Drug Store 49 $133,741,077 20.88%
Grocery Store 4 26,213,230 4.09
Discount Dept. 4 22,482,830 3.51
Store
Electronic Store 9 56,313,436 8.79
Furniture Store 20 32,269,271 5.04
Grocer/Dept. Store 3 44,502,209 6.95
Other Retail 3 37,418,314 5.84
--- ------------ ------
Sub Total 92 $352,940,366 55.11%
Office 9 206,994,753 32.32
Health Club 6 43,180,982 6.74
Office/Warehouse 1 3,509,734 0.55
Other 40 33,768,180 5.27
--- ------------ ------
TOTALS: 148 $640,394,016 100.00%
ALL MORTGAGE LOANS
GEOGRAPHIC DISTRIBUTION
% OF
AGGREGATE AGGREGATE
NUMBER OF AMENDMENT AMENDMENT
MORTGAGED CUT-OFF DATE CUT-OFF DATE
STATE PROPERTIES BALANCE BALANCE
----- ---------- --------------- -----------
New York 11 $106,405,932 16.62%
Georgia 1 77,805,504 12.15
Pennsylvania 42 58,925,392 9.20
Washington 8 41,343,728 6.46
Florida 6 40,295,825 6.29
California 11 39,341,371 6.14
Oregon 7 32,957,078 5.15
23 Others 62 243,319,185 38.00
---- --------------- ------
Total: 1462 $640,394,015.00 100.00%
5
<PAGE>
ALL MORTGAGE LOANS
MORTGAGE RATES
% OF
AGGREGATE AGGREGATE WEIGHTED
NUMBER OF AMENDMENT AMENDMENT AVERAGE
RANGE OF MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE
MORTGAGE RATES LOANS BALANCE BALANCE RATE
- -------------- --------- ------------ ------------ --------
6.570%--6.999% 44 $256,686,029 40.08% 6.772%
7.000 --7.124 8 36,340,501 5.67 7.058
7.125 --7.249 2 15,982,666 2.50 7.146
7.250 --7.374 2 4,536,058 0.71 7.323
7.375 --7.499 22 51,901,897 8.10 7.468
7.500 --7.624 3 11,980,454 1.87 7.597
7.625 --7.749 13 107,049,131 16.72 7.677
7.750 --7.874 4 24,285,980 3.79 7.826
7.875 --7.999 1 6,037,177 0.94 7.950
8.250 --8.374 1 15,241,305 2.38 8.350
8.500 --8.624 3 17,438,093 2.72 8.610
8.750 --8.874 7 47,655,156 7.44 8.765
8.875 --9.000 1 45,259,569 7.07 9.000
--- ------------ ------ --------
Total/Wtd. Avgs: 111 $640,394,016 100.00% 94.83772%
6
<PAGE>
ALL MORTGAGE LOANS
AMENDMENT CUT-OFF DATE BALANCES
RANGE OF NUMBER AGGREGATE % OF AGGREGATE
AMENDMENT OF AMENDMENT AMENDMENT
CUT-OFF DATE MORTGAGE CUT-OFF DATE CUT-OFF DATE
BALANCES LOANS BALANCE BALANCE
- ------------------------ --------- ------------ --------------
$ 789,801--$ 999,999 2 $ 1,733,040 0.27%
1,000,000-- 1,999,999 27 43,961,265 6.86
2,000,000-- 2,999,999 26 65,372,450 10.21
3,000,000-- 3,999,999 14 47,116,898 7.36
4,000,000-- 4,999,999 8 36,018,574 5.62
5,000,000-- 5,999,999 7 39,267,310 6.13
6,000,000-- 6,999,999 6 40,000,678 6.25
7,000,000-- 7,999,999 2 14,883,041 2.32
8,000,000-- 8,999,999 3 24,666,242 3.85
9,000,000-- 9,999,999 3 28,609,065 4.47
10,000,000-- 14,999,999 4 52,698,594 8.23
15,000,000-- 19,999,999 6 102,019,648 15.93
20,000,000-- 24,999,999 1 20,982,138 3.28
40,000,000-- 49,999,999 1 45,259,569 7.07
50,000,000-- 77,805,504 1 77,805,504 12.15
--- ------------ ------
Total: 111 $640,394,016 100.00%
PROPOSED AMENDMENT TO THE POOLING
AND SERVICING AGREEMENT
On the Amendment Closing Date, the Pooling and Servicing Agreement will be
amended and restated to provide for the changes described below. Capitalized
terms used and not otherwise defined herein have the meanings ascribed to such
terms in the Pooling and Servicing Agreement.
CERTIFICATE BALANCES AND NOTIONAL AMOUNTS
The Certificate Balance of each Class of the CTL Certificates (other than
the Class A-PO Certificates) and the Notional Amounts of the Components that
collectively comprise the Class IO Certificates will not change as a result of
the Proposed Amendment. However, the Certificate Balance of the Class A-PO
Certificates will be increased by $256,651 to $1,714,285. This adjustment to the
Certificate Balance of the Class A-PO Certificates is necessary to adjust the
effective Net Mortgage Rate on the Tops Market Loan (described below) to 6.75%.
7
<PAGE>
On the Amendment Closing Date, the Trust will issue a new CTL Certificate
(the "Class P Certificate") to Daiwa Finance in exchange for the New Loans. The
Class P Certificate will have a Certificate Balance equal to the aggregate
outstanding Principal Balance of the AGH Loans, $102,334,933 as of the Amendment
Cut-Off Date, and will represent the right to receive distributions of all
collections on the AGH Loans after the Amendment Cut-Off Date. If, for any
reason (such as the occurrence of an event of default), the AGH Loans were to be
sold by the Trust, any proceeds received in respect thereof will not result in a
prepayment of any of the CTL Certificates other than the Class P Certificate.
PASS-THROUGH RATES
The Pass-Through Rate on each Class of CTL Certificates (other than the
Class IO Certificates and the Class A-PO Certificates which do not have a
Pass-Through Rate) will not be adjusted pursuant to the Proposed Amendment.
However, because the Weighted Average Net Mortgage Rate on the AGH Loans exceeds
the Weighted Average Net Mortgage Rate on the New Loans, the Pass-Through Rate
on the Class IO Certificates will be reduced because of the substitution of the
New Loans for the AGH Loans as collateral for the existing CTL Certificates. The
Weighted Average Net Mortgage Rate of the Original Loans was 7.443% immediately
prior to the Amendment Cut-Off Date and the Weighted Average Net Mortgage Rate
of the Original Loans (other than the AGH Loans) and the New Loans immediately
after the Amendment Cut-Off Date was 7.423%.
The Class P Certificate will have a Pass-Through Rate equal to the weighted
average of the Net Mortgage Rates on the AGH Loans.
COLLECTIONS
All collections on the New Loans received after the Amendment Cut-Off Date
(subject to applicable participation interests) will be distributed in the same
manner and priority as the collections on all of the Original Loans (other than
the AGH Loans). All collections on the AGH Loans after the Amendment Cut-Off
Date will be distributed exclusively to the holder of the Class P Certificate.
Because the Tops Market Loan is a Discount Mortgage Loan, a portion of any
payments of principal received on such loan will be allocated as a portion of
the Class A-PO Principal Distribution Amount on each Distribution Date and will
be distributed in respect of the Class A-PO Certificates as set forth in the
Pooling and Servicing Agreement.
DISTRIBUTIONS
The Available Distribution Amount, the Principal Distribution Amount and
the Class A-PO Principal Distribution Amount (each as defined in the Pooling and
Servicing Agreement) and distributions of interest will be distributable in
substantially the same (or somewhat greater, in the case of the Class A-PO
Distribution Amount) amounts and the same order of priority as prior to the
Proposed Amendment, except that none of the foregoing will include collections
in respect of the AGH Loans and each of the foregoing will include collections
in respect of the New Loans. All collections on the AGH Loans will be
distributed
8
<PAGE>
exclusively to the holder of the Class P Certificate. No prepayment interest
shortfalls on the AGH Loans will be allocated to the CTL Certificates.
SUBORDINATION; ALLOCATION OF LOSSES
The subordination of certain Classes of the CTL Certificates to other
classes of the CTL Certificates will be unaffected by the Proposed Amendment.
However, the Class P Certificate will not be subordinated to any other Class of
CTL Certificates and will not provide any credit support to such other Classes
of CTL Certificates.
Realized Losses and Additional Trust Fund Expenses in respect of the New
Loans will be allocated in the same manner as the allocation of Realized Losses
and Additional Trust Fund Expenses in respect of the Original Loans, except that
Realized Losses and Additional Trust Fund Expenses in respect of the AGH Loans
will be allocated exclusively to the Class P Certificate.
SERVICING
The New Loans will be serviced in the same manner as the Original Loans.
THE NEW LOANS
The New Loans are each secured by a first mortgage lien on the related
borrower's fee simple interest or ground lease interest in one or more
income-producing real properties (the "New Properties"). Each New Property is
subject to a Lease to a single Tenant (each a "Tenant") which meets, or the
Guarantor of which meets, certain credit criteria of the originator of such New
Loan. Each New Loan was originated or acquired by affiliates of Legg Mason Wood
Walker, Incorporated between August, 1997 and September, 1998.
The Mortgage Rates on the New Loans range from 6.62% to 7.07% and the
weighted average Mortgage Rate of the New Loans (weighted on the basis of their
respective Amendment Cut-Off Date Balances) equals 6.822%.
All the New Loans are subject to a Lockout Period and thereafter, the
borrower may substitute Defeasance Collateral in exchange for a release of the
related Mortgaged Property.
All the New Loans have stated remaining terms ranging from 239 months to
264 months.
All the Mortgage Properties securing the New Loans were built since January
1981.
Georgia Power Loan. One (1) New Loan (the "Georgia Power Loan") having an
Amendment Cut-Off Date Balance of $77,805,504 is secured by a mortgage
encumbering the fee and leasehold interest in a Mortgaged Property located in
Atlanta, Georgia (the "Georgia Power Property") which is leased to Georgia Power
Company ("Georgia Power"), a
9
<PAGE>
subsidiary of the Southern Company, a publicly traded company (NYSE: SO). As of
the Amendment Cut-Off Date, Georgia Power had a corporate credit rating of "A+"
and a long-term credit rating of "A1" from Standard and Poor's and Moody's,
respectively.
The Georgia Power Property consists of a net rentable area of approximately
765,000 square feet and a total land area of 4.932 acres.
The Georgia Power Loan will be conveyed to the Trust subject to a
participation interest held by a third party. The description of the Georgia
Power Loan in this Solicitation of Consent describes the portion of the Georgia
Power Loan that will be held by the Trust after the Amendment Cut-Off Date with
a fixed Mortgage Rate of 6.80%. Each month the Trust will be entitled to receive
all collections of principal and all collections of interest at the applicable
Mortgage Rate. Under the terms of the Georgia Power Loan, the monthly payments
in respect of principal will increase by approximately $100,000 on December 10,
2000 through scheduled maturity. Any amounts of interest collections remaining
after distribution to the Trust will be distributed to the holder of the
participation interest in the Georgia Power Loan. Collections of prepayment
premiums, if any, on the Georgia Power Loan will be allocated between the Trust
and the holder of the participation interest, as specified in the related
participation agreement.
The terms of such participation agreement prohibit the Master Servicer and
the Special Servicer from waiving any payment default on the Georgia Power Loan
without the prior written consent of the holder of the participation interest.
Rite Aid Loans. Six (6) New Loans (the "Rite Aid Loans"), having an
aggregate Amendment Cut-Off Date Balance of $14,943,881 and a weighted average
coupon of 7.07%, are secured by six separate mortgages encumbering the
respective fee simple interests in six separate Mortgaged Properties (the "Rite
Aid Properties"), which are leased to various wholly-owned subsidiaries of Rite
Aid Corporation (with a lease guaranty from Rite Aid Corporation), a publicly
traded company (NYSE: RAD) which operates a national retail chain of
approximately 3,900 drug stores in various states through the United States. As
of the Amendment Cut-Off Date, the Rite Aid Corporation had a corporate credit
rating of "BBB+" and a long-term credit rating of "Baa1" from Standard & Poor's
and Moody's, respectively. The Rite Aid Properties are used for retail purposes,
are located in five different states and have aggregate improvements totaling
approximately 64,940 square feet.
One Rite Aide Loan, secured by the Mortgaged Property located in Columbus,
Ohio (the "Columbus Rite Aide Loan"), will be conveyed to the Trust subject to a
retained participation interest in favor of the Mortgage Loan Seller equal to
5.5763863% of such loan. All collections of principal, interest and prepayment
premiums, if any, on the Columbus Rite Aide Loan will be allocated between the
Trust and the holder of such participation interest on a 94.4236137%/5.5763863%
basis.
Tops Market Inc. Loan One (1) New Loan (the "Tops Market Loan"), having an
Amendment Cut-Off Date Balance of $9,991,663, and Mortgage Rate of 6.62%, is
secured by a lease guaranty by Koninklijke Ahold, N.V. and a mortgage
encumbering the fee simple interest in a Mortgaged Property located in
Chautauqua County, New York (the "Tops
10
<PAGE>
Property") which is leased to Tops Markets, Inc., a publicly traded company
(NYSE: AHO) which operates a chain of approximately 238 supermarkets in western
and central New York, Northern Pennsylvania and Northeast Ohio, offering food
and general merchandise. As of the Amendment Cut-Off Date, Koninklijke Ahold,
N.V. had a corporate credit rating of "A" and a long-term credit rating of "A3"
from Standard and Poor's and Moody's, respectively.
The Tops Property consists of approximately 85,000 square feet consisting
of 77,000 square feet that it occupies and 8,000 square feet that it subleases
for a net annual fixed minimum rental of $1.00.
ADDITIONAL NEW LOAN INFORMATION
The following tables set forth certain characteristics of the New Loans
(see "TABLE DEFINITIONS" herein for definition of certain table headings).
NEW LOANS/PROPERTY TYPES
<TABLE>
<CAPTION>
WEIGHTED AVERAGES
-----------------
% OF
AGGREGATE AGGREGATE
AMENDMENT AMENDMENT STATED APPROXIMATE
NUMBER OF CUT-OFF CUT-OFF REMAIN PROPERTY
MORTGAGE DATE DATE MORTGAGE TERM LOAN PER SIZE
PROPERTY TYPES PROPERTIES BALANCE BALANCE RATE (MO.) SQ. FT. (SQ. FT.)
- -------------- ---------- ------------ ---------- -------- ------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Office 1 $ 77,805,504 12.15% 6.800% 264 $102 765,000
Retail
Grocery Store 1 9,991,663 1.56 6.620 239 118 85,000
Drug Store 6 14,943,881 2.33 7.070 251 230 10,823
Sub Total 7 24,935,544 3.89 6.890 246 214 21,420
- ------------ ----- ----- --- --- -------
Total/Wtd. Avgs. 8 $ 102,741,048 16.04% 6.822% 260 $200 114,368
</TABLE>
NEW LOANS
GEOGRAPHIC DISTRIBUTION
% OF
AGGREGATE AGGREGATE
NUMBER OF AMENDMENT AMENDMENT
MORTGAGED CUT-OFF DATE CUT-OFF DATE
STATE PROPERTIES BALANCE BALANCE
----- ---------- ------------ ------------
Georgia 1 $ 77,805,504 12.15%
New York 1 9,991,663 1.56
Ohio 2 5,666,260 0.88
New Jersey 1 3,103,512 0.48
Connecticut 1 2,257,100 0.35
West Virginia 1 2,012,581 0.31
Delaware 1 1,904,428 0.30
- ------------ -----
Total: 8 $102,741,048 16.04%
11
<PAGE>
NEW LOANS
MORTGAGE RATES
<TABLE>
<CAPTION>
WEIGHTED AVERAGES
% OF CUMULATIVE -------------------------------------
AGGREGATE % OF
AGGREGATE AMENDMENT AMENDMENT
NUMBER OF AMENDMENT CUT-OFF CUT-OFF STATED REMAINING
RANGE OF MORTGAGE CUT-OFF DATE DATE DATE MORTGAGE REMAINING AMORT
MORTGAGE RATES LOANS BALANCE BALANCE BALANCE RATE TERM (MO.) TERM (MO.)
- -------------- -------- ------------ --------- ----------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
6.620--6.999 2 $ 87,797,167 13.71% 13.71% 6.780% 261 261
7.000--7.070 6 14,943,881 2.33 16.04 7.070 251 251
- ------------ ----- ----- ----- --- ---
Total/Wtd. Avgs. 8 $102,741,048 16.04% 16.04% 6.822% 260 260
Avgs.
NEW LOANS
AMENDED CUT-OFF DATE BALANCES
<CAPTION>
WEIGHTED AVERAGES
% OF CUMULATIVE -------------------------------
AGGREGATE % OF
RANGE OF NUMBER AGGREGATE AMENDMENT AMENDMENT STATED
AMENDMENT OF AMENDMENT CUT-OFF CUT-OFF REMAINING REMAINING
CUT-OFF DATE MORTGAGE CUT-OFF DATE DATE DATE MORTGAGE TERM AMORT
BALANCES LOANS BALANCE BALANCE BALANCE RATE (MO.) TERM (MO.)
- ------------------------ -------- ------------ --------- ---------- -------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 1,904,428--$ 1,999,999 1 $ 1,904,428 0.30% 0.30% 7.070% 251 251
2,000,000-- 2,999,999 4 9,935,941 1.55 1.85 7.070 251 251
2,000,000-- 3,999,999 1 3,103,512 0.48 2.33 7.070 251 251
4,000,000-- 9,999,999 1 9,991,663 1.56 3.89 6.620 239 239
10,000,000-- 77,805,504 1 77,805,504 12.15 16.04 6.800 264 264
-- ------------ ----- ----- ----- --- ---
Total/Wtd. Avgs. 8 $102,741,048 16.04% 16.04% 6.822% 260 260
<CAPTION>
NEW LOANS
YEARS OF SCHEDULED MATURITY
WEIGHTED AVERAGES
CUMULATIVE ---------------------------------
% OF % OF
AGGREGATE AGGREGATE AMENDMENT STATED
NUMBER OF AMENDMENT AMENDMENT CUT-OFF REMAINING REMAINING
YEAR OF MORTGAGE CUT-OFF DATE CUT-OFF DATE DATE MORTGAGE TERM AMORT
MATURITY LOANS BALANCE BALANCE BALANCE RATE (MO.) TERM (MO.)
- -------- -------- ------------- ------------ ---------- -------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
2018 1 $ 9,991,663 1.56% 1.56% 6.620% 239 239
2019 6 14,943,881 2.33 3.89 7.070 251 251
2020 1 77,805,504 12.15 16.04 6.800 264 264
-- ------------- ----- ----- ----- --- ---
Total/Wtd. Avgs. 8 $ 102,741,048 16.04% 16.04% 6.822% 260 260
</TABLE>
12
<PAGE>
TABLE DEFINITIONS
For purposes of the tables herein:
(i) References to "Remaining Amort Term" are references to the
remaining amortization terms.
(ii) References to "DSCR" are references to "Debt Service Coverage
Ratios." With respect to the Mortgage Loans, debt service coverage ratios
are used by lenders to measure the ratio of (a) absolute net cash realized
by a landlord (as borrower) under a related Credit Lease ("Net Cash Flow")
that is available for debt service (that is, cash remaining after deducting
any expenses which are either (i) explicitly the responsibility of the
landlord under the related Credit Lease (i.e., roof replacements if
required under a Double-Net Lease, etc.), and/or (ii) those expenses which
could potentially become the responsibility of the landlord under the
Credit Lease if and as reasonably forecasted by the Mortgage Loan Seller,
based upon either (A) potential expense obligations of the landlord to the
Tenant or Mortgaged Property, or (B) expenses which may be incurred in
order to comply with Rating Agencies' requirements (i.e., reserves for
insurance in the event the Tenant, while currently doing so, is not
obligated pursuant to the Credit Lease to maintain insurance meeting the
requirements of the Rating Agencies, etc.)) to (b) required debt service
payments.
The "Debt Service Coverage Ratio" for any Mortgage Loan is the ratio
of annual Net Cash Flow produced by the related Mortgaged Property to the
annualized amount of debt service that will be payable under that Mortgage
Loan commencing after the origination date. Debt Service Coverage Ratios
measure the ability of a property to service mortgage debt based upon the
existing lease payments due by the Tenant under the Credit Lease. The Net
Cash Flow for a Mortgaged Property is the "net cash flow" of such Mortgaged
Property as set forth in, or determined by, the Mortgage Loan Seller on the
basis of a review of (i) the related Credit Lease, (ii) supporting
confirmation of the matters set forth in the related Credit Lease
(specifically in reliance upon Tenant estoppel certificates and
subordination, attornment and non-disturbance agreements), and (iii) a
review of third-party professional reports (structural engineering/property
site assessments). Net Cash Flow does not reflect interest expense and
non-cash items such as depreciation and amortization, and generally does
not reflect capital expenditures, but does reflect reserves for
replacements in those instances in which the landlord under the Credit
Lease is responsible for specific repair, maintenance and/or capital items.
(iii) References to "Loan per Sq. ft." refer to the Amendment Cut-Off
Date Balance of such Mortgage Loan divided by the number of square feet
that comprise the related Mortgaged Property.
(iv) References to "Weighted Averages" are references to averages
weighted on the basis of the Amendment Cut-Off Due Balances of the related
Mortgage Loans (exclusive of the AGH Loans).
13
<PAGE>
(v) References to "Mortgage Rate" are references to the interest rate
on a Mortgage Loan set forth in the related Mortgage Note on the Amendment
Cut-Off Date; provided, however, that for purposes of this term, the
portion of the Georgia Power Loan conveyed to the Trust shall have a
"Mortgage Rate" of 6.80%.
14
<PAGE>
WEIGHTED AVERAGE LIFE
The weighted average life of any Class of Certificate refers to the average
amount of time that will elapse from the date of its issuance until each dollar
allocable to principal of such Certificate is distributed to the investor. The
weighted average life of any Class of Certificate will be influenced by, among
other things, the rate at which principal on the Mortgage Loans is paid or
otherwise collected or advanced and applied to pay principal of such
Certificate. Any delay in collection of a Balloon Payment due at the maturity of
a Mortgage Loan will likely extend the weighted average life of a Class or
Classes of Certificates entitled to distributions in respect of principal as of
the date such Balloon Payment was due. As set forth in the Pooling and Servicing
Agreement, the Principal Distribution Amount (up to the Class A-PO Principal
Distribution Amount) for each Distribution Date will be distributable first in
respect of the Class A-PO Certificates and then in respect of the Class A-1
Certificates until the Certificate Balance thereof is reduced to zero, and will
thereafter be distributable entirely in respect of the Class A-2 Certificates,
the Class A-3 Certificates, the Class B Certificates, the Class C Certificates,
the Class D Certificates, the Class E Certificates, the Class F Certificates,
the Class G Certificates, the Class H Certificates, the Class J Certificates and
the Class K Certificates in that order, in each case until the Certificate
Balance of such Class of Certificates is reduced to zero.
Prepayments on mortgage loans may be measured by a prepayment standard or
model. The model used in this Solicitation of Consent is the "Constant
Prepayment Rate" or "CPR" model. The CPR model represents an assumed constant
annual rate of prepayment each month, expressed as a per annum percentage of the
then scheduled principal balance of one or more mortgage loans. As used in the
following table, the column headed "0%" assumes that none of the Mortgage Loans
are prepaid in whole or in part before scheduled maturity. The columns headed
"5%" and "10%," respectively, assume that prepayments are made each month at
those levels of CPR on each Mortgage Loan whether or not such Mortgage is then
in its Lockout Period, if any.
The following tables are based on the following assumptions ("Modeling
Assumptions"): (i) No Mortgage Loan prepays during a month in which a Lockout
Period is in effect or in which prepayments on such Mortgage Loan are required
to be accompanied by a Yield Maintenance Charge. All other Mortgage Loans prepay
each month at the indicated rate, (ii) the Amendment Cut-Off Date Certificate
Balances of the Sequential Pay Certificates and Class A-PO Certificates and the
Pass-Through Rates for the REMIC Regular Certificates are as described in the
Sections "Certificate Balances and National Amounts" and "Pass Through Rates"
hereof, (iii) there are no delinquencies or Additional Trust Fund Expenses, (iv)
scheduled interest and principal payments on the Mortgage Loans are timely
received, except as described above, and prepayments are made on the Mortgage
Loans on their respective Due Dates (assumed in all cases to be the first day of
each month) at the indicated levels of CPR set forth in the tables, (v) partial
prepayments on the Mortgage Loans are permitted, but are assumed not to affect
the amortization schedules, (vi) no Prepayment Premiums are collected, (vii)
neither the Master Servicer nor the Depositor exercises its right of optional
termination of the Trust Fund described herein, (viii) no Mortgage Loan is
required to be purchased from the Trust Fund, (ix) there are no Prepayment
Interest Shortfalls or
15
<PAGE>
Appraisal Reductions, (x) distributions on the Certificates are made on the 15th
day (each assumed to be a Business Day) of each month, commencing in December,
1998, (xi) the assumed settlement date for the Certificates is March 31, 1998,
(xii) the Quarterly Pay Loans are assumed to pay principal on a quarterly basis
and interest on a monthly basis, (xiii) the Mortgage Rate for Mortgage Loan
Control Number 58 is assumed to be 8.8177147914% per annum and (xiv) for
Mortgage Loan Control Number 21, it was assumed that only the Percentage Premium
was applicable to such Mortgage Loan and the Yield Maintenance provision was
ignored.
The following tables indicate the percentage of the Amendment Cut-Off Date
Certificate Balance of each Class of Certificates (other than the Class IO
Certificates and the Class P Certificates) that would be outstanding after each
of the dates shown under each of the designated scenarios (each, a "Scenario")
and the corresponding weighted average life of each such Class of Certificates.
The tables have been prepared on the basis of, among others, the assumptions
described below. To the extent that the Mortgage Loans or the Certificates have
characteristics that differ from those assumed in preparing the tables, the
Certificates may mature earlier or later than indicated by the tables. The
Mortgage Loans will not prepay at any constant rate, and it is highly unlikely
that the Mortgage Loans will prepay in a manner consistent with the assumptions
underlying any of the Scenarios. In addition, variations in the actual
prepayment experience and the balance of the Mortgage Loans that prepay may
increase or decrease the percentages of Amendment Cut-Off Date Certificate
Balances (and shorten or extend the weighted average lives) shown in the
following tables. Investors are urged to conduct their own analyses of the rates
at which the Mortgage Loans may be expected to prepay.
The tables set forth below were prepared on the basis of the Modeling
Assumptions, except that it was assumed that there are no prepayments on the
Mortgage Loans other than in accordance with the designated Scenario. The
Scenarios are as follows:
Scenario (1): No Mortgage Loan prepays; that is, the CPR
for the Mortgage Pool is 0%.
Scenarios (2), (3), No Mortgage Loan (including Defeasance Loans
(4) and (5): allowing defeasance but not voluntary
prepayment during the Lock-Out Period)
prepays during a month in which a Lockout
Period is in effect or in which prepayments
on such Mortgage Loan are required to be
accompanied by a Yield Maintenance Charge.
All other Mortgage Loans prepay each month at
the rate of 5% CPR in the case of Scenario
(2), 10% CPR in the case of Scenario (3), 15%
in the case of Scenario (4) and 25% in the
case of Scenario (5).
16
<PAGE>
Based on the above-referenced assumptions, the following thirteen tables
indicate the resulting weighted average lives of each Class of the Certificates
(other than the Class IO and Class PCertificates) and sets forth the percentages
of the Amendment Cut-Off Date Certificate Balance of such Class of Certificates
that would be outstanding after each of the dates shown under each of the
designated Scenarios. For purposes of the following tables, the weighted average
life is determined by (i) multiplying the amount of each principal distribution
thereon by the number of years from the date of issuance of such Certificate to
the related Distribution Date, (ii) summing the results and (iii) dividing the
sum by the aggregate amount of the reductions in the principal balance of such
Certificate.
<TABLE>
<CAPTION>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF THE
CLASS A-1 CERTIFICATES UNDER EACH DESIGNATED SCENARIO
0% CPR during lockout or yld. maint.-otherwise at indicated CPR
---------------------------------------------------------------
Distribution Date (0% CPR) (5% CPR) (10% CPR) (15% CPR) (25% CPR)
- ----------------- 1 2 3 4 5
------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Closing Date............... 100 100 100 100 100
November 15, 1999.......... 91 91 91 91 91
November 15, 2000.......... 82 82 82 82 82
November 15, 2001.......... 71 71 71 71 71
November 15, 2002.......... 58 58 58 58 58
November 15, 2003.......... 45 45 45 45 45
November 15, 2004.......... 30 30 30 30 30
November 15, 2005.......... 14 14 14 14 14
November 15, 2006 (and
thereafter).............. 0 0 0 0 0
Weighted Average Life (in
years) .................. 4.4 4.4 4.4 4.4 4.4
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF THE
CLASS A-2 CERTIFICATES UNDER EACH DESIGNATED SCENARIO
0% CPR during lockout or yld. maint.-otherwise at indicated CPR
---------------------------------------------------------------
Distribution Date (0% CPR) (5% CPR) (10% CPR) (15% CPR) (25% CPR)
- ----------------- 1 2 3 4 5
------ -------- --------- --------- -------
<S> <C> <C> <C> <C> <C>
Closing Date............... 100 100 100 100 100
November 15, 1999.......... 100 100 100 100 100
November 15, 2000.......... 100 100 100 100 100
November 15, 2001.......... 100 100 100 100 100
November 15, 2002.......... 100 100 100 100 100
November 15, 2003.......... 100 100 100 100 100
November 15, 2004.......... 100 100 100 100 100
November 15, 2005.......... 100 100 100 100 100
November 15. 2006.......... 96 96 96 95 95
November 15, 2007.......... 50 50 49 48 47
November 15, 2008.......... 20 19 18 17 16
November 15, 2009 (and
thereafter).............. 0 0 0 0 0
Weighted Average Life (in
years) .................. 9.2 9.2 9.1 9.1 9.1
<CAPTION>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF THE
CLASS A-3 CERTIFICATES UNDER EACH DESIGNATED SCENARIO
0% CPR during lockout or yld. maint.-otherwise at indicated CPR
---------------------------------------------------------------
Distribution Date (0% CPR) (5% CPR) (10% CPR) (15% CPR) (25% CPR)
- ----------------- 1 2 3 4 5
------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Closing Date............... 100 100 100 100 100
November 15, 1999.......... 100 100 100 100 100
November 15, 2000.......... 100 100 100 100 100
November 15, 2001.......... 100 100 100 100 100
November 15, 2002.......... 100 100 100 100 100
November 15, 2003.......... 100 100 100 100 100
November 15, 2004.......... 100 100 100 100 100
November 15, 2005.......... 100 100 100 100 100
November 15. 2006.......... 100 100 100 100 100
November 15, 2007.......... 100 100 100 100 100
November 15, 2008.......... 100 100 100 100 100
November 15, 2009.......... 91 91 91 90 90
November 15, 2010 ......... 79 79 79 78 78
November 15, 2011.......... 66 66 66 66 66
November 15, 1012.......... 52 52 52 52 52
November 15, 2013.......... 38 38 38 38 38
November 15, 2014.......... 23 23 23 23 23
November 15, 2015.......... 7 7 6 6 6
November 15, 2016 (and
thereafter).............. 0 0 0 0 0
Weighted Average Life (in
years) .................. 14.1 14.1 14.1 14.0 14.0
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF THE
CLASS A-PO CERTIFICATES UNDER EACH DESIGNATED SCENARIO
0% CPR during lockout or yld. maint.-otherwise at indicated CPR
---------------------------------------------------------------
Distribution Date (0% CPR) (5% CPR) (10% CPR) (15% CPR) (25% CPR)
- ----------------- 1 2 3 4 5
------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
Closing Date............... 100 100 100 100 100
November 15, 1999.......... 98 98 98 98 98
November 15, 2000.......... 96 96 96 96 96
November 15, 2001.......... 93 93 93 93 93
November 15, 2002.......... 90 90 90 90 90
November 15, 2003.......... 88 88 88 88 88
November 15, 2004.......... 84 84 84 84 84
November 15, 2005.......... 81 81 81 81 81
November 15. 2006.......... 78 78 78 78 78
November 15, 2007.......... 74 74 74 74 74
November 15, 2008.......... 70 70 70 70 70
November 15, 2009.......... 65 65 65 65 65
November 15, 2010 ......... 61 61 61 61 61
November 15, 2011.......... 56 56 56 56 56
November 15, 1012.......... 51 51 51 51 51
November 15, 2013.......... 46 46 46 46 46
November 15, 2014.......... 41 41 41 41 41
November 15, 2015.......... 35 35 35 35 35
November 15, 2016 ......... 29 29 29 29 29
November 15, 1017.......... 23 23 23 23 23
November 15, 2018.......... 16 16 16 16 16
November 15, 2019.......... 12 12 12 12 12
November 15, 2020 (and
thereafter) ............. 0 0 0 0 0
Weighted Average Life (in
years) .................. 13.3 13.3 13.3 13.3 13.3
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF THE
CLASS B CERTIFICATES UNDER EACH DESIGNED SCENARIO
0% CPR during lockout or yld. maint.-otherwise at indicated CPR
---------------------------------------------------------------
Distribution Date (0% CPR) (5% CPR) (10% CPR) (15% CPR) (25% CPR)
- ----------------- 1 2 3 4 5
------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Closing Date............... 100 100 100 100 100
November 15, 1999.......... 100 100 100 100 100
November 15, 2000.......... 100 100 100 100 100
November 15, 2001.......... 100 100 100 100 100
November 15, 2002.......... 100 100 100 100 100
November 15, 2003.......... 100 100 100 100 100
November 15, 2004.......... 100 100 100 100 100
November 15, 2005.......... 100 100 100 100 100
November 15. 2006.......... 100 100 100 100 100
November 15, 2007.......... 100 100 100 100 100
November 15, 2008.......... 100 100 100 100 100
November 15, 2009.......... 100 100 100 100 100
November 15, 2010 ......... 100 100 100 100 100
November 15, 2011.......... 100 100 100 100 100
November 15, 1012.......... 100 100 100 100 100
November 15, 2013.......... 100 100 100 100 100
November 15, 2014.......... 100 100 100 100 100
November 15, 2015.......... 100 100 100 100 100
November 15, 2016 ......... 34 33 33 32 31
November 15, 2017 (and
thereafter) ............. 0 0 0 0 0
Weighted Average Life (in
years) .................. 17.9 17.8 17.8 17.8 17.8
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF THE
CLASS C CERTIFICATES UNDER EACH DESIGNATED SCENARIO
0% CPR during lockout or yld. maint.-otherwise at indicated CPR
---------------------------------------------------------------
Distribution Date (0% CPR) (5% CPR) (10% CPR) (15% CPR) (25% CPR)
- ----------------- 1 2 3 4 5
------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Closing Date............... 100 100 100 100 100
November 15, 1999.......... 100 100 100 100 100
November 15, 2000.......... 100 100 100 100 100
November 15, 2001.......... 100 100 100 100 100
November 15, 2002.......... 100 100 100 100 100
November 15, 2003.......... 100 100 100 100 100
November 15, 2004.......... 100 100 100 100 100
November 15, 2005.......... 100 100 100 100 100
November 15. 2006.......... 100 100 100 100 100
November 15, 2007.......... 100 100 100 100 100
November 15, 2008.......... 100 100 100 100 100
November 15, 2009.......... 100 100 100 100 100
November 15, 2010 ......... 100 100 100 100 100
November 15, 2011.......... 100 100 100 100 100
November 15, 1012.......... 100 100 100 100 100
November 15, 2013.......... 100 100 100 100 100
November 15, 2014.......... 100 100 100 100 100
November 15, 2015.......... 100 100 100 100 100
November 15, 2016 ......... 100 100 100 100 100
November 15, 2017 (and
thereafter).............. 0 0 0 0 0
Weighted Average Life (in
years) .................. 18.7 18.7 18.7 18.7 18.7
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF THE
CLASS D CERTIFICATES UNDER EACH DESIGNATED SCENARIO
0% CPR during lockout or yld. maint.-otherwise at indicated CPR
---------------------------------------------------------------
Distribution Date (0% CPR) (5% CPR) (10% CPR) (15% CPR) (25% CPR)
1 2 3 4 5
-------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Closing Date............... 100 100 100 100 100
November 15, 1999.......... 100 100 100 100 100
November 15, 2000.......... 100 100 100 100 100
November 15, 2001.......... 100 100 100 100 100
November 15, 2002.......... 100 100 100 100 100
November 15, 2003.......... 100 100 100 100 100
November 15, 2004.......... 100 100 100 100 100
November 15, 2005.......... 100 100 100 100 100
November 15. 2006.......... 100 100 100 100 100
November 15, 2007.......... 100 100 100 100 100
November 15, 2008.......... 100 100 100 100 100
November 15, 2009.......... 100 100 100 100 100
November 15, 2010 ......... 100 100 100 100 100
November 15, 2011.......... 100 100 100 100 100
November 15, 1012.......... 100 100 100 100 100
November 15, 2013.......... 100 100 100 100 100
November 15, 2014.......... 100 100 100 100 100
November 15, 2015.......... 100 100 100 100 100
November 15, 2016 ......... 100 100 100 100 100
November 15, 2017.......... 89 88 87 86 85
November 15, 2018 (and
thereafter).............. 0 0 0 0 0
Weighted Average Life (in
years) .................. 19.4 19.4 19.4 19.4 19.4
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF THE
CLASS E CERTIFICATES UNDER EACH DESIGNATED SCENARIO
0% CPR during lockout or yld. maint.-otherwise at indicated CPR
---------------------------------------------------------------
Distribution Date (0% CPR) (5% CPR) (10% CPR) (15% CPR) (25% CPR)
- ----------------- 1 2 3 4 5
-------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C>
Closing Date............... 100 100 100 100 100
November 15, 1999.......... 100 100 100 100 100
November 15, 2000.......... 100 100 100 100 100
November 15, 2001.......... 100 100 100 100 100
November 15, 2002.......... 100 100 100 100 100
November 15, 2003.......... 100 100 100 100 100
November 15, 2004.......... 100 100 100 100 100
November 15, 2005.......... 100 100 100 100 100
November 15, 2006.......... 100 100 100 100 100
November 15, 2007.......... 100 100 100 100 100
November 15, 2008.......... 100 100 100 100 100
November 15, 2009.......... 100 100 100 100 100
November 15, 2010.......... 100 100 100 100 100
November 15, 2011.......... 100 100 100 100 100
November 15, 2012.......... 100 100 100 100 100
November 15, 2013.......... 100 100 100 100 100
November 15, 2014.......... 100 100 100 100 100
November 15, 2015.......... 100 100 100 100 100
November 15, 2016.......... 100 100 100 100 100
November 15, 2017.......... 100 100 100 100 100
November 15, 2018.......... 56 52 49 47 44
November 15, 2019 (and 0 0 0 0 0
thereafter)..............
Weighted Average Life (in
years)................... 20.0 20.0 20.0 20.0 20.0
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF THE
CLASS F CERTIFICATES UNDER EACH DESIGNATED SCENARIO
0% CPR during lockout or yld. maint.-otherwise at indicated CPR
---------------------------------------------------------------
(0% CPR) (5% CPR) (10% CPR) (15% CPR) (25% CPR)
Distribution Date 1 2 3 4 5
- ----------------- -------- -------- --------- --------- --------
<S> <C> <C> <C> <C> <C>
Closing Date............... 100 100 100 100 100
November 15, 1999.......... 100 100 100 100 100
November 15, 2000.......... 100 100 100 100 100
November 15, 2001.......... 100 100 100 100 100
November 15, 2002.......... 100 100 100 100 100
November 15, 2003.......... 100 100 100 100 100
November 15, 2004.......... 100 100 100 100 100
November 15, 2005.......... 100 100 100 100 100
November 15, 2006.......... 100 100 100 100 100
November 15, 2007.......... 100 100 100 100 100
November 15, 2008.......... 100 100 100 100 100
November 15, 2009.......... 100 100 100 100 100
November 15, 2010.......... 100 100 100 100 100
November 15, 2011.......... 100 100 100 100 100
November 15, 2012.......... 100 100 100 100 100
November 15, 2013.......... 100 100 100 100 100
November 15, 2014.......... 100 100 100 100 100
November 15, 2015.......... 100 100 100 100 100
November 15, 2016.......... 100 100 100 100 100
November 15, 2017.......... 100 100 100 100 100
November 15, 2018.......... 100 100 100 100 100
November 15, 2019.......... 56 55 55 55 54
November 15, 2020 (and
thereafter) ............. 0 0 0 0 0
Weighted Average Life (in
years)................... 20.8 20.8 0.8 20.8 20.8
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF THE
CLASS G CERTIFICATES UNDER EACH DESIGNATED SCENARIO
0% CPR during lockout or yld. maint.-otherwise at indicated CPR
---------------------------------------------------------------
(0% CPR) (5% CPR) (10% CPR) (15% CPR) (25% CPR)
Distribution Date 1 2 3 4 5
- ----------------- -------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Closing Date............... 100 100 100 100 100
November 15, 1999.......... 100 100 100 100 100
November 15, 2000.......... 100 100 100 100 100
November 15, 2001.......... 100 100 100 100 100
November 15, 2002.......... 100 100 100 100 100
November 15, 2003.......... 100 100 100 100 100
November 15, 2004.......... 100 100 100 100 100
November 15, 2005.......... 100 100 100 100 100
November 15, 2006.......... 100 100 100 100 100
November 15, 2007.......... 100 100 100 100 100
November 15, 2008.......... 100 100 100 100 100
November 15, 2009.......... 100 100 100 100 100
November 15, 2010.......... 100 100 100 100 100
November 15, 2011.......... 100 100 100 100 100
November 15, 2012.......... 100 100 100 100 100
November 15, 2013.......... 100 100 100 100 100
November 15, 2014.......... 100 100 100 100 100
November 15, 2015.......... 100 100 100 100 100
November 15, 2016.......... 100 100 100 100 100
November 15, 2017.......... 100 100 100 100 100
November 15, 2018.......... 100 100 100 100 100
November 15, 2019 ......... 100 100 100 100 100
November 15, 2020 (and
thereafter) ............. 0 0 0 0 0
Weighted Average Life (in
years) .................. 21.5 21.5 21.5 21.5 21.5
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF THE
CLASS H CERTIFICATES UNDER EACH DESIGNATED SCENARIO
0% CPR during lockout or yld. maint.-otherwise at indicated CPR
---------------------------------------------------------------
(0% CPR) (5% CPR) (10% CPR) (15% CPR) (25% CPR)
Distribution Date 1 2 3 4 5
- ----------------- -------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Closing Date............... 100 100 100 100 100
November 15, 1999.......... 100 100 100 100 100
November 15, 2000.......... 100 100 100 100 100
November 15, 2001.......... 100 100 100 100 100
November 15, 2002.......... 100 100 100 100 100
November 15, 2003.......... 100 100 100 100 100
November 15, 2004.......... 100 100 100 100 100
November 15, 2005.......... 100 100 100 100 100
November 15, 2006.......... 100 100 100 100 100
November 15, 2007.......... 100 100 100 100 100
November 15, 2008.......... 100 100 100 100 100
November 15, 2009.......... 100 100 100 100 100
November 15, 2010.......... 100 100 100 100 100
November 15, 2011.......... 100 100 100 100 100
November 15, 2012.......... 100 100 100 100 100
November 15, 2013.......... 100 100 100 100 100
November 15, 2014.......... 100 100 100 100 100
November 15, 2015.......... 100 100 100 100 100
November 15, 2016.......... 100 100 100 100 100
November 15, 2017.......... 100 100 100 100 100
November 15, 2018.......... 100 100 100 100 100
November 15, 2019.......... 100 100 100 100 100
November 15, 2020 (and
thereafter) ............. 0 0 0 0 0
Weighted Average Life (in
years)................... 21.8 21.8 21.7 21.7 21.7
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF THE
CLASS J CERTIFICATES UNDER EACH DESIGNATED SCENARIO
0% CPR during lockout or yld. maint.-otherwise at indicated CPR
---------------------------------------------------------------
(0% CPR) (5% CPR) (10% CPR) (15% CPR) (25% CPR)
Distribution Date 1 2 3 4 5
- ----------------- -------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Closing Date............... 100 100 100 100 100
November 15, 1999.......... 100 100 100 100 100
November 15, 2000.......... 100 100 100 100 100
November 15, 2001.......... 100 100 100 100 100
November 15, 2002.......... 100 100 100 100 100
November 15, 2003.......... 100 100 100 100 100
November 15, 2004.......... 100 100 100 100 100
November 15, 2005.......... 100 100 100 100 100
November 15, 2006.......... 100 100 100 100 100
November 15, 2007.......... 100 100 100 100 100
November 15, 2008.......... 100 100 100 100 100
November 15, 2009.......... 100 100 100 100 100
November 15, 2010.......... 100 100 100 100 100
November 15, 2011.......... 100 100 100 100 100
November 15, 2012.......... 100 100 100 100 100
November 15, 2013.......... 100 100 100 100 100
November 15, 2014.......... 100 100 100 100 100
November 15, 2015.......... 100 100 100 100 100
November 15, 2016.......... 100 100 100 100 100
November 15, 2017.......... 100 100 100 100 100
November 15, 2018.......... 100 100 100 100 100
November 15, 2019.......... 100 100 100 100 100
November 15, 2020.......... 58 44 35 29 22
November 15, 2020 (and
thereafter) ............. 0 0 0 0
Weighted Average Life (in
years)................... 22.0 22.0 22.0 22.0 22.0
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF THE
CLASS K CERTIFICATES UNDER EACH DESIGNATED SCENARIO
0% CPR during lockout or yld. maint.-otherwise at indicated CPR
---------------------------------------------------------------
(0% CPR) (5% CPR) (10% CPR) (15% CPR) (25% CPR)
Distribution Date 1 2 3 4 5
- ----------------- -------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Closing Date............... 100 100 100 100 100
November 15, 1999.......... 100 100 100 100 100
November 15, 2000.......... 100 100 100 100 100
November 15, 2001.......... 100 100 100 100 100
November 15, 2002.......... 100 100 100 100 100
November 15, 2003.......... 100 100 100 100 100
November 15, 2004.......... 100 100 100 100 100
November 15, 2005.......... 100 100 100 100 100
November 15, 2006.......... 100 100 100 100 100
November 15, 2007.......... 100 100 100 100 100
November 15, 2008.......... 100 100 100 100 100
November 15, 2009.......... 100 100 100 100 100
November 15, 2010.......... 100 100 100 100 100
November 15, 2011.......... 100 100 100 100 100
November 15, 2012.......... 100 100 100 100 100
November 15, 2013.......... 100 100 100 100 100
November 15, 2014.......... 100 100 100 100 100
November 15, 2015.......... 100 100 100 100 100
November 15, 2016.......... 100 100 100 100 100
November 15, 2017.......... 100 100 100 100 100
November 15, 2018.......... 100 100 100 100 100
November 15, 2019.......... 100 100 100 100 100
November 15, 2020.......... 100 100 100 100 100
November 15, 2021.......... 50 49 48 47 47
November 15, 2022.......... 6 6 6 6 6
November 15, 2023 (and
thereafter).............. 0 0 0 0 0
Weighted Average Life (in
years)................... 23.1 23.0 23.0 23.0 23.0
</TABLE>
28
<PAGE>
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
For federal income tax purposes, each CTL Certificate evidences ownership
of an interest in a real estate mortgage investment conduit (a "REMIC"). Solely
for federal income tax purposes, on the Amendment Closing Date each holder of a
CTL Certificate will be deemed to have exchanged the REMIC interest that is
currently represented by such CTL Certificate for a new REMIC interest. However,
no actual exchange of CTL Certificates will occur and there will be no new CTL
Certificates on the book-entry system of the Depository Trust Company.
For federal income tax purposes, a holder of a CTL Certificate will not
recognize any taxable gain or loss as a result of the above-described exchange
of REMIC interests that will result from the adoption of the Proposed Amendment.
Moreover, a holder's adjusted federal income tax basis for a CTL Certificate
immediately after the adoption of the Proposed Amendment will be equal to the
adjusted federal income tax basis for such CTL Certificate immediately prior to
the adoption of the Proposed Amendment.
However, if the fair market value of a CTL Certificate as of the date of
adoption of the Proposed Amendment exceeds the adjusted federal income basis of
such CTL Certificate immediately prior to the adoption of the Proposed
Amendment, the holder will be required to include such excess in gross income
over the remaining term of such CTL Certificate as if it were "market discount"
within the meaning of Section 1278(a)(2) of the Internal Revenue Code of 1986
(the "Code") and the holder had made an election under Section 1278(b) of the
Code to include such market discount currently in gross income. However, the
holder would not be deemed to have made an election under Section 1278(b) with
respect to other evidences of indebtedness owned by the holder.
In addition, if the holder's adjusted federal income tax basis for a CTL
Certificate immediately prior to the adoption of the Proposed Amendment exceeds
the fair market value of such CTL Certificate immediately after the adoption of
the Proposed Amendment, the holder will be treated as having made an election to
treat such excess as amortizable bond premium on a taxable bond under Section
171(b) of the Code. However, the holder will not be deemed to have made a
similar election with respect to other evidences of indebtedness owned by the
holder.
Except as set forth above, the federal income tax treatment of the CTL
Certificates after the adoption of the Proposed Amendment will be as described
under the respective discussions of "MATERIAL FEDERAL INCOME TAX CONSEQUENCES"
set forth in the Prospectus, dated February 25, 1998, and the Prospectus
Supplement, dated March 25, 1998, for the CTL Certificates.
29
<PAGE>
RISK FACTORS
The following Risk Factors relate only to certain risks associated with the
transactions contemplated by the Proposed Amendment and do not purport to
represent the risks associated with the Mortgage Loans generally or the risks
associated with an investment in the CTL Certificates.
NO ASSURANCE OF THE RATINGS
There can be no assurance that the ratings assigned to the Tenant or
Guarantor on the Credit Leases with respect to the New Loans will not be
qualified, downgraded or withdrawn by the rating agency assigning such ratings.
Such a qualification, downgrade or withdrawal could result in a qualification,
downgrade or withdrawal of the ratings assigned to the CTL Certificates.
In the event that ratings assigned to the Tenant or Guarantor on the AGH
Loans are upgraded, the existing CTL Certificates will not benefit from such a
change in the ratings assigned to such Tenants or Guarantor.
CONCENTRATION RISK
Six of the eight New Loans are Rite Aid Loans, which rely on the credit
Rite Aid Corporation, which as of the Amendment Cut-Off Date represent 20.59% of
the Mortgage Loans and 14.5% of the New Mortgage Loans. A greater concentration
of any one borrower, Tenant or Guarantor supporting payment on the Mortgage
Loans, can result in a greater negative impact on the Trust and payments on the
CTL Certificates in the event of a default by such borrower, Tenant or Guarantor
or in the event of a qualification, downgrade or withdrawal of the ratings
assigned to such Tenant or Guarantor.
Seven of the eight New Loans are secured by Mortgaged Properties which are
in the retail industry. A greater concentration of Mortgage Loans that are
secured by similar types of income-producing properties can result in a greater
negative impact on the Trust and the distributions on the CTL Certificates in
the event of a downturn in such business.
BANKRUPTCY RISK
In the event of a voluntary or involuntary bankruptcy of Daiwa Finance,
there can be no assurance that the bankruptcy court would characterize the
transfer of the New Loans from Daiwa Finance to MLMI and the deposit of the New
Loans into the Trust as a "true sale". Accordingly the payments on the New Loans
may be subject to the automatic stay provisions of the United States Bankruptcy
Code which could result in substantial delay of distributions to the CTL
Certificates in respect of collections on New Loans.
30
<PAGE>
RATINGS
It is a condition to the execution and delivery of the Proposed Amendment
and the delivery of the New Loans to the Trust that each of Moody's, Standard &
Poor's and Duff & Phelps confirm that the Proposed Amendment and the delivery of
the New Loans to the Trust will not result in a qualification, downgrade or
withdrawal of the ratings that were assigned to each class of the CTL
Certificates then rated by each such rating agency.
LEGAL MATTERS
Certain securities laws matters will be passed upon for MLMI by Willkie
Farr & Gallagher, New York, New York and certain tax matters will be passed upon
by Brown & Wood, LLP, New York, New York.
31
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT A
CERTAIN CHARACTERISTICS OF THE NCTL LOANS
NOT INCLUDING CLASS P
CONTROL ZIP
NO. PROPERTY NAME ADDRESS CITY STATE CODE PROPERTY TYPE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
N1 Georgia Power Office Building 241 Ralph McGill Boulevard Atlanta GA 30308 Office Headquarters
N2 Tops Market 2000 Washington Street Jamestown NY 14701 Retail Supermarket
N3 Rite Aid Corp. Summerhill & Main Spotswood NJ 08884 Retail
N4 Rite Aid Corp. Royalton/State Rds. North Royalton OH 44133 Retail
N5 Rite Aid Corp. 5445 North High St. Columbus OH 43214 Retail
N6 Rite Aid Corp. 588 Main Street East Haven CT 06512 Retail
N7 Rite Aid Corp. Route 34 & Mt. Vernon Hurricane WV 25526 Retail
N8 Rite Aid Corp. 701 Atlanta Road Seaford DE 19973 Retail
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL/WEIGHTED AVERAGE
TOTAL NEW POOL BALANCE
<CAPTION>
CUMULATIVE % OF CROSSED
CONTROL ORIGINAL CURRENT % OF NEW NEW POOL COLLATERALIZED
NO. BALANCE BALANCE POOL BALANCE BALANCE LOANS CONTROL NO.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
N1 $ 77,925,000 $ 77,805,504 (a) 12.1% 12.1%
N2 $ 10,011,786 $ 9,991,663 1.6% 13.7%
N3 $ 3,176,247 $ 3,103,512 0.5% 14.2%
N4 $ 3,055,934 $ 2,985,954 0.5% 14.7%
N5 $ 2,743,122 $ 2,680,306 (b) 0.4% 15.1%
N6 $ 2,309,998 $ 2,257,100 0.4% 15.4%
N7 $ 2,059,748 $ 2,012,581 0.3% 15.7%
N8 $ 1,949,061 $ 1,904,428 0.3% 16.0%
- ------------------------------------------------------------------------------------------------------------------------------------
$ 103,230,896 $ 102,741,048 16.0% 16.0%
$ 640,394,016
<CAPTION>
STATED ORIG REM
ORIG REM AMORT AMORT
CONTROL INTEREST ACCRUAL MORTGAGE ADMINISTRATIVE TERM TERM TERM TERM ORIGINATION REPAYMENT
NO. METHOD RATE COST RATE (MOS.) (MOS.) (MOS.) (MOS.) DATE DATE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
N1 30/360 6.80% 0.045% 267 264 267 264 07/01/98 11/10/20
N2 30/360 6.62% 0.045% 240 239 240 239 09/03/98 10/01/18
N3 30/360 7.07% 0.045% 265 251 265 251 08/27/97 10/10/19
N4 30/360 7.07% 0.045% 265 251 265 251 08/27/97 10/10/19
N5 30/360 7.07% 0.045% 265 251 265 251 08/27/97 10/10/19
N6 30/360 7.07% 0.045% 265 251 265 251 08/27/97 10/10/19
N7 30/360 7.07% 0.045% 265 251 265 251 08/27/97 10/10/19
N8 30/360 7.07% 0.045% 265 251 265 251 08/27/97 10/10/19
- ------------------------------------------------------------------------------------------------------------------------------------
6.82% 264 260 264 260
<CAPTION>
BALLOON/ ANNUAL ANNUAL NET MINIMUM STABILIZED
CONTROL REPAYMENT AMORTIZATION PREPAYMENT DEBT RENT (BEFORE DEBT SERVICE COVERAGE
NO. BALANCE TYPE RESTRICTIONS SERVICE LENDER RESERVES) (NET OF LENDER RESERVES)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
N1 0 Fully Amortizing L(42),Def(225) 590,875 617,416 1.00
N2 0 Fully Amortizing L(60),Def(180) 75,354 75,354 1.00
N3 0 Fully Amortizing L(60),Def(205) 23,713 23,713 1.00
N4 0 Fully Amortizing L(60),Def(205) 22,814 22,814 1.00
N5 0 Fully Amortizing L(60),Def(205) 20,479 20,479 1.00
N6 0 Fully Amortizing L(60),Def(205) 17,246 17,246 1.00
N7 0 Fully Amortizing L(60),Def(205) 15,377 15,377 1.00
N8 0 Fully Amortizing L(60),Def(205) 14,551 14,551 1.00
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
CURRENT STABILIZED ORIGINATION DATE CURRENT BALLOON
CONTROL DEBT SERVICE COVERAGE APPRAISED APPRAISAL LOAN-TO-VALUE LOAN-TO-VALUE LOAN-TO-VALUE YEAR SQUARE
NO. (NET OF LENDER RESERVES) VALUE DATE RATIO RATIO RATIO BUILT FOOTAGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
N1 1.04 90,500,000 08/20/98 86.1% 86.0% 0% 1981 765,000
N2 1.00 10,800,000 02/02/98 92.7% 92.5% 0% 1997 85,000
N3 1.00 3,300,000 09/01/97 96.2% 94.0% 0% 1997 10,752
N4 1.00 3,200,000 07/08/97 95.5% 93.3% 0% 1997 10,752
N5 1.00 2,900,000 07/07/97 94.6% 92.4% 0% 1997 10,752
N6 1.00 2,400,000 09/01/97 96.2% 94.0% 0% 1997 11,180
N7 1.00 2,200,000 09/01/97 93.6% 91.5% 0% 1997 10,752
N8 1.00 2,100,000 06/01/97 92.8% 90.7% 0% 1997 10,752
- ------------------------------------------------------------------------------------------------------------------------------------
1 88.0% 87.6% 0.0%
<CAPTION>
INITIAL TENANT/GUARANTOR
CONTROL LOAN PER OCCUPANCY RESERVES UNDERWRITING TENANT RATING
NO. SQ FT PERCENTAGE AT CLOSING RESERVES NAME S&P
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
N1 $102 100% 0 0 Georgia Power Company A+
N2 $118 100% 0 0 Koninklijke Ahold, n.v. A
N3 $289 100% 0 0 Rite Aid Corp. BBB+
N4 $278 100% 0 0 Rite Aid Corp. BBB+
N5 $249 100% 0 0 Rite Aid Corp. BBB+
N6 $202 100% 0 0 Rite Aid Corp. BBB+
N7 $187 100% 0 0 Rite Aid Corp. BBB+
N8 $177 100% 0 0 Rite Aid Corp. BBB+
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
CONTROL LEASE LEASE LEASE CONTROL
NO. MOODY'S START DATE EXP DATE TYPE NO.
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
N1 A1 11/01/80 10/31/20 Absolute Bond N1
N2 A3 01/05/98 09/30/18 Absolute Bond N2
N3 Baa1 08/28/97 09/30/19 Absolute Bond N3
N4 Baa1 08/28/97 09/30/19 Absolute Bond N4
N5 Baa1 08/28/97 09/30/19 Absolute Bond N5
N6 Baa1 08/28/97 09/30/19 Absolute Bond N6
N7 Baa1 08/28/97 09/30/19 Absolute Bond N7
N8 Baa1 08/28/97 09/30/19 Absolute Bond N8
- ------------------------------------------------------------------------------------------
</TABLE>
- ----------
(1) - The Administrative Cost for all Loans is 4.5 bps.
(2) - L=Lockout, Def=Defeasance, YM=Yield Maintenance, O=Open. Number of months
at origination for each penalty type in parenthesis
(3) - Minimum Stablized DSCR (net of Lender Reserves) is calculated as 1st year
stabilized Base Rent due under a lease, less Funded Reserves, divided by
Annual Debt Service.
(4) - Represents the Corporate Credit Rating with respect to S&P and the Long
Term Credit Rating with respect to Moody's.
(a) The Georgia Power Loan was originated on July 27, 1979. On July 1, 1998,
the loan was purchased by Legg Mason Mortgage Capital Corporation
("LMMCC") from the holder. Prior to the purchase of the loan by LMMCC, the
loan documents, with the consent of the borrower and holder, were amended
to conform generally with the requirements of LMMCC.
(b) The Columbus Rite Aid Loan is subject to a participation agreement with
Daiwa Finance. The participation agreement provides that Daiwa Finance
will retain a portion of the current balance of such loan equal to
$149,464 and that the Trust will hold the remainder equal to $2,530,842.
<PAGE>
CERTIFICATE OF CONSENT
[FOR CLASS IO CERTIFICATES]
December __, 1998
Norwest Bank Minnesota, National
Association, solely in its
capacity as Trustee
11000 Broken Land Parkway
Columbia, Maryland 21044-3562
Merrill Lynch Mortgage Investors, Inc.
100 Church Street
18th Floor
New York, New York 10080-6518
Daiwa Finance Corp.
Financial Square
32 Old Slip
New York, New York 10005-3538
Re: Merrill Lynch Mortgage Investors, Inc.
Mortgage Pass-Through Certificates
Series 1998-C1-CTL
---------------------------------------
Ladies and Gentlemen:
I am a duly authorized representative of [____________] ("[___________]"),
which is the beneficial owner of the Class [__] Certificates that had an
original Certificate Principal Balance of $[__________] (the "Certificates") and
which comprise a portion of the Merrill Lynch Mortgage Investors, Inc. Mortgage
Pass-Through Certificates Series 1998-C1-CTL that were issued under the Pooling
and Servicing Agreement, dated as of March 1, 1998 (the "Original Pooling and
Servicing Agreement"), by and among Merrill Lynch Mortgage Investors, Inc. as
depositor (the "Depositor"), GMAC Commercial Mortgage Corporation as master
servicer (the "Master Servicer"), GMAC Commercial Mortgage Corporation as
special servicer (the "Special Servicer") and Norwest Bank Minnesota, National
Association as trustee (the "Trustee"). I hereby certify to you that:
<PAGE>
1) [__________] has received and had an opportunity to review a copy of
the Solicitation of Consent, dated as of December [__], 1998 (the
"Solicitation of Consent") together with the exhibits thereto. All
capitalized terms used herein which are not defined herein shall have
the respective meanings ascribed thereto in the Solicitation of
Consent.
2) [__________] hereby consents to the amendment of the Original Pooling
and Servicing Agreement as described in the Solicitation of Consent
and as set forth in the New Pooling and Servicing Agreement, and
agrees to be bound by the terms thereof. Upon such amendment of the
Original Pooling and Servicing Agreement and effective as of November
1, 1998 (the "Amendment Cut-Off Date"), [__________] hereby releases
all interest in and claims relating to the AGH Loans that were
formerly represented by the Certificates.
3) Effective as of the Amendment Cut-Off Date, [__________] hereby
exchanges the REMIC III Regular Interest that was represented by the
Certificates prior to the Amendment Cut-Off Date for the "regular
interest" in REMIC VI that will be represented by the Certificates on
and after the Amendment Cut-Off Date, provided that such exchange
shall not result in any reduction to the Certificate Principal Balance
of such Certificates or the Pass-Through Rate applicable thereto.
4) The DTC Participant of the undersigned is [__________]. The original
Certificate Principal Balance of the Class[____] Certificates now held
by the undersigned is $[_______].
[NAME OF BENEFICIAL OWNER]
By:
Name:
Title:
-2-
